What changed in this filing

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Item 1. Financial Statements

2023-05-10 compared with 2022-11-09 · 469 added, 731 removed, 1313 unchanged (48% of the section changed)

FINANCIAL STATEMENTS (UNAUDITED)

The September 30, 2022 and December 31, 2021, consolidated balance sheets of United Bankshares, Inc.

and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2022 and 2021, the related consolidated statement of changes in shareholders’ equity for the three and nine months ended September 30, 2022 and 2021, the related condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021, and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS

The March 31, 2023 and December 31, 2022, consolidated balance sheets of United

Bankshares, Inc.

and Subsidiaries

(“United” or the “Company”), consolidated statements of income and comprehensive income for the three months ended March 31, 2023 and 2022, the related consolidated statement of changes in shareholders’ equity for the three months ended March 31, 2023 and 2022, the related condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022, and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS (Unaudited)

UNITED BANKSHARES, INC.

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Total cash and cash equivalents

Securities available for sale at estimated fair value (amortized cost-$ 5,142,448 at September 30, 2022 and $ 4,031,494 at December 31, 2021, allowance for credit losses of $ 0 at September 30, 2022 and December 31, 2021)

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

Securities available for sale at estimated fair value (amortized cost-$ 4,830,343 at March 31, 2023 and $ 5,011,729 at December 31, 2022, allowance for credit losses of $ 0 at March 31, 2023 and December 31, 2022)

Securities held to maturity, net of allowance for credit losses of $ 18 at March 31, 2023 and December 31, 2022 (estimated fair value-$ 1,020 at March 31, 2023 and December 31, 2022)

Equity securities at estimated fair value

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Operating lease right-of-use

Mortgage servicing rights, net of valuation allowance of $ 0 at September 30, 2022 and $ 883 at December 31, 2021

Mortgage servicing rights

Bank-owned life insurance (“BOLI”)

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

Accrued interest receivable

Noninterest-bearing

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issued- 142,238,046

and 141,360,266 at September 30, 2022 and December 31, 2021, respectively, including 7,266,226 and 4,967,508 shares in treasury at September 30, 2022 and December 31, 2021, respectively

and 142,011,560 at March 31, 2023 and December 31, 2022, respectively, including 7,301,495 and 7,266,438 shares in treasury at March 31, 2023 and December 31, 2022, respectively

Retained earnings

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Three Months Ended

Nine Months Ended

Interest income

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Other real estate owned (“OREO”) expense

Net losses (gains) on the sales of OREO properties

Net gains on the sales of OREO properties

Equipment expense

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Three Months Ended

Nine Months Ended

Earnings per common share:

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Three Months Ended

Nine Months Ended

Change in net unrealized loss on available-for-sale

(“AFS”) securities, net of tax

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

Change in pension plan assets, net of tax

Comprehensive (loss) income, net of tax

Change in net unrealized gain (loss) on available for sale (“AFS”) securities, net of tax

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

Change in defined benefit pension plan, net of tax

Comprehensive income (loss), net of tax

See notes to consolidated unaudited financial statements

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

UNITED BANKSHARES, INC.

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(Dollars in thousands, except per share data)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Comprehensive

Shareholders’

(Loss) Income

Balance at January 1, 2023

Comprehensive income:

Other comprehensive loss, net of tax

Total comprehensive loss, net of tax

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

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Balance at March 31, 2023

Three Months Ended March 31, 2022

Comprehensive

Shareholders’

Balance at January 1, 2022

Comprehensive income:

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Stock based compensation expense

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

Cash dividends ($ 0.36 per share)

Stock grant forfeiture ( 6,212 shares)

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

Balance at June 30, 2022

Comprehensive income:

Other comprehensive loss, net of tax

Total comprehensive loss, net of tax

Stock based compensation expense

Purchase of treasury stock ( 740,873 shares)

Cash dividends ($ 0.36 per share)

Stock grant forfeiture ( 207 shares)

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

Balance at September 30, 2022

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands, except per share data)

Nine Months Ended September 30, 2021

Comprehensive

Income (Loss)

Shareholders’

Balance at January 1, 2021

Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Purchase of treasury stock ( 339,229 shares)

Cash dividends ($ 0.35 per share)

Grant of restricted stock ( 180,901 shares)

Common stock options exercised ( 145,621 shares)

Balance at March 31, 2022

Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Cash dividends ($ 0.35 per share)

Stock grant forfeiture ( 1,971 shares)

Grant of restricted stock ( 1,443 shares)

Common stock options exercised ( 28,324 shares)

Balance at June 30, 2021

Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Cash dividends ($ 0.35 per share)

Stock grant forfeiture ( 1,531 shares)

Common stock options exercised ( 1,717 shares)

Balance at September 30, 2021

See notes to consolidated unaudited financial statements

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(Dollars in thousands

Nine Months Ended

Three Months Ended

NET CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES

Proceeds from maturities and calls of securities held to maturity

Proceeds from sales of securities available for sale

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Purchases of other investment securities

Purchases of bank-owned life insurance policies

Redemption of bank-owned life insurance policies

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Proceeds from the sales of OREO properties

Net change in loans

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

Net change in loans and leases

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

FINANCING ACTIVITIES

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Proceeds from exercise of stock options

Redemption of subordinated debt

Repayment of long-term Federal Home Loan Bank borrowings

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

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(Decrease) Increase in cash and cash equivalents

NET CASH PROVIDED BY FINANCING ACTIVITIES

Increase (Decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Transfers of loans to bank premises and equipment

Acquisitions:

Acquisition of subsidiaries and purchase price adjustments:

Assets acquired, net of cash

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Basis of Presentation

The accompanying unaudited consolidated interim financial statements of United Bankshares, Inc.

and Subsidiaries (“United” or “the Company”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States (“GAAP”) and with the instructions for Form 10-Q

The accompanying unaudited consolidated interim financial statements of United Bankshares

and Subsidiaries

(“United” or “the Company”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States (“GAAP”) and with the instructions for Form 10-Q

and Article 10 of Regulation S-X.

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Actual results could differ from those estimates.

The financial statements presented as of September 30, 2022 and 2021 and for the three-month and nine-month periods then ended have not been audited.

The financial statements presented as of March 31, 2023 and 2022 and for the three-month periods then ended have not been audited.

The Notes to Consolidated Financial Statements appearing in United’s 2022 Annual Report on Form 10-K,

which includes descriptions of significant accounting policies, should be read in conjunction with these interim financial statements.

Certain amounts reported in prior periods have been reclassified to conform with the current presentation.

In addition, $ 1,483,987

was reclassed from noninterest-bearing deposits to interest-bearing deposits on United’s Consolidated Balance Sheets for the period ended December 31, 2021 due to the nature of the underlying deposit accounts and a misclassification in the previous presentation.

This reclassification did not impact any other amounts reported or disclosed in the consolidated financial statements and footnotes.

In the opinion of management, any additional adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made.

In the opinion of management, any adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made.

Such adjustments are of a normal and recurring nature.

The accompanying consolidated interim financial statements include the accounts of United and its wholly owned subsidiaries.

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New Accounting Standards

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

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-02,

“Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” ASU 2023-02

permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

The amendments in this ASU apply to all reporting entities that hold tax equity investments that meet the conditions for and elect to account for them using the proportional amortization method or an investment in a low income housing tax credit (“LIHTC”) structure through a limited liability entity that is not accounted for using the proportional amortization method and to which certain LIHTC-specific guidance removed from Subtopic 323-740

has been applied.

Additionally, the disclosure requirements apply to investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method (including investments within that elected program that do not meet the conditions to apply the proportional amortization method).

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

The amendments in this update must be applied on either a modified retrospective or a retrospective basis except for LIHTC investments not accounted for using the proportional amortization method.

The adoption of ASU 2023-02

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

In December 2022, the FASB issued ASU 2022-06,

“Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848.” ASU 2022-06

extends the period of time financial statement preparers can utilize the reference rate reform relief guidance.

In 2020, the FASB issued ASU 2020-04

to provide temporary, optional expedients related to the accounting for contract modifications and hedging transactions as a result of the global markets’ anticipated transition away from the use of LIBOR and other interbank offered rates to alternative reference rates.

At the time ASU 2020-04

was issued, the United Kingdom’s Financial Conduct Authority (“FCA”) had established the intent that it would no longer be necessary to

persuade, or compel, banks to submit to LIBOR after December 31, 2021.

As a result, the sunset provision was set for December 31, 2022;

12 months after the expected cessation date of all currencies and tenors of LIBOR.

In March 2021, the FCA announced that the intended cessation date of LIBOR in the United States would be June 30, 2023.

Accordingly, ASU 2022-06

defers the expiration date of ASU 848 to December 31, 2024.

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

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

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

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

In June 2022, the FASB issued ASU 2022 -

03, “Fair Value Measurement (Topic 820):

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

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

Early adoption of the amendment is permitted.

The Company is assessing the impact ASU No.

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

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

Early adoption of the amendment was permitted.

was adopted by United prospectively for the period beginning January 1, 2023.

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

However, ASU No.

did affect the Company’s disclosures.

For additional information, see Notes to Consolidated Financial Statements, Note 4, “Credit Quality,” in this Form 10-Q.

In March 2022, the FASB issued ASU No.

“Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio

Layer Method”.

Fair Value Hedging – Portfolio Layer Method”.

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

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for the corresponding period.

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

was adopted by United on January 1, 2023.

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

In October 2021, the FASB issued ASU No.

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Early adoption of the amendments is permitted.

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

In July 2021, the FASB issued ASU No.

“Leases (Topic 842):

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

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

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

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

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

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

Entities may elect to adopt the amendments through either a retrospective application to leases that commenced or were modified after the beginning of the period in which ASC 842 was adopted or a prospective application to leases that commence or are modified subsequent to the date the amendments in ASU 2021-05

are first applied.

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

was adopted by United on January 1, 2023.

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

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

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

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

The Company has implemented a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR.

In addition, the Company took steps to ensure that no new contracts using LIBOR were originated after December 31, 2021.

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

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

In August 2020, the FASB issued No.

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

and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40).”

The amendments in the ASU remove certain separation models for convertible debt instruments and convertible preferred stock that require the separation of a convertible debt instrument into a debt component and an equity or derivative component.

The ASU also amends the

derivative scope exception guidance for contracts in an entity’s own equity.

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

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

calculations that are impacted by the amendments.

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

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

was adopted by United on January 1, 2022.

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

In March 2020, the FASB issued ASU No.

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

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

See information above under ASU No.

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

MERGERS AND ACQUISITIONS

On December 3, 2021 (the “Acquisition Date”), United completed its acquisition of Community Bankers Trust Corporation (“Community Bankers Trust”).

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

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

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

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

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

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

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

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

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

It also strategically connected our Mid-Atlantic

and Southeast footprints.

As of the Acquisition Date, Community Bankers Trust had $ 1,788,013 in total assets, $ 1,282,997 in loans and leases, net of unearned income and $ 1,517,502 in deposits.

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

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

The preliminary purchase price has been allocated to the identifiable tangible and intangible assets resulting in preliminary additions to goodwill and core deposit intangibles of $ 78,849 and $ 3,398 , respectively.

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

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

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

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

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

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

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

loans recorded to the provision for credit losses.

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

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

At September 30, 2022, the discount on the trust preferred issuance had an estimated remaining life of 11.50 years and the premiums on the buildings, and interest-bearing deposits each had an average estimated remaining life of 30.50 years, and 4.50 years, respectively.

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

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

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

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

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

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

The difference between the unpaid principal balance (“UPB”), or par value, of PCD loans and leases and the amortized cost basis is considered to relate to noncredit factors and resulted in a discount of $ 3,559 at the Acquisition Date.

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

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

The total fair value mark on the non-PCD

loans and leases at the Acquisition Date was $ 4,186 .

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

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

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

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

Purchase price of PCD loans and leases at acquisition

Allowance for credit losses at acquisition

discount at acquisition

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

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

Purchase price:

Value of common shares issued ( 7,135,771 shares)

Fair value of stock options assumed

Cash for fractional shares

Total purchase price

Identifiable assets:

Cash and cash equivalents

Investment securities

Net loans and leases

Premises and equipment

Operating lease right-of-use

Core deposit intangible

Total identifiable assets

Identifiable liabilities:

Short-term borrowings

Long-term borrowings

Operating lease liability

Other liabilities

Total identifiable liabilities

Preliminary fair value of net assets acquired including identifiable intangible assets

Preliminary resulting goodwill

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

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

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

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

Nine Months Ended

September 30, 2021

Total Revenues (1)

Represents net interest income plus other income

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

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

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

The Company is assessing ASU No.

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

INVESTMENT SECURITIES

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

September 30, 2022

March 31, 2023

Treasury securities and obligations of U.S.

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Other corporate securities

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

United excludes

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

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

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debt securities.

The table above excludes accrued interest receivable of $ 22,269 and $ 15,353 at September 30, 2022 and December 31, 2021, respectively, that is recorded in “Accrued interest receivable.”

The following is a summary of securities available for sale which were in an unrealized loss position at September 30, 2022 and December 31, 2021.

The table above excludes accrued interest receivable of $ 23,579 and $ 23,955 at March 31, 2023 and December 31, 2022, respectively, that is recorded in “Accrued interest receivable.”

The following is a summary of securities available for sale which were in an unrealized loss position at March 31, 2023 and December 31, 2022.

Less than 12 months

12 months or longer

September 30, 2022

March 31, 2023

Treasury securities and obligations of U.S.

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Three Months Ended

Nine Months Ended

Proceeds from maturities, sales and calls

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Gross realized losses

At September 30, 2022, gross unrealized losses on available for sale securities were $ 494,529 on 1,468 securities of a total portfolio of 1,526 available for sale securities.

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.

At March 31, 2023, gross unrealized losses on available for sale securities were $ 411,192 on 1,382 securities of a total portfolio of 1,462 available for sale securities.

Securities with the most significant gross unrealized losses at March 31, 2023 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities, asset-backed securities and other corporate securities.

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

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

Generally, the significant amount of gross unrealized losses on available for sale securities at March 31, 2023 was the result of rising interest rates.

State and political subdivisions

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

The total amortized cost of available for sale state and political subdivision securities was $ 827,078 at September 30, 2022.

As of September 30, 2022, approximately 53 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality.

The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of September 30, 2022.

The total amortized cost of available for sale state and political subdivision securities was $ 812,022 at March 31, 2023.

As of March 31, 2023, approximately 53 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality.

The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of March 31, 2023.

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

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

Agency mortgage-backed securities

Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities had credit losses at March 31, 2023.

Mortgage-backed securities

The fair value of mortgage-backed

securities is affected by changes in interest rates and prepayment speeds.

When interest rates decline, prepayment speeds generally accelerate due to homeowners refinancing their mortgages at lower interest rates.

This may result in the proceeds being reinvested at lower interest rates.

Rising interest rates may decrease the assumed prepayment speed.

Slower prepayment speeds may extend the maturity of the security beyond its estimated maturity.

Therefore, investors may not be able to invest at current higher market rates due to the extended expected maturity of the security.

United had a net unrealized loss of $ 241,006 on mortgage-backed

securities at March 31, 2023.

Below is a detailed discussion of mortgage-backed securities by type.

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

The total amortized cost of available for sale agency mortgage-backed securities was $ 2,071,977 at September 30, 2022.

The total amortized cost of available for sale agency mortgage-backed securities was $ 1,933,421 at March 31, 2023.

Of the $ 1,933,421 amount, $ 594,150 was related to agency commercial mortgage-backed securities and $ 1,339,271 was related to agency residential mortgage-backed securities.

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

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

residential mortgage-backed securities

Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at March 31, 2023.

United’s non-agency

1 unchanged sentence

The total amortized cost of available for sale non-agency

residential mortgage-backed securities was $ 122,069 at September 30, 2022.

residential mortgage-backed securities was $ 121,001 at March 31, 2023.

Of the $ 121,001 , 100 % was rated AAA.

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

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

residential mortgage-backed securities had credit losses at March 31, 2023.

Asset-backed securities

As of September 30, 2022, United’s asset-backed securities portfolio had a total amortized cost balance of $ 961,942 .

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

As of March 31, 2023, United’s asset-backed securities portfolio had a total amortized cost balance of $ 922,890 .

100 % of the portfolio was investment grade rated as of March 31, 2023.

Approximately 25 % of the portfolio relates to securities that are backed by Federal Family Education Loan Program (“FFELP”) student loan collateral which includes a minimum of a 97 % government repayment guaranty, as well as additional credit support and subordination in excess of the government guaranteed portion.

Approximately 75 % of the portfolio relates to collateralized loan obligation securities that are all AAA rated.

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

Upon reviewing this portfolio as of March 31, 2023, it was determined that no ne of the asset-backed securities had credit losses.

Single issue trust preferred securities

2 unchanged sentences

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

The amortized cost of available for sale single issue trust preferred securities as of September 30, 2022 consisted of $ 8,464 in investment grade bonds, $ 3,083 in split rated bonds, and $ 5,782 in unrated bonds.

The amortized cost of available for sale single issue trust preferred securities as of March 31, 2023 consisted of $ 8,470 in investment grade bonds, $ 3,091 in split rated bonds, and $ 5,791 in unrated bonds.

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

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

Upon completing the review for the first quarter of 2023, it was determined that none of the single issue trust preferred securities had credit losses.

Other corporate securities

As of September 30, 2022, United’s other corporate securities portfolio had a total amortized cost balance of $ 592,127 .

As of March 31, 2023, United’s other corporate securities portfolio had a total amortized cost balance of $ 477,355 .

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

Of the $ 592,127 total amortized cost balance, 96 % was investment grade rated, 2 % was below investment grade rated, 1 % was split rated, and 1 % was unrated.

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

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

The amortized cost and estimated fair value of securities available for sale at September 30, 2022 and December 31, 2021 by contractual maturity are shown as follows.

Of the $ 477,355 , 98 % had at least one rating above investment grade, none were below investment grade rated, and 2 % were unrated.

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

Based upon management’s analysis and judgment, it was determined that none of the other corporate securities had credit losses at March 31, 2023.

The amortized cost and estimated fair value of securities available for sale at March 31, 2023 and December 31, 2022 by contractual maturity are shown as follows.

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

September 30, 2022

March 31, 2023

December 31, 2022

4 unchanged sentences

Equity securities at fair value

Equity securities consist primarily of mutual funds.

The fair value of United’s equity securities was $ 7,314 at September 30, 2022 and $ 12,404 at December 31, 2021.

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

The fair value of United’s equity securities was $ 7,792 at March 31, 2023 and $ 7,629 at December 31, 2022.

Three Months Ended

Nine Months Ended

Net gains recognized during the period on equity securities sold

1 unchanged sentence

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

Net (losses) gains recognized during the period

Net gains (losses) recognized during the period

Other investment securities

During the third quarter of 2022, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the third quarter of 2022 had a significant adverse effect on the fair value of any of its cost method securities.

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

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

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 1,722,762 and $ 1,871,328 at September 30, 2022 and December 31, 2021, respectively.

During the first quarter of 2023, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the first quarter of 2023 had a significant adverse effect on the recorded value of any of its cost method securities.

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

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

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 3,116,743 and $ 2,412,820 at March 31, 2023 and December 31, 2022, respectively.

LOANS AND LEASES

Major classes of loans and leases are as follows:

September 30, 2022

March 31, 2023

December 31, 2022

8 unchanged sentences

Unearned income

Total loans and leases, net of unearned income

The table above does not include loans held for sale of $ 210,075 and $ 504,416 at September 30, 2022 and December 31, 2021, respectively.

Total gross loans

The table above does not include loans held for sale of $ 68,176 and $ 56,879 at March 31, 2023 and December 31, 2022, respectively.

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

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

The aggregate dollar amount of these loans was $ 25,386 and $ 32,990 at September 30, 2022 and December 31, 2021, respectively.

The aggregate dollar amount of these loans was $ 24,409 and $ 24,901 at March 31, 2023 and December 31, 2022, respectively.

CREDIT QUALITY

7 unchanged sentences

When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and unpaid interest accrued in prior years is charged to the allowance for credit losses.

United’s method of income recognition for loans and leases that are classified as nonaccrual is to recognize interest income on a cash

basis or apply the cash receipt to principal when the ultimate collectibility of principal is in doubt.

United’s method of income recognition for loans and leases that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectibility of principal is in doubt.

Nonaccrual loans and leases will not normally be returned to accrual status unless all past due principal and interest has been paid and the borrower has evidenced their ability to meet the contractual provisions of the note.

A loan is categorized as a troubled debt restructuring (“TDR”) if a concession is granted and there is deterioration in the financial condition of the borrower.

A loan classified as a TDR will generally retain such classification until the loan is paid in full.

However, a one-to-four-family

residential mortgage TDR loan that yields a market rate and demonstrates the ability to pay under the terms of the restructured note through a sustained period of repayment performance, which is generally one year, is removed from the TDR classification.

Interest income on TDRs is accrued at the reduced rate and the loan is returned to performing status once the borrower demonstrates the ability to pay under the terms of the restructured note through a sustained period of repayment performance, which is generally six months.

TDRs can take the form of a reduction of the stated interest rate, splitting a loan into separate loans and leases with market terms on one loan and concessionary terms on the other loan, receipts of assets from a debtor in partial or full satisfaction of a loan, the extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk, the reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement, or the reduction of accrued interest or any other concessionary type of renegotiated debt.

Under United’s current loan policy, a loan is not recognized as a TDR until it becomes reasonably expected that the loan will be a TDR.

The portfolio of TDR loans is monitored monthly.

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

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

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

This program ended on January 1, 2022.

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

As of September 30, 2022, United no longer has any eligible loan modifications in deferral under section 4013, “Temporary Relief from Troubled Debt Restructurings,” of the CARES Act as compared to 188 eligible loan modifications in deferral on $ 18,039 of loans outstanding at December 31, 2021.

As of September 30, 2022, United had TDRs of $ 23,155 as compared to $ 35,856 as of December 31, 2021.

Of the $ 23,155 aggregate balance of TDRs at September 30, 2022, $ 10,336 was on nonaccrual and $ 2,941 was 90 days or more past due.

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

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

As of September 30, 2022, there was a commitment to lend additional funds of $ 60 to a debtor owing a receivable whose terms have been modified in a TDR.

During the first nine months of 2022, advances of $ 72 were made to this debtor under a loan that had been previously modified.

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

Reason for modification

September 30, 2022

December 31, 2021

Interest rate reduction

Interest rate reduction and change in terms

Concession of principal and term

Extended maturity

Transfer of asset

Change in terms

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

Troubled Debt Restructurings

For the Three Months Ended

September 30, 2022

September 30, 2021

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land

Other consumer

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

Troubled Debt Restructurings

For the Nine Months Ended

September 30, 2022

September 30, 2021

The following table sets forth United’s age analysis of its past due loans and leases, segregated by class of loans and leases:

Age Analysis of Past Due Loans and Leases

As of March 31, 2023

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land

Construction & land development

Other consumer

The following table sets forth United’s troubled debt restructurings, based on their post-modification outstanding recorded balance, that have been restructured during the three and nine months ended September 30, 2022 and 2021, segregated by the reason for modification:

Three Months Ended

Nine Months Ended

Reason for modification

Interest rate reduction and change in terms

Transfer of asset

Extended maturity

Change in terms

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

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

Three Months Ended

September 30, 2022

Nine Months Ended

September 30, 2022

Troubled Debt Restructurings

Age Analysis of Past Due Loans and Leases

As of December 31, 2022

Commercial real estate:

5 unchanged sentences

Other consumer

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

No charge-offs were recorded during the three months ended September 30, 2021.

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

Nine Months Ended

September 30, 2021

Troubled Debt Restructurings

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

At March 31, 2023

At December 31, 2022

With No Related

Allowance for

Credit Losses

With No Related

Allowance for

Credit Losses

Commercial Real Estate:

3 unchanged sentences

Residential Real Estate

Construction & land development

Other consumer

The following table sets forth United’s age analysis of its past due loans and leases, segregated by class of loans:

Age Analysis of Past Due Loans and Leases

As of September 30, 2022

Interest income recognized on nonaccrual loans was insignificant during the three months ended March 31, 2023 and 2022.

In some cases, United will modify a loan to a borrower experiencing financial difficulty by providing multiple types of concessions such as a term extension, principal forgiveness, an interest rate reduction or a combination thereof.

The following table presents the amortized cost of loans and leases to borrowers experiencing financial difficulty modified on or after January 1, 2023, the date United adopted ASU 2022-02,

through March 31, 2023, by class of financing receivable and by type of modification.

The percentage of the amortized cost basis of loans and leases that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also represented below.

Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial Difficulty

For the Three Months Ended March 31, 2023

Interest Rate

% of Total Class of

Financing Receivable

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land

Construction & land development

Other consumer

Age Analysis of Past Due Loans and Leases

As of December 31, 2021

As of March 31, 2023, United did not have any commitments to lend additional funds on the loans above modified due to the debtors experiencing financial difficulty.

United’s estimate of future credit losses uses a lifetime methodology, derived from modeled loan performance based on the extensive historical experience of loans with similar risk characteristics, adjusted to reflect current conditions and reasonable and supportable forecasts.

The historical loss experience used in United’s credit loss models includes the impact of loan modifications provided to borrowers experiencing financial difficulty, and also includes the impact of projected loss severities as a result of loan defaults.

United closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents an aging analysis of loans and leases to borrowers experiencing financial difficulty modified on or after January 1, 2023 through March 31, 2023, presented by class of financing receivable:

Payment Status (Amortized Cost Basis)

As of March 31, 2023

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land

Construction & land development

Other consumer

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

At September 30, 2022

At December 31, 2021

The following table presents the financial effect of loan and lease modifications to borrowers experiencing financial difficulty for the three months ended March 31, 2023.

For the Three Months Ended March 31, 2023

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land

Construction & land development

Other consumer

Interest income recognized on nonaccrual loans was insignificant during the three and nine months ended September 30, 2022 and 2021.

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

The following table presents the amortized cost basis of collateral-dependent loans and leases in which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty, by class of loans and leases as of September 30, 2022 and December 31, 2021:

No loan or lease modifications completed on or after January 1, 2023 through March 31, 2023 to borrowers experiencing financial difficulty had a payment default during the first three months ended March 31, 2023.

United elects the practical expedient to measure expected credit

losses on collateral dependent loans and leases based on the difference between the loan’s amortized cost and the collateral’s fair value, adjusted for selling costs.

Collateral Dependent Loans and Leases

At September 30, 2022

At March 31, 2023

Commercial real estate:

45 unchanged sentences

prior to such a classification.

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

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

Commercial Real Estate – Owner-occupied

Origination Year

Revolving loans

amortized cost

As of September 30, 2022

Origination Year

As of March 31, 2023

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period

Current-period recoveries

Current-period net charge-offs

Origination Year

Current-period net recoveries

Revolving loans

1 unchanged sentence

loans and leases

Origination Year

As of December 31, 2022

1 unchanged sentence

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net recoveries

Commercial Real Estate – Nonowner-occupied

Origination Year

Revolving loans

amortized cost

As of September 30, 2022

Origination Year

As of March 31, 2023

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Origination Year

Current-period

Current-period net

Revolving loans

1 unchanged sentence

loans and leases

Origination Year

As of December 31, 2022

1 unchanged sentence

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period

net recoveries

Other commercial

loans and leases

Term Loans and leases

Origination Year

Revolving loans

amortized cost

As of September 30, 2022

loans and leases

Origination Year

As of March 31, 2023

Internal Risk Grade:

4 unchanged sentences

Term Loans and leases

Origination Year

Revolving loans

1 unchanged sentence

loans and leases

Origination Year

As of December 31, 2022

1 unchanged sentence

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period

net (charge-offs)

Residential Real Estate

Origination Year

Revolving loans

amortized cost

As of September 30, 2022

Origination Year

As of March 31, 2023

Internal Risk Grade:

3 unchanged sentences

Current-period net (charge-offs)

Origination Year

Revolving loans

amortized cost

Origination Year

As of December 31, 2022

1 unchanged sentence

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net (charge-offs)

Construction and Land Development

Origination Year

Revolving loans

amortized cost

As of September 30, 2022

Origination Year

As of March 31, 2023

Internal Risk Grade:

2 unchanged sentences

Current-period recoveries

Current-period net charge-offs

Origination Year

Current-period net recoveries

Revolving loans

amortized cost

Origination Year

As of December 31, 2022

1 unchanged sentence

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Origination Year

Current-period charge-offs

Current-period recoveries

Current-period net recoveries

Revolving loans

amortized cost

As of September 30, 2022

Origination Year

As of March 31, 2023

Internal Risk Grade:

3 unchanged sentences

Current-period net charge-offs

Origination Year

Revolving loans

amortized cost

Origination Year

As of December 31, 2022

1 unchanged sentence

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Other Consumer

Origination Year

Revolving loans

amortized cost

As of September 30, 2022

Origination Year

As of March 31, 2023

Internal Risk Grade:

2 unchanged sentences

Current-period recoveries

Current-period net charge-offs

Origination Year

Current-period net (charge-offs) recoveries

Revolving loans

amortized cost

Origination Year

As of December 31, 2022

1 unchanged sentence

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

At September 30, 2022 and December 31, 2021, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 10,779 and $ 14,823 , respectively.

Current-period charge-offs

Current-period recoveries

Current-period net (charge-offs)

At March 31, 2023 and December 31, 2022, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 4,086 and $ 2,052 , respectively.

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

2 unchanged sentences

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

Outstanding balances of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process are $ 1,200 at September 30, 2022 as compared to $ 13 at December 31, 2021.

At March 31, 2023 and December 31, 2022, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $ 1,090 and $ 1,309 , respectively.

ALLOWANCE FOR CREDIT LOSSES

7 unchanged sentences

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

Accrued interest receivable was $ 59,331 ( no allowance for credit losses) and $ 49,029 (net of an allowance for credit losses of $ 8 ) at September 30, 2022 and December 31, 2021, respectively, related to loans and leases are included separately in “Accrued interest receivable” in the consolidated balance sheets.

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

As a result of this assessment, United did not record an allowance for credit losses for accrued interest receivables not expected to be collected as of September 30, 2022 as compared to an allowance for credit losses of $ 8 as of December 31, 2021.

Accrued interest receivable was $ 72,922 and $ 70,332 at March 31, 2023 and December 31, 2022, respectively, related to loans and leases are included separately in “Accrued interest receivable” in the consolidated balance sheets.

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

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

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

The following table represents the accrued interest receivable as of March 31, 2023 and December 31, 2022:

Accrued Interest Receivable

At September 30, 2022

At March 31, 2023

At December 31, 2022

4 unchanged sentences

Residential Real Estate

Construction & land development

Other consumer

Allowance for credit losses

The following table represents the accrued interest receivables written off by reversing interest income for the three months and nine months ended September 30, 2022 and 2021:

Accrued Interest Receivables Written Off by Reversing Interest Income

The following table represents the accrued interest receivables written off by reversing interest income for the three months ended March 31, 2023 and 2022:

Accrued Interest Receivables Written Off

by Reversing Interest Income

Three Months Ended

Nine Months Ended

Commercial Real Estate:

3 unchanged sentences

Residential Real Estate

Construction & land development

Other consumer

1 unchanged sentence

Historical credit loss experience provides the basis for the estimation of expected credit losses.

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

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

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

10 unchanged sentences

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

Residential real estate loans are dependent upon individual borrowers who are affected by changes in general economic conditions, demand for housing and resulting residential real estate valuation.

Residential real estate loans are dependent upon

individual borrowers who are affected by changes in general economic conditions, demand for housing and resulting residential real estate valuation.

Construction and land development loans are impacted mainly by demand whether for new residential housing or for retail, industrial, office and other types of commercial construction within a given area.

3 unchanged sentences

When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral but may also include other non-performing

loans or TDRs, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

loans, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

These individually evaluated loans are removed from their respective pools and typically represent collateral dependent loans.

In addition, the Company individually evaluates “reasonably expected” TDRs, which are identified by the Company as a loan expected to be classified as a TDR.

Expected credit losses are estimated over the contractual term of the loans and leases, adjusted for expected prepayments when appropriate.

The contractual term excludes expected extensions, renewals and modifications unless either of the following applies:

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

The contractual term excludes expected extensions, renewals and modifications unless management has a reasonable expectation at the reporting date that the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by United.

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

3 unchanged sentences

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

The reserve for lending-related commitments of $ 39,698 and $ 31,442 at September 30, 2022 and December 31, 2021, respectively, is separately classified on the balance sheet and is included in other liabilities.

The reserve for lending-related commitments of $ 48,789 and $ 46,189 at March 31, 2023 and December 31, 2022, respectively, is separately classified on the balance sheet and is included in other liabilities.

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

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

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

Then any qualitative adjustments are applied to account for the Company’s view of the future.

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

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

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

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

and concentrations of credit.

United’s allowance for credit losses at March 31, 2023 increased $ 8,345 or 2.97 % from December 31, 2022.

The overall increase in the allowance was driven primarily by a change in qualitative factors and as well as an expected worsening of future economic performance within the reasonable and supportable forecast.

This increase was offset slightly due to improvement in historical loss rates and a decrease in allocations established for individually assessed loans.

The first quarter of 2023 qualitative adjustments include analyses of the following:

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.

– United considered the impact of inflation, interest rates, the regulatory environment due to recent bank failures and geopolitical conflict when making determinations related to factor adjustments for the external environment.

United also considered portfolio trends related to economic and business conditions, collateral values for dependent loans;

past due, nonaccrual and graded loans and leases;

and concentrations of credit.

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 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 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.

The forecast for real GDP in 2023 shifted slightly downward in the first quarter, from a projection of 0.50 % for 2023 at the end of 2022 to 0.40 % for 2023 with a larger downward shift for 2024, from a projection of 1.60 % for 2024 at the end of 2022 to 1.20 % for 2023.

The unemployment rate remained fairly consistent to the end of 2022 with a steady trend expected throughout 2023 and 2024.

Greater risk of loss is probable in the office portfolio due to continued hybrid and remote work that may be exacerbated by future economic conditions and in the construction portfolio due to weakened economic conditions.

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

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

For the Three Months Ended September 30, 2022

Commercial Real Estate

Allowance for Loan and Lease Losses:

Beginning balance

Ending balance

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

For the Nine Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

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Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

Beginning balance

Allowance for PCD loans (acquired during the period)

Ending balance

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

September 30, 2022

March 31, 2023

Community Banking

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Core deposit intangible assets

December 31, 2021

Community Banking

Mortgage Banking

Non-amortized

3 unchanged sentences

Goodwill not subject to amortization

United incurred amortization expense of $ 1,379 and $ 4,137 for the three and nine months ended September 30, 2022 as compared to $ 1,466 and $ 4,399 for the three and nine months ended September 30, 2021, respectively.

The following table provides a reconciliation of goodwill:

Goodwill at December 31, 2021

Addition to goodwill from Community Bankers Trust acquisition

Goodwill at September 30, 2022

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

United incurred amortization expense of $ 1,279 and $ 1,379 for the quarters ended March 31, 2023 and 2022, respectively.

The following table sets forth the anticipated amortization expense for intangible assets for the years subsequent to 2022:

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MSRs are amortized in proportion to, and over the period of, estimated net servicing income.

The amortization of the MSRs is analyzed periodically and is adjusted to reflect changes in prepayment rates, economic factors and other assumptions.

The amortization of the MSRs is analyzed periodically and is adjusted to reflect changes in prepayment rates and other estimates.

The Company evaluates potential impairment of MSRs based on the difference between the carrying amount and current estimated fair value of the servicing rights.

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

If impairment exists, a valuation allowance is

established for any excess of amortized cost over the current estimated fair value by a charge to income.

If impairment exists, a valuation allowance is established for any excess of amortized cost over the current estimated fair value by a charge to income.

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

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

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

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

The unpaid principal balances of loans serviced for others were approximately $ 3,459,781 at September 30, 2022 and $ 3,698,998 at December 31, 2021.

The estimated fair value of the mortgage servicing rights was $ 44,305 and $ 27,355 at September 30, 2022 and December 31, 2021, respectively.

The estimated fair value of servicing rights at September 30, 2022 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 10.50 % to 11.02 % with a weighted average discount rate of 10.62 %, average constant prepayment rates (“CPR”) ranging from 5.92 % to 10.06 % with a weighted average prepayment rate of 6.48 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 1.97 %.

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

The unpaid principal balances of loans serviced for others were approximately $ 3,280,741 at March 31, 2023 and $ 3,381,485 at December 31, 2022.

The estimated fair value of the mortgage servicing rights was $ 39,699 and $ 41,880 at March 31, 2023 and December 31, 2022, respectively.

The estimated fair value of servicing rights at March 31, 2023 was determined using a net servicing fee of 0.25 %, average discount rates ranging from 9.54 % to 11.63 % with a weighted average discount rate of 10.60 %, average constant prepayment rates (“CPR”) ranging from 5.32 % to 6.25 % with a weighted average prepayment rate of 5.79 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 1.83 %.

The estimated fair value of servicing rights at December 31, 2022 was determined using a net servicing fee of 0.25 %, average discount rates ranging from 10.50 % to 10.74 % with a weighted average discount rate of 10.62 %, average CPR ranging from 5.66 % to 7.62 % with a weighted average prepayment rate of 6.30 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.19 %.

Please refer to Note 13 in these Notes to Consolidated Financial Statements for additional information concerning the fair value of MSRs.

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

The following presents the activity in mortgage servicing rights, including their valuation allowance for the three months ended March 31, 2023 and 2022:

Three Months Ended

Nine Months Ended

March 31, 2023

Three Months Ended

March 31, 2022

MSRs beginning balance

Addition from acquisition of subsidiary

Amount capitalized

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MSRs, net of valuation allowance

The Company did no t record any temporary impairments on mortgage servicing rights for the three months ended March 31, 2023 and 2022.

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

Amortization expense could change in future periods based on changes in the volume of prepayments and economic factors.

United determines if an arrangement is a lease at inception.

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The components of lease expense were as follows:

Classification

Three Months Ended

September 30, 2022

Three Months Ended

September 30, 2021

Operating lease cost

Net occupancy expense

Sublease income

Net occupancy expense

Net lease cost

Classification

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

March 31, 2023

March 31, 2022

Operating lease cost

5 unchanged sentences

Classification

September 30, 2022

March 31, 2023

December 31, 2022

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Other information related to leases was as follows:

September 30, 2022

March 31, 2023

Weighted-average remaining lease term:

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Three Months Ended

September 30, 2022

September 30, 2021

Cash paid for amounts in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in the exchange for lease liabilities

Nine Months Ended

September 30, 2022

September 30, 2021

March 31, 2023

March 31, 2022

Cash paid for amounts in the measurement of lease liabilities:

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ROU assets obtained in the exchange for lease liabilities

Maturities of lease liabilities by year and in the aggregate, under operating leases with initial or remaining terms of one year or more, for years subsequent to December 31, 2021, consists of the following as of September 30, 2022:

Maturities of lease liabilities by year and in the aggregate, under operating leases with initial or remaining terms of one year or more, for years subsequent to December 31, 2022, consists of the following as of March 31, 2023:

Total lease payments

1 unchanged sentence

SHORT-TERM BORROWINGS

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

September 30, 2022

At March 31, 2023 and December 31, 2022, short-term borrowings were as follows:

March 31, 2023

December 31, 2022

Federal funds purchased

Securities sold under agreements to repurchase

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

Total short-term borrowings

Securities sold under agreements to repurchase have not been a significant source of funds for the company.

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

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The line requires compliance with various financial and nonfinancial covenants.

At September 30, 2022, United had no outstanding balance under this credit.

At March 31, 2023, United had no outstanding balance under this credit.

LONG-TERM BORROWINGS

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

At September 30, 2022, United had an unused borrowing amount of approximately $ 7,065,152 available subject to delivery of collateral after certain trigger points.

At March 31, 2023, United had an unused borrowing amount of approximately $ 5,818,883 available subject to delivery of collateral after certain trigger points.

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

At September 30, 2022, $ 1,010,846 of FHLB advances with a weighted-average contractual interest rate of 2.84 % and a weighted-average effective interest rate of 1.61 % are scheduled to mature within the next three years.

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

At March 31, 2023, $ 2,510,703 of FHLB advances with a weighted-average contractual interest rate of 4.84 % and a weighted-average effective interest rate of 3.97 % are scheduled to mature within the next two

The weighted-average effective rate considers the effect of any interest rate swaps designated as cash flow hedges outstanding at March 31, 2023 to manage interest rate risk on its long-term debt.

The scheduled maturities of these FHLB borrowings are as follows:

2027 and thereafter

At September 30, 2022, United had a total of twenty statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (“Capital Securities”) with the proceeds invested in junior subordinated debt securities (“Debentures”) of United.

At March 31, 2023, United had a total of twenty statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (“Capital Securities”) with the proceeds invested in junior subordinated debt securities (“Debentures”) of United.

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

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

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

rate subordinated notes in the Carolina Financial Corporation acquisition.

At September 30, 2022 and December 31, 2021, the outstanding balance of the subordinated notes was $ 9,887 and $ 9,872 , respectively.

At September 30, 2022 and December 31, 2021, the outstanding balance of the Debentures was $ 276,575 and $ 275,323 , respectively, and was included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets.

United assumed $

10,000 in aggregate principal amount of fixed-to-floating rate subordinated notes in the Carolina Financial Corporation acquisition.

During the first quarter of 2023, United redeemed these fixed-to-floating rate subordinated notes.

At December 31, 2022, the outstanding balance of the subordinated notes was $

At March 31, 2023 and December 31, 2022, the outstanding balance of the Debentures was $

277,400 and $ 276,989 , respectively, and was included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets.

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

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Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily, and historically do not, represent future cash requirements.

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

counterparty.

United had approximately $ 7,274,694 and $ 6,847,550 of loan commitments outstanding as of September 30, 2022 and December 31, 2021, respectively, approximately 35% of which contractually expire within one year .

Excluded in the September 30, 2022 and December 31, 2021 amounts above are commitments to extend credit of $ 739,809 and $ 571,792 , respectively, related to mortgage loan funding commitments of United’s mortgage banking segment which are of a short-term nature.

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

United had approximately $ 7,370,125 and $ 7,250,155 of loan commitments outstanding as of March 31, 2023 and December 31, 2022, respectively, approximately 37% of which contractually expire within one year .

Excluded in the March 31, 2023 and December 31, 2022 amounts above are commitments to extend credit of $ 696,412 and $ 719,841 respectively, related to mortgage loan funding commitments of United’s mortgage banking segment which are of a short-term nature.

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

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

As of September 30, 2022 and December 31, 2021, United had $ 17,408 and $ 14,774 of commercial letters of credit outstanding, respectively.

As of March 31, 2023 and December 31, 2022, United had $ 16,389 of commercial letters of credit outstanding.

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

United has issued standby letters of credit of $ 151,662 and $ 164,743 as of September 30, 2022 and December 31, 2021, respectively.

United has issued standby letters of credit of $ 151,778 and $ 147,511 as of March 31, 2023 and December 31, 2022, respectively.

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

Mortgage Banking Activities

Mortgage Banking

United’s mortgage banking segment provides for its estimated exposure to repurchase loans previously sold to investors for which borrowers failed to provide full and accurate information on their loan application or for which appraisals have not been acceptable or where the loan was not underwritten in accordance with the loan program specified by the loan investor, and for other exposure to its investors related to loan sales activities.

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

United’s mortgage banking segment had a reserve of $ 1,081 and $ 1,150 as of September 30, 2022 and December 31, 2021.

United’s mortgage banking segment had a reserve of $ 1,081 as of March 31, 2023 and December 31, 2022.

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

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

As of September 30, 2022, United accrued a $ 5,000 estimated liability related to a litigation matter with a former commercial customer.

This accrual was based upon currently available information and is subject to adjustment to reflect any subsequent developments.

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

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A variety of consumer products, including mortgage and deposit products, and certain fees and charges related to such products, have come under increased regulatory scrutiny.

It is possible that regulatory authorities could bring enforcement

actions, including civil money penalties, or take other actions against United in regard to these consumer products.

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

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

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

United may execute derivative instruments with its commercial banking customers to facilitate its risk management strategies.

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

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

Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

The fair value of derivative positions outstanding is included in accrued interest receivable and other assets and accrued interest payable and other liabilities in United’s Consolidated Balance Sheets and in the net change in these financial statement line items in net cash provided by operating activities in United’s Condensed Consolidated Statements of Cash Flows.

During the second quarter of 2020, United entered into a new interest rate swap derivative designated as a cash flow hedge.

The notional amount of the cash flow hedge derivative totaled $ 250,000 .

The derivative is intended to hedge the changes in cash flows associated with floating rate FHLB borrowings.

United is required to pay-fixed

0.59 % and receive-variable 1-month

LIBOR with monthly resets.

The tenor of the interest rate swap derivative is 10 years with an expiration date in June 2030.

During the third quarter of 2020, United entered into an additional interest rate swap derivative designated as a cash flow hedge.

The notional amount of the cash flow hedge derivative totaled $ 250,000 .

The derivative is intended to hedge the changes in cash flows associated with floating rate FHLB borrowings.

United is required to pay-fixed

0.19 % and receive-variable 1-month

LIBOR with monthly resets.

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

As of September 30, 2022, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring.

Fair value hedges may be eligible for offset on the consolidated balance sheets because they are subject to master netting arrangements or similar agreements.

United has elected not to offset the assets and liabilities subject to such arrangements on the consolidated financial statements.

During 2020, United entered into two interest rate swap derivatives designated as cash flow hedges.

The notional amount of these cash flow hedge derivatives totaled $ 500,000 .

The derivatives are intended to hedge the changes in cash flows associated with floating rate FHLB borrowings.

As of March 31, 2023, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring.

United estimates that $ 21,776 will be reclassified from AOCI as a decrease to interest expense over the next 12-months

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

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

following March 31, 2023 related to the cash flow hedges.

As of March 31, 2023, the maximum length of time over which forecasted transactions are hedged is seven years.

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

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The change in fair value method compares the change in the fair value of the hedging derivative to the change in the fair value of the hedged exposure, attributable to changes in the benchmark rate.

United is subject to the Dodd-Frank Act clearing requirement for eligible derivatives.

United has executed and cleared eligible derivatives through the London Clearing House (“LCH”).

Variation margin at the LCH is distinguished as settled-to-market

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

The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.

The total notional amount of interest rate swap derivatives designated as cash flow hedges cleared through the LCH include $

500,000 for asset derivatives as of March 31, 2023.

Balances related to LCH are presented as a single unit of account with the fair value of the designated cash flow interest rate swap asset being reduced by variation margin posted by (with) the applicable counterparty and reported in the following table on a net basis.

The related fair value on a net basis approximates zero .

United through its mortgage banking subsidiaries enters into interest rate lock commitments to finance residential mortgage loans with its customers.

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

When the interest rate is locked with the borrower, the rate lock commitment, forward sale agreement, and mortgage-backed

security position are undesignated derivatives and marked to fair value through earnings.

When the interest rate is locked with the borrower, the rate lock commitment, forward sale agreement, and mortgage-backed security position are undesignated derivatives and marked to fair value through earnings.

The fair value of the rate lock derivative is measured using valuations from investors for loans with similar characteristics as well as considering the probability of the loan closing (i.e.

2 unchanged sentences

Income from mortgage banking activities includes the gain recognized for the period presented and associated elements of fair value.

United is subject to the Dodd-Frank Act clearing requirement for eligible derivatives.

United has executed and cleared eligible derivatives through the London Clearing House (“LCH”).

Variation margin at the LCH is distinguished as settled-to-market

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

The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.

The total notional amount of interest rate swap derivatives designated as cash flow hedges cleared through the LCH include $ 500,000 for asset derivatives as of September 30, 2022.

The related fair value on a net basis approximates zero .

The following tables disclose the derivative instruments’ location on the Company’s Consolidated Balance Sheets and the notional amount and fair value of those instruments at September 30, 2022 and December 31, 2021.

Asset Derivatives

September 30, 2022

March 31, 2023

December 31, 2022

1 unchanged sentence

Fair Value Hedges:

Interest rate swap contracts (hedging commercial loans)

Interest rate swap contracts

(hedging commercial loans)

Total Fair Value Hedges

Cash Flow Hedges:

Interest rate swap contracts (hedging FHLB borrowings)

Interest rate swap contracts

(hedging FHLB borrowings)

Total Cash Flow Hedges

7 unchanged sentences

Liability Derivatives

September 30, 2022

December 31, 2021

Derivatives designated as hedging instruments

Fair Value Hedges:

Interest rate swap contracts (hedging commercial loans)

Other liabilities

Total Fair Value Hedges

Liability Derivatives

September 30, 2022

March 31, 2023

December 31, 2022

Total derivatives designated as hedging instruments

Derivatives not designated as hedging instruments

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Total liability derivatives

The following table represents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value accounting relationship as of September 30, 2022 and December 31, 2021.

March 31, 2023

Derivatives in Fair Value

Hedging Relationships

Location in the Statement

September 30, 2022

Location in the Statement of

Carrying Amount of

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Loans, net of unearned income

December 31, 2022

Derivatives in Fair Value

Hedging Relationships

Location in the Statement

December 31, 2021

Location in the Statement of

Carrying Amount of

Assets/(Liabilities)

the Hedged Assets/

(Liabilities)

Cumulative Amount

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

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

Three Months Ended

Location of Gain (Loss) Recognized in

the Consolidated Statements of Income

September 30,

Derivatives in hedging relationships

Fair Value Hedges:

Interest rate swap contracts

Interest and fees on loans

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three months ended March 31, 2023 and 2022 are presented as follows:

Three Months Ended

Location of Gain (Loss) Recognized in

the Consolidated Statements of Income

September 30,

Cash flow Hedges:

Interest rate swap contracts

Interest on long-term borrowings

Total derivatives in hedging relationships

Derivatives not designated as hedging instruments

Forward loan sales commitments

Income from Mortgage Banking Activities

TBA mortgage-backed securities

Income from Mortgage Banking Activities

Interest rate lock commitments

Income from Mortgage Banking Activities

Total derivatives not designated as hedging instruments

Total derivatives

Nine Months Ended

Location of Gain (Loss) Recognized in

the Consolidated Statements of Income

September 30,

Income Statement

Derivatives in hedging relationships

15 unchanged sentences

Total derivatives

Gains/losses on United’s interest rate swap contracts used in cash flow hedge accounting relationships for the three and nine months ended September 30, 2022 and 2021 are presented in Note 18 to these unaudited Notes to Consolidated Financial Statements.

United includes the gains/losses on the hedging derivative in the same line item in United’s Consolidated Statements of Income as the change in cash flows on the related hedge item.

For the three months ended March 31, 2023 and 2022, changes in the fair value of any interest rate swaps attributed to hedge ineffectiveness were recorded, but not significant to United’s Consolidated Statements of Income.

FAIR VALUE MEASUREMENTS

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Therefore, the results may no t be realized in an actual sale or immediate settlement of the asset or liability.

Additionally, there are inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values.

Additionally, there are inherent weaknesses in any calculation technique, and changes in

the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values.

The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

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

Upon completing its review of the pricing from third party vendors at September 30, 2022, management determined that the prices provided by its third party pricing sources were reasonable and in line with management’s expectations for the market values of these securities.

Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted materially by management at September 30, 2022.

Upon completing its review of the pricing from third party vendors at March 31, 2023, management determined that the prices provided by its third party pricing sources were reasonable and in line with management’s expectations for the market values of these securities.

Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted materially by management at March 31, 2023.

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

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Loans held for sale

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

pricing (“Level 3”).

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

For September 30, 2022, the range of historical sales prices (decreased)/increased the investor’s indicated pricing by a range of ( 0.22 %) to 0.73 % with a weighted average increase of 0.31 %.

For March 31, 2023, the range of historical sales prices increased the investor’s indicated pricing by a range of

0.03 % to 0.96 % with a weighted average increase of 0.13 %.

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

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

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

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

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

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

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

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

The rate lock commitments to borrowers and the forward sales contracts to investors are undesignated derivatives and accordingly, are marked to fair value through earnings.

The interest rate lock commitments are recorded at fair value which is measured using valuations from investors for loans with similar characteristics as well as considering the probability of the loan closing (i.e.

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

These valuations fall into a Level 2 category.

The interest rate lock commitments are recorded at fair value which is measured using valuations from investors for loans with similar characteristics (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing (“Level 3”).

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

For September 30, 2022, the range of historical sales prices (decreased)/increased the investor’s indicated pricing by a range of ( 0.22 %) to 0.73 % with a weighted average increase of 0.31 %.

For derivatives that are not designated in a hedge relationship within the mortgage banking segment, changes in the fair value of these derivatives are recognized in income from mortgage banking activities in the same period as the change in the fair value.

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

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

Fair Value at September 30, 2022 Using

For March 31, 2023, the range of historical sales prices increased the investor’s indicated pricing by a range of

0.03 % to 0.96 % with a weighted average increase of 0.13 %.

For interest rate swap derivatives that are not designated in a hedge relationship within the mortgage banking segment, changes in the fair value of the derivatives are recognized in income from mortgage banking activities in the same period as the change in the fair value.

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

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, segregated by the level of the valuation inputs within the fair value hierarchy.

Fair Value at March 31, 2023 Using

Balance as of

September 30,

Quoted Prices

Available for sale debt securities:

Treasury securities and obligations of U.S.

Government corporations and agencies

Treasury securities and

obligations of U.S.

corporations and agencies

State and political subdivisions

Residential mortgage-backed securities Agency

Commercial mortgage-backed securities Agency

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

Fair Value at March 31, 2023 Using

Balance as of

Quoted Prices

Single issue trust preferred securities

10 unchanged sentences

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

1 unchanged sentence

Derivative financial liabilities:

Forward sales commitments

Interest rate lock commitments

TBA mortgage-backed securities

Total derivative financial liabilities

3 unchanged sentences

Available for sale debt securities:

Treasury securities and obligations of U.S.

Government corporations and agencies

Treasury securities and

obligations of U.S.

corporations and agencies

State and political subdivisions

Residential mortgage-backed securities Agency

Fair Value at December 31, 2021 Using

Balance as of

Quoted Prices

Commercial mortgage-backed securities Agency

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

9 unchanged sentences

Derivative financial assets:

Interest rate swap contracts

Forward sales commitments

1 unchanged sentence

Interest rate lock commitments

Fair Value at December 31, 2022 Using

Balance as of

Quoted Prices

Total derivative financial assets

Derivative financial liabilities:

Interest rate swap contracts

Forward sales commitments

TBA mortgage-backed securities

1 unchanged sentence

Total derivative financial liabilities

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

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

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

There were no transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the three months ended March 31, 2023 and the year ended December 31, 2022.

The following tables present additional information about financial assets and liabilities measured at fair value at March 31, 2023 and December 31, 2022 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value.

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

Loans held for sale

September 30,

Balance, beginning of period

Total gains or losses during the period recognized in earnings

Transfers to portfolio loans

Total gains during the period recognized in earnings

Balance, end of period

2 unchanged sentences

TBA Securities

September 30,

Balance, beginning of period

3 unchanged sentences

Derivative Financial Assets

Forward Sales Commitments

Balance, beginning of period

Transfers other

Balance, end of period

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

Derivative Financial Assets

Interest Rate Lock

September 30,

Balance, beginning of period

4 unchanged sentences

Forward Sales Commitments

September 30,

Balance, beginning of period

4 unchanged sentences

TBA Securities

September 30,

Balance, beginning of period

4 unchanged sentences

Interest Rate Lock

September 30,

Balance, beginning of period

5 unchanged sentences

Three Months Ended

September 30, 2022

March 31, 2023

Three Months Ended

September 30, 2021

Income from mortgage banking activities

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

Income from mortgage banking activities

March 31, 2022

Income from mortgage banking

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

September 30, 2022

March 31, 2023

December 31, 2022

25 unchanged sentences

Once the property is subsequently vacated, a formal appraisal is obtained and the recorded asset value appropriately adjusted.

On the other hand, if the OREO property has been vacated and an appraisal can be conducted, the fair value of the property is determined based upon the appraisal using a market approach.

hand, if the OREO property has been vacated and an appraisal can be conducted, the fair value of the property is determined based upon the appraisal using a market approach.

An authorized independent appraiser conducts appraisals for United.

16 unchanged sentences

The goodwill impairment test did not identify any goodwill impairment.

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

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

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

Core deposit intangibles relate to the estimated value of the deposit base of acquired institutions.

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

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

No fair value measurement of intangible assets was made during the first three months of 2023 and 2022.

Mortgage Servicing Rights (“MSRs”):

6 unchanged sentences

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

For the unobservable inputs used in the valuation of mortgage servicing rights at September 30, 2022 and December 31, 2021, refer to Note 8 of these Notes to Consolidated Financial Statements.

For the unobservable inputs used in the valuation of mortgage servicing rights at March 31, 2023 and December 31, 2022, refer to Note 7 of these Notes to Consolidated Financial Statements.

The Company did no t record any temporary impairment of mortgage servicing rights in the quarter ended March 31, 2023 and 2022.

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

Balance as of

September 30, 2022

Fair value at September 30, 2022

March 31, 2023

Fair Value at March 31, 2023

Quoted Prices

5 unchanged sentences

Individually assessed loans

Mortgage servicing rights

Fair Value of Other Financial Instruments

5 unchanged sentences

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

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

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

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

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

16 unchanged sentences

Quoted Prices

September 30, 2022

March 31, 2023

Cash and cash equivalents

9 unchanged sentences

Derivative financial liabilities

Fair Value Measurements

Quoted Prices

December 31, 2022

23 unchanged sentences

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

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

Subject to certain change in control provisions,

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

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

1 unchanged sentence

The 2020 LTI Plan replaces the 2016 LTI Plan.

Compensation expense of $ 2,462 and $ 7,066 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the third quarter and first nine months of 2022, respectively, as compared to the compensation expense of $ 1,912 and $ 5,492 related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the third quarter and first nine months of 2021, respectively.

Compensation expense of $ 2,713 and $ 2,061 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the first quarter of 2023 and 2022, respectively.

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

4 unchanged sentences

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

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

Nine Months Ended September 30, 2022

A summary of activity under United’s stock option plans as of March 31, 2023, and the changes during the first three months of 2023 are presented below:

Three Months Ended March 31, 2023

Weighted Average

1 unchanged sentence

Forfeited or expired

Outstanding at September 30, 2022

Exercisable at September 30, 2022

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

Outstanding at March 31, 2023

Exercisable at March 31, 2023

The following table summarizes the status of United’s nonvested stock option awards during the first three months of 2023:

Weighted-Average

2 unchanged sentences

Forfeited or expired

Nonvested at September 30, 2022

During the nine months ended September 30, 2022 and 2021, 370,995 and 175,662 shares, respectively, were issued in connection with stock option exercises.

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

The total intrinsic value of options exercised under the Plans during the nine months ended September 30, 2022 and 2021 was $ 5,095 and $ 1,685 respectively.

As of September 30, 2022, the total unrecognized compensation cost related to nonvested stock option awards was $ 579 with a weighted-average expense recognition period of 0.7 years.

Nonvested at March 31, 2023

During the three months ended March 31, 2023 and 2022, 55,796 and 258,574 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for the three months ended March 31, 2023 and 2022 were issued from authorized and unissued stock.

The total intrinsic value of options exercised under the Plans during the three months ended March 31, 2023 and 2022 was $ 722 and $ 3,856 respectively.

As of March 31, 2023, the total unrecognized compensation cost related to nonvested stock option awards was $ 270 with a weighted-average expense recognition period of 0.9 years.

Restricted Stock

3 unchanged sentences

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

As of September 30, 2022, the total unrecognized compensation cost related to nonvested restricted stock awards was $ 9,433 with a weighted-average expense recognition period of 1.1 years.

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

As of March 31, 2023, the total unrecognized compensation cost related to nonvested restricted stock awards was $

11,838 with a weighted-average expense recognition period of 1.5 years.

The following summarizes the changes to United’s nonvested restricted common shares for the period ended March 31, 2023:

Weighted-Average

Grant Date Fair Value

Grant Date Fair

Value Per Share

Nonvested at January 1, 2023

Nonvested at September 30, 2022

Nonvested at March 31, 2023

Restricted Stock Units

14 unchanged sentences

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

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

The following table summarizes the status of United’s nonvested RSUs during the first three months of 2023:

Weighted-Average

Grant Date Fair Value

Grant Date Fair

Value Per Share

Nonvested at January 1, 2023

Forfeited or expired

Nonvested at September 30, 2022

As of September 30, 2022, the total unrecognized compensation cost related to nonvested restricted stock units was $ 6,194 with a weighted-average expense recognition period of 1.2 years.

Nonvested at March 31, 2023

As of March 31, 2023, the total unrecognized compensation cost related to nonvested restricted stock units was $ 11,126 with a weighted-average expense recognition period of 1.5 years.

EMPLOYEE BENEFIT PLANS

2 unchanged sentences

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

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

No discretionary contributions were made during the first quarter of 2023 and 2022.

Included in accumulated other comprehensive income at December 31, 2022 are unrecognized actuarial losses of $ 38,530 ($ 29,553 net of tax) that have not yet been recognized in net periodic pension cost.

Net periodic pension cost for the three and nine months ended September 30, 2022 and 2021 included the following components:

Three Months Ended

Nine Months Ended

Net periodic pension cost for the three months ended March 31, 2023 and 2022 included the following components:

Three Months Ended March 31

Interest cost

1 unchanged sentence

Recognized net actuarial loss

Net periodic pension cost

Net periodic pension cost (benefit)

Weighted-Average Assumptions:

6 unchanged sentences

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

As of September 30, 2022 and 2021, the total amount of accrued interest related to uncertain tax positions was $ 807 and $ 748 , respectively.

As of March 31, 2023 and 2022, the total amount of accrued interest related to uncertain tax positions was $ 525 and $ 753 , respectively.

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

United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2019, 2020 and 2021 and certain State Taxing authorities for the years ended December 31, 2019 through 2021.

United’s effective tax rate was 20.17 % and 19.90 % the third quarter and first nine months of 2022, respectively, and 20.39 % and 20.47 % for the third quarter and first nine months of 2021, respectively.

United’s effective tax rate was 19.92 % for the first quarter of 2023 and 19.75 % for the first quarter of 2022.

COMPREHENSIVE INCOME

The components of total comprehensive income for the three and nine months ended September 30, 2022 and 2021 are as follows:

The components of total comprehensive income for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended

Nine Months Ended

Available for sale (“AFS”) securities:

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

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

Related income tax effect

Net reclassification adjustment for gains included in net income

Related income tax expense

Related income tax effect

Net effect of AFS securities on other comprehensive income

Three Months Ended

Nine Months Ended

Cash flow hedge derivatives:

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

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

Related income tax effect

7 unchanged sentences

Total change in other comprehensive income

Total Comprehensive (Loss) Income

The components of accumulated other comprehensive income for the nine months ended September 30, 2022 are as follows:

Total Comprehensive Income (Loss)

The components of accumulated other comprehensive income for the three months ended March 31, 2023 are as follows:

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

For the Nine Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

Balance at January 1, 2023

2 unchanged sentences

Net current-period other comprehensive income, net of tax

Balance at September 30, 2022

Balance at March 31, 2023

All amounts are net-of-tax.

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Nine Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

Details about AOCI Components

14 unchanged sentences

Total before tax

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Nine Months Ended September 30, 2022

Details about AOCI Components

Affected Line Item in the Statement Where

Net Income is Presented

Related income tax effect

4 unchanged sentences

Three Months Ended

Nine Months Ended

Distributed earnings allocated to common stock

2 unchanged sentences

Average common shares outstanding

Equivalents from stock options

Common stock equivalents

Average diluted shares outstanding

1 unchanged sentence

Earnings per diluted common share

Antidilutive stock options and restricted stock outstanding of 678,879 and 1,117,428 for the three months and nine months ended September 30, 2022, respectively, were excluded from the earnings per diluted common share calculation as compared to 1,239,529 and 984,803 for the three months and nine months ended September 30, 2021, respectively.

Antidilutive stock options and restricted stock outstanding of 563,127 for the three months ended March 31, 2023 were excluded from the earnings per diluted common share calculation as compared to 1,143,182 for the three months ended March 31, 2022.

VARIABLE INTEREST ENTITIES

12 unchanged sentences

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

At March 31, 2023 and December

31, 2022, United’s

investment (maximum exposure to loss) in these trusts were $ 11,388 and $ 11,277 , respectively.

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

13 unchanged sentences

July 12, 2007

LIBOR + 1.55%

3-month LIBOR + 1.55%

October 1, 2037

1 unchanged sentence

September 20, 2007

LIBOR + 1.30%

3-month LIBOR + 1.30%

December 15, 2037

1 unchanged sentence

September 25, 2003

LIBOR + 3.10%

3-month LIBOR + 3.10%

October 8, 2033

Premier Statutory Trust III

LIBOR + 1.74%

3-month LIBOR + 1.74%

June 15, 2035

1 unchanged sentence

June 20, 2006

LIBOR + 1.55%

3-month LIBOR + 1.55%

September 23, 2036

1 unchanged sentence

December 14, 2006

LIBOR + 1.61%

3-month LIBOR + 1.61%

March 1, 2037

1 unchanged sentence

September 20, 2004

LIBOR + 2.29%

3-month LIBOR + 2.29%

September 20, 2034

1 unchanged sentence

June 15, 2006

LIBOR + 1.65%

Virginia Commerce Trust II

3-month LIBOR + 1.65%

December 19, 2002

LIBOR + 3.30%

6-month LIBOR + 3.30%

December 19, 2032

Virginia Commerce Trust III

VCBI Capital Trust III

December 20, 2005

LIBOR + 1.42%

3-month LIBOR + 1.42%

February 23, 2036

1 unchanged sentence

July 27, 2004

LIBOR + 2.40%

3-month LIBOR + 2.40%

September 15, 2034

9 unchanged sentences

November 5, 2003

LIBOR + 3.05%

3-month LIBOR + 3.05%

January 7, 2034

1 unchanged sentence

October 12, 2004

LIBOR + 2.20%

3-month LIBOR + 2.20%

October 18, 2034

1 unchanged sentence

December 28, 2006

LIBOR + 1.73%

3-month LIBOR + 1.73%

January 30, 2037

1 unchanged sentence

September 26, 2003

LIBOR + 2.95%

3-month LIBOR + 2.95%

September 30, 2033

1 unchanged sentence

December 12, 2003

LIBOR + 3.00%

3-month LIBOR + 3.00%

December 12, 2033

4 unchanged sentences

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

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

As of September 30, 2022

As of December 31, 2021

Trust preferred securities

Represents investment in VIEs.

At March 31, 2023 and December 31, 2022, United’s investment (maximum exposure to loss) in these low income housing and community development partnerships were $ 76,870 and $ 75,021 , respectively, while related unfunded commitments were $

75,956 and $ 77,143 , respectively.

As of March 31, 2023, United expects to recover its remaining investments through the use of the tax credits that are generated by the investments.

SEGMENT INFORMATION

3 unchanged sentences

In particular, the community banking segment includes both commercial and consumer lending and provides customers with such products as commercial loans, real estate loans, business financing and consumer loans.

In addition, this segment provides customers

with several choices of deposit products including demand deposit accounts, savings accounts and certificates of deposit as well as investment and financial advisory services to businesses and individuals, including financial planning, retirement/estate planning, and investment management.

In addition, this segment provides customers with several choices of deposit products including demand deposit accounts, savings accounts and certificates of deposit as well as investment and financial advisory services to businesses and individuals, including financial planning, retirement/estate planning, and investment management.

The mortgage banking segment engages primarily in the origination and acquisition of residential mortgages for sale into the secondary market though United’s mortgage banking subsidiaries, George Mason and Crescent.

Crescent may retain servicing rights on their mortgage loans sold.

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

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

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

6 unchanged sentences

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

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

At and For the Three Months Ended September 30, 2022

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

At and For the Three Months Ended September 30, 2021

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

At and For the Nine Months Ended September 30, 2022

Information about the reportable segments and reconciliation of this information to the consolidated financial statements at and for the three months ended March 31, 2023 and 2022 is as follows:

At and For the Three Months Ended March 31, 2023

Net interest income

4 unchanged sentences

Average assets (liabilities)

At and For the Nine Months Ended September 30, 2021

At and For the Three Months Ended March 31, 2022

Net interest income

5 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements