0000729986 us-gaap:ResidentialPortfolioSegmentMember ubsi:FinancingReceivablesCurrentMember 2023-03-31
FORM
10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
to

Commission File Number:0-13322

002-86947
United Bankshares, Inc.

(Exact name of registrant as specified in its charter)

West Virginia
 
55-0641179

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

300 United Center

500 Virginia Street, East

Charleston, West Virginia

 
25301
(Address of principal executive offices)
 
Zip Code

Registrant’s telephone number, including area code: (304)
424-8716

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $2.50 per share
UBSI
NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
Yes 
 No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
Yes
 No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act:

Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer   (Do not check if a smaller reporting company)  Smaller reporting company 
   Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Act). Yes ☐ 
No 

Indicate

As of
April
 30, 2024
, the number of registrant had
135,196,935
shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class - Common Stock, $2.50 Par Value;104,992,423shares outstanding as ofOctober 31, 2017.par value per share, outstanding.



UNITED BANKSHARES, INC. AND SUBSIDIARIES

FORM10-Q

TABLE OF CONTENTS

 

   Page

PART I. FINANCIAL INFORMATION

  

Item 1.

Financial Statements
  

Financial Statements

Consolidated Balance Sheets (Unaudited) September  30, 2017March 31, 2024 and December 31, 20162023

  4

Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2017March 31, 2024 and 20162023

  5

Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2017March 31, 2024 and 20162023

  7

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) for the NineThree MonthsEnded September 30, 2017March 31, 2024 and 2023

  8

Condensed Consolidated Statements of Cash Flows (Unaudited) for the NineThree MonthsEnded September 30, 2017March 31, 2024 and 20162023

  9

Notes to Consolidated Financial Statements

  10

Item 2.

Management’s Discussion and Analysis of Financial Condition andResults of Operations

  6155

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

  8673

Item 4.

Controls and Procedures

  8976

PART II. OTHER INFORMATION

  

Item 1.

Legal Proceedings
  

77

Legal ProceedingsItem 1A. Risk Factors

  9077

Item 1A.

Risk Factors

90

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

  9077

Item 3.

Defaults Upon Senior Securities

  9178

Item 4.

Mine Safety Disclosures

  9178

Item 5.

Other Information
  

78

Other InformationItem 6. Exhibits

  9179

Item 6.

Signatures
  

Exhibits

91

Signatures

9280

2


PART I - FINANCIAL INFORMATION

Item 1.FINANCIAL STATEMENTS (UNAUDITED)

Item 1. FINANCIAL STATEMENTS (UNAUDITED)
The September 30, 2017March 31, 2024 and December 31, 2016,2023, consolidated balance sheets of United Bankshares, Inc. and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2017March 31, 2024 and 2016,2023, the related consolidated statement of changes in shareholders’ equity for the ninethree months ended September 30, 2017,March 31, 2024 and 2023, the related condensed consolidated statements of cash flows for the ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, and the notes to consolidated financial statements appear on the following pages.

3

CONSOLIDATED BALANCE SHEETS

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except par value)

   September 30
2017
  December 31
2016
 
   (Unaudited)  (Note 1) 

Assets

   

Cash and due from banks

  $212,692  $175,468 

Interest-bearing deposits with other banks

   1,533,558   1,258,334 

Federal funds sold

   787   725 
  

 

 

  

 

 

 

Total cash and cash equivalents

   1,747,037   1,434,527 

Securities available for sale at estimated fair value (amortized cost-$1,654,657 at September 30, 2017 and $1,277,639 at December 31, 2016)

   1,649,634   1,259,214 

Securities held to maturity (estimated fair value-$19,909 at September 30, 2017 and $31,178 at December 31, 2016)

   20,335   33,258 

Other investment securities

   166,756   111,166 

Loans held for sale (at fair value-$311,186 at September 30, 2017 and $0 at December 31, 2016)

   315,031   8,445 

Loans

   13,156,854   10,356,719 

Less: Unearned income

   (16,386  (15,582
  

 

 

  

 

 

 

Loans net of unearned income

   13,140,468   10,341,137 

Less: Allowance for loan losses

   (74,926  (72,771
  

 

 

  

 

 

 

Net loans

   13,065,542   10,268,366 

Bank premises and equipment

   104,311   75,909 

Goodwill

   1,487,607   863,767 

Accrued interest receivable

   51,607   39,400 

Other assets

   522,118   414,840 
  

 

 

  

 

 

 

TOTAL ASSETS

  $19,129,978  $14,508,892 
  

 

 

  

 

 

 

Liabilities

   

Deposits:

   

Noninterest-bearing

  $4,134,019  $3,171,841 

Interest-bearing

   9,741,278   7,625,026 
  

 

 

  

 

 

 

Total deposits

   13,875,297   10,796,867 

Borrowings:

   

Federal funds purchased

   25,800   22,235 

Securities sold under agreements to repurchase

   316,236   237,316 

Federal Home Loan Bank borrowings

   1,272,115   897,707 

Other long-term borrowings

   242,131   224,319 

Reserve for lending-related commitments

   804   1,044 

Accrued expenses and other liabilities

   133,752   93,657 
  

 

 

  

 

 

 

TOTAL LIABILITIES

   15,866,135   12,273,145 

Shareholders’ Equity

   

Preferred stock, $1.00 par value;Authorized-50,000,000 shares, none issued

   0   0 

Common stock, $2.50 par value;Authorized-200,000,000 shares;issued-105,011,878 and 81,068,252 at September 30, 2017 and December 31, 2016, respectively, including 28,752 and 28,278 shares in treasury at September 30, 2017 and December 31, 2016, respectively

   262,530   202,671 

Surplus

   2,126,914   1,205,778 

Retained earnings

   909,556   872,990 

Accumulated other comprehensive loss

   (34,163  (44,717

Treasury stock, at cost

   (994  (975
  

 

 

  

 

 

 

TOTAL SHAREHOLDERS’ EQUITY

   3,263,843   2,235,747 
  

 

 

  

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

  $19,129,978  $14,508,892 
  

 

 

  

 

 

 

(Dollars in thousands, except par value)
  
March 31
2024
  
December 31
2023
 
   
(Unaudited)
  
(Note 1)
 
Assets
   
Cash and due from banks
  $238,148  $257,153 
Interest-bearing deposits with other banks
   1,493,312   1,340,620 
Federal funds sold
   1,186   1,170 
  
 
 
  
 
 
 
Total cash and cash equivalents
   1,732,646   1,598,943 
Securities available for sale at estimated fair value (amortized cost-$3,980,612 at March 31, 2024 and $4,149,895 at December 31, 2023, allowance for credit losses of $0 at March 31, 2024 and December 31, 2023)
   3,613,975   3,786,377 
Securities held to maturity, net of allowance for credit losses of $19 at March 31, 2024 and $17 at December 31, 2023 (estimated fair value-$1,020 at March 31, 2024 and December 31, 2023)
   1,001   1,003 
Equity securities at estimated fair value
   8,762   8,945 
Other investment securities
   330,781   329,429 
Loans held for sale measured using fair value option
   44,426   56,261 
Loans and leases
   21,532,568   21,373,185 
Less: Unearned income
   (12,492  (14,101
  
 
 
  
 
 
 
Loans and leases, net of unearned income
   21,520,076   21,359,084 
Less: Allowance for loan and lease losses
   (262,905  (259,237
  
 
 
  
 
 
 
Net loans and leases
   21,257,171   21,099,847 
Bank premises and equipment
   190,988   190,520 
Operating lease
right-of-use
assets
   86,074   86,986 
Goodwill
   1,888,889   1,888,889 
Mortgage servicing rights
   4,241   4,554 
Bank-owned life insurance (“BOLI”)
   490,596   486,895 
Accrued interest receivable
   113,815   111,420 
Other assets
   265,433   276,413 
  
 
 
  
 
 
 
TOTAL ASSETS
  $30,028,798  $29,926,482 
         
Liabilities
   
Deposits:
   
Noninterest-bearing
  $6,017,349  $6,149,080 
Interest-bearing
   16,902,397   16,670,239 
  
 
 
  
 
 
 
Total deposits
   22,919,746   22,819,319 
Borrowings:
   
Securities sold under agreements to repurchase
   207,727   196,095 
Federal Home Loan Bank (“FHLB”) borrowings
   1,460,415   1,510,487 
Other long-term borrowings
   279,019   278,616 
Reserve for lending-related commitments
   42,915   44,706 
Operating lease liabilities
   92,266   92,885 
Accrued expenses and other liabilities
   219,269   213,134 
  
 
 
  
 
 
 
TOTAL LIABILITIES
   25,221,357   25,155,242 
Shareholders’ Equity
   
Preferred stock, $1.00 par value;
Authorized-50,000,000
shares, none issued
   0   0 
Common stock, $2.50 par value;
Authorized-200,000,000
shares;
issued-142,536,369
and 142,257,646 at March 31, 2024 and December 31, 2023, respectively, including 7,343,694 and 7,308,583 shares in treasury at March 31, 2024 and December 31, 2023, respectively
   356,341   355,644 
Surplus
   3,183,198   3,181,764 
Retained earnings
   1,782,220   1,745,619 
Accumulated other comprehensive loss
   (260,992  (259,681
Treasury stock, at cost
   (253,326  (252,106
  
 
 
  
 
 
 
TOTAL SHAREHOLDERS’ EQUITY
   4,807,441   4,771,240 
  
 
 
  
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $30,028,798  $29,926,482 
  
 
 
  
 
 
 
See notes to consolidated unaudited financial statements.

statements

4

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except per share data)

   Three Months Ended   Nine Months Ended 
   September 30   September 30 
   2017   2016   2017  2016 

Interest income

       

Interest and fees on loans

  $155,819   $112,273   $405,660  $314,936 

Interest on federal funds sold and other short-term investments

   4,874    1,107    11,345   2,371 

Interest and dividends on securities:

       

Taxable

   9,406    8,764    26,226   24,728 

Tax-exempt

   1,484    993    4,057   2,685 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total interest income

   171,583    123,137    447,288   344,720 

Interest expense

       

Interest on deposits

   14,227    7,723    35,281   21,278 

Interest on short-term borrowings

   430    553    1,149   1,132 

Interest on long-term borrowings

   6,650    3,792    16,717   10,232 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total interest expense

   21,307    12,068    53,147   32,642 
  

 

 

   

 

 

   

 

 

  

 

 

 

Net interest income

   150,276    111,069    394,141   312,078 

Provision for loan losses

   7,279    6,988    21,429   18,690 
  

 

 

   

 

 

   

 

 

  

 

 

 

Net interest income after provision for loan losses

   142,997    104,081    372,712   293,388 

Other income

       

Fees from trust and brokerage services

   5,052    4,891    14,683   14,552 

Fees from deposit services

   8,744    8,306    24,978   24,669 

Bankcard fees and merchant discounts

   1,332    1,551    3,432   3,754 

Other service charges, commissions, and fees

   535    500    1,533   1,725 

Income from bank-owned life insurance

   1,403    2,541    3,878   4,913 

Income from mortgage banking activities

   20,385    982    43,597   2,499 

Other income

   311    249    1,626   1,050 

Total other-than-temporary impairment losses

   0    0    (60  339 

Portion of loss recognized in other comprehensive income

   0    0    0   (372
  

 

 

   

 

 

   

 

 

  

 

 

 

Net other-than-temporary impairment losses

   0    0    (60  (33

Net gains on sales/calls of investment securities

   467    1    5,214   251 
  

 

 

   

 

 

   

 

 

  

 

 

 

Net investment securities gains

   467    1    5,154   218 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total other income

   38,229    19,021    98,881   53,380 

Other expense

       

Employee compensation

   44,308    24,213    123,240   69,123 

Employee benefits

   9,578    7,483    27,372   21,380 

Net occupancy expense

   9,364    6,919    30,061   20,945 

Other real estate owned (OREO) expense

   2,713    1,342    4,651   4,654 

Equipment expense

   3,057    2,097    7,493   6,162 

Data processing expense

   5,597    3,857    14,971   11,004 

Bankcard processing expense

   449    480    1,356   1,283 

FDIC insurance expense

   1,540    2,086    5,062   6,341 

Other expense

   20,046    14,300    57,425   44,796 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total other expense

   96,652    62,777    271,631   185,688 
  

 

 

   

 

 

   

 

 

  

 

 

 

Income before income taxes

   84,574    60,325    199,962   161,080 

Income taxes

   27,836    18,846    67,356   53,103 
  

 

 

   

 

 

   

 

 

  

 

 

 

Net income

  $56,738   $41,479   $132,606  $107,977 
  

 

 

   

 

 

   

 

 

  

 

 

 

   
Three Months Ended
 
   
March 31
 
(Dollars in thousands, except per share data)
  
2024
  
2023
 
Interest income
   
Interest and fees on loans
  $320,991  $279,896 
Interest on federal funds sold and other short-term investments
   12,303   10,983 
Interest and dividends on securities:
   
Taxable
   34,722   36,259 
Tax-exempt
   1,164   2,165 
  
 
 
  
 
 
 
Total interest income
   369,180   329,303 
Interest expense
   
Interest on deposits
   128,377   68,592 
Interest on short-term borrowings
   2,082   1,157 
Interest on long-term borrowings
   16,232   25,234 
  
 
 
  
 
 
 
Total interest expense
   146,691   94,983 
  
 
 
  
 
 
 
Net interest income
   222,489   234,320 
Provision for credit losses
   5,740   6,890 
  
 
 
  
 
 
 
Net interest income after provision for credit losses
   216,749   227,430 
Other income
   
Fees from trust services
   4,646   4,780 
Fees from brokerage services
   5,267   4,200 
Fees from deposit services
   8,971   9,362 
Bankcard fees and merchant discounts
   1,873   1,707 
Other service charges, commissions, and fees
   858   1,138 
Income from bank-owned life insurance
   2,418   1,891 
Income from mortgage banking activities
   5,298   6,384 
Mortgage loan servicing income
   789   2,276 
Net investment securities losses
   (99  (405
Other income
   2,191   1,411 
  
 
 
  
 
 
 
Total other income
   32,212   32,744 
Other expense
   
Employee compensation
   59,293   55,414 
Employee benefits
   14,671   13,435 
Net occupancy expense
   12,343   11,833 
Other real estate owned (“OREO”) expense
   159   667 
Net gains on the sales of OREO properties
   (83  (43
Equipment expense
   6,853   6,996 
Data processing expense
   7,463   7,473 
Mortgage loan servicing expense and impairment
   1,015   1,884 
Bankcard processing expense
   616   522 
FDIC insurance expense
   6,455   4,587 
Other expense
   31,957   34,651 
  
 
 
  
 
 
 
Total other expense
   140,742   137,419 
  
 
 
  
 
 
 
Income before income taxes
   108,219   122,755 
Income taxes
   21,405   24,448 
  
 
 
  
 
 
 
Net income
  $86,814  $98,307 
  
 
 
  
 
 
 
5

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - continued

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except per share data)

   Three Months Ended   Nine Months Ended 
   September 30   September 30 
   2017   2016   2017   2016 

Earnings per common share:

        

Basic

  $0.54   $0.54   $1.39   $1.49 
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $0.54   $0.54   $1.39   $1.48 
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per common share

  $0.33   $0.33   $0.99   $0.99 
  

 

 

   

 

 

   

 

 

   

 

 

 

Average outstanding shares:

        

Basic

   104,760,153    76,218,573    95,040,664    72,413,246 

Diluted

   105,068,122    76,647,773    95,450,626    72,746,363 

   
Three Months Ended
 
   
March 31
 
(Dollars in thousands, except per share data)
  
2024
   
2023
 
Earnings per common share:
    
Basic
  $0.64   $0.73 
  
 
 
   
 
 
 
Diluted
  $0.64   $0.73 
  
 
 
   
 
 
 
Average outstanding shares:
    
Basic
   134,808,634    134,411,166 
Diluted
   135,121,380    134,840,328 
See notes to consolidated unaudited financial statements

6

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands)

   Three Months Ended  Nine Months Ended 
   September 30  September 30 
   2017   2016  2017   2016 

Net income

  $56,738   $41,479  $132,606   $107,977 

Change in net unrealized gain (loss) onavailable-for-sale (AFS)
securities, net of tax

   1,964    (4,865  8,443    7,944 

Accretion of the net unrealized loss on the transfer of AFS securities toheld-to-maturity (HTM) securities, net of tax

   2    2   4    4 

Change in pension plan assets, net of tax

   717    777   2,107    2,235 
  

 

 

   

 

 

  

 

 

   

 

 

 

Comprehensive income, net of tax

  $59,421   $37,393  $143,160   $118,160 
  

 

 

   

 

 

  

 

 

   

 

 

 

   
Three Months Ended
 
   
March 31
 
(Dollars in thousands)
  
2024
  
2023
 
Net income
  $86,814  $98,307 
Change in net unrealized (loss) gain on available for sale (“AFS”) securities, net of tax
   (2,392  45,157 
Change in net unrealized gain (loss) on cash flow hedge, net of tax
   657   (7,157
Change in defined benefit pension plan, net of tax
   424   602 
  
 
 
  
 
 
 
Comprehensive income, net of tax
  $85,503  $136,909 
  
 
 
  
 
 
 
See notes to consolidated unaudited financial statements
7

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except per share data)

   Nine Months Ended September 30, 2017 
                 Accumulated       
   Common Stock         Other     Total 
       Par      Retained  Comprehensive  Treasury  Shareholders’ 
   Shares   Value   Surplus  Earnings  Income (Loss)  Stock  Equity 

Balance at January 1, 2017

   81,068,252   $202,671   $1,205,778  $872,990  ($44,717 ($975 $2,235,747 

Comprehensive income:

          

Net income

   0    0    0   132,606   0   0   132,606 

Other comprehensive income, net of tax:

   0    0    0   0   10,554   0   10,554 
          

 

 

 

Total comprehensive income, net of tax

           143,160 

Stock based compensation expense

   0    0    2,589   0   0   0   2,589 

Acquisition of Cardinal Financial Corporation (23,690,589 shares)

   23,690,589    59,226    916,028   0   0   0   975,254 

Purchase of treasury stock (82 shares)

   0    0    0   0   0   (1  (1

Distribution of treasury stock from deferred compensation plan (28 shares)

   0    0    0   0   0   1   1 

Cash dividends ($0.99 per share)

   0      0   (96,040  0   0   (96,040

Grant of restricted stock (89,475 shares)

   89,475    224    (224  0   0   0   0 

Forfeiture of restricted stock (420 shares)

   0    0    19   0   0   (19  0 

Common stock options exercised (163,562 shares)

   163,562    409    2,724   0   0   0   3,133 
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2017

   105,011,878   $262,530   $2,126,914  $909,556  ($34,163 ($994 $3,263,843 
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

   
Three Months Ended March 31, 2024
 
   
Common Stock
   
Surplus
  
Retained
Earnings
  
Accumulated
Other

Comprehensive
Loss
  
Treasury
Stock
  
Total

Shareholders’
Equity
 

  
Shares
   
Par
Value
 
Balance at January 1, 2024
   142,257,646   $355,644   $3,181,764  $1,745,619  $(259,681 $(252,106 $4,771,240 
Comprehensive income:
          
Net income
   0    0    0   86,814   0   0   86,814 
Other comprehensive loss, net of tax
   0    0    0   0   (1,311  0   (1,311
          
 
 
 
Total comprehensive income, net of tax
           85,503 
Stock based compensation expense
   0    0    3,266   0   0   0   3,266 
Stock grant forfeiture (5,215 shares)
   0    0    190   0   0   (190  0 
Purchase of treasury stock (29,896 shares)
   0    0    0   0   0   (1,030  (1,030
Cash dividends ($0.37 per share)
   0    0    0   (50,213  0   0   (50,213
Net issuance of common stock under stock-based compensation plans (278,723 shares)
   278,723    697    (2,022  0   0   0   (1,325
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance at March 31, 2024
   142,536,369   $356,341   $3,183,198  $1,782,220  $(260,992 $(253,326 $4,807,441 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
   
Three Months Ended March 31, 2023
 
   
Common Stock
   
Surplus
   
Retained
Earnings
  
Accumulated
Other

Comprehensive
(Loss) Income
  
Treasury
Stock
  
Total

Shareholders’
Equity
 
   
Shares
   
Par
Value
 
Balance at January 1, 2023
   142,011,560   $355,029   $3,168,874   $1,575,426  $(332,732 $(250,404 $4,516,193 
Comprehensive income:
           
Net income
   0    0    0    98,307   0   0   98,307 
Other comprehensive income, net of tax
   0    0    0    0   38,602   0   38,602 
           
 
 
 
Total comprehensive income, net of tax
            136,909 
Stock based compensation expense
   0    0    2,713    0   0   0   2,713 
Stock grant forfeiture (1,506 shares)
   0    0    58    0   0   (58  0 
Purchase of treasury stock (33,551 shares)
   0    0    0    0   0   (1,374  (1,374
Cash dividends ($0.36 per share)
   0    0    0    (48,720  0   0   (48,720
Net issuance of common stock under stock-based compensation plans (226,486 shares)
   226,486    566    250    0   0   0   816 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at March 31, 2023
   142,238,046   $355,595   $3,171,895   $1,625,013  $(294,130 $(251,836 $4,606,537 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
See notes to consolidated unaudited financial statements.

statements

8

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands)

   Nine Months Ended 
   September 30 
   2017  2016 

NET CASH PROVIDED BY OPERATING ACTIVITIES

  $125,151  $125,948 

INVESTING ACTIVITIES

   

Proceeds from maturities and calls of securities held to maturity

   12,929   5,039 

Proceeds from sales of securities available for sale

   245,065   103,411 

Proceeds from maturities and calls of securities available for sale

   386,496   264,834 

Purchases of securities available for sale

   (630,061  (385,030

Purchases of bank premises and equipment

   (11,115  (4,150

Proceeds from sales of bank premises and equipment

   13   229 

Purchases of other investment securities

   (51,941  (61,193

Proceeds from sales and redemptions of other investment securities

   14,393   47,285 

Proceeds from the sales of OREO properties

   4,908   15,435 

Acquisition of subsidiaries, net of cash paid

   44,531   29,330 

Net change in loans

   369,233   (111,723
  

 

 

  

 

 

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

   384,451   (96,533
  

 

 

  

 

 

 

FINANCING ACTIVITIES

   

Cash dividends paid

   (86,709  (71,129

Acquisition of treasury stock

   (1  (1

Proceeds from exercise of stock options

   3,296   4,668 

Repayment of long-term Federal Home Loan Bank borrowings

   (845,207  (725,077

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

   815,000   795,000 

Distribution of treasury stock for deferred compensation plan

   1   1 

Changes in:

   

Deposits

   (269,742  265,183 

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

   186,270   (36,889
  

 

 

  

 

 

 

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

   (197,092  231,756 
  

 

 

  

 

 

 

Increase in cash and cash equivalents

   312,510   261,171 

Cash and cash equivalents at beginning of year

   1,434,527   857,335 
  

 

 

  

 

 

 

Cash and cash equivalents at end of period

  $1,747,037  $1,118,506 
  

 

 

  

 

 

 

Supplemental information

   

Noncash investing activities:

   

Transfers of loans to OREO

  $3,829  $19,228 

   
Three Months Ended
March 31
 
(Dollars in thousands)
  
2024
  
2023
 
NET CASH PROVIDED BY OPERATING ACTIVITIES
  $124,371  $118,154 
INVESTING ACTIVITIES
   
Proceeds from sales of securities available for sale
   93   1,689 
Proceeds from maturities and calls of securities available for sale
   416,317   184,059 
Purchases of securities available for sale
   (248,049  (7,855
Proceeds from sales of equity securities
   289   98 
Purchases of equity securities
   (205  (246
Proceeds from sales and redemptions of other investment securities
   46,739   21,547 
Purchases of other investment securities
   (52,379  (52,217
Purchases of bank premises and equipment
   (4,772  (3,447
Proceeds from sales of bank premises and equipment
   63   2,465 
Proceeds from the sales of OREO properties
   146   279 
Net change in loans and leases
   (160,675  (54,938
  
 
 
  
 
 
 
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
   (2,433  91,434 
  
 
 
  
 
 
 
FINANCING ACTIVITIES
   
Cash dividends paid
   (50,137  (48,651
Acquisition of treasury stock
   (1,030)  (1,374
Proceeds from exercise of stock options
   702   1,559 
Redemption of subordinated debt
   0   (10,250
Repayment of long-term Federal Home Loan Bank borrowings
   (1,500,000  (1,900,000
Proceeds from issuance of long-term Federal Home Loan Bank borrowings
   1,450,000   2,500,000 
Changes in:
   
Deposits
   100,598   (18,227
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings
   11,632   9,396 
  
 
 
  
 
 
 
NET CASH PROVIDED BY FINANCING ACTIVITIES
   11,765   532,453 
  
 
 
  
 
 
 
Increase in cash and cash equivalents
   133,703   742,041 
Cash and cash equivalents at beginning of year
   1,598,943   1,176,652 
  
 
 
  
 
 
 
Cash and cash equivalents at end of period
  $1,732,646  $1,918,693 
  
 
 
  
 
 
 
Supplemental information
   
Noncash investing activities:
   
Transfers of loans to OREO
  $119  $2,919 
Right-of-use
assets obtained in the exchange for lease liabilities
   3,671   10,192 
See notes to consolidated unaudited financial statements
.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Unaudite

d)
UNITED BANKSHARES, INC. AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated interim financial statements of United Bankshares, Inc. and Subsidiaries (“United” or “the Company”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States (GAAP)(“GAAP”) and with the instructions for Form
10-Q
and Article 10 of Regulation
S-X.
Accordingly, the financial statements do not contain all of the information and footnotes required by accounting principles generally accepted in the United States. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements presented as of September 30, 2017March 31, 2024 and 20162023 and for the three-month and nine-month periods then ended have not been audited. The consolidated balance sheet as of December 31, 20162023 has been extracted from the audited financial statements included in United’s 20162023 Annual Report to Shareholders. The accounting and reporting policies followedNotes to Consolidated Financial Statements appearing in the presentation of these financial statements are consistent with those applied in the preparation of the 2016United’s 2023 Annual Report of United on Form10-K. To conform to the 2017 presentation, certain reclassifications have been made to prior period amounts,
10-K,
which had no impact on net income, comprehensive income, or stockholders’ equity.includes descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. In the opinion of management, allany adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made. Such adjustments are of a normal and recurring nature.

The accompanying consolidated interim financial statements include the accounts of United and its wholly owned subsidiaries. United considers all of its principal business activities to be bank related. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Dollars areInformation is presented in these notes to the unaudited consolidated interim financial statements with dollars expressed in thousands, except per share or unless otherwise noted.

Operating and Reporting Segments
As of March 31, 2024, United’s business activities are confined to one operating segment, United Bank, and one reportable segment, community banking. As a community banking entity, United, through United Bank, offers a full range of products and services through various delivery channels. Included among the banking products and services offered are the acceptance of deposits in checking, savings, time and money market accounts; the making and servicing of personal, credit card, commercial, and floor plan loans; and the making of construction and real estate loans as well as the origination and sale of residential mortgages in the secondary market. Also offered are trust and brokerage services, safe deposit boxes, and wire transfers. United’s chief operating decision maker regularly reviews the operating results of United Bank in order to assess performance and make decisions about resource allocation. Previously, United had three operating segments: United Bank, George Mason Mortgage, LLC (“George Mason”) and Crescent Mortgage Company (“Crescent”), and two reporting segments: community banking and mortgage banking. However, during the first quarter of 2024, United consolidated the mortgage origination and sales business of George Mason and Crescent with that of United Bank. United previously exited the third-party origination (“TPO”) business during the fourth quarter of 2023.
New Accounting Standards

In August 2017,December 2023, the FASBFinancial Accounting Standards Board (“FASB”) issued ASUNo. 2017-12, “Targeting ImprovementAccounting Standards Update (“ASU”)
2023-09,
“Improvements to Accounting for Hedging Activities.Income Tax Disclosures.This ASU amends ASC 815
2023-09
enhances annual income tax disclosures by requiring (1) consistent categories and its objectives aregreater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU
2023-09
also includes certain other amendments to improve the transparency and understandabilityeffectiveness of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and reduce the complexity and simplify the application of hedge accounting by preparers.income tax disclosures. ASUNo. 2017-12
2023-09
is effective for interim andpublic business entities for annual reporting periods beginning after December 15, 2018;2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Entities are permitted to early adopt the standard for annual financial statements that have not yet been issued or made available for issuance. The adoption is permitted. of
ASUNo. 2017-12 2023-09
is not expected to have an impact on the Company’s financial condition or results of operations but could change certain disclosures in United’s SEC filings.
10

In November 2023, the FASB issued ASU
2023-07,
“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in ASU
2023-07
improve reportable segment disclosure requirements, mainly through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a materialsingle reportable segment, and contain other disclosure requirements. The purpose of the amendments will enable investors to better understand an entity’s overall performance and assess potential future cash flows. ASU
No. 2023-07
is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted. The adoption of
ASU 2023-07
is not expected to have an impact on the Company’s financial condition or results of operations but could change certain disclosures in United’s SEC filings starting with its 2024 Annual Report on Form
10-K.
In October 2023, the FASB issued ASU
2023-06,
“Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” which adopts certain disclosure requirements referred by the SEC. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation
S-X
or Regulation
S-K
becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. The adoption of
ASU 2023-06
is not expected to have an impact on the Company’s financial condition or results of operations but could change certain disclosures in United’s SEC filings.
In August 2023, the FASB issued ASU
2023-05,
“Business Combinations – Joint Venture Formations (Subtopic
805-60).”
ASU
2023-05
requires a joint venture to apply a new basis of accounting at its formation date by valuing the net assets contributed at fair value for both business and asset transactions. The value of the net assets in total is then allocated to individual assets and liabilities by applying Topic 805 with certain exceptions. ASU
2023-05
requires certain disclosures to aid the user of the financial statements in understanding the implications of the joint venture formation. ASU
2023-05
is effective for joint venture formations with a formation date on or after January 1, 2025. The adoption of
ASU 2023-05
is not expected to have an impact on the Company’s financial condition or results of operations.

In July 2017,2023, the FASB issued ASU
No. 2017-11, “Part I,2023-03,
“Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation
S-X:
Income or Loss Applicable to Common Stock.” ASU
2023-03
amends the ASC for Certain Financial Instruments with Down Round FeaturesSEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”) Meeting; and Part II, ReplacementStaff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic EnticesRegulation
S-X:
Income or Loss Applicable to Common Stock. These updates were immediately effective and Certain Mandatorily Redeemable Noncontrolling interests with a Scope Exception.” Part I of this ASU simplifies the accounting for financial instruments that include down round features while the amendments in Part II, which dodid not have an accounting effect, address the difficulty of navigating the guidance in ASC 480, “Distinguishing Liabilities from Equity”, due to the existence of extensive pending content in the Codification. ASUNo. 2017-11 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. ASUNo. 2017-11 is not expected to have a materialsignificant impact on the Company’s financial condition or results of operations.

statements.

In May 2017,March 2023, the FASB issued Accounting ASUNo. 2017-09, “Stock Compensation, Scope
2023-02,
“Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” ASU
2023-02
permits reporting entities to elect to account for their tax equity investments, regardless of Modification Accounting.” Thisthe tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The amendments in this ASU clarifies when changesapply to all reporting entities that hold
11

tax equity investments that meet the terms of conditions offor and elect to account for them using the proportional amortization method or an investment in a share-based payment award must below income housing tax credit (“LIHTC”) structure through a limited liability entity that is not accounted for as

modifications. Companies willusing the proportional amortization method and to which certain LIHTC-specific guidance removed from Subtopic

323-740
has been applied. Additionally, the disclosure requirements apply to investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the modification accounting guidance ifproportional amortization method (including investments within that elected program that do not meet the value, vesting conditions or classification ofto apply the award changes. The new guidance should reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications, as the guidance will allow companies to make certainnon-substantive changes to awards without accounting for them as modifications. It does not change the accounting for modifications.proportional amortization method). ASUNo. 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017; early adoption is permitted. ASUNo. 2017-09 is not expected to have a material impact on the Company’s financial condition or results of operations.

In March 2017, the FASB issued ASU2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU2017-07 amends ASC 715, “Compensation - Retirement Benefits” and will change how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. ASU2017-07 is

2023-02
was effective for United on January 1, 2018, with early adoption permitted. Management is currently evaluating2024. The amendments in this update must be applied on either a modified retrospective or a retrospective basis except for LIHTC investments not accounted for using the possible impact this standard may have onproportional amortization method. At January 1, 2024, United chose not to elect to account for its tax equity investments using the Company’s financial condition or results of operations.

proportional amortization method.

In January 2017,December 2022, the FASB issued ASU2017-04, “Intangibles – Goodwill
2022-06,
“Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” ASU
2022-06
extends the period of time financial statement preparers can utilize the reference rate reform relief guidance. In 2020, the FASB issued ASU
2020-04
to provide temporary, optional expedients related to the accounting for contract modifications and Other (topic 350).” ASU2017-04 eliminateshedging transactions as a result of the requirementglobal markets’ anticipated transition away from the use of LIBOR and other interbank offered rates to calculatealternative reference rates. At the impliedtime ASU
2020-04
was issued, the United Kingdom’s Financial Conduct Authority (“FCA”) had established the intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021. As a result, the sunset provision was set for December 31, 2022; 12 months after the expected cessation date of all currencies and tenors of LIBOR. In March 2021, the FCA announced that the intended cessation date of LIBOR in the United States would be June 30, 2023, which has now taken effect as intended. Accordingly, ASU
2022-06
defers the expiration date of ASU 848 to December 31, 2024. United implemented a comprehensive project plan to execute the transition of its LIBOR-based financial instruments to alternative reference rates. United utilized the Secured Overnight Financing Rate (“SOFR”) and Prime as the preferred alternatives to LIBOR.
In June 2022, the FASB issued ASU
2022-03,
“Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.”
ASU 2022-03
clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair valuevalue.
ASU 2022-03
also clarifies that an entity cannot, as a separate unit of goodwill toaccount, recognize and measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. contractual sale restriction and requires certain new disclosures for equity securities subject to contractual sale restrictions.
ASU2017-04 is 2022-03
was effective for United on January 1, 2020, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.

In January 2017, the FASB issued ASU2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” ASU2017-01 changes the definition of a business to assist entities with evaluation when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. ASU2017-01 is effective for United on January 1, 2018, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.

In August 2016, the FASB issued ASU2016-15, “Classification of Certain Cash Receipts and Cash Payments.” ASU2016-15 amends ASC topic 230 to add and clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows as a result of diversity in practice and in certain circumstances, financial statement restatements. Entities should apply ASU2016-15 using a retrospective transition method to each period presented. ASU2016-15 is effective for United on January 1, 2018, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.

In June 2016, the FASB issued ASU2016-13, “Financial Instruments – Credit Losses.” ASU2016-13 changes the impairment model for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances foravailable-for-sale debt securities rather than reduce the carrying amount under the current other-than-temporary impairment (OTTI) model. ASU2016-13 also simplifies the accounting model for purchased credit-impaired debt securities and loans. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting

period in which the guidance is effective. ASU2016-13 is effective for United on January 1, 2020, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.

In March 2016, the FASB issued ASU2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” United adopted ASU2016-09 on January 1, 2017 utilizing the modified retrospective method. ASU2016-09 changes certain aspects of accounting for share-based payments to employees. The new guidance, amongst other things, requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. The requirement to report those income tax effects in earnings was applied to settlements occurring on or after January 1, 2017 and the impact of applying that guidance reduced reporting income tax expense by $146 and $960 for the three and nine months ended September 30, 2017, respectively. ASU2016-09 also allows an employer to repurchase more of an employee’s shares than it could previously for tax withholding purposes without triggering liability accounting and make a policy election to account for forfeitures as they occur. The Company will continue to estimate the number of awards expected to be forfeited and adjust the estimate when it is no longer probable that the employee will fulfill the service condition, as was previously required. ASU2016-09 also requires that all incometax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award’s vesting period. United elected to apply that change in cash flow classification on a retrospective basis, which resulted in an $2,083 increase to net cash from operating activities and a corresponding decrease to net cash from financing activities in the accompanying Consolidated Statement of Cash Flows for the first nine months of 2016. The recognition of excess tax benefits and deficiencies in the income statement was adopted prospectively.2024. The adoption of

ASU2016-09 2022-03
did not have a material impact on the Company’s financial condition or results of operations.

In February 2016, the FASB issued ASU2016-02, “Leases (Topic 842)”. ASU2016-02 includes a lessee accounting model that recognizes two types of leases, finance leases and operating leases, while lessor accounting will remain largely unchanged from the current GAAP. ASU2016-02 requires, amongst other things, that a lessee recognize on the balance sheet aright-of-use asset and a lease liability

12

2. INVESTMENT SECURITIES
Securities Available for leases with terms of more than twelve months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or operating lease. ASU2016-02 is effective for United on January 1, 2019 and management is currently evaluating the impact this standard may have on the Company’s financial condition or results of operations.

In January 2016, the FASB issued ASU2016-01, “Financial Instruments Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU2016-01 makes changes to the classification and measurement of investments in equity securities, the presentation of certain fair value changes for financial liabilities measured at fair value under the fair value option and disclosure of fair value of instruments. In addition, ASU2016-01 clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses onavailable-for-sale debt securities. ASU2016-01 is effective for United on January 1, 2018 and is not expected to have a significant impact on the Company’s financial condition or results of operations.

In May 2014, the FASB issued ASU2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU2014-09 supersedes the revenue recognition requirements in ASC topic 605, “Revenue Recognition”, and most industry-specific guidance throughout the ASC. The amendments require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new revenue recognition standard sets forth a five step principle-based approach for determining revenue recognition. ASU2014-09 will be effective for United on January 1, 2018. The Company intends to adopt the amendments of ASU2014-09 beginning January 1, 2018 through the modified-retrospective transition method with a cumulative effect adjustment to opening retained earnings. The

Company’s revenue is comprised of net interest income and noninterest income. As the standard does not apply to revenue associated with financial instruments, net interest income and gains and losses from securities are not impacted by the standard. Thus far, we have identified revenue streams within the scope of the guidance and analyzed those revenue streams to determine the impact of the standard. We have reviewed and evaluated a number of revenue contracts to determine the impact the new recognition methods will have on revenue recognition. Based on this review, ASU2014-09 may require the Company to change how it recognizes certain recurring revenue streams related to noninterest income including fees from trust and brokerage services. Although we currently do not expect this standard to have a material impact on the timing or amount of revenue, we are still assessing the potential impact on the Company’s consolidated financial statements.

2. MERGERS AND ACQUISITIONS

Cardinal Financial Corporation

On April 21, 2017 (Cardinal Acquisition Date), United acquired 100% of the outstanding common stock of Cardinal Financial Corporation (Cardinal), headquartered in Tysons Corner, Virginia. The acquisition of Cardinal expands United’s existing footprint in the Washington, D.C. Metropolitan Statistical Area. At consummation, Cardinal had assets of $4,136,008, loans of $3,313,033 and deposits of $3,344,740. Cardinal also operated George Mason Mortgage, LLC (George Mason), a residential mortgage lending company based in Fairfax, Virginia with offices located in Virginia, Maryland, North Carolina, South Carolina and the District of Columbia. As a result of the merger, George Mason became an indirectly-owned subsidiary of United.

The merger was accounted for under the acquisition method of accounting. The results of operations of Cardinal are included in the consolidated results of operations from the Cardinal Acquisition Date.

The aggregate purchase price was approximately $975,254, including common stock valued at $972,499, stock options assumed valued at $2,741, and cash paid for fractional shares of $14. The number of shares issued in the transaction was 23,690,589, which were valued based on the closing market price of $41.05 for United’s common shares on April 21, 2017. The preliminary purchase price has been allocated to the identifiable tangible and intangible assets resulting in preliminary additions to goodwill, core deposit intangibles and the George Mason trade name intangible of $622,513, $28,723 and $1,230, respectively. The core deposit intangibles are expected to be amortized over ten years. The George Mason trade name provides a source of market recognition to attract potential clients and retain existing relationships. United believes the George Mason trade name provides a competitive advantage and is likely going to be used into perpetuity and thus will not be subject to amortization, but rather be evaluated for impairment.

Because the consideration paid was greater than the net fair value of the acquired assets and liabilities, the Company recorded goodwill as part of the acquisition. None of the goodwill from the Cardinal acquisition is expected to be deductible for tax purposes. United used an independent third party to help determine the fair values of the assets and liabilities acquired from Cardinal. As a result of the merger, United recorded preliminary fair value discounts of $144,434 on the loans acquired, $2,281 on leases and $8,738 on trust preferred issuances, respectively, and premiums of $4,408 on land acquired, $5,072 on interest-bearing deposits and $10,740 on long-term FHLB advances, respectively. The remaining discount and premium amounts are being accreted or amortized on an accelerated or straight-line basis over each asset’s or liability’s estimated remaining life at the time of acquisition except for loans and land. The discount on loans will be accreted into income based on the effective yield method. The premium on land will not be amortized. At September 30, 2017, the discounts on leases and trust preferred issuances had an average estimated remaining life of 6.00 years and 16.97 years, respectively, and the premiums on the interest-bearing deposits and the FHLB advances each had an average estimated remaining life of 5.00 years and 4.81 years, respectively. United assumed approximately $1,825 of liabilities to provide severance benefits to terminated employees of Cardinal, which has no remaining balance as of September 30, 2017. The estimated fair values of the

acquired assets and assumed liabilities, including identifiable intangible assets are preliminary as of September 30, 2017 and are subject to refinement as additional information relative to closing date fair values becomes available. Any subsequent adjustments to the fair values of acquired assets and liabilities assumed, identifiable intangible assets, or other purchase accounting adjustments will result in adjustments to goodwill within the measurement period following the date of acquisition.

In many cases, determining the estimated fair value of the acquired assets and assumed liabilities required United to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations related to the fair valuation of acquired loans. The fair value of the acquired loans was based on the present value of the expected cash flows. Periodic principal and interest cash flows were adjusted for expected losses and prepayments, then discounted to determine the present value and summed to arrive at the estimated fair value. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with GAAP, there was no carry-over of Cardinal’s previously established allowance for loan losses.

The acquired loans were divided into loans with evidence of credit quality deterioration, which are accounted for under ASC topic310-30 (acquired impaired) and loans that do not meet this criteria, which are accounted for under ASC topic310-20 (acquired performing). Acquired impaired loans have experienced a deterioration of credit quality from origination to acquisition for which it is probable that United will be unable to collect all contractually required payments receivable, including both principal and interest. Subsequent decreases in the expected cash flows require United to evaluate the need for additions to the Company’s allowance for credit losses. Subsequent improvements in expected cash flows generally result in the recognition of additional interest income over the then remaining lives of the loans.

In conjunction with the Cardinal merger, the acquired loan portfolio was accounted for at fair value as follows:

   April 21, 2017 

Contractually required principal and interest at acquisition

  $4,211,734 

Contractual cash flows not expected to be collected

   (56,176
  

 

 

 

Expected cash flows at acquisition

   4,155,558 

Interest component of expected cash flows

   (986,959
  

 

 

 

Basis in acquired loans at acquisition – estimated fair value

  $3,168,599 
  

 

 

 

Included in the above table is information related to acquired impaired loans. Specifically, contractually required principal and interest, cash flows expected to be collected and estimated fair value of acquired impaired loans were $132,837, $108,275, and $86,696, respectively.

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

Purchase price:

  

Value of common shares issued (23,690,589 shares)

  $972,499 

Fair value of stock options assumed

   2,741 

Cash for fractional shares

   14 
  

 

 

 

Total purchase price

   975,254 
  

 

 

 

Identifiable assets:

  

Cash and cash equivalents

   44,545 

Investment securities

   395,829 

Loans held for sale

   271,301 

Loans

   3,168,599 

Premises and equipment

   24,208 

Core deposit intangibles

   28,723 

George Mason trade name intangible

   1,230 

Other assets

   135,383 
  

 

 

 

Total identifiable assets

  $4,069,818 

Identifiable liabilities:

  

Deposits

  $3,349,812 

Short-term borrowings

   96,215 

Long-term borrowings

   220,119 

Unfavorable lease liability

   2,281 

Other liabilities

   48,650 
  

 

 

 

Total identifiable liabilities

   3,717,077 
  

 

 

 

Preliminary fair value of net assets acquired including identifiable intangible assets

   352,741 
  

 

 

 

Preliminary resulting goodwill

  $622,513 
  

 

 

 

The operating results of United for the nine months ended September 30, 2017 include operating results of acquired assets and assumed liabilities subsequent to the Cardinal Acquisition Date. The operations of United’s metropolitan Washington D.C. geographic area, which primarily includes the acquired operations of Cardinal, provided $157,326 in total revenues, which represents net interest income plus other income, and $81,817 in net income from the period from the Cardinal Acquisition Date to September 30, 2017. These amounts are included in United’s consolidated financial statements as of and for the nine months ended September 30, 2017. Cardinal’s results of operations prior to the Cardinal Acquisition Date are not included in United’s consolidated financial statements.

The following table presents certain unaudited pro forma information for the results of operations for the nine months ended September 30, 2017 and 2016, as if the Cardinal merger had occurred on January 1, 2017 and 2016, respectively. These results combine the historical results of Cardinal into United’s consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair valuation adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on the indicated date nor are they intended to represent or be indicative of future results of operations. In particular, no adjustments have been made to eliminate the amount of Cardinal’s provision for credit losses for 2017 and 2016 that may not have been necessary had the acquired loans been recorded at fair value as of the beginning of 2017 and 2016. Additionally, United expects to achieve operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts.

   Proforma
Nine Months Ended
September 30
 
   2017   2016 

Total Revenues (1)

  $573,790   $585,223 

Net Income

   136,104    160,731 

(1)

Represents net interest income plus other income

Bank of Georgetown

After the close of business on June 3, 2016 (BOG Acquisition Date), United acquired 100% of the outstanding common stock of Bank of Georgetown, a privately held community bank headquartered in Washington, D.C. With this transaction, United continues to expand its existing footprint in the D.C. Metro Region. The results of operations of Bank of Georgetown are included in the consolidated results of operations from the BOG Acquisition Date.

At consummation, Bank of Georgetown had assets of $1,278,837, loans of $999,773, and deposits of $971,369. The transaction was accounted for under the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the BOG Acquisition Date.

The aggregate purchase price was $264,505, including common stock valued at $253,799, stock options assumed valued at $10,696, and cash paid for fractional shares of $10. The number of shares issued in the transaction was 6,527,746, which were valued based on the closing market price of $38.88 for United’s common shares on June 3, 2016. The purchase price has been allocated to the identifiable tangible and intangible assets resulting in additions to goodwill and core deposit intangibles of $152,845 and $9,058, respectively. The core deposit intangibles are being amortized over ten years.

Because the consideration paid was greater than the net fair value of the acquired assets and liabilities, the Company recorded goodwill as part of the acquisition. None of the goodwill from the Bank of Georgetown acquisition is expected to be deductible for tax purposes. United used an independent third party to help determine the fair values of the assets and liabilities acquired from the Bank of Georgetown. As a result of the merger, United recorded fair value discounts of $43,072 on the loans acquired and $1,550 on leasehold improvements, respectively, and premiums on interest-bearing deposits acquired of $316 and a premium on long-term FHLB advances of $2,659. The remaining discount and premium amounts are being amortized or accreted on an accelerated basis over each asset’s or liability’s estimated remaining life at the time of acquisition. At September 30, 2017, the premium on the interest-bearing deposits and the FHLB advances had an estimated remaining life of 0.33 years and 7.92 years, respectively. United assumed approximately $300 of liabilities to provide severance benefits to terminated employees of Bank of Georgetown, which has no remaining balance as of September 30, 2017. The measurement period has closed and the estimated fair values of the acquired assets and assumed liabilities, including identifiable intangible assets were considered final as of June 30, 2017.

In many cases, determining the estimated fair value of the acquired assets and assumed liabilities required United to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations related to the fair valuation of acquired loans. The fair value of the acquired loans was based on the present value of the expected cash flows. Periodic principal and interest cash flows were adjusted for expected losses and prepayments, then discounted to determine the present value and summed to arrive at the estimated fair value. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with GAAP, there was no carry-over of Bank of Georgetown’s previously established allowance for loan losses.

In conjunction with the Bank of Georgetown merger, the acquired loan portfolio was accounted for at fair value as follows:

   June 3, 2016 

Contractually required principal and interest at acquisition

  $1,275,398 

Contractual cash flows not expected to be collected

   (33,980
  

 

 

 

Expected cash flows at acquisition

   1,241,418 

Interest component of expected cash flows

   (274,548
  

 

 

 

Basis in acquired loans at acquisition – estimated fair value

  $966,870 
  

 

 

 

Included in the above table is information related to acquired impaired loans. Specifically, contractually required principal and interest, cash flows expected to be collected and estimated fair value of acquired impaired loans were $138,125, $117,564, and $95,570, respectively.

The consideration paid for Bank of Georgetown’s common equity and the fair value of acquired identifiable assets and liabilities assumed as of the BOG Acquisition Date were as follows:

Purchase price:

  

Value of common shares issued (6,527,746 shares)

  $253,799 

Fair value of stock options assumed

   10,696 

Cash for fractional shares

   10 
  

 

 

 

Total purchase price

   264,505 
  

 

 

 

Identifiable assets:

  

Cash and cash equivalents

   29,340 

Investment securities

   219,783 

Loans

   966,870 

Premises and equipment

   5,574 

Core deposit intangibles

   9,058 

Other assets

   31,605 
  

 

 

 

Total identifiable assets

  $1,262,230 

Identifiable liabilities:

  

Deposits

  $971,685 

Short-term borrowings

   101,021 

Long-term borrowings

   67,659 

Other liabilities

   11,532 
  

 

 

 

Total identifiable liabilities

   1,151,897 
  

 

 

 

Fair value of net assets acquired including identifiable intangible assets

   110,333 
  

 

 

 

Resulting goodwill

  $154,172 
  

 

 

 

3. INVESTMENT SECURITIES

Sale

Securities held for indefinite periods of time and all marketable equity securities are classified as available for sale and carried at estimated fair value. The amortized cost, and estimated fair values, and allowance for credit losses of securities available for sale are summarized as follows.

   September 30, 2017 
       Gross   Gross   Estimated   Cumulative 
   Amortized   Unrealized   Unrealized   Fair   OTTI in 
   Cost   Gains   Losses   Value   AOCI (1) 

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

  $115,224   $864   $222   $115,866   $0 

State and political subdivisions

   305,096    2,567    2,522    305,141    0 

Residential mortgage-backed securities

          

Agency

   715,003    3,819    4,122    714,700    0 

Non-agency

   5,259    587    0    5,846    86 

Commercial mortgage-backed securities

          

Agency

   420,115    2,081    1,404    420,792    0 

Asset-backed securities

   13,422    10    3    13,429    0 

Trust preferred collateralized debt obligations

   38,186    317    6,844    31,659    20,770 

Single issue trust preferred securities

   13,404    404    1,341    12,467    0 

Other corporate securities

   18,998    256    0    19,254    0 

Marketable equity securities

   9,950    541    11    10,480    0 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,654,657   $11,446   $16,469   $1,649,634   $20,856 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

   December 31, 2016 
       Gross   Gross   Estimated   Cumulative 
   Amortized   Unrealized   Unrealized   Fair   OTTI in 
   Cost   Gains   Losses   Value   AOCI (1) 

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

  $95,247   $698   $159   $95,786   $0 

State and political subdivisions

   196,350    1,364    4,902    192,812    0 

Residential mortgage-backed securities

          

Agency

   585,208    3,999    5,111    584,096    0 

Non-agency

   6,629    426    12    7,043    86 

Commercial mortgage-backed securities

          

Agency

   304,635    1,948    1,242    305,341    0 

Asset-backed securities

   217    0    0    217    0 

Trust preferred collateralized debt obligations

   48,558    729    15,735    33,552    25,952 

Single issue trust preferred securities

   13,363    284    2,170    11,477    0 

Other corporate securities

   14,996    66    0    15,062    0 

Marketable equity securities

   12,436    1,398    6    13,828    0 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,277,639   $10,912   $29,337   $1,259,214   $26,038 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(1)Non-credit related other-than-temporary impairment in accumulated other comprehensive income. Amounts arebefore-tax.

   
March 31, 2024
 
   
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Allowance
For Credit
Losses
   
Estimated
Fair

Value
 
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
  $439,648   $45   $5,582   $0   $434,111 
State and political subdivisions
   611,240    14    82,953    0    528,301 
Residential mortgage-backed securities
          
Agency
   1,183,484    4    176,629    0    1,006,859 
Non-agency
   83,698    0    8,394    0    75,304 
Commercial mortgage-backed securities
          
Agency
   507,889    13    54,189    0    453,713 
Asset-backed securities
   837,064    75    6,209    0    830,930 
Single issue trust preferred securities
   16,390    0    1,057    0    15,333 
Other corporate securities
   301,199    0    31,775    0    269,424 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $ 3,980,612   $ 151   $ 366,788   $ 0   $ 3,613,975 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
December 31, 2023
 
   
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Allowance
For Credit
Losses
   
Estimated
Fair

Value
 
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
  $492,638   $4   $7,692   $0   $484,950 
State and political subdivisions
   613,588    11    79,768    0    533,831 
Residential mortgage-backed securities
          
Agency
   1,217,744    7    167,810    0    1,049,941 
Non-agency
   100,364    0    9,753    0    90,611 
Commercial mortgage-backed securities
          
Agency
   511,560    13    52,275    0    459,298 
Asset-backed securities
   872,048    44    11,454    0    860,638 
Single issue trust preferred securities
   16,380    0    1,239    0    15,141 
Other corporate securities
   325,573    0    33,606    0    291,967 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $4,149,895   $79   $363,597   $0   $3,786,377 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
For the adoption of ASC Topic 326, “Financial Instruments—Credit Losses,” United made a policy election to exclude accrued interest from the amortized cost basis of
available-for-sale
debt securities and report accrued interest separately in “Accrued interest receivable” in the consolidated balance sheets.
Available-for-sale
debt securities are placed on
non-accrual
status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on
non-accrual
status. Accordingly, United does not currently recognize an allowance for credit loss against accrued interest receivable on
available-for-sale
debt securities. The table above excludes accrued interest receivable of $19,963 and $20,878 at March 31, 2024 and December 31, 2023, respectively, that is recorded in “Accrued interest receivable.”
13

The following is a summary of securitiesavailable-for-sale available for sale which were in an unrealized loss position at September 30, 2017March 31, 2024 and December 31, 2016.

   Less than 12 months   12 months or longer 
   Fair   Unrealized   Fair   Unrealized 
   Value   Losses   Value   Losses 
September 30, 2017        

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

  $27,053   $128   $19,932   $94 

State and political subdivisions

   83,310    896    38,004    1,626 

Residential mortgage-backed securities

        

Agency

   351,936    3,410    31,690    712 

Non-agency

   0    0    0    0 

Commercial mortgage-backed securities

        

Agency

   228,307    1,218    12,272    186 

Asset-backed securities

   6,760    3    0    0 

Trust preferred collateralized debt obligations

   0    0    29,544    6,844 

Single issue trust preferred securities

   0    0    4,365    1,341 

Marketable equity securities

   0    0    352    11 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $697,366   $5,655   $136,159   $10,814 
  

 

 

   

 

 

   

 

 

   

 

 

 

   Less than 12 months   12 months or longer 
   Fair   Unrealized   Fair   Unrealized 
   Value   Losses   Value   Losses 
December 31, 2016        

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

  $24,101   $159   $0   $0 

State and political subdivisions

   116,300    4,902    0    0 

Residential mortgage-backed securities

        

Agency

   309,376    5,111    0    0 

Non-agency

   0    0    218    12 

Commercial mortgage-backed securities

        

Agency

   162,479    1,242    0    0 

Asset-backed securities

   0    0    0    0 

Trust preferred collateralized debt obligations

   0    0    28,579    15,735 

Single issue trust preferred securities

   0    0    8,185    2,170 

Marketable equity securities

   357    6    0    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $612,613   $11,420   $36,982   $17,917 
  

 

 

   

 

 

   

 

 

   

 

 

 

Marketable equity securities consist mainly of equity securities of financial institutions and mutual funds within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries. 2023.

   
Less than 12 months
   
12 months or longer
   
Total
 
   
Fair
Value
   
Unrealized
Losses
   
Fair

Value
   
Unrealized
Losses
   
Fair

Value
   
Unrealized
Losses
 
March 31, 2024
            
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
  $3,561   $12   $178,459   $5,570   $182,020   $5,582 
State and political subdivisions
   4,089    196    512,438    82,757    516,527    82,953 
Residential mortgage-backed securities
            
Agency
   6,791    95    999,081    176,534    1,005,872    176,629 
Non-agency
   0    0    72,662    8,394    72,662    8,394 
Commercial mortgage-backed securities
            
Agency
   0    0    451,366    54,189    451,366    54,189 
Asset-backed securities
   79,624    175    656,712    6,034    736,336    6,209 
Single issue trust preferred securities
   0    0    15,333    1,057    15,333    1,057 
Other corporate securities
   2,422    78    261,891    31,697    264,313    31,775 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $  96,487   $ 556   $  3,147,942   $ 366,232   $  3,244,429   $ 366,788 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
Less than 12 months
   
12 months or longer
   
Total
 
   
Fair
Value
   
Unrealized
Losses
   
Fair

Value
   
Unrealized
Losses
   
Fair

Value
   
Unrealized
Losses
 
December 31, 2023
            
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
  $4,625   $11   $477,615   $7,681   $482,240   $7,692 
State and political subdivisions
   2,050    193    517,186    79,575    519,236    79,768 
Residential mortgage-backed securities
            
Agency
   9,755    51    1,038,632    167,759    1,048,387    167,810 
Non-agency
   8,964    101    81,647    9,652    90,611    9,753 
Commercial mortgage-backed securities
            
Agency
   0    0    456,866    52,275    456,866    52,275 
Asset-backed securities
   15,866    216    829,778    11,238    845,644    11,454 
Single issue trust preferred securities
   2,922    182    12,219    1,057    15,141    1,239 
Other corporate securities
   0    0    274,308    33,606    274,308    33,606 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $ 44,182   $ 754   $ 3,688,251   $ 362,843   $ 3,732,433   $ 363,597 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
14

The following table shows the proceeds from maturities, sales and calls of available for sale securities and the gross realized gains and losses on sales and calls of those securities that have been included in earnings as a result of thoseany sales and calls. Gains or losses on sales and calls of available for sale securities were recognized by the specific identification method. The realized losses relate to sales of securities within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries.

   Three Months Ended
September 30
   Nine Months Ended
September 30
 
   2017   2016   2017   2016 

Proceeds from sales and calls

  $64,257   $174,015   $631,561   $368,246 

Gross realized gains

   1,781    3    2,840    259 

Gross realized losses

   1,314    1    1,396    7 

   
Three Months Ended

March 31
 
   
2024
   
2023
 
Proceeds from maturities, sales and calls
  $ 416,410   $ 185,748 
Gross realized gains
   0    0 
Gross realized losses
   0    420 
At September 30, 2017,March 31, 2024, gross unrealized losses on available for sale securities were $16,469$366,788 on 3751,071 securities of a total portfolio of 8221,124 available for sale securities. Securities in anwith the most significant gross unrealized loss positionlosses at September 30, 2017March 31, 2024 consisted primarily of pooled trust preferred collateralized debt obligations (“Trup Cdos”), single issue trust preferred securities and agency residential mortgage-backed securities. The Trup Cdos and the single issue trust preferred securities relate mainly to securities of financial institutions. The state and political subdivisions securities relate to securities issued by various municipalities. The agency residential mortgage-backed securities, relate to residential propertiesstate and provide a guaranty of fullpolitical subdivision securities, agency commercial mortgage-backed securities and timely payments of principal and interest by the issuing agency. other corporate securities.
In determining whether or not a security is other-than-temporarily impaired, (“OTTI”), management considered the severity and the duration of the loss in conjunction with United’s positive intent and the more likely than not ability to hold these securities to recovery of their cost basis or maturity.

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

State and political subdivisions

United’s state and political subdivisions portfolio relates to securities issued by various municipalities located throughout the United States. The total amortized cost of available for sale state and political subdivision securities was $305,096$611,240 at September 30, 2017.March 31, 2024. As of September 30, 2017,March 31, 2024, approximately 75%48% of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means

available to the municipality. The majority of the portfolio was rated AA or higher, and less than one percent ofno securities within the portfolio waswere rated below investment grade as of September 30, 2017.March 31, 2024. In addition to monitoring the credit ratings of these securities, management also evaluates the financial performance of the underlying issuers on an ongoing basis. Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities were other-than-temporarily impairedhad credit losses at September 30, 2017.

AgencyMarch 31, 2024.

Mortgage-backed securities
The fair value of
mortgage-backed
securities is affected by changes in interest rates and prepayment speeds. When interest rates decline, prepayment speeds generally accelerate due to homeowners refinancing their mortgages at lower interest rates. This may result in the proceeds being reinvested at lower interest rates. Rising interest rates may decrease the assumed prepayment speed. Slower prepayment speeds may extend the maturity of the security beyond its estimated maturity. Therefore, investors may not be able to invest at current higher market rates due to the extended expected maturity of the security. United had a net unrealized loss of $239,195 on
mortgage-backed
securities at March 31, 2024. Below is a detailed discussion of mortgage-backed securities

by type.

United’s agency mortgage-backed securities portfolio relates to securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae. The total amortized cost of available for sale agency mortgage-backed securities was $1,135,118$1,691,373 at September 30, 2017.March 31, 2024. Of the $1,135,118$1,691,373 amount, $420,115$507,889 was related to agency commercial mortgage-backed securities and $715,003$1,183,484 was related to agency residential mortgage-backed securities. Each of the agency mortgage-backed securities provides a guarantee of full and timely payments of principal and interest by the issuing agency. Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities were other-than-temporarily impairedhad credit losses at September 30, 2017.

Non-agency residential mortgage-backed securities

March 31, 2024.

United’s
non-agency
residential mortgage-backed securities portfolio relates to securities of various private label issuers. The total amortized cost of available for sale
non-agency
residential mortgage-backed securities was $5,259$83,698 at September 30, 2017.March 31, 2024. Of the $5,259 amount, $627$83,698, 100% was rated above investment grade and $4,632 was rated below investment grade. Approximately 18% of the portfolio includes collateral that was originated during the year of 2005 or before. The remaining 82% includes collateral that was originated in the years of 2006 and 2007. The entire portfolio of thenon-agency residential mortgage-backed securities are either the senior or super-senior tranches of their respective structure.AAA. Based upon management’s analysis and judgment, it was determined that none of the
non-agency
residential mortgage-backed securities were other-than-temporarily impairedhad credit losses at September 30, 2017.

March 31, 2024.

15

Asset-backed securities
As of March 31, 2024, United’s asset-backed securities portfolio had a total amortized cost balance of $837,064. 100% of the portfolio was investment grade rated as of March 31, 2024. Approximately 24% of the portfolio relates to securities that are backed by Federal Family Education Loan Program (“FFELP”) student loan collateral which includes a minimum of a 97% government repayment guaranty, as well as additional credit support and subordination in excess of the government guaranteed portion. Approximately 76% of the portfolio relates to collateralized loan obligation securities that are all AAA rated. Upon reviewing this portfolio as of March 31, 2024, it was determined that none of the asset-backed securities had credit losses.
Single issue trust preferred securities

The majority of United’s single issue trust preferred portfolio consists of obligations from large cap banks (i.e. banks with market capitalization in excess of $10 billion). All single issue trust preferred securities are currently receiving interest payments. The amortized cost of available for sale single issue trust preferred securities as of March 31, 2024 consisted of $7,477 in investment grade bonds, $3,109 in split rated bonds, and $5,804 in unrated bonds. Management reviews each issuer’s current and projected earnings trends, asset quality, capitalization levels, and other key factors. Upon completing the review for the thirdfirst quarter of 2017,2024, it was determined that none of the single issue trust preferred securities were other-than-temporarily impaired. All single issue trust preferredhad credit losses.
Other corporate securities are currently receiving interest payments. The available for sale single issue trust preferred securities’ ratings ranged from
As of March 31, 2024, United’s other corporate securities portfolio had a low of Ba1 to a high ofBBB-. Thetotal amortized cost balance of available for sale single issue trust preferred securities as$301,199. The majority of September 30, 2017the portfolio consisted of $3,017 indebt issuances of corporations representing a variety of industries, including financial institutions. Of the $301,199, 96% had at least one rating above investment grade, bonds, $4,680 in split-rated bonds and $5,707 in unrated bonds. All of the unrated bonds1% were in an unrealized loss position for twelve months or longer as of September 30, 2017.

Trust preferred collateralized debt obligations (Trup Cdos)

In order to determine how and when the Company recognizes OTTI, the Company first assesses its intentions regarding any sale of securities as well as the likelihood that it would be required to sell prior to recovery of the amortized cost. As of September 30, 2017, the Company has determined that it does not intend to sell any pooled trust preferred security and that it is not more likely than not that the Company will be required to sell such securities before recovery of their amortized cost.

To determine a net realizable value and assess whether other-than-temporary impairment existed, management performed detailed cash flow analysis to determine whether, in management’s judgment, it was more likely that United would not recover the entire amortized cost basis of the security. The Company discounts the security-specific

cash flow projection at the security-specific interest rate and compares the present value to the amortized cost. Management’s cash flow analysis was performed for each security and considered the current deferrals and defaults within the underlying collateral, the likelihood that current deferrals would cure or ultimately default, potential future deferrals and defaults, potential prepayments, cash reserves, excess interest spread, credit analysis of the underlying collateral and the priority of payments in the cash flow structure. The underlying collateral analysis for each issuer took into consideration multiple factors including capital adequacy, earnings trends and asset quality. After completing its analysis of estimated cash flows, management determined that none of the Trup Cdos experienced an adverse change in cash flows during the third quarter of 2017, as the expected discounted cash flows from these particular securities were greater than or equal to the discounted cash flows originally expected at purchase or from the previous date of other-than-temporary impairment (cash flows are discounted at the contractual coupon rate for purposes of assessing OTTI).

There was no credit-related other-than-temporary impairment recognized in earnings for the third quarter of 2017 related to these securities. The balance of noncredit-related other-than-temporary impairment recognized on United’s Trup Cdos portfolio was $20,770 at September 30, 2017.

The following is a summary of the available for sale Trup Cdos as of September 30, 2017:

              Amortized Cost 

Class

  Amortized
Cost
   Fair
Value
   Unrealized
Loss
  Investment
Grade
   Split
Rated
   Below
Investment
Grade
 

Senior – Bank

  $5,208   $5,287   $(79 $3,410   $0   $1,798 

Mezzanine – Bank (now in senior position)

   6,428    5,518    910   0    0    6,428 

Mezzanine – Bank

   22,656    17,918    4,738   0    0    22,656 

Mezzanine – Bank & Insurance (combination)

   3,894    2,936    958   0    0    3,894 
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

Totals

  $38,186   $31,659   $6,527  $3,410   $0   $34,776 
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

While a large difference remains between the fair value and amortized cost, the Company believes the remaining unrealized losses are related to the illiquid market for Trup Cdos rather than an adverse change in expected cash flows. The expected future cash flow substantiates the return of the remaining amortized cost of the security. The Company believes the following evidence supports the position that the remaining unrealized loss is related to the illiquid market for Trup Cdos:

The market for new issuance of Trup Cdos was robust from 2000 to 2007 with an estimated $60 billion in new issuance. The new market issuances came to an abrupt halt in 2007.

The secondary market for Trup Cdos ultimately became illiquid and although the market has improved, trading activity remains limited on these securities. In making this determination, the Company holds discussions with institutional traders to identify trends in the number and type of transactions related to the Trup Cdos.

The presence of a below-investment grade rating severely limits the pool of available buyers and contributes to the illiquidity of the market.

Trup Cdos have a more complex structure than most debt instruments, making projections of tranche returns difficult fornon-specialists in the product. Deferral features available to the underlying issuers within each pool are unique to these securities. Additionally, it can be difficult for market participants to predict whether deferrals will ultimately cure or ultimately default. Due to the lack of transparency, market participants will require a higher risk premium, thus resulting in higher required discount rates.

The variability of cash flows at the time the securities were originated was expected to be very limited. Due to the financial crisis, Trup Cdos have experienced more substantive variability of cash flows compared to expectations, resulting in a higher risk premium when evaluating discount rates.

The limited, yet relevant, observable inputs indicate that market yield requirements for Trup Cdos, on a credit-adjusted basis, remained very high relative to discount rates at purchase and compared to other similarly rated debt securities.

Overall, the Company believes the lack of new issuances, illiquid secondary market, limited pool of buyers, below investment grade ratings,rated, and complex structures are the key drivers of the remaining unrealized losses in the Company’s Trup Cdos and the robust expected cash flow analysis substantiates the return of the remaining amortized cost under ASC topic 320.

Management also considered the ratings of the Company’s bonds in its portfolio and the extent of downgrades in United’s impairment analysis. However, management considered it imperative to independently perform its own credit analysis based on cash flows as described. The ratings of the investment grade Trup Cdos in the table above range from a low of AA to a high of Aaa. The below investment grade Trup Cdos range from a low of C to a high of Ba2.

On the Trup Cdos that have not been deemed to be other-than-temporarily impaired, the collateralization ratios range from a low of 105.4% to a high of 414.5%, with a median of 260.0%, and a weighted average of 283.8%. The collateralization ratio is defined as the current performing collateral in a security, divided by the current balance of the specific tranche the Company owns, plus any debt which is senior or pari passu with the Company’s security’s priority level. Performing collateral excludes the balance of any issuer that has either defaulted or has deferred its interest payment. It is not uncommon for the collateralization of a security that is not other-than-temporarily impaired to be less than 100% due to the excess spread built into the securitization structure.

Except for the debt securities that have already been deemed to be other-than-temporarily impaired, management does not believe any3% were unrated. For other individual security with an unrealized loss as of September 30, 2017 is other-than-temporarily impaired. For these securities, United believes the decline in value resulted from changes in market interest rates, credit spreads and liquidity, not a change in the expected contractual cash flows. Based on a review of each of the securities in the investment portfolio, management concluded that it expected to recover the amortized cost basis of the investment in such securities.

Equity securities

The amortized cost of United’s equity securities was $9,950 at September 30, 2017. For equitycorporate securities, management has evaluated the near-term prospects of the investment in relation to the severity and duration of any impairmentunrealized loss. Based upon management’s analysis and based on that evaluation, managementjudgment, it was determined that no equity securities were other-than-temporarily impaired at September 30, 2017.

Other investment securities (cost method)

During the third quarter of 2017, United also evaluated all of its cost method investments to determine if certain events or changes in circumstances during the third quarter of 2017 had a significant adverse effect on the fair value of any of its cost method securities. United determined that there were no events or changes in circumstances during the third quarter which would have an adverse effect on the fair value of any of its cost method securities. Therefore, no impairment was recorded.

Below is a progressionnone of the other corporate securities had credit losses on securities which United has recorded other-than-temporary charges. These charges were recorded through earnings and other comprehensive income.

   Three Months Ended
September 30
   Nine Months Ended
September 30
 
   2017   2016   2017   2016 

Balance of cumulative credit losses at beginning of period

  $22,162   $22,162   $22,162   $23,773 

Additional credit losses on securities for which OTTI was previously recognized

   0    0    0    33 

Reductions during the period for securities for which the amount previously recognized in other comprehensive income was recognized in earnings

   (4,102   0    (4,102   (1,644
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance of cumulative credit losses at end of period

  $18,060   $22,162   $18,060   $22,162 
  

 

 

   

 

 

   

 

 

   

 

 

 

at March 31, 2024.

The amortized cost and estimated fair value of securities available for sale at September 30, 2017March 31, 2024 and December 31, 20162023 by contractual maturity are shown as follows. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.

   September 30, 2017   December 31, 2016 
       Estimated       Estimated 
   Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value 

Due in one year or less

  $57,720   $57,622   $53,286   $53,330 

Due after one year through five years

   370,020    371,007    296,181    297,385 

Due after five years through ten years

   342,176    343,326    213,094    213,791 

Due after ten years

   874,791    867,199    702,642    680,880 

Marketable equity securities

   9,950    10,480    12,436    13,828 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,654,657   $1,649,634   $1,277,639   $1,259,214 
  

 

 

   

 

 

   

 

 

   

 

 

 

   
March 31, 2024
   
December 31, 2023
 
   
Amortized
Cost
   
Estimated
Fair

Value
   
Amortized
Cost
   
Estimated
Fair

Value
 
Due in one year or less
  $431,832   $429,801   $497,555   $493,651 
Due after one year through five years
   483,693    447,504    448,020    416,436 
Due after five years through ten years
   853,498    754,469    852,698    751,780 
Due after ten years
   2,211,589    1,982,201    2,351,622    2,124,510 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $ 3,980,612   $ 3,613,975   $ 4,149,895   $ 3,786,377 
  
 
 
   
 
 
   
 
 
   
 
 
 
Equity securities at fair value
Equity securities consist mainly of mutual funds of Community Reinvestment Act (“CRA”) qualified investments and equity securities within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries. The amortized cost and estimated fair values of securities held to maturity are summarized as follows:

   September 30, 2017 
       Gross   Gross   Estimated 
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

  $5,215   $400   $0   $5,615 

State and political subdivisions

   5,674    12    0    5,686 

Residential mortgage-backed securities

        

Agency

   26    4    0    30 

Single issue trust preferred securities

   9,400    0    842    8,558 

Other corporate securities

   20    0    0    20 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $20,335   $416   $842   $19,909 
  

 

 

   

 

 

   

 

 

   

 

 

 

   December 31, 2016 
       Gross   Gross   Estimated 
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

  $5,295   $570   $0   $5,865 

State and political subdivisions

   8,598    17    0    8,615 

Residential mortgage-backed securities

        

Agency

   30    5    0    35 

Single issue trust preferred securities

   19,315    0    2,672    16,643 

Other corporate securities

   20    0    0    20 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $33,258   $592   $2,672   $31,178 
  

 

 

   

 

 

   

 

 

   

 

 

 

Even though the market value of theheld-to-maturityUnited’s equity securities was $

8,762 at March 31, 2024 and $8,945 at December 31, 2023.
16

   
Three Months Ended
March 31
 
   
2024
   
2023
 
Unrealized gains recognized during the period on equity securities still held at period end
  $0    82 
Unrealized losses recognized during the period on equity securities still held at period end
   (99   (67
  
 
 
   
 
 
 
Net (losses) gains recognized during the period
  $(99)   $15 
  
 
 
   
 
 
 
Other investment portfolio is less thansecurities
During the first quarter of 2024, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the unrealized loss has no impactfirst quarter of 2024 had a significant adverse effect on the net worth or regulatory capital requirementsrecorded value of United. Asany of September 30, 2017,its cost method securities. United determined that there was no individual security that experienced an adverse event during the Company’s largestheld-to-maturity single-issue trust preferred exposure was to SunTrust Bank ($7,424). The twoheld-to-maturity single-issue trust preferred exposures with at least one rating below investment grade included SunTrust Bank ($7,424) and Royal Bank of Scotland ($976).

first quarter. There were no gross realized gainsother events or losseschanges in circumstances during the first quarter which would have an adverse effect on calls and sales of held to maturity securities included in earnings for the third quarter and first nine months of 2017 and 2016.

The amortized cost and estimatedrecorded fair value of debt securities held to maturity at September 30, 2017 and December 31, 2016 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.

   September 30, 2017   December 31, 2016 
       Estimated       Estimated 
   Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value 

Due in one year or less

  $0   $0   $1,040   $1,041 

Due after one year through five years

   9,189    9,600    8,268    8,850 

Due after five years through ten years

   5,726    5,382    3,585    3,589 

Due after ten years

   5,420    4,927    20,365    17,698 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $20,335   $19,909   $33,258   $31,178 
  

 

 

   

 

 

   

 

 

   

 

 

 

its cost method securities.

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $1,312,813$2,279,895 and $1,137,408$2,307,591 at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively.

4.

3. LOANS

AND LEASES

Major classes of loans and leases are as follows:

   September 30,
2017
   December 31,
2016
 

Commercial, financial and agricultural:

    

Owner-occupied commercial real estate

  $1,364,757   $1,049,885 

Nonowner-occupied commercial real estate

   4,686,183    3,425,453 

Other commercial loans

   1,757,741    1,613,437 
  

 

 

   

 

 

 

Total commercial, financial & agricultural

   7,808,681    6,088,775 

Residential real estate

   3,050,868    2,403,437 

Construction & land development

   1,599,632    1,255,738 

Consumer:

    

Bankcard

   13,775    14,187 

Other consumer

   683,898    594,582 
  

 

 

   

 

 

 

Total gross loans

  $13,156,854   $10,356,719 
  

 

 

   

 

 

 

   
March 31, 2024
   
December 31, 2023
 
Commercial, financial and agricultural:
    
Owner-occupied commercial real estate
  $1,624,746   $1,598,231 
Nonowner-occupied commercial real estate
   7,010,266    6,718,343 
Other commercial
   3,539,826    3,572,440 
  
 
 
   
 
 
 
Total commercial, financial & agricultural
   12,174,838    11,889,014 
Residential real estate
   5,366,385    5,271,236 
Construction & land development
   2,997,678    3,148,245 
Consumer:
    
Bankcard
   9,431    9,962 
Other consumer
   984,236    1,054,728 
Less: Unearned income
   (12,492   (14,101
  
 
 
   
 
 
 
Total gross loans
  $21,520,076   $21,359,084 
  
 
 
   
 
 
 
The table above does not include loans held for sale of $315,031$44,426 and $8,445$56,261 at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively. The increase was due to the acquisition of Cardinal and it mortgage banking subsidiary, George Mason. Loans held for sale consist of single-family residential real estate loans originated for sale in the secondary market.

The outstanding balances in the table above include previously acquired impaired loans with a recorded investment of $227,754 or 1.73% of total gross loans at September 30, 2017 and $171,596 or 1.66% of total gross loans at December 31, 2016. The contractual principal in these acquired impaired loans was $310,609 and $231,096 at September 30, 2017 and December 31, 2016, respectively. The balances above do not include future accretable net interest (i.e. the difference between the undiscounted expected cash flows and the recorded investment in the loan) on the acquired impaired loans.

Activity for the accretable yield for the first nine months of 2017 follows:

Accretable yield at the beginning of the period

  $29,165 

Accretion (including cash recoveries)

   (11,312

Additions

   17,444 

Net reclassifications to accretable from non-accretable

   2,727 

Disposals (including maturities, foreclosures, and charge-offs)

   (2,367
  

 

 

 

Accretable yield at the end of the period

  $35,657 
  

 

 

 

United’s subsidiary banks havebank has made loans to the directors and officers of United and its subsidiaries, and to their affiliates. The aggregate dollar amount of these loans was $364,774$68,274 and $255,476$68,460 at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively.

5.

4. CREDIT QUALITY

Management monitors the credit quality of its loans and leases on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan.

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

17

For all loan classes, past due loans and leases are reviewed on a monthly basis to identify loans and leases for nonaccrual status. Generally, when collection in full of the principal and interest is jeopardized, the loan is placed on nonaccrual status. The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest. However, regardless of delinquency status, if a loan is fully secured and in the process of collection and resolution of collection is expected in the near term (generally less than 90 days), then the

loan will not be placed on nonaccrual status. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and unpaid interest accrued in prior years is charged to the allowance for loancredit losses. United’s method of income recognition for loans and leases that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectibilitycollectability of principal is in doubt. Nonaccrual loans and leases will not normally be returned to accrual status unless all past due principal and interest has been paid and the borrower has evidenced their ability to meet the contractual provisions of the note.

A loan is categorized as a troubled debt restructuring (“TDR”) if a concession is granted and there is deterioration in the financial condition of the borrower. TDRs can take the form of a reduction of the stated interest rate, splitting a loan into separate loans with market terms on one loan and concessionary terms on the other loan, receipts of assets from a debtor in partial or full satisfaction of a loan, the extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk, the reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement, the reduction of accrued interest or any other concessionary type of renegotiated debt. As of September 30, 2017, United had TDRs of $46,132 as compared to $21,152 as of December 31, 2016. Of the $46,132 aggregate balance of TDRs at September 30, 2017, $29,717 was on nonaccrual status and included in the “Loans on Nonaccrual Status” on the following pages. Of the $21,152 aggregate balance of TDRs at December 31, 2016, $11,106 was on nonaccrual status and included in the “Loans on Nonaccrual Status” on the following page. As of September 30, 2017, there were no commitments to lend additional funds to debtors owing receivables whose terms have been modified in TDRs. At September 30, 2017, United had restructured loans in the amount of $2,043 that were modified by a reduction in the interest rate, $4,507 that were modified by a combination of a reduction in the interest rate and the principal and $39,582 that was modified by a change in terms.

A loan acquired and accounted for under ASC topic310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality” is reported as an accruing loan and a performing asset.

No loans were restructured during the three months ended September 30, 2017. The following table sets forth United’s troubled debt restructurings that were restructured during the three months ended September 30, 2016, segregated by class of loans:

   Troubled Debt Restructurings 
   For the Three Months Ended 
   September 30, 2016 
   Number of
Contracts
   Pre-
Modification
Outstanding
Recorded
Investment
   Post-
Modification
Outstanding
Recorded
Investment
 

Commercial real estate:

      

Owner-occupied

   0   $0   $0 

Nonowner-occupied

   0    0    0 

Other commercial

   1    110    110 

Residential real estate

   0    0    0 

Construction & land

development

   0    0    0 

Consumer:

      

Bankcard

   0    0    0 

Other consumer

   0    0    0 
  

 

 

   

 

 

   

 

 

 

Total

   1   $110   $110 
  

 

 

   

 

 

   

 

 

 

The following table sets forth United’s troubled debt restructurings that were restructured during the nine months ended September 30, 2017 and 2016, segregated by class of loans:

   Troubled Debt Restructurings 
   For the Nine Months Ended 
   September 30, 2017   September 30, 2016 
   Number of
Contracts
   Pre-
Modification
Outstanding
Recorded
Investment
   Post-
Modification
Outstanding
Recorded
Investment
   Number of
Contracts
   Pre-
Modification
Outstanding
Recorded
Investment
   Post-
Modification
Outstanding
Recorded
Investment
 

Commercial real estate:

            

Owner-occupied

   1   $5,333   $5,333    1   $1,190   $1,184 

Nonowner-occupied

   0    0    0    0    0    0 

Other commercial

   8    24,102    22,291    5    2,250    1,725 

Residential real estate

   0    0    0    1    1,400    1,400 

Construction & land

development

   1    1,456    1,400    0    0    0 

Consumer:

            

Bankcard

   0    0    0    0    0    0 

Other consumer

   0    0    0    0    0    0 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   10   $30,891   $29,024    7   $4,840   $4,309 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

During the first nine months of 2017, $29,024 of restructured loans were modified by a change in terms. During the third quarter and first nine months of 2016, $110 and $2,909, respectively, of restructured loans were modified by a change in loan terms. In addition, during the first nine months of 2016, $1,400 of restructured loans were modified by a combination of a reduction in the interest rate and an extension of the maturity date. In some instances, the post-modification balance on the restructured loans is larger than thepre-modification balance due to the advancement of monies for items such as delinquent taxes on real estate property. The loans were evaluated individually for allocation within United’s allowance for loan losses. The modifications had an immaterial impact on the financial condition and results of operations for United.

The following table presents troubled debt restructurings, by class of loan, that had charge-offs during the three months and nine months ended September 30, 2017.

   Three Months Ended
September 30, 2017
   Nine Months Ended
September 30, 2017
 
(In thousands)  Number of
Contracts
   Recorded
Investment
   Number of
Contracts
   Recorded
Investment
 

Troubled Debt Restructurings

        

Commercial real estate:

        

Owner-occupied

   0   $0    0   $0 

Nonowner-occupied

   0    0    0    0 

Other commercial

   1    1,495    1    1,495 

Residential real estate

   0    0    0    0 

Construction & land development

   0    0    0    0 

Consumer:

        

Bankcard

   0    0    0    0 

Other consumer

   0    0    0    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   1   $1,495    1   $1,495 
  

 

 

   

 

 

   

 

 

   

 

 

 

No loans restructured during the twelve-month period ended September 30, 2016 subsequently defaulted, resulting in a principalcharge-off during the three months and first nine months ended September 30, 2016.

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

Age Analysis of Past Due Loans

As of September 30, 2017

   30-89
Days
Past Due
   90 Days or
more Past
Due
   Total Past
Due
   Current &
Other (1)
   Total
Financing
Receivables
   Recorded
Investment
>90  Days

& Accruing
 

Commercial real estate:

            

Owner-occupied

  $9,704   $6,912   $16,616   $1,348,141   $1,364,757   $0 

Nonowner-occupied

   7,686    20,797    28,483    4,657,700    4,686,183    0 

Other commercial

   13,589    79,342    92,931    1,664,810    1,757,741    802 

Residential real estate

   33,654    25,564    59,218    2,991,650    3,050,868    5,298 

Construction & land

development

   3,351    17,852    21,203    1,578,429    1,599,632    14,828 

Consumer:

            

Bankcard

   385    210    595    13,180    13,775    210 

Other consumer

   8,087    1,305    9,392    674,506    683,898    1,111 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $76,456   $151,982   $228,438   $12,928,416   $13,156,854   $22,249 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(1)Other includes loans with a recorded investment of $227,754 acquired and accounted for under ASC topic310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality”.

Age Analysis of Past Due Loans

As of December 31, 2016

(In thousands)  30-89
Days
Past Due
   90 Days or
more Past
Due
   Total Past
Due
   Current &
Other (1)
   Total
Financing
Receivables
   Recorded
Investment
>90  Days

& Accruing
 

Commercial real estate:

            

Owner-occupied

  $5,850   $3,981   $9,831   $1,040,054   $1,049,885   $94 

Nonowner-occupied

   9,288    20,847    30,135    3,395,318    3,425,453    172 

Other commercial

   15,273    42,766    58,039    1,555,398    1,613,437    2,518 

Residential real estate

   29,976    25,991    55,967    2,347,470    2,403,437    4,216 

Construction & land

development

   3,809    7,779    11,588    1,244,150    1,255,738    33 

Consumer:

            

Bankcard

   422    141    563    13,624    14,187    141 

Other consumer

   10,015    1,712    11,727    582,855    594,582    1,412 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $74,633   $103,217   $177,850   $10,178,869   $10,356,719   $8,586 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(1)Other includes loans with a recorded investment of $171,596 acquired and accounted for under ASC topic310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality”.

loans and leases:

   
Age Analysis of Past Due Loans and Leases

As of March 31, 2024
 
   
30-89 Days

Past Due
   
90 Days or
more Past
Due
   
Total Past
Due
   
Current &
Other
   
Total

Financing
Receivables
   
90 Days or
More Past
Due &
Accruing
 
Commercial real estate:
            
Owner-occupied
  $3,503   $8,840   $12,343   $1,612,403   $1,624,746   $95 
Nonowner-occupied
   10,041    6,950    16,991    6,993,275    7,010,266    0 
Other commercial
   4,108    33,979    38,087    3,501,739    3,539,826    582 
Residential real estate
   27,179    12,881    40,060    5,326,325    5,366,385    6,981 
Construction & land development
   957    6,027    6,984    2,990,694    2,997,678    0 
Consumer:
            
Bankcard
   122    138    260    9,171    9,431    138 
Other consumer
   23,483    5,567    29,050    955,186    984,236    3,533 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $69,393   $74,382   $143,775   $21,388,793   $21,532,568   $11,329 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
Age Analysis of Past Due Loans and Leases

As of December 31, 2023
 
   
30-89 Days

Past Due
   
90 Days or
more Past
Due
   
Total Past
Due
   
Current &
Other
   
Total

Financing
Receivables
   
90 Days or
More Past
Due &
Accruing
 
Commercial real estate:
            
Owner-occupied
  $6,361   $6,335   $12,696   $1,585,535   $1,598,231   $110 
Nonowner-occupied
   10,373    13,146    23,519    6,694,824    6,718,343    2,460 
Other commercial
   3,218    1,224    4,442    3,567,998    3,572,440    560 
Residential real estate
   26,523    12,136    38,659    5,232,577    5,271,236    6,244 
Construction & land development
   879    6,423    7,302    3,140,943    3,148,245    0 
Consumer:
            
Bankcard
   145    127    272    9,690    9,962    127 
Other consumer
   36,451    6,107    42,558    1,012,170    1,054,728    5,078 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $83,950   $45,498   $129,448   $21,243,737   $21,373,185   $14,579 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
18

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

Loansloans and leases:

   
At March 31, 2024
   
At December 31, 2023
 
   
Nonaccruals
   
With No Related
Allowance for
Credit Losses
   
Nonaccruals
   
With No
Related
Allowance
for Credit
Losses
 
Commercial Real Estate:
        
Owner-occupied
  $8,745   $8,745   $6,225   $6,225 
Nonowner-occupied
   6,950    4,061    10,686    10,686 
Other Commercial
   33,397    548    664    664 
Residential Real Estate
   5,900    5,900    5,892    5,892 
Construction
   6,027    6,027    6,423    6,423 
Consumer:
        
Bankcard
   0    0    0    0 
Other consumer
   2,034    2,034    1,029    1,029 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $63,053   $27,315   $30,919   $30,919 
  
 
 
   
 
 
   
 
 
   
 
 
 
Interest income recognized on Nonaccrual Status

    September 30,
2017
   December 31,
2016
 

Commercial real estate:

    

Owner-occupied

  $6,912   $3,887 

Nonowner-occupied

   20,797    20,675 

Other commercial

   78,540    40,248 

Residential real estate

   20,266    21,775 

Construction & land development

   3,024    7,746 

Consumer:

    

Bankcard

   0    0

Other consumer

   194    300
  

 

 

   

 

 

 

Total

  $129,733   $94,631 
  

 

 

   

 

 

 

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

In some cases, United assignswill modify a loan to a borrower experiencing financial difficulty by providing multiple types of concessions such as a term extension, principal forgiveness, an interest rate reduction or a combination thereof. The following table presents the amortized cost of loans and leases to borrowers experiencing financial difficulty modified during the first three months of 2024 and 2023, respectively, by class of financing receivable and by type of modification. The percentage of the amortized cost basis of loans and leases that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also represented below.
   
Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial
Difficulty
 
   
For the Three Months ended March 31, 2024
 
   
Term
Extension
   
Interest

Rate
Reduction
   
Term Extension &
Interest Rate
Reduction
   
Term Extension &
Payment Delay
   
% of Total Class of
Financing
Receivable
 
Commercial real estate:
          
Owner-occupied
  $0   $0   $0   $0    0.00
Nonowner-occupied
   5,726    0    0    0    0.08
Other commercial
   0    0    2,316    0    0.07
Residential real estate
   8,750    0    0    170    0.17
Construction & land development
   300    0    0    0    0.01
Consumer:
          
Bankcard
   0    0    0    0    0.00
Other consumer
   0    0    0    0    0.00
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $14,776   $0   $2,316   $170    0.08
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
19

   
Amortized Cost Basis of Loan Modifications Made to Borrowers Experiencing Financial
Difficulty
 
   
For the Three Months ended March 31, 2023
 
   
Term
Extension
   
Interest

Rate
Reduction
   
Term Extension &
Interest Rate
Reduction
   
Term Extension &
Payment Delay
   
% of Total Class of
Financing
Receivable
 
Commercial real estate:
          
Owner-occupied
  $0   $0   $0   $0    0.00
Nonowner-occupied
   0    1,771    0    0    0.03
Other commercial
   0    0    0    0    0.00
Residential real estate
   95    0    0    0    0.00
Construction & land development
   0    0    0    0    0.00
Consumer:
          
Bankcard
   0    0    0    0    0.00
Other consumer
   0    0    0    0    0.00
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $95   $1,771   $0   $0    0.01
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
As of March 31, 2024 and December 31, 2023, there were commitments to lend additional funds of $
718 and $28
, respectively, to debtors owing loan receivables whose terms have been modified.
United’s estimate of future credit quality indicatorslosses uses a lifetime methodology, derived from modeled loan performance based on the extensive historical experience of pass, special mention, substandardloans with similar risk characteristics, adjusted to reflect current conditions and doubtfulreasonable and supportable forecasts. The historical loss experience used in United’s credit loss models includes the impact of loan modifications provided to borrowers experiencing financial difficulty, and also includes the impact of projected loss severities as a result of loan defaults.
United closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its loans. modification efforts. The following table presents the performance in the 12 months after a modification made to borrowers experiencing financial difficulty presented by class of financing receivable:
   
Payment Status (Amortized Cost Basis)
 
   
As of March 31, 2024
   
As of March 31, 2023
 
   
Current
   
30-89 Days

Past Due
   
90+ Days
Past Due
   
Current
   
30-89 Days

Past Due
   
90+ Days
Past Due
 
Commercial real estate:
            
Owner-occupied
  $474   $0   $0   $0   $0   $0 
Nonowner-occupied
   38,736    0    0    1,771    0    0 
Other commercial
   2,474    0    0    0    0    0 
Residential real estate
   9,420    0    0    0    95    0 
Construction & land development
   300    0    0    0    0    0 
Consumer:
            
Bankcard
   0    0    0    0    0    0 
Other consumer
   0    0    0    0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $51,404   $0   $0   $1,771   $95   $0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
20

The following table presents the financial effect of loan and lease modifications to borrowers experiencing financial difficulty for the three months ended March 31, 2024 and 2023.
   
For the Three Months Ended
March 31, 2024
   
For the Three Months Ended
March 31, 2023
 
   
Weighted-
Average
Interest Rate
Reduction
  
Weighted
Average Term
Extension

(in years)
   
Weighted-
Average
Interest Rate
Reduction
  
Weighted
Average Term
Extension

(in years)
 
Commercial Real Estate:
      
Owner-occupied
   0.00  0    0.00  0 
Nonowner-occupied
   0.00  0.6    1.50  0 
Other Commercial
   1.00  0.3    0.00  0 
Residential Real Estate
   0.00  0.6    0.00  2.5 
Construction & land development
   0.00  0.5    0.00  0 
Consumer:
      
Bankcard
   0.00  0    0.00  0 
Other consumer
   0.00  0    0.00  0 
  
 
 
  
 
 
   
 
 
  
 
 
 
Total
   1.00  0.6    1.50  2.5 
  
 
 
  
 
 
   
 
 
  
 
 
 
No loan or lease modifications completed within the last 12 months to borrowers experiencing financial difficulty had a payment default during the first three months ended March 31, 2024 and 2023.
United elects the practical expedient to measure expected credit losses on collateral dependent loans and leases based on the difference between the loan’s amortized cost and the collateral’s fair value, adjusted for selling costs. The following table presents the amortized cost basis of collateral-dependent loans and leases in which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty, by class of loans and leases as of March 31, 2024 and December 31, 2023:
   
Collateral Dependent Loans and Leases
 
   
At March 31, 2024
 
   
Residential
Property
   
Business
Assets
   
Land
   
Commercial
Property
   
Other
   
Total
 
Commercial
r
eal
e
state:
                   
Owner-occupied
  $22   $0   $0   $4,834   $9,022   $13,878 
Nonowner-occupied
   6,909    0    0    27,163    1,575    35,647 
Other commercial
   0    33,611    0    5,168    251    39,030 
Residential real estate
   9,132    0    0    0    0    9,132 
Construction & land development
   954    0    3,395    0    3,164    7,513 
Consumer:
            
Bankcard
   0    0    0    0    0    0 
Other consumer
   0    0    0    0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $17,017   $33,611   $3,395   $37,165   $14,012   $105,200 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
Collateral Dependent Loans and Leases
 
   
At December 31, 2023
 
   
Residential
Property
   
Business
Assets
   
Land
   
Commercial
Property
   
Other
   
Total
 
Commercial real estate:                       
Owner-occupied
  $27   $0   $0   $5,208   $9,272   $14,507 
Nonowner-occupied
   11,200    0    0    13,555    1,810    26,565 
Other commercial
   0    891    0    5,193    256    6,340 
Residential real estate
   9,775    0    0    0    0    9,775 
Construction & land development
   954    0    3,661    0    3,314    7,929 
Consumer:
            
Bankcard
   0    0    0    0    0    0 
Other consumer
   0    0    0    0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $21,956   $891   $3,661   $23,956   $14,652   $65,116 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
21

United categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt: current financial information, historical payment experience, credit documentation, underlying collateral (if any), public information and current economic trends, among other factors.
United uses the following definitions for risk ratings:
Pass
Special Mention
Substandard
Doubtful
For United’s loans with a corporate credit exposure, United internally assigns a grade based onanalyzes loans individually to classify the creditworthinessloans as to credit risk. Review and analysis of criticized (special mention-rated loans in the borrower.amount of $1,000 or greater) and classified (substandard-rated and worse in the amount of $500 and greater) loans is completed once per quarter. Review of notes with committed exposure of $2,000 or greater is completed at least annually. For loans with a consumer credit exposure, United internally assigns a grade based upon an individual loan’s delinquency status. United reviews and updates, as necessary, these grades on a quarterly basis.

Special mention loans, with a corporate credit exposure, have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or in the Company’s credit position at some future date. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices. For loans with a consumer credit exposure, loans that are past due
30-89
days are generally considered special mention.

A substandard loan with a corporate credit exposure is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt by the borrower. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. They require more intensive supervision by management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some substandard loans, the likelihood of full collection of interest and principal may be in doubt and thus, placed on nonaccrual. For loans with a consumer credit exposure, loans that are 90 days or more past due or that have been placed on nonaccrual are considered substandard.

A loan with corporate credit exposure is classified as doubtful if it has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.questionable. A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the loan, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing. Generally, there are not any loans with a consumer credit exposure that are classified as doubtful. Usually, they are
charged-off
prior to such a classification. Loans classified
22

Based on the most recent analysis performed, the risk category of loans and leases as doubtful are also considered impaired.

The following tables set forth United’s credit quality indicators information,well as charge-offs and recoveries by class of loans:

Credit Quality Indicators

Corporate Credit Exposure

As of September 30, 2017

 
   Commercial Real Estate   Other
Commercial
   Construction
& Land
Development
 
   Owner-
occupied
   Nonowner-
occupied
     

Grade:

        

Pass

  $1,282,657   $4,544,799   $1,611,250   $1,498,656 

Special mention

   23,827    44,080    47,450    19,872 

Substandard

   58,273    97,304    98,933    81,104 

Doubtful

   0    0    108    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,364,757   $4,686,183   $1,757,741   $1,599,632 
  

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2016

 
   Commercial Real Estate   Other
Commercial
   Construction
& Land
Development
 
   Owner-
occupied
   Nonowner-
occupied
     

Grade:

        

Pass

  $963,503   $3,284,497   $1,463,797   $1,126,742 

Special mention

   20,490    36,462    26,537    52,327 

Substandard

   65,892    104,494    122,893    76,669 

Doubtful

   0    0    210    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,049,885   $3,425,453   $1,613,437   $1,255,738 
  

 

 

   

 

 

   

 

 

   

 

 

 

Credit Quality Indicators

Consumer Credit Exposure

As of September 30, 2017

 
   Residential
Real Estate
   Bankcard   Other
Consumer
 

Grade:

      

Pass

  $2,999,614   $13,180   $674,447 

Special mention

   18,953    385    8,134 

Substandard

   32,301    210    1,317 

Doubtful

   0    0    0 
  

 

 

   

 

 

   

 

 

 

Total

  $3,050,868   $13,775   $683,898 
  

 

 

   

 

 

   

 

 

 

As of December 31, 2016

 
   Residential
Real Estate
   Bankcard   Other
Consumer
 

Grade:

      

Pass

  $2,348,017   $13,624   $582,704 

Special mention

   18,240    422    10,132 

Substandard

   36,995    141    1,746 

Doubtful

   185    0    0 
  

 

 

   

 

 

   

 

 

 

Total

  $2,403,437   $14,187   $594,582 
  

 

 

   

 

 

   

 

 

 

Loans are designatedloans is as impaired when, in the opinion of management, based on current informationfollows:

Commercial Real Estate – Owner-occupied
   
Term Loans

Origination Year
   
Revolving loans
amortized cost
basis
   
Revolving

loans

converted to
term loans
   
Total
 
As of March 31, 2024
  
2024
   
2023
   
2022
   
2021
   
2020
   
Prior
 
Internal Risk Grade:
                  
Pass
  $46,413   $134,319   $315,027   $259,889   $243,586   $550,971   $24,909   $0   $1,575,114 
Special Mention
   0    0    0    0    0    17,068    0    0    17,068 
Substandard
   0    881    1,733    265    459    28,413    449    127    32,327 
Doubtful
   0    0    0    0    0    237    0    0    237 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $46,413   $135,200   $316,760   $260,154   $244,045   $596,689   $25,358   $127   $1,624,746 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    0    0    0    0 
Current-period recoveries
   0    0    4    0    0    532    0    0    536 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Current-period net recoveries
  $0   $0   $4   $0   $0   $532   $0   $0   $536 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
Term Loans

Origination Year
  
Revolving loans
amortized cost
basis
   
Revolving

loans and leases

converted to
term loans
   
Total
 
As of December 31, 2023
  
2023
   
2022
   
2021
   
2020
   
2019
   
Prior
 
Internal Risk Grade:
                 
Pass
  $132,376   $316,117   $246,635   $248,861   $109,182   $465,223  $29,619   $0   $1,548,013 
Special Mention
   0    0    0    0    2,460    15,423   125    0    18,008 
Substandard
   0    1,734    274    475    436    28,469   449    129    31,966 
Doubtful
   0    0    0    0    0    244   0    0    244 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Total
  $132,376   $317,851   $246,909   $249,336   $112,078   $509,359  $30,193   $129   $1,598,231 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    (855  0    0    (855
Current-period recoveries
   0    13    0    0    0    174   0    0    187 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period net recoveries (charge-offs)  $0   $13   $0   $0   $0   $(681 $0   $0   $(668
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Commercial Real Estate – Nonowner-occupied
   
Term Loans

Origination Year
  
Revolving loans
amortized cost
basis
   
Revolving

loans

converted to
term loans
   
Total
 
As of March 31, 2024
  
2024
   
2023
   
2022
   
2021
   
2020
  
Prior
 
Internal Risk Grade:
                
Pass
  $115,786   $546,520   $1,517,166   $1,717,621   $678,954  $1,903,586  $241,589   $98   $6,721,320 
Special Mention
   0    0    4,569    2,371    25,121   161,110   30,774    0    223,945 
Substandard
   0    0    0    4,020    363   60,618   0    0    65,001 
Doubtful
   0    0    0    0    0   0   0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
   
 
 
   
 
 
 
Total
  $115,786   $546,520   $1,521,735   $1,724,012   $704,438  $2,125,314  $272,363   $98   $7,010,266 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    (751  (35  0    0    (786
Current-period recoveries
   0    0    0    0    0   195   0    0    195 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
   
 
 
   
 
 
 
Current-period net (charge-offs) recoveries  $0   $0   $0   $0   $(751 $160  $0   $0   $(591
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
   
 
 
   
 
 
 
23

   
Term Loans

Origination Year
  
Revolving loans
amortized cost
basis
   
Revolving

loans and leases

converted to
term loans
   
Total
 
As of December 31, 2023
  
2023
   
2022
   
2021
   
2020
   
2019
   
Prior
 
Internal Risk Grade:
                 
Pass
  $455,399   $1,428,880   $1,587,315   $717,189   $695,492   $1,335,526  $228,743   $106   $6,448,650 
Special Mention
   0    4,614    2,381    25,437    43,017    104,997   30,651    0    211,097 
Substandard
   0    0    4,020    4,736    3,493    46,347   0    0    58,596 
Doubtful
   0    0    0    0    0    0   0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Total
  $455,399   $1,433,494   $1,593,716   $747,362   $742,002   $1,486,870  $259,394   $106   $6,718,343 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    (24  0    0    (24
Current-period recoveries
   0    0    0    0    0    1,233   0    0    1,233 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period net recoveries
  $0   $0   $0   $0   $0   $1,209  $0   $0   $1,209 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Other commercial
   
Term Loans and leases

Origination Year
  
Revolving loans
and leases
amortized cost
basis
  
Revolving

loans and leases

converted to
term loans
   
Total
 
As of March 31, 2024
  
2024
   
2023
   
2022
   
2021
  
2020
   
Prior
 
Internal Risk Grade:
               
Pass
  $174,543   $547,168   $501,378   $458,070  $130,013   $786,592  $864,039  $7   $3,461,810 
Special Mention
   116    130    4,173    475   1,806    5,867   11,053   10    23,630 
Substandard
   0    59    16,109    263   806    9,727   27,383   0    54,347 
Doubtful
   0    0    0    0   0    39   0   0    39 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
Total
  $174,659   $547,357   $521,660   $458,808  $132,625   $802,225  $902,475  $17   $3,539,826 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    (33  0    (4  (179  0    (216
Current-period recoveries
   0    0    1    43   0    464   1   0    509 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
Current-period net recoveries (charge-offs)
  $0   $0   $1   $10  $0   $460  $(178 $0   $293 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
   
Term Loans and leases

Origination Year
  
Revolving loans
and leases
amortized cost
basis
  
Revolving

loans and leases

converted to
term loans
  
Total
 
As of December 31, 2023
  
2023
  
2022
  
2021
  
2020
   
2019
  
Prior
 
Internal Risk Grade:
           
Pass
  $593,153  $596,258  $477,457  $197,173   $187,560  $447,430  $988,809  $13  $3,487,853 
Special Mention
   221   4,798   542   1,775    1,611   2,093   16,901   15   27,956 
Substandard
   1,059   16,248   306   792    660   11,923   25,597   0   56,585 
Doubtful
   0   0   0   0    0   46   0   0   46 
  
 
 
  
 
 
  
 
 
  
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
  $594,433  $617,304  $478,305  $199,740   $189,831  $461,492  $1,031,307  $28  $3,572,440 
  
 
 
  
 
 
  
 
 
  
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Current-period charge-offs
   (88  (163  (233  0    (661  (567  (217  (78  (2,007
Current-period recoveries
   0   0   0   0    25   1,699   5   0   1,729 
  
 
 
  
 
 
  
 
 
  
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Current-period net (charge- offs) recoveries
  $(88 $(163 $(233 $0   $(636 $1,132  $(212 $(78 $(278
  
 
 
  
 
 
  
 
 
  
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
           
Residential Real Estate
   
Term Loans

Origination Year
  
Revolving loans
amortized cost
basis
   
Revolving

loans

converted to
term loans
   
Total
 
As of March 31, 2024
  
2024
   
2023
   
2022
   
2021
   
2020
   
Prior
 
Internal Risk Grade:
                 
Pass
  $130,784   $785,953   $1,630,062   $838,872   $433,662   $1,087,426  $425,977   $2,549   $5,335,285 
Special Mention
   170    0    0    0    8,750    3,847   1,700    0    14,467 
Substandard
   0    50    73    376    0    15,213   833    88    16,633 
Doubtful
   0    0    0    0    0    0   0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Total
  $130,954   $786,003   $1,630,135   $839,248   $442,412   $1,106,486  $428,510   $2,637   $5,366,385 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    (127  0    0    (127
Current-period recoveries
   0    0    0    0    0    39   0    0    39 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period net charge- offs
  $0   $0   $0   $0   $0   $(88 $0   $0   $(88
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 

24

   
Term Loans

Origination Year
   
Revolving loans
amortized cost
basis
   
Revolving

loans

converted to
term loans
   
Total
 
As of December 31, 2023
  
2023
   
2022
   
2021
   
2020
   
2019
  
Prior
 
Internal Risk Grade:
                 
Pass
  $783,866   $1,618,774   $850,760   $443,514   $262,524  $863,186   $423,302   $2,568   $5,248,494 
Special Mention
   0    0    0    0    65   3,561    1,710    0    5,336 
Substandard
   51    75    386    258    599   14,827    1,121    89    17,406 
Doubtful
   0    0    0    0    0   0    0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $783,917   $1,618,849   $851,146   $443,772   $263,188  $881,574   $426,133   $2,657   $5,271,236 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    (785  0    0    0    (785
Current-period recoveries
   0    0    8    0    688   1    0    0    697 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Current-period net recoveries (charge-offs)
  $0   $0   $8   $0   $(97 $1   $0   $0   $(88
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Construction and events, the collection of principal and interest in accordance with the loan contract is doubtful. Typically, United does not consider loans for impairment unless a sustained period of delinquency (i.e. 90 days or more) is noted or there are subsequent events that impact repayment probability (i.e. negative financial trends, bankruptcy filings, eminent foreclosure proceedings, etc.). Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans.

Consistent with United’s existing method of income recognition for loans, interest on impaired loans, except those classified as nonaccrual, is recognized as income using the accrual method. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

The following table sets forth United’s impaired loans information, by class of loans:

   Impaired Loans 
   September 30, 2017   December 31, 2016 
   Recorded
Investment
   Unpaid
Principal
Balance
   Related
Allowance
   Recorded
Investment
   Unpaid
Principal
Balance
   Related
Allowance
 

With no related allowance recorded:

            

Commercial real estate:

            

Owner-occupied

  $64,592   $65,355   $0   $46,575   $47,108   $0 

Nonowner-occupied

   143,100    143,552    0    92,654    93,104    0 

Other commercial

   55,022    58,785    0    46,064    48,308    0 

Residential real estate

   20,873    22,546    0    22,747    24,404    0 

Construction & land
development

   30,959    33,225    0    19,863    21,746    0 

Consumer:

            

Bankcard

   0    0    0    0   0   0 

Other consumer

   16    16    0    36   36   0 

With an allowance recorded:

            

Commercial real estate:

            

Owner-occupied

  $8,220   $8,220   $923   $1,787   $2,082   $815 

Nonowner-occupied

   12,182    12,182    1,786    17,938    17,938    2,524 

Other commercial

   70,344    80,415    21,890    43,774    46,188    13,441 

Residential real estate

   13,743    15,082    1,659    12,066    12,801    3,431 

Construction & land
development

   1,411    5,910    488    4,940    7,899    3,206 

Consumer:

            

Bankcard

   0    0    0    0   0   0

Other consumer

   0    0    0    0    0    0

Total:

            

Commercial real estate:

            

Owner-occupied

  $72,812   $73,575   $923   $48,362   $49,190   $815 

Nonowner-occupied

   155,282    155,734    1,786    110,592    111,042    2,524 

Other commercial

   125,366    139,200    21,890    89,838    94,496    13,441 

Residential real estate

   34,616    37,628    1,659    34,813    37,205    3,431 

Construction & land
development

   32,370    39,135    488    24,803    29,645    3,206 

Consumer:

            

Bankcard

   0    0    0    0    0   0

Other consumer

   16    16    0    36    36   0

   Impaired Loans 
   For the Three Months Ended 
   September 30, 2017   September 30, 2016 
   Average
Recorded
Investment
   Interest
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
 

With no related allowance recorded:

        

Commercial real estate:

        

Owner-occupied

  $58,980   $376   $38,199   $531 

Nonowner-occupied

   108,959    312   71,154    321 

Other commercial

   57,317    306   45,028    1,221 

Residential real estate

   19,553    74   27,214    170

Construction & land development

   23,846    552   28,730    46

Consumer:

        

   Impaired Loans 
   For the Three Months Ended 
   September 30, 2017   September 30, 2016 
   Average
Recorded
Investment
   Interest
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
 

Bankcard

   0   0   0   0

Other consumer

   25    0    35    0 

With an allowance recorded:

        

Commercial real estate:

        

Owner-occupied

  $11,624   $131   $3,353   $36 

Nonowner-occupied

   13,408    89   14,046    122

Other commercial

   72,835    216   33,195    42

Residential real estate

   15,225    16   8,579    52

Construction & land development

   1,641    21   8,591    56

Consumer:

        

Bankcard

   0   0   0   0

Other consumer

   0   0   0   0

Total:

        

Commercial real estate:

        

Owner-occupied

  $70,604   $507   $41,552   $567 

Nonowner-occupied

   122,367    401   85,200    443

Other commercial

   130,152    522   78,223    1,263 

Residential real estate

   34,778    90   35,793    222

Construction & land development

   25,487    573   37,321    102

Consumer:

        

Bankcard

   0   0   0   0

Other consumer

   25   0    35   0

   Impaired Loans 
   For the Nine Months Ended 
   September 30, 2017   September 30, 2016 
   Average
Recorded
Investment
   Interest
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
 

With no related allowance recorded:

        

Commercial real estate:

        

Owner-occupied

  $55,506   $1,011   $34,030   $715 

Nonowner-occupied

   93,254    811   70,081    714 

Other commercial

   55,891    895   37,805    1,446 

Residential real estate

   19,634    206   26,737    406 

Construction & land development

   20,706    563   26,559    112 

Consumer:

        

Bankcard

   0   0   0   0 

Other consumer

   29   0   32   0 

With an allowance recorded:

        

Commercial real estate:

        

Owner-occupied

  $9,392   $424   $3,603   $92 

Nonowner-occupied

   14,595    363   10,416    360

Other commercial

   65,142    1,410    34,755    270

Residential real estate

   15,186    89   9,129    77

Construction & land development

   2,872    64   10,300    146

Consumer:

        

Bankcard

   0   0   0   0

Other consumer

   0   0   0   0

Total:

        

Commercial real estate:

        

Owner-occupied

  $64,898   $1,435   $37,633   $807 

Nonowner-occupied

   107,849    1,174    80,497    1,074 

Other commercial

   121,033    2,305    72,560    1,716 

Residential real estate

   34,820    295   35,866    483

Construction & land development

   23,578    627   36,859    258

Consumer:

        

Bankcard

   0   0   0   0

Other consumer

   29   0   32   0

Land Development

   
Term Loans

Origination Year
   
Revolving loans
amortized cost
basis
   
Revolving

loans

converted to
term loans
   
Total
 
As of March 31, 2024
  
2024
   
2023
   
2022
   
2021
   
2020
   
Prior
 
Internal Risk Grade:
                  
Pass
  $74,884   $651,658   $1,274,582   $656,065   $50,762   $51,936   $226,321   $0   $2,986,208 
Special Mention
   0    0    2,902    0    61    344    300    0    3,607 
Substandard
   0    0    954    2,490    2,470    1,949    0    0    7,863 
Doubtful
   0    0    0    0    0    0    0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $74,884   $651,658   $1,278,438   $658,555   $53,293   $54,229   $226,621   $0   $2,997,678 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    0    0    0    0 
Current-period recoveries
   0    0    0    0    0    1    0    0    1 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Current-period net recoveries
  $0   $0   $0   $0   $0   $1   $0   $0   $1 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
                  
   
Term Loans

Origination Year
  
Revolving loans
amortized cost
basis
   
Revolving

loans

converted to
term loans
   
Total
 
As of December 31, 2023
  
2023
   
2022
   
2021
   
2020
   
2019
   
Prior
 
Internal Risk Grade:
                 
Pass
  $628,047   $1,308,793   $827,138   $53,004   $16,062   $60,920  $239,390   $0   $3,133,354 
Special Mention
   0    2,902    0    62    3,386    258   0    0    6,608 
Substandard
   0    1,091    2,490    2,470    0    2,232   0    0    8,283 
Doubtful
   0    0    0    0    0    0   0    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Total
  $628,047   $1,312,786   $829,628   $55,536   $19,448   $63,410  $239,390   $0   $3,148,245 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    (14  0    0    (14
Current-period recoveries
   0    0    0    0    0    80   0    0    80 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
Current-period net recoveries
  $0   $0   $0   $0   $0   $66  $0   $0   $66 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
 
                 
Bankcard
   
Term Loans

Origination Year
   
Revolving loans
amortized cost
basis
  
Revolving

loans

converted to
term loans
   
Total
 
As of March 31, 2024
  
2024
   
2023
   
2022
   
2021
   
2020
   
Prior
 
Internal Risk Grade:
                 
Pass
                 
Special Mention
  $0   $0   $0   $0   $0   $0   $9,171  $0   $9,171 
Substandard
   0    0    0    0    0    0    122   0    122 
Doubtful
   0    0    0    0    0    0    138   0    138 
Total
   0    0    0    0    0    0    0   0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
  $0   $0   $0   $0   $0   $0   $9,431  $0   $9,431 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    0    (87  0    (87
Current-period recoveries
   0    0    0    0    0    0    9   0    9 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Current-period net charge-offs
  $0   $0   $0   $0   $0   $0   $(78 $0   $(78
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 

25

   
Term Loans

Origination Year
   
Revolving loans
amortized cost
basis
  
Revolving

loans

converted to
term loans
   
Total
 
As of December 31, 2023
  
2023
   
2022
   
2021
   
2020
   
2019
   
Prior
 
Internal Risk Grade:
                 
Pass
  $0   $0   $0   $0   $0   $0   $9,690  $0   $9,690 
Special Mention
   0    0    0    0    0    0    145   0    145 
Substandard
   0    0    0    0    0    0    127   0    127 
Doubtful
   0    0    0    0    0    0    0   0    0 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Total
  $0   $0   $0   $0   $0   $0   $9,962  $0   $9,962 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Current-period charge-offs
   0    0    0    0    0    0    (263  0    (263
Current-period recoveries
   0    0    0    0    0    0    28   0    28 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Current-period net charge-offs
  $0   $0   $0   $0   $0   $0   $(235 $0   $(235
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Other Consumer
  
Term Loans

Origination Year
  
Revolving loans
amortized cost
basis
  
Revolving

loans

converted to
term loans
  
Total
 
As of March 31, 2024
 
2024
  
2023
  
2022
  
2021
  
2020
  
Prior
 
Internal Risk Grade:
         
Pass
 $44,489  $177,286  $393,071  $185,076  $88,124  $64,619  $2,521  $0  $955,186 
Special Mention
  0   416   10,082   8,419   2,812   1,715   39   0   23,483 
Substandard
  0   51   2,784   1,928   646   153   5   0   5,567 
Doubtful
  0   0   0   0   0   0   0   0   0 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 $44,489  $177,753  $405,937  $195,423  $91,582  $66,487  $2,565  $0  $984,236 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Current-period charge-offs
  0   (32  (1,366  (646  (172  (144  0   0   (2,360
Current-period recoveries
  0   5   73   37   41   61   0   0   217 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Current-period net (charge- offs) recoveries
 $0  $(27 $(1,293 $(609 $(131 $(83 $0  $0  $(2,143
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
Term Loans

Origination Year
  
Revolving loans
amortized cost
basis
  
Revolving

loans

converted
to term
loans
  
Total
 
As of December 31, 2023
 
2023
  
2022
  
2021
  
2020
  
2019
  
Prior
 
Internal Risk Grade:
         
Pass
 $192,184  $428,295  $205,015  $102,300  $62,861  $18,876  $2,638  $0  $1,012,169 
Special Mention
  674   16,031   12,220   4,454   2,050   977   46   0   36,452 
Substandard
  0   3,010   2,207   647   126   96   21   0   6,107 
Doubtful
  0   0   0   0   0   0   0   0   0 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 $192,858  $447,336  $219,442  $107,401  $65,037  $19,949  $2,705  $0  $1,054,728 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Current-period charge-offs
  (9  (3,205  (2,699  (933  (319  (191  0   0   (7,356
Current-period recoveries
  0   219   125   54   54   235   0   0   687 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Current-period net (charge- offs) recoveries
 $(9 $(2,986 $(2,574 $(879 $(265 $44  $0  $0  $(6,669
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
At September 30, 2017March 31, 2024 and December 31, 2016,2023, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $26,826$2,670 and $31,510,$2,615, respectively. OREO consists of real estate acquired in foreclosure or other settlement of loans. Such assets are carried at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. Any adjustment to the fair value at the date of transfer is charged against the allowance for loan losses. Any subsequent valuation adjustments as well as any costs relating to operating, holding or disposing of the property are recorded in other expense in the period incurred. At September 30, 2017March 31, 2024 and December 31, 2016,2023, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $116$258 and $660,$142, respectively.

6.

26

5. ALLOWANCE FOR CREDIT LOSSES


The allowance for loan losses is management’san estimate of the probableexpected credit losses inherenton financial assets measured at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit
losses expected to arise over the life of the asset (contractual term). Assets are charged off when United determines that such financial assets are deemed uncollectible or based on regulatory requirements, whichever is earlier. Charge-offs are recognized as a deduction from the allowance for credit losses. Expected recoveries of amounts previously
charged-off,
not to exceed the aggregate of the amount previously
charged-off,
are included in determining the necessary reserve at the balance sheet date.
United made a policy election to present the accrued interest receivable balance separately in its consolidated balance sheets from the amortized cost of a loan. Accrued interest receivable was $91,178 and $88,963 at March 31, 2024 and December 31, 2023, respectively, related to loans and leases are included separately in “Accrued interest receivable” in the loan portfolio.consolidated balance sheets. For purposesall classes of determiningloans and leases receivable, the general allowance,accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due, unless the loan is well secured and in the process of collection. Interest received on nonaccrual loans and leases, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal.
The following table represents the accrued interest receivable as of March 31, 2024 and December 31, 2023:
   
Accrued Interest Receivable
 
   
At March 31, 2024
   
At December 31, 2023
 
Commercial Real Estate:
    
Owner-occupied
  $4,662   $4,751 
Nonowner-occupied
   36,089    27,507 
Other Commercial
   12,540    14,562 
Residential Real Estate
   20,931    20,718 
Construction
   14,438    18,504 
Consumer:
    
Bankcard
   0    0 
Other consumer
   2,518    2,921 
  
 
 
   
 
 
 
Total
  $91,178   $88,963 
  
 
 
   
 
 
 
The following table represents the accrued interest receivables written off by reversing interest income for the three months ended March 31, 2024 and 2023:
   
Accrued Interest Receivables Written Off
by Reversing Interest Income
 
   
Three Months Ended

March 31
 
   
2024
   
2023
 
Commercial Real Estate:
    
Owner-occupied
  $168   $0 
Nonowner-occupied
   2    0 
Other Commercial
   669    13 
Residential Real Estate
   6    50 
Construction
   0    2 
Consumer:
    
Bankcard
   0    0 
Other consumer
   115    94 
  
 
 
   
 
 
 
Total
  $960   $159 
  
 
 
   
 
 
 
United estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio is segregated by product typemix, delinquency level or term as well as reasonable and supportable forecast adjustments for changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors. A reversion to recognize differing risk profiles among categories. It is further segregated by credit grade fornon-homogenous loan pools and delinquency for homogeneous loan pools. The outstanding principal balance within each pool is multiplied by historical loss data occurs via a straight-line method during the loss emergence period (which isyear following the period
one-year
reasonable and supportable forecast period.
27

United pools its loans and leases based on similar risk characteristics in estimating expected credit losses. United has identified the following portfolio segments and measures the allowance for credit losses using the following methods:
Method: Probability of time between the event that triggers a loss and the confirmation and/or charge off of that loss) and certain qualitative factors to derive the general loss allocation per pool. Specific loss allocations are calculated for commercial loans in excess of $500,000 in accordance with ASC topic 310. Default/Loss Given Default (PD/LGD)
Commercial Real Estate Owner-Occupied
Commercial Real Estate Nonowner-Occupied
Commercial Other
Method: Cohort
Residential Real Estate
Construction & Land Development
Consumer
Bankcard
Risk characteristics of owner-occupied commercial real estate owner-occupied loans and commercial other commercial loans and leases are similar in that they are normally dependent upon the borrower’s internal cash flow from operations to service debt. Nonowner-occupied commercialCommercial real estate nonowner-occupied loans differ in that cash flow to service debt is normally dependent on external income from third parties for use of the real estate such as rents, leases and room rates. Residential real estate loans are dependent upon individual borrowers who are affected by changes in general economic conditions, demand for housing and resulting residential real estate valuation. Construction and land development loans are impacted mainly by demand whether for new residential housing or for retail, industrial, office and other types of commercial construction within a given area. Consumer loan pool risk characteristics are influenced by general, regional and local economic conditions.

Loans deemedthat do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be uncollectibleprovided substantially through the operation or sale of the collateral but may also include other
non-performing
loans, expected credit losses are charged againstbased on the allowance for loan losses, while recoveries of previouslycharged-off amounts are credited to the allowance for loan losses. For commercial loans, when a loan or a portion of a loan is identified to contain a loss, acharge-off recommendation is directed to management tocharge-off all or a portion of that loan. Generally, any unsecured commercial loan more than six months delinquent in payment of interest must becharged-off in full. If secured, thecharge-off is generally made to reduce the loan balance to a level equal to the liquidationfair value of the collateral when payment of principalat the reporting date, adjusted for selling costs as appropriate. These individually evaluated loans are removed from their respective pools and interest is six months delinquent. Any commercial loan, secured or unsecured, on which a principal or interest payment has not been made within 90 days, is reviewed monthly for appropriate action.

For consumer loans,closed-end retail loans thattypically represent collateral dependent loans.

Expected credit losses are past due 120 cumulative days delinquent fromestimated over the contractual due date andopen-end loans 180 cumulative days delinquent from the contractual due date arecharged-off. Any consumer loan on which a principal or interest payment has not been made within 90 days is reviewed monthly for appropriate action. For aone-to-four familyopen-end orclosed-end residential real estate loan, home equity loan, orhigh-loan-to-value loan that has reached 180 or more days past due, management evaluates the collateral position andcharges-off any amount that exceeds the valueterm of the collateral. On retail creditsloans and leases, adjusted for whichexpected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless management has a reasonable expectation at the borrowerreporting date that the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by United.
At the acquisition date, an initial allowance for expected credit losses for
non-PCD
loans is in bankruptcy,estimated and recorded as credit loss expense. The subsequent measurement of expected credit losses for all

amounts deemed unrecoverable are charged off within 60 days of acquired loans is the receipt of the notification. On retail credits effected by fraud, a loan ischarged-off within 90 days of the discovery of the fraud. In the event of the borrower’s death and if repayment within the required timeframe is uncertain, the loan is generallycharged-off as soonsame as the amount of the loss is determined.

For loans acquired through the completion of a transfer, including loans acquired in a business combination, that have evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that United will be unable to collect all contractually required payments receivable are initially recorded at fair value (as determined by the present valuesubsequent measurement of expected future cash flows) with no valuation allowance. The difference betweencredit losses for originated loans. For allowance for credit losses under ASC Topic 326 calculation purposes, United includes its acquired loans and leases in their relevant pool unless they meet the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income on a level-yield method over the life of the loan. Contractually required paymentscriteria for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or a valuation allowance. Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows are recognized as impairment. Valuation allowances on these impaired loans reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not to be received). For the three and nine months ended September 30, 2017, there-estimation of the expected cash flows related to loans acquired that have evidence of deterioration of credit quality resulted in a reversal of provision for loan losses expense of $43 and $415, respectively, as compared to a reversal of provision for loan losses expense of $1,130 and provision for loan losses expense of $160, respectively, for the three and nine months ended September 30, 2016.

specific review.

United maintains an allowance for loan losses and a reserve for lending-related commitments such as unfunded loan commitments and letters of credit. The reserve for lending-related commitments of $804$42,915 and $1,044$44,706 at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively, is separately classified on the balance sheet and is included in other liabilities.
The combined allowance for loan losses and reserve for lending-related commitments are referred to asis considered the allowance for credit losses.

28

United’s allowance for credit losses at March 31, 2024 was relatively flat from December 31, 2023, increasing
$1,877
or less than
1
%. This slight increase was due mainly to increases in the loan loss reserves for the commercial real estate, both owner and non-owner occupied, the residential real estate and the other commercial loans segments due to increased outstanding loan balances and increased adjustments resulting from the reasonable and supportable forecast.
The first quarter of 2024 qualitative adjustments include analyses of the following:
Current conditions
– United considered the impact of inflation, interest rates, the banking regulatory environment and geopolitical conflict when making determinations related to factor adjustments for the external environment. United also considered portfolio trends related to economic and business conditions, collateral values for dependent loans; past due, nonaccrual and graded loans and leases; and concentrations of credit.
Reasonable and supportable forecasts
– The forecast is determined on a
portfolio-by-portfolio
basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables. The reasonable and supportable forecast selection is subjective in nature and requires more judgment compared to the other components of the allowance. Assumptions for the economic variables were the following:
The forecast for real GDP in 2024 increased in the first quarter, from a projection of 1.40% for 2024 at the end of 2023 to 2.10% for 2024 with a slightly smaller increase for 2025, from a projection of 1.80% for 2025 at the end of 2023 to 2.00% for 2025. The unemployment rate remained fairly consistent to the end of 2023 with a steady trend expected throughout 2024 and 2025.
Greater risk of loss is probable in the office portfolio due to continued hybrid and remote work that may be exacerbated by future economic conditions as well as higher interest rates and cap rates.
Reversion to historical loss data occurs via a straight-line method during the year following the
one-year
reasonable and supportable forecast period.
A progression of the allowance for loan and lease losses, by portfolio segment, for the periods indicated is summarized as follows:

Allowance for Loan Losses

For the Three Months Ended September 30, 2017

  Commercial Real Estate        Construction     

Allowance

for

    
  Owner-
occupied
  Nonowner-
occupied
  Other
Commercial
  Residential Real
Estate
  & Land
Development
  Consumer  Estimated
Imprecision
  Total 

Allowance for Loan Losses:

        

Beginning balance

 $5,129  $7,099  $37,287  $12,479  $7,514  $2,715  $760  $72,983 

Charge-offs

  518  0  4,854   299  54  632  0  6,357 

Recoveries

  397   168   156   60   89   151   0  1,021 

Provision

  230  (472  8,782   (1,385  452  281  (609  7,279 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Ending balance

 $5,238  $6,795  $41,371  $10,855  $8,001  $2,515  $151  $74,926 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Allowance for Loan Losses and Carrying Amount of Loans

For the Nine Months Ended September 30, 2017

  Commercial Real Estate        Construction     

Allowance

for

    
  Owner-
occupied
  Nonowner-
occupied
  Other
Commercial
  Residential
Real Estate
  & Land
Development
  Consumer  Estimated
Imprecision
  Total 

Allowance for Loan Losses:

        

Beginning balance

 $5,273  $6,883  $33,087  $13,770  $10,606  $2,805  $347  $72,771 

Charge-offs

  1,433   295  14,883   2,331   2,576   2,046   0  23,564 

Recoveries

  1,590   198   821   352   705   624   0  4,290 

Provision

  (192  9  22,346   (936  (734  1,132   (196  21,429 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Ending balance

 $5,238  $6,795  $41,371  $10,855  $8,001  $2,515  $151  $74,926 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Ending Balance: individually evaluated for impairment

 $923  $1,786  $21,890  $1,659  $488  $0  $0  $26,746 

Ending Balance: collectively evaluated for impairment

 $4,315  $5,009  $19,481  $9,196  $7,513  $2,515  $151  $48,180 

Ending Balance: loans acquired with deteriorated credit quality

 $0  $0  $0  $0  $0  $0  $0  $0 

Financing receivables:

        

Ending balance

 $1,364,757  $4,686,183  $1,757,741  $3,050,868  $1,599,632  $697,673  $0  $13,156,854 

Ending Balance: individually evaluated for impairment

 $32,888  $25,220  $89,559  $15,574  $16,879  $0  $0  $180,120 

Ending Balance: collectively evaluated for impairment

 $1,297,668  $4,537,792  $1,636,037  $3,021,173  $1,558,653  $697,657  $0  $12,748,980 

Ending Balance: loans acquired with deteriorated credit quality

 $34,201  $123,171  $32,145  $14,121  $24,100  $16  $0  $227,754 

Allowance for Loan Losses and Carrying Amount of Loans

For the Year Ended December 31, 2016

  Commercial Real Estate  Other
Commercial
  Residential
Real Estate
  Construction  Consumer  Allowance
for
  Total 
 Owner-
occupied
  Nonowner-
occupied
    & Land
Development
   Estimated
Imprecision
  

Allowance for Loan Losses:

        

Beginning balance

 $3,637  $5,309  $31,328  $15,148  $18,205  $1,995  $104  $75,726 

Charge-offs

  5,281   419  20,430   4,597   2,659   2,794   0  36,180 

Recoveries

  3,071   675  3,452   639  433  446  0  8,716 

Provision

  3,846   1,318   18,737   2,580   (5,373  3,158   243  24,509 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Ending balance

 $5,273  $6,883  $33,087  $13,770  $10,606  $2,805  $347  $72,771 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Allowance for Loan Losses and Carrying Amount of Loans

For the Year Ended December 31, 2016

  Commercial Real Estate  Other
Commercial
  Residential
Real Estate
  Construction  Consumer  Allowance
for
  Total 
 Owner-
occupied
  Nonowner-
occupied
    & Land
Development
   Estimated
Imprecision
  

Ending Balance: individually evaluated for impairment

 $815  $2,524  $13,441  $3,431  $3,206  $0  $0  $23,417 

Ending Balance: collectively evaluated for impairment

 $4,458  $4,359  $19,646  $10,339  $7,400  $2,805  $347  $49,354 

Ending Balance: loans acquired with deteriorated credit quality

 $0  $0  $0  $0  $0  $0  $0  $0 

Financing receivables:

        

Ending balance

 $1,049,885  $3,425,453  $1,613,437  $2,403,437  $1,255,738  $608,769  $0  $10,356,719 

Ending Balance: individually evaluated for impairment

 $18,976  $26,835  $56,091  $14,766  $8,152  $0  $0  $124,820 

Ending Balance: collectively evaluated for impairment

 $1,005,999  $3,323,117  $1,527,479  $2,373,969  $1,221,006  $608,733  $0  $10,060,303 

Ending Balance: loans acquired with deteriorated credit quality

 $24,910  $75,501  $29,867  $14,702  $26,580  $36  $0  $171,596 

7.

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

For the Three Months Ended March 31, 2024
 
   
Commercial Real Estate
  
Other
Commercial
  
Residential
Real
Estate
  
Construction

& Land
Development
  
Bankcard
     
Total
 
  
Owner-
occupied
  
Nonowner-
occupied
  
Other
Consumer
 
Allowance for Loan and Lease Losses:
         
Beginning balance
  $11,895  $57,935  $75,007  $41,167  $59,913  $810  $12,510  $259,237 
Charge-offs
   0   (786  (216  (127  0   (87  (2,360  (3,576
Recoveries
   536   195   509   39   1   9   217   1,506 
Provision
   (731  5,491   (1,005  4,879   (4,389  80   1,413   5,738 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Ending balance
  $11,700  $62,835  $74,295  $45,958  $55,525  $812  $11,780  $262,905 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
29

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

For the Year Ended December 31, 2023
 
   
Commercial Real Estate
  
Other
Commercial
  
Residential
Real
Estate
  
Construction

& Land
Development
  
Bankcard
     
Total
 
  
Owner-
occupied
  
Nonowner-
occupied
  
Other
Consumer
 
Allowance for Loan and Lease Losses:
         
Beginning balance
  $13,945  $38,543  $79,706  $36,227  $48,390  $561  $17,374  $234,746 
Charge-offs
   (855  (24  (2,007  (785  (14  (263  (7,356  (11,304
Recoveries
   187   1,233   1,729   697   80   28   687   4,641 
Provision
   (1,382  18,183   (4,421  5,028   11,457   484   1,805   31,154 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Ending balance
  $11,895  $57,935  $75,007  $41,167  $59,913  $810  $12,510  $259,237 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
6. INTANGIBLE ASSETS

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

  September 30, 2017 
  Community Banking  Mortgage Banking  Total 
  Gross
Carrying
Amount
  Accumulated
Amortization
  Gross
Carrying
Amount
  Accumulated
Amortization
  Gross
Carrying
Amount
  Accumulated
Amortization
 

Amortized intangible assets:

      

Core deposit intangible assets

 $98,358  ($52,062 $0  ($0 $98,358  ($52,062
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Non-amortized intangible assets:

      

George Mason trade name

 $0   $1,230   $1,230  
 

 

 

   

 

 

   

 

 

  

Goodwill not subject to amortization

 $1,466,152   $21,455   $1,487,607  
 

 

 

   

 

 

   

 

 

  

   December 31, 2016 
   Community Banking  Total 
   Gross Carrying
Amount
   Accumulated
Amortization
  Gross
Carrying
Amount
   Accumulated
Amortization
 

Amortized intangible assets:

       

Core deposit intangible assets

  $69,635   ($46,681 $69,635   ($46,681
  

 

 

   

 

 

  

 

 

   

 

 

 

Goodwill not subject to amortization

  $863,767    $863,767   
  

 

 

    

 

 

   

The following table provides a reconciliation of goodwill:

   Community
Banking
   Mortgage
Banking
   Total 

Goodwill at December 31, 2016

  $863,767   $0   $863,767 

Addition to goodwill from Bank of Georgetown acquisition

   1,327    0    1,327 

Preliminary addition to goodwill from Cardinal acquisition

   601,058    21,455    622,513 
  

 

 

   

 

 

   

 

 

 

Goodwill at September 30, 2017

  $1,466,152   $21,455   $1,487,607 
  

 

 

   

 

 

   

 

 

 

   
March 31, 2024
 
   
Community Banking
   
Total
 
   
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Gross
Carrying
Amount
   
Accumulated
Amortization
 
Amortized intangible assets:
        
Core deposit intangible assets
  $105,165   ($93,570  $105,165   ($93,570
  
 
 
   
 
 
   
 
 
   
 
 
 
Goodwill not subject to amortization
  $1,888,889     $1,888,889   
  
 
 
     
 
 
   
   
December 31, 2023
 
   
Community Banking
  
Mortgage Banking
   
Total
 
   
Gross
Carrying
Amount
   
Accumulated
Amortization
  
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Gross
Carrying
Amount
   
Accumulated
Amortization
 
Amortized intangible assets:
           
Core deposit intangible assets
  $105,165   ($92,660 $0   $0   $105,165   ($92,660
  
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Goodwill not subject to amortization
  $1,883,574    $5,315     $1,888,889   
  
 
 
    
 
 
     
 
 
   
United incurred amortization expense on intangible assets of $2,240$910 and $5,381$1,279 for the quarterquarters ended March 31, 2024 and nine months ended September 2023, respectively.
30 2017, respectively, and $1,122 and $2,786 for the quarter and nine months ended September 30, 2016, respectively.


The following table sets forth the anticipated amortization expense for intangible assets for the years subsequent to 2016:

Year

  Amount 

2017

  $7,772 

2018

   8,039 

2019

   7,015 

2020

   6,309 

2021 and thereafter

   22,542 

2023:

Year
  
Amount
 
2024
  $3,639 
2025
   3,282 
2026
   2,758 
2027
   1,152 
2028
   560 
2029 and thereafter
   1,114 
7. MORTGAGE SERVICING RIGHTS
Mortgage loans serviced for others are not included in the accompanying Consolidated Balance Sheets. The value of mortgage servicing rights (“MSRs”) is included on the Company’s Consolidated Balance Sheets.
The Company initially measures servicing assets and liabilities retained related to the sale of residential loans held for sale (“MSRs”) at fair value, if practicable. For subsequent measurement purposes, the Company measures servicing assets and liabilities based on the lower of cost or market using the amortization method. MSRs are amortized in proportion to, and over the period of, estimated net servicing income. The amortization of the MSRs is analyzed periodically and is adjusted to reflect changes in prepayment rates and other estimates.
The Company evaluates potential impairment of MSRs based on the difference between the carrying amount and current estimated fair value of the servicing rights. In determining impairment, the Company aggregates all servicing rights and stratifies them into tranches based on predominant risk characteristics. If impairment exists, a valuation allowance is established for any excess of amortized cost over the current estimated fair value by a charge to income. If the Company later determines that all or a portion of the impairment no longer exists for a particular tranche, a reduction of the allowance may be recorded as an increase to income.
Service fee income is recorded for fees earned for servicing mortgage loans under servicing agreements with the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and certain private investors. The fees are based on a contractual percentage of the outstanding principal balance of the loans serviced and are recorded in noninterest income. Amortization of MSRs and mortgage servicing costs are charged to expense when incurred.
The unpaid principal balances of loans serviced for others were approximately $1,173,246 at March 31, 2024 and $1,202,448 at December 31, 2023.
The estimated fair value of the mortgage servicing rights was $13,439 and $13,427 at March 31, 2024 and December 31, 2023, respectively. The estimated fair value of servicing rights at March 31, 2024 was determined using a net servicing fee of 0.25%, average discount rates ranging from 10.19% to 11.15% with a weighted average discount rate of 10.59%, average constant prepayment rates (“CPR”) ranging from 7.62% to 9.96% with a weighted average prepayment rate of 9.16%, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 2.65%. The estimated fair value of servicing rights at December 31, 2023 was determined using a net servicing fee of 0.25%, average discount rates ranging from 10.50% to 10.82% with a weighted average discount rate of 10.58%, average constant prepayment rates (“CPR”) ranging from 7.84% to 10.25% with a weighted average prepayment rate of 9.43%, depending upon the stratification of the specific servicing right, and a delinquency rate, including loans on forbearance of 3.29%. Please refer to Note 13 in these Notes to Consolidated Financial Statements for additional information concerning the fair value of MSRs.
31

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

March 31, 2024
   
Three Months Ended

March 31, 2023
 
MSRs beginning balance
  $4,554   $ 21,022 
Amount sold
   0    (235
Amount capitalized
   0    145 
Amount amortized
   (313   (945
  
 
 
   
 
 
 
MSRs ending balance
  $4,241   $19,987 
  
 
 
   
 
 
 
MSRs valuation allowance beginning balance
  $0   $0 
Aggregate additions charged and recoveries credited to operations
   0    0 
MSRs impairment
   0    0 
  
 
 
   
 
 
 
MSRs valuation allowance ending balance
  $0   $0 
  
 
 
   
 
 
 
MSRs, net of valuation allowance
  $4,241   $19,987 
  
 
 
   
 
 
 
The Company did not record any temporary impairments on mortgage servicing rights for the three months ended March 31, 2024 and 2023.
The estimated amortization expense is based on current information regarding future loan payments and prepayments. Amortization expense could change in future periods based on changes in the volume of prepayments and economic factors.
8. LEASES
United determines if an arrangement is a lease at inception. United and certain subsidiaries have entered into various noncancelable-operating leases for branch and loan production offices as well as operating facilities. Operating leases are included in operating lease
right-of-use
(“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets. Operating leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. Presently, United does not have any finance leases.
United’s operating leases are subject to renewal options under various terms. United’s operating leases have remaining terms of 1 to 15 years, some of which include options to extend leases generally for periods of 5 years. United rents or subleases certain real estate to third parties. Our sublease portfolio generally consists of operating leases to other organizations for former branch offices.
ROU assets represent United’s right to use an underlying asset for the lease term and lease liabilities represent United’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of United’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend the lease when it is reasonably certain that United will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
The components of lease expense were as follows:
       
Three Months Ended
 
   
Classification
   
March 31, 2024
   
March 31, 2023
 
Operating lease cost
   Net occupancy expense   $5,671   $5,392 
Sublease income
   Net occupancy expense    (84   (60
    
 
 
   
 
 
 
Net lease cost    $5,587   $5,332 
    
 
 
   
 
 
 
32

Supplemental balance sheet information related to leases was as follows:
   
Classification
   
March 31, 2024
   
December 31, 2023
 
Operating lease
right-of-use
assets
   
Operating lease right-of-use assets
   $86,074   $86,986 
Operating lease liabilities
   Operating lease liabilities   $92,266   $92,885 
Other information related to leases was as follows:
March 31, 2024
Weighted-average remaining lease term:
Operating leases
7.79 years
Weighted-average discount rate:
Operating leases
3.25
Supplemental cash flow information related to leases was as follows:
   
Three Months Ended
 
   
March 31, 2024
   
March 31, 2023
 
Cash paid for amounts in the measurement of lease liabilities:
    
Operating cash flows from operating leases
  $ 5,378   $5,487 
ROU assets obtained in the exchange for lease liabilities
   3,671    10,192 
Maturities of lease liabilities by year and in the aggregate, under operating leases with initial or remaining terms of one year or more, for years subsequent to December 31, 2023, consists of the following as of March 31, 2024:
Year
  
Amount
 
2024
  $13,586 
2025
   16,007 
2026
   14,469 
2027
   12,598 
2028
   10,616 
Thereafter
   38,715 
Total lease payments
   105,991 
   
 
 
 
Less: imputed interest
   (13,725
  
 
 
 
Total
  $92,266 
  
 
 
 
9. SHORT-TERM BORROWINGS

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

March 31, 2024
   
As of

December 31, 2023
 
Federal funds purchased
  $0   $0 
Securities sold under agreements to repurchase
   207,727    196,095 
  
 
 
   
 
 
 
Total short-term borrowings
  $ 207,727   $ 196,095 
  
 
 
   
 
 
 
Federal funds purchased and securities sold under agreements to repurchase arehave not been a significant source of funds for the Company. United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $264,000. These lines of credit, which bear interest at prevailing market rates, permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions. At September 30, 2017, federal funds purchased were $25,800 while total securities sold under agreements to repurchase (“REPOs”) were

$316,236. Included in the $316,236 of total REPOs is a wholesale REPOs of $50,000, assumed in the Virginia Commerce merger. This wholesale REPO is scheduled to mature in May of 2018.company. The securities sold under agreements to repurchase were accounted for as collateralized financial transactions. They were recorded at the amounts at which the securities were acquired or sold plus accrued interest.

United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $280,000. These lines of credit, which bear interest at prevailing market rates, permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions.
33

United has a $20,000 line of credit with an unrelated financial institution to provide for general liquidity needs. The line is an unsecured, revolving line of credit. The line will beis renewable on a360-day 360 day basis and will carrycarries an indexed, floating-rate of interest. The line requires compliance with various financial and nonfinancial covenants. At September 30, 2017,March 31, 2024, United had no outstanding balance under this line of credit.

9.

10. LONG-TERM BORROWINGS

United’s subsidiary banks are membersbank is a member of the Federal Home Loan Bank (“FHLB”). Membership in the FHLB makes available short-term and long-term borrowings from collateralized advances. All FHLB borrowings are collateralized by a mix of single-family residential mortgage loans, commercial loans and investment securities. At September 30, 2017,March 31, 2024, United had an unused borrowing amount of approximately $3,724,772$7,001,680 available subject to delivery of collateral after certain trigger points. Advances may be called by the FHLB or redeemed by United based on predefined factors and penalties.

At September 30, 2017, $1,272,115March 31, 2024, $1,460,415 of FHLB advances with a weighted-average contractual interest rate of 1.43%5.43% and a weighted-average effective interest rate of 3.70% are scheduled to mature within the next eighttwo years. Overnight fundsThe weighted-average effective rate considers the effect of $200,000 with anany interest rate of 1.27% are included in the $1,272,115 aboveswaps designated as cash flow hedges outstanding at September 30, 2017.

March 31, 2024 to manage interest rate risk on its long-term debt.

The scheduled maturities of these FHLB borrowings are as follows:

Year

  Amount 

2017

  $815,000 

2018

   131,776 

2019

   187,809 

2020

   42,247 

2021 and thereafter

   95,283 
  

 

 

 

Total

  $1,272,115 
  

 

 

 

Year
  
Amount
 
2024
  $ 1,450,000 
2025
   10,415 
2026
   0 
2027
   0 
2028 and thereafter
   0 
  
 
 
 
Total
  $1,460,415 
  
 
 
 
At September 30, 2017,March 31, 2024, United had a total of fifteentwenty statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (“Capital Securities”) with the proceeds invested in junior subordinated debt securities (“Debentures”) of United. The Debentures, which are subordinate and junior in right of payment to all present and future senior indebtedness and certain other financial obligations of United, are the sole assets of the trusts and United’s payment under the Debentures is the sole source of revenue for the trusts. At September 30, 2017March 31, 2024 and December 31, 2016,2023, the outstanding balance of the Debentures was $242,131$279,019 and $224,319,$278,616, respectively, and was included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings.” The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets. United fully and unconditionally guarantees each individual trust’s obligations under the Capital Securities.

Under the provisions of the subordinated debt, United has the right to defer payment of interest on the subordinated debt at any time, or from time to time, for periods not exceeding five years. If interest payments on the subordinated debt are deferred, the dividends on the Capital Securities are also deferred. Interest on the subordinated debt is cumulative.

For reporting periods prior to June 30, 2017,

In accordance with the Trust Preferred Securities qualified as Tier 1 regulatory capital under thefully-phased in “Basel III Capital Rules” as published by United’s primary federal regulator, the Federal Reserve, in July of 2013. The “Basel IIIUnited is unable to consider the Capital Rules” established a new comprehensive capital framework for U.S. banking organizations. Because United was less

than $15 billion in total consolidated assets, the Basel III Capital Rules grandfathered United’s Trust Preferred Securities as Tier 1 capital, underbut rather the limitations for restricted capital elements in the general risk-based capital rules. As a result, beginning in 2015 (the adoption date), United’s Trust PreferredCapital Securities was subject to a limit of 25 percent of Tier 1 capital elements excluding anynon-qualifying capital instruments and after all regulatory capital deductions and adjustments applied to Tier 1 capital, which is substantially similar to the limit in the general risk-based capital rules. Trust preferred securities no longer included in United’s Tier 1 capital could beare included as a component of United’s Tier 2 capital. United can include the Capital Securities in its Tier 2 capital on a permanent basis withoutphase-out.

However, with the acquisition of Cardinal on April 21, 2017, United’s total consolidated assets now exceeds $15 billion. As a result, United’s Trust Preferred Securities are no longer included in United’s Tier 1 capital but are included as a component of Tier 2 capital on a permanent basis withoutphase-out. This new requirement was reflected in United’s regulatory capital amounts for June 30, 2017, the first reporting period after the Cardinal acquisition.

10.basis.

34

11. COMMITMENTS AND CONTINGENT LIABILITIES

Lending-related Commitments
United is a party to financial instruments with
off-balance-sheet
risk in the normal course of business to meet the financing needs of its customers and to alter its own exposure to fluctuations in interest rates. These financial instruments include loan commitments, standby letters of credit, and interest rate swap agreements. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements.

United’s maximum exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for the loan commitments and standby letters of credit is the contractual or notional amount of those instruments. United uses the same policies in making commitments and conditional obligations as it does for
on-balance
sheet instruments. Collateral may be obtained, if deemed necessary, based on management’s credit evaluation of the counterparty.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily, and historically do not, represent future cash requirements. The amount of collateral obtained, if deemed necessary upon the extension of credit, is based on management’s credit evaluation of the counterparty. United had approximately $4,118,868$6,817,449 and $2,823,396$6,851,890 of loan commitments outstanding as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively, approximately half41% of which contractually expire within one year. IncludedExcluded in the September 30, 2017December 31, 2023 amount areabove were commitments to extend credit of $407,610$416,095 related to George Mason’s mortgage loan funding commitments and areof United’s previous mortgage banking segment which were of a short-term nature.

Commercial and standby letters of credit are agreements used by United’s customers as a means of improving their credit standing in their dealings with others. Under these agreements, United guarantees certain financial commitments of its customers. A commercial letter of credit is issued specifically to facilitate trade or commerce. Typically, under the terms of a commercial letter of credit, a commitment is drawn upon when the underlying transaction is consummated as intended between the customer and a third party. As of September 30, 2017,March 31, 2024 and December 31, 2023, United had no outstanding$16,113 and $16,233 of commercial letters of credit and $9 as of December 31, 2016.outstanding. A standby letter of credit is generally contingent upon the failure of a customer to perform according to the terms of an underlying contract with a third party. United has issued standby letters of credit of $148,742$155,354 and $121,584$147,705 as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively. In accordance with the Contingencies Topic of the FASB Accounting Standards Codification, United has determined that substantially all of its letters of credit are renewed on an annual basis and the fees associated with these letters of credit are immaterial.

George Mason

Mortgage Banking
Related to its mortgage banking activities, United provides for its estimated exposure to repurchase loans previously sold to investors for which borrowers failed to provide full and accurate information on their loan application or for which appraisals have not been acceptable or where the loan was not underwritten in accordance with the loan program specified by the loan investor, and for other exposure to its investors related to loan sales activities. United evaluates the merits of each claim and estimates its reserve based on actual and expected claims received and considers the historical amounts paid to settle such claims. George Mason has aUnited’s reserve of $575was immaterial as of September 30, 2017.

March 31, 2024 and December 31, 2023.

United has derivative counter-party risk that may arise from the possible inability of George Mason’sUnited’s mortgage banking third party investors to meet the terms of their forward sales contracts. George MasonUnited works with mortgage banking third-party investors that are generally well-capitalized, are investment grade and exhibit strong financial performance to mitigate this risk. United does not expect any third-party investor to fail to meet its obligation.

35

Legal Proceedings
United and its subsidiaries are currently involved in various legal proceedings in the normal course of business. On at least a quarterly basis, United assesses its liabilities and contingencies in connection with all pending or threatened claims and litigation, utilizing the most recent information available. On a
matter-by-matter
basis, an accrual for loss is established for those matters which United believes it is probable that a loss may be incurred and that the amount of such loss can be reasonably estimated. Once established, each accrual is adjusted as appropriate to reflect any subsequent developments. Accordingly, management’s estimate will change from time to time, and actual losses may be more or less than the current estimate. For matters where a loss is not probable, or the amount of the loss cannot be estimated, no accrual is established.
Management is vigorously pursuing all its legal and factual defenses and, after consultation with legal counsel, believes that all such litigation will be resolved with no material effect on United’s financial position.

11.statements.

Regulatory Matters
A variety of consumer products, including mortgage and deposit products, and certain fees and charges related to such products, have come under increased regulatory scrutiny. It is possible that regulatory authorities could bring enforcement actions, including civil money penalties, or take other actions against United in regard to these consumer products. United could also determine of its own accord, or be required by regulators, to refund or otherwise make remediation payments to customers in connection with these products. It is not possible at this time for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss related to such matters.
12. DERIVATIVE FINANCIAL INSTRUMENTS

United uses derivative instruments to help manageaid against adverse pricesprice changes or interest rate movements on the value of certain assets or liabilities and on future cash flows. These derivatives may consist of interest rate swaps, caps, floors, collars, futures, forward contracts, written and purchased options. United also executes derivative instruments with its commercial banking customers to facilitate its risk management strategies.

United accounts for its derivative financial instruments in accordance with the Derivatives and Hedging topic of the FASB Accounting Standards Codification. The Derivatives and Hedging topic require all derivative instruments to be carried at fair value on the balance sheet. United has designated certain derivative instruments used to manage interest rate risk as hedge relationships with certain assets, liabilities or cash flows being hedged. Certain derivatives used for interest rate risk management are not designated in a hedge relationship.

Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

For a fair

Fair value hedge,hedges may be eligible for offset on the fair value ofconsolidated balance sheets because they are subject to master netting arrangements or similar agreements. United has elected not to offset the assets and liabilities subject to such arrangements on the consolidated financial statements.
During 2020, United entered into two interest rate swap is recognized on the balance sheetderivatives designated as either a freestanding asset or liability with a corresponding adjustment to the hedged financial instrument. Subsequent adjustments due to changes in the fair valuecash flow hedges. The notional amount of a derivative that qualifies as a fair value hedge are offset in current period earnings. For athese cash flow hedge the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustmentderivatives totaled $500,000. The derivatives are intended to other comprehensive income within shareholders’ equity, net of tax. Subsequent adjustments due tohedge the changes in the fair valuecash flows associated with floating rate FHLB borrowings. As of a derivativeMarch 31, 2024, United has determined that qualifies as ano forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring. United estimates that $16,625 will be reclassified from AOCI as a decrease to interest expense over the next
12-months
following March 31, 2024 related to the cash flow hedges. As of March 31, 2024, the maximum length of time over which forecasted transactions are offset to other comprehensive income, net of tax. The portion of a hedge thathedged is ineffective is recognized immediately in earnings.

six years.

At inception of a hedge relationship, United formally documents the hedged item, the particular risk management objective, the nature of the risk being hedged, the derivative being used, how effectiveness of the hedge will be assessed
36

and how the ineffectiveness of the hedge will be measured. United also assesses hedge effectiveness at inception and on an ongoing basis using regression analysis. Hedge ineffectiveness is measured by using the change in fair value method. The change in fair value method compares the change in the fair value of the hedging derivative to the change in the fair value of the hedged exposure, attributable to changes in the benchmark rate.
United is subject to the Dodd-Frank Act clearing requirement for eligible derivatives. United has executed and cleared eligible derivatives through the London Clearing House (“LCH”). Variation margin at the LCH is distinguished as
settled-to-market
and settled daily based on the prior day value, rather than
collateralized-to-market.
The portiondaily settlement of the derivative exposure does not change or reset the contractual terms of the instrument. The total notional amount of interest rate swap derivatives designated as cash flow hedges cleared through the LCH include $500,000 for asset derivatives as of March 31, 2024. Balances related to LCH are presented as a hedge that is ineffective is recognized immediatelysingle unit of account with the fair value of the designated cash flow interest rate swap asset being reduced by variation margin posted by (with) the applicable counterparty and reported in earnings.

the following table on a net basis. The related fair value on a net basis approximates zero.

United through George Masonits mortgage banking channel enters into interest rate lock commitments to finance residential mortgage loans with its customers. These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by United. Interest rate risk arises on these commitments and subsequently closed loans if interest rates change between the time of the interest rate lock and the delivery of the loan to the investor. Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward mortgage loan sales contracts. United is a party to these forward mortgage loan sales contracts to sell loans with servicing either released or retained and short sales of mortgage-backed securities. When the interest rate is locked with the borrower, the rate lock commitment, forward sale agreement, and mortgage-backed security position are undesignated derivatives and marked to fair value through earnings. The fair value of the rate lock derivative includesis measured using valuations from investors for loans with similar characteristics as well as considering the servicing premium andprobability of the interest spreadloan closing (i.e. the “pull-through” rate) with some adjusted for the difference between retail and wholesale mortgage rates.Company’s actual sales experience versus the investor’s indicated pricing. Fair values of TBA mortgage-backed securities are measured using valuations from investors for mortgage-backed securities with similar characteristics. Income from mortgage banking activities includes the gain recognized for the period presented and associated elements of fair value.

United sells mortgage loans on either a best efforts or mandatory delivery basis. For loans sold on a mandatory delivery basis, United enters into forward mortgage-backed securities (the “residual hedge”) to mitigate the effect of interest rate risk. Both the rate lock commitment under mandatory delivery and the residual hedge are recorded at fair value through earnings and are not designated as accounting hedges. At the closing of the loan, the loan commitment derivative expires and United records a loan held for sale at fair value and continues to mark these assets to market under the election of fair value option. United closes out of the trading mortgage-backed securities assigned within the residual hedge and replaces the securities with a forward sales contract once a price has been accepted by an investor and recorded at fair value.

The derivative portfolio also includes derivative financial instruments not included in hedge relationships. These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. For derivatives that are not designated in a hedge relationship, changes in the fair value of the derivatives are recognized in earnings in the same period as the change in fair value. Gains and losses on other derivative financial instruments are included in noninterest income and noninterest expense, respectively.

The following tables disclose the derivative instruments’ location on the Company’s Consolidated Balance Sheets and the notional amount and fair value of those instruments at September 30, 2017March 31, 2024 and December 31, 2016.

   Asset Derivatives 
   September 30, 2017   December 31, 2016 
   Balance
Sheet
Location
   Notional
Amount
   Fair
Value
   Balance
Sheet
Location
   Fair
Value
 

Derivatives designated as hedging instruments Fair Value Hedges:

          

Interest rate swap contracts (hedging commercial loans)

   Other assets   $14,762   $40    Other assets   $24 
    

 

 

   

 

 

     

 

 

 

Total derivatives designated as hedging instruments

    $14,762   $40     $24 
    

 

 

   

 

 

     

 

 

 

Derivatives not designated as hedging instruments

          

Interest rate swap contracts

   Other assets   $0   $0    Other assets   $2,267 

TBA mortgage-backed securities

   Other assets    322,500    501    Other assets    0 

Interest rate lock commitments

   Other assets    169,588    7,027    Other assets    0 
    

 

 

   

 

 

     

 

 

 

Total derivatives not designated as hedging instruments

    $492,088   $7,528     $2,267 
    

 

 

   

 

 

     

 

 

 

Total asset derivatives

    $506,850   $7,568     $2,291 
    

 

 

   

 

 

     

 

 

 

   Liability Derivatives 
   September 30, 2017   December 31, 2016 
   Balance
Sheet
Location
   Notional
Amount
   Fair
Value
   Balance
Sheet
Location
   Fair
Value
 

Derivatives designated as hedging instruments Fair Value Hedges:

          

Interest rate swap contracts
(hedging commercial loans)

   Other liabilities   $76,869   $480    Other liabilities   $338 
    

 

 

   

 

 

     

 

 

 

Total derivatives designated as hedging instruments

    $76,869   $480     $338 
    

 

 

   

 

 

     

 

 

 

Derivatives not designated as hedging instruments

          

Interest rate swap contracts

   Other liabilities   $0   $0    Other liabilities   $2,267 

Forward loan sales commitments

   Other liabilities    50,063    257    Other liabilities    0 

Interest rate lock commitments

   Other liabilities    65,862    291    Other liabilities    0 
    

 

 

   

 

 

     

 

 

 

Total derivatives not designated as hedging instruments

    $115,925   $548     $2,267 
    

 

 

   

 

 

     

 

 

 

Total liability derivatives

    $192,794   $1,028     $2,605 
    

 

 

   

 

 

     

 

 

 

2023.


   
Asset Derivatives
 
   
March 31, 2024
   
December 31, 2023
 
   
Balance

Sheet

Location
   
Notional

Amount
   
Fair

Value
   
Balance

Sheet

Location
   
Notional

Amount
   
Fair

Value
 
Derivatives designated as hedging instruments
            
Fair Value Hedges:
            
Interest rate swap contracts
 
(hedging commercial loans)
   Other assets   $11,721   $761    Other assets   $12,032   $611 
    
 
 
   
 
 
     
 
 
   
 
 
 
Total Fair Value Hedges
    $11,721   $761     $12,032   $611 
Cash Flow Hedges:
            
Interest rate swap contracts
 
(hedging FHLB borrowings)
   Other assets   $500,000   $0    Other assets   $500,000   $0 
    
 
 
   
 
 
     
 
 
   
 
 
 
Total Cash Flow Hedges
    $500,000   $0     $500,000   $0 
    
 
 
   
 
 
     
 
 
   
 
 
 
Total derivatives designated as hedging instruments
    $511,721   $761     $512,032   $611 
    
 
 
   
 
 
     
 
 
   
 
 
 
Derivatives not designated as hedging instruments
            
Forward loan sales commitments
   Other assets   $3,565   $5    Other assets   $3,880   $93 
TBA mortgage-backed securities
   Other assets    19,060    16    Other assets    0    0 
37

   
Asset Derivatives
 
   
March 31, 2024
   
December 31, 2023
 
   
Balance

Sheet

Location
   
Notional

Amount
   
Fair

Value
   
Balance

Sheet

Location
   
Notional

Amount
   
Fair

Value
 
Interest rate lock commitments
   Other assets    130,339    1,264    Other assets    99,278    1,144 
    
 
 
   
 
 
     
 
 
   
 
 
 
Total derivatives not designated as hedging instruments
    $ 152,964   $1,285     $ 103,158   $1,237 
        
 
 
   
 
 
        
 
 
   
 
 
 
Total asset derivatives
    $664,685   $2,046     $615,190   $1,848 
    
 
 
   
 
 
     
 
 
   
 
 
 

   
Liability Derivatives
 
   
March 31, 2024
   
December 31, 2023
 
   
Balance

Sheet

Location
   
Notional

Amount
   
Fair

Value
   
Balance

Sheet

Location
   
Notional

Amount
   
Fair

Value
 
Derivatives not designated as hedging instruments
            
TBA mortgage-backed securities
   Other liabilities   $ 70,074   $23    Other liabilities   $ 77,115   $678 
Interest rate lock commitments
   Other liabilities    6,569    3    Other liabilities    0    0 
    
 
 
   
 
 
     
 
 
   
 
 
 
Total derivatives not designated as hedging instruments
    $76,643   $26     $77,115   $678 
        
 
 
   
 
 
        
 
 
   
 
 
 
Total liability derivatives
    $76,643   $26     $77,115   $678 
    
 
 
   
 
 
     
 
 
   
 
 
 
The following table represents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value accounting relationship as of March 31, 2024 and December 31, 2023.


Derivatives in Fair Value
Hedging Relationships
  
March 31, 2024
 
  
Location in the Statement
of Condition
  
Carrying Amount of
the Hedged

Assets/(Liabilities)
   
Cumulative Amount
of Fair Value Hedging

Adjustment Included
in the Carrying

Amount of the Hedged

Assets/(Liabilities)
   
Cumulative Amount of

Fair Value Hedging

Adjustment Remaining for

any Hedged Assets/

(Liabilities) for which
Hedge Accounting has
been Discontinued
 
Interest rate swaps
  Loans, net of unearned
income
  $11,721   $ (777 $0 
Derivatives in Fair Value
Hedging Relationships
  
December 31, 2023
 
  
Location in the Statement
of Condition
  
Carrying Amount of
the Hedged

Assets/(Liabilities)
   
Cumulative Amount
of Fair Value Hedging
Adjustment Included
in the Carrying
Amount of the Hedged
Assets/(Liabilities)
   
Cumulative Amount of
Fair Value Hedging
Adjustment Remaining for
any Hedged Assets/
(Liabilities) for which
Hedge Accounting has
been Discontinued
 
Interest rate swaps
  Loans, net of unearned
income
  $ 12,032   $ (632 $ 0 
Derivative contracts involve the risk of dealing with both bank customers and institutional derivative counterparties and their ability to meet contractual terms. Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. United’s exposure is limited to the replacement value of the contracts rather than the notional amount of the contract. The Company’s agreements generally contain provisions that limit the unsecured exposure up to an agreed upon threshold. Additionally, the Company attempts to minimize credit risk through certain approval processes established by management.

38

The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three and nine months ended September 30, 2017March 31, 2024 and 20162023 are presented as follows:

      Three Months Ended 
   Income Statement
Location
  September 30,
2017
  September 30,
2016
 

Derivatives in hedging relationships Fair Value Hedges:

    

Interest rate swap contracts

   Interest income/(expense $(208 $(385
   

 

 

  

 

 

 

Total derivatives in hedging relationships

   $(208 $(385
   

 

 

  

 

 

 

Derivatives not designated as hedging instruments

    

Forward loan sales commitments

   
Income from Mortgage
Banking Activities
 
 
  (257  0 

TBA mortgage-backed securities

   
Income from Mortgage
Banking Activities
 
 
  123   0 

Interest rate lock commitments

   
Income from Mortgage
Banking Activities
 
 
  (4,484  0 
   

 

 

  

 

 

 

Total derivatives not designated as hedging instruments

   $(4,618 $0 
   

 

 

  

 

 

 

Total derivatives

   $(4,826 $(385
   

 

 

  

 

 

 

      Nine Months Ended 
   Income Statement
Location
  September 30,
2017
  September 30,
2016
 

Derivatives in fair value hedging relationships Fair Value Hedges:

    

Interest rate swap contracts

   Interest income/(expense $(648 $353 

Cash Flow Hedges:

    

Forward loan sales commitments

   Other income   0   0 
   

 

 

  

 

 

 

Total derivatives in hedging relationships

   $(648 $353 
   

 

 

  

 

 

 

Derivatives not designated as hedging instruments

    

Forward loan sales commitments

   
Income from Mortgage
Banking Activities
 
 
  (427  0 

TBA mortgage-backed securities

   
Income from Mortgage
Banking Activities
 
 
  2,907   0 

Interest rate lock commitments

   
Income from Mortgage
Banking Activities
 
 
  (3,465  0 
   

 

 

  

 

 

 

Total derivatives not designated as hedging instruments

   $(985 $0 
   

 

 

  

 

 

 

Total derivatives

   $(1,633 $353 
   

 

 

  

 

 

 

12.



       
Three Months Ended
 
   
Income Statement

Location
   
March 31,

2024
   
March 31,
2023
 
Derivatives in hedging relationships Fair Value Hedges:
       
Interest
rate swap contracts
   Interest and fees on loans   $5  $89 
Cash flow Hedges:
       
Interest rate swap contracts
   Interest on long-term borrowings     6,352    4,915 
       
 
 
  
 
 
 
Total derivatives in hedging relationships
      $6,357  $5,004 
       
 
 
  
 
 
 
Derivatives not designated as hedging instruments
       
Forward loan sales commitments
   Income from Mortgage Banking Activities   $(89 $(93
TBA mortgage-backed securities
   Income from Mortgage Banking Activities    671   (499
Interest rate lock commitments
   Income from Mortgage Banking Activities    252   607 
       
 
 
  
 
 
 
Total derivatives not designated as hedging instruments
      $834  $15 
       
 
 
  
 
 
 
Total derivatives
      $7,191  $5,019 
      
 
 
  
 
 
 
For the three months ended March 31, 2024 and 2023, changes in the fair value of any interest rate swaps attributed to hedge ineffectiveness were recorded, but not significant to United’s Consolidated Statements of Income.
13. FAIR VALUE MEASUREMENTS

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

The Fair Value Measurements and Disclosures topic

ASC Topic 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect United’s market assumptions.

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

Level 1

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

Level 2

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

Level 3

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

When determining the fair value measurements for assets and liabilities, United looks to active and observable markets to price identical assets or liabilities whenever possible and classifies such items in Level 1. When identical assets and liabilities are
not
traded in active markets, United looks to market observable data for similar assets and liabilities and classifies such items as Level 2. Nevertheless, certain assets and liabilities are not actively traded in observable markets and United must use alternative valuation techniques using unobservable inputs to determine a fair value and classifies such items as Level 3. For assets and liabilities that are not
actively traded, the fair value measurement is based primarily upon estimates that require significant judgment. Therefore, the results may not be realized in an

actual sale or immediate

39

settlement of the asset or liability. Additionally, there are inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In accordance with ASC topicTopic 820, the following describes the valuation techniques used by United to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:

statements.

Securities available for sale and equity securities
: Securities available for sale and equity securities are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1)(“Level 1”). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Using a market approach valuation methodology, third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considersbased on observable market data (Level 2)inputs, which include benchmark yields, reported trades, issuer spreads, benchmark securities, and “To Be Announced” prices (“Level 2”). Management internally reviews the fair values provided by third party vendors on a monthly basis. Management’s review consists of comparing fair values assignedManagement also performs a quarterly price testing analysis at the individual security level which compares the pricing provided by the third party vendors to trades and offerings observed by management. The review requires some degreean independent pricing source’s valuation of judgment as to the number or percentage of securities to review on the part of management which could fluctuate based on results of past reviews and in comparison to current expectations. Exceptionssame securities. Variances that are deemed to be material are reviewed by management. Additionally, to further assess the reliability of the information received from third party vendors, management obtains documentation from third party vendors related to the sources, methodologies, and inputs utilized in valuing securities classified as Level 2. Management analyzes this information to ensure the underlying assumptions appear reasonable. Management also obtains an independent service auditor’s report from third party vendors to provide reasonable assurance that appropriate controls are in place over the valuation process. Upon completing its review of the pricing from third party vendors at September 30, 2017,March 31, 2024, management determined that the prices provided by its third party pricing sourcesources were reasonable and in line with management’s expectations for the market values of these securities. Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted materially by management at September 30, 2017.March 31, 2024. Management utilizes a number of factors to determine if a market is inactive, all of which may require a significant level of judgment. Factors that management considers include: a significant widening of the
bid-ask
spread, a considerable decline in the volume and level of trading activity in the instrument, a significant variance in prices among market participants, and a significant reduction in the level of observable inputs. Any securities available for sale not valued based upon quoted market prices or third party pricing models that consider observable market data are considered Level 3. Currently, United considers its valuation ofdoes not have any
available-for-sale Trup Cdos
securities considered as Level 3. The Fair Value Measurements and Disclosures topic assumes that fair values of financial assets are determined in an orderly transaction and not a forced liquidation or distressed sale at the measurement date. Based on financial market conditions, United feels that the fair values obtained from its third party vendor reflect forced liquidation or distressed sales for these Trup Cdos due to decreased volume and trading activity. Additionally, management held discussions with institutional traders to identify trends in the number and type of transactions related to the Trup Cdos sector. Based upon management’s review of the market conditions for Trup Cdos, it was determined that an income approach valuation technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs is more representative of fair value than the valuation technique used by United’s third party vendor. The present value technique discounts expected future cash flows of a security to arrive at a present value. Management considers the following items when calculating the appropriate discount rate: the implied rate of return when the market was last active, changes in the implied rate of return as markets moved from very active to inactive, recent changes in credit ratings, and recent activity showing that the market has built in increased liquidity and credit premiums. Management’s internal credit review of each security was also factored in to determine the appropriate discount rate. The credit review considered each security’s collateral, subordination, excess

spread, priority of claims, principal and interest. Discount margins used in the valuation at September 30, 2017 ranged from LIBOR plus 3.25% to LIBOR plus 6.00%. Management completed a sensitivity analysis on the fair value of its Trup Cdos. Given a comprehensive 200 basis point increase in the discount rates, the total fair value of these securities would decline by approximately 18%, or $5,741.

Loans held for sale
: For residential mortgage loans sold, in the mortgage banking segment, the loans closed are recorded at fair value using the fair value option which is measured using valuations from investors for loans with similar characteristics (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing. These valuations fall into thepricing (“Level 3”). The unobservable input for Level 3 category. The unobservable inputvaluations is the Company’s historical sales prices. TheFor March 31, 2024, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.27%0.001% to 0.40%0.392% with a weighted average increase of 0.36%0.140%.

Derivatives
: United utilizes interest rate swaps to hedge exposure to interest rate risk and variability of cash flows associated to changes in the underlying interest rate of the hedged item. These hedging interest rate swaps are classified as either a fair value hedge or a cash flow hedge. United’s derivative portfolio also includes derivative financial instruments not included in hedge relationships. These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. United utilizes third-party vendors for derivative valuation purposes. These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves (Level 2)(“Level 2”). Valuation adjustments to derivative fair values for liquidity and credit risk are also taken into consideration, as well as the likelihood of default by United and derivative counterparties, the net counterparty exposure and the remaining maturities of the positions. Values obtained from third party vendors are typically not adjusted by management. Management internally reviews the derivative values provided by third party vendors on a quarterly basis. All derivative values are tested for reasonableness by management utilizing a net present value calculation.

40

For a fair value hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to the hedged financial instrument. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a fair value hedge are offset in current period earnings either in interest income or interest expense depending on the nature of the hedged financial instrument. For a cash flow hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to accumulated other comprehensive income within shareholders’ equity, net of tax. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a cash flow hedge are offset to accumulated other comprehensive income, net of tax. The portion of a hedge that is ineffective is recognized immediatelytax and reclassified into earnings in the same line associated with the forecasted transaction when the forecasted transaction affects earnings.

The Company records its interest rate lock commitments and forward loan sales commitments at fair value determined as the amount that would be required to settle each of these derivative financial instruments at the balance sheet date. In the normal course of business, George MasonUnited, through its mortgage banking channel, enters into contractual interest rate lock commitments to extend credit to borrowers with fixed expiration dates. The commitments become effective when the borrowers
“lock-in”
a specified interest rate within the timeframes established by the mortgage companies. All borrowers are evaluated for credit worthiness prior to the extension of the commitment. MarketInterest rate risk arises if interest rates move adversely between the time of the interest rate lock by the borrower and the sale date of the loan to the investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, George MasonUnited, through its mortgage banking channel, enters into either a forward sales contract to sell loans to investors when using best efforts or a TBA mortgage-backed security under mandatory delivery. Assecurity. Fair values of TBA mortgage-backed securities are actively traded in an open market, TBAmeasured using valuations from investors for mortgage-backed securities fall into a with similar characteristics (“Level 1 category.2”). The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. Under the Company’s best efforts model, the rate lock commitments to borrowers and the forward sales contracts to investors through to the date the loan closes are undesignated derivatives and accordingly, are marked to fair value through earnings. These valuations fall into a Level 2 category. For residential mortgage loans sold in the mortgage banking segment, theThe interest rate lock commitments are recorded at fair value

which is measured using valuations from investors for loans with similar characteristics (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated pricing. These valuations fall into thepricing (“Level 3”). The unobservable input for Level 3 category. The unobservable inputvaluations is the Company’s historical sales prices. TheFor March 31, 2024, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.27%0.001% to 0.40%0.392% with a weighted average increase of 0.36%0.140%.

For interest rate swap derivatives that are not designated in a hedge relationship within United’s mortgage banking activities, changes in the fair value of the derivatives are recognized in earningsincome from mortgage banking activities in the same period as the change in the fair value. Unrealized gains and losses due to changes in the fair value of other derivative financial instruments not in hedge relationshiprelationships are included in noninterest income and noninterest expense, respectively.

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017March 31, 2024 and December 31, 2016,2023, segregated by the level of the valuation inputs within the fair value hierarchy.

       Fair Value at September 30, 2017 Using 

Description

  Balance as of
September 30,
2017
   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 

Assets

        

Available for sale debt securities:

        

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

  $115,866   $0   $115,866   $0 

State and political subdivisions

   305,141    0    305,141    0 

Residential mortgage-backed securities

        

Agency

   714,700    0    714,700    0 

Non-agency

   5,846    0    5,846    0 

Commercial mortgage-backed securities

        

Agency

   420,792    0    420,792    0 

Asset-backed securities

   13,429    0    13,429    0 

Trust preferred collateralized debt obligations

   31,659    0    0    31,659 

Single issue trust preferred securities

   12,467    0    12,467    0 

Other corporate securities

   19,254    0    19,254    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total available for sale debt securities

   1,639,154    0    1,607,495    31,659 

Available for sale equity securities:

        

Financial services industry

   3,016    401    2,615    0 

Equity mutual funds (1)

   6,250    6,250    0    0 

Other equity securities

   1,214    1,214    0    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total available for sale equity securities

   10,480    7,865    2,615    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total available for sale securities

   1,649,634    7,865    1,610,110    31,659 

Loans held for sale

   311,186    0    0    311,186 

Derivative financial assets:

        

Interest rate swap contracts

   40    0    40    0 

Interest rate lock commitments

   7,027    0    0    7,027 

TBA mortgage-backed securities

   501    501    0    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total derivative financial assets

   7,568    501    40    7,027 

Liabilities

        

       Fair Value at September 30, 2017 Using 

Description

  Balance as of
September 30,
2017
   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 

Derivative financial liabilities:

        

Interest rate swap contracts

   480    0    480    0 

Forward sales commitments

   257    0    257    0 

Interest rate lock commitments

   291    0    291    0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total derivative financial liabilities

   1,028    0    1,028    0 

(1)The equity mutual funds are within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key

officers of United and its subsidiaries.

     Fair Value at December 31, 2016 Using 

Description

 Balance as of
December 31,
2016
  Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Assets

    

Available for sale debt securities:

    

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

 $95,786  $0  $95,786  $0 

State and political subdivisions

  192,812   0   192,812   0 

Residential mortgage-backed securities

    

Agency

  584,096   0   584,096   0 

Non-agency

  7,043   0   7,043   0 

Asset-backed securities

  217   0   217   0 

Commercial mortgage-backed securities

    

Agency

  305,341   0   305,341   0 

Trust preferred collateralized debt obligations

  33,552   0   0   33,552 

Single issue trust preferred securities

  11,477   0   11,477   0 

Other corporate securities

  15,062   0   15,062   0 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total available for sale debt securities

  1,245,386   0   1,211,834   33,552 

Available for sale equity securities:

    

Financial services industry

  10,735   1,372   9,363   0 

Equity mutual funds (1)

  1,820   1,820   0   0 

Other equity securities

  1,273   1,273   0   0 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total available for sale equity securities

  13,828   4,465   9,363   0 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total available for sale securities

  1,259,214   4,465   1,221,197   33,552 

Derivative financial assets:

    

Interest rate swap contracts

  2,291   0   2,291   0 

Liabilities

    

Derivative financial liabilities:

    

Interest rate swap contracts

  2,605   0   2,605   0 

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

       
Fair Value at March 31, 2024 Using
 
Description
  
Balance as
of

March 31,

2024
   
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
Assets
        
Available for sale debt securities:
        
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
  $434,111   $ 0   $ 434,111   $ 0 
State and political subdivisions
   528,301    0    528,301    0 
Residential mortgage-backed securities
        
41

       
Fair Value at March 31, 2024 Using
 
Description
  
Balance as
of

March 31,

2024
   
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
Agency
   1,006,859    0    1,006,859    0 
Non-agency
   75,304    0    75,304    0 
Commercial mortgage-backed securities Agency   453,713    0    453,713    0 
Asset-backed securities   830,930    0    830,930    0 
Single issue trust preferred securities
   15,333    0    15,333    0 
Other corporate securities
   269,424    5,111    264,313    0 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total available for sale securities
   3,613,975    5,111    3,608,864    0 
Equity securities:
        
Financial services industry
   168    168    0    0 
Equity mutual funds (1)
   3,439    3,439    0    0 
Other equity securities
   5,155    5,155    0    0 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total equity securities
   8,762    8,762    0    0 
Loans held for sale
   44,426    0    4,164    40,262 
Derivative financial assets
:
        
Interest rate swap contracts
   761    0    761    0 
Forward sales commitments
   5    0    0    5 
TBA mortgage-backed securities
   16    0    0    16 
Interest rate lock commitments
   1,264    0    128    1,136 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total derivative financial assets
   2,046    0    889    1,157 
Liabilities
        
Derivative financial liabilities
:
        
TBA mortgage-backed securities
   23    0    0    23 
Interest rate lock commitments
   3    0    0    3 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total derivative financial liabilities
   26    0    0    26 
       
Fair Value at December 31, 2023 Using
 
Description
  
Balance as of

December 31,

2023
   
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
Assets
        
Available for sale debt securities:
        
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
  $484,950   $0   $484,950   $

 0 
State and political subdivisions
   533,831    0    533,831    0 
Residential mortgage-backed securities
        
Agency
   1,049,941    0    1,049,941    0 
Non-agency
   90,611    0    90,611    0 
Commercial mortgage-backed securities
        
Agency
   459,298    0    459,298    0 
Asset-backed securities
   860,638    0    860,638    0 
Single issue trust preferred securities
   15,141    0    15,141    0 
Other corporate securities
   291,967    5,159    286,808    0 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total available for sale securities   3,786,377    5,159    3,781,218    0 
Equity securities:
        
Financial services industry
   211    211    0    0 
Equity mutual funds (1)
   3,524    3,524    0    0 
42

       Fair Value at December 31, 2023 Using 
Description
  
Balance as of

December 31,

2023
   
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
Fixed income mutual funds
   5,210    5,210    0    0 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total equity securities
   8,945    8,945    0    0 
Loans held for sale
   56,261    0    4,283    51,978 
Derivative financial assets:
        
Interest rate swap contracts
   611    0    611    0 
Forward sales commitments
   93    0    60    33 
Interest rate lock commitments
   1,144    0    139    1,005 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total derivative financial assets
   1,848    0    810    1,038 
Liabilities
        
Derivative financial liabilities:
        
TBA mortgage-backed securities
   678    0    11    667 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total derivative financial liabilities
   678    0    11    667 
There were no transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the ninethree months ended September 30, 2017March 31, 2024 and the year ended December 31, 2016.

2023.

The following table presentstables present additional information about financial assets and liabilities measured at fair value at September 30, 2017March 31, 2024 and December 31, 20162023 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value:

   Available-for-sale
Securities
 
   Trust preferred
collateralized debt obligations
 
   September 30,
2017
  December 31,
2016
 

Balance, beginning of period

  $33,552  $34,686 

Total gains or losses (realized/unrealized):

   

Included in earnings (or changes in net assets)

   9   0 

Included in other comprehensive income

   6,148   (1,134

Sales

   (8,050  0 
  

 

 

  

 

 

 

Balance, end of period

  $31,659  $33,552 
  

 

 

  

 

 

 

The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

  $0  $0 
   Loans held for sale 
   September 30,
2017
  December 31,
2016
 

Balance, beginning of period

  $0  $0 

Acquired in Cardinal merger

   271,301   0 

Originations

   1,644,943   0 

Sales

   (1,639,737  0 

Total gains or losses during the period recognized in earnings

   41,929   0 

Transfers in and/or out of Level 3

   (7,250  0 
  

 

 

  

 

 

 

Balance, end of period

  $311,186  $0 
  

 

 

  

 

 

 

The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

  $0  $0 

   Derivative Financial Assets
Interest Rate Lock Commitments
 
   September 30,
2017
  December 31,
2016
 

Balance, beginning of period

  $0  $0 

Acquired in Cardinal merger

   10,393   0 

Transfers other

   (3,366  0 
  

 

 

  

 

 

 

Balance, end of period

  $7,027  $0 
  

 

 

  

 

 

 

The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date

  $0  $0 

value. The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses related to assets still held at the reporting date are recorded in Income from mortgage banking activities in the Consolidated Statements of Income.



      
Derivative Assets
   
Derivative Liabilities
 
March 31, 2024
  
Loans Held
for Sale
  
TBA
Securities
   
Forward
Sales
Commitments
  
Interest Rate
Lock
Commitments
   
TBA
Securities
  
Interest Rate
Lock
Commitments
 
Balance, beginning of period
  $51,978  $0   $33  $ 1,005   $667  $ 0 
Originations
   149,142   0    0   0    0   0 
Sales
   (165,006  0    0   0    0   0 
Transfers other
   0   16    (28  131    (644  3 
Total gains during the period recognized in earnings
   4,148   0    0   0    0   0 
  
 
 
  
 
 
   
 
 
  
 
 
   
 
 
  
 
 
 
Balance, end of period
  $40,262  $ 16   $5  $1,136   $23  $3 
  
 
 
  
 
 
   
 
 
  
 
 
   
 
 
  
 
 
 
The amount of total (losses) gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date
  $(813) $16   $5  $1,136   $23  $3 
43

      
Derivative Assets
   
Derivative Liabilities
 
December 31, 2023
  
Loans Held
for Sale
  
TBA
Securities
  
Forward
Sales
Commitments
   
Interest Rate
Lock
Commitments
   
TBA
Securities
   
Interest Rate
Lock
Commitments
 
Balance, beginning of period
  $44,871  $26  $6   $844   $ 213   $348 
Originations
   1,156,616   0   0    0    0    0 
Sales
   (1,179,612  0   0    0    0    0 
Transfers other
   0   (26  27    161    454    (348
Total gains during the period recognized in earnings
   30,103   0   0    0    0    0 
  
 
 
  
 
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Balance, end of period
  $51,978  $0  $33   $ 1,005   $667   $0 
  
 
 
  
 
 
  
 
 
   
 
 
   
 
 
   
 
 
 
The amount of total gains for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date  $1,142  $0  $ 33   $1,005   $667   $0 
Fair Value Option
The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:
Description
  
Three Months Ended

March 31, 2024
   
Three Months Ended

March 31, 2023
 
Income from mortgage banking activities
  $ (836  $ 788 
The following table reflects the difference between the aggregate fair value and the remaining contractual principal outstanding for financial instruments for which the fair value option has been elected:


   
March 31, 2024
   
December 31, 2023
 
Description
  
Unpaid
Principal
Balance
   
Fair
Value
   
Fair Value
Over/(Under)
Unpaid
Principal
Balance
   
Unpaid
Principal
Balance
   
Fair
Value
   
Fair Value
Over/(Under)
Unpaid
Principal
Balance
 
Loans held for sale
  $43,378   $44,426   $1,048   $54,377   $56,261   $1,884 
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of
lower-of-cost-or-market
accounting or write-downs of individual assets.

Fair Value Option

United elected the fair value option for the loans held for sale in its mortgage banking segment to mitigate a divergence between accounting losses and economic exposure.

The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:

Description

  Three Months  Ended
September 30, 2017
   Nine Months  Ended
September 30, 2017
 

Assets

    

Loans held for sale

    

Income from mortgage banking activities

  $(5,090  $(7,529

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

   September 30, 2017   December 31, 2016 

Description

  Unpaid
Principal
Balance
   Fair
Value
   Fair Value
Over/(Under)
Unpaid
Principal
Balance
   Unpaid
Principal
Balance
   Fair
Value
   Fair Value
Over/(Under)
Unpaid
Principal
Balance
 

Assets

            

Loans held for sale

  $303,953   $311,186   $7,233   $0   $0   $0 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

44

The following describes the valuation techniques used by United to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements.

Individually assessed loans
: In the determination of the allowance for loan losses, loans that do not share risk characteristics are evaluated on an individual basis. Loans held for sale: Loans held for sale withinevaluated individually are not also included in the community banking segmentcollective evaluation. When management determines that are delivered on a best efforts basis are carriedforeclosure is probable or when the borrower is experiencing financial difficulty at the lower of costreporting date and repayment is expected to be provided substantially through the operation or fair value. The fair value is based on the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2). As such, United records any fair value adjustments for these loans held for sale on a nonrecurring basis. No nonrecurring fair value adjustments were recorded on loans held for sale during the nine months ended September 30, 2017. Gains and losses on sale of loansthe collateral, expected credit losses are recorded within income from mortgage banking activities on the Consolidated Statements of Income.

Impaired Loans: Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. Impairment is measured based upon the present value of expected future cash flows from the loan discounted at the loan’s effective rate and the loan’s observable market price or the fair value of the collateral ifat the loan is collateral dependent.reporting date, adjusted for selling costs as appropriate. Fair value is measured using a market approach based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an appraisal conducted by an independent, licensed appraiser outside of the Company using comparable property sales (Level 2)(“Level 2”). However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial

statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3)(“Level 3”). For impairedindividually assessed loans, a specific reserve is established through the Allowanceallowance for Loan Losses,loan losses, if necessary, by estimating the fair value of the underlying collateral on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses expense on the Consolidated Statements of Income.

OREO:

OREO
: OREO consists of real estate acquired in foreclosure or other settlement of loans. Such assets are carried on the balance sheet at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. Fair value is determined by one of two market approach methods depending on whether the property has been vacated and an appraisal can be conducted. If the property has yet to be vacated and thus an appraisal cannot be performed, a Brokers Price Opinion (i.e. BPO), is obtained. A BPO represents a best estimate valuation performed by a realtor based on knowledge of current property values and a visual examination of the exterior condition of the property. Once the property is subsequently vacated, a formal appraisal is obtained and the recorded asset value appropriately adjusted. On the other hand, if the OREO property has been vacated and an appraisal can be conducted, the fair value of the property is determined based upon the appraisal using a market approach. An authorized independent appraiser conducts appraisals for United. Appraisals for property other than ongoing construction are based on consideration of comparable property sales (Level 2)(“Level 2”). In contrast, valuation of ongoing construction assets requires some degree of professional judgment. In conducting an appraisal for ongoing construction property, the appraiser develops two appraised amounts: an “as is” appraised value and a “completed” value. Based on professional judgment and their knowledge of the particular situation, management determines the appropriate fair value to be utilized for such property (Level 3)(“Level 3”). As a matter of policy, valuations are reviewed at least annually and appraisals are generally updated on a
bi-annual
basis with values lowered as necessary.

Intangible Assets:Assets
: For United, intangible assets consist of goodwill and core deposit intangibles. Goodwill is tested for impairment at least annually or sooner if indicators of impairment exist. Goodwill impairment would be defined asUnited may elect to perform a qualitative analysis to determine whether or not it is more-likely-than not that the difference between the recorded value of goodwill (i.e. book value) and the implied fair value of goodwill. In determininga reporting unit is less than its carrying amount. If United elects to bypass this qualitative analysis, or concludes via qualitative analysis that it is
more-likely-than-not
that the implied fair value of goodwill for purposesa reporting unit is less than its carrying value, United may use either a market or income quantitative approach to determine the fair value of evaluating goodwill impairment, United determinesthe reporting unit. If the fair value of the reporting unit using a market approach and compares the fair value tois less than its carrying value. Ifvalue, an impairment charge would be recorded for the difference, not to exceed the amount of goodwill allocated to the reporting unit. At each reporting date, the Company considers potential indicators of impairment. United performed its annual goodwill impairment test on the Company’s reporting units as of September 30, 2023. The goodwill impairment test did not identify any goodwill impairment. In subsequent periods, economic uncertainty, market volatility and the performance of the Company’s stock as well as possible other impairment indicators could cause us to perform a goodwill impairment test which could result in an impairment charge being recorded for that period if the carrying value exceeds theof goodwill was found to exceed fair value, a step two test is performed whereby the implied fair value is computed by deducting the fair value of all tangible and intangible net assets from the fair value of the reporting unit.value. Core deposit intangibles relate to the estimated value of the deposit base of acquired institutions. Management reviews core deposit intangible assets on an annual basis, or sooner if indicators of
45

impairment exist, and evaluates changes in facts and circumstances that may indicate impairment in the carrying value. Other than those intangible assets recorded inDuring the acquisitions of Cardinal in the secondfourth quarter of 20172023, United’s management formulated a plan to consolidate its mortgage delivery channels by consolidating George Mason’s and BankCrescent’s mortgage banking business into United Bank. As a result of Georgetown inthis consolidation decision, United impaired the second quarter of 2016, no othertrade names intangibles at George Mason and Crescent to zero at December 31
, 2023. No fair value measurement of intangible assets was made during the first ninethree months of 20172024 and 2016.

2023.

Mortgage Servicing Rights (“MSRs”):
A mortgage servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans are expected to more than adequately compensate the Company for performing the servicing. The Company initially measures servicing assets and liabilities retained related to the sale of residential loans held for sale (“mortgage servicing rights”) at fair value. For subsequent measurement purposes, the Company measures servicing assets and liabilities using the amortization method on a quarterly basis. The quarterly determination of fair value of servicing rights is provided by a third party and is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy. The unobservable inputs for Level 3 valuations are market discount rates, anticipated prepayment speeds, projected delinquency rates, and ancillary fee income net of servicing costs. For the unobservable inputs used in the valuation of mortgage servicing rights at March 31, 2024 and December 31, 2023, refer to Note 7 of these Notes to Consolidated Financial Statements. The Company did not record any temporary impairment of mortgage servicing rights in the quarter ended March 31, 2024 and 2023.
The following table summarizes United’s financial assets that were measured at fair value on a nonrecurring basis during the period:

        Carrying value at September 30, 2017     

Description

  Balance as of
September 30,
2017
   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
   YTD
Losses
 

Assets

          

Impaired Loans

  $105,900   $0   $74,852   $31,048   $9,045 

OREO

   26,826    0    26,743    83    2,904 
        Carrying value at December 31, 2016     

Description

  Balance as of
December 31,
2016
   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
   YTD
Losses
 

Assets

          

Impaired Loans

  $80,505   $0   $27,609   $52,896   $5,119 

OREO

   31,510    0    31,510    0    2,086 

Description
  
Balance
as of

March 31,
2024
   
Fair Value at March 31, 2024
   
YTD Losses
 
  
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
Assets
          
Individually assessed loans
  $53,018   $0   $52,450   $568   $(881
OREO
   2,670    0    2,584    86    0 
Description
  
Balance as of

December 31,
2023
   
Fair Value at December 31, 2023
   
YTD
Gains

(Losses)
 
  
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
Assets
          
Individually assessed loans
  $45,308   $0   $44,722   $586   $314 
OREO
   2,615    0    2,615    0    (67
Fair Value of Other Financial Instruments

The following methods and assumptions were used by United in estimating its fair value disclosures for other financial instruments:

Cash and Cash Equivalents:
The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values.

46

Securities held to maturity and other securities:securities
: The estimated fair values of securities held to maturity are based on quoted market prices, where available. If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considersconsider observable market data. Any securities held to maturity, not valued based upon the methods above, are valued based on a discounted cash flow methodology using appropriately adjusted discount rates reflecting nonperformance and liquidity risks. Other securities consist mainly of shares of Federal Home Loan Bank and Federal Reserve Bank stock that do not have readily determinable fair values and are carried at cost.

Loans:

Loans and leases
: The fair values of certain mortgage loans (e.g.,
one-to-four
family residential), credit card loans, and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. The fair values of other loans and leases (e.g., commercial real estate and rental property mortgage loans, commercial and industrial loans, financial institution loans and agricultural loans) are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans and leases with similar terms to borrowers of similar creditworthiness, which include adjustments for liquidity concerns. For acquired impairedPCD loans, fair value is assumed to equal United’s carrying value, which represents the present value of expected future principal and interest cash flows, as adjusted for any Allowance for LoanCredit Losses recorded for these loans.

Deposits:

Deposits
: The fair values of demand deposits (e.g., interest and noninterest checking, regular savings and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values of fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-term Borrowings:
The carrying amounts of federal funds purchased, borrowings under repurchase agreements and any other short-term borrowings approximate their fair values.

Long-term Borrowings:
The fair values of United’s Federal Home Loan Bank borrowings and trust preferred securities are estimated using discounted cash flow analyses, based on United’s current incremental borrowing rates for similar types of borrowing arrangements.

Summary of Fair Values for All Financial Instruments

The estimated fair values of United’s financial instruments are summarized below:

           Fair Value Measurements 
   Carrying
Amount
   Fair Value   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 

September 30, 2017

          

Cash and cash equivalents

  $1,747,037   $1,747,037   $0   $1,747,037   $0 

Securities available for sale

   1,649,634    1,649,634    7,865    1,610,110    31,659 

Securities held to maturity

   20,335    19,909    0    16,889    3,020 

Other securities

   166,756    158,418    0    0    158,418 

Loans held for sale

   315,031    315,031    0    3,845    311,186 

Loans

   13,065,542    12,550,352    0    0    12,550,352 

Derivative financial assets

   7,568    7,568    501    40    7,027 

Deposits

   13,875,297    13,859,205    0    13,859,205    0 

Short-term borrowings

   492,036    492,036    0    492,036    0 

Long-term borrowings

   1,364,246    1,328,753    0    1,328,753    0 

Derivative financial liabilities

   1,028    1,028    0    1,028    0 

December 31, 2016

          

Cash and cash equivalents

  $1,434,527   $1,434,527   $0   $1,434,527   $0 

Securities available for sale

   1,259,214    1,259,214    4,465    1,221,197    33,552 

Securities held to maturity

   33,258    31,178    0    28,158    3,020 

Other securities

   111,166    105,608    0    0    105,608 

Loans held for sale

   8,445    8,445    0    8,445    0 

Loans

   10,268,366    10,122,486    0    0    10,122,486 

Derivative financial assets

   2,291    2,291    0    2,291    0 

Deposits

   10,796,867    10,785,294    0    10,785,294    0 

Short-term borrowings

   209,551    209,551    0    209,551    0 

Long-term borrowings

   1,172,026    1,142,782    0    1,142,782    0 

Derivative financial liabilities

   2,605    2,605    0    2,605    0 

13.

   
Carrying
Amount
   
Fair Value
   
Fair Value Measurements
 
  
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
March 31, 2024
          
Cash and cash equivalents
  $1,732,646   $1,732,646   $0   $1,732,646   $0 
Securities available for sale
   3,613,975    3,613,975    5,111    3,608,864    0 
Securities held to maturity
   1,001    1,020    0    0    1,020 
Equity securities
   8,762    8,762    8,762    0    0 
47

   
Carrying
Amount
   
Fair Value
   
Fair Value Measurements
 
  
Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)
   
Significant

Other

Observable

Inputs

(Level 2)
   
Significant

Unobservable

Inputs

(Level 3)
 
Other securities
   330,781    314,242    0    0    314,242 
Loans held for sale
   44,426    44,426    0    4,164    40,262 
Net loans
   21,257,171    20,476,689    0    0    20,476,689 
Derivative financial assets
   2,046    2,046    0    889    1,157 
Mortgage servicing rights
   4,241    13,439    0    0    13,439 
Deposits
   22,919,746    22,864,127    0    22,864,127    0 
Short-term borrowings
   207,727    207,727    0    207,727    0 
Long-term borrowings
   1,739,434    1,719,423    0    1,719,423    0 
Derivative financial liabilities
   26    26    0    0    26 
December 31, 2023
          
Cash and cash equivalents
  $1,598,943   $1,598,943   $0   $1,598,943   $0 
Securities available for sale
   3,786,377    3,786,377    5,159    3,781,218    0 
Securities held to maturity
   1,003    1,020    0    0    1,020 
Equity securities
   8,945    8,945    8,945    0    0 
Other securities
   329,429    312,958    0    0    312,958 
Loans held for sale
   56,261    56,261    0    4,283    51,978 
Net loans
   21,099,847    20,463,710    0    0    20,463,710 
Derivative financial assets
   1,848    1,848    0    810    1,038 
Mortgage servicing rights
   4,554    13,427    0    0    13,427 
Deposits
   22,819,319    22,760,310    0    22,760,310    0 
Short-term borrowings
   196,095    196,095    0    196,095    0 
Long-term borrowings
   1,789,103    1,769,123    0    1,769,123    0 
Derivative financial liabilities
   678    678    0    11    667 
14. STOCK BASED COMPENSATION

On May 18, 2016,12, 2020, United’s shareholders approved the 20162020 Long-Term Incentive Plan (2016(“2020 LTI Plan)Plan”). The 20162020 LTI Plan became effective as of May 18, 2016 and replaced the 2011 Long-Term Incentive Plan (2011 LTI Plan) which expired during the second quarter of 2016.13, 2020. An award granted under the 20162020 LTI Plan may consist of any
non-qualified
stock options or incentive stock options, stock appreciation rights (SARs)(“SARs”), restricted stock, restricted stock units, performance units or other-stock-based award. These awards all relate to the common stock of United. The maximum number of shares of United common stock which may be issued under the 20162020 LTI Plan is 1,700,000.2,300,000. The 20162020 LTI Plan will be administered by a board committee appointed by United’s Board of Directors (the Board)“Board”). Unless otherwise determined by the Board, the Compensation Committee of the Board (the Committee)“Committee”) shall administer the 20162020 LTI Plan. Any and all shares may be issued in respect of any of the types of awards, provided that (1) the aggregate number of shares that may be issued in respect of restricted stock awards, and restricted stock unit awards which are settled in shares is 500,000, and (2) the aggregate number of shares that may be issued pursuant to stock options is 1,200,000. The shares to be offered under the 2016 LTI Plan may be authorized and unissued shares or treasury shares. The maximum number of options and SARs,stock appreciation rights, in the aggregate, which may be awarded to any individual key employee during any calendar year is 100,000. The maximum number of stock options and SARs,stock appreciation rights, in the aggregate, which may be awarded to any
non-employee
director during any calendar year is 10,000.10,000 or, if such Award is payable in cash, the Fair Market Value equivalent thereof. The maximum number of shares of restricted stock or shares subject to a restricted stock units award that may be granted

during any calendar year is 50,000225,000 shares to any individual key employee and 5,00010,000 shares to any individual

non-employee
director. Subject to certain change in control provisions, the 20162020 LTI Plan provides that all awards of restricted stock and restricted stock units will vest as the Committee determines in the award agreement, provided that no awards will vest sooner than 1/3 per year over the first
three
anniversaries of the award. Awards grantedUnited adopted a clawback policy that applies to named executive officers ofand other executive officers and permits the Committee to cancel certain awards and to recoup gains realized from previous awards should United typically will havebe required to prepare an accounting restatement due to materially inaccurate performance based vesting conditions.metrics. A Form
S-8
was filed on JulyMay 29, 20162020 with the Securities and Exchange Commission to register all the shares which were available for the 20162020 LTI Plan. During the first nine months of 2017, a total of 253,417non-qualified stock options and 89,475 shares of restricted stock were granted underThe 2020 LTI Plan replaces the 2016 LTI Plan.

48

Compensation expense of $909$3,266 and $2,589$2,713 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the thirdfirst quarter of 2024 and first nine months of 2017, respectively, as compared to the compensation expense of $720 and $2,050 related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the third quarter and first nine months of 2016,2023, respectively. Compensation expense was included in employee compensation in the unaudited Consolidated Statements of Income.

Stock Options

United currently has options outstanding from various option plans other than the 20162020 LTI Plan (the Prior Plans)“Prior Plans”); however, no common shares of United stock are available for grants under the Prior Plans as these plans have expired. Awards outstanding under the Prior Plans will remain in effect in accordance with their respective terms. The maximum term for options granted under the plans is ten (10) years.

A summary of activity under United’s stock option plans as of September 30, 2017,March 31, 2024, and the changes during the first ninethree months of 20172024 are presented below:

   Nine Months Ended September 30, 2017 
           Weighted Average 
   Shares   Aggregate
Intrinsic
Value
   Remaining
Contractual
Term (Yrs.)
   Exercise
Price
 

Outstanding at January 1, 2017

   1,411,735       $28.05 

Assumed in Cardinal merger

   153,602        21.47 

Granted

   253,417        45.27 

Exercised

   (163,562       20.93 

Forfeited or expired

   (2,962       38.81 
  

 

 

       

 

 

 

Outstanding at September 30, 2017

   1,652,230   $12,602    5.8   $30.76 
  

 

 

   

 

 

   

 

 

   

 

 

 

Exercisable at September 30, 2017

   1,138,309   $11,964    4.5   $26.64 
  

 

 

   

 

 

   

 

 

   

 

 

 



   
Three Months Ended March 31, 2024
 
  
Shares
   
Aggregate
Intrinsic
Value
   
Weighted Average
 
  
Remaining
Contractual
Term (Yrs.)
   
Exercise
Price
 
Outstanding at January 1, 2024
   1,337,382       $35.47 
Exercised
   (25,991       27.15 
Forfeited or expired
   (3,477       27.49 
  
 
 
       
 
 
 
Outstanding at March 31, 2024
   1,307,914   $3,440    3.6   $35.66 
  
 
 
   
 
 
   
 
 
   
 
 
 
Exercisable at March 31, 2024
   1,307,914   $3,440    3.6   $35.66 
  
 
 
   
 
 
   
 
 
   
 
 
 
The following table summarizes the status of United’s nonvested stock option awards during the first ninethree months of 2017:

   Shares   Weighted-Average
Grant Date Fair Value
Per Share
 

Nonvested at January 1, 2017

   430,278   $6.84 

Granted

   253,417    8.85 

Vested

   (168,274   6.64 

Forfeited or expired

   (1,500   8.85 
  

 

 

   

 

 

 

Nonvested at September 30, 2017

   513,921   $7.89 
  

 

 

   

 

 

 

2024:

   
Shares
   
Weighted-Average

Grant Date Fair Value
Per Share
 
Nonvested at January 1, 2024
   56,526   $5.65 
Vested
   (56,526   5.65 
Forfeited or expired
   0    0.00 
  
 
 
   
 
 
 
Nonvested at March 31, 2024
   0   $0.00 
  
 
 
   
 
 
 
During the ninethree months ended September 30, 2017March 31, 2024 and 2016, 163,5622023, 25,991 and 248,67755,796 shares, respectively, were issued in connection with stock option exercises. All shares issued in connection with stock option exercises for the ninethree months ended September 30, 2017March 31, 2024 and 20162023 were issued from authorized and unissued stock. The total intrinsic value of options exercised under the Plans during the ninethree months ended September 30, 2017March 31, 2024 and 20162023 was $3,078$207 and $4,670$722 respectively.

As of March 31, 2024, there was
no
unrecognized compensation cost related to nonvested stock option awards.
Restricted Stock

Under the 20112020 LTI Plan, United may award restricted common shares to key employees and
non-employee
directors. Restricted shares granted to participants have a four-year time-based vesting period. Recipientswill vest no sooner than 1/3 per year over the first three anniversaries of the award. Unless determined by the Committee or the Board and provided in the award agreement, recipients of restricted shares do not pay any consideration to United for the shares, have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested. Presently, these nonvested participating securities have an immaterial impact on diluted earnings per share.

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

49

The following summarizes the changes to United’s nonvested restricted common shares for the period ended September 30, 2017:

   Number of
Shares
   Weighted-Average
Grant Date Fair Value
Per Share
 

Outstanding at January 1, 2017

   137,268   $33.61 

Granted

   89,475    45.27 

Vested

   (53,950   32.23 

Forfeited

   (420   45.30 
  

 

 

   

 

 

 

Outstanding at September 30, 2017

   172,373   $40.07 
  

 

 

   

 

 

 

14.March 31, 2024:

   
Shares
   
Weighted-Average

Grant Date Fair Value
Per Share
 
Nonvested at January 1, 2024
   333,932   $37.75 
Granted
   183,908    34.36 
Vested
   (187,258   36.60 
Forfeited
   (5,215   36.48 
  
 
 
   
 
 
 
Nonvested at March 31, 2024
   325,367   $36.51 
  
 
 
   
 
 
 
Restricted Stock Units
Under the 2020 LTI Plan, United may grant restricted stock units (“RSUs”) to key employees. These awards help align the interests of these employees with the interests of the shareholders of United by providing economic value directly related to the performance of the Company. These RSU grants could be time-vested RSUs, performance-vested RSUs, or a combination of both. Currently, time-vested RSUs vest ratably over three years from the date of grant. Performance-vested RSUs cliff-vest after assessment of the Company’s performance over a period of three years. The number of performance-vested RSUs that vest is determined by two metrics measured relative to peers: Return on Average Tangible Common Equity (“ROATCE”) and Total Shareholder Return (“TSR”). Based on ASC Topic 718, the ROATCE comparison is considered a performance condition while the TSR comparison is considered a market condition. There will be no payout of the performance-vested awards if the threshold performance is not achieved. United communicates the specific threshold, target, and maximum performance-vested RSU awards and performance targets to the applicable key employees at the beginning of a performance period. Dividends are accrued but not paid in respect to the awards until the RSUs vest. The holder does not have the right to vote the shares during the time and performance periods. The value of the time-vested RSUs and the performance-vested, based on the performance condition, RSUs awarded is established as the fair market value of the stock at the time of the grant. The value of the performance-vested, based on the market condition, RSUs awarded is estimated through the use of a Monte Carlo valuation model as of the grant date. The Company recognizes expense on the RSUs in accordance with ASC Topic 718.
The following table summarizes the status of United’s nonvested RSUs during the first three months of 2024:
   
Shares
   
Weighted-Average

Grant Date Fair Value
Per Share
 
Nonvested at January 1, 2024
   363,502   $37.53 
Granted
   254,592    32.80 
Vested
   (127,536   36.28 
Forfeited or expired
   (439   34.72 
  
 
 
   
 
 
 
Nonvested at March 31, 2024
   490,119   $35.41 
  
 
 
   
 
 
 
As of March 31, 2024, the total unrecognized compensation cost related to nonvested restricted stock units was $13,314 with a weighted-average expense recognition period of 2.0 years.
15. EMPLOYEE BENEFIT PLANS

United has a defined benefit retirement plan covering a majority of all employees.qualified employees hired prior to October 1, 2007. Pension benefits are based on years of service and the average of the employee’s highest five consecutive plan years of basic compensation paid during the ten plan years preceding the date of determination. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. DuringNo discretionary contributions were made during the thirdfirst quarter of 2017, United made a discretionary contribution of $10,000 to the Plan.

In September of 2007, after a recommendation by United’s Pension Committee2024 and approval by United’s Board of Directors, the United Bankshares, Inc. Pension Plan (the Plan) was amended to change the participation rules. The decision to change the participation rules for the Plan followed current industry trends, as many large and medium size companies had taken similar steps. The amendment provides that employees hired on or after October 1, 2007, will not be eligible to participate in the Plan. However, new employees will be eligible to participate in United’s Savings and Stock Investment 401(k) plan. This change had no impact on current employees hired prior to October 1, 2007 as they will continue to participate in the Plan, with no change in benefit provisions, and will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) plan.

As of December 31, 2016, United changed the method used to estimate the interest cost component of net periodic benefit cost for the Plan. Under the previous method, appropriate spot rates were used to discount the projected benefit obligation (PBO) cash flows based on date of measurement. Then, a single aggregated discount rate was calculated such that the present value of the PBO remained the same. This rate is technically a weighted-average of the spot rates. This single discount rate was applied to the interest and service costs as well. Under the full yield curve approach, separate discount rates are used to calculate the present value for each projected cash flow. This does not have any impact on the present value of the PBO as the PBO was originally discounted with spot rates. The adoption of this method concerns the manner in which it affects interest and service costs. This new method constitutes a change in an accounting estimate under the provisions of ASC topic 250, “Accounting Changes and Error Corrections,” that is inseparable from a change in accounting principle and was accounted for prospectively, with the resulting change impacting the recognition of net periodic pension cost beginning January 1, 2017. The impact of this accounting change on United’s net periodic pension cost for the third quarter and first nine months of 2017 was a decline of $252 and $748, respectively, in expense from the amount that would have been recorded under the previous method.

2023.

Included in accumulated other comprehensive income at December 31, 20162023 are unrecognized actuarial losses of $53,991$32,548 ($34,01420,817 net of tax) that have not yet been recognized in net periodic pension cost. The amortization of this item expected to be recognized in net periodic pension cost during the fiscal year ended December 31, 2017 is $4,411 ($2,779 net of tax).

50

Net periodic pension cost for the three and nine months ended September 30, 2017March 31, 2024 and 20162023 included the following components:

   Three Months Ended
September 30
  Nine Months Ended
September 30
 
   2017  2016  2017  2016 

Service cost

  $574  $614  $1,705  $1,829 

Interest cost

   1,293   1,471   3,837   4,383 

Expected return on plan assets

   (2,072  (2,034  (6,148  (6,058

Recognized net actuarial loss

   1,111   1,161   3,298   3,458 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net periodic pension (benefit) cost

  $906  $1,212  $2,692  $3,612 
  

 

 

  

 

 

  

 

 

  

 

 

 

Weighted-Average Assumptions:

     

Discount rate

   4.49  4.75  4.49  4.75

Expected return on assets

   7.00  7.25  7.00  7.25

Rate of compensation increase (prior to age 45)

   3.50  3.50  3.50  3.50

Rate of compensation increase

   3.00  3.00  3.00  3.00

15.

   
Three Months Ended March 31
 
   
2024
  
2023
 
Service cost
  $391  $461 
Interest cost
   1,719   1,736 
Expected return on plan assets
   (2,650  (2,897
Recognized net actuarial loss
   550   775 
  
 
 
  
 
 
 
Net periodic pension cost
  $10  $75 
  
 
 
  
 
 
 
Weighted-Average Assumptions:
   
Discount Rate
   5.07  5.25
Expected return on assets
   6.25  7.25
Rate of Compensation Increase (prior to age 40)
   5.00  5.00
Rate of Compensation Increase (ages
40-54)
   4.00  4.00
Rate of Compensation Increase (otherwise)
   3.50  3.50
16. INCOME TAXES

United records a liability for uncertain income tax positions based on a recognition threshold of
more-likely-than-not,
and a measurement attribute for all tax positions taken on a tax return, in order for those tax positions to be recognized in the financial statements.

As of September 30, 2017, United has provided a liability for $2,405 of unrecognized tax benefits related to various federalMarch 31, 2024 and state income tax matters. The entire amount of unrecognized tax benefits, if recognized, would impact United’s effective tax rate. Over the next 12 months, the statute of limitations will close on certain income tax periods. However, at this time, United cannot reasonably estimate the amount of tax benefits it may recognize over the next 12 months.

United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2014, 2015 and 2016 and certain State Taxing authorities for the years ended December 31, 2014 through 2016.

As of September 30, 2017 and 2016,2023, the total amount of accrued interest related to uncertain tax positions was $548$773 and $792,$525, respectively. United accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes.

16.

United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2020, 2021 and 2022 and certain State Taxing authorities for the years ended December 31, 2020 through 2022.
United’s effective tax rate was 19.78% for the first quarter of 2024 and 19.92% for the first quarter of 2023.
17. COMPREHENSIVE INCOME

The components of total comprehensive income for the three and nine months ended September 30, 2017March 31, 2024 and 20162023 are as follows:

   Three Months Ended
September 30
  Nine Months Ended
September 30
 
   2017  2016  2017  2016 

Net Income

  $56,738  $41,479  $132,606  $107,977 

Available for sale (“AFS”) securities:

     

AFS securities with OTTI charges during the period

   0   0   (60  (77

Related income tax effect

   0   0   22   28 

Less: OTTI charges recognized in net income

   0   0   60   33 

Related income tax benefit

   0   0   (22  (12

Reclassification of previous noncredit OTTI to credit OTTI

   0   0   0   415 

Related income tax benefit

   0   0   0   (150
  

 

 

  

 

 

  

 

 

  

 

 

 

Net unrealized (losses) gains on AFS securities with OTTI

   0   0   0   237 

AFS securities – all other:

     

Change in net unrealized gain on AFS securities arising during the period

   3,584   (7,599  14,846   12,356 

Related income tax effect

   (1,326  2,735   (5,493  (4,489

Net reclassification adjustment for (gains) losses included in net income

   (467  (1  (1,444  (251

Related income tax expense (benefit)

   173   0   534   91 
  

 

 

  

 

 

  

 

 

  

 

 

 
   1,964   (4,865  8,443   7,707 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net effect of AFS securities on other comprehensive income

   1,964   (4,865  8,443   7,944 

Held to maturity (“HTM”) securities:

     

Accretion on the unrealized loss for securities transferred from AFS to the HTM investment portfolio prior to call or maturity

   2   2   6   6 

Related income tax expense

   (0  (0  (2  (2
  

 

 

  

 

 

  

 

 

  

 

 

 

Net effect of HTM securities on other comprehensive income

   2   2   4   4 

Pension plan:

     

Recognized net actuarial loss

   1,111   1,161   3,298   3,458 

Related income tax benefit

   (394  (384  (1,191  (1,223
  

 

 

  

 

 

  

 

 

  

 

 

 

Net effect of change in pension plan asset on other
comprehensive income

   717   777   2,107   2,235 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total change in other comprehensive income

   2,683   (4,086  10,554   10,183 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total Comprehensive Income

  $59,421  $37,393  $143,160  $118,160 
  

 

 

  

 

 

  

 

 

  

 

 

 

   
Three Months Ended
March 31
 
   
2024
   
2023
 
Net Income
  
$
86,814
 
  
$
98,307
 
Available for sale (“AFS”) securities:
    
Change in net unrealized (loss) gain on AFS securities arising during the period
   (3,119   58,455 
Related income tax effect
   727    (13,620
Net reclassification adjustment for gains included in net income   0    420 
Related income tax effect   0    (98
  
 
 
   
 
 
 
   (2,392   45,157 
  
 
 
   
 
 
 
Net effect of AFS securities on other comprehensive income
  
 
(2,392
  
 
45,157
 
51

   
Three Months Ended
March 31
 
   
2024
   
2023
 
Cash flow hedge derivatives:
    
Unrealized gain (loss) on cash flow hedge before reclassification to interest expense
   7,209    (4,416
Related income tax effect
   (1,680   1,029 
Net reclassification adjustment for gains included in net income
   (6,352   (4,915
Related income tax effect
   1,480    1,145 
  
 
 
   
 
 
 
Net effect of cash flow hedge derivatives on other comprehensive income
  
 
657
 
  
 
(7,157
Pension plan:
    
Recognized net actuarial loss
   550    775 
Related income tax benefit
   (126   (173
  
 
 
   
 
 
 
Net effect of change in pension plan asset on other comprehensive income
  
 
424
 
  
 
602
 
  
 
 
   
 
 
 
Total change in other comprehensive income
  
 
(1,311
  
 
38,602
 
  
 
 
   
 
 
 
Total Comprehensive Income
  
$
85,503
 
  
$
136,909
 
  
 
 
   
 
 
 
The components of accumulated other comprehensive income for the ninethree months ended September 30, 2017March 31, 2024 are as follows:

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

For the NineThree Months Ended September 30, 2017

   Unrealized
Gains/Losses
on AFS
Securities
  Accretion on
the unrealized
loss for
securities
transferred
from AFS to
the HTM
  Defined
Benefit
Pension

Items
  Total 

Balance at January 1, 2017

  ($10,297 ($51 ($34,369 ($44,717

Other comprehensive income before reclassification

   9,353   4   0   9,357 

Amounts reclassified from accumulated other comprehensive income

   (910  0   2,107   1,197 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net current-period other comprehensive income, net of tax

   8,443   4   2,107   10,554 
  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2017

  ($1,854 ($47 ($32,262 ($34,163
  

 

 

  

 

 

  

 

 

  

 

 

 

March 31, 2024


   
Unrealized
Gains/Losses
on AFS
Securities
   
Unrealized
Gains/Losses
on Cash
Flow Hedges
   
Defined
Benefit
Pension

Items
   
Total
 
Balance at January 1, 2024
  $(278,819  $39,955   $(20,817  $(259,681
Other comprehensive income before reclassification
   (2,392   5,529    0    3,137 
Amounts reclassified from accumulated other comprehensive income
   0    (4,872   424    (4,448
  
 
 
   
 
 
   
 
 
   
 
 
 
Net current-period other comprehensive (loss) income, net of tax   (2,392   657    424    (1,311
  
 
 
   
 
 
   
 
 
   
 
 
 
Balance at March 31, 2024
  $(281,211  $40,612   $(20,393  $(260,992
  
 
 
   
 
 
   
 
 
   
 
 
 

(a)
All amounts are
net-of-tax.
Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the NineThree Months Ended September 30, 2017

Details about AOCI Components

  Amount
Reclassified
from AOCI
  

Affected Line Item in the Statement Where

Net Income is Presented

Available for sale (“AFS”) securities:

   

Reclassification of previous noncredit OTTI
to credit OTTI

  $0  Total other-than-temporary impairment losses

Net reclassification adjustment for losses
(gains) included in net income

   (1,444 Net gains on sales/calls of investment securities
  

 

 

  
   (1,444 Total before tax

Related income tax effect

   534  Tax expense
  

 

 

  
   (910 Net of tax

Pension plan:

   

Recognized net actuarial loss

   3,298(a)  
  

 

 

  
   3,298  Total before tax

Related income tax effect

   (1,191 Tax expense
  

 

 

  
   2,107  Net of tax
  

 

 

  

Total reclassifications for the period

  $1,197  
  

 

 

  

March 31, 2024

Details about AOCI Components
  
Amount
Reclassified
from AOCI
  
Affected Line Item in the Statement Where
Net Income is Presented
Available for sale (“AFS”) securities:
   
Net reclassification adjustment for gains included in net income
  $0  Net investment securities gains
  
 
 
  
   0  Total before tax
Related income tax effect
   0  Income taxes
  
 
 
  
   0  Net of tax
Cash flow hedge:
   
Net reclassification adjustment for losses included in net income
  $(6,352 Interest expense
  
 
 
  
   (6,352 Total before tax
Related income tax effect
   1,480  Income taxes
  
 
 
  
   (4,872 Net of tax
  
 
 
  
52

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)
For the Three Months Ended March 31, 2024
Details about AOCI Components
  
Amount
Reclassified
from AOCI
  
Affected Line Item in the Statement Where
Net Income is Presented
Pension plan:      
Recognized net actuarial loss
   550(a)  
   550  Total before tax
Related income tax effect
   (126 Income taxes
  
 
 
  
   424  Net of tax
  
 
 
  
Total reclassifications for the period
  $(4,448 
  
 
 
  

(a)This AOCI component is included in the computation of net periodic pension cost (see Note 14,15, Employee Benefit Plans)

17.

18. EARNINGS PER SHARE

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

   Three Months Ended   Nine Months Ended 
   September 30   September 30 
   2017   2016   2017   2016 

Distributed earnings allocated to common stock

  $34,587   $25,174   $95,871   $73,242 

Undistributed earnings allocated to common stock

   22,065    16,234    36,518    34,545 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings allocated to common shareholders

  $56,652   $41,408   $132,389   $107,787 
  

 

 

   

 

 

   

 

 

   

 

 

 

Average common shares outstanding

   104,760,153    76,218,573    95,040,664    72,413,246 

Equivalents from stock options

   307,969    429,200    409,962    333,117 
  

 

 

   

 

 

   

 

 

   

 

 

 

Average diluted shares outstanding

   105,068,122    76,647,773    95,450,626    72,746,363 
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per basic common share

  $0.54   $0.54   $1.39   $1.49 

Earnings per diluted common share

  $0.54   $0.54   $1.39   $1.48 

18.

   
Three Months Ended
March 31
 
   
2024
   
2023
 
Distributed earnings allocated to common stock
  $50,374   $48,450 
Undistributed earnings allocated to common stock
   36,242    49,611 
  
 
 
   
 
 
 
Net earnings allocated to common shareholders
  $86,616   $98,061 
  
 
 
   
 
 
 
Average common shares outstanding
   134,808,634    134,411,166 
Common stock equivalents
   312,746    429,162 
  
 
 
   
 
 
 
Average diluted shares outstanding
   135,121,380    134,840,328 
  
 
 
   
 
 
 
Earnings per basic common share
  $0.64   $0.73 
Earnings per diluted common share
  $0.64   $0.73 
Antidilutive stock options and restricted stock outstanding of 1,198,358 for the three months ended March 31, 2024 were excluded from the earnings per diluted common share calculation as compared to 563,127 for the three months ended March 31, 2023.
19. VARIABLE INTEREST ENTITIES

Variable interest entities (VIEs)(“VIEs”) are entities that either have a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest (i.e., ability to make significant decisions, through voting rights, right to receive the expected residual returns of the entity, and obligation to absorb the expected losses of the entity). VIEs can be structured as corporations, trusts, partnerships, or other legal entities. United’s business practices include relationships with certain VIEs. For United, the business purpose of these relationships primarily consists of funding activities in the form of issuing trust preferred securities.

United currently sponsors fifteentwenty statutory business trusts that were created for the purpose of raising funds that originally qualified for Tier I regulatory capital. As previously discussed, with the acquisition of Cardinal, these trusts now are considered Tier II regulatory capital. These trusts, of which several were acquired through bank acquisitions, issued or participated in pools of trust preferred capital securities to third-party investors with the proceeds invested in junior subordinated debt securities of United. The Company, through a small capital contribution, owns 100% of the voting equity shares of each trust. The assets, liabilities, operations, and cash flows of each trust are solely related to the issuance, administration, and repayment of the preferred equity securities held by third-party investors. United fully and unconditionally guarantees the obligations of each trust and is obligated to redeem the junior subordinated debentures upon maturity.

53

United does not consolidate these trusts as it is not the primary beneficiary of these entities because United’s wholly owned and indirect wholly owned statutory trust subsidiaries do not have a controlling financial interest in the VIEs. A controlling financial interest is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE.

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

ere
$11,876 and $11,751, respectively.
Information related to United’s statutory trusts is presented in the table below:

Description

  

Issuance Date

  Amount of
Capital
Securities Issued
   

Interest Rate

  

Maturity Date

Century Trust

  March 23, 2000  $8,800   10.875% Fixed  March 8, 2030

United Statutory Trust III

  December 17, 2003  $20,000   3-month LIBOR + 2.85%  December 17, 2033

United Statutory Trust IV

  December 19, 2003  $25,000   3-month LIBOR + 2.85%  January 23, 2034

United Statutory Trust V

  July 12, 2007  $50,000   3-month LIBOR + 1.55%  October 1, 2037

United Statutory Trust VI

  September 20, 2007  $30,000   3-month LIBOR + 1.30%  December 15, 2037

Premier Statutory Trust II

  September 25, 2003  $6,000   3-month LIBOR + 3.10%  October 8, 2033

Premier Statutory Trust III

  May 16, 2005  $8,000   3-month LIBOR + 1.74%  June 15, 2035

Premier Statutory Trust IV

  June 20, 2006  $14,000   3-month LIBOR + 1.55%  September 23, 2036

Premier Statutory Trust V

  December 14, 2006  $10,000   3-month LIBOR + 1.61%  March 1, 2037

Centra Statutory Trust I

  September 20, 2004  $10,000   3-month LIBOR + 2.29%  September 20, 2034

Centra Statutory Trust II

  June 15, 2006  $10,000   3-month LIBOR + 1.65%  July 7, 2036

Virginia Commerce Trust II

  December 19, 2002  $15,000   6-month LIBOR + 3.30%  December 19, 2032

Virginia Commerce Trust III

  December 20, 2005  $25,000   3-month LIBOR + 1.42%  February 23, 2036

Cardinal Statutory Trust I

  July 27, 2004  $20,000   3-month LIBOR + 2.40%  September 15, 2034

UFBC Capital Trust I

  December 30, 2004  $5,000   3-month LIBOR + 2.10%  March 15, 2035

Description
  
Issuance Date
  
Amount of
Capital
Securities Issued
   
Stated Interest Rate
(1)
  
Maturity Date
United Statutory Trust III
  December 17, 2003  $20,000   3-month CME Term SOFR + 2.85%  December 17, 2033
United Statutory Trust IV
  December 19, 2003  $25,000   3-month CME Term SOFR + 2.85%  January 23, 2034
United Statutory Trust V
  July 12, 2007  $50,000   3-month CME Term SOFR + 1.55%  October 1, 2037
United Statutory Trust VI
  September 20, 2007  $30,000   3-month CME Term SOFR + 1.30%  December 15, 2037
Premier Statutory Trust II
  September 25, 2003  $6,000   3-month CME Term SOFR + 3.10%  October 8, 2033
Premier Statutory Trust III
  May 16, 2005  $8,000   3-month CME Term SOFR + 1.74%  June 15, 2035
Premier Statutory Trust IV
  June 20, 2006  $14,000   3-month CME Term SOFR + 1.55%  September 23, 2036
Premier Statutory Trust V
  December 14, 2006  $10,000   3-month CME Term SOFR + 1.61%  March 1, 2037
Centra Statutory Trust I
  September 20, 2004  $10,000   3-month CME Term SOFR + 2.29%  September 20, 2034
Centra Statutory Trust II
  June 15, 2006  $10,000   3-month CME Term SOFR + 1.65%  July 7, 2036
VCBI Capital Trust II
  December 19, 2002  $15,000   6-month CME Term SOFR + 3.30%  December 19, 2032
VCBI Capital Trust III
  December 20, 2005  $25,000   3-month CME Term SOFR + 1.42%  February 23, 2036
Cardinal Statutory Trust I
  July 27, 2004  $20,000   3-month CME Term SOFR + 2.40%  September 15, 2034
UFBC Capital Trust I
  December 30, 2004  $5,000   3-month CME Term SOFR + 2.10%  March 15, 2035
Carolina Financial Capital Trust I
  December 19, 2002  $5,000   Prime + 0.50%  December 31, 2032
Carolina Financial Capital Trust II
  November 5, 2003  $10,000   3-month CME Term SOFR + 3.05%  January 7, 2034
Greer Capital Trust I
  October 12, 2004  $6,000   3-month CME Term SOFR + 2.20%  October 18, 2034
Greer Capital Trust II
  December 28, 2006  $5,000   3-month CME Term SOFR + 1.73%  January 30, 2037
First South Preferred Trust I
  September 26, 2003  $10,000   3-month CME Term SOFR + 2.95%  September 30, 2033
BOE Statutory Trust I
  December 12, 2003  $4,000   3-month CME Term SOFR + 3.00%  December 12, 2033

(1)
The
3-month
CME Term SOFR rates have a spread adjustment of 0.26161% and the
6-month
CME Term SOFR rate has a spread adjustment of 0.42826%.
United, through its banking subsidiaries,subsidiary, also makes limited partner equity investments in various low income housing and community development partnerships sponsored by independent third-parties. United invests in these partnerships to either realize tax credits on its consolidated federal income tax return or for purposes of earning a return on its investment. These partnerships are considered VIEs as the limited partners lack a controlling financial interest in the entities through their inability to make decisions that have a significant effect on the operations and success of the partnerships. United’s limited partner interests in these entities is immaterial, however;immaterial; however, these partnerships are not consolidated as United is not deemed to be the primary beneficiary.

The following table summarizes quantitative information about At March 31, 2024 and December 31, 2023, United’s significant involvementinvestment (maximum exposure to loss) in unconsolidated VIEs:

   As of September 30, 2017   As of December 31, 2016 
   Aggregate
Assets
   Aggregate
Liabilities
   Risk Of
Loss(1)
   Aggregate
Assets
   Aggregate
Liabilities
   Risk Of
Loss(1)
 

Trust preferred securities

  $266,560   $257,605   $8,955   $240,668   $232,583   $8,085 

(1)Represents investment in VIEs.

19. SEGMENT INFORMATION

these low income housing and community development partnerships were $90,919 and $87,554, respectively, while related unfunded commitments were $65,039 and $63,539, respectively. As a resultof March 31, 2024, United expects to recover its remaining investments through the use of the Cardinal acquisition,tax credits that are generated by the investments.

54

20. SUBSEQUENT EVENT
Agreement to Acquire Piedmont Bancorp, Inc.
On May 9, 2024, United now operates in two business segments: community bankingentered into an Agreement and mortgage banking. PriorPlan 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 Cardinal acquisition, United’s business activities were confined to just one reportable segment of community banking.

Through its community banking segment,conditions set forth therein, Piedmont will merge with and into United offers a full range of products and services through various delivery channels. In particular,(the “Merger”), with United as the community banking segment includes both commercial and consumer lending and provides customers with such products as commercial loans, real estate loans, business financing and consumer loans. In addition, this segment provides customers with several choices of deposit products including demand deposit accounts, savings accounts and certificates of deposit as well as investment and financial advisory services to businesses and individuals, including financial planning, retirement/estate planning, and investment management. The mortgage banking segment engages primarilysurviving corporation in the originationMerger. 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 acquisitioninto United’s wholly-owned subsidiary, United Bank, a state bank chartered under the laws of residential mortgagesthe Commonwealth of Virginia (the “Bank Merger”), with United Bank as the surviving bank in the Bank Merger. The Merger Agreement was approved and adopted by the board of directors of each of United and Piedmont.
Piedmont is a well-capitalized, single bank holding company headquartered in
Atlanta, Georgia
with total assets of approximately $2.1 billion, total loans of approximately $1.7 billion, total liabilities of approximately $1.9 billion, total deposits of approximately $1.8 billion, and total shareholders’ equity of approximately $195 million as of March 31, 2024. Piedmont is the holding company for saleThe Piedmont Bank, a Georgia state-chartered bank, with sixteen
locations
in the State of Georgia.
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, $0.01 par value, of Piedmont (“Piedmont Common Stock”) outstanding immediately prior to the Effective Time, other than certain shares of Piedmont Common Stock held by United and its subsidiaries, will be converted into the secondary market though George Mason.

The community banking segment providesright to receive, without interest, (a) 0.300 of a share (the “Exchange Ratio”) of common stock, $2.50 par value, of United (“United Common Stock” and such consideration is hereinafter referred to as the mortgage banking segment (George Mason) with short-term funds“Merger Consideration”) and (b) cash in lieu of fractional shares.

At the Effective Time, (i) each option to originate mortgage loans throughpurchase shares of Piedmont Common Stock will fully vest and will be cashed out based on a warehouse lineformula that takes into account the difference between the exercise price and the volume-weighted average of creditthe closing sales price on Nasdaq of United Common Stock for the 10 full trading days ending on the second trading day immediately preceding the Effective Time and charges the mortgage banking segment interestExchange Ratio, (ii) each warrant to purchase shares of Piedmont Common Stock will fully vest and holders will have the option to convert into the right to receive shares of United Common Stock based on the prime rate. These transactionsexchange ratio or be cashed out based on the same formula applicable to option holders, and (iii) each restricted stock grant, restricted stock unit grant and any other outstanding equity award with respect to Piedmont Common Stock that is subject to vesting will fully vest and be entitled to receive the Merger Consideration.
The completion of the Merger
and the Bank Merger are eliminated in the consolidation process.

The Company does not have any operating segments other than those reported. The “Other” category consists of financial information not directly attributable to a specific segment, including interest income from investments and net securities gains or losses of parent companies and theirnon-banking subsidiaries, interest expense related to subordinated notes of unconsolidated subsidiaries as well as the elimination ofnon-segment related intercompany transactions such as management fees. The “Other” represents an overhead function rather than an operating segment.

Information about the reportable segments and reconciliation of this information

subject to the consolidated financial statements atsatisfaction of customary closing conditions, including receipt of regulatory approvals from the Board of Governors of the Federal Reserve System and for the threeVirginia Bureau of Financial Institutions, regulatory filings with the Georgia Department of Banking and nine months ended September 30, 2017Finance, and 2016 is as follows:

   At and For the Three Months Ended September 30, 2017 
   Community
Banking
   Mortgage
Banking
   Other   Consolidated 

Net interest income

  $152,886   $(36  $(2,574  $150,276 

Provision for loans losses

   7,279    0    0    7,279 

Other income

   18,373    19,936    (80   38,229 

Other expense

   74,553    24,036    (1,937   96,652 

Income taxes

   29,490    (1,332   (322   27,836 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $59,937   $(2,804  $(395  $56,738 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets (liabilities)

  $18,780,395   $350,483   $(900  $19,129,978 

Average assets (liabilities)

   18,620,035    321,744    (13,994   18,927,785 

   At and For the Three Months Ended September 30,  2016 
   Community
Banking
   Other   Consolidated 

Net interest income

  $113,033   $(1,964  $111,069 

Provision for loans losses

   6,988    0    6,988 

Other income

   19,666    (645   19,021 

Other expense

   63,009    (232   62,777 

Income taxes

   19,729    (883   18,846 
  

 

 

   

 

 

   

 

 

 

Net income (loss)

  $42,973   $(1,494  $41,479 
  

 

 

   

 

 

   

 

 

 

Total assets (liabilities)

  $14,364,797   $(20,101  $14,344,696 

Average assets (liabilities)

   14,182,202    (22,633   14,159,569 

   At and For the Nine Months Ended September 30, 2017 
   Community
Banking
   Mortgage
Banking
   Other   Consolidated 

Net interest income

  $401,044   $54   $(6,957  $394,141 

Provision for loans losses

   21,429    0    0    21,429 

Other income

   53,409    42,329    3,143    98,881 

Other expense

   215,935    42,744    12,952    271,631 

Income taxes

   73,214    (39   (5,819   67,356 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $143,875   $(322  $(10,947  $132,606 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets (liabilities)

  $18,780,395   $350,483   $(900  $19,129,978 

Average assets (liabilities)

   17,020,928    187,118    (20,402   17,187,644 

   At and For the Nine Months Ended September 30,  2016 
   Community
Banking
   Other   Consolidated 

Net interest income

  $317,835   $(5,757  $312,078 

Provision for loans losses

   18,690    0    18,690 

Other income

   55,323    (1,943   53,380 

Other expense

   186,322    (634   185,688 

Income taxes

   55,580    (2,477   53,103 
  

 

 

   

 

 

   

 

 

 

Net income (loss)

  $112,566   $(4,589  $107,977 
  

 

 

   

 

 

   

 

 

 

Total assets (liabilities)

  $14,364,797   $(20,101  $14,344,696 

Average assets (liabilities)

   13,125,973    (21,575   13,104,398 

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

the approval by the stockholders of Piedmont.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS

Congress passed the Private Securities Litigation Act of 1995 to encourage corporations to provide investors with information about the company’s anticipated future financial performance, goals, and strategies. The act provides a safe harborhaven for such disclosure,disclosure; in other words, protection from unwarranted litigation if actual results are not the same as management expectations.

United desires to provide its shareholders with sound information about past performance and future trends. Consequently, any forward-looking statements contained in this report, in a report incorporated by reference to this report, or made by management of United in this report, in any other
55


reports and filings, in press releases and in oral statements, involve numerous assumptions, risks and uncertainties. ActualForward-looking statements can be identified by the use of the words “expect,” “may,” “could,” “intend,” “project,” “estimate,” “believe,” “anticipate,” and other words of similar meaning. Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect. 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 couldmay differ materially from those containedcontemplated in or implied by United’sthese “forward-looking statements.” United undertakes no obligation to publicly update any forward-looking statements, for a variety of factors including, but not limited to: changes in economic conditions; business conditions in the banking industry; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving banking industry standards.

ACQUISITIONS

On April 21, 2017, United acquired 100% of the outstanding common stock of Cardinal Financial Corporation (“Cardinal”), headquartered in Tysons Corner, Virginia. The acquisition of Cardinal expands United’s existing footprint in the Washington, D.C. Metropolitan Statistical Area (“MSA”). Cardinal also operated George Mason Mortgage, LLC (“George Mason”), a residential mortgage lending company based in Fairfax, Virginia with offices located in Virginia, Maryland, North Carolina, South Carolina and the District of Columbia. Aswhether as a result of new information, future events, or otherwise.

RECENT DEVELOPMENTS

During the merger,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 became an indirectly-owned subsidiary of United. The Cardinal merger was accounted foroffices re-branded under the acquisition methodUnited umbrella. The consolidation streamlined operations and will enhance the customer experience.

Based on this consolidation of accounting. At consummation, Cardinal had assets of $4.14 billion, portfolio loans of $3.31 billionits mortgage delivery channels and deposits of $3.34 billion.an analysis performed at March 31, 2024 in accordance with ASC 280, “Segment Reporting,” United has concluded that it operates only in one reportable segment – community banking. 

In addition, after the close of business on June 3, 2016, United acquired 100% of the outstanding common stock of Bank of Georgetown, a privately held community bank headquartered in Washington, D.C. The acquisition of Bank of Georgetown enhances United’s existing footprint in the Washington, D.C. MSA. The merger was accounted for under the acquisition method of accounting. At consummation, Bank of Georgetown had assets of approximately $1.28 billion, loans of $999.77 million, and deposits of $971.37 million.

Both the results of operations of Cardinal and Bank of Georgetown are included in the consolidated results of operations from their respective dates of acquisition. As a result of the Cardinal acquisition, the third quarter and first nine months of 2017 were impacted by increased levels of average balances, income, and expense as compared to the third quarter and first nine months of 2016 which were impacted by increased levels of average balances, income, and expense due to the Bank of Georgetown acquisition. In addition, the third quarter and first nine months of 2017 included $532 thousand and $24.99 million, respectively, of merger-related expenses from the Cardinal acquisition and the third quarter and first nine months of 2016 included $924 thousand and $5.61 million, respectively, of merger-related expenses to the Bank of Georgetown acquisition.

INTRODUCTION

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. This discussion and the unaudited consolidated financial statements and the notes to unaudited Consolidated Financial Statements include the accounts

of United Bankshares, Inc. and its wholly-owned subsidiaries, unless otherwise indicated. Management has evaluated all significant events and transactions that occurred after September 30, 2017,March 31, 2024, 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.

USE OFNON-GAAP FINANCIAL MEASURES

This discussion and analysis contains a certain financial measuremeasures that isare not recognized under GAAP. Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with each“non-GAAP” financial measure, certain additional information, including a reconciliation of thenon-GAAP financial measure to the closest comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing thenon-GAAP financial measure.

56


Generally, United has presented thisa non-GAAP financial measure because it believes that this measure provides meaningful additional information to assist in the evaluation of United’s results of operations or financial position. Presentation of thisa non-GAAP financial measure is consistent with how United’s management evaluates its performance internally and thisnon-GAAP financial measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the banking industry. Specifically, this discussion contains certain references to a financial measuremeasures identified astax-equivalent (“FTE”) net interest income.income and return on average tangible equity. Management believes thisthese non-GAAP financial measure, if significant,measures to be helpful in understanding United’s results of operations or financial position.

Net interest income is presented in this discussion on a tax-equivalent basis. The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments. Although this is a non-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition.

Average tangible equity is calculated as GAAP total shareholders’ equity minus total intangible assets. Tangible equity can thus be considered a more conservative valuation of the company. When considering net income, a return on average tangible equity can be calculated. Management provides a return on average equity to facilitate the understanding of as well as to assess the quality and composition of United’s capital structure. This measure, along with others, is used by management to analyze capital adequacy and performance.

However, thisnon-GAAP information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP.

Where thenon-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing thenon-GAAP financial measure, can be found within this discussion and analysis. Investors should recognize that United’s presentation of thisnon-GAAP financial measure might not be comparable to a similarly titled measure at other companies.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of United conform with U.S. generally accepted accounting principles. In preparing the consolidated financial statements, management is required to make estimates, 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, 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 creditloan and lease losses, the valuation of investment securities and the related other-than-temporary impairment analysis, the accounting for acquired loans and 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.

Allowance for Credit Losses

As explainedUnited’s critical accounting policies involving the significant judgments and assumptions used in Note 6, Allowance for Credit Losses to the unauditedpreparation of the Consolidated Financial Statements as of March 31, 2024 were unchanged from the

allowance policies disclosed in United’s Annual Report on Form 10-K for loan losses represents management’s estimate of the probable credit losses inherent inyear ended December 31, 2023 within the lending portfolio.

Determining the allowance for loan losses requires management to make estimates of losses that are highly uncertain and require a high degree of judgment. At September 30, 2017, the allowance for loan losses was $74.9 million and is subject to periodic adjustment based on management’s assessment of current probable losses in the loan portfolio. Such adjustment from period to period can have a significant impact on United’s consolidated financial statements. To illustrate the potential effect on the financial statements of our estimates of the allowance for loan losses, a 10% increase in the allowance for loan losses would have required $7.5 million in additional allowance (funded by additional provision for credit losses), which would have negatively impacted the third quarter of 2017 net income by approximately $4.9 million,after-tax or $0.05 diluted per common share. Management’s evaluation of the adequacy of the allowance for loan losses and the appropriate provision for loan losses is based upon a quarterly evaluation of the loan portfolio. This evaluation is inherently subjective and requires significant estimates, including estimates related to the amounts and timing of future cash flows, value of collateral, losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends, all of which are susceptible to constant and significant change. The allowance allocated to specific credits and loan pools grouped by similar risk characteristics is reviewed on a quarterly basis and adjusted as necessary based upon subsequent changes in circumstances. In determining the components of the allowance for loan losses, management considers the risk arising in part from, but not limited to,charge-off and delinquency trends, current economic and business conditions, lending policies and procedures, the size and risk characteristics of the loan portfolio, concentrations of credit, and other various factors. The methodology used to determine the allowance for loan losses is described in Note 6. A discussion of the factors leading to changes in the amount of the allowance for credit losses is included in the Provision for Credit Losses section of this Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A). Additional information relating to United’s loans is included in Note 4, Loans to the unaudited Consolidated Financial Statements.Operations.”

Investment Securities

Accounting estimates are used in the presentation of the investment portfolio and these estimates impact the presentation of United’s financial condition and results of operations. United classifies its investments in debt as either held to maturity or available for sale and its equity securities as available for sale. Securities held to maturity are accounted for using historical costs, adjusted for amortization of premiums and accretion of discounts. Securities available for sale are accounted for at fair value, with the net unrealized gains and losses, net of income tax effects, presented as a separate component of shareholders’ equity. When available, fair values of securities are based on quoted prices or prices obtained from third party vendors. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data. Prices obtained from third party vendors that do not reflect forced liquidation or distressed sales are not adjusted by management. Where prices reflect forced liquidation or distressed sales, as is the case with United’s portfolio of trust preferred securities (Trup Cdos), management estimates fair value based on a discounted cash flow methodology using appropriately adjusted discount rates reflecting nonperformance and liquidity risks. Due to the subjective nature of this valuation process, it is possible that the actual fair values of these securities could differ from the estimated amounts, thereby affecting United’s financial position, results of operations and cash flows. The potential impact to United’s financial position, results of operations or cash flows for changes in the valuation process cannot be reasonably estimated.57

If the estimated value of investments is less than the cost or amortized cost, the investment is considered impaired and management evaluates whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. If such an event or change has occurred, management must exercise judgment to determine the nature of the potential impairment (i.e., temporary or other-than-temporary) in order to apply the appropriate accounting treatment. If United intends to sell, or is more likely than not they will be required to sell an impaired debt security before recovery of its amortized cost basis less any current period credit loss, other-than-temporary impairment is recognized in earnings. The amount recognized in earnings is equal to the entire difference


between the security’s amortized cost basis and its fair value at the balance sheet date. If United does not intend to sell, and is not more likely than not they will be required to sell the impaired debt security prior to recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment is separated into the following: 1) the amount representing the credit loss, which is recognized in earnings, and 2) the amount related to all other factors, which is recognized in other comprehensive income. For additional information on management’s consideration of investment valuation and other-than-temporary impairment, see Note 3, Investment Securities, and Note 12, Fair Value Measurements, to the unaudited consolidated financial statements.

Accounting for Acquired Loans

Loans acquired are initially recorded at their acquisition date fair values. The fair value of the acquired loans is based on the present value of the expected cash flows, including principal, interest and prepayments. Periodic principal and interest cash flows are adjusted for expected losses and prepayments, then discounted to determine the present value and summed to arrive at the estimated fair value. Fair value estimates involve assumptions and judgments as to credit risk, interest rate risk, prepayment risk, liquidity risk, default rates, loss severity, payment speeds, collateral values and discount rate.

Acquired loans are divided into loans with evidence of credit quality deterioration, which are accounted for under ASC topic310-30 (acquired impaired) and loans that do not meet this criteria, which are accounted for under ASC topic310-20 (acquired performing). Acquired impaired loans have experienced a deterioration of credit quality from origination to acquisition for which it is probable that United will be unable to collect all contractually required payments receivable, including both principal and interest. In the assessment of credit quality, numerous assumptions, interpretations and judgments must be made, based on internal and third-party credit quality information and ultimately the determination as to the probability that all contractual cash flows will not be able to be collected. This is a point in time assessment and inherently subjective due to the nature of the available information and judgment involved.

Subsequent to the acquisition date, United continues to estimate the amount and timing of cash flows expected to be collected on acquired impaired loans. Increases in expected cash flows will generally result in a recovery of any previously recorded allowance for loan losses, to the extent applicable, and/or a reclassification from the nonaccretable difference to accretable yield, which will be recognized prospectively. The present value of any decreases in expected cash flows after the acquisition date will generally result in an impairment charge recorded as a provision for loan losses, resulting in an increase to the allowance for loan losses.

For acquired performing loans, the difference between the acquisition date fair value and the contractual amounts due at the acquisition date represents the fair value adjustment. Fair value adjustments may be discounts (or premiums) to a loan’s cost basis and are accreted (or amortized) to interest income over the loan’s remaining life using the level yield method. Subsequent to the acquisition date, the methods utilized to estimate the required allowance for loan losses for these loans is similar to originated loans.

See Note 2, Merger and Acquisitions, and Note 4, Loans, to the unaudited Consolidated Financial Statements for information regarding United’s acquired loans disclosures.

Income Taxes

United’s calculation of income tax provision is inherently complex due to the various different tax laws and jurisdictions in which we operate and requires management’s use of estimates and judgments in its determination. The current income tax liability also includes income tax expense related to our uncertain tax positions as required in ASC topic 740, “Income Taxes.” Changes to the estimated accrued taxes can occur due to changes in tax rates, implementation of new business strategies, resolution of issues with taxing authorities and recently enacted statutory,

judicial and regulatory guidance. These changes can be material to the Company’s operating results for any particular reporting period. The analysis of the income tax provision requires the assessments of the relative risks and merits of the appropriate tax treatment of transactions, filing positions, filing methods and taxable income calculations after considering statutes, regulations, judicial precedent and other information. United strives to keep abreast of changes in the tax laws and the issuance of regulations which may impact tax reporting and provisions for income tax expense. United is also subject to audit by federal and state authorities. Because the application of tax laws is subject to varying interpretations, results of these audits may produce indicated liabilities which differ from United’s estimates and provisions. United continually evaluates its exposure to possible tax assessments arising from audits and records its estimate of probable exposure based on current facts and circumstances. The potential impact to United’s operating results for any of the changes cannot be reasonably estimated. See Note 15, Income Taxes, to the unaudited Consolidated Financial Statements for information regarding United’s ASC topic 740 disclosures.

Use of Fair Value Measurements

United determines the fair value of its financial instruments based on the fair value hierarchy established in ASC topic 820, whereby the fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC topic 820 establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs in the methodology for determining fair value are observable or unobservable. Observable inputs reflect market-based information obtained from independent sources (Level 1 or Level 2), while unobservable inputs reflect management’s estimate of market data (Level 3). For assets and liabilities that are actively traded and have quoted prices or observable market data, a minimal amount of subjectivity concerning fair value is needed. Prices and values obtained from third party vendors that do not reflect forced liquidation or distressed sales are not adjusted by management. When quoted prices or observable market data are not available, management’s judgment is necessary to estimate fair value.

At September 30, 2017, approximately 10.98% of total assets, or $2.10 billion, consisted of financial instruments recorded at fair value. Of this total, approximately 81.87% or $1.72 billion of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. Approximately $381.00 million or 18.13% of these financial instruments were valued using unobservable market information or Level 3 measurements. Most of these financial instruments valued using unobservable market information were pooled trust preferred investment securities classified asavailable-for-sale. At September 30, 2017, only $1.03 million or less than 1% of total liabilities were recorded at fair value. This entire amount was valued using methodologies involving observable market data. United does not believe that any changes in the unobservable inputs used to value the financial instruments mentioned above would have a material impact on United’s results of operations, liquidity, or capital resources. See Note 12, Fair Value Measurements, to the unaudited Consolidated Financial Statements for additional information regarding ASC topic 820 and its impact on United’s financial statements.

Any material effect on the financial statements related to these critical accounting areas are further discussed in this MD&A.

FINANCIAL CONDITION

United’s total assets as of September 30, 2017March 31, 2024 were $19.13$30.03 billion, which was an increase of $4.62 billion$102.32 million or 31.85%less than 1% from December 31, 2016, primarily the result2023. This increase was mainly due to an increase of the acquisition of Cardinal on April 21, 2017. Portfolio loans increased $2.80 billion$133.70 million or 27.07%,8.36% in cash and cash equivalents increased $312.51and an increase of $160.99 million or 21.78%,less than 1% in portfolio loans. These increases in assets were partly offset by a $171.24 million or 4.15% decrease in investment securities, increased $433.09an $11.84 million or 30.85%, goodwill increased $623.8421.04% decrease in loans held for sale, and a $10.98 million or 72.22%,3.97% decrease in other assets increased $107.28 million or 25.86%, bank premises and equipment increased $28.40 million or 37.42% and interest receivable increased $12.21 million or 30.98% due primarily to the Cardinal merger.assets. Total liabilities increased $3.59 billion or

29.28% fromyear-end 2016. This increase in total liabilities was due mainly to an increase of $3.08 billion or 28.51% and $474.71$66.12 million or 34.36%less than 1% from year-end 2023. Deposits increased $100.43 million or less than 1% and accrued expenses and other liabilities increased $6.14 million or 2.88%, which were partially offset by a $38.04 million or 1.92% decrease in deposits and borrowings, respectively, mainly due to the Cardinal acquisition.borrowings. Shareholders’ equity increased $1.03 billion$36.20 million or 45.98% fromyear-end 2016 due primarily to the acquisition of Cardinal.less than 1%.

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, 2017March 31, 2024 increased $312.51$133.70 million or 21.78%8.36% fromyear-end 2016. Of this total increase, 2023. In particular, interest-bearing deposits with other banks increased $275.22$152.69 million or 21.87%11.39% as United placed more cash in an interest-bearing account with the Federal Reserve while cash and due from banks increased $37.22decreased $19.01 million or 21.21% and fed7.39%. Federal funds sold increased $62$16 thousand or 8.55%1.37%. During the first ninethree months of 2017,2024, net cash of $125.15$124.37 million and $384.45$11.77 million waswere provided by operating activities and investingfinancing activities, respectively, while $197.09net cash of $2.43 million was used in financinginvesting 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 ninethree months of 20172024 and 2016.2023.

Securities

Total investment securities at September 30, 2017 increased $433.09March 31, 2024 decreased $171.24 million or 30.85% fromyear-end 2016. Cardinal added $395.83million in investment securities, including purchase accounting amounts, upon consummation of the acquisition.4.15%. Securities available for sale increased $390.42decreased $172.40 million or 31.01%4.55%. This change in securities available for sale reflects $378.05$248.05 million acquired from Cardinal, $630.12in purchases, $416.41 million in sales, maturities and calls of securities, $630.06 million in purchases, and an increasea decrease of $13.40$3.12 million in market value. Securities heldThe majority of the purchase activity was related to maturity decreased $12.92obligations of U.S. Government corporations and agencies. Equity securities were $8.76 million at March 31, 2024, a decrease of $183 thousand or 38.86% fromyear-end 20162.05% due mainly to calls and maturities of securities.a net decrease in fair value. Other investment securities increased $55.59were relatively flat from year-end 2023, increasing $1.35 million or 50.01% fromyear-end 2016. Cardinal added $14.27 million in otherless than 1% due to net purchases of investment securities. Otherwise, Federal Reserve Bank (FRB) stock increased $33.28 million and FHLB stock increased $7.30 million.tax credits.

The following table summarizes the changes in the available for sale securities sinceyear-end 2016: 2023:

 

  September 30   December 31       
(Dollars in thousands)  2017   2016   $ Change % Change   March 31
2024
   December 31
2023
   $ Change %
Change
 

U.S. Treasury securities and obligations of U.S.
Government corporations and agencies

  $115,866   $95,786   $20,080   20.96  $434,111   $484,950   $(50,839  (10.48%) 

State and political subdivisions

   305,141    192,812    112,329   58.26   528,301    533,831    (5,530  (1.04%) 

Mortgage-backed securities

   1,141,338    896,480    244,858   27.31   1,535,876    1,599,850    (63,974  (4.00%) 

Asset-backed securities

   13,429    217    13,212   6,088.48   830,930    860,638    (29,708  (3.45%) 

Marketable equity securities

   10,480    13,828    (3,348  (24.21%) 

Trust preferred collateralized debt obligations

   31,659    33,552    (1,893  (5.64%) 

Single issue trust preferred securities

   12,467    11,477    990   8.63   15,333    15,141    192   1.27

Corporate securities

   19,254    15,062    4,192   27.83

Other corporate securities

   269,424    291,967    (22,543  (7.72%) 
  

 

   

 

   

 

  

 

 

 

   

 

   

 

  

 

 

Total available for sale securities, at fair value

  $1,649,634   $1,259,214   $390,420   31.01  $3,613,975   $3,786,377   $(172,402  (4.55%) 
  

 

   

 

   

 

  

 

 

 

   

 

   

 

  

 

 

58


The following table summarizes the changes in the held to maturity securities sinceyear-end 2016: 2023:

 

(Dollars in thousands)  September 30
2017
   December 31
2016
   $ Change % Change   March 31
2024
 December 31
2023
 $ Change   % Change 

U.S. Treasury securities and obligations of U.S.
Government corporations and agencies

  $5,215   $5,295   $(80  (1.51%) 

State and political subdivisions

   5,674    8,598    (2,924  (34.01%)   $981(1)  $983(2)  $(2   (0.20%) 

Mortgage-backed securities

   26    30    (4  (13.33%) 

Single issue trust preferred securities

   9,400    19,315    (9,915  (51.33%) 

Other corporate securities

   20    20    0   0.00   20   20   0    0.00
  

 

   

 

   

 

  

 

 

 

  

 

  

 

   

 

 

Total held to maturity securities, at amortized cost

  $20,335   $33,258   $(12,923  (38.86%)   $1,001  $1,003  $(2   (0.20%) 
  

 

   

 

   

 

  

 

 

 

  

 

  

 

   

 

 

(1)

net of allowance for credit losses of $19 thousand.

(2)

net of allowance for credit losses of $17 thousand.

At September 30, 2017,March 31, 2024, gross unrealized losses on available for sale securities were $16.47$366.79 million. Securities in anwith the most significant gross unrealized loss positionlosses at September 30, 2017March 31, 2024 consisted primarily of Trup Cdos, single issue trust preferred securities and agency residential mortgage-backed securities. The Trup Cdos and the single issue trust preferred securities relate mainly to securities of financial institutions. The agency residential mortgage-backed securities, relate to residential propertiesstate and provide a guaranty of fullpolitical subdivision securities, agency commercial mortgage-backed securities and timely payments of principal and interest by the issuing agency.corporate securities.

As of September 30, 2017,March 31, 2024, United’s available for sale mortgage-backed securities had an amortized cost of $1.14$1.78 billion, with an estimated fair value of $1.14$1.54 billion. The portfolio consisted primarily of $715.03 million$1.18 billion in agency residential mortgage-backed securities with a fair value of $714.73$1.01 billion, $83.70 million $5.26 million innon-agency residential mortgage-backed securities with an estimated fair value of $5.85$75.30 million, and $420.12$507.89 million in commercial agency mortgage-backed securities with an estimated fair value of $420.79$453.71 million.

As of September 30, 2017,March 31, 2024, United’s available for sale state and political subdivisions securities had an amortized cost of $611.24 million, with an estimated fair value of $528.30 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 March 31, 2024.

As of March 31, 2024, United’s available for sale corporate securities had an amortized cost of $103.38 million,$1.15 billion, with an estimated fair value of $95.87 million.$1.12 billion. The portfolio consisted primarily of $38.19 million in Trup Cdos with a fair value of $31.66 million and $22.80$16.39 million in single issue trust preferred securities with an estimated fair value of $21.03$15.33 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 $13.42$837.06 million and a fair value of $13.43$830.93 million and marketable equityother corporate securities, with an amortized cost of $9.95$301.20 million and a fair value of $10.48 million, only one of which was individually significant.$269.42 million.

The Trup Cdos consisted of pools of trust preferred securities issued by trusts related primarily to financial institutions and to a lesser extent, insurance companies. The Company has no exposure to Real Estate Investment Trusts (REITs) in its investment portfolio. The Company owns both senior and mezzanine tranches in the Trup Cdos; however, the Company does not own any income notes. The senior and mezzanine tranches of Trup Cdos generally have some protection from defaults in the form of over-collateralization and excess spread revenues, along with waterfall structures that redirect cash flows in the event certain coverage test requirements have failed. Generally, senior tranches have the greatest protection, with mezzanine tranches subordinated to the senior tranches, and income notes subordinated to the mezzanine tranches. The fair value of senior tranches represents $5.29 million of the Company’s pooled securities, while mezzanine tranches represent $26.37 million. Of the $26.37 million in mezzanine tranches, $5.52 million are now in the Senior position as the Senior notes have been paid to a zero balance. As of September 30, 2017, Trup Cdos with a fair value of $3.17 million were investment grade, and the remaining $28.49 million were below investment grade. In terms of capital adequacy, the Company allocates additional risk-based capital to the below investment grade securities. As of September 30, 2017, United’s available for sale single issue trust preferred securities had a fair value of $21.00 million.$15.33 million as of March 31, 2024. Of the $21.03$15.33 million, $4.12$7.11 million or 19.60%46.36% were investment grade; $9.42$3.04 million or 44.85%19.82% were split rated; $3.10and $5.18 million or 14.77% were below investment grade; and $4.36 million or 20.78%33.82% were unrated. The two largest exposures accounted for 53.50%80.19% of the $21.03$15.33 million. These included SunTrustTruist Bank at $6.87$7.11 million and Emigrant Bank at $4.36$5.18 million. All single-issuesingle issue trust preferred securities are currently receiving full scheduled principal and interest payments.

The following two tables provide a summary of Trup Cdos as of September 30, 2017:

Description (1)

  Tranche   Class   Moodys   S&P   Fitch   Amortized
Cost Basis
   Fair
Value
   Unrealized
Loss
(Gain)
  Cumulative
Credit-
Related
OTTI
 
                       Dollars in thousands 

SECURITY 1

   Senior    Sr    Ca    NR    WD    $1,798    $2,115   $(317 $1,219 

SECURITY 2

   Senior (org Mezz)    B    Ca    NR    WD    6,429    5,519    910   7,398 

SECURITY 5

   Mezzanine    C-2    Caa1    NR    C    1,978    1,300    678   184 

SECURITY 6

   Mezzanine    C-1    Ca    NR    C    1,916    1,636    280   1,316 

SECURITY 7

   Mezzanine    B-1    Caa1    NR    C    4,493    3,601    892   41 

SECURITY 8

   Mezzanine    B-1    Ca    NR    C    3,676    3,122    554   1,651 

SECURITY 14

   Mezzanine    B-1    Ba2    NR    CCC    3,300    2,625    675   422 

SECURITY 15

   Mezzanine    B    Caa3    NR    C    6,436    5,000    1,436   3,531 

SECURITY 17

   Mezzanine    B-1    Caa1    NR    C    2,250    1,920    330   750 

SECURITY 18

   Senior    A-3    Aaa    NR    AA    3,410    3,171    239   0 

SECURITY 22

   Mezzanine    B-1    B1    NR    CCC    2,500    1,650    850   0 
            

 

 

   

 

 

   

 

 

  

 

 

 
            $38,186   $31,659   $6,527  $16,512 
            

 

 

   

 

 

   

 

 

  

 

 

 

(1)Securities that are no longer owned by the Company have been removed from the tables.

Desc.

  # of Issuers
Currently
Performing

(1)
  Deferrals
as % of
Original
Collateral
  Defaults
as a % of
Original
Collateral
  Expected
Deferrals
and Defaults
as a % of
Remaining
Performing
Collateral (2)
  Projected
Recovery/
Cure Rates
on
Deferring
Collateral
 Excess
Subordination
as % of
Performing
Collateral
  Amortized
Cost as a
% of Par
Value
 Discount
as a % of
Par Value

(3)
 

1

   5  6.3%   13.3  7.9 25 - 90%  (73.5)%  57.0%  43.0

2

   7  0.0%   11.1  5.0 N/A  (104.7)%  45.4%  54.6

5

   39  0.0%   9.8  5.7 N/A  0.2 91.3%  8.7

6

   39  0.0%   15.9  5.6 N/A  (21.9)%  58.5%  41.5

7

   18  0.0%   12.0  5.4 N/A  (7.8)%  84.8%  15.2

8

   22  0.0%   22.4  5.2 N/A  (28.5)%  68.3%  31.7

14

   37  3.1%   7.1  6.0 0 - 90%  10.5 88.0%  12.0

15

   18  0.8%   13.2  6.7 90%  (33.1)%  64.4%  35.6

17

   26  0.0%   7.4  6.1 N/A  (1.6)%  75.0%  25.0

18

   28  1.0%   15.2  5.4 15%  76.2 100.0%  0.0

22

   28  1.5%   4.8  5.5 50%  6.6 100.0%  0.0

(1)“Performing” refers to all outstanding issuers less issuers that have either defaulted or are currently deferring their interest payment.
(2)“Expected Deferrals and Defaults” refers to projected future defaults on performing collateral and does not include the projected defaults on deferring collateral.
(3)The “Discount” in the table above represents the Par Value less the Amortized Cost. This metric generally approximates the level of OTTI that has been incurred on these securities.

The Company defines “Excess Subordination” as all outstanding collateral less the sum of (i) 100% of the defaulted collateral, (ii) the sum of the projected net loss amounts for each piece of the deferring but not defaulted collateral and (iii) the amount of each Trup Cdo’s debt that is either senior to or pari passu with our security’s priority level.

The calculation of excess subordination in the above table does not consider the OTTI the Company has recognized on these securities. While the ratio of excess subordination provides some insight on overall collateralization levels, the Company completes an expected cash flow analysis each quarter to determine whether an adverse change in future cash flows has occurred under ASC 320. The standard specifies that a cash flow projection can be present-valued at the security specific effective interest rate and the resulting present value compared to the amortized cost in order to quantify the credit component of impairment. The Company utilizes the cash flow models to determine the net realizable value and assess whether additional OTTI has occurred.

While the ratio of excess subordination provides some insight on overall collateralization levels, the Company does not utilize this ratio to calculate OTTI. The ratio of excess subordination represents only one component of the projected cash flow. The Company believes the excess subordination is limited as it does not consider the following:

Waterfall structure and redirection of cash flows

Excess interest spread

Cash reserves

The collateral backing of a particular tranche can be increased by decreasing the more senior liabilities of the Trup Cdo tranche. This occurs when collateral deterioration due to defaults and deferrals triggers alternative waterfall provisions of the cash flow. The waterfall structure of the bond requires the excess spread to be rerouted away from the most junior classes of debt (which includes the income notes) in order to pay down the principal of the most senior liabilities. As these senior liabilities are paid down, the senior and mezzanine tranches become better secured (due to the rerouting away from the income notes). Therefore, variances will exist between the calculated excess subordination measure and the amount of OTTI recognized due to the impact of the specific structural features of each bond as it relates to the cash flow models.

The following is a summary of available for sale single-issue trust preferred securities as of September 30, 2017:

Security

  Moodys   S&P   Fitch   Amortized Cost   Fair Value   Unrealized
Loss/
(Gain)
 
               (Dollars in thousands) 

Emigrant Bank

   NR    NR    WD   $5,707   $4,366   $1,341 

Bank of America

   Ba1    NR    BBB-    4,680    4,819    (139

M&T Bank

   NR    BBB-    BBB-    3,017    3,282    (265
        

 

 

   

 

 

   

 

 

 
        $13,404   $12,467   $937 
        

 

 

   

 

 

   

 

 

 

Additionally, the Company owns two single-issue trust preferred securities that are classified asheld-to-maturity and include at least one rating below investment grade. These securities include SunTrust Bank ($7.42 million) and Royal Bank of Scotland ($976 thousand).

During the thirdfirst quarter of 2017,2024, United did not recognize any other-than-temporary impairment charges.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, 2017March 31, 2024 is other-than-temporarily impaired. United believes the decline in value resulted from changes in market interest rates, credit spreads and liquidity, not an adverse change in the expected contractual cash flows.a deterioration of credit. Based on a review of each of the securities in the available for sale investment portfolio, management concluded that it was not probablemore-likely-than-not that it would be unableable to realize the cost basis investment and appropriate interest payments on such securities. United has the intent and the ability to hold these securities until such time as the value recovers or the securities mature. As of March 31, 2024, there was no allowance for credit losses related to the Company’s available for sale securities. However, United acknowledges that any impaired securities in an unrealized loss position may be sold in future periods in response to significant, unanticipated changes in asset/liability management decisions, unanticipated future market movements or business plan changes.

Further information regarding the amortized cost and estimated fair value of investment securities, including remaining maturities as well as a more detailed discussion of management’s other-than-temporary impairment analysis, is presented in Note 32 to the unaudited Notes to Consolidated Financial Statements.

59


Loans heldHeld for saleSale

Loans held for sale increased $306.59were $44.43 million at March 31, 2024, a decrease of $11.84 million or 3,630.38% due mainly to the acquisition of Cardinal and its mortgage banking subsidiary, George Mason.21.04% from year-end 2023. Loan originations exceeded loan sales in the secondary market exceeded originations during the first ninethree months of 2017.2024. Loan originations for the first ninethree months of 20172024 were $1.72 billion$176.91 million while loans sales were $1.67 billion. Loans held for sale were $315.03 million at September 30, 2017 as compared to $8.45 million atyear-end 2016.$188.74 million.

Portfolio Loans

Loans, net of unearned income, increased $2.80 billion$160.99 million or 27.07% fromless than 1%. Since year-end 2016 mainly as a result of the Cardinal acquisition which added $3.17 billion, including purchase accounting amounts, in portfolio loans. Sinceyear-end 2016, 2023, commercial, financial and agricultural loans increased $1.72 billion$285.82 million or 28.25%2.40% as a result of a $318.44 million or 3.83% increase in commercial real estate loans, increased $1.58 billionwhich was partially offset by a $32.61 million or 35.21% andless than 1% decrease in commercial loans (not secured by real estate) increased $144.30. Construction and land development loans decreased $150.57 million or 8.94%. In addition,4.78%, residential real estate loans increased $95.15 million or 1.81%, and other consumer loans increased $647.43decreased $71.02 million or 26.94% and $88.90 million or 14.60%, respectively, while construction and land development loans increased $343.89 million or 27.39%. These increases were6.67% due primarily to the Cardinal acquisition. Otherwise, portfolio loans, net of unearned income, declined $369.23 million fromyear-end 2016.a decrease in indirect automobile financing.

The following table summarizes the changes in the major loan classes sinceyear-end 2016: 2023:

 

   September 30   December 31         
(Dollars in thousands)  2017   2016   $ Change   % Change 

Loans held for sale

  $315,031   $8,445   $306,586    3,630.38
  

 

 

   

 

 

   

 

 

   

 

 

 

Commercial, financial, and agricultural:

        

Owner-occupied commercial real estate

  $1,364,757   $1,049,885   $314,872    29.99

Nonowner-occupied commercial real estate

   4,686,183    3,425,453    1,260,730    36.80

Other commercial loans

   1,757,741    1,613,437    144,304    8.94
  

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial, financial, and agricultural

  $7,808,681   $6,088,775   $1,719,906    28.25

Residential real estate

   3,050,868    2,403,437    647,431    26.94

Construction & land development

   1,599,632    1,255,738    343,894    27.39

Consumer:

        

Bankcard

   13,775    14,187    (412   (2.90%) 

Other consumer

   683,898    594,582    89,316    15.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Total gross loans

  $13,156,854   $10,356,719   $2,800,135    27.04

Less: Unearned income

   (16,386   (15,582   (804   5.16
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Loans, net of unearned income

  $13,140,468   $10,341,137   $2,799,331    27.07
  

 

 

   

 

 

   

 

 

   

 

 

 

The following table summarizes the outstanding balances of portfolio loans originated and acquired, by type, as of September 30, 2017 and December 31, 2016:

   September 30, 2017 
(In thousands)  Commercial,
financial and
agricultural
   Residential real
estate
   Construction &
land development
   Consumer   Total 
          

Originated

  $4,459,221   $1,973,839   $1,056,959   $690,711   $8,180,730 

Acquired

   3,349,460    1,077,029    542,673    6,962    4,976,124 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total gross loans

  $7,808,681   $3,050,868   $1,599,632   $697,673   $13,156,854 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   December 31, 2016 
(In thousands)  Commercial,
financial and
agricultural
   Residential real
estate
   Construction &
land development
   Consumer   Total 
          

Originated

  $4,457,470   $1,914,273   $1,095,972   $603,781   $8,071,496 

Acquired

   1,631,305    489,164    159,766    4,988    2,285,223 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total gross loans

  $6,088,775   $2,403,437   $1,255,738   $608,769   $10,356,719 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(Dollars in thousands)  March 31
2024
   December 31
2023
   $ Change   % Change 

Loans held for sale

  $44,426   $56,261   $(11,835   (21.04%) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Commercial, financial, and agricultural:

        

Owner-occupied commercial real estate

  $1,624,746   $1,598,231   $26,515    1.66

Nonowner-occupied commercial real estate

   7,010,266    6,718,343    291,923    4.35

Other commercial loans

   3,539,826    3,572,440    (32,614   (0.91%) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial, financial, and agricultural

  $12,174,838   $11,889,014   $285,824    2.40

Residential real estate

   5,366,385    5,271,236    95,149    1.81

Construction & land development

   2,997,678    3,148,245    (150,567   (4.78%) 

Consumer:

        

Bankcard

   9,431    9,962    (531   (5.33%) 

Other consumer

   984,236    1,054,728    (70,492   (6.68%) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total gross loans

  $21,532,568   $21,373,185   $159,383    0.75

Less: Unearned income

   (12,492   (14,101   1,609    (11.41%) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Loans, net of unearned income

  $21,520,076   $21,359,084   $160,992    0.75
  

 

 

   

 

 

   

 

 

   

 

 

 

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

Other Assets

Other assets increased $107.28decreased $10.98 million or 25.86%3.97% fromyear-end 2016. The Cardinal acquisition added $135.38 2023. Income tax receivable decreased $9.42 million due to timing differences, accounts receivable decreased $1.54 million, and dealer reserve decreased $2.09 million due to a decrease in indirect automobile financing. In addition, core deposit intangibles decreased $910 thousand due to amortization. Partially offsetting these decreases was an increase of $1.68 million in other prepaid assets, plus an additional $28.72 milliona $986 thousand increase in core deposit intangiblesdeferred tax assets, and $1.23 million for the George Mason trade name intangible. The cash surrender value of bank-owned life insurance policies increased $37.66 million, of which $33.50 million was acquired from Cardinal while the remaininga $208 thousand increase wasin derivative assets due to an increase in the cash surrenderfair value. Deferred tax assets increased $30.77 million due mainly to the deferred taxes recorded on the purchase accounting adjustments in the Cardinal acquisition. The remainder of the increase in other assets is the result of an increase of $5.28 million in derivative assets from George Mason, an increase of $4.26 million in income taxes receivable due to a timing difference in payments and an increase of $4.94 million in accounts receivable. Partially offsetting these increases was a decrease of $4.68 million in OREO due to sales and declines in the fair values of properties.

Deposits

60


Deposits

Deposits represent United’s primary source of funding. Total deposits at September 30, 2017March 31, 2024 increased $3.08 billion$100.43 million or 28.51% fromyear-end 2016 as a result of the Cardinal acquisition. Cardinal added $3.35 billion in deposits, including purchase accounting amounts.less than 1%. In terms of composition, noninterest-bearing deposits increased $962.18decreased $131.73 million or 30.34%2.14% while interest-bearing deposits increased $2.12 billion$232.16 million or 27.75%1.39% from December 31, 2016. Organically,2023.

Noninterest-bearing deposits declined $269.74consist of demand deposit and noninterest bearing money market (“MMDA”) account balances. The $131.73 million fromyear-end 2016.

The increasedecrease in noninterest-bearing deposits was due mainly to increasesa $99.65 million or 2.22% decrease in commercial noninterest-bearing deposits of $793.09and a $32.30 million or 32.65%54.40% decrease in official checks. In addition, items in-process decreased $34.53 million. Partially offsetting these decreases in noninterest-bearing deposits was an increase in public noninterest-bearing deposits of $25.59 million or 16.24% and an increase in personal noninterest-bearing deposits of $92.09$7.96 million or 16.03%less than 1%.

Interest-bearing deposits consist of interest-bearing transaction, regular savings, interest-bearing MMDA, and time deposit account balances. Interest-bearing transaction accounts decreased $145.62 million or 2.58% since year-end 2023 as the result of decreases of $57.60 million in personal interest-bearing transaction accounts, $81.28 million in commercial interest-bearing transaction accounts, and $6.74 million in public funds interest-bearing transaction accounts. Regular savings accounts decreased $22.71 million or 1.69% mainly as a result of the Cardinal acquisition. Public funds noninterest-bearing deposits increased $37.42a $14.63 million or 37.07%.

All major categories of interest-bearing deposits increased fromyear-end 2016 as the result of the Cardinal acquisition. Interest-bearing checking accounts increased $418.90 million or 23.56% mainly due to a $110.68 million increasedecrease in commercial interest-bearing checkingpersonal savings accounts and a $252.31$9.86 million increasedecrease in personal interest-bearing checkingcommercial savings accounts. Regular savings increased $342.61 million or 47.50% due to the Cardinal acquisition. Interest-bearing MMDAs increased $617.08$265.66 million or 19.58% as commercial MMDAs increased $526.03 million or 28.59% and4.18%. In particular, personal MMDAs increased $81.74$69.61 million or 7.03%. while commercial MMDAs and public funds MMDAs increased $175.05 million and $21.00 million, respectively.

Time deposits under $100,000 increased $128.41$41.49 million or 18.53% due mainly to an3.89% from year-end 2023. This increase in time deposits under $100,000 was the result of a $45.06 million increase in fixed rate certificatesCertificates of Deposits (“CDs”) under $100,000. Partially offsetting this increase in deposits (CDs)under $100,000 was a $3.36 million decrease in CDs under $100,000 obtained through the use of $89.24 million due to the Cardinal acquisition. Timedeposit listing services.

Since year-end 2023, time deposits over $100,000 increased $609.25$93.34 million or 47.57% due to increases in brokered deposits of $163.45 million,4.13% as fixed rate CDs increased $109.62 million. Partially offsetting this increase in time deposits over $100,000, were decreases of $255.88$5.49 million Certificate of Deposit Account Registry Service (CDARS) balances of $88.09in CDARS over $100,000, $4.36 million in brokered CDs, and $5.71 million in public funds CDs of $95.64 million, all as a result of the Cardinal acquisition.

over $100,000.

The following table below summarizes the changes in theby deposit categoriescategory sinceyear-end 2016: 2023:

 

(Dollars in thousands)  September 30
2017
   December 31
2016
   $ Change   % Change   March 31
2024
   December 31
2023
   $ Change   % Change 

Demand deposits

  $4,134,019   $3,171,841   $962,178    30.33  $6,017,349   $6,149,080   $(131,731   (2.14%) 

Interest-bearing checking

   2,197,058    1,778,156    418,902    23.56   5,502,513    5,648,135    (145,622   (2.58%) 

Regular savings

   1,063,830    721,224    342,606    47.50   1,322,553    1,345,258    (22,705   (1.69%) 

Money market accounts

   3,768,979    3,151,896    617,083    19.58   6,615,111    6,349,453    265,658    4.18

Time deposits under $100,000

   821,417    693,005    128,412    18.53   1,107,580    1,066,092    41,488    3.89

Time deposits over $100,000(1)

   1,889,994    1,280,745    609,249    47.57   2,354,640    2,261,301    93,339    4.13
  

 

   

 

   

 

   

 

 

 

   

 

   

 

   

 

 

Total deposits

  $13,875,297   $10,796,867   $3,078,430    28.51  $22,919,746   $22,819,319   $100,427    0.44
  

 

   

 

   

 

   

 

 

 

   

 

   

 

   

 

 

 

(1)

Includes time deposits of $250,000 or more of $935,197$905,829 and $536,507$842,118 at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively.

Borrowings

Total borrowings at September 30, 2017 increased $474.71March 31, 2024 decreased $38.04 million or 34.36% during1.92% since year-end 2023. During the first ninethree months of 2017. Cardinal added $316.33 million, including purchase accounting amounts, upon consummation of the acquisition. Sinceyear-end 2016,2024, short-term borrowings increased $282.49$11.63 million or 134.80%5.93% due to increases of $200.00 million and $78.92 millionan increase in short-term FHLB advances and short-term securities sold under agreements to repurchase, respectively. In addition, federal funds purchased increased $3.57 million. Cardinal added $96.21 million in short-term borrowings, all of which was repaid prior toquarter-end.repurchase. Long-term borrowings increased $192.22decreased $49.67 million or 16.40% since2.78% from year-end 2016 as long-term 2023 due to maturities of advances obtained from the FHLB advances increased $174.41 million and issuancesduring the first quarter of trust preferred capital securities increased $17.81 million. Cardinal added $220.12 million in long-term borrowings, $20 million of which was repaid prior toquarter-end.2024.

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The table below summarizes the change in the borrowing categories sinceyear-end 2016: 2023:

 

(Dollars in thousands)  September 30
2017
   December 31
2016
   $ Change   % Change   March 31
2024
   December 31
2023
   $ Change   % Change 

Federal funds purchased

  $25,800   $22,235   $3,565    16.03

Short-term securities sold under agreements to repurchase

   266,236    187,316    78,920    42.13  $207,727   $196,095   $11,632    5.93

Long-term securities sold under agreements to repurchase

   50,000    50,000    0    0.00

Short-term FHLB advances

   200,000    0    200,000    100.00

Long-term FHLB advances

   1,072,115    897,707    174,408    19.43   1,460,415    1,510,487    (50,072   (3.31)% 

Issuances of trust preferred capital securities

   242,131    224,319    17,812    7.94   279,019    278,616    403    0.14
  

 

   

 

   

 

   

 

 

 

   

 

   

 

   

 

 

Total borrowings

  $1,856,282   $1,381,577   $474,705    34.36  $1,947,161   $1,985,198   $(38,037   (1.92)% 
  

 

   

 

   

 

   

 

 

 

   

 

   

 

   

 

 

For a further discussion of borrowings see Notes 89 and 910 to the unaudited Notes to Consolidated Financial Statements.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at September 30, 2017March 31, 2024 increased $40.10$6.14 million or 42.81%2.88% fromyear-end 2016. Cardinal added $50.93 million including an unfavorable lease liability of $2.28 million. 2023. In particular, deferred compensation increased $14.33 million, dividends payable increased $9.33 million, accrued mortgage escrow liabilities increased $6.05 million, other accrued expenses increased $8.12 million and income taxes payable increased $6.75$12.44 million due to timing differences, business franchise taxes increased $2.60 million, and accrued loan expenses increased $7.44 million. In addition, interest payable increased $534 thousand due to an increase in CDs. Partially offsetting these increases in accrued expenses and other liabilities was a decrease of $10.72$11.52 million in the pension liabilityincentives payable due to a $10 million payment in the third quarter of 2017 and a decline of $1.58 million in derivative liabilities due to a change in fair value.

payments.

Shareholders’ Equity

Shareholders’ equity at September 30, 2017March 31, 2024 was $4.81 billion, which was an increase of $36.20 million or less than 1% from year-end 2023.

Retained earnings increased $1.03 billion$36.60 million or 45.98%2.10% from December 31, 2016 mainly as a result of the Cardinal acquisition. The Cardinal transaction added approximately $975.25 million in shareholders’ equity as 23,690,589 shares were issued from United’s authorized but unissued shares for the merger at a cost of approximately $972.50 million.year-end 2023. Earnings net of dividends for the first ninethree months of 20172024 were $36.57$36.60 million.

Accumulated other comprehensive income increased $10.55decreased $1.31 million or less than 1% from year-end 2023 due mainly to an increasea decrease of $8.44$2.39 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes. Partially offsetting this decrease was a $657 thousand increase in the fair value of cash flow hedges, net of deferred income taxes. The after taxnon-credit portionafter-tax accretion of pension costs was $2.11 million$424 thousand for the first nine monthsquarter of 2017.2024.

RESULTS OF OPERATIONS

Overview

NetThe following table sets forth certain consolidated income for the third quarterstatement information of 2017 was $56.74 million or $0.54 per diluted share, as compared to $41.48 million or $0.54 per diluted share for the prior year third quarter. United:

   Three Months Ended 
(Dollars in thousands)  March
2024
   March
2023
   December
2023
 

Income Statement Summary:

      

Interest income

  $369,180   $329,303   $369,175 

Interest expense

   146,691    94,983    139,485 
  

 

 

   

 

 

   

 

 

 

Net interest income

   222,489    234,320    229,690 

Provision for credit losses

   5,740    6,890    6,875 

Other income

   32,212    32,744    33,675 

Other expense

   140,742    137,419    152,287 
  

 

 

   

 

 

   

 

 

 

Income before income taxes

   108,219    122,755    104,203 

Income taxes

   21,405    24,448    24,813 
  

 

 

   

 

 

   

 

 

 

Net income

  $86,814   $98,307   $79,390 
  

 

 

   

 

 

   

 

 

 

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Net income for the first nine monthsquarter of 20172024 was $132.61$86.81 million or $1.39 per diluted shareas compared to $107.98earnings of $98.31 million or $1.48 per share for the first nine monthsquarter of 2016.

As previously mentioned, United completed its acquisition of Cardinal on April 21, 2017. The financial results of Cardinal are included in United’s results from the acquisition date. As a result of the acquisition,2023. Earnings for the first nine months and third quarter of 2017 were impacted for increased levels of average balances, income, and expense2024, as compared to the first nine months and third quarter of 2016 and two full months in2023, decreased primarily due to lower net interest income as a result of the secondimpact of higher market interest rates on interest-bearing liabilities. Diluted earnings per share were $0.64 for the first quarter of 2017.

In addition, as previously mentioned, United completed its acquisition of Bank of Georgetown on June 3, 2016. The financial results of Bank of Georgetown were included in United’s results from the acquisition date. As a result,2024 and $0.73 for the first nine months and third quarter of 2016 were impacted by increased levels of average balances,2023. On a linked-quarter basis, net income and expense. The third quarter and first nine months of 2017 included $532 thousand and $24.99 million, respectively, of merger-related expenses fromfor the Cardinal acquisition and the third quarter and first nine months of 2016 included $924 thousand and $5.61 million, respectively, of merger-related expenses from the Bank of Georgetown acquisition.

For the thirdfourth quarter of 2017, 2023 was $79.39 million or $0.59 per diluted share. The fourth quarter of 2023 included $11.99 million of noninterest expense for the FDIC special assessment levied on banking organizations as compared to an additional $1.81 million of noninterest expense for the first quarter of 2024 related to the FDIC’s revised loss estimates to the Deposit Insurance Fund.

United’s annualized return on average assets for the first three months of 2024 was 1.19% and return on average shareholders’ equity was 6.89%7.25% as compared to 1.17%1.35% and 8.10%8.72%, respectively, for the third quarterfirst three months of 2016.2023. On a linked-quarter basis, United’s annualized return on average assets for the first nine monthsfourth quarter of 20172024 was 1.03%1.08% and return on average shareholders’ equity was 6.22%6.70%. For the first three months of 2024, United’s annualized return on average tangible equity, a non-GAAP measure, was 11.98%, as compared to 1.10% and 7.73%14.97% for the first ninethree months of 2016.2023. On a linked-quarter basis, United’s Federal Reserve peer group’s (bank holding companies with total assets over $10 billion) most recently reported averageannualized return on assets and average return ontangible equity were 0.96% and 8.28%, respectively,was 11.27% for the first six monthsfourth quarter of 2017.2023.

   Three Months Ended 
   March 31,
2024
  March 31,
2023
  December 31,
2023
 

Return on Average Tangible Equity:

    

(a) Net Income (GAAP)

  $86,814  $98,307  $79,390 

(b) Number of Days

   91   90   92 

Average Total Shareholders’ Equity (GAAP)

  $4,816,476  $4,570,288  $4,697,680 

Less: Average Total Intangibles

   (1,901,074  (1,907,331  (1,903,458
  

 

 

  

 

 

  

 

 

 

(c) Average Tangible Equity (non-GAAP)

  $2,915,402  $2,662,957  $2,794,222 

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

   11.98  14.97  11.27

Net interest income for the thirdfirst quarter of 2017 was $394.14 million, an increase of $39.212024 decreased $11.83 million, or 35.30%5.05%, to $222.49 million from net interest income of $234.32 million for the third quarterfirst three months of 2016.2023. The increasedecrease of $11.83 million in net interest income occurred because total interest income increased $48.45$39.88 million while total interest expense only increased $9.24$51.71 million from the thirdfirst quarter of 2016.2023. Net interest income for the first nine monthsquarter of 2017 was $394.14 million, an increase of $82.062024 decreased $7.20 million, or 26.30%3.14%, from the prior year’s first nine months.fourth quarter of 2023. The increasedecrease of $7.20 million in net interest income occurred because total interest income increased $102.57 million$5 thousand while total interest expense only increased $20.51$7.21 million from the first nine monthsfourth quarter of 2016.2023.

The provision for credit losses was $7.28 million and $21.43$5.74 million for the thirdfirst quarter and first nine months of 2017, respectively,2024 as compared to $6.99 million and $18.69a provision for credit losses of $6.89 million for the thirdfirst quarter of 2023. The decrease in the provision for credit losses was mainly due to a change in qualitative factors and the impact of reasonable and supportable forecasts of future macroeconomic conditions. On a linked-quarter basis, the provision for credit losses for the first ninequarter of 2024 declined $1.14 million from $6.88 million for the fourth quarter of 2023 due mainly to less portfolio loan growth as well as a change in the impact of reasonable and supportable forecasts of future macroeconomic conditions in the first quarter of 2024 as compared to the fourth quarter of 2023.

63


Noninterest income was $32.21 million for the first three months of 2016, respectively. For the third quarter2024, a decrease of 2017, noninterest income was $38.23 million, which was an increase of $19.21 million$532 thousand or 100.98%1.62% from the third quarterfirst three months of 2016. Noninterest2023 due mainly to a decrease in mortgage loan servicing income of $1.49 million partially offset by increased fees of $1.07 million from brokerage services. On a linked-quarter basis, noninterest income for the first nine monthsquarter of 20172024 decreased $1.46 million, or 4.34%, from the fourth quarter of 2023. The fourth quarter of 2023 included a $2.66 million gain from the payoff of a fixed rate commercial loan that had an associated interest rate swap derivative. Partially offsetting the decrease in noninterest income was $98.88a $907 thousand increase in fees from brokerage services.

Noninterest expense for the first quarter of 2024 was $140.74 million, which was an increase of $45.50$3.32 million or 85.24%2.42% from the first ninequarter of 2023 primarily due to increases in employee compensation and FDIC insurance expense partially offset by a decrease in other noninterest expense. On a linked-quarter basis, noninterest expense for the first quarter of 2024 decreased $11.55 million or 7.58% from the fourth quarter of 2023. This decrease in noninterest expense was driven by decreases in FDIC insurance expense and other noninterest expense partially offset by an increase in employee benefits.

Income taxes decreased $3.04 million or 12.45% for the first three months of 2016. These

increases from 2016 were mainly2024 as compared to the first three months of 2023 primarily due to additionaldecreased earnings and a slightly lower effective tax rate. On a linked-quarter basis, income from mortgage banking activities as a result oftaxes decreased $3.41 million or 13.73% for the Cardinal acquisition. For the thirdfirst quarter of 2017, noninterest expense increased $33.88 million or 53.96% from2024 as compared to the thirdfourth quarter of 2016. For the first nine months of 2017, noninterest expense increased $85.94 million or 46.28% from the first nine months of 2016. These increases from 2016 were2023 due mainly to the Cardinal acquisition.

Income taxes for the third quarter of 2017 were $27.84 million as compared to $18.85 million for the third quarter of 2016. For the first nine months of 2017 and 2016, income tax expense was $67.36 million and $53.10 million, respectively. These increases for 2017 were due to higher earnings and a higherlower effective tax rate. For the quarters ended September 30, 2017 and 2016, United’srate partially offset by higher earnings. The effective tax rate was 32.91%19.78% and 31.24%,19.92% and for the first quarter of 2024 and 2023, respectively. The effective tax rate was 23.81% for the first nine months of 2017 and 2016 was 33.68% and 32.97%, respectively.

Business Segments

As a result of the Cardinal acquisition, United now operates in two business segments: community banking and mortgage banking. Prior to the Cardinal acquisition, United’s business activities were confined to just one reportable segment of community banking.

Community Banking

Net income attributable to the community banking segment for the thirdfourth quarter of 2017 was $59.94 million compared to net income of $42.97 million for the third quarter of 2016.

Net interest income increased $39.85 million to $152.89 million for the third quarter of 2017, compared to $113.03 million for the same period of 2016. Generally, net interest income for the third quarter of 2017 increased from the third quarter of 2016 because of the earning assets added from the Cardinal acquisition. Provision for loan losses was $7.28 million for the three months ended September 30, 2017 compared to a provision of $6.99 million for the same period of 2016. Noninterest income decreased $1.29 million for the third quarter of 2017 to $18.37 million as compared to $19.67 million for the third quarter of 2016. The decrease was mainly due to a decline of $1.14 million in income from bank-owned life insurance policies due to death benefits recorded in the third quarter of 2016. Noninterest expense was $74.55 million for the third quarter of 2017, compared to $63.01 million for the same period of 2016. The increase of $11.54 million in noninterest expense was primarily attributable to increases in branches, staffing and merger-related expenses from the Cardinal acquisition.

Net income attributable to the community banking segment for the first nine months of 2017 was $143.88 million compared to net income of $112.57 million for the first nine months of 2016.

Net interest income increased $83.21 million to $401.04 million for the first nine months of 2017, compared to $317.84 million for the same period of 2016. Generally, net interest income for the first nine months of 2017 increased from the first nine months of 2016 because of the earning assets added from the Cardinal acquisition. Provision for loan losses was $21.43 million for the nine months ended September 30, 2017 compared to a provision of $18.69 million for the same period of 2016. Noninterest income decreased by $1.91 million to $53.41 million for the first nine months of 2017 as compared to $55.32 million for the first nine months of 2016. The decrease was mainly due to a decline of $1.04 million in income from bank-owned life insurance policies due to death benefits recorded in the third quarter of 2016. Noninterest expense was $215.94 million for the nine months ended September 30, 2017, compared to $186.32 million for the same period of 2016. The increase of $29.61 million in noninterest expense was primarily attributable to increases in branches, staffing and merger-related expenses from the Cardinal acquisition.

Mortgage Banking

The mortgage banking segment reported a net loss of $2.80 million and $322 thousand for the third quarter and first nine months of 2017, respectively. Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was $19.94 million and $42.33 million for the third quarter and first nine months of 2017, respectively. Noninterest expense was $24.04 million and $42.74 million for the third quarter and first nine months of 2017, respectively. Noninterest expense consists mainly of salaries, commissions and benefits of mortgage segment employees. There is no comparison to results for 2016 because United did not have a mortgage banking segment in 2016.2023.

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

Net Interest Income

Net interest income represents the primary component of United’s earnings. It is the difference between interest income from earning assets and interest expense incurred to fund these assets. Net interest income is impacted by changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as changes in market interest rates. Such changes, and their impact on net interest income in 20172024 and 2016,2023, are presented below.

Net interest income for the thirdfirst quarter of 20172024 was $150.28$222.49 million, which was an increasea decrease of $39.21$11.83 million or 35.30%5.05% from the thirdfirst quarter of 2016.2023. The $39.21$11.83 million increasedecrease in net interest income occurred because total interest income increased $48.45$39.88 million while total interest expense only increased $9.24$51.71 million from the thirdfirst quarter of 2016. Net2023. On a linked-quarter basis, net interest income for the first nine monthsquarter of 2017 was $394.14 million, which was an increase of $82.062024 decreased $7.20 million, or 26.30%3.14%, from the first nine monthsfourth quarter of 2016.2023. The $82.06$7.20 million increasedecrease in net interest income occurred because total interest income increased $102.57 million$5 thousand while total interest expense only increased $20.51$7.21 million from the first nine months of 2016. On a linked-quarter basis, net interest income for the thirdfourth quarter of 2017 increased $14.03 million or 10.30% from the second quarter of 2017. The $14.03 million increase in net interest income occurred because total interest income increased $16.64 million while total interest expense only increased $2.61 million from the second quarter of 2017. Generally, interest income for the third quarter and first nine months of 2017 increased from the third quarter and first nine months of 2016 because of the earning assets added from the Cardinal acquisition. In addition, loan accretion on acquired loans for the third quarter and first nine months of 2017 increased from the same time periods last year and the second quarter of 2017. 2023.

For the purpose of this remaining discussion, net interest income is presented on atax-equivalent basis to provide a comparison among all types of interest earning assets. Thetax-equivalent basis adjusts for thetax-favored status of income from certain loans and investments. Although this is anon-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable andtax-exempt sources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition.

Tax-equivalent net interest income for the thirdfirst quarter of 20172024 was $152.37$223.36 million, an increasewhich was a decrease of $39.74$12.09 million or 35.29%5.14% from the thirdfirst quarter of 20162023. The decrease in net interest income and tax-equivalent net interest income was primarily due mainly to higher interest expense driven by deposit rate repricing, an increase in average earning assets frominterest-bearing deposits and a decrease in loan fees partially offset by the Cardinal acquisition. Average earning assets for the third quarterimpact of 2017 increased $3.97 billion or 31.53% from the third quarter of 2016 due mainly to a $3.18 billion or 30.66% increase in average net loans. Average short-term investments increased $436.66 million or 53.90% while average investment securities increased $360.25 million or 25.15%. The third quarter of 2017 average yieldrising market interest rates on earning assets, organic loan growth and a decrease in average long-term borrowings. The average cost of funds increased 22104 basis points from the thirdfirst quarter of 2016 due2023 to additional3.21% driven by an increase in the yield on average interest-bearing deposits of 127 basis points. Average interest-bearing deposits increased $1.48 billion or 9.73% from the first quarter of 2023.

64


Acquired loan accretion of $7.68 million on acquired loans and higher market interest rates. Partially offsetting the increases totax-equivalent net interest income for the thirdfirst quarter of 2017 was2024 decreased $613 thousand from the first quarter of 2023. Loan fees for the first quarter of 2024 decreased $351 thousand from the first quarter of 2023. The yield on average earning assets increased 60 basis points from the first quarter of 2023 to 5.70% driven by an increase of 19 basis points in the yield on average costnet loans of funds as compared to53 basis points. Average net loans increased $800.47 million, or 3.91%, from the thirdfirst quarter of 2016 due to the higher market interest rates.2023. The net interest margin of 3.65%3.44% for the thirdfirst quarter of 20172024 was an increasea decrease of 919 basis points from the net interest margin of 3.56%3.63% for the thirdfirst quarter of 2016.

2023.

Tax-equivalentOn a linked-quarter basis, tax-equivalent net interest income for the first nine monthsquarter of 2017 was $400.31 million, an increase of $83.672024 decreased $7.20 million, or 26.42%3.12%, from the first nine monthsfourth quarter of 2016. This increase2023. The decrease in net interest income and tax-equivalent net interest income was primarily attributabledue to an increasehigher interest expense driven by the impact of deposit rate repricing and a decrease in loan fees. The yield on average earning assets from the Cardinal acquisition. Average earning assetsinterest-bearing deposits increased $3.53 billion or 30.25% from the first nine months of 2016 as average net loans increased $2.51 billion or 25.66%15 basis points to 3.10% for the first nine monthsquarter of 2017. Average investment securities increased $340.92 million or 26.26%. Partially offsetting the increases totax-equivalent net interest income for the first nine months of 2017 was an increase of 15 basis points in2024. Overall, the average cost of funds as compared tofor the first nine monthsquarter of 2016 due to higher market interest rates.2024 increased 14 basis points from the fourth quarter of 2023. In addition,comparison, the yield on average earning assets for the first nine monthsquarter of 2017 average yield on2024 increased 2 basis points from the fourth quarter of 2023. Loan fees for the first quarter of 2024 decreased $677 thousand from the fourth quarter of 2023. Acquired loan accretion income for the first quarter of 2024 decreased $521 thousand from the fourth quarter of 2023. Average earning assets decreased a basis pointfor the first quarter of 2024 were relatively flat from the first nine monthsfourth quarter of 2016 due to the replacement of maturing higher-yielding investment securities with those at a lower current interest rate despite an increase of $11.642023, increasing $211.65 million from accretion on acquired loans.or less than 1%. Average net loans increased $224.86 million or 1.07% and average short-term investments increased $63.23 million or 7.72% while average investments decreased $76.44 million or 1.90%. The net interest margin of 3.52%3.44% for the first nine monthsquarter of 20172024 was a decrease of 1011 basis points from the net interest margin of 3.62%3.55% for the first nine months of 2016.

On a linked-quarter basis, United’stax-equivalent net interest income for the thirdfourth quarter of 2017 increased $13.61 million or 9.81% due mainly to increases in the average yield on and the average balance of earning assets. The third quarter of 2017 average yield on earning assets increased 25 basis points from the second quarter of 2017 due to additional loan accretion of $5.45 million on acquired loans. Average earning assets increased $426.47 million or 2.64% for the linked-quarter due to the Cardinal acquisition. Average net loans increased $492.64 million or 3.78% while average investment securities increased $40.60 million or 2.32%. Average short-term investments decreased $106.77 million or 7.89%. Partially offsetting the increases totax-equivalent net interest income for the third quarter of 2017 was an increase of 7 basis points in the average cost of funds as compared to the second quarter of 2017 due to higher market interest rates. The net interest margin of 3.65% for the third quarter of 2017 was an increase of 21 basis points from the net interest margin of 3.44% for the second quarter of 2017.2023.

United’stax-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 totax-equivalent net interest income for the three months ended September 30, 2017, September 30, 2016March 31, 2024, March 31, 2023 and June 30, 2017 and the nine months ended September 30, 2017 and September 30, 2016:December 31, 2023:

 

  Three Months Ended 
  September 30   September 30   June 30   Three Months Ended 
(Dollars in thousands)  2017   2016   2017   March 31
2024
   March 31
2023
   December 31
2023
 

Loan accretion

  $12,805   $5,121   $7,355   $2,506   $3,119   $3,027 

Certificates of deposit

   817    63    776    171    356    201 

Long-term borrowings

   268    22    197    (331   (353   (333
  

 

   

 

   

 

 

 

   

 

   

 

 

Total

  $13,890   $5,206   $8,328   $2,346   $3,122   $2,895 
  

 

   

 

   

 

 

 

   

 

   

 

 

   Nine Months Ended 
   September 30   September 30 
(Dollars in thousands)  2017   2016 

Loan accretion

  $24,395   $12,750 

Certificates of deposit

   1,640    63 

Long-term borrowings

   348    328 
  

 

 

   

 

 

 

Tax-equivalent net interest income

  $26,383   $13,141 
  

 

 

   

 

 

 

The following tables reconcile the difference between net interest income andtax-equivalent net interest income for the three months ended September 30, 2017, September 30, 2016March 31, 2024, March 31, 2023 and June 30, 2017 and the nine months ended September 30, 2017 and September 30, 2016.December 31, 2023.

 

   Three Months Ended 
   September 30   September 30   June 30 
(Dollars in thousands)  2017   2016   2017 

Net interest income, GAAP basis

  $150,276   $111,069   $136,245 

Tax-equivalent adjustment (1)

   2,092    1,556    2,512 
  

 

 

   

 

 

   

 

 

 

Tax-equivalent net interest income

  $152,368   $112,625   $138,757 
  

 

 

   

 

 

   

 

 

 

  Nine Months Ended 
  September 30   September 30   Three Months Ended 
(Dollars in thousands)  2017   2016   March 31
2024
   March 31
2023
   December 31
2023
 

Net interest income, GAAP basis

  $394,141   $312,078   $222,489   $234,320   $229,690 

Tax-equivalent adjustment (1)

   6,168    4,562    872    1,135    866 
  

 

   

 

 

 

   

 

   

 

 

Tax-equivalent net interest income

  $400,309   $316,640   $223,361   $235,455   $230,556 
  

 

   

 

 

 

   

 

   

 

 

 

(1)

Thetax-equivalent adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 35%.21% for the three months ended March 31, 2024 and 2023 and December 31, 2023. All interest income on loans and investment securities was subject to state income taxes.

65


The following tables showtable shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month andsix-monthperiods ended September 30, 2017March 31, 2024 and 2016,2023, 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 atax-equivalent basis using the statutory federal income tax rate of 35%.21% for the three-month period ended March 31, 2024 and 2023. Interest income on all loans and investment securities was subject to state income taxes.

 

  Three Months Ended Three Months Ended   Three Months Ended Three Months Ended 
  September 30, 2017 September 30, 2016   March 31, 2024 March 31, 2023 
(Dollars in thousands)  Average
Balance
 Interest
(1)
   Avg. Rate
(1)
 Average
Balance
 Interest
(1)
   Avg. Rate
(1)
   Average
Balance
 Interest
(1)
   Avg. Rate
(1)
 Average
Balance
 Interest
(1)
   Avg. Rate
(1)
 

ASSETS

         

Earning Assets:

         

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

  $1,246,742  $4,874    1.55 $810,081  $1,107    0.54  $882,656  $12,303    5.61 $936,394  $10,983    4.76

Investment Securities:

         

Taxable

   1,533,444   9,406    2.45  1,270,734   8,764    2.76   3,743,157   34,722    3.71  4,404,864   36,259    3.29

Tax-exempt

   259,189   2,284    3.52  161,651   1,527    3.78   212,375   1,474    2.78  387,671   2,740    2.83
  

 

  

 

   

 

  

 

  

 

   

 

 

 

  

 

   

 

  

 

  

 

   

 

 

Total Securities

   1,792,633   11,690    2.61  1,432,385   10,291    2.87   3,955,532   36,196    3.66  4,792,535   38,999    3.26

Loans, net of unearned income (2)

   13,607,933   157,111    4.59  10430,449   113,295    4.32

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

   21,508,611   321,553    6.01  20,683,610   280,456    5.49

Allowance for loan losses

   (73,031     (71,493   
  

 

     

 

    

Net loans

   13,534,902     4.61  10,358,956     4.35

Net loans (2)(3)

   21,249,270     6.08  20,448,801     5.55
  

 

  

 

   

 

  

 

  

 

   

 

 

 

  

 

   

 

  

 

  

 

   

 

 

Total earning assets

   16,574,277  $173,675    4.16  12,601,422  $124,693    3.94   26,087,458  $370,052    5.70  26,177,730  $330,438    5.10
   

 

   

 

   

 

   

 

  

 

   

 

   

 

   

 

 

Other assets

   2,353,508      1,558,147    
  

 

     

 

    

TOTAL ASSETS

  $18,927,785     $14,159,569    
  

 

     

 

    

LIABILITIES

         

Interest-Bearing Funds:

         

Interest-bearing deposits

  $9,837,967  $14,227    0.57 $7,255,184  $7,723    0.42  $16,663,765  $128,377    3.10 $15,186,632  $68,592    1.83

Short-term borrowings

   325,631   430    0.52  519,807   553    0.42   203,570   2,082    4.11  166,614   1,157    2.82

Long-term borrowings

   1,364,417   6,650    1.93  1,171,599   3,792    1.29   1,500,237   16,232    4.35  2,417,999   25,234    4.23
  

 

  

 

   

 

  

 

  

 

   

 

 

 

  

 

   

 

  

 

  

 

   

 

 

Total Interest-Bearing Funds

   11,528,015   21,307    0.73  8,946,590   10,068    0.54   18,367,572   146,691    3.21  17,771,245   94,983    2.17
   

 

   

 

   

 

   

 

  

 

   

 

   

 

   

 

 

Noninterest-bearing deposits

   4,036,653      3,105,273    

Accrued expenses and other liabilities

   97,575      71,670    
  

 

     

 

    

TOTAL LIABILITIES

   15,662,243      12,123,533    

SHAREHOLDERS’ EQUITY

   3,265,542      2,036,036    
  

 

     

 

    

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

  $18,927,785     $14,159,569    

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY

  

 

     

 

    

NET INTEREST INCOME

   $152,368     $112,625   
   

 

     

 

   

INTEREST SPREAD

      3.43     3.40      2.49     2.93

NET INTEREST MARGIN

      3.65     3.56      3.44     3.63

 

(1)

The interest income and the yields on federally nontaxable loans and investment securities are presented on atax-equivalent basis using the statutory federal income tax rate of 35%21%.

(2)

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

(3)

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

   Nine Months Ended  Nine Months Ended 
   September 30, 2017  September 30, 2016 
(Dollars in thousands)  Average
Balance
  Interest
(1)
   Avg. Rate
(1)
  Average
Balance
  Interest
(1)
   Avg. Rate
(1)
 

ASSETS

         

Earning Assets:

         

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

  $1,282,589  $11,345    1.18 $599,695  $2,371    0.53

Investment Securities:

         

Taxable

   1,412,221   26,226    2.48  1,162,082   24,728    2.84

Tax-exempt

   227,171   6,242    3.66  136,386   4,130    4.04
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Total Securities

   1,639,392   32,468    2.64  1,298,468   28,858    2.96

Loans, net of unearned income (2)

   12,360,252   409,643    4.43  9,852,670   318,053    4.31

Allowance for loan losses

   (72,904     (74,198   
  

 

 

     

 

 

    

Net loans

   12,287,348     4.46  9,778,472     4.34
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Total earning assets

   15,209,329  $453,456    3.99  11,676,635  $349,282    4.00
   

 

 

   

 

 

   

 

 

   

 

 

 

Other assets

   1,978,315      1,427,763    
  

 

 

     

 

 

    

TOTAL ASSETS

  $17,187,644     $13,104,398    
  

 

 

     

 

 

    

LIABILITIES

         

Interest-Bearing Funds:

         

Interest-bearing deposits

  $9,024,232  $35,281    0.52 $6,815,863  $21,278    0.42

Short-term borrowings

   298,213   1,149    0.52  396,769   1,132    0.38

Long-term borrowings

   1,286,583   16,717    1.74  1,100,741   10,232    1.24
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Total Interest-Bearing Funds

   10,609,028   53,147    0.67  8,313,373   32,642    0.52
   

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest bearing deposits

   3,639,507      2,856,807    

Accrued expenses and other liabilities

   90,112      67,820    
  

 

 

     

 

 

    

TOTAL LIABILITIES

   14,338,647      11,238,000    

SHAREHOLDERS’ EQUITY

   2,848,997      1,866,398    
  

 

 

     

 

 

    

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

  $17,187,644     $13,104,398    
  

 

 

     

 

 

    

NET INTEREST INCOME

   $400,309     $316,640   
   

 

 

     

 

 

   

INTEREST SPREAD

      3.32     3.48

NET INTEREST MARGIN

      3.52     3.62
66


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, 2024 and December 31, 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 March 31, 2024 and December 31, 2023. Interest income on all loans and investment securities was subject to state income taxes.

   Three Months Ended
March 31, 2024
  Three Months Ended
December 31, 2023
 
(Dollars in thousands)  Average
Balance
  Interest
(1)
   Avg. Rate
(1)
  Average
Balance
  Interest
(1)
   Avg. Rate
(1)
 

ASSETS

         

Earning Assets:

         

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

  $882,656  $12,303    5.61 $819,431  $11,570    5.60

Investment Securities:

         

Taxable

   3,743,157   34,722    3.71  3,836,498   35,710    3.72

Tax-exempt

   212,375   1,474    2.78  195,471   1,471    3.01
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Total Securities

   3,955,532   36,196    3.66  4,031,969   37,181    3.69

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

   21,508,611   321,553    6.01  21,279,444   321,290    6.00

Allowance for loan losses

   (259,341     (255,032   
  

 

 

     

 

 

    

Net loans (2)(3)

   21,249,270     6.08  21,024,412     6.07
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Total earning assets

   26,087,458  $370,052    5.70  25,875,812  $370,041    5.68
   

 

 

   

 

 

   

 

 

   

 

 

 

Other assets

   3,344,925      3,288,334    
  

 

 

     

 

 

    

TOTAL ASSETS

  $29,432,383     $29,164,146    
  

 

 

     

 

 

    

LIABILITIES

         

Interest-Bearing Funds:

         

Interest-bearing deposits

  $16,663,765  $128,377    3.10 $16,414,152  $122,132    2.95

Short-term borrowings

   203,570   2,082    4.11  198,453   1,998    3.99

Long-term borrowings

   1,500,237   16,232    4.35  1,394,361   15,355    4.37
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Total Interest-Bearing Funds

   18,367,572   146,691    3.21  18,006,966   139,485    3.07
   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest-bearing deposits

   5,941,866      6,175,309    

Accrued expenses and other liabilities

   306,469      284,191    
  

 

 

     

 

 

    

TOTAL LIABILITIES

   24,615,907      24,466,466    

SHAREHOLDERS’ EQUITY

   4,816,476      4,697,680    
  

 

 

     

 

 

    

TOTAL LIABILITIES AND

         

SHAREHOLDERS’ EQUITY

  $29,432,383     $29,164,146    
  

 

 

     

 

 

    

NET INTEREST INCOME

   $223,361     $230,556   
   

 

 

     

 

 

   

INTEREST SPREAD

      2.49     2.61

NET INTEREST MARGIN

      3.44     3.55

 

(1)

The interest income and the yields on federally nontaxable loans and investment securities are presented on atax-equivalent basis using the statutory federal income tax rate of 35%21%.

(2)

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

(3)

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

67


Provision for LoanCredit Losses

The provision for credit losses was $5.74 million for the first quarter of 2024 as compared to a provision for credit losses of $6.89 million for the first quarter of 2023. On a linked-quarter basis, the provision for credit losses for the fourth quarter of 2023 was $6.88 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 quartersquarter ended September 30, 2017 and 2016,March 31, 2024, the provision for loan and lease losses was $7.28 million and $6.99 million, respectively. The provision for loan losses for the first nine months of 2017 and 2016 was $21.43 million and $18.69 million, respectively. Net charge-offs were $5.34 million for the third quarter of 2017 as compared to net charge-offs of $6.78 million for the same quarter in 2016. Net charge-offs for the first nine months of 2017 were $19.27a $5.74 million as compared to $21.76a provision for loan and lease losses of $6.89 million for the first nine months of 2016.quarter ended March 31, 2023. The higher amountslower amount of provision expense for the periods in 2017first quarter of 2024 compared to the same periods in 2016 werefirst quarter of 2023 was mainly due to an increase in impaired loans necessitating specific allowance allocation.less credit deterioration expected within the portfolios for 2024 as compared to 2023. Net charge-offs were $2.07 million for the first quarter of 2024 compared to net charge-offs were $1.14 million for the first quarter of 2023. The lower amountshigher amount of net charge-offs for the periods in 20172024 as compared to

the same periods in 2016 were 2023 was primarily due to thecharge-off in 2016 of a large loan relationship which had deteriorated toincreased charge-offs within the point ofnon-collectability.consumer portfolio. On a linked-quarter basis, the provision for loan and lease losses and net charge-offs decreased $972 thousand and $2.81for the fourth quarter of 2023 was $6.88 million. The decline of $1.14 million respectively,for the first quarter of 2024 from the secondfourth quarter of 20172023 was due mainly to providing for additional allowance allocation needs withina greater amount of recoveries in the existingfirst quarter of 2024 compared to fourth quarter of 2023, primarily in the commercial real estate owner-occupied portfolio and recognitionother commercial portfolio. Net charge-offs were $2.53 million for the fourth quarter of charge-offs on previously impaired loans.2023. Annualized net charge-offs as a percentage of average loans were 0.16% and 0.21% for the third quarter and first nine months of 2017, respectively.

At September 30, 2017, nonperforming loans were $168.40 million or 1.28% of loans,leases, net of unearned income for the first quarter of 2024 were 0.04% as compared to nonperforming loansannualized net charge-offs of $113.26 million or 1.10% of loans, net of unearned income at December 31, 2016. The components of nonperforming loans include: 1) nonaccrual loans, 2) loans which are contractually past due 90 days or more as to interest or principal, but have not been put on a nonaccrual basis and 3) loans whose terms have been restructured0.02% for economic or legal reasons due to financial difficulties of the borrowers.

Loans past due 90 days or more and still on accrual were $22.25 million at September 30, 2017 which was an increase of $13.66 million or 159.13% from $8.59 million atyear-end 2016. The increase was due to the delinquency of a $14.83 million credit atquarter-end. At September 30, 2017, nonaccrual loans were $100.02 million, an increase of $16.49 million or 19.74% from $83.53 million atyear-end 2016. This increase was due to the downgrade and transfer to nonaccrual of several oil, gas and coal industry relationships within the Company’s loan portfolio. Restructured loans were $46.13 million at September 30, 2017, an increase of $24.98 million or 118.10% from $21.15 million atyear-end 2016. Ten loans totaling $30.89 million were restructured during the first nine monthsquarter of 2017. Two2023 and annualized net charge-offs of 0.05% for the restructured loans totaling $20.99 million were associated with an oil, gas and coal industry-related relationship. The remaining difference was mainly due to repayments and acharge-off. The loss potential on these loans has been properly evaluated and allocated within the Company’s allowance for loan losses.

Nonperforming assets include nonperforming loans and real estate acquired in foreclosure or other settlementfourth quarter of loans (OREO). Total nonperforming assets of $195.22 million, including OREO of $26.83 million at September 30, 2017, represented 1.02% of total assets.2023.

The following table summarizesshows a summary of United’s nonperforming assets for the indicated periods.    including nonperforming loans and other real estate owned (“OREO”) at March 31, 2024 and December 31, 2023:

 

   September 30,   December 31, 
(In thousands)  2017   2016   2015   2014   2013   2012 

Nonaccrual Loans

            

Originated

  $93,731   $77,111   $83,146   $64,312   $58,121   $66,711 

Acquired

   6,285    6,414    8,043    10,739    3,807    4,848 

Loans which are contractually past due 90 days or more as to interest or principal, and are still accruing interest

            

Originated

   21,464    7,763    11,462    10,868    10,015    13,819 

Acquired

   785    823    166    807    1,029    4,249 

Restructured loans

            

Originated

   44,695    21,115    23,890    22,234    8,157    3,175 

Acquired

   1,437    37    0    0    0    0 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming loans

  $168,397   $113,263   $126,707   $108,960   $81,129   $92,802 

Other real estate owned

   26,826    31,510    32,228    38,778    38,182    49,484 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL NONPERFORMING ASSETS

  $195,223   $144,773   $158,935   $147,738   $119,311   $142,286 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(In thousands)  March 31
2024
   December 31
2023
 

Nonaccrual loans

  $63,053   $30,919 

Loans past due 90 days of more

   11,329    14,579 
  

 

 

   

 

 

 

Total nonperforming loans

  $74,382   $45,498 

Other real estate owned

   2,670    2,615 
  

 

 

   

 

 

 

Total nonperforming assets

  $77,052   $48,113 
  

 

 

   

 

 

 

Loans are designated as impaired when, in the opinion of management, the collection of principal and interest in accordance with the loan contract is doubtful. At September 30, 2017, impaired loans were $420.46 million, which was anThe increase of $112.02$32.13 million or 36.32%in nonaccrual loans from $308.44 million at December 31, 2016. This increase2023 to March 31, 2024 was due mainly to the acquired impaired loans from Cardinal and the Company’s exposuretransfer to the oil, gas and coal industry. Acquired impaired loans are accounted for under ASC Subtopic310-30. The recorded investment balance and the contractual principal balancenonaccrual of the acquired impaired loans were $227.75 million and $310.61 million, respectively, at September 30, 2017 as compared to $171.60 million and $231.10 million, respectively, at December 31, 2016. For the acquired impaired loans accounted for under ASC310-30, the difference between the contractually required payments due and the cash flows expected to be collected, considering the impact of prepayments, is referred to as the non-accretable difference (the credit mark). The credit mark is not recognized in income. The remaining credit mark was $70.75 million and $58.88 million at September 30, 2017 and December 31, 2016, respectively. For further details regarding impaired loans, see Note 5 to the unaudited Consolidated Financial Statements.one significant commercial lending 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 are referred to asis considered the allowance for credit losses. At September 30, 2017 and DecemberMarch 31, 2016,2024, the allowance for credit losses was $75.73$305.82 million and $73.82as compared to $303.94 million respectively.at December 31, 2023.

At September 30, 2017,March 31, 2024, the allowance for loan and lease losses was $74.93$262.91 million as compared to $72.78$259.24 million at December 31, 2016.2023. The slight increase in the allowance for loan and lease losses was primarily driven by increases in the reserves for the commercial real estate, both owner and non-owner occupied, the residential real estate and the other commercial loans segments due to increased outstanding loan balances and increased adjustments resulting from the reasonable and supportable forecast. As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 0.57%1.22% at September 30, 2017March 31, 2024 and 0.70%1.21% at December 31, 2016, respectively.2023. The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 44.49%353.45% and 64.25%569.78% at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively. The Company’s detailed methodology and analysis indicated a minimal increase in this ratio was due mainly to an increase in nonperforming loans.

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United continues to evaluate risks which may impact its loan and lease portfolios. Reserves are initially determined based on losses identified from the allowancePD/LGD and Cohort models which utilize the Company’s historical information. Then, any qualitative adjustments are applied to account for loan losses primarily becausethe Company’s view of current conditions, the future and other factors.

The first quarter of 2024 qualitative adjustments include analyses of the offsetting factorsfollowing:

Current conditions – United considered the impact of inflation, interest rates, the banking regulatory environment and geopolitical conflict when making determinations related to factor adjustments for the external environment. United also considered portfolio trends related to economic and business conditions, collateral values for dependent loans; past due, nonaccrual and graded loans and leases; and concentrations of credit.

Reasonable and supportable forecasts – The forecast is determined on a portfolio-by-portfolio basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables. The reasonable and supportable forecast selection is subjective in nature and requires more judgment compared to the other components of the allowance. Assumptions for the economic variables were the following:

The forecast for real GDP in 2024 increased in the first quarter, from a projection of changes within historical1.40% for 2024 at the end of 2023 to 2.10% for 2024 with a slightly smaller increase for 2025, from a projection of 1.80% for 2025 at the end of 2023 to 2.00% for 2025. The unemployment rate remained fairly consistent to the end of 2023 with a steady trend expected throughout 2024 and 2025.

Greater risk of loss rates and reduced loss allocations on impaired loans.

Allocations are made for specific commercial loans based upon management’s estimate ofis probable in the borrowers’ ability to repay and other factors impacting collectibility. Other commercial loans not specifically reviewed on an individual basis are evaluated based on historical loss percentages applied to loan pools that have been segregated by risk. Allocations for loans other than commercial loans are made based upon historical loss experience adjusted for current environmental conditions. The allowance for credit losses includes estimated probable inherent but unidentified losses within theoffice portfolio due to uncertainties incontinued hybrid and remote work that may be exacerbated by future economic conditions delays in obtaining information, including unfavorable information about a borrower’s financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent lossas well as higher interest rates and risk factors that have not yet fully manifested themselves in loss allocation factors. In addition, a portion of the allowance accounts for the inherent imprecision in the allowance for credit losses analysis.cap rates.

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 company-wide review of the allowance for loan and lease losses at September 30, 2017March 31, 2024 produced increased allocationsreserves in onetwo of the four loan categories.categories as compared to December 31, 2023. The allowance related to the commercial, financial & agricultural loan pool, allocationconsisting of the owner and non-owner occupied commercial real estate and other commercial loan segments, increased $8.16$3.99 million primarily due to an increase in other commercial loans deemed impaired necessitating specific allowance allocation. Offsetting these increases was a decrease in the allocation relatedincreased outstanding balances and increased reasonable and supportable forecast adjustments particularly as it pertains to theoffice loans. The residential real estate segment reserve increased $4.79 million due primarily to increased outstanding balances. The real estate construction and development loan pool of $2.60segment reserve decreased $4.39 million due to recognition of losses previously allocated. The residential real estate loan pool allocation decreased $2.92 million due to improvement in the Bank’s collateral position for a significant relationship and reduction of impairment allocation required.outstanding balances. The consumer loan pool also experiencedsegment reserve decreased $728 thousand primarily due to a decrease of $290 thousand due to an improvement in historical loss rates. In summary, the overall level of the allowance for loan losses was relatively stable in comparison toyear-end 2016 as a result of offsetting factors within the portfolio as described above.outstanding balances.

An allowance is established for probable creditestimated lifetime losses on impairedfor loans via specific allocations.that are individually assessed. Nonperforming commercial loans and leases are regularly reviewed to identify impairment.expected credit losses. A loan or lease is impairedindividually assessed for expected credit losses when based on current information and events, it is probable that the Company willloan does not be able to collect all amounts contractually due.share similar characteristics with other loans in the portfolio. Measuring impairmentexpected credit losses of a loan requires judgment and estimates, and the eventual outcomes may differ from

those estimates. Impairment isExpected credit losses are measured based upon the present value of expected future cash flows from the loan discounted at the loan’s effective rate the loan’s observable market price or the fair value of collateral if the loan is collateral dependent. When the selected measure is less than the recorded investment in the loan, an impairmentexpected credit loss has occurred. The allowance for impaired loans and leases that were individually assessed was $26.75$18.02 million at September 30, 2017March 31, 2024 and $23.42$13.15 million at December 31, 2016.2023. In comparison to the prioryear-end, this element of the allowance increased by $3.33$4.87 million primarily due to increased specific allocations forthe downgrade of a commercial financial & agricultural loans.real estate non-owner occupied loan.

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Management believes that the allowance for credit losses of $75.73$305.82 million at September 30, 2017March 31, 2024 is adequate to provide for probableexpected losses on existing loans and lending-related commitments based on information currently available. Note 6 to the accompanying unaudited Notes to Consolidated Financial Statements provides a progression of the allowance for loan losses by portfolio segment.

United’s loan administration policies are focused on the risk characteristics of the loan portfolio in terms of loan approval and credit quality. The commercial loan portfolio is monitored for possible concentrations of credit in one or more industries. 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. 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 first quarter 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 March 31, 2024 and December 31, 2023, respectively. There was no provision for credit losses recorded on available for sale investment securities for the first quarter of 2024 and 2023 and no allowance for credit losses on available for sale investment securities as of March 31, 2024 and December 31, 2023.

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. Additionally, management has disclosed all known material credits, which cause management to have serious doubts as to the ability of such borrowers to comply with the loan repayment schedules.

Other Income

Other income consists of all revenues, which are not included in interest and fee income related to earning assets. Noninterest income has been and will continue to be an important factor for improving United’s profitability. Recognizing the importance, management continues to evaluate areas where noninterest income can be enhanced.

Noninterest income for the thirdfirst quarter of 20172024 was $38.23$32.21 million, a decrease of $532 thousand or 1.62% from the first quarter of 2023 driven by decreases in mortgage loan servicing income and mortgage banking income partially offset by an increase of $19.21 million or 100.98%in fees from the third quarter of 2016. Noninterestbrokerage services and lower net losses on investment securities transactions.

Mortgage loan servicing income for the first nine monthsquarter of 2017 was $98.88 million, which was an increase of $45.502024 decreased $1.49 million or 85.24%65.33% from the first nine monthsquarter of 2016.2023. The decrease in mortgage loan servicing income was due to lower mortgage servicing rights (“MSRs”) balances after the sale of MSRs during the second quarter of 2023.

Income from mortgage banking activities totaled $20.39$5.30 million for the thirdfirst quarter of 20172024 compared to $982 thousand$6.38 million for the same periodfirst quarter of 2016. For2023. The decrease of $1.09 million or 17.01% for the first nine monthsquarter of 2017 and 2016, income from mortgage banking activities2024 was $43.60 million and $2.50 million, respectively. The increasesmainly due to a decrease in the fair value of loans held for 2017 are the result of the acquisition of Cardinal and, in particular, the acquisition of its mortgage banking subsidiary, George Mason. For the three months ended September 30, 2017 and 2016, mortgagesale. Mortgage loan sales were $908.60$188.74 million and $43.32 million, respectively. Forin the nine months ended September 30, 2017 and 2016, mortgage loan sales were $1.67 billion and $112.70 million, respectively.

For the thirdfirst quarter of 2017, fees from deposit services were $8.742024 as compared to $166.51 million an increase of $438 thousand or 5.27% fromin the thirdfirst quarter of 2016. In particular, overdraft fees and ATM income increased $167 thousand and $160 thousand, respectively. 2023. Mortgage loans originated for sale were $176.91 million for the first quarter of 2024 as compared to $177.81 million for the first quarter of 2023.

Fees from depositbrokerage services for the first nine monthsquarter of 2017 were $24.982024 increased $1.07 million an increase of $309 thousand or 1.25%25.40% from the first nine monthsquarter of 2016. In particular, debit card income increased $2362023. The increase was primarily due to higher volume.

United recorded a net loss on investment securities of $99 thousand duringfor the first nine monthsquarter of 2017.

Partially offsetting these increases2024 as compared to noninterest income was a decline in income from bank-owned life insurance policies. Income from bank-owned life insurancenet loss on investment securities of $405 thousand for the third quarter and first nine months of 2017 decreased $1.14 million or 44.79% and $1.04 million or 21.07%, respectively, from the third quarter and first nine months of 2016. These decreases were due to death benefits recorded in the third quarter of 2016.2023 driven primarily by a net loss of $420 thousand on the sale of AFS securities in last year’s first quarter.

On a linked-quarter basis, noninterest income for the thirdfirst quarter of 20172024 decreased $2.28$1.46 million, or 5.62%4.34%, from the secondfourth quarter of 2017 due mainly to2023 driven by a declinedecrease of $2.15$3.00 million in income from mortgage banking activities despite increased production and sales of mortgage loans in the secondary market.other noninterest income. The decline was due mainly to the impact of Accounting Standards Codification (ASC) 815 “Derivatives and Hedging” (ASC815-10-S99-1), formerly Staff Accounting Bulletin (SAB) 109, accounting requirement to record unrealized gains associated with George Mason’s locked mortgage loan pipeline which creates a timing difference in the recognition of income as the loans are sold. The impact of ASC815-10-S99-1 resulted in a decline of $4.48 million in income for the thirdfourth quarter of 2017 versus2023 included a $2.66 million gain from the payoff of a fixed rate commercial loan that had an associated interest rate swap derivative. Partially offsetting the decrease in noninterest income was a $907 thousand increase of $1.02 million in income for the second quarter of 2017.fees from brokerage services primarily due to higher volume.

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Other Expenses

Just as management continues to evaluate areas where noninterest income can be enhanced, it strives to improve the efficiency of its operations to reduce costs. Other expenses include all items of expense other than interest expense, the provision for loancredit losses, and income taxes. Noninterest expense increased $33.88for the first quarter of 2024 was $140.74 million, which was an increase of $3.32 million or 53.96% for the third quarter of 2017 compared to the same period in 2016. For the first nine months of 2017, noninterest expense increased $85.94 million or 46.28%2.42% from the first nine monthsquarter of 2016. Generally, these increases in 2017 from 2016 were the result of additional general operating expenses and increased merger-related charges from the Cardinal acquisition.2023.

Employee compensation for the thirdfirst quarter of 20172024 increased $20.10$3.88 million or 82.99% from the third quarter of 2016. Employee compensation increased $54.12 million or 78.29% for the first nine months of 20177.00% when compared to the first nine monthsquarter of 2016. Merger severance charges of $12.78 million from the Cardinal acquisition were included in first nine months of 2017 as compared to $670 thousand in the first nine of 2016 from the Bank of Georgetown acquisition. Otherwise, base salaries for the third quarter and first nine months of 2017 increased $9.37 million or 44.67% and $19.49 million or 32.41%, respectively, from the same time periods in 2016 due mainly to additional employees from the Cardinal acquisition.2023. The remainder of the increase in employee compensation for the third quarter and first nine months of 2017 was due mainly todriven by higher employee incentives, commissions, base salaries and commissions expense mainly related to the mortgage banking production of George Mason.employee severance.

Employee benefits expense for the thirdfirst quarter of 20172024 increased $2.10$1.24 million or 28.00%9.20% from the thirdfirst quarter of 2016. Employee benefits expense for the first nine months of 2017 increased $5.99 million or 28.03% as compared to the first nine months of 2016. The increases for third quarter and first nine months of 2017 were due in large part to additional health insurance expense of $1.11 million and $2.68 million, respectively, from the same time periods last year2023. This increase was primarily due to higher premiumsamounts of expense for postretirement benefits.

Mortgage servicing and additional employeesimpairment expense decreased $869 thousand or 46.13% due to a lower amount of loans serviced.

FDIC expense increased $1.87 million or 40.72% from the Cardinal acquisition. In addition, Federal Insurance Contributions Act (FICA) expense for thirdfirst quarter and first nine months of 2017 increased $784 thousand and $2.692023 due to an additional special assessment accrual of $1.81 million respectively,resulting from the third quarter and first nine months of 2016 due mainlyFDIC’s revised loss estimates to the additional employees from the Cardinal acquisition

Net occupancy expense increased $2.45 million or 35.34% and $9.12 million or 43.52% for the third quarter and first nine months of 2017, respectively, as compared to the same periods in the prior year. The increases were due mainly to additional building rental expense from the offices added in the Cardinal acquisition. Included in net occupancy expense for the first nine months of 2017 were charges of $5.93 million for the termination of leases and the reduction in the value of leasehold improvements for closed offices in the Cardinal acquisition as compared to charges of $1.58 million in the third quarter and first nine months of 2016 for the termination of leases for closed offices in the Bank of Georgetown acquisition.

Other real estate owned (OREO) expense for the third quarter of 2017 increased $1.37 million or 102.16% from the third quarter of 2016 due to declines in the fair value on OREO properties.

Data processing expense increased $1.74 million or 45.11% and $3.97 million or 36.05% for the third quarter and first nine months of 2017, respectively, as compared to the same periods in prior year due to additional processing as a result of the Cardinal acquisition. In addition, the results for first nine months of 2017 included a penalty of $525 thousand for the termination of Cardinal’s data processing contract.

Federal Deposit Insurance Corporation (FDIC) insurance expense for the third quarter and first nine months of 2017 decreased $546 thousand or 26.17% and $1.28 million or 20.17%, respectively, from the third quarter and first nine months of 2016 due to lower premiums.Fund.

Other expense for the thirdfirst quarter of 2017 increased $5.752024 decreased $2.69 million or 40.18%7.77% from the thirdfirst quarter of 2016. Other2023. Within other expenses, the most significant decrease was the expense for the first nine monthsreserve for unfunded commitments of 2017 increased $12.63$4.39 million or 28.19% from the first nine months of 2016. Included in other expense for the third quarter and first nine months of 2017 were merger-related expenses of $434 thousand and $5.83 million, respectively, as compared to merger-related expenses of $620 thousand and $2.78 million, respectively for the third quarter and first nine months of 2016. Amortization of core deposit intangibles increased $1.12 million and $2.60 million for the third quarter and first nine months of 2017, respectively, as compared to the same periods in 2016 due to the additional core deposit intangibles addedlower amount of outstanding loan commitments. Partially offsetting this decrease was an increase in the Cardinal acquisition. Business and occupation (B&O) taxes increased $1.32 million and $2.47 million for the third quarter and first nine monthsamortization of 2017, respectively, as compared to the same periods in 2016.investment tax credits of $950 thousand.

On a linked-quarter basis, noninterest expense for the thirdfirst quarter of 20172024 decreased $15.49$11.55 million, or 13.81%7.58%, from the secondfourth quarter of 2017 generally due to a decline2023. This decrease in noninterest expense was driven by decreases in FDIC insurance expense of $22.62$10.17 million in merger-related expenses. Partially offsetting this decrease wasand other noninterest expense of $8.02 million partially offset by an increase in OREOemployee benefits of $4.90 million and employee compensation of $1.46 million. The fourth quarter of 2023 included $11.99 million of expense for the FDIC special assessment. The first quarter of 2024 included an additional expense of $2.19$1.81 million duerelated to declinesthe FDIC special assessment stemming from the FDIC’s revised loss estimates. The decrease of $8.02 million in other noninterest expense was driven primarily by decreases of $2.73 million in the fair valueexpense for the reserve for unfunded commitments, $1.23 million of OREO properties.expense related to community development lending programs and $1.22 million of amortization for investment tax credits. Additionally, other noninterest expense for the fourth quarter of 2023 included $1.28 million related to trade name intangible impairments. The decrease in the expense for the reserve for unfunded loan commitments was driven by a decrease in the outstanding balance of loan commitments. The increase in employee benefits was primarily driven by higher postretirement benefit costs and higher Federal Insurance Contributions Act (“FICA”) costs. Employee compensation for the first quarter of 2024 increased due mainly to higher amount of base salaries and approximately $240 thousand of severance expense associated with the mortgage delivery channel consolidation.

Income Taxes

For the thirdfirst quarter of 2017,2024, income tax expense was $27.84$21.41 million as compared to $18.85 million for the third quarter of 2016. This increase was mainly due to higher earnings and a higher effective tax rate as the result of a reduction in the income tax expense for the third quarter of 2016 due to an increase in United’s deferred tax rate. For the first nine months of 2017, income tax expense was $67.36 million as compared to $53.10$24.45 million for the first nine monthsquarter of 20162023. The decrease of $3.04 million was primarily due to higherdecreased earnings and a higherlower effective tax rate. On a linked-quarter basis, income tax expense increased $8.53decreased $3.41 million primarily due to higher earningsa lower effective tax rate partially offset by a decline in the effective tax rate due to the Cardinal acquisition.higher earnings. United’s effective tax rate was 32.91%19.78% for the thirdfirst quarter of 2017, 34.25%2024, 19.92% for the secondfirst quarter of 20172023 and 31.24%23.81% for the thirdfourth quarter of 2016. For the first nine months of 20172023.

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Liquidity and 2016, United’s effective tax rate was 33.68% and 32.97%, respectively. For further details related to income taxes, see Note 15 of the unaudited Notes to Consolidated Financial Statements contained within this document.

Contractual Obligations, Commitments, Contingent Liabilities andOff-Balance Sheet Arrangements

United has various financial obligations, including contractual obligations and commitments, that may require future cash payments. Please refer to United’s Annual Report on Form10-K for the year ended December 31, 2016 for disclosures with respect to United’s fixed and determinable contractual obligations. As previously mentioned, United completed its acquisition of Cardinal during the second quarter of 2017. As such, United assumed the financial obligations of Cardinal, including contractual obligations and commitments, which also may require future payments. Otherwise, there have been no material changes outside the ordinary course of business sinceyear-end 2016 in the specified contractual obligations disclosed in United’s Annual Report on Form10-K.

As of September 30, 2017, United recorded a liability for uncertain tax positions, including interest and penalties, of $2.41 million in accordance with ASC topic 740. This liability represents an estimate of tax positions that United has

taken in its tax returns which may ultimately not be sustained upon examination by tax authorities. Since the ultimate amount and timing of any future cash settlements cannot be predicted with reasonable certainty, this estimated liability is excluded from the contractual obligations table in the 2016 Form10-K report.

United also enters into derivative contracts, mainly to protect against adverse interest rate movements on the value of certain assets or liabilities, under which it is required to either pay cash to or receive cash from counterparties depending on changes in interest rates. Derivative contracts are carried at fair value and not notional value on the consolidated balance sheet. Because the derivative contracts recorded on the balance sheet at September 30, 2017 do not present the amounts that may ultimately be paid under these contracts, they are excluded from the contractual obligations table in the 2016 Form10-K report. Further discussion of derivative instruments is presented in Note 11 to the unaudited Notes to Consolidated Financial Statements.

United is a party to financial instruments withoff-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include loan commitments and standby letters of credit. United’s maximum exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for the loan commitments and standby letters of credit is the contractual or notional amount of those instruments. United uses the same policies in making commitments and conditional obligations as it does foron-balance sheet instruments. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Further discussion ofoff-balance sheet commitments is included in Note 10 to the unaudited Notes to Consolidated Financial Statements.

LiquidityCapital Resources

In the opinion of management, United maintains liquidity that is sufficient to satisfy its depositors’ requirements and the credit needs of its customers. Like all banks, United depends upon its ability to renew maturing deposits and other liabilities on a daily basis and to acquire new funds in a variety of markets. A significant source of funds available to United is “core deposits”. Core deposits include certain demand deposits, statement and special savings and NOW accounts. These deposits are relatively stable, and they are the lowest cost source of funds available to United. Short-term borrowings have also been a significant source of funds. These include federal funds purchased and securities sold under agreements to repurchase as well as advances from the FHLB. Repurchase agreements represent funds which are obtained as the result of a competitive bidding process.

Liquid assets are cash and those items readily convertible to cash. All banks must maintain sufficient balances of cash and near-cash items to meet theday-to-day demands of customers and United’s cash needs. Other than cash and due from banks, the available for sale securities portfolio and maturing loans are the primary sources of liquidity.

The goal of liquidity management is to ensure the ability to access funding which enables United to efficiently satisfy the cash flow requirements of depositors and borrowers and meet United’s cash needs. Liquidity is managed by monitoring funds’ availability from a number of primary sources. Substantial funding is available from cash and cash equivalents, unused short-term borrowing and a geographically dispersed network of branches providing access to a diversified and substantial retail deposit market.

Short-term needs can be met through a wide array of outside sources such as correspondent and downstream correspondent federal funds and utilization of Federal Home Loan Bank advances.

Other sources of liquidity available to United to provide long-term as well as short-term funding alternatives, in addition to FHLB advances, are long-term certificates of deposit, lines of credit, borrowings that are secured by bank premises or stock of United’s subsidiaries and issuances of trust preferred securities. 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 quarter of 2024, United increased its interest-bearing deposit balance at the FRB by $135.62 million to $1.38 billion. The change in the balance at the FRB was mostly the result of a $100.43 million increase in total deposits and $168.36 million of net sales, maturities, and paydowns in the available for sale debt securities portfolio partially offset by a $50.07 million decrease in FHLB advances.

For the ninethree months ended September 30, 2017,March 31, 2024, cash of $125.15$124.37 million was provided by operating activities due mainly to net income of $132.61 million for$86.81 million. In addition, proceeds from the first nine monthssale of 2017.mortgage loans in the secondary market exceeded originations by $17.14 million. Net cash of $384.45$2.43 million was provided byused in investing activities which was primarily due to net repayments on loansloan growth of $369.23$160.68 million and net cashpurchases of $44.53$4.71 million provided in the acquisitionbank premises and equipment over sales proceeds mostly offset by $162.81 million of Cardinal.net proceeds from sales of investment securities over purchases. During the first ninethree months of 2017,2024, net cash of $197.09$11.77 million was used inprovided by financing activities due primarily to a declinegrowth of $100.60 million in deposits partially offset by cash dividends paid of $269.74$50.14 million and the net repayment of long-term borrowings of $30.21 million and the payment of cash dividends in the amount of $86.71 million. Partially offsetting these decreases to cash were net proceeds of $200.00$50.00 million in short-term FHLB borrowings.borrowings during the quarter. The net effect of the cash flow activities was an increase in cash and cash equivalents of $312.51$133.70 million for the first ninethree months of 2017.2024.

At March 31, 2024, United had an unused borrowing amount at the FHLB of approximately $7.00 billion subject to delivery of collateral after certain trigger points, $2.86 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, 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 March 31, 2024. At March 31, 2024, United’s borrowing capacity for the FRB Discount Window was $2.53 billion. United did not have any borrowings from the FRB’s Discount Window, or its new Bank Term Funding Program, during the first quarter of 2024.

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United anticipates it can meet its obligations over the next 12 months and has no material commitments for capital expenditures. There are no known trends, demands, commitments, or events that will result in or that are reasonably likely to result in United’s liquidity increasing or decreasing in any material way. United also has lines of credit available. See Notes 89 and 910 to the accompanying unaudited Notes to Consolidated Financial Statements for more details regarding the amounts available to United under lines of credit.

The Asset Liability Committee monitors liquidity to ascertain that a liquidity position within certain prescribed parameters is maintained. No changes are anticipated in the policies of United’s Asset Liability Committee.

Capital Resources

United’s capital position is financially sound. United seeks to maintain a proper relationship between capital and total assets to support growth and sustain earnings. United has historically generated attractive returns on shareholders’ equity. United is well-capitalized based upon regulatory guidelines. United’s risk-based capital ratio is 14.26%15.55% at September 30, 2017March 31, 2024 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 11.99%13.22%, 11.99%13.22% and 10.09%11.41%, respectively. The March 31, 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. 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 $3.26$4.81 billion at September 30, 2017, increasing $1.03 billion or 45.98%March 31, 2024, which was relatively flat from December 31, 20162023, increasing $36.20 million or less than 1%. This increase is primarily due to the Cardinal acquisition. increases of $36.60 million in retained earnings (net income less dividends declared).

United’s equity to assets ratio was 17.06%16.01% at September 30, 2017March 31, 2024 as compared to 15.41%15.94% at December 31, 2016.2023. The primary capital ratio, capital and reserves to total assets and reserves, was 17.39%16.86% at September 30, 2017March 31, 2024 as compared to 15.84%16.79% at December 31, 2016.2023. United’s average equity to average asset ratio was 17.25%16.36% for the thirdfirst quarter of 20172024 as compared to 14.38%15.49% the thirdfirst quarter of 2016. United’s average equity to average asset ratio was 16.58% for the first nine months of 2017 as compared to 14.24% for the first half of 2016.2023. All of these financial measurements reflect a financially sound position.

During the thirdfirst quarter of 2017,2024, United’s Board of Directors declared a cash dividend of $0.33$0.37 per share. Cash dividends were $0.99 per common share for the first nine months of 2017. Total cash dividends declared were $34.64 million for the third quarter of 2017 and $96.04$50.21 million for the first nine monthsquarter of 2017 as compared to $25.222024 which was an increase of $1.49 million and $73.38or 3.07% from dividends declared of $48.72 million respectively, for the thirdfirst quarter and first nine months of 2016.2023.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The objective of United’s Asset Liability Management function is to maintain consistent growth in net interest income within United’s policy guidelines. This objective is accomplished through the management of balance sheet liquidity and interest rate risk exposures due to changes in economic conditions, interest rate levels and customer preferences.

Interest Rate Risk

Management considers interest rate risk to be United’s most significant market risk. Interest rate risk is the exposure to adverse changes in United’s net interest income as a result of changes in interest rates. United’s earnings are largely dependent on the effective management of interest rate risk.

Management of interest rate risk focuses on maintaining consistent growth in net interest income within Board-approved policy limits. United’s Asset/Liability Management Committee (ALCO)(“ALCO”), which includes senior management representatives and reports to the Board, of Directors, monitors and manages interest rate risk to maintain an acceptable level of change to net interest income as a result of changes in interest rates. Policy established for interest rate risk is stated in terms of the change in net interest income over aone-year andtwo-year horizon given an immediate and sustained increase or decrease in interest rates. The current limits approved by the Board of Directors are structured on a staged basis with each stage requiring specific actions.

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United employs a variety of measurement techniques to identify and manage its exposure to changing interest rates. One such technique utilizes an earnings simulation model to analyze the sensitivity of net interest income to movements in interest rates. The model is based on actual cash flows and repricing characteristics for on andoff-balance sheet instruments and incorporates market-based assumptions regarding the impact of changing interest rates on the prepayment rate of certain assets and liabilities. The model also includes executive management projections for activity levels in product lines offered by United. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates are also incorporated into the model. Rate scenarios could involve parallel or nonparallel shifts in the yield curve, depending on historical, current, and expected conditions, as well as the need to capture any material effects of explicit or embedded options. These assumptions are inherently uncertain and, as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and management’s strategies.

Interest sensitive assets and liabilities are defined as those assets or liabilities that mature or are repriced within a designated time frame. The principal function of managing interest rate risk is to maintain an appropriate relationship between those assets and liabilities that are sensitive to changing market interest rates. The difference between rate sensitive assets and rate sensitive liabilities for specified periods of time is known as the “GAP.” Earnings-simulation analysis captures not only the potential of these interest sensitive assets and liabilities to mature or reprice, but also the probability that they will do so. Moreover, earnings-simulation analysis considers the relative sensitivities of these balance sheet items and projects their behavior over an extended period of time. United closely monitors the sensitivity of its assets and liabilities on anon-going basis and projects the effect of various interest rate changes on its net interest margin.

The following table shows United’s estimated earnings sensitivity profile as of September 30, 2017March 31, 2024 and December 31, 2016:2023:

 

Change in Interest Rates (basis points)

  Percentage Change in Net Interest Income  Percentage Change in Net Interest Income
September 30,
2017
 December 31,
2016
March 31, 2024 December 31, 2023

+200

  (0.22%) (2.05%)  (0.62%) (0.28%)

+100

  (0.02%) (1.05%)  0.07% 0.24%

-100

  0.22% 1.87%  2.82% 2.66%

-200

  —   —    4.31% 4.35%

At September 30, 2017,March 31, 2024, given an immediate, sustained 100 basis point upward shock to the yield curve used in the simulation model, net interest income for United is estimated to decreaseincrease by 0.02%0.07% over one year as compared to a decrease of 1.05%an increase by 0.24% at December 31, 2016.2023. A 200 basis point immediate, sustained upward shock in the yield curve would decrease net interest income by an estimated 0.22%0.62% over one year as of September 30, 2017,March 31, 2024, as compared to a decrease of 2.05%0.28% as of December 31, 2016.2023. A 100 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated 0.22%2.82% over one year as of September 30, 2017March 31, 2024 as compared to an increase of 1.87%2.66%, over one year as of December 31, 2016. With the federal funds rate at 1.25% at September 30, 2017 and 0.75% at December 31, 2016, management believed a2023. A 200 basis point immediate, sustained declinedownward shock in rates was highly unlikely.

the yield curve would increase net interest income by an estimated 4.31% over one year as of March 31, 2024 as compared to an increase of 4.35% over one year as of December 31, 2023.

In addition to the one year earnings sensitivity analysis, atwo-year analysis is also performed. Compared to the one year analysis, United is projected to show improved performance in year two within the upward rate shock scenarios. Given an immediate, sustained 100 basis point upward shock to the yield curve used in the simulation model, net interest income for United is estimated to increase by 2.58%1.94% in year two as of September 30, 2017.March 31, 2024. A 200 basis point immediate, sustained upward shock in the yield curve would increase net interest income by an estimated 4.80%2.80% in year two as of September 30, 2017.March 31, 2024. A 100 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated 0.46% in year two as of March 31, 2024. A 200 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated 1.95%0.76% in year two as of September 30, 2017.March 31, 2024.

This analysis does not include the potential increased refinancing activities, which should lessen the negative impact on net income from falling rates.

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While it is unlikely market rates would immediately move 100 or 200 basis points upward or downward on a sustained basis, this is another tool used by management and the Board of Directors to gauge interest rate risk. All of these estimated changes in net interest income are and were within the policy guidelines established by the Board of Directors.Board.

To further aid in interest rate management, United’s subsidiary banks are membersbank is a member of the Federal Home Loan Bank (FHLB)(“FHLB”). The use of FHLB advances provides United with a low risk means of matching maturities of earning assets and interest-bearing funds to achieve a desired interest rate spread over the life of the earning assets. In addition, United uses credit with large regional banks and trust preferred securities to provide funding.

As part of its interest rate risk management strategy, United may use derivative instruments to protect against adverse price or interest rate movements on the value of certain assets or liabilities and on future cash flows. These derivatives commonly consist of interest rate swaps, caps, floors, collars, futures, forward contracts, written and purchased options. Interest rate swaps obligate two parties to exchange one or more payments generally calculated with reference to a fixed or variable rate of interest applied to the notional amount. United accounts for its derivative activities in accordance with the provisions of ASC topicTopic 815, “Derivatives and Hedging.”

Extension Risk

A key feature of most mortgage loans is the ability of the borrower to repay principal earlier than scheduled. This is called a prepayment. Prepayments arise primarily due to sale of the underlying property, refinancing, or foreclosure. In general, declining interest rates tend to increase prepayments, and rising interest rates tend to slow prepayments. Like other fixed-income securities, when interest rates rise, the value of mortgage- related securities generally declines. The rate of prepayments on underlying mortgages will affect the price and volatility of mortgage-related securities and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If interest rates rise, United’s holdings of mortgage-related securities may experience reduced returns if the borrowers of the underlying mortgages pay off their mortgages later than anticipated. This is generally referred to as extension risk.

At September 30, 2017,March 31, 2024, United’s mortgage related securities portfolio had an amortized cost of $1.1$1.8 billion, of which approximately $664$745.1 million or 58%42% were fixed rate collateralized mortgage obligations (CMOs)(“CMOs”). These fixed rate CMOs consisted primarily of planned amortization class (PACs)(“PACs”),sequential-pay and accretion directed (VADMs)(“VADMs”) bonds having an average life of approximately 3.95.7 years and a weighted average yield of 2.51%2.09%, under current projected prepayment assumptions. These securities are expected to have very littlemoderate extension risk in a rising rate environment. Current models show that an immediate, sustained upward shock of 300 basis points, the average life of these securities would only extend to 4.66.7 years. The projected price decline of the fixed rate CMO portfolio in rates up 300 basis points would be 11.3%15.9%, or less than the price decline of a5-7- year treasury note. By comparison, the price decline of a30-year 5.5% current coupon mortgage backed security (MBS) given an immediate, sustained upward shock of(“MBS”) in rates higher by 300 basis points would be approximately 16.9%12.2%.

United had approximately $257$487.9 million in balloon and otherfixed rate commercial mortgage backed securities (“CMBS”) with a projected yield of 2.12%1.94% and a projected average life of 4.14.5 years on September 30, 2017.March 31, 2024. This portfolio consisted primarily of Freddie Mac Multifamily K securities and Fannie Mae Delegated Underwriting and Servicing (DUS) mortgage backed(“DUS”) securities (MBS) with a weighted average loan age (WALA)maturity (“WAM”) of 3.8 years and a weighted average maturity (WAM) of 4.48.3 years.

United had approximately $63$22.9 million in15-year mortgage backed securities with a projected yield of 2.20%1.98% and a projected average life of 3.74.6 years as of September 30, 2017.March 31, 2024. This portfolio consisted of seasoned15-year mortgage paper with a weighted average loan age (WALA)(“WALA”) of 4.74.2 years and a weighted average maturity (WAM)WAM of 9.911.1 years.

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United had approximately $69$318.9 million in20-year mortgage backed securities with a projected yield of 2.68%1.82% and a projected average life of 56.7 years on September 30, 2017.March 31, 2024. This portfolio consisted of seasoned20-year mortgage paper with a weighted average loan age (WALA)WALA of 5.13 years and a weighted average maturity (WAM)WAM of 14.516.8 years.

United had approximately $65$151.3 million in30-year mortgage backed securities with a projected yield of 2.60%2.65% and a projected average life of 5.57.8 years on September 30, 2017.March 31, 2024. This portfolio consisted of seasoned30-year mortgage paper and Home Equity Conversion Mortgages with a weighted average loan age (WALA)WALA of 2.34.6 years and a weighted average maturity (WAM)WAM of 26.323.7 years.

The remaining 2%3% of the mortgage related securities portfolio at September 30, 2017,on March 31, 2024, included adjustablefloating rate securities (ARMs),10-yearCMO, CMBS, and mortgage backed pass-through securitiessecurities.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and other fixed rate mortgage backed securities.Procedures

Item 4.CONTROLS AND PROCEDURES

As of September 30, 2017,March 31, 2024, an evaluation was performed under the supervision of and with the participation of United’s management, including the Chief Executive Officer (CEO)(“CEO”) and Chief Financial Officer (CFO)(“CFO”), of the effectiveness of the design and operation of United’s disclosure controls and procedures. Based on that evaluation, United’s management, including the CEO and CFO, concluded that United’s disclosure controls and procedures as of September 30, 2017March 31, 2024 were effective in ensuring that information required to be disclosed in the Quarterly Report on Form10-Q was recorded, processed, summarized and reported within the time period required by the Securities and Exchange Commission’s rules and forms.

Limitations on the Effectiveness of Controls

United’s management, including the CEO and CFO, does not expect that United’s disclosure controls and internal controls will prevent all errors and fraud. While United’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objective, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

Changes in Internal Controls

There have been no changes in United’s internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2017,March 31, 2024, or in other factors that have materially affected or are reasonably likely to materially affect United’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Item 1.LEGAL PROCEEDINGS

United and its subsidiaries are currently involved in various legal proceedings in the normal course of business. Management is vigorously pursuing all its legal and factual defenses and, after consultation with legal counsel, believes that all such litigation will be resolved with no material effect on United’s financial position.

Item 1A. RISK FACTORS

Item 1A.RISK FACTORS

In addition to the other information set forth in this report, please refer to United’s Annual Report on Form10-K for the year ended December 31, 20162023 for disclosures with respect to United’s risk factors which could materially affect United’s business, financial condition or future results. The risks described in the Annual Report on Form10-K are not the only risks facing United. Additional risks and uncertainties not currently known to United or that United currently deems to be immaterial also may materially adversely affect United’s business, financial condition and/or operating results. There are no material changes from the risk factors disclosed in United’s Annual Report on Form10-K for the year ended December 31, 2016.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no United equity securities sales during the quarter ended September 30, 2017March 31, 2024 that were not registered. The table below includes certain information regarding United’s purchase of its common shares during the quarter ended September 30, 2017:March 31, 2024:

 

Period

  Total Number
of Shares
Purchased

(1)(2)
   Average
Price Paid

per Share
   Total Number  of
Shares
Purchased as
Part of Publicly
Announced
Plans (3)
   Maximum Number
of Shares that May
Yet be Purchased
Under the Plans (3)
 

7/01 – 7/31/2017

   0   $00.00    0    2,000,000 

8/01 – 8/31/2017

   4   $41.58    0    2,000,000 

9/01 – 9/30/2017

   0   $00.00    0    2,000,000 
  

 

 

   

 

 

   

 

 

   

Total

   4   $41.58    0   
  

 

 

   

 

 

   

 

 

   

Period

  Total Number
of Shares
Purchased

(1) (2)
   Average
Price Paid
per Share
   Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans (3)
   Maximum Number
of Shares that May
Yet be Purchased
Under the Plans (3)
 

1/01 – 1/31/2024

   0   $0.00    0    4,371,239 

2/01 – 2/29/2024

   29,896   $ 34.43    0    4,371,239 

3/01 – 3/31/2024

   0   $0.00    0    4,371,239 
  

 

 

   

 

 

   

 

 

   

Total

   29,896   $34.43    0   
  

 

 

   

 

 

   

 

 

   

 

(1)

Includes shares exchanged in connection with the exercise of stock options or the vesting of restricted stock under United’s stock optionlong-term incentive plans. Shares are purchased pursuant to the terms of the applicable stock option plan and not pursuant to a publicly announced stock repurchase plan. For the quarter ended September 30, 2017, no sharesMarch 31, 2024 – 29,891shares were exchanged by participants in United’s stock option plans.long-term incentive plans at an average price of $34.43.

(2)

Includes shares purchased in open market transactions by United for a rabbi trust to provide payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries. For the quarter ended September 30, 2017,March 31, 2024, the following shares were purchased for the deferred compensation plan: August 2017February 202445 shares at an average price of $41.58.$37.30.

(3)

In AugustMay of 2017,2022, United’s Board of Directors approved a new repurchase plan to repurchase up to 2 million4,750,000 shares of United’s common stock on the open market (the 2017 Plan)“2022 Plan”). The timing, price and quantity of purchases under the planplans are at the discretion of management and the plan may be discontinued, suspended or restarted at any time depending on the facts and circumstances.

The 2022 Plan replaces a repurchase plan approved by United’s Board of Directors in October of 2019.

Item 3.DEFAULTS UPON SENIOR SECURITIES

None.

Item 4.MINE SAFETY DISCLOSURES

None.

Item 5.OTHER INFORMATION

 

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Item 3. DEFAULTS UPON SENIOR SECURITIE
S
None.
Item 4. MINE SAFETY DISCLOSURES
None.
Item 5. OTHER INFORMATION
 (a)
None.

 (b)
No changes were made to the procedures by which security holders may recommend nominees to United’s Board of Directors.

Item 6.EXHIBITS(c)
United’s directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of United’s shares that are intended to satisfy the affirmative defense conditions of Rule
10b5-1(c)
or may represent a
non-Rule
10b5-1
trading arrangement under the Securities Exchange Act of 1934, as amended. During the quarter ended March 31, 2024, none of our directors or executive officers adopted, modified or terminated any “Rule
10b5-1
trading arrangement” or any
“non-Rule
10b5-1 trading arrangement”, as each term is defined in Rule 408(e) of Regulation
S-K.
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Item 6. EXHIBITS

Index to exhibits required by Item 601 of RegulationS-K

 

Exhibit
No.

  

Description

  2.1
  Agreement and Plan of Reorganization, dated June 2, 2021, by and amongbetween United Bankshares, UBV Holding Company, LLCInc. and Cardinal FinancialCommunity Bankers Trust Corporation (incorporated into this filing by reference to Exhibit 2.1 to the Form8-K dated August 17, 2016December 3, 2021 and filed August 18, 2016December 3, 2021 for United Bankshares, Inc., File No. 0-13322) 002-86947)
  3.1  Amended and Restated Articles of Incorporation (incorporated into this filing by reference to aExhibit 3.1 to the Quarterly Report on Form10-Q dated March 31, 2017 and filed May 9, 2017 for United Bankshares, Inc., FileNo.0-13322)No. 002-86947)
  3.2  Restated Bylaws (incorporated into this filing by reference to aExhibit 3.1 to the Current Report on Form8-K dated January 25, 2010 and filed January 29, 2010on March 20, 2020 for United Bankshares, Inc., FileNo.0-13322)No. 002-86947)
  4.1Description of Registrant’s Securities (incorporated into this filing by reference to the Annual Report on Form 10-K dated December 31, 2019 and filed March 2, 2020 for United Bankshares, Inc., File No. 002-86947)
 31.1  Certification as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer (filed herewith)
 31.2  Certification as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer (filed herewith)
 32.1  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer (furnished herewith)
 32.2  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer (furnished herewith)
101  Interactive data file (XBRL)(inline XBRL) (filed herewith)
104Cover Page (embedded in inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

UNITED BANKSHARES, INC.

    (Registrant)

Date: May 10, 2024  UNITED BANKSHARES, INC.
(Registrant)
Date:

November 9, 2017

/s/ Richard M. Adams,

Jr.
  Name: Richard M. Adams, Chairman ofJr.
Title: the Board and Chief Executive Officer
Date: May 10, 2024 

November 9, 2017

 

/s/ W. Mark Tatterson

  Name: W. Mark Tatterson Executive Vice President and
Title:Chief
Financial Officer

 

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