Item 8. Financial Statements and Supplementary Data
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of United Bankshares, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of United Bankshares, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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Allowance for Loan Losses
Description of
the Matter
The Company’s loan portfolio totaled $21.7 billion as of December 31, 2024, and the associated allowance for loan losses (ALL) for the loan portfolio was $272 million. As discussed in Notes A and F to the consolidated financial statements, the ALL is an estimate of the expected credit losses on loans at amortized cost to present the net amount expected to be collected as of the balance sheet date. The ALL is based on the credit losses expected to arise over the life of the asset. Management pools its loans based on similar risk characteristics and assigns an appropriate calculation method to estimate the expected credit losses. For loans that do not share risk characteristics, management evaluates the ALL on an individual basis based on the present value of expected future cash flows using the loan’s effective interest rate, or as a practical expedient, the fair value of the collateral if the loan is collateral-dependent. For loans not specifically reviewed on an individual basis, management measures the ALL using a probability of default/loss given default method or cohort method based on portfolio segment. Management also records qualitative adjustments to expected credit losses for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as reasonable and supportable forecast adjustments for changes in macroeconomic and environmental conditions, such as changes in unemployment rates, gross domestic product or other relevant factors, that have not been fully captured in the allowance calculation.
Auditing management’s estimate used in determining the ALL for the loan portfolio involved a high degree of subjectivity in evaluating management’s determination of the forecast selection used to derive the reasonable and supportable forecast qualitative adjustment.
How We
Addressed the Matter in
Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s ALL process for the loan portfolio. Controls tested included, among others, those over the risk rating process, management’s review and approval of the calculations used to determine the ALL, including the underlying data and data inputs and outputs of those calculations, and management’s evaluation and review of the qualitative adjustments, including the reasonable and supportable forecast qualitative adjustment.
To test the Company’s reasonable and supportable forecast qualitative adjustment for the loan portfolio, we tested the underlying data used in the estimate calculation to determine it was accurate, complete and relevant. Further, we evaluated management’s basis for the adjustment in relation to changes in economic conditions and forecasts. Our procedures included evaluating management’s inputs and assumptions used in determining the qualitative adjustment by comparing the information to internal and external source data including, among others, the economic forecasts utilized by the Company and third-party economic outlook reports. We involved our internal modeling specialists in evaluating the model performance. In addition, we evaluated the overall ALL amount, inclusive of the qualitative adjustments, and whether the amount appropriately reflects losses expected in the loan portfolios as of the consolidated balance sheet date. For example, we evaluated the Company’s analysis of their historical loss experience and peer losses to the Company’s recorded ALL to test the ALL in totality. We also reviewed subsequent events and transactions and considered whether they corroborate or contradict the Company’s conclusion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1986.
Charleston, West Virginia
February 28, 2025
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CONSOLIDATED BALANCE SHEETS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands, except par value)
December 31
December 31
2024
2023
Assets
Cash and due from banks
$
240,655
$
257,153
Interest-bearing deposits with other banks
2,050,321
1,340,620
Federal funds sold
1,268
1,170
Total cash and cash equivalents
2,292,244
1,598,943
Securities available for sale at estimated fair value (amortized cost-$ 3,282,690 at December 31, 2024 and
$ 4,149,895 at December 31, 2023, allowance for credit losses of $ 0 at December 31, 2024 and
December 31, 2023)
2,959,719
3,786,377
Securities held to maturity, net of allowance for credit losses of $ 18 at December 31, 2024 and $ 17 at
December 31, 2023 (estimated fair value-$ 1,020 at December 31, 2024 and December 31, 2023)
1,002
1,003
Equity securities at estimated fair value
21,058
8,945
Other investment securities
277,517
329,429
Loans held for sale measured using fair value option
44,360
56,261
Loans and leases
21,680,498
21,373,185
Less: Unearned income
( 7,005
)
( 14,101
)
Loans and leases, net of unearned income
21,673,493
21,359,084
Less: Allowance for loan and lease losses
( 271,844
)
( 259,237
)
Net loans and leases
21,401,649
21,099,847
Bank premises and equipment
186,131
190,520
Operating lease right-of-use assets
81,742
86,986
Goodwill
1,888,889
1,888,889
Mortgage servicing rights
0
4,554
Bank-owned life insurance (“BOLI”)
497,181
486,895
Accrued interest receivable
102,412
111,420
Other assets
269,641
276,413
TOTAL ASSETS
$
30,023,545
$
29,926,482
Liabilities
Deposits:
Noninterest-bearing
$
6,135,413
$
6,149,080
Interest-bearing
17,826,446
16,670,239
Total deposits
23,961,859
22,819,319
Borrowings:
Securities sold under agreements to repurchase
176,090
196,095
Federal Home Loan Bank (“FHLB”) borrowings
260,199
1,510,487
Other long-term borrowings
280,221
278,616
Reserve for lending-related commitments
34,911
44,706
Operating lease liabilities
86,771
92,885
Accrued expenses and other liabilities
230,271
213,134
TOTAL LIABILITIES
25,030,322
25,155,242
Shareholders’ Equity
Preferred stock, $ 1.00 par value; Authorized- 50,000,000 shares, no ne issued
0
0
Common stock, $ 2.50 par value; Authorized- 200,000,000 shares; issued- 142,694,816 and 142,257,646 at
December 31, 2024 and December 31, 2023, respectively, including 7,348,188 and 7,308,583 shares in treasury
at December 31, 2024 and December 31, 2023, respectively
356,737
355,644
Surplus
3,196,154
3,181,764
Retained earnings
1,917,726
1,745,619
Accumulated other comprehensive loss
( 223,903
)
( 259,681
)
Treasury stock, at cost
( 253,491
)
( 252,106
)
TOTAL SHAREHOLDERS’ EQUITY
4,993,223
4,771,240
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
30,023,545
$
29,926,482
See notes to consolidated financial statements.
6 5
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CONSOLIDATED STATEMENTS OF INCOME
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)
Year Ended December 31
2024
2023
2022
Interest income
Interest and fees on loans and leases
$
1,302,604
$
1,203,186
$
864,583
Interest on federal funds sold and other short-term investments
66,207
47,069
22,950
Interest and dividends on securities:
Taxable
128,731
144,420
105,780
Tax-exempt
4,579
6,645
8,677
Total interest income
1,502,121
1,401,320
1,001,990
Interest expense
Interest on deposits
539,805
391,094
80,237
Interest on short-term borrowings
7,966
6,449
1,785
Interest on long-term borrowings
43,282
83,853
23,537
Total interest expense
591,053
481,396
105,559
Net interest income
911,068
919,924
896,431
Provision for credit losses
25,153
31,153
18,822
Net interest income after provision for credit losses
885,915
888,771
877,609
Other income
Fees from trust services
19,450
18,318
17,216
Fees from brokerage services
20,277
16,911
16,412
Fees from deposit services
37,183
37,076
40,557
Bankcard fees and merchant discounts
7,059
7,013
6,580
Other service charges, commissions, and fees
3,485
3,861
3,267
Income from bank-owned life insurance
11,225
8,330
9,188
Income from mortgage banking activities
16,057
26,593
42,690
Mortgage loan servicing income
8,958
13,746
9,235
Net investment securities (losses) gains
( 7,720
)
( 7,646
)
776
Other income
7,721
11,056
7,340
Total other income
123,695
135,258
153,261
Other expense
Employee compensation
234,618
230,809
242,408
Employee benefits
53,621
48,368
45,944
Net occupancy expense
46,084
46,426
45,129
Other real estate owned (“OREO”) expense
576
1,355
2,138
Net (gains) losses on the sales of OREO properties
( 75
)
( 60
)
700
Equipment expense
29,686
29,731
29,320
Data processing expense
29,646
29,395
29,997
Mortgage loan servicing expense and impairment
2,694
5,596
7,099
Bankcard processing expense
2,490
2,192
1,938
FDIC insurance expense
19,735
30,376
11,988
Other expense
125,956
136,036
138,426
Total other expense
545,031
560,224
555,087
Income before income taxes
464,579
463,805
475,783
Income taxes
91,583
97,492
96,156
Net income
$
372,996
$
366,313
$
379,627
6 6
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CONSOLIDATED STATEMENTS OF INCOME
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)
Year Ended December 31
2024
2023
2022
Earnings per common share:
Basic
$
2.76
$
2.72
$
2.81
Diluted
$
2.75
$
2.71
$
2.80
Dividends per common share
$
1.48
$
1.45
$
1.44
Average outstanding shares:
Basic
134,947,592
134,505,058
134,776,241
Diluted
135,225,417
134,753,820
135,117,512
See notes to consolidated financial statements
6 7
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands)
Year Ended December 31
2024
2023
2022
Net income
$
372,996
$
366,313
$
379,627
Other comprehensive income (loss) on available-for-sale
(“AFS”) securities, net of tax
30,855
81,521
( 368,934
)
Other comprehensive (loss) income on cash flow hedge, net of tax
( 6,249
)
( 13,059
)
36,655
Other comprehensive income on defined benefit pension plan, net of tax
11,172
4,589
4,435
Total comprehensive income, net of tax
$
408,774
$
439,364
$
51,783
See notes to consolidated financial statements
6 8
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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)
Accumulated
Common Stock
Other
Total
Par
Retained
Comprehensive
Treasury
Shareholders’
Shares
Value
Surplus
Earnings
(Loss) Income
Stock
Equity
Balance at January 1, 2022
141,360,266
$
353,402
$
3,149,955
$
1,390,777
$
( 4,888
)
$
( 170,618
)
$
4,718,628
Comprehensive income:
Net income
0
0
0
379,627
0
0
379,627
Other comprehensive loss, net of tax
0
0
0
0
( 327,844
)
0
( 327,844
)
Total comprehensive income, net of tax
51,783
Stock based compensation expense
0
0
9,881
0
0
0
9,881
Stock grant forfeiture ( 9,071 shares)
0
0
326
0
0
( 326
)
0
Purchase of treasury stock ( 2,289,859 shares)
0
0
0
0
0
( 79,460
)
( 79,460
)
Cash dividends ($ 1.44 per share)
0
0
0
( 194,978
)
0
0
( 194,978
)
Net issuance of common stock under stock-based compensation plans ( 651,294 shares)
651,294
1,627
8,712
0
0
0
10,339
Balance at December 31, 2022
142,011,560
355,029
3,168,874
1,575,426
( 332,732
)
( 250,404
)
4,516,193
Comprehensive income:
Net income
0
0
0
366,313
0
0
366,313
Other comprehensive income, net of tax
0
0
0
0
73,051
0
73,051
Total comprehensive income, net of tax
439,364
Stock based compensation expense
0
0
12,463
0
0
0
12,463
Stock grant forfeiture ( 8,295 shares)
0
0
320
0
0
( 320
)
0
Purchase of treasury stock ( 33,850 shares)
0
0
0
0
0
( 1,382
)
( 1,382
)
Cash dividends ($ 1.45 per share)
0
0
0
( 196,120
)
0
0
( 196,120
)
Net issuance of common stock under stock-based compensation plans ( 246,086 shares)
246,086
615
107
0
0
0
722
Balance at December 31, 2023
142,257,646
355,644
3,181,764
1,745,619
( 259,681
)
( 252,106
)
4,771,240
Comprehensive income:
Net income
0
0
0
372,996
0
0
372,996
Other comprehensive income, net of tax
0
0
0
0
35,778
0
35,778
Total comprehensive income, net of tax
408,774
Stock based compensation expense
0
0
12,130
0
0
0
12,130
Stock grant forfeiture ( 9,413 shares)
0
0
345
0
0
( 345
)
0
Purchase of treasury stock ( 30,192 shares)
0
0
0
0
0
( 1,040
)
( 1,040
)
Cash dividends ($ 1.48 per share)
0
0
0
( 200,889
)
0
0
( 200,889
)
Net issuance of common stock under stock-based compensation plans ( 437,170 shares)
437,170
1,093
1,915
0
0
0
3,008
Balance at December 31, 2024
142,694,816
$
356,737
$
3,196,154
$
1,917,726
$
( 223,903
)
$
( 253,491
)
$
4,993,223
See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands)
Year Ended December 31
2024
2023
2022
OPERATING ACTIVITIES
Net income
$
372,996
$
366,313
$
379,627
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses
25,153
31,153
18,822
Amortization and accretion
( 5,313
)
5,915
5,433
Loss on sales of bank premises, OREO, leases and equipment
322
345
457
Write-downs on bank premises, OREO, leases and equipment
219
945
2,007
Depreciation
15,709
17,191
18,237
Loss (gain) on securities
7,720
7,646
( 776
)
Loans originated for sale
( 645,942
)
( 860,901
)
( 1,903,981
)
Proceeds from sales of loans
673,906
887,398
2,238,093
Gain on sales of loans
( 16,063
)
( 25,879
)
( 41,274
)
Mortgage repurchase loan losses paid, net of recoveries
19
( 304
)
( 69
)
Stock-based compensation
12,130
12,463
9,881
Excess tax benefits from stock-based compensation arrangements
258
128
1,040
Deferred income tax (benefit) expense
( 3,368
)
( 2,921
)
6,887
Amortization of tax credit investments
15,277
15,238
13,567
Originations of mortgage servicing rights
0
( 715
)
( 1,417
)
Recoveries of impairment on mortgage servicing rights
0
0
( 883
)
Gain on sale of mortgage servicing rights
( 7,086
)
( 8,306
)
0
Increase in cash surrender value of bank-owned life insurance policies
( 14,150
)
( 9,267
)
( 14,064
)
Accretion (amortization) of net periodic pension costs
10
159
( 1,640
)
Changes in:
Interest receivable
9,008
( 16,530
)
( 30,370
)
Other assets
2,056
( 3,618
)
57,380
Accrued expenses and other liabilities
2,593
18,784
3,865
NET CASH PROVIDED BY OPERATING ACTIVITIES
445,454
435,237
760,822
INVESTING ACTIVITIES
Proceeds from sales of securities available for sale
454,993
181,824
410
Proceeds from maturities and calls of securities available for sale
2,459,102
770,389
575,338
Purchases of securities available for sale
( 2,062,441
)
( 107,866
)
( 1,572,482
)
Proceeds from sales of equity securities
8,113
344
6,782
Purchases of equity securities
( 1,159
)
( 1,647
)
( 2,596
)
Proceeds from sales and redemptions of other investment securities
160,637
155,299
4,829
Purchases of other investment securities
( 136,392
)
( 178,476
)
( 99,435
)
Redemption of bank-owned life insurance policies
3,864
2,556
11,947
Purchases of bank premises and equipment
( 12,128
)
( 11,687
)
( 16,862
)
Proceeds from sales of bank premises and equipment
101
2,542
902
Proceeds from sales of mortgage servicing rights
12,489
23,450
0
Proceeds from sales of OREO properties
2,355
3,240
10,571
Net change in loans and leases
( 318,049
)
( 800,974
)
( 2,367,060
)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
571,485
38,994
( 3,447,656
)
FINANCING ACTIVITIES
Cash dividends paid
( 200,727
)
( 194,727
)
( 193,041
)
Acquisition of treasury stock
( 1,040
)
( 1,382
)
( 79,460
)
Proceeds from exercise of stock options
5,274
1,750
10,295
Repayment of long-term Federal Home Loan Bank borrowings
( 1,500,000
)
( 1,900,000
)
( 520,000
)
Proceeds from issuance of long-term Federal Home Loan Bank borrowings
250,000
1,500,000
1,900,000
Redemption of subordinated debt
0
( 10,250
)
0
Changes in:
Time deposits
254,936
1,318,577
( 623,254
)
Other deposits
887,924
( 801,305
)
( 421,078
)
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings
( 20,005
)
35,397
31,854
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
( 323,638
)
( 51,940
)
105,316
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
693,301
422,291
( 2,581,518
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
1,598,943
1,176,652
3,758,170
CASH AND CASH EQUIVALENTS AT END OF YEAR
$
2,292,244
$
1,598,943
$
1,176,652
7 0
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CONSOLIDATED STATEMENTS OF CASH FLOWS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands)
Year Ended December 31
2024
2023
2022
Supplemental information
Cash paid for:
Interest on deposits and borrowed funds
$
590,635
$
468,123
$
98,161
Income taxes
91,689
106,083
93,680
Amounts in the measurement of lease liabilities
19,900
21,581
21,240
Noncash investing activities:
Transfers of loans held for sale to loans
0
0
154,699
Transfers of loans to OREO
359
4,941
1,546
Right-of-use assets obtained in the exchange for lease liabilities
8,896
33,403
9,184
Acquisition of subsidiaries and purchase price adjustments:
Assets acquired, net of cash
0
0
( 345
)
Liabilities assumed
0
0
2,050
Goodwill
0
0
2,395
See notes to consolidated financial statements
7 1
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
December 31, 2024
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations:
United Bankshares, Inc. (“United”, the “Company”) is a financial holding company headquartered in Charleston, West Virginia. United considers all of West Virginia to be included in its market area. This area includes the five largest West Virginia Metropolitan Statistical Areas (“MSA”): the Parkersburg MSA, the Charleston MSA, the Huntington MSA, the Morgantown MSA and the Wheeling MSA. United serves the Ohio counties of Lawrence, Belmont, Jefferson and the Pennsylvania counties of Washington and Fayette, primarily because of their close proximity to the Ohio and Pennsylvania borders and United banking offices located in those counties in nearby West Virginia. United’s Virginia markets include the Maryland, northern Virginia and Washington, D.C. MSA, the Winchester MSA, the Harrisonburg MSA, and the Charlottesville MSA. Through its acquisition of Carolina Financial, United’s market also includes the Coastal, Midlands, and Upstate regions of South Carolina, including the Charleston (Charleston, Dorchester and Berkeley Counties), Myrtle Beach (Horry and Georgetown Counties), Columbia (Richland and Lexington Counties), and the Upstate (Greenville and Spartanburg Counties) areas as well as areas in North Carolina including Wilmington (New Hanover County), Raleigh-Durham (Durham and Wake Counties), Charlotte-Concord-Gastonia (NC and SC) and the southeastern coastal region of North Carolina (Bladen, Brunswick, Columbus, Cumberland, Duplin and Robeson Counties). Through its acquisition of Community Bankers Trust, United added new markets in Baltimore and Annapolis, Maryland and Lynchburg and Richmond, Virginia as well as the Northern Neck of Virginia. United considers all of the above locations to be the primary market areas for its business.
Operating and Reporting Segments
As of December 31, 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. Included among the banking products and services offered are the acceptance of deposits in checking, savings, time and money market accounts; the making and servicing of personal, credit card, commercial, and floor plan loans; and the making of construction and real estate loans as well as the origination and sale of residential mortgages in the secondary market. Also offered are trust and brokerage services, safe deposit boxes, and wire transfers. 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. 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: community banking and mortgage banking. However, during the first quarter of 2024, United consolidated the mortgage origination and sales business of George Mason and Crescent with that of United Bank. United previously exited the third-party origination (“TPO”) business during the fourth quarter of 2023.
Basis of Presentation:
The consolidated financial statements and the notes to consolidated financial statements include the accounts of United and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.
As defined in applicable accounting standards, variable interest entities (“VIEs”) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. United’s wholly owned and indirect wholly owned statutory trust subsidiaries are VIEs for which United is not the primary beneficiary. Accordingly, its accounts are not included in United’s consolidated financial statements.
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The accounting and reporting policies of United conform with U.S. generally accepted accounting principles. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. To conform to the 2024 presentation, certain reclassifications have been made to prior period amounts, which had no impact on net income, comprehensive income or shareholders’ equity. In the opinion of management, all adjustments necessary for a fair presentation of financial position and results of operations have been made. Such adjustments are of a normal and recurring nature. In the opinion of management, all adjustments necessary for a fair presentation of financial position and results of operations have been made.
The Company has evaluated events and transactions subsequent to December 31, 2024 through the date these financial statements were issued. Based on definitions and requirements of generally accepted accounting principles for “Subsequent Events,” the Company has not identified any events that would require adjustments to, or disclosure in the financial statements other than information related to the acquisition of Piedmont Bancorp, Inc. (“Piedmont”) disclosed in Note B, Notes to Consolidated Financial Statements.
Cash and Cash Equivalents:
United considers cash and due from banks, interest-bearing deposits with other banks and federal funds sold as cash and cash equivalents.
Debt securities
: The Company accounts for debt securities in two categories: held to maturity (“HTM”) and available for sale (“AFS”). Premiums and discounts on debt securities are deferred and recognized into income over the contractual life of the asset using the effective interest method.
HTM securities are accounted for at amortized cost, but the Company must have both the positive intent and the ability to hold those securities to maturity. There are very limited circumstances under which securities in the HTM category can be sold without jeopardizing the cost basis of accounting for the remainder of the securities in this category. Substantially all of the Company’s HTM debt securities are issued by state and political subdivisions (municipalities). As of December 31, 2024, United considers its HTM debt securities portfolio to be immaterial.
AFS securities are accounted for at fair value. Gains and losses realized on the sale of these securities are accounted for based on the specific identification method. Unrealized gains and losses for AFS securities are excluded from earnings and reported net of the related tax effect in the accumulated other comprehensive income component of shareholders’ equity.
Allowance for Credit Losses (HTM Debt Securities)
: For HTM debt securities, the Company is required to utilize a current expected credit losses (“CECL”) methodology to estimate expected credit losses. As of December 31, 2024 and 2023, the Company recorded an allowance for credit losses of $ 18 ,000 and $ 17 ,000, respectively, on its HTM debt securities portfolio.
Allowance for Credit Losses (AFS Debt Securities)
: The impairment model for available-for-sale (“AFS”) debt securities differs from the CECL methodology applied for HTM debt securities because AFS debt securities are measured at fair value rather than amortized cost. Although ASC Topic 326, “Financial Instruments – Credit Losses” replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model. For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more-likely-than-not that it will be required to sell, the security before recovery of its amortized cost basis. If either criteria is met, the security’s amortized cost basis is written down to fair value through income. For AFS debt securities where neither of the criteria are met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the credit rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited to the amount that the fair value is less than the amortized cost basis. Any remaining discount that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. An entity may no longer consider the length of time fair value has been less than amortized cost. Changes in the allowance for credit losses are recorded as a provision (or release) for credit losses. Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. As of December 31, 2024, the Company determined that the unrealized loss positions in AFS securities were no t the result of credit losses, and therefore, an allowance for credit losses was not recorded. United has the intent and the ability to hold these securities until such time as the value recovers or the securities mature.
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Equity securities:
Investments in equity securities with readily determinable fair values (marketable) are measured at fair value, with changes in the fair value recognized in Net investment securities gains in the Consolidated Statements of Income.
Other investment securities:
Certain security investments such as Federal Reserve Bank stock and Federal Home Loan Bank stock that do not have readily determinable fair values (non-marketable) are accounted for at cost minus impairment, if any. For other security investments
that do not have readily determinable fair values (non-marketable), they are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer, also referred to as the measurement alternative. Any adjustments to the carrying value of these investments are recorded in Other income in the Consolidated Statements of Income.
Securities Purchased Under Resale Agreements and Securities Sold Under Agreements to Repurchase:
Securities purchased under agreements to resell and securities sold under agreements to repurchase are accounted for as collateralized financing transactions. They are recorded at the amounts at which the securities were acquired or sold plus accrued interest. Securities, generally U.S. government and federal agency securities, pledged as collateral under these financing arrangements cannot be repledged or sold, unless replaced, by the secured party. The fair value of the collateral either received from or provided to a third party is continually monitored and additional collateral is obtained or is requested to be returned to United as deemed appropriate.
Loans:
Loans are reported at the principal amount outstanding, net of unearned income, except loans acquired through transfer (see below). Interest on loans is accrued and credited to operations using methods that produce a level yield on individual principal amounts outstanding. Loan origination and commitment fees and related direct loan origination costs are deferred and amortized as an adjustment of loan yield over the estimated life of the related loan. Loan fees net of costs accreted and included in interest income were $ 36,937 ,000, $ 39,509 ,000, and $ 57,424 ,000, for the years of 2024, 2023 and 2022, respectively.
For all loan classes, past due loans and leases are reviewed on a monthly basis to identify loans and leases for nonaccrual status. Generally, when collection in full of the principal and interest is jeopardized, the loan is placed on nonaccrual status. The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest. However, regardless of delinquency status, if a loan is fully secured and in the process of collection and resolution of collection is expected in the near term (generally less than 90 days), then the loan will not be placed on nonaccrual status. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and unpaid interest accrued in prior years is charged to the allowance for credit losses. United’s method of income recognition for loans and leases that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectibility of principal is in doubt. Nonaccrual loans and leases will not normally be returned to accrual status unless all past due principal and interest has been paid and the borrower has evidenced their ability to meet the contractual provisions of the note.
Loans Acquired Through Transfer:
Acquired loans are recorded at fair value at the date of acquisition based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Certain purchased loans are individually evaluated while certain purchased loans are grouped together according to similar risk characteristics and are treated in the aggregate when applying various valuation techniques. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.
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Loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics. This initial allowance for credit losses is allocated to individual PCD loans and added to the purchase price or acquisition date fair values to establish the initial amortized cost basis of the PCD loans. As the initial allowance for credit losses is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan. Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors and results in a discount or premium. Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans.
For loans and leases acquired after the adoption of ASC Topic 326, United will likely take several factors into consideration when determining if loans and leases meet the definition of PCD. ASC Topic 326 lists some, but not all, factors for consideration in the bifurcation of PCD versus non-PCD assets:
·
Financial assets that are delinquent as of the acquisition date
·
Financial assets that have been downgraded since origination
·
Financial assets that have been placed on nonaccrual status
For acquired loans not deemed purchased credit deteriorated at acquisition, the differences between the initial fair value and the unpaid principal balance are recognized as interest income on a level-yield basis over the lives of the related loans.
Loans Held for Sale:
Loans held for sale consist of one-to-four family conforming residential real estate loans originated for sale in the secondary market.
Loans held for sale are recorded under the fair value option at a fair value measured using valuations from investors for loans with similar characteristics adjusted for the Company’s actual sales experience versus the investor’s indicated pricing.
Gains and losses on sale of loans are recorded within income from mortgage banking activities.
Allowance for Loan and Lease Losses:
The allowance for loan losses is an estimate of the expected credit losses on financial assets measured at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit losses expected to arise over the life of the asset (contractual term). Assets are charged off when United determines that such financial assets are deemed uncollectible or based on regulatory requirements, whichever is earlier. Charge-offs are recognized as a deduction from the allowance for loan losses. Expected recoveries of amounts previously charged-off, not to exceed the aggregate of the amount previously charged-off, are included in determining the necessary reserve at the balance sheet date.
United made a policy election to present the accrued interest receivable balance separately in its consolidated balance sheets from the amortized cost of a loan. United estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as reasonable and supportable forecast adjustments for changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors. A reversion to historical loss data occurs via a straight-line method during the year following the one-year reasonable and supportable forecast period.
United pools its loans and leases based on similar risk characteristics in estimating expected credit losses. United has identified the following portfolio segments and measures the allowance for credit losses using the following methods:
·
Method: Probability of Default/Loss Given Default (PD/LGD)
Ø
Commercial Real Estate Owner-Occupied
Ø
Commercial Real Estate Nonowner-Occupied
Ø
Commercial Other
·
Method: Cohort
Ø
Residential Real Estate
Ø
Construction & Land Development
Ø
Consumer
Ø
Bankcard
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Risk characteristics of commercial real estate owner-occupied loans and commercial other loans and leases are similar in that they are normally dependent upon the borrower’s internal cash flow from operations to service debt. Commercial real estate nonowner-occupied loans differ in that cash flow to service debt is normally dependent on external income from third parties for use of the real estate such as rents, leases and room rates. Residential real estate loans are dependent upon individual borrowers who are affected by changes in general economic conditions, demand for housing and resulting residential real estate valuation. Construction and land development loans are impacted mainly by demand whether for new residential housing or for retail, industrial, office and other types of commercial construction within a given area. Consumer loan pool risk characteristics are influenced by general, regional and local economic conditions.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral but may also include other non-performing loans, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. These individually evaluated loans are removed from their respective pools and typically represent collateral dependent loans.
Expected credit losses are estimated over the contractual term of the loans and leases, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless management has a reasonable expectation at the reporting date that the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by United.
At the acquisition date, an initial allowance for expected credit losses for non-PCD loans is estimated and recorded as credit loss expense. The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans. For allowance for credit losses under ASC Topic 326 calculation purposes, United includes its acquired loans and leases in their relevant pool unless they meet the criteria for specific review.
Bank Premises and Equipment:
Bank premises and equipment are stated at cost, less allowances for depreciation and amortization. The provision for depreciation is computed principally by the straight-line method over the estimated useful lives of the respective assets. Useful lives range primarily from three
to 15 years for furniture, fixtures and equipment and five
to 40 years for buildings and improvements. Leasehold improvements are generally amortized over the lesser of the term of the respective leases or the estimated useful lives of the improvements.
Other Real Estate Owned
: At December 31, 2024 and 2023, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $ 327,000 and $ 2,615,000 , respectively. OREO consists of real estate acquired in foreclosure or other settlement of loans. Such assets are carried at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. Any adjustment to the fair value at the date of transfer is charged against the allowance for loan losses. Any subsequent valuation adjustments as well as any costs relating to operating, holding or disposing of the property are recorded in other expense in the period incurred. At December 31, 2024 and 2023, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $ 795,000 and $ 142,000 , respectively.
Intangible Assets:
Intangible assets relating to the estimated fair value of the deposit base of the acquired institutions are being amortized on an accelerated basis over a one
to ten-year period. Management reviews intangible assets on an annual basis, or sooner if indicators of impairment exist, and evaluates changes in facts and circumstances that may indicate impairment in the carrying value. United incurred amortization expense of $ 3,639,000 , $ 5,116,000 , and $ 5,516,000 , in 2024, 2023, and 2022, respectively, related to all intangible assets.
Goodwill is tested for impairment at least annually or sooner if indicators of impairment exist. United may elect to perform a qualitative analysis to determine whether or not it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If United elects to bypass this qualitative analysis, or concludes via qualitative analysis that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, United may use either a market or income quantitative approach, whichever is more practical, to determine the fair value of the reporting unit to compare to its carrying value. If the estimated fair value of the reporting unit is less than its carrying value, an
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impairment charge would be recorded for the excess, not to exceed the amount of goodwill allocated to the reporting unit. At each reporting date, the Company considers potential indicators of impairment. United bypassed a qualitative assessment and utilized a quantitative approach to test goodwill for impairment as of September 30, 2024. The goodwill impairment test did not identify any indicators of goodwill impairment. As of December 31, 2024, and 2023, total goodwill approximated
$
1,888,889,000 .
Mortgage Servicing Rights, Fees and Costs:
The Company initially measures servicing assets and liabilities retained related to the sale of residential loans held for sale (“MSRs”) at fair value. For subsequent measurement purposes, the Company measures servicing assets and liabilities using the amortization method.
MSRs are amortized in proportion to, and over the period of, estimated net servicing income. The amortization of the MSRs is analyzed periodically and is adjusted to reflect changes in prepayment rates and other estimates.
The Company evaluates potential impairment of MSRs based on the difference between the carrying amount and current estimated fair value of the servicing rights. In determining impairment, the Company aggregates all servicing rights and stratifies them into tranches based on predominant risk characteristics. If impairment exists, a valuation allowance is established for any excess of amortized cost over the current estimated fair value by a charge to income. If the Company later determines that all or a portion of the impairment no longer exists for a particular tranche, a reduction of the allowance may be recorded as an increase to income.
Service fee income is recorded for fees earned for servicing mortgage loans under servicing agreements with the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and certain private investors. The fees are based on a contractual percentage of the outstanding principal balance of the loans serviced and are recorded in noninterest income. Amortization of MSRs and mortgage servicing costs are charged to expense when incurred. During the third quarter of 2024, United sold its remaining balance of MSRs.
Accrued Interest Receivable
:
In accordance with ASC Topic 326, the Company made the following elections regarding accrued interest receivable (“AIR”):
•
Presenting accrued interest receivable balances separately from their underlying instruments within the consolidated statements of financial condition.
•
Excluding accrued interest receivable that is included in the amortized cost of financing receivables from related disclosure requirements.
•
Continuing our policy to write off accrued interest receivable by reversing interest income in cases where the Company does not reasonably expect to receive payment.
•
Not measuring an allowance for credit losses for accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner.
Revenue Recognition
: Interest and dividend income, loan fees, fees from trust and brokerage services, deposit services and bankcard fees are recognized and accrued as earned.
Descriptions of our revenue-generating activities that are within the scope of ASC Topic 606, which are presented in our Consolidated Statements of Income as components of Other Income are discussed below. There are no significant judgements relating to the amount and timing of revenue recognition for those revenue streams under the scope of ASC Topic 606.
Fees from Trust Services
Revenue from trust services primarily is comprised of fees earned from the management and administration of trusts and other customer assets. Trust services include custody of assets, investment management, escrow services, and similar fiduciary activities. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts.
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Fees from Brokerage Services
Revenue from brokerage services are recorded as the income is earned at the time the related service is performed. In return for such services, the Company charges a commission for the sales of various securities products primarily consisting of investment company shares, annuity products, and corporate debt and equity securities, for its selling and administrative efforts. For account supervision, advisory and administrative services, revenue is recognized over a period of time as earned based on customer account balances and activity.
Fees from Deposit Services
Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, ATM activity fees, debit card fees, and other deposit account related fees. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (ATM or debit card activity).
Bankcard Fees and Merchant Discounts
Bankcard fees and merchant discounts are primarily comprised of credit card income and merchant services income. Credit card income is primarily comprised of interchange fees earned whenever the Company’s credit cards are processed through card payment networks such as Visa. Merchant services income mainly represents fees charged to merchants to process their credit card transactions. The Company’s performance obligation for bankcard fees and interchange are largely satisfied, and related revenue recognized at the time services are rendered. Payment is typically received immediately or in the following month.
Advertising Costs:
Advertising costs are generally expensed as incurred and included in Other Expense on the Consolidated Statements of Income. Advertising expense was $ 8,336 ,000, $ 9,330 ,000, and $ 8,160 ,000, for the years of 2024, 2023, and 2022, respectively.
Income Taxes:
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities (excluding deferred tax assets and liabilities related to business combinations or components of other comprehensive income). Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more-likely-than-not that all of the deferred tax assets will be realized. Interest and/or penalties related to income taxes are reported as a component of income tax expense.
For uncertain income tax positions, United records a liability based on a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken on a tax return, in order for those tax positions to be recognized in the financial statements.
United files a consolidated income tax return with its subsidiaries. Federal income tax expense or benefit has been allocated to subsidiaries on a separate return basis.
Derivative Financial Instruments:
United accounts for its derivative financial instruments in accordance with ASC Topic 815 which requires all derivative instruments to be carried at fair value on the balance sheet. United has designated certain derivative instruments used to manage interest rate risk as hedge relationships with certain assets, liabilities or cash flows being hedged. Certain derivatives used for interest rate risk management are not designated in a hedge relationship.
Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.
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For a fair value hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to the hedged financial instrument. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a fair value hedge are offset in current period earnings either in interest income or interest expense depending on the nature of the hedged financial instrument. For a cash flow hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to accumulated other comprehensive income within shareholders’ equity, net of tax. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a cash flow hedge are offset to accumulated other comprehensive income, net of tax and reclassified into earnings in the same line associated with the forecasted transaction when the forecasted transaction affects earnings. Fair value hedges may be eligible for offset on the consolidated balance sheets because they are subject to master netting arrangements or similar agreements. United has elected not to offset the assets and liabilities subject to such arrangements on the consolidated financial statements.
At inception of a hedge relationship, United formally documents the hedged item, the particular risk management objective, the nature of the risk being hedged, the derivative being used, how effectiveness of the hedge will be assessed and how the ineffectiveness of the hedge will be measured. United also assesses hedge effectiveness at inception and on an ongoing basis using regression analysis. Hedge ineffectiveness is measured by using the change in fair value method. The change in fair value method compares the change in the fair value of the hedging derivative to the change in the fair value of the hedged exposure, attributable to changes in the benchmark rate.
United enters into interest rate lock commitments to finance residential mortgage loans with its customers. These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by United. Interest rate risk arises on these commitments and subsequently closed loans if interest rates change between the time of the interest rate lock and the delivery of the loan to the investor. Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward mortgage loan sales contracts. United is a party to these forward mortgage loan sales contracts to sell loans with servicing released and short sales of mortgage-backed securities. When the interest rate is locked with the borrower, the rate lock commitment, forward sale agreement, and mortgage-backed security position are undesignated derivatives and marked to fair value through earnings. The fair value of the rate lock derivative is measured using valuations from investors for loans with similar characteristics as well as considering the probability of the loan closing (i.e. the “pull-through” rate) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing. Fair values of TBA mortgage-backed securities are measured using valuations from investors for mortgage-backed securities with similar characteristics. Income from mortgage banking activities includes the gain recognized for the period presented and associated elements of fair value.
United is subject to the Dodd-Frank Act clearing requirement for eligible derivatives. United has executed and cleared eligible derivatives through the London Clearing House (“LCH”). Variation margin at the LCH is distinguished as settled-to-market and settled daily based on the prior day value, rather than collateralized-to-market. The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.
For derivatives that are not designated in a hedge relationship, changes in the fair value of the derivatives are recognized in earnings in the same period as the change in the fair value.
Cash flows from derivative financial instruments are classified as cash flows from operating activities on the consolidated statements of cash flows.
Off-balance-sheet credit exposures
:
United maintains a reserve for lending-related commitments such as unfunded loan commitments and letters of credit. United estimates expected credit losses over the contractual period in which United is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by United. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. Methodology is based on a loss rate approach that starts with the probability of funding based on historical experience. Similar to methodology discussed previously related to the loans and leases receivable portfolio, adjustments are made to the historical losses for current conditions and reasonable and supportable forecast. Adjustments to the reserve for lending-related commitments on off-balance sheet credit exposures is recorded as other expense in the consolidated statements of income. The reserve for lending-related commitments is separately classified on the balance sheet and is included in other liabilities. The combined allowance for loan losses and reserve for lending-related commitments is considered the allowance for credit losses on loans and leases.
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Stock-Based Compensation
: Compensation expense related to stock options, restricted stock awards (“RSA”) and restricted stock units (“RSU”) issued to participants is based upon the fair value of the award at the date of grant. The fair value of stock options is estimated at the date of grant using a binomial lattice option pricing model, while the fair value of RSAs is based upon the stock price at the date of grant. RSU grants could be time-vested RSUs, performance-vested RSUs, or a combination of both. The value of the time-vested RSUs and the performance-vested, based on a performance condition, RSUs awarded is established as the fair market value of the stock at the time of the grant. The value of the performance-vested, based on a market condition, RSUs awarded is estimated through the use of a Monte Carlo valuation model as of the grant date. Compensation expense is recognized on a straight-line basis over the vesting period for all stock-based awards and grants.
Stock-based compensation expense was $ 12,130 ,000 in 2024, $ 12,463 ,000 in 2023, and $ 9,881 ,000 in 2022.
Treasury Stock
: United records common stock purchased for treasury at cost. At the date of subsequent reissuance, the treasury stock account is reduced by the cost of such stock using the weighted-average cost method.
Trust Assets and Income:
Assets held in a fiduciary or agency capacity for customers are not included in the balance sheets since such items are not assets of the company. Trust income is reported on an accrual basis.
Earnings Per Common Share:
United calculates earnings per common share in accordance with ASC Topic 260, “Earnings Per Share,” which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. United has determined that its outstanding non-vested restricted stock awards are participating securities.
Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. Antidilutive stock options and restricted stock outstanding of 590,395 , 1,410,389 , and 656,432 for the years ended December 31, 2024, 2023 and 2022, respectively, were excluded from the earnings per diluted common share calculation.
The reconciliation of the numerator and denominator of basic earnings per share with that of diluted earnings per share is presented as follows:
Year Ended December 31
(Dollars in thousands, except per share)
2024
2023
2022
Distributed earnings allocated to common
stock
$
200,156
$
195,167
$
194,052
Undistributed earnings allocated to common
stock
172,006
170,267
184,572
Net earnings allocated to common
shareholders
$
372,162
$
365,434
$
378,624
Average common shares outstanding
134,947,592
134,505,058
134,776,241
Dilutive effect of stock compensation
277,825
248,762
341,271
Average diluted shares outstanding
135,225,417
134,753,820
135,117,512
Earnings per basic common share
$
2.76
$
2.72
$
2.81
Earnings per diluted common share
$
2.75
$
2.71
$
2.80
Fair Value Measurements
: United determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which also clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
ASC Topic 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect United’s market assumptions.
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The three levels of the fair value hierarchy based on these two types of inputs are as follows:
Level 1
-
Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2
-
Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.
Level 3
-
Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.
When determining the fair value measurements for assets and liabilities, United looks to active and observable markets to price identical assets or liabilities whenever possible and classifies such items in Level 1. When identical assets and liabilities are not traded in active markets, United looks to market observable data for similar assets and liabilities and classifies such items as Level 2. Nevertheless, certain assets and liabilities are not actively traded in observable markets and United must use alternative valuation techniques using unobservable inputs to determine a fair value and classifies such items as Level 3. For assets and liabilities that are not actively traded, the fair value measurement is based primarily upon estimates that require significant judgment. Therefore, the results may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there are inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.
Recent Accounting Pronouncements
:
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-04,
“Induced Conversions of Convertible Debt Instruments.” ASU 2024-04
provides additional guidance on whether induced conversion or extinguishment accounting should be applied to certain settlements of convertible debt instruments that do not occur in accordance with the instruments’ preexisting terms. ASU 2024-04
requires entities to apply a preexisting contract approach. To qualify for induced conversion accounting under this approach, the inducement offer is required to preserve the form of consideration and result in an amount of consideration that is not less than that issuable pursuant to the preexisting conversion privileges. ASU 2024-04
clarifies how entities should assess the form and amount of consideration when applying this approach. ASU 2024-04
is effective for public business entities for annual periods beginning after December 15, 2025, with early adoption permitted, and can be adopted either on a prospective or retrospective basis. The adoption of ASU 2024-04
is not expected to have an impact on the Company’s financial condition or results of operations.
In November 2024, the FASB issued Accounting Standards Update ASU 2024-03, “Disaggregation of Income Statement Expenses.” ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 adds ASC 220-40 to require a footnote disclosure about specific expenses by requiring public business entities to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other types of depletion expenses. Certain other expenses and gains or losses that must be disclosed under existing U.S. GAAP, and that are recorded in a relevant expense caption, must be presented in the same tabular disclosure. ASU 2024-03 does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnote to the financial statements. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026. Entities are permitted to early adopt the standard and apply retrospectively for annual financial statements that have not yet been issued or made available for issuance. The adoption of ASU 2024-03 is not expected to have an impact on the Company’s financial condition or results of operations but could change certain disclosures in United’s SEC filings.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09,
“Improvements to Income Tax Disclosures.” ASU 2023-09
enhances annual income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09
also includes certain other amendments to improve the
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effectiveness of income tax disclosures. ASU 2023-09
is effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard for annual financial statements that have not yet been issued or made available for issuance. The adoption of ASU 2023-09
is not expected to have an impact on the Company’s financial condition or results of operations but could change certain disclosures in United’s SEC filings.
In November 2023, the FASB issued ASU 2023-07,
“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in ASU 2023-07
improve reportable segment disclosure requirements, mainly through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments will enable investors to better understand an entity’s overall performance and assess potential future cash flows. ASU No. 2023-07
is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted. The adoption of ASU 2023-07
did not have an impact on the Company’s financial condition or results of operations but changed certain disclosures in United’s SEC filings starting with this Annual Report on Form 10-K.
In October 2023, the FASB issued ASU 2023-06,
“Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” which adopts certain disclosure requirements referred by the SEC. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X
or Regulation S-K
becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. The adoption of ASU 2023-06
did not have an impact on the Company’s financial condition or results of operations.
In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60).” ASU 2023-05 requires a joint venture to apply a new basis of accounting at its formation date by valuing the net assets contributed at fair value for both business and asset transactions. The value of the net assets in total is then allocated to individual assets and liabilities by applying Topic 805 with certain exceptions. ASU 2023-05 requires certain disclosures to aid the user of the financial statements in understanding the implications of the joint venture formation. ASU 2023-05 is effective for joint venture formations with a formation date on or after January 1, 2025. The adoption of ASU 2023-05 is not expected to have an impact on the Company’s financial condition or results of operations.
In July 2023, the FASB issued ASU No. 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”) Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a significant impact on the Company’s financial statements.
In March 2023, the FASB issued Accounting ASU 2023-02, “Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The amendments in this ASU apply to all reporting entities that hold tax equity investments that meet the conditions for and elect to account for them using the proportional amortization method or an investment in a low income housing tax credit (“LIHTC”) structure through a limited liability entity that is not accounted for using the proportional amortization method and to which certain LIHTC-specific guidance removed from Subtopic 323-740 has been applied. Additionally, the disclosure requirements apply to investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the
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proportional amortization method (including investments within that elected program that do not meet the conditions to apply the proportional amortization method). ASU 2023-02
was effective for United on January 1, 2024. The amendments in this update must be applied on either a modified retrospective or a retrospective basis except for LIHTC investments not accounted for using the proportional amortization method. At January 1, 2024, United chose not to elect to account for its tax equity investments using the proportional amortization method.
In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” ASU 2022-06 extends the period of time financial statement preparers can utilize the reference rate reform relief guidance. In 2020, the FASB issued ASU 2020-04 to provide temporary, optional expedients related to the accounting for contract modifications and hedging transactions as a result of the global markets’ anticipated transition away from the use of LIBOR and other interbank offered rates to alternative reference rates. At the time ASU 2020-04 was issued, the United Kingdom’s Financial Conduct Authority (“FCA”) had established the intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021. As a result, the sunset provision was set for December 31, 2022; 12 months after the expected cessation date of all currencies and tenors of LIBOR. In March 2021, the FCA announced that the intended cessation date of LIBOR in the United States would be June 30, 2023, which has now taken effect as intended. Accordingly, ASU 2022-06 defers the expiration date of ASU 848 to December 31, 2024. 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.
In June 2022, the FASB issued ASU 2022 -
03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. ASU 2022-03 also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and requires certain new disclosures for equity securities subject to contractual sale restrictions. ASU 2022-03 was effective for United on January 1, 2024. The adoption of ASU 2022-03 did not have a material impact on the Company’s financial condition or results of operations.
In March 2022, the FASB issued ASU No. 2022-02, “Troubled Debt Restructurings and Vintage Disclosures”. ASU 2022-02 updates the requirements for accounting for credit losses under ASC 326, eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40, and enhances creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 also amends the guidance on “vintage disclosures” to require disclosure of gross write-offs by year of origination. ASU No. 2022-02 was effective for public business entities that have adopted Topic 326 for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendment was permitted. ASU No. 2022-02 was adopted by United prospectively for the period beginning January 1, 2023. The adoption did not have a material impact on the Company’s financial condition or results of operations. However, ASU No. 2022-02 did affect the Company’s disclosures. For additional information, see notes to Consolidated Financial Statements, Note E, “Credit Quality,” in this Form 10-K.
In March 2022, the FASB issued ASU No. 2022-01,
“Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method”. ASU 2022-01
further aligns risk management objectives with hedge accounting results on the application of the last-of-layer
method, which was first introduced in ASU No. 2017-12.
The enhanced guidance further improves the last-of-layer
concepts to expand to nonprepayable financial assets and allows more flexibility in the derivative structures used to hedge the interest rate risk. ASU 2022-01
also provides guidance on the relationship between the portfolio layer method requirements and other areas of GAAP. ASU No. 2022-01
is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendment is permitted if an entity has adopted ASU 2017-12
for the corresponding period. ASU No. 2022-01
was adopted by United on January 1, 2023. The adoption did not have a material impact on the Company’s financial condition or results of operations.
In October 2021, the FASB issued ASU No. 2021-08,
“Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. ASU 2021-08
amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. As a result of these amendments, it is expected that an acquirer
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will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its preacquisition financial statements. ASU No. 2021-08
is effective for public business entities
for fiscal years beginning after December
15 ,
2022 , including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted. ASU
No .
2021-08 was adopted by the Company on January
1 ,
2023 . The adoption did
not
have a
material
impact on the Company’s financial condition or results of operations.
NOTE B--MERGERS
AND ACQUISITIONS
On January 10, 2025, United consummated its acquisition of Piedmont. Piedmont was merged with and into United (the “Merger”), pursuant to the terms of the Agreement and Plan of Merger, dated May 9, 2024, by and between United and Piedmont (the “Agreement”). The Merger was accounted for under the acquisition method of accounting.
Piedmont, headquartered in Atlanta, Georgia 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 as of January 10, 2025. Piedmont was the holding company for The Piedmont Bank, a Georgia state-chartered bank, with sixteen locations in the
State of Georgia.
Under the terms of the Agreement, each outstanding share of common stock of Piedmont was converted into the right to receive 0.3 shares of United common stock, par value $ 2.50 per share.
Also pursuant to the Agreement, as of the effective time of the Merger, each option to purchase shares of Piedmont Common Stock (each, a “Piedmont Stock Option”) that is outstanding under the Piedmont Bancorp, Inc. 2009 Stock Option Plan (the “Piedmont Stock Plan”) immediately prior to the Effective Time, was, to the extent not vested, became fully vested and exercisable and was canceled in consideration for the right to receive a lump sum cash payment with respect thereto equal to the product of: (i) the excess, if any, of the product of (A) 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 Date (the “Average United Closing Price”) multiplied by (B) the Exchange Ratio, over the applicable exercise price of such Piedmont Stock Option; and (ii) the number of shares of Piedmont Common Stock subject to such Piedmont Stock Option, less any required withholding taxes.
Also pursuant to the Agreement, as of the effective time of the Merger, each warrant to purchase shares of Piedmont Common Stock (each, a “Piedmont Stock Warrant”) that was outstanding under the Piedmont Stock Plan or individual award agreement immediately prior to the Effective Time, was, to the extent not vested, became fully vested and exercisable and canceled, and in consideration therefor, at the election of the holder (i) converted into a warrant to purchase shares of United common stock with adjustments to the exercise price and number of shares to take into account the Exchange Ratio or (ii) received a lump sum cash payment with respect thereto equal to the product of: (A) the excess, if any, of the product of (x) the Average United Closing Price multiplied by (y) the Exchange Ratio, over the applicable exercise price of such Piedmont Stock Warrant; and (B) the number of shares of Piedmont Common Stock subject to such Piedmont Stock Warrant, less any required withholding taxes.
In addition, at the Effective Time, each restricted stock grant, restricted stock unit grant and any other award in respect of a share of Piedmont Common Stock subject to vesting, repurchase or other lapse restriction under a Piedmont Stock Plan that was outstanding immediately prior to the Effective Time other than a Piedmont Option or a Piedmont Stock Warrant (each, a “Piedmont Stock Award”) became fully vested, cancelled and converted automatically into the right to receive the Merger Consideration (with any fractional share being entitled to receive cash in lieu thereof) in respect of each share of Piedmont Common Stock underlying such Piedmont Stock Award, less any required withholding taxes.
Immediately following the Merger, The Piedmont Bank, a wholly-owned subsidiary of Piedmont, merged with and into United Bank, a wholly-owned subsidiary of United (the “Bank Merger”) pursuant to an Agreement and Plan of Merger dated May 9, 2024 (the “Bank Plan of Merger”). United Bank survived the Bank Merger and continues to exist as a Virginia banking corporation. For the year of 2024, United recorded acquisition-related costs of $ 2,870,000 .
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NOTE C--INVESTMENT
SECURITIES
Securities Available for Sale
Securities held for indefinite periods of time are classified as available for sale and carried at estimated fair value. The amortized cost and estimated fair values of securities available for sale are summarized as follows.
December 31, 2024
Gross
Gross
Allowance
Estimated
(Dollars in thousands)
Amortized
Unrealized
Unrealized
For Credit
Fair
Cost
Gains
Losses
Losses
Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
248,867
$
59
$
3,084
$
0
$
245,842
State and political subdivisions
574,580
8
79,515
0
495,073
Residential mortgage-backed securities
Agency
1,226,400
433
167,114
0
1,059,719
Non-agency
88,392
262
6,531
0
82,123
Commercial mortgage-backed securities
Agency
372,646
38
42,698
0
329,986
Asset-backed securities
476,863
166
2,047
0
474,982
Single issue trust preferred securities
13,296
0
1,377
0
11,919
Other corporate securities
281,646
0
21,571
0
260,075
Total
$
3,282,690
$
966
$
323,937
$
0
$
2,959,719
December 31, 2023
Gross
Gross
Allowance
Estimated
(Dollars in thousands)
Amortized
Unrealized
Unrealized
For Credit
Fair
Cost
Gains
Losses
Losses
Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
492,638
$
4
$
7,692
$
0
$
484,950
State and political subdivisions
613,588
11
79,768
0
533,831
Residential mortgage-backed securities
Agency
1,217,744
7
167,810
0
1,049,941
Non-agency
100,364
0
9,753
0
90,611
Commercial mortgage-backed securities
Agency
511,560
13
52,275
0
459,298
Asset-backed securities
872,048
44
11,454
0
860,638
Single issue trust preferred securities
16,380
0
1,239
0
15,141
Other corporate securities
325,573
0
33,606
0
291,967
Total
$
4,149,895
$
79
$
363,597
$
0
$
3,786,377
For the adoption of ASC Topic 326, “Financial Instruments—Credit Losses,” United made a policy election to exclude accrued interest from the amortized cost basis of available-for-sale debt securities and report accrued interest separately in “Accrued interest receivable” in the consolidated balance sheets. Available-for-sale debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, United does not currently recognize an allowance for credit loss against accrued interest receivable on available-for-sale debt securities. The table above excludes accrued interest receivable of $ 14,776,000 and $ 20,878,000 at December 31, 2024 and December 31, 2023, respectively, that is recorded in “Accrued interest receivable.”
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The following is a summary of securities available for sale which were in an unrealized loss position at December 31, 2024 and December 31, 2023.
Less than 12 months
12 months or longer
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in thousands)
Value
Losses
Value
Losses
Value
Losses
December 31, 202 4
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
1,476
$
3
$
42,886
$
3,081
$
44,362
$
3,084
State and political subdivisions
3,314
22
479,681
79,493
482,995
79,515
Residential mortgage-backed securities
Agency
128,655
1,660
856,448
165,454
985,103
167,114
Non-agency
0
0
59,668
6,531
59,668
6,531
Commercial mortgage-backed securities
Agency
0
0
319,506
42,698
319,506
42,698
Asset-backed securities
83,188
50
215,886
1,997
299,074
2,047
Single issue trust preferred securities
0
0
11,919
1,377
11,919
1,377
Other corporate securities
2,476
24
252,634
21,547
255,110
21,571
Total
$
219,109
$
1,759
$
2,238,628
$
322,178
$
2,457,737
$
323,937
Less than 12 months
12 months or longer
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in thousands)
Value
Losses
Value
Losses
Value
Losses
December 31, 2023
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
4,625
$
11
$
477,615
$
7,681
$
482,240
$
7,692
State and political subdivisions
2,050
193
517,186
79,575
519,236
79,768
Residential mortgage-backed securities
Agency
9,755
51
1,038,632
167,759
1,048,387
167,810
Non-agency
8,964
101
81,647
9,652
90,611
9,753
Commercial mortgage-backed securities
Agency
0
0
456,866
52,275
456,866
52,275
Asset-backed securities
15,866
216
829,778
11,238
845,644
11,454
Single issue trust preferred securities
2,922
182
12,219
1,057
15,141
1,239
Other corporate securities
0
0
274,308
33,606
274,308
33,606
Total
$ 44,182
$
754
$
3,688,251
$
362,843
$
3,732,433
$
363,597
The following table shows the proceeds from maturities, sales and calls of available for sale securities and the gross realized gains and losses on sales and calls of those securities that have been included in earnings as a result of any sales and calls. Gains or losses on sales and calls of available for sale securities were recognized by the specific identification method.
Year Ended
(In thousands)
2024
2023
2022
Proceeds from maturities, sales and calls
$
2,914,095
$
952,213
$
575,748
Gross realized gains
0
0
2
Gross realized losses
16,296
7,659
0
At December 31, 2024, gross unrealized losses on available for sale securities were $ 323,937 ,000 on 958 securities of a total portfolio of 1,029 available for sale 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.
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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 December 31, 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 $ 574,580,000 at December 31, 2024. As of December 31, 2024, approximately 46 % of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality. The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of December 31, 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 December 31, 2024.
Mortgage-backed securities
The fair value of mortgage-backed
securities is affected by changes in interest rates and prepayment speeds. When interest rates decline, prepayment speeds generally accelerate due to homeowners refinancing their mortgages at lower interest rates. This may result in the proceeds being reinvested at lower interest rates. Rising interest rates may decrease the assumed prepayment speed. Slower prepayment speeds may extend the maturity of the security beyond its estimated maturity. Therefore, investors may not be able to invest at current higher market rates due to the extended expected maturity of the security. United had a net unrealized loss of $ 215,610,000 on mortgage-backed
securities at December 31, 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 $ 1,599,046,000 at December 31, 2024. Of the $ 1,599,046,000 amount, $ 372,646,000 was related to agency commercial mortgage-backed securities and $ 1,226,400,000 was related to agency residential mortgage-backed securities. Each of the agency mortgage-backed securities provides a guarantee of full and timely payments of principal and interest by the issuing agency. Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at December 31, 2024.
United’s non-agency residential mortgage-backed securities portfolio relates to securities of various private label issuers. The total amortized cost of available for sale non-agency residential mortgage-backed securities was $ 88,392,000 at December 31, 2024. Of the $ 88,392,000 , 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 December 31, 2024.
Asset-backed securities
As of December 31, 2024, United’s asset-backed securities portfolio had a total amortized cost balance of $ 476,863,000 . 100 % of the portfolio was investment grade rated as of December 31, 2024. Approximately 34 % 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 66 % of the portfolio relates to collateralized loan obligation securities that are all AAA rated. Upon reviewing this portfolio as of December 31, 2024, it was determined that none of the asset-backed securities had credit losses.
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Single issue trust preferred securities
The majority of United’s single issue trust preferred portfolio consists of obligations from large cap banks (i.e. banks with market capitalization in excess of $ 10 billion). All single issue trust preferred securities are currently receiving interest payments. The amortized cost of available for sale single issue trust preferred securities as of December 31, 2024 consisted of $ 7,481,000 in investment grade bonds and $ 5,815,000 in unrated bonds. Management reviews each issuer’s current and projected earnings trends, asset quality, capitalization levels, and other key factors. Upon completing the review for the fourth quarter of 2024, it was determined that none of the single issue trust preferred securities had credit losses.
Corporate securities
As of December 31, 2024, United’s other corporate securities portfolio had a total amortized cost balance of $ 281,646,000 . The majority of the portfolio consisted of debt issuances of corporations representing a variety of industries, including financial institutions. Of the $ 281,646,000 , 95 % had at least one rating above investment grade, 2 % were below investment grade rated, and 3 % were unrated. For other corporate securities, management has evaluated the near-term prospects of the investment in relation to the severity of any unrealized loss. Based upon management’s analysis and judgment, it was determined that none of the other corporate securities had credit losses at December 31, 2024.
The amortized cost and estimated fair value of securities available for sale at December 31, 2024 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.
Maturities of mortgage-backed securities with an amortized cost of $ 1,687,438,000 and an estimated fair value of $ 1,471,828,000 at December 31, 2024 are included below based upon contractual maturity.
(In thousands)
Amortized
Cost
Estimated
Fair Value
Due in one year or less
$
262,093
$
261,458
Due after one year through five years
405,617
375,276
Due after five years through ten years
863,601
779,069
Due after ten years
1,751,379
1,543,916
Total
$
3,282,690
$
2,959,719
Equity securities at fair value
Equity securities consist mainly of equity securities of financial institutions, 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 $ 21,058,000 at December 31, 2024 and $ 8,945,000 at December 31, 2023.
Year Ended
(In thousands)
December 31, 2024
December 31, 2023
Net gains recognized during the period on equity securities sold
$
4,602
$
0
Unrealized gains recognized during the period on equity securities still held at period end
4,259
358
Unrealized losses recognized during the period on equity securities still held at period end
( 285
)
( 345
)
Net gains (losses) recognized during the period
$
8,576
$
13
Other investment securities
During the fourth quarter of 2024, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the fourth 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 fourth quarter. There were no other events or changes in circumstances during the fourth quarter which would have an adverse effect on the recorded fair value of its cost method securities.
The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $ 2,038,864,000 and $ 2,307,591,000 at December 31, 2024 and December 31, 2023, respectively.
8 8
Table of Contents
NOTE D—LOANS AND LEASES
Major classes of loans and leases are as follows:
(In thousands)
December 31,
2024
December 31,
2023
Commercial, financial and agricultural:
Owner-occupied commercial real estate
$
1,590,002
$
1,598,231
Nonowner-occupied commercial real estate
6,939,641
6,718,343
Other commercial
3,351,362
3,572,440
Total commercial, financial & agricultural
11,881,005
11,889,014
Residential real estate
5,507,384
5,271,236
Construction & land development
3,509,034
3,148,245
Consumer:
Bankcard
9,998
9,962
Other consumer
773,077
1,054,728
Less: Unearned income
( 7,005
)
( 14,101
)
Loans and leases, net of unearned income
$
21,673,493
$
21,359,084
The table above does not include loans held for sale of $ 44,360 ,000 and $ 56,261 ,000 at December 31, 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.
At December 31, 2024 and 2023, loans-in-process of $ 5,569,000 and $ 6,370,000 and overdrafts from deposit accounts of $ 4,919,000 and $ 7,146,000 , respectively, are included within the appropriate loan classifications above. The outstanding loan balances in the table above also include unamortized net discounts of $ 26,322,000 and $ 35,586,000 at December 31, 2024 and December 31, 2023, respectively.
United’s subsidiary bank has made loans, in the normal course of business, to the directors and officers of United and its subsidiaries, and to their associates. The aggregate dollar amount of these loans was $ 22,702,000 and $ 68,460,000 at December 31, 2024 and 2023, respectively. During 2024, $ 1,014,000 of new loans were made and repayments totaled $ 46,772,000 .
NOTE E--CREDIT
QUALITY
Management monitors the credit quality of its loans and leases on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan. United considers a loan to be past due when it is 30 days or more past its contractual payment due date.
For all loan classes, past due loans and leases are reviewed on a monthly basis to identify loans and leases for nonaccrual status. Generally, when collection in full of the principal and interest is jeopardized, the loan is placed on nonaccrual status. The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest. However, regardless of delinquency status, if a loan is fully secured and in the process of collection and resolution of collection is expected in the near term (generally less than 90 days), then the loan will not be placed on nonaccrual status. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and unpaid interest accrued in prior years is charged to the allowance for credit losses. United’s method of income recognition for loans and leases that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectability of principal is in doubt. Nonaccrual loans and leases will not normally be returned to accrual status unless all past due principal and interest has been paid and the borrower has evidenced their ability to meet the contractual provisions of the note.
8
9
Table of Contents
The following table sets forth United’s age analysis of its past due loans and leases, segregated by class of loans and leases:
Age Analysis of Past Due Loans and Leases
As of December 31, 2024
(In thousands)
30-89
Days Past
Due
90 Days or
more Past
Due
Total Past
Due
Current &
Other
Total
Financing
Receivables
90 Days or
More Past
Due &
Accruing
Commercial real estate:
Owner-occupied
$
3,767
$
1,284
$
5,051
$
1,584,951
$
1,590,002
$
0
Nonowner-occupied
11,931
23,379
35,310
6,904,331
6,939,641
0
Other commercial
5,594
19,019
24,613
3,326,749
3,351,362
431
Residential real estate
33,783
20,946
54,729
5,452,655
5,507,384
12,429
Construction & land
development
390
4,265
4,655
3,504,379
3,509,034
1,677
Consumer:
Bankcard
63
61
124
9,874
9,998
61
Other consumer
28,414
4,446
32,860
740,217
773,077
2,342
Total
$
83,942
$
73,400
$
157,342
$
21,523,156
$
21,680,498
$
16,940
Age Analysis of Past Due Loans and Leases
As of December 31, 2023
(In thousands)
30-89
Days Past
Due
90 Days or
more Past
Due
Total Past
Due
Current &
Other
Total
Financing
Receivables
90 Days or
More
Past Due &
Accruing
Commercial real estate:
Owner-occupied
$
6,361
$
6,335
$
12,696
$
1,585,535
$
1,598,231
$
110
Nonowner-occupied
10,373
13,146
23,519
6,694,824
6,718,343
2,460
Other commercial
3,218
1,224
4,442
3,567,998
3,572,440
560
Residential real estate
26,523
12,136
38,659
5,232,577
5,271,236
6,244
Construction & land
development
879
6,423
7,302
3,140,943
3,148,245
0
Consumer:
Bankcard
145
127
272
9,690
9,962
127
Other consumer
36,451
6,107
42,558
1,012,170
1,054,728
5,078
Total
$
83,950
$
45,498
$
129,448
$
21,243,737
$
21,373,185
$
14,579
The following table sets forth United’s nonaccrual loans and leases, segregated by class of loans and leases:
At December 31, 2024
At December 31, 2023
(In thousands)
Nonaccruals
With No
Related
Allowance
for Credit
Losses
Nonaccruals
With No
Related
Allowance
for Credit
Losses
Commercial Real Estate:
Owner-occupied
$
1,284
$
1,284
$
6,225
$
6,225
Nonowner-occupied
23,379
8,475
10,686
10,686
Other Commercial
18,588
584
664
664
Residential Real Estate
8,517
5,562
5,892
5,892
Construction
2,588
2,589
6,423
6,423
Consumer:
Bankcard
0
0
0
0
Other consumer
2,104
2,104
1,029
1,029
Total
$
56,460
$
20,598
$
30,919
$
30,919
Interest income recognized on nonaccrual loans was insignificant during the year ended December 31, 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 years 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.
9 0
Table of Contents
Amortized Cost Basis of L o
an Modifications Made to Borrowers Experiencing Financial Difficulty
For the Year ended December 31, 2024
Term
Extension
Interest Rate
Reduction
Term Extension &
Interest Rate
Reduction
Term Extension &
Payment Delay
% of Total Class of
Financing Receivable
Commercial real estate:
Owner-occupied
$
445
$
0
$
0
$
0
0.03
%
Nonowner-occupied
5,765
0
0
0
0.08
%
Other commercial
0
0
2,400
0
0.00
%
Residential real
estate
185
0
0
168
0.06
%
Construction & land
development
52
0
0
0
0.00
%
Consumer:
Bankcard
0
0
0
0
0.00
%
Other consumer
0
0
0
0
0.00
%
Total
$
6,447
$
0
$
2,400
$
168
0.04
%
Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial Difficulty
For the Year ended December 31, 2023
Term
Extension
Interest Rate
Reduction
Term Extension &
Interest Rate
Reduction
Term Extension &
Payment Delay
% of Total Class of
Financing Receivable
Commercial real estate:
Owner-occupied
$
484
$
0
$
0
$
0
0.03
%
Nonowner-occupied
31,633
1,737
0
0
0.50
%
Other commercial
165
0
0
0
0.00
%
Residential real
estate
506
0
0
0
0.01
%
Construction & land
development
0
0
0
0
0.00
%
Consumer:
Bankcard
0
0
0
0
0.00
%
Other consumer
0
0
0
0
0.00
%
Total
$
32,788
$
1,737
$
0
$
0
0.16
%
As of December 31, 2024, there was a commitment to lend additional funds of $ 1,199,000 to two debtors owing a loan receivable 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. The historical loss experience used in United’s credit loss models includes the impact of loan modifications provided to borrowers experiencing financial difficulty, and also includes the impact of projected loss severities as a result of loan defaults.
United closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance in the 12 months after a modification made to borrowers experiencing financial difficulty presented by class of financing receivable:
Payment Status (Amortized Cost Basis)
As of December 31, 2024
As of December 31, 2023
Current
30-89
Days Past
Due
90+
Days Past
Due
Current
30-89
Days Past
Due
90+
Days Past
Due
Commercial real estate:
Owner-occupied
$
445
$
0
$
0
$
484
$
0
$
0
Nonowner-occupied
1,366
4,399
0
33,370
0
0
Other commercial
2,400
0
0
65
100
0
Residential real estate
297
56
0
506
0
0
Construction & land development
52
0
0
0
0
0
Consumer:
Bankcard
0
0
0
0
0
0
Other consumer
0
0
0
0
0
0
Total
$
4,560
$
4,455
$
0
$
34,425
$
100
$
0
91
Table of Contents
The following table presents the financial effect of loan and lease modifications to borrowers experiencing financial difficulty for the year ended December 31, 2024 and 2023.
For the Year Ended
December 31, 2024
December 31, 2023
Weighted-
Average
Interest Rate
Reduction
Weighted
Average Term
Extension
(in years)
Weighted-
Average
Interest Rate
Reduction
Weighted
Average Term
Extension
(in years)
Commercial Real Estate:
Owner-occupied
0.00
%
0.3
0.00
%
1.0
Nonowner-occupied
0.00
%
0.5
1.50
%
1.4
Other Commercial
1.00
%
0.3
0.00
%
1.8
Residential Real Estate
0.00
%
4.9
0.00
%
4.6
Construction & land development
0.00
%
4.5
0.00
%
0
Consumer:
Bankcard
0.00
%
0
0.00
%
0
Other consumer
0.00
%
0
0.00
%
0
The following table presents loan or lease modifications completed within the last 12 months to borrowers experiencing financial difficulty had a payment default during the year ended December 31, 2024. No loan or lease modifications completed within the last 12 months to borrowers experiencing financial difficulty had a payment default during the year ended December 31, 2023.
Amortized Cost Basis of Modified Loans That Subsequently Defaulted
For the Year ended December 31, 2024
Term
Extension
Interest Rate
Reduction
Term
Extension &
Interest Rate
Reduction
Term
Extension &
Payment
Delay
% of Total Class of
Financing Receivable
Commercial real estate:
Owner-occupied
$
0
$
0
$
0
$
0
0.00
%
Nonowner-occupied
0
0
0
0
0.00
%
Other commercial
0
0
0
0
0.00
%
Residential real estate
0
0
0
0
0.00
%
Construction & land development
0
0
0
674
0.02
%
Consumer:
Bankcard
0
0
0
0
0.00
%
Other consumer
0
0
0
0
0.00
%
Total
$
0
$
0
$
0
$
674
0.00
%
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.
9 2
Table of Contents
The following table presents the amortized cost basis of collateral-dependent loans and leases in which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty, by class of loans and leases as of December 31, 2024 and December 31, 2023:
Collateral Dependent Loans and Leases
At December 31, 2024
(In thousands)
Residential
Property
Business
Assets
Land
Commercial
Property
Other
Total
Commercial real estate:
Owner-occupied
$
5
$
0
$
0
$
3,119
$
6,465
$
9,589
Nonowner-occupied
7,037
0
0
23,975
2,367
33,379
Other commercial
0
15,816
0
5,041
528
21,385
Residential real estate
7,348
0
0
0
11
7,359
Construction & land development
0
0
2,492
0
873
3,365
Consumer:
Bankcard
0
0
0
0
0
0
Other consumer
0
0
0
0
0
0
Total
$
14,390
$
15,816
$
2,492
$
32,135
$
10,244
$
75,077
Collateral Dependent Loans and Leases
At December 31, 2023
(In thousands)
Residential
Property
Business
Assets
Land
Commercial
Property
Other
Total
Commercial real estate:
Owner-occupied
$
27
$
0
$
0
$
5,208
$
9,272
$
14,507
Nonowner-occupied
11,200
0
0
13,555
1,810
26,565
Other commercial
0
891
0
5,193
256
6,340
Residential real estate
9,775
0
0
0
0
9,775
Construction & land
development
954
0
3,661
0
3,314
7,929
Consumer:
Bankcard
0
0
0
0
0
0
Other consumer
0
0
0
0
0
0
Total
$
21,956
$
891
$
3,661
$
23,956
$
14,652
$
65,116
United categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt: current financial information, historical payment experience, credit documentation, underlying collateral (if any), public information and current economic trends, among other factors.
United uses the following definitions for risk ratings:
·
Pass
·
Special Mention
·
Substandard
·
Doubtful
For United’s loans with a corporate credit exposure, United analyzes loans individually to classify the loans as to credit risk. Review and analysis of criticized (special mention-rated loans in the amount of $1,000,000 or greater) and classified (substandard-rated and worse in the amount of $500,000 and greater) loans is completed once per quarter. Review of notes with committed exposure of $3,000,000 or greater is completed at least annually. For loans with a consumer credit exposure, United internally assigns a grade based upon an individual loan’s delinquency status. United reviews and updates, as necessary, these grades on a quarterly basis.
Special mention loans, with a corporate credit exposure, have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or in the Company’s credit position at some future date. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry
9 3
Table of Contents
of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices. For loans with a consumer credit exposure, loans that are past due
30 - 89 days are generally considered special mention.
A substandard loan with a corporate credit exposure is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt by the borrower. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. They require more intensive supervision by management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some substandard loans, the likelihood of full collection of interest and principal may be in doubt and thus, placed on nonaccrual. For loans with a consumer credit exposure, loans that are 90 days or more past due or that have been placed on nonaccrual are considered substandard.
A loan with corporate credit exposure is classified as doubtful if it has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, highly questionable. A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the loan, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing. Generally, there are not any loans with a consumer credit exposure that are classified as doubtful. Usually, they are charged-off
prior to such a classification.
Based on the most recent analysis performed, the risk category of loans and leases as well as charge-offs and recoveries by class of loans is as follows. Loans originated in any year may be renewals of existing loans and not necessarily new loans.
Commercial Real Estate – Owner-occupied
Revolving
loans
converted to
(In thousands)
Term Loans
Origination Year
Revolving loans
amortized cost
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
236,547
$
132,095
$
243,103
$
225,152
$
205,461
$
467,417
$
29,900
$
0
$
1,539,675
Special Mention
0
0
0
0
0
15,199
8,545
0
23,744
Substandard
247
0
3,493
0
307
21,744
445
121
26,357
Doubtful
0
0
0
0
0
226
0
0
226
Total
$
236,794
$
132,095
$
246,596
$
225,152
$
205,768
$
504,586
$
38,890
$
121
$
1,590,002
Current-period charge-offs
0
0
0
0
0
( 116
)
0
0
( 116
)
Current-period recoveries
0
0
15
0
0
1,168
0
0
1,183
Current-period net recoveries
$
0
$
0
$
15
$
0
$
0
$
1,052
$
0
$
0
$
1,067
(In thousands)
Term Loans
Origination Year
Revolving loans
amortized cost
Revolving
loans and
leases
converted
to
As of December 31, 2023
2023
2022
2021
2020
2019
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
132,376
$
316,117
$
246,635
$
248,861
$
109,182
$
465,223
$
29,619
$
0
$
1,548,013
Special Mention
0
0
0
0
2,460
15,423
125
0
18,008
Substandard
0
1,734
274
475
436
28,469
449
129
31,966
Doubtful
0
0
0
0
0
244
0
0
244
Total
$
132,376
$
317,851
$
246,909
$
249,336
$
112,078
$
509,359
$
30,193
$
129
$
1,598,231
Current-period charge-offs
0
0
0
0
0
( 855
)
0
0
( 855
)
Current-period recoveries
0
13
0
0
0
174
0
0
187
Current-period net recoveries (charge-offs)
$
0
$
13
$
0
$
0
$
0
$
( 681 )
$
0
$
0
$
( 668 )
9 4
Table of Contents
Commercial Real Estate – Nonowner-occupied
(In thousands)
Term Loans
Origination Year
Revolving loans
amortized cost
Revolving loans
converted to
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
741,996
$
485,437
$
1,623,423
$
1,294,232
$
639,143
$
1,584,833
$
160,243
$
78
$
6,529,385
Special Mention
0
0
8,465
82,240
29,940
210,912
0
0
331,557
Substandard
0
0
4,085
4,020
143
48,633
21,818
0
78,699
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
741,996
$
485,437
$
1,635,973
$
1,380,492
$
669,226
$
1,844,378
$
182,061
$
78
$
6,939,641
Current-period charge-offs
0
0
0
0
( 751
)
( 1,830
)
0
0
( 2,581
)
Current-period recoveries
0
0
0
0
0
200
0
0
200
Current-period net recoveries
(charge-offs)
$
0
$
0
$
0
$
0
$
( 751
)
$
( 1,630
)
$
0
$
0
$
( 2,381
)
(In thousands)
Term Loans
Origination Year
Revolving loans
amortized cost
basis
Revolving loans
and leases
converted to
term loans
As of December 31, 2023
Internal
Risk
Grade:
2023
2022
2021
2020
2019
Prior
Total
Pass
$
455,399
$
1,428,880
$
1,587,315
$
717,189
$
695,492
$
1,335,526
$
228,743
$
106
$
6,448,650
Special Mention
0
4,614
2,381
25,437
43,017
104,997
30,651
0
211,097
Substandard
0
0
4,020
4,736
3,493
46,347
0
0
58,596
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
455,399
$
1,433,494
$
1,593,716
$
747,362
$
742,002
$
1,486,870
$
259,394
$
106
$
6,718,343
Current-period charge-offs
0
0
0
0
0
( 24
)
0
0
( 24
)
Current-period recoveries
0
0
0
0
0
1,233
0
0
1,233
Current-period net recoveries
$
0
$
0
$
0
$
0
$
0
$
1,209
$
0
$
0
$
1,209
Other commercial
(In thousands)
Term Loans and leases
Origination Year
Revolving
loans and leases
amortized cost
Revolving
loans and leases
converted to
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
403,641
$
505,947
$
378,072
$
394,412
$
164,671
$
519,488
$
912,293
$
0
$
3,278,524
Special Mention
81
36
1,129
339
251
18,941
4,652
0
25,429
Substandard
206
419
18,927
7,029
835
11,262
8,706
0
47,384
Doubtful
0
0
0
0
0
25
0
0
25
Total
$
403,928
$
506,402
$
398,128
$
401,780
$
165,757
$
549,716
$
925,651
$
0
$
3,351,362
Current-period charge-offs
0
( 464
)
( 252
)
( 156
)
( 148
)
( 1,352
)
( 1,217
)
0
( 3,589
)
Current-period recoveries
10
67
9
45
0
1,512
7
0
1,650
Current-period net (charge-
offs) recoveries
$
10
$
( 397
)
$
( 243
)
$
( 111
)
$
( 148
)
$
160
$
( 1,210
)
$
0
$
( 1,939
)
(In thousands)
Term Loans and leases
Origination Year
Revolving
loans and leases
amortized cost
Revolving
loans and leases
converted to
As of December 31, 2023
2023
2022
2021
2020
2019
Prior
basis
Total
Internal Risk Grade:
Pass
$
593,153
$
596,258
$
477,457
$
197,173
$
187,560
$
447,430
$
988,809
$
13
$
3,487,853
Special Mention
221
4,798
542
1,775
1,611
2,093
16,901
15
27,956
Substandard
1,059
16,248
306
792
660
11,923
25,597
0
56,585
Doubtful
0
0
0
0
0
46
0
0
46
Total
$
594,433
$
617,304
$
478,305
$
199,740
$
189,831
$
461,492
$
1,031,307
$
28
$
3,572,440
Current-period charge-offs
( 88
)
( 163
)
( 233
)
0
( 661
)
( 567
)
( 217
)
( 78
)
( 2,007
)
Current-period recoveries
0
0
0
0
25
1,699
5
0
1,729
Current-period net (charge-
offs) recoveries
$
( 88
)
$
( 163
)
$
( 233
)
$
0
$
( 636
)
$
1,132
$
( 212
)
$
( 78
)
$
( 278
)
9 5
Table of Contents
Residential Real Estate
(In thousands)
Term Loans
Origination Year
Revolving
loans
amortized cost
basis
Revolving
loans
converted to
term loans
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
Total
Internal Risk Grade:
Pass
$
407,430
$
820,059
$
1,617,541
$
827,395
$
396,094
$
971,226
$
447,363
$
2,467
$
5,489,575
Special Mention
382
107
0
0
0
2,466
1,326
0
4,281
Substandard
0
0
0
508
0
12,430
507
83
13,528
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
407,812
$
820,166
$
1,617,541
$
827,903
$
396,094
$
986,122
$
449,196
$
2,550
$
5,507,384
Current-period charge-offs
0
( 7
)
( 2
)
0
0
( 359
)
( 113
)
0
( 481
)
Current-period recoveries
0
0
0
5
0
489
1
0
495
Current-period net (charge- offs) recoveries
$
0
$
( 7
)
$
( 2
)
$
5
$
0
$
130
$
( 112
)
$
0
$
14
(In thousands)
Term Loans
Origination Year
Revolving loans a
mortized cost
Revolving
loans
converted to
term loans
As of December 31, 2023
2023
2022
2021
2020
2019
Prior
basis
Total
Internal Risk Grade:
Pass
$
783,866
$
1,618,774
$
850,760
$
443,514
$
262,524
$
863,186
$
423,302
$
2,568
$
5,248,494
Special Mention
0
0
0
0
65
3,561
1,710
0
5,336
Substandard
51
75
386
258
599
14,827
1,121
89
17,406
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
783,917
$
1,618,849
$
851,146
$
443,772
$
263,188
$
881,574
$
426,133
$
2,657
$
5,271,236
Current-period charge-offs
0
0
0
0
( 785
)
0
0
0
( 785
)
Current-period recoveries
0
0
8
0
688
1
0
0
697
Current-period net recoveries (charge-offs)
$
0
$
0
$
8
$
0
$
( 97
)
$
1
$
0
$
0
$
( 88
)
Construction and Land Development
(In thousands)
Term Loans
Origination Year
Revolving loans
amortized cost
Revolving
loans
converted to
term loans
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
basis
Total
Internal Risk Grade:
Pass
$
628,186
$
837,662
$
1,253,480
$
426,662
$
18,559
$
18,542
$
302,302
$
0
$
3,485,393
Special Mention
0
0
1,455
18,356
57
153
0
0
20,021
Substandard
0
0
0
200
1,607
1,813
0
0
3,620
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
628,186
$
837,662
$
1,254,935
$
445,218
$
20,223
$
20,508
$
302,302
$
0
$
3,509,034
Current-period charge-offs
0
0
0
0
0
( 29
)
0
0
( 29
)
Current-period recoveries
0
0
0
0
0
319
0
0
319
Current-period net (charge- offs) recoveries
$
0
$
0
$
0
$
0
$
0
$
290
$
0
$
0
$
290
(In thousands)
Term Loans Origination Year
Revolving loans
amortized cost
Revolving
loans
converted to
As of December 31, 2023
2023
2022
2021
2020
2019
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
628,047
$
1,308,793
$
827,138
$
53,004
$
16,062
$
60,920
$
239,390
$
0
$
3,133,354
Special Mention
0
2,902
0
62
3,386
258
0
0
6,608
Substandard
0
1,091
2,490
2,470
0
2,232
0
0
8,283
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
628,047
$
1,312,786
$
829,628
$
55,536
$
19,448
$
63,410
$
239,390
$
0
$
3,148,245
Current-period charge-offs
0
0
0
0
0
( 14
)
0
0
( 14
)
Current-period recoveries
0
0
0
0
0
80
0
0
80
Current-period net recoveries
$
0
$
0
$
0
$
0
$
0
$
66
$
0
$
0
$
66
9 6
Table of Contents
Bankcard
Revolving loans
converted to
Term Loans
Origination Year
Revolving loans
(In thousands)
amortized
cost
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
0
$
0
$
0
$
0
$
0
$
0
$
9,874
$
0
$
9,874
Special Mention
0
0
0
0
0
0
63
0
63
Substandard
0
0
0
0
0
0
61
0
61
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
0
$
0
$
0
$
0
$
0
$
0
$
9,998
$
0
$
9,998
Current-period charge-offs
0
0
0
0
0
0
( 431
)
0
( 431
)
Current-period recoveries
0
0
0
0
0
0
19
0
19
Current-period net charge-offs
$
0
$
0
$
0
$
0
$
0
$
0
$
( 412
)
$
0
$
( 412
)
Revolving
Term Loans
Origination Year
Revolving loans
loans
(In thousands)
amortized cost
converted to
As of December 31, 2023
2023
2022
2021
2020
2019
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
0
$
0
$
0
$
0
$
0
$
0
$
9,690
$
0
$
9,690
Special Mention
0
0
0
0
0
0
145
0
145
Substandard
0
0
0
0
0
0
127
0
127
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
0
$
0
$
0
$
0
$
0
$
0
$
9,962
$
0
$
9,962
Current-period charge-offs
0
0
0
0
0
0
( 263
)
0
( 263
)
Current-period recoveries
0
0
0
0
0
0
28
0
28
Current-period net charge-offs
$
0
$
0
$
0
$
0
$
0
$
0
$
( 235
)
$
0
$
( 235
)
Other Consumer
Revolving
Term Loans
Origination Year
Revolving loans
loans
(In thousands)
amortized cost
converted to
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
139,908
$
131,108
$
276,041
$
118,478
$
49,553
$
22,913
$
2,215
$
0
$
740,216
Special Mention
495
1,805
13,462
8,485
2,704
1,440
23
0
28,414
Substandard
76
182
2,454
1,106
358
261
10
0
4,447
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
140,479
$
133,095
$
291,957
$
128,069
$
52,615
$
24,614
$
2,248
$
0
$
773,077
Current-period charge-offs
( 28
)
( 206
)
( 5,724
)
( 3,096
)
( 869
)
( 380
)
0
0
( 10,303
)
Current-period recoveries
0
21
402
241
125
330
0
0
1,119
Current-period net charge-offs
$
( 28
)
$
( 185
)
$
( 5,322
)
$
( 2,855
)
$
( 744
)
$
( 50
)
$
0
$
0
$
( 9,184
)
Revolving
Term Loans
Origination Year
Revolving loans
loans
(In thousands)
amortized cost
converted to
As of December 31, 2023
2023
2022
2021
2020
2019
Prior
basis
term loans
Total
Internal Risk Grade:
Pass
$
192,184
$
428,295
$
205,015
$
102,300
$
62,861
$
18,876
$
2,638
$
0
$
1,012,169
Special Mention
674
16,031
12,220
4,454
2,050
977
46
0
36,452
Substandard
0
3,010
2,207
647
126
96
21
0
6,107
Doubtful
0
0
0
0
0
0
0
0
0
Total
$
192,858
$
447,336
$
219,442
$
107,401
$
65,037
$
19,949
$
2,705
$
0
$
1,054,728
Current-period charge-offs
( 9
)
( 3,205
)
( 2,699
)
( 933
)
( 319
)
( 191
)
0
0
( 7,356
)
Current-period recoveries
0
219
125
54
54
235
0
0
687
Current-period net (charge-
offs) recoveries
$
( 9
)
$
( 2,986
)
$
( 2,574
)
$
( 879
)
$
( 265
)
$
44
$
0
$
0
$
( 6,669
)
N OTE F—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). Assets are charged off when United determines that such financial assets are deemed uncollectible or based on regulatory requirements, whichever is earlier. Charge-offs are recognized as a deduction from the allowance for credit losses. Expected recoveries of amounts previously charged-off,
not to exceed the aggregate of the amount previously charged-off,
are included in determining the necessary reserve at the balance sheet date.
97
Table of Contents
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 $ 87,062,000 and $ 88,963,000 at December 31, 2024 and December 31, 2023, respectively, related to loans and leases are included separately in “Accrued interest receivable” in the consolidated balance sheets. For all classes of loans and leases receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due, unless the loan is well secured and in the process of collection. Interest received on nonaccrual loans and leases, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal.
The following table represents the accrued interest receivable as of December 31, 2024 and December 31, 2023:
Accrued Interest Receivable
(In thousands)
At December 31, 2024
At December 31, 2023
Commercial Real Estate:
Owner-occupied
$
4,700
$
4,751
Nonowner-occupied
30,582
27,507
Other Commercial
10,512
14,562
Residential Real Estate
21,662
20,718
Construction
17,174
18,504
Consumer:
Bankcard
0
0
Other consumer
2,432
2,921
Total
$
87,062
$
88,963
The following table represents the accrued interest receivables written off by reversing interest income for the year ended December 31, 2024 and December 31, 2023:
Accrued Interest Receivables Written Off
by Reversing Interest Income
(In thousands)
Year Ended
2024
2023
Commercial Real Estate:
Owner-occupied
$
186
$
31
Nonowner-occupied
853
85
Other Commercial
736
39
Residential Real Estate
232
214
Construction
23
285
Consumer:
Bankcard
0
0
Other consumer
345
371
Total
$
2,375
$
1,025
United maintains an allowance for loan losses and a reserve for lending-related commitments such as unfunded loan commitments and letters of credit. For a detailed discussion of the methodology used to estimate the reserve for lending-related commitments, see Note A, “Summary of Significant Accounting Policies.” The reserve for lending-related commitments of $ 34,911,000 and $ 44,706,000 at December 31, 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 continuously evaluates any risks which may impact its loan and lease portfolios. Reserves are initially determined based on losses identified from the PD/LGD and Cohort models which utilize the Company’s historical information. Then any qualitative adjustments are applied to account for the Company’s view of the future and other factors. If current conditions underlying any qualitative adjustment factor were deemed to be materially different than historical conditions, then an adjustment was made for that factor.
United’s allowance for loan and lease losses at December 31, 2024 increased $ 12,607,000 or 4.86 % from December 31, 2023. 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 loan segments as well as increased reasonable and supportable forecast adjustments for the commercial real estate nonowner-occupied loan segment.
9 8
Table of Contents
The year of 2024 qualitative adjustments include analyses of the following:
·
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; and concentrations of credit and external factors.
·
Reasonable and supportable forecasts
– The forecast is determined on a portfolio-by-portfolio basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables. The reasonable and supportable forecast selection is subjective in nature and requires more judgment compared to the other components of the allowance. Assumptions for the economic variables were the following:
Ø
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 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.
Ø
Greater risk of loss in the office portfolio due to continued hybrid and remote work that may be exacerbated by future economic conditions.
Ø
Reversion to historical loss data occurs via a straight-line method during the year following the one-year reasonable and supportable forecast period.
A progression of the allowance for loan losses, by portfolio segment, for the periods indicated is summarized as follows:
Allowance for Loan and Lease Losses and Carrying Amount of Loans and Leases
For the Year Ended December 31, 2024
(In thousands)
Commercial Real
Estate
Other
Commercial
Residential
Real
Estate
Construction &
Land
Development
Bankcard
Total
Owner-
occupied
Nonowner-
occupied
Other
Consumer
Allowance for Loan and Lease Losses:
Beginning balance
$
11,895
$
57,935
$
75,007
$
41,167
$
59,913
$
810
$
12,510
$
259,237
Charge-offs
( 116 )
( 2,581 )
( 3,589 )
( 481 )
( 29 )
( 431 )
( 10,303 )
( 17,530 )
Recoveries
1,183
200
1,650
495
319
19
1,119
4,985
Provision
( 1,110 )
18,968
( 7,963 )
5,192
3,418
493
6,154
25,152
Ending balance
$
11,852
$
74,522
$
65,105
$
46,373
$
63,621
$
891
$
9,480
$
271,844
Allowance for Loan and Lease Losses and Carrying Amount of Loans and Leases
For the Year Ended December 31, 2023
(In thousands)
Commercial Real
Estate
Other
Commercial
Residential
Real
Estate
Construction &
Land
Development
Bankcard
Total
Owner-
occupied
Nonowner-
occupied
Other
Consumer
Allowance for Loan and Lease Losses:
Beginning balance
$
13,945
$
38,543
$
79,706
$
36,227
$
48,390
$
561
$
17,374
$
234,746
Charge-offs
( 855 )
( 24 )
( 2,007 )
( 785 )
( 14 )
( 263 )
( 7,356 )
( 11,304 )
Recoveries
187
1,233
1,729
697
80
28
687
4,641
Provision
( 1,382 )
18,183
( 4,421 )
5,028
11,457
484
1,805
31,154
Ending balance
$
11,895
$
57,935
$
75,007
$
41,167
$
59,913
$
810
$
12,510
$
259,237
A progression of the allowance for credit losses, which includes the allowance for loan losses and the reserve for lending-related commitments, for the periods presented is summarized as follows:
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Table of Contents
Year Ended December 31
(In thousands)
2024
2023
2022
Balance of allowance for loan and lease losses at beginning of period
$
259,237
$
234,746
$
216,016
Gross charge-offs
( 17,530
)
( 11,304
)
( 9,650
)
Recoveries
4,985
4,641
9,549
Net charge-offs
( 12,545
)
( 6,663
)
( 101
)
Provision for loan and lease losses
25,152
31,154
18,831
Balance of allowance for loan and lease losses at end of period
$
271,844
$
259,237
$
234,746
Reserve for lending-related commitments
34,911
44,706
46,189
Balance of allowance for credit losses at end of period
$
306,755
$
303,943
$
280,935
NOTE G—BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized as follows:
December 31
(In thousands)
2024
2023
Land
$
62,506
$
62,506
Buildings and improvements
206,281
204,841
Leasehold improvements
43,971
42,752
Furniture, fixtures and equipment
109,510
118,514
422,268
428,613
Less allowance for depreciation and amortization
( 236,137
)
( 238,093
)
Bank premises and equipment
$
186,131
$
190,520
Depreciation expense was $ 15,709,000 , $ 17,191,000 , and $ 18,237,000 for years ending December 31, 2024, 2023 and 2022, respectively, while amortization expense was $ 310,000 , $ 310,000 and $ 343,000 for the years ended December 31, 2024, 2023 and 2022, respectively.
NOTE H—LEASES
United determines if an arrangement is a lease at inception. United and certain subsidiaries have entered into various noncancelable-operating leases for branch and loan production offices as well as operating facilities. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets. Operating leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. Presently, United does not have any finance leases.
United’s operating leases are subject to renewal options under various terms. United’s operating leases have remaining terms of 1 to 14 years, some of which include options to extend leases generally for periods of 5 years. United rents or subleases certain real estate to third parties. Our sublease portfolio generally consists of operating leases to other organizations for former branch offices.
ROU assets represent United’s right to use an underlying asset for the lease term and lease liabilities represent United’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of United’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend the lease when it is reasonably certain that United will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
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The components of lease expense were as follows:
Year Ended
Year Ended
(In thousands)
Classification
December 31,
2024
December 31,
2023
Operating lease cost
Net occupancy expense
$
20,367
$
21,280
Sublease income
Net occupancy expense
( 184
)
( 244
)
Net lease cost
$
20,183
$
21,036
Supplemental balance sheet information related to leases was as follows:
(In thousands)
Classification
December 31,
2024
December 31,
2023
Operating lease right-of-use assets
Operating lease right-of-use assets
$
81,742
$
86,986
Operating lease liabilities
Operating lease liabilities
$
86,771
$
92,885
Other information related to leases was as follows:
December 31,
2024
Weighted-average remaining lease term:
Operating leases
7.46 years
Weighted-average discount rate:
Operating leases
3.18
%
Supplemental cash flow information related to leases was as follows:
Year Ended
(In thousands)
December 31, 2024
December 31, 2023
Cash paid for amounts in the measurement of lease liabilities:
Operating cash flows from operating leases
$
19,900
$
21,581
ROU assets obtained in the exchange for lease liabilities
8,896
33,403
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, 2024, consists of the following:
Year
Amount
(Dollars in thousands)
2025
$
17,115
2026
15,501
2027
13,597
2028
11,628
2029
9,700
Thereafter
30,807
Total lease payments
98,348
Less: imputed interest
( 11,577
)
Total
$
86,771
NOTE I—INTANGIBLE ASSETS
The following is a summary of intangible assets subject to amortization and those not subject to amortization:
December 31, 2024
Community Banking
Total
(In thousands)
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Amortized intangible assets:
Core deposit intangible assets
$
105,165
($
96,299
)
$
105,165
($
96,299
)
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Table of Contents
Community Banking
Total
(In thousands)
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Goodwill not subject to amortization
$
1,888,889
$
1,888,889
December 31, 2023
Community Banking
Mortgage Banking
Total
(In thousands)
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Amortized intangible assets:
Core deposit intangible assets
$
105,165
($
92,660
)
$
0
$
0
$
105,165
($
92,660
)
Goodwill not subject to amortization
$
1,883,574
$
5,315
$
1,888,889
The following table sets forth the anticipated amortization expense for intangible assets for the years subsequent to 2024:
Year
Amount
(Dollars in thousands)
2025
$
3,282
2026
2,758
2027
1,152
2028
560
2029
535
2030 and thereafter
579
NOTE J—MORTGAGE SERVICING RIGHTS
Mortgage loans serviced for others are not included in the accompanying Consolidated Balance Sheets. The value of mortgage servicing rights (“MSRs”) is included on the Company’s Consolidated Balance Sheets.
During the third quarter of 2024, United sold its remaining MSRs at a net gain of $ 7,086,000 . The unpaid principal balances of loans serviced for others was approximately $ 1,202,448,000 at December 31, 2023.
Because of the sale of its remaining MSRs during the third quarter of 2024, there was no estimated fair value of the MSRs at December 31, 2024. The estimated fair value of the mortgage servicing rights was $ 13,427,000 at December 31, 2023. 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 W in these Notes to Consolidated Financial Statements for additional information concerning the fair value of MSRs.
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Table of Contents
The following presents the activity in mortgage servicing rights, including their valuation allowance for the year ended December 31, 2024 and 2023:
(In thousands)
Year Ended
December 31, 2024
Year Ended
December 31, 2023
MSRs beginning balance
$
4,554
$
21,022
Amount sold
( 3,934
)
( 15,001
)
Amount capitalized
0
715
Amount amortized
( 620
)
( 2,182
)
MSRs ending balance
$
0
$
4,554
MSRs valuation allowance beginning balance
$
0
$
0
Aggregate additions charged and recoveries credited to operations
0
0
MSRs impairment
0
0
MSRs valuation allowance ending balance
$
0
$
0
MSRs, net of valuation allowance
$
0
$
4,554
In determining impairment, the Company aggregated all servicing rights and stratified them into tranches based on predominant risk characteristics. The estimated amortization expense was based on information regarding future loan payments and prepayments.
NOTE K—DEPOSITS
The book value of deposits consisted of the following:
December 31
(In thousands)
2024
2023
Noninterest-bearing accounts
$
6,135,413
$
6,149,080
Interest-bearing transaction accounts
5,936,925
5,648,135
Regular savings
1,250,295
1,345,258
Interest-bearing money market accounts
7,056,897
6,349,453
Time deposits under $100,000
1,172,462
1,066,092
Time deposits over $100,000
2,409,867
2,261,301
Total deposits
$
23,961,859
$
22,819,319
Included in time deposits over $100,000 at December 31, 2024 and 2023 were time deposits of $250,000 or more of $ 1,115,748,000 and $ 842,118,000 , respectively. Interest paid on deposits approximated $ 537,661,000 , $ 377,008,000 , and $ 77,271,000 in 2024, 2023 and 2022, respectively.
United’s subsidiary banks have received deposits, in the normal course of business, from the directors and officers of United and its subsidiaries, and their associates. Such related party deposits were accepted on substantially the same terms, including interest rates and maturities, as those prevailing at the time for comparable transactions with unrelated persons. The aggregate dollar amount of these deposits was $ 34,197,000 and $ 47,857,000 at December 31, 2024 and 2023, respectively.
NOTE L—SHORT-TERM BORROWINGS
At December 31, 2024 and 2023, short-term borrowings were as follows:
December 31
(In thousands)
2024
2023
Federal funds purchased
$
0
$
0
Securities sold under agreements to repurchase
176,090
196,095
Total short-term borrowings
$
176,090
$
196,095
Federal funds purchased and securities sold under agreements to repurchase have not been a significant source of funds for the company. United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $ 280,000,000 . These lines of credit, which bear interest at prevailing market rates, permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions.
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At December 31, 2024, all the repurchase agreements were in overnight accounts. The rates offered on these funds vary according to movements in the federal funds and short-term
investment market rates.
United has a $ 20,000,000 line of credit with an unrelated financial institution to provide for general liquidity needs. The line is an unsecured, revolving line of credit. The line is renewable on a 360 day basis and carries an indexed, floating-rate of interest. The line requires compliance with various financial and nonfinancial covenants. At December 31, 2024, United had no outstanding balance under this credit.
Interest paid on short-term borrowings approximated $ 8,063,000 , $ 6,390,000 , and $ 1,747,000 in 2024, 2023 and 2022, respectively.
NOTE M—LONG-TERM BORROWINGS
United’s subsidiary bank is a member of the Federal Home Loan Bank (“FHLB”). Membership in the FHLB makes available short-term and long-term borrowings from collateralized advances. All FHLB borrowings are collateralized by a mix of single-family residential mortgage loans, commercial loans and investment securities. At December 31, 2024, the total carrying value of loans pledged as collateral for FHLB advances approximated $ 7,408,250,000 . United had an unused borrowing amount as of December 31, 2024 of approximately $ 8,144,327,000 available subject to delivery of collateral after certain trigger points.
Advances may be called by the FHLB or redeemed by United based on predefined factors and penalties.
At December 31, 2024 and 2023, FHLB advances and the related weighted-average interest rates were as follows:
2024
2023
(Dollars in thousands)
Amount
Weighted-
Average
Contractual
Rate
Weighted-
Average
Effective
Rate
Amount
Weighted-
Average
Contractual
Rate
Weighted-
Average
Effective
Rate
FHLB advances
$
260,199
4.62
%
0.63
%
$
1,510,487
5.43
%
3.75
%
No overnight funds were included in the $ 260,199,000 and $ 1,510,487,000 above at December 31, 2024 and 2023, respectively. At December 31, 2024, FHLB advances of $ 260,199,000 mature in 2025. The weighted-average effective rate considers the effect of any interest rate swaps designated as cash flow hedges outstanding at year-end 2024 and 2023 to manage interest rate risk on its long-term debt. Additional information is provided in Note S, Notes to Consolidated Financial Statements.
At December 31, 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. United assumed $ 10,000,000 in aggregate principal amount of fixed-to-floating rate subordinated notes in the Carolina Financial Corporation acquisition. During the first quarter of 2023, United redeemed these fixed-to-floating rate subordinated notes. At December 31, 2024 and 2023, the outstanding balance of the Debentures was $ 280,221,000 and $ 278,616,000 , respectively, and was included the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets. United fully and unconditionally guarantees each individual trust’s obligations under the Capital Securities.
Under the provisions of the subordinated debt, United has the right to defer payment of interest on the subordinated debt at any time, or from time to time, for periods not exceeding five years . If interest payments on the subordinated debt are deferred, the dividends on the Capital Securities are also deferred. Interest on the subordinated debt is cumulative.
In accordance with the fully-phased in “Basel III Capital Rules” as published by United’s primary federal regulator, the Federal Reserve, United is unable to consider the Capital Securities as Tier 1 capital, but rather the Capital Securities are included as a component of United’s Tier 2 capital. United can include the Capital Securities in its Tier 2 capital on a permanent basis.
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Table of Contents
Information related to United’s statutory trusts is presented in the table below:
(Dollars in thousands)
Description
Issuance Date
Amount of
Capital
Securities
Issued
Stated Interest Rate (1)
Maturity Date
United Statutory Trust III
December 17, 2003
$
20,000
3-month CME Term SOFR + 2.85%
December 17, 2033
United Statutory Trust IV
December 19, 2003
$
25,000
3-month CME Term SOFR + 2.85%
January 23, 2034
United Statutory Trust V
July 12, 2007
$
50,000
3-month CME Term SOFR + 1.55%
October 1, 2037
United Statutory Trust VI
September 20, 2007
$
30,000
3-month CME Term SOFR + 1.30%
December 15, 2037
Premier Statutory Trust II
September 25, 2003
$
6,000
3-month CME Term SOFR + 3.10%
October 8, 2033
Premier Statutory Trust III
May 16, 2005
$
8,000
3-month CME Term SOFR + 1.74%
June 15, 2035
Premier Statutory Trust IV
June 20, 2006
$
14,000
3-month CME Term SOFR + 1.55%
September 23, 2036
Premier Statutory Trust V
December 14, 2006
$
10,000
3-month CME Term SOFR + 1.61%
March 1, 2037
Centra Statutory Trust I
September 20, 2004
$
10,000
3-month CME Term SOFR + 2.29%
September 20, 2034
Centra Statutory Trust II
June 15, 2006
$
10,000
3-month CME Term SOFR + 1.65%
July 7, 2036
VCBI Capital Trust II
December 19, 2002
$
15,000
6-month CME Term SOFR + 3.30%
December 19, 2032
VCBI Capital Trust III
December 20, 2005
$
25,000
3-month CME Term SOFR + 1.42%
February 23, 2036
Cardinal Statutory Trust I
July 27, 2004
$
20,000
3-month CME Term SOFR + 2.40%
September 15, 2034
UFBC Capital Trust I
December 30, 2004
$
5,000
3-month CME Term SOFR + 2.10%
March 15, 2035
Carolina Financial Capital Trust I
December 19, 2002
$
5,000
Prime + 0.50%
December 31, 2032
Carolina Financial Capital Trust II
November 5, 2003
$
10,000
3-month CME Term SOFR + 3.05%
January 7, 2034
Greer Capital Trust I
October 12, 2004
$
6,000
3-month CME Term SOFR + 2.20%
October 18, 2034
Greer Capital Trust II
December 28, 2006
$
5,000
3-month CME Term SOFR + 1.73%
January 30, 2037
First South Preferred Trust I
September 26, 2003
$
10,000
3-month CME Term SOFR + 2.95%
September 30, 2033
BOE Statutory Trust I
December 12, 2003
$
4,000
3-month CME Term SOFR + 3.00%
December 12, 2033
(1)
The 3-month CME Term SOFR rates have a spread adjustment of 0.26161 % and the 6-month CME Term SOFR rate has a spread adjustment of 0.42826 %.
At December 31, 2024 and 2023, the Debentures and their related weighted-average interest rates were as follows:
2024
2023
(Dollars in thousands)
Amount
Weighted-
Average
Rate
Amount
Weighted-
Average
Rate
United Statutory Trust III
$
20,619
7.46
%
$
20,619
8.49
%
United Statutory Trust IV
25,774
7.70
%
25,774
8.50
%
United Statutory Trust V
51,547
6.40
%
51,547
7.21
%
United Statutory Trust VI
30,928
5.92
%
30,928
6.95
%
Premier Statutory Trust II
6,186
8.02
%
6,186
8.76
%
Premier Statutory Trust III
8,248
6.95
%
8,248
7.39
%
Premier Statutory Trust IV
14,433
6.15
%
14,433
7.17
%
Premier Statutory Trust V
10,310
6.37
%
10,310
7.25
%
Centra Statutory Trust I
10,000
6.91
%
10,000
7.92
%
Centra Statutory Trust II
10,000
6.57
%
10,000
7.31
%
Virginia Commerce Trust II
13,627
8.31
%
13,397
8.88
%
Virginia Commerce Trust III
19,899
6.20
%
19,373
7.06
%
Cardinal Statutory Trust I
16,812
7.02
%
16,414
8.05
%
UFBC Capital Trust I
4,076
6.72
%
3,971
7.75
%
Carolina Financial Capital Trust I
5,046
8.00
%
5,034
9.00
%
Carolina Financial Capital Trust II
9,641
7.97
%
9,572
8.71
%
Greer Capital Trust I
5,419
7.09
%
5,341
7.86
%
Greer Capital Trust II
4,275
6.58
%
4,184
7.38
%
First South Preferred Trust I
9,587
7.54
%
9,513
8.54
%
BOE Statutory Trust I
3,794
7.59
%
3,772
8.59
%
Total
$
280,221
6.88
%
$
278,616
7.75
%
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Table of Contents
At December 31, 2024, the scheduled maturities of long-term borrowings were as follows:
Year
Amount
(Dollars in thousands)
2025
$
260,199
2026
0
2027
0
2028
0
2029
0
2030 and thereafter
280,221
Total
$
540,420
Interest paid on long-term borrowings approximated $ 44,911,000 , $ 84,775,000 , and $ 19,143,000 in 2024, 2023 and 2022, respectively.
NOTE N—OTHER EXPENSE
The following details certain items of other expense for the periods indicated:
Year Ended December 31
(In thousands)
2024
2023
2022
Legal, consulting & other professional services
$
24,330
$
25,604
$
24,403
Franchise & other taxes not on income
16,916
16,202
13,537
Expense for reserve on lending-related commitments
(9,795
)
( 1,483
)
14,747
Automated Teller Machine (“ATM”) expenses
11,885
10,914
10,250
Amortization of income tax credits
15,277
15,238
13,567
NOTE O—INCOME TAXES
The income tax provisions included in the consolidated statements of income are summarized as follows:
Year Ended December 31
(In thousands)
2024
2023
2022
Current expense:
Federal
$
77,347
$
84,441
$
86,799
State
17,604
15,972
16,244
Deferred expense (benefit):
Federal
334
( 2,053
)
( 6,016
)
State
( 3,702
)
( 868
)
( 871
)
Total income taxes
$
91,583
$
97,492
$
96,156
The following is a reconciliation of income tax expense to the amount computed by applying the statutory federal income tax rate to income before income taxes:
Year Ended December 31
(Dollars in thousands)
2024
2023
2022
Amount
%
Amount
%
Amount
%
Tax on income before taxes at statutory federal rate
$
97,562
21.0
%
$
97,399
21.0
%
$
99,914
21.0
%
Plus: State income taxes net of federal tax benefits
13,591
2.9
11,847
2.6
12,431
2.6
111,153
23.9
109,246
23.6
112,345
23.6
Increase (decrease) resulting from:
Tax-exempt interest income
( 2,439
)
( 0.5
)
( 2,974
)
( 0.6
)
( 3,477
)
( 0.7
)
Tax credits
( 16,520
)
( 3.5
)
( 15,196
)
( 3.3
)
( 14,326
)
( 3.0
)
Other items-net
( 611
)
( 0.2
)
6,416
1.3
1,614
0.3
Income taxes
$
91,583
19.7
%
$
97,492
21.0
%
$
96,156
20.2
%
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Table of Contents
For year ended 2024 and 2023, United incurred a federal income tax benefit of $ 2,456,000 and $ 1,608,000 , respectively, as compared to federal income tax expense
of $ 287,000 for the year ended 2022, applicable to the sales and calls of securities. Income taxes paid approximated $ 91,689,000 , $ 106,083,000 , and $ 93,680,000 in 2024, 2023 and 2022, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2024, United had no federal or state net operating loss carryforwards.
Taxes not on income, which consists mainly of business franchise taxes, were $ 16,916,000 , $ 16,202,000 , and $ 13,537,000 , for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts are recorded in other expense in the Consolidated Statements of Income.
Significant components of United’s deferred tax assets and liabilities (included in other assets in the Consolidated Balance Sheets) at December 31, 2024 and 2023 are as follows:
(In thousands)
2024
2023
Deferred tax assets:
Allowance for credit losses
$
73,315
$
70,818
Accrued benefits payable
20,256
18,287
Other accrued liabilities
1,857
2,857
Unrealized loss on securities available for sale
77,189
84,683
Other real estate owned
127
512
Lease liabilities under operating leases
20,738
21,642
Income tax credit carryforward
4,415
0
Deferred mortgage points
425
2,081
Total deferred tax assets
198,322
200,880
Deferred tax liabilities:
Premises and equipment
8,307
8,789
Right-of-use assets under operating leases
19,536
20,267
Pension plan accruals
10,743
7,251
Derivatives
10,487
12,137
Purchase accounting intangibles
6,626
5,940
Other
1,063
1,497
Total deferred tax liabilities
56,762
55,881
Net deferred tax assets
$
141,560
$
144,999
At December 31, 2024 and 2023, United believes that all of the deferred tax amounts shown above are more likely than not to be realized based on an assessment of all available positive and negative evidence and therefore no valuation allowance has been recorded.
In accordance with ASC Topic 740, “Income Taxes,” United records a liability for uncertain income tax positions based on a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken on a tax return, in order for those tax positions to be recognized in the financial statements.
Below is a reconciliation of the total amounts of unrecognized tax benefits:
December 31
(In thousands)
2024
2023
Unrecognized tax benefits at beginning of year
$
2,599
$
2,521
Increase in unrecognized tax benefits as a result of tax positions taken during the current period
323
242
Decreases in the unrecognized tax benefits as a result of a
lapse of the applicable statute of limitations
( 778
)
( 164
)
Unrecognized tax benefits at end of year
$
2,144
$
2,599
The entire amount of unrecognized tax benefits, if recognized, would impact United’s effective tax rate. Over the next 12 months, the statute of limitations will close on certain income tax returns. However, at this time, United cannot reasonably estimate the amount of tax benefits, if any, it may recognize over the next 12 months.
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Table of Contents
United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2021, 2022 and 2023 and certain State Taxing authorities for the years ended December 31, 2021 through 2023.
As of December
31 ,
2024 , and
2023 , the
total amount of accrued interest related to uncertain tax positions was $
651,000 and $
747,000 , respectively. United accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes.
No interest or penalties were recognized in the results of operations for the years of
2024 ,
2023 and
2022 .
NOTE P—EMPLOYEE BENEFIT PLANS
United has a defined benefit retirement plan covering qualified employees. Pension benefits are based on years of service and the average of the employee’s highest five consecutive plan years of basic compensation paid during the ten plan years preceding the date of determination. Contributions by United are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future.
In September of 2007, after a recommendation by United’s Pension Committee and approval by United’s Board of Directors, the United Bankshares, Inc. Pension Plan (the “Plan”) was amended to change the participation rules. The decision to change the participation rules for the Plan followed industry trends, as many large and medium size companies took similar steps. The amendment provided that employees hired on or after October 1, 2007, will not be eligible to participate in the Plan. However, new employees will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) plan. This change had no impact on employees hired prior to October 1, 2007 as they will continue to participate in the Plan, with no change in benefit provisions, and will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) Plan.
Net periodic pension costs, except for service cost, are recognized in employee benefits on the consolidated statements of income. Service cost is recognized in employee compensation. Net consolidated periodic pension cost included the following components:
(Dollars in thousands)
Year Ended December 31,
2024
2023
2022
Service cost
$
1,387
$
1,440
$
2,669
Interest cost
6,967
7,134
4,988
Expected return on plan assets
( 10,659
)
( 11,762
)
( 12,942
)
Amortization of net actuarial loss
2,315
3,347
3,645
Net periodic pension cost (income)
$
10
$
159
$
( 1,640
)
Weighted-Average Assumptions:
Discount rate
5.07
%
5.26
%
3.08
%
Expected return on assets
6.25
%
7.25
%
6.25
%
Rate of compensation increase (prior to age 40)
5.00
%
5.00
%
5.00
%
Rate of compensation increase (ages 40-54)
4.00
%
4.00
%
4.00
%
Rate of compensation increase (otherwise)
3.50
%
3.50
%
3.50
%
Amounts related to the Plan recognized as a component of other comprehensive income were as follows:
(In thousands)
Year Ended December 31,
2024
2023
2022
Net actuarial gain
$
( 12,348
)
$
( 2,635
)
$
( 2,195
)
Amortization of actuarial loss
( 2,315
)
( 3,347
)
( 3,645
)
Total recognized in other comprehensive income
$
( 14,663
)
$
( 5,982
)
$
( 5,840
)
Included in accumulated other comprehensive income at December 31, 2024 are unrecognized actuarial losses of $ 17,884,000 ($ 9,645,000 net of tax) that have not yet been recognized in net periodic pension cost.
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The reconciliation of the beginning and ending balances of the projected benefit obligation and the fair value of plan assets for the years ended December 31, 2024 and 2023 and the accumulated benefit obligation at December 31, 2024 and 2023 are as follows:
(Dollars in thousands)
December 31,
2024
2023
Change in Projected Benefit Obligation
Projected Benefit Obligation at the Beginning of the Year
$
143,306
$
140,609
Service Cost
1,387
1,440
Interest Cost
6,967
7,134
Actuarial (Gain) Loss
( 7,506
)
4,918
Lump Sum Window Payments
0
( 4,546
)
Benefits Paid
( 6,307
)
( 6,249
)
Projected Benefit Obligation at the End of the Year
$
137,847
$
143,306
Accumulated Benefit Obligation at the End of the Year
$
125,429
$
131,758
Change in Plan Assets
Fair Value of Plan Assets at the Beginning of the Year
$
173,840
$
165,320
Actual Return on Plan Assets
15,502
19,315
Lump Sum Window Payments
0
( 4,546
)
Benefits Paid
( 6,307
)
( 6,249
)
Fair Value of Plan Assets at End of Year
$
183,035
$
173,840
Net Amount Recognized
Funded Status
$
45,187
$
30,534
Unrecognized Actuarial Net Loss
17,884
32,548
Net Amount Recognized
$
63,071
$
63,082
Weighted-Average Assumptions at the End of the Year
Discount Rate
5.76
%
5.07
%
Rate of compensation Increase (prior to age 40)
6.00
%
5.00
%
Rate of compensation Increase (ages 40-49)
5.50
%
—
Rate of compensation Increase (ages 50-54)
5.00
%
—
Rate of compensation Increase (ages 40-54)
—
4.00
%
Rate of compensation Increase (ages 55-64)
4.00
%
—
Rate of compensation Increase (otherwise)
3.00
%
3.50
%
Asset allocation for the defined benefit pension plan as of the measurement date, by asset category, is as follows:
Plan Assets
Target Allocation
2025
Allowable
Allocation Range
Percentage of
Plan Assets at
December 31,
2024
December 31,
2023
Equity Securities
48
%
20 - 70
%
56 %
56 %
Fixed Income Securities
42
%
20 - 50
%
41 %
41 %
Other
10
%
0 - 25
%
3 %
3 %
Total
100 %
100 %
Equity securities include United common stock in the amounts of $ 3,974,000 ( 4 %) at December 31, 2024 and $ 3,974,000 ( 4 %) at December 31, 2023 .
The policy, as established by the Pension Committee, primarily consisting of United’s Executive Management, is to invest assets based upon the target allocations stated above. The assets are reallocated periodically to meet the above target allocations. The investment policy is reviewed at least annually, subject to the approval of the Pension Committee, to determine if the policy should be changed. Prohibited investments include, but are not limited to, futures contracts, private placements, uncovered options, real estate, the use of margin, short sales, derivatives for speculative purposes, and other investments that are speculative in nature. In order to achieve a prudent level of portfolio diversification, the securities of any one company are not to exceed
10 % of the total plan assets, and no more than the 15 % of total plan
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assets is to be invested in any one industry (other than securities of U.S. Government or Agencies). Additionally, no more than 15 % of the plan assets is to be invested in foreign securities, both equity and fixed. The expected long-term rate of return for the plan’s total assets is based on the expected return of each of the above categories, weighted based on the median of the target allocation for each class. United uses the corridor approach based on 10 % of the greater of the projected benefit obligation and the market-related value of plan assets to amortize actuarial gains and losses.
At December 31, 2024, the benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five years thereafter are as follows:
Year
Amount
(Dollars in thousands)
2025
$
7,361
2026
7,381
2027
7,775
2028
8,274
2029
8,633
2030 through 2034
47,114
United did not contribute to the plan in 2024, 2023 or in 2022 as no contributions were required by funding regulations or law. For 2025, no contributions to the plan are required by funding regulations or law. However, United may make a discretionary contribution in 2025, the amount of which cannot be reasonably estimated at this time.
In accordance with ASC Topic 715 and using the guidance contained in ASC Topic 820, the following is a description of the valuation methodologies used to measure the plan assets at fair value.
Cash and Cash Equivalents:
These underlying assets are highly liquid U.S. government obligations. The fair value of cash and cash equivalents approximates cost (Level 1).
Debt Securities
: Securities of the U.S. Government, municipalities, private issuers and corporations are valued at the closing price reported in the active market in which the individual security is traded, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Using a market approach valuation methodology, third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considers observable market data (Level 2).
Common and Preferred Stock:
These securities are valued at the closing price on the respective stock exchange (Level 1).
Mutual Funds:
Generally, these securities are valued at the closing price reported in the active market in which the individual mutual fund is traded (Level 1).
The following tables present the balances of the plan assets, by fair value hierarchy level, as of December 31, 2024 and 2023:
Fair Value Measurements at December 31, 2024 Using
(In thousands)
Description
Balance as of
December 31,
2024
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Cash and Cash equivalents
$
5,829
$
5,829
$
0
$
0
Fixed Income Debt Securities:
U.S. Government and agencies
24,874
24,874
0
0
Mortgage backed securities
6,588
6,588
0
0
Collateralized mortgage obligations
623
623
Municipal obligations
707
707
0
0
Corporate bonds
8,394
8,394
0
0
Fixed Income Mutual Funds:
General
33,537
33,537
0
0
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Fair Value Measurements at December 31, 2024 Using
(In thousands)
Description
Balance as of
December 31,
2024
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Equity Securities:
Common stock
19,539
19,539
0
0
Equity Mutual Funds:
Domestic equity large cap
37,990
37,990
0
0
Domestic equity small cap
13,332
13,332
0
0
Alternative equity
16,145
16,145
International emerging equity
3,993
3,993
0
0
International equity developed
11,484
11,484
0
0
Total
$
183,035
$
183,035
$
0
$
0
Fair Value Measurements at December 31, 2023 Using
(In thousands)
Description
Balance as of
December 31,
2023
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Cash and Cash equivalents
$
4,565
$
4,565
$
0
$
0
Fixed Income Debt Securities:
U.S. Government and agencies
20,052
20,052
0
0
Mortgage backed securities
7,440
7,440
0
0
Municipal obligations
1,551
1,551
0
0
Corporate bonds
8,030
8,030
0
0
Fixed Income Mutual Funds:
General
34,083
34,083
0
0
Equity Securities:
Common stock
23,868
23,868
0
0
Equity Mutual Funds:
Domestic equity large cap
29,894
29,894
0
0
Domestic equity small cap
13,256
13,256
0
0
Alternative equity
15,376
15,376
International emerging equity
3,990
3,990
0
0
International equity developed
11,735
11,735
0
0
Total
$
173,840
$
173,840
$
0
$
0
Common stock investments are diversified amongst various industries with no industry representing more than 5% of the total plan assets.
The United Bankshares, Inc. Savings and Stock Investment Plan (the Plan) is a defined contribution plan under Section 401(k) of the Internal Revenue Code. Each employee of United, who completes ninety ( 90 ) days of qualified service, is eligible to participate in the Plan. Each participant may contribute from 1 % to 100 % of compensation to his/her account, subject to Internal Revenue Service maximum deferral limits. United matches 100 % of the first 5 % of salary deferred with United stock, subject to certain imposed limitations. Vesting is 100 % for employee deferrals and the company match at the time the employee makes his/her deferral. United’s expense relating to the Plan approximated $ 7,332,000 , $ 7,590,000 , and $ 8,242,000 in 2024, 2023 and 2022, respectively.
The assets of United’s defined benefit plan and 401(k) Plan each include investments in United common stock. At December 31, 2024 and 2023, the combined plan assets included 1,810,400 and 1,828,171 shares, respectively, of United common stock with an approximate fair value of $ 67,981,000 and $ 68,648,000 , respectively. Dividends paid on United common stock held by the plans approximated $ 2,727,000 , $ 2,468,000 , and $ 2,340,000 for the years ended December 31, 2024, 2023, and 2022, respectively.
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United has certain other supplemental deferred compensation plans covering various key employees. Periodic charges are made to operations so that the liability due each employee is fully recorded as of the date of their retirement. Amounts charged to expense have not been significant in any year.
NOTE Q—STOCK BASED COMPENSATION
On May 12, 2020, United’s shareholders approved the 2020 Long-Term Incentive Plan (“2020 LTI Plan”). The 2020 LTI Plan became effective May 13, 2020. An award granted under the 2020 LTI Plan may consist of any non-qualified stock options or incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance units or other-stock-based award. These awards all relate to the common stock of United. The maximum number of shares of United common stock which may be issued under the 2020 LTI Plan is 2,300,000 . The 2020 LTI Plan will be administered by a board committee appointed by United’s Board of Directors (the “Board”). Unless otherwise determined by the Board, the Compensation Committee of the Board (the “Committee”) shall administer the 2020 LTI Plan. The maximum number of options and stock appreciation rights, in the aggregate, which may be awarded to any individual key employee during any calendar year is 100,000 . The maximum number of options and stock appreciation rights, in the aggregate, which may be awarded to any non-employee director during any calendar year is 10,000 or, if such Award is payable in cash, the Fair Market Value equivalent thereof. The maximum number of shares of restricted stock or shares subject to a restricted stock units award that may be granted during any calendar year is 225,000 shares to any individual key employee and 10,000 shares to any individual non-employee director. Subject to certain change in control provisions, the 2020 LTI Plan provides that all awards of will vest as the Committee determines in the award agreement, provided that no awards will vest sooner than 1/3 per year over the first three anniversaries of the award. United adopted a clawback policy that applies to named executive officers and other executive officers and permits the Committee to cancel certain awards and to recoup gains realized from previous awards should United be required to prepare an accounting restatement due to materially inaccurate performance metrics. A Form S-8 was filed on May 29, 2020 with the Securities and Exchange Commission to register all the shares which were available for the 2020 LTI Plan. The 2020 LTI Plan replaces the 2016 LTI Plan.
During the year of 2024, a total of 184,458 shares of restricted stock and 254,592 of restricted stock units were granted under the 2020 LTI Plan. No non-qualified stock options were granted under the 2020 LTI Plan during the year of 2024. Compensation expense of $ 12,130 ,000, $ 12,463 ,000, and $ 9,881 ,000 related to all share-based grants and awards under United’s Long-Term Incentive Plans was incurred for the years 2024, 2023 and 2022, respectively. Compensation expense was included in employee compensation in the Consolidated Statements of Income.
Stock Options
United currently has options outstanding from various option plans other than the 2020 LTI Plan (the “Prior Plans”); however, no common shares of United stock are available for grants under the Prior Plans as these plans have expired. Awards outstanding under the Prior Plans will remain in effect in accordance with their respective terms. The maximum term for options granted under the plans is ten ( 10 ) years.
A summary of activity under the United’s stock option plans as of December 31, 2024, and the changes during the year of 2024 are presented below:
Year ended December 31, 2024
Weighted Average
(Dollars in thousands, except per share amounts)
Aggregate
Intrinsic
Remaining
Contractual
Exercise
Shares
Value
Term (Yrs.)
Price
Outstanding at January 1, 2024
1,337,382
$
35.47
Exercised
( 183,888
)
30.18
Forfeited or expired
( 103,826
)
36.54
Outstanding at December 31, 2024
1,049,668
$
3,275
3.2
$
36.29
Exercisable at December 31, 2024
1,049,668
$
3,275
3.2
$
36.29
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The following table summarizes the status of United’s nonvested awards for the year ended December 31, 2024:
Shares
Weighted-Average
Grant Date Fair Value
Per Share
Nonvested at January 1, 2024
56,526
$ 5.65
Vested
( 56,526
)
5.65
Forfeited or expired
0
0.00
Nonvested at December 31, 2024
0
$ 0.00
As of December 31, 2024, there was no unrecognized compensation cost related to nonvested option awards. The total fair value of awards vested during the year ended December 31, 2024, was $ 319,000 .
Cash received from options exercised under the Plans for the years ended December 31, 2024, 2023 and 2022 was $ 5,274 ,000, $ 1,750 ,000, and $ 10,295 ,000, respectively. During 2024 and 2023, 183,888 and 75,361 shares, respectively, were issued in connection with stock option exercises. All shares issued in connection with stock option exercises for 2024 and 2023 were issued from authorized and unissued stock. No options were granted in 2024,
2023, and 2022. The total intrinsic value of options exercised under the Plans during the years ended December 31, 2024, 2023, and 2022 was $ 1,881 ,000, $ 947 ,000, and $ 6,325 ,000, respectively.
ASC Topic 230, “Statement of Cash Flows,” requires the benefits of tax deductions in excess of recognized compensation cost to be reported as an operating cash flow. This requirement reduces net operating cash flows. While the company cannot estimate what those amounts will be in the future (because they depend on, among other things, the date employees exercise stock options), United recognized cash flows used in operating activities of $ 258 ,000, $ 128 ,000, and $ 1,040 ,000 from excess tax benefits related to share-based compensation arrangements for the year of 2024, 2023 and 2022, respectively.
Restricted Stock
Under the 2020 LTI Plan, United may award restricted common shares to key employees and non-employee directors. Restricted shares granted to participants will vest no sooner than 1/3 per year over the first three
anniversaries of the award. Unless determined by the Committee or the Board and provided in the award agreement, recipients of restricted shares do not pay any consideration to United for the shares, have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested. Presently, these nonvested participating securities have an immaterial impact on diluted earnings per share. As of December 31, 2024, the total unrecognized compensation cost related to nonvested restricted stock awards was $ 6,572 ,000 with a weighted-average expense recognition period of 0.9 years.
The following summarizes the changes to United’s restricted common shares for the year ended December 31, 2024:
Number of
Shares
Weighted-Average
Grant Date Fair Value
Per Share
Outstanding at January 1, 2024
333,932
$ 37.75
Granted
184,458
34.37
Vested
( 198,950
)
36.49
Forfeited
( 9,413
)
36.67
Outstanding at December 31, 2024
310,027
$ 36.58
Restricted Stock Units
Under the 2020 LTI Plan, United may grant restricted stock units (“RSUs”) to key employees. These awards help align the interests of these employees with the interests of the shareholders of United by providing economic value directly related to the performance of the Company. These RSU grants could be time-vested RSUs, performance-vested RSUs, or a combination of both. Currently, time-vested RSUs vest ratably over three years from the date of grant. Performance-vested RSUs cliff-vest after assessment of the Company’s performance over a period of three years. The number of performance-vested RSUs that vest is determined by two metrics measured relative to peers: Return on Average Tangible Common Equity (“ROATCE”) and Total Shareholder Return (“TSR”). Based on ASC Topic 718, the ROATCE comparison is considered a performance condition while the TSR comparison is considered a market condition. There
11 3
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will be no payout of the performance-vested awards if the threshold performance is not achieved. United communicates the specific threshold, target, and maximum performance-vested RSU awards and performance targets to the applicable key employees at the beginning of a performance period. Dividends are accrued but not paid in respect to the awards until the RSUs vest. The holder does not have the right to vote the shares during the time and performance periods. The value of the time-vested RSUs and the performance-vested, based on the performance condition, RSUs awarded is established as the fair market value of the stock at the time of the grant. The value of the performance-vested, based on the market condition, RSUs awarded is estimated through the use of a Monte Carlo valuation model as of the grant date. The Company recognizes expense on the RSUs in accordance with ASC Topic 718.
The following table summarizes the status of United’s nonvested RSUs during the year ended December 31, 2024:
Shares
Weighted-Average
Grant Date Fair Value
Per Share
Nonvested at January 1, 2024
363,502
$ 37.53
Granted
254,592
32.80
Vested
( 127,536
)
36.28
Forfeited or expired
( 439
)
34.72
Nonvested at December 31, 2024
490,119
$ 35.41
As of December 31, 2024, the total unrecognized compensation cost related to nonvested restricted stock units was $ 8,500 ,000 with a weighted-average expense recognition period of 1.2 years.
NOTE R—COMMITMENTS AND CONTINGENT LIABILITIES
Lending-related Commitments
United is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers and to alter its own exposure to fluctuations in interest rates. These financial instruments include loan commitments, standby letters of credit, and interest rate swap agreements. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements.
United’s maximum exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for the loan commitments and standby letters of credit is the contractual or notional amount of those instruments. United uses the same policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Collateral may be obtained, if deemed necessary, based on management’s credit evaluation of the counterparty.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily, and historically do not, represent future cash requirements. The amount of collateral obtained, if deemed necessary upon the extension of credit, is based on management’s credit evaluation of the counterparty. United had approximately $ 5,886,473,000 and $ 6,851,890,000 of loan commitments outstanding as of December 31, 2024 and December 31, 2023, respectively, approximately 38% of which contractually expire within one year . Excluded in the December 31, 2023 amount above are commitments to extend credit of $ 416,095,000 related to mortgage loan funding commitments.
Commercial and standby letters of credit are agreements used by United’s customers as a means of improving their credit standing in their dealings with others. Under these agreements, United guarantees certain financial commitments of its customers. A commercial letter of credit is issued specifically to facilitate trade or commerce. Typically, under the terms of a commercial letter of credit, a commitment is drawn upon when the underlying transaction is consummated as intended between the customer and a third party. As of December 31, 2024 and December 31, 2023, United had $ 15,546,000 and $ 16,233,000 of commercial letters of credit outstanding. A standby letter of credit is generally contingent upon the failure of a customer to perform according to the terms of an underlying contract with a third party. United has issued standby letters of credit of $ 148,874,000 and $ 147,705,000 as of December 31, 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.
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Table of Contents
Mortgage Banking
Related to its mortgage banking activities, United provides for its estimated exposure to repurchase loans previously sold to investors for which borrowers failed to provide full and accurate information on their loan application or for which appraisals have not been acceptable or where the loan was not underwritten in accordance with the loan program specified by the loan investor, and for other exposure to its investors related to loan sales activities. United evaluates the merits of each claim and estimates its reserve based on actual and expected claims received and considers the historical amounts paid to settle such claims. United’s repurchase reserve was immaterial as of December 31, 2024 and December 31, 2023.
United has derivative counter-party risk that may arise from the possible inability of United’s third party investors to meet the terms of their forward sales contracts. United’s third-party investors that are generally well-capitalized, are investment grade and exhibit strong financial performance to mitigate this risk. United does not expect any third-party investor to fail to meet its obligation.
Legal Proceedings
United and its subsidiaries are currently involved in various legal proceedings in the normal course of business. On at least a quarterly basis, United assesses its liabilities and contingencies in connection with all pending or threatened claims and litigation, utilizing the most recent information available. On a matter-by-matter basis, an accrual for loss is established for those matters which United believes it is probable that a loss may be incurred and that the amount of such loss can be reasonably estimated. Once established, each accrual is adjusted as appropriate to reflect any subsequent developments. Accordingly, management’s estimate will change from time to time, and actual losses may be more or less than the current estimate. For matters where a loss is not probable, or the amount of the loss cannot be estimated, no accrual is established.
Management is vigorously pursuing all its legal and factual defenses and, after consultation with legal counsel, believes that all such litigation will be resolved with no material effect on United’s financial statements.
Regulatory Matters
A variety of consumer products, including mortgage and deposit products, and certain fees and charges related to such products, have come under increased regulatory scrutiny. It is possible that regulatory authorities could bring enforcement actions, including civil money penalties, or take other actions against United in regard to these consumer products. United could also determine of its own accord, or be required by regulators, to refund or otherwise make remediation payments to customers in connection with these products. It is not possible at this time for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss related to such matters.
NOTE S—DERIVATIVE FINANCIAL INSTRUMENTS
United uses derivative instruments to help aid against adverse price changes or interest rate movements on the value of certain assets or liabilities and on future cash flows. These derivatives may consist of interest rate swaps, caps, floors, collars, futures, forward contracts, written and purchased options. United also executes derivative instruments with its commercial banking customers to facilitate its risk management strategies.
During 2020, United entered into two interest rate swap derivatives designated as cash flow hedges. The notional amount of these cash flow hedge derivatives totaled $ 500,000,000 . The derivatives are intended to hedge the changes in cash flows associated with floating rate FHLB borrowings. One of these two interest rate swap derivatives matured during the third quarter of 2024.
As of December 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. United estimates that $ 9,131,000 will be reclassified from AOCI as a decrease to interest expense over the next 12-months following December 31, 2024 related to the cash flow hedges. As of December 31, 2024, the maximum length of time over which forecasted transactions are hedged is six years.
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United is subject to the Dodd-Frank Act clearing requirement for eligible derivatives. United has executed and cleared eligible derivatives through the London Clearing House (“LCH”). Variation margin at the LCH is distinguished as settled-to-market and settled daily based on the prior day value, rather than collateralized-to-market. The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument. The total notional amount of interest rate swap derivatives designated as cash flow hedges cleared through the LCH include $ 250,000,000 for asset derivatives as of December 31, 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. The related fair value on a net basis approximates zero .
The following tables disclose the derivative instruments’ location on the Company’s Consolidated Balance Sheets and the notional amount and fair value of those instruments at December 31, 2024 and December 31, 2023.
Asset Derivatives
December 31, 2024
December 31, 2023
(In thousands)
Balance
Sheet
Location
Notional
Amount
Fair
Value
Balance
Sheet
Location
Notional
Amount
Fair
Value
Derivatives designated as hedging instruments
Fair Value Hedges:
Interest
rate swap contracts (hedging commercial loans)
Other assets
$
10,770
$
644
Other assets
$
12,032
$
611
Total Fair Value Hedges
$
10,770
$
644
$
12,032
$
611
Cash Flow Hedges:
Interest rate swap contracts (hedging FHLB borrowings)
Other assets
$
250,000
$
0
Other assets
$
500,000
$
0
Total Cash Flow Hedges
$
250,000
$
0
$
500,000
$
0
Total derivatives designated as hedging instruments
$
260,770
$
644
$
512,032
$
611
Derivatives not designated as hedging instruments
Forward loan sales commitments
Other assets
$
0
$
0
Other assets
$
3,880
$
93
TBA mortgage-backed securities
Other assets
54,826
278
Other assets
0
0
Interest rate lock commitments
Other assets
21,553
339
Other assets
99,278
1,144
Total derivatives not designated as hedging instruments
$
76,379
$
617
$
103,158
$
1,237
Total asset derivatives
$
337,149
$
1,261
$
615,190
$
1,848
Liability Derivatives
December 31, 2024
December 31, 2023
Balance
Sheet
Location
Notional
Amount
Fair
Value
Balance
Sheet
Location
Notional
Amount
Fair
Value
Derivatives not designated as hedging instruments
TBA mortgage-backed securities
Other liabilities
$
0
$
0
Other liabilities
$
77,115
$
678
Forward loan sales commitments
Other liabilities
3,186
20
Other liabilities
0
0
Total derivatives not designated as hedging instruments
$
3,186
$
20
$
77,115
$
678
Total liability derivatives
$
3,186
$
20
$
77,115
$
678
The following table represents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value accounting relationship as of December 31, 2024 and December 31, 2023.
11 6
Table of Contents
December 31, 2024
(In thousands)
Derivatives in Fair Value
Hedging Relationships
Location in the Statement of
Condition
Carrying Amount of
the Hedged Assets/
(Liabilities)
Cumulative Amount
of Fair Value Hedging
Adjustment Included
in the Carrying
Amount of the Hedged
Assets/(Liabilities)
Cumulative Amount of
Fair Value Hedging
Adjustment Remaining for
any Hedged Assets/
(Liabilities) for which
Hedge Accounting has
been Discontinued
Interest rate swaps
Loans, net of unearned income
$ 10,770
$
( 657 )
$
0
December 31, 2023
(In thousands)
Derivatives in Fair Value
Hedging Relationships
Location in the Statement
of Condition
Carrying Amount of
the Hedged
Assets/(Liabilities)
Cumulative Amount
of Fair Value Hedging
Adjustment Included
in the Carrying
Amount of the Hedged
Assets/(Liabilities)
Cumulative Amount of
Fair Value Hedging
Adjustment Remaining for
any Hedged Assets/
(Liabilities) for which
Hedge Accounting has
been Discontinued
Interest rate swaps
Loans, net of unearned income
$
12,032
$
( 632 )
$
0
Derivative contracts involve the risk of dealing with both bank customers and institutional derivative counterparties and their ability to meet contractual terms. Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. United’s exposure is limited to the replacement value of the contracts rather than the notional amount of the contract. The Company’s agreements generally contain provisions that limit the unsecured exposure up to an agreed upon threshold. Additionally, the Company attempts to minimize credit risk through certain approval processes established by management.
The effect of United’s derivative financial instruments on its Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 is presented as follows:
Year Ended
(In thousands)
Income Statement
Location
December 31,
2024
December 31,
2023
December 31,
2022
Derivatives in hedging relationships
Cash Flow Hedges:
Interest rate swap contracts
Interest on long-term
borrowings (1)
$
20,932
$
23,574
$
5,782
Fair Value Hedges:
Interest rate swap contracts
Interest and fees on loans and leases
$
8
$
117
$
( 177 )
Total derivatives in hedging relationships
$
20,940
$
23,691
$
5,605
Derivatives not designated as hedging instruments
Forward loan sales commitments
Income from Mortgage Banking Activities
( 114
)
( 127
)
( 174
)
TBA mortgage-backed securities
Income from Mortgage Banking Activities
956
( 611
)
276
Interest rate lock commitments
Income from Mortgage Banking Activities
( 489
)
( 240
)
( 8,373
)
Total derivatives not designated as hedging instruments
$
353
$
( 978
)
$
( 8,271
)
Total derivatives
$
21,293
$
22,713
$
( 2,666
)
(1)
Decreases or increases in interest expense are expressed as positive or negative amounts, respectively, based on their impact to net income.
For the years ended December 31, 2024, 2023 and 2022, changes in the fair value of any interest rate swaps attributed to hedge ineffectiveness were recorded, but were not significant to United’s Consolidated Statements of Income.
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NOTE T--COMPREHENSIVE
INCOME
The changes in accumulated other comprehensive income are as follows:
For the Years Ended December 31
(In thousands)
2024
2023
2022
Net Income
$
372,996
$
366,313
$
379,627
Available for sale (“AFS”) securities:
Change in net unrealized gains (losses) on AFS securities arising during the period
24,251
98,627
( 481,007
)
Related income tax effect
( 5,840
)
( 22,980
)
112,075
Net reclassification adjustment for losses (gains) included in net income
16,296
7,659
( 2
)
Related income tax effect
( 3,852
)
( 1,785
)
0
30,855
81,521
( 368,934
)
Net effect of AFS securities on other comprehensive income
30,855
81,521
( 368,934
)
Cash flow hedge derivatives:
Unrealized gain on cash flow hedge before reclassification to interest expense
12,744
6,548
53,572
Related income tax effect
( 2,987
)
( 1,526
)
( 12,482
)
Net reclassification adjustment for gains included in net income
( 20,932
)
( 23,574
)
( 5,782
)
Related income tax effect
4,926
5,493
1,347
Net effect of cash flow hedge derivatives on other comprehensive income
( 6,249
)
( 13,059
)
36,655
Defined benefit pension plan:
Net actuarial gain during the period
12,348
2,635
2,195
Related income tax expense
( 2,951
)
( 613
)
( 512
)
Amortization of net actuarial loss recognized in net income
2,315
3,347
3,645
Related income tax effect
( 540
)
( 780
)
( 893
)
Net effect of change in defined benefit pension plan on other comprehensive income
11,172
4,589
4,435
Total change in other comprehensive income, net of tax
35,778
73,051
( 327,844
)
Total Comprehensive Income
$
408,774
$
439,364
$
51,783
The components of accumulated other comprehensive income for the year ended December 31, 2024 are as follows:
Changes in Accumulated Other Comprehensive Income (AOCI) by Component (a)
For the Year Ended December 31, 2024
(Dollars in thousands)
Unrealized
Gains/
Losses on
AFS
Securities
Unrealized
Gains/
Losses on
Cash Flow
Hedges
Defined
Benefit
Pension
Items
Total
Balance at January 1, 2024
$
( 278,819 )
$
39,955
$
( 20,817 )
$
( 259,681 )
Other comprehensive income before reclassification
18,411
9,757
0
28,168
Amounts reclassified from accumulated other comprehensive income
12,444
( 16,006
)
11,172
7,610
Net current-period other comprehensive income (loss), net of tax
30,855
( 6,249
)
11,172
35,778
Balance at December 31, 2024
$
( 247,964 )
$
33,706
$
( 9,645 )
$
( 223,903 )
(a) All amounts are net-of-tax.
United has adopted the portfolio approach for purposes of releasing residual tax effects within AOCI.
11 8
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Reclassifications out of Accumulated Other Comprehensive Income (AOCI)
For the Year Ended December 31, 2024
(In thousands)
Details about AOCI Components
Amount
Reclassified
from AOCI
Affected Line Item in the Statement Where
Net Income is Presented
Available for sale (“AFS”) securities:
Net reclassification adjustment for losses included in net income
$
16,296
Net investment securities losses
16,296
Total before tax
Related income tax effect
( 3,852
)
Tax expense
12,444
Net of tax
Cash flow hedge:
Net reclassification adjustment for gains included in net income
$
( 20,932
)
Interest expense
( 20,932
)
Total before tax
Related income tax effect
4,926
Tax expense
( 16,006
)
Net of tax
Pension plan:
Recognized net actuarial gain
12,348
(a)
Amortization of net actuarial loss
2,315
(b)
14,663
Total before tax
Related income tax effect
( 3,491
)
Tax expense
11,172
Net of tax
Total reclassifications for the period
$
7,610
(a) This AOCI component is included in the computation of changes in plan assets (see Note P, Employee Benefit Plans)
(b) This AOCI component is included in the computation of net periodic pension cost (see Note P, Employee Benefit Plans)
NOTE U--UNITED
BANKSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
Condensed Balance Sheets
December 31
(In thousands)
2024
2023
Assets
Cash and due from banks
$
249,515
$
238,256
Securities available for sale
5,663
5,846
Securities held to maturity
20
20
Equity securities
15,897
3,735
Other investment securities
11,400
20,704
Investment in subsidiaries:
Bank subsidiaries
5,024,692
4,818,320
Nonbank subsidiaries
55,755
54,556
Goodwill
( 16,715
)
( 16,715
)
Other assets
32,152
28,315
Total Assets
$
5,378,379
$
5,153,037
Liabilities and Shareholders’ Equity
Junior subordinated debentures of subsidiary trusts
$
280,221
$
278,617
Accrued expenses and other liabilities
104,935
103,180
Shareholders’ equity (including other accumulated comprehensive losses of
$ 223,903 and $ 259,681 at December 31, 2024 and 2023, respectively)
4,993,223
4,771,240
Total Liabilities and Shareholders’ Equity
$
5,378,379
$
5,153,037
Condensed Statements of Income
Year Ended December 31
(In thousands)
2024
2023
2022
Income
Dividends from banking subsidiaries
$
231,000
$
217,000
$
272,500
Net interest income
933
970
446
Management fees:
Bank subsidiaries
48,307
43,852
35,931
Nonbank subsidiaries
51
27
27
Other income
5,064
2,167
3,053
Total Income
285,355
264,016
311,957
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Condensed Statements of Income
Year Ended December 31
(In thousands)
2024
2023
2022
Expenses
Operating expenses
80,922
67,968
50,242
Income Before Income Taxes and Equity in Undistributed Net Income of Subsidiaries
204,433
196,048
261,715
Applicable income tax benefit
( 5,589
)
( 4,521
)
( 2,196
)
Income Before Equity in Undistributed Net
Income of Subsidiaries
210,022
200,569
263,911
Equity in undistributed net income of subsidiaries:
Bank subsidiaries
169,778
170,997
117,594
Nonbank subsidiaries
( 6,804
)
( 5,253
)
( 1,878
)
Net Income
$
372,996
$
366,313
$
379,627
Condensed Statements of Cash Flows
Year Ended December 31
(In thousands)
2024
2023
2022
Operating Activities
Net income
$
372,996
$
366,313
$
379,627
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries
( 162,974
)
( 165,744
)
( 115,716
)
Amortization of net periodic pension costs
141
204
220
Stock-based compensation
12,130
12,463
9,881
Excess tax benefits from stock-based compensation arrangements
258
128
1,040
Net change in other assets and liabilities
( 5,925
)
( 5,420
)
( 6,118
)
Net Cash Provided by Operating Activities
216,626
207,944
268,934
Investing Activities
Net proceeds from sales (purchases) of debt securities
183
338
( 426
)
Net proceeds from sales (purchases) of equity
securities
130
( 1,303
)
4,186
Increase in investment in subsidiaries
( 8,000
)
( 16,000
)
( 13,000
)
Change in other investment securities
( 1,187
)
( 1,525
)
( 6,144
)
Net Cash Used in Investing Activities
( 8,874
)
( 18,490
)
( 15,384
)
Financing Activities
Repayment of subordinated notes
0
( 10,250
)
0
Cash dividends paid
( 200,727
)
( 194,727
)
( 193,041
)
Acquisition of treasury stock
( 1,040
)
( 1,382
)
( 79,460
)
Proceeds from exercise of stock options
5,274
1,750
10,295
Net Cash Used in Financing Activities
( 196,493
)
( 204,609
)
( 262,206
)
Increase (Decrease) in Cash and Cash Equivalents
11,259
( 15,155
)
( 8,656
)
Cash and Cash Equivalents at Beginning of Year
238,256
253,411
262,067
Cash and Cash Equivalents at End of Year
$
249,515
$
238,256
$
253,411
NOTE V--REGULATORY
MATTERS
United Bank maintains average reserve balances with its Federal Reserve Bank. The average amount of those consolidated reserve balances maintained for the year ended December 31, 2024 and 2023 were approximately $ 1,184,007,000 and $ 813,480,000 , respectively. No reserve balance for the year ended December 31, 2024 and 2023 was required.
The primary source of funds for the dividends paid by United to its shareholders is dividends received from United Bank. Dividends paid by United Bank are subject to certain regulatory limitations. Generally, the most restrictive provision requires regulatory approval if dividends declared in any year exceed that year’s net income, as defined, plus the retained net profits of the two preceding years.
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During 2025, the retained net profits available for distribution to United by United Bank as dividends without regulatory approval, are approximately $ 340,775,000 , plus net income for the interim period through the date of declaration.
Under Federal Reserve regulation, United Bank is also limited as to the amount they may loan to affiliates, including the parent company. Loans from United Bank to the parent company are limited to 10 % of the banking subsidiaries’ capital and surplus, as defined, or $ 395,066,000 at December 31, 2024, and must be secured by qualifying collateral.
United’s subsidiary banks are subject to various regulatory capital requirements administered by federal banking agencies. Pursuant to capital adequacy guidelines, United’s subsidiary banks must meet specific capital guidelines that involve various quantitative measures of the banks’ assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. United’s subsidiary banks’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
As previously mentioned, in December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms. The quantitative measures established by the Basel III regulation to ensure capital adequacy require United and United Bank to maintain minimum amounts and ratios of total, Tier I capital, and common Tier I capital as defined in the regulations, to risk-weighted assets, as defined, and of Tier I capital, as defined, to average assets, as defined. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on United’s financial statements. As of December 31, 2024, United exceeds all capital adequacy requirements to which it is subject.
At December 31, 2024, the most recent notification from its regulators, United and United Bank were categorized as well-capitalized. To be categorized as well-capitalized, United must maintain minimum total risk-based, Tier I risk-based, Common Tier I risk-based, and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes would impact United’s well-capitalized status.
United’s and United Bank’s capital amounts (in thousands of dollars) and ratios are presented in the following table.
(Dollars in thousands)
Actual
For Capital
Adequacy Purposes
To Be Well-
Capitalized
Amount
Ratio
Amount
Ratio
Amount
Ratio
As of December 31, 2024:
Total Capital (to Risk- Weighted Assets):
United Bankshares
$
3,897,755
16.5
%
$
1,887,433
≥
8.0
%
$
2,359,292
≥
10.0
%
United Bank
3,620,657
15.4
%
1,877,704
≥
8.0
%
2,347,131
≥
10.0
%
Tier I Capital (to Risk- Weighted Assets):
United Bankshares
$
3,335,667
14.1
%
$
1,415,575
≥
6.0
%
$
1,887,433
≥
8.0
%
United Bank
3,348,071
14.3
%
1,408,278
≥
6.0
%
1,877,704
≥
8.0
%
Common Tier I Capital (to Risk Weighted Assets):
United Bankshares
$
3,335,667
14.1
%
$
1,061,681
≥
4.5
%
$
1,533,540
≥
6.5
%
United Bank
3,348,071
14.3
%
1,056,209
≥
4.5
%
1,525,635
≥
6.5
%
Tier I Capital (to Average Assets):
United Bankshares
$
3,335,667
11.7
%
$
1,136,661
≥
4.0
%
$
1,420,827
≥
5.0
%
United Bank
3,348,071
11.8
%
1,132,023
≥
4.0
%
1,415,029
≥
5.0
%
As of December 31, 2023:
Total Capital (to Risk- Weighted Assets):
United Bankshares
$
3,700,453
15.4
%
$
1,924,541
≥
8.0
%
$
2,405,676
≥
10.0
%
United Bank
3,440,096
14.4
%
1,916,834
≥
8.0
%
2,396,043
≥
10.0
%
Tier I Capital (to Risk- Weighted Assets):
United Bankshares
$
3,162,118
13.1
%
$
1,443,405
≥
6.0
%
$
1,924,541
≥
8.0
%
United Bank
3,190,950
13.3
%
1,437,626
≥
6.0
%
1,916,834
≥
8.0
%
121
Table of Contents
(Dollars in thousands)
Actual
For Capital
Adequacy Purposes
To Be Well-
Capitalized
Amount
Ratio
Amount
Ratio
Amount
Ratio
Common Tier I Capital (to Risk Weighted Assets):
United Bankshares
$
3,162,118
13.1
%
$
1,082,554
≥
4.5
%
$
1,563,689
≥
6.5
%
United Bank
3,190,950
13.3
%
1,078,219
≥
4.5
%
1,557,428
≥
6.5
%
Tier I Capital (to Average Assets):
United Bankshares
$
3,162,118
11.4
%
$
1,110,296
≥
4.0
%
$
1,387,870
≥
5.0
%
United Bank
3,190,950
11.5
%
1,108,321
≥
4.0
%
1,385,401
≥
5.0
%
NOTE W--FAIR
VALUES OF FINANCIAL INSTRUMENTS
In accordance with ASC Topic 820, the following describes the valuation techniques used by United to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements.
Securities available for sale and equity securities
: Securities available for sale and equity securities are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (“Level 1”). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Using a market approach valuation methodology, third party vendors compile prices based on observable market inputs, which include benchmark yields, reported trades, issuer spreads, benchmark securities, and “To Be Announced” prices (“Level 2”). Management internally reviews the fair values provided by third party vendors on a monthly basis. Management also performs a quarterly price testing analysis at the individual security level which compares the pricing provided by the third party vendors to an independent pricing source’s valuation of the same securities. Variances that are deemed to be material are reviewed by management. Additionally, to further assess the reliability of the information received from third party vendors, management obtains documentation from third party vendors related to the sources, methodologies, and inputs utilized in valuing securities classified as Level 2. Management analyzes this information to ensure the underlying assumptions appear reasonable. Management also obtains an independent service auditor’s report from third party vendors to provide reasonable assurance that appropriate controls are in place over the valuation process. Upon completing its review of the pricing from third party vendors at December 31, 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 December 31, 2024. Management utilizes a number of factors to determine if a market is inactive, all of which may require a significant level of judgment. Factors that management considers include: a significant widening of the bid-ask spread, a considerable decline in the volume and level of trading activity in the instrument, a significant variance in prices among market participants, and a significant reduction in the level of observable inputs. Any securities available for sale not valued based upon quoted market prices or third party pricing models that consider observable market data are considered Level 3. Currently, United does not have any available-for-sale securities considered as Level 3.
Loans held for sale
: For residential mortgage loans sold, the loans closed are recorded at fair value using the fair value option which is measured using valuations from investors for loans with similar characteristics (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing (“Level 3”). The unobservable input for Level 3 valuations is the Company’s historical sales prices. For December 31, 2024, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.12 % to 0.64 % with a weighted average increase of 0.20 %.
Derivatives
: United utilizes interest rate swaps to hedge exposure to interest rate risk and variability of cash flows associated to changes in the underlying interest rate of the hedged item. These hedging interest rate swaps are classified as either a fair value hedge or a cash flow hedge. United utilizes third-party vendors for derivative valuation purposes. These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves (“Level 2”). Valuation adjustments to derivative fair values for liquidity and credit risk are also taken into consideration, as well as the likelihood of default by United and derivative counterparties, the net counterparty exposure and the remaining maturities of the positions. Values obtained from third party vendors are typically not adjusted by management. Management internally reviews the derivative values provided by third party vendors on a quarterly basis.
12 2
Table of Contents
For a fair value hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to the hedged financial instrument. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a fair value hedge are offset in current period earnings either in interest income or interest expense depending on the nature of the hedged financial instrument. For a cash flow hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to accumulated other comprehensive income within shareholders’ equity, net of tax. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a cash flow hedge are offset to accumulated other comprehensive income, net of tax and reclassified into earnings in the same line associated with the forecasted transaction when the forecasted transaction affects earnings.
The Company records its interest rate lock commitments and forward loan sales commitments at fair value determined as the amount that would be required to settle each of these derivative financial instruments at the balance sheet date. In the normal course of business, United enters into contractual interest rate lock commitments to extend credit to borrowers with fixed expiration dates. The commitments become effective when the borrowers “lock-in”
a specified interest rate within the timeframes established by United. All borrowers are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the interest rate lock by the borrower and the sale date of the loan to the investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, United may enter into either a forward sales contract to sell loans to investors or a TBA mortgage-backed security. Fair values of TBA mortgage-backed securities are measured using valuations from investors for mortgage-backed securities with similar characteristics (“Level 2”). The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. The rate lock commitments to borrowers and the forward sales contracts to investors are undesignated derivatives and accordingly, are marked to fair value through earnings. The interest rate lock commitments are recorded at fair value which is measured using valuations from investors for loans with similar characteristics as well as considering the probability of the loan closing (i.e. the “pull-through” rate) (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing (“Level 3”). The unobservable input for Level 3 valuations is the Company’s historical sales prices. For December 31, 2024, the range of historical sales prices increased the investor’s indicated pricing
by a range of
0.12 % to
0.64 % with a weighted average increase of
0.20 %.
For derivatives that are not designated in a hedge relationship, changes in the fair value of these derivatives are recognized in income from mortgage banking activities in the same period as the change in the fair value. Unrealized gains and losses due to changes in the fair value of other derivative financial instruments not in hedge relationship, if any, are included in noninterest income and noninterest expense, respectively.
The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023, segregated by the level of the valuation inputs within the fair value hierarchy:
Fair Value at December 31, 2024 Using
(In thousands)
Description
Balance as of
December 31,
2024
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Available for sale debt securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
245,842
$
0
$
245,842
$
0
State and political subdivisions
495,073
0
495,073
0
Residential mortgage-backed securities
Agency
1,059,719
0
1,059,719
0
Non-agency
82,123
0
82,123
0
Commercial mortgage-backed securities
Agency
329,986
0
329,986
0
Asset-backed securities
474,982
0
474,982
0
Single issue trust preferred securities
11,919
0
11,919
0
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Fair Value at December 31, 2024 Using
(In thousands)
Description
Balance as of
December 31,
2024
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Other corporate securities
260,075
4,965
255,110
0
Total available for sale securities
2,959,719
4,965
2,954,754
0
Equity securities:
Financial services industry
12.504
12,504
0
0
Equity mutual funds (1)
3,394
3,394
0
0
Fixed income mutual funds
5,160
5,160
0
0
Total equity securities
21,058
21,058
0
0
Loans held for sale
44,360
0
0
44,360
Derivative financial assets:
Interest rate swap contracts
644
0
644
0
TBA mortgage-backed securities
278
0
0
278
Interest rate lock commitments
339
0
0
339
Total derivative financial assets
1,261
0
644
617
Liabilities
Derivative financial liabilities:
Forward sales commitments
20
0
0
20
Total derivative financial liabilities
20
0
0
20
Fair Value at December 31, 2023 Using
(In thousands)
Description
Balance as of
December 31,
2023
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Available for sale debt securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
484,950
$
0
$
484,950
$
0
State and political subdivisions
533,831
0
533,831
0
Residential mortgage-backed securities
Agency
1,049,941
0
1,049,941
0
Non-agency
90,611
0
90,611
0
Commercial mortgage-backed securities
Agency
459,298
0
459,298
0
Asset-backed securities
860,638
0
860,638
0
Single issue trust preferred securities
15,141
0
15,141
0
Other corporate securities
291,967
5,159
286,808
0
Total available for sale securities
3,786,377
5,159
3,781,218
0
Equity securities:
Financial services industry
211
211
0
0
Equity mutual funds (1)
3,524
3,524
0
0
Fixed income mutual funds
5,210
5,210
0
0
Total equity securities
8,945
8,945
0
0
Loans held for sale
56,261
0
4,283
51,978
Derivative financial assets:
Interest rate swap contracts
611
0
611
0
Forward sales commitments
93
0
60
33
Interest rate lock commitments
1,144
0
139
1,005
Total derivative financial assets
1,848
0
810
1,038
Liabilities
Derivative financial liabilities
:
TBA mortgage-backed securities
678
0
11
667
Total derivative financial liabilities
678
0
11
667
(1)
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.
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There were no transfers between Level 1, Level 2 and Level 3 for financial assets and liabilities measured at fair value on a recurring basis during the year ended December 31, 2024 and 2023.
The following tables present additional information about financial assets and liabilities measured at fair value at December 31, 2024 and 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.
Derivative Assets
Derivative Liabilities
December31, 2024
Loans
Held for
Sale
TBA
Securities
Forward Sales
Commitments
Interest Rate
Lock
Commitments
TBA
Securities
Forward
Sales
Commitments
Balance, beginning of period
$
51,978
$
0
$
33
$
1,005
$
667
$
0
Originations
607,383
0
0
0
0
0
Sales
( 630,244
)
0
0
0
0
0
Transfers other
0
278
( 33
)
( 666
)
( 667
)
20
Total gains during the period recognized in earnings
15,243
0
0
0
0
0
Balance, end of period
$
44,360
$
278
$
0
$
339
$
0
$
20
The amount of total (losses) gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date
$
( 1,133
)
$
278
0
$
339
$
0
$ 20
Derivative Assets
Derivative Liabilities
December 31, 2023
Loans
Held for Sale
TBA
Securities
Forward Sales
Commitments
Interest Rate
Lock
Commitments
TBA
Securities
Interest Rate
Lock
Commitments
Balance, beginning of period
$
44,871
$
26
$
6
$
844
$
213
$
348
Originations
1,156,616
0
0
0
0
0
Sales
( 1,179,612
)
0
0
0
0
0
Transfers other
0
( 26
)
27
161
454
( 348
)
Total gains during the period recognized in earnings
30,103
0
0
0
0
0
Balance, end of period
$
51,978
$
0
$
33
$
1,005
$
667
$
0
The amount of total gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date
$
1,142
$
0
$
33
$
1,005
$
667
$
0
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Fair Value Option
The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:
(In thousands)
Description
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Income from mortgage banking activities
$ ( 1,222 )
$ 1,175
The following table reflects the difference between the aggregate fair value and the remaining contractual principal outstanding for financial instruments for which the fair value option has been elected:
December 31, 2024
December 31, 2023
(In thousands)
Description
Unpaid
Principal
Balance
Fair Value
Fair Value
Over/(Under)
Unpaid
Principal
Balance
Unpaid
Principal
Balance
Fair Value
Fair Value
Over/(Under)
Unpaid
Principal
Balance
Loans held for sale
$
43,698
$
44,360
$
662
$
54,377
$
56,261
$
1,884
No loans held for sale were past due or on nonaccrual status as of December 31, 2024 and 2023.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.
The following describes the valuation techniques used by United to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements.
Individually assessed loans
: In the determination of the allowance for loan losses, loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. Fair value is measured using a market approach based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an appraisal conducted by an independent, licensed appraiser outside of the Company using comparable property sales (“Level 2”). However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (“Level 3”). For individually assessed loans, a specific reserve is established through the allowance for loan losses, if necessary, by estimating the fair value of the underlying collateral on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses expense on the Consolidated Statements of Income.
OREO
: OREO consists of real estate acquired in foreclosure or other settlement of loans. Such assets are carried on the balance sheet at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. Fair value is determined by one of two market approach methods depending on whether the property has been vacated and an appraisal can be conducted. If the property has yet to be vacated and thus an appraisal cannot be performed, a Brokers Price Opinion (i.e. BPO), is obtained. A BPO represents a best estimate valuation performed by a realtor based on knowledge of current property values and a visual examination of the exterior condition of the property. Once the property is subsequently vacated, a formal appraisal is obtained and the recorded asset value appropriately adjusted. On the other hand, if the OREO property has been vacated and an appraisal can be conducted, the fair value of the property is
12 6
Table of Contents
determined based upon the appraisal using a market approach. An authorized independent appraiser conducts appraisals for United. Appraisals for property other than ongoing construction are based on consideration of comparable property sales (“Level 2”). In contrast, valuation of ongoing construction assets requires some degree of professional judgment. In conducting an appraisal for ongoing construction property, the appraiser develops two appraised amounts: an “as is” appraised value and a “completed” value. Based on professional judgment and their knowledge of the particular situation, management determines the appropriate fair value to be utilized for such property (“Level 3”). As a matter of policy, valuations are reviewed at least annually and appraisals are generally updated on a bi-annual
basis with values lowered as necessary.
Intangible Assets
: For United, intangible assets consist of goodwill and core deposit intangibles. Goodwill is tested for impairment at least annually or sooner if indicators of impairment exist. United may elect to perform a qualitative analysis to determine whether or not it is more-likely-than not that the fair value of a reporting unit is less than its carrying amount. If United elects to bypass this qualitative analysis, or concludes via qualitative analysis that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, United may use either a market or income quantitative approach to determine the fair value of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment charge would be recorded for the difference, not to exceed the amount of goodwill allocated to the reporting unit. At each reporting date, the Company considers potential indicators of impairment. United performed its annual goodwill impairment test on the Company’s reporting units as of September 30, 2024. The goodwill impairment test did not identify any goodwill impairment. In subsequent periods, economic uncertainty, market volatility and the performance of the Company’s stock as well as possible other impairment indicators could cause us to perform a goodwill impairment test which could result in an impairment charge being recorded for that period if the carrying value of goodwill was found to exceed fair value. Core deposit intangibles relate to the estimated value of the deposit base of acquired institutions. Management reviews core deposit intangible assets on an annual basis, or sooner if indicators of impairment exist, and evaluates changes in facts and circumstances that may indicate impairment in the carrying value. 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 other fair value measurement of intangible assets was made during the year of 2024 and 2023.
Mortgage Servicing Rights (“MSRs”):
A mortgage servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans are expected to more than adequately compensate the Company for performing the servicing. The Company initially measures servicing assets and liabilities retained related to the sale of residential loans held for sale at fair value. For subsequent measurement purposes, the Company measures servicing assets and liabilities using the amortization method on a quarterly basis. The quarterly determination of fair value of servicing rights is provided by a third party and is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy. The unobservable inputs for Level 3 valuations are market discount rates, anticipated prepayment speeds, projected delinquency rates, and ancillary fee income net of servicing costs. During the third quarter of 2024, United sold its remaining balance of MSRs. For the unobservable inputs used in the valuation of MSRs at December 31, 2023, refer to Note J of these Notes to Consolidated Financial Statements. The Company did not record any temporary impairment of MSRs in during the year of 2024 and 2023.
The following table summarizes United’s financial assets that were measured at fair value on a nonrecurring basis during the period:
(In thousands)
Description
Fair Value at December 31, 2024
Balance as of
December 31,
2024
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
YTD
Gains
(Losses)
Assets
Individually assessed loans
$
40,701
$
0
$
21,725
$
18,976
$
( 231
)
OREO
327
0
240
87
0
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(In thousands)
Description
Fair Value at December 31, 2023
Balance as of
December 31,
2023
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
YTD
Gains
(Losses)
Assets
Individually assessed loans
$
45,308
$
0
$
44,722
$
586
$
314
OREO
2,615
0
2,615
0
( 67
)
Fair Value of Other Financial Instruments
The following methods and assumptions were used by United in estimating its fair value disclosures for other financial instruments:
Cash and Cash Equivalents:
The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values.
Securities held to maturity and other securities
: The estimated fair values of securities held to maturity are based on quoted market prices, where available. If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data. Any securities held to maturity, not valued based upon the methods above, are valued based on a discounted cash flow methodology using appropriately adjusted discount rates reflecting nonperformance and liquidity risks. Other securities consist mainly of shares of Federal Home Loan Bank and Federal Reserve Bank stock as well as investment tax credits that do not have readily determinable fair values and are carried at cost.
Loans and leases
: The fair values of certain mortgage loans (e.g., one-to-four family residential), credit card loans, and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. The fair values of other loans and leases (e.g., commercial real estate and rental property mortgage loans, commercial and industrial loans, financial institution loans and agricultural loans) are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans and leases with similar terms to borrowers of similar creditworthiness, which include adjustments for liquidity concerns. For acquired PCD loans, fair value is assumed to equal United’s carrying value, which represents the present value of expected future principal and interest cash flows, as adjusted for any Allowance for Credit Losses recorded for these loans.
Deposits
: The fair values of demand deposits (e.g., interest and noninterest checking, regular savings and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values of fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.
Short-term Borrowings:
The carrying amounts of federal funds purchased, borrowings under repurchase agreements and any other short-term borrowings approximate their fair values.
Long-term Borrowings:
The fair values of United’s Federal Home Loan Bank borrowings and trust preferred securities are estimated using discounted cash flow analyses, based on United’s current incremental borrowing rates for similar types of borrowing arrangements.
12 8
Table of Contents
Summary of Fair Values for All Financial Instruments
The estimated fair values of United’s financial instruments are summarized below:
Fair Value at Measurement
(In thousands)
Carrying
Amount
Fair Value
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31, 2024
Cash and cash equivalents
$
2,292,244
$
2,292,244
$
0
$
2,292,244
$
0
Securities available for sale
2,959,719
2,959,719
4,965
2,954,754
0
Securities held to maturity
1,002
1,020
0
0
1,020
Equity securities
21,058
21,058
21,058
0
0
Other securities
277,517
263,641
0
0
263,641
Loans held for sale
44,360
44,360
0
0
44,360
Net loans
21,401,649
20,868,239
0
0
20,868,239
Derivative financial assets,
1,261
1,261
0
644
617
Mortgage servicing rights
0
0
0
0
0
Deposits
23,961,859
23,922,063
0
23,922,063
0
Short-term borrowings
176,090
176,090
0
176,090
0
Long-term borrowings
540,420
505,305
0
505,305
0
Derivative financial liabilities
20
20
0
0
20
December 31, 2023
Cash and cash equivalents
$
1,598,943
$
1,598,943
$
0
$
1,598,943
$
0
Securities available for sale
3,786,377
3,786,377
5,159
3,781,218
0
Securities held to maturity
1,003
1,020
0
0
1,020
Equity securities
8,945
8,945
8,945
0
0
Other securities
329,429
312,958
0
0
312,958
Loans held for sale
56,261
56,261
0
4,283
51,978
Net loans
21,099,847
20,463,710
0
0
20,463,710
Derivative financial assets,
1,848
1,848
0
810
1,038
Mortgage servicing rights
4,554
13,427
0
0
13,427
Deposits
22,819,319
22,760,310
0
22,760,310
0
Short-term borrowings
196,095
196,095
0
196,095
0
Long-term borrowings
1,789,103
1,769,123
0
1,769,123
0
Derivative financial liabilities
678
678
0
11
667
NOTE X--VARIABLE
INTEREST ENTITIES
Variable interest entities (“VIEs”) are entities that either have a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest (i.e., ability to make significant decisions, through voting rights, right to receive the expected residual returns of the entity, and obligation to absorb the expected losses of the entity). VIEs can be structured as corporations, trusts, partnerships, or other legal entities. United’s business practices include relationships with certain VIEs. For United, the business purpose of these relationships primarily consists of funding activities in the form of issuing trust preferred securities.
United currently sponsors twenty statutory business trusts that were created for the purpose of raising funds that originally qualified for Tier I regulatory capital. As previously discussed, these trusts now are considered Tier II regulatory capital. These trusts, of which several were acquired through bank acquisitions, issued or participated in pools of trust preferred capital securities to third-party investors with the proceeds invested in junior subordinated debt securities of United. The Company, through a small capital contribution, owns 100 % of the voting equity shares of each trust. The assets, liabilities, operations, and cash flows of each trust are solely related to the issuance, administration, and repayment of the preferred equity securities held by third-party investors. United fully and unconditionally guarantees the obligations of each trust and is obligated to redeem the junior subordinated debentures upon maturity.
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As defined in applicable accounting standards, VIEs are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. United’s wholly owned and indirect wholly owned statutory trust subsidiaries are VIEs for which United is not the primary beneficiary. Accordingly, its accounts are not included in United’s consolidated financial statements. At December 31, 2024 and 2023, United’s investment (maximum exposure to loss) in these trusts were $ 12,238,000 and $ 11,751,000 , respectively.
United, through its banking subsidiary, also makes limited partner equity investments in various low income housing and community development partnerships sponsored by independent third-parties. United invests in these partnerships to either realize tax credits on its consolidated federal income tax return or for purposes of earning a return on its investment. These partnerships are considered VIEs as the limited partners lack a controlling financial interest in the entities through their inability to make decisions that have a significant effect on the operations and success of the partnerships. These partnerships are not consolidated as United is not deemed to be the primary beneficiary. At December 31, 2024 and 2023, United’s investment (maximum exposure to loss) in these low income housing and community development partnerships were $ 98,441,000 and $ 87,554,000 , respectively, while related unfunded commitments were $ 89,292,000 and $ 63,539,000 , respectively. As of December 31, 2024, United expects to recover its remaining investments through the use of the tax credits that are generated by the investments.
NOTE Y--SEGMENT
INFORMATION
United operates in one reportable segment, community banking. Through its community banking segment, United offers a full range of products and services through various delivery channels. Included among the banking products and services offered are the acceptance of deposits in checking, savings, time and money market accounts; the making and servicing of personal, credit card, commercial, and floor plan loans; and the making of construction and real estate loans as well as the origination and sale of residential mortgages in the secondary market. Also offered are trust and brokerage services, safe deposit boxes, and wire transfers. The community banking segment derives revenues mainly from interest income on loans to customers, investment securities held and other short-term investments in addition to fees and income derived related to the services listed above.
The accounting policies of the community banking segment are the same as those described in the summary of significant accounting policies. United’s chief operating decision maker (“CODM”) is its chief executive officer who maintains responsibility for the day-to-day
management of the Company including regularly reviewing the operating results of the community banking segment in order to assess performance and make decisions about resource allocation based on net income that also is reported on the income statement as consolidated net income. The measure of community banking segment assets is reported on the Consolidated Balance Sheets as total assets .
The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the community banking segment or into other parts of the entity, such as for acquisitions or to pay dividends. Net income is used to monitor budget versus actual results as well as comparing to prior year’s results. The comparative analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment.
13 0
Table of Contents
Information about the community banking segment for the years ended December 31, 2024, 2023 and 2022 is as follows:
For the Year Ended December 31
(In thousands)
2024
2023
2022
Total Assets
$
30,023,545
$
29,926,482
$
29,489,380
Net interest income
$
911,068
$
919,924
$
896,431
Provision for credit losses
25,153
31,153
18,822
Other income
123,695
135,258
153,261
Other expense
Employee compensation
234,618
230,809
242,408
Employee benefits
53,621
48,368
45,944
Net occupancy expense
46,084
46,426
45,129
OREO expense
576
1,355
2,138
Net (gains) losses on the sales of OREO properties
( 75
)
( 60
)
700
Equipment expense
29,686
29,731
29,320
Data processing expense
29,646
29,395
29,997
Mortgage loan servicing expense and impairment
2,694
5,596
7,099
Bankcard processing expense
2,490
2,192
1,938
FDIC insurance expense
19,735
30,376
11,988
Other segment expense (a)
125,956
136,036
138,426
Total other expense
545,031
560,224
555,087
Income before income taxes
464,579
463,805
475,783
Income taxes
91,583
97,492
96,156
Segment net income
372,996
366,313
379,627
Reconciliation of profit or loss
Adjustments and reconciling items
0
0
0
Consolidated net income
$
372,996
$
366,313
$
379,627
(a)
Other segment expense includes legal, consulting and other professional services expense, franchise and other taxes not on income, expense for reserve on lending-related commitments, ATM expenses, marketing expense, core deposits amortization, and other general operating expenses.
NOTE Z--QUARTERLY
FINANCIAL DATA (UNAUDITED)
Quarterly financial data for 2024 and 2023 is summarized below:
(Dollars in thousands, except per share data)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
2024
Interest income
$
369,180
$
374,184
$
382,723
$
376,034
Interest expense
146,691
148,469
152,467
143,426
Net interest income
222,489
225,715
230,256
232,608
Provision for credit losses
5,740
5,779
6,943
6,691
Mortgage banking income
5,298
3,901
4,544
2,314
Securities (losses) gains, net
( 99
)
( 218
)
( 6,715
)
( 688
)
Other noninterest income
27,013
26,540
34,113
27,692
Noninterest expense
140,742
134,774
135,339
134,176
Income taxes
21,405
18,878
24,649
26,651
Net income (1)
86,814
96,507
95,267
94,408
Per share data:
Average shares outstanding (000s):
Basic
134,809
135,138
135,158
135,236
Diluted
135,121
135,315
135,505
135,732
Net income per share:
Basic
$
0.64
$
0.71
$
0.70
$
0.70
Diluted
$
0.64
$
0.71
$
0.70
$
0.69
Dividends per share
$
0.37
$
0.37
$
0.37
$
0.37
2023
Interest income
$
329,303
$
345,932
$
356,910
$
369,175
Interest expense
94,983
118,471
128,457
139,485
Net interest income
234,320
227,461
228,453
229,690
Provision for credit losses
6,890
11,440
5,948
6,875
Mortgage banking income
6,384
7,907
7,556
4,746
Securities (losses) gains, net
( 405
)
( 7,336
)
( 181
)
276
Other noninterest income
26,765
34,607
26,286
28,653
Noninterest expense
137,419
135,288
135,230
152,287
Income taxes
24,448
23,452
24,779
24,813
Net income (1)
98,307
92,459
96,157
79,390
Per share data:
Average shares outstanding (000s):
Basic
134,411
134,683
134,685
134,691
Diluted
134,840
134,850
134,888
134,985
Net income per share:
Basic
$
0.73
$
0.68
$
0.71
$
0.59
Diluted
$
0.73
$
0.68
$
0.71
$
0.59
Dividends per share
$
0.36
$
0.36
$
0.36
$
0.37
(1) For further information, see the related discussion “Quarterly Results” included in Management’s Discussion and Analysis.
13 1
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
This item is omitted since it is not applicable.