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Item 1. Financial Statements

2024-08-09 compared with 2024-05-10 · 414 added, 275 removed, 1468 unchanged (32% of the section changed)

FINANCIAL STATEMENTS (UNAUDITED)

The March 31, 2024 and December 31, 2023, consolidated balance sheets of United Bankshares, Inc.

and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three months ended March 31, 2024 and 2023, the related consolidated statement of changes in shareholders’ equity for the three months ended March 31, 2024 and 2023, the related condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, and the notes to consolidated financial statements appear on the following pages.

The June 30, 2024 and December 31, 2023, consolidated balance sheets of United Bankshares, Inc.

and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three and six months ended June 30, 2024 and 2023, the related consolidated statement of changes in shareholders’ equity for the three and six months ended June 30, 2024 and 2023, the related condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023, and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS

6 unchanged sentences

Total cash and cash equivalents

Securities available for sale at estimated fair value (amortized cost-$ 3,980,612 at March 31, 2024 and $ 4,149,895 at December 31, 2023, allowance for credit losses of $ 0 at March 31, 2024 and December 31, 2023)

Securities held to maturity, net of allowance for credit losses of $ 19 at March 31, 2024 and $ 17 at December 31, 2023 (estimated fair value-$ 1,020 at March 31, 2024 and December 31, 2023)

Securities available for sale at estimated fair value (amortized cost-$ 3,679,539 at June 30, 2024 and $ 4,149,895 at December 31, 2023, allowance for credit losses of $ 0 at June 30, 2024 and December 31, 2023)

Securities held to maturity, net of allowance for credit losses of $ 19 at June 30, 2024 and $ 17 at December 31, 2023 (estimated fair value-$ 1,020 at June 30, 2024 and December 31, 2023)

Equity securities at estimated fair value

28 unchanged sentences

issued- 142,541,516

and 142,257,646 at March 31, 2024 and December 31, 2023, respectively, including 7,343,694 and 7,308,583 shares in treasury at March 31, 2024 and December 31, 2023, respectively

and 142,257,646 at June 30, 2024 and December 31, 2023, respectively, including 7,345,812 and 7,308,583 shares in treasury at June 30, 2024 and December 31, 2023, respectively

Retained earnings

7 unchanged sentences

AND SUBSIDIARIES

Three Months Ended

(Dollars in thousands, except per share data)

Three Months Ended

Six Months Ended

Interest income

26 unchanged sentences

Other real estate owned (“OREO”) expense

Net gains on the sales of OREO properties

Net losses (gains) on the sales of OREO properties

Equipment expense

9 unchanged sentences

AND SUBSIDIARIES

Three Months Ended

(Dollars in thousands, except per share data)

Three Months Ended

Six Months Ended

Earnings per common share:

4 unchanged sentences

AND SUBSIDIARIES

Three Months Ended

(Dollars in thousands)

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

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

Change in defined benefit pension plan, net of tax

Three Months Ended

Six Months Ended

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

(“AFS”) securities, net of tax

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

Change in pension plan assets, net of tax

Comprehensive income, net of tax

See notes to consolidated unaudited financial statements

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

UNITED BANKSHARES, INC.

1 unchanged sentence

(Dollars in thousands, except per share data)

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

Comprehensive

Shareholders’

Income (Loss)

Balance at January 1, 2024

8 unchanged sentences

Balance at March 31, 2024

Three Months Ended March 31, 2023

Comprehensive income:

Other comprehensive loss, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Purchase of treasury stock ( 65 shares)

Cash dividends ($ 0.37 per share)

Stock grant forfeiture ( 2,053 shares)

Net issuance of common stock under stock-based compensation plans ( 5,147 shares)

Balance at June 30, 2024

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

UNITED BANKSHARES, INC.

AND SUBSIDIARIES

(Dollars in thousands, except per share data)

Six Months Ended June 30, 2023

Comprehensive

(Loss) Income

Shareholders’

Income (Loss)

Balance at January 1, 2023

8 unchanged sentences

Balance at March 31, 2023

Comprehensive income:

Other comprehensive loss, net of tax

Total comprehensive income, net of tax

Stock based compensation expense

Purchase of treasury stock ( 60 shares)

Cash dividends ($ 0.36 per share)

Stock grant forfeiture ( 4,445 shares)

Net issuance of common stock under stock-based compensation plans ( 2,812 shares)

Balance at June 30, 2023

See notes to consolidated unaudited financial statements.

2 unchanged sentences

AND SUBSIDIARIES

Three Months Ended

(Dollars in thousands)

Six Months Ended

NET CASH PROVIDED BY OPERATING ACTIVITIES

7 unchanged sentences

Purchases of other investment securities

Redemption of bank-owned life insurance policies

Purchases of bank premises and equipment

Proceeds from sales of bank premises and equipment

Proceeds from sales of mortgage servicing rights

Proceeds from the sales of OREO properties

Net change in loans and leases

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

Net change in loans

NET CASH PROVIDED BY INVESTING ACTIVITIES

FINANCING ACTIVITIES

2 unchanged sentences

Proceeds from exercise of stock options

Redemption of subordinated debt

Repayment of long-term Federal Home Loan Bank borrowings

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

Redemption of subordinated debt

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

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET CASH USED IN FINANCING ACTIVITIES

Increase in cash and cash equivalents

6 unchanged sentences

See notes to consolidated unaudited financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudite d)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

UNITED BANKSHARES, INC.

8 unchanged sentences

Actual results could differ from those estimates.

The financial statements presented as of March 31, 2024 and 2023 and for the three-month periods then ended have not been audited.

The financial statements presented as of June 30, 2024 and 2023 and for the three-month and six-month

periods then ended have not been audited.

The consolidated balance sheet as of December 31, 2023 has been extracted from the audited financial statements included in United’s 2023 Annual Report to Shareholders.

7 unchanged sentences

Operating and Reporting Segments

As of March 31, 2024, United’s business activities are confined to one operating segment, United Bank, and one reportable segment, community banking.

As of June 30, 2024, United’s business activities are confined to one operating segment, United Bank, and one reportable segment, community banking.

As a community banking entity, United, through United Bank, offers a full range of products and services through various delivery channels.

4 unchanged sentences

United’s chief operating decision maker regularly reviews the operating results of United Bank in order to assess performance and make decisions about resource allocation.

Previously, United had three operating segments:

At December 31, 2023, United had three operating segments:

United Bank, George Mason Mortgage, LLC (“George Mason”) and Crescent Mortgage Company (“Crescent”), and two reporting segments:

52 unchanged sentences

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

The amendments in this ASU apply to all reporting entities that hold

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

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

has been applied.

26 unchanged sentences

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

MERGERS AND ACQUISITIONS

On May 9, 2024, United entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Piedmont Bancorp, Inc., a Georgia corporation (“Piedmont”).

The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Piedmont will merge with and into United (the “Merger”), with United as the surviving corporation in the Merger.

Immediately following the Merger, Piedmont’s wholly-owned subsidiary, The Piedmont Bank, a state bank chartered under the laws of the State of Georgia, will merge with and into United’s wholly-owned subsidiary, United Bank, a state bank chartered under the laws of the Commonwealth of Virginia (the “Bank Merger”), with United Bank as the surviving bank in the Bank Merger.

The Merger Agreement was approved and adopted by the board of directors of each of United and Piedmont.

Piedmont is a well-capitalized, single bank holding company headquartered in Atlanta, Georgia with total assets of approximately $ 2.1 billion, total loans of approximately $ 1.8 billion, total liabilities of approximately $ 1.9 billion, total deposits of approximately $ 1.9 billion, and total shareholders’ equity of approximately $ 200 million as of June 30, 2024.

Piedmont is the holding company for The Piedmont Bank, a Georgia state-chartered bank, with sixteen locations in the State of Georgia.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, $ 0.01 par value, of Piedmont (“Piedmont Common Stock”) outstanding immediately prior to the Effective Time, other than certain shares of Piedmont Common Stock held by United and its subsidiaries, will be converted into the right to receive, without interest, (a) 0.300 of a share (the “Exchange Ratio”) of common stock, $ 2.50 par value, of United (“United Common Stock” and such consideration is hereinafter referred to as the “Merger Consideration”) and (b) cash in lieu of fractional shares.

Common Stock will fully vest and holders will have the option to convert into the right to receive shares of United Common Stock based on the exchange ratio or be cashed out based on the same formula applicable to option holders, and (iii) each restricted stock grant, restricted stock unit grant and any other outstanding equity award with respect to Piedmont Common Stock that is subject to vesting will fully vest and be entitled to receive the Merger Consideration.

The completion of the Merger and the Bank Merger are subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals from the Board of Governors of the Federal Reserve System and the Virginia Bureau of Financial Institutions, regulatory filings with the Georgia Department of Banking and Finance, and the approval by the stockholders of Piedmont.

United has filed an amended Form S-4

with the Securities and Exchange Commission regarding the proposed merger with Piedmont.

The merger is expected to close late in the fourth quarter of 2024 or early in the first quarter of 2025.

INVESTMENT SECURITIES

2 unchanged sentences

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

March 31, 2024

June 30, 2024

Treasury securities and obligations of U.S.

23 unchanged sentences

debt securities.

The table above excludes accrued interest receivable of $ 19,963 and $ 20,878 at March 31, 2024 and December 31, 2023, respectively, that is recorded in “Accrued interest receivable.”

The following is a summary of securities available for sale which were in an unrealized loss position at March 31, 2024 and December 31, 2023.

The table above excludes accrued interest receivable of $ 17,131 and $ 20,878 at June 30, 2024 and December 31, 2023, respectively, that is recorded in “Accrued interest receivable.”

The following is a summary of securities available for sale which were in an unrealized loss position at June 30, 2024 and December 31, 2023.

Less than 12 months

12 months or longer

March 31, 2024

June 30, 2024

Treasury securities and obligations of U.S.

20 unchanged sentences

Three Months Ended

Proceeds from maturities, sales and calls

Six Months Ended

Proceeds from sales and calls

Gross realized gains

Gross realized losses

At March 31, 2024, gross unrealized losses on available for sale securities were $ 366,788 on 1,071 securities of a total portfolio of 1,124 available for sale securities.

Securities with the most significant gross unrealized losses at March 31, 2024 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities and other corporate securities.

At June 30, 2024, gross unrealized losses on available for sale securities were $ 364,144 on 1,028 securities of a total portfolio of 1,084 available for sale securities.

Securities with the most significant gross unrealized losses at June 30, 2024 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities and other corporate securities.

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

Generally, the significant amount of gross unrealized losses on available for sale securities at March 31, 2024 was the result of rising interest rates.

Generally, the significant amount of gross unrealized losses on available for sale securities at June 30, 2024 was the result of rising interest rates.

State and political subdivisions

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

The total amortized cost of available for sale state and political subdivision securities was $ 611,240 at March 31, 2024.

As of March 31, 2024, approximately 48 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality.

The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of March 31, 2024.

The total amortized cost of available for sale state and political subdivision securities was $ 599,741 at June 30, 2024.

As of June 30, 2024, approximately 47 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality.

The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of June 30, 2024.

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

Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities had credit losses at March 31, 2024.

Based upon management’s analysis and judgment, it was determined that none

of the state and political subdivision securities had credit losses at June 30, 2024.

Mortgage-backed securities

7 unchanged sentences

United had a net unrealized loss of $ 233,840 on mortgage-backed

securities at March 31, 2024.

securities at June 30, 2024.

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 $ 1,691,373 at March 31, 2024.

The total amortized cost of available for sale agency mortgage-backed securities was $ 1,582,695 at June 30, 2024.

Of the $ 1,582,695 amount, $ 453,287 was related to agency commercial mortgage-backed securities and $ 1,129,408 was related to agency residential mortgage-backed securities.

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

Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at March 31, 2024.

Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at June 30, 2024.

United’s non-agency

1 unchanged sentence

The total amortized cost of available for sale non-agency

residential mortgage-backed securities was $ 83,698 at March 31, 2024.

residential mortgage-backed securities was $ 89,854 at June 30, 2024.

Of the $ 89,854 , 100 % was rated AAA.

Based upon management’s analysis and judgment, it was determined that none of the non-agency

residential mortgage-backed securities had credit losses at March 31, 2024.

residential mortgage-backed securities had credit losses at June 30, 2024.

Asset-backed securities

As of March 31, 2024, United’s asset-backed securities portfolio had a total amortized cost balance of $ 837,064 .

100 % of the portfolio was investment grade rated as of March 31, 2024.

As of June 30, 2024, United’s asset-backed securities portfolio had a total amortized cost balance of $ 767,123 .

100 % of the portfolio was investment grade rated as of June 30, 2024.

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

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

Upon reviewing this portfolio as of March 31, 2024, it was determined that none of the asset-backed securities had credit losses.

Upon reviewing this portfolio as of June 30, 2024, it was determined that none of the asset-backed securities had credit losses.

Single issue trust preferred securities

2 unchanged sentences

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

The amortized cost of available for sale single issue trust preferred securities as of March 31, 2024 consisted of $ 7,477 in investment grade bonds, $ 3,109 in split rated bonds, and $ 5,804 in unrated bonds.

The amortized cost of available for sale single issue trust preferred securities as of June 30, 2024 consisted of $ 7,478 in investment grade bonds, $ 3,113 in split rated bonds, and $ 5,808 in unrated bonds.

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

Upon completing the review for the first quarter of 2024, it was determined that none of the single issue trust preferred securities had credit losses.

Upon completing the review for the second quarter of 2024, it was determined that none of the single issue trust preferred securities had credit losses.

Other corporate securities

As of March 31, 2024, United’s other corporate securities portfolio had a total amortized cost balance of $ 301,199 .

As of June 30, 2024, United’s other corporate securities portfolio had a total amortized cost balance of $ 285,653 .

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

1 unchanged sentence

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

Based upon management’s analysis and judgment, it was determined that none of the other corporate securities had credit losses at March 31, 2024.

The amortized cost and estimated fair value of securities available for sale at March 31, 2024 and December 31, 2023 by contractual maturity are shown as follows.

Based upon management’s analysis and judgment, it was determined that none of the other corporate securities had credit losses at June 30, 2024.

The amortized cost and estimated fair value of securities available for sale at June 30, 2024 and December 31, 2023 by contractual maturity are shown as follows.

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

March 31, 2024

June 30, 2024

December 31, 2023

5 unchanged sentences

Equity securities consist mainly of mutual funds of Community Reinvestment Act (“CRA”) qualified investments and equity securities within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries.

The fair value of United’s equity securities was $

8,762 at March 31, 2024 and $ 8,945 at December 31, 2023.

The fair value of United’s equity securities was $ 11,094 at June 30, 2024 and $ 8,945 at December 31, 2023.

The balance of $ 11,094 in equity securities at June 30, 2024 includes 2,117 C shares of Visa valued at $ 2,223 .

Three Months Ended

Six Months Ended

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 (losses) gains recognized during the period

recognized during the period

Other investment securities

During the first quarter of 2024, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the first quarter of 2024 had a significant adverse effect on the recorded value of any of its cost method securities.

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

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

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 2,279,895 and $ 2,307,591 at March 31, 2024 and December 31, 2023, respectively.

During the second quarter of 2024, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the second quarter of 2024 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 second quarter.

There were no other events or changes in circumstances during the second 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 $ 2,182,117 and $ 2,307,591 at June 30, 2024 and December 31, 2023, respectively.

LOANS AND LEASES

Major classes of loans and leases are as follows:

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

Construction & land development

June 30, 2024

Other consumer

1 unchanged sentence

Total gross loans

The table above does not include loans held for sale of $ 44,426 and $ 56,261 at March 31, 2024 and December 31, 2023, respectively.

The table above does not include loans held for sale of $ 66,475 and $ 56,261 at June 30, 2024 and December 31, 2023, respectively.

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

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

The aggregate dollar amount of these loans was $ 68,274 and $ 68,460 at March 31, 2024 and December 31, 2023, respectively.

The aggregate dollar amount of these loans was $ 23,137 and $ 68,460 at June 30, 2024 and December 31, 2023, respectively.

CREDIT QUALITY

11 unchanged sentences

Age Analysis of Past Due Loans and Leases

As of March 31, 2024

As of June 30, 2024

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

9 unchanged sentences

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

At March 31, 2024

At June 30, 2024

At December 31, 2023

8 unchanged sentences

Other consumer

Interest income recognized on nonaccrual loans was insignificant during the three months ended March 31, 2024 and 2023.

Interest income recognized on nonaccrual loans was insignificant during the three and six months ended June 30, 2024 and 2023.

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

The following table presents the amortized cost of loans and leases to borrowers experiencing financial difficulty modified during the first three months of 2024 and 2023, respectively, by class of financing receivable and by type of modification.

The following table presents the amortized cost of loans and leases to borrowers experiencing financial difficulty modified during the first three and six months of 2024 and 2023, respectively, by class of financing receivable and by type of modification.

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

Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial

For the Three Months ended March 31, 2024

For the Three Months ended June 30, 2024

Term Extension &

9 unchanged sentences

Construction & land development

Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial

For the Three Months ended June 30, 2024

Term Extension &

Interest Rate

Term Extension &

Payment Delay

% of Total Class of

Other consumer

Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial

For the Three Months ended March 31, 2023

For the Three Months ended June 30, 2023

Term Extension &

8 unchanged sentences

Residential real estate

Construction & land

Other consumer

Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial

For the Six Months ended June 30, 2024

Term Extension &

Interest Rate

Term Extension &

Payment Delay

% of Total Class of

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Construction & land development

Other consumer

As of March 31, 2024 and December 31, 2023, there were commitments to lend additional funds of $

, respectively, to debtors owing loan receivables whose terms have been modified.

Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial

For the Six Months ended June 30, 2023

Term Extension &

Interest Rate

Term Extension &

Payment Delay

% of Total Class of

Commercial real estate:

Owner-occupied

Nonowner-occupied

Other commercial

Residential real estate

Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial

For the Six Months ended June 30, 2023

Term Extension &

Interest Rate

Term Extension &

Payment Delay

% of Total Class of

Construction & land development

Other consumer

As of June 30, 2024 and December 31, 2023, there were commitments to lend additional funds of $ 340 and $ 28 , respectively, to debtors owing loan receivables whose terms have been modified.

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

3 unchanged sentences

Payment Status (Amortized Cost Basis)

As of March 31, 2024

As of March 31, 2023

As of June 30, 2024

As of June 30, 2023

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

The following table presents the financial effect of loan and lease modifications to borrowers experiencing financial difficulty for the three months ended March 31, 2024 and 2023.

The following table presents the financial effect of loan and lease modifications to borrowers experiencing financial difficulty for the three and six months ended June 30, 2024 and 2023.

For the Three Months Ended

March 31, 2024

June 30, 2024

June 30, 2023

Interest Rate

Commercial Real Estate:

Owner-occupied

Nonowner-occupied

Other Commercial

Residential Real Estate

For the Three Months Ended

March 31, 2023

June 30, 2024

June 30, 2023

Interest Rate

Construction & land development

Other consumer

For the Six Months Ended

June 30, 2024

June 30, 2023

Interest Rate

Commercial Real Estate:

5 unchanged sentences

Other consumer

No loan or lease modifications completed within the last 12 months to borrowers experiencing financial difficulty had a payment default during the first three months ended March 31, 2024 and 2023.

United elects the practical expedient to measure expected credit losses on collateral dependent loans and leases based on the difference between the loan’s amortized cost and the collateral’s fair value, adjusted for selling costs.

The following table presents the amortized cost basis of collateral-dependent loans and leases in which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty, by class of loans and leases as of March 31, 2024 and December 31, 2023:

No loan or lease modifications completed within the last 12 months to borrowers experiencing financial difficulty had a payment default during the three and six months ended June 30, 2024 and 2023.

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.

Collateral Dependent Loans and Leases

At March 31, 2024

At June 30, 2024

Commercial real estate:

Owner-occupied

11 unchanged sentences

Residential real estate

Construction & land development

Construction & land

Other consumer

35 unchanged sentences

amortized cost

As of March 31, 2024

As of June 30, 2024

Internal Risk Grade:

17 unchanged sentences

amortized cost

As of March 31, 2024

As of June 30, 2024

Internal Risk Grade:

19 unchanged sentences

loans and leases

As of March 31, 2024

As of June 30, 2024

Internal Risk Grade:

2 unchanged sentences

Current-period recoveries

Current-period net recoveries (charge-offs)

Current-period net (charge-offs) recoveries

Term Loans and leases

13 unchanged sentences

amortized cost

As of March 31, 2024

loans converted to

As of June 30, 2024

Internal Risk Grade:

2 unchanged sentences

Current-period recoveries

Current-period net charge- offs

Current-period net recoveries

Origination Year

11 unchanged sentences

amortized cost

As of March 31, 2024

As of June 30, 2024

Internal Risk Grade:

15 unchanged sentences

amortized cost

As of March 31, 2024

As of June 30, 2024

Internal Risk Grade:

16 unchanged sentences

amortized cost

As of March 31, 2024

As of June 30, 2024

Internal Risk Grade:

2 unchanged sentences

Current-period recoveries

Current-period net (charge- offs) recoveries

Current-period net charge- offs

Origination Year

7 unchanged sentences

Current-period net (charge-offs) recoveries

At March 31, 2024 and December 31, 2023, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 2,670 and $ 2,615 , respectively.

At June 30, 2024 and December 31, 2023, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 2,156 and $ 2,615 , respectively.

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

2 unchanged sentences

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

At March 31, 2024 and December 31, 2023, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $ 258 and $ 142 , respectively.

At June 30, 2024 and December 31, 2023, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are

in process was $ 952 and $ 142 , respectively.

ALLOWANCE FOR CREDIT 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).

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

not to exceed the aggregate of the amount previously

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 $ 91,178 and $ 88,963 at March 31, 2024 and December 31, 2023, respectively, related to loans and leases are included separately in “Accrued interest receivable” in the consolidated balance sheets.

Accrued interest receivable was $ 91,330 and $ 88,963 at June 30, 2024 and December 31, 2023, respectively, related to loans and leases t

are included separately in “Accrued interest receivable” in the consolidated balance sheets.

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

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

The following table represents the accrued interest receivable as of March 31, 2024 and December 31, 2023:

The following table represents the accrued interest receivable as of June 30, 2024 and December 31, 2023:

Accrued Interest Receivable

At March 31, 2024

At June 30, 2024

At December 31, 2023

5 unchanged sentences

Other consumer

The following table represents the accrued interest receivables written off by reversing interest income for the three months ended March 31, 2024 and 2023:

Accrued Interest Receivables Written Off

by Reversing Interest Income

The following table represents the accrued interest receivables written off by reversing interest income for the three months and six months ended June 30, 2024 and 2023:

Accrued Interest Receivables Written Off by Reversing Interest Income

Three Months Ended

Six Months Ended

Commercial real estate:

3 unchanged sentences

Residential real estate

Construction & land development

Other consumer

28 unchanged sentences

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.

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

The reserve for lending-related commitments of $ 42,915 and $ 44,706 at March 31, 2024 and December 31, 2023, respectively, is separately classified on the balance sheet and is included in other liabilities.

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

The reserve for lending-related commitments of $ 40,739 and $ 44,706 at June 30, 2024 and December 31, 2023, 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’s allowance for credit losses at March 31, 2024 was relatively flat from December 31, 2023, increasing

$ 1,877 or less than

This slight increase was due mainly to increases in the loan loss reserves for the commercial real estate, both owner and non-owner occupied, the residential real estate and the other commercial loans segments due to increased outstanding loan balances and increased adjustments resulting from the reasonable and supportable forecast.

The first quarter of 2024 qualitative adjustments include analyses of the following:

United’s allowance for credit losses at June 30, 2024 increased $ 4,219 or 1.39 % from December 31, 2023.

The increase in the allowance for credit losses was primarily driven by increased outstanding loan balances for the commercial real estate non-owner

occupied and residential real estate loan segments as well as adjustments for the reasonable and supportable forecast increasing the reserve for the commercial real estate non-owner

occupied segment, particularly as it relates to office loans.

The second quarter of 2024 qualitative adjustments include analyses of the following:

Current conditions

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

– United considered the impact of inflation, interest rates, the banking regulatory environment, geopolitical conflict and the presidential election when making determinations related to factor adjustments for the external environment.

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

6 unchanged sentences

Assumptions for the economic variables were the following:

The forecast for real GDP in 2024 increased in the first quarter, from a projection of 1.40 % for 2024 at the end of 2023 to 2.10 % for 2024 with a slightly smaller increase for 2025, from a projection of 1.80 % for 2025 at the end of 2023 to 2.00 % for 2025.

The unemployment rate remained fairly consistent to the end of 2023 with a steady trend expected throughout 2024 and 2025.

Greater risk of loss is probable in the office portfolio due to continued hybrid and remote work that may be exacerbated by future economic conditions as well as higher interest rates and cap rates.

The forecast for real GDP in the second quarter remained consistent with the first quarter projections of 2.10 % for 2024, 2.00 % for 2025 and 2.00 % for 2026.

The unemployment rate remained the same for 2024 at 4.00 % while 2025 shifted up slightly to 4.20 % from 4.10 % and 2026 also increased slightly to 4.10 % from 4.00 % .

Greater risk of loss is probable in the office portfolio due to continued hybrid and remote work that may be exacerbated by future economic conditions as well as higher interest rates, cap rates and the uncertainty surrounding appraised values of the collateral.

United recognized this greater risk of loss by increasing the loss multiple relating to the historical loss experience of the office portfolio.

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

2 unchanged sentences

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

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

2 unchanged sentences

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

For the Six Months Ended June 30, 2024

Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

Beginning balance

Ending balance

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

For the Year Ended December 31, 2023

Commercial Real Estate

Construction &

Allowance for Loan and Lease Losses:

3 unchanged sentences

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

March 31, 2024

June 30, 2024

Community Banking

8 unchanged sentences

Goodwill not subject to amortization

United incurred amortization expense of $ 910 and $ 1,279 for the quarters ended March 31, 2024 and 2023, respectively.

United incurred amortization expense of $ 910 and $ 1,820 for the three and six months ended June 30, 2024 as compared to $ 1,279 and $ 2,558 for the three and six months ended June 30, 2023, respectively.

The following table sets forth the anticipated amortization expense for intangible assets for the years subsequent to 2023:

14 unchanged sentences

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

The unpaid principal balances of loans serviced for others were approximately $ 1,173,246 at March 31, 2024 and $ 1,202,448 at December 31, 2023.

The estimated fair value of the mortgage servicing rights was $ 13,439 and $ 13,427 at March 31, 2024 and December 31, 2023, respectively.

The estimated fair value of servicing rights at March 31, 2024 was determined using a net servicing fee of 0.25 %, average discount rates ranging from 10.19 % to 11.15 % with a weighted average discount rate of 10.59 %, average constant prepayment rates (“CPR”) ranging from 7.62 % to 9.96 % with a weighted average prepayment rate of 9.16 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.65 %.

The unpaid principal balances of loans serviced for others were approximately $ 1,138,443 at June 30, 2024 and $ 1,202,448 at December 31, 2023.

The estimated fair value of the mortgage servicing rights was $ 13,434 and $ 13,427 at June 30, 2024 and December 31, 2023, respectively.

The estimated fair value of servicing rights at June 30, 2024 was determined using a net servicing fee of 0.25 %, average discount rates ranging from 10.43 % to 11.00 % with a weighted average discount rate of 10.53 %, average constant prepayment rates (“CPR”) ranging from 7.55 % to 9.82 % with a weighted average prepayment rate of 9.05 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.95 %.

The estimated fair value of servicing rights at December 31, 2023 was determined using a net servicing fee of 0.25 %, average discount rates ranging from 10.50 % to 10.82 % with a weighted average discount rate of 10.58 %, average constant prepayment rates (“CPR”) ranging from 7.84 % to 10.25 % with a weighted average prepayment rate of 9.43 %, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 3.29 %.

Please refer to Note 14 in these Notes to Consolidated Financial Statements for additional information concerning the fair value of MSRs.

The following presents the activity in mortgage servicing rights, including their valuation allowance for the three months ended March 31, 2024 and 2023:

Three Months Ended

March 31, 2024

The following presents the activity in mortgage servicing rights, including their valuation allowance for the three and six months ended June 30, 2024 and 2023:

Three Months Ended

March 31, 2023

Six Months Ended

MSRs beginning balance

7 unchanged sentences

MSRs, net of valuation allowance

The Company did no t record any temporary impairments on mortgage servicing rights for the three months ended March 31, 2024 and 2023.

For the three and six months ended June 30, 2023, United recognized net gains of $ 8,148 and $ 8,306 on the sale of MSRs.

The Company did no t record any temporary impairments on MSRs for the three and six months ended June 30, 2024 and 2023.

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

17 unchanged sentences

The components of lease expense were as follows:

Three Months Ended

Classification

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Operating lease cost

3 unchanged sentences

Net lease cost

Classification

June 30, 2024

June 30, 2023

Operating lease cost

Net occupancy expense

Sublease income

Net occupancy expense

Net lease cost

Supplemental balance sheet information related to leases was as follows:

Classification

March 31, 2024

June 30, 2024

December 31, 2023

Operating lease right-of-use

Operating lease right-of-use assets

Operating lease right-of-use

Operating lease liabilities

1 unchanged sentence

Other information related to leases was as follows:

March 31, 2024

June 30, 2024

Weighted-average remaining lease term:

4 unchanged sentences

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Cash paid for amounts in the measurement of lease liabilities:

1 unchanged sentence

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, 2023, consists of the following as of March 31, 2024:

Six Months Ended

June 30, 2024

June 30, 2023

Cash paid for amounts in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in the exchange for lease liabilities

Total lease payments

1 unchanged sentence

SHORT-TERM BORROWINGS

At March 31, 2024 and December 31, 2023, short-term borrowings were as follows:

March 31, 2024

December 31, 2023

At June 30, 2024 and December 31, 2023, short-term borrowings were as follows:

Federal funds purchased

10 unchanged sentences

The line requires compliance with various financial and nonfinancial covenants.

At March 31, 2024, United had no outstanding balance under this credit.

At June 30, 2024, United had no outstanding balance under this credit.

LONG-TERM BORROWINGS

2 unchanged sentences

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

At March 31, 2024, United had an unused borrowing amount of approximately $ 7,001,680 available subject to delivery of collateral after certain trigger points.

At June 30, 2024, United had an unused borrowing amount of approximately $ 7,257,739 available subject to delivery of collateral after certain trigger points.

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

At March 31, 2024, $ 1,460,415 of FHLB advances with a weighted-average contractual interest rate of 5.43 % and a weighted-average effective interest rate of 3.70 % are scheduled to mature within the next two years.

The weighted-average effective rate considers the effect of any interest rate swaps designated as cash flow hedges outstanding at March 31, 2024 to manage interest rate risk on its long-term debt.

At June 30, 2024, $ 1,210,343 of FHLB advances with a weighted-average contractual interest rate of 5.42 % and a weighted-average effective interest rate of 3.33 % are scheduled to mature within the next two years.

The weighted-average effective rate considers the effect of any interest rate swaps designated as cash flow hedges outstanding at June 30, 2024 to manage interest rate risk on its long-term debt.

The scheduled maturities of these FHLB borrowings are as follows:

2028 and thereafter

At March 31, 2024, United had a total of twenty statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (“Capital Securities”) with the proceeds invested in junior subordinated debt securities (“Debentures”) of United.

At June 30, 2024, 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.

At March 31, 2024 and December 31, 2023, the outstanding balance of the Debentures was $ 279,019 and $ 278,616 , respectively, and was included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets.

At June 30, 2024 and December 31, 2023, the outstanding balance of the Debentures was $ 279,421 and $ 278,616 , respectively, and was included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets.

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

18 unchanged sentences

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

United had approximately $ 6,817,449 and $ 6,851,890 of loan commitments outstanding as of March 31, 2024 and December 31, 2023, respectively, approximately 41% of which contractually expire within one year .

United had approximately $ 6,630,609 and $ 6,851,890 of loan commitments outstanding as of June 30, 2024 and December 31, 2023, respectively, approximately 41% of which contractually expire within one year .

Excluded in the December 31, 2023 amount above were commitments to extend credit of $ 416,095 related to mortgage loan funding commitments of United’s previous mortgage banking segment which were of a short-term nature.

3 unchanged sentences

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

As of March 31, 2024 and December 31, 2023, United had $ 16,113 and $ 16,233 of commercial letters of credit outstanding.

As of June 30, 2024 and December 31, 2023, United had $ 15,922 and $ 16,233 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 $ 155,354 and $ 147,705 as of March 31, 2024 and December 31, 2023, respectively.

United has issued standby letters of credit of $ 151,898 and $ 147,705 as of June 30, 2024 and December 31, 2023, respectively.

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

2 unchanged sentences

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

United’s reserve was immaterial as of March 31, 2024 and December 31, 2023.

United’s reserve was immaterial as of June 30, 2024 and December 31, 2023.

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

26 unchanged sentences

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

As of March 31, 2024, 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.

As of June 30, 2024, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring.

United estimates that $ 13,498 will be reclassified from AOCI as a decrease to interest expense over the next 12-months

following March 31, 2024 related to the cash flow hedges.

As of March 31, 2024, the maximum length of time over which forecasted transactions are hedged is six years.

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

and how the ineffectiveness of the hedge will be measured.

following June 30, 2024 related to the cash flow hedges.

As of June 30, 2024, the maximum length of time over which forecasted transactions are hedged is six years.

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

6 unchanged sentences

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

The total notional amount of interest rate swap derivatives designated as cash flow hedges cleared through the LCH include $ 500,000 for asset derivatives as of March 31, 2024.

The total notional amount of interest rate swap derivatives designated as cash flow hedges cleared through the LCH include $ 500,000 for asset derivatives as of June 30, 2024.

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.

10 unchanged sentences

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

The following tables disclose the derivative instruments’ location on the Company’s Consolidated Balance Sheets and the notional amount and fair value of those instruments at March 31, 2024 and December 31, 2023.

Asset Derivatives

March 31, 2024

June 30, 2024

December 31, 2023

1 unchanged sentence

Fair Value Hedges:

Interest rate swap contracts

(hedging commercial loans)

Interest rate swap contracts (hedging commercial loans)

Total Fair Value Hedges

Cash Flow Hedges:

Interest rate swap contracts

(hedging FHLB borrowings)

Interest rate swap contracts (hedging FHLB borrowings)

Total Cash Flow Hedges

3 unchanged sentences

TBA mortgage-backed securities

Asset Derivatives

March 31, 2024

December 31, 2023

Interest rate lock commitments

2 unchanged sentences

Liability Derivatives

March 31, 2024

June 30, 2024

December 31, 2023

3 unchanged sentences

Other liabilities

Interest rate lock commitments

Forward loan sales commitments

Other liabilities

2 unchanged sentences

Total liability derivatives

The following table represents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value accounting relationship as of March 31, 2024 and December 31, 2023.

June 30, 2024

Derivatives in Fair Value

Hedging Relationships

March 31, 2024

Location in the Statement

15 unchanged sentences

Interest rate swaps

Loans, net of unearned

Loans, net of unearned income

December 31, 2023

Derivatives in Fair Value

Hedging Relationships

December 31, 2023

Location in the Statement

15 unchanged sentences

Interest rate swaps

Loans, net of unearned

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.

3 unchanged sentences

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

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three months ended March 31, 2024 and 2023 are presented as follows:

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023 are presented as follows:

Three Months Ended

Income Statement

Derivatives in hedging relationships Fair Value Hedges:

Derivatives in hedging relationships

Cash flow Hedges:

Interest rate swap contracts

Interest on long-term borrowings

Fair Value Hedges:

rate swap contracts

Interest and fees on loans

Total derivatives in hedging relationships

Derivatives not designated as hedging instruments

Forward loan sales commitments

Income from Mortgage Banking Activities

TBA mortgage-backed securities

Income from Mortgage Banking Activities

Interest rate lock commitments

Income from Mortgage Banking Activities

Total derivatives not designated as hedging instruments

Total derivatives

Six Months Ended

Income Statement

Derivatives in hedging relationships

Cash flow Hedges:

1 unchanged sentence

Interest on long-term borrowings

Fair Value Hedges:

rate swap contracts

Interest and fees on loans

Total derivatives in hedging relationships

8 unchanged sentences

Total derivatives

For the three months ended March 31, 2024 and 2023, 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.

For the three and six months ended June 30, 2024 and 2023, changes in the fair value of any interest rate swaps attributed to hedge ineffectiveness were recorded, but not significant to United’s Consolidated Statements of Income.

FAIR VALUE MEASUREMENTS

6 unchanged sentences

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

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

When determining the fair v

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

When identical assets and liabilities are no t

2 unchanged sentences

For assets and liabilities that are no t actively traded, the fair value measurement is based primarily upon estimates that require significant judgment.

Therefore, the results may no t be realized in an actual sale or immediate

settlement of the asset or liability.

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

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

12 unchanged sentences

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

Upon completing its review of the pricing from third party vendors at March 31, 2024, management determined that the prices provided by its third party pricing sources were reasonable and in line with management’s expectations for the market values of these securities.

Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted materially by management at March 31, 2024.

Upon completing its review of the pricing from third party vendors at June 30, 2024, management determined that the prices provided by its third party pricing sources were reasonable and in line with management’s expectations for the market values of these securities.

Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted materially by management at June 30, 2024.

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

8 unchanged sentences

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

For March 31, 2024, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.001 % to 0.392 % with a weighted average increase of 0.140 %.

For June 30, 2024, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.034 % to 0.336 % with a weighted average increase of 0.150 %.

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.

22 unchanged sentences

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

For March 31, 2024, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.001 % to 0.392 % with a weighted average increase of 0.140 %.

For June 30, 2024, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.034 % to 0.336 % with a weighted average increase of 0.150 %.

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

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

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy.

Fair Value at March 31, 2024 Using

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy.

Fair Value at June 30, 2024 Using

Balance as of

Quoted Prices

4 unchanged sentences

Residential mortgage-backed securities

Fair Value at March 31, 2024 Using

Quoted Prices

Commercial mortgage-backed securities Agency

Commercial mortgage-backed securities

Asset-backed securities

5 unchanged sentences

Equity mutual funds (1)

Other equity securities

Fixed income mutual funds

Total equity securities

2 unchanged sentences

Interest rate swap contracts

Forward sales commitments

Forward sales co mm

TBA mortgage-backed securities

3 unchanged sentences

TBA mortgage-backed securities

Interest rate lock commitments

Forward sales commitments

Total derivative financial liabilities

8 unchanged sentences

Commercial mortgage-backed securities

Fair Value at December 31, 2023 Using

Balance as of

Quoted Prices

Asset-backed securities

5 unchanged sentences

Equity mutual funds (1)

Fair Value at December 31, 2023 Using

Balance as of

Quoted Prices

Fixed income mutual funds

9 unchanged sentences

Total derivative financial liabilities

There were no transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the three months ended March 31, 2024 and the year ended December 31, 2023.

The following tables present additional information about financial assets and liabilities measured at fair value at March 31, 2024 and December 31, 2023 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value.

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

There were no transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the six months ended June 30, 2024 and the year ended December 31, 2023.

The following tables present additional information about financial assets and liabilities measured at fair value at June 30, 2024 and December 31, 2023 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.

1 unchanged sentence

Derivative Liabilities

March 31, 2024

Interest Rate

June 30, 2024

Forward Sales

Interest Rate

11 unchanged sentences

Transfers other

Total gains during the period recognized in earnings

recognized in

Balance, end of period

3 unchanged sentences

Three Months Ended

March 31, 2024

June 30, 2024

Three Months Ended

March 31, 2023

June 30, 2023

Income from mortgage banking activities

Six Months Ended

June 30, 2024

Six Months Ended

June 30, 2023

Income from mortgage banking activities

No loans held for sale were past due or on nonaccrual status as of June 30, 2024 and December 31, 2023.

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

March 31, 2024

June 30, 2024

December 31, 2023

46 unchanged sentences

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.

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.

During the fourth quarter of 2023, United’s management formulated a plan to consolidate its mortgage delivery channels by consolidating George Mason’s and Crescent’s mortgage banking business into United Bank.

As a result of this consolidation decision, United impaired the trade names intangibles at George Mason and Crescent to zero at December 31, 2023.

No fair value measurement of intangible assets was made during the first three months of 2024 and 2023.

No fair value measurement of intangible assets was made during the first six months of 2024 and 2023.

Mortgage Servicing Rights (“MSRs”):

6 unchanged sentences

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

For the unobservable inputs used in the valuation of mortgage servicing rights at March 31, 2024 and December 31, 2023, refer to Note 7 of these Notes to Consolidated Financial Statements.

The Company did no t record any temporary impairment of mortgage servicing rights in the quarter ended March 31, 2024 and 2023.

For the unobservable inputs used in the valuation of mortgage servicing rights at June 30, 2024 and December 31, 2023, refer to Note 8 of these Notes to Consolidated Financial Statements.

The Company did no t record any temporary impairment of mortgage servicing rights in the second quarter and first six months ended June 30, 2024 and 2023.

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

Fair Value at March 31, 2024

Fair Value at June 30, 2024

Balance as of

June 30, 2024

Quoted Prices

Individually assessed loans

Balance as of

Fair Value at December 31, 2023

Balance as of

December 31, 2023

Quoted Prices

26 unchanged sentences

Quoted Prices

March 31, 2024

June 30, 2024

Cash and cash equivalents

2 unchanged sentences

Equity securities

Fair Value Measurements

Quoted Prices

Other securities

30 unchanged sentences

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

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

Subject to certain change in control provisions, the 2020 LTI Plan provides that all awards of will vest as the Committee determines in the award agreement, provided that

no awards will vest sooner than 1/3 per year over the first three

anniversaries of the award.

2 unchanged sentences

The 2020 LTI Plan replaces the 2016 LTI Plan.

Compensation expense of $ 3,266 and $ 2,713 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the first quarter of 2024 and 2023, respectively.

Compensation expense of $ 3,004 and $ 6,270 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the second quarter and first six months of 2024, respectively, as compared to the compensation expense of $ 3,295 and $ 6,008 related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the second quarter and first six months of 2023, respectively.

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

4 unchanged sentences

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

A summary of activity under United’s stock option plans as of March 31, 2024, and the changes during the first three months of 2024 are presented below:

Three Months Ended March 31, 2024

A summary of activity under United’s stock option plans as of June 30, 2024, and the changes during the first six months of 2024 are presented below:

Six Months Ended June 30, 2024

Weighted Average

1 unchanged sentence

Forfeited or expired

Outstanding at March 31, 2024

Exercisable at March 31, 2024

The following table summarizes the status of United’s nonvested stock option awards during the first three months of 2024:

Outstanding at June 30, 2024

Exercisable at June 30, 2024

The following table summarizes the status of United’s nonvested stock option awards during the first six months of 2024:

Weighted-Average

2 unchanged sentences

Forfeited or expired

Nonvested at March 31, 2024

During the three months ended March 31, 2024 and 2023, 25,991 and 55,796 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for the three months ended March 31, 2024 and 2023 were issued from authorized and unissued stock.

The total intrinsic value of options exercised under the Plans during the three months ended March 31, 2024 and 2023 was $ 207 and $ 722 respectively.

As of March 31, 2024, there was no

unrecognized compensation cost related to nonvested stock option awards.

Nonvested at June 30, 2024

During the six months ended June 30, 2024 and 2023, 31,138 and 58,608 shares, respectively, were issued in connection with stock option exercises.

All shares issued in connection with stock option exercises for the six months ended June 30, 2024 and 2023 were issued from authorized and unissued stock.

The total intrinsic value of options exercised under the Plans during the six months ended June 30, 2024 and 2023 was $ 254 and $ 763 respectively.

As of June 30, 2024, there was no unrecognized compensation cost related to nonvested stock option awards.

Restricted Stock

1 unchanged sentence

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.

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 March 31, 2024, the total unrecognized compensation cost related to nonvested restricted stock awards was $ 10,971 with a weighted-average expense recognition period of 1.6 years.

The following summarizes the changes to United’s nonvested restricted common shares for the period ended March 31, 2024:

As of June 30, 2024, the total unrecognized compensation cost related to nonvested restricted stock awards was $ 9,570 with a weighted-average expense recognition period of 1.4 years.

The following summarizes the changes to United’s nonvested restricted common shares for the period ended June 30, 2024:

Weighted-Average

1 unchanged sentence

Nonvested at January 1, 2024

Nonvested at March 31, 2024

Nonvested at June 30, 2024

Restricted Stock Units

14 unchanged sentences

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

The following table summarizes the status of United’s nonvested RSUs during the first three months of 2024:

The following table summarizes the status of United’s nonvested RSUs during the first six months of 2024:

Weighted-Average

2 unchanged sentences

Forfeited or expired

Nonvested at March 31, 2024

As of March 31, 2024, the total unrecognized compensation cost related to nonvested restricted stock units was $ 13,314 with a weighted-average expense recognition period of 2.0 years.

Nonvested at June 30, 2024

As of June 30, 2024, the total unrecognized compensation cost related to nonvested restricted stock units was $ 11,709 with a weighted-average expense recognition period of 1.7 years.

EMPLOYEE BENEFIT PLANS

2 unchanged sentences

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

No discretionary contributions were made during the first quarter of 2024 and 2023.

No discretionary contributions were made during the first six months of 2024 and 2023.

Included in accumulated other comprehensive income at December 31, 2023 are unrecognized actuarial losses of $ 32,548 ($ 20,817 net of tax) that have not yet been recognized in net periodic pension cost.

Net periodic pension cost for the three months ended March 31, 2024 and 2023 included the following components:

Three Months Ended March 31

Net periodic pension cost for the three and six months ended June 30, 2024 and 2023 included the following components:

Three Months Ended

Six Months Ended

Interest cost

10 unchanged sentences

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

As of March 31, 2024 and 2023, the total amount of accrued interest related to uncertain tax positions was $ 773 and $ 525 , respectively.

As of June 30, 2024 and 2023, the total amount of accrued interest related to uncertain tax positions was $ 800 and $ 788 , respectively.

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

United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2020, 2021 and 2022 and certain State Taxing authorities for the years ended December 31, 2020 through 2022.

United’s effective tax rate was 19.78 % for the first quarter of 2024 and 19.92 % for the first quarter of 2023.

United’s effective tax rate was 16.36 % and 18.02 % for the second quarter and first six months of 2024, respectively, and 20.23 % and 20.07 % for the second quarter and first six months of 2023.

United’s effective tax rate was 19.78 % for the first quarter of 2024.

The lower effective tax rates in the second quarter and first six months of 2024 were primarily due to the impact of discrete tax benefits recognized in the second quarter of 2024.

COMPREHENSIVE INCOME

The components of total comprehensive income for the three months ended March 31, 2024 and 2023 are as follows:

The components of total comprehensive income for the three and six months ended June 30, 2024 and 2023 are as follows:

Three Months Ended

Six Months Ended

Available for sale (“AFS”) securities:

1 unchanged sentence

Related income tax effect

Net reclassification adjustment for gains included in net income

Related income tax effect

Net reclassification adjustment for losses included in net income

Related income tax expense

Net effect of AFS securities on other comprehensive income

Three Months Ended

Six Months Ended

Cash flow hedge derivatives:

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

Unrealized gain on cash flow hedge before reclassification to interest expense

Related income tax effect

8 unchanged sentences

Total Comprehensive Income

The components of accumulated other comprehensive income for the three months ended March 31, 2024 are as follows:

The components of accumulated other comprehensive income for the six months

ended June 30, 2024 are as follows:

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

For the Three Months Ended March 31, 2024

For the Six Months Ended June 30, 2024

Balance at January 1, 2024

Other comprehensive income before reclassification

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 March 31, 2024

Net current-period other comprehensive (loss)

Balance at June 30, 2024

All amounts are net-of-tax.

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Three Months Ended March 31, 2024

For the Six Months Ended June 30, 2024

Details about AOCI Components

2 unchanged sentences

Available for sale (“AFS”) securities:

Net reclassification adjustment for gains included in net income

Net investment securities gains

Net reclassification adjustment for losses included in net income

Net investment securities (losses) gains

Total before tax

1 unchanged sentence

Cash flow hedge:

Net reclassification adjustment for losses included in net income

Net reclassification adjustment for gains included in net income

Interest expense

1 unchanged sentence

Related income tax effect

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Three Months Ended March 31, 2024

Details about AOCI Components

Affected Line Item in the Statement Where

Net Income is Presented

Pension plan:

Recognized net actuarial loss

Employee benefits

Total before tax

1 unchanged sentence

Total reclassifications for the period

This AOCI component is included in the computation of net periodic pension cost (see Note 15, Employee Benefit Plans)

This AOCI component is included in the computation of changes in plan assets (see Note 16, Employee Benefit Plans)

EARNINGS PER SHARE

1 unchanged sentence

Three Months Ended

Six Months Ended

Distributed earnings allocated to common stock

2 unchanged sentences

Average common shares outstanding

Common stock equivalents

Equivalents from stock options

Average diluted shares outstanding

1 unchanged sentence

Earnings per diluted common share

Antidilutive stock options and restricted stock outstanding of 1,198,358 for the three months ended March 31, 2024 were excluded from the earnings per diluted common share calculation as compared to 563,127 for the three months ended March 31, 2023.

Antidilutive stock options and restricted st ock

outstanding of 1,025,677 and 1,321,544 for the three months and six months ended June 30, 2024, respectively, were excluded from the earnings per diluted common share calculation as compared to 1,548,913 and 1,078,040 for the three months and six months ended June 30, 2023, respectively.

VARIABLE INTEREST ENTITIES

12 unchanged sentences

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

At March 31, 2024 and December 31, 2023, United’s investment (maximum exposure to loss) in these trusts w ere

$ 11,876 and $ 11,751 , respectively.

At June 30, 2024 and December 31, 2023, United’s investment (maximum exposure to loss) in these trusts were $ 12,001 and $ 11,751 , respectively.

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

88 unchanged sentences

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

At March 31, 2024 and December 31, 2023, United’s investment (maximum exposure to loss) in these low income housing and community development partnerships were $ 90,919 and $ 87,554 , respectively, while related unfunded commitments were $ 65,039 and $ 63,539 , respectively.

As of March 31, 2024, United expects to recover its remaining investments through the use of the tax credits that are generated by the investments.

SUBSEQUENT EVENT

Agreement to Acquire Piedmont Bancorp, Inc.

On May 9, 2024, United entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Piedmont Bancorp, Inc., a Georgia corporation (“Piedmont”).

Immediately following

the Merger, Piedmont’s wholly-owned subsidiary, The Piedmont Bank, a state bank chartered under the laws of the State of Georgia, will merge with and into United’s wholly-owned subsidiary, United Bank, a state bank chartered under the laws of the Commonwealth of Virginia (the “Bank Merger”), with United Bank as the surviving bank in the Bank Merger.

The Merger Agreement was approved and adopted by the board of directors of each of United and Piedmont.

Piedmont is a well-capitalized, single bank holding company headquartered in Atlanta, Georgia

with total assets of approximately $ 2.1 billion, total loans of approximately $ 1.7 billion, total liabilities of approximately $ 1.9 billion, total deposits of approximately $ 1.8 billion, and total shareholders’ equity of approximately $ 195 million as of March 31, 2024.

Piedmont is the holding company for The Piedmont Bank, a Georgia state-chartered bank, with sixteen locations

in the State of Georgia.

At the Effective Time, (i) each option to purchase shares of Piedmont Common Stock will fully vest and will be cashed out based on a formula that takes into account the difference between the exercise price and the volume-weighted average of the closing sales price on Nasdaq of United Common Stock for the 10 full trading days ending on the second trading day immediately preceding the Effective Time and the Exchange Ratio, (ii) each warrant to purchase shares of Piedmont Common Stock will fully vest and holders will have the option to convert into the right to receive shares of United Common Stock based on the exchange ratio or be cashed out based on the same formula applicable to option holders, and (iii) each restricted stock grant, restricted stock unit grant and any other outstanding equity award with respect to Piedmont Common Stock that is subject to vesting will fully vest and be entitled to receive the Merger Consideration.

The completion of the Merger

and the Bank Merger are

subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals from the Board of Governors of the Federal Reserve System and the Virginia Bureau of Financial Institutions, regulatory filings with the Georgia Department of Banking and Finance, and the approval by the stockholders of Piedmont.

At June 30, 2024 and December 31, 2023, United’s investment (maximum exposure to loss) in these low income housing and community development partnerships were $ 93,829 and $ 87,554 , respectively, while related unfunded commitments were $ 100,214 and $ 63,539 , respectively.

As of June 30, 2024, United expects to recover its remaining investments through the use of the tax credits that are generated by the investments.

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

What changed 10-Q

Item 1. Financial Statements