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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 535 added, 691 removed, 1364 unchanged (47% of the section changed)

FINANCIAL STATEMENTS (UNAUDITED)

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

The March 31, 2022 and December 31, 2021, consolidated balance sheets of United Bankshares, Inc.

and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three months ended March 31, 2022 and 2021, the related consolidated statement of changes in shareholders’ equity for the three months ended March 31, 2022 and 2021, the related condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021, and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS (Unaudited)

UNITED BANKSHARES, INC.

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Total cash and cash equivalents

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)

Securities available for sale at estimated fair value (amortized cost-$ 4,951,963 at March 31, 2022 and $ 4,031,494 at December 31, 2021, allowance for credit losses of $ 0 at March 31, 2022 and December 31, 2021)

Securities held to maturity, net of allowance for credit losses of $ 19 at March 31, 2022 and December 31, 2021 (estimated fair value-$ 1,020 at March 31, 2022 and December 31, 2021)

Equity securities at estimated fair value

Other investment securities

Loans held for sale ( measured using the

fair value option

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

Loans held for sale measured using fair value option

Loans and leases

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Operating lease right-of-use

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

Mortgage servicing rights, net of valuation allowance of $ 0 at March 31, 2022 and $ 883 at December 31, 2021

Bank-owned life insurance (“BOLI”)

Accrued interest receivable, net of allowance for credit losses of $ 0 at March 31, 2022 and $ 8 at December 31, 2021

Noninterest-bearing

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Authorized- 50,000,000

shares, none issued

shares, no ne issued

Common stock, $ 2.50 par value;

1 unchanged sentence

issued- 141,783,032

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

and 141,360,266 at March 31, 2022 and December 31, 2021, respectively, including 5,714,593 and 4,967,508 shares in treasury at March 31, 2022 and December 31, 2021, respectively

Retained earnings

8 unchanged sentences

(Dollars in thousands, except per share data)

Three Months Ended

Nine Months Ended

Three Months Ended March 31

Interest income

Interest and fees on loans and leases

Interest and fees on loans

Interest on federal funds sold and other short-term investments

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Mortgage loan servicing income

Net gain on the sale of bank premises

Net investment securities gains

Net investment securities (losses) gains

Total other income

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FDIC insurance expense

FHLB prepayment penalties

Other expense

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(Dollars in thousands, except per share data)

Three Months Ended

Nine Months Ended

Three Months Ended March 31

Earnings per common share:

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Three Months Ended

Nine Months Ended

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

(“AFS”) securities, net of tax

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

Change in pension plan assets, net of tax

Comprehensive income, net of tax

Change in net unrealized loss on available for sale (“

securities, net of tax

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

Change in defined benefit pension plan, net of tax

Comprehensive (loss) income, net of tax

See notes to consolidated unaudited financial statements

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

UNITED BANKSHARES, INC.

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(Dollars in thousands, except per share data)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Comprehensive

Income (Loss)

(Loss) Income

Shareholders’

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Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Other comprehensive loss

Total comprehensive loss

Stock based compensation expense

Stock grant forfeiture ( 6,212 shares)

Purchase of treasury stock ( 740,873 shares)

Cash dividends ($ 0.36 per share)

Grant of restricted stock ( 180,901 shares)

Common stock options exercised ( 145,621 shares)

Net issuance of common stock under stock-based

compensation plans

( 422,766 shares)

Balance at March 31, 2022

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 ( 1,971 shares)

Grant of restricted stock ( 1,443 shares)

Common stock options exercised ( 28,324 shares)

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.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands, except per share data)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Comprehensive

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Balance at January 1, 2021

Cumulative effect of adopting Accounting Standard Update 2016-13

Comprehensive income:

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Cash dividends ($ 0.35 per share)

Grant of restricted stock ( 175,495 shares)

Forfeiture of restricted stock ( 946 shares)

Common stock options exercised ( 14,694 shares)

Net issuance of common stock under stock-based

compensation plans

( 326,522 shares)

Balance at March 31, 2021

Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Acquisition of Carolina Financial Corporation ( 28,031,501 shares)

Purchase of treasury stock ( 6 shares)

Cash dividends ($ 0.35 per share)

Common stock options exercised ( 300 shares)

Balance at June 30, 2020

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

See notes to consolidated unaudited financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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(Dollars in thousands)

Nine Months Ended

NET CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES

Three Months Ended

NET CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES

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Purchases of other investment securities

Purchases of bank-owned life insurance policies

Redemption of bank-owned life insurance policies

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Proceeds from the sales of OREO properties

Acquisition of Carolina Financial Corporation, net of cash paid

Net change in loans

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

Net change in loans and leases

NET CASH USED IN INVESTING ACTIVITIES

FINANCING ACTIVITIES

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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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Transfers of loans to OREO

Acquisition of Carolina Financial:

Transfers of loans to bank premises and equipment

Acquisitions:

Assets acquired, net of cash

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Actual results could differ from those estimates.

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.

The financial statements presented as of March 31, 2022 and 2021 and for the three-month periods then ended have not been audited.

The Notes to Consolidated Financial Statements appearing in United’s 2021 Annual Report on Form 10-K,

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New Accounting Standards

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

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

“Troubled Debt Restructurings and Vintage Disclosures”.

updates the requirements for accounting for credit losses under ASC 326, eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40,

and enhances creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty.

also amends the guidance on “vintage disclosures” to require disclosure of gross write-offs by year of origination.

is effective for public business entities that have adopted Topic 326 for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption of the amendment is permitted.

The Company is assessing the impact ASU No.

will have on the Company’s disclosures, financial condition or results of operations.

In March 2022, the FASB issued ASU No.

“Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio Layer Method”.

further aligns risk management objectives with hedge accounting results on the application of the last-of-layer

method, which was first introduced in ASU No.

The enhanced guidance further improves the last-of-layer

concepts to expand to nonprepayable financial assets and allows more flexibility in the derivative structures used to hedge the interest rate risk.

also provides guidance on the relationship between the portfolio layer method requirements and other areas of GAAP.

is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption of the amendment is permitted if an entity has adopted ASU 2017-12

for the corresponding period.

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

In October 2021, the FASB issued ASU No.

“Business Combinations (Topic 805):

Accounting for contract assets and contract liabilities from contracts with customers”.

amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity acquirer recognize and measure contract assets and contract liabilities acquired in a business

combination in accordance with Topic 606.

As a result of these amendments, it is expected that an acquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its preacquisition financial statements.

is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

Early adoption of the amendments is permitted.

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

In July 2021, the FASB issued ASU No.

“Leases (Topic 842):

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are first applied.

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

was adopted by United on January 1, 2022 on a prospective basis.

The adoption did not 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.

“Reference Rate Reform (Topic 848).” This update to ASU No.

“Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” 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.

is effective for public business entities upon issuance through December 31, 2022.

United is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR.

The Company is assessing ASU No.

and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments.

In August 2020, the FASB issued ASU No.

In addition, United has taken steps to ensure that no new contracts using LIBOR will be originated after December 31, 2021.

At this time, United intends to prioritize the Secured Overnight Financing Rate (“SOFR”) and Prime as the preferred alternatives to LIBOR;

however, these preferred alternatives could change over time based on market developments.

In August 2020, the FASB issued No.

“Debt – Debt with Conversion and Other Options (Subtopic 470-20)

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Entities may elect to adopt the amendments through either a modified retrospective method of transition or a fully retrospective method of transition.

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

In March 2020, the FASB issued ASU No.

“Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides “optional expedients and exceptions for applying generally accepted accounting principles under ASC Topic 848 to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.” ASU No.

is effective for public business entities on March 12, 2020 through December 31, 2022.

United is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR.

The Company is assessing ASU No.

and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments.

In January 2020, the FASB issued ASU No.

“Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The new guidance addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments.

is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2020;

early adoption is permitted.

was adopted by United on January 1, 2022.

The adoption did not have a material impact on the Company’s financial condition or results of operations.

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.

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.

is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2020;

early adoption is permitted.

was adopted by United on January 1, 2021.

The adoption did not have a material impact on the Company’s financial condition or results of operations.

In March 2020, the FASB issued ASU No.

“Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides “optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.” ASU No.

is effective for public business entities on March 12, 2020 through December 31, 2022.

See information above under ASU No.

for an update on the steps United has taken to transition away from LIBOR for its loan and other financial instruments.

MERGERS AND ACQUISITIONS

Community Bankers Trust Corporation

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”).

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.

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”).

United Bank will survive the Essex Bank Merger and continue to exist as a Virginia banking corporation.

The acquisition of Community Bankers Trust will enhance United’s existing presence in the DC Metro MSA and will take United into new markets including Baltimore, Annapolis, Lynchburg, Richmond, and the Northern Neck of Virginia.

It also strategically connects our Mid-Atlantic

On December 3, 2021 (the “Acquisition Date”),

United completed its acquisition of Community Bankers Trust Corporation (“Community Bankers Trust”).

Community Bankers Trust was merged with and into United (the “Merger”), pursuant to the terms of the Agreement and Plan of Reorganization, dated June 2, 2021, by and between United and Community Bankers Trust (the “Agreement”).

Under the terms of the Agreement, each outstanding share of common stock of Community Bankers Trust was converted into the right to receive 0.3173 shares of United common stock, par value $ 2.50 per share.

Also, pursuant to the Agreement, at the effective time of the 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 Merger, vested as provided pursuant to the terms of such Community Bankers Trust stock plan and converted into an option to acquire United common stock adjusted based on the 0.3173 exchange ratio.

Also, at the effective time of the Merger, each restricted stock unit granted under a Community Bankers Trust stock plan that was outstanding immediately prior to the effective time of the Merger vested in accordance with the formula and other terms of the Community Bankers Trust stock plan and converted into the right to receive shares of United common stock based on the 0.3173 exchange ratio.

Immediately following the Merger, Essex Bank, a wholly-owned subsidiary of Community Bankers Trust, merged with and into United Bank, a wholly-owned subsidiary of United (the “Bank Merger”) pursuant to an Agreement and Plan of Merger, dated June 2, 2021.

United Bank survived the Bank Merger and continues to exist as a Virginia banking corporation.

Merger was accounted for under the acquisition method of accounting.

The results of operations of Community Bankers Trust are included in the consolidated results of operations from the Acquisition Date.

The acquisition of Community Bankers Trust enhanced United’s existing presence in the DC Metro MSA and took United into new markets including Baltimore, Annapolis, Lynchburg, Richmond, and the Northern Neck of Virginia.

It also strategically connected our Mid-Atlantic

and Southeast footprints.

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

On May 1, 2020 (“Acquisition Date”), United acquired 100 % of the outstanding shares of Carolina Financial Corporation (“Carolina Financial”), a Delaware corporation headquartered in Charleston, South Carolina.

Carolina Financial was merged with and into United (the “Carolina Financial Merger”), pursuant to the terms of the Agreement and Plan of Merger, dated November 17, 2019, by and between United and Carolina Financial (the “Carolina Financial Agreement”).

Upon completion of the Carolina Financial Merger, Carolina Financial ceased to exist and United survived and continues to exist as a West Virginia corporation.

Under the terms of the Carolina Financial Agreement, each outstanding share of common stock of Carolina Financial was converted into the right to receive 1.13 shares of United common stock, par value $ 2.50 per share.

Also pursuant to the Carolina Financial Agreement, as of the effective time of the Carolina Financial Merger, each outstanding Carolina Financial stock option, whether vested or unvested as of the date of the Carolina Financial Merger, at such option holder’s election, (i) vested and converted into an option to acquire United common stock adjusted based on the 1.13 exchange ratio, or (ii) was entitled to receive cash consideration equal to the difference between (a) the option’s exercise price and (b) $ 28.99 , representing the volume weighted average trading price of the Carolina Financial common stock on NASDAQ for the twenty full trading days ending on the second trading day immediately preceding the closing date (the “CFC Closing Price”) multiplied by the number of shares of Carolina Financial common stock subject to such stock option.

Also, at the effective time of the Carolina Financial Merger, each restricted stock grant, restricted stock unit grant or any other award of a share of Carolina Financial common stock subject to vesting, repurchase or other lapse restriction under a Carolina Financial stock plan (other than a stock option) (each, a “Stock Award”) that was outstanding immediately prior to the effective time of the Carolina Financial Merger, vested in accordance with the terms of the Carolina Financial stock plan and at the election of the holder (i) converted into the right to receive shares of United common stock based on the 1.13 exchange ratio or (ii) converted into cash in an amount equal to the CFC Closing Price multiplied by the shares of Carolina Financial common stock subject to the Stock Award.

Immediately following the Carolina Financial Merger, CresCom Bank, a wholly-owned subsidiary of Carolina Financial, merged with and into United Bank, a wholly-owned subsidiary of United (the “CresCom Bank Merger”).

United Bank survived the CresCom Bank Merger and continues to exist as a Virginia banking corporation.

CresCom Bank owned and operated Crescent Mortgage Company (“Crescent”), which is based in Atlanta, Georgia.

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

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.

The results of operations of Carolina Financial are included in the consolidated results of operations from the Acquisition Date.

The acquisition of Carolina Financial affords United the opportunity to expand its existing footprint 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.

As of the Acquisition Date, Community Bankers Trust had $ 1,788,230 in total assets, $ 1,282,997 in loans and leases, net of unearned income and $ 1,517,502 in deposits.

The aggregate purchase price was $ 260,304 , including common stock valued at $ 252,321 , stock options assumed valued at $ 7,958 , and cash paid for fractional shares of $ 25 .

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

The core deposit intangible is being amortized on an accelerated basis over ten years.

The Crescent trade name provides a source of market recognition to attract potential clients and retain existing relationships.

United believes the Crescent trade name provides a competitive advantage and is likely going to be used into perpetuity and thus will not be subject to amortization, but rather be evaluated for impairment.

The number of shares issued in the transaction was 7,135,771 , which were valued based on the closing market price of $ 35.36 for United’s common shares on December 3, 2021.

The preliminary purchase price has been allocated to the identifiable tangible and intangible assets resulting in preliminary additions to goodwill and core deposit intangibles of $ 79,204 and $ 3,398 , respectively.

The goodwill recognized results from the expected synergies and potential earnings from the combination of United and Community Bankers Trust.

The core deposit intangible is expected to be amortized on an accelerated basis over ten years.

Because the consideration paid was greater than the net fair value of the acquired assets and liabilities, the Company recorded goodwill as part of the acquisition.

None of the goodwill from the Carolina Financial acquisition is expected to be deductible for tax purposes.

United used an independent third party to help determine the fair values of the assets and liabilities acquired from Carolina Financial.

As a result of the merger, United recorded fair value discounts of $ 47,425 on the loans and leases acquired, $ 620 on investment securities, $ 272 on OREO, $ 4,831 on trust preferred issuances and $ 135 on subordinated notes, respectively, and premiums of $ 5,908 on buildings acquired, $ 4,357 on land acquired, $ 12,818 on interest-bearing deposits, and $ 468 on long-term FHLB advances, respectively.

United also recorded an allowance for credit losses, including a reserve for unfunded commitments, of $ 50,562 on the loans and commitments acquired split between $ 19,797 for purchased credit deteriorated (“PCD”) loans and $ 30,765 for non-PCD

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 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

Portfolio loans and leases acquired from Carolina Financial were recorded at their fair value at the Acquisition Date based on a discounted cash flow methodology.

None of the goodwill from the Community Bankers Trust acquisition is expected to be deductible for tax purposes.

United used an independent third party to help determine the fair values of the assets and liabilities acquired from Community Bankers Trust.

As a result of the merger, United recorded preliminary fair value discounts of $ 7,744 on the loans and leases acquired, $ 230 on land acquired, $ 50 on OREO properties acquired and $ 415 on a trust preferred issuance, and premiums of $ 6,766 on investment securities acquired, $ 492 on buildings acquired, $ 2,741 on interest-bearing deposits, and $ 457 on long-term FHLB advances, respectively.

United also recorded an allowance for credit losses, including a reserve for unfunded commitments, of $ 25,920 on the loans and commitments acquired split between $ 12,788 for purchased credit deteriorated (“PCD”) loans which is part of the acquisition date fair value, and $ 13,132 for non-PCD

loans recorded to the provision for credit losses.

The discounts and premium amounts, except for discount on the land, OREO and FHLB advances 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.

The FHLB advances acquired were subsequently repaid prior to year-end.

At March 31, 2022, the discount on the trust preferred issuance had an estimated remaining life of 12.00 years and the premiums on the buildings, and interest-bearing deposits each had an average estimated remaining life of 31.00 years, and 5.00 years, respectively.

Portfolio loans and leases acquired from Community Bankers Trust were recorded at their fair value at the Acquisition Date based on a discounted cash flow methodology.

The estimated fair value incorporates adjustments related to market loss assumptions and prevailing market interest rates for comparable assets and other market factors such as liquidity from the perspective of a market participant.

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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

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.

This discount is being recognized through interest income on a level-yield method over the life of the loans which is estimated to be a weighted-average of 4.6 years.

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.

Acquisition Date.

This discount will be recognized through interest income on a level-yield method over the life of the loans which is estimated to be a weighted-average of 5.5 years.

acquired loans and leases, the differences between the initial fair value and the UPB, or par value, are recognized as interest income on a level-yield basis over the lives of the related loans and leases which is estimated to be a weighted-average of 5.6 years.

4 unchanged sentences

loans and leases are recognized in the provision for credit losses.

The following table provides a reconciliation of the difference between the purchase price and the par value of portfolio PCD loans and leases acquired from Carolina Financial as of the Acquisition Date:

The following table provides a reconciliation of the difference between the purchase price and the par value of portfolio PCD loans and leases acquired from Community Bankers Trust as of the Acquisition Date:

Purchase price of PCD loans and leases at acquisition

2 unchanged sentences

Par value (UPB) of acquired PCD loans and leases at acquisition

The consideration paid for Carolina Financial’s common equity and the amounts of acquired identifiable assets and liabilities assumed as of the Acquisition Date were as follows:

The consideration paid for Community Bankers Trust’s common equity and the preliminary amounts of acquired identifiable assets and liabilities assumed as of the Acquisition Date were as follows:

Purchase price:

6 unchanged sentences

Investment securities

Loans held for sale

Net loans and leases

1 unchanged sentence

Operating lease right-of-use

Crescent trade name intangible

Core deposit intangible

Mortgage servicing rights

Total identifiable assets

5 unchanged sentences

Total identifiable liabilities

Fair value of net assets acquired including identifiable intangible assets

Resulting goodwill

Preliminary fair value of net assets acquired including identifiable intangible assets

Preliminary resulting goodwill

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 $ 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.

The operations of United’s central region of Virginia, which includes most of the acquired operations of Community Bankers Trust provided $ 9,805 in total revenues (net interest income plus other income), and $ 6,096 in net income for the first three months ended March 31, 2022.

These amounts are included in United’s consolidated financial statements as of and for the first three months ended

March 31, 2022.

Community Bankers Trust’s results of operations prior to the Acquisition Date are not included in United’s consolidated results of operations.

The following table presents certain unaudited pro forma information for the results of operations for the first three months of 2021, as if the Merger had occurred on January 1, 2021.

These results combine the historical results of Community Bankers Trust into United’s consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair valuation adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on the indicated date nor are they intended to represent or be indicative of future results of operations.

In particular, no adjustments have been made to eliminate the amount of Community Bankers Trust’s provision for credit losses for the first three months of 2021 that may not have been necessary had the acquired loans and leases been recorded at fair value as of the beginning of 2021.

Additionally, United expects to achieve operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts.

Three Months Ended

March 31, 2021

Total Revenues (1)

Represents net interest income plus other income

INVESTMENT SECURITIES

2 unchanged sentences

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

September 30, 2021

Treasury securities and obligations of U.S.

Government corporations and agencies

March 31, 2022

State and political subdivisions

6 unchanged sentences

Treasury securities and obligations of U.S.

Government corporations and

Government corporations and agencies

State and political subdivisions

4 unchanged sentences

Other corporate securities

For the adoption of ASC Topic 326, “Financial Instruments—Credit Losses,” United made a policy election to exclude accrued interest from the amortized cost basis of available-for-sale

United excludes

accrued interest from the amortized cost basis of available-for-sale

debt securities and report accrued interest separately in “Accrued interest receivable” in the consolidated balance sheets.

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

1 unchanged sentence

debt securities.

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.

The table above excludes accrued interest receivable of $ 17,425 and $ 15,353 at March 31, 2022 and December 31, 2021, 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 March 31, 2022 and December 31, 2021.

Less than 12 months

12 months or longer

September 30, 2021

March 31, 2022

Treasury securities and obligations of U.S.

15 unchanged sentences

Asset-backed securities

Trust preferred collateralized debt obligations

Single issue trust preferred securities

3 unchanged sentences

Three Months Ended

Nine Months Ended

Proceeds from sales and calls

1 unchanged sentence

Gross realized losses

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.

At March 31, 2022, gross unrealized losses on available for sale securities were $ 195,581 on 1,174 securities of a total portfolio of 1,546 available for sale securities.

Securities with the most significant gross unrealized losses at March 31, 2022 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.

Generally, the significant amount of gross unrealized losses on available for sale securities at March 31, 2022 was the result of rising interest rates.

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 $ 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.

The total amortized cost of available for sale state and political subdivision securities was $ 838,384 at March 31, 2022.

As of March 31, 2022, approximately 53 % 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 March 31, 2022.

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 September 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 March 31, 2022.

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 $ 1,646,342 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.

The total amortized cost of available for sale agency mortgage-backed securities was $ 2,126,348 at March 31, 2022.

Of the $ 2,126,348 amount, $ 653,526 was related to agency commercial mortgage-backed securities and $ 1,472,822 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 September 30, 2021.

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

residential mortgage-backed securities

2 unchanged sentences

The total amortized cost of available for sale non-agency

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

residential mortgage-backed securities was $ 103,779 at March 31, 2022.

Of the $ 103,779 , 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 September 30, 2021.

residential mortgage-backed securities had credit losses at March 31, 2022.

Asset-backed securities

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.

As of March 31, 2022, United’s asset-backed securities portfolio had a total amortized cost balance of $ 856,840 .

100 % of the portfolio was investment grade rated as of March 31, 2022.

Approximately 35 % 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 65 % 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

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

Upon reviewing this portfolio for the first quarter of 2022, it was determined that no ne of the asset-backed securities had credit losses.

Single issue trust preferred securities

2 unchanged sentences

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 September 30, 2021 consisted of $ 8,453 in investment grade bonds, $ 3,067 in split rated bonds, and $ 5,761 in unrated bonds.

The amortized cost of available for sale single issue trust preferred securities as of March 31, 2022 consisted of $ 8,458 in investment grade bonds, $ 3,075 in split rated bonds, and $ 5,771 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 third quarter of 2021, it was determined that none of the single issue trust preferred securities had credit losses.

Upon completing the review for the first quarter of 2022, it was determined that none of the single issue trust preferred securities had credit losses.

Corporate securities

As of September 30, 2021, United’s corporate

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

As of March 31, 2022, United’s Corporate securities portfolio had a total amortized cost balance of $ 632,223 .

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

Of the $ 517,733 total amortized cost balance, 90 % had at least one rating above investment grade, 2 % was below investment grade rated, and 8 % was unrated.

Of the $ 632,223 total amortized cost balance, 81 % was investment grade rated, 1 % was below investment grade rated, 1 % was split rated, and 17 % was unrated.

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 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.

Based upon management’s analysis and judgment, it was determined that none of the corporate securities had credit losses at March 31, 2022.

The amortized cost and estimated fair value of securities available for sale at March 31, 2022 and December 31, 2021 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.

September 30, 2021

March 31, 2022

December 31, 2021

5 unchanged sentences

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 $ 11,984 at September 30, 2021 and $ 10,718 at December 31, 2020.

The fair value of United’s equity securities was $ 12,357 at March 31, 2022 and $ 12,404 at December 31, 2021.

Three Months Ended

Nine Months Ended

Net gains recognized during the period on equity securities sold

1 unchanged sentence

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

Net gains recognized during the period

Net (losses) gains recognized during the period

Other investment securities

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.

During the first quarter of 2022, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the first quarter of 2022 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 first quarter.

There were no other events or changes in circumstances during the first 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 $ 1,794,895 and $ 1,871,328 at March 31, 2022 and December 31, 2021, respectively.

LOANS AND LEASES

Major classes of loans and leases are as follows:

September 30, 2021

March 31, 2022

December 31, 2021

9 unchanged sentences

Total gross loans

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.

The table above does not include loans held for sale of $ 340,040 and $ 504,416 at March 31, 2022 and December 31, 2021, 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 $ 32,882 and $ 35,756 at September 30, 2021 and December 31, 2020, respectively.

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 $

32,990 at March 31, 2022 and December 31, 2021, respectively.

CREDIT QUALITY

19 unchanged sentences

In response to the coronavirus (“COVID-19”)

pandemic and its economic impact on our customers, United has implemented a short-term modification program that complies with the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to provide temporary payment relief to those borrowers directly impacted by COVID-19

pandemic and its economic impact on our customers, United implemented a short-term modification program that complied with the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to provide temporary payment relief , primarily deferral of payments, to those borrowers directly impacted by COVID-19

who were not more than 30 days past due as of December 31, 2019.

This program allows for a deferral of payments from the period beginning March 1, 2020 until the earlier of January 1, 2022 or the date that is 60 days after the date on which the national emergency concerning the COVID-19

outbreak terminates.

This program ended on January 1, 2022.

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 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.

Of the $ 55,657 aggregate balance of TDRs at December 31, 2020, $ 41,185 was on nonaccrual and $ 197 was 30-89

As of March 31, 2022, United has 61 eligible loan modifications in deferral under section 4013, “Temporary Relief from Troubled Debt Restructurings,” of the CARES Act on $ 3,034 of loans outstanding, compared to 188 eligible loan modifications in deferral on $ 18,039 of loans outstanding at December 31, 2021.

As of March 31, 2022, United had TDRs of $ 30,582 as compared to $ 35,856 as of December 31, 2021.

Of the $ 30,582 aggregate balance of TDRs at March 31, 2022, $ 13,568 was on nonaccrual and $ 4,882 was 30 - 89

days past due.

Of the $ 35,856 aggregate balance of TDRs at December 31, 2021, $ 22,421 was on nonaccrual and $ 102 was 90 days or more days

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

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:

As of March 31, 2022, there was a commitment to lend additional funds of $ 49 to a debtor owing a receivable whose terms have been modified in a TDR.

During the first three months of 2022, advances of $ 61 were made to this debtor under a loan that had been previously modified.

The following tables sets forth the balances of TDRs at March 31, 2022 and December 31, 2021 and the reasons for modification:

Reason for modification

September 30, 2021

March 31, 2022

December 31, 2021

1 unchanged sentence

Interest rate reduction and change in terms

Forgiveness of principal

Concession of principal and term

Transfer of asset

Extended maturity

Transfer of asset

Change in terms

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:

The following table sets forth United’s troubled debt restructurings that were restructured during the three months ended March 31, 2022 and 2021, segregated by class of loans.

Troubled Debt Restructurings

For the Three Months Ended

September 30, 2021

September 30, 2020

Pre-Modification

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land

Other consumer

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 Nine Months Ended

September 30, 2021

September 30, 2020

Pre-Modification

March 31, 2022

March 31, 2021

Commercial real estate:

5 unchanged sentences

Other consumer

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.

The following table sets forth United’s troubled debt restructurings, based on their post-modification outstanding recorded balance, that have been restructured during the three months ended March 31, 2022 and 2021, segregated by the reason for modification:

Three Months Ended

September 30, 2021

Nine Months Ended

September 30, 2021

Troubled Debt Restructurings

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Reason for modification

Interest rate reduction

Interest rate reduction and change in terms

Forgiveness of principal

Concession of principal and term

Transfer of asset

Extended maturity

Change in terms

The loans and leases were evaluated individually for allocation within United’s allowance for loan losses.

The modifications had an immaterial impact on the financial condition and results of operations for United.

The following table presents troubled debt restructurings, by class of loan, that were restructured during the twelve-month period ended March 31, 2022 and March 31, 2021 and had charge-offs during the the first quarter of 2022 and 2021, respectively.

The recorded investment amounts presented were as of the March 31, 2022 and 2021 balance sheet dates.

Three Months Ended

September 30, 2021

Nine Months Ended

September 30, 2021

Troubled Debt Restructurings

Construction & land development

Other consumer

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.

March 31, 2022

Three Months Ended

September 30, 2020

Nine Months Ended

September 30, 2020

March 31, 2021

Troubled Debt Restructurings

8 unchanged sentences

Age Analysis of Past Due Loans and Leases

As of September 30, 2021

As of March 31, 2022

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land

Construction & land development

Other consumer

5 unchanged sentences

Other commercial

Age Analysis of Past Due Loans and Leases

As of December 31, 2020

Residential real estate

Construction & land

Construction & land development

Other consumer

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

At September 30, 2021

At March 31, 2022

At December 31, 2021

5 unchanged sentences

Other consumer

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

No interest income was recognized on United’s nonaccrual loans and leases for the first three months of 2022 and 2021.

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 September 30, 2021 and December 31, 2020:

Collateral Dependent Loans and Leases

At September 30, 2021

At March 31, 2022

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land

Construction & land development

Other consumer

6 unchanged sentences

Residential real estate

Construction & land

Construction & land development

Other consumer

25 unchanged sentences

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 d e

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

Doubtful borrowers are usually in default, 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.

7 unchanged sentences

amortized cost

As of September 30, 2021

As of March 31, 2022

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Origination Year

1 unchanged sentence

amortized cost

loans and leases

As of December 31, 2021

8 unchanged sentences

amortized cost

As of September 30, 2021

As of March 31, 2022

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Origination Year

1 unchanged sentence

amortized cost

connverted to

As of December 31, 2021

9 unchanged sentences

amortized cost

As of September 30, 2021

loans and leases

As of March 31, 2022

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Term Loans and leases

2 unchanged sentences

amortized cost

loans and leases

As of December 31, 2021

7 unchanged sentences

Revolving loans

amortized cost

As of September 30, 2021

As of March 31, 2022

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Origination Year

Revolving loans

amortized cost

As of December 31, 2021

6 unchanged sentences

Origination Year

to term loans

As of September 30, 2021

Revolving loans

amortized cost

As of March 31, 2022

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Origination Year

to term loans

Revolving loans

amortized cost

As of December 31, 2021

5 unchanged sentences

Origination Year

Revolving loans

amortized cost

As of September 30, 2021

As of March 31, 2022

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Origination Year

8 unchanged sentences

Other Consumer

Origination Year

Term Loans Origination Year

Revolving loans

amortized cost

As of September 30, 2021

As of March 31, 2022

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Origination Year

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Term Loans Origination Year

Revolving loans

amortized cost

As of December 31, 2021

4 unchanged sentences

YTD net charge-offs

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.

At March 31, 2022 and December 31, 2021, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 13,641 and $ 14,823 , respectively.

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

2 unchanged sentences

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 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.

At March 31, 2022, there were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as compared to $ 13 at December 31, 2021.

ALLOWANCE FOR CREDIT LOSSES

As of January 1, 2020, United adopted the CECL methodology for measuring credit losses in accordance with ASC Topic 326.

Under ASC Topic 326, the allowance for loan losses is an estimate of the expected credit losses on financial assets measured at amortized cost to present the net amount expected to be collected as of the balance sheet date.

Such allowance

is based on the cr e

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

United adopted the CECL methodology for measuring credit losses as of January 1, 2020.

All disclosures as of March 31, 2022 and December 31, 2021

and for the three months ended March 31, 2022 and 2021 are presented in accordance with ASC Topic 326.

The allowance for loan losses is an estimate of the expected credit losses on financial assets measured at amortized cost to present the net amount expected to be collected as of the balance sheet date.

Such allowance is based on the credit 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 $ 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.

Accrued interest receivable was $ 48,764 ( no allowance for credit losses) and $ 49,029 (net of an allowance for credit losses of $ 8 ) at March 31, 2022 and December 31, 2021, respectively, related to loans and leases 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 $ 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.

As a result of this assessment, United did not record

an allowance for credit

losses for accrued interest receivables not expected to be collected as of March 31, 2022 as compared to an allowance for credit losses of $ 8 as of December 31, 2021.

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 September 30, 2021 and December 31, 2020:

The following table represents the accrued interest receivable as of March 31, 2022 and December 31, 2021:

Accrued Interest Receivable

At September 30, 2021

At March 31, 2022

At December 31, 2021

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 nine months ended September 30, 2021 and 2020:

Accrued Interest Receivables Written Off by Reversing Interest Income

The following table represents the accrued interest receivables written off by reversing interest income for the three months ended March 31, 2022 and 2021:

Accrued Interest Receivables Written Off

by Reversing Interest Income

Three Months Ended

Nine Months Ended

Commercial Real Estate:

3 unchanged sentences

Residential Real Estate

Construction & land development

Other consumer

2 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

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

reasonable and supportable forecast period.

21 unchanged sentences

management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by United.

For past loans and leases acquired through the completion of a transfer, including loans and leases acquired in a business combination, that had evidence of deterioration of credit quality since origination (“PCI”) and accounted for under ASC Topic 310, an entity did not have to reassess whether any loans and leases previously accounted for as PCI meet the definition of purchased credit deteriorated (“PCD”) loans and leases upon adoption of ASC Topic 326.

Any changes in the allowance for credit losses for these loans and leases were accounted for as an adjustment to the loan’s amortized cost basis and not as a cumulative-effect adjustment to an entity’s beginning retained earnings.

loans and leases are now classified as non-PCD

loans and leases with the adoption of ASC Topic 326.

In accordance with ASC Topic 326 guidance, United calculated a PCD rate adjustment for all PCD loans and leases at adoption.

Such adjustment created a discount balance for any excess amount not deemed to be credit-related between the PCD recorded balance at the adoption date and the contractual principal and interest balances outstanding.

At the acquisition date, an initial allowance for expected credit losses is estimated and recorded as credit loss expense.

At the acquisition date, an initial allowance for expected credit losses for non-PCD

loans is estimated and recorded as credit loss expense.

The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans.

1 unchanged sentence

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 $ 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 reserve for lending-related commitments of $ 36,679 and $ 31,442 at March 31, 2022 and December 31, 2021, 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 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.

As of March 31, 2022, the allowance for credit losses decreased from December 31, 2021 primarily due to better performance trends within the loan portfolio.

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

The first quarter of 2022 qualitative adjustments include analyses of the following:

– This includes portfolio trends related to business conditions;

2 unchanged sentences

Current conditions

– United considered the continued impact of COVID-19

on the economy as well as loan deferrals and modifications made in light of the pandemic when making determinations related to factor adjustments, such as changes in economic and business conditions, collateral values, external factors and past due loans and leases.

– United considered the impact of inflation, supply chain issues, labor shortages and the conflict in eastern Europe when making determinations related to factor adjustments, such as changes in economic and business conditions, collateral values and external factors.

Reasonable and supportable forecasts

3 unchanged sentences

Assumptions for the economic variables were the following:

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.

The forecast for real GDP shifted downward in the first quarter, from a projection of 4.00 % for 2022 at the end of 2021 to 2.80 % for 2022 with a more level downward future trendline as compared to the end of 2021.

The unemployment rate remained fairly consistent to the end of 2021 with a steady trend expected throughout 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.

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 some positive impact on the economy.

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

reasonable and supportable forecast period.

A progression of the allowance for loan losses, by portfolio segment, for the periods indicated is summarized as follows:

Allowance for Loan Losses and Carrying Amount of Loans

For the Three Months Ended September 30, 2021

Commercial Real Estate

Allowance for Loan Losses:

Beginning balance

Ending balance

Allowance for Loan Losses and Carrying Amount of Loans

For the Nine Months Ended September 30, 2021

A progression of the allowance for loan and lease losses, by portfolio segment, for the periods indicated is summarized as follows:

Allowance for Loan and Lease Losses and Carrying Amount of Loans and

Leases For the Three Months Ended March 31, 2022

Commercial Real Estate

Allowance for Loan Losses:

Allowance for Loan and Lease Losses:

Beginning balance

5 unchanged sentences

Beginning balance

Impact of the adoption of ASU 2016-13

on January 1, 2020

Impact of the adoption of ASU 2016-13

for PCD loans on

January 1, 2020

Initial allowance for PCD loans (acquired during the period)

Allowance for PCD loans (acquired during the period)

Ending balance

1 unchanged sentence

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

September 30, 2021

March 31, 2022

Community Banking

17 unchanged sentences

Goodwill not subject to amortization

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.

United incurred amortization expense of $ 1,379 and $ 1,466 for the quarters ended March 31, 2022 and 2021, respectively.

The following table provides a reconciliation of goodwill:

Goodwill at December 31, 2021

Goodwill from Carolina Financial acquisition

Goodwill at September 30, 2021

to goodwill from Community Bankers Trust acquisition

Goodwill at March 31, 2022

The addition during the first quarter of 2022 to goodwill from the Community Bankers Trust acquisiton was due mainly to establish a reserve for income tax contingencies.

The following table sets forth the anticipated amortization expense for intangible assets for the years subsequent to 2021:

14 unchanged sentences

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

The unpaid principal balances of loans serviced for others were approximately $ 3,723,206 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 %.

unpaid principal balances of loans serviced for others were approximately $

3,623,207 at March

3,698,998 at December

The estimated fair value of the mortgage servicing rights was $ 37,740 and $ 27,355 at March 31, 2022 and December 31, 2021, respectively.

The estimated fair value of servicing rights at March 31, 2022 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 10.50 % to 10.98 % with a weighted average discount rate of 10.61 %, average constant prepayment rates (“CPR”) ranging from 8.02 % to 13.24 % with a weighted average prepayment rate of 9.79 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.65 %.

The estimated fair value of servicing rights at December 31, 2021 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 10.50 % to 11.71 % with a weighted average discount rate of 10.60 %, average constant prepayment rates (“CPR”) ranging from 12.59 % to 21.20 % with a weighted average prepayment rate of 16.56 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.09 %.

Please refer to Note 15 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 nine months ended September 30, 2021 and 2020:

The following presents the activity in mortgage servicing rights, including their valuation allowance for the three months ended March 31, 2022 and 2021:

Three Months Ended

Nine Months Ended

March 31, 2022

Three Months Ended

March 31, 2021

MSRs beginning balance

Addition from acquisition of subsidiary

Amount capitalized

6 unchanged sentences

MSRs, net of valuation allowance

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

The Company did not record any temporary impairments on mortgage servicing rights for the three months ended March 31, 2022 and 2021.

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

9 unchanged sentences

United rents or subleases certain real estate to third parties.

Our sublease portfolio consists of operating leases to other organizations for former branch offices.

Our sublease portfolio generally consists of operating leases to other organizations for former branch offices.

ROU assets represent United’s right to use an underlying asset for the lease term and lease liabilities represent United’s obligation to make lease payments arising from the lease.

5 unchanged sentences

The components of lease expense were as follows:

Classification

September 30,

Operating lease cost

Net occupancy expense

Sublease income

Net occupancy expense

Net lease cost

Three Months Ended

Classification

September 30,

March 31, 2022

March 31, 2021

Operating lease cost

5 unchanged sentences

Classification

September 30,

March 31, 2022

December 31, 2021

Operating lease right-of-use

Operating lease right-of-use assets

Operating lease right-of-use

Operating lease liabilities

1 unchanged sentence

Other information related to leases was as follows:

September 30, 2021

March 31, 2022

Weighted-average remaining lease term:

4 unchanged sentences

Three Months Ended

September 30,

Cash paid for amounts in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in the exchange for lease liabilities

Nine Months Ended

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Cash paid for amounts in the measurement of lease liabilities:

Operating cash flows from operating leases

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 September 30, 2021 and December 31, 2020:

September 30, 2021

December 31, 2020

ROU assets obtained in the exchange for lease liabilties

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, 2021, consists of the following as of March 31, 2022:

Total lease payments

1 unchanged sentence

SHORT-TERM BORROWINGS

Federal funds purchased and securities sold under agreements to repurchase are a significant source of funds for the Company.

At March 31, 2022 and December 31, 2021, short-term borrowings were as follows:

March 31, 2022

December 31, 2021

Federal funds purchased

Securities sold under agreements to repurchase

Total short-term borrowings

sold under agreements to repurchase have been a significant source of funds for the company.

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

They were recorded at the amounts at which the securities were acquired or sold plus accrued interest.

United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $ 230,000 .

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 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.

They were recorded at the amounts at which the securities were acquired or sold plus accrued interest.

United has a $ 20,000 line of credit with an unrelated financial institution to provide for general liquidity needs.

20,000 line of credit with an unrelated financial institution to provide for general liquidity needs.

The line is an unsecured, revolving line of credit.

The line will be renewable on a 360-day

basis and will carry an indexed, floating-rate of interest.

The line is renewable on a

360 day basis and carries an indexed, floating-rate of interest.

The line requires compliance with various financial and nonfinancial covenants.

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

2022 , United had

no outstanding balance under this 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 September 30, 2021, United had an unused borrowing amount of approximately $ 7,060,714 available subject to delivery of collateral after certain trigger points.

At March 31, 2022, United had an unused borrowing amount of approximately $ 7,668,153 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 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.

At March 31, 2022, $ 531,615 of FHLB advances with a weighted-average contractual interest rate of 0.48 % and a weighted-average effective interest rate of 0.55 % are scheduled to mature within the next four years.

The weighted-average effective rate considers the effect of any interest rate swaps designated as cash flow

hedges outstanding at March 31, 2022 to manage interest rate risk on its long-term debt.

The scheduled maturities of these FHLB borrowings are as follows:

2026 and thereafter

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.

March 31, 2022, United had a total of twenty 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 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 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.

United assumed $4,124 in aggregate principal amount of a LIBOR-indexed floating rate subordinated note in the Community Bankers Trust merger.

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

rate subordinated notes in the Carolina Financial Corporation

At March 31, 2022 and December 31, 2021, the outstanding balance of the subordinated notes was $ 9,877 and $ 9,872 , respectively.

At March 31, 202 2

and December 31, 2021, the outstanding balance of the Debentures was $ 275,743 and $ 275,323 , respectively, and was 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.

United fully and unconditionally guarantees each individual trust’s obligations under the Capital Securities.

Under the provisions of the junior subordinated debt, United has the right to defer payment of interest on the junior subordinated debt at any time, or from time to time, for periods not exceeding five years .

If interest payments on the junior subordinated debt are deferred, the dividends on the Capital Securities are also deferred.

Interest on the junior subordinated debt is cumulative.

In accordance with the fully-phased in “Basel III Capital Rules” as published by United’s primary federal regulator, the Federal Reserve, United is unable to consider the Capital Securities or the subordinated notes as Tier 1 capital, but rather the Capital Securities and subordinated notes are included as a component of United’s Tier 2 capital.

United can include the Capital Securities and subordinated notes in its Tier 2 capital on a permanent basis.

Under the provisions of the subordinated debt, United has the right to defer payment of interest on the subordinated debt at any time, or from time to time, for periods not exceeding five years .

If interest payments on the subordinated debt are deferred, the dividends on the Capital Securities are also deferred.

Interest on the subordinated debt is cumulative.

In accordance with the fully-phased in “Basel III Capital Rules” as published by United’s primary federal regulator, the Federal Reserve, United is unable to consider the Capital Securities as Tier 1 capital, but rather the Capital Securities are included as a component of United’s Tier 2 capital.

United can include the Capital Securities in its Tier 2 capital on a permanent basis.

COMMITMENTS AND CONTINGENT LIABILITIES

12 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 $ 6,964,784 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.

United had approximately $ 7,117,518 and $ 6,847,550 of loan commitments outstanding as of March 31, 2022 and December 31, 2021, respectively, approximately 35% of which contractually expire within one year .

Excluded in the March 31, 2022 and December 31, 2021 amounts above are commitments to extend credit of $ 714,634 and $ 571,792 , respectively, related to mortgage loan funding commitments of United’s mortgage banking segment which 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 September 30, 2021 and December 31, 2020, respectively.

As of March 31, 2022 and December 31, 2021, United had $ 17,408 and $ 14,774 of commercial letters of credit outstanding, 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 $ 164,061 and $ 134,916 as of September 30, 2021 and December 31, 2020, respectively.

United has issued standby letters of credit of $ 155,933 and $ 164,743 as of March 31, 2022 and December 31, 2021, 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 September 30, 2021 and December 31, 2020, respectively.

United’s mortgage banking segment had a reserve of $ 1,150 as of March 31, 2022 and December 31, 2021.

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.

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.

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.

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.

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.

United has designated certain derivative instruments used to manage interest rate risk as hedge relationships with certain assets, liabilities or cash flows being hedged.

Certain derivatives used for interest rate risk management are not designated in a hedge relationship.

United uses derivative instruments to help aid against adverse price changes or interest rate movements on the value of certain assets or liabilities and on future cash flows.

These derivatives may consist of interest rate swaps, caps, floors, collars, futures, forward contracts, written and purchased options.

United also executes derivative instruments with its commercial banking customers to facilitate its risk management strategies.

Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

14 unchanged sentences

United is required to pay-fixed

0.19 % and receive-variable 1-month

LIBOR with monthly resets.

0.19 % and receive-variable 1-month LIBOR with monthly resets.

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

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 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.

As of March 31, 2022, 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 $ 6,425 will be reclassified from AOCI as an increase to interest expense over the next 12-months following March 31, 2022 related to the cash flow hedges.

As of March 31, 2022, 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.

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.

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.

7 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 September 30, 2021.

The total notional amount of interest rate swap derivatives cleared through the LCH include $ 500,000 for asset derivatives as of March 31, 2022.

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 September 30, 2021 and December 31, 2020.

Asset Derivatives

September 30, 2021

March 31, 2022

December 31, 2021

Derivatives designated as hedging instruments

Fair Value Hedges:

Interest rate swap contracts (hedging commercial loans)

Total Fair Value Hedges

Cash Flow Hedges:

Interest rate swap contracts

(hedging FHLB borrowings)

Interest rate swap contracts (hedging FHLB borrowings)

Total Cash Flow Hedges

7 unchanged sentences

Liability Derivatives

September 30, 2021

March 31, 2022

December 31, 2021

1 unchanged sentence

Fair Value Hedges:

Interest rate swap contracts

(hedging commercial loans)

Interest rate swap contracts (hedging commercial loans)

Other liabilities

2 unchanged sentences

Total derivatives designated as hedging instruments

Liability Derivatives

March 31, 2022

December 31, 2021

Derivatives not designated as hedging instruments

2 unchanged sentences

Other liabilities

TBA mortgage-backed securities

Oth er liabilities

Other liabilities

Interest rate lock commitments

Other liabilities

Total derivatives not designated as hedging instruments

Total liability derivatives

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

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 March 31, 2022 and December 31, 2021.

Derivatives in Fair Value

1 unchanged sentence

Location in the Statement

March 31, 2022

Carrying Amount of

Assets/(Liabilities)

Cumulative Amount

of Fair Value Hedging

Adjustment Included

in the Carrying

Cumulative Amount of Fair

Value Hedging Adjustment

Included in the Carrying

Amount of the Hedged

Assets/(Liabilities)

Cumulative Amount of

Fair Value Hedging

Adjustment Remaining for

any Hedged Assets/

(Liabilities) for which

Hedge Accounting has

been Discontinued

Cumulative Amount of Fair

Value Hedging Adjustment

Remaining for any Hedged

Assets/ (Liabilities) for

which Hedge Accounting

has been Discontinued

Interest rate swaps

Loans, net of unearned income

December 31, 2020

Derivatives in Fair Value

1 unchanged sentence

Location in the Statement

December 31, 2021

Carrying Amount of

Assets/(Liabilities)

Cumulative Amount

of Fair Value Hedging

Adjustment Included

in the Carrying

Cumulative Amount of Fair

Value Hedging Adjustment

Included in the Carrying

Amount of the Hedged

Assets/(Liabilities)

Cumulative Amount of

Fair Value Hedging

Adjustment Remaining for

any Hedged Assets/

(Liabilities) for which

Hedge Accounting has

been Discontinued

Cumulative Amount of Fair

Value Hedging Adjustment

Remaining for any Hedged

Assets/ (Liabilities) for

which Hedge Accounting

has been Discontinued

Interest rate swaps

Loans, net of unearned income

Derivative contracts involve the risk of dealing with both bank customers and institutional derivative counterparties and their ability to meet contractual terms.

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts.

contracts involve the risk of dealing with both bank customers and institutional derivative counterparties and their ability to meet contractual terms.

Credit risk arises from the possible inability of counterparties to m

eet the terms of their contracts.

United’s exposure is limited to the replacement value of the contracts rather than the notional amount of the contract.

1 unchanged sentence

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

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three months ended March 31, 2022 and 2021 are presented as follows:

Three Months Ended

Income Statement

September 30,

Derivatives in hedging relationships

Cash flow Hedges:

Interest rate swap contracts

Interest on long-term borrowings

Fair Value Hedges:

1 unchanged sentence

Interest and fees on loans

Total derivatives in hedging relationships

Derivatives not designated as hedging instruments

Forward loan sales commitments

Income from Mortgage Banking Activities

TBA mortgage-backed securities

Income from Mortgage Banking Activities

Interest rate lock commitments

Income from Mortgage Banking Activities

Total derivatives not designated as hedging instruments

Total derivatives

Income Statement

Nine Months Ended

September 30,

Derivatives in hedging relationships

Cash flow Hedges:

1 unchanged sentence

Interest on long-term borrowings

Fair Value Hedges:

Interest rate swap contracts

Interest and fees on loans

Total derivatives in hedging relationships

Three Months Ended

Income Statement

Derivatives not designated as hedging instruments

34 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.

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.

Upon completing its review of the pricing from third party vendors at March 31, 2022, management determined that the prices provided by its third party pricing sources 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 materially by management at March 31, 2022.

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

6 unchanged sentences

Loans held for sale

For residential mortgage loans sold in the mortgage banking segment, the loans closed are recorded at fair value using the fair value option which is measured using valuations from investors for loans with similar characteristics (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing (“Level 3”).

For residential mortgage loans sold in the mortgage banking segment, the loans closed are recorded at fair value using the fair value option which is measured using valuations from investors for loans with similar characteristics as well as considering the probability of the loan closing (i.e.

the “pull-through” rate) (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing (“Level 3”).

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

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 March 31, 2022, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.07 % to 0.65 % with a weighted average increase of 0.13 %.

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.

14 unchanged sentences

a specified interest rate within the timeframes established by the mortgage companies.

All borrowers are evaluated for credit worthiness prior to the extension of the commitment.

All borrowers are evaluated for credit

worthiness prior to the extension of the commitment.

Market risk arises if interest rates move adversely between the time of the interest rate lock by the borrower and the sale date of the loan to the investor.

To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, United’s mortgage banking subsidiaries enter into either a forward sales contract to sell loans to investors when using best efforts or a TBA mortgage-backed security under mandatory delivery.

As TBA mortgage-backed securities are actively traded in an open market, TBA mortgage-backed securities fall into a Level 1 category.

Fair values of TBA mortgage-backed securities are measured using valuations from investors for mortgage-backed securities with similar characteristics (“Level 2”).

The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments.

3 unchanged sentences

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

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 March 31, 2022, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.07 % to 0.65 % with a weighted average increase of 0.13 %.

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 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

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, segregated by the level of the valuation inputs within the fair value hierarchy.

Balance as of

September 30,

Fair Value at March 31, 2022 Using

Quoted Prices

Available for sale debt securities:

Treasury securities and

obligations of U.S.

corporations and agencies

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

10 unchanged sentences

Total equity securities

Fair Value at September 30, 2021 Using

Balance as of

September 30,

Quoted Prices

Loans held for sale

3 unchanged sentences

TBA mortgage-backed securities

Balance as of

Fair Value at March 31, 2022 Using

Quoted Prices

Interest rate lock commitments

3 unchanged sentences

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

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.

Fair Value at December 31, 2021 Using

2 unchanged sentences

Available for sale debt securities:

Treasury securities and

obligations of U.S.

corporations and agencies

Treasury securities and obligations of U.S.

Government 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:

Interest rate swap contracts

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

Total derivative financial liabilities

(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:

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 three months ended March 31, 2022 and the year ended December 31, 2021.

The following tables present additional information about financial assets and liabilities measured at fair value at March 31, 2022 and December 31, 2021 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value.

The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses related to assets still held at the reporting date are recorded in Income from mortgage banking activities in the Consolidated Statements of Income.

Loans held for sale

September 30,

Balance, beginning of period

Total gains or losses during the period recognized in earnings

Transfers in and/or out of Level 3

Balance, end of period

The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

The amount of total gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

Derivative Financial Assets

TBA Securities

September 30,

Balance, beginning of period

1 unchanged sentence

Balance, end of period

The amount of total gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

Derivative Financial Assets

Interest Rate Lock

September 30,

Balance, beginning of period

1 unchanged sentence

Balance, end of period

The amount of total gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

Derivative Financial Liabilities

Forward Sales Commitments

September 30,

Balance, beginning of period

1 unchanged sentence

Balance, end of period

The amount of total gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

Derivative Financial Liabilities

TBA Securities

Balance, beginning of period

Transfers other

Balance, end of period

The amount of total gains for the period included in earnings (or

changes in net assets) attributable to the change in unrealized gains

or losses relating to assets still held at reporting date

Derivative Financial Liabilities

Interest Rate Lock

September 30,

Balance, beginning of period

1 unchanged sentence

Balance, end of period

The amount of total gains for the period included in earnings (or

changes in net assets) attributable to the change in unrealized gains

or losses relating to assets still held at reporting date

Fair Value Option

As of January 1, 2021, United elected the fair value option for new loans held for sale originated in its community banking segment after that date to mitigate a divergence between accounting losses and economic exposure.

Prior to January 1, 2021, United elected the fair value option only for its loans held for sale in its mortgage banking segment.

The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:

Three Months Ended

September 30, 2021

March 31, 2022

Three Months Ended

September 30, 2020

Income from mortgage banking activities

Nine Months Ended

September 30, 2021

Nine Months Ended

September 30, 2020

March 31, 2021

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:

September 30, 2021

March 31, 2022

December 31, 2021

1 unchanged sentence

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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

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

accounting or write-downs of individual assets.

1 unchanged sentence

Loans held for sale

Prior to January 1, 2021, loans held for sale within the community banking segment that were delivered on a best efforts basis were carried at the lower of cost or fair value.

As previously mentioned, United elected the fair value option for all loans held for sale as of January 1, 2021.

Under the lower of cost or fair value accounting method, the fair value of loans held for sale within the community banking segment was based on the price secondary markets offered at the time for similar loans using observable market data which was not materially different than cost due to the short duration between origination and sale (“Level 2”).

As such, United recorded any fair value adjustments for these loans held for sale on a nonrecurring basis.

Gains and losses on sale of loans were recorded within income from mortgage banking activities on the Consolidated Statements of Income.

Loans held for sale within the community banking segment that are delivered on a best efforts basis are carried at the lower of cost or fair value.

The fair value is based on the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between

origination and sale (“Level 2”).

As such, United records any fair value adjustments for these loans held for sale on a nonrecurring basis.

No nonrecurring fair value adjustments were recorded on loans held for sale during the year ended March 31, 2022.

Gains and losses on sale of loans are recorded within income from mortgage banking activities on the Consolidated Statements of Income.

Individually assessed loans

14 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 Broker’s Price Opinion (i.e.

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

BPO), is obtained.

11 unchanged sentences

Intangible Assets

For United, intangible assets consist primarily of goodwill and core deposit intangibles.

For United, intangible assets consist of goodwill and core deposit intangibles.

Goodwill is tested for impairment at least annually or sooner if indicators of impairment exist.

Goodwill impairment would be defined as the difference between the recorded value of goodwill (i.e.

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.

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.

If United elects to bypass this qualitative analysis, or concludes via qualitative analysis that it is more-likely-than-not

that the fair value of a reporting unit is less than its carrying value, United may use either a market or income quantitative approach, whichever is more practical, to determine the fair value of the reporting unit to compare to its carrying value as step one.

If the fair value is greater than the carrying value, then the reporting unit’s goodwill is deemed not to be impaired.

If the fair value is less than the carrying value, then a second step is performed which measures the amount of impairment by comparing the carrying amount of the goodwill to its implied fair value.

If the implied fair value of the goodwill exceeds the carrying amount, there is no impairment.

If the carrying amount exceeds the implied fair value of goodwill, an impairment charge is recorded for the excess.

that the fair value of a reporting unit is less than its carrying value, United may use either a market or income quantitative approach to determine the fair value of the reporting unit.

If the fair value of the reporting unit is less than its carrying value, an impairment charge would be recorded for the difference, not to exceed the amount of goodwill allocated to the reporting unit.

At each reporting date, the Company considers potential indicators of impairment.

5 unchanged sentences

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 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 (

No other fair value measurement of intangible assets was made during the first three months of 2022 and 2021.

Mortgage Servicing Rights (“MSRs”):

A mortgage servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans are expected to more than adequately compensate the Company for performing the servicing.

The Company initially measures servicing assets and liabilities retained related to the sale of residential loans held for sale (“mortgage servicing rights”) at fair value, if practicable.

For subsequent measurement purposes, the Company measures servicing assets and liabilities based on the lower of cost or market quarterly on a nonrecurring basis.

The Company initially measures servicing assets and liabilities retained related to the sale of residential loans held for sale (“mortgage servicing rights”) at fair value.

For subsequent measurement purposes, the Company measures servicing assets and liabilities using the amortization method on a quarterly basis.

The quarterly determination of fair value of servicing rights is provided by a third party and is estimated using a present value cash flow model.

2 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 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 %;

the net servicing fee was 0.26 %;

and the delinquency rate, including loans on forbearance was 2.96 %.

For December 31, 2020, the average range of discount rates was 9.50 % to 14.07 % with a weighted average discount rate of 10.62 %;

the average range of constant prepayment rates was 7.98 % to 18.42 % with a weighted average prepayment rate of 14.60 %;

the net servicing fee was 0.26 %;

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

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.

For the unobservable inputs used in the valuation of mortgage servicing rights at March 31, 2022 and December 31, 2021, refer to Note 8 of these Notes to Consolidated Financial Statements.

The Company did no t record any temporary impairment of mortgage servicing rights in the quarter ended March 31, 2022 and 2021.

The following table summarizes United’s financial assets that were measured at fair value on a nonrecurring basis during the period:

Balance as of

September 30, 2021

Carrying value at September 30, 2021

March 31, 2022

Carrying value at March 31, 2022

Quoted Prices

5 unchanged sentences

Quoted Prices

Loans held for sale

Individually assessed loans

7 unchanged sentences

If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data.

Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data.

Third party vendors compile prices from various sources and may determine the

fair value of identical or similar securities by using pricing models that consider observable market data.

Any securities held to maturity, not valued based upon the methods above, are valued based on a discounted cash flow methodology using appropriately adjusted discount rates reflecting nonperformance and liquidity risks.

16 unchanged sentences

Quoted Prices

September 30, 2021

March 31, 2022

Cash and cash equivalents

9 unchanged sentences

Derivative financial liabilities

Fair Value Measurements

Quoted Prices

December 31, 2021

14 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.

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 i

s 2,300,000 .

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

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

6 unchanged sentences

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 th e

2020 LTI Plan.

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.

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 of $ 2,061 and $ 1,688 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the first quarter of 2022 and 2021, 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 September 30, 2021, and the changes during the first nine months of 2021 are presented below:

Nine Months Ended September 30, 2021

A summary of activity under United’s stock option plans as of March

2022 , and the changes during the first three months of

2022 are presented below:

Three Months Ended March 31, 2022

Weighted Average

1 unchanged sentence

Forfeited or expired

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:

Outstanding at March 31, 2022

Exercisable at March 31, 2022

The following table summarizes the status of United’s nonvested stock option awards during the first three months of 2022:

Weighted-Average

2 unchanged sentences

Forfeited or expired

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.

Nonvested at March 31, 2022

During the three months ended March 31, 2022 and 2021, 258,574 and 145,621 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for the three months ended March 31, 2022 and 2021 were issued from authorized and unissued stock.

The total intrinsic value of options exercised under the Plans during the three months ended March 31, 2022 and 2021 was $ 3,856 and $ 1,408 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 September 30, 2021:

The following summarizes the changes to United’s nonvested restricted common shares for the period ended March 31, 2022:

Weighted-Average

Grant Date Fair Value

Nonvested at January 1, 2022

Nonvested at September 30, 2021

Nonvested at March 31, 2022

Restricted Stock Units

1 unchanged sentence

These awards help align the interests of these employees with the interests of the shareholders of United by providing economic value directly related to the performance of the Company.

These RSU grants could be time-vested RSUs, performance-vested RSUs, or a combination of both.

These RSU grants could be time-vested RSUs, performance-vested RSUs, or a

combination of both.

Currently, time-vested RSUs vest ratably over three years from the date of grant.

10 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 nine months of 2021:

The following table summarizes the status of United’s nonvested RSUs during the first three months of 2022:

Weighted-Average

Grant Date Fair Value

Nonvested at January 1, 2022

Forfeited or expired

Nonvested at September 30, 2021

Nonvested at March 31, 2022

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 nine months of 2021.

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

No discretionary contributions were made during the first quarter of 2022 and 2021.

Included in accumulated other comprehensive income at December 31, 2021 are unrecognized actuarial losses of $ 44,370 ($ 34,032 net of tax) that have not yet been recognized in net periodic pension cost.

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

Three Months Ended

Nine Months Ended

Net periodic pension cost for the three months ended March 31, 2022 and 2021 included the following components:

Three Months Ended March 31

Interest cost

1 unchanged sentence

Recognized net actuarial loss

Net periodic pension cost

Net periodic pension (benefit) cost

Weighted-Average Assumptions:

3 unchanged sentences

Rate of Compensation Increase (ages 40-54)

Rate of Compensation Increase (prior to age 45)

Rate of Compensation Increase (otherwise)

1 unchanged sentence

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

As of March 31, 2022 and 2021, the total amount of accrued interest related to uncertain tax positions was $ 753 and $ 695 , 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 20.39 % 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.

United’s effective tax rate was 19.75 % for the first quarter of 2022 and 20.50 % for the first quarter of 2021.

COMPREHENSIVE INCOME

The components of total comprehensive income for the thr e

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

The components of total comprehensive income for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended

Nine Months Ended

Available for sale (“AFS”) securities:

Change in net unrealized gain on AFS securities arising during the period

Change in net unrealized loss on AFS securities arising during the period

Related income tax effect

Net reclassification adjustment for gains included in net income

Related income tax expense

Related income tax effect

Net effect of AFS securities on other comprehensive income

11 unchanged sentences

Total Comprehensive Income

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

The components of accumulated other comprehensive income for the three months ended March 31, 2022 are as follows:

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

For the Nine Months Ended September 30, 2021

For the Three Months Ended March 31, 2022

Balance at January 1, 2022

2 unchanged sentences

Net current-period other comprehensive income, net of tax

Balance at September 30, 2021

Balance at March 31, 2022

All amounts are net-of-tax.

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Nine Months Ended September 30, 2021

For the Three Months Ended March 31, 2022

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

Nine Months Ended

Distributed earnings allocated to common stock

2 unchanged sentences

Average common shares outstanding

Equivalents from stock awards

Common stock equivalents

Average diluted shares outstanding

1 unchanged sentence

Earnings per diluted common share

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.

Antidilutive stock options and restricted stock outstanding of 1,143,182 for the three months ended March 31, 2022 were excluded from the earnings per diluted common share calculation as compared to 1,373,241 for the three months ended March 31, 2021.

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 st r

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

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

United’s business practices include relationships with certain VIEs.

For United, the business purpose of these relationships primarily consists of funding activities in the form of issuing trust preferred securities.

United currently sponsors nineteen statutory business trusts that were created for the purpose of raising funds that originally qualified for Tier I regulatory capital.

United currently sponsors twenty statutory business trusts that were created for the purpose of raising funds that originally qualified for Tier I regulatory capital.

As previously discussed, these trusts now are considered Tier II regulatory capital.

8 unchanged sentences

Issuance Date

Capital Securities Issued

Securities Issued

Stated Interest Rate

2 unchanged sentences

December 17, 2003

3-month LIBOR + 2.85%

LIBOR + 2.85%

December 17, 2033

49 unchanged sentences

March 15, 2035

Carolina Financial Capital Trust

Carolina Financial Capital Trust I

December 19, 2002

1 unchanged sentence

December 31, 2032

Carolina Financial Capital Trust

Issuance Date

Securities Issued

Stated Interest Rate

Maturity Date

Carolina Financial Capital Trust II

November 5, 2003

13 unchanged sentences

September 30, 2033

BOE Statutory Trust I

December 12, 2003

LIBOR + 3.00%

December 12, 2033

United, through its banking subsidiary, also makes limited partner equity investments in various low income housing and community development partnerships sponsored by independent third-parties.

4 unchanged sentences

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

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

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 m o

rtgage banking segment interest based on the 30-day

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

These transactions are eliminated in the consolidation process.

The Company does not have any operating segments other than those reported.

The “Other” category consists of financial information not directly attributable to a specific segment, including interest income from investments and net securities gains or losses of parent companies and their non-banking

subsidiaries, interest expense related to subordinated notes of unconsolidated subsidiaries as well as the elimination of non-segment

subsidiaries, interest expense related to subordinated notes of unconsolidated subsidiaries as well as the elimination of

related intercompany transactions such as management fees.

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 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 losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

At and For the Three Months Ended September 30, 2020

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

At and For the Nine Months Ended September 30, 2021

Information about the reportable segments and reconciliation of this information to the consolidated financial statements at and for the three months ended March 31, 2022 and 2021 is as follows:

At and For the Three Months Ended March 31, 2022

Net interest income

4 unchanged sentences

Average assets (liabilities)

At and For the Nine Months Ended September 30, 2020

At and For the Three Months Ended March 31, 2021

Net interest income

5 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