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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 489 added, 368 removed, 1531 unchanged (36% of the section changed)

FINANCIAL STATEMENTS (UNAUDITED)

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)

The June 30, 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 and six months ended June 30, 2022 and 2021, the related consolidated statement of changes in shareholders’ equity for the three and six months ended June 30, 2022 and 2021, the related condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021, and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS

UNITED BANKSHARES, INC.

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Total cash and cash equivalents

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)

Securities available for sale at estimated fair value (amortized cost-$ 5,153,285 at June 30, 2022 and $ 4,031,494 at December 31, 2021, allowance for credit losses of $ 0 at June 30, 2022 and December 31, 2021)

Securities held to maturity, net of allowance for credit losses of $ 18 at June 30, 2022 and $ 19 at December 31, 2021 (estimated fair value-$ 1,020 at June 30, 2022 and December 31, 2021)

Equity securities at estimated fair value

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Operating lease right-of-use

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

Mortgage servicing rights, net of valuation allowance of $ 0 at June 30, 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

Accrued interest receivable, net of allowance for credit losses of $ 0 at June 30, 2022 and $ 8 at December 31, 2021

Noninterest-bearing

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issued- 141,846,451

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

and 141,360,266 at June 30, 2022 and December 31, 2021, respectively, including 7,265,805 and 4,967,508 shares in treasury at June 30, 2022 and December 31, 2021, respectively

Retained earnings

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(Dollars in thousands, except per share data)

Three Months Ended March 31

Three Months Ended

Six Months Ended

Interest income

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Mortgage loan servicing income

Net investment securities (losses) gains

Net investment securities gains

Total other income

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Other real estate owned (“OREO”) expense

Net gains on the sales of OREO properties

Equipment expense

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(Dollars in thousands, except per share data)

Three Months Ended March 31

Three Months Ended

Six Months Ended

Earnings per common share:

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Three Months Ended

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

Six 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 (loss) income, net of tax

See notes to consolidated unaudited financial statements

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

UNITED BANKSHARES, INC.

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(Dollars in thousands, except per share data)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Comprehensive

(Loss) Income

Income (Loss)

Shareholders’

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Comprehensive income:

Other comprehensive loss

Total comprehensive loss

Other comprehensive loss, net of tax

Total comprehensive loss, net of tax

Stock based compensation expense

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Cash dividends ($ 0.36 per share)

Net issuance of common stock under stock-based

compensation plans

( 422,766 shares)

Net issuance of common stock under stock-based compensation plans ( 422,766 shares)

Balance at March 31, 2022

Three Months Ended March 31, 2021

Comprehensive income:

Other comprehensive loss

Total comprehensive loss

Stock based compensation expense

Purchase of treasury stock ( 1,548,767 shares)

Cash dividends ($ 0.36 per share)

Stock grant forfeiture ( 2,445 shares)

Net issuance of common stock under stock-based compensation plans ( 63,419 shares)

Balance at June 30, 2022

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)

Six Months Ended June 30, 2021

Comprehensive

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Cash dividends ($ 0.35 per share)

Net issuance of common stock under stock-based

compensation plans

( 326,522 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

Cash dividends ($ 0.35 per share)

Stock grant forfeiture ( 1,971 shares)

Net issuance of common stock under stock-based compensation plans ( 29,767 shares)

Balance at June 30, 2021

See notes to consolidated unaudited financial statements.

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(Dollars in thousands)

Three Months Ended

Six Months Ended

NET CASH PROVIDED BY OPERATING 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

Net change in loans and leases

NET CASH USED IN INVESTING ACTIVITIES

Net change in loans

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

FINANCING ACTIVITIES

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

NET CASH PROVIDED BY FINANCING ACTIVITIES

Increase in cash and cash equivalents

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(Decrease) Increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Actual results could differ from those estimates.

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

The financial statements presented as of June 30, 2022 and 2021 and for the three-month and six-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 March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022 -

03, “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03

clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and requires certain new disclosures for equity securities subject to contractual sale restrictions.

will be effective for United on January 1, 2024 though early adoption is permitted.

The adoption of ASU 2022-03

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

In March 2022, the FASB issued ASU No.

“Troubled Debt Restructurings and Vintage Disclosures”.

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method, which was first introduced in ASU No.

The enhanced guidance further improves the last-of-layer

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.

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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.

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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.

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;

In addition, United took steps to ensure that no new contracts using LIBOR are originated after December 31, 2021.

At this time, United is prioritizing 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.

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The amendments remove three settlement conditions that are required for equity contracts to qualify for the derivative scope exception.

In addition, the ASU expands disclosure requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share

In addition, the ASU expands

disclosure requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share

calculations that are impacted by the amendments.

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MERGERS AND ACQUISITIONS

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

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

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”).

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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 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.

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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.

At June 30, 2022, the discount on the trust preferred issuance had an estimated remaining life of 11.75 years and the premiums on the buildings, and interest-bearing deposits each had an average estimated remaining life of 30.75 years, and 4.75 years, respectively.

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.

Also, acquired portfolio loans and leases were evaluated upon acquisition and classified as either PCD, which indicates that the loan has experienced a more-than-insignificant deterioration in credit quality since origination, or non-PCD.

United considered a variety of factors in evaluating the acquired loans and leases for a more-than-insignificant deterioration in credit quality, including but not limited to risk grades, delinquency, nonperforming status, current or previous troubled debt restructurings or bankruptcies, watch list credits and other qualitative factors that indicated a deterioration in credit quality since origination.

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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.

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 $ 3,559 at the

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.

The total fair value mark on the non-PCD

3,559 at the 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

The total fair value mark on the

loans and leases at the Acquisition Date was $

At the Acquisition Date, an initial allowance for expected credit losses of $ 12,288 was recorded with a corresponding charge to the provision for credit losses in the Consolidated Statements of Income.

Subsequent changes in the allowance for credit losses related to PCD and non-PCD

At the Acquisition Date, an initial allowance for expected credit losses of $

12,288 was recorded with a corresponding charge to the provision for credit losses in the Consolidated Statements of Income.

Subsequent changes in the allowance for credit losses related to PCD and

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

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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 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.

The following table presents certain unaudited pro forma information for the results of operations for the first six 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.

In particular, no adjustments have been made to eliminate the amount of Community Bankers Trust’s provision for credit losses for the first six 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

Six Months Ended

June 30, 2021

Total Revenues (1)

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

March 31, 2022

June 30, 2022

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

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Other corporate securities

United excludes

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.

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debt securities.

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.

The table above excludes accrued interest receivable of $ 20,039 and $ 15,353 at June 30, 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 June 30, 2022 and December 31, 2021.

Less than 12 months

12 months or longer

March 31, 2022

June 30, 2022

Treasury securities and obligations of U.S.

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Three Months Ended

Six Months Ended

Proceeds from sales and calls

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Gross realized losses

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.

At June 30, 2022, gross unrealized losses on available for sale securities were $ 341,906 on 1,374 securities of a total portfolio of 1,543 available for sale securities.

Securities with the most significant gross unrealized losses at June 30, 2022 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities, asset-backed securities and other corporate 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.

Management believes the significant amount of gross unrealized losses on available for sale securities at June 30, 2022 was primarily the result of rising interest rates and does not reflect any expected credit losses.

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 $ 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.

The total amortized cost of available for sale state and political subdivision securities was $ 836,622 at June 30, 2022.

As of June 30, 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 June 30, 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 March 31, 2022.

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

The total amortized cost of available for sale agency mortgage-backed securities was $ 2,111,407 at June 30, 2022.

Of the $ 2,111,407 amount, $ 686,470 was related to agency commercial mortgage-backed securities and $ 1,424,937 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 March

Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at June 30, 2022.

residential mortgage-backed securities

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The total amortized cost of available for sale non-agency

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

residential mortgage-backed securities was $ 114,692 at June 30, 2022.

Of the $ 114,692 , 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 March 31, 2022.

residential mortgage-backed securities had credit losses at June 30, 2022.

Asset-backed securities

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.

As of June 30, 2022, United’s asset-backed securities portfolio had a total amortized cost balance of $ 953,347 .

100 % of the portfolio was investment grade rated as of June 30, 2022.

Approximately 31 % 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 69 % of the portfolio relates to collateralized loan obligation securities that are all AAA rated.

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

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

Single issue trust preferred securities

The majority of United’s single issue trust preferred portfolio consists of obligations from large cap banks (i.e.

banks with market capitalization in excess of $ 10 billion).

market capitalization in excess of $ 10 billion).

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 March 31, 2022 consisted of $ 8,458 in investment grade bonds, $ 3,075 in split rated bonds, and $ 5,771 in unrated bonds.

The amortized cost of available for sale single issue trust preferred securities as of June 30, 2022 consisted of $ 8,461 in investment grade bonds, $ 3,078 in split rated bonds, and $ 5,777 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 first quarter of 2022, it was determined that none of the single issue trust preferred securities had credit losses.

Corporate securities

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

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

Other corporate securities

As of June 30, 2022, United’s other corporate securities portfolio had a total amortized cost balance of $ 617,171 .

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

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

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

Based upon management’s analysis and judgment, it was determined that none of the corporate securities had credit losses at June 30, 2022.

The amortized cost and estimated fair value of securities available for sale at June 30, 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.

March 31, 2022

June 30, 2022

December 31, 2021

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

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

The fair value of United’s equity securities was $ 13,513 at June 30, 2022 and $ 12,404 at December 31, 2021.

Three Months Ended

Six Months Ended

Net gains recognized during the period on equity securities sold

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Other investment securities

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.

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

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

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 1,636,234 and $ 1,871,328 at June 30, 2022 and December 31, 2021, respectively.

LOANS AND LEASES

Major classes of loans and leases are as follows:

March 31, 2022

June 30, 2022

December 31, 2021

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Total gross loans

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.

The table above does not include loans held for sale of $ 220,689 and $ 504,416 at June 30, 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.

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.

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 $ 25,430 and $ 32,990 at June 30, 2022 and December 31, 2021, respectively.

CREDIT QUALITY

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

As of 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

As of June 30, 2022, United has 40 eligible loan modifications in deferral under section 4013, “Temporary Relief from Troubled Debt Restructurings,” of the CARES Act on $ 2,031 of loans outstanding, compared to 188 eligible loan modifications in deferral on $ 18,039 of loans outstanding at December 31, 2021.

As of June 30, 2022, United had TDRs of $ 25,504 as compared to $ 35,856 as of December 31, 2021.

Of the $ 25,504 aggregate balance of TDRs at June 30, 2022, $ 11,298 was on nonaccrual, $ 3,162 was 90 days or more past due and $ 140 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

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 past due.

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

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:

As of June 30, 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 six months of 2022, advances of $ 65 were made to this debtor under a loan that had been previously modified.

The following tables sets forth the balances of TDRs at June 30, 2022 and December 31, 2021 and the reasons for modification:

Reason for modification

March 31, 2022

June 30, 2022

December 31, 2021

5 unchanged sentences

Change in terms

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.

The following table sets forth United’s troubled debt restructurings that have been restructured during the three months ended June 30, 2022 and 2021, segregated by class of loans:

Troubled Debt Restructurings

For the Three Months Ended

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

Commercial real estate:

5 unchanged sentences

Other consumer

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:

The following table sets forth United’s troubled debt restructurings that have been restructured during the six months ended June 30, 2022 and 2021, segregated by class of loans:

Troubled Debt Restructurings

For the Six Months Ended

June 30, 2022

June 30, 2021

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, based on their post-modification outstanding recorded balance, that have been restructured during the three and six months ended June 30, 2022 and 2021, segregated by the reason for modification:

Three Months Ended

Six Months Ended

Reason for modification

2 unchanged sentences

Forgiveness of principal

Concession of principal and term

Concession of principal and termp

Transfer of asset

1 unchanged sentence

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

March 31, 2022

The following table presents troubled debt restructurings, by class of loan, that were restructured during the twelve-month period ended June 30, 2022 and had charge-offs during the six months ended June 30, 2022.

No charge-offs were recorded during the three months ended June 30, 2022.

The recorded investment amounts presented were as of the June 30, 2022 balance sheet date.

Six Months Ended

June 30, 2022

Troubled Debt Restructurings

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

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 June 30, 2021 and had charge-offs during the three and six months ended June 30, 2021.

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

Three Months Ended

March 31, 2021

June 30, 2021

Six Months Ended

June 30, 2021

Troubled Debt Restructurings

8 unchanged sentences

Age Analysis of Past Due Loans and Leases

As of March 31, 2022

As of June 30, 2022

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

6 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

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

At March 31, 2022

At June 30, 2022

At December 31, 2021

5 unchanged sentences

Other consumer

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

Interest income recognized on nonaccrual loans was insignificant during the three and six months ended June 30, 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 March 31, 2022 and December 31, 2021:

Collateral Dependent Loans and Leases

At March 31, 2022

At June 30, 2022

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

6 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

32 unchanged sentences

Commercial Real Estate – Owner-occupied

As of June 30, 2022

Origination Year

1 unchanged sentence

amortized cost

As of March 31, 2022

Revolving loans

Internal Risk Grade:

17 unchanged sentences

amortized cost

As of March 31, 2022

As of June 30, 2022

Internal Risk Grade:

6 unchanged sentences

amortized cost

loans and leases

As of December 31, 2021

10 unchanged sentences

loans and leases

As of March 31, 2022

As of June 30, 2022

Internal Risk Grade:

4 unchanged sentences

Term Loans and leases

Origination Year

Revolving loans

1 unchanged sentence

loans and leases

Origination Year

As of December 31, 2021

5 unchanged sentences

Residential Real Estate

Origination Year

Revolving loans

As of March 31, 2022

amortized cost

Origination Year

As of June 30, 2022

Internal Risk Grade:

3 unchanged sentences

Current-period net charge-offs

Origination Year

Revolving loans

amortized cost

Origination Year

As of December 31, 2021

5 unchanged sentences

Construction and Land Development

Origination Year

Revolving loans

amortized cost

As of March 31, 2022

Origination Year

As of June 30, 2022

Internal Risk Grade:

3 unchanged sentences

Current-period net charge-offs

Origination Year

Revolving loans

amortized cost

Origination Year

As of December 31, 2021

4 unchanged sentences

YTD net charge-offs

Origination Year

Revolving loans

amortized cost

As of March 31, 2022

Origination Year

As of June 30, 2022

Internal Risk Grade:

3 unchanged sentences

Current-period net charge-offs

Origination Year

Revolving loans

amortized cost

Origination Year

As of December 31, 2021

5 unchanged sentences

Other Consumer

Term Loans Origination Year

Revolving loans

amortized cost

As of March 31, 2022

Origination Year

As of June 30, 2022

Internal Risk Grade:

3 unchanged sentences

Current-period net charge-offs

Term Loans Origination Year

Revolving loans

amortized cost

Origination Year

As of December 31, 2021

4 unchanged sentences

YTD net charge-offs

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.

At June 30, 2022 and December 31, 2021, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 13,847 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 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.

At June 30, 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

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.

All disclosures as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 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.

6 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 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.

Accrued interest receivable was $ 50,847 ( no allowance for credit losses) and $ 49,029 (net of an allowance for credit losses of $ 8

) at June 30, 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 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.

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 June 30, 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 March 31, 2022 and December 31, 2021:

The following table represents the accrued interest receivable as of June 30, 2022 and December 31, 2021:

Accrued Interest Receivable

At March 31, 2022

At June 30, 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 ended March 31, 2022 and 2021:

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 and six months ended June 30, 2022 and 2021:

Accrued Interest Receivables Written Off by Reversing Interest Income

Three Months Ended

Six Months Ended

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Other consumer

31 unchanged sentences

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

The reserve for lending-related commitments of $ 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 reserve for lending-related commitments of $ 42,579 and $ 31,442 at June 30, 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 March 31, 2022, the allowance for credit losses decreased from December 31, 2021 primarily due to better performance trends within the loan portfolio.

United continuously evaluates any risks which may impact its loan and lease portfolios.

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

– This includes portfolio trends related to business conditions;

past due, nonaccrual, and graded loans and leases;

and concentrations.

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

– This includes portfolio trends related to economic and business conditions;

past due, nonaccrual, and adversely classified loans and leases;

and concentrations of credit.

Current conditions

– 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.

– United considered the impact of inflation, supply chain disruptions, rising interest rates, increased oil and gas prices 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

– The forecast is determined on a portfolio-by-portfolio

– The forecast is

determined on a

portfolio-by-portfolio

basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables.

1 unchanged sentence

Assumptions for the economic variables were the following:

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.

The forecast for real GDP shifted downward in the second quarter, from a projection of 2.80 % for 2022 as of mid-March

2022 to 1.70 % for 2022 as of mid-June

with a level future trendline as compared to the first quarter of 2022.

The unemployment rate forecast shifted upward compared to the first quarter of 2022 with an increasing trend expected throughout 2024.

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

1 unchanged sentence

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

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

For the Three Months Ended June 30, 2022

Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

2 unchanged sentences

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

For the Six Months Ended June 30, 2022

Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

Beginning balance

Ending balance

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

For the Year Ended December 31, 2021

Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

4 unchanged sentences

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

March 31, 2022

June 30, 2022

Community Banking

17 unchanged sentences

Goodwill not subject to amortization

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

United incurred amortization expense of $ 1,379 and $ 2,758 for the three and six months ended June 30, 2022 as compared to $ 1,467 and $ 2,933 for the three and six months ended June 30, 2021, respectively.

The following table provides a reconciliation of goodwill:

Goodwill at December 31, 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.

Addition to goodwill from Community Bankers Trust acquisition

Goodwill at June 30, 2022

The addition during the first six months of 2022 to goodwill from the Community Bankers Trust acquisition was due mainly to a measurement period adjustment to establish a reserve for income tax contingencies that existed at the time of the acquisition.

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.

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 %.

The unpaid principal balances of loans serviced for others were approximately $ 3,534,607 at June 30, 2022 and $ 3,698,998 at December 31, 2021.

The estimated fair value of the mortgage servicing rights was $ 41,748 and $ 27,355 at June 30, 2022 and December 31, 2021, respectively.

The estimated fair value of servicing rights at June 30, 2022 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 10.50 % to 11.00 % with a weighted average discount rate of 10.61 %, average constant prepayment rates (“CPR”) ranging from 6.66 % to 10.99 % with a weighted average prepayment rate of 7.54 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.90 %.

% 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.

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

March 31, 2022

The following presents the activity in mortgage servicing rights, including their valuation allowance for the three and six months ended June 30, 2022 and 2021:

Three Months Ended

March 31, 2021

Six Months Ended

MSRs beginning balance

Addition from acquisition of subsidiary

Amount capitalized

6 unchanged sentences

MSRs, net of valuation allowance

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

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 and six months ended June 30, 2022.

The Company recorded a $ 250 temporary impairment, net of recoveries on mortgage servicing rights for the three and six months ended June 30, 2021.

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

17 unchanged sentences

The components of lease expense were as follows:

Three Months Ended

Classification

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

Operating lease cost

3 unchanged sentences

Net lease cost

Classification

June 30, 2022

June 30, 2021

Operating lease cost

Net occupancy expense

Sublease income

Net occupancy expense

Net lease cost

Supplemental balance sheet information related to leases was as follows:

Classification

March 31, 2022

June 30, 2022

December 31, 2021

4 unchanged sentences

Other information related to leases was as follows:

March 31, 2022

June 30, 2022

Weighted-average remaining lease term:

4 unchanged sentences

Three Months Ended

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 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 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:

ROU assets obtained in the exchange for lease liabilities

Six Months Ended

June 30, 2022

June 30, 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

Total lease payments

1 unchanged sentence

SHORT-TERM BORROWINGS

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

March 31, 2022

At June 30, 2022 and December 31, 2021, short-term borrowings were as follows:

June 30, 2022

December 31, 2021

2 unchanged sentences

Total short-term borrowings

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

Securities 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.

4 unchanged sentences

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

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

United has a $ 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 is renewable on a

360 day basis and carries 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.

2022 , United had

no outstanding balance under this credit.

At June 30, 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 March 31, 2022, United had an unused borrowing amount of approximately $ 7,668,153 available subject to delivery of collateral after certain trigger points.

At June 30, 2022, United had an unused borrowing amount of approximately $ 7,679,664 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 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.

At June 30, 2022, $ 510,918 of FHLB advances with a weighted-average contractual interest rate of 1.29 % and a weighted-average effective interest rate of 0.42 % are scheduled to mature within the next three

The weighted-average effective rate considers the effect of any interest rate swaps designated as cash flow hedges outstanding at June 30, 2022 to manage interest rate risk on its long-term debt.

The scheduled maturities of these FHLB borrowings are as follows:

2026 and thereafter

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.

At June 30, 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.

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

rate subordinated notes in the Carolina Financial Corporation acquisition.

At June 30, 2022 and December 31, 2021, the outstanding balance of the subordinated notes was $ 9,882 and $ 9,872 , respectively.

At June 30, 2022 and December 31, 2021, the outstanding balance of the Debentures was $ 276,161 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.

18 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 $ 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.

United had approximately $ 7,397,308 and $ 6,847,550 of loan commitments outstanding as of June 30, 2022 and December 31, 2021, respectively, approximately 35% of which contractually expire within one year .

Excluded in the June 30, 2022 and December 31, 2021 amounts above are commitments to extend credit of $ 714,635 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.

As of March 31, 2022 and December 31, 2021, United had $ 17,408 and $ 14,774 of commercial letters of credit outstanding, respectively.

As of June 30, 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 $ 155,933 and $ 164,743 as of March 31, 2022 and December 31, 2021, respectively.

United has issued standby letters of credit of $ 156,599 and $ 164,743 as of June 30, 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 $ 1,150 as of March 31, 2022 and December 31, 2021.

United’s mortgage banking segment had a reserve of $ 1,081 and $ 1,150 as of June 30, 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.

3 unchanged sentences

United and its subsidiaries are currently involved in various legal proceedings in the normal course of business.

On at least a quarterly basis, United assesses its liabilities and contingencies in connection with all pending or threatened claims and litigation, utilizing the most recent information available.

On a matter-by-matter basis, an accrual for loss is established for those matters which United believes it is probable that a loss may be incurred and that the amount of such loss can be reasonably estimated.

Once established, each accrual is adjusted as appropriate to reflect any subsequent developments.

Accordingly, management’s estimate will change from time to time, and actual losses may be more or less than the current estimate.

For matters where a loss is not probable, or the amount of the loss cannot be estimated, no accrual is established.

Management is vigorously pursuing all its legal and factual defenses and, after consultation with legal counsel, believes that all such litigation will be resolved with no material effect on United’s financial position.

24 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 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.

As of June 30, 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 $ 13,114 will be reclassified from AOCI as a decrease to interest expense over the next 12-months

following June 30, 2022 related to the cash flow hedges.

As of June 30, 2022, the maximum length of time over which forecasted transactions are hedged is eight 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.

14 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 March 31, 2022.

The total notional amount of interest rate swap derivatives cleared through the LCH include $ 500,000 for asset derivatives as of June 30, 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 March 31, 2022 and December 31, 2021.

Asset Derivatives

March 31, 2022

June 30, 2022

December 31, 2021

1 unchanged sentence

Fair Value Hedges:

Interest rate swap contracts (hedging commercial loans)

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

March 31, 2022

June 30, 2022

December 31, 2021

6 unchanged sentences

Total derivatives designated as hedging instruments

Liability Derivatives

March 31, 2022

December 31, 2021

Derivatives not designated as hedging instruments

3 unchanged sentences

TBA mortgage-backed securities

Oth er liabilities

Other liabilities

Interest rate lock commitments

3 unchanged sentences

Total liability derivatives

The following table represents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value accounting relationship as of March 31, 2022 and December 31, 2021.

Derivatives in Fair Value

Hedging Relationships

Location in the Statement

March 31, 2022

Location in the Statement of

June 30, 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

2 unchanged sentences

Hedging Relationships

Location in the Statement

Location in the Statement of

December 31, 2021

Carrying Amount of

Assets/(Liabilities)

Cumulative Amount of Fair

Value Hedging Adjustment

Included in the Carrying

the Hedged Assets/

(Liabilities)

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

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.

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.

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 months ended March 31, 2022 and 2021 are presented as follows:

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021 are presented as

Three Months Ended

1 unchanged sentence

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

Six Months Ended

Income Statement

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

15 unchanged sentences

Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

When determining the fair value measurements for assets and liabilities, United looks to active and observable markets to price identical assets or liabilities whenever possible and classifies such items in Level 1.

determining the fair value measurements for assets and liabilities, United looks to active and observable markets to price identical assets or liabilities whenever possible and classifies such items in Level 1.

When identical assets and liabilities are no t traded in active markets, United looks to market observable data for similar assets and liabilities and classifies such items as Level 2.

16 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 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.

Upon completing its review of the pricing from third party vendors at June 30, 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 June 30, 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 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”).

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 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 June 30, 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.

4 unchanged sentences

These valuations fall into a Level 2 category.

For residential mortgage loans sold in the mortgage banking segment, the interest rate lock commitments are recorded at fair value 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 interest rate lock commitments are recorded at fair value 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 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 June 30, 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 March 31, 2022 and December 31, 2021, segregated by the level of the valuation inputs within the fair value hierarchy.

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, segregated by the level of the valuation inputs within the fair value hierarchy.

Fair Value at June 30, 2022 Using

Balance as of

Fair Value at March 31, 2022 Using

Quoted Prices

19 unchanged sentences

TBA mortgage-backed securities

Balance as of

Fair Value at March 31, 2022 Using

Quoted Prices

Interest rate lock commitments

1 unchanged sentence

Derivative financial liabilities:

Interest rate swap contracts

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

31 unchanged sentences

Total derivative financial liabilities

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.

There were no transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the six months ended June 30, 2022 and the year ended December 31, 2021.

The following tables present additional information about financial assets and liabilities measured at fair value at June 30, 2022 and December 31, 2021 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value.

Loans held for sale

1 unchanged sentence

Total gains or losses during the period recognized in earnings

Loans held for sale

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

The amount of total (losses) 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

21 unchanged sentences

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

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

2 unchanged sentences

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

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

1 unchanged sentence

Three Months Ended

March 31, 2022

June 30, 2022

Three Months Ended

March 31, 2021

June 30, 2021

Income from mortgage banking activities

Six Months Ended

June 30, 2022

Six Months Ended

June 30, 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:

March 31, 2022

June 30, 2022

December 31, 2021

7 unchanged sentences

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.

No nonrecurring fair value adjustments were recorded on loans held for sale during the year ended June 30, 2022.

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

37 unchanged sentences

United performed its annual goodwill impairment test on the Company’s reporting units as of September 30, 2021.

The goodwill impairment test did not identify any goodwill impairment.

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

The goodwill impairment test did not

identify any goodwill impairment.

In subsequent periods, economic uncertainty and

volatility surrounding COVID-19

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

1 unchanged sentence

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

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

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

Mortgage Servicing Rights (“MSRs”):

6 unchanged sentences

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

For 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.

For the unobservable inputs used in the valuation of mortgage servicing rights at June 30, 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 second quarter and first six months ended June 30, 2022.

The Company recorded a temporary impairment, net of recoveries of $ 250 on mortgage servicing rights in the second quarter and first six months ended June 30, 2021.

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

Fair value at June 30, 2022

Balance as of

March 31, 2022

Carrying value at March 31, 2022

June 30, 2022

Quoted Prices

1 unchanged sentence

Mortgage servicing rights

Fair value at December 31, 2021

Balance as of

December 31, 2021

Carrying value at December 31, 2021

Quoted Prices

8 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

March 31, 2022

June 30, 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

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

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

These awards all relate to the common stock of United.

5 unchanged sentences

director during any calendar year is 10,000 or, if such Award is payable in cash, the Fair Market Value equivalent thereof.

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

The maximum number of shares of restricted stock or shares

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

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

2 unchanged sentences

The 2020 LTI Plan replaces the 2016 LTI Plan.

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 of $ 2,543 and $ 4,604 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the second quarter and first six months of 2022, respectively, as compared to the compensation expense of $ 1,892 and $ 3,580 related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the second quarter and first six months of 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 March

2022 , and the changes during the first three months of

2022 are presented below:

Three Months Ended March 31, 2022

A summary of activity under United’s stock option plans as of June 30, 2022, and the changes during the first six months of 2022 are presented below:

Six Months Ended June 30, 2022

Weighted Average

1 unchanged sentence

Forfeited or expired

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:

Outstanding at June 30, 2022

Exercisable at June 30, 2022

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

Weighted-Average

2 unchanged sentences

Forfeited or expired

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.

Nonvested at June 30, 2022

During the six months ended June 30, 2022 and 2021, 319,573 and 173,945 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for the six months ended June 30, 2022 and 2021 were issued from authorized and unissued stock.

The total intrinsic value of options exercised under the Plans during the six months ended June 30, 2022 and 2021 was $ 4,619 and $ 1,644 respectively.

As of June 30, 2022, the total unrecognized compensation cost related to nonvested stock option awards was $ 753 with a weighted-average expense recognition period of 1.0 years.

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 March 31, 2022:

As of June 30, 2022, the total unrecognized compensation cost related to nonvested restricted stock awards was $ 10,388 with a weighted-average expense recognition period of 1.3 years.

The following summarizes the changes to United’s nonvested restricted common shares for the period ended June 30, 2022:

Weighted-Average

1 unchanged sentence

Nonvested at January 1, 2022

Nonvested at March 31, 2022

Nonvested at June 30, 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 three months of 2022:

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

Weighted-Average

1 unchanged sentence

Nonvested at January 1, 2022

Nonvested at March 31, 2022

Forfeited or expired

Nonvested at June 30, 2022

As of June 30, 2022, the total unrecognized compensation cost related to nonvested restricted stock units was $ 6,810 with a weighted-average expense recognition period of 1.4 years.

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 quarter of 2022 and 2021.

No discretionary contributions were made during the first six months 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 months ended March 31, 2022 and 2021 included the following components:

Three Months Ended March 31

Net periodic pension cost for the three and six months ended June 30, 2022 and 2021 included the following

Three Months Ended

Six Months Ended

Interest cost

1 unchanged sentence

Recognized net actuarial loss

Net periodic pension (benefit) cost

Net periodic pension 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 March 31, 2022 and 2021, the total amount of accrued interest related to uncertain tax positions was $ 753 and $ 695 , respectively.

As of June 30, 2022 and 2021, the total amount of accrued interest related to uncertain tax positions was $ 780 and $ 722 , 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 19.75 % for the first quarter of 2022 and 20.50 % for the first quarter of 2021.

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

COMPREHENSIVE INCOME

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

The components of total comprehensive income for the three and six months ended June 30, 2022 and 2021 are as

Three Months Ended

Six Months Ended

Available for sale (“AFS”) securities:

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

Change in net unrealized (loss) gain on AFS securities arising during

Related income tax effect

Net reclassification adjustment for gains included in net income

Related income tax effect

Related income tax expense

Net effect of AFS securities on other comprehensive income

Cash flow hedge derivatives:

Unrealized gain on cash flow hedge before reclassification to interest expense

Unrealized gain (loss) on cash flow hedge before reclassification to interest expense

Related income tax effect

Net reclassification adjustment for losses included in net income

Net reclassification adjustment for (gains) losses included in net income

Related income tax effect

3 unchanged sentences

Related income tax benefit

Net effect of change in pension plan asset on other comprehensive income

Net effect of change in pension plan asset on other comprehensive

Total change in other comprehensive income

Total Comprehensive Income

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

Total Comprehensive (Loss) Income

The components of accumulated other comprehensive income for the six months ended June 30, 2022 are as

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

For the Three Months Ended March 31, 2022

For the Six Months Ended June 30, 2022

Balance at January 1, 2022

2 unchanged sentences

Net current-period other comprehensive income, net of tax

Balance at March 31, 2022

Balance at June 30, 2022

All amounts are net-of-tax.

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Three Months Ended March 31, 2022

For the Six Months Ended June 30, 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

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Six Months Ended June 30, 2022

Details about AOCI Components

Affected Line Item in the Statement Where

Net Income is Presented

Total before tax

1 unchanged sentence

Cash flow hedge:

Net reclassification adjustment for losses included in net income

Net reclassification adjustment for losses included in net

Interest expense

10 unchanged sentences

Three Months Ended

Six Months Ended

Distributed earnings allocated to common stock

2 unchanged sentences

Average common shares outstanding

Common stock equivalents

Equivalents from stock options

Average diluted shares outstanding

1 unchanged sentence

Earnings per diluted common share

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.

Antidilutive stock options and restricted stock outstanding of 847,758 and 1,144,734 for the three months and six months ended June 30, 2022, respectively, were excluded from the earnings per diluted common share calculation as compared to 468,892 and 978,095 for the three months and six months ended June 30, 2021, respectively.

VARIABLE INTEREST ENTITIES

12 unchanged sentences

The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE.

Information related to United’s statutory trusts is presented in the table below:

Information related to United’s statutory trusts is presented in the table

Issuance Date

4 unchanged sentences

December 17, 2003

LIBOR + 2.85%

3-month LIBOR + 2.85%

December 17, 2033

53 unchanged sentences

December 31, 2032

Issuance Date

Securities Issued

Stated Interest Rate

Maturity Date

Carolina Financial Capital Trust II

24 unchanged sentences

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

As of March 31, 2022

As of June 30, 2022

As of December 31, 2021

14 unchanged sentences

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

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

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

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 months ended March 31, 2022 and 2021 is as follows:

At and For the Three Months Ended March 31, 2022

Information about the reportable segments and reconciliation of this information to the consolidated financial statements at and for the three and six months ended June 30, 2022 and 2021 is as follows:

At and For the Three Months Ended June 30, 2022

Net interest income

4 unchanged sentences

Average assets (liabilities)

At and For the Three Months Ended March 31, 2021

At and For the Three Months Ended June 30, 2021

Net interest income

4 unchanged sentences

Average assets (liabilities)

At and For the Six Months Ended June 30, 2022

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

At and For the Six Months Ended June 30, 2021

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

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