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Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 391 added, 352 removed, 1664 unchanged (31% of the section changed)

FINANCIAL STATEMENTS (UNAUDITED)

The June 30, 2021 and December 31, 2020, consolidated balance sheets of United Bankshares, Inc.

and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three and six months ended June 30, 2021 and 2020, the related consolidated statement of changes in shareholders’ equity for the three and six months ended June 30, 2021 and 2020, the related condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020, and the notes to consolidated financial statements appear on the following pages.

The September 30, 2021 and December 31, 2020, consolidated balance sheets of United Bankshares, Inc.

and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2021 and 2020, the related consolidated statement of changes in shareholders’ equity for the three and nine months ended September 30, 2021 and 2020, the related condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020, and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS

6 unchanged sentences

Total cash and cash equivalents

Securities available for sale at estimated fair value (amortized cost-$ 3,221,432 at June 30, 2021 and $ 2,868,346 at December 31, 2020, allowance for credit losses of $ 0 at June 30, 2021 and December 31, 2020)

Securities held to maturity, net of allowance for credit losses of $ 31 at June 30, 2021 and $ 23 at December 31, 2020 (estimated fair value-$ 1,020 at June 30, 2021 and $ 1,235 at December 31, 2020)

Securities available for sale at estimated fair value (amortized cost-$ 3,372,304 at September 30, 2021 and $ 2,868,346 at December 31, 2020, allowance for credit losses of $ 0 at September 30, 2021 and December 31, 2020)

Securities held to maturity, net of allowance for credit losses of $ 27 at September 30, 2021 and $ 23 at December 31, 2020 (estimated fair value-$ 1,020 at September 30, 2021 and $ 1,235 at December 31, 2020)

Equity securities at estimated fair value

Other investment securities

Loans held for sale (at fair value-$ 576,827 at June 30, 2021 and $ 698,341 at December 31, 2020)

Loans held for sale ( measured using the

fair value option

-$ 493,299 at September 30, 2021 and $ 698,341 at December 31,

Loans and leases

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Operating lease right-of-use

Mortgage servicing rights, net of valuation allowance of $ 1,633 at June 30, 2021 and $ 1,383 at December 31, 2020

Accrued interest receivable, net of allowance for credit losses of $ 29 at June 30, 2021 and $ 250 at December 31, 2020

Mortgage servicing rights, net of valuation allowance of $ 1,383 at September 30, 2021 and at December 31, 2020

Accrued interest receivable, net of allowance for credit losses of $ 26 at September 30, 2021 and $ 250 at December 31, 2020

Noninterest-bearing

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issued- 134,167,380

and 133,809,374 at June 30, 2021 and December 31, 2020, respectively, including 4,962,070 and 4,620,867 shares in treasury at June 30, 2021 and December 31, 2020, respectively

and 133,809,374 at September 30, 2021 and December 31, 2020, respectively, including 4,963,606 and 4,620,867 shares in treasury at September 30, 2021 and December 31, 2020, respectively

Retained earnings

Accumulated other comprehensive gain

Accumulated other comprehensive (loss)

Treasury stock, at cost

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Interest income

Interest and fees on loans

Interest and fees on loans and leases

Interest on federal funds sold and other short-term investments

17 unchanged sentences

Mortgage loan servicing income

Net gain on the sale of bank premises

Net investment securities gains

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FDIC insurance expense

FHLB prepayment penalties

Other expense

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Three Months Ended

Six Months Ended

Nine Months Ended

Earnings per common share:

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Three Months Ended

Six Months Ended

Change in net unrealized gain (loss)

on available-for-sale

Nine Months Ended

Change in net unrealized (loss) gain on available-for-sale

(“AFS”) securities, net of tax

Change in net unrealized (loss)

on cash flow hedge, net of tax

Change in net unrealized gain (loss) on cash flow hedge, net of tax

Change in pension plan assets, net of tax

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(Dollars in thousands, except per share data)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Comprehensive

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Balance at June 30, 2021

Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Cash dividends ($ 0.35 per share)

Stock grant forfeiture ( 1,531 shares)

Common stock options exercised ( 1,717 shares)

Balance at September 30, 2021

See notes to consolidated unaudited financial statements.

3 unchanged sentences

(Dollars in thousands, except per share data)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Comprehensive

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Balance at June 30, 2020

See notes to consolidated unaudited financial statements.

Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Distribution of treasury stock for deferred compensation plan ( 29 shares)

Purchase of treasury stock ( 6 shares)

Cash dividends ($ 0.35 per share)

Grant of restricted stock ( 6,930 shares)

Common stock options exercised ( 0 shares)

Balance at September 30, 2020

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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(Dollars in thousands)

Six Months Ended

NET CASH PROVIDED BY OPERATING ACTIVITIES

Nine Months Ended

NET CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES

INVESTING ACTIVITIES

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Purchases of other investment securities

of bank-owned life insurance policies

Purchases of bank-owned life insurance policies

Redemption of bank-owned life insurance policies

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Proceeds from issuance of long-term Federal Home Loan Bank borrowings

Distribution of treasury stock for deferred compensation plan

Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings

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Actual results could differ from those estimates.

The financial statements presented as of June 30, 2021 and 2020 and for the three-month and six-month

periods then ended have not been audited.

The financial statements presented as of September 30, 2021 and 2020 and for the three-month and nine-month periods then ended have not been audited.

The consolidated balance sheet as of December 31, 2020 has been extracted from the audited financial statements included in United’s 2020 Annual Report to Shareholders.

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New Accounting Standards

In January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In July 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

“Leases (Topic 842):

Lessors-Certain Leases with Variable Lease Payments (Topic 848).

This new guidance requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or direct financing lease in accordance with the classification criteria in ASC 842-10-25-2

respectively and if the lessor would have recognized a selling loss at lease commencement.

When applying the guidance in ASC 842-10-24-3A,

the lessor would not derecognize the underlying asset over its useful life.

is effective for public business entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Entities may elect to adopt the amendments through either a retrospective application to leases that commenced or were modified after the beginning of the period in which ASC 842 was adopted or a prospective application to leases that commence or are modified subsequent to the date the amendments in ASU 2021

are first applied.

is not expected to have a material impact on the Company’s financial condition or results of operations.

In January 2021, the FASB issued ASU No.

“Reference Rate Reform (Topic 848).” This update refines the scope of ASC Topic 848 and permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by change in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities under way in global financial markets.

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In August 2018, the FASB issued ASU No.

“Compensation – Retirement Benefits -

Defined Benefits – General (Topic 715-20):

Disclosure Framework –

Changes to the Disclosure Requirements for Defined Benefit Plans.” This update amends ASC Topic 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other post retirement plans.

“Compensation – Retirement Benefits - Defined Benefits – General (Topic 715-20):

Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” This update amends ASC Topic 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other post retirement plans.

The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project, which the FASB launched in 2014 to improve effectiveness of disclosures in notes to financial statements.

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On June 2, 2021, United entered into an Agreement and Plan of Reorganization (the “Community Bankers Trust Agreement”) with Community Bankers Trust Corporation (“Community Bankers Trust”), a Virginia corporation headquartered in Richmond, Virginia.

In accordance with the Community Bankers Trust Agreement, Community Bankers Trust will

merge with and into United (the “Community Bankers Trust Merger”).

In accordance with the Community Bankers Trust Agreement, Community Bankers Trust will merge with and into United (the “Community Bankers Trust Merger”).

Community Bankers Trust will cease to exist and United shall survive and continue to exist as a West Virginia corporation.

United may at any time prior to the effective time of the Community Bankers Trust Merger change the method of effecting the combination with Community Bankers Trust subject to certain conditions contained in the Community Bankers Trust Agreement.

The Community Bankers Trust Agreement provides that upon consummation of the Community Bankers Trust Merger, each outstanding share of common stock of Community Bankers Trust will be converted into the right to receive 0.3173 shares of United common stock, par value $ 2.50 per share.

vest only as provided pursuant to the terms of such Community Bankers Trust stock plan and convert into an option to acquire United common stock adjusted based on the 0.3173 exchange ratio.

vest only in accordance with the formula and other terms of the Community Bankers Trust stock plan and convert into the right to receive shares of United common stock based on the 0.3173 exchange ratio.

0.3173 shares of United common stock, par value $

2.50 per share.

Pursuant to the Community Bankers Trust Agreement, at the effective time of the Community Bankers Trust Merger, each outstanding Community Bankers Trust stock option granted under a Community Bankers Trust stock plan, whether vested or unvested as of the date of the Community Bankers Trust Agreement, will vest only as provided pursuant to the terms of such Community Bankers Trust stock plan and convert into an option to acquire United common stock adjusted based on the

0.3173 exchange ratio.

Also, at the effective time of the Community Bankers Trust Merger, each restricted stock unit granted under a Community Bankers Trust stock plan that is outstanding immediately prior to the effective time of the Community Bankers Trust Merger will vest only in accordance with the formula and other terms of the Community Bankers Trust stock plan and convert into the right to receive shares of United common stock based on the

0.3173 exchange ratio.

At the effective time of the Community Bankers Trust Merger, Essex Bank, a wholly-owned subsidiary of Community Bankers Trust, will merge with and into United Bank, a wholly-owned subsidiary of United (the “Essex Bank Merger”).

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and Southeast footprints.

As of June 30, 2021, Community Bankers Trust had $ 1,754,213 in total assets, $ 1,209,784 in gross loans and $ 1,488,828 in deposits.

The merger agreement

approved by the boards of directors of both companies.

The merger is expected to close in the fourth quarter of 2021, subject to satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the shareholders of Community Bankers Trust.

As of September 30, 2021, Community Bankers Trust had $ 1,771,300 in total assets, $ 1,246,660 in gross loans and $ 1,498,802 in deposits.

For the third quarter and first nine months of 2021, United recorded acquisition-related costs for the announced Community Bankers Trust merger of $ 845 and $ 1,027 .

All requisite regulatory approvals for the merger have been received from the Board of Governors of the Federal Reserve System and from the Virginia State Corporation Commission.

United has filed an amended Form S-4

with the Securities and Exchange Commission regarding the proposed merger with Community Bankers Trust.

The merger is expected to close in the fourth quarter of 2021, subject to satisfaction of customary closing conditions including approval by the shareholders of Community Bankers Trust.

Carolina Financial Corporation

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As a result of the CresCom Bank Merger, Crescent is now a wholly-owned subsidiary of United Bank.

For the second quarter and first half of 2021, United did not record any acquisition-related costs associated with the Carolina Financial Merger as compared to acquisition-related costs of $ 46,449 and $ 48,009 for the second quarter and first half of 2020.

For the third quarter and first nine months of 2021, United did not record any acquisition-related costs associated with the Carolina Financial Merger as compared to acquisition-related costs of $ 5,673 and $ 53,682 for the third quarter and first nine months of 2020.

The Carolina Financial Merger was accounted for under the acquisition method of accounting.

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The acquisition of Carolina Financial affords United the opportunity to expand its existing footprint in North Carolina and South Carolina.

Carolina Financial had banking locations in North Carolina and South Carolina.

As of the Acquisition Date, Carolina Financial had $ 5,004,990 in total assets, $ 3,292,635 in loans and leases, net of unearned income and $ 3,873,183 in deposits.

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The number of shares issued in the transaction was 28,031,501 , which were valued based on the closing market price of $ 29.11 for United’s common shares on May 1, 2020.

The purchase price

has been allocated to the identifiable

tangible and intangible assets resulting in additions to goodwill, core deposit intangibles and the Crescent trade name intangible of $ 332,026 , $ 3,408 , and $ 196 , respectively.

The purchase price has been allocated to the identifiable tangible and intangible assets resulting in additions to goodwill, core deposit intangibles and the Crescent trade name intangible of $ 332,026 , $ 3,408 , and $ 196 , respectively.

The goodwill recognized results from the expected synergies and potential earnings from the combination of United and Carolina Financial.

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The discounts and premium amounts, except for discount on the land and OREO acquired, are being accreted or amortized on an accelerated or straight-line basis, based on the type of asset or liability, over each asset’s or liability’s estimated remaining life at the time of acquisition.

At June 30, 2021, the discounts on subordinated debt and trust preferred issuances had an average estimated remaining life of 6.50 years and 15.75 years, respectively, and the premiums on the buildings, and interest-bearing deposits each had an average estimated remaining life of 30.50 years, and 4.10 years, respectively.

At September 30, 2021, the discounts on subordinated debt and trust preferred issuances had an average estimated remaining life of 6.25 years and 15.50 years, respectively, and the premiums on the buildings, and interest-bearing deposits each had an average estimated remaining life of 30.25 years, and 3.85 years, respectively.

The estimated fair values of the acquired assets and assumed liabilities, including identifiable intangible assets and goodwill were considered final as of June

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For PCD loans and leases, an initial allowance is determined based on the same methodology as other portfolio loans and leases.

This initial allowance for credit losses is allocated to individual PCD loans and leases and added to the acquisition date fair values to establish the initial amortized cost basis for the PCD loans and leases.

This initial allowance for credit losses is allocated to individual PCD loans and leases and added to the acquisition date fair values to establish the initial amortized cost basis for the PCD loans

The difference between the unpaid principal balance (“UPB”), or par value, of PCD loans and leases and the amortized cost basis is considered to relate to noncredit factors and resulted in a discount of $ 7,212 at Acquisition Date.

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The operating results of United include operating results of acquired assets and assumed liabilities subsequent to the Acquisition Date.

The operations of United’s North Carolina and South Carolina geographic area, which includes the acquired operations of Carolina Financial and Crescent Mortgage provided $ 104,069 in total revenues (net interest income plus other income), and $ 53,632 in net income for the first six months of 2021.

These amounts are included in United’s consolidated financial statements as of and for the six months ended June 30, 2021.

The operations of United’s North Carolina and South Carolina geographic area, which includes the acquired operations of Carolina Financial and Crescent Mortgage provided $ 152,276 in total revenues (net interest income plus other income), and $ 77,456 in net income for the first nine months of 2021.

These amounts are included in United’s consolidated financial statements as of and for the nine months ended September 30, 2021.

Carolina Financial’s results of operations prior to the Acquisition Date are not included in United’s consolidated results of operations.

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The amortized cost, estimated fair values, and allowance for credit losses of securities available for sale are summarized as follows.

June 30, 2021

September 30, 2021

Treasury securities and obligations of U.S.

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Treasury securities and obligations of U.S.

Government corporations and agencies

Government corporations and

State and political subdivisions

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Available-for-sale

debt securities are placed on non-accrual

status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due.

debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due.

Accrued interest receivable is reversed against interest income when a security is placed on non-accrual

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debt securities.

The table above excludes accrued interest receivable of $ 12,220 and $ 10,663 at June 30, 2021 and December 31, 2020, respectively, that is recorded in “Accrued interest receivable.”

The following is a summary of securities available for sale which were in an unrealized loss position at June 30, 2021 and December 31, 2020.

The table above excludes accrued interest receivable of $ 12,896 and $ 10,663 at September 30, 2021 and December 31, 2020, respectively, that is recorded in “Accrued interest receivable.”

The following is a summary of securities available for sale which were in an unrealized loss position at September 30, 2021 and December 31, 2020.

Less than 12 months

12 months or longer

June 30, 2021

September 30, 2021

Treasury securities and obligations of U.S.

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Asset-backed securities

Trust preferred collateralized debt obligations

Single issue trust preferred securities

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Three Months Ended

Six Months Ended

Nine Months Ended

Proceeds from sales and calls

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Gross realized losses

At June 30, 2021, gross unrealized losses on available for sale securities were $ 12,713 on 113 securities of a total portfolio of 1,005 available for sale securities.

Securities with the most significant gross unrealized losses at June 30, 2021 consisted primarily of agency residential mortgage-backed securities and agency commercial mortgage-backed securities.

determining whether or not a security is impaired, management considered the severity of the loss in conjunction with United’s positive intent and the more likely than not ability to hold these securities to recovery of their cost basis or maturity.

At September 30, 2021, gross unrealized losses on available for sale securities were $ 19,837 on 181 securities of a total portfolio of 994 available for sale securities.

Securities with the most significant gross unrealized losses at September 30, 2021 consisted primarily of agency residential mortgage-backed securities and agency commercial mortgage-backed securities.

In determining whether or not a security is impaired, management considered the severity of the loss in conjunction with United’s positive intent and the more likely than not ability to hold these securities to recovery of their cost basis or maturity.

State and political subdivisions

United’s state and political subdivisions portfolio relates to securities issued by various municipalities located throughout the United States.

The total amortized cost of available for sale state and political subdivision securities was $ 592,778 at June 30, 2021.

As of June 30, 2021, approximately 59 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality.

The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of June 30, 2021.

The total amortized cost of available for sale state and political subdivision securities was $ 604,224 at September 30, 2021.

As of September 30, 2021, approximately 59 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality.

The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of September 30, 2021.

In addition to monitoring the credit ratings of these securities, management also evaluates the financial performance of the underlying issuers on an ongoing basis.

Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities had credit losses at June 30, 2021.

Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities had credit losses at September 30, 2021.

Agency mortgage-backed securities

United’s agency mortgage-backed securities portfolio relates to securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae.

The total amortized cost of available for sale agency mortgage-backed securities was $ 1,607,975 at June 30, 2021.

The total amortized cost of available for sale agency mortgage-backed securities was $ 1,646,342 at September 30, 2021.

Of the $ 1,646,342 amount, $ 617,651 was related to agency commercial mortgage-backed securities and $ 1,028,691 was related to agency residential mortgage-backed securities.

Each of the agency mortgage-backed securities provides a guarantee of full and timely payments of principal and interest by the issuing agency.

Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at June 30, 2021.

Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at September 30, 2021.

residential mortgage-backed securities

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The total amortized cost of available for sale non-agency

residential mortgage-backed securities was $ 39,792 at June 30, 2021.

residential mortgage-backed securities was $ 38,383 at September 30, 2021.

Of the $ 38,383 , 100 % was rated AAA.

Based upon management’s analysis and judgment, it was determined that no ne of the non-agency

residential mortgage-backed securities had credit losses at June 30, 2021.

residential mortgage-backed securities had credit losses at September 30, 2021.

Asset-backed securities

As of June 30, 2021, United’s asset-backed securities portfolio had a total amortized cost balance of $ 489,901 .

The entire portfolio was rated AA+ or better as of June 30, 2021.

As of September 30, 2021, United’s asset-backed securities portfolio had a total amortized cost balance of $ 535,422 .

The entire portfolio was rated AA+ or better as of September 30, 2021.

Approximately 49 % of the portfolio relates to securities that are backed by Federal Family Education Loan Program (“FFELP”) student loan collateral which includes a minimum of a 97 % government repayment guaranty, as well as additional credit support and subordination in excess of the government guaranteed portion.

Approximately 47 % of the portfolio relates to collateralized loan obligation securities that are all AAA rated.

The remaining 4% of the portfolio relates to various other asset-backed securities that are all AAA rated.

Upon reviewing this portfolio for the second quarter of 2021, it was determined that no ne of the asset-backed securities had credit losses.

The remaining 4% of the portfolio relates to various other asset-backed securities that are all AAA

Upon reviewing this portfolio for the third quarter of 2021, it was determined that no ne of the asset-backed securities had credit losses.

Single issue trust preferred securities

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All single issue trust preferred securities are currently receiving interest payments.

The amortized cost of available for sale single issue trust preferred securities as of June 30, 2021 consisted of $ 11,514 in investment grade bonds, $ 978 in split rated bonds, and $ 5,757 in unrated bonds.

The amortized cost of available for sale single issue trust preferred securities as of September 30, 2021 consisted of $ 8,453 in investment grade bonds, $ 3,067 in split rated bonds, and $ 5,761 in unrated bonds.

Management reviews each issuer’s current and projected earnings trends, asset quality, capitalization levels, and other key factors.

Upon completing the review for the second quarter of 2021, it was determined that none of the single issue trust preferred securities had credit losses.

Upon completing the review for the third quarter of 2021, it was determined that none of the single issue trust preferred securities had credit losses.

Corporate securities

As of June 30, 2021, United’s Corporate securities portfolio had a total amortized cost balance of $ 457,829 .

As of September 30, 2021, United’s corporate

securities portfolio had a total amortized cost balance of $ 517,733 .

The majority of the portfolio consisted of debt issuances of corporations representing a variety of industries, including financial institutions.

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For corporate securities, management has evaluated the near-term prospects of the investment in relation to the severity of any unrealized loss.

Based upon management’s analysis and judgment, it was determined that none of the corporate securities had credit losses at June 30, 2021.

The amortized cost and estimated fair value of securities available for sale at June 30, 2021 and December 31, 2020 by contractual maturity are shown as follows.

Based upon management’s analysis and judgment, it was determined that none of the corporate securities had credit losses at September 30, 2021.

The amortized cost and estimated fair value of securities available for sale at September 30, 2021 and December 31, 2020 by contractual maturity are shown as follows.

Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.

June 30, 2021

September 30, 2021

December 31, 2020

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Equity securities consist mainly of equity securities of financial institutions and mutual funds within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries.

The fair value of United’s equity securities was $ 11,507 at June 30, 2021 and $ 10,718 at December 31, 2020.

The fair value of United’s equity securities was $ 11,984 at September 30, 2021 and $ 10,718 at December 31, 2020.

Three Months Ended

Six Months Ended

Net gains recognized during the period

Nine Months Ended

Net gains recognized during the period on equity securities sold

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Unrealized losses recognized during the period on equity securities still held at period end

Net gains recognized during the period

Other investment securities

During the second quarter of 2021, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the second quarter of 2021 had a significant adverse effect on the fair value of any of its

cost method securities.

United determined that there was no individual security that experienced an adverse event during the second quarter.

There were no other events or changes in circumstances during the second quarter which would have an adverse effect on the fair value of its cost method securities.

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 1,912,762 and $ 1,942,087 at June 30, 2021 and December 31, 2020, respectively.

During the third quarter of 2021, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the third quarter of 2021 had a significant adverse effect on the fair value of any of its cost method securities.

United determined that there was no individual security that experienced an adverse event during the third quarter.

There were no other events or changes in circumstances during the third quarter which would have an adverse effect on the fair value of its cost method securities.

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 1,819,897 and $ 1,942,087 at September 30, 2021 and December 31, 2020, respectively.

LOANS AND LEASES

Major classes of loans and leases are as follows:

June 30, 2021

September 30, 2021

December 31, 2020

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Total gross loans

The table above does not include loans held for sale of $ 576,827 and $ 718,937 at June 30, 2021 and December 31, 2020, respectively.

The table above does not include loans held for sale of $ 493,299 and $ 718,937 at September 30, 2021 and December 31, 2020, respectively.

Loans held for sale consist of single-family residential real estate loans originated for sale in the secondary market.

United’s subsidiary bank has made loans to the directors and officers of United and its subsidiaries, and to their affiliates.

The aggregate dollar amount of these loans was $ 32,791 and $ 35,756 at June 30, 2021 and December 31, 2020, respectively.

The aggregate dollar amount of these loans was $ 32,882 and $ 35,756 at September 30, 2021 and December 31, 2020, respectively.

CREDIT QUALITY

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As provided for under the CARES Act, these loan modifications are exempt by law from classification as a TDR as defined by GAAP.

As of June 30, 2021, United has 238 eligible loan modifications in deferral under section 4013, “Temporary Relief from Troubled Debt Restructurings,” of the CARES Act on $ 66,364 of loans outstanding, down from 1,002 eligible loan modifications in deferral on $ 399,857 of loans outstanding at December 31, 2020.

As of June 30, 2021, United had TDRs of $ 47,271 as compared to $ 55,657 as of December 31, 2020.

Of the $ 47,271 aggregate balance of TDRs at June 30, 2021, $ 32,471 was on nonaccrual, $ 46 was 90 days or more past due and $ 1,362 was 30-89

As of September 30, 2021, United has 146 eligible loan modifications in deferral under section 4013, “Temporary Relief from Troubled Debt Restructurings,” of the CARES Act on $ 51,926 of loans outstanding, down significantly from 1,002 eligible loan modifications in deferral on $ 399,857 of loans outstanding at December 31, 2020.

As of September 30, 2021, United had TDRs of $ 37,752 as compared to $ 55,657 as of December 31, 2020.

Of the $ 37,752 aggregate balance of TDRs at September 30, 2021, $ 24,662 was on nonaccrual and $ 292 was 30-89

days past due.

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All these amounts are included in the appropriate categories in the “Age Analysis of Past Due Loans” table on a subsequent page.

As of June 30, 2021, there was a commitment to lend additional funds of $ 125 to a debtor owing a receivable whose terms have been modified in a TDR.

During the second quarter and first six months of 2021, advances totaling $ 13 were made to this debtor under a loan that had been previously modified.

The following tables sets forth the balances of TDRs at June 30, 2021 and December 31, 2020 and the reasons for modification:

As of September 30, 2021, there was a commitment to lend additional funds of $ 112 to a debtor owing a receivable whose terms have been modified in a TDR.

During the first nine months of 2021, advances totaling $ 13 were made to this debtor under a loan that had been previously modified.

No advances were made to this debtor during the third quarter of 2021 under a loan that had been previously modified.

The following tables sets forth the balances of TDRs at September 30, 2021 and December 31, 2020 and the reasons for modification:

Reason for modification

June 30, 2021

September 30, 2021

December 31, 2020

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Change in terms

The following table sets forth United’s troubled debt restructurings that have been restructured during the three months ended June 30, 2021 and 2020, segregated by class of loans:

The following table sets forth United’s troubled debt restructurings that have been restructured during the three months ended September 30, 2021 and 2020, segregated by class of loans:

Troubled Debt Restructurings

For the Three Months Ended

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Pre-Modification

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

following table sets forth United’s troubled debt restructurings that have been restructured during the six months ended June 30, 2021 and 2020, segregated by class of loans:

The following table sets forth United’s troubled debt restructurings that have been restructured during the nine months ended September 30, 2021 and 2020, segregated by class of loans:

Troubled Debt Restructurings

For the Six Months Ended

June 30, 2021

June 30, 2020

For the Nine Months Ended

September 30, 2021

September 30, 2020

Pre-Modification

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

The following table presents troubled debt restructurings, by class of loan, that were restructured during the twelve-month period ended June 30, 2021 and had charge-offs during the three months and six months ended June 30, 2021.

The recorded investment amounts presented were as of the June 30, 2021 balance sheet date.

The following table presents troubled debt restructurings, by class of loan, that were restructured during the twelve-month period ended September 30, 2021and had charge-offs during the three months and nine months ended September 30, 2021.

The recorded investment amounts presented were as of the September 30, 2021 balance sheet date.

Three Months Ended

June 30, 2021

Six Months Ended

June 30, 2021

September 30, 2021

Nine Months Ended

September 30, 2021

Troubled Debt Restructurings

5 unchanged sentences

Three Months Ended

June 30, 2021

Six Months Ended

June 30, 2021

September 30, 2021

Nine Months Ended

September 30, 2021

Troubled Debt Restructurings

1 unchanged sentence

Other consumer

The following table presents troubled debt restructurings, by class of loan, that were restructured during the twelve-month period ended June 30, 2020 and had charge-offs during the three and six months ended June 30, 2020.

The recorded investment amounts presented were as of the June 30, 2020 balance sheet date.

The following table presents troubled debt restructurings, by class of loan, that were restructured during the twelve-month period ended September 30, 2020 and had charge-offs during the three and nine months ended September 30, 2020.

The recorded investment amounts presented were as of the September 30, 2020 balance sheet date.

Three Months Ended

June 30, 2020

Six Months Ended

June 30, 2020

September 30, 2020

Nine Months Ended

September 30, 2020

Troubled Debt Restructurings

8 unchanged sentences

Age Analysis of Past Due Loans and Leases

As of June 30, 2021

As of September 30, 2021

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

8 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

The following table sets forth United’s nonaccrual loans and leases, segregated by class of loans:

At June 30, 2021

At September 30, 2021

At December 31, 2020

Allowance for

Credit Losses

Commercial Real Estate:

4 unchanged sentences

Other consumer

Interest income recognized on nonaccrual loans was insignificant during the three and six months ended June 30, 2021 and 2020.

Interest income recognized on nonaccrual loans was insignificant during the three and nine months ended September 30, 2021 and 2020.

For the adoption of ASC Topic 326, United elected the practical expedient to measure expected credit losses on collateral dependent loans and leases based on the difference between the loan’s amortized cost and the collateral’s fair value, adjusted for selling costs.

The following table presents the amortized cost basis of collateral-dependent loans and leases in which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty, by class of loans and leases as of June 30, 2021 and December 31, 2020:

Collateral Dependent Loans and Leases

At June 30, 2021

At September 30, 2021

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

6 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

23 unchanged sentences

For loans with a consumer credit exposure, loans that are 90 days or more past due or that have been placed on nonaccrual are considered substandard.

corporate credit exposure is classified as doubtful if it has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, highly questionable.

A loan with corporate credit exposure is classified as doubtful if it has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, highly questionable.

A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the loan, its classification as loss is deferred.

Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity.

Doubtful borrowers are usually in d e

fault, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity.

Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing.

2 unchanged sentences

prior to such a classification.

Based on the most recent analysis

performed, the risk category of loans and leases by class of loans is as follows:

Commercial Real Estate

wner-occupied

Based on the most recent analysis performed, the risk category of loans and leases by class of loans is as follows:

Commercial Real Estate – Owner-occupied

Origination Year

1 unchanged sentence

amortized cost

As of June 30, 2021

As of September 30, 2021

Internal Risk Grade:

16 unchanged sentences

amortized cost

As of June 30, 2021

As of September 30, 2021

Internal Risk Grade:

18 unchanged sentences

amortized cost

loans and leases

As of June 30, 2021

As of September 30, 2021

Internal Risk Grade:

7 unchanged sentences

amortized cost

loans and leases

As of December 31, 2020

8 unchanged sentences

amortized cost

As of June 30, 2021

As of September 30, 2021

Internal Risk Grade:

4 unchanged sentences

Origination Year

Revolving loans

amortized cost

As of December 31, 2020

6 unchanged sentences

Origination Year

Revolving loans

amortized cost

As of June 30, 2021

to term loans

As of September 30, 2021

Internal Risk Grade:

4 unchanged sentences

Origination Year

Revolving loans

amortized cost

to term loans

As of December 31, 2020

5 unchanged sentences

Origination Year

Revolving loans

amortized cost

As of June 30, 2021

As of September 30, 2021

Internal Risk Grade:

14 unchanged sentences

Origination Year

Revolving loans

amortized cost

As of June 30, 2021

As of September 30, 2021

Internal Risk Grade:

4 unchanged sentences

Origination Year

Revolving loans

amortized cost

As of December 31, 2020

4 unchanged sentences

YTD net charge-offs

At June 30, 2021 and December 31, 2020, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 18,474 and $ 22,595 , respectively.

At September 30, 2021 and December 31, 2020, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 16,696 and $ 22,595 , respectively.

OREO consists of real estate acquired in foreclosure or other settlement of loans.

Such assets are carried at the lower of the investment in the assets or the fair value of the assets less estimated selling costs.

Any adjustment to the fair value at the date of transfer is charged

against the allowance for loan losses.

Any adjustment to the fair value at the date of transfer is charged against the allowance for loan losses.

Any subsequent valuation adjustments as well as any costs relating to operating, holding or disposing of the property are recorded in other expense in the period incurred.

At June 30, 2021, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $ 71 .

There were no consumer mortgage loans secured by residential real estate pr o

perties for which formal foreclosure proceedings were in process as of December 31, 2020.

At September 30, 2021, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $ 17 .

There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of December 31, 2020.

ALLOWANCE FOR CREDIT LOSSES

2 unchanged sentences

Such allowance

is based on the credit losses expected to arise over the life of the asset (contractual term).

is based on the cr e

dit losses expected to arise over the life of the asset (contractual term).

Assets are charged off when United determines that such financial assets are deemed uncollectible or based on regulatory requirements, whichever is earlier.

4 unchanged sentences

United made a policy election to present the accrued interest receivable balance separately in its consolidated balance sheets from the amortized cost of a loan.

Accrued interest receivable, net of an allowance for credit losses, of $ 48,559

and $ 56,143 at June 30, 2021 and December 31, 2020, respectively, related to loans are included separately in “Accrued interest receivable” in the consolidated balance sheets.

Accrued interest receivable, net of an allowance for credit losses, of $ 45,130 and $ 56,143 at September 30, 2021 and December 31, 2020, respectively, related to loans are included separately in “Accrued interest receivable” in the consolidated balance sheets.

Due to loan interest payment deferrals granted by United under the CARES Act, United assessed the collectability of the accrued interest receivables on these deferring loans and leases.

As a result of this assessment, United recorded an allowance for credit losses of $ 29 and $ 250 for accrued interest receivables not expected to be collected as of June 30, 2021 and December 31, 2020, respectively.

As a result of this assessment, United recorded an allowance for credit losses of $ 26 and $ 250 for accrued interest receivables not expected to be collected as of September 30, 2021 and December 31, 2020, respectively.

For all classes of loans and leases receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due, unless the loan is well secured and in the process of collection.

Interest received on nonaccrual loans and leases, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal.

The following table represents the accrued interest receivable as of June 30, 2021 and December 31, 2020:

The following table represents the accrued interest receivable as of September 30, 2021 and December 31, 2020:

Accrued Interest Receivable

At June 30, 2021

At September 30, 2021

At December 31, 2020

6 unchanged sentences

Allowance for credit losses

The following table represents the accrued interest receivables written off by reversing interest income for the three months and six months ended June 30, 2021 and 2020

The following table represents the accrued interest receivables written off by reversing interest income for the three months and nine months ended September 30, 2021 and 2020:

Accrued Interest Receivables Written Off by Reversing Interest Income

Three Months Ended

Six Months Ended

Nine Months Ended

Commercial real estate:

8 unchanged sentences

Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors.

A reversion to historical loss data occurs via a straight-line method during the year following the one-year

A reversion to historical loss data occurs via a straight-line method during the year following the

reasonable and supportable forecast period.

7 unchanged sentences

Construction & Land Development

Risk characteristics of

commercial real estate owner-occupied loans and commercial other loans and leases are similar in that they are normally dependent upon the borrower’s internal cash flow from operations to service debt.

Risk characteristics of commercial real estate owner-occupied loans and commercial other loans and leases are similar in that they are normally dependent upon the borrower’s internal cash flow from operations to service debt.

Commercial real estate nonowner-occupied loans differ in that cash flow to service debt is normally dependent on external income from third parties for use of the real estate such as rents, leases and room rates.

21 unchanged sentences

United maintains an allowance for loan losses and a reserve for lending-related commitments such as unfunded loan commitments and letters of credit.

The reserve for lending-related commitments of $ 20,897 and $ 19,250 at June 30, 2021 and December 31, 2020, respectively, is separately classified on the balance sheet and is included in other liabilities.

The reserve for lending-related commitments of $ 25,191 and $ 19,250 at September 30, 2021 and December 31, 2020, respectively, is separately classified on the balance sheet and is included in other liabilities.

The combined allowance for loan losses and reserve for lending-related commitments is considered the allowance for credit losses.

As of June 30, 2021, the allowance for credit losses decreased from December 31, 2020 primarily due to

better performance trends within the loan portfolio and

improved macroeconomic factors surrounding the COVID-19

pandemic considered in the determination of the allowance for loan and lease losses at June 30, 2021.

As of September 30, 2021, the allowance for credit losses decreased from December 31, 2020 primarily due to better performance trends within the loan portfolio and improved macroeconomic factors surrounding the COVID-19

pandemic considered in the determination of the allowance for loan and lease losses at September 30, 2021.

Reserves are initially determined based on losses identified from the PD/LGD and Cohort models which utilize the Company’s historical information.

1 unchanged sentence

If current conditions underlying any qualitative adjustment factor were deemed to be materially different than historical conditions, then an adjustment was made for that factor.

The second quarter of 2021 qualitative adjustments include analyses of the following:

The third quarter of 2021 qualitative adjustments include analyses of the following:

– This includes portfolio trends related to business conditions;

9 unchanged sentences

Assumptions for the economic variables were the following:

The forecast improved in the second quarter of 2021 as compared to the first quarter while maintaining a gradual recovery pace extending into 2023.

Greater risk of loss is probable in the hotel and accommodations portfolio due to weakened economic conditions brought on by the pandemic which resulted in a more negative forecast relative to other portfolios and a longer projected recovery period to extend into late 2023 or 2024.

Consideration was given to the $ 1.9 trillion American Rescue Plan (effective March 11, 2021) during the forecast selection process as it is likely this stimulus package continues to have a positive impact on the economy.

The real GDP projection decreased from the second quarter of

2021 but increased for 2022 and 2023.

The unemployment rate projection increased slightly from the second quarter of

2021 but was flat for 2022 and 2023.

This indicates a weakening of the economy for the remainder of the year with the rebound continuing in 2022 and 2023.

Greater risk of loss is probable in the hotel and accommodations portfolio due to weakened economic conditions brought on by the pandemic and labor shortages which resulted in a more negative forecast relative to other portfolios and a longer projected recovery period to extend into late 2023 or 2024.

However, we acknowledge the impact of the stimulus has been fading and will likely have no further impact by the end of the year.

Reversion to historical loss data occurs via a straight-line method during the year following the one-year

2 unchanged sentences

Allowance for Loan Losses and Carrying Amount of Loans

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Commercial Real Estate

2 unchanged sentences

Ending balance

For the Six Months Ended June 30, 2021

Allowance for Loan Losses and Carrying Amount of Loans

For the Nine Months Ended September 30, 2021

Commercial Real Estate

10 unchanged sentences

Impact of the adoption of ASU 2016-13

for PCD loans on January 1, 2020

for PCD loans on

January 1, 2020

Initial allowance for PCD loans (acquired during the period)

1 unchanged sentence

INTANGIBLE ASSETS

The following is a summary

of intangible assets subject to amortization and those not subject to amortization:

June 30, 2021

The following is a summary of intangible assets subject to amortization and those not subject to amortization:

September 30, 2021

Community Banking

17 unchanged sentences

Goodwill not subject to amortization

United incurred amortization expense of $ 1,467 and $ 2,933 for the three and six months ended June 30, 2021 as compared to $ 1,646 and $ 3,223 for the three and six months ended June 30, 2020, respectively.

For the first six months of 2021, goodwill of $ 13,192 was recorded for the Carolina Financial acquisition due to adjustments in current and deferred income taxes.

United incurred amortization expense of $ 1,466 and $ 4,399 for the three and nine months ended September 30, 2021 as compared to $ 1,691 and $ 4,914 for the three and nine months ended September 30, 2020, respectively.

For the first nine months of 2021, goodwill of $ 13,192 was recorded for the Carolina Financial acquisition due to measurement period

adjustments in current and deferred income taxes.

The following table provides a reconciliation of goodwill:

Goodwill at December 31, 2020

from Carolina Financial acquisition

Goodwill at June 30, 2021

Goodwill from Carolina Financial acquisition

Goodwill at September 30, 2021

The following table sets forth the anticipated amortization expense for intangible assets for the years subsequent to 2020:

11 unchanged sentences

If the Company later determines that all or a portion of the impairment no longer exists for a particular tranche, a reduction of the allowance may be recorded as an increase to income.

Service fee income is recorded for fees earned for servicing mortgage loans under servicing agreements with the Federal N

ational Mortgage Association (“FNMA”), the Federal H

oan Mortgage Corporation (“FHLMC”), Government N

ational Mortgage Association (“GNMA”) and certain private investors.

Service fee income is recorded for fees earned for servicing mortgage loans under servicing agreements with the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”), Government National Mortgage Association (“GNMA”) and certain private investors.

The fees are based on a contractual percentage of the outstanding principal balance of the loans serviced and are recorded in noninterest income.

Amortization of MSRs and mortgage servicing costs are charged to expense when incurred.

The unpaid principal balances of loans serviced for others were approximately $ 3,674,023 at June 30, 2021 and $ 3,587,953 at December 31, 2020.

The estimated fair value of the mortgage servicing rights was $ 24,630 and $ 20,955 at June 30, 2021 and December 31, 2020, respectively.

The estimated fair value of servicing rights at June 30, 2021 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 10.50 % to 12.00 % with a weighted average discount rate of 10.61 %, average constant prepayment rates (“CPR”) ranging from 11.29 % to 22.83 % with a weighted average prepayment rate of 17.53 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.76 %.

The unpaid principal balances of loans serviced for others were approximately $ 3,723,206 at September 30, 2021 and $ 3,587,953 at December 31, 2020.

The estimated fair value of the mortgage servicing rights was $ 26,005 and $ 20,955 at September 30, 2021 and December 31, 2020, respectively.

The estimated fair value of servicing rights at September 30, 2021 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 10.50 % to 12.00 % with a weighted average discount rate of 10.61 %, average constant prepayment rates (“CPR”) ranging from 11.48 % to 21.71 % with a weighted average prepayment rate of 16.59 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.96 %.

The estimated fair value of servicing rights at December 31, 2020 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 9.50 % to 14.07 % with a weighted average discount rate of 10.62 %, average CPR ranging from 7.98 % to 18.42 % with a weighted average prepayment rate of 14.60 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.88 %.

Please refer to Note 1 4

in these Notes to Consolidated Financial Statements for additional information concerning the fair value of MSRs.

Please refer to Note 14 in these Notes to Consolidated Financial Statements for additional information concerning the fair value of MSRs.

As disclosed in Note 2 of these Notes to Consolidated Financial Statements, the Company acquired $ 20,123 of mortgage servicing rights from its acquisition of Carolina Financial Corporation on May 1, 2020.

The following presents the activity in mortgage servicing rights, including their valuation allowance for the three and six months ended June 30, 2021 and 2020:

The following presents the activity in mortgage servicing rights, including their valuation allowance for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Nine Months Ended

MSRs beginning balance

9 unchanged sentences

In determining impairment, the Company aggregates all servicing rights and stratifies them into tranches based on predominant risk characteristics.

The Company recorded a $ 250 temporary impairment , net of recoveries

on mortgage servicing rights for the three and six months ended June 30, 2021.

The Company recorded a $ 710 temporary impairment of mortgage servicing rights from the date of acquisition to June 30, 2020.

The estimated amortization expense is based on current information regarding future loan payments and prepayments.

18 unchanged sentences

Classification

June 30, 2021

June 30, 2020

September 30,

Operating lease cost

4 unchanged sentences

Classification

June 30, 2021

June 30, 2020

September 30,

Operating lease cost

4 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

June 30, 2021

December 31, 2020

Classification

September 30,

Operating lease right-of-use

3 unchanged sentences

Other information related to leases was as follows:

June 30, 2021

September 30, 2021

Weighted-average remaining lease term:

4 unchanged sentences

Three Months Ended

June 30, 2021

June 30, 2020

September 30,

Cash paid for amounts in the measurement of lease liabilities:

1 unchanged sentence

ROU assets obtained in the exchange for lease liabilities

Six Months Ended

June 30, 2021

June 30, 2020

Nine Months Ended

September 30, 2021

September 30, 2020

Cash paid for amounts in the measurement of lease liabilities:

1 unchanged sentence

ROU assets obtained in the exchange for lease liabilities

Maturities of lease liabilities by year and in the aggregate, under operating leases with initial or remaining terms of one year or more, for years subsequent to December 31, 2020, consists of the following as of June 30, 2021 and December 31, 2020:

June 30, 2021

September 30, 2021

December 31, 2020

5 unchanged sentences

These lines of credit, which bear interest at prevailing market rates, permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions.

At June 30, 2021, United did no t have any federal funds purchased while total securities sold under agreements to repurchase (“REPOs”) were $ 127,745 .

At September 30, 2021, United did no t have any federal funds purchased while total securities sold under agreements to repurchase (“REPOs”) were $ 123,018 .

The securities sold under agreements to repurchase were accounted for as collateralized financial transactions.

5 unchanged sentences

The line requires compliance with various financial and nonfinancial covenants.

At June 30, 2021, United had no outstanding balance under this line of credit.

At September 30, 2021, United had no outstanding balance under this line of credit.

LONG-TERM BORROWINGS

2 unchanged sentences

All FHLB borrowings are collateralized by a mix of single-family residential mortgage loans, commercial loans and investment securities.

At June 30, 2021, United had an unused borrowing amount of approximately $ 7,005,031 available subject to delivery of collateral after certain trigger points.

At September 30, 2021, United had an unused borrowing amount of approximately $ 7,060,714 available subject to delivery of collateral after certain trigger points.

Advances may be called by the FHLB or redeemed by United based on predefined factors and penalties.

At June 30, 2021, $ 533,365 of FHLB advances with a weighted-average contractual interest rate of 0.34 % and a weighted-average effective interest rate of 0.55 % are scheduled to mature within the next four years.

At September 30, 2021, $ 532,782 of FHLB advances with a weighted-average contractual interest rate of 0.34 % and a weighted-average effective interest rate of 0.55 % are scheduled to mature within the next four years.

The scheduled maturities of these FHLB borrowings are as follows:

2025 and thereafter

At June 30, 2021, United had a total of nineteen statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (“Capital Securities”) with the proceeds invested in junior subordinated debt securities (“Debentures”) of United.

At September 30, 2021, United had a total of nineteen statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (“Capital Securities”) with the proceeds invested in junior subordinated debt securities (“Debentures”) of United.

The Debentures, which are subordinate and junior in right of payment to all present and future senior indebtedness and certain other financial obligations of United, are the sole assets of the trusts and United’s payment under the Debentures is the sole source of revenue for the trusts.

At June 30, 2021 and December 31, 2020, the outstanding balance of the Debentures was $ 270,792 and $ 269,972 , respectively.

At September 30, 2021 and December 31, 2020, the outstanding balance of the Debentures was $ 271,201 and $ 269,972 , respectively.

United also assumed $10,000 in aggregate principal amount of fixed-to-floating

rate subordinated notes in the Carolina Financial acquisition.

At both June 30, 2021 and December 31, 2020, the outstanding balance of the subordinated notes was $ 9,865 .

At September 30, 2021 and December 31, 2020, the outstanding balance of the subordinated notes was $ 9,868 and $ 9,865 .

The amounts for the Debentures and the subordinated notes are included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets.

19 unchanged sentences

The amount of collateral obtained, if deemed necessary upon the extension of credit, is based on management’s credit evaluation of the counterparty.

United had approximately $ 6,368,974 and $ 5,730,876 of loan commitments outstanding as of June 30, 2021 and December 31, 2020, respectively, approximately 43% of which contractually expire within one year .

Included in the June 30, 2021 amount are commitments to extend credit of $ 597,304 related to mortgage loan funding commitments of United’s mortgage banking segment and are of a short-term nature.

United had approximately $ 6,964,784 and $ 5,730,876 of loan commitments outstanding as of September 30, 2021 and December 31, 2020, respectively, approximately 43% of which contractually expire within one year .

Included in the September 30, 2021 amount are commitments to extend credit of $ 686,233 related to mortgage loan funding commitments of United’s mortgage banking segment and are of a short-term nature.

Commercial and standby letters of credit are agreements used by United’s customers as a means of improving their credit standing in their dealings with others.

2 unchanged sentences

Typically, under the terms of a commercial letter of credit, a commitment is drawn upon when the underlying transaction is consummated as intended between the customer and a third party.

United had $ 3,055 and $ 5,092 of commercial letters of credit outstanding as of June 30, 2021 and December 31, 2020, respectively.

United had $ 3,055 and $ 5,092 of commercial letters of credit outstanding as of September 30, 2021 and December 31, 2020, respectively.

A standby letter of credit is generally contingent upon the failure of a customer to perform according to the terms of an underlying contract with a third party.

United has issued standby letters of credit of $ 151,289 and $ 134,916 as of June 30, 2021 and December 31, 2020, respectively.

United has issued standby letters of credit of $ 164,061 and $ 134,916 as of September 30, 2021 and December 31, 2020, respectively.

In accordance with the Contingencies Topic of the FASB Accounting Standards Codification, United has determined that substantially all of its letters of credit are renewed on an annual basis and the fees associated with these letters of credit are immaterial.

2 unchanged sentences

United evaluates the merits of each claim and estimates its reserve based on actual and expected claims received and considers the historical amounts paid to settle such claims.

United’s mortgage banking segment had a reserve of $ 1,209 and $ 1,216 as of June 30, 2021 and December 31, 2020, respectively.

United’s mortgage banking segment had a reserve of $ 1,209 and $ 1,216 as of September 30, 2021 and December 31, 2020, respectively.

United has derivative counter-party risk that may arise from the possible inability of United’s mortgage banking segment’s third party investors to meet the terms of their forward sales contracts.

7 unchanged sentences

It is possible that regulatory authorities could bring enforcement actions, including civil money penalties, or take other actions against United in regard to these consumer products.

United could also determine of its own accord, or be required by regulators, to refund or otherwise make remediation payments to customers in connection with these products.

could also determine of its own accord, or be required by regulators, to refund or otherwise make remediation payments to customers in connection with these products.

It is not possible at this time for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss related to such matters.

FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

United accounts for its derivative financial instruments in accordance with ASC Topic 815 which requires all derivative instruments to be carried at fair value on the balance sheet.

20 unchanged sentences

The tenor of the interest rate swap derivative is 4 years with an expiration date in August 2024.

As of June 30, 2021, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring.

As of September 30, 2021, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring.

United estimates that $ 1,384 will be reclassified from AOCI as an increase to interest expense over the next 12-months

following June 30, 2021 related to the cash flow hedges.

As of June 30, 2021, the maximum length of time over which forecasted transactions are hedged is nine years.

following September 30, 2021 related to the cash flow hedges.

As of September 30, 2021, the maximum length of time over which forecasted transactions are hedged is nine years.

At inception of a hedge relationship, United formally documents the hedged item, the particular risk management objective, the nature of the risk being hedged, the derivative being used, how effectiveness of the hedge will be assessed and how the ineffectiveness of the hedge will be measured.

4 unchanged sentences

These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by United.

rate risk arises on these commitments and subsequently closed loans if interest rates change between the time of the interest rate lock and the delivery of the loan to the investor.

Market risk on interest rate lock commitments and mortgage loans held

for sale is managed using corresponding forward mortgage loan sales contracts.

Interest rate risk arises on these commitments and subsequently closed loans if interest rates change between the time of the interest rate lock and the delivery of the loan to the investor.

Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward mortgage loan sales contracts.

United is a party to these forward mortgage loan sales contracts to sell loans servicing released and short sales of mortgage-backed securities.

6 unchanged sentences

and settled daily based on the prior day value, rather than collateralized-to-market.

The total notional amount of interest rate swap derivatives cleared through the LCH include $ 500,000 for asset derivatives as of June 30, 2021.

The total notional amount of interest rate swap derivatives cleared through the LCH include $ 500,000 for asset derivatives as of September 30, 2021.

The related fair value on a net basis approximate zero .

The following tables disclose the derivative instruments’ location on the Company’s Consolidated Balance Sheets and the notional amount and fair value of those instruments at June 30, 2021 and December 31, 2020.

Asset Derivatives

June 30, 2021

September 30, 2021

December 31, 2020

11 unchanged sentences

Liability Derivatives

June 30, 2021

September 30, 2021

December 31, 2020

11 unchanged sentences

Other liabilities

TBA mortgage-backed securities

Interest rate lock commitments

Other liabilities

1 unchanged sentence

Total liability derivatives

The following table represents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value accounting relationship as of June 30, 2021 and December 31, 2020.

June 30, 2021

The following table represents the carrying a m

ount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value accounting relationship as of September 30, 2021 and December 31, 2020.

September 30, 2021

Derivatives in Fair Value

23 unchanged sentences

Carrying Amount of

the Hedged Assets/

(Liabilities)

Assets/(Liabilities)

Cumulative Amount

18 unchanged sentences

Additionally, the Company attempts to minimize credit risk through certain approval processes established by management.

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three and six months ended June 30, 2021 and 2020 are presented as follows:

Income Statement

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three and nine months ended September 30, 2021 and 2020 are presented as follows:

Three Months Ended

Income Statement

September 30,

Derivatives in hedging relationships

16 unchanged sentences

Income Statement

Six Months Ended

Nine Months Ended

September 30,

Derivatives in hedging relationships

42 unchanged sentences

Management also obtains an independent service auditor’s report from third party vendors to provide reasonable assurance that appropriate controls are in place over the valuation process.

completing its review of the pricing from third party vendors at June 30, 2021, management determined that the prices provided by its third party pricing source were reasonable and in line with management’s expectations for the market values of these securities.

Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted by management at June 30, 2021.

Upon completing its review of the pricing from third party vendors at September 30, 2021, management determined that the prices provided by its third party pricing source were reasonable and in line with management’s expectations for the market values of these securities.

Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted by management at September 30, 2021.

Management utilizes a number of factors to determine if a market is inactive, all of which may require a significant level of judgment.

8 unchanged sentences

The unobservable input for Level 3 valuations is the Company’s historical sales prices.

For June 30, 2021, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.11 % to 0.31 % with a weighted average increase of 0.21 %.

For September 30, 2021, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.10 % to 0.34 % with a weighted average increase of 0.23 %.

United utilizes interest rate swaps to hedge exposure to interest rate risk and variability of cash flows associated to changes in the underlying interest rate of the hedged item.

23 unchanged sentences

The unobservable input for Level 3 valuations is the Company’s historical sales prices.

For June 30, 2021, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.11 % to 0.31 % with a weighted average increase of 0.21 %.

For September 30, 2021, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.10 % to 0.34 % with a weighted average increase of 0.23 %.

For interest rate swap derivatives that are not designated in a hedge relationship, changes in the fair value of the derivatives are recognized in earnings in the same period as the change in the fair value.

Unrealized gains and losses due to changes in the fair value of other derivative financial instruments not in hedge relationship are included in noninterest income and noninterest expense, respectively.

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, segregated by the level of the valuation inputs within the fair value hierarchy.

Fair Value at June 30, 2021 Using

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020, segregated by the level of the valuation inputs within the fair value hierarchy.

Fair Value at September 30, 2021 Using

Balance as of

September 30,

Quoted Prices

Available for sale debt securities:

Treasury securities and obligations of U.S.

Government corporations and agencies

Treasury securities and

obligations of U.S.

corporations and agencies

State and political subdivisions

Residential mortgage-backed securities

Commercial mortgage-backed sec

Commercial mortgage-backed securities

Asset-backed securities

7 unchanged sentences

Total equity securities

Loans held for sale

Fair Value at June 30, 2021 Using

Fair Value at September 30, 2021 Using

Balance as of

September 30,

Quoted Prices

Loans held for sale

Derivative financial assets:

7 unchanged sentences

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

Total derivative financial liabilities

4 unchanged sentences

Available for sale debt securities:

Treasury securities and obligations of U.S.

Government corporations and agencies

Treasury securities and

obligations of U.S.

corporations and agencies

State and political subdivisions

17 unchanged sentences

Total derivative financial assets

Fair Value at December 31, 2020 Using

Balance as of

Quoted Prices

Derivative financial liabilities:

2 unchanged sentences

Total derivative financial liabilities

(1) The equity mutual funds are within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries.

There were no transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the six months ended June 30, 2021 and the year ended December 31, 2020.

The following table presents additional information about financial assets and liabilities measured at fair value at June 30, 2021 and December 31, 2020 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value:

(1) The equity mutual funds are w i

thin a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries.

were no transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the nine months ended September 30, 2021 and the year ended December 31, 2020.

The following table presents additional information about financial assets and liabilities measured at fair value at September 30, 2021 and December 31, 2020 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value:

Loans held for sale

September 30,

Balance, beginning of period

5 unchanged sentences

TBA Securities

September 30,

Balance, beginning of period

4 unchanged sentences

Interest Rate Lock

September 30,

Balance, beginning of period

4 unchanged sentences

Forward Sales Commitments

December 31, 2020

September 30,

Balance, beginning of period

3 unchanged sentences

Derivative Financial Liabilities

TBA Securities

Interest Rate Lock

September 30,

Balance, beginning of period

7 unchanged sentences

Three Months Ended

June 30, 2021

September 30, 2021

Three Months Ended

June 30, 2020

September 30, 2020

Income from mortgage banking activities

Six Months Ended

June 30, 2021

Six Months Ended

June 30, 2020

Nine Months Ended

September 30, 2021

Nine Months Ended

September 30, 2020

Income from mortgage banking activities

The following table reflects the difference between the aggregate fair value and the remaining contractual principal outstanding for financial instruments for which the fair value option has been elected:

June 30, 2021

September 30, 2021

December 31, 2020

1 unchanged sentence

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP.

Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market

Certain financial assets are measured a

t fair value on a nonrecurring basis in accordance with GAAP.

Adjustments to

the fair value of these assets usually result from the application of lower-of-cost-or-market

accounting or write-downs of individual assets.

22 unchanged sentences

Fair value is determined by one of two market approach methods depending on whether the property has been vacated and an appraisal can be conducted.

If the property has yet to be vacated and thus an appraisal cannot be performed, a Brokers Price Opinion (i.e.

If the property has yet to be vacated and thus an appraisal cannot be performed, a Broker’s Price Opinion (i.e.

BPO), is obtained.

15 unchanged sentences

book value) and the implied fair value of goodwill.

In determining the implied fair value of goodwill for purposes of evaluating goodwill impairment, United determines the fair value of the reporting unit and compares the fair value to its carrying value.

In determining the implied fair value of goodwill for purposes of evaluating goodwill impairment, United determines the fair

value of the reporting unit and compares the fair value to its carrying value.

United may elect to perform a qualitative analysis to determine whether or not it is more-likely-than not that the fair value of a reporting unit is less than its carrying amount.

8 unchanged sentences

The goodwill impairment test did not identify any goodwill impairment.

In subsequent periods,

economic uncertainty and volatility surrounding

In subsequent periods, economic uncertainty and volatility surrounding COVID-19

and the performance of the Company’s stock as well as possible other impairment indicators could cause us to perform a goodwill impairment test which could result in an impairment charge being recorded for that period if the carrying value of goodwill was found to exceed fair value.

1 unchanged sentence

Management reviews core deposit intangible assets on an annual basis, or sooner if indicators of impairment exist, and evaluates changes in facts and circumstances that may indicate impairment in the carrying value.

No other fair value measurement of intangible assets was made during the first six months of 2021 and 2020 other than those intangible assets recorded in the acquisition of Carolina Financial in the second quarter of 2020.

No other fair value measurement of intangible assets was made during the first nine months of 2021 and 2020 other than those intangible assets recorded in the acquisition of Carolina Financial in the second quarter of 2020.

Mortgage Servicing Rights (

6 unchanged sentences

The unobservable inputs for Level 3 valuations are market discount rates, anticipated prepayment speeds, projected delinquency rates, and ancillary fee income net of servicing costs.

For June 30, 2021, the average range of discount rates was 10.50 % to 12.00 % with a weighted average discount rate of 10.61 %;

For September 30, 2021, the average range of discount rates was 10.50 % to 12.00 % with a weighted average discount rate of 10.61 %;

the average range of constant prepayment rates was 11.48 % to 21.71 % with a weighted average prepayment rate of 16.59 %;

5 unchanged sentences

and the delinquency rate, including loans on forbearance was 2.88 %.

The Company recorded a temporary impairment

, net of recoveries

of $ 250 on mortgage servicing rights in the quarter and six months ended June 30, 2021.

The Company recorded a $ 710 temporary impairment of mortgage servicing rights in the quarter and six months ended June 30, 2020.

The Company recorded a

net of recovery of $ 250 on mortgage servicing rights in the third quarter of 2021.

The Company recorded a $ 400 temporary impairment of mortgage servicing rights in the third quarter of 2020.

No net impairment on mortgage servicing rights was recorded in the first nine months of 2021.

For the first nine months of 2020, the Company recorded a $ 1,110 temporary impairment of mortgage servicing rights.

The Company does not hedge the mortgage servicing rights positions and the impact of falling long-term interest rates increased prepayment speed assumptions reducing the value of MSRs asset in 2020.

1 unchanged sentence

Balance as of

June 30, 2021

Carrying value at June 30, 2021

September 30, 2021

Carrying value at September 30, 2021

Quoted Prices

34 unchanged sentences

Quoted Prices

June 30, 2021

September 30, 2021

Cash and cash equivalents

25 unchanged sentences

An award granted under the 2020 LTI Plan may consist of any non-qualified

stock options or incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance units or other-stock-based award.

stock options or incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance

units or other-stock-based award.

These awards all relate to the common stock of United.

The maximum number of shares of United common stock which may be issued under the 2020 LTI Plan is 2,300,000 .

The maximum number of shares of United common stock which may be issued under the 2020 LTI Plan i

s 2,300,000 .

The 2020 LTI Plan will be administered by a board committee appointed by United’s Board of Directors (the “Board”).

4 unchanged sentences

The maximum number of shares of restricted stock or shares subject to a restricted stock units award that may be granted during any calendar year is 225,000 shares to any individual key employee and 10,000 shares to any individual non-employee

Subject to certain change in control provisions, the 2020 LTI Plan provides that all awards of will vest as the Committee determines in the award agreement, provided that

no awards will vest sooner than 1/3 per year over the first three anniversaries of the award.

Subject to certain change in control provisions, the 2020 LTI Plan provides that all awards of will vest as the Committee determines in the award agreement, provided that no awards will vest sooner than 1/3 per year over the first three anniversaries of the award.

United adopted a clawback policy that applies to named executive officers and other executive officers and permits the Committee to cancel certain awards and to recoup gains realized from previous awards should United be required to prepare an accounting restatement due to materially inaccurate performance metrics.

was filed on May 29, 2020 with the Securities and Exchange Commission to register all the shares which were available for the 2020 LTI Plan.

LTI Plan replaces the 2016 LTI Plan.

Compensation expense of $ 1,892 and $ 3,580 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the second quarter and first six months of 2021, respectively, as compared to the compensation expense of $ 1,369 and $ 2,622 related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the second quarter and first six months of 2020, respectively.

was filed on May 29, 2020 with the Securities and Exchange Commission to register all the shares which were available for th e

2020 LTI Plan.

The 2020 LTI Plan replaces the 2016 LTI Plan.

Compensation expense of $ 1,912 and $ 5,492 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the third quarter and first nine months of 2021, respectively, as compared to the compensation expense of $ 1,369 and $ 3,991 related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the third

quarter and first nine months of 2020, respectively.

Compensation expense was included in employee compensation in the unaudited Consolidated Statements of Income.

4 unchanged sentences

The maximum term for options granted under the plans is ten ( 10 ) years.

A summary of activity under United’s stock option plans as of June 30, 2021, and the changes during the first six months of 2021 are presented below:

Six Months Ended June 30, 2021

A summary of activity under United’s stock option plans as of September 30, 2021, and the changes during the first nine months of 2021 are presented below:

Nine Months Ended September 30, 2021

Weighted Average

1 unchanged sentence

Forfeited or expired

Outstanding at June 30, 2021

Exercisable at June 30, 2021

The following table summarizes the status of United’s nonvested stock option awards during the first six months of 2021:

Outstanding at September 30, 2021

Exercisable at September 30, 2021

The following table summarizes the status of United’s nonvested stock option awards during the first nine months of 2021:

Weighted-Average

2 unchanged sentences

Forfeited or expired

Nonvested at June 30, 2021

During the six months ended June 30, 2021 and 2020, 173,945 and 14,994 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for the six months ended June 30, 2021 and 2020 were issued from authorized and unissued stock.

The total intrinsic value of options exercised under the Plans during the six months ended June 30, 2021 and 2020 was $ 1,644 and $ 249 respectively.

Nonvested at September 30, 2021

During the nine months ended September 30, 2021 and 2020, 175,662 and 14,994 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for the nine months ended September 30, 2021 and 2020 were issued from authorized and unissued stock.

The total intrinsic value of options exercised under the Plans during the nine months ended September 30, 2021 and 2020 was $ 1,685 and $ 249 respectively.

Restricted Stock

3 unchanged sentences

Presently, these nonvested participating securities have an immaterial impact on diluted earnings per share.

The following summarizes the changes to United’s nonvested restricted common shares for the period ended June 30, 2021:

The following summarizes the changes to United’s nonvested restricted common shares for the period ended September 30, 2021:

Weighted-Average

Grant Date Fair Value

Nonvested at January 1, 2021

Nonvested at June 30, 2021

Nonvested at September 30, 2021

Restricted Stock Units

14 unchanged sentences

The Company recognizes expense on the RSUs in accordance with ASC Topic 718.

The following table summarizes the status of United’s nonvested RSUs during the first six months of 2021:

The following table summarizes the status of United’s nonvested RSUs during the first nine months of 2021:

Weighted-Average

Grant Date Fair Value

Nonvested at January 1, 2021

Forfeited or expired

Nonvested at June 30, 2021

Nonvested at September 30, 2021

EMPLOYEE BENEFIT PLANS

2 unchanged sentences

Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future.

No discretionary contributions were made during the first six months of 2021 and 2020.

No discretionary contributions were made during the first nine months of 2021.

United did make a discretionary contribution of $ 20,000 during the first nine months of 2020.

Included in accumulated other comprehensive income at December 31, 2020 are unrecognized actuarial losses of $ 65,426 ($ 50,182 net of tax) that have not yet been recognized in net periodic pension cost.

Net periodic pension cost for the three and six months ended June 30, 2021 and 2020 included the following components:

Net periodic pension cost for the three and nine months ended September 30, 2021 and 2020 included the following components:

Three Months Ended

Six Months Ended

Nine Months Ended

Interest cost

10 unchanged sentences

and a measurement attribute for all tax positions taken on a tax return, in order for those tax positions to be recognized in the financial statements.

As of June 30, 2021 and 2020, the total amount of accrued interest related to uncertain tax positions was $ 722 and $ 718 , respectively.

As of September 30, 2021 and 2020, the total amount of accrued interest related to uncertain tax positions was $ 748 and $ 931 , respectively.

United accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes.

United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2018, 2019 and 2020 and certain State Taxing authorities for the years ended December 31, 2018 through 2020.

United’s effective tax rate was 20.50 % for both the second quarter and first six months of 2021 and 17.30 % and 18.38 % for the second quarter and first six months of 2020.

United’s effective tax rate was 20.39 % and 20.47 % for the third quarter and first nine months of 2021 and 21.82 % and 20.23 % for the third quarter and first nine months of 2020.

COMPREHENSIVE INCOME

The components of total comprehensive income for the three and six months ended June 30, 2021 and 2020 are as follows:

The components of total comprehensive income for the thr e

e and nine months ended September 30, 2021 and 2020 are as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

Available for sale (“AFS”) securities:

10 unchanged sentences

Net effect of cash flow hedge derivatives on other comprehensive income

Three Months Ended

Six Months Ended

Pension plan:

4 unchanged sentences

Total Comprehensive Income

The components of accumulated other comprehensive income for the six months ended June 30, 2021 are as follows:

The components of accumulated other comprehensive income for the nine months ended September 30, 2021 are as follows:

Changes in Accumulated Other Comprehensive Income (AOCI) by Component (a)

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Balance at January 1, 2021

2 unchanged sentences

Net current-period other comprehensive income, net of tax

Balance at June 30, 2021

Balance at September 30, 2021

All amounts are net-of-tax.

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Details about AOCI Components

2 unchanged sentences

Available for sale (“AFS”) securities:

Net reclassification adjustment for gains included in net income

Net reclassification adjustment for

gains included in net income

Net investment securities gains

2 unchanged sentences

Cash flow hedge:

Net reclassification adjustment for losses included in net income

Net reclassification adjustment for

losses included in net income

Interest expense

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Distributed earnings allocated to common stock

2 unchanged sentences

Average common shares outstanding

Equivalents from stock options

Equivalents from stock awards

Average diluted shares outstanding

1 unchanged sentence

Earnings per diluted common share

Antidilutive stock options and restricted stock outstanding of 468,892 and 978,095 for the three months and six months ended June 30, 2021, respectively, were excluded from the earnings per diluted common share calculation as compared to 2,027,073 and 1,700,493 for the three months and six months ended June 30, 2020, respectively.

Antidilutive stock options outstanding

of 1,239,529 and 984,803

for the three months and nine months ended September 30, 2021, respectively, were excluded from the earnings per diluted common share calculation as compared to

2,138,750 and 1,983,557

for the three months and nine months ended September 30, 2020, respectively.

VARIABLE INTEREST ENTITIES

Variable interest entities (“VIEs”) are entities that either have a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest (i.e., ability to make significant decisions, through voting rights, right to receive the expected residual returns of the entity, and obligation to absorb the expected losses of the entity).

VIEs can be structured as corporations, trusts, partnerships, or other legal entities.

VIEs can be st r

uctured as corporations, trusts, partnerships, or other legal entities.

United’s business practices include relationships with certain VIEs.

32 unchanged sentences

September 25, 2003

3-month LIBOR + 3.10%

LIBOR + 3.10%

October 8, 2033

33 unchanged sentences

March 15, 2035

Carolina Financial Capital Trust I

Carolina Financial Capital Trust

December 19, 2002

1 unchanged sentence

December 31, 2032

Carolina Financial Capital Trust II

Carolina Financial Capital Trust

November 5, 2003

17 unchanged sentences

United’s limited partner interests in these entities is immaterial, however;

these partnerships are not consolidated as United is not deemed to be the

primary beneficiary.

these partnerships are not consolidated as United is not deemed to be the primary beneficiary.

The following table summarizes quantitative information about United’s significant involvement in unconsolidated VIEs:

As of June 30, 2021

As of September 30, 2021

As of December 31, 2020

10 unchanged sentences

At certain times, Crescent may purchase rights to service loans from third parties.

These rights are known as mortgage servicing rights and

provide the owner with the contractual right to receive a stream of cash flows in exchange for performing specified mortgage servicing functions.

The community banking segment provides the mortgage banking segment (George Mason and Crescent) with short-term funds to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest based on the 30-day

These rights are known as mortgage servicing rights and provide the owner with the contractual right to receive a stream of cash flows in exchange for performing specified mortgage servicing functions.

rtgage banking segment interest based on the 30-day

These transactions are eliminated in the consolidation process.

4 unchanged sentences

The “Other” represents an overhead function rather than an operating segment.

Information about the reportable segments and reconciliation of this information to the consolidated financial statements at and for the three and six months ended June 30, 2021 and 2020 is as follows:

At and For the Three Months Ended June 30, 2021

Information about the reportable segments and reconciliation of this information to the consolidated financial statements at and for the three and nine months ended September 30, 2021 and 2020 is as follows:

At and For the Three Months Ended September 30, 2021

Net interest income

Provision for credit

Provision for credit losses

Other expense

2 unchanged sentences

Average assets (liabilities)

At and For the Three Months Ended June 30, 2020

At and For the Three Months Ended September 30, 2020

Net interest income

Provision for credit

Provision for credit losses

Other expense

2 unchanged sentences

Average assets (liabilities)

At and For the Six Months Ended June 30, 2021

At and For the Nine Months Ended September 30, 2021

Net interest income

Provision for credit

Provision for credit losses

Other expense

2 unchanged sentences

Average assets (liabilities)

At and For the Six Months Ended June 30, 2020

At and For the Nine Months Ended September 30, 2020

Net interest income

Provision for credit

Provision for credit losses

Other expense

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements