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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-08 · 278 added, 366 removed, 260 unchanged (71% of the section changed)

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

United cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.” United undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

PENDING ACQUISITION

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

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

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

As of September 30, 2024, Piedmont has total assets of approximately $2.2 billion, total loans of approximately $1.9 billion, total liabilities of approximately $2.0 billion, total deposits of approximately $2.0 billion, and total shareholders’ equity of approximately $207 million.

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

RECENT DEVELOPMENTS

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

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

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

The consolidation streamlined operations and will enhance the customer experience.

Based on this consolidation of its mortgage delivery channels and an analysis performed at September 30, 2024 in accordance with ASC 280, “Segment Reporting,” United has concluded that it operates only in one reportable segment – community banking.

United cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.” The following factors, among others, could cause the actual results of United’s operations to differ materially from its expectations:

(1) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve and the recently announced and future tariffs;

(2) general competitive, economic, political and market conditions and other factors that may affect future results of United, including changes in asset quality and credit risk;

the inability to sustain revenue and earnings growth;

changes in interest rates and capital markets;

customer borrowing, repayment, investment and deposit practices;

the impact, extent and timing of technological changes;

capital management activities;

and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms;

(3) risks related to the acquisition and integration of Piedmont Bancorp, Inc.

including, among others, (i) the risk that the expected growth opportunities or cost savings from the acquisition may not be fully realized or may take longer to realize than expected, and (ii) reputational risk and the reaction of each company’s customers, suppliers, employees or other business partners to the acquisition;

(4) deposit attrition, client loss or revenue loss following completed mergers or acquisitions that may be greater than anticipated;

(5) regulatory change risk resulting from new laws, rules, regulations, or accounting principles, including,

without limitation, the possibility that regulatory agencies may require higher levels of capital above the current regulatory-mandated minimums and the possibility of changes in accounting standards, policies, principles and practices;

(6) the cost and effects of cyber incidents or other failures, interruptions, or security breaches of United’s systems and those of our customers or third-party providers;

(7) competitive pressures on product pricing and services;

(8) success, impact, and timing of United’s business strategies, including market acceptance of any new products or services;

(9) volatility and disruptions in global capital and credit markets;

(10) operational, technological, cultural, regulatory, legal, credit and other risks associated with the exploration, consummation and integration of potential future acquisitions;

(11) catastrophic events such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including public health crises and infectious disease outbreaks, as well as any government actions in response to such events;

(12) geopolitical risk from terrorist activities and armed conflicts that may result in economic and supply disruptions, and loss of market and consumer confidence;

(13) the risks of fluctuations in market prices for United common stock that may or may not reflect economic condition or performance of United;

(14) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations;

and any other risks described in the “Risk Factors” sections of this and other reports filed by United with the Securities and Exchange Commission.

United undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

On January 10, 2025 (the “Acquisition Date”), United consummated its acquisition of Atlanta-based Piedmont Bancorp, Inc.

(“Piedmont”).

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

The operating results of United include operating results of acquired assets and assumed liabilities subsequent to the Acquisition Date.

Piedmont’s results of operations prior to the Acquisition Date are not included in United’s consolidated results of operations.

ECONOMIC AND TRADE POLICY UNCERTAINTY

United continues to monitor the potential impact of evolving trade policies, including the threat of additional tariffs imposed by the United States.

While no specific tariffs have been implemented during the reporting period that materially affect United’s operations, the potential for future changes in cross-border trade arrangements and import/export duties contributes to broader economic uncertainty.

Management has considered these risks in its forward-looking assessments and determined that, as of the reporting date, there are no material adverse effects on United’s financial position, results of operations, or estimates related to credit losses or asset impairments.

The following discussion and analysis presents the significant changes in financial condition and the results of operations of United and its subsidiaries for the periods indicated below.

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and its wholly-owned subsidiaries, unless otherwise indicated.

Management has evaluated all significant events and transactions that occurred after September 30, 2024, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.

Management has evaluated all significant events and transactions that occurred after March 31, 2025, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.

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

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

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

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

Actual results could differ from these estimates.

These policies, along with the disclosures presented in the financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined.

Based on the valuation techniques used and the

sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan and lease losses, the calculation of the income tax provision, and the use of fair value measurements to account for certain financial instruments to be the accounting areas that require the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.

United’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of September 30, 2024 were unchanged from the policies disclosed in United’s Annual Report on Form 10-K for the year ended December 31, 2023 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan and lease losses, the calculation of the income tax provision, and the use of fair value measurements to account for certain financial instruments to be the accounting areas that require the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.

United’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of March 31, 2025 were unchanged from the policies disclosed in United’s Annual Report on Form 10-K for the year ended December 31, 2024 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

FINANCIAL CONDITION

United’s total assets as of September 30, 2024 were $29.86 billion, which was a decrease of $63.22 million or less than 1% from December 31, 2023.

This decrease was mainly due to a decrease of $587.34 million or 14.24% in investment securities, a decrease of $9.77 million or 17.36% in loans held for sale, and a decrease of $19.20 million or 6.95% in other assets.

These decreases in assets were mostly offset by a $309.89 million or 19.38% increase in cash and cash equivalents and a $262.88 million or 1.23% increase in loans, net of unearned income.

Total liabilities decreased $259.80 million or 1.03% from year-end 2023.

Borrowings decreased $1.26 billion or 63.63%, which were partially offset by a $1.01 billion or 4.42% increase in deposits.

Shareholders’ equity increased $196.58 million or 4.12%.

United’s total assets as of March 31, 2025 were $32.79 billion, which was an increase of $2.76 billion or 9.21% from December 31, 2024.

The acquisition of Piedmont on January 10, 2025 added $2.30 billion in total assets, including purchase accounting amounts.

Portfolio loans increased $2.19 billion or 10.10%, cash and cash equivalents increased $317.94 million or 13.87%, investment securities increased $54.70 million or 1.68%, goodwill increased $134.72 million or 7.13%, other assets increased $43.75 million or 16.23%, bank-owned life insurance policies increased $41.55 million or 8.36%, bank premises and equipment increased $23.82 million or 12.80%, operating lease right-of-use assets increased $5.09 million or 6.23%, and interest receivable increased $8.10 million or 7.91%.

Loans held for sale decreased $15.72 million or 35.43%.

Total liabilities increased $2.44 billion or 9.76% from year-end 2024.

This increase in total liabilities was due mainly to an increase of $2.40 billion or 10.03% in deposits, an increase of $24.01 million or 10.43% in accrued and other liabilities, and an increase of $20.40 million or 7.28% in long-term borrowings, all mainly due to the Piedmont acquisition.

Shareholders’ equity increased $321.23 million or 6.43% from year-end 2024 due primarily to the acquisition of Piedmont.

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

Cash and Cash Equivalents

Cash and cash equivalents at September 30, 2024 increased $309.89 million or 19.38% from year-end 2023.

Cash and cash equivalents at March 31, 2025 increased $317.94 million or 13.87% from year-end 2024.

Net cash acquired in the Piedmont merger was $77.47 million.

In particular, interest-bearing deposits with other banks increased $271.41 million or 13.24% as United placed more cash in an interest-bearing account with the Federal Reserve while cash and due from banks increased $46.49 million or 19.32%.

Federal funds sold increased $31 thousand or 2.44%.

During the first nine months of 2024, net cash of $309.17 million and $405.57 million were provided by operating and investing activities, respectively, while net cash of $404.86 million was used in financing activities.

See the unaudited Consolidated Statements of Cash Flows for data on cash and cash equivalents provided and used in operating, investing and financing activities for the first nine months of 2024 and 2023.

Total investment securities at September 30, 2024 decreased $587.34 million or 14.24%.

Securities available for sale decreased $546.88 million or 14.44%.

This change in securities available for sale reflects $1.41 billion in purchases, $2.06 billion in sales, maturities and calls of securities, and an increase of $93.37 million in market value.

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

Equity securities were $9.08 million at September 30, 2024, an increase of $137 thousand or 1.53% due mainly to a net increase in fair value.

Other investment securities decreased $40.60 million or 12.32% from year-end 2023, due to a redemption of FHLB stock due to a decline in FHLB borrowings.

During the first three months of 2025, net cash of $119.98 million and $216.63 million were provided by operating and financing activities, respectively, while net cash of $18.67 million was used in investing activities.

See the unaudited Consolidated Statements of Cash Flows for data on cash and cash equivalents provided and used in operating, investing and financing activities for the first three months of 2025 and 2024.

Total investment securities at March 31, 2025 increased $54.70 million or 1.68%.

Piedmont added $94.43 million in investment securities, including purchase accounting amounts, upon consummation of the acquisition.

Securities available for sale increased $43.27 million or 1.46%.

This change in securities available for sale reflects $92.99 million related to the acquisition of Piedmont, $586.24 million in sales, maturities and calls of securities, $491.98 million in purchases, and an increase of $43.58 million in market value.

Equity securities were $21.51 million at March 31, 2025, an increase of $456 thousand or 2.17% due mainly to a net increase in fair value.

Other investment securities increased $10.98 million or 3.96% from year-end 2024 due to an increase in Federal Reserve Bank stock as a result of the Piedmont acquisition and net purchases of investment tax credits.

The following table summarizes the changes in the available for sale securities since year-end 2024:

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net of allowance for credit losses of $18 thousand.

net of allowance for credit losses of $17 thousand.

At September 30, 2024, gross unrealized losses on available for sale securities were $272.56 million.

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

As of September 30, 2024, United’s available for sale mortgage-backed securities had an amortized cost of $1.80 billion, with an estimated fair value of $1.63 billion.

At March 31, 2025, gross unrealized losses on available for sale securities were $286.60 million.

Securities with the most significant gross unrealized losses at March 31, 2025 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities and corporate securities.

As of March 31, 2025, United’s available for sale mortgage-backed securities had an amortized cost of $1.81 billion, with an estimated fair value of $1.63 billion.

The portfolio consisted primarily of $1.26 billion in agency residential mortgage-backed securities with a fair value of $1.12 billion, $87.22 million in non-agency residential mortgage-backed securities with an estimated fair value of $82.04 million, and $457.46 million in commercial agency mortgage-backed securities with an estimated fair value of $425.38 million.

As of September 30, 2024, United’s available for sale state and political subdivisions securities had an amortized cost of $576.77 million, with an estimated fair value of $513.61 million.

The portfolio relates to securities issued by various municipalities located throughout the United States, and no securities within the portfolio were rated below investment grade as of September 30, 2024.

As of September 30, 2024, United’s available for sale corporate securities had an amortized cost of $852.12 million, with an estimated fair value of $822.82 million.

As of March 31, 2025, United’s available for sale state and political subdivisions securities had an amortized cost of $584.98 million, with an estimated fair value of $510.39 million.

As of March 31, 2025, United’s available for sale corporate securities had an amortized cost of $640.65 million, with an estimated fair value of $617.58 million.

The portfolio consisted of $13.30 million in single issue trust preferred securities with an estimated fair value of $12.03 million.

In addition to the single issue trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of $347.46 million and a fair value of $344.67 million and other corporate securities, with an amortized cost of $279.89 million and a fair value of $260.88 million.

United’s available for sale single issue trust preferred securities had a fair value of $14.61 million as of September 30, 2024.

Of the $14.61 million, $7.30 million or 49.95% were investment grade;

$2.98 million or 20.43% were split rated;

and $4.33 million or 29.62% were unrated.

United’s available for sale single issue trust preferred securities had a fair value of $12.03 million as of March 31, 2025.

Of the $12.03 million, $7.35 million or 61.10% were investment grade rated and $4.68 million or 38.90% were unrated.

The two largest exposures accounted for 100% of the $12.03 million.

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

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

Management does not believe that any individual security with an unrealized loss as of September 30, 2024 is impaired.

During the first quarter of 2025, United did not recognize any credit losses on its available for sale investment securities.

Management does not believe that any individual security with an unrealized loss as of March 31, 2025 is impaired.

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

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

As of September 30, 2024, there was no allowance for credit losses related to the Company’s available for sale securities.

As of March 31, 2025, there was no allowance for credit losses related to the Company’s available for sale securities.

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

During the third quarter of 2024, United sold approximately $197 million of available for sale securities at a loss of $6.88 million.

The securities sold were comprised of approximately 66% in floating rate securities and approximately 34% in fixed rate securities.

Approximately $150 million of the sale proceeds were reinvested in available for sale securities with an average yield of 5.1%.

Further information regarding the amortized cost and estimated fair value of investment securities, including remaining maturities as well as a more detailed discussion of management’s impairment analysis, is presented in Note 3 to the unaudited Notes to Consolidated Financial Statements.

Loans Held for Sale

Loans held for sale were $46.49 million at September 30, 2024, a decrease of $9.77 million or 17.36% from year-end 2023.

Loan sales in the secondary market exceeded originations during the first nine months of 2024.

Loan originations for the first nine months of 2024 were $513.56 million while loans sales were $523.33 million.

Loans held for sale were $28.64 million at March 31, 2025, a decrease of $15.72 million or 35.43% from year-end 2024.

Loan sales in the secondary market exceeded originations during the first three months of 2025.

Loan originations for the first three months of 2025 were $75.90 million while loans sales were $91.62 million.

Portfolio Loans

Loans, net of unearned income, increased $262.88 million or 1.23%.

Since year-end 2023, commercial, financial and agricultural loans increased $111.38 million or less than 1% as a result of a $286.81 million or 3.45% increase in commercial real estate loans, which was partially offset by a $175.43 million or 4.91% decrease in commercial loans (not secured by real estate).

Residential real estate loans increased $147.71 million or 2.80% and construction and land development loans increased $221.95 million or 7.05%.

Consumer loans decreased $223.18 million or 20.96% due to a decrease in indirect automobile financing.

Loans, net of unearned income, increased $2.19 billion or 10.10% from year-end 2024 mainly as a result of the Piedmont acquisition which added $2.01 billion, including purchase accounting amounts, in portfolio loans.

Otherwise, portfolio loans and leases, net of unearned income, grew $177.79 million from year-end 2024.

Since year-end 2024, commercial, financial and agricultural loans increased $1.68 billion or 14.10% as a result of a $1.46 billion or 17.13% increase in commercial real estate loans and a $214.63 million or 6.40% increase in commercial loans (not secured by real estate).

Construction and land development loans increased $242.89 million or 6.92% and residential real estate loans increased $305.81 million or 5.55%, while consumer loans decreased $30.87 million or 3.94% due to a decrease in indirect automobile financing.

The following table summarizes the changes in the major loan classes since year-end 2024:

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For a further discussion of loans see Note 4 to the unaudited Notes to Consolidated Financial Statements.

Other assets decreased $19.20 million or 6.95% from year-end 2023.

Deferred tax assets decreased $15.61 million due to an increase in the fair value of AFS securities, dealer reserve decreased $6.35 million due to a decrease in indirect automobile financing, core deposit intangibles decreased $2.73 million due to amortization, and OREO properties decreased $2.45 million due to sales of consumer OREO properties.

Partially offsetting these decreases in other assets was a $6.87 million increase in income tax receivable due to timing differences.

Bank-Owned Life Insurance

The cash surrender value of bank-owned life insurance policies increased $41.55 million, of which $40.80 million was acquired from Piedmont while the remaining increase was due to an increase in the cash surrender value.

Other assets increased $43.75 million or 16.23% from year-end 2024.

The Piedmont acquisition added $24.60 million in other assets plus an additional $32.76 million in core deposit intangibles.

Deferred tax assets increased $5.85 million due mainly to the deferred taxes recorded on the purchase accounting adjustments in the Piedmont acquisition.

The remainder of the increase in other assets is the result of an increase of $3.19 million in prepaid assets, an increase of $2.62 million in accounts receivable, and an increase of $1.15 million in OREO.

Deposits represent United’s primary source of funding.

Total deposits at September 30, 2024 increased $1.01 billion or 4.42%.

In terms of composition, noninterest-bearing deposits decreased $110.98 million or 1.80% while interest-bearing deposits increased $1.12 billion or 6.72% from December 31, 2023.

Total deposits at March 31, 2025 increased $2.40 billion or 10.03% due mainly to the Piedmont acquisition.

Piedmont added $2.11 billion in deposits, including purchase accounting amounts.

In terms of composition, noninterest-bearing deposits increased $345.46 million or 5.63% ($378.24 million added from Piedmont acquisition) while interest-bearing deposits increased $2.06 billion or 11.54% ($1.73 billion added from Piedmont acquisition) from December 31, 2024.

Organically, deposits grew $297.21 million from year-end 2024.

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

The $110.98 million decrease in noninterest-bearing deposits was due mainly to a $151.64 million or 3.38% decrease in commercial noninterest-bearing deposits and a $55.76 million or 4.08% decrease in personal noninterest deposits.

Public noninterest-bearing deposits increased $92.11 million or 58.48% and official checks increased $34.24 million or 57.68%.

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

Interest-bearing transaction accounts increased $241.72 million or 4.28% since year-end 2023.

In particular, commercial interest-bearing transaction accounts increased $378.96 million and public interest-bearing transaction accounts increased $46.19 million while personal interest-bearing transaction accounts decreased $183.42 million.

Regular savings accounts decreased $90.44 million or 6.72% mainly as a result of a $78.62 million decrease in personal savings accounts and a $13.73 million decrease in commercial savings accounts.

The $345.46 million increase in noninterest-bearing deposits was due to a $385.39 million or 8.65% increase in commercial noninterest-bearing deposits, a $73.07 million or 5.25% increase in personal noninterest-bearing deposits, and a $76.38 million increase in public funds noninterest-bearing deposits.

Partially offsetting these increases in noninterest-bearing deposits was a $204.58 million decrease in official checks.

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

Interest-bearing transaction accounts increased $406.07 million or 6.84% since year-end 2024 as the result of increases of $118.65 million in personal interest-bearing transaction accounts, $230.68 million in commercial interest-bearing transaction accounts, and $56.75 million in public funds interest-bearing transaction accounts.

Regular savings accounts increased $56.32 million or 4.50% mainly as a result of a $40.96 million increase in personal savings accounts and a $14.85 million increase in commercial savings accounts.

Interest-bearing MMDAs increased $747.16 million or 10.59%.

In particular, commercial MMDAs increased $577.54 million while personal MMDAs and public funds MMDAs increased $151.26 million and $36.83 million, respectively.

In particular, personal MMDAs increased $207.62 million while commercial MMDAs and public funds MMDAs increased $504.61 million and $34.93 million, respectively.

Time deposits under $100,000 increased $138.99 million or 11.85% from year-end 2024.

This increase in time deposits under $100,000 was the result of a $114.63 million increase in fixed rate Certificates of Deposits (“CDs”) under $100,000.

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

Since year-end 2023, time deposits over $100,000 increased $98.68 million or 4.36% as fixed rate CDs increased $341.79 million and public funds CDs increased $37.37 million.

Partially offsetting these increases in time deposits over $100,000, was a decrease of $272.13 million in brokered CDs and a decrease of $6.11 million in CDARS over $100,000.

This increase in time deposits under $100,000 was the result of a $76.71 million increase in variable rate Certificates of Deposits (“CDs”) under $100,000 and a $49.68 million increase in fixed rate CDs.

Since year-end 2024, time deposits over $100,000 increased $708.77 million or 29.41% as fixed rate CDs increased $428.03 million, brokered CDs increased $196.39 million, variable rate CDs increased $46.81 million, and CDARS over $100,000 increased $31.69 million.

The table below summarizes the changes by deposit category since year-end 2024:

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Total deposits

Includes time deposits of $250,000 or more of $1,094,097 and $842,118 at September 30, 2024 and December 31, 2023, respectively.

Total borrowings at September 30, 2024 decreased $1.26 billion or 63.63% since year-end 2023.

During the first nine months of 2024, short-term borrowings decreased $14.13 million or 7.20% due to a decrease in securities sold under agreements to repurchase.

Long-term borrowings decreased $1.25 billion or 69.81% from year-end 2023 due to maturities of advances obtained from the FHLB during the first nine months of 2024.

Includes time deposits of $250,000 or more of $1,375,203 and $1,115,748 at March 31, 2025 and December 31, 2024, respectively.

Total borrowings at March 31, 2025 increased $10.13 million or 1.41% since year-end 2024.

Piedmont added $20.00 million of subordinated debt upon consummation of the acquisition.

During the first three months of 2025, short-term borrowings decreased $75 thousand or less than 1% due to a decrease in securities sold under agreements to repurchase.

Long-term borrowings increased $10.20 million or 1.89% from year-end 2024 as a result of adding Piedmont’s subordinated debt totaling $20.00 million partially offset by a $10.20 million reduction in long-term FHLB advances.

The table below summarizes the change in the borrowing categories since year-end 2024:

(Dollars in thousands)

Federal funds purchased

Short-term securities sold under agreements to repurchase

Long-term FHLB advances

Subordinated debt

Issuances of trust preferred capital securities

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Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at September 30, 2024 increased $5.47 million or 2.56% from year-end 2023.

In particular, accrued loan expenses increased $10.26 million, which correlates to the increase in the loan portfolio, deferred compensation increased $2.45 million, and interest payable increased $1.52 million due to an increase in CDs.

Partially offsetting these increases in accrued expenses and other liabilities was a decrease of $1.80 million in business franchise taxes due to timing differences and a decrease of $2.60 million in incentives payable due to payments.

Accrued expenses and other liabilities at March 31, 2025 increased $24.01 million or 10.43% from year-end 2024.

Piedmont added $19.76 million.

In particular, income taxes payable increased $17.49 million due to timing differences, business franchise taxes increased $2.87 million, and accrued loan expenses increased $9.46 million.

In addition, interest payable increased $4.10 million due to an increase in CDs.

Partially offsetting these increases was a decrease of $12.90 million in incentives payable due to payments.

Shareholders’ Equity

Shareholders’ equity at September 30, 2024 was $4.97 billion, which was an increase of $196.58 million or 4.12% from year-end 2023.

Shareholders’ equity at March 31, 2025 was $5.31 billion, which was an increase of $321.23 million or 6.43% from year-end 2024, mainly as the result of the Piedmont acquisition.

The Piedmont transaction added approximately $280.95 million in shareholders’ equity as 7,860,831 shares were issued from United’s authorized but unissued shares for the merger at a cost of approximately $280.95 million.

Retained earnings increased $30.97 million or 1.61% from year-end 2024.

Earnings net of dividends for the first nine months of 2024 were $127.96 million.

Accumulated other comprehensive income increased $60.77 million or 23.40% from year-end 2023 due to an increase of $71.05 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes.

In addition, the after-tax accretion of pension costs was $1.29 million for the first nine months of 2024.

Partially offsetting these increases was a decrease of $11.58 million in the fair value of cash flow hedges, net of deferred income taxes.

Earnings net of dividends for the first three months of 2025 were $30.97 million.

Accumulated other comprehensive income increased $28.90 million or 12.91% from year-end 2024 due mainly to an increase of $33.17 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes.

The fair value of cash flow hedges, net of deferred income taxes, decreased $4.27 million.

During the first quarter of 2025, United restarted repurchasing its common stock on the open market under a repurchase plan approved by United’s Board of Directors.

United repurchased 567,405 shares during the first quarter at a cost of $19.82 million or an average share price of $34.93.

RESULTS OF OPERATIONS

1 unchanged sentence

Three Months Ended

Nine Months Ended

(Dollars in thousands except per share amounts)

(Dollars in thousands)

Income Statement Summary:

Interest income

2 unchanged sentences

Provision for credit losses

Noninterest income

Noninterest expense

Other expense

Income before income taxes

Net income for the third quarter and first nine months of 2024 was $95.27 million and $278.59 million, respectively, as compared to earnings of $96.16 million and $286.92 million for the third quarter and first nine months of 2023.

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

Earnings for the first nine months of 2024 as compared to the first nine months of 2023 decreased due mainly to lower net interest income, lower noninterest income and higher noninterest expense partially offset by lower provision for credit losses and income tax expense.

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

Diluted earnings per share were $2.06 for the first nine months of 2024 as compared to $2.12 for the first nine months of 2023.

On a linked-quarter basis, net income for the second quarter of 2024 was $96.51 million or $0.71 per diluted share.

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

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

Expenses of $332 thousand and $1.61 million related to the announced Piedmont acquisition were recorded in the third quarter and first nine months of 2024, respectively.

During the third quarter and first nine months of 2024, United sold approximately $197 million and $299 million of AFS investment securities at a loss of $6.88 million and $13.69 million, respectively.

Additionally, during the third quarter of 2024, United recognized a net gain of $7.09 million on the sale of its remaining mortgage rights (“MSRs”) associated with a loan portfolio of $1.12 billion.

The second quarter of 2024 included a $6.85 million gain on a VISA share exchange.

For the third quarter of 2024, United’s annualized return on average assets was 1.28% and return on average shareholders’ equity was 7.72% as compared to 1.31% and 8.14% for the third quarter of 2023.

United’s annualized return on average assets was 1.32% and return on average shareholders’ equity was 7.99% for the second quarter of 2024.

United’s annualized return on average assets for the first nine months of 2024 was 1.26% and return on average shareholders’ equity was 7.65% as compared to 1.31% and 8.27% for the first nine months of 2023.

For the third quarter and first nine months of 2024, United’s annualized return on average tangible equity, a non-GAAP measure, was 12.59% and 12.57%, respectively, as compared to 13.71% and 14.03% for the third quarter and first nine months of 2023, respectively.

United’s annualized return on average tangible equity was 13.12% for the second quarter of 2024.

Net income for the first quarter of 2025 was $84.31 million as compared to earnings of $86.81 million for the first quarter of 2024.

Diluted earnings per share were $0.59 for the first quarter of 2025 and $0.64 for the first quarter of 2024.

On a linked-quarter basis, net income for the fourth quarter of 2024 was $94.41 million or $0.69 per diluted share.

As previously mentioned, United completed its acquisition of Piedmont on January 10, 2025.

The financial results of Piedmont are included in United’s results from the acquisition date.

As a result of the acquisition, the first quarter of 2025 was impacted for nearly three months of increased levels of average balances, income, and expense as compared to the first quarter of 2024 and the fourth quarter of 2024.

In addition, United recorded acquisition-related costs for the Piedmont merger of $30.04 million, including a provision for credit losses of $18.73 million for purchased non-PCD loans for the first quarter of 2025 and $1.26 million for the fourth quarter of 2024.

United’s annualized return on average assets for the first three months of 2025 was 1.06% and return on average shareholders’ equity was 6.47% as compared to 1.19% and 7.25%, respectively, for the first three months of 2024.

On a linked-quarter basis, United’s annualized return on average assets for the fourth quarter of 2024 was 1.25% and return on average shareholders’ equity was 7.48%.

For the first three months of 2025, United’s annualized return on average tangible equity, a non-GAAP measure, was 10.61%, as compared to 11.98% for the first three months of 2024.

On a linked-quarter basis, United’s annualized return on average tangible equity was 12.03% for the fourth quarter of 2024.

Three Months Ended

Nine Months Ended

(Dollars in thousands)

September 30,

Return on Average Tangible Equity:

5 unchanged sentences

Return on Average Tangible Equity (non-GAAP)\ [(a) / (b)] x 365 or 366 / (c)]

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

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

Net interest income for the first nine months of 2024 was $678.46 million, a decrease of $11.77 million or 1.71% from the first nine months of 2023.

The decrease of $11.77 million in net interest income occurred because total interest income increased $93.94 million while total interest expense increased $105.72 million from the first nine months of 2023.

On a linked quarter basis, net interest income for the third quarter of 2024 increased $4.54 million, or 2.01%, from the second quarter of 2024.

Total interest income for the third quarter of 2024 increased $8.54 million while total interest expense increased $4.00 million from the second quarter of 2024.

The provision for credit losses was $6.94 million and $18.46 million for the third quarter and first nine months of 2024, respectively, while the provision for credit losses was $5.95 million and $24.28 million for the third quarter and first nine months of 2023.

The provision for credit losses was $5.78 million for the second quarter of 2024.

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

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

Noninterest income for the first nine months of 2024 was $94.38 million which was a decrease of $7.21 million or 7.09% from the first nine months of 2023.

This decrease in noninterest income for the first nine months of 2024 was due mainly to decreases of $8.10 million and $4.01 million, respectively, in income from mortgage banking activities driven by lower mortgage loan sales volume and mortgage loan servicing income due mainly to a decline in net gains on the sales of MSRs and a lower amount of loans serviced.

Partially offsetting these decreases were increases in fees from brokerage services and income from bank-owned life insurance as well as lower net losses on investment securities transactions.

On a linked quarter basis, noninterest income increased $1.72 million or 5.69% primarily due the previously mentioned gain on the sale of MSRs and increased income from mortgage banking activities partially offset by an increase in net losses on investment securities transactions.

For the third quarter and first nine months of 2024, noninterest expense was relatively flat from the third quarter and first nine months of 2023, increasing $109 thousand and $2.92 million, respectively.

Both of these increases were less than 1%.

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

For the first nine months of 2024, the increase of $2.92 million in noninterest expense from the first nine months of 2023 was driven primarily by increases of $3.30 million in employee compensation and $2.10 million in FDIC insurance expense partially offset by decreases of $2.21 million in mortgage loan servicing expense and $1.42 million in other expense.

The increase in employee compensation was driven by higher employee incentives, base salaries, and employee severance associated with the previously announced mortgage delivery channel consolidation partially offset by lower employee commissions related to mortgage banking production.

The increase in FDIC insurance expense was driven by $1.81 million of expense recognized in the first quarter of 2024 for the FDIC special assessment.

The decrease in mortgage loan servicing expense was driven by the sales of MSRs.

The decrease in other noninterest expense was primarily due to a decrease in the expense for the reserve for unfunded loan commitments driven by a decrease in the outstanding balance of loan commitments.

On a linked quarter basis, noninterest expense was relatively flat from the second quarter of 2024, increasing $565 thousand or less than 1%.

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

Income tax expense was $18.88 million for the second quarter of 2024.

For the first nine months of 2024 and 2023, income tax expense was $64.93 million and $72.68 million, respectively.

For the quarters ended September 30, 2024 and June 30, 2024, United’s effective tax rate was 20.56% and 16.36%, respectively.

For the quarter ended September 30, 2023, United’s effective tax rate was 20.49%.

The effective tax rate for the first nine months of 2024 and 2023 was 18.90% and 20.21%, respectively.

Net interest income for the first quarter of 2025 increased $37.57 million, or 16.88% from the first quarter of 2024.

The increase of $37.57 million in net interest income occurred because total interest income increased $34.47 million while total interest expense decreased $3.10 million from the first quarter of 2024.

Net interest income for the first quarter of 2025 increased $27.45 million, or 11.80%, from the fourth quarter of 2024.

The increase of $27.45 million in net interest income occurred because total interest income increased $27.61 million while total interest expense increased $166 thousand from the fourth quarter of 2024.

The provision for credit losses was $29.10 million for the first quarter of 2025 as compared to a provision for credit losses of $5.74 million and $6.69 million for the first quarter and fourth quarter of 2024, respectively.

The increase in the provision for credit losses was mainly due to the previously mentioned $18.73 million of provision recorded on purchased non-PCD loans from Piedmont.

For the first quarter of 2025, noninterest income decreased $2.66 million or 8.25% from the first quarter of 2024.

The decrease of $2.66 million was primarily due to a decrease in income from mortgage banking activities as a result of lower mortgage loan origination and sale volume.

Noninterest expense for the first quarter of 2025 increased $12.83 million or 9.12% from the first quarter of 2024.

The increase of $12.83 million was due mainly to $11.31 million of merger-rated expenses incurred during the first quarter of 2025 from the Piedmont acquisition.

Income taxes increased $1.22 million or 5.71% for the first three months of 2025 as compared to the first three months of 2024 primarily due to a higher effective tax rate partially offset by lower earnings.

On a linked-quarter basis, income taxes decreased $4.02 million or 15.10% for the first quarter of 2025 as compared to the fourth quarter of 2024 due mainly to lower earnings and a lower effective tax rate.

The effective tax rate was 21.16% and 19.78% for the first quarter of 2025 and 2024, respectively.

The effective tax rate was 22.01% for the fourth quarter of 2024.

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

4 unchanged sentences

Such changes, and their impact on net interest income in 2025 and 2024, are presented below.

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

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

Net interest income for the first nine months of 2024 was $678.46 million, a decrease of $11.77 million or 1.71% from the first nine months of 2023.

On a linked-quarter basis, net interest income for the third quarter of 2024 increased $4.54 million or 2.01% from the second quarter of 2024.

The $4.54 million increase in net interest income occurred because total interest income increased $8.54 million while total interest expense increased $4.00 million from the second quarter of 2024.

Net interest income for the first quarter of 2025 was $260.06 million, which was an increase of $37.57 million or 16.88% from the first quarter of 2024.

The $37.57 million increase in net interest income occurred because total interest income increased $34.47 million while total interest expense decreased $3.10 million from the first quarter of 2024.

On a linked-quarter basis, net interest income for the first quarter of 2025 increased $27.45 million, or 11.80%, from the fourth quarter of 2024.

The $27.45 million increase in net interest income occurred because total interest income increased $27.61 million while total interest expense increased $166 thousand from the fourth quarter of 2024.

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

2 unchanged sentences

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

Tax-equivalent net interest income for the third quarter of 2024 was flat from the third quarter of 2023, increasing $1.80 million, or less than 1%.

The slight increase in tax-equivalent net interest income was primarily due to a higher yield on average net loans and loans held for sale, a decrease in average long-term borrowings, organic loan growth, and an increase in average short-term investments.

This increase in tax-equivalent net interest income was partially offset by the impact of deposit rate repricing and an increase in average interest-bearing deposits.

The yield on average earning assets increased 33 basis points from the third quarter of 2023 to 5.85% driven by an increase in the yield on average net loans and loans held for sale of 28 basis points.

Average long-term borrowings decreased $842.16 million, or 52.94%, from the third quarter of 2023.

Average earning assets for the third quarter of 2024 increased $363.70 million, or 1.41%, from the third quarter of 2023 due to a $610.37 million increase in average net loans and loans held for sale and a $535.24 million increase in average short-term investments partially offset by a $781.91 million decrease in average investment securities.

The yield on average interest-bearing deposits increased 58 basis points from the third quarter of 2023.

Average interest-bearing deposits increased $1.41 billion, or 8.79%, from the third quarter of 2023.

The net interest margin for the third quarter of 2024 and 2023 was 3.52% and 3.54%, respectively.

Tax-equivalent net interest income for the first nine months of 2024 decreased $12.36 million, or 1.78%, from the first nine months of 2023.

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

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

The yield on average interest-bearing deposits increased 88 basis points from the first nine months of 2023.

Average interest-bearing deposits increased $1.37 billion from the first nine months of 2023.

Acquired loan accretion income for the first nine months of 2024 of $7.29 million was a decrease of $1.24 million from the first nine months of 2023.

The yield on average earning assets increased 46 basis points from the first nine months of 2023 to 5.78% driven by an increase in the yield on average net loans and loans held for sale of 39 basis points.

Average net loans and loans held for sale increased $773.33 million from the first nine months of 2023.

Average long-term borrowings decreased $924.21 million from the first nine months of 2023.

Additionally, average investment securities decreased $857.35 million, or 18.84%, from the first nine months of 2023 while the yield on average investment securities increased 36 basis points from the first nine months of 2023.

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

On a linked-quarter basis, tax-equivalent net interest income for the third quarter of 2024 also increased $4.50 million, or 1.99%, from the second quarter of 2024.

The increase in tax-equivalent net interest income was driven by an increase in average short-term investments, a higher yield on average net loans and loans held for sale, and a decrease in average long-term borrowings partially offset by an increase in average interest-bearing deposits as well as a higher average rate paid on deposits.

Average short-term investments increased $457.01 million, or 49.12%, from the second quarter of 2024 primarily driven by cash received from deposit growth.

The yield on average net loans and loans held for sale increased 6 basis points to 6.20% for the third quarter of 2024.

As previously disclosed, the second quarter of 2024 included a $654 thousand interest recovery from a commercial real estate nonaccrual loan payoff.

Average long-term borrowings decreased $541.80 million, or 41.99%, from the second quarter of 2024.

Average interest-bearing deposits increased $659.24 million, or 3.94%, from the second quarter of 2024.

The yield on average interest-bearing deposits increased 10 basis points to 3.28% for the third quarter of 2024.

The net interest margin of 3.52% for the third quarter of 2024 was an increase of 2 basis points from the net interest margin of 3.50% for the second quarter of 2024.

Tax-equivalent net interest income for the first quarter of 2025 was $260.84 million, an increase of $37.48 million or 16.78% from the first quarter of 2024 due mainly to an increase in average earning assets from the Piedmont acquisition.

Average earning assets for the first quarter of 2025 increased $2.48 billion or 9.51% from the first quarter of 2024.

The increase in average earning assets was due mainly to a $1.94 billion or 9.14% increase in average net loans and a $1.25 billion or 141.45% increase in average short-term investments, partially offset by a decrease of $709.58 million or 17.94% in average investment securities.

Average interest-bearing funds for the first quarter of 2025 increased $1.72 billion or 9.37% from the first quarter of 2024.

In particular, average interest-bearing deposits increased $2.70 billion while average long-term borrowings decreased $945.62 million from the first quarter of 2024.

In addition, the average cost of funds for the first quarter of 2025 decreased 31 basis points due primarily to a decrease in interest rates from the first quarter of 2024.

Most notably, the cost of average interest-bearing deposits and short-term borrowings decreased 25 and 59 basis points, respectively, from the first quarter of 2024.

Also, the average yield on earning assets for the first quarter of 2025 increased 3 basis points from the first quarter of 2024 despite a decline in interest rates due mainly to an increase in loan accretion on acquired loans.

For the first quarter of 2025, interest income and tax-equivalent net interest income included $5.99 million of acquired loan accretion income as compared to $2.51 million for the first quarter of 2024.

The net interest margin of 3.69% for the first quarter of 2025 was an increase of 25 basis points from the net interest margin of 3.44% for the first quarter of 2024.

On a linked-quarter basis, tax-equivalent net interest income for the first quarter of 2025 increased $27.43 million, or 11.75%, from the fourth quarter of 2024.

The increase in tax-equivalent net interest income was primarily due to an increase in average earning assets from the Piedmont acquisition as well as a decrease in the average cost of funds due to the impact of deposit rate repricing as a result of lower interest rates.

Average earning assets for the first quarter of 2025 increased $1.88 million or 7.05% from the fourth quarter of 2024 as average net loans increased $1.75 billion or 8.16% and average short-term investments increased $323.95 million or 17.93% while average investments decreased $192.28 million or 5.59%.

The average cost of funds for the first quarter of 2025 decreased 17 basis points.

In particular, the cost on average interest-bearing deposits and long-term borrowings decreased 17 and 22 basis points, respectively, for the first quarter of 2025.

The yield on average earning assets for the first quarter of 2025 increased 11 basis points from the fourth quarter of 2024 driven by an increase of 13 basis points on the yield on average net loans.

Acquired loan accretion income for the first quarter of 2025 was $5.99 million as compared to $1.98 million for the fourth quarter of 2024.

The net interest margin of 3.69% for the first quarter of 2025 was an increase of 20 basis points from the net interest margin of 3.49% for the fourth quarter of 2024.

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

The following table provides the discount/premium and net accretion impact to tax-equivalent net interest income for the three months ended September 30, 2024, September 30, 2023 and June 30, 2024 and the nine months ended September 30, 2024 and September 30, 2023:

The following table provides the discount/premium and net accretion impact to tax-equivalent net interest income for the three months ended March 31, 2025, March 31, 2024 and December 31, 2024:

Three Months Ended

3 unchanged sentences

Long-term borrowings

Nine Months Ended

(Dollars in thousands)

Loan accretion

Certificates of deposit

Long-term borrowings

Tax-equivalent net interest income

The following tables reconcile the difference between net interest income and tax-equivalent net interest income for the three months ended September 30, 2024, September 30, 2023 and June 30, 2024 and the nine months ended September 30, 2024 and September 30, 2023.

The following tables reconcile the difference between net interest income and tax-equivalent net interest income for the three months ended March 31, 2025, March 31, 2024 and December 31, 2024.

Three Months Ended

3 unchanged sentences

Tax-equivalent net interest income

Nine Months Ended

(Dollars in thousands)

Net interest income, GAAP basis

Tax-equivalent adjustment (1)

Tax-equivalent net interest income

The tax-equivalent adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21% for the three months and nine months ended September 30, 2024 and 2023 and the three months ended June 30, 2024.

The tax-equivalent adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21% for the three months ended March 31, 2025 and 2024 and December 31, 2024.

All interest income on loans and investment securities was subject to state income taxes.

The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month periods ended September 30, 2024 and 2023, respectively, with the interest and rate earned or paid on such amount.

The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for the three-month period ended September 30, 2024 and 2023.

The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month periods ended March 31, 2025 and 2024, respectively, with the interest and rate earned or paid on such amount.

Interest income on all loans and investment securities was subject to state income taxes.

1 unchanged sentence

Three Months Ended

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

(Dollars in thousands)

5 unchanged sentences

Allowance for loan losses

Net loans (2)(3)

Total earning assets

Interest-Bearing Liabilities:

Interest-Bearing Funds:

Interest-bearing deposits

1 unchanged sentence

Long-term borrowings

Total Interest-Bearing Liabilities

Total Interest-Bearing Funds

Noninterest-bearing deposits

4 unchanged sentences

NET INTEREST INCOME

INTEREST RATE SPREAD

INTEREST SPREAD

NET INTEREST MARGIN

2 unchanged sentences

Loans held for sale and leases are included in the daily average loan amounts outstanding.

The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month periods ended September 30, 2024 and June 30, 2024, respectively, with the interest and rate earned or paid on such amount.

The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month periods ended March 31, 2025 and December 31, 2024, respectively, with the interest and rate earned or paid on such amount.

Interest income on all loans and investment securities was subject to state income taxes.

1 unchanged sentence

Three Months Ended

September 30, 2024

June 30, 2024

March 31, 2025

December 31, 2024

(Dollars in thousands)

5 unchanged sentences

Allowance for loan losses

Net loans (2)(3)

Total earning assets

Interest-Bearing Liabilities:

Interest-Bearing Funds:

Interest-bearing deposits

1 unchanged sentence

Long-term borrowings

Total Interest-Bearing Liabilities

Total Interest-Bearing Funds

Noninterest-bearing deposits

4 unchanged sentences

NET INTEREST INCOME

INTEREST RATE SPREAD

NET INTEREST MARGIN

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

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

Loans held for sale and leases are included in the daily average loan amounts outstanding.

The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the nine-month periods ended September 30, 2024 and 2023, respectively, with the interest and rate earned or paid on such amount.

The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for the nine-month period ended September 30, 2024 and 2023.

Interest income on all loans and investment securities was subject to state income taxes.

Nine Months Ended

September 30, 2024

September 30, 2023

(Dollars in thousands)

Earning Assets:

Federal funds sold and securities repurchased under agreements to resell and other short-term investments

Investment Securities:

Total Securities

Loans, net of unearned income (2)(3)

Allowance for loan losses

Total earning assets

Interest-Bearing Liabilities:

Interest-bearing deposits

Short-term borrowings

Long-term borrowings

Total Interest-Bearing Liabilities

Non-interest bearing deposits

Accrued expenses and other liabilities

TOTAL LIABILITIES

SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

NET INTEREST INCOME

INTEREST RATE SPREAD

INTEREST SPREAD

NET INTEREST MARGIN

3 unchanged sentences

Provision for Credit Losses

The provision for credit losses was $6.94 million and $18.46 million for the third quarter and first nine months of 2024, respectively, as compared to a provision for credit losses of $5.95 million and $24.28 million for third quarter and first nine months of 2023, respectively.

On a linked-quarter basis, the provision for credit losses for the second quarter of 2024 was $5.78 million.

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

For the quarter ended September 30, 2024, the provision for loan and lease losses was $6.94 million as compared to a provision for loan and lease losses of $5.95 million for the quarter ended September 30, 2023.

The higher amount of provision expense for the third quarter of 2024 from the third quarter of 2023 was primarily due to a greater amount of charge-offs in the third quarter of 2024 compared to the third quarter of 2023.

The provision for loan and lease losses for the first nine months of 2024 was $18.46 million as compared to a provision for loan and lease losses of $24.28 million for the first nine months of 2023.

The lower amount of provision expense for the first nine months of 2024 compared to the first nine months of 2023 was mainly due to qualitative adjustment factors and reasonable and supportable forecast assumptions regarding future economic expectations.

Net charge-offs were $3.60 million for the third quarter of 2024 as compared to net charge-offs of $1.78 million for the same quarter in 2023.

Net charge-offs for the first nine months of 2024 were $6.93 million as compared to net charge-offs of $4.14 million for the first nine months of 2023.

The higher amount of net charge-offs for 2024 as compared to 2023 was primarily due to increased charge-offs within the consumer loan portfolio.

On a linked-quarter basis, the provision for loan and lease losses was $6.94 million for the third quarter of 2024 as compared to a provision for loan and lease losses of $5.78 million for the second quarter of 2024.

The higher amount of provision expense on a linked-quarter basis was due mainly to increased charge-offs within the consumer loan portfolio.

Net charge-offs were $1.26 million for the second quarter of 2024.

Annualized net charge-offs as a percentage of average loans and leases, net of unearned income for the third quarter and first nine months of 2024 were 0.07% and 0.04% as compared to annualized net charge-offs of 0.03% for both the third quarter and first nine months of 2023.

Annualized net charge-offs as a percentage of average loans and leases, net of unearned income for the second quarter of 2024 were 0.02%.

The following table shows a summary of United’s nonperforming assets including nonperforming loans and other real estate owned (“OREO”) at September 30, 2024 and December 31, 2023:

The provision for credit losses was $29.10 million for the first quarter of 2025 as compared to a provision for credit losses of $5.74 million for the first quarter of 2024.

On a linked-quarter basis, the provision for credit losses for the fourth quarter of 2024 was $6.69 million.

The provision for credit losses for the first quarter of 2025 included provision expense of $18.73 million recorded for purchased non-PCD loans from Piedmont.

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

For the quarter ended March 31, 2025, the provision for loan and lease losses was $29.10 million as compared to a provision for loan and lease losses of $5.74 million for the quarter ended March 31, 2024.

The higher amount of provision expense for the first quarter of 2025 compared to the first quarter of 2024 was mainly due to the previously mentioned provision expense of $18.73 million recorded for purchased non-PCD loans from Piedmont.

Net charge-offs were $8.04 million for the first quarter of 2025 compared to net charge-offs of $2.07 million for the first quarter of 2024.

The higher amount of net charge-offs for 2025 as compared to 2024 was primarily due to increased charge-offs within the consumer, commercial real estate nonowner-occupied and other commercial portfolios.

On a linked-quarter basis, the provision for loan and lease losses for the fourth quarter of 2024 was $6.69 million.

Again, the higher amount of provision expense for the first quarter of 2025 from the fourth quarter of 2024 was due primarily to the provision expense recorded on the non-PCD loans acquired from Piedmont.

Net charge-offs were $5.62 million for the fourth quarter of 2024.

Annualized net charge-offs as a percentage of average loans and leases, net of unearned income for the first quarter of 2025 was 0.14% as compared to annualized net charge-offs of 0.04% for the first quarter of 2024 and annualized net charge-offs of 0.10% for the fourth quarter of 2024.

The following table shows a summary of United’s nonperforming assets including nonperforming loans and other real estate owned (“OREO”) at March 31, 2025 and December 31, 2024:

(In thousands)

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Total nonperforming assets

The increase of $21.53 million in nonaccrual loans from December 31, 2023 to September 30, 2024 was due mainly to the transfer to nonaccrual of one significant commercial lending relationship and one large residential real estate relationship.

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

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

At September 30, 2024, the allowance for credit losses was $308.74 million as compared to $303.94 million at December 31, 2023.

At September 30, 2024, the allowance for loan and lease losses was $270.77 million as compared to $259.24 million at December 31, 2023.

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

nonowner-occupied office portfolio.

As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 1.25% at September 30, 2024 and 1.21% at December 31, 2023.

The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 415.03% and 569.78% at September 30, 2024 and December 31, 2023, respectively.

The decrease in this ratio was due mainly to an increase in nonperforming loans.

At March 31, 2025, the allowance for credit losses was $346.99 million as compared to $306.76 million at December 31, 2024.

At March 31, 2025, the allowance for loan and lease losses was $310.42 million as compared to $271.84 million at December 31, 2024.

The increase in the allowance for loan and lease losses was primarily driven by the allowance for loan and lease losses recorded as a result of the Piedmont acquisition.

The allowance for loan and lease losses at March 31, 2025 saw the largest increases in the reserves for commercial real estate, both owner and nonowner-occupied, the residential real estate and the real estate construction and development loans segments from year-end 2024 due to increased outstanding loan balances from the Piedmont acquisition, increased allocations for individually evaluated loans that do not share similar portfolio characteristics and increased adjustments resulting from the reasonable and supportable forecast.

As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 1.30% at March 31, 2025 and 1.25% at December 31, 2024.

The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 444.89% and 370.36% at March 31, 2025 and December 31, 2024, respectively.

The increase in this ratio was due mainly to an increase in the allowance for loan losses as well as a slight decline in nonperforming loans.

United continues to evaluate 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 current conditions, the future and other factors.

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

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

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

past due, nonaccrual and graded loans and leases;

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, an adjustment was made for that factor.

The first quarter of 2025 qualitative adjustments include analyses of the following:

Current conditions – United considered the impact of government efficiency efforts and potential tariffs when making determinations related to factor adjustments for the external environment.

United also 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.

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Assumptions for the economic variables were the following:

The forecast for real GDP in the third quarter remained relatively consistent with the second quarter projections of 2.00% for 2024 (a decrease of 0.10% from the second quarter), 2.00% for 2025 and 2.00% for 2026.

The unemployment rate forecast increased by 0.40% for 2024 to 4.40% while 2025 shifted up slightly to 4.40% from 4.20% and 2026 also increased slightly to 4.30% from 4.10%.

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

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

The forecast for real GDP adjusted downward in the first quarter, from a projection of 2.10% for 2025 as of mid-December 2024 to 1.70% for 2025 as of mid-March with a projection of 1.80% for 2026.

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

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

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

United’s review of the allowance for loan and lease losses at September 30, 2024 produced increased reserves in three of the four loan categories as compared to December 31, 2023.

The allowance related to the commercial, financial & agricultural loan pool, consisting of the owner and non-owner occupied commercial real estate and other commercial loan segments, increased $6.33 million due to increased outstanding balances, increased allocations for individually assessed loans and increased reasonable and supportable forecast adjustments particularly as it pertains to office loans.

The residential real estate segment reserve increased $5.61 million due primarily to increased outstanding balances while also impacted by a slight downgrade in the adjustment for past due, nonaccrual and graded loans.

The real estate construction and development loan segment reserve increased $2.35 million due to increased outstanding balances.

The consumer loan segment reserve decreased $2.76 million primarily due to a decrease in outstanding balances.

United’s review of the allowance for loan and lease losses at March 31, 2025 produced increased reserves in each of the four loan categories as compared to December 31, 2024.

The allowance related to the commercial, financial & agricultural loan pool, consisting of the owner and non-owner occupied commercial real estate and other commercial loan segments, increased $21.39 million due to the first quarter acquisition of Piedmont and increased outstanding balances.

The residential real estate segment reserve increased $8.63 million due to increased outstanding balances with the acquisition of Piedmont and the annual evaluation of delay periods utilized in the historical loss rate calculation.

The real estate construction and development loan segment reserve increased $8.34 million due to increased outstanding balances with the acquisition of Piedmont.

The consumer loan segment reserve increased $217 thousand primarily due to an increase in the quarterly maximum loss experience utilized within the reasonable and supportable forecast adjustment.

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

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When the selected measure is less than the recorded investment in the loan, an expected credit loss has occurred.

The allowance for loans and leases that were individually assessed was $19.43 million at September 30, 2024 and $13.15 million at December 31, 2023.

In comparison to the prior year-end, this element of the allowance increased $6.28 million due to the downgrade of a commercial real estate non-owner occupied relationship secured by office collateral as well as an unsecured relationship with a governmental-type entity.

Management believes that the allowance for credit losses of $308.74 million at September 30, 2024 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available.

The allowance for loans and leases that were individually assessed was $18.44 million at March 31, 2025 and $11.21 million at December 31, 2024.

In comparison to year-end, this element of the allowance increased $7.23 million due to loans individually evaluated from the acquisition of Piedmont requiring allocations as well as a large United-originated office loan with elevated collection concerns due to pending lease maturities and upcoming loan maturity which will necessitate an increase in the loan’s interest rate.

Management believes that the allowance for credit losses of $346.99 million at March 31, 2025 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available.

United’s loan administration policies are focused on the risk characteristics of the loan portfolio in terms of loan approval and credit quality.

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Management has lending limits as a percentage of capital per type of credit concentration in an effort to ensure adequate diversification within the portfolio.

Most of United’s commercial loans are secured by real estate located in West Virginia, southeastern Ohio, Pennsylvania, Virginia, Maryland, North Carolina, South Carolina, and the District of Columbia.

Most of United’s commercial loans are secured by real estate located in United’s footprint.

It is the opinion of management that these commercial loans do not pose any unusual risks and that adequate consideration has been given to these loans in establishing the allowance for credit losses.

The provision for credit losses related to held to maturity securities for the third quarter and first nine months of 2024 and 2023 was immaterial.

The allowance for credit losses related to held to maturity securities was $19 thousand and $17 thousand as of September 30, 2024 and December 31, 2023, respectively.

There was no provision for credit losses recorded on available for sale investment securities for the third quarter and first nine months of 2024 and 2023 and no allowance for credit losses on available for sale investment securities as of September 30, 2024 and December 31, 2023.

The provision for credit losses related to held to maturity securities for the first quarter of 2025 and 2024 was immaterial.

The allowance for credit losses related to held to maturity securities was $18 thousand as of March 31, 2025 as well as December 31, 2024.

There was no provision for credit losses recorded on available for sale investment securities for the first quarter of 2025 and 2024 and no allowance for credit losses on available for sale investment securities as of March 31, 2025 and December 31, 2024.

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

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Recognizing the importance, management continues to evaluate areas where noninterest income can be enhanced.

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

This decrease was driven by net losses on the sale of investment securities and a decrease in mortgage banking income partially offset by increases in mortgage loan servicing income and fees from brokerage services.

Noninterest income for the first nine months of 2024 was $94.38 million, a decrease of $7.21 million or 7.09% from the first nine months of 2023.

This decrease was driven by decreases in mortgage loan servicing income and mortgage banking income partially offset by an increase in fees from brokerage services, higher income from bank-owned life insurance and lower net losses on investment securities transactions.

Income from mortgage banking activities totaled $4.54 million for the third quarter of 2024 compared to $7.56 million for the same period of 2023, a decline of $3.01 million or 39.86%.

For the first nine months of 2024 and 2023, income from mortgage banking activities was $13.74 million and $21.85 million, respectively.

The decreases for 2024 as compared to 2023 were due mainly to lower mortgage loan production.

For the three months ended September 30, 2024 and 2023, mortgage loan sales were $171.32 million and $217.63 million, respectively.

For the nine months ended September 30, 2024 and 2023, mortgage loan sales were $523.33 million and $632.85 million, respectively.

Mortgage loans originated for sale were $151.33 million and $513.56 million for the third quarter and first nine months of 2024, respectively, as compared to $185.95 million and $635.58 million for the third quarter and first nine months of 2023, respectively.

Mortgage loan servicing income for the third quarter of 2024 increased $6.54 million or 772.93% from the third quarter of 2023.

This increase was driven primarily by the aforementioned $7.09 million gain on the sale of MSRs in the third quarter of 2024.

Mortgage loan servicing income for the first nine months of 2024 decreased $4.01 million or 30.90% from the first nine months of 2023.

The first nine months of 2024 also included the $7.09 million net gain on the sale of MSRs in the third quarter of 2024 while the first nine months of 2023 included net gains on the sale of MSRs of $8.31 million.

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

United recorded a net loss on investment securities of $6.72 million for the third quarter of 2024 as compared to a net loss on investment securities of $181 thousand for the third quarter of 2023.

For the first nine months of 2024, net losses on investment securities were $7.03 million as compared to net losses on investment securities of $7.92 million for the first nine months of 2023.

Additionally, during the first nine months of 2024, United recognized a $6.91 million gain on the VISA share exchange, of which $4.60 million was realized through the sale of eligible shares and the remainder of which related to shares held at fair value at the end of the second quarter which were eventually sold in the third quarter of 2024.

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

Fees from brokerage services for the third quarter and first nine months of 2024 increased $640 thousand or 14.44% and $2.75 million or 21.89%, respectively, from the third quarter and first nine months of 2023.

The increase was primarily due to higher volume.

Income from bank-owned life insurance for the first nine months of 2024 increased $1.52 million or 23.54% from the first nine months of 2023.

This increase was due mainly to an increase in the cash surrender value of insurance policies as well as death proceeds of $690 thousand recognized in the third quarter of 2024.

On a linked-quarter basis, noninterest income for the third quarter of 2024 increased of $1.72 million, or 5.69%, from the second quarter of 2024 due mainly to the previously mentioned gain on the sale of MSRs and increased income from mortgage banking activities partially offset by an increase in net losses on investment securities transactions.

Income from mortgage banking activities increased $643 thousand primarily due to higher mortgage loan sale volume and a higher quarter-end valuation of mortgage loans held for sale.

Additionally, in comparison to the second quarter of 2024, an increase in mortgage loan servicing income was mostly offset by higher net losses on investment securities.

Mortgage loan servicing income was $7.39 million for the third quarter of 2024, an increase of $6.60 million from the second quarter of 2024.

During the third quarter of 2024, as previously mentioned, United sold its remaining MSRs with an aggregate unpaid principal balance of approximately $1.1 billion at a gain of $7.09 million.

Net losses on investment securities were $6.72 million for the third quarter of 2024 due primarily to a net loss of $6.88 million on approximately $197 million of AFS investment securities sold in the third quarter of 2024 compared to net losses of $218 thousand for the second quarter of 2024.

Noninterest income for the first quarter of 2025 was $29.55 million, a decrease of $2.66 million or 8.25% from the first quarter of 2024.

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

Income from mortgage banking activities totaled $2.48 million for the first quarter of 2025 compared to $5.30 million for the first quarter of 2024.

The decrease of $2.82 million or 53.21% for the first quarter of 2025 was mainly due to lower mortgage loan origination and sale volume.

Mortgage loan sales were $91.62 million in the first quarter of 2025 as compared to $188.74 million in the first quarter of 2024.

Mortgage loans originated for sale were $75.90 million for the first quarter of 2025 as compared to $176.91 million for the first quarter of 2024.

Mortgage loan servicing income for the first quarter of 2025 decreased $789 thousand or 100.00% from the first quarter of 2024.

The decrease in mortgage loan servicing income was due to the sale of United’s remaining mortgage servicing portfolio in the second half of 2024.

Income from bank-owned life insurance for the first quarter of 2025 increased $952 thousand or 39.37% from the first quarter of 2024.

The increase was primarily due to death proceeds of $461 thousand in the first quarter of 2025 as well as income from the bank-owned life insurance policies added from the Piedmont acquisition and an increase in the cash surrender value.

Net gains on investment securities were $521 thousand for the first quarter of 2025 as compared to net losses on investment securities of $99 thousand for the first quarter of 2024.

On a linked-quarter basis, noninterest income for the first quarter of 2025 was flat from the fourth quarter of 2024, increasing $236 thousand, or less than 1%.

Net gains on investment securities were $521 thousand for the first quarter of 2025 as compared to net losses on investment securities of $688 thousand for the fourth quarter of 2024.

Fees from brokerage services increased $667 thousand from the fourth quarter of 2024 due to increased volume.

Partially offsetting these increases in noninterest income was a decrease in other noninterest income of $1.32 million.

Other Expenses

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Other expenses include all items of expense other than interest expense, the provision for credit losses, and income taxes.

Noninterest expense for the third quarter of 2024 was $135.34 million, which was relatively flat from the third quarter of 2023, increasing $109 thousand or less than 1%.

For the first nine months of 2024, noninterest expense was $410.86 million, which was also relatively flat from the first nine months of 2023, increasing $2.92 million or less than 1%.

Employee compensation for the first nine months of 2024 increased $3.30 million or 1.90% from the first nine months of 2023.

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

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

Employee benefits expense for the first nine months of 2024 increased $1.31 million or 3.38% as compared to the first nine months of 2023.

This increase was primarily due to higher amounts of expense for postretirement benefits partially offset by lower health insurance costs.

OREO expense for the first nine months of 2024 decreased $636 thousand or 54.50% as compared to the first nine months of 2023.

This decrease was primarily due to fewer declines in the fair value of OREO properties.

Equipment expense for the third quarter of 2024 increased $641 thousand or 8.94% as compared to the third quarter of 2023.

This increase was primarily due to an increase in maintenance expense partially offset by lower depreciation expense.

Mortgage loan servicing expense and impairment expense for the third quarter and first nine months of 2024 decreased $648 thousand or 61.66% and $2.21 million or 47.58%, respectively, from the third quarter and first nine months of 2023.

The decreases in 2024 were due primarily to a lower amount of mortgage loans serviced as a result of the sale of MSRs in the third quarters of 2024 and 2023.

FDIC insurance expense for the first nine months of 2024 increased $2.10 million or 15.24% from the first nine months of 2023.

The increase in FDIC insurance expense was driven by $1.81 million of expense recognized in the first quarter of 2024 for the FDIC special assessment.

Other expense for the third quarter of 2024 increased $1.08 million or 3.52% from the third quarter of 2023.

This increase was driven by higher amounts of certain general operating expenses mostly offset by smaller decreases in several other categories of noninterest expense.

Other expense for the first nine months of 2024 decreased $1.42 million or 1.48% from the first nine months of 2023.

Within other expenses, the most significant decrease was $4.31 million in the expense for the reserve for unfunded loan commitments.

In addition, advertising expense decreased $1.54 million and amortization of intangibles declined $1.11 million.

Partially offsetting these decreases were increases in the amortization of investment tax credits of $2.23 million and merger expenses of $1.61 million as well as higher amounts of certain other general operating expenses.

On a linked-quarter basis, noninterest expense for the third quarter of 2024 was relatively flat from the second quarter of 2024, increasing $565 thousand, or less than 1%.

The slight increase in noninterest expense was primarily driven by increases in employee benefits of $937 thousand and other noninterest expense of $847 thousand.

The increase in employee benefits was primarily driven by higher postretirement benefit costs.

The increase in other noninterest expense from the second quarter of 2024 was driven by higher amounts of certain general operating expenses mostly offset by smaller decreases in several other categories of noninterest expense.

Within other noninterest expense, merger-related expenses for the third quarter of 2024 were $332 thousand compared to $1.27 million for the second quarter of 2024.

Partially offsetting the increases in noninterest expense were decreases of $720 thousand in FDIC insurance expense due mainly to an adjustment for the special assessment in the second quarter of 2024 as well as a lower assessment rate and $608 thousand in mortgage loan servicing expense and impairment due to a lower amount of loans serviced.

Income tax expense for the third quarter of 2024 was flat from the third quarter of 2023, decreasing $130 thousand, or less than 1%, primarily due to slightly lower pre-tax earnings partially offset by a slightly higher effective tax rate.

On a linked-quarter basis, income tax expense increased $5.77 million from the second quarter of 2024.

This increase was driven by higher pre-tax earnings and the impact of discrete tax benefits recognized in the second quarter of 2024.

For the first nine months of 2024, income tax expense was $64.93 million as compared to $72.68 million in the first nine months of 2023.

This decrease was primarily due to lower pre-tax earnings and the impact of discrete tax benefits recognized in the second quarter of 2024.

United’s effective tax rate was 20.56% for the third quarter of 2024, 20.49% for the third quarter of 2023 and 16.36% for the second quarter of 2024.

For the first nine months of 2024 and 2023, United’s effective tax rate was 18.90% and 20.21%, respectively.

Noninterest expense for the first quarter of 2025 was $153.57 million, which was an increase of $12.83 million or 9.12% from the first quarter of 2024.

This increase was due mainly to $11.31 million of merger-rated expenses incurred during the first quarter of 2025 from the Piedmont acquisition.

Employee compensation for the first quarter of 2025 increased $1.57 million or 2.65% when compared to the first quarter of 2024.

The increase in employee compensation was due primarily due to $1.17 million in merger-related expenses and the additional employees from the Piedmont acquisition.

Employee benefits expense for the first quarter of 2025 decreased $1.38 million or 9.41% from the first quarter of 2024.

This decrease was primarily due to a decline in expenses for postretirement benefits partially offset by an increase in health care insurance expense due to a higher amount of claims and the additional employees from the Piedmont acquisition.

Equipment expense for the first quarter of 2025 increased $1.73 million or 25.23% from the first quarter of 2024.

This increase was due to higher equipment maintenance and depreciation expense.

Data processing expense for the first quarter of 2025 increased $992 thousand or 13.29% from the first quarter of 2024 due to increased processing from the Piedmont acquisition.

Mortgage servicing and impairment expense decreased $1.02 million or 100.00% due to the sale of the remaining loans serviced by United in 2024.

FDIC expense decreased $1.73 million or 25.23% from the first quarter of 2024 due to an additional assessment accrual of $1.81 million during the first quarter of 2024 resulting from the FDIC’s revised loss estimates to the Deposit Insurance Fund.

Other expense for the first quarter of 2025 increased $12.48 million or 39.06% from the first quarter of 2024.

Within other expense, merger-related expenses increased $6.00 million and the expense for the reserve for unfunded commitments increased $3.45 million, which includes $4.06 million for the expense related to the reserve for the acquired unfunded loan commitments from Piedmont.

In addition, consulting fees increased $2.73 million and the amortization of core deposit intangibles increased $1.43 million due mainly to the Piedmont acquisition.

On a linked-quarter basis, noninterest expense for the first quarter of 2025 increased $19.40 million or 14.46% from the fourth quarter of 2024.

Generally, most general operating expenses for the first quarter of 2025 increased from the fourth quarter of 2024 due primarily to the added employees and branch offices from the Piedmont acquisition in addition to an increase in merger-related expense.

In particular, employee compensation expense increased $2.52 million, $1.17 million of which was merger-related expense, net occupancy expense increased $1.53 million, equipment expense increased $1.11 million, data processing expense increased $1.02 million, and other expenses increased $13.12 million.

Within other expense, merger-related expenses increased $4.74 million, the expense for the reserve for unfunded commitments increased $4.72 million, $4.06 million of which was for the expense related to the reserve for the acquired unfunded loan commitments from Piedmont, consulting fees increased $2.94 million and amortization expense for core deposit intangibles increased $1.43 million due mainly to the Piedmont acquisition.

For the first quarter of 2025, income tax expense was $22.63 million as compared to $21.41 million for the first quarter of 2024.

The increase of $1.22 million was primarily due to a higher effective tax rate partially offset by lower earnings.

On a linked-quarter basis, income tax expense decreased $4.02 million primarily due to lower earnings and a lower effective tax rate.

United’s effective tax rate was 21.16% for the first quarter of 2025, 19.78% for the first quarter of 2024 and 22.01% for the fourth quarter of 2024.

Liquidity and Capital Resources

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

During the first nine months of 2024, United increased its interest-bearing deposit balance at the FRB by $330.04 million to $1.57 billion.

The change in the balance at the FRB was mostly the result of a $1.01 billion increase in total deposits and $640.84 million of net sales, maturities, and paydowns in the available for sale debt securities portfolio partially offset by a $1.25 billion decrease in FHLB advances.

For the nine months ended September 30, 2024, cash of $309.17 million was provided by operating activities due mainly to net income of $278.59 million.

Net cash of $405.57 million was provided by investing activities which was primarily due to $661.41 million of net proceeds from the sales of investment securities over purchases partially offset by portfolio loan growth of $262.65 million.

During the first nine months of 2024, net cash of $404.86 million was used in financing activities due primarily to a net repayment of $1.25 billion in FHLB advances and cash dividends paid of $150.54 million partially offset by growth in deposits of $1.01 billion.

The net effect of the cash flow activities was an increase in cash and cash equivalents of $309.89 million for the first nine months of 2024.

At September 30, 2024, United had an unused borrowing amount at the FHLB of approximately $8.19 billion subject to delivery of collateral after certain trigger points, $4.03 billion without the delivery of additional collateral.

United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $280 million, all of which was available at September 30, 2024.

United also has a $20 million unsecured, revolving line of credit with an unrelated financial institution to provide for general liquidity needs, all of which was available at September 30, 2024.

At September 30, 2024, United’s borrowing capacity for the FRB Discount Window was $4.59 billion.

United did not have any borrowings from the FRB’s Discount Window, or its new Bank Term Funding Program, during the first nine months of 2024.

During the first quarter of 2025, United increased its interest-bearing deposit balance at the FRB by $271.52 million to $2.24 billion.

The change in the balance at the FRB was mostly the result of a $2.40 billion increase in total deposits and $94.26 million of net sales, maturities, and paydowns in the available for sale debt securities portfolio partially offset by a $10.20 million decrease in FHLB advances.

For the three months ended March 31, 2025, cash of $119.98 million was provided by operating activities due mainly to net income of $84.31 million.

In addition, proceeds from the sale of mortgage loans in the secondary market exceeded originations by $18.20 million and the provision for loan losses was $29.10 million for the first quarter.

Net cash of $18.67 million was used in investing activities which was primarily due to loan growth of $177.79 million partially offset by $83.41 million of net proceeds from sales of investment securities over purchases and $77.48 million in net cash received in the Piedmont acquisition.

During the first three months of 2025, net cash of $216.63 million was provided by financing activities due primarily to growth of $297.21 million in deposits partially offset by cash dividends paid of $50.48 million, net acquisition of $20.35 million in treasury stock and the net repayment of $10.00 million in FHLB borrowings during the first quarter.

The net effect of the cash flow activities was an increase in cash and cash equivalents of $317.94 million for the first three months of 2025.

At March 31, 2025, United had an unused borrowing amount at the FHLB of approximately $8.14 billion subject to delivery of collateral after certain trigger points, $4.29 billion without the delivery of additional collateral.

United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $280 million, all of which was available at March 31, 2025.

At March 31, 2025, United’s borrowing capacity for the FRB Discount Window was $4.59 billion.

United did not have any borrowings from the FRB’s Discount Window during the first quarter of 2025.

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

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United is well-capitalized based upon regulatory guidelines.

United’s risk-based capital ratio is 16.18% at September 30, 2024 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.80%, 13.80% and 11.73%, respectively.

The September 30, 2024 ratios reflects United’s election of a five-year transition provision, allowed by the Federal Reserve Board and other federal banking agencies in response to the COVID-19 pandemic, to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period.

United’s risk-based capital ratio is 15.69% at March 31, 2025 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.26%, 13.26% and 11.32%, respectively.

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

Total shareholders’ equity was $4.97 billion at September 30, 2024, which was an increase of $196.58 million or 4.12% from December 31, 2023.

This increase is primarily due to an increase of $127.96 million in retained earnings (net income less dividends declared).

United’s equity to assets ratio was 16.64% at September 30, 2024 as compared to 15.94% at December 31, 2023.

The primary capital ratio, capital and reserves to total assets and reserves, was 17.49% at September 30, 2024 as compared to 16.79% at December 31, 2023.

United’s average equity to average asset ratio was 16.64% for the third quarter of 2024 as compared to 16.12% the third quarter of 2023.

United’s average equity to average asset ratio was 16.52% for the first nine months of 2024 as compared to 15.81% for the first nine months of 2023.

Total shareholders’ equity was $5.31 billion at March 31, 2025, which was an increase of $321.23 million or 6.43% from December 31, 2024.

This increase is primarily due to increases of $19.65 million and $261.29 million to common stock and surplus, respectively, related to the Piedmont acquisition and $30.97 million in retained earnings (net income less dividends declared).

During the first quarter of 2025, United repurchased 567,405 shares of its common stock at an average price of $34.93 per share.

United’s equity to assets ratio was 16.21% at March 31, 2025 as compared to 16.63% at December 31, 2024.

The primary capital ratio, capital and reserves to total assets and reserves, was 17.09% at March 31, 2025 as compared to 17.47% at December 31, 2024.

United’s average equity to average asset ratio was 16.42% for the first quarter of 2025 as compared to 16.36% the first quarter of 2024.

All of these financial measurements reflect a financially sound position.

During the third quarter of 2024, United’s Board of Directors declared a cash dividend of $0.37 per share.

Cash dividends were $1.11 per common share for the first nine months of 2024.

Total cash dividends declared were $50.21 million for the third quarter of 2024 and $150.63 million for the first nine months of 2024 as compared to $48.71 million for the third quarter of 2023 and $146.05 million for the first nine months of 2023, respectively.

During the first quarter of 2025, United’s Board of Directors declared a cash dividend of $0.37 per share.

Total cash dividends declared were $53.34 million for the first quarter of 2025 which was an increase of $3.12 million or 6.22% from dividends declared of $50.21 million for the first quarter of 2024.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis