What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-09 · 315 added, 383 removed, 316 unchanged (69% of the section changed)

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Forward-looking statements can be identified by the use of the words “expect,” “may,” “could,” “intend,” “project,” “estimate,” “believe,” “anticipate,” and other words of similar meaning.

Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect, such as statements about the potential impacts of the COVID-19

Therefore, undue reliance

should not be placed upon these estimates and statements.

Therefore, undue reliance should not be placed upon these estimates and statements.

United cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.” United undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

RECENT DEVELOPMENTS

United Bank (the “Bank”), the wholly-owned bank subsidiary of United, has received a Community Reinvestment Act (“CRA”) Performance Evaluation from the Federal Reserve Bank of Richmond (the “FRB”) with a rating of “Needs to Improve.” Based on its performance on the individual components of the CRA exam, the Bank received a rating of “Satisfactory.” These individual components were a “High Satisfactory” rating for the Lending Test, an “Outstanding” rating for the Investment Test and a “High Satisfactory” rating for the Service Test.

The Bank’s final overall rating, however, was downgraded to “Needs to Improve” as a result of a Fair Housing Act violation cited in the Washington DC Metropolitan Statistical Area following a FRB fair lending examination of the Bank and its wholly-owned subsidiary, George Mason Mortgage, LLC.

This matter is also the subject of an investigation by the Department of Justice.

The FRB Performance Evaluation states that “Bank management has taken action to address the deficiencies and committed to taking further voluntary corrective actions to prevent further violations.”

A “Needs to Improve” rating results in restrictions on certain expansionary activities, including certain mergers and acquisitions and the establishment of bank branches.

These restrictions will remain in place until the FRB issues a higher CRA rating following a subsequent CRA examination.

The next CRA examination is expected to commence in October 2022.

The precise timing of the completion of that examination and any results therefrom will not be known until later.

CORONAVIRUS (“COVID-19”)

During 2020, and to a lesser extent in 2021, the COVID-19

pandemic had a severe disruptive impact on the U.S.

CORONAVIRUS (“COVID-19”) PANDEMIC

During 2020, and to a lesser extent in 2021, the COVID-19 pandemic had a severe disruptive impact on the U.S.

and global economy.

As the pandemic is ongoing and dynamic in nature, there are many uncertainties related to COVID-19

including, among other things, the ongoing impact to our customers, employees and vendors;

As the pandemic is ongoing and dynamic in nature, there are many uncertainties related to COVID-19 including, among other things, the ongoing impact to our customers, employees and vendors;

the impact to the financial services and banking industry;

and the impact to the economy as a whole as well as the effect of actions taken, or that may yet be taken, or inaction by governmental authorities to contain the outbreak or to mitigate its impact (both economic and health-related).

Refer to our 2021 Form 10-K

for further information regarding (i) the impact of the COVID-19

pandemic on our operations and our results thereof, as well as the impact on our financial position and (ii) legislative and regulatory actions taken related to the COVID-19

pandemic, particularly as they relate to the banking and financial services industry.

As the COVID-19

pandemic continues to be on-going,

there continues to be uncertainties related to its magnitude, duration and persistent effects.

and the impact to the economy as a whole as well as the effect of actions taken, or that may yet be taken,

or inaction by governmental authorities to contain the outbreak or to mitigate its impact (both economic and health-related).

Refer to our 2021 Form 10-K for further information regarding (i) the impact of the COVID-19 pandemic on our operations and our results thereof, as well as the impact on our financial position and (ii) legislative and regulatory actions taken related to the COVID-19 pandemic, particularly as they relate to the banking and financial services industry.

As the COVID-19 pandemic continues to be on-going, there continues to be uncertainties related to its magnitude, duration and persistent effects.

This is particularly the case with the emergence, contagiousness and threat of new and different strains of the virus as well as the availability, acceptance and effectiveness of vaccines.

However, United is currently unable to fully assess or predict the extent of the effects of COVID-19

on its operations and results in the future as the ultimate impact will depend on factors that are currently unknown and/or beyond our control.

However, United is currently unable to fully assess or predict the extent of the effects of COVID-19 on its operations and results in the future as the ultimate impact will depend on factors that are currently unknown and/or beyond our control.

On December 3, 2021, United acquired 100% of the outstanding common stock of Community Bankers Trust Corporation (“Community Bankers Trust”), a Virginia corporation headquartered in Richmond, Virginia.

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

It also strategically connected our Mid-Atlantic

and Southeast footprints.

It also strategically connected our Mid-Atlantic and Southeast footprints.

The Community Bankers Trust merger was accounted for under the acquisition method of accounting.

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The results of operations of Community Bankers Trust are included in the consolidated results of operations from its date of acquisition.

As a result of the Community Bankers Trust acquisitions, the second quarter and first six months of 2022 were impacted by increased levels of average balances, income, and expense as compared to the second quarter and first six months of 2021.

As a result of the Community Bankers Trust acquisitions, the third quarter and first nine months of 2022 were impacted by increased levels of average balances, income, and expense as compared to the third quarter and first nine months of 2021.

TRANSITION FROM THE LONDON INTERBANK OFFERED RATE (LIBOR)

In 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, publicly announced its intention to stop persuading or compelling banks to submit the rates used to calculate LIBOR after 2021.

ICE Benchmark Administration (the publisher of LIBOR) discontinued publication of the one-week

and two-month

Dollar LIBOR settings on December 31, 2021, and plans to discontinue publication of overnight, one-month,

three-month, six-month,

and twelve-month U.S.

ICE Benchmark Administration (the publisher of LIBOR) discontinued publication of the one-week and two-month U.S.

Dollar LIBOR settings on December 31, 2021, and plans to discontinue publication of overnight, one-month, three-month, six-month, and twelve-month U.S.

Dollar LIBOR settings on June 30, 2023.

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and its wholly-owned subsidiaries, unless otherwise indicated.

Management has evaluated all significant events and transactions that occurred after June 30, 2022, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.

Management has evaluated all significant events and transactions that occurred after September 30, 2022, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.

This discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements and accompanying notes thereto, which are included elsewhere in this document.

USE OF NON-GAAP

FINANCIAL MEASURES

USE OF NON-GAAP FINANCIAL MEASURES

This discussion and analysis contains certain financial measures that are not recognized under GAAP.

Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with each “non-GAAP”

financial measure, certain additional information, including a reconciliation of the non-GAAP

financial measure to the closest comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP

financial measure.

Generally, United has presented a non-GAAP

financial measure because it believes that this measure provides meaningful additional information to assist in the evaluation of United’s results of operations or financial position.

Presentation of a non-GAAP

financial measure is consistent with how United’s management evaluates its performance internally and this non-GAAP

financial measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the banking industry.

Specifically, this discussion contains certain references to financial measures identified as tax-equivalent

(“FTE”) net interest income and return on average tangible equity.

Management believes these non-GAAP

financial measures to be helpful in understanding United’s results of operations or financial position.

Net interest income is presented in this discussion on a tax-equivalent

The tax-equivalent

basis adjusts for the tax-favored

status of income from certain loans and investments.

Although this is a non-GAAP

measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt

Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with each “non-GAAP” financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure.

Generally, United has presented a non-GAAP financial measure because it believes that this measure provides meaningful additional information to assist in the evaluation of United’s results of operations or financial position.

Presentation of a non-GAAP financial measure is consistent with how United’s management evaluates its performance internally and this non-GAAP financial measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the banking industry.

Specifically, this discussion contains certain references to financial measures identified as tax-equivalent (“FTE”) net interest income and return on average tangible equity.

Management believes these non-GAAP financial measures to be helpful in understanding United’s results of operations or financial position.

Net interest income is presented in this discussion on a tax-equivalent basis.

The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments.

Although this is a non-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources.

United uses this measure to monitor net interest income performance and to manage its balance sheet composition.

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This measure, along with others, is used by management to analyze capital adequacy and performance.

However, this non-GAAP

information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP.

Where the non-GAAP

financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP

financial measure, can be found within this discussion and analysis.

Investors should recognize that United’s presentation of this non-GAAP

financial measure might not be comparable to a similarly titled measure at other companies.

However, this non-GAAP information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP.

Where the non-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis.

Investors should recognize that United’s presentation of this non-GAAP financial measure might not be comparable to a similarly titled measure at other companies.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

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Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan and lease losses, the calculation of the income tax provision, and the use of fair value measurements to account for certain financial instruments to be the accounting areas that require the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.

United’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of June 30, 2022 were unchanged from the policies disclosed in United’s Annual Report on Form 10-K

for the year ended December 31, 2021 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

United’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of September 30, 2022 were unchanged from the policies disclosed in United’s Annual Report on Form 10-K for the year ended December 31, 2021 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

FINANCIAL CONDITION

United’s total assets as of June 30, 2022 were $28.78 billion, which was a decrease of $551.01 million or 1.88% from December 31, 2021.

United’s total assets as of September 30, 2022 were $29.05 billion, which was a decrease of $280.43 million or less than 1% from December 31, 2021.

This decrease was mainly due to a decrease of $2.40 billion or 63.91% in cash and cash equivalents and a decrease of $294.34 million or 58.35% in loans held for sale.

These decreases in assets were partially offset by an increase of $777.87 million or 18.11% in investment securities and an increase of $946.75 million or 5.25% in portfolio loans and leases.

Total liabilities decreased $319.43 million or 1.30% from year-end

Deposits decreased $323.61 million or 1.39% and borrowings decreased $21.04 million or 2.22%.

Accrued expenses and other liabilities increased $21.00 million or 10.73% and the allowance for lending-related commitments increased $11.14 million or 35.42%.

These decreases in assets were partially offset by an increase of $627.95 million or 14.62% in investment securities and an increase of $1.68 billion or 9.30% in portfolio loans and leases.

Total liabilities were flat from year-end 2021, decreasing $1.89 million or less than 1%.

Deposits decreased $486.89 million or 2.09%, accrued expenses and other liabilities decreased $8.85 million or 4.52% and the operating lease liability decreased $7.96 million or 9.17%.

Mostly offsetting these decreases in liabilities was a $493.55 million or 52.16% increase in borrowings and an increase of $8.26 million in the allowance for lending-related commitments.

Shareholders’ equity decreased $278.54 million or 5.90%.

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Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2022 decreased $2.10 billion or 55.87% from year-end

Cash and cash equivalents at September 30, 2022 decreased $2.40 billion or 63.91% from year-end 2021.

In particular, interest-bearing deposits with other banks decreased $2.44 billion or 70.27% as United placed less cash in an interest-bearing account with the Federal Reserve.

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Federal funds sold increased $140 thousand or 15.10%.

During the first six months of 2022, net cash of $490.02 million was provided by operating activities while net cash of $2.08 billion and $511.46 million were used in investing and financing activities, respectively.

See the unaudited Consolidated Statements of Cash Flows for data on cash and cash equivalents provided and used in operating, investing and financing activities for the first six months of 2022 and 2021.

Total investment securities at June 30, 2022 increased $777.87 million or 18.11%.

During the first nine months of 2022, net cash of $623.77 million was provided by operating activities while net cash of $2.82 billion and $206.95 million were used in investing and financing activities, respectively.

See the unaudited Consolidated Statements of Cash Flows for data on cash and cash equivalents provided and used in operating, investing and financing activities for the first nine months of 2022 and 2021.

Total investment securities at September 30, 2022 increased $627.95 million or 14.62%.

Securities available for sale increased $605.39 million or 14.97%.

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Securities held to maturity were flat from year-end 2021.

Equity securities were $13.51 million at June 30, 2022, an increase of $1.11 million or 8.94% due mainly to purchases.

Other investment securities increased $6.75 million or 2.82% from year-end

2021 due to purchases of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stock as well as investment tax credits.

Equity securities were $7.31 million at September 30, 2022, a decrease of $5.09 million or 41.04% due mainly to sales.

Other investment securities increased $27.65 million or 11.54% from year-end 2021 due to purchases of Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock as well as investment tax credits.

The following table summarizes the changes in the available for sale securities since year-end 2021:

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net of allowance for credit losses of $19 thousand.

At June 30, 2022, gross unrealized losses on available for sale securities were $341.91 million.

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.

As of June 30, 2022, United’s available for sale mortgage-backed securities had an amortized cost of $2.23 billion, with an estimated fair value of $2.05 billion.

The portfolio consisted primarily of $1.42 billion in agency residential mortgage-backed securities with a fair value of $1.30 billion, $114.69 million in non-agency

residential mortgage-backed securities with an estimated fair value of $108.64 million, and $686.47 million in commercial agency mortgage-backed securities with an estimated fair value of $641.59 million.

As of June 30, 2022, United’s available for sale state and political subdivisions securities had an amortized cost of $836.62 million, with an estimated fair value of $751.08 million.

The portfolio relates to securities issued by various municipalities located throughout the United States, and no securities within the portfolio were rated below investment grade as of June 30, 2022.

As of June 30, 2022, United’s available for sale corporate securities had an amortized cost of $1.59 billion, with an estimated fair value of $1.52 billion.

At September 30, 2022, gross unrealized losses on available for sale securities were $494.53 million.

Securities with the most significant gross unrealized losses at September 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.

As of September 30, 2022, United’s available for sale mortgage-backed securities had an amortized cost of $2.19 billion, with an estimated fair value of $1.92 billion.

The portfolio consisted primarily of $1.42 billion in agency residential mortgage-backed securities with a fair value of $1.22 billion, $122.07 million in non-agency residential mortgage-backed securities with an estimated fair value of $112.88 million, and $656.64 million in commercial agency mortgage-backed securities with an estimated fair value of $589.06 million.

As of September 30, 2022, United’s available for sale state and political subdivisions securities had an amortized cost of $827.08 million, with an estimated fair value of $702.45 million.

As of September 30, 2022, United’s available for sale corporate securities had an amortized cost of $1.57 billion, with an estimated fair value of $1.50 billion.

The portfolio consisted of $17.33 million in single issue trust preferred securities with an estimated fair value of $16.10 million.

In addition to the single issue trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of $961.94 million and a fair value of $930.58 million and other corporate securities, with an amortized cost of $592.13 million and a fair value of $551.10 million.

United’s available for sale single issue trust preferred securities had a fair value of $16.20 million as of June 30, 2022.

United’s available for sale single issue trust preferred securities had a fair value of $16.10 million as of September 30, 2022.

Of the $16.10 million, $7.72 million or 47.94% were investment grade;

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All single issue trust preferred securities are currently receiving full scheduled principal and interest payments.

During the second quarter of 2022, United did not recognize any credit losses on its available for sale investment securities.

Management does not believe that any individual security with an unrealized loss as of June 30, 2022 is impaired.

During the third quarter of 2022, United did not recognize any credit losses on its available for sale investment securities.

Management does not believe that any individual security with an unrealized loss as of September 30, 2022 is impaired.

United believes the decline in value resulted from changes in market interest rates, credit spreads and liquidity, not a deterioration of credit.

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United has the intent and the ability to hold these securities until such time as the value recovers or the securities mature.

As of June 30, 2022, there was no allowance for credit losses related to the Company’s available for sale securities.

As of September 30, 2022, there was no allowance for credit losses related to the Company’s available for sale securities.

However, United acknowledges that any securities in an unrealized loss position may be sold in future periods in response to significant, unanticipated changes in asset/liability management decisions, unanticipated future market movements or business plan changes.

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Loans held for sale

Loans held for sale were $220.69 million at June 30, 2022, a decrease of $283.73 million or 56.25% from year-end

Loan sales in the secondary market exceeded originations during the first six months of 2022.

Loan originations for the first six months of 2022 were $1.49 billion while loans sales were $1.78 billion.

Loans held for sale were $210.08 million at September 30, 2022, a decrease of $294.34 million or 58.35% from year-end 2021.

Loan sales in the secondary market exceeded originations during the first nine months of 2022.

Loan originations for the first nine months of 2022 were $1.76 billion while loans sales were $2.06 billion.

Portfolio Loans

Loans, net of unearned income, increased $946.75 million or 5.25%.

Since year-end

2021, commercial, financial and agricultural loans were flat, decreasing $1.86 million or less than 1%.

In particular, commercial real estate loans decreased $20.65 million or less than 1% while commercial loans (not secured by real estate) increased $18.80 million or less than 1%.

Loans, net of unearned income, increased $1.68 billion or 9.30%.

Since year-end 2021, commercial, financial and agricultural loans increased $158.13 million or 1.42%.

In particular, commercial real estate loans increased $82.77 million or 1.08% while commercial loans (not secured by real estate) increased $75.36 million or 2.18%.

Construction and land development loans increased $609.95 million or 30.28%, residential real estate loans increased $699.19 million or 18.94%, and consumer loans increased $203.91 million or 17.10% due to an increase in indirect automobile financing.

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For a further discussion of loans see Note 4 to the unaudited Notes to Consolidated Financial Statements.

Other assets increased $108.12 million or 46.69% from year-end

Derivative assets increased $30.00 million due to an increase in fair value and deferred tax assets increased $76.23 million due to a decrease in the fair value of available-for-sale

Partially offsetting these increases were decreases of $786 thousand in income tax receivable due to timing differences, $976 thousand in other real estate owned properties (“OREO”) due to sales and write downs, and $2.76 million in core deposit intangibles due to amortization.

Other assets increased $101.88 million or 44.00% from year-end 2021 as a result of a $109.47 million increase in deferred tax assets due to a decrease in the fair value of available-for-sale securities.

Partially offsetting this increase were decreases of $1.25 million in income tax receivable due to timing differences, a $4.04 million in other real estate owned properties (“OREO”) due to sales and write downs, and $4.14 million in core deposit intangibles due to amortization.

Deposits represent United’s primary source of funding.

Total deposits at June 30, 2022 decreased $323.61 million or 1.39%.

In terms of composition, noninterest-bearing deposits were flat, increasing $50.39 million or less than 1% while interest-bearing deposits decreased $374.01 million or 2.60% from December 31, 2021.

Noninterest-bearing deposits, which consist of demand deposit and noninterest bearing money market (“MMDA”) account balances, were flat from year-end

2021, increasing $50.39 million due to an increase in commercial noninterest-bearing deposits.

Interest-bearing deposits consist of interest-bearing checking (“NOW”), regular savings, interest-bearing MMDA, and time deposit account balances.

NOW accounts increased $123.86 million or 3.32% since year-end

2021 as the result of increases of $65.50 million in commercial NOW accounts and $86.24 million in public funds NOW accounts.

Total deposits at September 30, 2022 decreased $486.89 million or 2.09%.

In terms of composition, noninterest-bearing deposits increased $122.26 million or 1.63% while interest-bearing deposits decreased $609.15 million or 3.84% from December 31, 2021.

Noninterest-bearing deposits, which consist of noninterest-bearing demand deposit and noninterest-bearing money market (“MMDA”) account balances, increased $122.26 million from year-end 2021 due to a $228.26 million increase in commercial noninterest-bearing deposits.

Interest-bearing deposits consist of interest-bearing transaction accounts, regular savings, interest-bearing MMDA, and time deposit account balances.

Interest-bearing transaction accounts increased $100.70 million or 1.93% since year-end 2021 as the result of an increase of $132.53 million in nonpersonal interest-bearing transaction accounts partially offset by a $72.95 million decrease in personal interest-bearing transaction accounts.

Regular savings accounts increased $100.26 million or 6.11% mainly as a result of a $89.52 million increase in personal savings accounts and a $10.04 million increase in commercial savings accounts.

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Time deposits under $100,000 decreased $166.66 million or 16.16% from year-end 2021.

This decrease in time deposits under $100,000 was the result of a $90.47 million decrease in fixed rate Certificates of Deposits (“CDs”) under $100,000, a $3.61 million decrease in Certificate of Deposit Account Registry Service (“CDARS”) under $100,000, and a $4.32 million decrease in CDs under $100,000 obtained through the use of deposit listing services.

Since year-end

2021, time deposits over $100,000 decreased $370.75 million or 23.16% as fixed rate CDs decreased $246.06 million, CDARS over $100,000 decreased $59.16 million, public funds CDs over $100,000 decreased $58.24 million, and brokered certificates of deposits decreased $7.06 million.

This decrease in time deposits under $100,000 was the result of a $162.70 million decrease in fixed rate Certificates of Deposits (“CDs”) under $100,000 and a $5.31 million decrease in CDs under $100,000 obtained through the use of deposit listing services.

Since year-end 2021, time deposits over $100,000 decreased $483.04 million or 30.17% as fixed rate CDs decreased $378.23 million, CDARS over $100,000 decreased $43.01 million, public funds CDs over $100,000 decreased $50.79 million, and brokered certificates of deposits decreased $10.52 million.

The table below summarizes the changes by deposit category since year-end 2021:

(Dollars in thousands)

Demand deposits

Interest-bearing checking

Noninterest-bearing accounts

Interest-bearing transaction accounts

Regular savings

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Total deposits

Includes time deposits of $250,000 or more of $446,584 and $640,752 at June 30, 2022 and December 31, 2021, respectively.

Total borrowings at June 30, 2022 decreased $21.04 million or 2.22% since year-end

During the first six months of 2022, short-term borrowings were flat, decreasing $602 thousand or less than 1% due to a decrease in securities sold under agreements to repurchase.

Long-term borrowings decreased $20.43 million or 2.50% from year-end

2021 due to a decrease in long-term advances of $21.28 million.

For December 31, 2021, $1,483,987 was reclassed from noninterest-bearing accounts to interest-bearing transaction accounts.

Includes time deposits of $250,000 or more of $405,717 and $640,752 at September 30, 2022 and December 31, 2021, respectively.

Total borrowings at September 30, 2022 increased $493.55 million or 52.16% since year-end 2021.

During the first nine months of 2022, short-term borrowings increased $13.63 million or 10.58% due to an increase in securities sold under agreements to repurchase.

Long-term borrowings increased $479.91 million or 58.71% from year-end 2021 due to an increase in FHLB advances of $478.65 million.

The table below summarizes the change in the borrowing categories since year-end 2021:

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Short-term securities sold under agreements to repurchase

Long-term FHLB advances

FHLB advances

Subordinated debt

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Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at June 30, 2022 increased $21.00 million or 10.73% from year-end

In particular, a $36.49 million liability related to clearing house variation margin cash collateral on FHLB swaps was recorded during the first six months of 2022 while accrued mortgage escrow liabilities increased $8.46 million.

Partially offsetting these increases was a $5.41 million decrease in business franchise taxes, a $2.63 million decrease in income tax payable, both due to timing differences, and a $5.80 million decrease in incentives payables due to payments.

Accrued expenses and other liabilities at September 30, 2022 decreased $8.85 million or 4.52% from year-end 2021.

In particular, income tax payable decreased $3.21 million, business franchise taxes decreased $2.65 million, both due to timing differences, incentives payables decreased $2.72 million due to payments, and accrued employee expense decreased $5.53 million.

Partially offsetting these decreases was a $1.85 million increase in interest payable due mainly to an increase in FHLB borrowings and rising interest rates, a $7.74 million increase in accrued mortgage escrow liabilities due primarily to a growth in residential real estate loans and a $1.89 million increase in dividends payable.

Shareholders’ Equity

Shareholders’ equity at June 30, 2022 was $4.49 billion, which was a decrease of $231.58 million or 4.91% from year-end

Shareholders’ equity at September 30, 2022 was $4.44 billion, which was a decrease of $278.54 million or 5.90% from year-end 2021.

Retained earnings increased $133.49 million or 9.60% from year-end 2021.

Earnings net of dividends for the first six months of 2022 were $79.47 million.

Accumulated other comprehensive income decreased $242.47 million or 4,960.50% from year-end

2021 due to a decrease of $269.82 million in United’s available for sale investment portfolio, net of deferred income taxes primarily the result of an increase in market interest rates.

Earnings net of dividends for the first nine months of 2022 were $133.49 million.

Accumulated other comprehensive income decreased $347.42 million or 7,107.53% from year-end 2021 due to a decrease of $387.77 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes, primarily the result of an increase in market interest rates.

Partially offsetting this decrease was a $38.36 million increase in the fair value of cash flow hedges, net of deferred income taxes.

The after-tax

accretion of pension costs was $1.28 million for the first six months of 2022.

The after-tax accretion of pension costs was $1.98 million for the first nine months of 2022.

Treasury stock increased $79.78 million or 46.76% from year-end 2021.

During the first six months of 2022, United repurchased 2,259,546 shares of its common stock on the open market under repurchase plans approved by United’s Board of Directors at a cost of $78.37 million or an average price per share of $34.69.

During the first nine months of 2022, United repurchased 2,259,546 shares of its common stock on the open market under repurchase plans approved by United’s Board of Directors at a cost of $78.37 million or an average price per share of $34.69.

RESULTS OF OPERATIONS

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Three Months Ended

Six Months Ended

Nine Months Ended

(Dollars in thousands except per share amounts)

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PER COMMON SHARE :

Net income for the second quarter of 2022 was $95.61 million or $0.71 per diluted share, as compared to $94.84 million or $0.73 per diluted share for the prior year second quarter.

Net income for the first quarter of 2022 was $81.66 million or $0.60 per diluted share.

Net income for the first six months of 2022 was $177.28 million or $1.30 per diluted share compared to $201.73 million or $1.56 per share for the first six months of 2021.

Earnings for the second quarter and first half of 2022, as compared to the second quarter and first half of 2021 decreased primarily due to lower income from mortgage banking activities primarily as a result of a rising rate environment partially offset by increased net interest income due primarily to the acquisition of Community Bankers Trust Corporation (“Community Bankers Trust”).

The increase in earnings for the second quarter of 2022 from the first quarter of 2022 was due mainly to loan growth and net interest margin expansion.

For the second quarter of 2022, United’s annualized return on average assets was 1.32% and return on average shareholders’ equity was 8.33% as compared to 1.41% and 8.69% for the second quarter of 2021.

United’s annualized return on average assets was 1.13% and return on average shareholders’ equity was 6.96% for the first quarter of 2022.

United’s annualized return on average assets for the first six months of 2022 was 1.23% and return on average shareholders’ equity was 7.63% as compared to 1.52% and 9.32% for the first six months of 2021.

For the second quarter and first half of 2022, United’s annualized return on average tangible equity was 14.23% and 12.90%, respectively, as compared to 14.95% and 16.06% for the second quarter and first half of 2021, respectively.

United’s annualized return on average tangible equity was 11.63% for the first quarter of 2022.

Net income for the third quarter of 2022 was $102.59 million or $0.76 per diluted share, as compared to $92.15 million or $0.71 per diluted share for the prior year third quarter.

Net income for the second quarter of 2022 was $95.61 million or $0.71 per diluted share.

Net income for the first nine months of 2022 was $279.86 million or $2.06 per diluted share compared to $293.89 million or $2.27 per diluted share for the first nine months of 2021.

Earnings for the third quarter of 2022 as compared to the third quarter of 2021 increased primarily due to the acquisition of Community Bankers Trust Corporation (“Community Bankers Trust”), organic loan growth and a rising interest rate environment.

Earnings for the first nine months of 2022 as compared to the first nine months of 2021 decreased primarily due to lower income from mortgage banking activities primarily as a result of the rising rate environment The increase in earnings for the third quarter of 2022 from the second quarter of 2022 was due mainly to loan growth and net interest margin expansion.

For the third quarter of 2022, United’s annualized return on average assets was 1.41% and return on average shareholders’ equity was 8.96% as compared to 1.33% and 8.23% for the third quarter of 2021.

United’s annualized return on average assets was 1.32% and return on average shareholders’ equity was 8.33% for the second quarter of 2022.

United’s annualized return on average assets for the first nine months of 2022 was 1.29% and return on average shareholders’ equity was 8.07% as compared to 1.46% and 8.95% for the first nine months of 2021.

For the third quarter and first nine months of 2022, United’s annualized return on average tangible equity was 15.46% and 13.73%, respectively, as compared to 14.03% and 15.36% for the third quarter and first nine months of 2021, respectively.

United’s annualized return on average tangible equity was 14.23% for the second quarter of 2022.

Three Months Ended

Six Months Ended

Nine Months Ended

(Dollars in thousands)

September 30,

Return on Average Tangible Equity:

6 unchanged sentences

[(a) / (b)] x 365/ (c)

Net interest income for the second quarter of 2022 was $214.90 million, which was an increase of $28.39 million, or 15.22%, from the second quarter of 2021.

Net interest income for the first half of 2022 was $406.41 million, an increase of $28.93 million or 7.66% from the first half of 2021.

Mainly, these increases in net interest income for 2022 compared to 2021 were due to the impact of higher average earning assets driven primarily by the Community Bankers Trust acquisition.

Net interest income for the second quarter of 2022 increased $23.40 million, or 12.22%, from the first quarter of 2022.

This increase in net interest income was primarily due to higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets.

The provision for credit losses was a net benefit of $1.81 million and $5.22 million for the second quarter and first half of 2022, respectively, while the provision for credit losses was a net benefit of $8.88 million and $8.74 million for the second quarter and first half of 2021.

The provision for credit losses was a net benefit of $3.41 million for the first quarter of 2022.

The lower net benefit amounts for 2022 compared to 2021 were mainly due to an increase in total loans outstanding.

For the second quarter of 2022, noninterest income was $43.61 million, which was a decrease of $19.26 million or 30.63% from the second quarter of 2021.

Noninterest income for the first six months of 2022 was $89.63 million which was a decrease of $65.81 million or 42.34% from the first six months of 2021.

Noninterest income for the second quarter of 2022 decreased $2.42 million, or 5.25%, from the first quarter of 2022.

Net interest income for the third quarter of 2022 was $240.62 million, which was an increase of $59.04 million, or 32.52%, from the third quarter of 2021.

Net interest income for the first nine months of 2022 was $647.03 million, an increase of $87.97 million or 15.74% from the first nine months of 2021.

Mainly, these increases in net interest income for 2022 compared to 2021 were due to the impact of higher average earning assets, driven primarily by the Community Bankers Trust acquisition and organic loan growth, the impact of rising market interest rates on earning assets and a change in the asset mix to higher earning assets.

Net interest income for the third quarter of 2022 increased $25.72 million, or 11.97%, from the second quarter of 2022.

The increase in net interest income was primarily due to the impact of rising market interest rates on earning assets and a change in the asset mix to higher earning assets.

The provision for credit losses was $7.67 million and $2.45 million for the third quarter and first nine months of 2022, respectively, while the provision for credit losses was a net benefit of $7.83 million and $16.57 million for the third quarter and first nine months of 2021.

The provision for credit losses was a net benefit of $1.81 million for the second quarter of 2022.

The higher amounts for 2022 compared to 2021 were mainly due to an increase in total loans outstanding.

For the third quarter of 2022, noninterest income was $32.75 million, which was a decrease of $35.88 million or 52.28% from the third quarter of 2021.

Noninterest income for the first nine months of 2022 was $122.38 million which was a decrease of $101.69 million or 45.38% from the first nine months of 2021.

Noninterest income for the third quarter of 2022 decreased $10.86 million, or 24.90%, from the second quarter of 2022.

These decreases in noninterest income were primarily due to decreased income from mortgage banking activities due to a lower volume of mortgage loan originations and sales in the secondary market mainly the result of a rising interest rate environment.

For the second quarter of 2022, noninterest expense increased $2.21 million or 1.59% from the second quarter of 2021 due mainly to an increase in the expense for the reserve for unfunded loan commitments as well as higher amounts of certain general operating expenses.

For the first six months of 2022, noninterest expense decreased $7.55 million or 2.62% from the first six months of 2021 mainly due to lower employee compensation expense as a result of lower employee commissions, incentives and overtime related to mortgage banking production.

Noninterest expense for the second quarter of 2022 increased $2.00 million, or 1.44%, from the first quarter of 2022 due mainly to higher amounts of certain general operating expenses including an increase in the expense for reserve for unfunded loan commitments.

Income taxes for the second quarter of 2022 were $23.53 million as compared to $24.46 million for the second quarter of 2021.

Income tax expense was $20.10 million for the first quarter of 2022.

For the first six months of 2022 and 2021 income tax expense was $43.63 million and $52.02 million, respectively.

For the quarters ended June 30, 2022 and March 31, 2022, United’s effective tax rate was 19.75%.

For the quarter ended June 30, 2021, United’s effective tax rate was 20.50%.

The effective tax rate for the first six months of 2022 and 2021 was 19.75% and 20.50%, respectively.

For the third quarter of 2022, noninterest expense decreased $5.08 million or 3.58% from the third quarter of 2021.

For the first nine months of 2022, noninterest expense decreased $12.64 million or 2.94% from the first nine months of 2021.

These decreases were due mainly to lower employee compensation expense as a result of lower employee commissions, incentives and overtime related to mortgage banking production.

Noninterest expense for the third quarter of 2022 decreased $3.98 million, or 2.82%, from the second quarter of 2022 due mainly to a decrease in the expense for the reserve for unfunded loan commitments.

Income taxes for the third quarter of 2022 were $25.92 million as compared to $23.60 million for the third quarter of 2021.

Income tax expense was $23.53 million for the second quarter of 2022.

For the first nine months of 2022 and 2021 income tax expense was $69.55 million and $75.62 million, respectively.

For the quarters ended September 30, 2022 and June 30, 2022, United’s effective tax rate was 20.17%, and 19.75%, respectively.

For the quarter ended September 30, 2021, United’s effective tax rate was 20.39%.

The effective tax rate for the first nine months of 2022 and 2021 was 19.90% and 20.47%, respectively.

Business Segments

2 unchanged sentences

Community Banking

Net income attributable to the community banking segment for the second quarter of 2022 was $97.14 million compared to net income of $89.77 million for the second quarter of 2021.

Net income attributable to the community banking segment for the first half of 2022 was $180.17 million compared to net income of $172.00 million for the first half of 2021.

The higher net income within the community banking segment in 2022 was due primarily to the impact of the Community Bankers Trust acquisition.

On a linked quarter basis, net income attributable to the community banking segment for the second quarter of 2022 increased $14.12 million from the first quarter of 2022 primarily due to loan growth and net interest margin expansion.

Net interest income increased $28.19 million to $211.59 million for the second quarter of 2022, compared to $183.40 million for the same period of 2021.

Net interest income increased $30.68 million to $401.27 million for the first half of 2022, compared to $370.60 million for the same period of 2021.

Generally, net interest income for the second quarter and first six months of 2022 increased from the second quarter and first six months of 2021 due to an increase in average earning assets as a result of the Community Bankers Trust acquisition as well as lower interest expense on deposits driven by rate repricing.

On a linked quarter basis, net interest income for the second quarter of 2022 increased $21.91 million from the first quarter of 2022 primarily due to higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets.

Provision for credit losses was a net benefit of $1.81 million for the three months ended June 30, 2022 compared to a net benefit of $8.88 million for the three months ended June 30, 2021.

Provision for credit losses was a net benefit of $5.22 million for the six months ended June 30, 2022, compared to a net benefit of $8.74 million for the six months ended June 30, 2021.

As previously mentioned, the reduced net benefit amounts for the second quarter and first half of 2022 were due mainly to loan growth.

The provision for credit losses was a net benefit of $3.41 million for the first quarter of 2022.

Noninterest income increased $2.81 million for the second quarter of 2022 to $26.90 million as compared to $24.09 million for the second quarter of 2021.

Noninterest income for the first half of 2022 increased $1.32 million to $51.80 million for the first half of 2022 as compared to $50.49 million for the first half of 2021.

On a linked quarter basis, noninterest income for the second quarter of 2022 increased $2.00 million from the first quarter of 2022.

All of these increases were due mainly to increases in fees from deposit services and income from bank-owned life insurance policies (“BOLI”).

Noninterest expense was $119.25 million for the second quarter of 2022, compared to $103.45 million for the same period of 2021.

Noninterest expense was $233.79 million for the six months ended June 30, 2022, compared to $213.47 million for the same period of 2021.

These increases in noninterest expense for the first six months of 2022 were primarily attributable to the additional employees and branch offices from the Community Bankers Trust acquisition as most major categories of noninterest expense showed increases.

On a linked quarter basis, noninterest expense for the second quarter of 2022 increased $4.71 million from the first quarter of 2022 due mainly to higher amounts of certain general operating expenses including an increase in the expense for reserve for unfunded loan commitments.

Net income attributable to the community banking segment for the third quarter of 2022 was $108.66 million compared to net income of $81.88 million for the third quarter of 2021.

Net income attributable to the community banking segment for the first nine months of 2022 was $288.83 million compared to net income of $253.88 million for the first nine months of 2021.

The higher net income within the community banking segment in 2022 was due primarily to the impact of the Community Bankers Trust acquisition, organic loan growth and the positive impact of rising market interest rates on the net interest margin.

On a linked quarter basis, net income attributable to the community banking segment for the third quarter of 2022 increased $11.52 million from the second quarter of 2022 primarily due to organic loan growth and net interest margin expansion.

Net interest income increased $60.10 million to $239.54 million for the third quarter of 2022, compared to $179.44 million for the same period of 2021.

Net interest income increased $90.78 million to $640.82 million for the first nine months of 2022, compared to $550.04 million for the same period of 2021.

Generally, net interest income for the third quarter and first nine months of 2022 increased from the third quarter and first nine months of 2021 due to an increase in average earning assets as a result of the Community Bankers Trust acquisition and organic loan growth.

On a linked quarter basis, net interest income for the third quarter of 2022 increased $27.95 million from the second quarter of 2022 primarily due to higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets.

Provision for credit losses was $7.67 million for the three months ended September 30, 2022 compared to a net benefit of $7.83 million for the same period of 2021.

Provision for credit losses was $2.45 million for the nine months ended September 30, 2022 compared to a net benefit of $16.57 million for the same period of 2021.

The provision for credit losses was $7.67 million for the third quarter of 2022 as compared to a net benefit of $1.81 million for the second quarter of 2022.

Theses increases in the provision for credit losses was primarily due to an increase in loans outstanding.

Noninterest income decreased $941 thousand for the third quarter of 2022 to $23.78 million as compared to $24.71 million for the third quarter of 2021.

Noninterest income for the first nine months of 2022 was relatively flat from the first nine months of 2021, increasing $374 thousand or less than 1%.

On a linked quarter basis, noninterest income for the third quarter of 2022 decreased $3.12 million from the second quarter of 2022 due mainly to lower income from bank-owned life insurance policies (“BOLI”).

The decrease in BOLI income was primarily due to lower death benefits from the second quarter of 2022 and the impact of lower market values of underlying investments in the third quarter of 2022.

Noninterest expense was $119.57 million for the third quarter of 2022, compared to $109.14 million for the same period of 2021, an increase of $10.43 million.

Noninterest expense was $353.36 million for the nine months ended September 30, 2022, compared to $322.61 million for the same period of 2021, an increase of $30.75 million.

These increases in noninterest expense for the first nine months of 2022 were primarily attributable to the additional employees and branch

offices from the Community Bankers Trust acquisition as most major categories of noninterest expense showed increases.

On a linked quarter basis, noninterest expense for the third quarter of 2022 was relatively flat from the second quarter of 2022, increasing $320 thousand or less than 1% from the second quarter of 2022.

Mortgage Banking

The mortgage banking segment reported net losses of $1.15 million and $944 thousand for the second quarter and the first half of 2022, respectively, as compared to net income of $4.97 million and $28.00 million for the second quarter and first half of 2021.

The mortgage banking segment reported net income of $209 thousand in the first quarter of 2022.

Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was $21.47 million for the second quarter of 2022 as compared to $39.77 million for the second quarter of 2021.

Noninterest income for the first half of 2022 was $44.87 million as compared to $107.27 million for the first half of 2021.

On a linked quarter basis, noninterest income for the second quarter of 2022 decreased $1.93 million from the first quarter of 2022.

All of these decreases in noninterest income were due mainly to decreased sales of mortgage loans in the secondary market primarily as a result of a rising interest rate environment.

Noninterest expense was $25.78 million and $51.22 million for the second quarter and first half of 2022 as compared to $36.39 million and $77.57 million for the second quarter and first half of 2021.

The mortgage banking segment reported net losses of $3.34 million and $4.28 million for the third quarter and the first nine months of 2022, respectively, as compared to net income of $12.42 million and $40.42 million for the third quarter and first nine months of 2021.

Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was $13.75 million for the third quarter of 2022 as compared to $45.02 million for the third quarter of 2021.

Noninterest income for the first nine months of 2022 was $58.61 million as compared to $152.30 million for the first nine months of 2021.

The decreases in 2022 were due mainly to lower originations and sales of mortgage loans driven by the rising rate environment and a lower margin on loans sold in the secondary market.

Noninterest expense consists mainly of salaries, commissions and benefits of mortgage segment employees.

The decreases in 2022 were due mainly to lower employee commissions, incentives and overtime related to the decreased mortgage banking production.

On a linked quarter basis, noninterest expense for the second quarter of 2022 increased $328 thousand from the first quarter of 2022 due mainly to higher amounts of certain general operating expenses.

Noninterest expense was $20.66 million for the third quarter of 2022 as compared $31.79 million for the third quarter of 2021.

Noninterest expense was $71.89 million for the first nine months of 2022 as compared to $109.36 million for the first nine months of 2021.

These decreases were primarily due to a decrease in employee compensation due to lower employee incentives and commissions related to a decrease in mortgage banking production.

The following discussion explains in more detail the consolidated results of operations by major category.

4 unchanged sentences

Such changes, and their impact on net interest income in 2022 and 2021, are presented below.

Net interest income for the second quarter of 2022 was $214.90 million, which was an increase of $28.39 million or 15.22% from the second quarter of 2021.

The $28.39 million increase in net interest income occurred because total interest income increased $27.59 million while total interest expense decreased $801 thousand from the second quarter of 2021.

Net interest income for the first half of 2022 was $406.41 million, which was an increase of $28.93 million or 7.66% from the first half of 2021.

The $28.93 million increase in net interest income occurred because total interest income increased $24.72 million while total interest expense decreased $4.21 million from the first half of 2021.

On a linked-quarter basis, net interest income for the second quarter of 2022 increased $23.40 million or 12.22% from the first quarter of 2022.

The $23.40 million increase in net interest income occurred because total interest income increased $24.98 million while total interest expense increased $1.58 million from the first quarter of 2022.

For the purpose of this remaining discussion, net interest income is presented on a tax-equivalent

basis to provide a comparison among all types of interest earning assets.

The tax-equivalent

basis adjusts for the tax-favored

status of income from certain loans and investments.

Although this is a non-GAAP

Net interest income for the third quarter of 2022 was $240.62 million, which was an increase of $59.04 million or 32.52% from the third quarter of 2021.

The $59.04 million increase in net interest income occurred because total interest income increased $69.60 million while total interest expense increased $10.56 million from the third quarter of 2021.

Net interest income for the first nine months of 2022 was $647.03 million, which was an increase of $87.97 million or 15.74% from the first nine months of 2021.

The $87.97 million increase in net interest income occurred because total interest income increased $94.33 million while total interest expense increased $6.36 million from the first nine months of 2021.

On a linked-quarter basis, net interest income for the third quarter of 2022 increased $25.72 million or 11.97% from the second quarter of 2022.

The $25.72 million increase in net interest income occurred because total interest income increased $35.91 million while total interest expense increased $10.19 million from the second quarter of 2022.

For the purpose of this remaining discussion, net interest income is presented on a tax-equivalent basis to provide a comparison among all types of interest earning assets.

The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments.

United uses this measure to monitor net interest income performance and to manage its balance sheet composition.

Tax-equivalent

net interest income for the second quarter of 2022 was $216.01 million, an increase of $28.42 million or 15.15% from the second quarter of 2021.

The increase in net interest income and tax-equivalent

net interest income was primarily due to the impact of higher average earnings assets, driven by the Community Bankers Trust acquisition, as well as the impact of rising market interest rates on earning assets and a change in the asset mix to higher earning assets.

These increases were mostly offset by lower accretion on acquired loans, lower fee income from Paycheck Protection Program (“PPP”) loans and higher average interest-bearing deposit balances as a result of the Community Bankers Trust acquisition.

Average earning assets for the second quarter of 2022 increased $1.66 billion or 6.92% from the second quarter of 2021 due to a $1.62 billion increase in average investment securities and a $1.21 billion increase in average net loans and loans held for sale, partially offset by a $1.17 billion decrease in average short-term investments.

The interest rate spread for the second quarter of 2022 increased 26 basis points from the second quarter of 2021 to 3.24% due to a 21 basis point increase in the average yield on earning assets and a 5 basis point decrease in the average cost of funds.

Net PPP loan fee income was $3.56 million and $9.02 million for the second quarter of 2022 and 2021, respectively, a decrease of $5.46 million.

The decline was driven primarily by loan forgiveness by the SBA.

Loan accretion on acquired loans and leases was $5.40 million and $9.67 million for the second quarter of 2022 and 2021, respectively, a decrease of $4.27 million.

Average interest-bearing liabilities for the second quarter of 2022 increased $914.13 million, or 6.45%, from the second quarter of 2021.

The net interest margin of 3.38% for the second quarter of 2022 was an increase of 24 basis points from the net interest margin of 3.14% for the second quarter of 2021.

Tax-equivalent

net interest income for the first six months of 2022 was $408.62 million, an increase of $29.02 million or 7.64% from the first six months of 2021.

The increase in net interest income and tax-equivalent

Average earning assets increased $2.10 billion or 8.84% from the first six months of 2021 due to a $1.56 billion increase in average investment securities and a $763.75 million or 4.29% increase in average net loans and loans held for sale partially offset by a $219.86 million decrease in average short-term investments.

Average interest-bearing liabilities for the first six months of 2022 increased $1.04 billion, or 7.37% from the first six months of 2021;

however, the average cost of funds decreased 8 basis points from the six months of 2021 to 0.32% for the first six months of 2022.

The interest rate spread for the first six months of 2022 decreased a basis point from the first six months of 2021 to 3.05% due to a 9 basis point decrease in the average yield on earning assets partially offset by the 8 basis point decrease in the average cost of funds.

Loan accretion on acquired loans was $9.54 million and $19.47 million for the first half of 2022 and 2021, respectively, a decrease of $9.93 million.

Net PPP loan fee income of $7.66 million was recognized in the first half of 2022 driven primarily by loan forgiveness, as compared to $20.33 million for the first half of 2021.

The net interest margin of 3.18% for the first half of 2022 was a decrease of 4 basis points from the net interest margin of 3.22% for the first half of 2021.

On a linked-quarter basis, net interest income for the second quarter of 2022 increased $23.40 million, or 12.22%, from the first quarter of 2022.

Tax-equivalent

net interest income for the second quarter of 2022 increased $23.40 million, or 12.15% from the first quarter of 2022.

The increase in net interest income and tax-equivalent

net interest income was primarily due to higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets.

The interest rate spread of 3.24% for the second quarter of 2022 increased 38 basis points from the first quarter of 2022 due to a 42 basis point increase in the average yield on earning assets partially offset by a 4 basis point increase in the average cost of funds.

A decrease in average earning assets of $425.99 million, or 1.64%, from the first quarter of 2022 driven by a decrease of $1.29 billion in short-term investments was partially offset by increases in higher yielding average net loans and loans held for sale of $489.88 million and average investment securities of $375.81 million.

Acquired loan accretion income increased $1.26 million to $5.40 million for the second quarter of 2022.

Net PPP loan fee income decreased $542 thousand to $3.56 million for the second quarter of 2022.

The net interest margin of 3.38% for the second quarter of 2022 was an increase of 39 basis points from the net interest margin of 2.99% for the first quarter of 2022.

United’s tax-equivalent

net interest income also includes the impact of acquisition accounting fair value adjustments.

The following table provides the discount/premium and net accretion impact to tax-equivalent

net interest income for the three months ended June 30, 2022, June 30, 2021 and March 31, 2022 and the six months ended June 30, 2022 and June 30, 2021:

Tax-equivalent net interest income for the third quarter of 2022 was $241.73 million, an increase of $59.09 million or 32.35% from the third quarter of 2021.

The increase in tax-equivalent net interest income was primarily due to the impact of higher average earning assets, driven by the Community Bankers Trust acquisition and organic loan growth, the impact of rising market interest rates on earning assets and a change in the asset mix to higher earning assets.

These increases were partially offset by higher interest expense primarily driven by deposit rate repricing, lower Paycheck Protection

Program (“PPP”) loan fee income and lower acquired loan accretion income.

Average earning assets for the third quarter of 2022 increased $1.08 billion, or 4.42%, from the third quarter of 2021 due to a $2.47 billion increase in average net loans and a $1.51 billion increase in average investment securities partially offset by a $2.91 billion decrease in average short-term investments.

The interest rate spread for the third quarter of 2022 increased 71 basis points from the third quarter of 2021 to 3.58% due to a 96 basis point increase in the average yield on earning assets partially offset by a 25 basis point increase in the average cost of funds.

Net PPP loan fee income was $1.62 million and $7.85 million for the third quarter of 2022 and 2021, respectively, a decrease of $6.23 million.

Acquired loan accretion income was $4.07 million and $8.15 million for the third quarter of 2022 and 2021, respectively, a decrease of $4.09 million.

The net interest margin of 3.78% for the third quarter of 2022 was an increase of 80 basis points from the net interest margin of 2.98% for the third quarter of 2021.

Tax-equivalent net interest income for the first nine months of 2022 was $650.35 million, an increase of $88.11 million or 15.67% from the first nine months of 2021.

This increase in tax-equivalent net interest income was primarily due to the impact of rising market interest rates on earning assets, an increase in average earning assets from the Community Bankers Trust acquisition, organic loan growth and a change in the asset mix to higher earning assets.

These increases were partially offset by lower PPP loan fee income and lower acquired loan accretion income.

Average earning assets for the first nine months of 2022 increased $1.75 billion, or 7.33%, from the first nine months of 2021 due to a $1.54 billion increase in average investment securities and a $1.34 billion increase in average net loans partially offset by a $1.13 billion decrease in average short-term investments.

The interest rate spread for the first nine months of 2022 increased 22 basis points from the first nine months of 2021 due to a 26 basis point increase in the average yield on earning assets partially offset by a 3 basis point increase in the average cost of funds.

Net PPP loan fee income was $9.28 million and $28.19 million for the first nine months of 2022 and 2021, respectively, a decrease of $18.90 million.

Acquired loan accretion income was $13.60 million and $27.62 million for the first nine months of 2022 and 2021, respectively, a decrease of $14.02 million.

The net interest margin of 3.38% for the first nine months of 2022 was an increase of 24 basis points from the net interest margin of 3.14% for the first nine months of 2021.

On a linked-quarter basis, tax-equivalent net interest income for the third quarter of 2022 increased $25.72 million, or 11.91% from the second quarter of 2022.

The increase in tax-equivalent net interest income was primarily due to higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets.

This increase in tax-equivalent net interest income was partially offset by higher interest expense primarily driven by deposit rate repricing as well as due to lower PPP loan fee income and lower acquired loan accretion.

The interest rate spread of 3.58% for the third quarter of 2022 increased 31 basis points from the second quarter of 2022 due to a 56 basis point increase in the average yield on earning assets partially offset by a 25 basis point increase in the average cost of funds.

Average earning assets for the third quarter of 2022 were relatively flat from the second quarter of 2022, decreasing $188.13 or less than 1% as a decrease of $818.46 million in short-term investments was mostly offset by an increase in higher yielding average net loans of $627.57 million.

Net PPP loan fee income decreased $1.94 million to $1.62 million for the third quarter of 2022.

Acquired loan accretion income decreased $1.33 million to $4.07 million for the third quarter of 2022.

The net interest margin of 3.78% for the third quarter of 2022 was an increase of 40 basis points from the net interest margin of 3.38% for the second quarter of 2022.

United’s tax-equivalent net interest income also includes the impact of acquisition accounting fair value adjustments.

The following table provides the discount/premium and net accretion impact to tax-equivalent net interest income for the three months ended September 30, 2022, September 30, 2021 and June 30, 2022 and the nine months ended September 30, 2022 and September 30, 2021:

Three Months Ended

3 unchanged sentences

Long-term borrowings

Six Months Ended

Nine Months Ended

(Dollars in thousands)

2 unchanged sentences

Long-term borrowings

Tax-equivalent

net interest income

The following tables reconcile the difference between net interest income and tax-equivalent

net interest income for the three months ended June 30, 2022, June 30, 2021 and March 31, 2022 and the six months ended June 30, 2022 and June 30, 2021.

Tax-equivalent net interest income

The following tables reconcile the difference between net interest income and tax-equivalent net interest income for the three months ended September 30, 2022, September 30, 2021 and June 30, 2022 and the nine months ended September 30, 2022 and September 30, 2021.

Three Months Ended

1 unchanged sentence

Net interest income, GAAP basis

Tax-equivalent

adjustment (1)

Tax-equivalent

net interest income

Six Months Ended

Tax-equivalent adjustment (1)

Tax-equivalent net interest income

Nine Months Ended

(Dollars in thousands)

Net interest income, GAAP basis

Tax-equivalent

adjustment (1)

Tax-equivalent

net interest income

The tax-equivalent

adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21% for the three months and six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022.

Tax-equivalent adjustment (1)

Tax-equivalent net interest income

The tax-equivalent adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21% for the three months and nine months ended September 30, 2022 and 2021 and the three months ended June 30, 2022.

All interest income on loans and investment securities was subject to state income taxes.

The following tables show the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month and six-month

periods ended June 30, 2022 and 2021, respectively, with the interest and rate earned or paid on such amount.

The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent

basis using the statutory federal income tax rate of 21% for the three-month and six-month

period ended June 30, 2022 and 2021.

The following tables show the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month and nine-month periods ended September 30, 2022 and 2021, respectively, with the interest and rate earned or paid on such amount.

The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for the three-month and nine-month period ended September 30, 2022 and 2021.

Interest income on all loans and investment securities was subject to state income taxes.

Three Months Ended

June 30, 2022

Three Months Ended

June 30, 2021

September 30, 2022

September 30, 2021

(Dollars in thousands)

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SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY

NET INTEREST INCOME

1 unchanged sentence

NET INTEREST MARGIN

The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent

basis using the statutory federal income tax rate of 21%.

The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21%.

Nonaccruing loans are included in the daily average loan amounts outstanding.

Six Months Ended

June 30, 2022

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2022

September 30, 2021

(Dollars in thousands)

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Total Interest-Bearing Liabilities

bearing deposits

Non-interest bearing deposits

Accrued expenses and other liabilities

1 unchanged sentence

SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY

NET INTEREST INCOME

1 unchanged sentence

NET INTEREST MARGIN

The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent

basis using the statutory federal income tax rate of 21%.

The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21%.

Nonaccruing loans are included in the daily average loan amounts outstanding.

Provision for Credit Losses

United’s provision for credit losses was a net benefit of $1.81 million and $5.22 million for the second quarter and first half of 2022, respectively, while the provision for credit losses was a net benefit of $8.88 million and $8.74 million for the second quarter and first half of 2021.

United’s provision for credit losses relates to its portfolio of loans and leases, held-to-maturity

securities and interest receivable on loans which are discussed in more detail in the following paragraphs.

For the quarter ended June 30, 2022, the provision for loan and lease losses was a net benefit of $1.81 million as compared to a net benefit of $8.82 million for the quarter ended June 30, 2021.

The provision for loan and lease losses for the first six months of 2022 was a net benefit of $5.21 million as compared to a net benefit of $8.52 million for the first six months of 2021.

United’s provision for credit losses was $7.67 million and $2.45 million for the third quarter and first nine months of 2022, respectively, while the provision for credit losses was net benefit of $7.83 million and $16.57 million, respectively, for the third quarter and first nine months of 2021.

United’s provision for credit losses relates to its portfolio of loans and leases, held-to-maturity securities and interest receivable on loans which are discussed in more detail in the following paragraphs.

For the quarter ended September 30, 2022, the provision for loan and lease losses was $7.67 million as compared to a net benefit of $7.82 million for the quarter ended September 30, 2021.

The provision for loan and lease losses for the first nine months of 2022 was $2.46 million as compared to a net benefit of $16.34 million for the first nine months of 2021.

The higher amount of provision expense for 2022 compared to 2021 was mainly due to an increase in overall loans outstanding.

Net recoveries were $941 thousand for the second quarter of 2022 as compared to net charge-offs of $5.22 million for the same quarter in 2021.

Net recoveries for the first six months of 2022 were $2.92 million as compared to net charge-offs of $9.76 million for the first six months of 2021.

The lower amount of net charge-offs for 2022 as compared to 2021 was primarily due to charge-offs recognized on several large commercial credits in the second quarter and first half of 2021.

On a linked-quarter basis, the provision for loan and lease losses the provision for loan and lease losses was a net benefit of $3.40 million for the first quarter of 2022.

Net recoveries were $1.98 million for the first quarter of 2022.

Annualized net recoveries as a percentage of average loans and leases, net of unearned income were (0.02%) and (0.03%) for the second quarter and first half of 2022, respectively, compared to annualized net charge-offs of 0.12% and 0.11% for the second quarter and first half of 2021.

Annualized net recoveries as a percentage of average loans were (0.04%) for the first quarter of 2022.

As of June 30, 2022, nonperforming loans and leases were $70.33 million or 0.37% of loans and leases, net of unearned income as compared to $90.76 million or 0.50% of loans, net of unearned income at December 31, 2021.

Net charge-offs were $1.79 million for the third quarter of 2022 as compared to net recoveries of $1.17 million for the same quarter in 2021.

The higher amount of net charge-offs for the third quarter of 2022 as compared to the third quarter of 2021 was primarily due to charge-offs recognized on several large commercial credits in the third quarter of 2022 as well as several large commercial recoveries in the third quarter of 2021.

Net recoveries for the first nine months of 2022 were $1.13 million as compared to net charge-offs of $8.59 million for the first nine months of 2021.

The lower amount of net charge-offs for the first nine months of 2022 as compared to the first nine months of 2021 was primarily due to charge-offs recognized on several large commercial credits in the first nine months of 2021.

On a linked-quarter basis, the provision for loan and lease losses was a net benefit of $1.81 million for the second quarter of 2022.

Net recoveries were $941 thousand for the second quarter of 2022.

Annualized net charge-offs (recoveries) as a percentage of average loans and leases, net of unearned income were 0.04% and (0.01%) for the third quarter and first nine months of 2022, respectively, compared to (0.03%) and 0.07% for the third quarter and first nine months of 2021.

Annualized net recoveries as a percentage of average loans and leases, net of unearned income was (0.02%) for the second quarter of 2022.

As of September 30, 2022, nonperforming loans and leases were $69.65 million or 0.35% of loans and leases, net of unearned income as compared to $90.76 million or 0.50% of loans, net of unearned income at December 31, 2021.

The components of nonperforming loans and leases include:

1) nonaccrual loans and leases, 2) loans and leases which are contractually past due 90 days or more as to interest or principal, but have not been put on a nonaccrual basis and 3) loans and leases whose terms have been restructured for economic or legal reasons due to financial difficulties of the borrowers.

Loans past due 90 days or more were $16.44 million at June 30, 2022, a decrease of $2.44 million or 12.90% from $18.88 million at year-end

This decrease was primarily due to a large delinquent commercial credit being brought current.

At June 30, 2022, nonaccrual loans were $28.39 million, which was a decrease of $7.64 million or 21.21% from $36.03 million at year-end

This decrease was due to the repayment of several mid-sized

commercial nonaccrual loans as well as the return to accrual status for two commercial relationships.

Restructured loans were $25.50 million at June 30, 2022, a decrease of $10.35 million or 28.87% from $35.86 million at year-end

The decrease was mainly due to the repayment of four large commercial relationships and removal of TDR status for one commercial relationship during the first half of 2022.

Loans past due 90 days or more were $18.25 million at September 30, 2022, a decrease of $625 thousand or 3.31% from $18.88 million at year-end 2021.

This slight decrease was primarily due to a large delinquent commercial credit being brought current.

At September 30, 2022, nonaccrual loans were $28.24 million, which was a decrease of $7.78 million or 21.60% from $36.03 million at year-end 2021.

This decrease was due to the repayment of several mid-sized commercial nonaccrual loans as well as the return to accrual status for two commercial relationships.

Restructured loans were $23.15 million at September 30, 2022, a decrease of $12.70 million or 35.42% from $35.86 million at year-end 2021.

The decrease was mainly due to the repayment of five large commercial relationships during the first nine months of 2022.

The loss potential on these loans has been properly evaluated and allocated within the Company’s allowance for loan losses.

Nonperforming assets include nonperforming loans and real estate acquired in foreclosure or other settlement of loans (“OREO”).

Total nonperforming assets of $84.18 million, including OREO of $13.85 million at June 30, 2022, represented 0.29% of total assets as compared to non-performing

assets of $105.59 million, including OREO of $14.82 million, or 0.36% of total assets at December 31, 2021.

Total nonperforming assets of $80.43 million, including OREO of $10.78 million at September 30, 2022, represented 0.28% of total assets as compared to non-performing assets of $105.59 million, including OREO of $14.82 million, or 0.36% of total assets at December 31, 2021.

United maintains an allowance for loan and lease losses and a reserve for lending-related commitments.

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

At June 30, 2022, the allowance for credit losses was $256.31 million as compared to $247.46 million at December 31, 2021.

At June 30, 2022, the allowance for loan and lease losses was $213.73 million as compared to $216.02 million at December 31, 2021.

The slight decrease in the allowance for loan and lease losses was due to improved trends within the loan portfolio that included lower historical loss rates and improvements in criticized loan totals.

As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 1.13% at June 30, 2022 and 1.20% at December 31, 2021.

The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 303.88% and 238.00% at June 30, 2022 and December 31, 2021, respectively.

At September 30, 2022, the allowance for credit losses was $259.31 million as compared to $247.46 million at December 31, 2021.

At September 30, 2022, the allowance for loan and lease losses was $219.61 million as compared to $216.02 million at December 31, 2021.

The slight increase in the allowance for loan and lease losses was due mainly to an increase in outstanding loans.

As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 1.11% at September 30, 2022 and 1.20% at December 31, 2021.

The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 315.29% and 238.00% at September 30, 2022 and December 31, 2021, respectively.

The increase in this ratio was due mainly to a decline in nonperforming loans.

3 unchanged sentences

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

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

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

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

Past events – 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 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

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

Current conditions – United considered the impact of inflation, supply chain disruptions, rising interest rates, increased oil and gas prices and the potential impact of the geopolitical situation 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 basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables.

The reasonable and supportable forecast selection is subjective in nature and requires more judgment compared to the other components of the allowance.

Assumptions for the economic variables were the following:

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

reasonable and supportable forecast period.

United’s review of the allowance for loan and lease losses at June 30, 2022 produced increased reserves in three of the four loan categories as compared to December 31, 2021.

The real estate construction and development loan pool reserve increased $4.44 million.

The forecast for real GDP shifted downward in the third quarter, from a projection of 1.70% for 2022 as of mid-June 2022 to 0.20% for 2022 as of mid-September with a steeper increasing future trendline as compared to the second quarter of 2022.

The unemployment rate forecast shifted slightly upward compared to the second quarter of 2022 with an increasing trend expected throughout 2023 and 2024.

Reversion to historical loss data occurs via a straight-line method during the year following the one-year reasonable and supportable forecast period.

United’s review of the allowance for loan and lease losses at September 30, 2022 produced increased reserves in three of the four loan categories as compared to December 31, 2021.

The residential real estate reserve increased $6.30 million.

The real estate construction and development loan pool reserve increased $2.97 million.

The consumer loan pool reserve increased $2.25 million.

8 unchanged sentences

When the selected measure is less than the recorded investment in the loan, an expected credit loss has occurred.

The allowance for loans and leases that were individually assessed was $2.93 million at June 30, 2022 and $6.53 million at December 31, 2021.

In comparison to the prior year-end,

this element of the allowance decreased $3.61 million primarily due to repayment of individually assessed loans as well as improved collateral valuations.

Management believes that the allowance for credit losses of $256.31 million at June 30, 2022 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available.

The allowance for loans and leases that were individually assessed was $2.92 million at September 30, 2022 and $6.53 million at December 31, 2021.

In comparison to the prior year-end, this element of the allowance decreased $3.61 million due to repayment of individually assessed loans, improved borrowers’ financial conditions such that individual assessments were no longer necessary and improved collateral valuations.

Management believes that the allowance for credit losses of $259.31 million at September 30, 2022 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available.

United’s loan administration policies are focused on the risk characteristics of the loan portfolio in terms of loan approval and credit quality.

3 unchanged sentences

It is the opinion of management that these commercial loans do not pose any unusual risks and that adequate consideration has been given to these loans in establishing the allowance for credit losses.

The provision for credit losses related to held to maturity securities for the second quarter and first half of 2022 and 2021 was immaterial.

The allowance for credit losses related to held to maturity securities was $18 thousand as of June 30, 2022 and $19 thousand as December 31, 2021.

There was no provision for credit losses recorded on available for sale investment securities for the second quarter and first half of 2022 and 2021 and no allowance for credit losses on available for sale investment securities as of June 30, 2022 and December 31, 2021.

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 as of June 30, 2022.

As a result of this assessment, United released all of its remaining $8 thousand in reserves for the first half of 2022 as compared to the release of $221 thousand in reserves for the first half of 2021.

The provision for credit losses related to held to maturity securities for the third quarter and first nine months of 2022 and 2021 was immaterial.

The allowance for credit losses related to held to maturity securities was $19 thousand as of September 30, 2022 and December 31, 2021.

There was no provision for credit losses recorded on available for sale investment securities for the third quarter and first nine months of 2022 and 2021 and no allowance for credit losses on available for sale investment securities as of September 30, 2022 and December 31, 2021.

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 as of September 30, 2022.

As a result of this assessment, United released all of its remaining $8 thousand in reserves in the first nine months of 2022 as compared to the release of $3 thousand and $224 thousand for the third quarter and first nine months of 2021.

The allowance for accrued interest receivables not expected to be collected as of December 31, 2021 was $8 thousand.

4 unchanged sentences

Recognizing the importance, management continues to evaluate areas where noninterest income can be enhanced.

Noninterest income for the second quarter of 2022 was $43.61 million, a decrease of $19.26 million or 30.63% from the second quarter of 2021.

Noninterest income for the first half of 2022 was $89.63 million, a decrease of $65.81 million or 42.34% from the first half of 2021.

Both differences from the second quarter and first half of 2021 were due mainly to a decrease in income from mortgage banking activities primarily as a result of a rising interest rate environment and a lower margin on loans sold in the secondary market.

Income from mortgage banking activities totaled $12.45 million for the second quarter of 2022 compared to $36.94 million for the same period of 2021, a decline of $24.50 million or 66.31%.

For the first half of 2022 and 2021, income from mortgage banking activities was $31.65 million and $102.34 million, respectively.

Noninterest income for the third quarter of 2022 was $32.75 million, a decrease of $35.88 million or 52.28% from the third quarter of 2021.

Noninterest income for the first nine months of 2022 was $122.38 million, a decrease of $101.69 million or 45.38% from the first nine months of 2021.

Both differences from the third quarter and first nine months of 2021 were due mainly to a decrease in income from mortgage banking activities primarily as a result of lower mortgage loan originations and sales volume driven by a rising interest rate environment and a lower margin on loans sold in the secondary market.

Income from mortgage banking activities totaled $6.42 million for the third quarter of 2022 compared to $42.01 million for the same period of 2021, a decline of $35.59 million or 84.71%.

For the first nine months of 2022 and 2021, income from mortgage banking activities was $38.07 million and $144.35 million, respectively.

The decreases for 2022 as compared to 2021 were due mainly to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower margin on loans sold in the secondary market.

For the three months ended June 30, 2022 and 2021, mortgage loan sales were $683.73 million and $1.88 billion, respectively.

For the six months ended June 30, 2022 and 2021, mortgage loan sales were $1.78 billion and $3.72 billion, respectively.

Fees from deposit services for the second quarter and first half of 2022 increased $1.43 million or 15.26% and $2.69 million or 14.68%, respectively, from the second quarter and first half of 2021.

The increases were due primarily to higher income from overdraft fees and debit card fee income.

Income from bank-owned life insurance (“BOLI”) for the second quarter and first half of 2022 increased $2.46 million and $3.25 million, respectively, from the second quarter and first half of 2021.

These increases were due mainly to the purchase of $85 million in policies since June 30, 2021, the addition of approximately $31 million in BOLI from the Community Bankers Trust acquisition and proceeds from death benefits.

For the second quarter and first half of 2022, United recognized death benefits from BOLI of $2.48 million and $2.76 million, respectively.

On a linked-quarter basis, noninterest income for the second quarter of 2022 decreased $2.41 million, or 5.25%, from the first quarter of 2022.

The decrease in noninterest income was primarily due to a decrease of $6.76 million in income from mortgage banking activities mainly due to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower margin on loans sold in the secondary market.

Income from BOLI increased $1.93 million from the first quarter of 2022 due to an increase of $2.19 million in the recognition of death benefits partially offset by a decline in the cash surrender value of policies.

For the three months ended September 30, 2022 and 2021, mortgage loan sales were $281.76 million and $1.45 billion, respectively.

For the nine months ended September 30, 2022 and 2021, mortgage loan sales were $2.06 billion and $5.16 billion, respectively.

Income from bank-owned life insurance (“BOLI”) for the third quarter of 2022 decreased $1.08 million from the third quarter of 2021.

The decrease was due mainly to the impact of lower market values of underlying investments in the third quarter of 2022.

Income from BOLI for the first nine months of 2022 increased $2.17 million from the first nine months of 2021.

This increase was due mainly to an increase of $2.64 million in proceeds from death benefits and the addition of approximately $31 million in BOLI from the Community Bankers Trust acquisition.

Fees from deposit services for the first nine months of 2022 increased $2.87 million or 10.17% from the first nine months of 2021.

This increase was due primarily to higher income from overdraft fees and debit card fee income.

Fees from brokerage services for the first nine months of 2022 were $12.68 million, an increase of $823 thousand or 6.94% from the first nine months of 2021.

Bankcard fees and merchant discounts for the first nine months of 2022 increased $1.00 million or 25.66% from the first nine months of 2021.

Both of these increases were due to higher volume.

On a linked-quarter basis, noninterest income for the third quarter of 2022 decreased $10.86 million, or 24.90%, from the second quarter of 2022.

The decrease in noninterest income was primarily due to decreases of $6.02 million in income from mortgage banking activities, $2.65 million in income from BOLI, $1.39 million in net (losses) gains on investment securities and $761 thousand in fees from deposit services.

The decrease in income from mortgage banking activities was mainly due to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower margin on loans sold in the secondary market.

The decrease in BOLI income was primarily due to lower death benefits from the second quarter of 2022 and the impact of lower market values of underlying investments in the third quarter of 2022.

The decrease in fees from deposit services reflects changes to United’s overdraft policy implemented during the third quarter of 2022.

Other Expenses

1 unchanged sentence

Other expenses include all items of expense other than interest expense, the provision for credit losses, and income taxes.

Noninterest expense increased $2.21 million or 1.59% for the second quarter of 2022 compared to the same period in 2021.

For the first half of 2022, noninterest expense was $280.35 million, which was a decrease of $7.55 million or 2.62% from the first half of 2021.

Employee compensation for the second quarter and first half of 2022 decreased $5.93 million or 8.64% and $15.72 million or 11.15%, respectively, from the second quarter and first half of 2021.

Noninterest expense decreased $5.09 million or 3.58% for the third quarter of 2022 compared to the same period in 2021.

For the first nine months of 2022, noninterest expense was $417.55 million, which was a decrease of $12.64 million or 2.94% from the first nine months of 2021.

Employee compensation for the third quarter and first nine months of 2022 decreased $7.84 million or 11.62% and $23.56 million or 11.30%, respectively, from the third quarter and first nine months of 2021.

The decreases for 2022 were due mainly to lower employee commissions, incentives and overtime related to a decline in mortgage banking production partially offset by additional employees from the Community Bankers Trust acquisition.

Employee benefits expense for the second quarter of 2022 decreased $2.42 million or 16.74% from the second quarter of 2021.

Employee benefits expense for the first half of 2022 decreased $5.02 million or 16.78% as compared to the first half of 2021.

Employee benefits expense for the third quarter of 2022 decreased $2.38 million or 18.14% from the third quarter of 2021.

Employee benefits expense for the first nine months of 2022 decreased $7.40 million or 17.20% as compared to the first nine months of 2021.

These decreases were primarily due to lower amounts of expense for postretirement benefits.

Net occupancy expense for the second quarter and first half of 2022 increased $1.11 million or 10.94% and $1.35 million or 6.42%, respectively, as compared to the same time periods in 2021.

Net occupancy expense for the third quarter and first nine months of 2022 increased $942 thousand or 9.11% and $2.29 million or 7.31%, respectively, as compared to the same time periods in 2021.

The increases were due primarily to increases in building depreciation and maintenance expenses mainly as a result of the offices added in the Community Bankers Trust acquisition.

OREO expense for the first half of 2022 decreased $3.83 million or 94.38% due mainly to fewer declines in the fair value of OREO properties.

Equipment expense increased $1.48 million or 25.39% and $2.77 million or 23.34% for the second quarter and first half of 2022, respectively, as compared to the same time periods in 2021.

The increases were due mainly to higher maintenance costs and depreciation expense primarily due to the Community Bankers Trust acquisition.

Mortgage loan servicing expense and impairment for the second quarter and first half of 2022 decreased $1.82 million or 50.46% and $3.35 million or 49.44%, respectively, from the same time periods in 2021 due to the recovery of past temporary impairment and lower amortization expense of mortgage servicing rights.

Federal Deposit Insurance Corporation (“FDIC”) expense for the second quarter and first half of 2022 increased $1.20 million or 66.89% and $1.88 million or 49.39%, respectively, from the second quarter and first half of 2021 due a higher assessment base.

Other expense for the second quarter of 2022 increased $8.78 million or 32.76% from the second quarter of 2021.

For the first half of 2022, other expense increased $13.84 million or 25.34% from the first half of 2021.

Within other expenses, the most significant increase for second quarter and first half of 2022 as compared to the same time periods in 2021 was in the expense for the reserve for unfunded loan commitments of $5.03 million and $9.49 million, respectively.

In addition, consulting and legal expenses as well as advertising expense increased significantly in 2022 from 2021.

On a linked-quarter basis, noninterest expense for the second quarter of 2022 increased $2.00 million, or 1.44% from the first quarter of 2022.

The increase in noninterest expense resulted from higher amounts of certain general operating expenses including an increase in the expense for reserve for unfunded loan commitments of $662 thousand.

For the second quarter and first half of 2022, income tax expense was $23.53 million and $43.63 million, respectively, as compared to $24.46 million and $52.02 million, respectively, in the second quarter and first half of 2021.

These decreases were due to lower earnings and a lower effective tax rate.

On a linked-quarter basis, income tax expense increased $3.43 million due to higher earnings from the first quarter of 2022.

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

For the first half of 2022 and 2021, United’s effective tax rate was 19.75% and 20.50%, respectively.

OREO expense for the third quarter of 2022 increased $1.28 million or 299.07% from the third quarter of 2021 due mainly to additional declines in the fair value of OREO properties.

OREO expense for the first nine months of 2022 decreased $2.55 million or 56.81% due mainly to fewer declines in the fair value of OREO properties.

Equipment expense increased $3.29 million or 17.18% for the first nine months of 2022 as compared to the first nine months of 2021.

The increase was due mainly to higher maintenance costs and depreciation expense primarily due to the Community Bankers Trust acquisition.

Data processing expense for the third quarter and first nine months of 2022 increased $1.00 million or 15.15% and $1.94 million or 9.42%, respectively, from the third quarter and first nine months of 2021 due additional processing as a result of the Community Bankers Trust acquisition.

Mortgage loan servicing expense and impairment for the third quarter and first nine months of 2022 decreased $1.41 million or 43.22% and $4.76 million or 47.42%, respectively, from the same time periods in 2021 due to the recovery of past temporary impairment and lower amortization expense of mortgage servicing rights.

Federal Deposit Insurance Corporation (“FDIC”) expense for the third quarter and first nine months of 2022 increased $1.14 million or 59.53% and $3.02 million or 52.80%, respectively, from the third quarter and first nine months of 2021 due a higher assessment base.

Other expense for the third quarter of 2022 increased $1.41 million or 4.47% from the third quarter of 2021.

Within other expenses, the most significant increase for third quarter of 2022 as compared to the third quarter of 2021 was an accrual of $5 million related to a litigation matter with a former commercial customer.

Partially offsetting this increase was a decrease of $7.17 million in the expense for the reserve for unfunded loan commitments.

For the first nine months of 2022, other expense increased $15.25 million or 17.71% from the first nine months of 2021.

This increase in other expense for the first nine months of 2022 from the first nine months of 2021 resulted from the previously mentioned litigation accrual in the third quarter of 2022, an increase of $2.31 million in the expense for the reserve for unfunded loan commitments as well higher amounts of certain general operating expenses.

On a linked-quarter basis, noninterest expense for the third quarter of 2022 decreased $3.98 million, or 2.82%, from the second quarter of 2022.

The decrease in noninterest expense was primarily due to decreases of $3.01 million in employee compensation and $2.69 million in other expense.

The decrease in employee compensation was primarily due to lower employee commissions related to mortgage banking production.

Within other expense, the expense for the reserve for unfunded loan commitments declined $8.78 million, The decrease in the reserve for unfunded loan commitments reflects a decrease in the outstanding balance of loan commitments at quarter-end driven by loan fundings.

Partially offsetting this decrease in other expense was the previously mentioned accrual related to a litigation matter with a former commercial customer included in the third quarter of 2022.

For the third quarter of 2022, income tax expense was $25.92 million as compared to $23.60 million for the third quarter of 2021 primarily due to higher earnings partially offset by a slightly lower effective tax rate.

For the first nine months of 2022, income tax expense was $69.55 million as compared to $75.62 million for the first nine months of 2021 primarily due to lower earnings and a lower effective tax rate.

On a linked-quarter basis, income tax expense increased $2.39 million primarily due to increased earnings and a slightly higher effective tax rate.

United’s effective tax rate was 20.17% for the third quarter of 2022, 20.39% for the third quarter of 2021 and 19.75% for the second quarter of 2022.

For the first nine months of 2022 and 2021, United’s effective tax rate was 19.90% and 20.47%, respectively.

For further details related to income taxes, see Note 17 of the unaudited Notes to Consolidated Financial Statements contained within this document.

9 unchanged sentences

Liquid assets are cash and those items readily convertible to cash.

All banks must maintain sufficient balances of cash and near-cash items to meet the day-to-day

demands of customers and United’s cash needs.

All banks must maintain sufficient balances of cash and near-cash items to meet the day-to-day demands of customers and United’s cash needs.

Other than cash and due from banks, the available for sale securities portfolio and maturing loans are the primary sources of liquidity.

The goal of liquidity management is to ensure the ability to access funding which enables United to efficiently satisfy the cash flow requirements of depositors and borrowers and meet United’s cash needs.

Liquidity is managed by monitoring funds’ availability from a number of primary sources.

Liquidity is managed by monitoring

funds’ availability from a number of primary sources.

Substantial funding is available from cash and cash equivalents, unused short-term borrowing and a geographically dispersed network of branches providing access to a diversified and substantial retail deposit market.

2 unchanged sentences

In the normal course of business, United through its Asset Liability Committee evaluates these as well as other alternative funding strategies that may be utilized to meet short-term and long-term funding needs.

For the first six months ended June 30, 2022, cash of $490.02 million was provided by operating activities due mainly to net income of $177.28 million.

For the first nine months ended September 30, 2022, cash of $623.77 million was provided by operating activities due mainly to net income of $279.86 million.

In addition, mortgage banking activities added cash of $294.34 million to the net income amount as sales of mortgage loans in the secondary market exceeded originations.

Net cash of $2.08 billion was used in investing activities which was primarily due to purchases of investment securities over proceeds from sales of $1.15 billion and net loan growth of $939.33 million.

During the first half of 2022, net cash of $511.46 million was used in financing activities due primarily to a net withdrawal of $321.84 million in deposits, cash dividends paid of $95.94 million, net repurchases of $79.45 million in treasury stock and the net repayment of $20.00 million in FHLB advances.

The net effect of the cash flow activities was a decrease in cash and cash equivalents of $2.10 billion for the first six months of 2022.

Net cash of $2.82 billion was used in investing activities which was primarily due to net loan growth of $1.67 billion and purchases of investment securities over proceeds from sales of $1.16 billion.

During the first nine months of 2022, net cash of $206.95 million was used in financing activities due primarily to a net withdrawal of $484.56 million in deposits, cash dividends paid of $144.48 million, net repurchases of $79.46 million in treasury stock partially offset by net advances of $480.00 million in FHLB advances.

The net effect of the cash flow activities was a decrease in cash and cash equivalents of $2.40 billion for the first nine months of 2022.

United anticipates it can meet its obligations over the next 12 months and has no material commitments for capital expenditures.

7 unchanged sentences

United is well-capitalized based upon regulatory guidelines.

United’s risk-based capital ratio is 14.75% at June 30, 2022 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 12.65%, 12.65% and 10.45%, respectively.

The June 30, 2022 ratios reflects United’s election of a five-year transition provision, allowed by the Federal Reserve Board and other federal banking agencies in response to the COVID-19

pandemic, to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period.

United’s risk-based capital ratio is 14.43% at September 30, 2022 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 12.39%, 12.39% and 10.67%, respectively.

The September 30, 2022 ratios reflects United’s election of a five-year transition provision, allowed by the Federal Reserve Board and other federal banking agencies in response to the COVID-19 pandemic, to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period.

The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10.0%, a Common Equity Tier 1 capital ratio of 6.5%, a Tier 1 capital ratio of 8.0% and a leverage ratio of 5.0%.

Total shareholders’ equity was $4.49 billion at June 30, 2022, which was a decrease of $231.58 million or 4.91% from December 31, 2021.

This decrease is primarily due to a decrease of $242.47 million in accumulated other comprehensive income due mainly to an after-tax

decrease in the fair value of available for sale securities as a result of a rising interest rate environment.

Total shareholders’ equity was $4.44 billion at September 30, 2022, which was a decrease of $278.54 million or 5.90% from December 31, 2021.

This decrease is primarily due to a decrease of $347.42 million in accumulated other comprehensive income due mainly to an after-tax decrease in the fair value of available for sale securities as a result of a rising interest rate environment.

In addition, treasury stock increased $79.78 million or 46.76% due to the repurchase of 2,259,546 shares of United common stock under stock repurchase plans approved by United’s Board of Directors.

Partially offsetting these decreases was an increase of $133.49 million in retained earnings (net income less dividends declared).

United’s equity to assets ratio was 15.59% at June 30, 2022 as compared to 16.09% at December 31, 2021.

The primary capital ratio, capital and reserves to total assets and reserves, was 16.34% at June 30, 2022 as compared to 16.79% at December 31, 2021.

United’s average equity to average asset ratio was 15.88% for the second quarter of 2022 as compared to 16.21% the second quarter of 2021.

United’s average equity to average asset ratio was 16.05% for the first half of 2022 as compared to 16.31% for the first half of 2021.

United’s equity to assets ratio was 15.29% at September 30, 2022 as compared to 16.09% at December 31, 2021.

The primary capital ratio, capital and reserves to total assets and reserves, was 16.03% at September 30, 2022 as compared to 16.79% at December 31, 2021.

United’s average equity to average asset ratio was 15.75% for the third quarter of 2022 as compared to 16.18% for the third quarter of 2021.

United’s average equity to average asset ratio was 15.95% for the first nine months of 2022 as compared to 16.27% for the first nine months of 2021.

All of these financial measurements reflect a financially sound position.

During the second quarter of 2022, United’s Board of Directors declared a cash dividend of $0.36 per share.

Cash dividends were $0.72 per common share for the first six months of 2022.

Total cash dividends declared were $48.54 million for the second quarter of 2022 and $97.81 million for the first six months of 2022 as compared to $45.27 million for the second quarter of 2021 and $90.52 million for the first six months of 2021.

During the third quarter of 2022, United’s Board of Directors declared a cash dividend of $0.36 per share.

Cash dividends were $1.08 per common share for the first nine months of 2022.

Total cash dividends declared were $48.56 million for the third quarter of 2022 and $146.37 million for the first nine months of 2022 as compared to $45.27 million for the third quarter of 2021 and $135.79 million for the first nine months of 2021.

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 2. Management’s Discussion and Analysis