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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 217 added, 234 removed, 556 unchanged (45% of the section changed)

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

RECENT DEVELOPMENTS

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

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

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

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

The consolidation will streamline operations and enhance the customer experience.

TRANSITION FROM THE LONDON INTERBANK OFFERED RATE (LIBOR)

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

Dollar LIBOR settings were discontinued on December 31, 2021.

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

Dollar LIBOR settings were discontinued on June 30, 2023.

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

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

On January 10, 2025, United consummated its acquisition of Atlanta-based Piedmont Bancorp, Inc.

(“Piedmont”).

As of January 10, 2025, Piedmont had total assets of approximately $2.4 billion, total loans of approximately $2.1 billion, total liabilities of approximately $2.2 billion, total deposits of approximately $2.1 billion, and total shareholders’ equity of approximately $202 million.

During the first quarter of 2024, United consolidated its mortgage delivery channels by consolidating George Mason’s and Crescent’s mortgage origination and sales business with United Bank.

United had previously exited the third-party origination (“TPO”) business during the fourth quarter of 2023 as part of this consolidation.

United continues to offer mortgage products through its bank mortgage channel with previous George Mason offices re-branded under the United umbrella.

The consolidation streamlined operations and will enhance the customer experience.

The following discussion and analysis presents the more significant changes in financial condition as of December 31, 2024 and 2023 and the results of operations of United and its subsidiaries for each of the years then ended.

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Management has evaluated all significant events and transactions that occurred after December 31, 2024, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.

Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on March 1, 2023 (the 2022 Form 10-K ) for a discussion and analysis of the more significant factors that affected periods prior to 2022.

Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 29, 2024 (the 2023 Form 10-K ) for a discussion and analysis of the more significant factors that affected periods prior to 2024.

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

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

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

significant change.

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

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

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

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

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

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

Use of Fair Value Measurements

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Approximately 2.09% or $64.04 million of these financial instruments were valued using unobservable market information or Level 3 measurements.

Most of these financial instruments valued using unobservable market information were loans held for sale at our mortgage banking segment.

Most of these financial instruments valued using unobservable market information were loans held for sale.

At December 31, 2024, only $20 thousand or less than 1% of total liabilities were recorded at fair value.

This entire amount was valued using methodologies involving observable market data.

This entire amount was valued using methodologies involving unobservable market data.

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

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

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

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

2024 COMPARED TO 2023

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

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

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

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

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

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

United’s total assets as of December 31, 2024 were $30.02 billion, which was an increase of $97.06 million or less than 1% from December 31, 2023.

This increase was mainly due to an increase of $693.30 million or 43.36% in cash and cash equivalents, a $314.41 million or 1.47% increase in loans, net of unearned income, and a $10.29 million or 2.11% increase in cash surrender life insurance policies.

These increases in assets were mostly offset by a $866.46 million or 21.00% decrease in investment securities, a $11.90 million or 21.15% decrease in loans held for sale, a $9.01 million or 8.08% decrease in interest receivable, and a $6.77 million or 2.45% decrease in other assets.

Total liabilities decreased $124.92 million or less than 1% from year-end 2023.

Borrowings decreased $1.27 billion or 63.91%, which were partially offset by a $1.14 billion or 5.01% increase in deposits.

Shareholders’ equity increased $221.98 million or 4.65%.

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Cash and cash equivalents at December 31, 2024 increased $693.30 million or 43.36% from year-end 2023.

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

In particular, interest-bearing deposits with other banks increased $709.70 million or 52.94% as United placed more cash in an interest-bearing account with the Federal Reserve while cash and due from banks decreased $16.50 million or 6.42%.

Federal funds sold increased $98 thousand or 8.38%.

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Securities available for sale decreased $826.66 million or 21.83%.

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

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

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

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

This change in securities available for sale reflects $2.06 billion in purchases, $2.93 billion in sales, maturities and calls of securities, and an increase of $40.55 million in market value.

The majority of the sales activity was related to asset-backed securities, mortgage-backed securities and state and political subdivision securities.

Equity securities were $21.06 million at December 31, 2024, an increase of $12.11 million or 135.42% due mainly to a reclass of an equity security that now has a readily determinable market value.

The equity security was previously held in “Other investment securities” on the December 31, 2023 Consolidated Balance Sheets.

Other investment securities decreased $51.91 million or 15.76% from year-end 2023, due mainly to a redemption of FHLB stock due to a decline in FHLB borrowings.

The following table summarizes the changes in the available for sale securities since year-end 2023:

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At December 31, 2024, gross unrealized losses on available for sale securities were $323.94 million.

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

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

As of December 31, 2024, United’s available for sale mortgage-backed securities had an amortized cost of $1.69 billion, with an estimated fair value of $1.47 billion.

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The portfolio relates to securities issued by various municipalities located throughout the United States, and no securities within the portfolio were rated below investment grade as of December 31, 2024.

As of December 31, 2023, United’s available for sale corporate securities had an amortized cost of $1.21 billion, with an estimated fair value of $1.17 billion.

As of December 31, 2024, United’s available for sale corporate securities had an amortized cost of $771.81 million, with an estimated fair value of $746.98 million.

The portfolio consisted of $13.30 million in single issue trust preferred securities with an estimated fair value of $11.92 million.

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

$2.92 million or 19.30% were split rated;

and $5.32 million or 35.11% were unrated.

The two largest exposures accounted for 80.70% of the $15.14 million.

These included Truist Bank at $6.90 million and Emigrant Bank at $5.32 million.

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

In addition to the single issue trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of $476.86 million and a fair value of $474.98 million and other corporate securities, with an amortized cost of $281.65 million and a fair value of $260.08 million.

United’s available for sale single issue trust preferred securities had a fair value of $11.92 million as of December 31, 2024.

Of the $11.92 million, $7.32 million, or 61.44%, were investment grade and $4.60 million, or 38.56%, were unrated.

The portfolio consists of two exposures, with Truist Bank at $7.32 million and Emigrant Bank at $4.60 million.

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

During 2024, United did not recognize any credit losses on its available for sale investment securities.

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

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

During 2024, United sold approximately $470 million of available for sale securities at a loss of $16.30 million.

Loans Held for Sale

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

Loans held for sale were $44.36 million at December 31, 2024, a decrease of $11.90 million or 21.15% from year-end 2023.

Loan sales in the secondary market exceeded originations during the year of 2024.

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

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

Loan originations for the year of 2024 were $645.94 million while loans sales were $657.84 million.

Portfolio Loans

Loans, net of unearned income, increased $314.41 million or 1.47%.

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

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

Since year-end 2023, commercial, financial and agricultural loans decreased $8.01 million or less than 1% as a result of a $213.07 million or 2.56% increase in commercial real estate loans, which was mostly offset by a $221.08 million or 6.19% decrease in commercial loans (not secured by real estate).

Residential real estate loans increased $236.15 million or 4.48% and construction and land development loans increased $360.79 million or 11.46%.

Consumer loans decreased $281.62 million or 26.45% due to a decrease in indirect automobile financing.

The following table summarizes the changes in the major loan classes since year-end 2023:

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Other consumer

Total Loans and leases

Total gross loans

Unearned income

Total Loans and leases, net of unearned income

Total Loans, net of unearned income

The following table shows the amount of loans acquired and outstanding by major loan classes as of December 31, 2024 and 2023:

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Other assets decreased $6.77 million or 2.45% from year-end 2023.

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

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

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

Deferred tax assets decreased $3.43 million due to an increase in the fair value and sales of AFS securities, dealer reserve decreased $7.82 million due to a decrease in indirect automobile financing, accounts receivable decreased $4.56 million due to timing differences, core deposit intangibles decreased $3.64 million due to amortization, and OREO properties decreased $2.29 million due to sales of consumer OREO properties.

Partially offsetting these decreases in other assets was a $14.65 million increase in the pension asset.

Deposits represent United’s primary source of funding.

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

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

Total deposits at December 31, 2024 increased $1.14 billion or 5.01%.

In terms of composition, noninterest-bearing deposits decreased $13.67 million or less than 1% while interest-bearing deposits increased $1.16 billion or 6.94% from December 31, 2023.

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

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

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

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

The $13.67 million decrease in noninterest-bearing deposits was due mainly to a $37.19 million decrease in commercial noninterest-bearing deposits and a $57.56 million decrease in in-process items.

Partially offsetting these decreases in noninterest-bearing deposits were increases of $26.27 million and $19.92 million in personal and public noninterest-bearing deposits, respectively, and an increase of $30.11 million in official checks.

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

Interest-bearing transaction accounts increased $288.79 million or 5.11% since year-end 2023.

In particular, commercial interest-bearing transaction accounts increased $414.86 million and public interest-bearing transaction accounts increased $6.03 million while personal interest-bearing transaction accounts decreased $132.10 million.

Regular savings accounts decreased $94.96 million or 7.06% mainly as a result of a $77.10 million decrease in personal savings accounts and a $19.91 million decrease in commercial savings accounts.

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

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

Public funds interest-bearing MMDAs increased $30.68 million.

Interest-bearing MMDAs increased $707.44 million or 11.14%.

In particular, commercial MMDAs increased $511.19 million while personal MMDAs and public funds MMDAs increased $162.06 million and $34.20 million, respectively.

Time deposits under $100,000 increased $106.37 million or 9.98% from year-end 2023.

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

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

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

This increase in time deposits under $100,000 was the result of a $119.22 million increase in fixed rate Certificates of Deposits (“CDs”) under $100,000.

Partially offsetting this increase in deposits under $100,000 was a $5.69 million decrease in CDs under $100,000 obtained through the use of deposit listing services.

Since year-end 2023, time deposits over $100,000 increased $148.57 million or 6.57% as fixed rate CDs increased $375.07 million and public funds CDs increased $45.68 million.

Partially offsetting these increases in time deposits over $100,000, was a decrease of $272.13 million in brokered CDs.

The table below summarizes the changes by deposit category since year-end 2023:

(Dollars in thousands)

Noninterest-bearing accounts

Interest-bearing transaction accounts

Demand deposits

Interest-bearing checking

Regular savings

Interest-bearing money market accounts

Money market accounts

Time deposits under $100,000

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Time deposits

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

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

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

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

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

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

Total borrowings at December 31, 2024 decreased $1.27 billion or 63.91% since year-end 2023.

During the year of 2024, short-term borrowings decreased $20.01 million or 10.20% due to a decrease in securities sold under agreements to repurchase.

Long-term borrowings decreased $1.25 billion or 69.79% from year-end 2023 due to maturities of advances obtained from the FHLB during the year of 2024.

The table below summarizes the change in the borrowing categories since year-end 2023:

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Long-term FHLB advances

Subordinated debt

Issuances of trust preferred capital securities

Total borrowings

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

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

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at December 31, 2024 increased $17.14 million or 8.04% from year-end 2023.

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

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

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

In particular, other accrued expenses increased $10.96 million due to the accrual associated with housing tax credits, incentives payable increased $2.93 million due to timing differences, deferred compensation increased $3.20 million, and business franchise taxes increased $1.26 million due to timing differences.

Partially offsetting these increases in accrued expenses and other liabilities was a $1.12 million decrease in accrued loan expenses and a $5.24 million decrease in other miscellaneous liabilities.

Shareholders’ Equity

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Accumulated other comprehensive income increased $35.78 million or 13.78% from year-end 2023 due to an increase of $30.85 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes.

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

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

In addition, the after-tax amortization of the pension net actuarial loss was $9.40 million while the after-tax accretion of pension costs was $1.78 million for the year of 2024.

Partially offsetting these increases was a decrease of $6.25 million in the fair value of cash flow hedges, net of deferred income taxes.

RESULTS OF OPERATIONS

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PER COMMON SHARE:

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

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

Net income for the year 2024 was $373.00 million or $2.75 per diluted share, an increase of $6.68 million or 1.82% from $366.31 million or $2.71 per diluted share for the year of 2023.

Higher net income for the year 2024 compared to the year of 2023 was primarily driven by lower noninterest expense, provision for credit losses and income tax expense partially offset by lower net interest income and lower noninterest income.

As previously mentioned, on January 10, 2025, United announced the consummation of its merger with Piedmont.

Expenses of $2.87 million related to the Piedmont acquisition were recorded in the year of 2024.

During the year of 2024, United sold approximately $470 million of AFS investment securities at a loss of $16.30 million.

Additionally, United recognized a net gain of $7.09 million on the sale of its remaining mortgage rights (“MSRs”) associated with a loan portfolio of $1.12 billion, a gain of $6.85 million on a VISA share exchange and $1.72 million gain on the fair value of an equity security.

United’s return on average assets for the year of 2024 was 1.26% and the return on average shareholders’ equity was 7.61% as compared to 1.25% and 7.87% for the year of 2023.

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Return on Tangible Equity (non-GAAP) [(a) / (b)]

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

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

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

Net interest income for the year of 2024 was $911.07 million which was relatively flat from the prior year, decreasing $8.86 million or less than 1%.

The slight decrease of $8.86 million in net interest income occurred because total interest income increased $100.80 million while total interest expense increased $109.66 million from the year of 2023.

Generally, interest income increased in 2024 due to the impact of rising market interest rates on earning assets, loan growth and a change in the asset mix to higher earning assets while interest expense increased mainly due to higher funding costs as a result of the rising market interest rates on higher interest-bearing balances.

The provision for credit losses was $25.15 million for the year 2024 as compared to $31.15 million for the year 2023.

Noninterest income was $123.70 million for the year of 2024, which was a decrease of $11.56 million or 8.55% from the year of 2023.

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

Noninterest expense for the year of 2024 was $545.03 million, which was a decrease of $15.19 million from the year of 2023.

Income taxes for the year of 2024 were $91.58 million as compared to $97.49 million for the year of 2023.

United’s effective tax rate was approximately 19.7% and 21.0% for years ended December 31, 2024 and 2023, respectively, as compared to 20.2% for 2022.

Business Segments

United operates in two business segments:

community banking and mortgage banking.

Community Banking

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

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

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

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

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

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

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

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

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

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

Mortgage Banking

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

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

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

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

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

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

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

Net Interest Income

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Such changes, and their impact on net interest income in 2024 and 2023, are presented below.

Net interest income for the year of 2023 was $919.92 million, which was an increase of $23.49 million or 2.62% from the year of 2022.

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

Net interest income for the year of 2024 was $911.07 million which was relatively flat from the year of 2023, decreasing $8.86 million or less than 1%.

The $8.86 million decrease in net interest income occurred because total interest income increased $100.80 million while total interest expense increased $109.66 million from the year of 2023.

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

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

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

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

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

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

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

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

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

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

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

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

The net interest margin of 3.56% for the year of 2023 was an increase of 6 basis points from the net interest margin of 3.50% for the year of 2022.

Tax-equivalent net interest income for the year of 2024 decreased $9.51 million, or 1.04%, from the year of 2023.

The decrease in tax-equivalent net interest income was primarily due to higher interest expense driven by deposit rate repricing, an increase in average interest-bearing deposits, and a decrease in acquired loan accretion income.

These decreases were partially offset by a higher yield on average net loans, loan growth, and a decrease in average long-term borrowings.

The cost on average interest-bearing deposits increased 66 basis points from the year of 2023.

Average interest-bearing deposits increased $1.39 billion from the year of 2023.

Acquired loan accretion income for year of 2024 of $9.26 million was a decrease of $2.28 million from the year of 2023.

The yield on average earning assets increased 33 basis points from the year of 2023 to 5.74% driven by an increase in the yield on average net loans of 28 basis points.

Average net loans increased $683.67 million from the year of 2023.

Average long-term borrowings decreased $906.10 million from the year of 2023.

Additionally, average investment securities decreased $790.73 million, or 17.89%, from the year of 2023 while the yield on average investment securities increased 25 basis points from the year of 2023.

The net interest margin for the year of 2024 and 2023 was 3.49% and 3.56%, respectively.

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

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SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

NET INTEREST INCOME

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

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

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

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United’s provision for credit losses was $ 25.15 million for the year of 2024 while the provision for credit losses was $31.15 million for the year of 2023.

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

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

The provision for loan and lease losses for the year of 2024 was $25.15 million as compared to $31.15 million for the year of 2023.

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

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

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

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

The lower amount of provision expense for the year of 2024 compared to the year of 2023 was mainly due to less severe reasonable and supportable forecast assumptions regarding future economic expectations in 2024 as compared to 2023.

Net charge-offs for the year of 2024 were $12.55 million as compared to $ 6.66 million for the year of 2023.

The higher amount of net charge-offs for the year of 2024 as compared to the year of 2023 was primarily due to increased charge-offs within the commercial real estate nonowner-occupied and consumer loan portfolios.

Net charge-offs as a percentage of average loans and leases were 0.06% and 0.03% for the year of 2024 and 2023, respectively.

The following table shows a summary of United’s nonperforming assets including nonperforming loans and other real estate owned (“OREO”) at December 31, 2024 and December 31, 2023:

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Loans past due 90 days of more

Restructured loans (1)

Total nonperforming loans

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Total nonperforming assets

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

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

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

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

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

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

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

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At December 31, 2024, the allowance for loan and lease losses was $271.84 million as compared to $259.24 million at December 31, 2023.

The increase in the allowance for loan and lease losses was primarily due to increased reserves for the nonowner-occupied commercial real estate and construction and land development loan segments.

The increase in the allowance for loan and lease losses was primarily driven by increased outstanding loan balances for the real estate construction and development and residential real estate portfolios as well as increased reasonable and supportable forecast adjustments for the commercial real estate nonowner-occupied office portfolio.

As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 1.25% at December 31, 2024 and 1.21% at December 31, 2023.

The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 370.36% and 569.78% at December 31, 2024 and December 31, 2023, respectively.

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

The decrease in this ratio was due to a larger increase in nonperforming loans than the allowance for loan losses.

The following table summarizes United’s credit loss experience for loan and leases losses, based on loan categories, for the year of 2024 and 2023:

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Average gross loans & leases outstanding

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

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

Nonowner-occupied commercial real estate

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Average gross loans & leases outstanding

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

(Dollars in thousands)

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

Other Commercial

2 unchanged sentences

Average gross loans & leases outstanding

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

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

Residential Real Estate

Loans & leases charged off

(Dollars in thousands)

Net loans & leases charged off

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Average gross loans & leases outstanding

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

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

Loans & leases charged off

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The year of 2024 qualitative adjustments include analyses of the following:

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

Current conditions – United considered the impact of 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.

and concentrations of credit.

Reasonable and supportable forecasts – The forecast is determined on a portfolio-by-portfolio basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables.

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The forecast for real GDP shifted slightly in the fourth quarter, from a projection of 2.00% for 2025 as of mid-September 2024 to 2.10% for 2025 as of mid-December with a projection of 2.00% for 2026.

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

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

The unemployment rate forecast also shifted slightly in the fourth quarter from a projection of 4.40% for 2025 as of mid-September 2024 to 4.30% for 2025 as of mid-December with a projection of 4.30% for 2026.

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

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

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United’s review of the allowance for loan and lease losses at December 31, 2024 produced increased reserves in three of the four loan categories as compared to December 31, 2023.

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

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

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

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

The allowance related to the commercial, financial & agricultural loan pool, consisting of the owner and non-owner occupied commercial real estate and other commercial loan segments, increased $6.64 million due to increased reasonable and supportable forecast adjustments particularly as it pertains to office loans.

The balance of office loans at December 31, 2024 totaled approximately $950 million or 13.7% of nonowner-occupied commercial real estate loans or 4.4% of loans and leases, net of unearned income.

The top forty

office loans make up approximately 68% of the balance of nonowner-occupied commercial real estate office loans.

The weighted average loan-to-value (“LTV”) based on current loan balances and appraised values at origination date for the top forty office loans was approximately 56% at December 31, 2024.

The weighted average LTV at origination date for the top forty office loans was approximately 63%.

United has been disciplined in its approach to underwriting office loans with a stringent underwriting process focusing on the underlying tenants, lease terms, sponsor support, location, property class and amenities.

The residential real estate segment reserve increased $5.21 million due primarily to increased outstanding balances.

The real estate construction and development loan segment reserve increased $3.71 million due to increased outstanding balances.

The consumer loan segment reserve decreased $2.95 million primarily due to a decrease in outstanding balances.

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

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The allowance for loans and leases that were individually assessed was $11.21 million at December 31, 2024 and $13.15 million at December 31, 2023.

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

In comparison to the prior year-end, this element of the allowance decreased $1.94 million due to liquidation of collateral securing a commercial relationship which has reduced the balance outstanding for the relationship as well as the loss potential requiring individually assessed reserves.

Management believes that the allowance for credit losses of $306.75 million at December 31, 2024 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available.

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Noninterest income for the year of 2024 was $123.70 million, which was a decrease of $11.56 million or 8.55% from the year of 2023.

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

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

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

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

This decrease was driven by decreases in mortgage loan servicing income and mortgage banking income partially offset by an increase in fees from brokerage services and higher income from bank-owned life insurance.

For the year of 2024, net losses on investment securities were $7.72 million as compared to net losses on investment securities of $7.65 million for the year of 2023.

The net losses in 2024 were mainly due a loss of $16.30 million during the year of 2024 as United sold approximately $470 million of AFS investment securities.

Additionally,

during the year of 2024, United recognized a $6.85 million gain on the VISA share exchange and a $1.72 million change in fair value gain on an equity security.

In the year of 2023, United sold approximately $187 million of AFS investment securities resulting in a net loss of $7.24 million.

United did not recognize any impairment on investment securities for the year of 2024 and 2023.

Income from mortgage banking activities totaled $16.06 million for the year of 2024 compared to $26.59 million for the year of 2023.

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

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

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

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

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

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

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

The decrease of $10.54 million or 39.62% for the year of 2024 was primarily due mainly to lower mortgage loan production.

Mortgage loan sales were $657.84 million in the year of 2024 as compared to $861.52 million in the year of 2023.

Mortgage loans originated for sale were $645.94 million for the year of 2024 as compared to $860.90 million for the year of 2023.

Mortgage loan servicing income for the year of 2024 decreased $4.79 million or 34.83% from the year of 2023.

The year of 2024 included the $7.09 million net gain on the sale of MSRs while the year of 2023 included net gains on the sale of MSRs of $8.31 million.

In addition, mortgage loan servicing income declined in the year of 2024 due to lower mortgage balances serviced since the sale of the MSRs in 2023 and 2024.

Fees from brokerage services for the year of 2024 increased $3.37 million or 19.90%, from the year of 2023.

The increase was primarily due to higher volume.

Fees from trust services for the year of 2024 were $19.45 million, an increase of $1.13 million or 6.18% from the year of 2023 due to an increase in managed assets.

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

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

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

Income from bank-owned life insurance (“BOLI”) for the year of 2024 increased $2.90 million or 34.75% from the year of 2023.

This increase was due mainly to an increase in the cash surrender value of insurance policies as well as death proceeds of $1.39 million recognized in 2024.

Death benefits were $571 thousand for the year of 2023.

Other income for the year of 2024 decreased $3.34 million or 30.16% from the year of 2023.

Included in the year of 2023 was a gain of $2.66 million from the payoff of a fixed rate commercial loan that had an associated interest rate swap.

Other Expense

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

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

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

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

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

Noninterest expense for the year of 2024 was $545.03 million, which was a decrease of $15.19 million or 2.71% from the year of 2023 driven by decreases in FDIC insurance expense, mortgage loan servicing expense and impairment, OREO expense and other noninterest expense.

Partially offsetting these decreases were increases in employee benefits expense and employee compensation expense.

OREO expense for the year of 2024 decreased $779 thousand or 57.49% from the year of 2023 due mainly to fewer declines in the fair value of OREO properties.

Mortgage loan servicing expense and impairment for the year of 2024 decreased $2.90 million or 51.86% from the year of 2023.

The decrease was due primarily to a lower amount of mortgage loans serviced as a result of the sale of MSRs in 2024 and 2023.

FDIC expense for the year of 2024 decreased $10.64 million or 35.03% from the year of 2023.

The decrease in FDIC insurance expense was driven by $11.99 million of expense recognized in 2023 as compared to $1.51 million of expense recognized in 2024 for a FDIC special assessment levied on banking organizations to recover losses to the Deposit Insurance Fund.

Employee compensation for the year of 2024 increased $3.81 million or 1.65% from the year of 2023.

The increase in employee compensation was driven by higher employee incentives, base salaries and employee severance related to the consolidation of the mortgage delivery channels.

Partially offsetting these increases was a decrease in commissions related to lower mortgage banking production.

Employee benefits expense for the year of 2024 increased $5.25 million or 10.86% as compared to the year of 2023.

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

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

The funded status of

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

For the year of 2024, postretirement expense, which includes expense associated with United’s pension plan, non-qualified deferred compensation plan, supplemental early retirement plans (“SERPs”) and Savings and Stock Investment Plan (“401K plan”), increased $5.58 million from the year of 2023.

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

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

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

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If United assumes a 1% increase or decrease in the discount rate while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease by approximately $2.13 million and increase by approximately $2.58 million, respectively.

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

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

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

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

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

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

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

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

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

Other expense for the year of 2024 decreased $10.08 million or 7.41% from the year of 2023.

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

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

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

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

Within other expenses, the most significant decrease was $8.31 million in the expense for the reserve for unfunded loan commitments.

In addition, amortization of intangibles declined $1.48 million, consulting and legal expense decreased $1.27 million and advertising expense decreased $994 thousand.

Partially offsetting these decreases were increases in the merger expenses of $2.87 million as well as higher amounts of certain other general operating expenses.

For the year ended December 31, 2024, income taxes were $91.58 million, compared to $97.49 million for 2023, a decrease of $5.91 million or 6.06%.

This decrease was primarily due to the impact of discrete tax benefits recognized in the second quarter of 2024.

United’s effective tax rate was approximately 19.7% and 21.0% for years ended December 31, 2024 and 2023, respectively.

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

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

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

Quarterly Results

Net income for the first quarter of 2024 was $86.81 million as compared to earnings of $98.31 million for the first quarter of 2023.

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

Earnings for the first quarter of 2024, as compared to the first quarter of 2023, decreased primarily due to lower net interest income as a result of the impact of higher market interest rates on interest-bearing liabilities.

Diluted earnings per share were $0.64 for the first quarter of 2024 and $0.73 for the first quarter of 2023.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Net interest income for the first quarter of 2024 decreased $11.83 million, or 5.05%, to $222.49 million from net interest income of $234.32 million for the first three months of 2023.

The decrease of $11.83 million in net interest income occurred because total interest income increased $39.88 million while total interest expense increased $51.71 million from the first quarter of 2023.

The provision for credit losses was $5.74 million for the first quarter of 2024 as compared to a provision for credit losses of $6.89 million for the first quarter of 2023.

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

Noninterest income was $32.21 million for the first three months of 2024, a decrease of $532 thousand or 1.62% from the first three months of 2023 due mainly to a decrease in mortgage loan servicing income of $1.49 million partially offset by increased fees of $1.07 million from brokerage services.

Noninterest expense for the first quarter of 2024 was $140.74 million, an increase of $3.32 million or 2.42% from the first quarter of 2023 primarily due to increases in employee compensation and FDIC insurance expense partially offset by a decrease in other noninterest expense.

Income taxes decreased $3.04 million or 12.45% for the first three months of 2024 as compared to the first three months of 2023 primarily due to decreased earnings and a slightly lower effective tax rate.

United’s effective tax rate was 19.8% and 19.9% for the first quarter of 2024 and 2023, respectively.

Net income for the second quarter of 2024 was $96.51 million, as compared to earnings of $92.46 million for the second quarter of 2023.

Earnings for the second quarter of 2024 as compared to the second quarter of 2023 increased primarily due to lower provision for credit losses and income tax expense.

Diluted earnings per share were $0.71 for the second quarter of 2024 and $0.68 for the second quarter of 2023.

As previously mentioned, United announced during the second quarter of 2024 that it entered into a definitive merger agreement with Piedmont.

Expenses of $1.27 million related to the announced Piedmont acquisition were recorded in the second quarter of 2024.

United also recognized a $6.87 million gain on a VISA share exchange during the second quarter of 2024, of which $4.65 million was realized through the sale of eligible shares and the remainder of which related to shares held at fair value at quarter-end.

Additionally, during the second quarter of 2024, United sold $102.72 million of AFS investment securities at a loss of $6.81 million.

The first quarter of 2024 included $1.81 million of noninterest expense related to the FDIC’s revised loss estimates to the Deposit Insurance Fund.

For the second quarter of 2024, United’s annualized return on average assets was 1.32% and return on average shareholders’ equity was 7.99% as compared to 1.26% and 7.96% for the second quarter of 2023.

Net interest income for the second quarter of 2024 was $225.72 million, which was relatively flat from the second quarter of 2023, decreasing $1.75 million or less than 1%.

The slight decrease of $1.75 million in net interest income occurred because total interest income increased $28.25 million while total interest expense increased $30.00 million from the second quarter of 2023.

The provision for credit losses was $5.78 million for the second quarter of 2024, respectively, while the provision for credit losses was $11.44 million for the second quarter of 2023.

The decrease in the provision for credit losses was mainly due to a more substantial increase in reserves for future expected losses in 2023 as compared to 2024.

For the second quarter of 2024, noninterest expense was relatively flat from the second quarter of 2023, decreasing $514 thousand or less than 1%.

Several categories of noninterest expense decreased which were largely offset by increases in other categories, none of which were significant.

Income taxes for the second quarter of 2024 were $18.88 million as compared to $23.45 million for the second quarter of 2023.

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

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

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

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

United’s effective tax rate was 16.4% and 20.2% for the second quarter of 2024 and second quarter of 2023, respectively.

Net income for the third quarter of 2024 was $95.27 million, as compared to earnings of $96.16 million for the third quarter of 2023.

Earnings for the third quarter of 2024 as compared to the third quarter of 2023 decreased primarily due to higher provision for credit losses and lower noninterest income partially offset by a higher net interest income and a lower income tax expense.

Diluted earnings per share were $0.70 for the third quarter of 2024 and $0.71 for the third quarter of 2023.

Net interest income for the third quarter of 2024 was $230.26 million, which was relatively flat from the third quarter of 2023, increasing $1.80 million or less than 1%.

The slight increase of $1.80 million in net interest income occurred because total interest income increased $25.81 million while total interest expense increased $24.01 million from the third quarter of 2023.

The provision for credit losses was $6.94 million for the third quarter of 2024, while the provision for credit losses was $5.95 million for the third quarter of 2023.

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

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

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

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

For the third quarter of 2024, noninterest income was $31.94 million, which was a decrease of $1.72 million or 5.11% from the third quarter of 2023.

This decrease in noninterest income for the third quarter of 2024 was due mainly to decreases of $6.53 million and $3.01 million, respectively, in net losses on investment securities transactions and in income from mortgage banking activities driven by lower mortgage loan sales volume partially offset by the gain on the sale of MSRs.

For the third quarter of 2024, noninterest expense was relatively flat from the third quarter of 2023, increasing $109 thousand.

This increase was less than 1%.

For the third quarter of 2024 compared to the third quarter of 2023, several categories of noninterest expense increased which were largely offset by decreases in other categories.

Income taxes for the third quarter of 2024 were $24.65 million as compared to $24.78 million for the third quarter of 2023.

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

For the quarters ended September 30, 2024 and 2023, United’s effective tax rate was 20.6% and 20.5%, respectively.

Net income for the fourth quarter of 2024 was $94.41 million or $0.69 per diluted share as compared to earnings of $79.39 million or $0.59 per diluted share for the fourth quarter of 2023.

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

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

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

Net interest income for the fourth quarter of 2024 was $232.61 million, which was an increase of $2.92 million or 1.27% from the fourth quarter of 2023.

The $2.92 million increase in net interest income occurred because total interest income increased $6.86 million while total interest expense increased $3.94 million from the fourth quarter of 2023.

The provision for credit losses was $6.69 million for the fourth quarter of 2024 as compared to a provision for credit losses of $6.88 million for the fourth quarter of 2023.

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

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

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

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

Noninterest income for the fourth quarter of 2024 was $29.32 million, which was a decrease of $4.36 million, or 12.94% from the fourth quarter of 2023.

This decrease in noninterest income was driven by decreases in other noninterest income of $3.26 million and income from mortgage banking activities of $2.43 million due to lower mortgage loan origination and sale volume partially offset by an increase in income from BOLI of $1.37 million due to the impact of higher market values of underlying investments and higher amounts of death benefits recognized in the fourth quarter of 2024.

noninterest income for the fourth quarter of 2023 included a $2.66 million gain from the payoff of a fixed rate commercial loan that had an associated interest rate swap derivative.

Noninterest expense for the fourth quarter of 2024 was $134.18 million, a decrease of $18.11 million, or 11.89%, from the fourth quarter of 2023.

The decrease in noninterest expense was driven by decreases in FDIC insurance expense of $12.74 million and other noninterest expense of $8.66 million due to a lower expense for the reserve for unfunded loan commitments partially offset by increases in employee benefits of $3.95 million.

FDIC insurance expense for the fourth quarter of 2023 included $11.99 million for the FDIC special assessment.

The decrease in the expense for the reserve for unfunded loan commitments was mainly due to a decrease in loan commitments.

The increase in employee benefits was driven by higher health insurance costs and higher postretirement benefit costs.

For the fourth quarter of 2024, income tax expense was $26.65 million as compared to $24.81 million for the fourth quarter of 2023.

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

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

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

The increase was driven by higher pre-tax earnings partially offset by a lower effective tax rate.

United’s effective tax rate was 22.0% and 23.8% for the fourth quarter of 2024 and fourth quarter of 2023, respectively.

The effective tax rates for the fourth quarter of 2024 and 2023 reflect the impact of provision to return adjustments during each period.

Additional quarterly financial data for 2024 and 2023 may be found in Note Z, Notes to Consolidated Financial Statements.

The Effect of Inflation

38 unchanged sentences

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

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

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

During the year of 2024, United increased its interest-bearing deposit balance at the FRB by $727.91 million to $1.97 billion.

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

The change in the balance at the FRB was mostly the result of net sales, maturities, and paydowns in the available for sale debt securities portfolio of $867.21 million and an increase in deposits of $1.14 billion partially offset by loan growth of $318.05 million and the net repayment of $1.25 billion in FHLB advances.

Cash flows provided by operations in 2024 were $445.45 million due mainly to net income of $373.00 million for the year of 2024.

1 unchanged sentence

In 2024, net cash of $571.49 million was provided by investing activities which was primarily due to proceeds of $882.85 million from sales, calls and maturities of investment securities over purchases partially offset by loan growth of $318.05 million.

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

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

During the year of 2024, net cash of $323.64 million was used in financing activities due primarily to net repayments of $1.25 billion from long-term FHLB borrowings partially offset by an increase of $1.14 billion in deposits.

Other uses of cash within funding activities for the year of 2024 were $200.73 million for cash dividends paid.

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

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

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

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

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

The net effect of the cash flow activities was an increase in cash and cash equivalents of $693.30 million for the year of 2024 as compared to increase in cash and cash equivalents of $422.29 million for the year of 2023.

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

6 unchanged sentences

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

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

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

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

14 unchanged sentences

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

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

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

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

1 unchanged sentence

United also has lines of credit available.

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

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

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

16 unchanged sentences

Total cash dividends declared to common shareholders were $200.89 million for the year of 2024 as compared to $196.12 million for the year of 2023.

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

The year 2024 was the fifty-first consecutive year of dividend increases to United shareholders.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis