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Item 9A. Controls and Procedures

2024-02-29 compared with 2023-03-01 · 29 added, 2723 removed, 125 unchanged (96% of the section changed)

CONTROLS AND PROCEDURES

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

EXECUTIVE COMPENSATION

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

PRINCIPAL ACCOUNTING FEES AND SERVICES

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

FORM 10-K SUMMARY

CONSOLIDATED BALANCE SHEETS

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands, except par value)

Cash and due from banks

Interest-bearing deposits with other banks

Federal funds sold

Total cash and cash equivalents

Securities available for sale at estimated fair value (amortized cost-$ 5,011,729 at December 31, 2022 and $ 4,031,494 at December 31, 2021, allowance for credit losses of $ 0 at December 31, 2022 and December 31, 2021)

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

Equity securities at estimated fair value

Other investment securities

Loans held for sale measured using fair value option

Loans and leases

Unearned income

Loans and leases, net of unearned income

Allowance for loan and lease losses

Net loans and leases

Bank premises and equipment

Operating lease right-of-use

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

Bank-owned life insurance (“BOLI”)

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

Noninterest-bearing

Interest-bearing

Total deposits

Securities sold under agreements to repurchase

Federal Home Loan Bank (“FHLB”) borrowings

Other long-term borrowings

Reserve for lending-related commitments

Operating lease liabilities

Accrued expenses and other liabilities

TOTAL LIABILITIES

Shareholders’ Equity

Preferred stock, $ 1.00 par value;

Authorized- 50,000,000

shares, no ne issued

Common stock, $ 2.50 par value;

Authorized- 200,000,000

issued- 142,011,560

and 141,360,266 at December 31, 2022 and December 31, 2021, respectively, including 7,266,438 and 4,967,508 shares in treasury at December 31, 2022 and December 31, 2021, respectively

Retained earnings

Accumulated other comprehensive loss

Treasury stock, at cost

TOTAL SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENTS OF INCOME

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands, except per share data)

Year Ended December 31

Interest income

Interest and fees on loans and leases

Interest on federal funds sold and other short-term investments

Interest and dividends on securities:

Total interest income

Interest expense

Interest on deposits

Interest on short-term borrowings

Interest on long-term borrowings

Total interest expense

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Fees from trust services

Fees from brokerage services

Fees from deposit services

Bankcard fees and merchant discounts

Other service charges, commissions, and fees

Income from bank-owned life insurance

Income from mortgage banking activities

Mortgage loan servicing income

Net gain on the sale of bank premises

Net investment securities gains

Total other income

Other expense

Employee compensation

Employee benefits

Net occupancy expense

Other real estate owned (“OREO”) expense

Net losses on the sales of OREO properties

Equipment expense

Data processing expense

Mortgage loan servicing expense and impairment

Bankcard processing expense

FDIC insurance expense

FHLB prepayment penalties

Other expense

Total other expense

Income before income taxes

CONSOLIDATED STATEMENTS OF INCOME

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands, except per share data)

Year Ended December 31

Earnings per common share:

Dividends per common share

Average outstanding shares:

See notes to consolidated financial statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands)

Year Ended December 31

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

(“AFS”) securities, net of tax

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

Change in defined benefit pension plan, net of tax

Comprehensive income, net of tax

See notes to consolidated financial statements

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands, except per share data)

Comprehensive

Shareholders’

(Loss) Income

Balance at January 1, 2020

Cumulative effect of adopting Accounting Standard Update 2016-13

Comprehensive income:

Other comprehensive income, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

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

Purchase of treasury stock ( 679,331 shares)

Distribution of treasury stock for deferred compensation plan ( 29 shares)

Cash dividends ($ 1.40 per share)

Stock grant forfeiture ( 946 shares)

Net issuance of common stock under stock-based compensation plans ( 283,583 shares)

Balance at December 31, 2020

Comprehensive income:

Other comprehensive loss, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Acquisition of Community Bankers Trust Corporation ( 7,135,771 shares)

Purchase of treasury stock ( 339,241 shares)

Cash dividends ($ 1.41 per share)

Stock grant forfeiture ( 7,400 shares)

Net issuance of common stock under stock-based compensation plans ( 415,121 shares)

Balance at December 31, 2021

Comprehensive income:

Other comprehensive loss, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Stock grant forfeiture ( 9,071 shares)

Purchase of treasury stock ( 2,289,859 shares)

Cash dividends ($ 1.44 per share)

Net issuance of common stock under stock-based compensation plans ( 651,294 shares)

Balance at December 31, 2022

See notes to consolidated financial statements

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands)

Year Ended December 31

OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

Amortization and accretion

Loss on sales of bank premises, OREO, leases and equipment

Write-downs on bank premises, OREO, leases and equipment

Gain on securities

Loans originated for sale

Proceeds from sales of loans

Gain on sales of loans

Mortgage repurchase loan losses paid, net of recoveries

Stock-based compensation

Excess tax benefits from stock-based compensation arrangements

Deferred income tax expense (benefit)

Amortization of tax credit investments

Originations of mortgage servicing rights

Impairment of mortgage servicing rights

Recoveries of impairment on mortgage servicing rights

Increase in cash surrender value of bank-owned life insurance policies

Contribution to pension plan

Amortization of net periodic pension costs

Interest receivable

Accrued expenses and other liabilities

NET CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES

Proceeds from maturities and calls of held to maturity securities

Proceeds from sales of securities available for sale

Proceeds from maturities and calls of securities available for sale

Purchases of securities available for sale

Proceeds from sales of equity securities

Purchases of equity securities

Proceeds from sales and redemptions of other investment securities

Purchases of other investment securities

Purchases of bank-owned life insurance policies

Redemption of bank-owned life insurance policies

Purchases of bank premises and equipment

Proceeds from sales of bank premises and equipment

Acquisition of subsidiaries, net of cash paid

Proceeds from sales of OREO properties

Net change in loans and leases

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

FINANCING ACTIVITIES

Cash dividends paid

Acquisition of treasury stock

Proceeds from exercise of stock options

Distribution of treasury stock from deferred compensation plan

Repayment of long-term Federal Home Loan Bank borrowings

Proceeds from issuance of long-term Federal Home Loan Bank borrowings

Time deposits

Other deposits

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

NET CASH PROVIDED BY FINANCING ACTIVITIES

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS AT END OF YEAR

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands)

Year Ended December 31

Supplemental information

Cash paid for:

Interest on deposits and borrowed funds

Noncash investing activities:

Transfers of loans to OREO

Acquisition of subsidiaries and purchase price adjustments:

Assets acquired, net of cash

Liabilities assumed

See notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

December 31, 2022

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations:

United Bankshares, Inc.

(“United”, the “Company”) is a financial holding company headquartered in Charleston, West Virginia.

United considers all of West Virginia to be included in its market area.

This area includes the five largest West Virginia Metropolitan Statistical Areas (“MSA”):

the Parkersburg MSA, the Charleston MSA, the Huntington MSA, the Morgantown MSA and the Wheeling MSA.

United serves the Ohio counties of Lawrence, Belmont, Jefferson and the Pennsylvania counties of Washington and Fayette, primarily because of their close proximity to the Ohio and Pennsylvania borders and United banking offices located in those counties in nearby West Virginia.

United’s Virginia markets include the Maryland, northern Virginia and Washington, D.C.

MSA, the Winchester MSA, the Harrisonburg MSA, and the Charlottesville MSA.

Through its acquisition of Carolina Financial, United’s market also includes the Coastal, Midlands, and Upstate regions of South Carolina, including the Charleston (Charleston, Dorchester and Berkeley Counties), Myrtle Beach (Horry and Georgetown Counties), Columbia (Richland and Lexington Counties), and the Upstate (Greenville and Spartanburg Counties) areas as well as areas in North Carolina including Wilmington (New Hanover County), Raleigh-Durham (Durham and Wake Counties), Charlotte-Concord-Gastonia (NC and SC) and the southeastern coastal region of North Carolina (Bladen, Brunswick, Columbus, Cumberland, Duplin and Robeson Counties).

Through its acquisition of Community Bankers Trust, United added new markets in Baltimore and Annapolis, Maryland and Lynchburg and Richmond, Virginia as well as the Northern Neck of Virginia.

United considers all of the above locations to be the primary market areas for the business of its banking and mortgage banking subsidiaries.

Operating Segments:

United operates in two business segments:

community banking and mortgage banking.

Through its community banking segment, United offers a full range of banking products and services through various delivery channels.

Included among the banking products and services offered are the acceptance of deposits in checking, savings, time and money market accounts;

the making and servicing of personal, credit card, commercial, and floor plan loans;

and the making of construction and real estate loans.

Also offered are trust and brokerage services, safe deposit boxes, and wire transfers.

The mortgage banking segment engages primarily in the origination and acquisition of residential mortgages for sale into the secondary market through George Mason Mortgage, LLC (“George Mason”) and Crescent Mortgage Company (“Crescent”), indirectly owned subsidiaries of United.

In addition, United, through Crescent, may retain the rights to service a portion of the loans sold in the third-party market as part of its mortgage banking activities, for which United receives service fee income.

In addition, at certain times United may purchase or sell rights to service from or to third parties.

These rights are known as mortgage servicing rights, or MSRs, where the owner of the MSR acts on behalf of the mortgage loan owner and has the contractual right to receive a stream of cash flows in exchange for performing specified mortgage servicing functions.

Basis of Presentation:

The consolidated financial statements and the notes to consolidated financial statements include the accounts of United and its wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

United determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”) under U.S.

generally accepted accounting principles.

Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities.

United consolidates voting interest entities in which it has all, or at least a majority of, the voting interest.

As defined in applicable accounting standards, VIEs are entities that lack one or more of the characteristics of a voting interest entity.

A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

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

United’s wholly owned and indirect wholly owned statutory trust subsidiaries are VIEs for which United is not the primary beneficiary.

Accordingly, its accounts are not included in United’s consolidated financial statements.

The accounting and reporting policies of United conform with U.S.

generally accepted accounting principles.

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

Actual results could differ from those estimates.

To conform to the 2022 presentation, certain reclassifications have been made to prior period amounts, which had no impact on net income, comprehensive income or shareholders’ equity.

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

Such adjustments are of a normal and recurring nature.

In addition, $ 1,483,987 ,000 was reclassed from noninterest-bearing deposits to interest-bearing deposits on United’s Consolidated Balance Sheets for the period ended December 31, 2021 due to the nature of the underlying deposit accounts and a misclassification in the previous presentation.

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

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

The Company has evaluated events and transactions subsequent to December 31, 2022 through the date these financial statements were issued.

Based on definitions and requirements of generally accepted accounting principles for “Subsequent Events,” the Company has not identified any events that would require adjustments to, or disclosure in the financial statements.

Cash and Cash Equivalents:

United considers cash and due from banks, interest-bearing deposits with other banks and federal funds sold as cash and cash equivalents.

Debt securities

The Company accounts for debt securities in two categories:

held to maturity (“HTM”) and available for sale (“AFS”).

Premiums and discounts on debt securities are deferred and recognized into income over the contractual life of the asset using the effective interest method.

HTM securities are accounted for at amortized cost, but the Company must have both the positive intent and the ability to hold those securities to maturity.

There are very limited circumstances under which securities in the HTM category can be sold without jeopardizing the cost basis of accounting for the remainder of the securities in this category.

Substantially all of the Company’s HTM debt securities are issued by state and political subdivisions (municipalities).

As of December 31, 2022, United considers its HTM debt securities portfolio to be immaterial.

AFS securities are accounted for at fair value.

Gains and losses realized on the sale of these securities are accounted for based on the specific identification method.

Unrealized gains and losses for AFS securities are excluded from earnings and reported net of the related tax effect in the accumulated other comprehensive income component of shareholders’ equity.

Allowance for Credit Losses (HTM Debt Securities)

For HTM debt securities, the Company is required to utilize a current expected credit losses (“CECL”) methodology to estimate expected credit losses.

As of December 31, 2022 and 2021, the Company recorded an allowance for credit losses of $ 18 ,000 and $ 19 ,000, respectively, on its HTM debt securities portfolio.

Allowance for Credit Losses (AFS Debt Securities)

The impairment model for available-for-sale

(“AFS”) debt securities differs from the CECL methodology applied for HTM debt securities because AFS debt securities are measured at fair value rather than amortized cost.

Although ASC Topic 326, “Financial Instruments – Credit Losses” replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model.

For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis.

If either criteria is met, the security’s amortized cost basis is written down to fair value through income.

For AFS debt securities where neither of the criteria are met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the credit rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited to the amount that the fair value is less than the amortized cost basis.

Any remaining discount that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

An entity may no longer consider the length of time fair value has been less than amortized cost.

Changes in the allowance for credit losses are recorded as a provision (or release) for credit losses.

Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

As of December 31, 2022, the Company determined that the unrealized loss positions in AFS securities were no t the result of credit losses, and therefore, an allowance for credit losses was not recorded.

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

Equity securities:

Investments in equity securities with readily determinable fair values (marketable) are measured at fair value, with changes in the fair value recognized in Net investment securities gains in the Consolidated Statements of Income.

Other investment securities:

Certain security investments such as Federal Reserve Bank stock and Federal Home Loan Bank stock that do not have readily determinable fair values (non-marketable)

are accounted for at cost minus impairment, if any.

For other security investments that do not have readily determinable fair values (non-marketable),

they are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer, also referred to as the measurement alternative.

Any adjustments to the carrying value of these investments are recorded in Other income in the Consolidated Statements of Income.

Securities Purchased Under Resale Agreements and Securities Sold Under Agreements to Repurchase:

Securities purchased under agreements to resell and securities sold under agreements to repurchase are accounted for as collateralized financing transactions.

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

Securities, generally U.S.

government and federal agency securities, pledged as collateral under these financing arrangements cannot be repledged or sold, unless replaced, by the secured party.

The fair value of the collateral either received from or provided to a third party is continually monitored and additional collateral is obtained or is requested to be returned to United as deemed appropriate.

Loans are reported at the principal amount outstanding, net of unearned income, except loans acquired through transfer (see below).

Interest on loans is accrued and credited to operations using methods that produce a level yield on individual principal amounts outstanding.

Loan origination and commitment fees and related direct loan origination costs are deferred and amortized as an adjustment of loan yield over the estimated life of the related loan.

Loan fees net of costs accreted and included in interest income were $ 57,424 ,000, $ 92,545 ,000, and $ 76,064 ,000, for the years of 2022, 2021 and 2020, respectively.

The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest.

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

Management may elect to continue the accrual of interest when the estimated net realizable value of collateral exceeds the principal balance and accrued interest, and the loan is in the process of collection.

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

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

However, a one-to-four-family

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

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

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

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

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

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

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

This program allowed for a deferral of payments from the period beginning March 1, 2020 until January 1, 2022 .

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

Loans Acquired Through Transfer:

Acquired loans are recorded at fair value at the date of acquisition based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates.

Certain purchased loans are individually evaluated while certain purchased loans are grouped together according to similar risk characteristics and are treated in the aggregate when applying various valuation techniques.

These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans.

At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics.

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

As the initial allowance for credit losses is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan.

Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors and results in a discount or premium.

Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans.

For loans and leases acquired after the adoption of ASC Topic 326, United will likely take several factors into consideration when determining if loans and leases meet the definition of PCD.

ASC Topic 326 lists some, but not all, factors for consideration in the bifurcation of PCD versus non-PCD

Financial assets that are delinquent as of the acquisition date

Financial assets that have been downgraded since origination

Financial assets that have been placed on nonaccrual status

For acquired loans not deemed purchased credit deteriorated at acquisition, the differences between the initial fair value and the unpaid principal balance are recognized as interest income on a level-yield basis over the lives of the related loans.

Loans Held for Sale:

Loans held for sale consist of one-to-four

family conforming residential real estate loans originated for sale in the secondary market.

Loans held for sale are recorded under the fair value option at a fair value measured using valuations from investors for loans with similar characteristics adjusted for the Company’s actual sales experience versus the investor’s indicated pricing.

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

Allowance for Loan and Lease Losses:

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

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

Assets are charged off when United determines that such financial assets are deemed uncollectible or based on regulatory requirements, whichever is earlier.

Charge-offs are recognized as a deduction from the allowance for loan losses.

Expected recoveries of amounts previously charged-off,

not to exceed the aggregate of the amount previously charged-off,

are included in determining the necessary reserve at the balance sheet date.

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

United estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.

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

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

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

reasonable and supportable forecast period.

United pools its loans and leases based on similar risk characteristics in estimating expected credit losses.

United has identified the following portfolio segments and measures the allowance for credit losses using the following methods:

Probability of Default/Loss Given Default (PD/LGD)

Commercial Real Estate Owner-Occupied

Commercial Real Estate Nonowner-Occupied

Commercial Other

Residential Real Estate

Construction & Land Development

Risk characteristics of commercial real estate owner-occupied loans and commercial other loans and leases are similar in that they are normally dependent upon the borrower’s internal cash flow from operations to service debt.

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

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

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

Consumer loan pool risk characteristics are influenced by general, regional and local economic conditions.

Loans that do not share risk characteristics are evaluated on an individual basis.

Loans evaluated individually are not also included in the collective evaluation.

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

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

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

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

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

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

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

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

loans is estimated and recorded as credit loss expense.

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

For allowance for credit losses under ASC Topic 326 calculation purposes, United includes its acquired loans and leases in their relevant pool unless they meet the criteria for specific review.

Bank Premises and Equipment:

Bank premises and equipment are stated at cost, less allowances for depreciation and amortization.

The provision for depreciation is computed principally by the straight-line method over the estimated useful lives of the respective assets.

Useful lives range primarily from three to 15 years for furniture, fixtures and equipment and five to 40 years for buildings and improvements.

Leasehold improvements are generally amortized over the lesser of the term of the respective leases or the estimated useful lives of the improvements.

Other Real Estate Owned

At December 31, 2022 and 2021, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 2,052 ,000 and $ 14,823 ,000 ,

respectively.

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

Such assets are carried at the lower of the investment in the assets or the fair value of the assets less estimated selling costs.

Any adjustment to the fair value at the date of transfer is charged against the

allowance for loan losses.

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

At December 31, 2022

and 2021, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $

13 ,000 , respectively.

Intangible Assets:

Intangible assets relating to the estimated fair value of the deposit base of the acquired institutions are being amortized on an accelerated basis over a one to ten-year

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

United incurred amortization expense of $ 5,516 ,000 ,

$ 5,908 ,000 ,

and $ 6,605 ,000, in 2022, 2021, and 2020, respectively, related to all intangible assets.

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

United may elect to perform a qualitative analysis to determine whether or not it is more-likely-than not that the fair value of a reporting unit is less than its carrying amount.

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

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

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

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

United utilized a qualitative approach to test goodwill for impairment as of September 30, 2022.

The goodwill impairment test did not identify any indicators of goodwill impairment.

As of December 31, 2022, and 2021, total goodwill approximated $ 1,888,889 , 000

and $ 1,886,494 ,000

, respectively.

Mortgage Servicing Rights, Fees and Costs:

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

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

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

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

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

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

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

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

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

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

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

Accrued Interest Receivable

In accordance with ASC Topic 326, the Company made the following elections regarding accrued interest receivable (“AIR”):

Presenting accrued interest receivable balances separately from their underlying instruments within the consolidated statements of financial condition.

Excluding accrued interest receivable that is included in the amortized cost of financing receivables from related disclosure requirements.

Continuing our policy to write off accrued interest receivable by reversing interest income in cases where the Company does not reasonably expect to receive payment.

Generally, not measuring an allowance for credit losses for accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner.

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

As a result of this assessment, United did no t record an allowance for credit losses for accrued interest receivables not expected to be collected as of December 31, 2022 as compared to an allowance for credit losses of $ 8 ,000 as of December 31, 2021

Revenue Recognition

Interest and dividend income, loans fees, fees from trust and brokerage services, deposit services and bankcard fees are recognized and accrued as earned.

Descriptions of our revenue-generating activities that are within the scope of ASC Topic 606, which are presented in our Consolidated Statements of Income as components of Other Income are discussed below.

There are no significant judgements relating to the amount and timing of revenue recognition for those revenue streams under the scope of ASC Topic 606.

Fees from Trust Services

Revenue from trust services primarily is comprised of fees earned from the management and administration of trusts and other customer assets.

Trust services include custody of assets, investment management, escrow services, and similar fiduciary activities.

The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end

market value of the assets under management and the applicable fee rate.

Payment is generally received a few days after month end through a direct charge to customers’ accounts.

Fees from Brokerage Services

Revenue from brokerage services are recorded as the income is earned at the time the related service is performed.

In return for such services, the Company charges a commission for the sales of various securities products primarily consisting of investment company shares, annuity products, and corporate debt and equity securities, for its selling and administrative efforts.

For account supervision, advisory and administrative services, revenue is recognized over a period of time as earned based on customer account balances and activity.

Fees from Deposit Services

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, ATM activity fees, debit card fees, and other deposit account related fees.

Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (ATM or debit card activity).

Bankcard Fees and Merchant Discounts

Bankcard fees and merchant discounts are primarily comprised of credit card income and merchant services income.

Credit card income is primarily comprised of interchange fees earned whenever the Company’s credit cards are processed through card payment networks such as Visa.

Merchant services income mainly represents fees charged to merchants to process their credit card transactions.

The Company’s performance obligation for bankcard fees and interchange are largely satisfied, and related revenue recognized at the time services are rendered.

Payment is typically received immediately or in the following month.

Advertising Costs:

Advertising costs are generally expensed as incurred and included in Other Expense on the Consolidated Statements of Income.

Advertising expense was $ 8,160 ,000, $ 5,781 ,000, and $ 5,611 ,000, for the years of 2022, 2021, and 2020, respectively.

Income Taxes:

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities (excluding deferred tax assets and liabilities related to business combinations or components of other comprehensive income).

Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.

A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized.

Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years.

Although realization is not assured, management believes it is more-likely-than-not

that all of the deferred tax assets will be realized.

Interest and/or penalties related to income taxes are reported as a component of income tax expense.

For uncertain income tax positions, United records a liability based on a recognition threshold of more-likely-than-not,

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

United files a consolidated income tax return with its subsidiaries.

Federal income tax expense or benefit has been allocated to subsidiaries on a separate return basis.

Derivative Financial Instruments:

United accounts for its derivative financial instruments in accordance with ASC Topic 815 which requires all derivative instruments to be carried at fair value on the balance sheet.

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

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

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

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

For a fair value hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to the hedged financial instrument.

Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a fair value hedge are offset in current period earnings either in interest income or interest expense depending on the nature of the hedged financial instrument.

For a cash flow hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to accumulated other comprehensive income within shareholders’ equity, net of tax.

Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a cash flow hedge are offset to accumulated other comprehensive income, net of tax and reclassified into earnings in the same line associated with the forecasted transaction when the forecasted transaction affects earnings.

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

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

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

United also assesses hedge effectiveness at inception and on an ongoing basis using regression analysis.

Hedge ineffectiveness is measured by using the change in fair value method.

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

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

These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by United.

Interest rate risk arises on these commitments and subsequently closed loans if interest rates change between the time of the interest rate lock and the delivery of the loan to the investor.

Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward mortgage loan sales contracts.

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

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

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

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

Fair values of TBA mortgage-backed securities are measured using valuations from investors for mortgage-backed securities with similar characteristics.

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

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

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

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

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

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

For derivatives that are not designated in a hedge relationship, changes in the fair value of the derivatives are recognized in earnings in the same period as the change in the fair value.

Off-balance-sheet

credit exposures

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

United estimates expected credit losses over the contractual period in which United is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by United.

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

Methodology is based on a loss rate approach that starts with the probability of funding based on historical experience.

Similar to methodology discussed previously related to the loans and leases receivable portfolio, adjustments are made to the historical losses for current conditions and reasonable and supportable forecast.

Adjustments to the reserve for lending-related commitments on off-balance

sheet credit exposures is recorded as other expense in the consolidated statements of income.

The reserve for lending-related commitments is separately classified on the balance sheet and is included in other liabilities.

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

Stock-Based Compensation

Compensation expense related to stock options, restricted stock awards (“RSA”) and restricted stock units (“RSU”) issued to participants is based upon the fair value of the award at the date of grant.

The fair value of stock options is estimated at the date of grant using a binomial lattice option pricing model, while the fair value of RSAs is based upon the stock price at the date of grant.

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

The value of the time-vested RSUs and the performance-vested, based on a performance condition, RSUs awarded is established as the fair market value of the stock at the time of the grant.

The value of the performance-vested, based on a market condition, RSUs awarded is estimated through the use of a Monte Carlo valuation model as of the grant date.

Compensation expense is recognized on a straight-line basis over the vesting period for all stock-based awards and grants.

Stock-based compensation expense was $ 9,881 ,000 in 2022, $ 8,018 ,000 in 2021, and $ 5,980 ,000 in 2020.

Treasury Stock

United records common stock purchased for treasury at cost.

At the date of subsequent reissuance, the treasury stock account is reduced by the cost of such stock using the weighted-average cost method.

Trust Assets and Income:

Assets held in a fiduciary or agency capacity for customers are not included in the balance sheets since such items are not assets of the company.

Trust income is reported on an accrual basis.

Earnings Per Common Share:

United calculates earnings per common share in accordance with ASC Topic 260, “Earnings Per Share,” which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class

United has determined that its outstanding non-vested

restricted stock awards are participating securities.

Under the two-class

method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities.

Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

Antidilutive stock options and restricted stock outstanding of 656,432 , 1,024,612 , and 1,926,840 for the years ended December 31, 2022, 2021 and 2020, respectively, were excluded from the earnings per diluted common share calculation.

The reconciliation of the numerator and denominator of basic earnings per share with that of diluted earnings per share is presented as follows:

Year Ended December 31

(Dollars in thousands, except per share)

Distributed earnings allocated to common stock

Undistributed earnings allocated to common stock

Net earnings allocated to common shareholders

Average common shares outstanding

Dilutive effect of stock compensation

Average diluted shares outstanding

Earnings per basic common share

Earnings per diluted common share

Fair Value Measurements

United determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which also clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

ASC Topic 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect United’s market assumptions.

The three levels of the fair value hierarchy based on these two types of inputs are as follows:

Valuation is based on quoted prices in active markets for identical assets and liabilities.

Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.

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

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

When identical assets and liabilities are not traded in active markets, United looks to market observable data for similar assets and liabilities and classifies such items as Level 2.

Nevertheless, certain assets and liabilities are not actively traded in observable markets and United must use alternative valuation techniques using unobservable inputs to determine a fair value and classifies such items as Level 3.

For assets and liabilities that are not actively traded, the fair value measurement is based primarily upon estimates that require significant judgment.

Therefore, the results may not be realized in an actual sale or immediate settlement of the asset or liability.

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

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

Recent Accounting Pronouncements

In December 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-06,

“Reference Rate Reform (Topic 848):

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

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

In 2020, the FASB issued ASU 2020-04

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

At the time ASU 2020-04

was issued, the United Kingdom’s Financial Conduct Authority (FCA) had established the intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021.

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

12 months after the

expected cessation date of all currencies and tenors of LIBOR.

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

Accordingly, ASU 2022-06

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

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

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

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

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

In June 2022, the FASB issued ASU 2022 -

03, “Fair Value Measurement (Topic 820):

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

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

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

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

The adoption of ASU 2022-03

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

In March 2022, the FASB issued ASU No.

“Troubled Debt Restructurings and Vintage Disclosures”.

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

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

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

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

Early adoption of the amendment is permitted.

was adopted by United on January 1, 2023.

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

However, ASU No.

will have an effect on the Company’s disclosures for United’s March 31, 2023 Form 10-Q.

In March 2022, the FASB issued ASU No.

“Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio Layer Method”.

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

method, which was first introduced in ASU No.

The enhanced guidance further improves the last-of-layer

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

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

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

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

for the corresponding period.

was adopted by United on January 1, 2023.

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

In October 2021, the FASB issued ASU No.

“Business Combinations (Topic 805):

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

amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

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

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

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

Early adoption of the amendments is permitted.

was adopted by United on January 1, 2023.

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

In July 2021, the FASB issued ASU No.

“Leases (Topic 842):

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

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

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

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

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

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

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

are first applied.

was adopted by United on January 1, 2022.

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

In January 2021, the FASB issued ASU No.

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

“Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” refines the scope of ASC Topic 848 and permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by change in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities under way in global financial markets.

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

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

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

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

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

In August 2020, the FASB issued No.

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

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

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

The ASU also amends the derivative scope exception guidance for contracts in an entity’s own equity.

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

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

calculations that are impacted by the amendments.

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

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

was adopted by United on January 1, 2022.

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

In March 2020, the FASB issued ASU No.

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

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

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

The Company is assessing ASU No.

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

In February 2020, FASB issued ASU No.

“Codification Improvements to Financial Instruments.” This update makes narrow-scope changes that are intended to improve the board’s standards for financial instruments accounting, including the credit losses standard issued in 2016, as part of FASB’s ongoing project to improve and clarify its Accounting Standards Codification and avoid unintended application.

was effective for public business entities upon issuance of this final update in March 2020.

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

In January 2020, the FASB issued ASU No.

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

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

early adoption is permitted.

was adopted by United on January 1, 2021.

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

NOTE B—MERGERS AND ACQUISITIONS

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

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

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

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

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

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

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

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

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

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

It also strategically connected our Mid-Atlantic

and Southeast footprints.

As of the Acquisition Date, Community Bankers Trust had $ 1,788,013,000 in total assets, $ 1,282,997,000 in loans and leases, net of unearned income and $ 1,517,502,000 in deposits.

For the year of 2022, United recorded acquisition-related costs for the Community Bankers Trust merger of $ 537,000 as compared to acquisition-related costs of $ 21,418,000 , including a provision for credit losses of $ 12,288,000 for non-PCD

loans, for the year of 2021.

The aggregate purchase price was approximately $ 260,304,000 , including common stock valued at $ 252,321 ,000, stock options assumed valued at $ 7,958,000 , and cash paid for fractional shares of $ 25,000 .

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

The purchase price was allocated to the identifiable tangible and intangible assets resulting in additions to goodwill, and core deposit intangibles of $ 78,849,000 and $ 3,398,000 , respectively.

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

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

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

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

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

As a result of the merger, United recorded fair value discounts of $ 7,744,000 on the loans and leases acquired, $ 230,000 on land acquired, $ 50,000 on OREO properties acquired and $ 415,000 on a trust preferred issuance, and premiums of $ 6,766,000 on investment securities acquired, $ 492,000 on buildings acquired, $ 2,741,000 on interest-bearing deposits, and $ 457,000 on long-term FHLB advances, respectively.

United also recorded an allowance for credit losses, including a reserve for unfunded commitments, of $ 25,920,000 on the loans and commitments acquired split between $ 12,788,000 for purchased credit deteriorated (“PCD”) loans which is part of the acquisition date fair value, $ 12,288,000 for non-PCD

loans recorded to the provision for credit losses and $ 844,000 for commitments acquired on non-PCD

loans recorded in other expense.

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

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

At December 31, 2022, the discount on the trust preferred issuance had an estimated remaining life of 11.25 years and the premiums on the buildings, and interest-bearing deposits each had an average estimated remaining life of 30.25 years, and 4.25 years, respectively.

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

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

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

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

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

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

The difference between the unpaid principal balance (“UPB”), or par value, of PCD loans and leases and the amortized cost basis is considered to relate to noncredit factors and resulted in a discount of $ 3,559,000 at Acquisition Date.

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

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

The total fair value mark on the non-PCD

loans and leases at the Acquisition Date was $ 4,186,000 .

At the Acquisition Date, an initial allowance for expected credit losses of $ 12,288,000 was recorded with a corresponding charge to the provision for credit losses in the Consolidated Statements of Income.

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

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

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

(Dollars in thousands)

Purchase price of PCD loans and leases at acquisition

Allowance for credit losses at acquisition

discount at acquisition

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

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

(Dollars in thousands)

Purchase price:

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

Fair value of stock options assumed

Cash for fractional shares

Total purchase price

Identifiable assets:

Cash and cash equivalents

Investment securities

Net loans and leases

Premises and equipment

Operating lease right-of-use

Core deposit intangible

Total identifiable assets

Identifiable liabilities:

Short-term borrowings

Long-term borrowings

Operating lease liability

Other liabilities

Total identifiable liabilities

Fair value of net assets acquired including identifiable intangible assets

Resulting goodwill

NOTE C—INVESTMENT SECURITIES

Securities Available for Sale

Securities held for indefinite periods of time are classified as available for sale and carried at estimated fair value.

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

December 31, 2022

(Dollars in thousands)

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

Single issue trust preferred securities

Other corporate securities

December 31, 2021

(Dollars in thousands)

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

Single issue trust preferred securities

Other corporate securities

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

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

Available-for-sale

debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due.

Accrued interest receivable is reversed against interest income when a security is placed on non-accrual

Accordingly, United does not currently recognize an allowance for credit loss against accrued interest receivable on available-for-sale

debt securities.

The table above excludes accrued interest receivable of $ 23,955 ,000 and $ 15,353 ,000 at December 31, 2022 and December 31, 2021, respectively, that is recorded in “Accrued interest receivable.”

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

Less than 12 months

12 months or longer

(Dollars in thousands)

December 31, 2022

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

Single issue trust preferred securities

Other corporate securities

Less than 12 months

12 months or longer

(Dollars in thousands)

December 31, 2021

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

Single issue trust preferred securities

Other corporate securities

The following table shows the proceeds from maturities, sales and calls of available for sale securities and the gross realized gains and losses on sales and calls of those securities that have been included in earnings as a result of any sales and calls.

Gains or losses on sales and calls of available for sale securities were recognized by the specific identification method.

(In thousands)

Proceeds from maturities, sales and calls

Gross realized gains

Gross realized losses

At December 31, 2022, gross unrealized losses on available for sale securities were $ 470,062 ,000 on 1,427 securities of a total portfolio of 1,502 available for sale securities.

Securities with the most significant gross unrealized losses at December 31, 2022 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities, asset-backed securities and other corporate securities.

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

State and political subdivisions

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

The total amortized cost of available for sale state and political subdivision securities was $ 820,167 ,000 at December 31, 2022.

As of December 31, 2022, approximately 53 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality.

The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of December 31, 2022.

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

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

Mortgage-backed securities

The fair value of mortgage-backed

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

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

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

Rising interest rates may decrease the assumed prepayment speed.

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

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

United had a net unrealized loss of $ 269,105 ,000 at December 31, 2022 and a net unrealized loss of $ 946 ,000 at December 31, 2021 on all mortgage-backed

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

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

The total amortized cost of available for sale agency mortgage-backed securities was $ 1,997,239 ,000 at December 31, 2022.

Of the $ 1,997,239 ,000 amount, $ 627,768 ,000 was related to agency commercial mortgage-backed securities and $ 1,369,471 ,000 was related to agency residential mortgage-backed securities.

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

Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at December 31, 2022.

United’s non-agency

residential mortgage-backed securities portfolio relates to securities of various private label issuers.

The total amortized cost of available for sale non-agency

residential mortgage-backed securities was $ 121,336 ,000 at December 31, 2022.

Of the $ 121,336 ,000, 100 % was rated AAA.

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

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

Asset-backed securities

As of December 31, 2022, United’s asset-backed securities portfolio had a total amortized cost balance of $ 943,813 ,000.

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

Approximately 27 % of the portfolio relates to securities that are backed by Federal Family Education Loan Program (“FFELP”) student loan collateral which includes a minimum of a 97 % government repayment guaranty, as well as additional credit support and subordination in excess of the government guaranteed portion.

Approximately 73 % of the portfolio relates to collateralized loan obligation securities that are all AAA rated.

Upon reviewing this portfolio as of December 31, 2022, it was determined that no ne of the asset-backed securities had credit losses.

Single issue trust preferred securities

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

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

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

The amortized cost of available for sale single issue trust preferred securities as of December 31, 2022 consisted of $ 8,468 ,000 in investment grade bonds, $ 3,086 ,000 in split rated bonds, and $ 5,788 ,000 in unrated bonds.

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

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

Corporate securities

As of December 31, 2022, United’s Corporate securities portfolio had a total amortized cost balance of $ 563,425 ,000.

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

Of the $ 563,425 ,000, 98 % had at least one rating above investment grade, none were below investment grade rated, and 2 % was unrated.

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

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

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

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

Maturities of mortgage-backed securities with an amortized cost of $ 2,118,575 ,000 and an estimated fair value of $ 1,849,470 ,000 at December 31, 2022 are included below based upon contractual maturity.

(In thousands)

Due in one year or less

Due after one year through five years

Due after five years through ten years

Due after ten years

Equity securities at fair value

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

The fair value of United’s equity securities was $ 7,629 ,000 at December 31, 2022 and $ 12,404 ,000 at December 31, 2021.

(In thousands)

December 31, 2022

December 31, 2021

Net gains recognized during the period on equity securities sold

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

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

Net gains recognized during the period

Other investment securities

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

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

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

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 2,412,820 ,000 and $ 1,871,328 ,000 at December 31, 2022 and December 31, 2021, respectively.

NOTE D—LOANS AND LEASES

Major classes of loans and leases are as follows:

(In thousands)

Commercial, financial and agricultural:

Owner-occupied commercial real estate

Nonowner-occupied commercial real estate

Other commercial

Total commercial, financial & agricultural

Residential real estate

Construction & land development Consumer:

Other consumer

Unearned income

Total gross loans

The table above does not include loans held for sale of $ 56,879 ,000 and $ 504,416 ,000 at December 31, 2022 and December 31, 2021, respectively.

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

At December 31, 2022 and 2021, loans-in-process

of $ 62,691 ,000

and $ 112,109 ,000

and overdrafts from deposit accounts of $ 36,209 ,000

and $ 14,270 ,000, respectively, are included within the appropriate loan classifications above.

The outstanding loan balances in the table above also include unamortized net discounts of $ 47,134 ,000

and $ 66,081 ,000

at December 31, 2022 and December 31, 2021, respectively.

United’s subsidiary bank has made loans, in the normal course of business, to the directors and officers of United and its subsidiaries, and to their associates.

The aggregate dollar amount of these loans was $ 24,901 ,000

and $ 32,990 ,000

at December 31, 2022 and 2021, respectively.

During 2022, $ 1,963 ,000 of new loans were made and repayments totaled $ 10,052 ,000

NOTE E—CREDIT QUALITY

Management monitors the credit quality of its loans and leases on an ongoing basis.

Measurement of delinquency and past due status are based on the contractual terms of each loan.

United considers a loan to be past due when it is 30 days or more past its contractual payment due date.

For all loan classes, past due loans and leases are reviewed on a monthly basis to identify loans and leases for nonaccrual status.

Generally, when collection in full of the principal and interest is jeopardized, the loan is placed on nonaccrual status.

The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest.

However, regardless of delinquency status, if a loan is fully secured and in the process of collection and resolution of collection is expected in the near term (generally less than 90 days), then the loan will not be placed on nonaccrual status.

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

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

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

Generally, a loan is categorized as a TDR if a concession is granted and there is deterioration in the financial condition of the borrower.

The portfolio of TDR loans is monitored monthly.

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

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

This program ended on January 1, 2022.

As provided for

under the CARES Act, these loan modifications were exempt by law from classification as a TDR as defined by GAAP.

As of December 31, 2022, United no longer has any eligible loan modifications in deferral under section 4013, “Temporary Relief from Troubled Debt Restructurings,” of the CARES Act as compared to 188 eligible loan modifications in deferral on $ 18,039 ,000

of loans outstanding at December 31, 2021.

As of December 31, 2022, United had TDRs of $ 19,388 ,000

Of the $ 19,388 ,000

aggregate balance of TDRs at December 31, 2022, $ 7,186 ,000

was on nonaccrual, $ 3,075 ,000

was 90 days or more days past due and $ 37,000 was 30 -89

days past due.

As of December 31, 2021, United had TDRs of $ 35,856 ,000

Of the $ 35,856 ,000

aggregate balance of TDRs at December 31, 2021, $ 22,421 ,000

was on nonaccrual and $ 102,000 was 90 days or more days past due.

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

As of December 31, 2022, there was a commitment to lend additional funds of $ 57,000 to a debtor owing a receivable whose terms have been modified in a TDR.

During the year of 2022, advances of $ 76,000 were made to this debtor under a loan that had been previously modified.

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

(In thousands)

Reason for modification

December 31, 2022

December 31, 2021

Interest rate reduction

Interest rate reduction and change in terms

Forgiveness of principal

Concession of principal and term

Extended maturity

Transfer of asset

Change in terms

The following table sets forth United’s troubled debt restructurings that have been restructured during the year ended December 31, 2022 and 2021, segregated by class of loans:

Troubled Debt Restructurings

For the Year Ended

December 31, 2022

December 31, 2021

(Dollars in thousands)

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land development

Other consumer

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

(In thousands)

Reason for modification

Interest rate reduction

Interest rate reduction and change in terms

Forgiveness of principal

(In thousands)

Reason for modification

Concession of principal and term

Transfer of asset

Extended maturity

Change in terms

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

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

The following table presents troubled debt restructurings, by class of loan, that had charge-offs during the year ended December 31, 2022 and 2021.

These loans were restructured during the twelve months ended December 31, 2022 and 2021 and subsequently defaulted, resulting in principal charge-offs during the year of 2022 and 2021.

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

December 31, 2022

December 31, 2021

(In thousands)

Troubled Debt Restructurings

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land development

Other consumer

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

Age Analysis of Past Due Loans and Leases

As of December 31, 2022

(In thousands)

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land development

Other consumer

Age Analysis of Past Due Loans and Leases

As of December 31, 2021

(In thousands)

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land development

Other consumer

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

At December 31, 2022

At December 31, 2021

(In thousands)

Commercial Real Estate:

Owner-occupied

Nonowner-occupied

Other Commercial

Residential Real Estate

Other consumer

Interest income recognized on nonaccrual loans was insignificant during the year ended December 31, 2022 and 2021.

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

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

Collateral Dependent Loans and Leases

At December 31, 2022

(In thousands)

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land development

Other consumer

Collateral Dependent Loans and Leases

At December 31, 2021

(In thousands)

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land development

Other consumer

United categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt:

current financial information, historical payment experience, credit documentation, underlying collateral (if any), public information and current economic trends, among other factors.

United uses the following definitions for risk ratings:

Special Mention

For United’s loans with a corporate credit exposure, United analyzes loans individually to classify the loans as to credit risk.

Review and analysis of criticized (special mention-rated loans in the amount of $1,000,000 or greater) and classified (substandard-rated and worse in the amount of $500,000 and greater) loans is completed once per quarter.

Review of notes with committed exposure of $2,000,000 or greater is completed at least annually.

For loans with a consumer credit exposure, United internally assigns a grade based upon an individual loan’s delinquency status.

United reviews and updates, as necessary, these grades on a quarterly basis.

Special mention loans, with a corporate credit exposure, have potential weaknesses that deserve management’s close attention.

If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or in the Company’s credit position at some future date.

Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity).

Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating.

Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices.

For loans with a consumer credit exposure, loans that are past due 30 -89

days are generally considered special mention.

A substandard loan with a corporate credit exposure is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans so classified have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt by the borrower.

They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

They require more intensive supervision by management.

Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization.

Repayment may depend on collateral or other credit risk mitigants.

For some substandard loans, the likelihood of full collection of interest and principal may be in doubt and thus, placed on nonaccrual.

For loans with a consumer credit exposure, loans that are 90 days or more past due or that have been placed on nonaccrual are considered substandard.

A loan with corporate credit exposure is classified as doubtful if it has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, highly questionable.

A doubtful loan has a high probability of total or substantial loss, but

because of specific pending events that may strengthen the loan, its classification as loss is deferred.

Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity.

Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing.

Generally, there are not any loans with a consumer credit exposure that are classified as doubtful.

Usually, they are charged-off

prior to such a classification.

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

Commercial Real Estate – Owner-occupied

(In thousands)

Origination Year

Revolving loans

amortized cost

As of December 31, 2022

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net recoveries

(In thousands)

Origination Year

Revolving loans

amortized cost

loans and leases

As of December 31, 2021

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net (charge-offs) recoveries

Commercial Real Estate – Nonowner-occupied

Origination Year

Revolving loans

(In thousands)

amortized cost

As of December 31, 2022

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net recoveries

Origination Year

Revolving loans

loans and leases

(In thousands)

amortized cost

As of December 31, 2021

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Other commercial

Revolving loans

Term Loans and leases

Origination Year

loans and leases

(In thousands)

amortized cost

As of December 31, 2022

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net (charge- offs) recoveries

Revolving loans

Term Loans and leases

Origination Year

loans and leases

(In thousands)

amortized cost

As of December 31, 2021

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Residential Real Estate

Origination Year

Revolving loans

(In thousands)

amortized cost

As of December 31, 2022

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net (charge- offs) recoveries

Origination Year

Revolving loans

(In thousands)

amortized cost

As of December 31, 2021

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Construction and Land Development

Origination Year

Revolving loans

(In thousands)

amortized cost

As of December 31, 2022

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net recoveries

Origination Year

Revolving loans

(In thousands)

amortized cost

As of December 31, 2021

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net (charge-offs) recoveries

Origination Year

Revolving loans

(In thousands)

amortized cost

As of December 31, 2022

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net charge-offs

Origination Year

Revolving loans

(In thousands)

amortized cost

As of December 31, 2021

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

Other Consumer

(In thousands)

Origination Year

Revolving loans

amortized cost

As of December 31, 2022

Internal Risk Grade:

Special Mention

Current-period charge-offs

Current-period recoveries

Current-period net (charge- offs) recoveries

(In thousands)

Origination Year

Revolving loans

amortized cost

As of December 31, 2021

Internal Risk Grade:

Special Mention

YTD charge-offs

YTD recoveries

YTD net charge-offs

N OTE F—ALLOWANCE FOR CREDIT LOSSES

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

Assets are charged off when United determines that such financial assets are deemed uncollectible or based on regulatory requirements, whichever is earlier.

Charge-offs are recognized as a deduction from the allowance for credit losses.

Expected recoveries of amounts previously charged-off,

not to exceed the aggregate of the amount previously charged-off,

are included in determining the necessary reserve at the balance sheet date.

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

Accrued interest receivable was $ 70,332 ,000 ( no allowance for credit losses) and $ 49,029 ,000 (net of an allowance for credit losses of $ 8 ,000) at December 31, 2022 and December 31, 2021, respectively, related to loans and leases are included separately in “Accrued interest receivable” in the consolidated balance sheets.

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

As a result of this assessment, United did not record an allowance for credit losses for accrued interest receivables not expected to be collected as of December 31, 2022 as compared to an allowance for credit losses of $ 8 ,000 as of December 31, 2021.

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

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

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

Accrued Interest Receivable

(In thousands)

At December 31, 2022

At December 31, 2021

Commercial Real Estate:

Owner-occupied

Nonowner-occupied

Other Commercial

Accrued Interest Receivable

(In thousands)

At December 31, 2022

At December 31, 2021

Residential Real Estate

Other consumer

Allowance for credit losses

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

Accrued Interest Receivables Written Off

by Reversing Interest Income

(In thousands)

Commercial Real Estate:

Owner-occupied

Nonowner-occupied

Other Commercial

Residential Real Estate

Other consumer

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

For a detailed discussion of the methodology used to estimate the reserve for lending-related commitments, see Note A, “Summary of Significant Accounting Policies.” The reserve for lending-related commitments of $ 46,189 ,000 and $ 31,442 ,000 at December 31, 2022 and December 31, 2021, respectively, is separately classified on the balance sheet and is included in other liabilities.

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

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

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

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

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

United’s allowance for loan and lease losses at December 31, 2022 increased $ 18,730,000

or 8.67 % from December 31, 2021.

The overall increase in the allowance was driven primarily by increases in outstanding loan balances 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 year of 2022 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;

collateral values for dependent loans;

past due, nonaccrual and adversely classified loans and leases;

concentrations of credit and external factors.

Reasonable and supportable forecasts

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

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

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

Assumptions for the economic variables were the following:

The forecast for real GDP shifted downward in the 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.

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

reasonable and supportable forecast period.

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

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

For the Year Ended December 31, 2022

(In thousands)

Commercial Real

Construction &

Allowance for Loan and Lease Losses:

Beginning balance

Ending balance

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

For the Year Ended December 31, 2021

(In thousands)

Commercial Real

Construction &

Allowance for Loan and Lease Losses:

Beginning balance

Allowance for PCD loans (acquired during the period)

Ending balance

A progression of the allowance for credit losses, which includes the allowance for loan losses and the reserve for lending-related commitments, for the periods presented is summarized as follows:

Year Ended December 31

(In thousands)

Balance of allowance for loan and lease losses at beginning of period

Cumulative effect adjustment for CECL

Initial allowance for acquired PCD loans

Gross charge-offs

Net charge-offs

Provision for loan and lease losses

Year Ended December 31

(In thousands)

Balance of allowance for loan and lease losses at end of period

Reserve for lending-related commitments

Balance of allowance for credit losses at end of period

NOTE G—BANK PREMISES AND EQUIPMENT

Bank premises and equipment are summarized as follows:

(In thousands)

Buildings and improvements

Leasehold improvements

Furniture, fixtures and equipment

Less allowance for depreciation and amortization

Net bank premises and equipment

Depreciation expense was $ 18,237,000 , $ 16,583,000 , and $ 13,464,000 for years ending December 31, 2022, 2021 and 2020, respectively, while amortization expense was $ 343,000 , $ 331,000 and $ 251,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

NOTE H—LEASES

United determines if an arrangement is a lease at inception.

United and certain subsidiaries have entered into various noncancelable-operating leases for branch and loan production offices as well as operating facilities.

Operating leases are included in operating lease right-of-use

(“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets.

Operating leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets.

Presently, United does not have any finance leases.

United’s operating leases are subject to renewal options under various terms.

United’s operating leases have remaining terms of 1 to 15 years, some of which include options to extend leases generally for periods of 5 years.

United rents or subleases certain real estate to third parties.

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

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

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As most of United’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The operating lease ROU asset also includes any lease payments made and excludes lease incentives.

Lease terms may include options to extend the lease when it is reasonably certain that United will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows:

(In thousands)

Classification

Operating lease cost

Net occupancy expense

Sublease income

Net occupancy expense

Net lease cost

Supplemental balance sheet information related to leases was as follows:

(In thousands)

Classification

Operating lease right-of-use

Operating lease liabilities

Other information related to leases was as follows:

December 31, 2022

Weighted-average remaining lease term:

Operating leases

Weighted-average discount rate:

Operating leases

Supplemental cash flow information related to leases was as follows:

(In thousands)

December 31, 2022

December 31, 2021

Cash paid for amounts in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in the exchange for lease liabilities

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

(Dollars in thousands)

Total lease payments

imputed interest

NOTE I—INTANGIBLE ASSETS

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

December 31, 2022

Community Banking

Mortgage Banking

(In thousands)

Gross Carrying

Amortized intangible assets:

Core deposit intangible assets

Non-amortized

intangible assets:

George Mason trade name

Crescent trade name

Goodwill not subject to amortization

December 31, 2021

Community Banking

Mortgage Banking

(In thousands)

Gross Carrying

Amortized intangible assets:

Core deposit intangible assets

Non-amortized

intangible assets:

George Mason trade name

Crescent trade name

Goodwill not subject to amortization

The following table provides a reconciliation of goodwill:

(In thousands)

Goodwill at December 31, 2021

Addition to goodwill from Community Bankers Trust acquisition

Goodwill at December 31, 2022

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

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

(Dollars in thousands)

2028 and thereafter

NOTE J—MORTGAGE SERVICING RIGHTS

Mortgage loans serviced for others are not included in the accompanying Consolidated Balance Sheets.

The value of mortgage servicing rights (“MSRs”) is included on the Company’s Consolidated Balance Sheets.

The unpaid principal balances of loans serviced for others were approximately $ 3,381,485,000 and $ 3,698,998,000 at December 31, 2022 and 2021, respectively.

The estimated fair value of the mortgage servicing rights was $ 41,880,000 and $ 27,355,000 at December 31, 2022 and December 31, 2021, respectively.

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

The estimated fair value of servicing rights at December 31, 2021 was determined using a net servicing fee of 0.26 %, average discount rates ranging from 10.50 % to 11.71 % with a weighted average discount rate of

10.60 %, CPR ranging from 12.59 % to 21.20 % with a weighted average prepayment rate of 16.56 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.09 %.

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

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

(In thousands)

December 31, 2022

December 31, 2021

MSRs beginning balance

Amount capitalized

Amount amortized

MSRs ending balance

MSRs valuation allowance beginning balance

Aggregate additions charged and recoveries credited to operations

MSRs impairment

MSRs valuation allowance ending balance

MSRs, net of valuation allowance

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

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

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

NOTE K—DEPOSITS

The book value of deposits consisted of the following:

(In thousands)

Noninterest-bearing accounts

Interest-bearing transaction accounts

Regular savings

Interest-bearing money market accounts

Time deposits under $100,000

Time deposits over $100,000

Total deposits

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

Included in time deposits over $100,000 at December 31, 2022 and 2021 were time deposits of $250,000 or more of $ 454,477,000 and $ 640,752,000 , respectively.

Interest paid on deposits approximated $ 77,271,000 , $ 43,562,000 , and $ 81,080,000 in 2022, 2021 and 2020, respectively.

United’s subsidiary banks have received deposits, in the normal course of business, from the directors and officers of United and its subsidiaries, and their associates.

Such related party deposits were accepted on substantially the same terms, including interest rates and maturities, as those prevailing at the time for comparable transactions with unrelated persons.

The aggregate dollar amount of these deposits was $ 36,476,000 and $ 25,889,000 at December 31, 2022 and 2021, respectively.

NOTE L—SHORT-TERM BORROWINGS

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

(In thousands)

Federal funds purchased

Securities sold under agreements to repurchase

Total short-term borrowings

Federal funds purchased and securities sold under agreements to repurchase have not been a significant source of funds for the company.

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

These lines of credit, which bear interest at prevailing market rates, permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions.

At December 31, 2022, all the repurchase agreements were in overnight accounts.

The rates offered on these funds vary according to movements in the federal funds and short-term

investment market rates.

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

The line is an unsecured, revolving line of credit.

The line is renewable on a 360 day basis and carries an indexed, floating-rate of interest.

The line requires compliance with various financial and nonfinancial covenants.

At December 31, 2022, United had no outstanding balance under this credit.

Interest paid on short-term borrowings approximated $ 1,747,000 , $ 693,000 , and $ 1,027,000 in 2022, 2021 and 2020, respectively.

NOTE M—LONG-TERM BORROWINGS

United’s subsidiary bank is a member of the Federal Home Loan Bank (“FHLB”).

Membership in the FHLB makes available short-term and long-term borrowings from collateralized advances.

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

At December 31, 2022, the total carrying value of loans pledged as collateral for FHLB advances approximated $ 5,188,745,000 .

United had an unused borrowing amount as of December 31, 2022 of approximately $ 6,248,366,000 available subject to delivery of collateral after certain trigger points.

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

At December 31, 2022 and 2021, FHLB advances and the related weighted-average interest rates were as follows:

(Dollars in thousands)

FHLB advances

No overnight funds were included in the $ 1,910,775 ,000 and $ 532,199 ,000 above at December 31, 2022 and 2021, respectively.

At December 31, 2022, FHLB advances of $ 1,900,000,000 mature in 2023 while $ 10,775,000 mature in 2025.

The weighted-average effective rate considers the effect of any interest rate swaps designated as fair value hedges outstanding at year-end

2022 and 2021 to manage interest rate risk on its long-term debt.

Additional information is provided in Note S, Notes to Consolidated Financial Statements.

At December 31, 2022, United had a total of twenty statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (“Capital Securities”) with the proceeds invested in junior subordinated debt securities (“Debentures”) of United.

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

United assumed $ 4,124,000 in aggregate principal amount of a LIBOR-indexed floating rate Debentures in the Community Bankers Trust

At December 31, 2022 and 2021, the outstanding balance of the Debentures was $ 276,989,000 and $ 275,323,000 , respectively.

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

rate subordinated note in the Community Bankers Trust merger.

At December 31, 2022 and 2021, the outstanding balance of the subordinated note was $ 9,892,000 and $ 9,872,000 , respectively.

The amount of the Debentures and the subordinated note was included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets.

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

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

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

Interest on the subordinated debt is cumulative.

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

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

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

(Dollars in thousands)

Issuance Date

Stated Interest Rate

Maturity Date

United Statutory Trust III

December 17, 2003

3-month LIBOR + 2.85%

December 17, 2033

United Statutory Trust IV

December 19, 2003

3-month LIBOR + 2.85%

January 23, 2034

United Statutory Trust V

July 12, 2007

3-month LIBOR + 1.55%

October 1, 2037

United Statutory Trust VI

September 20, 2007

3-month LIBOR + 1.30%

December 15, 2037

Premier Statutory Trust II

September 25, 2003

3-month LIBOR + 3.10%

October 8, 2033

Premier Statutory Trust III

3-month LIBOR + 1.74%

June 15, 2035

Premier Statutory Trust IV

June 20, 2006

3-month LIBOR + 1.55%

September 23, 2036

Premier Statutory Trust V

December 14, 2006

3-month LIBOR + 1.61%

March 1, 2037

Centra Statutory Trust I

September 20, 2004

3-month LIBOR + 2.29%

September 20, 2034

Centra Statutory Trust II

June 15, 2006

3-month LIBOR + 1.65%

Virginia Commerce Trust II

December 19, 2002

6-month LIBOR + 3.30%

December 19, 2032

Virginia Commerce Trust III

December 20, 2005

3-month LIBOR + 1.42%

February 23, 2036

Cardinal Statutory Trust I

July 27, 2004

3-month LIBOR + 2.40%

September 15, 2034

UFBC Capital Trust I

December 30, 2004

3-month LIBOR + 2.10%

March 15, 2035

Carolina Financial Capital Trust I

December 19, 2002

Prime + 0.50%

December 31, 2032

Carolina Financial Capital Trust II

November 5, 2003

3-month LIBOR + 3.05%

January 7, 2034

Greer Capital Trust I

October 12, 2004

3-month LIBOR + 2.20%

October 18, 2034

Greer Capital Trust II

December 28, 2006

3-month LIBOR + 1.73%

January 30, 2037

First South Preferred Trust I

September 26, 2003

3-month LIBOR + 2.95%

September 30, 2033

BOE Statutory Trust I

December 12, 2003

3-month LIBOR + 3.00%

December 12, 2033

At December 31, 2022 and 2021, the Debentures and their related weighted-average interest rates were as follows:

(Dollars in thousands)

United Statutory Trust III

United Statutory Trust IV

United Statutory Trust V

United Statutory Trust VI

Premier Statutory Trust II

Premier Statutory Trust III

Premier Statutory Trust IV

Premier Statutory Trust V

Centra Statutory Trust I

Centra Statutory Trust II

Virginia Commerce Trust II

Virginia Commerce Trust III

(Dollars in thousands)

Cardinal Statutory Trust I

UFBC Capital Trust I

Carolina Financial Capital Trust I

Carolina Financial Capital Trust II

Greer Capital Trust I

Greer Capital Trust II

First South Preferred Trust I

BOE Statutory Trust I

At December 31, 2022, the scheduled maturities of long-term borrowings were as follows:

(Dollars in thousands)

2028 and thereafter

Interest paid on long-term borrowings approximated $ 19,143,000 , $ 10,336,000 , and $ 33,240,000 in 2022, 2021 and 2020, respectively.

NOTE N—OTHER EXPENSE

The following details certain items of other expense for the periods indicated:

Year Ended December 31

(In thousands)

Legal, consulting & other professional services

Franchise & other taxes not on income

Expense for reserve on lending-related commitments

Automated Teller Machine (“ATM”) expenses

NOTE O—INCOME TAXES

The income tax provisions included in the consolidated statements of income are summarized as follows:

Year Ended December 31

(In thousands)

Current expense:

Deferred expense:

Total income taxes

The following is a reconciliation of income tax expense to the amount computed by applying the statutory federal income tax rate to income before income taxes:

Year Ended December 31

(Dollars in thousands)

Tax on income before taxes at statutory federal rate

State income taxes net of federal tax benefits

Increase (decrease) resulting from:

interest income

Other items-net

For years ended 2022, 2021 and 2020, United incurred federal income tax expense of $ 287,000 , $ 587,000 , and $ 663,000 , respectively, applicable to the sales and calls of securities.

Income taxes paid approximated $ 93,680 ,000, $ 101,227 ,000, and $ 65,378 ,000 in 2022, 2021 and 2020, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

At December 31, 2022, United had no federal or state net operating loss carryforwards.

Taxes not on income, which consists mainly of business franchise taxes, were $ 13,537 ,000, $ 12,412 ,000, and $ 12,122 ,000, for the years ended December 31, 2022, 2021 and 2020, respectively.

These amounts are recorded in other expense in the Consolidated Statements of Income.

Significant components of United’s deferred tax assets and liabilities (included in other assets in the Consolidated Balance Sheets) at December 31, 2022 and 2021 are as follows:

(In thousands)

Deferred tax assets:

Allowance for credit losses

Accrued benefits payable

Other accrued liabilities

Unrealized loss on securities available for sale

Other real estate owned

Lease liabilities under operating leases

Deferred mortgage points

Total deferred tax assets

Deferred tax liabilities:

Premises and equipment

Unrealized gain on securities available for sale

assets under operating leases

Pension plan accruals

Purchase accounting intangibles

Total deferred tax liabilities

Net deferred tax assets

At December 31, 2022 and 2021, United believes that all of the deferred tax amounts shown above are more likely than not to be realized based on an assessment of all available positive and negative evidence and therefore no valuation allowance has been recorded.

In accordance with ASC Topic 740, “Income Taxes,” United records a liability for uncertain income tax positions based on a recognition threshold of more-likely-than-not,

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

Below is a reconciliation of the total amounts of unrecognized tax benefits:

(In thousands)

Unrecognized tax benefits at beginning of year

Increase in unrecognized tax benefits as a result of tax positions taken during the current period

Decreases in the unrecognized tax benefits as a result of a lapse of the applicable statute of limitations

Unrecognized tax benefits at end of year

The entire amount of unrecognized tax benefits, if recognized, would impact United’s effective tax rate.

Over the next 12 months, the statute of limitations will close on certain income tax returns.

However, at this time, United cannot reasonably estimate the amount of tax benefits, if any, it may recognize over the next 12 months.

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

As of December 31, 2022, and 2021, the total amount of accrued interest related to uncertain tax positions was $ 525,000 and $ 727,000 , respectively.

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

No interest or penalties were recognized in the results of operations for the years of 2022, 2021 and 2020.

NOTE P—EMPLOYEE BENEFIT PLANS

United has a defined benefit retirement plan covering qualified employees.

Pension benefits are based on years of service and the average of the employee’s highest five consecutive plan years of basic compensation paid during the ten plan years preceding the date of determination.

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

In September of 2007, after a recommendation by United’s Pension Committee and approval by United’s Board of Directors, the United Bankshares, Inc.

Pension Plan (the “Plan”) was amended to change the participation rules.

The decision to change the participation rules for the Plan followed current industry trends, as many large and medium size companies have taken similar steps.

The amendment provided that employees hired on or after October 1, 2007, will not be eligible to participate in the Plan.

However, new employees will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) plan.

This change had no impact on current employees hired prior to October 1, 2007 as they will continue to participate in the Plan, with no change in benefit provisions, and will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) Plan.

Net periodic pension costs, except for service cost, are recognized in employee benefits on the consolidated statements of income.

Service cost is recognized in employee compensation.

Net consolidated periodic pension cost included the following components:

(Dollars in thousands)

Year Ended December 31,

Interest cost

Expected return on plan assets

Recognized net actuarial loss

Net periodic pension (income) cost

Weighted-Average Assumptions:

Discount rate

Expected return on assets

Rate of compensation increase (prior to age 40)

Rate of compensation increase (ages 40-54)

Rate of compensation increase (otherwise)

Amounts related to the Plan recognized as a component of other comprehensive income were as follows:

(In thousands)

Year Ended December 31,

Net actuarial (gain) loss

Amortization of actuarial loss

Total recognized in other comprehensive income

Included in accumulated other comprehensive income at December 31, 2022 are unrecognized actuarial losses of $ 38,530,000 ($ 29,553,000 net of tax) that have not yet been recognized in net periodic pension cost.

The reconciliation of the beginning and ending balances of the projected benefit obligation and the fair value of plan assets for the years ended December 31, 2022 and 2021 and the accumulated benefit obligation at December 31, 2022 and 2021 are as follows:

(Dollars in thousands)

Change in Projected Benefit Obligation

Projected Benefit Obligation at the Beginning of the Year

Interest Cost

Actuarial Gain

Annuity Purchase Payment

Benefits Paid

Projected Benefit at the End of the Year

Accumulated Benefit Obligation at the End of the Year

Change in Plan Assets

Fair Value of Plan Assets at the Beginning of the Year

Actual Return on Plan Assets

Annuity Purchase Payment

Benefits Paid

Fair value of plan assets at end of year

Net Amount Recognized

Funded Status

Unrecognized Net Loss

Net Amount Recognized

Weighted-Average Assumptions at the End of the Year

Discount Rate

Rate of compensation Increase (prior to age 40)

Rate of compensation Increase (ages 40-54)

Rate of compensation Increase (otherwise)

Asset allocation for the defined benefit pension plan as of the measurement date, by asset category, is as follows:

Target Allocation

Allocation Range

Percentage of

Plan Assets at

Equity Securities

Debt Securities

Equity securities include United common stock in the amounts of $ 4,285,000 ( 4 %) at December 31, 2022 and $ 3,839,000 ( 3 %) at December 31, 2021 .

The policy, as established by the Pension Committee, primarily consisting of United’s Executive Management, is to invest assets based upon the target allocations stated above.

The assets are reallocated periodically to meet the above target allocations.

The investment policy is reviewed at least annually, subject to the approval of the Pension Committee, to determine if the policy should be changed.

Prohibited investments include, but are not limited to, futures contracts, private placements, uncovered options, real estate, the use of margin, short sales, derivatives for speculative purposes, and other investments that are speculative in nature.

In order to achieve a prudent level of portfolio diversification, the securities of any one company are not to exceed 10 % of the total plan assets, and no more than the 15 % of total plan assets is to be invested in any one industry (other than securities of U.S.

Government or Agencies).

Additionally, no more than 15 % of the plan assets is to be invested in foreign securities, both equity and fixed.

The expected long-term rate of return for the plan’s total assets is based on the expected return of each of the above categories, weighted based on the median of the target allocation for each class.

United uses the corridor approach based on 10 % of the greater of the projected benefit obligation and the market-related value of plan assets to amortize actuarial gains and losses.

At December 31, 2022, the benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five years thereafter are as follows:

(Dollars in thousands)

2028 through 2032

United made a discretionary contribution of $ 20,000,000 during the third quarter of 2020.

United did not contribute to the plan in 2022 or in 2021 as no contributions were required by funding regulations or law.

For 2023, no contributions to the plan are required by funding regulations or law.

However, United may make a discretionary contribution in 2023, the amount of which cannot be reasonably estimated at this time.

In accordance with ASC Topic 715 and using the guidance contained in ASC Topic 820, the following is a description of the valuation methodologies used to measure the plan assets at fair value.

Cash and Cash Equivalents:

These underlying assets are highly liquid U.S.

government obligations.

The fair value of cash and cash equivalents approximates cost (Level 1).

Debt Securities

Securities of the U.S.

Government, municipalities, private issuers and corporations are valued at the closing price reported in the active market in which the individual security is traded, when available (Level 1).

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

Using a market approach valuation methodology, third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considers observable market data (Level 2).

Common and Preferred Stock:

These securities are valued at the closing price on the respective stock exchange (Level 1).

Mutual Funds:

Generally, these securities are valued at the closing price reported in the active market in which the individual mutual fund is traded (Level 1).

The following tables present the balances of the plan assets, by fair value hierarchy level, as of December 31, 2022 and 2021:

Fair Value Measurements at December 31, 2022 Using

(In thousands)

Balance as of

Quoted Prices

Cash and Cash equivalents

Fixed Income Debt Securities:

Government and agencies

Fixed Income Mutual Funds:

Equity Securities:

Equity Mutual Funds:

Global equity

Domestic equity large cap

Domestic equity small cap

Alternative equity

International emerging equity

International equity developed

Fair Value Measurements at December 31, 2021 Using

(In thousands)

Balance as of

Quoted Prices

Cash and Cash equivalents

Fixed Income Mutual Funds:

Equity Securities:

Equity Mutual Funds:

Global equity

Domestic equity large cap

Domestic equity small cap

International emerging equity

International equity developed

Common stock investments are diversified amongst various industries with no industry representing more than 5% of the total plan assets.

The United Bankshares, Inc.

Savings and Stock Investment Plan (the Plan) is a defined contribution plan under Section 401(k) of the Internal Revenue Code.

Each employee of United, who completes ninety ( 90 ) days of qualified service, is eligible to participate in the Plan.

Each participant may contribute from 1 % to 100 % of compensation to his/her account, subject to Internal Revenue Service maximum deferral limits.

United matches 100 % of the first 5 % of salary deferred with United stock, subject to certain imposed limitations.

Vesting is 100 % for employee deferrals and the company match at the time the employee makes his/her deferral.

United’s expense relating to the Plan approximated $ 8,242,000 , $ 7,984,000 , and $ 6,531,000 in 2022, 2021 and 2020, respectively.

The assets of United’s defined benefit plan and 401(k) Plan each include investments in United common stock.

At December 31, 2022 and 2021, the combined plan assets included 1,662,179 and 1,578,389 shares, respectively, of United common stock with an approximate fair value of $ 67,302,000 and $ 57,264,000 , respectively.

Dividends paid on United common stock held by the plans approximated $ 2,340,000 , $ 2,060,000 , and $ 1,776,000 for the years ended December 31, 2022, 2021, and 2020, respectively.

United has certain other supplemental deferred compensation plans covering various key employees.

Periodic charges are made to operations so that the liability due each employee is fully recorded as of the date of their retirement.

Amounts charged to expense have not been significant in any year.

NOTE Q—STOCK BASED COMPENSATION

On May 12, 2020, United’s shareholders approved the 2020 Long-Term Incentive Plan (“2020 LTI Plan”).

The 2020 LTI Plan became effective May 13, 2020.

An award granted under the 2020 LTI Plan may consist of any non-qualified

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

These awards all relate to the common stock of United.

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

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

Unless otherwise determined by the Board, the Compensation Committee of the Board (the “Committee”) shall administer the 2020 LTI Plan.

The maximum number of options and stock appreciation rights, in the aggregate, which may be awarded to any individual key employee during any calendar year is 100,000 .

The maximum number of options and stock appreciation rights, in the aggregate, which may be awarded to any non-employee

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

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

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

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

was filed on May 29, 2020 with the Securities and Exchange Commission to register all the shares which were available for the 2020 LTI Plan.

The 2020 LTI Plan replaces the 2016 LTI Plan.

During the year of 2022, a total of 156,988 shares of restricted stock and 147,511 of restricted stock units were granted under the 2020 LTI Plan.

No non-qualified

stock options were granted under the 2020 LTI Plan during the year of 2022.

Compensation expense of $ 9,881 ,000, $ 8,018 ,000, and $ 5,980 ,000 related to all share-based grants and awards under United’s Long-Term Incentive Plans was incurred for the years 2022, 2021 and 2020, respectively.

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

Stock Options

United currently has options outstanding from various option plans other than the 2020 LTI Plan (the “Prior Plans”);

however, no common shares of United stock are available for grants under the Prior Plans as these plans have expired.

Awards outstanding under the Prior Plans will remain in effect in accordance with their respective terms.

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

A summary of activity under the United’s stock option plans as of December 31, 2022, and the changes during the year of 2022 are presented below:

Year ended December 31, 2022

Weighted Average

(Dollars in thousands, except per share amounts)

Outstanding at January 1, 2022

Forfeited or expired

Outstanding at December 31, 2022

Exercisable at December 31, 2022

The following table summarizes the status of United’s nonvested awards for the year ended December 31, 2022:

Weighted-Average

Grant Date Fair Value

Nonvested at January 1, 2022

Forfeited or expired

Nonvested at December 31, 2022

As of December 31, 2022, the total unrecognized compensation cost related to nonvested option awards was $ 410 ,000 with a weighted-average expense recognition period of 0.5 years.

The total fair value of awards vested during the year ended December 31, 2022, was $ 1,751 ,000.

Cash received from options exercised under the Plans for the years ended December 31, 2022, 2021 and 2020 was $ 10,295 ,000, $ 5,206 ,000, and $ 1,241 ,000, respectively.

During 2022 and 2021, 484,682 and 232,777 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for 2022 and 2021 were issued from authorized and unissued stock.

No options were granted in 2022.

The weighted-average grant-date fair value of options granted in the year of 2021 and 2020 was $ 5.83 and $ 5.65 , respectively.

The total intrinsic value of options exercised under the Plans during the years ended December 31, 2022, 2021, and 2020 was $ 6,325 ,000, $ 2,337 ,000, and $ 1,917 ,000, respectively.

ASC Topic 230, “Statement of Cash Flows,” requires the benefits of tax deductions in excess of recognized compensation cost to be reported as an operating cash flow.

This requirement reduces net operating cash flows.

While the company cannot estimate what those amounts will be in the future (because they depend on, among other things, the date employees exercise stock options), United recognized cash flows used in operating activities of $ 1,040 ,000, $ 303 ,000, and $ 351 ,000 from excess tax benefits related to share-based compensation arrangements for the year of 2022, 2021 and 2020, respectively.

Restricted Stock

Under the 2020 LTI Plan, United may award restricted common shares to key employees and non-employee

Restricted shares granted to participants will vest no sooner than 1/3 per year over the first three anniversaries of the award.

Unless determined by the Committee or the Board and provided in the award agreement, recipients of restricted shares do not pay any consideration to United for the shares, have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested.

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

As of December 31, 2022, the total unrecognized compensation cost related to nonvested restricted stock awards was $ 7,566 ,000 with a weighted-average expense recognition period of 0.8 years.

The following summarizes the changes to United’s restricted common shares for the year ended December 31, 2022:

Weighted-Average

Grant Date Fair Value

Outstanding at January 1, 2022

Outstanding at December 31, 2022

Restricted Stock Units

Under the 2020 LTI Plan, United may grant restricted stock units (“RSUs”) to key employees.

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

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

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

Performance-vested RSUs cliff-vest after assessment of the Company’s performance over a period of three years.

The number of performance-vested RSUs that vest is determined by two metrics measured relative to peers:

Return on Average Tangible Common Equity (“ROATCE”) and Total Shareholder Return (“TSR”).

Based on ASC Topic 718, the ROATCE comparison is considered a performance condition while the TSR comparison is considered a market condition.

There will be no payout of the performance-vested awards if the threshold performance is not achieved.

United communicates the specific threshold, target, and maximum performance-vested RSU awards and performance targets to the applicable key employees at the beginning of a performance period.

Dividends are accrued but not paid in respect to the awards until the RSUs vest.

The holder does not have the right to vote the shares during the time and performance periods.

The value of the time-vested RSUs and the performance-vested, based on the performance condition, RSUs awarded is established as the fair market value of the stock at the time of the grant.

The value of the performance-vested, based on the market condition, RSUs awarded is estimated through the use of a Monte Carlo valuation model as of the grant date.

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

The following table summarizes the status of United’s nonvested RSUs during the year ended December 31, 2022:

Weighted-Average

Grant Date Fair Value

Nonvested at January 1, 2022

Nonvested at December 31, 2022

As of December 31, 2022, the total unrecognized compensation cost related to nonvested restricted stock units was $ 5,259 ,000 with a weighted-average expense recognition period of 0.9 years.

NOTE R—COMMITMENTS AND CONTINGENT LIABILITIES

Lending-related Commitments

United is a party to financial instruments with off-balance-sheet

risk in the normal course of business to meet the financing needs of its customers and to alter its own exposure to fluctuations in interest rates.

These financial instruments include loan commitments, standby letters of credit, and interest rate swap agreements.

The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements.

United’s maximum exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for the loan commitments and standby letters of credit is the contractual or notional amount of those instruments.

United uses the same policies in making commitments and conditional obligations as it does for

sheet instruments.

Collateral may be obtained, if deemed necessary, based on management’s credit evaluation of the counterparty.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment contract.

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

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

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

United had approximately $ 7,250,155,000 and $ 7,419,342,000 of loan commitments outstanding as of December 31, 2022 and December 31, 2021, respectively, approximately 34% of which contractually expire within one year .

Excluded in the December 31, 2022 and December 31, 2021 amounts above are commitments to extend credit of $ 719,841,000 and $ 571,792,000 , respectively, related to mortgage loan funding commitments of United’s mortgage banking segment and are of a short-term nature.

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

Under these agreements, United guarantees certain financial commitments of its customers.

A commercial letter of credit is issued specifically to facilitate trade or commerce.

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

As of December 31, 2022 and December 31, 2021, United had $ 16,389,000 and $ 14,774,000 of commercial letters of credit outstanding.

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

United has issued standby letters of credit of $ 147,511,000 and $ 164,743,000 as of December 31, 2022 and December 31, 2021, respectively.

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

Mortgage Banking

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

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

United’s mortgage banking segment has a reserve of $ 1,081,000 and $ 1,150,000 as of December 31, 2022 and 2021, respectively.

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

United’s mortgage banking segment works with third-party investors that are generally well-capitalized, are investment grade and exhibit strong financial performance to mitigate this risk.

United does not expect any third-party investor to fail to meet its obligation.

Legal Proceedings

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

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

On a matter-by-matter

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

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

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

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

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

This accrual was based upon available information at that time and was subject to adjustment to reflect any subsequent developments.

During the fourth quarter of 2022, the litigation was settled resulting in a reduction of $ 3,905,000 in the estimated liability related to this matter.

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

Regulatory Matters

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

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

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

It is not possible at this time for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss related to such matters.

NOTE S—DERIVATIVE FINANCIAL INSTRUMENTS

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

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

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

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

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

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

As of December 31, 2022, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring.

United estimates that $ 22,043,000 will be reclassified from AOCI as a decrease to interest expense over the next 12-months

following December 31, 2022 related to the cash flow hedges.

As of December 31, 2022, the maximum length of time over which forecasted transactions are hedged is eight years.

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

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

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

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

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

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

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

The related fair value on a net basis approximates zero .

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

Asset Derivatives

December 31, 2022

December 31, 2021

(In thousands)

Derivatives designated as hedging instruments

Fair Value Hedges:

Interest rate swap contracts (hedging commercial loans)

Total Fair Value Hedges

Cash Flow Hedges:

Interest rate swap contracts (hedging FHLB borrowings)

Total Cash Flow Hedges

Total derivatives designated as hedging instruments

Derivatives not designated as hedging instruments

Forward loan sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

Total derivatives not designated as hedging instruments

Total asset derivatives

Liability Derivatives

December 31, 2022

December 31, 2021

(In thousands)

Derivatives designated as hedging instruments

Fair Value Hedges:

Interest rate swap contracts (hedging commercial loans)

Other liabilities

Total Fair Value Hedges

Total derivatives designated as hedging instruments

Derivatives not designated as hedging instruments

Forward loan sales commitments

Other liabilities

TBA mortgage-backed securities

Other liabilities

Interest rate lock commitments

Other liabilities

Total derivatives not designated as hedging instruments

Total liability derivatives

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

December 31, 2022

(In thousands)

Derivatives in Fair Value

Hedging Relationships

Location in the Statement

Carrying Amount

of the Hedged

Assets/(Liabilities)

Cumulative Amount

of Fair Value Hedging

Adjustment Included

in the Carrying

Amount of the Hedged

Assets/(Liabilities)

Cumulative Amount of

Fair Value Hedging

Adjustment Remaining for

any Hedged Assets/

(Liabilities) for which

Hedge Accounting has

been Discontinued

Interest rate swaps

Loans, net of unearned income

December 31, 2021

(In thousands)

Derivatives in Fair Value

Hedging Relationships

Location in the Statement

Carrying Amount of

Assets/(Liabilities)

Cumulative Amount

of Fair Value Hedging

Adjustment Included

in the Carrying

Amount of the Hedged

Assets/(Liabilities)

Cumulative Amount of

Fair Value Hedging

Adjustment Remaining for

any Hedged Assets/

(Liabilities) for which

Hedge Accounting has

been Discontinued

Interest rate swaps

Loans, net of unearned income

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

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

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

The Company’s agreements generally contain provisions that limit the unsecured exposure up to an agreed upon threshold.

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

The effect of United’s d erivat

ive financial instruments on its Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020 is presented as follows:

(In thousands)

Income Statement

Derivatives in hedging relationships

Cash Flow Hedges:

Interest rate swap contracts

Interest on long-term

Fair Value Hedges:

Interest rate swap contracts

Interest and fees on

loans and leases

Total derivatives in hedging relationships

Derivatives not designated as hedging instruments

Forward loan sales commitments

Income from Mortgage

Banking Activities

TBA mortgage-backed securities

Income from Mortgage

Banking Activities

Interest rate lock commitments

Income from Mortgage

Banking Activities

Total derivatives not designated as hedging instruments

Total derivatives

For the years ended December 31, 2022, 2021 and 2020, changes in the fair value of any interest rate swaps attributed to hedge ineffectiveness were recorded, but not significant to United’s Consolidated Statements of Income.

NOTE T—COMPREHENSIVE INCOME

The changes in accumulated other comprehensive income are as follows:

For the Years Ended December 31

(In thousands)

Available for sale (“AFS”) securities:

Change in net unrealized gains (losses) on AFS securities arising during the period

Related income tax effect

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

Related income tax effect

Net effect of AFS securities on other comprehensive income

Cash flow hedge derivatives:

Unrealized gain on cash flow hedge before reclassification to interest expense

Related income tax effect

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

Related income tax effect

Net effect of cash flow hedge derivatives on other comprehensive income

For the Years Ended December 31

(In thousands)

Defined benefit pension plan:

Net actuarial loss during the period

Related income tax expense

Amortization of net actuarial loss recognized in net income

Related income tax effect

Net effect of change in defined benefit pension plan on other comprehensive income

Total change in other comprehensive income, net of tax

Total Comprehensive Income

The components of accumulated other comprehensive income for the year ended December 31, 2022 are as follows:

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

For the Year Ended December 31, 2022

(Dollars in thousands)

Balance at January 1, 2022

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive (loss) income, net of tax

Balance at December 31, 2022

(a) All amounts are net-of-tax.

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Year Ended December 31, 2022

(In thousands)

Details about AOCI Components

Affected Line Item in the Statement Where

Net Income is Presented

Available for sale (“AFS”) securities:

Net reclassification adjustment for gains included in net income

Net investment securities gains

Total before tax

Related income tax effect

Cash flow hedge:

Net reclassification adjustment for gains included in net income

Interest expense

Total before tax

Related income tax effect

Pension plan:

Recognized net actuarial loss

Amortization of net actuarial loss

Total before tax

Related income tax effect

Total reclassifications for the period

(a) This AOCI component is included in the computation of changes in plan assets (see Note P, Employee Benefit Plans)

(b) This AOCI component is included in the computation of net periodic pension cost (see Note P, Employee Benefit Plans)

NOTE U—UNITED BANKSHARES, INC.

(PARENT COMPANY ONLY) FINANCIAL INFORMATION

Condensed Balance Sheets

(In thousands)

Cash and due from banks

Securities available for sale

Securities held to maturity

Equity securities

Other investment securities

Investment in subsidiaries:

Bank subsidiaries

Nonbank subsidiaries

Liabilities and Shareholders’ Equity

Subordinated notes

Junior subordinated debentures of subsidiary trusts

Accrued expenses and other liabilities

Shareholders’ equity (including other accumulated comprehensive loss of $ 332,732 at December 31, 2022 and other accumulated comprehensive loss of $ 4,888 at December 31, 2021)

Total Liabilities and Shareholders’ Equity

Condensed Statements of Income

Year Ended December 31

(In thousands)

Dividends from banking subsidiaries

Net interest income

Management fees:

Bank subsidiaries

Nonbank subsidiaries

Operating expenses

Income Before Income Taxes and Equity in Undistributed Net Income of Subsidiaries

Applicable income tax benefit

Income Before Equity in Undistributed Net

Income of Subsidiaries

Equity in undistributed net income of subsidiaries:

Bank subsidiaries

Nonbank subsidiaries

Condensed Statements of Cash Flows

Year Ended December 31

(In thousands)

Operating Activities

Adjustments to reconcile net income to net cash provided by operating activities:

Equity in undistributed net income of subsidiaries

Amortization of net periodic pension costs

Stock-based compensation

Excess tax benefits from stock-based compensation arrangements

Net change in other assets and liabilities

Net Cash Provided by Operating Activities

Investing Activities

Net (purchases) proceeds from sales of debt securities

Net proceeds from sales (purchases) of equity securities

Net cash received (paid) in acquisition of subsidiary

Increase in investment in subsidiaries

Change in other investment securities

Net Cash Used in Investing Activities

Financing Activities

Cash dividends paid

Acquisition of treasury stock

Distribution of treasury stock from deferred compensation plan

Proceeds from exercise of stock options

Net Cash Used in Financing Activities

(Decrease) Increase in Cash and Cash Equivalents

Cash and Cash Equivalents at Beginning of Year

Cash and Cash Equivalents at End of Year

NOTE V—REGULATORY MATTERS

United Bank maintains average reserve balances with its Federal Reserve Bank.

The average amount of those consolidated reserve balances maintained for the year ended December 31, 2022 and 2021 were approximately $ 1,577,485,000 and $ 3,119,391,000 , respectively.

No reserve balance for the year ended December 31, 2022 and 2021 was required.

The primary source of funds for the dividends paid by United to its shareholders is dividends received from United Bank.

Dividends paid by United Bank are subject to certain regulatory limitations.

Generally, the most restrictive provision requires regulatory approval if dividends declared in any year exceed that year’s net income, as defined, plus the retained net profits of the two preceding years.

During 2023, the retained net profits available for distribution to United by United Bank as dividends without regulatory approval, are approximately $ 201,101,000 , plus net income for the interim period through the date of declaration.

Under Federal Reserve regulation, United Bank is also limited as to the amount they may loan to affiliates, including the parent company.

Loans from United Bank to the parent company are limited to 10 % of the banking subsidiaries’ capital and surplus, as defined, or $ 395,066,000 at December 31, 2022, and must be secured by qualifying collateral.

United’s subsidiary banks are subject to various regulatory capital requirements administered by federal banking agencies.

Pursuant to capital adequacy guidelines, United’s subsidiary banks must meet specific capital guidelines that involve various quantitative measures of the banks’ assets, liabilities, and certain off-balance-sheet

items as calculated under regulatory accounting practices.

United’s subsidiary banks’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

As previously mentioned, the new Basel III Capital Rules became effective for United and United Bank on January 1, 2015 (subject to a phase-in

These new quantitative measures established by regulation to ensure capital adequacy require United and United Bank to maintain minimum amounts and ratios of total, Tier I capital, and common Tier I capital as defined in the regulations, to risk-weighted assets, as defined, and of Tier I capital, as defined, to average assets, as defined.

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on United’s financial statements.

As of December 31, 2022, United exceeds all capital adequacy requirements to which it is subject.

At December 31, 2022, the most recent notification from its regulators, United and United Bank were categorized as well-capitalized.

To be categorized as well-capitalized, United must maintain minimum total risk-based, Tier I risk-based, Common Tier I risk-based, and Tier I leverage ratios as set forth in the following table.

There are no conditions or events since that notification that management believes would impact United’s well-capitalized status.

United’s and United Bank’s capital amounts (in thousands of dollars) and ratios are presented in the following table.

(Dollars in thousands)

Adequacy Purposes

As of December 31, 2022:

Total Capital (to Risk- Weighted Assets):

United Bankshares

Tier I Capital (to Risk- Weighted Assets):

United Bankshares

Common Tier I Capital (to Risk Weighted Assets):

United Bankshares

Tier I Capital (to Average Assets):

United Bankshares

As of December 31, 2021:

Total Capital (to Risk- Weighted Assets):

United Bankshares

Tier I Capital (to Risk- Weighted Assets):

United Bankshares

Common Tier I Capital (to Risk Weighted Assets):

United Bankshares

Tier I Capital (to Average Assets):

United Bankshares

United’s mortgage banking entities, George Mason and Crescent, are subject to net worth requirements issued by the U.S.

Department of Housing and Urban Development (“HUD”).

Failure to meet minimum capital requirements of HUD can result in certain mandatory and possibly additional discretionary actions that, if undertaken, could have a direct material effect on George Mason’s and Crescent’s operations.

For George Mason and Crescent, the maximum net worth requirement of HUD at December 31, 2022 was $ 2,500,000 .

George Mason’s net worth and Crescent’s net worth were $ 154,700,000 and $ 101,116,000 at December 31, 2022, which both exceeded the HUD requirements.

NOTE W—FAIR VALUES OF FINANCIAL INSTRUMENTS

In accordance with ASC Topic 820, the following describes the valuation techniques used by United to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements.

Securities available for sale and equity securities

Securities available for sale and equity securities are recorded at fair value on a recurring basis.

Fair value measurement is based upon quoted market prices, when available (“Level 1”).

Using a market approach valuation methodology, third party vendors compile prices based on observable market inputs, which include benchmark yields, reported trades, issuer spreads, benchmark securities, and “To Be Announced” prices (“Level 2”).

Management internally reviews the fair values provided by third party vendors on a monthly basis.

Management also performs a quarterly price testing analysis at the individual security level which compares the pricing provided by the third party vendors to an independent pricing source’s valuation of the same securities.

Variances that are deemed to be material are reviewed by management.

Additionally, to further assess the reliability of the information received from third party vendors, management obtains documentation from third party vendors related to the sources, methodologies, and inputs utilized in valuing securities classified as Level 2.

Management analyzes this information to ensure the underlying assumptions appear reasonable.

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

Upon completing its review of the pricing from third party vendors at December 31, 2022, management determined that the prices provided by its third party pricing sources were reasonable and in line with management’s expectations for the market values of these securities.

Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted materially by management at December 31, 2022.

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

Factors that management considers include:

a significant widening of the bid-ask

spread, a considerable decline in the volume and level of trading activity in the instrument, a significant variance in prices among market participants, and a significant reduction in the level of observable inputs.

Any securities available for sale not valued based upon quoted market prices or third party pricing models that consider observable market data are considered Level 3.

Currently, United does not have any available-for-sale

securities considered as Level 3.

Loans held for sale

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

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

For December 31, 2022, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.11 % to 0.72 % with a weighted average increase of 0.39 %.

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

These hedging interest rate swaps are classified as either a fair value hedge or a cash flow hedge.

United utilizes third-party vendors for derivative valuation purposes.

These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves (“Level 2”).

Valuation adjustments to derivative fair values for liquidity and credit risk are also taken into consideration, as well as the likelihood of default by United and derivative counterparties, the net counterparty exposure and the remaining maturities of the positions.

Values obtained from third party vendors are typically not adjusted by management.

Management internally reviews the derivative values provided by third party vendors on a quarterly basis.

All derivative values are tested for reasonableness by management utilizing a net present value calculation.

The Company records its interest rate lock commitments and forward loan sales commitments at fair value determined as the amount that would be required to settle each of these derivative financial instruments at the balance sheet date.

In the normal course of business, United’s mortgage banking subsidiaries enter into contractual interest rate lock commitments to extend credit to borrowers with fixed expiration dates.

The commitments become effective when the borrowers “lock-in”

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

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

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

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

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

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

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

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

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

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

For December 31, 2022, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.11 % to 0.72 % with a weighted average increase of 0.39 %.

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

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

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

Fair Value at December 31, 2022 Using

(In thousands)

Balance as of

Quoted Prices

Available for sale debt securities:

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

Single issue trust preferred securities

Other corporate securities

Total available for sale securities

Equity securities:

Financial services industry

Equity mutual funds (1)

Fixed income mutual funds

Total equity securities

Loans held for sale

Derivative financial assets:

Fair Value at December 31, 2022 Using

Balance as of

Quoted Prices

Interest rate swap contracts

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

Total derivative financial assets

Derivative financial liabilities:

TBA mortgage-backed securities

Interest rate lock commitments

Total derivative financial liabilities

Fair Value at December 31, 2021 Using

(In thousands)

Balance as of

Quoted Prices

Available for sale debt securities:

Treasury securities and obligations of U.S.

Government corporations and agencies

State and political subdivisions

Residential mortgage-backed securities

Commercial mortgage-backed securities

Asset-backed securities

Single issue trust preferred securities

Other corporate securities

Total available for sale securities

Equity securities:

Financial services industry

Equity mutual funds (1)

Fixed income mutual funds

Total equity securities

Loans held for sale

Derivative financial assets:

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

Total derivative financial assets

Derivative financial liabilities:

Interest rate swap contracts

Forward sales commitments

TBA mortgage-backed securities

Interest rate lock commitments

Total derivative financial liabilities

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

There were no transfers between Level 1, Level 2 and Level 3 for financial assets and liabilities measured at fair value on a recurring basis during the year ended December 31, 2022 and 2021.

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

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

Loans held for sale

(In thousands)

Balance, beginning of period

Transfers to portfolio loans

Total gains during the period recognized in earnings

Balance, end of period

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

Derivative Financial Assets

TBA Securities

(In thousands)

Balance, beginning of period

Transfers other

Balance, end of period

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

Derivative Financial Assets

Interest Rate Lock

(In thousands)

Balance, beginning of period

Transfers other

Balance, end of period

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

Derivative Financial Liabilities

Forward Sales Commitments

(In thousands)

Balance, beginning of period

Transfers other

Balance, end of period

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

Derivative Financial Liabilities

TBA Securities

(In thousands)

Balance, beginning of period

Transfers other

Balance, end of period

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

Derivative Financial Liabilities

Interest Rate Lock

(In thousands)

Balance, beginning of period

Transfers other

Balance, end of period

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

Fair Value Option

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

(In thousands)

December 31, 2022

December 31, 2021

Income from mortgage banking activities

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

December 31, 2022

December 31, 2021

(In thousands)

Loans held for sale

No loans held for sale were past due or on nonaccrual status as of December 31, 2022 and 2021.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP.

Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market

accounting or write-downs of individual assets.

The following describes the valuation techniques used by United to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements.

Individually assessed loans

In the determination of the allowance for loan losses, loans that do not share risk characteristics are evaluated on an individual basis.

Loans evaluated individually are not also included in the collective evaluation.

Fair value is measured using a market approach based on the value of the collateral securing the loans.

Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable.

The vast majority of the collateral is real estate.

The value of real estate collateral is determined utilizing an appraisal conducted by an independent, licensed appraiser outside of the Company using comparable property sales (“Level 2”).

However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is considered Level 3.

The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data.

Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (“Level 3”).

For individually assessed loans, a specific reserve is established through the allowance for loan losses, if necessary, by estimating the fair value of the underlying collateral on a nonrecurring basis.

Any fair value adjustments are recorded in the period incurred as provision for credit losses expense on the Consolidated Statements of Income.

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

Such assets are carried on the balance sheet at the lower of the investment in the assets or the fair value of the assets less estimated selling costs.

Fair value is determined by one of two market approach methods depending on whether the property has been vacated and an appraisal can be conducted.

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

BPO), is obtained.

A BPO represents a best estimate valuation performed by a realtor based on knowledge of current property values and a visual examination of the exterior condition of the property.

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

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

An authorized independent appraiser conducts appraisals for United.

Appraisals for property other than ongoing construction are based on consideration of comparable property sales (“Level 2”).

In contrast, valuation of ongoing construction assets requires some degree of professional judgment.

In conducting an appraisal for ongoing construction property, the appraiser develops two appraised amounts:

an “as is” appraised value and a “completed” value.

Based on professional judgment and their knowledge of the particular situation, management determines the appropriate fair value to be utilized for such property (“Level 3”).

As a matter of policy, valuations are reviewed at least annually and appraisals are generally updated on a bi-annual

basis with values lowered as necessary.

Intangible Assets

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

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

United may elect to perform a qualitative analysis to determine whether or not it is more-likely-than not that the fair value of a reporting unit is less than its carrying amount.

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

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

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

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

United performed its annual goodwill impairment test on the Company’s reporting units as of September 30, 2022.

The goodwill impairment test did not identify any goodwill impairment.

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

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

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

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

Other than those intangible assets recorded in the acquisition of Community Bankers Trust in the fourth quarter of 2021, no other fair value measurement of intangible assets was made during the year of 2022 and 2021.

Mortgage Servicing Rights (“MSRs”):

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

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

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

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

The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates.

Although some assumptions in determining fair value are based on standards used by market participants,

some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

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

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

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

(In thousands)

Fair value at December 31, 2022

Balance as of

Quoted Prices

Individually assessed loans

(In thousands)

Fair value at December 31, 2021

Balance as of

Quoted Prices

Individually assessed loans

Mortgage servicing rights

Fair Value of Other Financial Instruments

The following methods and assumptions were used by United in estimating its fair value disclosures for other financial instruments:

Cash and Cash Equivalents:

The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values.

Securities held to maturity and other securities

The estimated fair values of securities held to maturity are based on quoted market prices, where available.

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

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

Other securities consist mainly of shares of Federal Home Loan Bank and Federal Reserve Bank stock that do not have readily determinable fair values and are carried at cost.

Loans and leases

The fair values of certain mortgage loans (e.g., one-to-four

family residential), credit card loans, and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics.

The fair values of other loans and leases (e.g., commercial real estate and rental property mortgage loans, commercial and industrial loans, financial institution loans and agricultural loans) are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans and leases with similar terms to borrowers of similar creditworthiness, which include adjustments for liquidity concerns.

For acquired PCD loans, fair value is assumed to equal United’s carrying value, which represents the present value of expected future principal and interest cash flows, as adjusted for any Allowance for Credit Losses recorded for these loans.

The fair values of demand deposits (e.g., interest and noninterest checking, regular savings and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts).

The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date.

Fair values of fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-term Borrowings:

The carrying amounts of federal funds purchased, borrowings under repurchase agreements and any other short-term borrowings approximate their fair values.

Long-term Borrowings:

The fair values of United’s Federal Home Loan Bank borrowings and trust preferred securities are estimated using discounted cash flow analyses, based on United’s current incremental borrowing rates for similar types of borrowing arrangements.

Summary of Fair Values for All Financial Instruments

The estimated fair values of United’s financial instruments are summarized below:

Fair Value Measurements

(In thousands)

Quoted Prices

December 31, 2022

Cash and cash equivalents

Securities available for sale

Securities held to maturity

Equity securities

Other securities

Loans held for sale

Derivative financial assets,

Mortgage servicing rights

Short-term borrowings

Long-term borrowings

Derivative financial liabilities

December 31, 2021

Cash and cash equivalents

Securities available for sale

Securities held to maturity

Equity securities

Other securities

Loans held for sale

Derivative financial assets

Mortgage servicing rights

Short-term borrowings

Long-term borrowings

Derivative financial liabilities

NOTE X—VARIABLE INTEREST ENTITIES

Variable interest entities (“VIEs”) are entities that either have a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest (i.e., ability to make significant decisions, through voting rights, right to receive the expected residual returns of the entity, and obligation to absorb the expected losses of the entity).

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

United’s business practices include relationships with certain VIEs.

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

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

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

These trusts, of which several were acquired through bank acquisitions, issued or participated in pools of trust preferred capital securities to third-party investors with the proceeds invested in junior subordinated debt securities of United.

The Company, through a small capital contribution, owns 100 % of the voting equity shares of each trust.

The assets, liabilities, operations, and cash flows of each trust are solely related to the issuance, administration, and repayment of the preferred equity securities held by third-party investors.

United fully and unconditionally guarantees the obligations of each trust and is obligated to redeem the junior subordinated debentures upon maturity.

United does not consolidate these trusts as it is not the primary beneficiary of these entities because United’s wholly owned and indirect wholly owned statutory trust subsidiaries do not have a controlling financial interest in the VIEs.

A controlling financial interest is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

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

At December 31, 2022 and 2021, United’s investment (maximum exposure to loss) in these trusts were $ 11,277 ,000 and $ 11,032 ,000, respectively.

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

United invests in these partnerships to either realize tax credits on its consolidated federal income tax return or for purposes of earning a return on its investment.

These partnerships are considered VIEs as the limited partners lack a controlling financial interest in the entities through their inability to make decisions that have a significant effect on the operations and success of the partnerships.

These partnerships are not consolidated as United is not deemed to be the primary beneficiary.

At December 31, 2022 and 2021, United’s investment (maximum exposure to loss) in these low income housing and community development partnerships were $ 75,021 ,000 and $ 62,235 ,000, respectively, while related unfunded commitments were $ 77,143 ,000 and $ 69,894 ,000, respectively.

As of December 31, 2022, United expects to recover its remaining investments through the use of the tax credits that are generated by the investments.

NOTE Y—SEGMENT INFORMATION

United operates in two business segments:

community banking and mortgage banking.

Through its community banking segment, United offers a full range of products and services through various delivery channels.

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

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

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

Crescent may retain servicing rights on their mortgage loans sold.

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

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

The community banking segment provides the mortgage banking segment (George Mason and Crescent) with short-term funds to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest based on a Fed Funds target rate.

These transactions are eliminated in the consolidation process.

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

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

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

related intercompany transactions such as management fees.

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

Information about the reportable segments and reconciliation of this information to the consolidated financial statements at and for the years ended December 31, 2022, 2021 and 2020 is as follows:

At and For the Year Ended December 31, 2022

(In thousands)

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

At and For the Year Ended December 31, 2021

(In thousands)

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

At and For the Year Ended December 31, 2020

(In thousands)

Net interest income

Provision for credit losses

Other expense

Net income (loss)

Total assets (liabilities)

Average assets (liabilities)

NOTE Z—QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial data for 2022 and 2021 is summarized below:

(Dollars in thousands, except per share data)

Interest income

Interest expense

Net interest income

Provision for credit losses

(Dollars in thousands, except per share data)

Mortgage banking income

Securities gains (losses), net

Other noninterest income

Noninterest expense

Net income (1)

Per share data:

Average shares outstanding (000s):

Net income per share:

Dividends per share

Interest income

Interest expense

Net interest income

Provision for credit losses

Mortgage banking income

Securities losses, net

Other noninterest income

Noninterest expense

Net income (1)

Per share data:

Average shares outstanding (000s):

Net income per share:

Dividends per share

(1) For further information, see the related discussion “Quarterly Results” included in Management’s Discussion and Analysis.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

This item is omitted since it is not applicable.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

5 unchanged sentences

Changes In Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f)

under the Exchange Act) during the fiscal quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

United’s directors and executive officers may from time to time enter into plans or other arrangements for the

purchase or sale of United’s shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)

or may represent a non-Rule

trading arrangement under the Securities Exchange Act of 1934, as amended.

During the quarter ended December 31, 2023, no ne of our directors or executive officers adopted, modified or terminated any “Rule 10b5-1

trading arrangement” or any “non-Rule

trading arrangement”, as each term is defined in Rule 408(e) of Regulation S-K.

DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

70 unchanged sentences

Form of Independent Contractor Agreement with Peter A.

Converse (incorporated into this filing by reference to Exhibit 10.2 to the Form 8-K dated January 31, 2014 and filed February 3, 2014 for United Bankshares, Inc., File No.

Converse (incorporated into this filing by reference to Exhibit 10.1 to the Form 10-Q dated March 31, 2016 and filed May 9, 2016 for United Bankshares, Inc., File No.

Amended and Restated Employment Agreement by and between United Bankshares, Inc., United Bank and Michael P.

24 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer (furnished herewith)

United Bankshares, Inc.

Compensation Recoupment Policy (filed herewith)

Interactive data file (Inline XBRL) (filed herewith)

8 unchanged sentences

Chief Executive Officer

March 1, 2023

February 29, 2024

Mark Tatterson

1 unchanged sentence

Chief Accounting Officer

March 1, 2023

February 29, 2024

/s/ Richard M.

Executive Chairman

March 1, 2023

February 29, 2024

/s/ Patrice A.

February 29, 2024

Paul McNamara

March 1, 2023

/s/ Jerold L.

March 1, 2023

/s/ Charles L.

March 1, 2023

/s/ Michael P.

March 1, 2023

February 29, 2024

/s/ Diana Lewis Jackson

March 1, 2023

February 29, 2024

/s/ Charles L.

February 29, 2024

Clinton Winter

March 1, 2023

/s/ Albert H.

March 1, 2023

February 29, 2024

/s/ Michael P.

February 29, 2024

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 9A. Controls and Procedures