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Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-03-01 · 247 added, 293 removed, 543 unchanged (50% of the section changed)

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

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

Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect.

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

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The discussion in Item 1A, “Risk Factors,” lists some of the factors that could cause United’s actual results to vary materially from those expressed or implied by any forward-looking statements, and such discussion is incorporated into this discussion by reference.

CORONAVIRUS (“COVID-19”) PANDEMIC

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

and global economy.

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

the impact to the financial services and banking industry;

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

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

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

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

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

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

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.

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

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.

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

At consummation, Community Bankers Trust had assets of $1.79 billion, loans and leases, net of unearned income of $1.28 billion and deposits of $1.52 billion.

On May 1, 2020, United acquired 100% of the outstanding common stock of Carolina Financial Corporation (“Carolina Financial”), headquartered in Charleston, South Carolina.

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

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

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

The merger resulted in a combined company with more than 200 locations in some of the best banking markets in the United States.

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

Crescent is approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers.

As a result of the merger, Crescent became an indirectly-owned subsidiary of United.

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

At consummation, Carolina Financial had assets of $5.00 billion, loans and leases, net of unearned income of $3.29 billion and deposits of $3.87 billion.

The results of operations of Community Bankers Trust and Carolina Financial are included in the consolidated results of operations from their date of acquisition.

As a result of the Community Bankers Trust acquisition, the year of 2022 was impacted by increased levels of average balances, income, and expense as compared to the year 2021.

As a result of the Community Bankers Trust and Carolina Financial acquisitions, the year of 2021 was impacted by increased levels of average balances, income, and expense from both the Community Bankers Trust and Carolina Financial acquisition as compared to the year of 2020.

In addition, the year of 2021 included $21.42 million of merger-related expenses from Community Bankers Trust acquisition as compared to $54.24 million of merger-related expenses from the Carolina Financial acquisition in the year of 2020.

RECENT DEVELOPMENTS

United plans to complete a consolidation of its mortgage delivery channels during the early part of 2024.

The plan is to consolidate George Mason’s and Crescent’s mortgage origination and sales business with United Bank.

As part of the planned consolidation, United exited the third-party origination (“TPO”) business during the fourth quarter of 2023.

United will continue to offer mortgage products through its bank mortgage channel and existing George Mason offices (which will be re-branded under the United umbrella).

The consolidation will streamline operations and enhance the customer experience.

TRANSITION FROM THE LONDON INTERBANK OFFERED RATE (LIBOR)

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

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

Dollar LIBOR settings on December 31, 2021, and will cease the publication of overnight, one-month, three-month, six-month, and twelve-month U.S.

Dollar LIBOR settings on June 30, 2023.

It is assumed that LIBOR will either cease to be provided by any administrator or will no longer be representative of an acceptable market benchmark after these respective dates.

Additionally, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have issued joint supervisory guidance encouraging banks to cease entering into any new contracts using LIBOR by December 31, 2021.

Accordingly, United took steps to ensure compliance with the joint supervisory guidance, and no new contracts using LIBOR have been originated after December 31, 2021.

Working groups comprised of various regulators and other industry groups have been formed in the United States and other countries in order to provide guidance on this topic.

In particular, the Alternative Reference Rates Committee (“ARRC”) has been formed in the United States by the Federal Reserve Board and the Federal Reserve Bank of New York.

The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative reference rate for U.S.

Dollar LIBOR.

The ARRC has also published recommended fall-back language for LIBOR-linked financial instruments, among numerous other areas of guidance.

In addition, the Adjustable Interest Rate (LIBOR) Act, enacted in March 2022, provides a statutory framework to replace U.S.

dollar LIBOR with a benchmark rate based on the Secured Overnight Financing Rate (“SOFR”) for contracts governed by U.S.

law that have no or ineffective fallback, and in December 2022, the Federal Reserve Board adopted related implementing rules.

At this time, however, it is unclear to what extent these recommendations will be broadly accepted by industry participants, whether they will continue to evolve, and what other alternatives may be adopted by the broader markets that utilize LIBOR as a reference rate.

United has formed a project team comprised of individuals across various lines of business throughout the company to identify risks, monitor market developments, evaluate replacement benchmark alternatives, and manage the company’s transition away from LIBOR.

At this time, United is prioritizing SOFR and Prime as the preferred alternatives to LIBOR;

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

United has loans, derivative contracts, borrowings, and other financial instruments that are directly or indirectly dependent on LIBOR.

The transition from LIBOR will cause changes to payment calculations for existing contracts that use LIBOR as the reference rate.

These changes will create various risks surrounding the financial, operational, compliance and legal aspects associated with changing certain elements of existing contracts.

United will also be subject to risks surrounding changes to models and systems that currently use LIBOR reference rates, as well as market and strategic risks that could arise from the use of alternative reference rates.

Additionally, United could face reputational risks if this transition is not managed appropriately with its customers.

While the full impact of the transition is not yet known, failure to adequately manage the transition could have a material adverse effect on our business, financial condition and results of operations.

As disclosed in the “Transition From The London Interbank Offered Rate (LIBOR)” section within the MD&A of United’s 2022 Annual Report on Form 10-K (the 2022 Form 10-K ), as a result of the efforts led by the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, the publication of the one-week and two-month U.S.

Dollar LIBOR settings were discontinued on December 31, 2021.

Subsequently, publication of the remaining overnight, one-month, three-month, six-month, and twelve-month U.S.

Dollar LIBOR settings were discontinued on June 30, 2023.

United implemented a comprehensive project plan to execute the transition of its LIBOR-based financial instruments to alternative reference rates.

United utilized the Secured Overnight Financing Rate (“SOFR”) and Prime as the preferred alternatives to LIBOR.

The following discussion and analysis presents the more significant changes in financial condition as of December 31, 2023 and 2022 and the results of operations of United and its subsidiaries for each of the years then ended.

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In preparing the consolidated financial statements, management is required to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes.

These estimates, assumptions and judgments, which are reviewed with the Audit Committee of the Board of Directors, are based on information available as

of the date of the financial statements.

These estimates, assumptions and judgments, which are reviewed with the Audit Committee of the Board of Directors, are based on information available as of the date of the financial statements.

Actual results could differ from these estimates.

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

Determining the allowance for loan losses requires management to make estimates of expected credit losses that are highly uncertain and require a high degree of judgment.

At December 31, 2022, the allowance for loan losses was $234.75 million and is subject to periodic adjustment based on management’s assessment of expected credit losses in the loan portfolio.

Determining the allowance for loan and lease losses requires management to make estimates of expected credit losses that are highly uncertain and require a high degree of judgment.

At December 31, 2023, the allowance for loan and lease losses was $259.24 million and is subject to periodic adjustment based on management’s assessment of expected credit losses in the loan portfolio.

Such adjustment from period to period can have a significant impact on United’s consolidated financial statements.

To illustrate the potential effect on the financial statements of our estimates of the allowance for loan losses, a 10% increase in the allowance for loan losses would have required $23.47 million in additional allowance (funded by additional provision for loan losses), which would have negatively impacted the year of 2022 net income by approximately $18.54 million, after-tax or $0.14 diluted per common share.

Management’s evaluation of the adequacy of the allowance for loan losses and the appropriate provision for loan losses is based upon a quarterly evaluation of the loan portfolio.

This evaluation is inherently subjective and requires significant estimates, including estimates related to the amounts and timing of future cash flows, value of collateral, losses on pools of homogeneous loans and leases based on historical loss experience, and consideration of qualitative factors such as current economic trends, all of which are susceptible to constant and significant change.

To illustrate the potential effect on the financial statements of our estimates of the allowance for loan and lease losses, a 10% increase in the allowance for loan and lease losses would have required $25.92 million in additional allowance (funded by additional provision for loan and lease losses), which would have negatively impacted the year of 2023 net income by approximately $20.48 million, after-tax or $0.15 diluted earnings per common share.

Management’s evaluation of the adequacy of the allowance for loan and lease losses and the appropriate provision for loan and lease losses is based upon a quarterly evaluation of the loan portfolio.

significant change.

The allowance allocated to specific credits and loan pools grouped by similar risk characteristics is reviewed on a quarterly basis and adjusted as necessary based upon subsequent changes in circumstances.

In determining the components of the allowance for loan losses, management considers the risk arising in part from, but not limited to, qualitative factors which include charge-off and delinquency trends, current business conditions and reasonable and supportable economic forecasts, lending policies and procedures, the size and risk characteristics of the loan portfolio, concentrations of credit, and other various factors.

The methodology used to determine the allowance for loan losses is described in Note A, Notes to Consolidated Financial Statements.

A discussion of the factors leading to changes in the amount of the allowance for loan losses is included in the Provision for Credit Losses section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).

In determining the components of the allowance for loan and lease losses, management considers the risk arising in part from, but not limited to, qualitative factors which include charge-off and delinquency trends, current business conditions and reasonable and supportable economic forecasts, lending policies and procedures, the size and risk characteristics of the loan portfolio, concentrations of credit, and other various factors.

The methodology used to determine the allowance for loan and lease losses is described in Note A, Notes to Consolidated Financial Statements.

A discussion of the factors leading to changes in the amount of the allowance for loan and lease losses is included in the Provision for Credit Losses section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).

For a discussion of concentrations of credit risk, see Item 1, under the caption of Loan Concentrations in this Form 10-K.

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The potential impact to United’s operating results for any of the changes cannot be reasonably estimated.

See Note O, Notes to Consolidated Financial Statements for information regarding United’s ASC Topic 740 disclosures.

See Note N, Notes to Consolidated Financial Statements for information regarding United’s ASC Topic 740 disclosures.

Use of Fair Value Measurements

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United does not believe that any changes in the unobservable inputs used to value the financial instruments mentioned above would have a material impact on United’s results of operations, liquidity, or capital resources.

See Note W for additional information regarding ASC Topic 820 and its impact on United’s financial statements.

See Note V for additional information regarding ASC Topic 820 and its impact on United’s financial statements.

Any material effect on the financial statements related to these critical accounting areas is further discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

2023 COMPARED TO 2022

United’s total assets as of December 31, 2022 were $29.49 billion, which was an increase of $160.48 million or less than 1% from December 31, 2021.

This increase was mainly due to an increase of $2.53 billion or 14.06% in portfolio loans and leases and an increase of $576.86 million or 13.43% in investment securities.

These increases in assets were partially offset by a decrease of $2.58 billion or 68.69% in cash and cash equivalents and a decrease of $447.54 million or 88.72% in loans held for sale.

Total liabilities increased $362.91 million or 1.47% from year-end 2021.

Borrowings increased $1.41 billion or 149.23% and the allowance for lending-related commitments increased $14.75 million or 46.90%.

Mostly offsetting these increases in liabilities was a $1.05 billion or 4.48% decrease in deposits and a $10.95 million or 12.63% decrease in the operating lease liability.

Shareholders’ equity decreased $202.44 million or 4.29%.

United’s total assets as of December 31, 2023 were $29.93 billion, which was an increase of $437.10 million or 1.48% from December 31, 2022.

This increase was mainly due to a $800.92 million or 3.90% increase in portfolio loans, a $422.29 million or 35.89% increase in cash and cash equivalents, a $16.53 million or 17.42% increase in interest receivable, and a $15.84 million or 22.27% increase in the operating lease asset.

These increases in assets were partially offset by a $746.85 million or 15.33% decrease in investment securities and a $16.47 million or 78.34% decrease in mortgage servicing rights.

Total liabilities increased $182.06 million or less than 1% from year-end 2022.

This increase was due to a $516.15 million or 2.31% increase in deposits, a $17.14 million or 22.62% increase in the operating lease liability, and a $23.41 million or 12.34% increase in accrued expenses and other liabilities.

Partially offsetting these increases in liabilities was a $373.16 million or 15.82% decrease in borrowings.

Shareholders’ equity increased $255.05 million or 5.65%.

The following discussion explains in more detail the changes in financial condition by major category.

Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2022 decreased $2.58 billion or 68.69% from year-end 2021.

In particular, interest-bearing deposits with other banks decreased $2.59 billion or 74.63% as United placed less cash in an interest-bearing account with the Federal Reserve.

Cash and due from banks increased $11.28 million or 3.99% from year-end 2021 while federal funds sold increased $152 thousand or 16.40%.

During the year of 2022, net cash of $760.82 million and $105.32 million were provided by operating and financing activities, respectively, while net cash of $3.45 billion was used in investing activities.

Cash and cash equivalents at December 31, 2023 increased $422.29 million or 35.89% from year-end 2022.

In particular, interest-bearing deposits with other banks increased $459.20 million or 52.10% while cash and due from banks decreased $37.00 million or 12.58%.

Federal funds sold increased $91 thousand or 8.43%.

During the year of 2023, net cash of $435.24 million and $38.99 million were provided by operating and investing activities, respectively, while net cash of $51.94 million was used in financing activities.

Further details related to changes in cash and cash equivalents are presented in the Consolidated Statements of Cash Flows.

Total investment securities at December 31, 2022 increased $576.86 million or 13.43%.

Securities available for sale increased $499.23 million or 12.35%.

This change in securities available for sale reflects $1.57 billion in purchases, $575.75 million in sales, maturities and calls of securities and a decrease of $481.01 million in market value.

The majority of the purchase activity was related to securities of the U.S.

Treasury and obligations of U.S.

Government corporations and agencies, mortgage-backed securities, and asset-backed securities.

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

Equity securities were $7.63 million at December 31, 2022, a decrease of $4.78 million or 38.50% due mainly to sales.

Other investment securities increased $82.40 million or 34.39% from year-end 2021 due to purchases of Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock as well as investment tax credits.

Total investment securities at December 31, 2023 decreased $746.85 million or 15.33%.

Securities available for sale decreased $755.55 million or 16.63%.

This change in securities available for sale reflects $107.87 million in purchases, $959.87 million in sales, maturities and calls of securities, and an increase of $106.29 million in market value.

The majority of the sales activity was related to state and political subdivision securities.

Equity securities were $8.95 million at December 31, 2023, an increase of $1.32 million or 17.25% due mainly to net purchases.

Other investment securities increased $7.38 million or 2.29% from year-end 2022 due to a $12.53 million increase in investment tax credits partially offset by a $6.14 million decrease in FHLB stock.

The following table summarizes the changes in the available for sale securities since year-end 2022:

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Single issue trust preferred securities

Corporate securities

Other corporate securities

Total available for sale securities, at fair value

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The portfolio consisted of $16.38 million in single issue trust preferred securities with an estimated fair value of $15.14 million.

In addition to the single issue trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of $943.81 million and a fair value of $911.61 million and other corporate securities, with an amortized cost of $563.43 million and a fair value of $525.54 million.

United’s available for sale single issue trust preferred securities had a fair value of $16.28 million as of December 31, 2022.

Of the $15.14 million, $6.90 million or 45.59% were investment grade;

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

In addition to the single issue trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of $872.05 million and a fair value of $860.64 million and other corporate securities, with an amortized cost of $325.57 million and a fair value of $291.97 million.

During 2023, United did not recognize any credit losses on its available for sale investment securities.

Management believes that any decline in value on an individual security with an unrealized loss as of December 31, 2022 resulted from changes in market interest rates, credit spreads and liquidity, not a deterioration of credit.

Management does not believe that any individual security with an unrealized loss as of December 31, 2023 is impaired.

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

Based on a review of each of the securities in the available for sale investment portfolio, management concluded that it was more-likely-than-not that it would be able to realize the cost basis investment and appropriate interest payments on such securities.

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

Further information regarding the amortized cost and estimated fair value of investment securities, including remaining maturities as well as a more detailed discussion of management’s impairment analysis, is presented in Note C, Notes to Consolidated Financial Statements.

Loans Held For Sale

Loans held for sale decreased $447.54 million or 88.72% from year-end 2021.

Loans held for sale decreased $618 thousand or 1.09% from year-end 2022.

Loan sales in the secondary market exceeded originations during the year of 2023.

Originations of loans for the year of 2022 were $1.90 billion while sales of loans were $2.20 billion.

Originations of loans for the year of 2023 were $860.90 million while sales of loans were $861.52 million.

Loans held for sale were $56.26 million at December 31, 2023 as compared to $56.88 million at year-end 2022.

Portfolio Loans

Loans, net of unearned income, increased $2.53 billion or 14.06%.

Since year-end 2021, commercial, financial and agricultural loans increased $471.64 million or 4.23%.

In particular, commercial real estate loans increased $321.44 million or 4.18% while commercial loans (not secured by real estate) increased $150.21 million or 4.34%.

Construction and land development loans increased $912.81 million or 45.32%, residential real estate loans increased $971.35 million or 26.31%, and consumer loans increased $173.06 million or 14.51% due to an increase in indirect automobile financing.

Loans, net of unearned income, increased $800.92 million or 3.90%.

Since year-end 2022, commercial, financial and agricultural loans increased $264.55 million or 2.28% as a result of a $304.67 million or 3.80% increase in commercial real estate loans which was partially offset by a $40.13 million or 1.11% decrease in commercial loans (not secured by real estate).

Construction and land development loans increased $221.27 million or 7.56% and residential real estate loans increased $608.33 million or 13.05%, while consumer loans decreased $301.12 million or 22.05% due to a decrease in indirect automobile financing.

The following table summarizes the changes in the major loan classes since year-end 2022:

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Other consumer

Total gross loans

Total Loans and leases

Unearned income

Total Loans, net of unearned income

Total Loans and leases, net of unearned income

The following table shows the amount of loans acquired and outstanding by major loan classes as of December 31, 2023 and 2022:

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Other consumer

Total gross loans

Total Loans and leases

The following table shows the maturity of loans and leases, outstanding as of December 31, 2023:

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Other consumer

Total Loans and leases

At December 31, 2023, for loans and leases due after one year, interest rate information is as follows:

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More information relating to loans is presented in Note D, Notes to Consolidated Financial Statements.

Other assets increased $72.98 million or 31.52% from year-end 2021 as a result of a $106.31 million increase in deferred tax assets due to a decrease in the fair value of available-for-sale securities.

In addition, dealer reserve increased $4.20 million and net pension asset increased $7.48 million primarily due to an increase in the discount rate used in the year-end valuation.

Partially offsetting these increases in other assets were decreases of $12.60 million in income tax receivable due to timing differences, $12.82 million in other real estate owned properties (“OREO”) due to sales and write downs, $26.67 million in derivative assets, and $5.52 million in core deposit intangibles due to amortization.

Other assets decreased $28.12 million or 9.23% from year-end 2022.

Deferred tax assets decreased $19.62 million due to the increase in the fair value of available-for sale securities, while derivative assets decreased $3.69 million.

In addition, dealer reserve decreased $10.01 million due to a decrease in indirect automobile financing and core deposits intangibles decreased $6.39 million due to amortization and impairment of trade name intangibles due to the planned consolidation of George Mason’s and Crescent’s mortgage banking business into United Bank.

Partially offsetting these decreases in other assets were a $3.88 million increase in income tax receivable due to timing differences, a $2.66 million increase in accounts receivable due to timing differences, and a $5.82 million increase in the pension asset.

Deposits represent United’s primary source of funding.

Total deposits at December 31, 2022 decreased $1.05 billion or 4.48%.

In terms of composition, noninterest-bearing deposits decreased $296.88 million or 3.96% while interest-bearing deposits decreased $750.22 million or 4.73% from December 31, 2021.

Noninterest-bearing deposits, which consist of noninterest-bearing demand deposit and noninterest-bearing money market (“MMDA”) account balances, decreased $296.88 million from year-end 2021 due to a $139.87 million decrease in commercial noninterest-bearing deposits and a $148.83 million decrease in public funds noninterest-bearing deposits.

Total deposits at December 31, 2023 increased $516.15 million or 2.31%.

In terms of composition, noninterest-bearing deposits decreased $1.05 billion or 14.59% while interest-bearing deposits increased $1.57 billion or 10.37% from December 31, 2022.

Noninterest-bearing deposits consist of demand deposit and noninterest bearing money market (“MMDA”) account balances.

The $1.05 billion decrease in noninterest-bearing deposits was due mainly to a $915.32 million or 16.93% decrease in commercial noninterest-bearing deposits, a $127.17 million or 8.51% decrease in personal noninterest-bearing deposits, and a $32.32 million or 17.02% decrease in public noninterest-bearing deposits.

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

Interest-bearing transaction accounts decreased $101.38 million or 1.94% since year-end 2021 as the result of a $182.47 million decrease in personal interest-bearing transaction accounts and a $20.84 million decrease in public funds interest-bearing transaction accounts partially offset by an increase of $101.94 million in nonpersonal interest-bearing transaction accounts.

Regular savings accounts increased $36.90 million or 2.25% mainly as a result of a $43.52 million increase in personal savings accounts.

Interest-bearing MMDAs decreased $62.48 million or less than 1%.

In particular, commercial MMDAs decreased $27.94 million, brokered MMDAs decreased $31.86 million, and public funds MMDAs decreased $43.97 million while personal MMDAs increased $41.30 million.

Time deposits under $100,000 decreased $187.06 million or 18.14% from year-end 2021.

This decrease in time deposits under $100,000 was the result of a $174.13 million decrease in fixed rate Certificates of Deposits (“CDs”) under $100,000, a $8.75 million decrease in CDs under $100,000 obtained through the use of deposit listing services, and a $4.60 million decrease in variable rate CDs.

Since year-end 2021, time deposits over $100,000 decreased $436.20 million or 27.24% as fixed rate CDs decreased $320.18 million, CDARS over $100,000 decreased $52.26 million, public funds CDs over $100,000 decreased $51.74 million, and brokered certificates of deposits decreased $11.27 million.

Interest-bearing transaction accounts increased $531.17 million or 10.38% since year-end 2022 as the result of an increase of $1.09 billion in commercial interest-bearing transaction accounts, which was partially offset by a $507.72 million decrease in personal interest-bearing transaction accounts and a $54.03 million decrease in public funds interest-bearing transaction accounts.

Regular savings accounts decreased $333.04 million or 19.84% mainly as a result of a $301.42 million decrease in personal savings accounts and a $34.58 million decrease in commercial savings accounts.

Interest-bearing MMDAs increased $50.05 million or less than 1%.

In particular, personal interest-bearing MMDAs decreased $245.74 million while commercial interest-bearing MMDAs increased $265.10 million.

Public funds interest-bearing MMDAs increased $30.68 million.

Time deposits under $100,000 increased $222.14 million or 26.32% from year-end 2022.

This increase in time deposits under $100,000 was the result of a $233.17 million increase in fixed rate Certificates of Deposits (“CDs”) under $100,000, and a $3.87 million increase in Certificate of Deposit Account Registry Service (“CDARS”) under $100,000.

CDs under $100,000 obtained through the use of deposit listing services decreased $5.17 million.

Since year-end 2022, time deposits over $100,000 increased $1.10 billion or 94.13% as fixed rate CDs increased $759.93 million, brokered certificates of deposits increased $266.45 million, and CDARS over $100,000 increased $72.54 million.

The table below summarizes the changes by deposit category since year-end 2022:

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Total deposits

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

Includes time deposits of $250,000 or more of $842,118 and $454,477 at December 31, 2023 and December 31, 2022, respectively.

Includes $246,505 and $375,510 of uninsured time deposits at December 31, 2022 and December 31, 2021, respectively.

At December 31, 2023, the scheduled maturities of time deposits are as follows:

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For the year of 2021, $1,571,758 was reclassed from noninterest-bearing accounts to interest-bearing transaction accounts.

For the year of 2020, $1,280,091 was reclassed from noninterest-bearing accounts to interest-bearing transaction accounts.

More information relating to deposits is presented in Note K, Notes to Consolidated Financial Statements.

Total borrowings at December 31, 2022 increased $1.41 billion or 149.23% since year-end 2021.

More information relating to deposits is presented in Note J, Notes to Consolidated Financial Statements.

Total borrowings at December 31, 2023 decreased $373.16 million or 15.82% since year-end 2022.

During the year of 2023, short-term borrowings increased $35.40 million or 22.03% due to an increase in securities sold under agreements to repurchase.

Long-term borrowings increased $1.38 billion or 168.86% from year-end 2021 due to an increase in FHLB advances.

Long-term borrowings decreased $408.55 million or 18.59% from year-end 2022 due to net repayments of $400.29 million in long-term FHLB advances and the redemption of $9.89 million in subordinated debt during year of 2023.

The table below summarizes the change in the borrowing categories since year-end 2022:

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Short-term securities sold under agreements to repurchase

FHLB advances

Long-term FHLB advances

Subordinated debt

1 unchanged sentence

Total borrowings

For a further discussion of borrowings see Notes L and M, Notes to Consolidated Financial Statements.

For a further discussion of borrowings see Notes K and L, Notes to Consolidated Financial Statements.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at December 31, 2022 decreased $5.90 million or 3.02% from year-end 2021.

In particular, accrued employee expenses and deferred compensation decreased $5.48 million and $2.77 million, respectively, and derivative liabilities decreased $3.13 million.

Partially offsetting these decreases was a $7.48 million increase in interest payable due mainly to an increase in FHLB borrowings and rising interest rates.

Accrued expenses and other liabilities at December 31, 2023 increased $23.41 million or 12.34% from year-end 2022.

In particular, interest payable increased $13.19 million due to an increase in CDs, brokered deposits and MMDAs as well as rising interest rates.

In addition, other accrued expenses increased $12.50 million due primarily to a special FDIC assessment of $11.99 million during the fourth quarter of 2023.

Partially offsetting these increases was a decrease of $3.22 million in deferred compensation, a decrease of $2.98 million in accrued loan expenses, and decreases of $2.23 million and $2.21 million in income tax payable and business franchise taxes, respectively, due to timing differences.

Shareholders’ Equity

Shareholders’ equity at December 31, 2022 was $4.52 billion, which was a decrease of $202.44 million or 4.29% from year-end 2021.

Shareholders’ equity at December 31, 2023 was $4.77 billion, which was an increase of $255.05 million or 5.65% from year-end 2022.

Retained earnings increased $170.19 million or 10.80% from year-end 2022.

Earnings net of dividends for the year of 2023 were $170.19 million.

Accumulated other comprehensive income decreased $327.84 million or 6,707.12% from year-end 2021 due to a decrease of $368.93 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes, primarily the result of an increase in market interest rates.

Partially offsetting this decrease was a $36.66 million increase in the fair value of cash flow hedges, net of deferred income taxes.

The after-tax accretion of pension costs was $2.75 million for the year of 2022 while the after-tax pension accounting adjustment at year-end 2022 resulted in an increase of $1.68 million.

Treasury stock increased $79.79 million or 46.76% from year-end 2021.

During the year of 2022, United repurchased 2,259,546 shares of its common stock on the open market under repurchase plans approved by United’s Board of Directors at a cost of $78.38 million or an average price per share of $34.69.

Accumulated other comprehensive income increased $73.05 million or 21.95% from year-end 2022 due to an increase of $81.52 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes.

In addition, the fair value of cash flow hedges, net of deferred income taxes decreased $13.06 million.

The after-tax amortization of the pension net actuarial loss was $2.57 million for the year of 2023.

RESULTS OF OPERATIONS

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PER COMMON SHARE:

Net income for the year 2022 was $379.63 million or $2.80 per diluted share, an increase of $11.89 million or 3.23% from $367.74 million or $2.83 per diluted share for the year of 2021.

Higher net income for the year 2022 compared to the year of 2021 was primarily driven by strong loan growth and net interest margin expansion primarily as a result of a rising rate environment.

As previously mentioned, United completed its acquisition of Community Bankers Trust on December 3, 2021.

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

In addition, the year of 2022 included merger-related expenses of $537 thousand related to the Community Bankers Trust acquisition compared to merger-related expenses of $21.42 million in 2021.

Net income for the year 2023 was $366.31 million or $2.71 per diluted share, a decrease of $13.31 million or 3.51% from $379.63 million or $2.80 per diluted share for the year of 2022.

Lower net income for the year 2023 compared to the year of 2022 was primarily driven by higher provision for credit losses expense, lower income from mortgage banking and a special FDIC assessment charge.

United’s return on average assets for the year of 2023 was 1.25% and the return on average shareholders’ equity was 7.87% as compared to 1.31% and 8.25% for the year of 2022.

For the year of 2022, United’s return on average tangible equity, a non-GAAP measure, was 14.11%, as compared to 14.18% the year of 2021.

For the year of 2023, United’s return on average tangible equity, a non-GAAP measure, was 13.33%, as compared to 14.11% for the year of 2022.

(Dollars in thousands)

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Net interest income for the year of 2023 was $919.92 million, an increase of $23.49 million or 2.62% from the prior year.

Mainly, this increase in net interest income for 2022 compared to 2021 was due to the impact of rising market interest rates on earning assets, an increase in average earning assets from the Community Bankers Trust acquisition as well as organic loan growth and a change in the asset mix to higher earning assets.

The provision for credit losses was $18.82 million for the year 2022 as compared to a benefit of $23.97 million for the year 2021.

The increase of $23.49 million in net interest income occurred because total interest income increased $399.33 million while total interest expense increased $375.84 million from the year of 2022.

Generally, interest income increased in 2023 due to the impact of rising market interest rates on earning assets, organic loan growth and a change in the asset mix to higher earning assets while interest expense increased mainly due to higher funding costs as a result of the rising market interest rates on higher interest-bearing balances.

The provision for credit losses was $31.15 million for the year 2023 as compared to $18.82 million for the year 2022.

Noninterest income was $135.26 million for the year of 2023, which was a decrease of $18.00 million or 11.75% from the year of 2022.

Noninterest expense was $555.09 million which was a decrease of $26.89 million or 4.62%.

Noninterest expense for the year of 2023 was $560.22 million, which was flat from the year of 2022, increasing $5.14 million or less than 1%.

Income taxes for the year of 2023 were $97.49 million as compared to $96.16 million for the year of 2022.

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Net income attributable to the community banking segment for the year of 2023 was $387.80 million compared to net income of $397.32 million for the year of 2022.

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

The full year of 2022 was impacted by the Community Bankers Trust acquisition as compared to one month in 2021.

The lower net income within the community banking segment in 2023 was due primarily to a higher provision for credit losses and a special FDIC assessment charge.

Net interest income increased $36.90 million to $927.48 million for the year of 2023, compared to $890.58 million for the same period of 2022.

Generally, net interest income for the year of 2022 increased from the year of 2021 due to an increase in average earning assets as a result of the Community Bankers Trust acquisition, organic loan growth and an increase in the average yield on earning assets due to rising market interest rates.

Provision for credit losses was $18.82 million for the year of 2022 compared to a net benefit of $23.97 million for the same period of 2021.

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

Noninterest income for the year of 2022 was relatively flat from the year of 2021, decreasing $877 thousand or less than 1%.

Generally, net interest income for the year of 2023 increased from the year of 2022 due mainly to the impact of rising market interest rates on earning assets, organic loan growth and a change in the asset mix to higher earning assets.

Provision for credit losses was $31.15 million for the year of 2023 compared to $18.82 million for the same period of 2022.

The increase in the provision for credit losses was mainly due to a change in the impact of the reasonable and supportable forecasts of future macroeconomic conditions and loan growth.

Noninterest income for the year of 2023 decreased $4.60 million to $94.53 million for the year of 2023 as compared to $99.13 million for the year of 2022.

This decrease from the year of 2022 was due mainly to net losses on the sales of AFS investment securities and declines in fees from deposit services and income from bank-owned life insurance.

Noninterest expense was $498.54 million for the year ended December 31, 2023, compared to $472.81 million for the same period of 2022.

The increase of $29.32 million in noninterest expense was primarily attributable to the additional employees and branch offices from the Community Bankers Trust acquisition as most major categories of noninterest expense showed increases.

The increase of $25.72 million in noninterest expense was primarily attributable to an increase in FDIC expense due to a special assessment charge and a higher assessment rate.

Mortgage Banking

The mortgage banking segment reported a net loss of $7.22 million for the year of 2022 as compared to net income of $43.93 million for the year of 2021.

The mortgage banking segment reported net income of $194 thousand for the year of 2023 as compared to a net loss of $7.22 million for the year of 2022.

Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was $49.36 million for the year of 2023 as compared to $69.31 million for the year of 2022.

The decrease of $113.91 million in 2022 was due mainly to lower originations and sales of mortgage loans driven by the rising rate environment and a lower margin on loans sold in the secondary market.

This decrease in noninterest income from 2022 was due mainly to decreased sales of mortgage loans in the secondary market primarily as a result of a rising interest rate environment.

Noninterest expense was $59.20 million for the year of 2023 as compared to $88.98 million the year of 2022.

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

The decrease in 2022 was primarily due to a decrease in employee compensation due to lower employee incentives and commissions related to a decrease in mortgage banking production.

The decrease in 2023 was due mainly to lower employee commissions and incentives related to the decreased mortgage banking production.

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

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The $23.49 million increase in net interest income occurred because total interest income increased $399.33 million while total interest expense increased $375.84 million from the year of 2022.

Generally, interest income for the year of 2022 increased from the year of 2021 due mainly to a higher amount of interest earning assets, mainly as result of the Community Bankers Trust acquisition and organic loan growth, and an increase in the yield on those earning assets mainly as a result of a rise in market interest rates.

Interest expense increased primarily due to an increase in the amount of interest-bearing funds, mainly as result of the Community Bankers Trust acquisition and to partially fund loan growth, as well as an increase in market interest rates which resulted in higher funding costs.

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

3 unchanged sentences

Tax-equivalent net interest income for the year of 2023 increased $23.04 million, or 2.56%, from the year of 2022.

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

These increases were partially offset by higher interest expense primarily driven by deposit rate repricing, lower Paycheck Protection Plan (“PPP”) loan fee income and lower acquired loan accretion income.

The interest rate spread for the year of 2022 increased 30 basis points from the year of 2021 due to a 61 basis point increase in the average yield on earning assets partially offset by a 31 basis point increase in the average cost of funds.

Average earning assets for the year of 2022 increased $1.52 billion, or 6.26%, from the year of 2021 due to a $1.68 billion increase in average net loans and loans held for sale and a $1.40 billion increase in average investment securities partially offset by a $1.57 billion decrease in average short-term investments.

Net PPP loan fee income was $9.62 million and $33.22 million for the year of 2022 and 2021, respectively, a decrease of $23.59 million.

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

These increases were partially offset by higher interest expense primarily driven by deposit rate repricing, higher average balances and the cost of long-term borrowings, lower income from Paycheck Protection Program (“PPP”) loan fees and lower acquired loan accretion income.

The yield on average earning assets increased 150 basis points from the year of 2022 to 5.41%.

Within the increase in the average yield on earning assets, the yield on short-term investments increased 379 basis points, the yield on net loans, including loans held for sale, increased 131 basis points, and the yield on investment securities increased 110 basis

Average earning assets for the year of 2023 increased $270.97 million, or 1.05%, from the year of 2022 due to a $1.49 billion increase in average net loans, including loans held for sale, partially offset by a $697.03 million decrease in average short-term investments and a $522.48 million decrease in average investment securities.

The average cost of funds increased 205 basis points from the year of 2022 to 2.69% primarily due to increases of 196 basis points and 204 basis points in the cost of average interest-bearing deposits and in the cost of average long-term borrowings, respectively.

Average interest-bearing deposits increased $316.38 million and average long-term borrowings increased $909.27 million from the year of 2022.

Net PPP loan fee income decreased $9.16 million from the year of 2022.

Acquired loan accretion income was $11.55 million and $18.32 million for the year of 2023 and 2022, respectively, a decrease of $6.77 million.

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The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for 2023, 2022 and 2021.

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

For the years of 2021 and 2020, average balances of $1,571,758 and $1,280,091, respectively, were reclassed from noninterest- bearing deposits to interest-bearing deposits.

Nonaccruing loans and loans held for sale are included in the daily average loan amounts outstanding.

For the year of 2021, average balances of $1,571,758 were reclassed from noninterest- bearing deposits to interest-bearing deposits.

The following table sets forth a summary for the periods indicated of the changes in consolidated interest earned and interest paid detailing the amounts attributable to (i) changes in volume (change in the average volume times the prior year’s average rate), (ii) changes in rate (change in the average rate times the prior year’s average volume), and (iii) changes in rate/volume (change in the average volume times the change in average rate).

17 unchanged sentences

Yields and interest income on federally tax-exempt loans and investment securities are computed on a fully tax-equivalent basis using the statutory federal income tax rate of 21% for 2023, 2022 and 2021.

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

Nonaccruing loans and loans held for sale are included in the daily average loan amounts outstanding.

Provision for Credit Losses

United’s provision for credit losses was $18.82 million for the year of 2022 while the provision for credit losses was a net benefit of $23.97 million for the year of 2021.

United’s provision for credit losses was $31.15 million for the year of 2023 while the provision for credit losses was $18.82 million for the year of 2022.

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

The provision for loan and lease losses for the year of 2022 was $18.83 million as compared to a net benefit of $23.72 million for the year of 2021.

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

Net charge-offs for the year of 2022 were $101 thousand as compared to $8.72 million for the year of 2021.

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

Net charge-offs as a percentage of average loans and leases were zero and 0.05% for the year of 2022 and 2021, respectively.

As of December 31, 2022, nonperforming loans and leases were $58.64 million or 0.29% of loans and leases, net of unearned income as compared to $90.76 million or 0.50% of loans, net of unearned income at December 31, 2021.

The components of nonperforming loans and leases include:

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

Loans past due 90 days or more were $15.57 million at December 31, 2022, a decrease of $3.31 million or 17.55% from $18.88 million at year-end 2021.

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

At December 31, 2022, nonaccrual loans were $23.69 million, which was a decrease of $12.34 million or 34.26% from $36.03 million at year-end 2021.

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

Restructured loans were $19.39 million at December 31, 2022, a decrease of $16.47 million or 45.93% from $35.86 million at year-end 2021.

The decrease was mainly due to the repayment of six large commercial relationships during the year of 2022.

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

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

Total nonperforming assets of $60.69 million, including OREO of $2.05 million at December 31, 2022, represented 0.21% of total assets.

The provision for loan and lease losses for the year of 2023 was $31.15 million as compared to $18.83 million for the year of 2022.

The higher amount of provision expense for the year of 2023 compared to the year of 2022 was mainly due to a change in the reasonable and supportable forecasts of future macroeconomic conditions and loan growth.

Net charge-offs for the year of 2023 were $6.66 million as compared to $101 thousand for the year of 2022.

The higher amount of net charge-offs for the year of 2023 as compared to year of 2022 was primarily due to an increase in charge-offs in 2023 for the consumer loan segment as well as a lower amount of recoveries in 2023 of previously charged-off amounts for the other commercial loan segment.

Net charge-offs as a percentage of average loans and leases were 0.03% and zero for the year of 2023 and 2022, respectively.

The following table shows a summary of United’s nonperforming assets including nonperforming loans and other real estate owned (“OREO”) at December 31, 2023 and December 31, 2022:

(In thousands)

Nonaccrual loans

Loans past due 90 days of more

Restructured loans (1)

Total nonperforming loans

Other real estate owned

Total nonperforming assets

On January 1, 2023, United adopted ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures” prospectively which eliminated the accounting guidance on troubled debt restructurings and enhanced creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty.

After the adoption of ASU 2022-02, United no longer considers accruing restructured loans that are fewer than 90 days past due as nonperforming loans or nonperforming assets.

Nonperforming loans and nonperforming assets at December 31, 2022 included $9,127 of restructured loans that were on accruing status and fewer than 90 days past due but classified as nonperforming loans and nonperforming assets.

Restructured loans that are on nonaccrual or 90-day past due are included in the above nonperforming loan and nonperforming asset categories at December 31, 2023.

Restructured loans with an aggregate balance of $7,186 at December 31, 2022 were on nonaccrual status, but are not included in “Nonaccrual loans” above.

Restructured loans with an aggregate balance of $3,075 at December 31, 2022 were 90 days past due, but not included in “Loans past due 90 days or more” above.

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

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At December 31, 2023, the allowance for loan and lease losses was $259.24 million as compared to $234.75 million at December 31, 2022.

The increase in the allowance for loan and lease losses was due mainly to an increase in outstanding loans as well as lower forecasted Gross Domestic Product (“GDP”) and a higher forecasted unemployment rate 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 increase in the allowance for loan and lease losses was primarily due to increased reserves for the nonowner-occupied commercial real estate and construction and land development loan segments.

As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 1.21% at December 31, 2023 and 1.14% at December 31, 2022.

The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 569.78% and 400.33% at December 31, 2023 and December 31, 2022, respectively.

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

The increase in this ratio was due an increase in the allowance for loan losses and a decline in nonperforming loans.

The following table summarizes United’s credit loss experience for loan and leases losses, based on loan categories, for the year of 2023 and 2022:

3 unchanged sentences

Loans & leases charged off

Net loans & leases (recovered) charged off

Net loans & leases charged off (recovered)

Average gross loans & leases outstanding

Net recoveries as a percentage of average gross loans & leases outstanding

Net charge-offs (recoveries) as a percentage of average gross loans & leases outstanding

Nonowner-occupied commercial real estate

2 unchanged sentences

Average gross loans & leases outstanding

Net charge-offs as a percentage of average gross loans & leases outstanding

Net (recoveries) charge-offs as a percentage of average gross loans & leases outstanding

(Dollars in thousands)

Other Commercial

Loans & leases charged off

Net loans & leases (recovered) charged off

Net loans & leases charged off (recovered)

Average gross loans & leases outstanding

Net (recoveries) charge-offs as a percentage of average gross loans & leases outstanding

(Dollars in thousands)

Net charge-offs (recoveries) as a percentage of average gross loans & leases outstanding

Residential Real Estate

4 unchanged sentences

Loans & leases charged off

Net loans & leases (recovered) charged off

Net loans & leases recovered

Average gross loans & leases outstanding

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The year of 2023 qualitative adjustments include analyses of the following:

Current conditions – United considered the impact of inflation, 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;

Current conditions – United considered the impact of inflation, interest rates, the potential impact of the geopolitical situation, the banking regulatory environment and a potential government shutdown when making determinations related to factor adjustments, such as changes in economic and business conditions;

collateral values for dependent loans;

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Assumptions for the economic variables were the following:

The forecast for real GDP shifted downward in the fourth quarter, from a projection of 1.20% for 2023 as of mid-September 2022 to 0.50% for 2023 as of mid-December with projections of 1.60% for 2024 and 1.80% for 2025.

The unemployment rate forecast shifted slightly upward compared to the third quarter of 2022 with an increasing trend expected throughout 2024 and 2025.

The forecast for real GDP shifted slightly in the fourth quarter, from a projection of 1.50% for 2024 as of mid-September 2023 to 1.40% for 2024 as of mid-December with a projection of 1.80% for 2025.

The unemployment rate forecast for 2024 and 2025 remained the same at 4.10%.

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

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

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United’s review of the allowance for loan and lease losses at December 31, 2023 produced increased reserves in three of the four loan categories as compared to December 31, 2022.

The residential real estate reserve increased $9.82 million.

The real estate construction and development loan pool reserve increased $8.99 million.

The consumer loan pool reserve increased $2.75 million.

Each of these increases were primarily due to increased outstanding balances.

The allowance related to the commercial, financial & agricultural loan pool decreased $2.84 million.

This decrease is due to improvement in historical loss rates and a decrease in allocations established for individually assessed loans.

The allowance related to the commercial, financial & agricultural loan pool increased $12.64 million due to increased outstanding balances and increased reasonable and supportable forecast adjustments particularly as it pertains to office loans.

The construction and land development loan pool reserve increased $11.52 million due to increased outstanding balances as well as increased risk of loss for collateral value for dependent loans and increased reasonable and supportable forecast adjustments.

The residential real estate reserve increased $4.94 million due to increased outstanding balances.

The consumer loan pool reserve decreased $4.61 million primarily due to a decrease in outstanding balances.

An allowance is established for estimated lifetime losses for loans that are individually assessed.

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The allowance for loans and leases that were individually assessed was $13.15 million at December 31, 2023 and $1.27 million at December 31, 2022.

In comparison to the prior year-end, this element of the allowance decreased $5.26 million due to repayment of individually assessed loans, improved borrowers’ financial conditions such that individual assessments were no longer necessary and improved collateral valuations.

In comparison to the prior year-end, this element of the allowance increased $11.88 million due to a commercial relationship identified in 2023 with a loss potential requiring individually assessed reserves of $12.16 million.

Management believes that the allowance for credit losses of $303.94 million at December 31, 2023 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available.

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There was no provision for credit losses recorded on available for sale investment securities for the year of 2023 and 2022 and no allowance for credit losses on available for sale investment securities as of December 31, 2023 and 2022.

Loan interest payment deferrals granted by United under the CARES Act ended on of January 1, 2022.

Therefore, United released all of its remaining $8 thousand in reserves in the year of 2022 related to these loan interest payment deferrals granted under the CARES Act as compared to the release of $242 thousand in the year of 2021.

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

Management is not aware of any potential problem loans or leases, trends or uncertainties, which it reasonably expects, will materially impact future operating results, liquidity, or capital resources which have not been disclosed.

Additionally, management has disclosed all known material credits, which cause management to have serious doubts as to the ability of such borrowers to comply with the loan repayment schedules.

Other income consists of all revenues, which are not included in interest and fee income related to earning assets.

2 unchanged sentences

Noninterest income for the year of 2023 was $135.26 million, which was a decrease of $18.00 million or 11.75% from the year of 2022.

The decrease was due mainly to a decrease in income from mortgage banking activities primarily as a result of lower mortgage loan originations and sales volume driven by a rising interest rate environment and a lower margin on loans sold in the secondary market.

The decrease was due mainly to net losses recognized on the sales of AFS investment securities, decreases in income from mortgage banking activities and fees from deposit services partially offset by a net gain on the sale of MSRs within mortgage loan servicing income.

For the year of 2023, net losses on investment securities were $7.65 million as compared to net gains on investment securities of $776 thousand for the year of 2022.

The net losses in 2023 were mainly due to a net loss of $7.24 million on the sale of approximately $187 million of AFS investment securities in the second quarter of 2023.

United recognized a net gain of $1.36 million on an equity security without a readily determinable market value and a $589 thousand net loss on equity securities for the year of 2022.

United did not recognize any impairment on investment securities for the year of 2023 and 2022.

Income from mortgage banking activities totaled $26.59 million for the year of 2023 compared to $42.69 million for the year of 2022.

The decrease of $129.00 million or 75.14% for the year of 2022 was due mainly to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower margin on loans sold in the secondary market.

Mortgage loan sales were $2.20 billion in the year of 2022 as compared to $6.41 billion in the year of 2021.

Mortgage loans originated for sale were $1.90 billion for the year of 2022 as compared to $6.19 billion for the year of 2021.

United recognized a net gain of $776 thousand on investment securities’ activity in 2022 as compared to a net gain of $2.68 million on investment securities activity in 2021.

In particular, United recognized a net gain of $1.36 million on an equity security without a readily determinable market value and a $589 thousand net loss on equity securities for the year of 2022 as compared to net gains of $1.55 million on the sales, calls and redemption of available-for-sale securities investment securities, $670 thousand on equity securities and $455 thousand on an equity security without a readily determinable market value for the year of 2021.

In addition, United did not recognize any impairment on investment securities for the year of 2022 and 2021.

Fees from trust services for the year of 2022 were $17.22 million, an increase of $664 thousand or 4.01% from the year of 2021 due to an increase in managed assets.

Fees from brokerage services for the year of 2022 were $16.41 million, an increase of $853 thousand or 5.48% from the year of 2021 due to increased volume.

Fees from deposit services for the year of 2022 were $40.56 million, an increase of $1.87 million or 4.83% from the year of 2021.

Debit card income increased $741 thousand and overdraft fees increased $713 thousand.

Partially offsetting fees from deposit services was the impact of implemented changes to United’s overdraft policy during the third quarter of 2022.

Bankcard fees for the year of 2022 increased $1.10 million or 19.96% from the year of 2021 due mainly to an increase in interchange income from increased volume.

Income from bank-owned life insurance (“BOLI”) for the year of 2022 increased $2.35 million or 34.33% from the year of 2021 due to an increase of $2.64 million in death benefits and the addition of $30.64 million in BOLI from the Community Bankers Trust acquisition.

Other miscellaneous income decreased $700 thousand or 8.71% mainly due to an decrease in prepayment fees received on Delegated Underwriting and Servicing (“DUS”) securities.

The decrease of $16.10 million or 37.71% for the year of 2023 was primarily a result of lower mortgage loan originations and sales volume driven by a rising interest rate environment and a lower margin on loans sold in the secondary market.

Mortgage loan sales were $861.52 million in the year of 2023 as compared to $2.20 billion in the year of 2022.

Mortgage loans originated for sale were $860.90 million for the year of 2023 as compared to $1.90 billion for the year of 2022.

Fees from deposit services for the year of 2023 were $37.08 million, a decrease of $3.48 million or 8.58% from the year of 2022.

In particular, overdraft fees were down $2.69 million due to the impact of changes in United’s overdraft policy and account analysis fees declined $2.13 million.

Partially offsetting these decreases were increases of $725 thousand and $581 thousand on early withdrawal penalties on CDs and debit card income, respectively.

Mortgage servicing income was $13.75 million for the year of 2023, an increase of $4.51 million or 48.85% from the year of 2022 due primarily to a net gain of $8.31 million on the sale of mortgage servicing rights during 2023.

Fees from trust services for the year of 2023 were $18.32 million, an increase of $1.10 million or 6.40% from the year of 2022 due to an increase in managed assets.

Income from bank-owned life insurance (“BOLI”) for the year of 2023 decreased $858 thousand or 9.34% from the year of 2022 due to a decrease of $2.76 million in death benefits.

Death benefits were $571 thousand for the year of 2023 as compared to death benefits of $3.33 million in year of 2022.

Other miscellaneous income for the year of 2023 increased $3.72 million or 50.63% from the year of 2022 due mainly to a net gain of $2.66 million from the payoff of a fixed rate commercial loan that had an associated interest rate swap derivative.

Other Expense

1 unchanged sentence

Other expense includes all items of expense other than interest expense, the provision for credit losses and income tax expense.

Noninterest expense for the year of 2022 was $555.09 million, which was a decrease of $26.89 million or 4.62% from the year of 2021.

Noninterest expense for the year of 2023 was $560.22 million, which was flat from the year of 2022, increasing $5.14 million or less than 1% driven by increases in FDIC insurance expense, employee benefits expense, and net occupancy expense.

Partially offsetting these increases were decreases in OREO expenses on as well as net losses from sales of OREO properties, mortgage loan servicing expense and impairment, and other noninterest expense.

Employee compensation for the year of 2023 decreased $11.60 million or 4.78% from the year of 2022.

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

Employee benefits expense for the year of 2022 decreased $7.93 million or 14.71% as compared to the year of 2021.

The decrease for 2023 was due mainly to lower employee commissions and incentives related to a decline in mortgage banking production and a decline in base salaries due to a lower employee headcount.

Employee benefits expense for the year of 2023 increased $2.42 million or 5.28% as compared to the year of 2022.

For the year of 2023, postretirement expense, which includes expense associated with United’s pension plan, supplemental early retirement plans (“SERPs”) and Savings and Stock Investment Plan (“401K plan”), decreased $2.09 million from the year of 2022.

United uses certain valuation methodologies to measure the fair value of the assets within United’s pension plan which are presented in Note P, Notes to Consolidated Financial Statements.

The funded status of United’s pension plan is based upon the fair value of the plan assets compared to the projected benefit obligation.

United uses certain valuation methodologies to measure the fair value of the assets within United’s pension plan which are presented in Note O, Notes to Consolidated Financial Statements.

The funded status of

United’s pension plan is based upon the fair value of the plan assets compared to the projected benefit obligation.

The determination of the projected benefit obligation and the associated periodic benefit expense involves significant judgment and estimation of future employee compensation levels, the discount rate and the expected long-term rate of return on plan assets.

If United assumes a 1% increase or decrease in the estimation of future employee compensation levels while

keeping all other assumptions constant, the benefit cost associated with the pension plan would increase by approximately $909 thousand and decrease by approximately $849 thousand, respectively.

If United assumes a 1% increase or decrease in the estimation of future employee compensation levels while keeping all other assumptions constant, the benefit cost associated with the pension plan would increase by approximately $604 thousand and decrease by approximately $572 thousand, respectively.

If United assumes a 1% increase or decrease in the discount rate while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease by approximately $2.18 million and increase by approximately $2.61 million, respectively.

If United assumes a 1% increase or decrease in the expected long-term rate of return on plan assets while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease and increase by approximately $2.07 million, respectively.

If United assumes a 1% increase or decrease in the expected long-term rate of return on plan assets while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease by and increase by approximately $1.62 million, respectively.

Net occupancy expense increased $1.30 million or 2.87% for the year of 2023 as compared to the prior year.

The increase was due mainly to increases of $1.17 million in building maintenance expense and $998 thousand in depreciation due mainly to the offices added in the Community Bankers Trust acquisition partially offset by a decline of $479 thousand in building rental expense due to the closing of certain leased offices.

OREO expense for the year of 2022 decreased $3.23 million or 60.19% from the year of 2021 due mainly to fewer declines in the fair value of OREO properties.

Equipment expense increased $3.34 million or 12.86% for the year of 2022 as compared to the year of 2021.

The increase was due mainly to higher maintenance costs of $2.32 million and depreciation expense of $684 thousand primarily due to the Community Bankers Trust acquisition.

Data processing expense decreased $1.45 million or 4.61% for the year of 2022 as compared to the year of 2021.

The decrease for year of 2022 was due to $3.47 million of merger conversion and Community Bankers Trust contract termination costs included in the year of 2021.

Mortgage loan servicing expense and impairment for the year of 2022 decreased $5.15 million from the year of 2021.

This increase was primarily due to higher amounts of building rental and depreciation expense partially offset by lower maintenance costs.

OREO expense for the year of 2023 decreased $783 thousand or 36.62% from the year of 2022 due mainly to fewer declines in the fair value of OREO properties.

Net losses on the sales of OREO properties declined $760 thousand or 108.57% for the year of 2023 as compared to the year of 2022.

Mortgage loan servicing expense and impairment for the year of 2023 decreased $1.50 million or 21.17% from the year of 2022.

The decrease was due to the recovery of past temporary impairment and lower amortization expense of mortgage servicing rights.

Federal Deposit Insurance Corporation (“FDIC”) expense for the year of 2022 increased $3.64 million or 43.64% from the year of 2021 due to a higher assessment base.

Other expense for the year of 2022 increased $17.48 million or 14.46% from the year of 2021.

The increase in other noninterest expense mainly resulted from higher amounts of certain general operating expenses primarily related to consulting and legal costs.

Additionally, the expense for the reserve for unfunded loan commitments increased $2.71 million and charitable contributions increased $1.41 million from the year of 2021.

FDIC expense for the year of 2023 increased $18.39 million or 153.39% from the year of 2022.

The increase was due mainly to a $11.99 million special assessment fee levied on banking organizations to recover losses to the Deposit Insurance Fund as well as a higher overall assessment rate and base.

Other expense for the year of 2023 decreased $2.39 million or 1.73% from the year of 2022.

The decrease in other noninterest expense mainly resulted from a decline $16.23 million in the reserve for unfunded loan commitments.

Partially offsetting this decrease were increases in business franchise taxes of $2.66 million, expense of $2.65 million for mortgage loan down payment and closing cost assistance programs, amortization of $1.67 million for tax credit investments, impairment of $1.28 million on trade name tangibles due to the planned consolidation of George Mason’s and Crescent’s mortgage banking business into United Bank, consulting and legal expense of $1.20 million, loan collection expense of $1.03 million as well as higher amounts of certain other general operating expenses.

For the year ended December 31, 2023, income taxes were $97.49 million, compared to $96.16 million for 2022, an increase of $1.34 million or 1.39%.

The increase was due to higher earnings partially offset by a slightly lower effective tax rate.

United’s effective tax rate was approximately 20.2% and 20.6% for years ended December 31, 2022 and 2021, respectively, as compared to 19.7% for 2020.

For further details related to income taxes, see Note O, Notes to Consolidated Financial Statements.

The increase was due to a higher effective tax rate partially offset by lower earnings.

United’s effective tax rate was approximately 21.0% and 20.2% for years ended December 31, 2023 and 2022, respectively.

The increase in the effective tax rate for the year of 2023 was primarily driven by increases in the federal and state tax provisions as well as lower benefits related to the issuance of shares in share-based compensation plans.

For further details related to income taxes, see Note N, Notes to Consolidated Financial Statements.

Quarterly Results

Net income for the first quarter of 2023 was $98.31 million as compared to earnings of $81.66 million for the first quarter of 2022.

Earnings for the first quarter of 2022, as compared to the first quarter of 2021, decreased primarily due to lower income from mortgage banking activities mainly as a result of the rising rate environment partially offset by lower noninterest expense associated with decreased mortgage banking production.

Net interest income for the first quarter of 2022 was relatively flat from the first quarter of 2021, increasing $542 thousand, or less than 1%, to $191.50 million from net interest income of $190.96 million for the first three months of 2021.

The slight increase of $542 thousand in net interest income occurred because total interest income decreased $2.86 million while total interest expense decreased $3.40 million from the first quarter of 2021.

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

as compared to a provision for credit losses expense of $143 thousand for the first quarter of 2021.

The decrease in the provision for credit losses was mainly due to the impact of better performance trends within the loan portfolio.

Noninterest income was $46.02 million for the first three months of 2022, a decrease of $46.55 million or 50.28% from the first three months of 2021 due mainly to decreased income from mortgage banking activities due to a lower volume of mortgage loan originations and sales in the secondary market mainly the result of a rising interest rate environment.

Noninterest expense for the first three months of 2022 decreased $9.75 million or 6.55% from the first three months of 2021 due mainly to lower employee compensation expense as a result of lower employee commissions, incentives and overtime related to mortgage banking production and lower OREO expense due to fewer declines in the fair value of OREO properties.

Income taxes decreased $7.47 million or 27.09% for the first three months of 2022 as compared to the first three months of 2021 primarily due to lower earnings and a lower effective tax rate.

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

Earnings for the first quarter of 2023, as compared to the first quarter of 2022, increased primarily due to higher net interest income as a result of the impact of rising market interest rates on earning assets, organic loan growth and a change in the asset mix to higher earning assets.

Diluted earnings per share were $0.73 for the first quarter of 2023 and $0.60 for the first quarter of 2022.

Net interest income for the first quarter of 2023 increased $42.82 million,

or 22.36%, to $234.32 million from net interest income of $191.50 million for the first three months of 2022.

The increase of $42.82 million in net interest income occurred because total interest income increased $126.51 million while total interest expense increased $83.69 million from the first quarter of 2022.

The provision for credit losses was $6.89 million for the first quarter of 2023 as compared to a net benefit of $3.41 million for the first quarter of 2022.

The increase in the provision for credit losses was mainly due to a change in qualitative factors and the impact of reasonable and supportable forecasts of future macroeconomic conditions.

Noninterest income was $32.74 million for the first three months of 2023, a decrease of $13.28 million or 28.86% from the first three months of 2022 due mainly to decreased income from mortgage banking activities primarily due to lower mortgage loan origination and sale volume and a lower margin on loans sold in the secondary market.

Noninterest expense for the first three months of 2023 decreased $1.76 million or 1.26% from the first three months of 2022 due mainly to lower employee compensation expense as a result of lower employee commissions and incentives related to mortgage banking production and a lower employee headcount.

Income taxes increased $4.35 million or 21.64% for the first three months of 2023 as compared to the first three months of 2022 primarily due to increased earnings and a higher effective tax rate.

Net income for the second quarter of 2023 was $92.46 million or $0.68 per diluted share, as compared to $95.61 million or $0.71 per diluted share for the prior year second quarter.

During the second quarter of 2023, United sold MSRs with an aggregate unpaid principal balance of approximately $2 billion at a net gain of $8.15 million.

Additionally, during the second quarter of 2023, United sold approximately $187 million of AFS investment securities at a net loss of $7.24 million.

Net interest income for the second quarter of 2023 was $227.46 million, which was an increase of $12.56 million, or 5.84%, from the second quarter of 2022.

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

United’s provision for credit losses was a net benefit of $1.81 million for the second quarter of 2022 while the provision for credit losses was a net benefit of $8.88 million for the second quarter of 2021.

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

The increase of $12.56 million in net interest income occurred because total interest income increased $118.16 million while total interest expense increased $105.60 million from the second quarter of 2022.

The provision for credit losses was $11.44 million for the second quarter of 2023 while the provision for credit losses was a net benefit of $1.81 million for the second quarter 2022.

The increase in the provision for credit losses was mainly due to a change in qualitative factors and the impact of reasonable and supportable forecasts of future macroeconomic conditions.

For the second quarter of 2023, noninterest income was $35.18 million, which was a decrease of $8.43 million or 19.33% from the second quarter of 2022.

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

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

The decrease in noninterest income was due mainly to lower mortgage loan origination and sale volume and a lower margin on loans sold in the secondary market as well as the previously mentioned net losses on the sales of securities in 2023.

For the second quarter of 2023, noninterest expense decreased $5.89 million or 4.17% from the second quarter of 2022 due mainly to a decrease in the expense for the reserve for unfunded loan commitments within other expenses.

Income taxes for the second quarter of 2023 were $23.45 million as compared to $23.53 million for the second quarter of 2022.

For the quarters ended June 30, 2022 and June 30, 2021, United’s effective tax rate was 19.75% and 20.50%, respectively.

For the quarters ended June 30, 2023 and 2022, United’s effective tax rate was 20.23% and 19.75%, respectively.

Net income for the third quarter of 2023 was $96.16 million or $0.71 per diluted share, as compared to $102.59 million or $0.76 per diluted share for the prior year third quarter.

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

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

The provision for credit losses was $7.67 million for the third quarter of 2022 while the provision for credit losses was a net benefit of $7.83 million for the third quarter of 2021.

For the third quarter of 2022, noninterest income was $32.75 million, which was a decrease of $35.88 million or 52.28% from the third quarter of 2021 primarily due to decreased income from mortgage banking activities due to a lower volume of mortgage loan originations and sales in the secondary market mainly the result of a rising interest rate environment.

For the third quarter of 2022, noninterest expense decreased $5.08 million or 3.58% from the third quarter of 2021 due mainly to lower employee compensation expense as a result of lower employee commissions, incentives and overtime related to mortgage banking production.

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

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

Net interest income for the third quarter of 2023 was $228.45 million, which was a decrease of $12.17 million, or 5.06%, from the third quarter of 2022.

The decrease of $12.17 million in net interest income occurred because total interest income increased $93.23 million while total interest expense increased $105.40 million from the third quarter of 2022.

The provision for credit losses was $5.95 million for the third quarter of 2023 while the provision for credit losses was $7.67 million for the third quarter of 2022.

The lower amount of provision expense for the third quarter of 2023 as compared to the third quarter of 2022 was mainly due to the impact of reasonable and supportable forecasts of future macroeconomic conditions.

For the third quarter of 2023, noninterest income was $33.66 million, which was an increase of $912 thousand or 2.78% from the third quarter of 2022.

This increase was primarily due to increases in income from mortgage banking activities and income from BOLI partially offset by a decrease in mortgage loan servicing income.

For the third quarter of 2023, noninterest expense decreased $1.97 million or 1.43% from the third quarter of 2022 primarily due to decreases in OREO expense, mortgage loan servicing expense and certain general operating expenses within other noninterest expenses partially offset by increases in employee benefits and FDIC insurance expense.

Income taxes for the third quarter of 2023 were $24.78 million as compared to $25.92 million for the third quarter of 2022.

For the quarters ended September 30, 2023 and June 30, 2023, United’s effective tax rate was 20.49% and 20.23%, respectively.

Net income for the fourth quarter of 2023 was $79.39 million or $0.59 per diluted share as compared to earnings of $99.77 million or $0.74 per diluted share for the fourth quarter of 2022.

Net interest income for the fourth quarter of 2022 was $249.40 million, which was an increase of $65.73 million or 35.78% from the fourth quarter of 2021.

The $65.73 million increase in net interest income occurred because total interest income increased $112.55 million while total interest expense increased $46.82 million from the fourth quarter of 2021.

The provision for credit losses was $16.37 million for the fourth quarter of 2022 as compared to a net benefit of $7.41 million for the fourth quarter of 2021.

The increase in the provision for credit losses was primarily due to loan growth and the impact of reasonable and supportable forecasts of future macroeconomic conditions.

Partially offsetting the fourth quarter of 2021 net benefit was a provision for loan losses of $12.29 million recorded on purchased non-credit deteriorated (“non-PCD”) loans from Community Bankers Trust.

Noninterest income for the fourth quarter of 2022 was $30.88 million, which was a decrease of $23.17 million, or 42.87%

from the fourth quarter of 2021.

The decrease in noninterest income was driven primarily by a $22.72 million decrease in income from mortgage banking activities mainly due to lower mortgage loan origination and sale volume and a lower margin on loans sold in the secondary market.

Noninterest expense for the fourth quarter of 2022 was $137.54 million, a decrease of $14.25 million, or 9.39%, from the fourth quarter of 2021 primarily due to decreases of $14.01 million in employee compensation and $3.39 million in data processing expense.

The decrease in employee compensation was primarily due to lower employee commissions and incentives related to mortgage banking production and the impact of $2.53 million of merger-related expenses recognized in the fourth quarter of 2021.

Data processing expense for the fourth quarter of 2021 included $3.47 million of merger-related expenses associated with the Community Bankers Trust acquisition.

Net interest income for the fourth quarter of 2023 was $229.69 million, which was a decrease of $19.71 million or 7.90% from the fourth quarter of 2022.

The $19.71 million decrease in net interest income occurred because total interest income increased $61.43 million while total interest

expense increased $81.15 million from the fourth quarter of 2022.

The provision for credit losses was $6.88 million for the fourth quarter of 2023 as compared to a provision for credit losses of $16.37 million for the fourth quarter of 2022.

The decrease in the provision for credit losses was primarily due the impact of reasonable and supportable forecasts of future macroeconomic conditions.

Noninterest income for the fourth quarter of 2023 was $33.68 million, which was an increase of $2.80 million, or 9.05% from the fourth quarter of 2022.

The increase in noninterest income was driven by an increase of $2.73 million in other noninterest income due to the $2.66 million gain on the from the payoff of a fixed rate commercial loan that had an associated interest rate swap derivative.

Noninterest expense for the fourth quarter of 2023 was $152.29 million, an increase of $14.75 million, or 10.72%, from the fourth quarter of 2022 primarily due to increases of $13.37 million in FDIC insurance expense due to the $11.99 million special assessment recognized in the fourth quarter of 2023 as well as a higher overall assessment rate.

For the fourth quarter of 2023, income tax expense was $24.81 million as compared to $26.61 million for the fourth quarter of 2022.

The increase of $7.12 million was primarily due to higher earnings and a slightly higher effective tax rate.

The decrease of $1.80 million was primarily due to lower earnings and partially offset by a higher effective tax rate.

United’s effective tax rate was 23.81% for the fourth quarter of 2023 and 21.06% for the fourth quarter of 2022.

Additional quarterly financial data for 2022 and 2021 may be found in Note Z, Notes to Consolidated Financial Statements.

Additional quarterly financial data for 2023 and 2022 may be found in Note Y, Notes to Consolidated Financial Statements.

The Effect of Inflation

23 unchanged sentences

Like all banks, United depends upon its ability to renew maturing deposits and other liabilities on a daily basis and to acquire new funds in a variety of markets.

A significant source of funds available to United

is “core deposits”.

A significant source of funds available to United is “core deposits”.

Core deposits include certain demand deposits, statement and special savings and NOW accounts.

12 unchanged sentences

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

See Notes L and M, Notes to Consolidated Financial Statements.

See Notes K and L, Notes to Consolidated Financial Statements.

During the year of 2023, United increased its interest-bearing deposit balance at the FRB by $438.02 million to $1.24 billion.

The change in the balance at the FRB was mostly the result of net sales, maturities, and paydowns in the available for sale debt securities portfolio of $952.01 million and an increase in deposits of $516.15 million partially offset by loan growth of $800.97 million and the net repayment of $400.29 million in FHLB advances.

Cash flows provided by operations in 2023 were $435.24 million due mainly to net income of $366.31 million for the year of 2023.

In 2022, cash flows provided by operations were $760.82 million due mainly to net income of $379.63 million for the year of 2022.

In 2022, net cash of $3.45 billion was used in investing activities which was primarily due to net loan growth of $2.37 billion and net purchases of $1.09 billion of investment securities over proceeds from sales of investment securities.

In 2021, net cash of $15.65 million was provided by investing activities which was primarily due to net loan repayments of $882.15 million and net cash of $39.42 million acquired in the Community Bankers Trust merger partially offset by $813.94 million of purchases of investment securities over proceeds from sales of investment securities and the purchase of $85.00 million of bank-owned life insurance policies.

In 2023, net cash of $38.99 million was provided by investing activities which was primarily due to proceeds of $819.87 million from sales, calls and maturities of investment securities over purchases partially offset by loan growth of $800.97 million.

In 2022, net cash of $3.45 billion was used in investing activities which was primarily due to loan growth of $2.37 billion and purchases of $1.09 billion of investment securities over proceeds from sales, calls and maturities of investment securities.

During the year of 2023, net cash of $51.94 million was used in financing activities due primarily to net repayments of $400.00 million from long-term FHLB borrowings partially offset by an increase of $517.27 million in deposits.

Other uses of cash within funding activities for the year of 2023 were $194.73 million for cash dividends paid.

During the year of 2022, net cash of $105.32 million was provided by financing activities due primarily to net advances of $1.38 billion from long-term FHLB borrowings partially offset by a decline of $1.04 billion in deposits.

Other uses of cash within funding activities for the year of 2022 were $193.04 million for cash dividends paid and $79.46 million for the acquisition of treasury stock.

During the year of 2021, net cash of $923.91 million was provided by financing activities due primarily to net growth of $1.25 billion in deposits.

This source of cash from funding activities was partially offset by net repayment of $40.21 million in short-term borrowings, net repayment of $97.79 million in long-term FHLB advances and cash dividends paid of $181.28 million for year of 2021.

The net effect of the cash flow activities was a decrease in cash and cash equivalents of $2.58 billion for the year of 2022 as compared to an increase in cash and cash equivalents of $1.55 billion for the year of 2021.

The net effect of the cash flow activities was an increase in cash and cash equivalents of $422.29 million for the year of 2023 as compared to a decrease in cash and cash equivalents of $2.58 billion for the year of 2022.

See the Consolidated Statement of Cash Flows in the Consolidated Financial Statements.

At December 31, 2023, United had an unused borrowing amount at the FHLB of approximately $6.74 billion subject to delivery of collateral after certain trigger points and $2.67 billion without the delivery of additional collateral.

United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $230 million, all of which was available at December 31, 2023.

United also has a $20 million unsecured, revolving line of credit with an unrelated financial institution to provide for general liquidity needs, all of which were available at December 31, 2023.

At December 31, 2023, United’s borrowing capacity for the FRB Discount Window was $2.67 billion.

United did not have any borrowings from the FRB’s Discount Window, or its Bank Term Funding Program, during the year of 2023.

United enters into derivative contracts, mainly to protect against adverse interest rate movements on the value of certain assets or liabilities, under which it is required to either pay cash to or receive cash from counterparties depending on changes in interest rates.

Derivative contracts are carried at fair value and not notional value on the consolidated balance sheet and therefore do not represent the amounts that may ultimately be paid under these contracts.

Further discussion of derivative instruments is included in Note S, Notes to Consolidated Financial Statements.

Further discussion of derivative instruments is included in Note R, Notes to Consolidated Financial Statements.

United is also a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.

14 unchanged sentences

Commitments generally have fixed expiration dates or other termination clauses, generally within one year, and may require the payment of a fee.

Further discussion of commitments is included in Note R, Notes to Consolidated Financial Statements.

Further discussion of commitments is included in Note Q, Notes to Consolidated Financial Statements.

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

1 unchanged sentence

United also has lines of credit available.

See Notes L and M to the accompanying unaudited Notes to Consolidated Financial Statements for more details regarding the amounts available to United under lines of credit.

See Notes K and L to the accompanying unaudited Notes to Consolidated Financial Statements for more details regarding the amounts available to United under lines of credit.

The Asset Liability Committee monitors liquidity to ascertain that a liquidity position within certain prescribed parameters is maintained.

7 unchanged sentences

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

Total shareholders’ equity was $4.52 billion at December 31, 2022, which was a decrease of $202.44 million or 4.29% from December 31, 2021.

This decrease is primarily due to a decrease of $327.84 million in accumulated other comprehensive income due mainly to an after-tax decrease in the fair value of available for sale securities as a result of a rising interest rate environment.

In addition, treasury stock increased $79.79 million or 46.76% due to the repurchase of 2,259,546 shares of United common stock under stock repurchase plans approved by United’s Board of Directors.

Partially offsetting these decreases was an increase of $184.65 million in retained earnings (net income less dividends declared).

Total shareholders’ equity was $4.77 billion at December 31, 2023, which was an increase of $255.05 million or 5.65% from December 31, 2022.

This increase is primarily due to increases of $170.19 million in net earnings and $73.05 million in accumulated other comprehensive income due mainly to an after-tax increase in the fair value of available for sale securities.

United’s equity to assets ratio was 15.94% at December 31, 2023 as compared to 15.31% at December 31, 2022.

5 unchanged sentences

Total cash dividends declared to common shareholders were $196.12 million for the year of 2023 as compared to $194.98 million for the year of 2022.

The year 2022 was the forty-nineth consecutive year of dividend increases to United shareholders.

The year 2023 was the fiftieth consecutive year of dividend increases to United shareholders.

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-K

Item 7. Management’s Discussion and Analysis