FORM

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM10-Q~~

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

For the quarterly period ended ~~September~~June 30, ~~2018~~

2019

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

For the transition period from
to

Commission FileNumber:

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

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

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes

☒

☐

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.


Large accelerated filer	☒	Accelerated filer	☐

~~Non-accelerated filer~~	☐
Non-accelerated filer	☐	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

☐

☒

~~Indicate~~

As of

July

31, 2019

, the ~~number of~~ registrant had

101,871,901

shares ~~outstanding of each of the issuer’s classes~~ of common stock, as$2.50 par value per share, outstanding.

Table of ~~the latest practicable date.~~

~~Class—Common Stock, $2.50 Par Value;~~ ~~103,183,953~~~~shares outstanding as of~~~~October~~ ~~31, 2018~~.

Contents

UNITED BANKSHARES, INC. AND SUBSIDIARIES

FORM10-Q

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

Consolidated Balance Sheets (Unaudited) ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018				4

Consolidated Statements of Income (Unaudited) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018				5

Consolidated Statements of Comprehensive Income (Unaudited) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018				7

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, 2019 and 2018				8

Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018				9
~~Notes to Consolidated Financial Statements~~		10

Notes to Consolidated Financial Statements				11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			6057

Item 3.	Quantitative and Qualitative Disclosures about Market Risk			8378
~~Item 4. Controls and Procedures~~		86

~~PART II. OTHER INFORMATION~~

~~Item 1. Legal Proceedings~~		87
Item 4.
~~Item 1A. Risk Factors~~Controls and Procedures		8781

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings			82

Item 1A.	Risk Factors			82

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			8782

Item 3.	Defaults Upon Senior Securities			8883
~~Item 4. Mine Safety Disclosures~~		88
~~Item 5. Other Information~~		88
Item 4.
~~Item 6. Exhibits~~Mine Safety Disclosures		8883
~~Signatures~~		89
Item 5.	Other Information			83

Item 6.	Exhibits			83

Signatures				84

Table of Contents

PART I - FINANCIAL INFORMATION

~~Item 1. FINANCIAL STATEMENTS (UNAUDITED)~~

Item 1.

FINANCIAL STATEMENTS (UNAUDITED)

The ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, the related consolidated statement of changes in shareholders’ equity for the ~~nine~~three and six months ended ~~September~~June 30, 2019 and 2018, the related condensed consolidated statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, and the notes to consolidated financial statements appear on the following pages.

Table of Contents

CONSOLIDATED BALANCE SHEETS

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except par value)    September 30
2018 December 31
2017
   (Unaudited) (Note 1)
Assets

Cash and due from banks
   $ 191,809 $ 196,742
Interest-bearing deposits with other banks
   1,062,078 1,468,636
Federal funds sold
   799 789


Total cash and cash equivalents
   1,254,686 1,666,167
Securities available for sale at estimated fair value (amortized cost-$2,230,884 at September 30, 2018 and $1,900,684 at December 31, 2017)
   2,178,567 1,888,756
Securities held to maturity (estimated fair value-$19,619 at September 30, 2018 and $20,018 at December 31, 2017)
   20,351 20,428
Equity securities at estimated fair value
   9,845 0
Other investment securities
   166,749 162,461
Loans held for sale (at fair value-$231,310 at September 30, 2018 and $263,308 at December 31, 2017)
   234,196 265,955
Loans
   13,286,711 13,027,337
Less: Unearned income
   (9,971 ) (15,916 )


Loans net of unearned income
   13,276,740 13,011,421
Less: Allowance for loan losses
   (76,941 ) (76,627 )


Net loans
   13,199,799 12,934,794
Bank premises and equipment
   99,748 104,894
Goodwill
   1,478,014 1,478,380
Accrued interest receivable
   60,057 52,815
Other assets
   485,631 484,309


TOTAL ASSETS
   $ 19,187,643 $ 19,058,959


Liabilities

Deposits:

Noninterest-bearing
   $ 4,470,815 $ 4,294,687
Interest-bearing
   9,620,357 9,535,904


Total deposits
   14,091,172 13,830,591
Borrowings:

Federal funds purchased
   25,790 16,235
Securities sold under agreements to repurchase
   153,718 311,352
Federal Home Loan Bank borrowings
   1,284,781 1,271,531
Other long-term borrowings
   234,590 242,446
Reserve for lending-related commitments
   1,144 679
Accrued expenses and other liabilities
   145,320 145,595


TOTAL LIABILITIES
   15,936,515 15,818,429
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-105,226,986 and 105,069,821 at September 30, 2018 and December 31, 2017, respectively, including 1,421,150 and 29,173 shares in treasury at September 30, 2018 and December 31, 2017, respectively
   263,068 262,675
Surplus
   2,133,157 2,129,077
Retained earnings
   984,062 891,816
Accumulated other comprehensive loss
   (76,660 ) (42,025 )
Treasury stock, at cost
   (52,499 ) (1,013 )


TOTAL SHAREHOLDERS’ EQUITY
   3,251,128 3,240,530


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 19,187,643 $ 19,058,959

(Dollars in thousands, except par value)

June 30
2019

December 31
2018

(Unaudited)

(Note 1)

Assets

Cash and due from banks
$
198,171
$
187,886

Interest-bearing deposits with other banks

1,054,589

831,707

Federal funds sold

813

803

Total cash and cash equivalents

1,253,573

1,020,396

Securities available for sale at estimated fair value (amortized cost-$2,324,286 at June 30, 2019 and $2,360,884 at December 31, 2018)

2,345,791

2,337,039

Securities held to maturity (estimated fair value-$6,483 at June 30, 2019 and $18,655 at December 31, 2018)

6,461

19,999

Equity securities at estimated fair value

9,098

9,734

Other investment securities

201,912

176,955

Loans held for sale (at fair value-$365,440 at June 30, 2019 and $247,104 at December 31, 2018)

370,593

249,846

Loans

13,639,946

13,429,532

Less: Unearned income

(4,680
)
(7,310
)

Loans net of unearned income

13,635,266

13,422,222

Less: Allowance for loan losses

(76,400
)
(76,703
)

Net loans

13,558,866

13,345,519

Bank premises and equipment

94,545

95,245

Operating lease
right-of-use
assets

63,113

0

Goodwill

1,478,014

1,478,014

Accrued interest receivable

60,934

60,597

Other assets

439,639

457,154

TOTAL ASSETS
$
19,882,539
$
19,250,498

Liabilities

Deposits:

Noninterest-bearing
$
4,330,665
$
4,416,815

Interest-bearing

10,073,420

9,577,934

Total deposits

14,404,085

13,994,749

Borrowings:

Federal funds purchased

0

23,400

Securities sold under agreements to repurchase

122,159

152,927

Federal Home Loan Bank (FHLB) borrowings

1,548,032

1,439,198

Other long-term borrowings

235,535

234,905

Reserve for lending-related commitments

1,752

1,389

Operating lease liabilities

66,821

0

Accrued expenses and other liabilities

170,297

152,306

TOTAL LIABILITIES

16,548,681

15,998,874

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-105,413,508
and 105,239,121 at June 30, 2019 and December 31, 2018, respectively, including 3,450,478 and 2,915,633 shares in treasury at June 30, 2019 and December 31, 2018, respectively

263,534

263,098

Surplus

2,137,459

2,134,462

Retained earnings

1,073,390

1,013,037

Accumulated other comprehensive loss

(20,367
)
(57,019
)
Treasury stock, at cost

(120,158
)
(101,954
)

TOTAL SHAREHOLDERS’ EQUITY

3,333,858

3,251,624

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
19,882,539
$
19,250,498

See notes to consolidated unaudited financial statements.

Table of Contents

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
   2018 2017    2018 2017
Interest income

Interest and fees on loans
   $ 164,229 $ 155,819    $ 472,451 $ 405,660
Interest on federal funds sold and other short-term investments
   5,485 4,874    13,867 11,345
Interest and dividends on securities:

Taxable
   13,994 9,406    39,679 26,226
Tax-exempt
   1,322 1,484    4,218 4,057




Total interest income
   185,030 171,583    530,215 447,288
Interest expense

Interest on deposits
   26,368 14,227    61,101 35,281
Interest on short-term borrowings
   618 430    1,503 1,149
Interest on long-term borrowings
   9,269 6,650    25,671 16,717




Total interest expense
   36,255 21,307    88,275 53,147




Net interest income
   148,775 150,276    441,940 394,141
Provision for loan losses
   4,808 7,279    16,190 21,429




Net interest income after provision for loan losses
   143,967 142,997    425,750 372,712
Other income

Fees from trust services
   3,350 2,972    9,545 8,865
Fees from brokerage services
   2,787 2,080    6,964 5,818
Fees from deposit services
   8,673 8,744    25,323 24,978
Bankcard fees and merchant discounts
   1,549 1,332    4,384 3,432
Other service charges, commissions, and fees
   532 535    1,640 1,533
Income from bank-owned life insurance
   1,251 1,403    3,776 3,878
Income from mortgage banking activities
   13,277 20,385    46,539 43,597
Net investment securities (losses) gains
   (152 ) 467    (692 ) 5,154
Other income
   419 311    1,406 1,626




Total other income
   31,686 38,229    98,885 98,881
Other expense

Employee compensation
   41,312 44,882    125,268 124,945
Employee benefits
   8,645 9,004    27,514 25,667
Net occupancy expense
   9,273 9,364    27,776 30,061
Other real estate owned (OREO) expense
   921 2,713    2,423 4,651
Equipment expense
   3,892 3,057    10,328 7,493
Data processing expense
   6,068 5,597    17,735 14,971
Bankcard processing expense
   485 449    1,431 1,356
FDIC insurance expense
   3,530 1,540    8,220 5,062
Other expense
   19,189 20,046    56,482 57,425




Total other expense
   93,315 96,652    277,177 271,631




Income before income taxes
   82,338 84,574    247,458 199,962
Income taxes
   17,926 27,836    55,066 67,356




Net income
   $ 64,412 $ 56,738    $ 192,392 $ 132,606

(Dollars in thousands, except per share data)


	Three Months Ended June 30					Six Months Ended June 30
	2019		2018			2019			2018
Interest income
Interest and fees on loans	$	175,130	$	159,294		$	340,001		$	308,222
Interest on federal funds sold and other short-term investments		5,405		3,465			11,242			8,382
Interest and dividends on securities:
Taxable		17,748		13,810			35,111			25,685
Tax-exempt		962		1,431			1,988			2,896

Total interest income		199,245		178,000			388,342			345,185

Interest expense
Interest on deposits		35,455		19,076			68,093			34,733
Interest on short-term borrowings		608		464			1,299			885
Interest on long-term borrowings		12,629		9,338			24,229			16,402

Total interest expense		48,692		28,878			93,621			52,020

Net interest income		150,553		149,122			294,721			293,165
Provision for loan losses		5,417		6,204			10,413			11,382

Net interest income after provision for loan losses		145,136		142,918			284,308			281,783

Other income
Fees from trust services		3,438		3,104			6,702			6,195
Fees from brokerage services		2,766		1,953			5,290			4,177
Fees from deposit services		8,464		8,420			16,517			16,650
Bankcard fees and merchant discounts		1,102		1,479			2,258			2,835
Other service charges, commissions, and fees		576		599			1,097			1,108
Income from bank-owned life insurance		1,326		1,271			3,153			2,525
Income from mortgage banking activities		21,704		18,692			35,385			33,262
Net investment securities gains (losses)		109		(55	)		(50	)		(540	)
Other income		310		544			666			987

Total other income		39,795		36,007			71,018			67,199

Other expense
Employee compensation		44,301		43,120			83,250			83,956
Employee benefits		8,578		9,298			18,009			18,869
Net occupancy expense		8,667		9,076			17,418			18,503
Other real estate owned (OREO) expense		633		556			2,049			1,502
Equipment expense		3,675		3,279			6,990			6,436
Data processing expense		5,567		5,817			10,729			11,667
Bankcard processing expense		448		480			928			946
FDIC insurance expense		3,300		2,842			6,600			4,690
FHLB prepayment penalties		5,105		0			5,105			0
Other expense		19,921		18,942			38,542			37,293

Total other expense		100,195		93,410			189,620			183,862

Income before income taxes		84,736		85,515			165,706			165,120
Income taxes		17,529		19,241			34,857			37,140

Net income	$	67,207	$	66,274		$	130,849		$	127,980

Table of Contents

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
   2018    2017    2018    2017
Earnings per common share:

Basic
   $ 0.62    $ 0.54    $ 1.84    $ 1.39








Diluted
   $ 0.62    $ 0.54    $ 1.83    $ 1.39








Dividends per common share
   $ 0.34    $ 0.33    $ 1.02    $ 0.99








Average outstanding shares:

Basic
   103,617,590    104,760,153    104,382,094    95,040,664
Diluted
   103,933,959    105,068,122    104,679,876    95,450,626

(Dollars in thousands, except per share data)

Three Months Ended
June 30

Six Months Ended
June 30

2019

2018

2019

2018

Earnings per common share:

Basic
$
0.66
$
0.63
$
1.28
$
1.22

Diluted
$
0.66
$
0.63
$
1.28
$
1.22

Average outstanding shares:

Basic

101,773,643

104,682,910

101,833,880

104,770,681

Diluted

102,047,845

104,952,788

102,099,809

105,058,014

See notes to consolidated unaudited financial statements

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands)    Three Months Ended
September 30    Nine Months Ended
September 30
   2018 2017    2018 2017
Net income
   $ 64,412 $ 56,738    $ 192,392 $ 132,606
Change in net unrealized (loss) gain onavailable-for-sale (AFS) securities, net of tax
   (7,579 ) 1,964    (30,853 ) 8,443
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
   918 717    2,703 2,107




Comprehensive income, net of tax
   $ 57,753 $ 59,421    $ 164,246 $ 143,160

(Dollars in thousands)

Three Months Ended

Six Months Ended

June 30

June 30

2019

2018

2019

2018

Net income
$
67,207
$
66,274
$
130,849
$
127,980

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

17,994

(6,501
)
34,783

(23,274
)
Accretion of the net unrealized loss on the transfer of AFS securities to
held-to-maturity
(HTM) securities, net of tax

0

1

0

2

Change in pension plan assets, net of tax

909

1,052

1,819

1,785

Comprehensive income, net of tax
$
86,110
$
60,826
$
167,451
$
106,493

Table of Contents
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
UNITED BANKSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)

Six Months Ended June 30, 2019

Accumulated

Common Stock

Other

Total

Par

Retained

Comprehensive

Treasury

Shareholders’

Shares

Value

Surplus

Earnings

Income (Loss)

Stock

Equity

Balance at January 1, 2019

105,239,121
$
263,098
$
2,134,462
$
1,013,037
$
(57,019
) $
(101,954
) $
3,251,624

Cumulative effect of adopting Accounting Standard Update
2016-02

0

0

0

(1,049
)
0

0

(1,049
)
Reclass due to adopting Accounting Standard Update
2017-12

0

0

0

0

50

0

50

Comprehensive income

Net income

0

0

0

63,642

0

0

63,642

Other comprehensive income, net of tax

0

0

0

0

17,699

0

17,699

Total comprehensive income, net of tax

81,341

Stock based compensation expense

0

0

1,113

0

0

0

1,113

Purchase of treasury stock (365,702 shares)

0

0

0

0

0

(12,072
)
(12,072
)
Cash dividends ($0.34 per share)

0

0

0

(34,759
)
0

0

(34,759
)
Grant of restricted stock (126,427 shares)

126,427

316

(316
)
0

0

0

0

Common stock options exercised (33,816 shares)

33,816

84

559

0

0

0

643

Balance at March 31, 2019

105,399,364

263,498

2,135,818

1,040,871

(39,270
)
(114,026
)
3,286,891

Comprehensive income:

Net income

0

0

0

67,207

0

0

67,207

Other comprehensive income, net of tax

0

0

0

0

18,903

0

18,903

Total comprehensive income, net of tax

86,110

Stock based compensation expense

0

0

1,198

0

0

0

1,198

Purchase of treasury stock (166,604 shares)

0

0

0

0

0

(6,032
)
(6,032
)
Cash dividends ($0.34 per share)

0

0

0

(34,688
)
0

0

(34,688
)
Forfeiture of restricted stock (2,539 shares)

0

0

100

0

0

(100
)
0

Common stock options exercised (14,144 shares)

14,144

36

343

0

0

0

379

Balance at June 30, 2019

105,413,508
$
263,534
$
2,137,459
$
1,073,390
$
(20,367
) $
(120,158
) $
3,333,858

Table of Contents

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY ~~(Unaudited)~~

- continued

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except per share data)

   Nine Months Ended September 30, 2018
         Surplus Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Total
Shareholders’
Equity
   Common Stock
   Shares    Par Value
Balance at January 1, 2018
   105,069,821    $ 262,675    $ 2,129,077 $ 891,816 ($ 42,025 ) ($ 1,013 ) $ 3,240,530
Cumulative effect of adopting Accounting Standard Update2016-01
         136 (136 ) 0
Reclass due to adopting Accounting Standard Update2018-02
         6,353 (6,353 ) 0
Comprehensive income:

Net income
   0    0    0 192,392 0 0 192,392
Other comprehensive income, net of tax:
   0    0    0 0 (28,146 ) 0 (28,146 )


Total comprehensive income, net of tax
         164,246
Stock based compensation expense
   0    0    3,016 0 0 0 3,016
Purchase of treasury stock (1,387,750 shares)
   0    0    0 0 0 (51,323 ) (51,323 )
Distribution of treasury stock from deferred compensation plan (26 shares)
   0    0    0 0 0 1 1
Cash dividends ($1.02 per share)
   0       (106,635 ) 0 0 (106,635 )
Grant of restricted stock (97,004 shares)
   97,004    243    (243 ) 0 0 0 0
Forfeiture of restricted stock (4,253 shares)
   0    0    164 0 0 (164 ) 0
Common stock options exercised (60,161 shares)
   60,161    150    1,143 0 0 0 1,293






Balance at September 30, 2018
   105,226,986    $ 263,068    $ 2,133,157 $ 984,062 ($ 76,660 ) ($ 52,499 ) $ 3,251,128

Six Months Ended June 30, 2018

Accumulated

Common Stock

Other

Total

Par

Retained

Comprehensive

Treasury

Shareholders’

Shares

Value

Surplus

Earnings

Income (Loss)

Stock

Equity

Balance at January 1, 2018

105,069,821
$
262,675
$
2,129,077
$
891,816
($
42,025
) ($
1,013
) $
3,240,530

Cumulative effect of adopting Accounting Standard Update
2016-01

0

0

0

136

(136
)
0

0

Reclass due to adopting Accounting Standard Update
2018-02

0

0

0

6,353

(6,353
)
0

0

Comprehensive income:

Net income

0

0

0

61,706

0

0

61,706

Other comprehensive income, net of tax

0

0

0

0

(16,039
)
0

(16,039
)

Total comprehensive income, net of tax

45,667

Stock based compensation expense

0

0

968

0

0

0

968

Purchase of treasury stock (10,842 shares)

0

0

0

0

0

(404
)
(404
)
Cash dividends ($0.34 per share)

0

(35,748
)
0

0

(35,748
)
Grant of restricted stock (97,004 shares)

97,004

243

(243
)
0

0

0

0

Forfeiture of restricted stock (683 shares)

0

0

27

0

0

(27
)
0

Common stock options exercised (15,043 shares)

15,043

37

263

0

0

0

300

Balance at March 31, 2018

105,181,868

262,955

2,130,092

924,263

(64,553
)
(1,444
)
3,251,313

Comprehensive income:

Net income

0

0

0

66,274

0

0

66,274

Other comprehensive income, net of tax

0

0

0

0

(5,448
)
0

(5,448
)

Total comprehensive income, net of tax

60,826

Stock based compensation expense

0

0

1,024

0

0

0

1,024

Purchase of treasury stock (962,504 shares)

0

0

0

0

0

(35,580
)
(35,580
)
Cash dividends ($0.34 per share)

0

0

0

(35,584
)
0

0

(35,584
)
Forfeiture of restricted stock (2,170 shares)

0

0

82

0

0

(82
)
0

Common stock options exercised (27,046 shares)

27,046

67

499

0

0

0

566

Balance at June 30, 2018

105,208,914
$
263,022
$
2,131,697
$
954,953
$
(70,001
) ($
37,106
) $
3,242,565

See notes to consolidated unaudited financial statements.

Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands)

   Nine Months Ended
September 30
   2018 2017
NET CASH PROVIDED BY OPERATING ACTIVITIES
   $ 218,771 $ 125,151
INVESTING ACTIVITIES

Proceeds from maturities and calls of securities held to maturity
   2 12,929
Proceeds from sales of securities available for sale
   86,061 245,065
Proceeds from maturities and calls of securities available for sale
   201,107 386,496
Purchases of securities available for sale
   (629,760 ) (630,061 )
Proceeds from sales of equity securities
   1,825 0
Purchases of equity securities
   (598 ) 0
Proceeds from sales and redemptions of other investment securities
   35,987 14,393
Purchases of other investment securities
   (45,075 ) (51,941 )
Purchases of bank premises and equipment
   (4,439 ) (11,115 )
Proceeds from sales of bank premises and equipment
   2,171 13
Proceeds from the sales of OREO properties
   9,105 4,908
Acquisition of subsidiaries, net of cash paid
   0 44,531
Net change in loans
   (248,623 ) 369,233


NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
   (592,237 ) 384,451


FINANCING ACTIVITIES

Cash dividends paid
   (107,046 ) (86,709 )
Acquisition of treasury stock
   (51,323 ) (1 )
Proceeds from exercise of stock options
   1,277 3,296
Repayment of long-term Federal Home Loan Bank borrowings
   (635,000 ) (845,207 )
Proceeds from issuance of long-term Federal Home Loan Bank borrowings
   650,000 815,000
Repayment of trust preferred issuance
   (9,374 ) 0
Distribution of treasury stock for deferred compensation plan
   1 1
Changes in:

Deposits
   261,529 (269,742 )
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings
   (148,079 ) 186,270


NET CASH USED IN FINANCING ACTIVITIES
   (38,015 ) (197,092 )


(Decrease) Increase in cash and cash equivalents
   (411,481 ) 312,510
Cash and cash equivalents at beginning of year
   1,666,167 1,434,527


Cash and cash equivalents at end of period
   $ 1,254,686 $ 1,747,037


Supplemental information

Noncash investing activities:

Transfers of loans to OREO
   $ 1,809 $ 3,829

Six Months Ended

June 30

2019

2018

NET CASH PROVIDED BY OPERATING ACTIVITIES
$
31,786
$
98,498

INVESTING ACTIVITIES

Proceeds from maturities and calls of securities held to maturity

2,000

2

Proceeds from sales of securities available for sale

248,187

53,179

Proceeds from maturities and calls of securities available for sale

136,576

124,894

Purchases of securities available for sale

(338,983
)
(391,186
)
Proceeds from sales of equity securities

1,497

1,826

Purchases of equity securities

(618
)
(380
)
Proceeds from sales and redemptions of other investment securities

50,271

15,606

Purchases of other investment securities

(75,228
)
(33,279
)
Redemption of bank-owned life insurance policies
2,829

0

Purchases of bank premises and equipment
(4,110
)
(2,159
)
Proceeds from sales of bank premises and equipment
251

2,123

Proceeds from the sales of OREO properties
3,870

4,658

Net change in loans

(203,898
)
(493,787
)

NET CASH USED IN INVESTING ACTIVITIES
(177,356
)
(718,503
)

FINANCING ACTIVITIES

Cash dividends paid

(69,732
)
(71,461
)
Acquisition of treasury stock

(18,104
)
(35,984
)
Proceeds from exercise of stock options

1,020

851

Repayment of long-term Federal Home Loan Bank borrowings

(1,115,000
)
(625,000
)
Proceeds from issuance of long-term Federal Home Loan Bank borrowings

1,400,000

1,115,000

Repayment of trust preferred issuance

0

(9,374
)
Changes in:

Deposits

409,731

812

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

(229,168
)
(328,080
)

NET CASH PROVIDED BY FINANCING ACTIVITIES
378,747

46,764

Increase (Decrease) in cash and cash equivalents
233,177

(573,241
)

Cash and cash equivalents at beginning of year

1,020,396

1,666,167

Cash and cash equivalents at end of period
$
1,253,573
$
1,092,926

Supplemental information

Noncash investing activities:

Transfers of loans to OREO
$
3,133
$
527

Transfer of held to maturity debt securities to available for sale debt securities

11,544

0

See notes to consolidated unaudited financial statements

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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) 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~~June 30, ~~2018~~2019 and ~~2017~~2018 and for the three-month and ~~nine-month~~

six-month

periods then ended have not been audited. The consolidated balance sheet as of December 31, ~~2017~~2018 has been extracted from the audited financial statements included in United’s ~~2017~~2018 Annual Report to Shareholders. The accounting and reporting policies followed in the presentation of these financial statements are consistent with those applied in the preparation of the ~~2017~~2018 Annual Report of United on Form

10-K. ~~To conform to the 2018 presentation, certain reclassifications have been made to prior period amounts, which had no impact on net income, comprehensive income, or stockholders’ equity.~~

In the opinion of management, all 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 operates in two business segments: community banking and mortgage banking. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Information is presented in these notes to the unaudited consolidated interim financial statements with dollars expressed in thousands, except per share or unless otherwise noted.

New Accounting Standards

In ~~August 2018,~~April 2019, the Financial Accounting Standards Board (FASB) issued ~~Accounting Standards Update (ASU)~~ASU No. 2019-04 “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” The amendments clarify the scope of the credit losses standard and address issued related to accrued interest receivable balances, recoveries, variable interest rates and prepayments. The amendments also address partial-term fair valued hedges, fair value hedge basis adjustments. The amendments to the credit losses and hedging standards have the same effective dates as those standards, unless an entity has already adopted the standards. The amendments to recognition and measurement guidance are effective for fiscal years beginning after December 15, 2019; early adoption is permitted. Management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.

In August 2018, the FASB issued ASU No. 2018-14 “Compensation – Retirement ~~Benefits—~~Benefits – Defined Benefits – General (Topic715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” This update amends ASC Topic 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other post retirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project, which the FASB launched in 2014 to improve effectiveness of disclosures in notes to financial statements. ASUNo. 2018-14 is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2020; early adoption is permitted. ASUNo. 2018-14 is not expected to have a material impact on the Company’s financial condition or results of operations.

Table of Contents

In August 2018, the FASB issued ASUNo.

2018-13 ~~“Fair~~

“Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This amendment changes the fair value measurement disclosure requirements of ASC Topic 820 and is the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting – Chapter 8: Notes to Financial Statements, which was finalized in August 2018. ASUNo.

2018-13

is effective for all entities for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2019; early adoption is permitted for any eliminated or modified disclosure upon issuance of this ASU. ASUNo.

2018-13

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

In June 2018, the FASB issued Accounting Standards Update (ASU)No.

2018-07 ~~“Compensation-Stock~~

“Compensation-Stock Compensation (Topic 718):Improvements to Nonemployee Share-Based Payment Accounting.” This update has been issued as part of a simplification initiative which will expand the scope of ASC Topic 718 to include share-based payment transactions for acquiring goods and services from

non-employees

and expands the scope through the amendments to address and improve aspects of the accounting for

non-employee

share-based payment transactions. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASUNo.

2018-07

is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018; early adoption is permitted. ASUNo.

2018-07 ~~is not expected to have a material impact~~

was adopted by United on ~~the Company’s financial condition or results of operations.~~

~~In February 2018, the FASB issued ASU No. 2018-03, “Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU2018-03~~ clarifies that entities that use the measurement alternative for equity securities without readily determinable fair values can change its measurement approach to fair value. This election is irrevocable and will apply to all future purchases of identical or similar investments of the same issuer.January 1, 2019. The amended guidance also clarifies that adjustments made under the measurement alternative should reflect the fair value of the security as of the date that an observable transaction took place rather than the current reporting date. Entities will use the prospective transition approach only for securities they elect to measure using the measurement alternative. ASU~~No. 2018-03~~ ~~is effective for interim and annual reporting periods beginning after December 15, 2017; early~~ adoption ~~is permitted. ASUNo. 2018-03~~ did not have a material impact on the Company’s financial condition or results of operations.

In February 2018, the FASB issued ASU No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” to help organizations address certain stranded income tax effects in accumulated other comprehensive income (AOCI) resulting from the Tax Cuts and Jobs Act (the “Tax Act”). This ASU provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act (or portion thereof) is recorded. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. United adopted ASU~~No. 2018-02~~ ~~in the first quarter of 2018 and reclassified $6,353 of stranded income tax effected amounts in AOCI to retained earnings.~~

In August 2017, the FASB issued ASUNo.

2017-12, ~~“Targeting~~

“Targeting Improvement to Accounting for Hedging Activities.” This ASU amends ASC 815 and its objectives are to improve the transparency and understandability 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. This ASU makes certain targeted improvements to simplify the application of the hedge accounting, including to derivative instruments as well as allow a

one-time

election to reclassify fixed-rate, prepayable debt securities from a held to maturity classification to an available for sale classification. ASU No.

2017-12

is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. ~~ASUNo. 2017-12~~ ~~is not expected~~United adopted the standard on January 1, 2019 using the modified retrospective approach. As part of this adoption, the Company made a

one-time

election to ~~have~~transfer eligible HTM securities to the AFS category. The Company transferred HTM securities with a ~~material impact on the Company’s financial condition or results~~carrying amount of ~~operations.~~

$11,544, which resulted in a decrease of $1,098 to AOCI.

In July 2017, the FASB issued ASUNo. 2017-11, “Part I, Accounting for Certain Financial Instruments with Down Round Features and Part II, Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities 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 do 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. ASUNo. 2017-11 ~~is not expected to have a material impact~~ was adopted by United on ~~the Company’s financial condition or results of operations.~~

January 1, 2019.

In ~~May~~March 2017, the FASB issued ASUNo. ~~2017-09,~~ ~~“Stock Compensation, Scope of Modification Accounting.~~2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This ~~ASU clarifies when changes~~update amends the amortization period for certain purchased callable debt securities held at a premium. FASB is shortening the amortization period for the premium to the terms of conditions of a share-based payment award must be accounted for as modifications. Companies will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes.earliest call date. The ~~new guidance should reduce diversity~~amendments 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. ASUNo. 2017-09~~ isthis update became effective for ~~interim and~~ annual reporting periods beginning after December 15, ~~2017; early~~2018, including interim reporting periods within those annual reporting periods. ASU No. 2017-08 was adopted by United on January 1, 2019. The adoption ~~is permitted. ASUNo. 2017-09~~ did not have a material impact on the Company’s financial condition or results of operations.

~~In March 2017, the FASB issued ASUNo. 2017-07,~~ ~~“Improving the Presentation~~

Table of ~~Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASUNo. 2017-07~~ 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. ASU~~No. 2017-07~~ ~~was effective for United on January 1, 2018. The adoption of ASUNo. 2017-07~~ had a slight change in presentation but did not materially impact the Company’s financial condition or results of operations. United used amounts previously disclosed in its Employee Benefits Plan footnote (Note 14) to retrospectively adjust prior period amounts of employee compensation and employee benefits within United’s Consolidated Statements of Income.

Contents

In January 2017, the FASB issued ASUNo.

2017-04, ~~“Intangibles~~

“Intangibles – Goodwill and Other (Topic 350).” ASU~~No.~~

2017-04

eliminates the requirement to calculate the implied fair value of goodwill to 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. ASU~~No.~~

2017-04

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 January 2017, the FASB issued ASUNo. 2017-01,~~ ~~“Business Combinations (Topic 805): Clarifying the Definition of a Business.” ASUNo. 2017-01~~ 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. ASU~~No. 2017-01~~ ~~was effective for United on January 1, 2018 and did not have a material impact on the Company’s financial condition or results of operations.~~

~~In August 2016, the FASB issued ASUNo. 2016-15,~~ ~~“Classification of Certain Cash Receipts and Cash Payments.” ASUNo. 2016-15~~ 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 ASU~~No. 2016-15~~ ~~using a retrospective transition method to each period presented. ASUNo. 2016-15~~ ~~was effective for United on January 1, 2018 and did not have a material impact on the Company’s financial condition or results of operations.~~

In June 2016, the FASB issued ASUNo. 2016-13, “Financial Instruments – Credit Losses.” ASUNo. 2016-13 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 for~~available-for-sale~~ available for sale debt securities rather than reduce the carrying amount under the current other-than-temporary impairment (OTTI) model. ASUNo. 2016-13 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. ~~ASU~~In May 2019, the FASB issued Accounting Standards Update (ASU) No. 2019-05 “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.” ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that were previously recorded at amortized cost and are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU No. 2019-05 is effective ~~for United~~ on the same date as ASU No. 2016-13, which is January 1, 2020 for United, with early adoption ~~permitted,~~permitted. United has completed an initial data gap assessment and ~~management~~loan segmentation procedures and is currently evaluating the various forecasting and modeling assumptions that will be used to estimate the initial current expected credit loss allowance. In addition, United is currently working through the implementation plan which includes documentation of methodologies, processes, data sources, internal controls and policies, as well as model development, documentation and validation. United has engaged a third-party service provider to assist with the implementation of the new accounting standard. 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 ASUNo. 2016-09,~~ ~~“Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” ASUNo. 2016-09~~ will change certain aspects of accounting for share-based payments to employees. The new guidance will, amongst other things, require 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 $1,048 for the year of 2017. ASU~~No. 2016-09~~ 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. ASU~~No. 2016-09~~ ~~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. The adoption of ASU~~No. 2016-09~~ ~~did not have a material impact on the Company’s financial condition or results of operations.~~

In February 2016, the FASB issued ASUNo. 2016-02, “Leases (Topic 842)”. ASUNo. 2016-02 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. ASUNo. 2016-02 requires, amongst other things, that a lessee recognize on the balance sheet aright-of-use asset and a lease liability for leases ~~which has not yet been quantified,~~ 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. In July 2018, the FASB issued ASUNo. 2018-11 “Leases (Topic 842), Targeted Improvements.” This update creates an additional transition method, and a lessor practical expedient to not separate lease andnon-lease components if specified criteria are met. The new transition method allows companies to use the effective date of the new leases standard as the date of initial application transition. Companies that elect this transition option will not adjust their comparative period financial information for the effect of ASC Topic 842, nor will they make the new required lease disclosure for periods before the effective date. In addition, these companies will carry forward their ASC Topic 840 disclosures for comparative periods. The practical expedient permits lessors to make an accounting policy election by class of underlying asset to not separate lease andnon-lease components if specified criteria are met. In July 2018, the FASB issued ASUNo. 2018-10 “Codification Improvements to ASC Topic 842, Leases.” This update includes narrow amendments to clarify how to apply certain aspects of the new leases standard. The amendments address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU2018-10 does not make any substantive changes to the core provisions or principals of the new leases standard. ~~The Company expects to adopt~~United adopted the ~~new guidance~~standard using the modified retrospective transition method on January 1, ~~2019 and use the effective date as the date of initial application.~~

2019. The Company ~~is currently assessing the impact of the adoption of ASUNo. 2016-02~~ ~~on the Company’s results of operations, financial position and cash flows. The Company has~~ evaluated and ~~plans to elect~~elected the package of practical expedients, which ~~would allow~~allows for existing leases to be accounted for consistent with current guidance, with the exception of the balance sheet recognition for lessees. AsThe Company has also elected the practical expedient on not separating lease and nonlease components and instead treating them as a ~~lessee, United had $69,844 in total future minimum~~single lease ~~payments for operating leases as~~

Table of ~~December 31, 2017. Management is substantially complete with its contract review and will update for any activity during the fourth quarter of 2018. The initial measurement~~Contents

component. Adoption of the ~~leases is currently under evaluation. To assist in determining this information as well as the additional requirements of the new~~ standard the Company has evaluated and selected a third-party lease accounting software solution as part of its implementation strategy. All lease data necessary to apply the new standard has been accumulated and entered into the new leasing software program. The Company is currently in the process of validating the accuracy of such information. The Company is also finalizing documentation of the new lease accounting process and has drafted internal controls over financial reporting as part of the implementation process.

~~In January 2016, the FASB issued ASUNo. 2016-01,~~ ~~“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, ASU~~No. 2016-01~~ ~~clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses onavailable-for-sale~~ ~~debt securities. ASUNo. 2016-01~~ ~~was adopted by United on January 1, 2018 and did not have a significant impact on the Company’s financial condition or results of operations.~~

~~In May 2014, the FASB issued ASUNo. 2014-09,~~ ~~“Revenue from Contracts with Customers (Topic 606).” ASUNo. 2014-09~~ 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. For United, 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, gains and losses from securities, income from bank-owned life insurance (BOLI) and income from mortgage banking activities are not impacted by the standard. Based on a review and evaluation of a number of revenue contracts, United’s management determined that ASU~~No. 2014-09~~ impacts certain recurring revenue streams related to noninterest income such as fees from trust and brokerage services. However, based on an assessment of these revenue streams under the standard, management concluded that ASU~~No. 2014-09~~ does not have a material impact on the Company’s financial condition or results of operations. In addition, in the Company’s evaluation of the nature of its contracts with customers, United has determined that further disaggregation of revenue from contracts with customers into more granular categories beyond those presented in the Consolidated Statements of Income was not necessary. ASU~~No. 2014-09~~ was adopted by United on January 1, 2018 using the modified-retrospective transition method. No cumulative effect adjustment was made to the opening balance of retained earnings because the amount was considered immaterial. The impact of ASU~~No. 2014-09~~ ~~for the first nine months of 2018 was also immaterial to United’s consolidated financial position, results of operations, shareholders’ equity, cash flows and disclosures.~~

Descriptions of our revenue-generating activities that are within the scope of ASC Topic 606, which are presented in our Consolidated Statements of Income as components of Other Income are discussed below. There are no significant judgements relating to the amount and timing of revenue recognition for those revenue streams under the scope of ASC Topic 606.

~~Fees from Trust Services~~

Revenue from trust services primarily is comprised of fees earned from the management and administration of trusts and other customer assets. Trust services include custody of assets, investment management, escrow services, and similar fiduciary activities. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the~~month-end~~ ~~market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts.~~

~~Fees from Brokerage Services~~

Revenue from brokerage services are recorded as the income is earned at the time the related service is performed. In return for such services, the Company charges a commission for the sales of various securities products primarily consisting of investment company shares, annuity products, and corporate debt and equity securities, for its selling and administrative efforts. For account supervision, advisory and administrative services, revenue is recognized over a period of time as earned based on customer account balances and activity.

~~Fees from Deposit Services~~

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, ATM activity fees, debit card fees, and other deposit account related fees. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (ATM or debit card activity).

~~Bankcard Fees and Merchant Discounts~~

Bankcard fees and merchant discounts are primarily comprised of credit card income and merchant services income. Credit card income is primarily comprised of interchange fees earned whenever the Company’s credit cards are processed through card payment networks such as Visa. Merchant services income mainly represents fees charged to merchants to process their credit card transactions. The Company’s performance obligation for bankcard fees and exchange are largely satisfied, and related revenue recognized at the time services are rendered. Payment is typically received immediately or in the following month.

~~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 purchase price has been allocated to the identifiable tangible and intangible assets

resulting in additions to goodwill, core deposit intangibles and the George Mason trade name intangible of $612,920, $28,724 and $1,080, respectively. The core deposit intangibles are being 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 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 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, 2018, the discounts on leases and trust preferred issuances had an average estimated remaining life of 5.00 years and 15.97 years, respectively, and the premiums on the interest-bearing deposits and the FHLB advances each had an average estimated remaining life of 4.00 years and 3.81 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, 2018. The estimated fair values of the acquired assets and assumed liabilities, including identifiable intangible assets and goodwill are considered final as of April 21, 2018.

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 value 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 resultresulted 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 amounts of acquired identifiable~~net lease assets and lease liabilities ~~assumed~~of $

67,040

and $

70,692

, respectively, as of January 1, 2019. Of the ~~Cardinal Acquisition Date were~~difference between these two amounts, $

1,049

was recorded 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
   24,774
Core deposit intangibles
   28,724
George Mason trade name intangible
   1,080
Other assets
   135,383


Total identifiable assets
   $ 4,070,235
Identifiable liabilities:

Deposits
   $ 3,349,812
Short-term borrowings
   96,215
Long-term borrowings
   220,119
Unfavorable lease liability
   2,281
Other liabilities
   39,474


Total identifiable liabilities
   3,707,901


Fair value of net assets acquired including identifiable intangible assets
   362,334


Resulting goodwill
   $ 612,920

The operating results of United for the nine months ended September 30, 2018 include operating results of acquired assets and assumed liabilities. The operations of United’s metropolitan Washington D.C. geographic area, which primarily includes the acquired operations of Cardinal, provided $519,747 in total revenues, which represents net interest income plus other income, and $270,914 in net income from the period from the Cardinal Acquisition Datean adjustment to September 30, 2018. These amounts are included in United’s consolidated financial statements as of and for the nine months ended September 30, 2018. Cardinal’s results of operations prior to the Cardinal Acquisition Date are not included in United’s consolidated financial statements.

retained earnings.

2. INVESTMENT SECURITIES

Securities Available for Sale

Securities held for indefinite periods of time are classified as available for sale and carried at estimated fair value. The amortized cost and estimated fair values of securities available for sale are summarized as follows.

   September 30, 2018
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair Value    Cumulative
OTTI in
AOCI (1)
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 103,237    $ 0    $ 1,672    $ 101,565    $ 0
State and political subdivisions
   258,656    440    6,850    252,246    0
Residential mortgage-backed securities

Agency
   973,307    541    30,201    943,647    0
Non-agency
   4,086    486    0    4,572    86
Commercial mortgage-backed securities

Agency
   557,211    71    13,630    543,652    0
Asset-backed securities
   223,350    638    386    223,602    0
Trust preferred collateralized debt obligations
   6,176    253    275    6,154    2,586
Single issue trust preferred securities
   8,748    127    771    8,104    0
Other corporate securities
   96,113    51    1,139    95,025    0










Total
   $ 2,230,884    $ 2,607    $ 54,924    $ 2,178,567    $ 2,672

   December 31, 2017
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair Value    Cumulative
OTTI in
AOCI (1)
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 114,735    $ 385    $ 362    $ 114,758    $ 0
State and political subdivisions
   303,101    3,197    2,429    303,869    0
Residential mortgage-backed securities

Agency
   821,857    2,096    9,360    814,593    0
Non-agency
   4,969    543    0    5,512    86
Commercial mortgage-backed securities

Agency
   457,107    1,059    3,309    454,857    0
Asset-backed securities
   109,829    148    7    109,970    0
Trust preferred collateralized debt obligations
   37,856    542    4,129    34,269    20,770
Single issue trust preferred securities
   13,417    368    1,225    12,560    0
Other corporate securities
   28,101    407    18    28,490    0
Marketable equity securities
   9,712    179    13    9,878    0










Total
   $ 1,900,684    $ 8,924    $ 20,852    $ 1,888,756    $ 20,856


	June 30, 2019
			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	$	73,369	$	1,116	$	1	$	74,484	$	0
State and political subdivisions		178,833		2,968		542		181,259		0
Residential mortgage-backed securities
Agency		866,597		12,539		1,569		877,567		0
Non-agency		3,598		380		0		3,978		86
Commercial mortgage-backed securities
Agency		566,366		8,738		383		574,721		0
Asset-backed securities		272,423		0		3,569		268,854		0
Trust preferred collateralized debt obligations		6,136		0		723		5,413		398
Single issue trust preferred securities		18,180		175		1,511		16,844		0
Other corporate securities		338,784		3,900		13		342,671		0

Total	$	2,324,286	$	29,816	$	8,311	$	2,345,791	$	484


	December 31, 2018
			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	$	86,285	$	35	$	430	$	85,890	$	0
State and political subdivisions		212,670		439		4,121		208,988		0
Residential mortgage-backed securities
Agency		1,047,345		3,235		14,930		1,035,650		0
Non-agency		3,927		332		0		4,259		86
Commercial mortgage-backed securities
Agency		560,634		996		7,030		554,600		0
Asset-backed securities		272,459		450		939		271,970		0
Trust preferred collateralized debt obligations		6,176		91		350		5,917		2,586
Single issue trust preferred securities		8,754		169		561		8,362		0
Other corporate securities		162,634		118		1,349		161,403		0

Total	$	2,360,884	$	5,865	$	29,710	$	2,337,039	$	2,672

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

Table of Contents

The following is a summary of securities~~available-for-sale~~ available for sale which were in an unrealized loss position at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~

   Less than 12 months    12 months or longer
September 30, 2018
   Fair Value    Unrealized
Losses    Fair Value    Unrealized
Losses
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 89,255    $ 1,233    $ 12,311    $ 439
State and political subdivisions
   127,202    2,166    80,886    4,684
Residential mortgage-backed securities

Agency
   612,343    15,591    300,669    14,610
Non-agency
   0    0    0    0
Commercial mortgage-backed securities

Agency
   318,487    7,693    209,241    5,937
Asset-backed securities
   92,432    386    0    0
Trust preferred collateralized debt obligations
   0    0    2,225    275
Single issue trust preferred securities
   0    0    4,950    771
Other corporate securities
   78,095    1,139    0    0








Total
   $ 1,317,814    $ 28,208    $ 610,282    $ 26,716

   Less than 12 months    12 months or longer
December 31, 2017
   Fair Value    Unrealized
Losses    Fair Value    Unrealized
Losses
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 36,678    $ 230    $ 22,920    $ 132
State and political subdivisions
   82,896    566    59,432    1,863
Residential mortgage-backed securities

Agency
   460,414    4,621    182,482    4,739
Non-agency
   0    0    0    0
Commercial mortgage-backed securities

Agency
   282,858    2,386    70,763    923
Asset-backed securities
   27,931    7    0    0
Trust preferred collateralized debt obligations
   0    0    28,629    4,129
Single issue trust preferred securities
   0    0    4,485    1,225
Other corporate securities
   6,975    18    0    0
Marketable equity securities
   0    0    363    13








Total
   $ 897,752    $ 7,828    $ 369,074    $ 13,024

2018.


	Less than 12 months				12 months or longer
	Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses
June 30, 2019
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	0	$	0	$	2,621	$	1
State and political subdivisions		1,127		6		50,689		536
Residential mortgage-backed securities
Agency		9,460		9		180,352		1,560
Non-agency		0		0		0		0
Commercial mortgage-backed securities
Agency		42,489		47		110,943		336
Asset-backed securities		261,566		3,462		7,288		107
Trust preferred collateralized debt obligations		0		0		5,412		723
Single issue trust preferred securities		0		0		13,633		1,511
Other corporate securities		12,679		13		0		0

Total	$	327,321	$	3,537	$	370,938	$	4,774


	Less than 12 months				12 months or longer
	Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses
December 31, 2018
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	66,072	$	250	$	7,374	$	180
State and political subdivisions		53,421		544		94,337		3,577
Residential mortgage-backed securities
Agency		195,009		1,597		508,041		13,333
Non-agency		0		0		0		0
Commercial mortgage-backed securities
Agency		107,443		1,124		294,129		5,906
Asset-backed securities		151,427		939		0		0
Trust preferred collateralized debt obligations		0		0		2,150		350
Single issue trust preferred securities		0		0		5,163		561
Other corporate securities		129,709		1,233		6,879		116

Total	$	703,081	$	5,687	$	918,073	$	24,023

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 ~~those~~any 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
   2018    2017    2018    2017
Proceeds from sales and calls
   $ 109,093    $ 64,257    $ 283,953    $ 631,561
Gross realized gains
   93    1,781    1,314    2,840
Gross realized losses
   207    1,314    1,604    1,396

Table of Contents


	Three Months Ended June 30				Six Months Ended June 30
	2019		2018		2019		2018
Proceeds from sales and calls	$	188,432	$	75,157	$	384,763	$	174,860
Gross realized gains		739		58		754		1,221
Gross realized losses		608		85		972		1,397

At ~~September~~June 30, ~~2018,~~2019, gross unrealized losses on available for sale securities were ~~$54,924~~$8,311 on ~~733~~245 securities of a total portfolio of ~~865~~ 791

available for sale securities. Securities ~~in an~~with the most significant gross unrealized ~~loss position~~losses at ~~September~~June 30, ~~2018~~2019 consisted primarily of ~~state and political subdivision~~asset-backed securities, agency residential mortgage-backed securities, and ~~agency commercial and residential mortgage-backed~~single issue trust preferred securities. The ~~state~~asset-backed securities 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 ~~political subdivisions securities relate to securities issued by various municipalities.~~subordination in excess of the government guaranteed portion. The agency ~~commercial and~~ residential mortgage-backed securities relate to ~~commercial and~~ residential properties and provide a guaranty of full and timely payments of principal and interest by the issuing agency.

The single issue trust preferred securities relate to securities of financial institutions.

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.

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 ~~$258,656 million~~$178,833 at ~~September~~June 30, ~~2018.~~2019. As of ~~September~~June 30, ~~2018,~~2019, approximately ~~76%~~77% 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 of the portfolio was rated below investment grade as of ~~September~~June 30, ~~2018.~~2019. 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 impaired at ~~September~~June 30, ~~2018.~~

2019.

Agency mortgage-backed securities

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 ~~$1,530,518~~$1,432,963 at ~~September~~June 30, ~~2018.~~2019. Of the ~~$1,530,518~~ $

1,432,963

amount, ~~$557,211~~$566,366 was related to agency commercial mortgage-backed securities and ~~$973,307~~$866,597 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 impaired at ~~September~~June 30, ~~2018.~~

2019.

Non-agency

residential mortgage-backed securities

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 ~~$4,086~~$3,598 at ~~September~~June 30, ~~2018.~~2019. Of the ~~$4,086~~$

3,598

amount, ~~$170~~$8 was rated above investment grade and ~~$3,916~~$3,590 was rated below investment grade. The entire portfolio of the

non-agency

residential mortgage-backed securities ~~are~~is either the senior or super-senior tranches of their respective structure. Based upon management’s analysis and judgment, it was determined that ~~none~~one of thenon-agency mortgage-backed securities ~~were~~was other-than-temporarily impaired at ~~September~~June 30, ~~2018.~~

2019. The total amount of OTTI recognized in earnings on this security during the second quarter of 2019 was $21.

Table of Contents

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). ~~Management reviews each issuer’s current and projected earnings trends, asset quality, capitalization levels, and other key factors. Upon completing the review for the third~~

~~quarter of 2018, it was determined that none of the single issue trust preferred securities were other-than-temporarily impaired.~~ 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 ~~September~~June 30, ~~2018~~2019 consisted of ~~$3,028~~$4,036 in investment grade bonds, $5,935 in split rated bonds, $2,480 in below investment grade rated bonds, and ~~$5,720~~$5,729 in unrated bonds. ~~The investment grade bonds were ratedBBB-.~~ ~~All~~Management reviews each issuer’s current and projected earnings trends, asset quality, capitalization levels, and other key factors. Upon completing the review for the second quarter of 2019, it was determined that none of the ~~unrated bonds~~single issue trust preferred securities were ~~in an unrealized loss position for twelve months or longer as of September 30, 2018.~~

other-than-temporarily impaired.

Trust preferred collateralized debt obligations (Trup Cdos)

The total amortized cost balance of United’s Trup Cdo portfolio was ~~$6,176~~$6,136 as of ~~September~~June 30, ~~2018.~~2019. For any securities in an unrealized loss position, 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~~June 30, ~~2018,~~2019, the Company has determined that it does not intend to sell any Trup Cdo 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. ~~Except for~~Based on this review, management determined that one of the ~~debt~~Trup Cdo securities ~~that have already been deemed to be~~was other-than-temporarily impaired ~~management does not believe any other individual security with an unrealized loss~~ as of ~~September~~June 30, ~~2018 is other-than-temporarily impaired.~~

2019. The total amount of OTTI recognized in earnings on this security during the second quarter of 2019 was $54.

Corporate securities

As of ~~September~~June 30, ~~2018,~~2019, United’s Corporate securities portfolio had a total amortized cost balance of ~~$96,113.~~$338,784. The majority of the portfolio consisted of debt issuances of corporations representing a variety of industries, including financial institutions. Of the ~~$96,113, 78%~~$338,784, 94% was investment grade rated and ~~22%~~6% was unrated. For corporate

securities, management has evaluated the near-term prospects of the investment in relation to the severity and duration of any ~~impairment~~impairment. Based upon management’s analysis and ~~based on that evaluation, management~~judgment, it was determined that nonone of the other corporate securities were other-than-temporarily impaired at ~~September~~June 30, ~~2018.~~

2019.

Below is a progression of the 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
   2018    2017    2018    2017
Balance of cumulative credit losses at beginning of period
   $ 3,199    $ 22,162    $ 18,060    $ 22,162
Reductions for securities sold or paid off during the period
   0    (4,102 )    (14,861 )    (4,102 )








Balance of cumulative credit losses at end of period
   $ 3,199    $ 18,060    $ 3,199    $ 18,060


	Three Months Ended June 30				Six Months Ended June 30
	2019		2018		2019		2018
Balance of cumulative credit losses at beginning of period	$	3,138	$	3,199	$	3,138	$	18,060
Additional credit losses on securities for which OTTI was previously recognized		54		0		54		0
Reductions for securities sold or paid off during the period		0		0		0		(14,861	)

Balance of cumulative credit losses at end of period	$	3,192	$	3,199	$	3,192	$	3,199

The amortized cost and estimated fair value of securities available for sale at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 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, 2018    December 31, 2017
   Amortized
Cost    Estimated
Fair Value    Amortized
Cost    Estimated
Fair Value
Due in one year or less
   $ 76,698    $ 76,346    $ 50,311    $ 50,212
Due after one year through five years
   500,052    490,797    386,039    384,585
Due after five years through ten years
   466,155    451,981    400,129    398,208
Due after ten years
   1,187,979    1,159,443    1,054,493    1,045,873
Marketable equity securities
   0    0    9,712    9,878








Total
   $ 2,230,884    $ 2,178,567    $ 1,900,684    $ 1,888,756

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	June 30, 2019				December 31, 2018
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	150,318	$	150,304	$	77,534	$	77,266
Due after one year through five years		560,933		567,674		518,975		514,734
Due after five years through ten years		519,370		527,238		483,567		477,135
Due after ten years		1,093,665		1,100,575		1,280,808		1,267,904

Total	$	2,324,286	$	2,345,791	$	2,360,884	$	2,337,039

Securities Held to Maturity

The amortized cost and estimated fair values of securities held to maturity are summarized as follows:

   September 30, 2018
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair
Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 5,103    $ 132    $ 0    $ 5,235
State and political subdivisions
   5,798    8    1    5,805
Residential mortgage-backed securities

Agency
   21    2    0    23
Single issue trust preferred securities
   9,409    0    873    8,536
Other corporate securities
   20    0    0    20








Total
   $ 20,351    $ 142    $ 874    $ 19,619

   December 31, 2017
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair
Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 5,187    $ 308    $ 0    $ 5,495
State and political subdivisions
   5,797    10    0    5,807
Residential mortgage-backed securities

Agency
   23    3    0    26
Single issue trust preferred securities
   9,401    0    731    8,670
Other corporate securities
   20    0    0    20








Total
   $ 20,428    $ 321    $ 731    $ 20,018


	June 30, 2019
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	5,015	$	21	$	0	$	5,036
State and political subdivisions		1,426		1		0		1,427
Residential mortgage-backed securities
Agency		0		0		0		0
Single issue trust preferred securities		0		0		0		0
Other corporate securities		20		0		0		20

Total	$	6,461	$	22	$	0	$	6,483


	December 31, 2018
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	5,074	$	90	$	0	$	5,164
State and political subdivisions		5,473		7		1		5,479
Residential mortgage-backed securities
Agency		20		2		0		22
Single issue trust preferred securities		9,412		0		1,442		7,970
Other corporate securities		20		0		0		20

Total	$	19,999	$	99	$	1,443	$	18,655

Even though the market value of the~~held-to-maturity~~ held to maturity investment portfolio is less than its cost, the unrealized loss has no impact on the net worth or regulatory capital requirements of United. ~~As of September 30, 2018, the Company’s largestheld-to-maturity~~ ~~single-issue trust preferred exposure was to SunTrust Bank ($7,432). The twoheld-to-maturity~~ ~~single-issue trust preferred exposures with at least one rating below investment grade included SunTrust Bank ($7,432) and Royal Bank of Scotland ($977).~~

There were no gross realized gains or losses on calls and sales of held to maturity securities included in earnings for the ~~third~~second quarter and first ~~nine~~six months of ~~2018~~2019 and ~~2017.~~

2018.

The amortized cost and estimated fair value of debt securities held to maturity at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 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, 2018    December 31, 2017
   Amortized
Cost    Estimated
Fair
Value    Amortized
Cost    Estimated
Fair
Value
Due in one year or less
   $ 7,103    $ 7,235    $ 0    $ 0
Due after one year through five years
   2,158    2,163    9,344    9,660
Due after five years through ten years
   8,093    7,610    5,663    5,343
Due after ten years
   2,997    2,611    5,421    5,015








Total
   $ 20,351    $ 19,619    $ 20,428    $ 20,018

Table of Contents


	June 30, 2019				December 31, 2018
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	5,225	$	5,246	$	7,913	$	8,005
Due after one year through five years		216		217		1,059		1,061
Due after five years through ten years		0		0		8,030		7,134
Due after ten years		1,020		1,020		2,997		2,455

Total	$	6,461	$	6,483	$	19,999	$	18,655

Equity securities at fair value

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. The fair value of United’s equity securities was ~~$9,845~~$9,098 at ~~September~~June 30, 2019 and $9,734 at December 31, 2018. ~~Prior to the adoption of ASUNo. 2016-01~~ ~~on January 1, 2018, equity securities were included in available for sale securities.~~

   Three Months
Ended
September 30,
2018    Nine Months
Ended
September 30,
2018
Net losses recognized during the period
   $ (38 )    $ (102 )
Net losses recognized during the period on equity securities sold
   (2 )    (4 )
Unrealized gains recognized during the period on equity securities still held at period end
   0    50
Unrealized losses recognized during the period on equity securities still held at period end
   36    148


	Three Months Ended June 30					Six Months Ended June 30
	2019		2018			2019		2018
Net gains (losses) recognized during the period	$	55	$	(28	)	$	244	$	(64	)
Net gains (losses) recognized during the period on equity securities sold		2		(4	)		134		(2	)
Unrealized gains recognized during the period on equity securities still held at period end		64		11			122		50
Unrealized losses recognized during the period on equity securities still held at period end		11		35			12		112

Other investment securities

During the ~~third~~second quarter of ~~2018,~~2019, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the ~~third~~second quarter of ~~2018~~2019 had a significant adverse effect on the fair value of any of its cost method securities. United determined that there was no individual security that experienced an adverse event during the ~~third~~second quarter. There were no other events or changes in circumstances during the ~~third~~second quarter which would have an adverse effect on the fair value of its cost method securities.

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated ~~$1,999,152~~$1,588,440 and ~~$1,403,565~~$1,887,176 at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018 respectively.

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3. LOANS

Major classes of loans are as follows:

   September 30,
2018    December 31,
2017
Commercial, financial and agricultural:

Owner-occupied commercial real estate
   $ 1,336,434    $ 1,361,629
Nonowner-occupied commercial real estate
   4,341,501    4,451,298
Other commercial loans
   1,932,919    1,998,979




Total commercial, financial & agricultural
   7,610,854    7,811,906
Residential real estate
   3,387,268    2,996,171
Construction & land development
   1,379,985    1,504,907
Consumer:

Bankcard
   9,530    10,314
Other consumer
   899,074    704,039




Total gross loans
   $ 13,286,711    $ 13,027,337


	June 30, 2019		December 31, 2018
Commercial, financial and agricultural:
Owner-occupied commercial real estate	$	1,239,954	$	1,291,790
Nonowner-occupied commercial real estate		4,194,064		4,303,613
Other commercial loans		2,021,953		1,957,641

Total commercial, financial & agricultural		7,455,971		7,553,044
Residential real estate		3,674,005		3,501,393
Construction & land development		1,464,064		1,410,468
Consumer:
Bankcard		9,380		10,203
Other consumer		1,036,526		954,424

Total gross loans	$	13,639,946	$	13,429,532

The table above does not include loans held for sale of ~~$234,196~~$370,593 and ~~$265,955~~$249,846 at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. 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 ~~$155,526~~$111,611 or ~~1.17%~~0.82% of total gross loans at ~~September~~June 30, ~~2018~~2019 and ~~$210,521~~$149,737 or ~~1.62%~~1.12% of total gross loans at December 31, ~~2017.~~2018. The contractual principal in these acquired impaired loans was ~~$205,034~~$144,127 and ~~$285,964~~$195,706 at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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~~six months of ~~2018~~2019 follows:

Accretable yield at the beginning of the period
   $ 39,098
Accretion (including cash recoveries)
   (8,371 )
Additions
   691
Net reclassifications to accretable fromnon-accretable
   9,112
Disposals (including maturities, foreclosures, and charge-offs)
   (3,323 )


Accretable yield at the end of the period
   $ 37,207


Accretable yield at the beginning of the period	$	26,289
Accretion (including cash recoveries)		(5,850	)
Additions		0
Net reclassifications to accretable from non-accretable		7,051
Disposals (including maturities, foreclosures, and charge-offs)		(4,335	)

Accretable yield at the end of the period	$	23,155

United’s subsidiary bank has made loans to the directors and officers of United and its subsidiaries, and to their affiliates. The aggregate dollar amount of these loans was ~~$25,826~~$85,506 and ~~$36,360~~$93,282 at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

4. CREDIT QUALITY

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

For all loan classes, past due loans are reviewed on a monthly basis to identify loans 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 loan

Table of Contents

losses. United’s method of income recognition for loans that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectibility of principal is in doubt. Nonaccrual loans 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~~June 30, ~~2018,~~2019, United had TDRs of ~~$63,626~~$58,750 as compared to ~~$50,129~~$59,425 as of December 31, ~~2017.~~2018. Of the ~~$63,626~~$58,750 aggregate balance of TDRs at ~~September~~June 30, ~~2018, $50,974~~2019, $48,586 was on nonaccrual ~~$85~~and $1,278 were ~~90 days or more past due and $1,778 were 30 to 89~~30-89 days past due. Of the ~~$50,129~~$59,425 aggregate balance of TDRs at December 31, ~~2017, $30,868 was~~2018, $48,899 were on nonaccrual ~~$95~~and $690 were 90 days or more ~~past due and $1,254 were 30 to 89 days~~ past due. All these amounts are included in the appropriate categories in the “Age Analysis of Past Due Loans” table on a subsequent page. As of ~~September~~June 30, ~~2018,~~2019, there were no commitments to lend additional funds to debtors owing receivables whose terms have been modified in TDRs. At ~~September~~June 30, ~~2018,~~2019, United had restructured loans in the amount of ~~$1,646~~$1,801 that were modified by a reduction in the interest rate, ~~$1,849~~$1,796 that were modified by a combination of a reduction in the interest rate and the principal and ~~$60,131~~$55,153 that were modified by a change in terms.

A loan acquired and accounted for under ASC Topic

310-30 ~~“Loans~~

“Loans and Debt Securities Acquired with Deteriorated Credit Quality” is reported as an accruing loan and a performing asset unless it does not perform in accordance with its restructured contractual provisions.

The following table sets forth United’s troubled debt restructurings that have been restructured during the three months ended ~~September~~June 30, 2019 and 2018, segregated by class of ~~loans. No loans were restructured during the three months ended September 30, 2017.~~

   Troubled Debt Restructurings
For the Three Months Ended
   September 30, 2018
   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
   5    7,420    7,364
Residential real estate
   1    272    272
Construction & land development
   0    0    0
Consumer:

Bankcard
   0    0    0
Other consumer
   0    0    0






Total
   6    $ 7,692    $ 7,636






loans:


	Troubled Debt Restructurings For the Three Months Ended
	June 30, 2019						June 30, 2018
	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	$	150	$	150		0	$	0	$	0
Nonowner-occupied		0		0		0		0		0		0
Other commercial		1		559		559		4		9,571		9,571
Residential real estate		2		1,845		1,832		2		6,953		6,953
Construction & land development		3		2,242		2,202		0		0		0
Consumer:
Bankcard		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0

Total		7	$	4,796	$	4,743		6	$	16,524	$	16,524

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The following table sets forth United’s troubled debt restructurings that have been restructured during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, segregated by class of loans:

   Troubled Debt Restructurings
For the Nine Months Ended
   September 30, 2018    September 30, 2017
   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
   0    $ 0    $ 0    1    $ 5,333    $ 5,333
Nonowner-occupied
   0    0    0    0    0    0
Other commercial
   9    16,992    16,890    8    24,102    22,291
Residential real estate
   3    7,225    7,225    0    0    0
Construction & land development
   0    0    0    1    1,456    1,400
Consumer:

Bankcard
   0    0    0    0    0    0
Other consumer
   0    0    0    0    0    0












Total
   12    $ 24,217    $ 24,115    10    $ 30,891    $ 29,024


	Troubled Debt Restructurings For the Six Months Ended
	June 30, 2019						June 30, 2018
	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	$	150	$	150		0	$	0	$	0
Nonowner-occupied		0		0		0		0		0		0
Other commercial		2		824		811		4		9,571		9,571
Residential real estate		3		2,258		2,234		2		6,953		6,953
Construction & land development		3		2,242		2,202		0		0		0
Consumer:
Bankcard		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0

Total		9	$	5,474	$	5,397		6	$	16,524	$	16,524

During the ~~third~~second quarter ~~and first nine months~~ of ~~2018, $7,636 and $24,115~~2019, $4,743 of restructured loans were modified by a change in ~~loan~~terms. For the first six months of 2019, $

251

thousand of restructured loans were modified by an interest rate reduction and $5,146 of restructured loans were modified by a change in terms. During the second quarter and first ~~nine~~six months of ~~2017, $29,024~~2018, $16,524 of restructured loans were modified by a change in loan terms. 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 were restructured during the twelve-month period ended June 30, 2019 and had charge-offs during the ~~three months and nine~~six months ended ~~September~~June 30, ~~2018.~~

   Three Months Ended
September 30, 2018    Nine Months Ended
September 30, 2018
(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    622    1    622
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    $ 622    1    $ 622

2019. No troubled debt restructurings had charge-offs during the second quarter of 2019.


	Six Months Ended June 30, 2019
(In thousands)	Number of Contracts		Recorded Investment
Troubled Debt Restructurings
Commercial real estate:
Owner-occupied		0	$	0
Nonowner-occupied		0		0
Other commercial		1		1,321
Residential real estate		0		0
Construction & land development		0		0
Consumer:
Bankcard		0		0
Other consumer		0		0

Total		1	$	1,321

No loans restructured during the twelve-month period ended ~~September~~June 30, ~~2017~~2018 subsequently defaulted, resulting in a principalcharge-off during the ~~three months~~second quarter and first ~~nine~~six months ~~ended September 30, 2017.~~

of 2018.

Table of Contents

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

Age Analysis of Past Due Loans
As of September 30, 2018

   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
   $ 11,089    $ 18,009    $ 29,098    $ 1,307,336    $ 1,336,434    $ 1,431
Nonowner-occupied
   17,182    17,557    34,739    4,306,762    4,341,501    2,015
Other commercial
   7,413    49,467    56,880    1,876,039    1,932,919    1,326
Residential real estate
   35,646    30,519    66,165    3,321,103    3,387,268    9,941
Construction & land development
   3,406    17,069    20,475    1,359,510    1,379,985    642
Consumer:

Bankcard
   649    177    826    8,704    9,530    177
Other consumer
   7,874    763    8,637    890,437    899,074    502












Total
   $ 83,259    $ 133,561    $ 216,820    $ 13,069,891    $ 13,286,711    $ 16,034

Age Analysis of Past Due Loans

As of June 30, 2019


	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	$	11,074	$	17,603	$	28,677	$	1,211,277	$	1,239,954	$	1,136
Nonowner-occupied		7,572		19,678		27,250		4,166,814		4,194,064		2,713
Other commercial		10,075		44,843		54,918		1,967,035		2,021,953		745
Residential real estate		33,514		32,418		65,932		3,608,073		3,674,005		7,069
Construction & land development		4,233		17,083		21,316		1,442,748		1,464,064		495
Consumer:
Bankcard		450		129		579		8,801		9,380		129
Other consumer		8,011		684		8,695		1,027,831		1,036,526		442

Total	$	74,929	$	132,438	$	207,367	$	13,432,579	$	13,639,946	$	12,729

(1)	Other includes loans with a recorded investment of ~~$155,526~~ $ 111,611 acquired and accounted for under ASC Topic 310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality”.

Age Analysis of Past Due Loans

As of December 31, 2018


	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	$	9,224	$	17,742	$	26,966	$	1,264,824	$	1,291,790	$	629
Nonowner-occupied		16,108		18,092		34,200		4,269,413		4,303,613		1,171
Other commercial		13,556		46,040		59,596		1,898,045		1,957,641		2,850
Residential real estate		37,111		30,278		67,389		3,434,004		3,501,393		9,141
Construction & land development		8,462		19,412		27,874		1,382,594		1,410,468		680
Consumer:
Bankcard		657		177		834		9,369		10,203		177
Other consumer		8,909		1,243		10,152		944,272		954,424		893

Total	$	94,027	$	132,984	$	227,011	$	13,202,521	$	13,429,532	$	15,541

(1)	Other includes loans with a recorded investment of $149,737 acquired and accounted for under ASC Topic 310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality”.

Age Analysis of Past Due Loans
As of December 31, 2017

(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
   $ 7,968    $ 13,663    $ 21,631    $ 1,339,998    $ 1,361,629    $ 458
Nonowner-occupied
   10,398    20,448    30,846    4,420,452    4,451,298    634
Other commercial
   11,533    68,476    80,009    1,918,970    1,998,979    940
Residential real estate
   35,300    28,637    63,937    2,932,234    2,996,171    6,519
Construction & land development
   1,615    17,190    18,805    1,486,102    1,504,907    385
Consumer:

Bankcard
   449    186    635    9,679    10,314    186
Other consumer
   9,288    968    10,256    693,783    704,039    775












Total
   $ 76,551    $ 149,568    $ 226,119    $ 12,801,218    $ 13,027,337    $ 9,897

~~(1)~~

~~Other includes loans with a recorded investment of $210,521 acquired and accounted for under ASC Topic310-30~~ ~~“Loans and Debt Securities Acquired with Deteriorated Credit Quality”.~~

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

Loans on Nonaccrual Status

   September 30,
2018    December 31,
2017
Commercial real estate:

Owner-occupied
   $ 16,578    $ 13,205
Nonowner-occupied
   15,542    19,814
Other commercial
   48,141    67,536
Residential real estate
   20,578    22,118
Construction & land development
   16,427    16,805
Consumer:

Bankcard
   0    0
Other consumer
   261    193




Total
   $ 117,527    $ 139,671

Loans on Nonaccrual Status


	June 30, 2019		December 31, 2018
Commercial real estate:
Owner-occupied	$	16,467	$	17,113
Nonowner-occupied		16,965		16,921
Other commercial		44,098		43,190
Residential real estate		25,349		21,137
Construction & land development		16,588		18,732
Consumer:
Bankcard		0		0
Other consumer		242		350

Total	$	119,709	$	117,443

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United assigns credit quality indicators of pass, special mention, substandard and doubtful to its loans. For United’s loans with a corporate credit exposure, United internally assigns a grade based on the creditworthiness of the borrower. 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 due30-89 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. 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 arecharged-off prior to such a classification. Loans classified as doubtful are also considered impaired.

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The following tables set forth United’s credit quality indicators ~~information,~~information, by class of loans:

Credit Quality Indicators

Corporate Credit Exposure

As of September 30, 2018

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

Pass
   $ 1,266,769    $ 4,197,966    $ 1,827,465    $ 1,302,968
Special mention
   15,221    60,293    13,528    4,715
Substandard
   54,444    83,242    90,023    72,302
Doubtful
   0    0    1,903    0








Total
   $ 1,336,434    $ 4,341,501    $ 1,932,919    $ 1,379,985

As of December 31, 2017

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

Pass
   $ 1,276,088    $ 4,312,985    $ 1,848,868    $ 1,413,706
Special mention
   20,165    57,618    55,564    5,196
Substandard
   65,376    80,695    90,625    86,005
Doubtful
   0    0    3,922    0








Total
   $ 1,361,629    $ 4,451,298    $ 1,998,979    $ 1,504,907


As of June 30, 2019
	Commercial Real Estate				Other Commercial		Construction & Land Development
	Owner- occupied		Nonowner- occupied		Other Commercial		Construction & Land Development
Grade:
Pass	$	1,146,018	$	4,080,814	$	1,892,676	$	1,377,072
Special mention		33,082		37,946		55,345		11,038
Substandard		60,854		75,304		73,497		75,954
Doubtful		0		0		435		0

Total	$	1,239,954	$	4,194,064	$	2,021,953	$	1,464,064


As of December 31, 2018
	Commercial Real Estate				Other Commercial		Construction & Land Development
	Owner- occupied		Nonowner- occupied		Other Commercial		Construction & Land Development
Grade:
Pass	$	1,201,387	$	4,161,149	$	1,858,821	$	1,330,899
Special mention		34,487		46,442		14,424		28,629
Substandard		55,916		96,022		81,946		50,940
Doubtful		0		0		2,450		0

Total	$	1,291,790	$	4,303,613	$	1,957,641	$	1,410,468

Credit Quality Indicators

Consumer Credit Exposure

As of September 30, 2018

   Residential
Real Estate    Bankcard    Other
Consumer
Grade:

Pass
   $ 3,322,863    $ 8,704    $ 890,411
Special mention
   17,309    649    7,879
Substandard
   47,096    177    784
Doubtful
   0    0    0






Total
   $ 3,387,268    $ 9,530    $ 899,074






As of December 31, 2017

   Residential
Real Estate    Bankcard    Other
Consumer
Grade:

Pass
   $ 2,945,266    $ 9,679    $ 693,727
Special mention
   18,025    449    9,334
Substandard
   32,880    186    978
Doubtful
   0    0    0






Total
   $ 2,996,171    $ 10,314    $ 704,039


As of June 30, 2019
	Residential Real Estate		Bankcard		Other Consumer
Grade:
Pass	$	3,611,502	$	8,801	$	1,027,772
Special mention		15,833		450		8,015
Substandard		46,670		129		739
Doubtful		0		0		0

Total	$	3,674,005	$	9,380	$	1,036,526


As of December 31, 2018
	Residential Real Estate		Bankcard		Other Consumer
Grade:
Pass	$	3,436,584	$	9,369	$	944,241
Special mention		19,051		657		8,914
Substandard		45,758		177		1,269
Doubtful		0		0		0

Total	$	3,501,393	$	10,203	$	954,424

Loans are designated as impaired when, in the opinion of management, based on current ~~information~~information 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

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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, 2018    December 31, 2017
   Recorded
Investment    Unpaid
Principal
Balance    Related
Allowance    Recorded
Investment    Unpaid
Principal
Balance    Related
Allowance
With no related allowance recorded:

Commercial real estate:

Owner-occupied
   $ 58,367    $ 58,532    $ 0    $ 78,117    $ 78,419    $ 0
Nonowner-occupied
   98,912    98,971    0    134,136    134,195    0
Other commercial
   60,602    63,069    0    46,993    49,552    0
Residential real estate
   33,190    34,041    0    26,751    28,202    0
Construction & land development
   36,576    40,673    0    52,279    59,691    0
Consumer:

Bankcard
   0    0    0    0    0    0
Other consumer
   23    23    0    15    15    0
With an allowance recorded:

Commercial real estate:

Owner-occupied
   $ 9,990    $ 9,990    $ 2,560    $ 9,132    $ 9,132    $ 2,251
Nonowner-occupied
   14,468    14,468    2,683    7,797    7,797    1,592
Other commercial
   50,454    59,052    16,500    60,512    70,396    16,721
Residential real estate
   17,853    19,295    3,115    9,813    10,418    1,552
Construction & land development
   16,816    19,470    2,494    1,383    1,383    229
Consumer:

Bankcard
   0    0    0    0    0    0
Other consumer
   0    0    0    0    0    0
Total:

Commercial real estate:

Owner-occupied
   $ 68,357    $ 68,522    $ 2,560    $ 87,249    $ 87,551    $ 2,251
Nonowner-occupied
   113,380    113,439    2,683    141,933    141,992    1,592
Other commercial
   111,056    122,121    16,500    107,505    119,948    16,721
Residential real estate
   51,043    53,336    3,115    36,564    38,620    1,552
Construction & land development
   53,392    60,143    2,494    53,662    61,074    229
Consumer:

Bankcard
   0    0    0    0    0    0
Other consumer
   23    23    0    15    15    0


	Impaired Loans
	June 30, 2019						December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial real estate:
Owner-occupied	$	71,948	$	73,267	$	0	$	63,633	$	63,798	$	0
Nonowner-occupied		50,228		50,294		0		98,845		98,904		0
Other commercial		63,121		68,326		0		40,291		50,459		0
Residential real estate		34,972		35,174		0		28,207		29,279		0
Construction & land development		36,868		43,318		0		37,174		40,459		0
Consumer:
Bankcard		0		0		0		0		0		0
Other consumer		31		31		0		27		27		0
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	4,942	$	4,942	$	1,390	$	10,004	$	10,004	$	2,542
Nonowner-occupied		10,371		10,371		1,524		15,720		15,720		2,715
Other commercial		35,166		37,403		7,805		61,266		62,812		17,581
Residential real estate		12,013		13,618		1,390		19,623		22,064		3,265
Construction & land development		14,085		16,135		1,954		14,742		19,446		2,254
Consumer:
Bankcard		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0
Total:
Commercial real estate:
Owner-occupied	$	76,890	$	78,209	$	1,390	$	73,637	$	73,802	$	2,542
Nonowner-occupied		60,599		60,665		1,524		114,565		114,624		2,715
Other commercial		98,287		105,729		7,805		101,557		113,271		17,581
Residential real estate		46,985		48,792		1,390		47,830		51,343		3,265
Construction & land development		50,953		59,453		1,954		51,916		59,905		2,254
Consumer:
Bankcard		0		0		0		0		0		0
Other consumer		31		31		0		27		27		0

   Impaired Loans
   For the Three Months Ended
   September 30, 2018    September 30, 2017
   Average
Recorded
Investment    Interest
Income
Recognized    Average
Recorded
Investment    Interest
Income
Recognized
With no related allowance recorded:

Commercial real estate:

Owner-occupied
   $ 65,625    $ 365    $ 74,111    $ 374
Nonowner-occupied
   99,005    311    148,753    178
Other commercial
   56,489    313    57,302    148
Residential real estate
   28,753    144    21,772    58
Construction & land development
   41,036    278    42,240    348
Consumer:

Bankcard
   0    0    0    0
Other consumer
   23    0    25    0
With an allowance recorded:

Commercial real estate:

Owner-occupied
   $ 7,378    $ 6    $ 11,442    $ 78
Nonowner-occupied
   12,465    189    13,111    10
Other commercial
   47,563    305    71,886    42
Residential real estate
   14,975    57    15,276    16
Construction & land development
   9,408    20    1,602    21
Consumer:

Bankcard
   0    0    0    0
Other consumer
   0    0    0    0
Total:

Commercial real estate:

Owner-occupied
   $ 73,003    $ 371    $ 85,553    $ 452
Nonowner-occupied
   111,470    500    161,864    188
Other commercial
   104,052    618    129,188    190
Residential real estate
   43,728    201    37,048    74
Construction & land development
   50,444    298    43,842    369
Consumer:

Bankcard
   0    0    0    0
Other consumer
   23    0    25    0

   Impaired Loans
   For the Nine Months Ended
   September 30, 2018    September 30, 2017
   Average
Recorded
Investment    Interest
Income
Recognized    Average
Recorded
Investment    Interest
Income
Recognized
With no related allowance recorded:

Commercial real estate:

Owner-occupied
   $ 69,009    $ 1,101    $ 70,477    $ 1,227
Nonowner-occupied
   105,199    928    121,811    551
Other commercial
   55,124    1,020    57,047    632
Residential real estate
   27,210    501    21,397    219
Construction & land development
   43,464    707    40,344    1,046
Consumer:

Bankcard
   0    0    0    0
Other consumer
   29    0    29    0
With an allowance recorded:

Commercial real estate:

Owner-occupied
   $ 6,876    $ 18    $ 12,141    $ 393
Nonowner-occupied
   11,158    251    13,492    108
Other commercial
   47,736    380    71,736    685
Residential real estate
   13,946    247    14,904    58
Construction & land development
   6,944    60    2,195    63
Consumer:

Bankcard
   0    0    0    0
Other consumer
   0    0    0    0
Total:

Commercial real estate:

Owner-occupied
   $ 75,885    $ 1,119    $ 82,618    $ 1,620
Nonowner-occupied
   116,357    1,179    135,303    659
Other commercial
   102,860    1,400    128,783    1,317
Residential real estate
   41,156    748    36,301    277
Construction & land development
   50,408    767    42,539    1,109
Consumer:

Bankcard
   0    0    0    0
Other consumer
   29    0    29    0


	Impaired Loans
	For the Three Months Ended
	June 30, 2019				June 30, 2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate:
Owner-occupied	$	70,051	$	467	$	74,330	$	354
Nonowner-occupied		68,371		354		108,343		159
Other commercial		52,659		327		52,384		246
Residential real estate		32,287		158		24,220		85
Construction & land development		36,654		199		46,909		98
Consumer:
Bankcard		0		0		0		0
Other consumer		29		0		32		0

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	Impaired Loans
	For the Three Months Ended
	June 30, 2019				June 30, 2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	5,212	$	0	$	5,319	$	6
Nonowner-occupied		12,210		39		9,503		60
Other commercial		41,641		9		46,376		10
Residential real estate		14,451		48		11,992		11
Construction & land development		14,413		20		2,008		20
Consumer:
Bankcard		0		0		0		0
Other consumer		0		0		0		0
Total:
Commercial real estate:
Owner-occupied	$	75,263	$	467	$	79,649	$	360
Nonowner-occupied		80,581		393		117,846		219
Other commercial		94,300		336		98,760		256
Residential real estate		46,738		206		36,212		96
Construction & land development		51,067		219		48,917		118
Consumer:
Bankcard		0		0		0		0
Other consumer		29		0		32		0


	Impaired Loans
	For the Six Months Ended
	June 30, 2019				June 30, 2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate:
Owner-occupied	$	67,911	$	911	$	75,592	$	739
Nonowner-occupied		78,529		708		116,941		328
Other commercial		48,536		614		50,587		470
Residential real estate		30,927		342		25,064		180
Construction & land development		36,828		417		48,699		197
Consumer:
Bankcard		0		0		0		0
Other consumer		28		0		26		0
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	6,809	$	0	$	6,590	$	31
Nonowner-occupied		13,380		84		8,934		119
Other commercial		48,183		49		51,088		28
Residential real estate		16,175		140		11,266		21
Construction & land development		14,522		40		1,800		40
Consumer:
Bankcard		0		0		0		0
Other consumer		0		0		0		0
Total:
Commercial real estate:
Owner-occupied	$	74,720	$	911	$	82,182	$	770
Nonowner-occupied		91,909		792		125,875		447
Other commercial		96,719		663		101,675		498
Residential real estate		47,102		482		36,330		201
Construction & land development		51,350		457		50,499		237
Consumer:
Bankcard		0		0		0		0
Other consumer		28		0		26		0

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At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was ~~$18,786~~$14,469 and ~~$24,348,~~$16,865, 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~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was ~~$569~~$288 and ~~$873,~~$520, respectively.

5. ALLOWANCE FOR CREDIT LOSSES

The allowance for loan losses is management’s estimate of the probable credit losses inherent in the loan portfolio. For purposes of determining the general allowance, the loan portfolio is segregated by product type to recognize differing risk profiles among categories. It is further segregated by credit grade for

non-homogenous

loan pools and delinquency for homogeneous loan pools. The outstanding principal balance within each pool is multiplied by historical loss data, the loss emergence period (which is the period 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. Risk characteristics of owner-occupied commercial real estate loans and other commercial loans are similar in that they are normally dependent upon the borrower’s internal cash flow from operations to service debt. Nonowner-occupied commercial real estate 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 deemed to be uncollectible are charged against the allowance for loan losses, while recoveries of previously

charged-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, a

charge-off

recommendation is directed to management to

charge-off

all or a portion of that loan. Generally, any unsecured commercial loan more than six months delinquent in payment of interest must be

charged-off

in full. If secured, the

charge-off

is generally made to reduce the loan balance to a level equal to the liquidation value of the collateral when payment of principal 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 that are past due 120 cumulative days delinquent from the contractual due date and

open-end

loans 180 cumulative days delinquent from the contractual due date are

charged-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 a

one-to-four

family

open-end

closed-end

residential real estate loan, home equity loan, or

high-loan-to-value

loan that has reached 180 or more days past due, management evaluates the collateral position and

charges-off

any amount that exceeds the value of the collateral. On retail credits for which the borrower is in bankruptcy, all amounts deemed unrecoverable are charged off within 60 days of the receipt of the notification. On retail credits effected by fraud, a loan is

charged-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 generally

charged-off

as soon 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

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be unable to collect all contractually required ~~payments~~payment receivable are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance. The difference between 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 payments 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~~six months ended ~~September~~June 30, ~~2018,~~2019, the~~re-estimation~~ amount of ~~the expected cash flows~~provision for loan losses related to loans acquired that have evidence of deterioration of credit quality resulted in provision for loan losses expense of ~~$924~~$1,631 and ~~$3,004,~~$3,268, respectively, as compared to a ~~reversal of~~ provision for loan losses expense of ~~$43~~$801 and ~~$415,~~$2,080, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017.~~

2018.

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 ~~$1,144~~$1,752 and ~~$679~~$1,389 at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 as the allowance for credit losses.

A progression of the allowance for loan losses, by portfolio segment, for the periods indicated is summarized as follows:

Allowance for Loan Losses
For the Three Months Ended September 30, 2018

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

Beginning balance
   $ 3,213    $ 6,183    $ 48,191    $ 10,380    $ 6,592    $ 2,419    $ 157 $ 77,135
Charge-offs
   1,478    0    4,432    365    110    659    0 7,044
Recoveries
   415    395    394    558    134    146    0 2,042
Provision
   2,391    22    291    1,067    480    575    (18 ) 4,808














Ending balance
   $ 4,541    $ 6,600    $ 44,444    $ 11,640    $ 7,096    $ 2,481    $ 139 $ 76,941

Allowance for Loan Losses and Carrying Amount of Loans
For the Nine Months Ended September 30, 2018

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

Beginning balance
   $ 5,401    $ 6,369 $ 45,189    $ 9,927    $ 7,187    $ 2,481    $ 73    $ 76,627
Charge-offs
   3,221    314 13,095    1,357    642    1,985    0    20,614
Recoveries
   1,160    548 1,484    916    145    485    0    4,738
Provision
   1,201    (3 ) 10,866    2,154    406    1,500    66    16,190














Ending balance
   $ 4,541    $ 6,600 $ 44,444    $ 11,640    $ 7,096    $ 2,481    $ 139    $ 76,941















Ending Balance: individually evaluated for impairment
   $ 2,560    $ 2,683 $ 16,500    $ 3,116    $ 2,494    $ 0    $ 0    $ 27,353
Ending Balance: collectively evaluated for impairment
   $ 1,981    $ 3,917 $ 27,944    $ 8,524    $ 4,602    $ 2,481    $ 139    $ 49,588
Ending Balance: loans acquired with deteriorated credit quality
   $ 0    $ 0 $ 0    $ 0    $ 0    $ 0    $ 0    $ 0
Financing receivables:

Ending balance
   $ 1,336,434    $ 4,341,501 $ 1,932,919    $ 3,387,268    $ 1,379,985    $ 908,604    $ 0    $ 13,286,711
Ending Balance: individually evaluated for impairment
   $ 29,391    $ 22,768 $ 73,544    $ 19,994    $ 16,875    $ 0    $ 0    $ 162,572
Ending Balance: collectively evaluated for impairment
   $ 1,284,114    $ 4,250,305 $ 1,830,646    $ 3,351,837    $ 1,343,130    $ 908,581    $ 0    $ 12,968,613
Ending Balance: loans acquired with deteriorated credit quality
   $ 22,929    $ 68,428 $ 28,729    $ 15,437    $ 19,980    $ 23    $ 0    $ 155,526

Allowance for Loan Losses

Allowance for Loan Losses and Carrying Amount of Loans
For the Year Ended December 31, 2017

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

Beginning balance
   $ 5,273 $ 6,883 $ 33,087    $ 13,770 $ 10,606 $ 2,805    $ 347 $ 72,771
Charge-offs
   2,246 296 21,189    2,973 3,337 2,822    0 32,863
Recoveries
   2,599 244 3,395    601 726 748    0 8,313
Provision
   (225 ) (462 ) 29,896    (1,471 ) (808 ) 1,750    (274 ) 28,406






Ending balance
   $ 5,401 $ 6,369 $ 45,189    $ 9,927 $ 7,187 $ 2,481    $ 73 $ 76,627






Ending Balance: individually evaluated for impairment
   $ 2,251 $ 1,592 $ 16,721    $ 1,552 $ 229 $ 0    $ 0 $ 22,345
Ending Balance: collectively evaluated for impairment
   $ 3,150 $ 4,777 $ 28,468    $ 8,375 $ 6,958 $ 2,481    $ 73 $ 54,282
Ending Balance: loans acquired with deteriorated credit quality
   $ 0 $ 0 $ 0    $ 0 $ 0 $ 0    $ 0 $ 0
Financing receivables:

Ending balance
   $ 1,361,629 $ 4,451,298 $ 1,998,979    $ 2,996,171 $ 1,504,907 $ 714,353    $ 0 $ 13,027,337
Ending Balance: individually evaluated for impairment
   $ 36,721 $ 21,851 $ 78,715    $ 14,316 $ 16,921 $ 0    $ 0 $ 168,524
Ending Balance: collectively evaluated for impairment
   $ 1,291,379 $ 4,320,997 $ 1,892,706    $ 2,967,666 $ 1,461,206 $ 714,338    $ 0 $ 12,648,292
Ending Balance: loans acquired with deteriorated credit quality
   $ 33,529 $ 108,450 $ 27,558    $ 14,189 $ 26,780 $ 15    $ 0 $ 210,521

For the Three Months Ended June 30, 2019


	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	$	6,164	$	6,718		$	40,664	$	13,022		$	7,186		$	2,748	$	384		$	76,886
Charge-offs		2,784		69			3,645		309			8			773		0			7,588
Recoveries		714		22			420		269			39			221		0			1,685
Provision		1,503		(630	)		7,270		(2,810	)		(292	)		527		(151	)		5,417

Ending balance	$	5,597	$	6,041		$	44,709	$	10,172		$	6,925		$	2,723	$	233		$	76,400

Allowance for Loan Losses and Carrying Amount of Loans

For the Six Months Ended June 30, 2019


	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	$	5,063	$	6,919		$	41,341	$	12,448		$	7,992		$	2,695	$	245		$	76,703
Charge-offs		6,521		69			4,579		750			573			1,510		0			14,002
Recoveries		1,618		41			717		354			152			404		0			3,286
Provision		5,437		(850	)		7,230		(1,880	)		(646	)		1,134		(12	)		10,413

Ending balance	$	5,597	$	6,041		$	44,709	$	10,172		$	6,925		$	2,723	$	233		$	76,400

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Allowance for Loan Losses and Carrying Amount of Loans

For the Six Months Ended June 30, 2019

	Commercial Real Estate								Construction				Allowance for
	Owner- occupied		Nonowner- occupied		Other Commercial		Residential Real Estate		& Land Development		Consumer		Estimated Imprecision		Total
Ending Balance: individually evaluated for impairment	$	1,390	$	1,524	$	7,805	$	1,390	$	1,954	$	0	$	0	$	14,063
Ending Balance: collectively evaluated for impairment	$	4,207	$	4,517	$	36,904	$	8,782	$	4,971	$	2,723	$	233	$	62,337
Ending Balance: loans acquired with deteriorated credit quality	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Financing receivables:
Ending balance	$	1,239,954	$	4,194,064	$	2,021,953	$	3,674,005	$	1,464,064	$	1,045,906	$	0	$	13,639,946
Ending Balance: individually evaluated for impairment	$	27,882	$	29,559	$	54,549	$	20,267	$	14,085	$	0	$	0	$	146,342
Ending Balance: collectively evaluated for impairment	$	1,185,613	$	4,147,831	$	1,930,570	$	3,642,859	$	1,429,245	$	1,045,906	$	0	$	13,381,993
Ending Balance: loans acquired with deteriorated credit quality	$	26,459	$	16,674	$	36,834	$	10,879	$	20,734	$	31	$	0	$	111,611

Allowance for Loan Losses and Carrying Amount of Loans

For the Year Ended December 31, 2018


	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	$	5,401	$	6,369	$	45,189	$	9,927	$	7,187	$	2,481	$	73	$	76,627
Charge-offs		3,225		314		16,424		3,162		2,731		2,750		0		28,606
Recoveries		1,189		563		2,944		1,114		197		662		0		6,669
Provision		1,698		301		9,632		4,569		3,339		2,302		172		22,013

Ending balance	$	5,063	$	6,919	$	41,341	$	12,448	$	7,992	$	2,695	$	245	$	76,703

Ending Balance: individually evaluated for impairment	$	2,543	$	2,715	$	17,581	$	3,265	$	2,254	$	0	$	0	$	28,358
Ending Balance: collectively evaluated for impairment	$	2,520	$	4,204	$	23,760	$	9,183	$	5,738	$	2,695	$	245	$	48,345

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Allowance for Loan Losses and Carrying Amount of Loans

For the Six Months Ended June 30, 2019

	Commercial Real Estate								Construction				Allowance for
	Owner- occupied		Nonowner- occupied		Other Commercial		Residential Real Estate		& Land Development		Consumer		Estimated Imprecision		Total
Ending Balance: loans acquired with deteriorated credit quality	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Financing receivables:
Ending balance	$	1,291,790	$	4,303,613	$	1,957,641	$	3,501,393	$	1,410,468	$	964,627	$	0	$	13,429,532
Ending Balance: individually evaluated for impairment	$	27,599	$	25,231	$	72,300	$	21,998	$	14,807	$	0	$	0	$	161,935
Ending Balance: collectively evaluated for impairment	$	1,234,919	$	4,215,060	$	1,860,085	$	3,468,356	$	1,374,840	$	964,600	$	0	$	13,117,860
Ending Balance: loans acquired with deteriorated credit quality	$	29,272	$	63,322	$	25,256	$	11,039	$	20,821	$	27	$	0	$	149,737

6. INTANGIBLE ASSETS

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

   September 30, 2018
   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
   $ 98,359    ($ 60,482 ) $ 0    ($ 0 ) $ 98,359    ($ 60,482 )








Non-amortized intangible assets:

George Mason trade name
   $ 0    $ 1,080    $ 1,080







Goodwill not subject to amortization
   $ 1,472,699    $ 5,315    $ 1,478,014

									��
	June 30, 2019
	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	$	98,359	$	( 66,000	)	$	0	$	0	$	98,359	$	( 66,000	)

Non-amortized intangible assets:
George Mason trade name	$	0				$	1,080			$	1,080

Goodwill not subject to amortization	$	1,472,699				$	5,315			$	1,478,014

   December 31, 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
   $ 98,359    ($ 54,453 ) $ 0    $ 0    $ 98,359    ($ 54,453 )










Non-amortized intangible assets:

George Mason trade name
   $ 0    $ 1,080       $ 1,080







Goodwill not subject to amortization
   $ 1,473,265    $ 5,115       $ 1,478,380

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	December 31, 2018
	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	$	98,359	$	( 62,492	)	$	0	$	0	$	98,359	$	( 62,492	)

Non-amortized intangible assets:
George Mason trade name	$	0				$	1,080			$	1,080

Goodwill not subject to amortization	$	1,472,699				$	5,315			$	1,478,014

The following table provides a reconciliation of goodwill:

   Community
Banking    Mortgage
Banking    Total
Goodwill at December 31, 2017
   $ 1,473,265    $ 5,115    $ 1,478,380
Addition to goodwill from Cardinal acquisition
   (566 )    200    (366 )






Goodwill at September 30, 2018
   $ 1,472,699    $ 5,315    $ 1,478,014


	Community Banking		Mortgage Banking		Total
Goodwill at December 31, 2018	$	1,472,699	$	5,315	$	1,478,014
Additions to goodwill		0		0		0

Goodwill at June 30, 2019	$	1,472,699	$	5,315	$	1,478,014

United incurred amortization expense on intangible assets of ~~$2,009~~$1,754 and ~~$6,029~~$3,508 for the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively, and ~~$2,240~~$2,010 and ~~$5,381~~$4,020 for the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively.

The following table sets forth the anticipated amortization expense for intangible assets for the years subsequent to ~~2017:~~

Year    Amount
2018
   $ 8,039
2019
   7,016
2020
   6,309
2021
   5,369
2022 and thereafter
   17,173
2018:


Year	Amount
2019	$	7,016
2020		6,309
2021		5,369
2022		4,581
2023 and thereafter		12,592

7. LEASES

United determines if an arrangement is a lease at inception. United and certain subsidiaries have entered into various noncancelable-operating leases for branch and loan production offices as well as operating facilities. Operating leases are included in operating lease

right-of-use

(“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets. Operating leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. Presently, United does not have any finance leases.

United’s operating leases are subject to renewal options under various terms. United’s operating leases have remaining terms of 1 to 14 years, some of which include options to extend leases generally for periods of 5 years. United rents or subleases certain real estate to third parties. Our sublease portfolio consists of operating leases to other organizations for former branch offices.

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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			Six Months Ended
	Classification		June 30, 2019			June 30, 2019
Operating lease cost		Net occupancy expense	$	4,886		$	9,707
Sublease income		Net occupancy expense		(197	)		(473	)

Net lease cost			$	4,689		$	9,234

Supplemental balance sheet information related to leases was as follows:


	Classification		June 30, 2019
Operating lease right-of-use assets		Operating lease right-of-use assets	$	63,113
Operating lease liabilities		Operating lease liabilities	$	66,821

Other information related to leases was as follows:


	June 30, 2019
Weighted-average remaining lease term:
Operating leases		5.0 years
Weighted-average discount rate:
Operating leases		3.25	%

Supplemental cash flow information related to leases was as follows:


	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Cash paid for amounts in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,931	$	9,649
ROU assets obtained in the exchange for lease liabilities		4,214		4,416

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, 2018, consists of the following as of June 30, 2019 and December 31, 2018:


	Amount
Year	As of June 30, 2019			As of December 31, 2018
2019	$	9,618		$	18,590
2020		17,249			16,359
2021		14,672			13,850
2022		11,008			10,269
2023		8,231			7,600
Thereafter		11,966			10,640

Total lease payments		72,744			77,308
Less: imputed interest		(5,923	)		(0	)

Total	$	66,821		$	77,308

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8. SHORT-TERM BORROWINGS

Federal funds purchased and securities sold under agreements to repurchase are 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 $230,000. 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~~June 30, ~~2018,~~2019, United did

t have any federal funds purchased ~~were $25,790~~ while total securities sold under agreements to repurchase (REPOs) were ~~$153,718.~~$

122,159

. 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 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 be renewable on a

360-day

basis and will carry an indexed, floating-rate of interest. The line requires compliance with various financial and nonfinancial covenants. At ~~September~~June 30, ~~2018,~~2019, United had

outstanding balance under this line of credit.

9. LONG-TERM BORROWINGS

United’s subsidiary bank is a member of the Federal Home Loan Bank (“FHLB”). Membership in the FHLB makes available short-term and long-term borrowings from collateralized advances. All FHLB borrowings are collateralized by a mix of single-family residential mortgage loans, commercial loans and investment securities. At ~~September~~June 30, ~~2018,~~2019, United had an unused borrowing amount of approximately ~~$3,986,778~~$3,905,439 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~~June 30, ~~2018, $1,284,781~~2019, $1,548,032 of FHLB advances with a weighted-average interest rate of ~~2.13%~~2.22% are scheduled to mature within the next ~~seven~~six years.

The scheduled maturities of these FHLB borrowings are as follows:

Year
   Amount
2018
   $ 970,890
2019
   187,224
2020
   41,779
2021
   52,667
2022 and thereafter
   32,221


Total
   $ 1,284,781


Year	Amount
2019	$	471,000
2020		442,000
2021		602,845
2022		21,000
2023 and thereafter		11,187

Total	$	1,548,032

At ~~September~~June 30, ~~2018,~~2019, United had a total of fourteen 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~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the outstanding balance of the Debentures was ~~$234,590~~$235,535 and ~~$242,446,~~$234,905, 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,~~

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In accordance with the ~~Trust Preferred Securities qualified as Tier 1 regulatory capital under the~~fully-phased in “Basel III Capital Rules” as published by United’s primary federal regulator, the Federal Reserve, ~~in July of 2013. The “Basel III~~United 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, ~~under~~but 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 Preferred~~Capital 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.~~

basis.

10. COMMITMENTS AND CONTINGENT LIABILITIES

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 ~~$3,861,482~~$3,909,612 and ~~$4,224,719~~$3,826,370 of loan commitments outstanding as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, ~~the majority~~approximately half of which contractually expire within one year. Included in the ~~September~~June 30, ~~2018~~2019 amount are commitments to extend credit of ~~$433,931~~$354,996 related to George Mason’s mortgage loan funding commitments and are 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~~June 30, ~~2018 and~~2019, United had $5,092 of commercial letters of credit outstanding. As of December 31, ~~2017,~~2018, United had

outstanding commercial letters of credit. 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 ~~$132,735~~$133,930 and ~~$147,017~~$141,032 as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 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 a reserve of ~~$516~~$946 as of ~~September~~June 30, ~~2018.~~

2019.

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

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.

11. DERIVATIVE FINANCIAL INSTRUMENTS

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

United accounts for its derivative financial instruments in accordance with ~~the Derivatives and Hedging topic of the FASB Accounting Standards Codification (ASC~~ASC Topic ~~815). The Derivatives and Hedging topic require~~815 which requires all derivative instruments to be carried at fair value on the balance sheet. United has designated certain derivative instruments used to manage interest rate risk as hedge relationships with certain assets, liabilities or cash flows being hedged. Certain derivatives used for interest rate risk management are not designated in a hedge relationship.

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

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~~recorded in ~~current~~income in the same period ~~earnings.~~and in the same income statement line as changes in the fair values of the hedged items that relate to the hedged risk(s). 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 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~~recorded as a component of other comprehensive income, net of ~~tax.~~deferred taxes, and reclassified to earnings when the hedged transaction affects earnings. The portion of a hedge that is ineffective is recognized immediately in earnings.

At inception of a hedge relationship, United formally documents the hedged item, the particular risk management objective, the nature of the risk being hedged, the derivative being used, how effectiveness of the hedge will be assessed and how the ineffectiveness of the hedge will be measured. United also assesses hedge effectiveness at inception and on an ongoing basis using regression analysis. Hedge ineffectiveness is measured by using the change in fair value method. The change in fair value method compares the change in the fair value of the hedging derivative to the change in the fair value of the hedged exposure, attributable to changes in the benchmark rate. The portion of a hedge that is ineffective is recognized immediately in earnings.

United through George Mason 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

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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 servicing released and short sales of mortgage-backed securities. When the interest rate is locked with the borrower, the rate lock commitment, forward sale agreement, and mortgage-backed security position are undesignated derivatives and marked to fair value through earnings. The fair value of the rate lock derivative includes the servicing premium and the interest spread for the difference between retail and wholesale mortgage rates. 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. For those loans selected to be sold under best efforts delivery, at the closing of the loan, the rate lock commitment derivative expires and the Company records a loan held for sale at fair value under the election of fair value option and continues to be obligated under the same forward loan sales contract entered into at inception of the rate lock commitment.

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~~amount and fair value of those instruments at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~

   Asset Derivatives
   September 30, 2018    December 31, 2017
   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    $ 86,655    $ 4,042    Other assets    $ 71,831    $ 538








Total derivatives designated as hedging instruments
      $ 86,655    $ 4,042       $ 71,831    $ 538








Derivatives not designated as hedging instruments

Forward loan sales commitments
   Other assets    $ 0    $ 0    Other assets    $ 31,024    $ 2
TBA mortgage-backed securities
   Other assets    223,500    1,161       0    0
Interest rate lock commitments
   Other assets    135,069    3,991    Other assets    148,866    4,559








Total derivatives not designated as hedging instruments
      $ 358,569    $ 5,152       $ 179,890    $ 4,561








Total asset derivatives
      $ 445,224    $ 9,194       $ 251,721    $ 5,099








2018.


	Asset Derivatives
	June 30, 2019						December 31, 2018
	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	$	0	$	0		Other assets	$	85,623	$	1,859

Total derivatives designated as hedging instruments			$	0	$	0			$	85,623	$	1,859

Derivatives not designated as hedging instruments
Interest rate swap contracts		Other assets	$	0	$	0		Other assets	$	0	$	0
Forward loan sales commitments		Other assets		48,488		492		Other assets		21,604		542
Interest rate lock commitments		Other assets		250,487		8,127		Other assets		93,955		4,103

Total derivatives not designated as hedging instruments			$	298,975	$	8,619			$	115,559	$	4,645

Total asset derivatives			$	298,975	$	8,619			$	201,182	$	6,504

   Liability Derivatives
   September 30, 2018    December 31, 2017
   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 liabilities    $ 0    $ 0    Other liabilities    $ 18,795    $ 165








Total derivatives designated as hedging instruments
      $ 0    $ 0       $ 18,795    $ 165








Derivatives not designated as hedging instruments

Forward loan sales commitments
   Other liabilities    $ 22,521    $ 197    Other liabilities    $ 0    $ 0
TBA mortgage-backed securities
   Other liabilities    $ 0    $ 0    Other liabilities    236,500    312
Interest rate lock commitments
   Other liabilities    0    0    Other liabilities    0    0








Total derivatives not designated as hedging instruments
      $ 22,521    $ 197       $ 236,500    $ 312








Total liability derivatives
      $ 22,521    $ 197       $ 255,295    $ 477

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	Liability Derivatives
	June 30, 2019						December 31, 2018
	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 liabilities	$	84,397	$	2,146		Other liabilities	$	0	$	0

Total derivatives designated as hedging instruments			$	84,397	$	2,146			$	0	$	0

Derivatives not designated as hedging instruments
Interest rate swap contracts		Other liabilities	$	0	$	0		Other liabilities	$	0	$	0
TBA mortgage-backed securities		Other liabilities		405,299		3,476		Other liabilities		200,281		3,002
Interest rate lock commitments		Other liabilities		0		0		Other liabilities		0		0

Total derivatives not designated as hedging instruments			$	405,299	$	3,476			$	200,281	$	3,002

Total liability derivatives			$	489,696	$	5,622			$	200,281	$	3,002

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 June 30, 2019.


Derivatives in Fair Value Hedging Relationships	Location in the Statement of Condition		June 30, 2019
			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	$	83,527	$	(2,146	)	$	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.

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The effect of United’s derivative financial instruments on its unaudited Consolidated Statements of Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are presented as follows:

      Three Months Ended
   Income Statement
Location    September 30,
2018    September 30,
2017
Derivatives in hedging relationships

Fair Value Hedges:

Interest rate swap contracts
   Interest income/(expense)    $ (24 )    $ (208 )




Total derivatives in hedging relationships
      $ (24 )    $ (208 )




Derivatives not designated as hedging instruments

Forward loan sales commitments

Income from Mortgage
Banking Activities
   (197 )    (257 )
TBA mortgage-backed securities

Income from Mortgage
Banking Activities
   2,583    123
Interest rate lock commitments

Income from Mortgage
Banking Activities
   (3,262 )    (4,484 )




Total derivatives not designated as hedging instruments
      $ (876 )    $ (4,618 )




Total derivatives
      $ (900 )    $ (4,826 )


			Nine Months Ended							Three Months Ended
	Income Statement Location		September 30, 2018			September 30, 2017			Income Statement Location	June 30, 2019			June 30, 2018
Derivatives in fair value hedging relationships
Fair Value Hedges:
Derivatives in hedging relationships Fair Value Hedges:
Interest rate swap contracts									Interest income/(expense)	$	(68	)	$	24

Total derivatives in hedging relationships										$	(68	)	$	24

Derivatives not designated as hedging instruments
Forward loan sales commitments									Income from Mortgage Banking Activities		492			112
TBA mortgage-backed securities									Income from Mortgage Banking Activities		(962	)		(660	)
Interest rate lock commitments									Income from Mortgage Banking Activities		3,833			2,888

Total derivatives not designated as hedging instruments										$	3,363		$	2,340

Total derivatives										$	3,295		$	2,364


										Six Months Ended
									Income Statement Location	June 30, 2019			June 30, 2018
Derivatives in fair value hedging relationships Fair Value Hedges:
Interest rate swap contracts		Interest income/(expense)	$	(42	)	$	(648	)	Interest income/(expense)	$	(98	)	$	(18	)
Cash Flow Hedges:
Forward loan sales commitments		Other income		0			0		Other income		0			0

Total derivatives in hedging relationships			$	(42	)	$	(648	)		$	(98	)	$	(18	)

Derivatives not designated as hedging instruments
Forward loan sales commitments		Income from Mortgage Banking Activities		(12	)		(427	)	Income from Mortgage Banking Activities		872			185
TBA mortgage-backed securities		Income from Mortgage Banking Activities		1,473			2,907		Income from Mortgage Banking Activities		(474	)		(1,110	)
Interest rate lock commitments		Income from Mortgage Banking Activities		(1,643	)		(3,465	)	Income from Mortgage Banking Activities		5,870			1,619

Total derivatives not designated as hedging instruments			$	(182	)	$	(985	)		$	6,268		$	694

Total derivatives			$	(224	)	$	(1,633	)		$	6,170		$	676

12. FAIR VALUE ~~MEASUREMENTS~~

EASUREMENTS

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

The Fair Value Measurements and Disclosures ~~topic~~Topic specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect United’s market assumptions.

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


~~Level 1~~	—
Level 1		-	Valuation is based on quoted prices in active markets for identical assets and liabilities.



~~Level 2~~	—
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~~	—
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 notactively traded in observable markets and United must use alternative valuation techniques using unobservable inputs to determine a fair value and classifies such items as Level 3. For assets and liabilities that are not actively traded, the fair value measurement is based primarily upon estimates that require significant judgment. Therefore, the results may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there are inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

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

Securities available for sale and equity securities

: Securities available for sale and equity securities are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Using a market approach valuation methodology, third party vendors compile prices ~~from various sources and may determine the fair value of identical or similar securities by using pricing models that considers~~based on observable market ~~data~~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 assigned~~Management 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 degree~~an 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. Exceptions~~same securities. Variances that are deemed to be material are reviewed by management. Additionally, to further assess the reliability of the information received from third party vendors, management obtains documentation from third party vendors related to the sources, methodologies, and inputs utilized in valuing securities classified as Level 2. Management analyzes this information to ensure the underlying assumptions appear reasonable. Management also obtains an independent service auditor’s report from third party vendors to provide reasonable assurance that appropriate controls are in place over the valuation process. Upon completing its review of the pricing from third party vendors at ~~September~~June 30, ~~2018,~~2019, management determined that the prices provided by its third party pricing source 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 by management at ~~September~~

June

30 ~~2018.~~

2019

. 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

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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 of~~available-for-sale~~ available for sale Trup Cdos as Level 3.

. 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 the most representative measurement technique for these securities. 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.

Loans held for sale

: For residential mortgage loans sold in the mortgage banking segment, the loans closed are recorded at fair value ~~using~~as management has elected the fair value option which is measured using valuations from investors for loans with similar characteristics adjusted for the Company’s actual sales experience versus the investor’s indicated pricing. These valuations fall into the Level 3 category. The unobservable input is the Company’s historical sales prices. The range of historical sales prices increased the investor’s indicated pricing by a range of ~~0.12%~~0.16% to ~~0.49%~~0.71% with a weighted average increase of ~~0.28%~~0.33%.

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). 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.

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 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 other comprehensive income, net of tax. The portion of a hedge that is ineffective is recognized immediately in 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 Mason 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”~~ “lock-in” a specified

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interest rate within the timeframes established by the mortgage companies. All borrowers are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the interest rate lock by the borrower and the sale date of the loan to the

investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, George Mason 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. As TBA mortgage-backed securities are actively traded in an open market, TBA mortgage-backed securities fall into a Level 12 category. 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, the interest rate lock commitments are recorded at fair value which is measured using valuations from investors for loans with similar characteristics adjusted for the Company’s actual sales experience versus the investor’s indicated pricing. These valuations fall into the Level 3 category. The unobservable input is the Company’s historical sales prices. The range of historical sales prices increased the investor’s indicated pricing by a range of ~~0.12%~~0.16% to ~~0.49%~~0.71% with a weighted average increase of ~~0.28%~~0.33%.

For interest rate swap derivatives that are not designated in a hedge relationship, changes in the fair value of the derivatives are recognized in earnings in the same period as the change in the fair value. Unrealized gains and losses due to changes in the fair value of other derivative financial instruments not in hedge relationship 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~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, segregated by the level of the valuation inputs within the fair value hierarchy.

      Fair Value at September 30, 2018 Using
Description
   Balance as of
September 30,
2018    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 securities:

U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 101,565    $ 0    $ 101,565    $ 0
State and political subdivisions
   252,246    0    252,246    0
Residential mortgage-backed securities

Agency
   943,647    0    943,647    0
Non-agency
   4,572    0    4,572    0
Commercial mortgage-backed securities

Agency
   543,652    0    543,652    0
Asset-backed securities
   223,602    0    223,602    0
Trust preferred collateralized debt obligations
   6,154    0    0    6,154
Single issue trust preferred securities
   8,104    0    8,104    0
Other corporate securities
   95,025    6,879    88,146    0








Total available for sale securities
   2,178,567    6,879    2,165,534    6,154
Equity securities:

Financial services industry
   173    173    0    0
Equity mutual funds (1)
   5,073    5,073    0    0
Other equity securities
   4,599    4,599    0    0








Total equity securities
   9,845    9,845    0    0
Loans held for sale
   231,310    0    0    231,310
Derivative financial assets:

Interest rate swap contracts
   4,042    0    4,042    0
Forward sales commitments
   0    0    0    0
Interest rate lock commitments
   3,991    0    0    3,991
TBA mortgage-backed securities
   1,161    0    1,161    0








Total derivative financial assets
   9,194    0    5,203    3,991
Liabilities

Derivative financial liabilities:

Forward sales commitments
   197    0    197    0








Total derivative financial liabilities
   197    0    197    0


			Fair Value at June 30, 2019 Using
Description	Balance as of June 30, 2019		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	$	74,484	$	0	$	74,484	$	0
State and political subdivisions		181,259		0		181,259		0
Residential mortgage-backed securities
Agency		877,567		0		877,567		0
Non-agency		3,978		0		3,978		0
Commercial mortgage-backed securities
Agency		574,721		0		574,721		0
Asset-backed securities		268,854		0		268,854		0
Trust preferred collateralized debt obligations		5,413		0		0		5,413
Single issue trust preferred securities		16,844		0		16,844		0
Other corporate securities		342,671		6,712		335,959		0

Total available for sale securities		2,345,791		6,712		2,333,666		5,413
Equity securities:
Financial services industry		133		133		0		0
Equity mutual funds (1)		4,209		4,209		0		0
Other equity securities		4,756		4,756		0		0

Total equity securities		9,098		9,098		0		0

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			Fair Value at June 30, 2019 Using
Description	Balance as of June 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Loans held for sale		365,440		0			0		365,440
Derivative financial assets:
Interest rate swap contracts		0		0			0		0
Forward sales commitments		492		0			492		0
Interest rate lock commitments		8,127		0	��		0		8,127

Total derivative financial assets		8,619		0			492		8,127
Liabilities
Derivative financial liabilities:
Interest rate swap contracts		2,146		0			2,146		0
TBA mortgage-backed securities		3,476		0			3,476		0

Total derivative financial liabilities		5,622		0			5,622		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, 2017 Using
Description
   Balance as of
December 31,
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
   $ 114,758    $ 0    $ 114,758    $ 0
State and political subdivisions
   303,869    0    303,869    0
Residential mortgage-backed securities

Agency
   814,593    0    814,593    0
Non-agency
   5,512    0    5,512    0
Commercial mortgage-backed securities

Agency
   454,857    0    454,857    0
Asset-backed securities
   109,970    0    109,970    0
Trust preferred collateralized debt obligations
   34,269    0    0    34,269
Single issue trust preferred securities
   12,560    0    12,560    0
Other corporate securities
   28,490    0    28,490    0








Total available for sale debt securities
   1,878,878    0    1,844,609    34,269
Available for sale equity securities:

Financial services industry
   3,545    331    3,214    0
Equity mutual funds (1)
   6,332    6,332    0    0
Other equity securities
   1    1    0    0








Total available for sale equity securities
   9,878    6,664    3,214    0








Total available for sale securities
   1,888,756    6,664    1,847,823    34,269
Loans held for sale
   263,308    0    0    263,308
Derivative financial assets:

Interest rate swap contracts
   538    0    538    0
Interest rate lock commitments
   4,561    0    2    4,559








Total derivative financial assets
   5,099    0    540    4,559
Liabilities

Derivative financial liabilities:

Interest rate swap contracts
   165    0    165    0
TBA mortgage-backed securities
   312    0    312    0








Total derivative financial liabilities
   477    0    477    0


			Fair Value at December 31, 2018 Using
Description	Balance as of December 31, 2018		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	$	85,890	$	0	$	85,890	$	0

State and political subdivisions		208,988		0		208,988		0
Residential mortgage-backed securities
Agency		1,035,650		0		1,035,650		0
Non-agency		4,259		0		4,259		0
Commercial mortgage-backed securities
Agency		554,600		0		554,600		0
Asset-backed securities		271,970		0		271,970		0
Trust preferred collateralized debt obligations		5,917		0		0		5,917
Single issue trust preferred securities		8,362		0		8,362		0
Other corporate securities		161,403		6,822		154,581		0

Total available for sale securities		2,337,039		6,822		2,324,300		5,917
Equity securities:
Financial services industry		140		140		0		0
Equity mutual funds (1)		4,954		4,954		0		0
Other equity securities		4,640		4,640		0		0

Total equity securities		9,734		9,734		0		0
Loans held for sale		247,104		0		0		247,104
Derivative financial assets:
Interest rate swap contracts		1,859		0		1,859		0
Forward sales commitments		542		0		542		0
Interest rate lock commitments		4,103		0		0		4,103

Total derivative financial assets		6,504		0		2,401		4,103

Table of Contents

			Fair Value at December 31, 2018 Using
Description	Balance as of December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities
Derivative financial liabilities:
TBA mortgage-backed securities		3,002		0		3,002		0

Total derivative financial liabilities		3,002		0		3,002		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.

~~officers of United and its subsidiaries.~~

There were

transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and the year ended December 31, ~~2017.~~

2018.

The following table presents additional information about financial assets and liabilities measured at fair value at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 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,
2018    December 31,
2017
Balance, beginning of period
   $ 34,269    $ 33,552
Total gains or losses (realized/unrealized):

Included in earnings (or changes in net assets)
   28    9
Included in other comprehensive income
   1,157    8,757
Purchases, issuances, and settlements
   0    0
Sales
   (29,300 )    (8,049 )
Transfers in and/or out of Level 3
   0    0




Balance, end of period
   $ 6,154    $ 34,269




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,
2018    December 31,
2017
Balance, beginning of period
   $ 263,308    $ 0
Acquired in Cardinal merger
   0    271,301
Originations
   2,089,366    2,333,927
Sales
   (2,148,777 )    (2,408,945 )
Total gains or losses during the period recognized in earnings
   54,829    58,132
Transfers in and/or out of Level 3
   (27,416 )    8,893




Balance, end of period
   $ 231,310    $ 263,308




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,
2018    December 31,
2017
Balance, beginning of period
   $ 4,559    $ 0
Acquired in Cardinal merger
   0    10,393
Transfers other
   (568 )    (5,834 )




Balance, end of period
   $ 3,991    $ 4,559




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


	Available for sale Securities
	Trust preferred collateralized debt obligations
	June 30, 2019			December 31, 2018
Balance, beginning of period	$	5,917		$	34,269
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		(53	)		28
Included in other comprehensive income		(451	)		920
Purchases, issuances, and settlements		0			0
Sales		0			(29,300	)
Transfers in and/or out of Level 3		0			0
Balance, end of period	$	5,413		$	5,917

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
	June 30, 2019			December 31, 2018
Balance, beginning of period	$	247,104		$	263,308
Originations		1,256,514			2,619,454
Sales		(1,177,754	)		(2,676,797	)
Total gains or losses during the period recognized in earnings		39,576			68,555
Transfers in and/or out of Level 3		0			(27,416	)
Balance, end of period	$	365,440		$	247,104

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	Available for sale Securities
	Trust preferred collateralized debt obligations
	June 30, 2019		December 31, 2018
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
	June 30, 2019		December 31, 2018
Balance, beginning of period	$	4,103	$	4,559
Transfers other		4,024		(456	)

Balance, end of period	$	8,127	$	4,103

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

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 oflower-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,
2018    Three Months
Ended
September 30,
2017
Assets

Loans held for sale

Income from mortgage banking activities
   $ (5,929 )    $ (5,090 )

Description
   Nine Months
Ended
September 30,
2018    Nine Months
Ended
September 30,
2017
Assets

Loans held for sale

Income from mortgage banking activities
   $ (2,838 )    $ (7,529 )


Description	Three Months Ended June 30, 2019		Three Months Ended June 30, 2018
Assets
Loans held for sale
Income from mortgage banking activities	$	4,578	$	3,929

Description	Six Months Ended June 30, 2019		Six Months Ended June 30, 2018
Assets
Loans held for sale
Income from mortgage banking activities	$	6,542	$	3,092

Table of Contents

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, 2018    December 31, 2017
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
   $ 227,943    $ 231,310    $ 3,367    $ 257,674    $ 263,308    $ 5,634

June 30, 2019

December 31, 2018

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
$
357,112
$
365,440
$
8,328
$
241,293
$
247,104
$
5,811

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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.

Loans held for sale

: Loans held for sale within the community banking segment that are delivered on a best efforts basis are carried at the lower of cost 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~~six months ended ~~September~~June 30, ~~2018.~~2019. Gains and losses on sale of loans 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 collateral, if the loan is collateral dependent. Fair value is measured using a market approach based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory,

and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an appraisal conducted by an independent, licensed appraiser outside of the Company using comparable property sales (Level 2). However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). For impaired loans, a specific reserve is established through the Allowance for Loan Losses, if necessary, by estimating the fair value of the underlying collateral on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses expense on the Consolidated Statements of Income.

OREO

: OREO consists of real estate acquired in foreclosure or other settlement of loans. Such assets are carried on the balance sheet at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. Fair value is determined by one of two market approach methods depending on whether the property has been vacated and an appraisal can be conducted. If the property has yet to be vacated and thus an appraisal cannot be performed, a Brokers Price Opinion (i.e. BPO), is obtained. A BPO represents a best estimate valuation performed by a realtor based on knowledge of current property values and a visual examination of the exterior condition of the property. Once the property is subsequently vacated, a formal appraisal is obtained and the recorded asset value appropriately adjusted. On the other hand, if the OREO property has been vacated and an appraisal can be conducted, the fair value of the property is 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

Table of Contents

comparable property sales (Level 2). In contrast, valuation of ongoing construction assets requires some degree of professional judgment. In conducting an appraisal for ongoing construction property, the appraiser develops two appraised amounts: an “as is” appraised value and a “completed” value. Based on professional judgment and their knowledge of the particular situation, management determines the appropriate fair value to be utilized for such property (Level 3). As a matter of policy, valuations are reviewed at least annually and appraisals are generally updated on a

bi-annual

basis with values lowered as necessary.

Intangible Assets:

For United, intangible assets consist of goodwill and core deposit intangibles. Goodwill is tested for impairment at least annually or sooner if indicators of impairment exist. Goodwill impairment would be defined as the difference between the recorded value of goodwill (i.e. book value) and the implied fair value of goodwill. In determining the implied fair value of goodwill for purposes of evaluating goodwill impairment, United determines the fair value of the reporting unit using a market approach and compares the fair value to its carrying value. If the carrying value exceeds the 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. Core deposit intangibles relate to the estimated value of the deposit base of acquired institutions. Management reviews core deposit intangible assets on an annual basis, or sooner if indicators of impairment exist, and evaluates changes in facts and circumstances that may indicate impairment in the carrying value. No other fair value measurement of intangible assets was made during the first ~~nine~~six months of ~~2018~~2019 and ~~2017.~~

2018.

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

Description
   Balance as of
September 30,
2018    Carrying value at September 30, 2018    YTD
Losses
   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)
Assets

Loans held for sale
   $ 2,886    $ 0    $ 2,886    $ 0    $ 0
Impaired Loans
   109,582    0    98,171    11,411    4,177
OREO
   18,786    0    18,786    0    796
Description
   Balance as of
December 31,
2017    Carrying value at December 31, 2017    YTD
Losses
   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)
Assets

Loans held for sale
   $ 2,647    $ 0    $ 2,647    $ 0    $ 14
Impaired Loans
   88,637    0    70,950    17,687    12,291
OREO
   24,348    0    24,151    197    4,200

Carrying value at June 30, 2019

Description

Balance as of
June 30,
2019

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

YTD
Gains
(Losses)

Assets

Loans held for sale
$
5,153
$
0
$
5,153
$
0
$
(4
)
Impaired Loans

76,577

0

65,604

10,973

4,781

OREO

14,469

0

14,391

78

(340
)

Carrying value at December 31, 2018

Description

Balance as of
December 31,
2018

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

YTD
Gains
(Losses)

Assets

Loans held for sale
$
2,742
$
0
$
2,742
$
0
$
(3
)
Impaired Loans

121,355

0

108,899

12,456

(12,301
)
OREO

16,865

0

16,865

0

(910
)

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.

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Securities held to maturity and other securities

: The estimated fair values of securities held to maturity are based on quoted market prices, where available. If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considers 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:~~ For September 30, 2018, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. This is not comparable with the fair values disclosed for December 31, 2017, which were based on an entrance price basis. For that date, the

Loans

: The fair values of certain mortgage loans (e.g.,

one-to-four

family residential), credit card loans, and other consumer loans ~~were~~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 (e.g., commercial real estate and rental property mortgage loans, commercial and industrial loans, financial institution loans and agricultural loans) ~~were~~are estimated using discounted cash flow analyses, using market interest rates currently being offered ~~at that time~~ for loans with similar terms to borrowers of similar creditworthiness, which ~~included~~include adjustments for liquidity concerns. For acquired impaired loans, fair value ~~was~~is assumed to equal United’s carrying value, which ~~represented~~represents the present value of expected future principal and interest cash flows, as adjusted for any Allowance for Loan 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, including those measured at amortized cost on the balance sheet, 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, 2018

Cash and cash equivalents
   $ 1,254,686    $ 1,254,686    $ 0    $ 1,254,686    $ 0
Securities available for sale
   2,178,567    2,178,567    6,879    2,165,534    6,154
Securities held to maturity
   20,351    19,619    0    16,599    3,020
Equity securities
   9,845    9,845    9,845    0    0
Other securities
   166,749    166,749    0    0    166,749
Loans held for sale
   234,196    234,196    0    2,886    231,310
Loans
   13,199,799    12,488,175    0    0    12,488,175
Derivative financial assets
   9,194    9,194    0    5,203    3,991
Deposits
   14,091,172    14,052,668    0    14,052,668    0
Short-term borrowings
   379,508    379,508    0    379,508    0
Long-term borrowings
   1,319,371    1,293,611    0    1,293,611    0
Derivative financial liabilities
   197    197    0    197    0
December 31, 2017

Cash and cash equivalents
   $ 1,666,167    $ 1,666,167    $ 0    $ 1,666,167    $ 0
Securities available for sale
   1,888,756    1,888,756    6,664    1,847,823    34,269
Securities held to maturity
   20,428    20,018    0    16,998    3,020
Other securities
   162,461    154,338    0    0    154,338
Loans held for sale
   265,955    265,955    0    2,647    263,308
Loans
   12,934,794    12,437,797    0    0    12,437,797
Derivative financial assets
   5,099    5,099    0    540    4,559
Deposits
   13,830,591    14,024,720    0    14,024,720    0
Short-term borrowings
   477,587    477,587    0    477,587    0
Long-term borrowings
   1,363,977    1,338,754    0    1,338,754    0
Derivative financial liabilities
   477    477    0    477    0


					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)
June 30, 2019
Cash and cash equivalents	$	1,253,573	$	1,253,573	$	0	$	1,253,573	$	0
Securities available for sale		2,345,791		2,345,791		6,712		2,333,666		5,413
Securities held to maturity		6,461		6,483		0		5,463		1,020
Equity securities		9,098		9,098		9,098		0		0
Other securities		201,912		200,367		0		0		200,367
Loans held for sale		370,593		370,593		0		5,153		365,440
Loans		13,558,866		13,076,745		0		0		13,076,745

Table of Contents


					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)
Derivative financial assets		8,619		8,619		0		492		8,127
Deposits		14,404,085		14,372,448		0		14,372,448		0
Short-term borrowings		122,159		122,159		0		122,159		0
Long-term borrowings		1,783,567		1,762,173		0		1,762,173		0
Derivative financial liabilities		5,622		5,622		0		5,622		0
December 31, 2018
Cash and cash equivalents	$	1,020,396	$	1,020,396	$	0	$	1,020,396	$	0
Securities available for sale		2,337,039		2,337,039		6,822		2,324,300		5,917
Securities held to maturity		19,999		18,655		0		15,635		3,020
Equity securities		9,734		9,734		9,734		0		0
Other securities		176,955		168,107		0		0		168,107
Loans held for sale		249,846		249,846		0		2,742		247,104
Loans		13,422,222		12,657,073		0		0		12,657,073
Derivative financial assets		6,504		6,504		0		2,401		4,103
Deposits		13,994,749		13,954,574		0		13,954,574		0
Short-term borrowings		351,327		351,327		0		351,327		0
Long-term borrowings		1,499,103		1,475,237		0		1,475,237		0
Derivative financial liabilities		3,002		3,002		0		3,002		0

13. STOCK BASED COMPENSATION

On May 18, 2016, United’s shareholders approved the 2016 Long-Term Incentive Plan (2016 LTI Plan). The 2016 LTI Plan became effective as of May 18, 2016. An award granted under the 2016 LTI Plan may consist of any

non-qualified

stock options or incentive stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, performance units or other-stock-based award. These awards all relate to the common stock of United. The maximum number of shares of United common stock which may be issued under the 2016 LTI Plan is 1,700,000. The 2016 LTI Plan will be administered by a board committee appointed by United’s Board of Directors (the Board).

Unless otherwise determined by the Board, the Compensation Committee of the Board (the Committee) shall administer the

2016

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.~~

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, in the aggregate, which may be awarded to any individual key employee during any calendar year is ~~100,000.~~

100,000

. The maximum number of stock options and SARs, in the aggregate, which may be awarded to any

non-employee

director during any calendar year is ~~10,000.~~

10,000

. 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

50,000

shares to any individual key employee and

5,000

shares to any individual

non-employee

director. Subject to certain change in control provisions, the

2016

LTI Plan provides that 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 granted to executive officers of United typically will have performance based vesting conditions. A Form

S-8

was filed on July

2016

with the Securities and Exchange Commission to register all the shares which were available for the

2016

LTI Plan. ~~During the first nine months~~

Table of ~~2018, a total of 276,192non-qualified~~ ~~stock options and 97,004 shares of restricted stock were granted under the 2016 LTI Plan.~~

Contents

Compensation expense of ~~$1,024~~ $

1,198

and ~~$3,016~~ $

2,311

related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the ~~third~~second quarter and first ~~nine~~six months of ~~2018,~~

2019

, respectively, as compared to the compensation expense of ~~$909~~ $

1,024

and ~~$2,589~~ $

1,992

related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~

2018

, 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 2016 LTI Plan (the Prior Plans); however, no common shares of United stock are available for grants under the Prior Plans as these plans have expired. Awards outstanding under the Prior Plans will remain in effect in accordance with their respective terms. The maximum term for options granted under the plans is ten ~~(10)~~(

) years.

A summary of activity under United’s stock option plans as of ~~September~~June 30, ~~2018,~~2019, and the changes during the first ~~nine~~six months of ~~2018~~2019 are presented below:

   Nine Months Ended September 30, 2018
   Shares    Aggregate
Intrinsic
Value    Weighted Average
   Remaining
Contractual
Term (Yrs.)    Exercise
Price

Outstanding at January 1, 2018
   1,558,438          $ 31.09
Granted
   276,192          37.60
Exercised
   (60,161 )          23.03
Forfeited or expired
   (24,007 )          32.66




Outstanding at September 30, 2018
   1,750,462    $ 9,624,912    5.8    $ 32.36








Exercisable at September 30, 2018
   1,169,402    $ 9,508,502    4.4    $ 28.78


	Six Months Ended June 30, 2019
						Weighted Average
	Shares			Aggregate Intrinsic Value		Remaining Contractual Term (Yrs.)		Exercise Price
Outstanding at January 1, 2019		1,730,389						$	32.43
Granted		240,205							38.49
Exercised		(47,960	)						21.92
Forfeited or expired		(12,548	)						35.27

Outstanding at June 30, 2019		1,910,086		$	9,445,566		5.7	$	33.43

Exercisable at June 30, 2019		1,314,149		$	9,355,396		4.3	$	30.76

The following table summarizes the status of United’s nonvested stock option awards during the first ~~nine~~six months of ~~2018:~~

   Shares    Weighted-Average
Grant Date Fair
Value Per Share
Nonvested at January 1, 2018
   507,871    $ 7.89
Granted
   276,192    7.56
Vested
   (187,815 )    7.53
Forfeited or expired
   (15,188 )    7.67




Nonvested at September 30, 2018
   581,060    $ 7.86

2019:


	Shares			Weighted-Average Grant Date Fair Value Per Share
Nonvested at January 1, 2019		575,672		$	7.86
Granted		240,205			7.16
Vested		(210,876	)		7.74
Forfeited or expired		(9,064	)		7.65

Nonvested at June 30, 2019		595,937		$	7.62

During the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, 47,960 and ~~2017, 60,161 and 163,562~~42,089 shares, respectively, were issued in connection with stock option exercises. All shares issued in connection with stock option exercises for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 were issued from authorized and unissued stock. The total intrinsic value of options exercised under the Plans during the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 was $713 and ~~2017 was $851 and $3,078~~$630 respectively.

Restricted Stock

Under the 2011 LTI Plan, United may award restricted common shares to key employees and

non-employee

directors. Restricted shares granted to participants have a ~~four-year~~

four

-year time-based vesting period. 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.

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The following summarizes the changes to United’s restricted common shares for the period ended ~~September~~June 30, ~~2018:~~

   Number
of Shares    Weighted-Average
Grant Date Fair
Value Per Share
Outstanding at January 1, 2018
   170,496    $ 40.05
Granted
   97,004    37.60
Vested
   (62,411 )    37.59
Forfeited
   (4,253 )    38.42




Outstanding at September 30, 2018
   200,836    $ 39.67




2019:


	Number of Shares			Weighted-Average Grant Date Fair Value Per Share
Outstanding at January 1, 2019		199,303		$	39.67
Granted		126,427			38.49
Vested		(73,535	)		39.28
Forfeited		(2,539	)		39.49

Outstanding at June 30, 2019		249,656		$	39.19

14. EMPLOYEE BENEFIT PLANS

United has a defined benefit retirement plan covering ~~a majority of all~~qualified employees. Pension benefits are based on years of service and the average of the employee’s highest five consecutive plan years of basic compensation paid during the ten plan years preceding the date of determination. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. During the first ~~quarter~~half of 2018, United made a discretionary ~~contribution~~contributions of ~~$7,000 to~~$

7,000

discretionary contributions were made during the ~~Plan.~~

first half of 2019.

In September of 2007, after a recommendation by United’s Pension Committee and approval by United’s Board of Directors, the United Bankshares, Inc. Pension Plan (the Plan) was amended to change the participation rules. The decision to change the participation rules for the Plan followed 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.

Included in accumulated other comprehensive income at December 31, ~~2017~~2018 are unrecognized actuarial losses of ~~$56,222 ($35,420~~ $

55,535

42,595

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, ~~2018~~2019 is ~~$4,653 ($2,932~~ $

4,744

3,639

net of tax).

Net periodic pension cost for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 included the following components:

   Three Months Ended
September 30 Nine Months Ended
September 30
   2018 2017 2018 2017
Service cost
   $ 673 $ 574 $ 1,997 $ 1,705
Interest cost
   1,324 1,293 3,927 3,837
Expected return on plan assets
   (2,578 ) (2,072 ) (7,651 ) (6,148 )
Recognized net actuarial loss
   1,174 1,111 3,485 3,298


Net periodic pension (benefit) cost
   $ 593 $ 906 $ 1,758 $ 2,692


Weighted-Average Assumptions:

Discount rate
   3.83 % 4.49 % 3.83 % 4.49 %
Expected return on assets
   7.00 % 7.00 % 7.00 % 7.00 %
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 %


	Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018
Service cost	$	561		$	666		$	1,116		$	1,324
Interest cost		1,459			1,308			2,901			2,603
Expected return on plan assets		(2,356	)		(2,551	)		(4,686	)		(5,073	)
Recognized net actuarial loss		1,184			1,162			2,355			2,311

Net periodic pension (benefit) cost	$	848		$	585		$	1,686		$	1,165

Weighted-Average Assumptions:
Discount rate		4.52	%		3.83	%		4.52	%		3.83	%
Expected return on assets		7.00	%		7.00	%		7.00	%		7.00	%
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. 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.

Table of Contents

As of ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, the total amount of accrued interest related to uncertain tax positions was ~~$649~~ $

726

and ~~$548,~~$

721

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

United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2015, 2016 and 2017 and certain State Taxing authorities for the years ended December 31, 2015 through 2017.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law. The Tax Act lowered the Federal corporate tax rate from 35% to 21% effective January 1, 2018 and made numerous other tax law changes. U.S. generally accepted accounting principles (GAAP) requires companies to recognize the effect of tax law changes in the period of enactment. As a result of the Tax Act, United was required to remeasure deferred tax assets and liabilities at the new tax rate and as a result, recorded deferred tax expense of $37,732 in the fourth quarter of 2017. Reasonable estimates were made based on the Company’s analysis of the Tax Act. This provisional amount may be adjusted in future periods during 2018 when additional information is obtained as provided for under Staff Accounting Bulletin 118 (“SAB 118”). Additional information that may affect our provisional amount would include further clarification and guidance on how the IRS will implement tax reform, further clarification and guidance on how state taxing authorities will implement tax reform and the related effect on the Company’s state income tax returns, completion of United’s 2017 tax return filings, and the potential for additional guidance from the SEC or the FASB related to the Tax Act. Management continues to evaluate other potential impacts of the Tax Act. The Company did not identify items for which the income tax effects of the Tax Act have not been completed and a reasonable estimate could not be determined as of September 30, 2018.

United’s effective tax rate was ~~21.77%~~

20.69

% and ~~22.25%~~

21.04

% for the ~~third~~second quarter and first ~~nine~~six months of ~~2018~~2019 and ~~32.91%~~

22.50

% and ~~33.68%~~

22.49

% for the ~~third~~second quarter and first ~~nine~~six months of ~~2017. The lower effective tax rate for the third quarter and first nine months of 2018 was due mainly to the Tax Act.~~

2018.

16. COMPREHENSIVE INCOME

The components of total comprehensive income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are as follows:

   Three Months Ended Nine Months Ended
   September 30 September 30
   2018 2017 2018 2017
Net Income
   $ 64,412 $ 56,738 $ 192,392 $ 132,606
Available for sale (“AFS”) securities:

AFS securities with OTTI charges during the period
   0 0 0 (60 )
Related income tax effect
   0 0 0 22
Less: OTTI charges recognized in net income
   0 0 0 60
Related income tax benefit
   0 0 0 (22 )
Reclassification of previous noncredit OTTI to credit OTTI
   0 0 0 0
Related income tax benefit
   0 0 0 0


Net unrealized (losses) gains on AFS securities with OTTI
   0 0 0 0
AFS securities – all other:

Change in net unrealized gain on AFS securities arising during the period
   (9,995 ) 3,584 (42,696 ) 14,846
Related income tax effect
   2,329 (1,326 ) 11,621 (5,493 )
Net reclassification adjustment for (gains) losses included in net income
   114 (467 ) 290 (1,444 )
Related income tax expense (benefit)
   (27 ) 173 (68 ) 534


   (7,579 ) 1,964 (30,853 ) 8,443


Net effect of AFS securities on other comprehensive income
   (7,579 ) 1,964 (30,853 ) 8,443
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
   1,174 1,111 3,485 3,298
Related income tax benefit
   (256 ) (394 ) (782 ) (1,191 )


Net effect of change in pension plan asset on other comprehensive income
   918 717 2,703 2,107


Total change in other comprehensive income
   (6,659 ) 2,683 (28,146 ) 10,554


Total Comprehensive Income
   $ 57,753 $ 59,421 $ 164,246 $ 143,160


	Three Months Ended						Six Months Ended
	June 30						June 30
	2019			2018			2019			2018
Net Income	$	67,207		$	66,274		$	130,849		$	127,980
Available for sale (“AFS”) securities:
AFS securities with OTTI charges during the period		(75	)		0			(75	)		0
Related income tax effect		17			0			17			0
Less: OTTI charges recognized in net income		75			0			75			0
Related income tax benefit		(17	)		0			(17	)		0
Reclassification of previous noncredit OTTI to credit OTTI		2,188			0			2,188			0
Related income tax benefit		(510	)		0			(510	)		0

Net unrealized (losses) gains on AFS securities with OTTI		1,678			0			1,678			0
AFS securities – all other:
Change in net unrealized gain on AFS securities arising during the period		21,141			(10,684	)		43,379			(32,701	)
Related income tax effect		(4,925	)		4,162			(10,107	)		9,292
Net reclassification adjustment for (gains) losses included in net income		130			27			(218	)		176
Related income tax expense (benefit)		(30	)		(6	)		51			(41	)

		16,316			(6,501	)		33,105			(23,274	)

Net effect of AFS securities on other comprehensive income		17,994			(6,501	)		34,783			(23,274	)
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		0			2			0			4
Related income tax expense		(0	)		(1	)		(0	)		(2	)

Net effect of HTM securities on other comprehensive income		0			1			0			2
Pension plan:
Recognized net actuarial loss		1,184			1,162			2,355			2,311
Related income tax benefit		(275	)		(110	)		(536	)		(526	)

Net effect of change in pension plan asset on other comprehensive income		909			1,052			1,819			1,785

Total change in other comprehensive income		18,903			(5,448	)		36,602			(21,487	)

Total Comprehensive Income	$	86,110		$	60,826		$	167,451		$	106,493

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The components of accumulated other comprehensive income for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 are as follows:

Changes in Accumulated Other Comprehensive Income (AOCI) by Component^(a)
For the Nine Months Ended September 30, 2018

   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, 2018
   ($ 6,204 ) ($ 46 ) ($ 35,775 ) ($ 42,025 )
Cumulative effect of adopting Accounting Standard Update2016-01
   (136 ) 0 0 (136 )
Reclass due to adopting Accounting Standard Update2018-02
   (1,632 ) 0 (4,721 ) (6,353 )
Other comprehensive income before reclassification
   (31,075 ) 4 0 (31,071 )
Amounts reclassified from accumulated other comprehensive income
   222 0 2,703 2,925


Net current-period other comprehensive income, net of tax
   (30,853 ) 4 2,703 (28,146 )


Balance at September 30, 2018
   ($ 38,825 ) ($ 42 ) ($ 37,793 ) ($ 76,660 )

Changes in Accumulated Other Comprehensive Income (AOCI) by Component

(a)

For the Six Months Ended June 30, 2019


	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, 2019	($	18,289	)	($	50	)	($	36,680	)	($	57,019	)
Reclass due to adopting Accounting Standard Update 2017-12		0			50			0			50
Other comprehensive income before reclassification		33,272			0			0			33,272
Amounts reclassified from accumulated other comprehensive income		1,511			0			1,819			3,330

Net current-period other comprehensive income, net of tax		34,783			0			1,819			36,602

Balance at June 30, 2019	$	16,494		$	0		($	36,861	)	($	20,367	)

(a)	All amounts arenet-of-tax.

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)
For the Nine Months Ended September 30, 2018
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 Net investment securities (losses) gains
Net reclassification adjustment for losses (gains) included in net income
   290 Net investment securities (losses) gains


   290 Total before tax
Related income tax effect
   (68 ) Tax expense


   222 Net of tax
Pension plan:

Recognized net actuarial loss
   3,485 (a)


   3,485 Total before tax
Related income tax effect
   (782 ) Tax expense


   2,703 Net of tax


Total reclassifications for the period
   $ 2,925

Reclassifications out of Accumulated Other Comprehensive Income (AOCI)

For the Six Months Ended June 30, 2019


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	$	2,188		Net investment securities (losses) gains
Net reclassification adjustment for losses (gains) included in net income		(218	)	Net investment securities (losses) gains

		1,970		Total before tax
Related income tax effect		(459	)	Tax expense

		1,511		Net of tax
Pension plan:
Recognized net actuarial loss		2,355	(a)

		2,355		Total before tax
Related income tax effect		(536	)	Tax expense

		1,819		Net of tax

Total reclassifications for the period	$	3,330

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

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17. 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
   2018    2017    2018    2017
Distributed earnings allocated to common stock
   $ 35,234    $ 34,587    $ 106,429    $ 95,871
Undistributed earnings allocated to common stock
   29,060    22,065    85,617    36,518








Net earnings allocated to common shareholders
   $ 64,294    $ 56,652    $ 192,046    $ 132,389








Average common shares outstanding
   103,617,590    104,760,153    104,382,094    95,040,664
Equivalents from stock options
   316,369    307,969    297,782    409,962








Average diluted shares outstanding
   103,933,959    105,068,122    104,679,876    95,450,626








Earnings per basic common share
   $ 0.62    $ 0.54    $ 1.84    $ 1.39
Earnings per diluted common share
   $ 0.62    $ 0.54    $ 1.83    $ 1.39


	Three Months Ended				Six Months Ended
	June 30				June 30
	2019		2018		2019		2018
Distributed earnings allocated to common stock	$	34,604	$	35,516	$	69,276	$	71,195
Undistributed earnings allocated to common stock		32,446		30,637		61,276		56,557

Net earnings allocated to common shareholders	$	67,050	$	66,153	$	130,552	$	127,752

Average common shares outstanding		101,773,643		104,682,910		101,833,880		104,770,681
Equivalents from stock options		274,202		269,878		265,929		287,333

Average diluted shares outstanding		102,047,845		104,952,788		102,099,809		105,058,014

Earnings per basic common share	$	0.66	$	0.63	$	1.28	$	1.22
Earnings per diluted common share	$	0.66	$	0.63	$	1.28	$	1.22

18. VARIABLE INTEREST ENTITIES

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

United currently sponsors

fourteen

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%~~

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.

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.

Table of Contents

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
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

Interest Rate

Maturity Date

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

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

The following table summarizes quantitative information about United’s significant involvement in unconsolidated VIEs:

   As of September 30, 2018    As of December 31, 2017
   Aggregate
Assets    Aggregate
Liabilities    Risk Of
Loss⁽¹⁾    Aggregate
Assets    Aggregate
Liabilities    Risk Of
Loss⁽¹⁾
Trust preferred securities
   $ 257,873    $ 248,921    $ 8,952    $ 266,669    $ 257,674    $ 8,995


	As of June 30, 2019						As of December 31, 2018
	Aggregate Assets		Aggregate Liabilities		Risk Of Loss (1)		Aggregate Assets		Aggregate Liabilities		Risk Of Loss (1)
Trust preferred securities	$	257,888	$	248,746	$	9,142	$	257,754	$	248,741	$	9,013

(1)	Represents investment in VIEs.

19. SEGMENT INFORMATION

~~As a result of the Cardinal acquisition in April 2017,~~

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.~~

Through its community banking segment, United offers a full range of products and services through various delivery channels. In particular, 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 primarily in the origination and acquisition of residential mortgages for sale into the secondary market though George Mason.

The community banking segment provides the mortgage banking segment (George Mason) with short-term funds to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest based on athe 30-day LIBOR rate. ~~In addition, the mortgage banking segment (George Mason) originates mortgage loans which are sold to the community banking segment for its loan portfolio.~~ These ~~intersegment~~ transactions are eliminated in the consolidation process.

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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 their

non-banking

subsidiaries, interest expense related to subordinated notes of unconsolidated subsidiaries as well as the elimination of

non-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 to the consolidated financial statements at and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 is as follows:

   At and For the Three Months Ended September 30, 2018
   Community
Banking    Mortgage
Banking Other Intersegment
Eliminations Consolidated
Net interest income
   $ 149,770    $ 388 $ (3,168 ) $ 1,785 $ 148,775
Provision for loans losses
   4,808    0 0 0 4,808
Other income
   18,717    16,478 58 (3,567 ) 31,686
Other expense
   75,255    17,957 1,885 (1,782 ) 93,315
Income taxes
   19,296    (246 ) (1,124 ) 0 17,926




Net income (loss)
   $ 69,128    $ (845 ) $ (3,871 ) $ 0 $ 64,412




Total assets (liabilities)
   $ 19,080,734    $ 288,638 $ 12,545 $ (194,274 ) $ 19,187,643
Average assets (liabilities)
   18,982,530    303,556 5,468 (243,867 ) 19,047,689
   At and For the Three Months Ended September 30, 2017
   Community
Banking    Mortgage
Banking Other Intersegment
Eliminations Consolidated
Net interest income
   $ 152,886    $ (36 ) $ (2,574 ) $ 0 $ 150,276
Provision for loans losses
   7,279    0 0 0 7,279
Other income
   18,373    19,936 (80 ) 0 38,229
Other expense
   74,553    24,036 (1,937 ) 0 96,652
Income taxes
   29,490    (1,332 ) (322 ) 0 27,836




Net income (loss)
   $ 59,937    $ (2,804 ) $ (395 ) $ 0 $ 56,738




Total assets (liabilities)
   $ 19,083,318    $ 350,483 $ (900 ) $ (302,923 ) $ 19,129,978
Average assets (liabilities)
   18,889,710    321,744 (13,994 ) (269,675 ) 18,927,785
   At and For the Nine Months Ended September 30, 2018
   Community
Banking    Mortgage
Banking Other Intersegment
Eliminations Consolidated
Net interest income
   $ 444,840    $ 1,028 $ (8,794 ) $ 4,866 $ 441,940
Provision for loans losses
   16,190    0 0 0 16,190
Other income
   53,952    54,829 (696 ) (9,200 ) 98,885
Other expense
   224,240    57,566 (295 ) (4,334 ) 277,177
Income taxes
   57,519    (385 ) (2,068 ) 0 55,066




Net income (loss)
   $ 200,843    $ (1,324 ) $ (7,127 ) $ 0 $ 192,392




Total assets (liabilities)
   $ 19,080,734    $ 288,638 $ 12,545 $ (194,274 ) $ 19,187,643
Average assets (liabilities)
   18,718,295    284,100 8,043 (240,505 ) 18,769,934


	At and For the Three Months Ended June 30, 2019
	Community Banking		Mortgage Banking		Other			Intersegment Eliminations			Consolidated
Net interest income	$	152,517	$	111	$	(3,209	)	$	1,134		$	150,553
Provision for loans losses		5,417		0		0			0			5,417
Other income		18,398		23,501		53			(2,157	)		39,795
Other expense		82,304		18,771		143			(1,023	)		100,195
Income taxes		17,207		1,004		(682	)		0			17,529

Net income (loss)	$	65,987	$	3,837	$	(2,617	)	$	0		$	67,207

Total assets (liabilities)	$	19,735,901	$	442,188	$	16,729		$	(312,279	)	$	19,882,539
Average assets (liabilities)		19,447,629		326,525		5,387			(263,687	)		19,515,854

	At and For the Three Months Ended June 30, 2018
	Community Banking		Mortgage Banking		Other			Intersegment Eliminations			Consolidated
Net interest income	$	149,448	$	264	$	(3,032	)	$	2,442		$	149,122
Provision for loans losses		6,204		0		0			0			6,204
Other income		17,465		23,468		68			(4,994	)		36,007
Other expense		76,495		21,225		(1,758	)		(2,552	)		93,410
Income taxes		18,948		564		(271	)		0			19,241

Net income (loss)	$	65,266	$	1,943	$	(935	)	$	0		$	66,274

Total assets (liabilities)	$	19,112,133	$	388,292	$	10,895		$	(303,717	)	$	19,207,603
Average assets (liabilities)		18,658,168		335,781		6,776			(288,341	)		18,712,384

   At and For the Nine Months Ended September 30, 2017
   Community
Banking    Mortgage
Banking Other Intersegment
Eliminations Consolidated
Net interest income
   $ 401,044    $ 54 $ (6,957 ) $ 0 $ 394,141
Provision for loans losses
   21,429    0 0 0 21,429
Other income
   53,409    42,329 3,143 0 98,881
Other expense
   215,935    42,744 12,952 0 271,631
Income taxes
   73,214    (39 ) (5,819 ) 0 67,356




Net income (loss)
   $ 143,875    $ (322 ) $ (10,947 ) $ 0 $ 132,606




Total assets (liabilities)
   $ 19,083,318    $ 350,483 $ (900 ) $ (302,923 ) $ 19,129,978
Average assets (liabilities)
   17,180,219    187,118 (20,402 ) (159,291 ) 17,187,644


	At and For the Six Months Ended June 30, 2019
	Community Banking		Mortgage Banking		Other			Intersegment Eliminations			Consolidated
Net interest income	$	298,407	$	166	$	(6,532	)	$	2,680		$	294,721
Provision for loans losses		10,413		0		0			0			10,413
Other income		36,050		39,607		255			(4,894	)		71,018
Other expense		158,298		33,613		(77	)		(2,214	)		189,620
Income taxes		34,873		1,286		(1,302	)		0			34,857

Net income (loss)	$	130,873	$	4,874	$	(4,898	)	$	0		$	130,849

Total assets (liabilities)	$	19,735,901	$	442,188	$	16,729		$	(312,279	)	$	19,882,539
Average assets (liabilities)		19,324,956		296,008		1,824			(239,281	)		19,383,507

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	At and For the Six Months Ended June 30, 2018
	Community Banking		Mortgage Banking			Other			Intersegment Eliminations			Consolidated
Net interest income	$	295,070	$	640		$	(5,626	)	$	3,081		$	293,165
Provision for loans losses		11,382		0			0			0			11,382
Other income		35,235		38,351			(754	)		(5,633	)		67,199
Other expense		148,986		39,609			(2,181	)		(2,552	)		183,862
Income taxes		38,224		(139	)		(945	)		0			37,140

Net income (loss)	$	131,713	$	(479	)	$	(3,254	)	$	0		$	127,980

Total assets (liabilities)	$	19,112,133	$	388,292		$	10,895		$	(303,717	)	$	19,207,603
Average assets (liabilities)		18,583,975		274,211			9,231			(238,796	)		18,628,621

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 harbor for such 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 reports and filings, in press releases and in oral statements, involve numerous assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by United’s 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. As a result of the merger, George Mason became an indirectly-owned subsidiary of United. The Cardinal merger was accounted for under the acquisition method of accounting. At consummation, Cardinal had assets of $4.14 billion, portfolio loans of $3.31 billion and deposits of $3.34 billion.

The results of operations of Cardinal are included in the consolidated results of operations from their respective dates of acquisition. As a result of the Cardinal acquisition, the first nine months of 2018 was impacted by increased levels of average balances, income, and expense as compared to the first nine months of 2017. In addition, the first nine months of 2017 included $24.99 million of merger-related expenses from the Cardinal 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~~June 30, ~~2018,~~2019, 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.

RECENT DEVELOPMENTS

United adopted the new accounting standard for leases effective January 1, 2019. Therefore, beginning in fiscal year 2019, our financial results reflect the adoption of this standard. This new standard impacted our Consolidated Balance Sheet as of June 30, 2019 by increasing total assets by $63.11 million and total liabilities by $66.82 million. Prior periods were not restated. See Note 1, Summary of Significant Accounting Policies of the unaudited Notes to Consolidated Financial Statements for a further discussion.

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USE OF
NON-GAAP
FINANCIAL MEASURES

This discussion and analysis contains a certain financial measure that is 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 the

non-GAAP

financial measure to the closest comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the

non-GAAP

financial measure.

Generally, United has presented this

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 this

non-GAAP

financial measure is consistent with how United’s management evaluates its performance internally and this

non-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 ~~measure~~measures identified as

tax-equivalent

(FTE) net interest ~~income.~~income and return on average tangible equity. Management believes ~~this~~these

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 the most 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. By removing the effect of intangible assets that result from merger and acquisition activity, the “permanent” items of shareholders’ equity are presented. This measure, along with others, is used by management to analyze capital adequacy and performance.

However, this

non-GAAP

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

Where the

non-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 the

non-GAAP

financial measure, can be found within this discussion and analysis. Investors should recognize that United’s presentation of this

non-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 materially differ from ~~these~~those estimates. ~~These~~United’s critical accounting policies ~~along with~~involving the ~~disclosures presented~~significant judgments and assumptions used 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 determinationpreparation of the allowance for credit 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 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 explained in Note 6, Allowance for Credit Losses to the unaudited~~ Consolidated Financial Statements as of June 30, 2019 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 in~~year ended December 31, 2018 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, 2018, the allowance for loan losses was $76.94 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 $7.69 million in additional allowance (funded by additional provision for credit losses), which would have negatively impacted the third quarter of 2018 net income by approximately $6.02 million,~~after-tax~~ or $0.06 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.~~

~~Investment Securities~~

~~Accounting estimates are used in the presentation~~Operations.”

Table 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.

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

Contents

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, 2018, approximately 13.34% of total assets, or $2.56 billion, consisted of financial instruments recorded at fair value. Of this total, approximately 90.12% or $2.31 billion of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. Approximately $252.87 million or 9.88% 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 as~~available-for-sale.~~ At September 30, 2018, only $197 thousand 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~~June 30, ~~2018~~2019 were ~~$19.19~~$19.88 billion, which was ~~relatively flat~~an increase of $632.04 million or 3.28% from December 31, ~~2017, increasing $128.68 million or less than 1% from December 31, 2017.~~2018. The ~~slight~~ increase was mainly due to an increase of ~~$265.32~~$233.18 million or ~~2.04%~~22.85% in cash and cash equivalents, an increase of $213.04 million or 1.59% in portfolio ~~loans.~~loans, and an increase of $120.75 million or 48.33% in loans held for sale. Investment securities increased ~~$303.87 million~~

~~or 14.67%. Loans held for sale decreased $31.76 million or 11.94%. Cash and cash equivalents decreased $411.48 million or 24.70%. Other assets were relatively flat, increasing $1.32~~$19.54 million or less than 1%. In addition, United adopted the new accounting standard for leases effective January 1, 2019, as previously mentioned, resulting in a $63.11 million operating lease

right-of-use

asset as of June 30, 2019. Partially offsetting these increases in total assets was a $17.52 million or 3.83% decrease in other assets. Total liabilities ~~were relatively flat, increasing $118.09~~increased $549.81 million or ~~less than 1%~~3.44% from

year-end ~~2017.~~

2018. Deposits increased ~~$260.58~~$409.34 million or ~~1.88%~~2.92%. Borrowings ~~decreased $142.69~~increased $55.30 million or ~~7.75%~~2.99% while accrued expenses and other liabilities ~~remained flat, decreasing $275 thousand~~increased $17.99 million or ~~less than 1%~~11.81%. As a result of the adoption of the leases accounting standard, United also recorded a $66.82 million operating lease liability as of June 30, 2019. Shareholders’ equity ~~was relatively flat from December 31, 2017, increasing $10.60~~increased $82.23 million or ~~less than 1%~~2.53%.

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~~June 30, ~~2018 decreased $411.48~~2019 increased $233.18 million or ~~24.70%~~22.85% from

year-end ~~2017.~~

2018. Of this total ~~decrease,~~increase, cash and due from banks ~~decreased $4.93~~increased $10.29 million or ~~2.51%~~5.47% while interest-bearing deposits with other banks ~~decreased $406.56~~increased $222.88 million or ~~27.68%~~26.80% as United ~~used~~placed excess cash ~~to mainly invest~~ in ~~securities and grow loans.~~an interest-bearing account with the Federal Reserve. Federal funds sold increased $10 thousand or ~~1.27%~~1.25%. During the first ~~nine~~six months of ~~2018,~~2019, net cash of ~~$218.77~~$31.79 million ~~was~~and $378.75 million were provided by operating and financing activities, respectively, while ~~$592.24~~net cash of $177.36 million ~~and $38.02 million were~~was used in investing ~~activities and financing activities, respectively.~~activities. See the unaudited Consolidated Statements of Cash Flows for data on cash and cash equivalents provided and used in operating, investing and financing activities for the first ~~nine~~six months of ~~2018~~2019 and ~~2017.~~

2018.

Securities

Total investment securities at ~~September~~June 30, ~~2018 increased $303.87~~2019 were flat, increasing $19.54 million or ~~14.67%~~less than 1% from

year-end ~~2017.~~

2018. Securities available for sale ~~increased $289.81~~were flat, increasing $8.75 million or ~~15.34%~~less than 1%. This slight change in securities available for sale reflects ~~$287.46~~$384.98 million in sales, maturities and calls of securities, ~~$629.76~~$338.98 million in purchases, and ~~a decrease~~an increase of ~~$40.39~~$43.16 million in market value. The majority of the purchase activity was related to corporate securities which were all issued by investment grade rated, single-name issuers, and have maturity dates of less than five years. Securities held to maturity declined $13.54 million or 67.69% from

year-end

2018 due to the transfer of $11.54 million of investment securities to available for sale securities upon the adoption of ASU No.

2017-12.

Equity securities were ~~flat, declining $77~~$9.10 million at June 30, 2019, a decrease of $636 thousand or ~~less than 1% fromyear-end~~ ~~2017~~6.53% due mainly to ~~calls and maturities of securities. Equity securities, now carried at fair value, were $9.85 million at September 30, 2018.~~net sales. Other investment securities increased ~~$4.29~~$24.96 million or ~~2.64%~~14.10% from

year-end ~~2017~~

2018 due mainly to ~~the purchase~~purchases of ~~Federal Home Loan Bank (FHLB)~~an equity security without a readily determinable fair value, investment tax credits, and FHLB stock.

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The following table summarizes the changes in the available for sale securities since

year-end ~~2017:~~

(Dollars in thousands)
   September 30
2018    December 31
2017    $ Change    % Change
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 101,565    $ 114,758    $ (13,193 )    (11.50 %)
State and political subdivisions
   252,246    303,869    (51,623 )    (16.99 %)
Mortgage-backed securities
   1,491,871    1,274,962    216,909    17.01 %
Asset-backed securities
   223,602    109,970    113,632    103.33 %
Market equity securities
   0    9,878    (9,878 )    (100.00 %)
Trust preferred collateralized debt obligations
   6,154    34,269    (28,115 )    (82.04 %)
Single issue trust preferred securities
   8,104    12,560    (4,456 )    (35.48 %)
Corporate securities
   95,025    28,490    66,535    233.54 %








Total available for sale securities, at fair value
   $ 2,178,567    $ 1,888,756    $ 289,811    15.34 %

2018:


	June 30		December 31
(Dollars in thousands)	2019		2018		$ Change			% Change
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	74,484	$	85,890	$	(11,406	)		(13.28	%)
State and political subdivisions		181,259		208,988		(27,729	)		(13.27	%)
Mortgage-backed securities		1,456,266		1,594,509		(138,243	)		(8.67	%)
Asset-backed securities		268,854		271,970		(3,116	)		(1.15	%)
Trust preferred collateralized debt obligations		5,413		5,917		(504	)		(8.52	%)
Single issue trust preferred securities		16,844		8,362		8,482			101.44	%
Corporate securities		342,671		161,403		181,268			112.31	%

Total available for sale securities, at fair value	$	2,345,791	$	2,337,039	$	8,752			0.37	%


The following table summarizes the changes in the held to maturity securities since year-end 2018:

	June 30		December 31
(Dollars in thousands)	2019		2018		$ Change			% Change
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	5,015	$	5,074	$	(59	)		(1.16	%)
State and political subdivisions		1,426		5,473		(4,047	)		(73.94	%)
Mortgage-backed securities		0		20		(20	)		(100.00	%)
Single issue trust preferred securities		0		9,412		(9,412	)		(100.00	%)
Other corporate securities		20		20		0			0.00	%

Total held to maturity securities, at amortized cost	$	6,461	$	19,999	$	(13,538	)		(67.69	%)

~~The following table summarizes the changes in the held to maturity securities sinceyear-end~~ ~~2017:~~

(Dollars in thousands)
   September 30
2018    December 31
2017    $ Change    % Change
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
   $ 5,103    $ 5,187    $ (84 )    (1.62 %)
State and political subdivisions
   5,798    5,797    1    0.02 %
Mortgage-backed securities
   21    23    (2 )    (8.70 %)
Single issue trust preferred securities
   9,409    9,401    8    0.09 %
Other corporate securities
   20    20    0    0.00 %








Total held to maturity securities, at amortized cost
   $ 20,351    $ 20,428    $ (77 )    (0.38 %)

At ~~September~~June 30, ~~2018,~~2019, gross unrealized losses on available for sale securities were ~~$54.92~~$8.31 million. Securities ~~in an~~with the most significant gross unrealized ~~loss position~~losses at ~~September~~June 30, ~~2018~~2019 consisted primarily of ~~state and political subdivision~~asset-backed securities, agency residential mortgage-backed securities, and ~~agency commercial and residential mortgage-backed~~single issue trust preferred securities. The ~~state~~asset-backed securities are backed by FFELP student loan collateral which includes a minimum of a 97% government repayment guaranty, as well as additional credit support and ~~political subdivisions securities relate to securities issued by various municipalities.~~subordination in excess of the government guaranteed portion. The agency ~~commercial and~~ residential mortgage-backed securities relate to ~~commercial and~~ residential properties and provide a guaranty of full and timely payments of principal and interest by the issuing agency.

The single issue trust preferred securities relate to securities of financial institutions.

As of ~~September~~June 30, ~~2018,~~2019, United’s mortgage-backed securities had an amortized cost of ~~$1.53~~$1.44 billion, with an estimated fair value of ~~$1.49~~$1.46 billion. The portfolio consisted primarily of ~~$973.33~~$866.60 million in agency residential mortgage-backed securities with a fair value of ~~$943.67~~$877.57 million, ~~$4.09~~$3.60 million in

non-agency

residential mortgage-backed securities with an estimated fair value of ~~$4.57~~$3.98 million, and ~~$557.21~~$566.37 million in commercial agency mortgage-backed securities with an estimated fair value of ~~$543.65~~$574.72 million.

As of ~~September~~June 30, ~~2018,~~2019, United’s corporate securities had an amortized cost of ~~$247.68~~$635.54 million, with an estimated fair value of ~~$246.40~~$633.80 million. The portfolio consisted ~~primarily~~ of ~~$6.18~~$6.14 million in Trup Cdos with a fair value of ~~$6.15~~$5.41 million and ~~$18.16~~$18.18 million in single issue trust preferred securities with an estimated fair value of ~~$16.64~~$16.84 million. In addition to the trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of ~~$223.35~~$272.42 million and a fair value of ~~$223.60~~$268.85 million and other corporate securities, with an amortized cost of ~~$96.13~~$338.80 million and a fair value of ~~$95.05~~$342.69 million.

The Trup Cdos consisted of pools of trust preferred securities issued by trusts related to financial institutions. ~~During the first quarter of 2018, seven Trup Cdos were sold and one Trup Cdo was redeemed at par. During the second quarter of 2018, one additional Trup Cdo was redeemed at par.~~ United’s Trup Cdos had a fair value of ~~$6.15~~$5.41 million as of ~~September~~June 30, ~~2018.~~2019. As of ~~September~~June 30, ~~2018,~~2019, all of the Trup Cdos were rated

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below investment grade. United’s single issue trust preferred securities had a fair value of ~~$16.64~~$16.84 million as of ~~September~~June 30, ~~2018.~~2019. Of the ~~$16.64~~$16.84 million, ~~$3.93~~$3.92 million or ~~23.59%~~23.28% were investment grade; ~~$5.47~~$5.40 million or ~~32.90%~~32.07% were split rated; ~~$2.29~~$2.28 million or ~~13.77%~~13.54% were below investment grade; and ~~$4.95~~$5.24 million or ~~29.74%~~31.11% were unrated. The two largest exposures accounted for ~~71.48%~~71.97% of the ~~$16.64~~$16.84 million. These included SunTrust Bank at ~~$6.95~~$6.88 million and Emigrant Bank at ~~$4.95~~$5.24 million. All single-issue trust preferred securities are currently receiving full scheduled principal and interest payments.

The following is a summary of available for sale single-issue trust preferred securities as of ~~September~~June 30, ~~2018:~~

Security
   Moodys    S&P    Fitch    Amortized
Cost    Fair
Value    Unrealized
Loss/
(Gain)
            (Dollars in thousands)
Emigrant Bank
   NR    NR    WD    $ 5,720    $ 4,950    $ 770
M&T Bank
   NR    BBB-    BBB-    3,028    3,155    (127 )






            $ 8,748    $ 8,105    $ 643

~~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 (amortized cost balance of $7.43 million) and Royal Bank of Scotland (amortized cost balance of $977 thousand).

2019:


Security	Moodys		S&P		Fitch		Amortized Cost		Fair Value		Unrealized Loss/ (Gain)
							(Dollars in thousands)
Emigrant Bank		NR		NR		WD	$	5,729	$	5,240	$	489
SunTrust Bank		Baa2		NR		BB+		4,958		4,600		358
M&T Bank		NR		BBB-		BBB-		3,036		3,211		(175	)
SunTrust Bank		NR		BB+		BB+		2,480		2,282		198
HSBC		Baa2		BBB+		NR		1,000		710		290
Royal Bank of Scotland		Baa3		BB+		BBB		977		801		176

							$	18,180	$	16,844	$	1,336

During the ~~third~~second quarter of ~~2018,~~2019, United ~~did not recognize any~~recognized other-than-temporary impairment totaling $75 thousand on ~~any of its~~two investment securities. ~~Management~~With the exception of these two securities, management does not believe that any other individual security with an unrealized loss as of ~~September~~June 30, ~~2018~~2019 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. Based on a review of each of the securities in the investment portfolio, management concluded that it was not probable that it would be unable 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. However, United acknowledges that any impaired securities 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.

Loans held for sale

Loans held for sale ~~decreased $31.76~~increased $120.75 million or ~~11.94% fromyear-end~~ ~~2017 mainly due to a $27.42 million transfer from loans held for sale to portfolio loans.~~48.33%. Loan originations in the secondary market exceeded sales during the first half of 2019. Loan originations for the first ~~nine months~~half of ~~2018~~2019 were ~~$1.58~~$1.06 billion while loans sales were ~~also $1.58 billion.~~$934.88 million. Loans held for sale were ~~$234.20~~$370.59 million at ~~September~~June 30, ~~2018~~2019 as compared to ~~$265.96~~$249.85 million at

year-end ~~2017.~~

2018.

Portfolio Loans

Loans, net of unearned income, increased ~~$265.32~~$213.04 million or ~~2.04% from~~1.59%. Since

year-end ~~2017. Sinceyear-end~~ 2017, residential real estate loans increased $391.10 million or 13.05% and consumer loans increased $194.25 million or 27.19%, due mainly to an increase in automobile loans. Partially offsetting these increases was a decrease in

2018, commercial, financial and agricultural loans ~~of $201.05~~decreased $97.07 million or ~~2.57%~~1.29% as commercial real estate loans decreased ~~$134.99~~$161.39 million or ~~2.32% and~~2.88% which was partially offset by a $64.31 million or 3.29% increase in commercial loans (not secured by real estate) ~~decreased $66.06~~. In addition, residential real estate loans increased $172.61 million or ~~3.30%. In addition,~~4.93%, consumer loans increased $81.28 million or 8.43% and construction and land development loans ~~decreased $124.92~~increased $53.60 million or ~~8.30%~~3.80%.

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The following table summarizes the changes in the major loan classes since

year-end ~~2017:~~

(Dollars in thousands)    September 30
2018    December 31
2017    $ Change    % Change
Loans held for sale
   $ 234,196    $ 265,955    $ (31,759 )    (11.94 %)








Commercial, financial, and agricultural:

Owner-occupied commercial real estate
   $ 1,336,434    $ 1,361,629    $ (25,195 )    (1.85 %)
Nonowner-occupied commercial real estate
   4,341,501    4,451,298    (109,797 )    (2.47 %)
Other commercial loans
   1,932,919    1,998,979    (66,060 )    (3.30 %)








Total commercial, financial, and agricultural
   $ 7,610,854    $ 7,811,906    $ (201,052 )    (2.57 %)
Residential real estate
   3,387,268    2,996,171    391,097    13.05 %
Construction & land development
   1,379,985    1,504,907    (124,922 )    (8.30 %)
Consumer:

Bankcard
   9,530    10,314    (784 )    (7.60 %)
Other consumer
   899,074    704,039    195,035    27.70 %








Total gross loans
   $ 13,286,711    $ 13,027,337    $ 259,374    1.99 %
Less: Unearned income
   (9,971 )    (15,916 )    5,945    (37.35 %)








Total Loans, net of unearned income
   $ 13,276,740    $ 13,011,421    $ 265,319    2.04 %

2018:


	June 30			December 31
(Dollars in thousands)	2019			2018			$ Change			% Change
Loans held for sale	$	370,593		$	249,846		$	120,747			48.33	%

Commercial, financial, and agricultural:
Owner-occupied commercial real estate	$	1,239,954		$	1,291,790		$	(51,836	)		(4.01	%)
Nonowner-occupied commercial real estate		4,194,064			4,303,613			(109,549	)		(2.55	%)
Other commercial loans		2,021,953			1,957,641			64,312			3.29	%

Total commercial, financial, and agricultural	$	7,455,971		$	7,553,044		$	(97,073	)		(1.29	%)
Residential real estate		3,674,005			3,501,393			172,612			4.93	%
Construction & land development		1,464,064			1,410,468			53,596			3.80	%
Consumer:
Bankcard		9,380			10,203			(823	)		(8.07	%)
Other consumer		1,036,526			954,424			82,102			8.60	%

Total gross loans	$	13,639,946		$	13,429,532		$	210,414			1.57	%
Less: Unearned income		(4,680	)		(7,310	)		2,630			(35.98	%)

Total Loans, net of unearned income	$	13,635,266		$	13,422,222		$	213,044			1.59	%

The following table summarizes the outstanding balances of portfolio loans originated and acquired, by type, as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017:~~

   September 30, 2018
(In thousands)    Commercial,
financial and
agricultural    Residential
real estate    Construction &
land
development    Consumer    Total
Originated
   4,780,708    $ 2,511,741    $ 1,098,457    $ 903,085    $ 9,293,991
Acquired
   2,830,146    875,527    281,528    5,519    3,992,720










Total gross loans
   $ 7,610,854    $ 3,387,268    $ 1,379,985    $ 908,604    $ 13,286,711

   December 31, 2017
(In thousands)    Commercial,
financial and
agricultural    Residential
real estate    Construction &
land
development    Consumer    Total
Originated
   $ 4,647,745    $ 1,974,804    $ 1,032,629    $ 707,661    $ 8,362,839
Acquired
   3,164,161    1,021,367    472,278    6,692    4,664,498










Total gross loans
   $ 7,811,906    $ 2,996,171    $ 1,504,907    $ 714,353    $ 13,027,337

2018:


	June 30, 2019
(In thousands)	Commercial, financial and agricultural		Residential real estate		Construction & land development		Consumer		Total
(In thousands)	Commercial, financial and agricultural		Residential real estate		Construction & land development		Consumer		Total
Originated	$	5,101,650	$	2,944,711	$	1,273,243	$	1,041,262	$	10,360,866
Acquired		2,354,321		729,294		190,821		4,644		3,279,080

Total gross loans	$	7,455,971	$	3,674,005	$	1,464,064	$	1,045,906	$	13,639,946


	December 31, 2018
(In thousands)	Commercial, financial and agricultural		Residential real estate		Construction & land development		Consumer		Total
(In thousands)	Commercial, financial and agricultural		Residential real estate		Construction & land development		Consumer		Total
Originated	$	4,887,688	$	2,686,817	$	1,179,676	$	959,392	$	9,713,573
Acquired		2,665,356		814,576		230,792		5,235		3,715,959

Total gross loans	$	7,553,044	$	3,501,393	$	1,410,468	$	964,627	$	13,429,532

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

Other Assets

Other assets ~~were relatively flat fromyear-end~~ ~~2017, increasing $1.32~~decreased $17.52 million or ~~less than 1%~~3.83% from

year-end ~~2017. Deferred taxes increased $4.60~~

2018, mainly due to deferred tax assets decreasing $15.77 million. In addition, ~~derivative assets and bank owned life insurance policies increased $4.19 million and $4.00 million, respectively, due to a change in fair value and dealer reserve increased $4.75~~core deposit intangibles decreased $3.51 million due to ~~an increase in automobile loans. Partially offsetting these increases were decreases in core deposit intangibles of $6.03 million due to~~ amortization ~~income taxes receivable of $3.52 million~~ and other real estate owned ~~of $5.56~~(OREO) decreased $2.40 million due to a combination of sales and ~~declines~~write-downs of fair value. Partially offsetting these decreases were increases of $2.17 million in ~~fair value.~~

derivative assets, $1.77 million in prepaid assets and $2.34 million in accounts receivables for the first half of 2019.

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Deposits

Deposits represent United’s primary source of funding. Total deposits at ~~September~~June 30, ~~2018~~2019 increased ~~$260.58~~$409.34 million or ~~1.88%~~2.92%. In terms of composition, interest-bearing deposits ~~were relatively flat, increasing $84.45~~increased $495.49 million or ~~less than 1%~~5.17% while noninterest-bearing deposits ~~increased $176.13~~decreased $86.15 million or ~~4.10%~~1.95% from December 31, ~~2017.~~

2018.

Noninterest-bearing deposits consists of demand deposit and noninterest bearing money market (MMDA) account balances. The ~~$176.13~~$86.15 million ~~increase~~decrease in noninterest-bearing deposits was due mainly to ~~increases~~a decrease in commercial noninterest-bearing deposits of ~~$144.73~~$51.61 million or ~~4.35%. Personal~~2.29% while personal noninterest-bearing deposits ~~were flat, increasing $2.28 million~~and public funds noninterest-bearing deposits decreased $350 thousand or less than 1%~~. Partially offsetting these increases was a decrease of $4.07~~ and $4.32 million or ~~3.18% in public funds noninterest-bearing deposits.~~

3.91%, respectively.

Interest-bearing deposits consists of interest-bearing checking (NOW), regular savings, interest-bearing MMDA, and time deposit account balances. Interest-bearing MMDAs increased ~~$2.14 billion~~$101.67 million or 1.71 % while NOW accounts decreased ~~$1.80 billion~~$7.38 million or 1.97% since

year-end ~~2017 due mainly to~~

2018. In particular, interest-bearing MMDAs increased $101.67 million as commercial MMDAs increased $180.48 million and personal MMDAs increased $26.47 million. These increases were partially offset by decreases in public funds MMDAs and brokered MMDAs of $49.10 million and $56.17 million, respectively. Excluding sweep activity ~~of $1.67 billion~~ from NOW accounts to interest-bearing MMDAs to reduce United’s reserve requirement at its Federal Reserve Bank. Otherwise, interest-bearing MMDAs increased $464.76 million or 12.37% as brokered MMDAs, commercial MMDAs, and personal MMDAs were up $219.72 million, $110.56 million, and $68.56 million, respectively. In addition, public funds MMDAs increased $65.92 million. Excluding the sweep activity,Bank, NOW accounts decreased ~~$125.63~~$155.25 million or ~~5.82%~~7.84% mainly due to a decrease of ~~$180.28~~$141.70 million in personal NOW accounts and a ~~$24.25~~$39.33 million decrease in ~~commercial~~public funds NOW accounts. Partially offsetting these decreases was an increase of ~~$78.90~~$25.78 million in ~~public funds~~commercial NOW accounts.

Regular savings ~~decreased $36.49~~increased $11.60 million or ~~3.53%~~1.21% from

year-end ~~2017~~

2018 mainly due to a ~~$50.08~~$60.10 million ~~decrease~~increase in ~~personal~~public funds savings accounts, which was partially offset by ~~a $12.98~~decreases of $42.32 million ~~increase~~and $6.12 million in personal and commercial savings ~~accounts.~~

accounts, respectively.

Time deposits under $100,000 ~~decreased $65.4~~increased $9.07 million or ~~8.23%~~1.27% from

year-end ~~2017.~~

2018. This ~~decrease~~increase in time deposits under $100,000 is the result of ~~decreases of $17.72~~a $4.26 million ~~and $29.34 million~~increase in ~~fixed rate certificates of deposits (CDs) and~~ Certificate of Deposit Account Registry Service (CDARS) balances ~~respectively. In addition, variable rate~~and a $4.14 million increase in fixed CDs ~~decreased $20.80 million.~~

under $100,000.

Since

year-end ~~2017,~~

2018, time deposits over $100,000 ~~decreased $152.79~~increased $380.53 million or ~~8.52%~~24.04% as brokered certificates of deposits (CDs) increased $242.39 million and CDARS ~~balances decreased $335.16 million, which was~~increased $103.82 million. In addition, fixed rate CDs increased $103.18 million. These increases in time deposits over $100,000 were partially offset by a ~~$95.26~~$68.86 million ~~increase in brokered deposits, a $24.14 million increase in fixed rate CDs over $100,000, and a $70.52 million increase~~decrease in public funds CDs over $100,000.

The following table summarizes the changes in the deposit categories since

year-end ~~2017:~~

(Dollars in thousands)    September 30
2018    December 31
2017    $ Change    % Change
Demand deposits
   $ 1,900,015    $ 4,294,687    $ (2,394,672 )    (55.76 %)
Interest-bearing checking
   357,477    2,156,974    (1,799,497 )    (83.43 %)
Regular savings
   997,610    1,034,100    (36,490 )    (3.53 %)
Money market accounts
   8,465,689    3,756,259    4,709,430    125.38 %
Time deposits under $100,000
   729,737    795,137    (65,400 )    (8.23 %)
Time deposits over $100,000 (1)
   1,640,644    1,793,434    (152,790 )    (8.52 %)








Total deposits
   $ 14,091,172    $ 13,830,591    $ 260,581    1.88 %

2018:


	June 30		December 31
(Dollars in thousands)	2019		2018		$ Change			% Change
Demand deposits	$	3,123,634	$	3,212,878	$	(89,244	)		(2.78	%)
Interest-bearing checking		367,115		374,495		(7,380	)		(1.97	%)
Regular savings		966,559		954,961		11,598			1.21	%
Money market accounts		7,261,789		7,157,028		104,761			1.46	%
Time deposits under $100,000		721,387		712,313		9,074			1.27	%
Time deposits over $100,000 (1)		1,963,601		1,583,074		380,527			24.04	%

Total deposits	$	14,404,085	$	13,994,749	$	409,336			2.92	%

(1)	Includes time deposits of $250,000 or more of ~~$979,015~~$1,213,987 and ~~$790,703~~$979,707 at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Table of Contents

Borrowings

Total borrowings at ~~September 30, 2018 decreased $142.69~~June 30,2019 increased $55.30 million or ~~7.75% from~~2.99% since

year-end ~~2017.~~

2018. During the first ~~nine months~~half of ~~2018,~~2019, short-term borrowings decreased ~~$98.08~~$229.17 million or ~~20.54%~~65.23% due to a ~~$107.63~~$175.00 million decrease in short-term FHLB advances, a $30.77 million decrease in short-term securities sold under agreements to ~~repurchase. Federal~~repurchase and a $23.40 million decrease in federal funds ~~purchased decreased $9.56~~purchased. Long-term borrowings increased $284.46 million or ~~58.85%. Long-term borrowings decreased $44.61 million or 3.27%~~18.98% from

year-end ~~2017~~

2018 due to a $283.83 million increase in long-term FHLB

advances as new borrowings exceeded repayments for the ~~redemption~~first six months of ~~a trust preferred issuance (Century Trust) and the repayment of a wholesale security sold under an agreement to repurchase.~~

2019.

The table below summarizes the change in the borrowing categories since

year-end ~~2017:~~

(Dollars in thousands)    September 30
2018    December 31
2017    $ Change    % Change
Federal funds purchased
   $ 25,790    $ 16,235    $ 9,555    58.85 %
Short-term securities sold under agreements to repurchase
   153,718    261,352    (107,634 )    (41.18 %)
Long-term securities sold under agreements to repurchase
   0    50,000    (50,000 )    (100.00 %)
Short-term FHLB advances
   200,000    200,000    0    0.00 %
Long-term FHLB advances
   1,084,781    1,071,531    13,250    1.24 %
Issuances of trust preferred capital securities
   234,590    242,446    (7,856 )    (3.24 %)








Total borrowings
   $ 1,698,879    $ 1,841,564    $ 142,685    (7.75 %)

2018:


	June 30		December 31
(Dollars in thousands)	2019		2018		$ Change			% Change
Federal funds purchased	$	0	$	23,400	$	(23,400	)		(100.00	%)
Short-term securities sold under agreements to repurchase		122,159		152,927		(30,768	)		(20.12	%)
Short-term FHLB advances		0		175,000		(175,000	)		(100.00	%)
Long-term FHLB advances		1,548,032		1,264,198		283,834			22.45	%
Issuances of trust preferred capital securities		235,535		234,905		630			0.27	%

Total borrowings	$	1,905,726	$	1,850,430	$	55,296			2.99	%

For a further discussion of borrowings see Notes 8 and 9 to the unaudited Notes to Consolidated Financial Statements.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at ~~September~~June 30, ~~2018 was flat, decreasing $275 thousand~~2019 increased $17.99 million or ~~less than 1%~~11.81% from

year-end ~~2017.~~

2018. In particular, the pension liability declined $8.71 million due to a discretionary contribution of $7.00 million to the Company’s pension plan during the first quarter, business franchise taxes decreased $1.97 million, incentive payables declined $1.40 million due to payments, and income taxes payable decreased $1.21 million due to a timing difference. Partially offsetting these decreases were increases of $9.18 million in the accounts payable associated with George Mason ~~and $4.07~~increased $19.68 million, ~~for~~accrued mortgage escrow ~~liabilities.~~

liabilities increased $4.86 million and derivative liabilities increased $2.62 million. Partially offsetting these increases was a decrease of $4.43 million in business franchise taxes payable and a $3.70 million decrease in accrued employee expenses due to decreases of $2.67 million and $2.03 million in deferred compensation and incentives payable, respectively.

Shareholders’ Equity

Shareholders’ equity at ~~September~~June 30, ~~2018~~2019 was ~~relatively flat from December 31, 2017, increasing $10.60~~$3.33 billion, which was an increase of $82.23 million or ~~less than 1%.~~

2.53% from

year-end

2018.

Retained earnings increased ~~$92.25~~$60.35 million or ~~10.34%~~5.96% from

year-end ~~2017.~~

2018. Earnings net of dividends for the first ~~nine~~six months of ~~2018~~2019 were ~~$85.76~~$61.40 million. ~~Amounts reclassed to~~Amount recognized in retained earnings ~~from AOCI~~ for the adoption of ASU No. ~~2016-01 and ASU No. 2018-02 totaled $6.49 million for the first nine months of 2018.~~

~~Sinceyear-end~~ ~~2017, accumulated~~

2016-02

was $1.05 million.

Accumulated other comprehensive income ~~decreased $34.64~~increased $36.65 million or ~~82.42%~~64.28% from

year-end

2018 due mainly to ~~a decrease~~an increase of ~~$38.07~~$34.78 million in the

after-tax

fair value of United’s available for sale investment portfolio, net of deferred income taxes partially offset by the reclass to retained earnings of $6.49 million and the reversal of $7.22 million in noncredit OTTI for securities sold in the first nine months of 2018.adjustment on AFS securities. The

after-tax

accretion of pension costs was ~~$2.70~~$1.82 million for the first ~~nine months~~half of ~~2018.~~

2019.

During the second quarter of 2018, United began repurchasing its common stock on the open market under ~~a plan announced~~repurchase plans approved by ~~the Company in August~~United’s Board of ~~2017 to repurchase up to 2 million shares of its common stock.~~Directors. United repurchased ~~1,376,900~~520,600 shares byin the ~~end~~first half of ~~the third quarter of 2018~~2019 at a cost of ~~$50.92~~$17.65 million or an average price per share of ~~$36.98.~~

$33.91.

Table of Contents

RESULTS OF OPERATIONS

Overview

Net income for the ~~third~~second quarter of ~~2018~~2019 was ~~$64.41~~$67.21 million or ~~$0.62~~$0.66 per diluted share, as compared to ~~$56.74~~$66.27 million or ~~$0.54~~$0.63 per diluted share for the prior year ~~third~~second quarter. Net income for the first ~~nine~~six months of ~~2018~~2019 was ~~$192.39~~$130.85 million or ~~$1.83~~$1.28 per diluted share compared to ~~$132.61~~$127.98 million or ~~$1.39~~$1.22 per share for the first ~~nine~~six months of ~~2017.~~

2018.

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, the first nine months of 2018 were impacted for increased levels of average balances, income, and expense as compared to the first nine months of 2017. In addition, the first nine months of 2017 included merger-related expenses of $24.99 million due to the Cardinal acquisition.

For the ~~third~~second quarter of ~~2018,~~2019, United’s annualized return on average assets was ~~1.34%~~1.38% and return on average shareholders’ equity was ~~7.83%~~8.12% as compared to ~~1.19 %~~1.42% and ~~6.89%~~8.11% for the ~~third~~second quarter of ~~2017.~~2018. United’s annualized return on average assets for the first ~~nine~~six months of ~~2018~~2019 was ~~1.37%~~1.36% and return on average shareholders’ equity was ~~7.86%~~8.00% as compared to ~~1.03%~~1.39% and ~~6.22%~~7.88% for the first ~~nine~~six months of ~~2017.~~

2018. United’s Federal Reserve peer group’s (bank holding companies with total assets over $10 billion) most recently reported average return on assets and average return on equity were 1.21% and 9.96%, respectively, for the first three months of 2019. For the second quarter and first half of 2019, United’s annualized return on average tangible equity was 14.90% and 14.78%, respectively, as compared to 15.14% and 14.72% for the second quarter and first half of 2018, respectively.


	Three Months Ended						Six Months Ended
(Dollars in thousands)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Return on Average Tangible Equity:
(a) Net Income (GAAP)	$	67,207		$	66,274		$	130,849		$	127,980
(b) Number of days		91			91			181			181
Average Total Shareholders’ Equity (GAAP)	$	3,220,987		$	3,276,099		$	3,299,061		$	3,274,639
Less: Average Total Intangibles		(1,512,400	)		(1,520,253	)		(1,513,279	)		(1,521,323	)

(c) Average Tangible Equity (non-GAAP)	$	1,808,587		$	1,755,846		$	1,785,782		$	1,753,316
Return on Tangible Equity (non-GAAP) [(a) / (b)] x 365 / (c)		14.90	%		15.14	%		14.78	%		14.72	%

Net interest income for the ~~third~~second quarter of 2019 was $150.55 million which was relatively flat from the second quarter of 2018, ~~was $148.78 million, which was a decrease of $1.5~~increasing $1.43 million or less than 1% ~~from the third quarter of 2017.~~. The decrease in net interest income occurred because total interest income increased $13.45 million while total interest expense increased $14.95 million from the third quarter of 2017. Net interest income for the first nine months of 2018 was $441.94 million, an increase of $47.80 million or 12.13% from the prior year’s first nine months. Theslight increase in net interest income occurred because total interest income increased ~~$82.93~~$21.25 million while total interest expense only increased ~~$35.13~~$19.81 million from the second quarter of 2018. Net interest income for the first half of 2019 was $294.72 million which was relatively flat from the prior year’s first six months, increasing $1.56 million or less than 1%. The slight increase in net interest income occurred because total interest income increased $43.16 million while total interest expense only increased $41.60 million from the first ~~nine~~six months of ~~2017.~~

2018.

The provision for ~~loan~~credit losses was ~~$4.81~~$5.42 million and ~~$16.19~~$10.41 million for the ~~third~~second quarter and first ~~nine~~six months of ~~2018,~~2019, respectively, as compared to ~~$7.28~~$6.20 million and ~~$21.43~~$11.38 million for the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2018, respectively. For the ~~third~~second quarter of ~~2018,~~2019, noninterest income was ~~$31.69~~$39.80 million, which was ~~a decrease~~an increase of ~~$6.54~~$3.79 million or ~~17.12%~~10.52% from the ~~third~~second quarter of ~~2017.~~2018. Noninterest income for the first ~~nine~~six months of ~~2018~~2019 was ~~$98.89~~$71.02 million which was ~~flat~~an increase of $3.82 million or 5.68% from the first ~~nine~~six months of ~~2017, increasing $4 thousand or less than 1%.~~2018. These increases from 2018 were mainly due to additional income from mortgage banking activities. For the ~~third~~second quarter of ~~2018,~~2019, noninterest expense ~~decreased $3.34~~increased $6.79 million or ~~3.45%~~7.26% from the ~~third~~second quarter of ~~2017.~~2018. For the first ~~nine~~six months of ~~2018,~~2019, noninterest expense increased ~~$5.55~~$5.76 million or ~~2.04%~~3.13% from the first ~~nine~~six months of ~~2017.~~

2018. These increases were due mainly to penalties incurred during the second quarter of 2019 on the prepayment of FHLB advances.

Income taxes for the ~~third~~second quarter of ~~2018~~2019 were ~~$17.93~~$17.53 million as compared to ~~$27.84~~$19.24 million for the ~~third~~second quarter of ~~2017.~~2018. For the first ~~nine~~six months of ~~2018~~2019 and ~~2017,~~2018, income tax expense was ~~$55.07~~$34.86 million and ~~$67.36~~$37.14 million, respectively. For the quarters ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, United’s effective tax rate was ~~21.77%~~20.69% and ~~32.91%~~22.50%, respectively. The effective tax rate for the first ~~nine~~six months of 2019 and 2018 was 21.04% and ~~2017 was 22.25% and 33.68%~~22.49%, respectively.

Table of Contents

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

Business Segments

~~As a result of the Cardinal acquisition,~~

Community Banking

Net income attributable to the community banking segment for the ~~third~~second quarter of ~~2018~~2019 was ~~$69.13~~$65.99 million compared to net income of ~~$59.94~~$65.27 million for the ~~third~~second quarter of ~~2017.~~

2018.

Net interest income ~~decreased $3.12~~increased $3.07 million to ~~$149.77~~$152.52 million for the ~~third~~second quarter of ~~2018,~~2019, compared to ~~$152.89~~$149.45 million for the same period of ~~2017.~~2018. Net interest income for the second quarter of 2019 increased from the second quarter of 2018 due mainly to an increase in average earning assets and additional accretion on acquired loans. Provision for loan losses was ~~$4.81~~$5.42 million for the three months ended ~~September~~June 30, ~~2018~~2019 compared to a provision of ~~$7.28~~$6.20 million for the same period of ~~2017.~~2018. Noninterest income increased ~~$344~~$933 thousand for the ~~third~~second quarter of ~~2018~~2019 to ~~$18.72~~$18.40 million as compared to ~~$18.37~~$17.47 million for the ~~third~~

second quarter of ~~2017.~~2018. The increase was due mainly ~~due~~ to ~~an increase in~~increased fees from ~~brokerage~~trust and ~~trust~~brokerage services. Noninterest expense was ~~$75.26~~$82.30 million for the ~~third~~second quarter of ~~2018,~~2019, compared to ~~$74.55~~$76.50 million for the same period of ~~2017.~~2018. The increase of ~~$702 thousand~~$5.81 million in noninterest expense was primarily attributable to ~~an increase in Federal Deposit Insurance Corporation (FDIC) insurance expense as United Bank is now considered a large institution and subject to increased assessment rates.~~

penalties on the prepayment of FHLB advances.

Net income attributable to the community banking segment for the first ~~nine months~~half of ~~2018~~2019 was ~~$200.84~~$130.87 million compared to net income of ~~$143.88~~$131.71 million for the first ~~nine months~~half of ~~2017.~~ 2018.

Net interest income increased ~~$43.80~~$3.34 million to ~~$444.84~~$298.41 million for the first ~~nine~~half of ~~2018,~~2019, compared to ~~$401.04~~$295.07 million for the same period of ~~2017. Generally, net~~2018. Net interest income for the first ~~nine~~six months of ~~2018~~2019 increased from the first ~~nine~~six months of ~~2017 because~~2018 due to a higher level of ~~the~~ earning ~~assets added from the Cardinal acquisition.~~assets. Provision for loan losses was ~~$16.19~~$10.41 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 compared to a provision of ~~$21.43~~$11.38 million for the same period of ~~2017.~~2018. Noninterest income ~~was relatively flat from~~for the first ~~nine months~~half of ~~2018, increasing $543~~2019 increased $815 thousand to ~~$53.95~~$36.05 million for the first ~~nine months~~half of ~~2018~~2019 as compared to ~~$53.41~~$35.24 million for the first ~~nine months~~half of ~~2017.~~2018. The increase was due mainly to increased fees from trust and brokerage services and higher income from bank-owned life insurance due to death benefits received in the first quarter of 2019. Noninterest expense was ~~$224.24~~$158.30 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to ~~$215.94~~$148.99 million for the same period of ~~2017.~~2018. The increase of ~~$8.31~~$9.31 million in noninterest expense was primarily attributable to ~~increases in branches, staffing~~penalties on the prepayment of FHLB advances and ~~merger-related expenses from the Cardinal acquisition.~~

higher FDIC insurance premiums due to United Bank now being considered a large institution and subject to increased assessment rates.

Mortgage Banking

The mortgage banking segment reported net income of $3.84 million and $4.87 million for the second quarter and the first half of 2019, respectively, as compared to net income of $1.94 million for the second quarter and a net loss of ~~$846 thousand and $1.33 million for the third quarter and the first nine months of 2018, respectively, as compared to a net loss of $2.80 million and $322~~$479 thousand for the ~~third quarter and~~ first ~~nine months~~half of ~~2017, respectively.~~2018. Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was ~~$16.48~~$23.50 million and ~~$54.83~~$39.61 million for the ~~third~~second quarter and first ~~nine~~half of ~~2018~~2019 as compared to ~~$19.94~~$23.47 million and ~~$42.33~~$38.35 million for the ~~third~~second quarter and first ~~nine months~~half of ~~2017.~~2018. Noninterest expense was ~~$17.96~~$18.77 million and ~~$57.57~~$33.61 million for the ~~third~~second quarter and first ~~nine months~~half of ~~2018~~2019 as compared ~~$24.04~~$21.23 million and ~~$42.74~~$39.61 million for the ~~third~~second quarter and first ~~nine months~~half of ~~2017.~~2018. Noninterest expense consists mainly of salaries, commissions and benefits of mortgage segment employees.

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

Table of Contents

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 ~~2018~~2019 and ~~2017,~~2018, are presented below.

Net interest income for the ~~third~~second quarter of 2019 was $150.55 million, which was relatively flat from the second quarter of 2018, ~~was $148.78 million, which was a decrease of $1.50~~increasing $1.43 million or ~~1.00% from the third quarter of 2017.~~less than 1%. The ~~decrease in net interest income occurred because total interest income only increased $13.45~~$1.43 million while total interest expense increased $14.95 million from the third quarter of 2017. Net interest income for the first nine months of 2018 was $441.94 million, an increase of $47.80 million or 12.13% from the prior year’s first nine months. The increase in net interest income occurred because total interest income increased ~~$82.93~~$21.25 million while total interest expense ~~only~~ increased ~~$35.13~~$19.81 million from the second quarter of 2018. Net interest income for the first half of 2019 was $294.72 million, which was relatively flat from the first half of 2018, increasing $1.56 million or less than 1%. The $1.56 million increase in net interest income occurred because total interest income increased $43.16 million while total interest expense increased $41.60 million from the first ~~nine months~~half of ~~2017.~~2018. On a linked-quarter basis, net interest income for the ~~third quarter of 2018 was relatively flat from the~~ second quarter of ~~2018, decreasing $347 thousand~~2019 increased $6.39 million or ~~less than 1%.~~4.43% from the first quarter of 2019. The ~~$347 thousand decrease~~$6.39 million increase in net interest income occurred because total interest income ~~only~~ increased ~~$7.03~~$10.15 million while total interest expense only increased ~~$7.38~~$3.76 million from the ~~second~~first quarter of ~~2018.~~

2019.

Generally, interest income for the first ~~nine months~~half of ~~2018~~2019 increased from the first ~~nine months~~half of ~~2017 because~~2018 due to a higher level of ~~the~~ earning ~~assets added from the Cardinal acquisition.~~assets. The ~~higher amount of~~increase in interest expense for the first ~~nine months~~half of ~~2018~~2019 from the first ~~nine months~~half of ~~2017~~2018 was due ~~mainly~~ to ~~the interest-bearing liabilities added from the Cardinal acquisition and~~ higher market interest rates. ~~In addition, loan accretion on acquired loans for the first nine months of 2018 increased from the same time period last year.~~ For the purpose of this remaining discussion, net interest income is presented on a

tax-equivalent

basis to provide a comparison among all types of interest earning assets. 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.

Tax-equivalent

net interest income, which adjusts for the

tax-favored

status of income from certain loans and investments, for the second quarter of 2019 was $151.53 million, which was relatively flat from the second quarter of 2018, increasing $1.29 million or less than 1% due mainly to an increase in average earning assets mostly offset by an increase in the average cost of funds. Average earning assets for the second quarter of 2019 increased $785.76 million or 4.79% from the second quarter of 2018 due mainly to increases of $341.44 million or 2.54% in average net loans, $323.0 million or 14.09% in average investment securities and $121.34 million or 18.68% in average short-term investments. In addition, the average yield on earning assets for the second quarter of 2019 increased 30 basis points from the second quarter of 2018 due to an increase of $2.39 million in loan accretion on acquired loans and higher market rates. Loan accretion on acquired loans was $14.45 million and $12.06 million for the second quarter of 2019 and 2018, respectively. Mostly offsetting these increases to

tax-equivalent

net interest income for the ~~third~~second quarter of ~~2018~~2019 was ~~$149.82 million, a decrease of $2.54 million or 1.67% from the third quarter of 2017 due mainly to~~ an increase of 5461 basis points in the average cost of funds as compared to the ~~third~~second quarter of ~~2017 due to higher market interest rates. In addition, loan accretion on acquired loans was $11.56 million and $12.81 million for the third quarter of~~ 2018 ~~and 2017, respectively, decreasing $1.25 million or 9.73%. Partially offsetting these decreases totax-equivalent~~ net interest income for the third quarter of 2018 was an increase of 26 basis points in the average yield on earning assets as compared to the third quarter of 2017 due to higher market interest rates. In addition, average earning assets for the third quarter of 2018 increased $172.50 million or 1.04% from the third quarter of 2017 due mainly to an increase of $491.90 million or 27.44% in average investment securities. Partially offsetting this increase was a decrease in average short-term investments of $335.33 million or 26.90%. Average net loans remained flat for the third quarter, increasing $15.97 million or less than 1% from the third quarter of 2017. The net interest margin of 3.56% for the third quarter of 2018 was a decrease of 9 basis points from the net interest margin of 3.65% for the third quarter of 2017.

~~Tax-equivalent~~ ~~net interest income for the first nine months of 2018 was $445.21 million, an increase of $44.90 million or 11.22% from the first nine months of 2017. This increase intax-equivalent~~ net interest income was primarily attributable to an increase in average earning assets from the Cardinal acquisition. Average earning assets increased $1.26 billion or 8.31% from the first nine months of 2017 as average net loans increased $1.09 billion or 8.85% for the first nine months of 2018. Average investment securities increased $613.07 million or 37.40% while short-term investments decreased $436.05 million or 34.00%. The first nine months of 2018 average yield on earning assets increased 34 basis points from the first nine months of 2017 due to higher market interest rates and additional loan accretion of $9.99 million on acquired loans. Loan accretion was $34.38 million and $24.40 million for the first nine months of 2018 and 2017, respectively. Partially offsetting the increases to~~tax-equivalent~~ ~~net interest income for the first nine months of 2018 was an increase of 39 basis points in the average cost of funds as compared to the first nine months of 2017~~ due to higher market interest rates. The net interest margin of ~~3.61%~~3.53% for ~~the first nine months of 2018 was an increase of 9 basis points from the net interest margin of 3.52% for the first nine months of 2017.~~

~~On a linked-quarter basis,tax-equivalent~~ ~~net interest income for the third quarter of 2018 was relatively flat from~~ the second quarter of 2018, decreasing $413 thousand or less than 1% due to a combination of a $265.94 million or 2.40% increase in interest bearing funds and an increase of 22 basis points in the average cost of funds as a result of higher market interest rates. In addition, loan accretion on acquired loans decreased $497 thousand. Partially offsetting these decreases to~~tax-equivalent~~ ~~net interest income for the third quarter of 2018~~2019 was a $334.54 million or 2.04% increase in the average earning assets and a 5 basis points increase in the yield on average earning assets. Specifically, average short-term investments increased $262.13 million or 40.37%. Average net loans and average investment securities were relatively flat for the third quarterdecrease of ~~2018, increasing $80.23 million and decreasing $7.82 million, respectively from the second quarter of 2018. The net interest margin of 3.56% for the third quarter of 2018 decreased 11~~14 basis points from the net interest margin of 3.67% for the second quarter of 2018.

Tax-equivalent

net interest income, which adjusts for the

tax-favored

status of income from certain loans and investments, for the first half of 2019 was $296.69 million, which was relatively flat from the first half of 2018, increasing $1.31 million or less than 1% due mainly to an increase in average earning assets mostly offset by an increase in the average cost of funds. Average earning assets for the first half of 2019 increased $726.82 million or 4.45% from the first half of 2018 due mainly to increases of $439.39 million or 3.31% in average net loans and $346.12 million or 15.48% in average investment securities. Average short-term investments decreased $58.70 million or 7.21%. In addition, the average yield on earning assets for the first half of 2019 increased 32 basis points from the first half of 2018 due to higher market rates. Mostly offsetting these increases to

tax-equivalent

net interest income for

Table of Contents

the first half of 2019 was an increase of 67 basis points in the average cost of funds as compared to the first half of 2018 due to higher market interest rates. Loan accretion on acquired loans was $23.00 million and $22.82 million for the first half of 2019 and 2018, respectively, increasing $173 thousand or less than 1%. The net interest margin of 3.50% for the first half of 2019 was a decrease of 14 basis points from the net interest margin of 3.64% for the first half of 2018.

On a linked-quarter basis, United’s

tax-equivalent

net interest income for the second quarter of 2019 increased $6.37 million or 4.43% from the first quarter of 2019 due to an increase in the yield on average earning assets. The average yield on earning assets for the second quarter of 2019 increased 13 basis points from the first quarter of 2019 due to an increase of $5.91 million in loan accretion on acquired loans due mainly to the repayment of two large acquired loans under a single customer relationship. Loan accretion on acquired loans was $14.45 million and $8.54 million for the second quarter and first quarter of 2019, respectively. In addition, average earning assets for the second quarter of 2019 increased $274.68 million or 1.62% as compared to the first quarter of 2019 as average net loans increased $176.52 million or 1.30%, average investment securities increased $66.47 million or 2.61% and average short-term investments increased $31.70 million or 4.29% for the linked quarter. Partially offsetting the increases to

tax-equivalent

net interest income for the second quarter of 2019 was an increase of 8 basis points in the average cost of funds as compared to the first quarter of 2019 due to higher market interest rates. The net interest margin of 3.53% for the second quarter of 2019 increased 7 basis points from the net interest margin of 3.46% for the first quarter of 2019.

United’s

tax-equivalent

net interest income also includes the impact of acquisition accounting fair value adjustments.

The following table provides the discount/premium and net accretion impact to

tax-equivalent

net interest income for the three months ended ~~September~~June 30, ~~2018, September 30, 2017 and~~2019, June 30, 2018 and March 31, 2019 and the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017:~~

   Three Months Ended
(Dollars in thousands)    September 30
2018    September 30
2017    June 30
2018
Loan accretion
   $ 11,559    $ 12,805    $ 12,056
Certificates of deposit
   311    817    311
Long-term borrowings
   269    268    268






Total
   $ 12,139    $ 13,890    $ 12,635

   Nine Months Ended
(Dollars in thousands)
   September 30
2018    September 30
2017
Loan accretion
   $ 34,381    $ 24,395
Certificates of deposit
   948    1,640
Long-term borrowings
   806    348




Tax-equivalent net interest income
   $ 36,135    $ 26,383

2018:


	Three Months Ended
	June 30		June 30		March 31
(Dollars in thousands)	2019		2018		2019
Loan accretion	$	14,451	$	12,056	$	8,544
Certificates of deposit		197		311		198
Long-term borrowings		269		268		268

Total	$	14,917	$	12,635	$	9,010


	Six Months Ended
	June 30		June 30
(Dollars in thousands)	2019		2018
Loan accretion	$	22,995	$	22,822
Certificates of deposit		395		637
Long-term borrowings		537		537

Tax-equivalent net interest income	$	23,927	$	23,996

The following tables reconcile the difference between net interest income and

tax-equivalent

   Three Months Ended
(Dollars in thousands)
   September 30
2018    September 30
2017    June 30
2018
Net interest income, GAAP basis
   $ 148,775    $ 150,276    $ 149,122
Tax-equivalent adjustment (1)
   1,049    2,092    1,115






Tax-equivalent net interest income
   $ 149,824    $ 152,368    $ 150,237

   Nine Months Ended
(Dollars in thousands)
   September 30
2018    September 30
2017
Net interest income, GAAP basis
   $ 441,940    $ 394,141
Tax-equivalent adjustment (1)
   3,268    6,168




Tax-equivalent net interest income
   $ 445,208    $ 400,309

2018.


	Three Months Ended
	June 30		June 30		March 31
(Dollars in thousands)	2019		2018		2019
Net interest income, GAAP basis	$	150,553	$	149,122	$	144,168
Tax-equivalent adjustment (1)		977		1,115		993

Tax-equivalent net interest income	$	151,530	$	150,237	$	145,161

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	Six Months Ended
	June 30		June 30
(Dollars in thousands)	2019		2018
Net interest income, GAAP basis	$	294,721	$	293,165
Tax-equivalent adjustment (1)		1,970		2,219

Tax-equivalent net interest income	$	296,691	$	295,384

(1)

The

tax-equivalent

adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21% for the three months and ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 and the three months ended ~~June 30, 2018 and 35% for the three months and nine months ended September 30, 2017.~~March 31, 2019. All interest income on loans and investment securities was subject to state income taxes.

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The following tables show the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month and ~~nine-month~~

six-month

periods ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, 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 and ~~nine-month periods~~

six-month

period ended ~~September~~June 30, ~~2018~~2019 and ~~35% for the three-month and nine-month periods ended September 30, 2017.~~2018. Interest income on all loans and investment securities was subject to state income taxes.

   Three Months Ended
September 30, 2018 Three Months Ended
September 30, 2017
(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
   $ 911,414 $ 5,485    2.39 % $ 1,246,742 $ 4,874    1.55 %
Investment Securities:

Taxable
   2,064,332 13,994    2.71 % 1,533,444 9,406    2.45 %
Tax-exempt
   220,197 1,673    3.04 % 259,189 2,284    3.52 %






Total Securities
   2,284,529 15,667    2.74 % 1,792,633 11,690    2.61 %
Loans, net of unearned income (2)
   13,627,932 164,927    4.81 % 13,607,933 157,111    4.59 %
Allowance for loan losses
   (77,103 )    (73,031 )





Net loans
   13,550,829    4.83 % 13,534,902    4.61 %






Total earning assets
   16,746,772 $ 186,079    4.42 % 16,574,277 $ 173,675    4.16 %






Other assets
   2,300,917    2,353,508





TOTAL ASSETS
   $ 19,047,689    $ 18,927,785





LIABILITIES

Interest-Bearing Funds:

Interest-bearing deposits
   $ 9,588,327 $ 26,368    1.09 % $ 9,837,967 $ 14,227    0.57 %
Short-term borrowings
   212,566 618    1.15 % 325,631 430    0.52 %
Long-term borrowings
   1,543,004 9,269    2.38 % 1,364,417 6,650    1.93 %






Total Interest-Bearing Funds
   11,343,897 36,255    1.27 % 11,528,015 21,307    0.73 %






Noninterest-bearing deposits
   4,338,309    4,036,653
Accrued expenses and other liabilities
   102,534    97,575





TOTAL LIABILITIES
   15,784,740    15,662,243
SHAREHOLDERS’ EQUITY
   3,262,949    3,265,542





TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 19,047,689    $ 18,927,785





NET INTEREST INCOME
   $ 149,824    $ 152,368





INTEREST SPREAD
      3.15 %    3.43 %
NET INTEREST MARGIN
      3.56 %    3.65 %


	Three Months Ended								Three Months Ended
	June 30, 2019								June 30, 2018
(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	$	770,625		$	5,405		2.81	%	$	649,282		$	3,465		2.14	%
Investment Securities:
Taxable		2,455,549			17,748		2.89	%		2,049,301			13,810		2.70	%
Tax-exempt		159,781			1,218		3.05	%		243,048			1,811		2.98	%

Total Securities		2,615,330			18,966		2.90	%		2,292,349			15,621		2.73	%
Loans, net of unearned income (2)		13,888,716			175,851		5.08	%		13,547,371			160,029		4.74	%
Allowance for loan losses		(76,682	)							(76,773	)

Net loans		13,812,034					5.10	%		13,470,598					4.76	%

Total earning assets		17,197,989		$	200,222		4.67	%		16,412,229		$	179,115		4.37	%

Other assets		2,317,865								2,300,155

TOTAL ASSETS	$	19,515,854							$	18,712,384

LIABILITIES
Interest-Bearing Funds:
Interest-bearing deposits	$	9,753,724		$	35,455		1.46	%	$	9,210,282		$	19,076		0.83	%
Short-term borrowings		136,230			608		1.79	%		208,058			464		0.89	%
Long-term borrowings		1,879,154			12,629		2.70	%		1,659,613			9,338		2.26	%

Total Interest-Bearing Funds		11,769,108			48,692		1.66	%		11,077,953			28,878		1.05	%

Noninterest-bearing deposits		4,240,050								4,255,840
Accrued expenses and other liabilities		185,709								102,492

TOTAL LIABILITIES		16,194,867								15,436,285
SHAREHOLDERS’ EQUITY		3,320,987								3,276,099

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	19,515,854							$	18,712,384

NET INTEREST INCOME				$	151,530							$	150,237

INTEREST SPREAD							3.01	%							3.32	%
NET INTEREST MARGIN							3.53	%							3.67	%

(1)	The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% ~~for 2018 and 35% for 2017.~~ .

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

   Nine Months Ended
September 30, 2018 Nine Months Ended
September 30, 2017
(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
   $ 846,537 $ 13,867    2.19 % $ 1,282,589 $ 11,345    1.18 %
Investment Securities:

Taxable
   2,012,841 39,679    2.63 % 1,412,221 26,226    2.48 %
Tax-exempt
   239,617 5,339    2.97 % 227,171 6,242    3.66 %






Total Securities
   2,252,458 45,018    2.66 % 1,639,392 32,468    2.64 %
Loans, net of unearned income (2)
   13,451,316 474,598    4.72 % 12,360,252 409,643    4.43 %
Allowance for loan losses
   (76,819 )    (72,904 )





Net loans
   13,374,497    4.74 % 12,287,348    4.46 %






Total earning assets
   16,473,492 $ 533,483    4.33 % 15,209,329 $ 453,456    3.99 %






Other assets
   2,296,442    1,978,315





TOTAL ASSETS
   $ 18,769,934    $ 17,187,644





LIABILITIES

Interest-Bearing Funds:

Interest-bearing deposits
   $ 9,384,890 $ 61,101    0.87 % $ 9,024,232 $ 35,281    0.52 %
Short-term borrowings
   235,388 1,503    0.85 % 298,213 1,149    0.52 %
Long-term borrowings
   1,518,997 25,671    2.26 % 1,286,583 16,717    1.74 %






Total Interest-Bearing Funds
   11,139,275 88,275    1.06 % 10,609,028 53,147    0.67 %






Non-interest bearing deposits
   4,256,707    3,639,507
Accrued expenses and other liabilities
   103,163    90,112





TOTAL LIABILITIES
   15,499,145    14,338,647
SHAREHOLDERS’ EQUITY
   3,270,789    2,848,997





TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 18,769,934    $ 17,187,644





NET INTEREST INCOME
   $ 445,208    $ 400,309





INTEREST SPREAD
      3.27 %    3.32 %
NET INTEREST MARGIN
      3.61 %    3.52 %

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	Six Months Ended								Six Months Ended
	June 30, 2019								June 30, 2018
(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	$	754,865		$	11,242		3.00	%	$	813,562		$	8,382		2.08	%
Investment Securities:
Taxable		2,419,202			35,111		2.90	%		1,986,668			25,685		2.59	%
Tax-exempt		163,077			2,516		3.09	%		249,488			3,666		2.94	%

Total Securities		2,582,279			37,627		2.91	%		2,236,156			29,351		2.63	%
Loans, net of unearned income (2)		13,800,985			341,443		4.98	%		13,361,545			309,671		4.67	%
Allowance for loan losses		(76,722	)							(76,675	)

Net loans		13,724,263					5.01	%		13,284,870					4.70	%

Total earning assets		17,061,407		$	390,312		4.60	%		16,334,588		$	347,404		4.28	%

Other assets		2,322,100								2,294,033

TOTAL ASSETS	$	19,383,507							$	18,628,621

LIABILITIES
Interest-Bearing Funds:
Interest-bearing deposits	$	9,724,379		$	68,093		1.41	%	$	9,281,485		$	34,733		0.75	%
Short-term borrowings		154,811			1,299		1.69	%		246,988			885		0.72	%
Long-term borrowings		1,788,790			24,229		2.73	%		1,506,795			16,402		2.20	%

Total Interest-Bearing Funds		11,667,980			93,621		1.62	%		11,035,268			52,020		0.95	%

Non-interest bearing deposits		4,230,598								4,215,230
Accrued expenses and other liabilities		185,868								103,484
														��
TOTAL LIABILITIES		16,084,446								15,353,982
SHAREHOLDERS’ EQUITY		3,299,061								3,274,639

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	19,383,507							$	18,628,621

NET INTEREST INCOME				$	296,691							$	295,384

INTEREST SPREAD							2.98	%							3.33	%
NET INTEREST MARGIN							3.50	%							3.64	%

(1)	The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% ~~for 2018 and 35% for 2017.~~ .

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

Provision for Loan Losses

For the quarters ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, the provision for loan losses was ~~$4.81~~$5.42 million and ~~$7.28~~$6.20 million, respectively. The provision for loan losses for the first ~~nine~~six months of 2019 and 2018 ~~and 2017~~ was ~~$16.19~~$10.41 million and ~~$21.43~~$11.38 million, respectively. Net charge-offs were ~~$5.00~~$5.90 million for the ~~third~~second quarter of ~~2018~~2019 as compared to net charge-offs of ~~$5.34~~$5.72 million for the same quarter in ~~2017.~~2018. Net charge-offs for the first ~~nine~~six months of ~~2018~~2019 were ~~$15.88~~$10.72 million as compared to ~~$19.27~~$10.87 million for the first ~~nine~~six months ~~of 2017. These lower amounts of provision expense and net charge-offs in 2018 compared to the same periods in 2017 were due to the recognition of losses on~~

~~several large commercial relationships in 2017. On a linked-quarter basis, the provision for loan losses decreased $1.40 million and net charge-offs decreased $720 thousand from the second quarter~~ of 2018. These lower amounts of provision expense and net charge-offs for the ~~third quarter~~first half of ~~2018~~2019 compared to the ~~second quarter~~first half of 2018 were due to a reduction in nonperforming loans requiring

charge-off.

On a linked-quarter basis, the ~~recognition~~provision for loan losses increased $421 thousand while net

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charge-offs decreased $1.09 million from the first quarter of 2019. The increase in the provision for loan losses ~~on two large commercial relationships and~~was due to loan growth requiring the need ~~to provide~~ for additional ~~allocations within the commercial portfolio during the second quarter of 2018.~~reserves. Annualized net charge-offs as a percentage of average loans ~~were 0.15%~~was 0.17% and 0.16% for the ~~third~~second quarter and first ~~nine months~~half of ~~2018,~~2019, respectively.

At ~~September~~June 30, ~~2018,~~2019, nonperforming loans were ~~$146.13~~$142.60 million or ~~1.10%~~1.05% of loans, net of unearned income compared to nonperforming loans of ~~$168.74~~$142.82 million or ~~1.30%~~1.06% of loans, net of unearned income at December 31, ~~2017.~~2018. 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 restructured for economic or legal reasons due to financial difficulties of the borrowers.

Loans past due 90 days or more were ~~$15.95~~$12.73 million at ~~September~~June 30, ~~2018, an increase of $6.15 million or 62.70% from $9.80 million atyear-end~~ ~~2017. This increase was primarily due to an increase in delinquencies of loans that have matured. At September 30, 2018, nonaccrual loans were $66.55 million,~~2019, a decrease of ~~$42.25~~$2.12 million or ~~38.83%~~14.29% from ~~$108.80~~$14.85 million at

year-end ~~2017.~~

2018. This decrease was primarily due to the ~~restructure~~transfer of ~~two~~a large nonperforming relationship to nonaccrual ~~relationships such that they are now reported as~~status. At June 30, 2019, nonaccrual loans were $71.12 million, an increase of $2.58 million or 3.76% from $68.54 million at

year-end

2018. This increase was due to the transfer to nonaccrual status of a ~~restructured loans as well as losses recognized on several~~ large ~~commercial nonaccrual relationships.~~nonperforming relationship while the borrower awaits settlement of a lawsuit. Restructured loans were ~~$63.63~~$58.75 million at ~~September~~June 30, ~~2018, an increase~~2019, a decrease of ~~$13.50~~$675 thousand or 1.14% from $59.43 million ~~or 26.92% from $50.13 million~~ at

year-end ~~2017. Twelve loans totaling $24.12 million were restructured during the first nine months of~~

2018. ~~Nine of the restructured loans totaling $16.89 million were associated with two oil, gas and coal industry-related relationships.~~ The ~~remaining difference~~decline was mainly due to repayments. 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 settlement of loans (OREO). Total nonperforming assets of ~~$164.92~~$157.07 million, including OREO of ~~$18.79~~$14.47 million at ~~September~~June 30, ~~2018,~~2019, represented ~~0.86%~~0.79% of total assets.

The following table summarizes nonperforming assets for the indicated periods.

   September 30,
2018    December 31,
(In thousands)    2017    2016    2015    2014    2013
Nonaccrual loans (1)

Originated
   $ 55,147    $ 97,971    $ 77,111    $ 83,146    $ 64,312    $ 58,121
Acquired
   11,407    10,832    6,414    8,043    10,739    3,807
Loans which are contractually past due 90 days or more as to interest or principal, and are still accruing interest

Originated
   10,478    7,288    7,763    11,462    10,868    10,015
Acquired
   5,471    2,515    823    166    807    1,029
Restructured loans (1)

Originated
   62,278    48,709    21,115    23,890    22,234    8,157
Acquired
   1,348    1,420    37    0    0    0












Total nonperforming loans
   $ 146,129    $ 168,735    $ 113,263    $ 126,707    $ 108,960    $ 81,129
Other real estate owned
   18,786    24,348    31,510    32,228    38,778    38,182












TOTAL NONPERFORMING ASSETS
   $ 164,915    $ 193,083    $ 144,773    $ 158,935    $ 147,738    $ 119,311


	June 30,		December 31,
(In thousands)	2019		2018		2017		2016		2015		2014
Nonaccrual loans (1)
Originated	$	60,731	$	57,258	$	97,971	$	77,111	$	83,146	$	64,312
Acquired		10,392		11,286		10,832		6,414		8,043		10,739
Loans which are contractually past due 90 days or more as to interest or principal and are still accruing interest (1)
Originated		9,485		11,945		7,288		7,763		11,462		10,868
Acquired		3,244		2,906		2,515		823		166		807
Restructured loans (1)
Originated		55,155		58,101		48,709		21,115		23,890		22,234
Acquired		3,595		1,324		1,420		37		0		0

Total nonperforming loans	$	142,602	$	142,820	$	168,835	$	113,263	$	126,707	$	108,960
Other real estate owned		14,469		16,865		24,348		31,510		32,228		38,778

TOTAL NONPERFORMING ASSETS	$	157,071	$	159,685	$	193,083	$	144,773	$	158,935	$	147,738

(1)

Restructured loans that were contractually past due 90 days or moreas to interest or principal and are still accruing interest or on nonaccrual status for the indicated periods are included in “Restructured loans” and not “Loans which are contractually past due 90 days or moreas to interest or principal and are still accruing interest” or “Nonaccrual loans” (see Note 54 to the unaudited Consolidated Financial Statements for further information).

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~~June 30, ~~2018,~~2019, impaired loans were ~~$397.25~~$333.74 million, which was a decrease of ~~$29.68~~$55.79 million or ~~6.95%~~14.32% from the ~~$426.93~~$389.53 million in impaired loans at December 31, ~~2017.~~2018. This

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decrease was due mainly to the payoff of a ~~reduction in~~large acquired ~~impaired loans.~~loan relationship. Acquired impaired loans are accounted for under ASC Subtopic

310-30.

The recorded investment balance and the contractual principal balance of the acquired impaired loans were ~~$155.53~~$111.61 million and ~~$205.03~~$144.13 million at ~~September~~June 30, ~~2018,~~2019, respectively, as compared to ~~$210.52~~$149.74 million and ~~$285.96~~$195.71 million, respectively, at December 31, ~~2017.~~2018. For the acquired impaired loans accounted for under ASC

310-30,

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 ~~$43.62~~$30.60 million and ~~$60.15~~$38.53 million at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. For further details regarding impaired loans, see Note 54 to the unaudited Notes to Consolidated Financial Statements.

United maintains an allowance for loan losses and a reserve for lending-related commitments. The combined allowance for loan losses and reserve for lending-related commitments are referred to as the allowance for credit losses. At ~~September~~June 30, ~~2018,~~2019, the allowance for credit losses was ~~$78.09~~$78.15 million as compared to ~~$77.31~~$78.09 million at December 31, ~~2017.~~

2018.

At ~~September~~June 30, ~~2018,~~2019, the allowance for loan losses was ~~$76.94~~$76.40 million as compared to ~~$76.63~~$76.70 million at December 31, ~~2017.~~2018. As a percentage of loans, net of unearned income, the allowance for loan losses was ~~0.58%~~0.56% at ~~September~~June 30, ~~2018~~2019 and ~~0.59%~~0.57% at December 31, ~~2017.~~2018. The ratio of the allowance for loan losses to nonperforming loans or coverage ratio was ~~52.65%~~53.58% and ~~45.41%~~53.71% at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. The Company’s detailed methodology and analysis indicated a minimal increase in the allowance for loan losses primarily because of the offsetting factors of ~~increased~~changes within historical loss rates and reduced loss allocations on impaired ~~loans, shortened loss emergence periods and changes within historical loss rates.~~

loans.

Allocations are made for specific commercial loans based upon management’s estimate of 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 the portfolio due to uncertainties in 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 loss 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.

United’s ~~company-wide~~ review of the allowance for loan losses at ~~September~~June 30, ~~2018~~2019 produced increased allocations in ~~one~~two of the four loan categories. The ~~residential real estate~~ allocation related to the commercial, financial and agricultural loan pool increased ~~$1.71~~$3.02 million ~~primarily~~ due to an increase in ~~allocations~~ historical loss rates as a result of a significant

charge-off

recognized ~~for impaired loans.~~in the first half of 2019 as well as downgrade of a $39 million loan from a pass-rating to a special mention-rating with a higher loss rate. The consumer loan pool experienced a minimal increase of $27 thousand due to an increase in outstanding loan balances. Offsetting these increases was a decrease in the ~~commercial, financial & agricultural~~residential real estate loan pool allocation of ~~$1.37~~$2.28 million ~~primarily~~ due to a decrease in historical loss rates ~~and shortened loss emergence periods.~~as well as reduction in specific allocations associated with improved collateral position on a large relationship. The ~~allocation related to the~~ real estate construction and development loan pool allocation decreased ~~$91 thousand~~$1.07 million primarily due to ~~improvement in the historical loss rate applied to the pool. The consumer loan pool also experienced~~ a ~~minimal~~ decrease ~~of $1 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 to

year-end ~~2017~~

2018 as a result of offsetting factors within the portfolio as described above.

An allowance is established for probable credit losses on impaired loans via specific allocations. Nonperforming commercial loans and leases are regularly reviewed to identify impairment. A loan or lease is impaired when, based on current information and events, it is probable that the Company will not be able to collect all amounts

contractually due. Measuring impairment of a loan requires judgment and estimates, and the eventual outcomes may differ from those estimates. Impairment is measured based upon the present value of expected future cash flows from the loan

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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 impairment has occurred. The allowance for impaired loans was ~~$27.35~~$14.06 million at ~~September~~June 30, ~~2018~~2019 and ~~$22.35~~$28.36 million at December 31, ~~2017.~~2018. In comparison to the prior

year-end,

this element of the allowance ~~increased~~decreased by ~~$5.00~~$14.30 million primarily due to ~~increased~~decreased specific allocations for ~~real estate construction and development loans as well as residential real estate~~commercial, financial & agricultural loans.

Management believes that the allowance for credit losses of ~~$78.09~~$78.15 million at ~~September~~June 30, ~~2018~~2019 is adequate to provide for probable 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 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.

Management is not aware of any potential problem loans, 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 ~~third~~second quarter of ~~2018~~2019 was ~~$31.69~~$39.80 million, ~~a decrease~~an increase of ~~$6.54~~$3.79 million or ~~17.12%~~10.52% from the ~~third~~second quarter of ~~2017.~~2018. Noninterest income for the first ~~nine months~~half of ~~2018~~2019 was ~~$98.89~~$71.02 million, which was ~~flat~~an increase of $3.82 million or 5.68% from the first ~~nine months~~half of ~~2017, increasing $4 thousand or less than 1%.~~

2018.

Income from mortgage banking activities totaled ~~$13.28~~$21.70 million for the ~~third~~second quarter of ~~2018~~2019 compared to ~~$20.39~~$18.69 million for the same period of ~~2017.~~2018. For the first ~~nine months~~half of ~~2018~~2019 and ~~2017,~~2018, income from mortgage banking activities was ~~$46.54~~$35.39 million and ~~$43.60~~$33.26 million, respectively. The ~~decrease~~increase for the ~~third~~second quarter of ~~2018~~2019 was due to ~~decreased~~increased production and sales of mortgage loans in the secondary market by United’s mortgage banking subsidiary, George ~~Mason.~~Mason Mortgage, LLC (George Mason). The increase for the first half of 2019 was due mainly to an increase of $2.12 million in income from mortgage banking activities due mainly to a change in fair value of $4.25 million on George Mason’s interest rate lock commitments due to a higher locked pipeline. For the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017, George Mason’s~~2018, mortgage loan sales were ~~$692.27~~$585.40 million and ~~$887.71~~$484.79 million, respectively. ~~The increase~~For the six months ended June 30, 2019 and 2018, mortgage loan sales were $934.88 million and $1.05 billion, respectively.

Fees from brokerage services for the second quarter and first half of 2019 increased $813 thousand and $1.11 million from the second quarter and first half of 2018, respectively, due to increased volume.

Fees from trust services for the first ~~nine months~~half of 2019 increased $507 thousand from the first half of 2018 ~~was mainly~~ due to ~~including~~an increase in managed assets.

Bankcard fees for the first half of 2019 decreased $577 thousand from the first half of 2018 due to decreased volume.

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On a linked-quarter basis, noninterest income for the second quarter of 2019 increased $8.57 million or 27.45% from the first quarter of 2019 due mainly to an increase of $8.02 million in income from mortgage banking activities. The increase was due mainly to increased production and sales of mortgage loans in the secondary market by George Mason for nine months in 2018 as compared to slightly over five months in 2017. For the nine months ended September 30, 2018 and 2017, George Mason’s mortgage loan sales were $2.09 billion and $1.60 billion, respectively.

For the third quarter of 2018, net gains and losses on investment securities’ activity declined $619 thousand from the third quarter of 2017. A net loss on investment securities of $152 thousand was recorded for the third quarter

of 2018 as compared to a net gain on investment securities of $467 thousand for the third quarter of 2017. The net loss and gain were mainly due to sales of investment securities. For the first nine months of 2018, United recorded a net loss of $692 thousand on investment securities’ activity as compared to a net gain of $5.15 million for the first nine months of 2017. A net gain of $3.77 million on the redemption of an investment security was recorded during the first quarter of 2017.

Fees from brokerage services for the third quarter and first nine months of 2018 increased $707 thousand and $1.15 million, respectively, from the third quarter and first nine months of 2017 due to increased volume.

~~Fees~~Mason. In addition, fees from deposit services ~~for the first nine months of 2018~~ increased ~~$345~~$411 thousand ~~from the first nine months of 2017. The increase was mainly~~ due to ~~higher~~increased income from debit card and ~~automated teller machine (ATM)~~overdraft fees. ~~Fees from deposits services were flat for~~Partially offsetting the ~~third quarter of 2018 compared to the third quarter of 2017, decreasing $71 thousand or less than 1%.~~

Bankcard fees for the third quarter and first nine months of 2018 increased $217 thousand and $952 thousand, respectively, from the third quarter and first nine months of 2017 due to increased volume.

~~On a linked-quarter basis, noninterest income for the third quarter of 2018 decreased $4.32 million or 12.00% from the second quarter of 2018 due mainly to~~increases was a decrease of ~~$5.42 million~~$501 thousand in income from mortgage banking activities. The decrease was due mainly to a change in fair value of $6.15 million on George Mason’s interest rate lock commitments. In addition, net gains and losses on investment securities’ activity decreased $97 thousand. Partially offsetting these decreases in noninterest income was a $834 thousand increase in fees from brokerage services as well as a $253 thousand increase in fees from deposit services and a $246 thousand increase in fees from trust services mainlybank-owned life insurance resulting due to ~~increased volume.~~

the recognition of proceeds from death benefits in the first quarter of 2019.

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 loan losses, and income taxes. Noninterest expense ~~decreased $3.34~~increased $6.79 million or ~~3.45%~~7.26% for the ~~third~~second quarter of ~~2018~~2019 compared to the same period in ~~2017.~~2018. For the first ~~nine~~six months of ~~2018,~~2019, noninterest expense increased ~~$5.55~~$5.76 million or ~~2.04%~~3.13% from the first ~~nine~~six months of ~~2017.~~

2018. These increases were due mainly to the recognition of $5.11 million in penalties to prepay FHLB advances during the second quarter of 2019.

Employee compensation for the ~~third~~second quarter of ~~2018 decreased $3.57~~2019 increased $1.18 million or ~~7.95%~~2.74% from the ~~third~~second quarter of ~~2017 as a result of a $3.23 million decrease~~2018. The increase in ~~commissions expense and fewer employees related to a decrease in production and sales of mortgage loans at George Mason. Employee~~employee compensation ~~only increased $323 thousand or less than 1%~~ for the ~~first nine months~~second quarter of 2018 when compared to the first nine months of 2017. Merger severance charges of $12.78 million from the Cardinal acquisition were included in the first nine months of 2017. Otherwise, base salaries for the first nine months of 2018 increased $10.14 million or 12.73% from the same time period in 20172019 was due mainly to ~~additional employees from the Cardinal acquisition. In addition,~~higher employee ~~incentives increased $1.29 million and commissions expense increased $3.25 million mainly related to the mortgage banking production of George Mason.~~

incentives.

Employee benefits expense for the second quarter and first ~~nine~~six months of ~~2018 increased $1.85~~2019 decreased $720 thousand or 7.74% and $860 thousand or 4.56%, respectively, from the same time periods in 2018. The decreases were due primarily to a decline in pension expense.

Net occupancy expense decreased $409 thousand or 4.51% and $1.09 million or ~~7.20%~~5.86% for the second quarter and first six months of 2019, respectively, as compared to the same periods in the prior year. The decrease was due mainly to a decline in building rental expense due to fewer offices since the first half of 2018.

Data processing expense decreased $938 thousand or 8.04% for the first half of 2019 as compared to the first ~~nine months of 2017. The increase for the first nine months~~half of 2018 was due in large part to additional 401K expense of $1.24 million, Federal Insurance Contributions Act (FICA) expense of $751 thousand, and health insurance expense of $932 thousand resulting from the additional employees from the Cardinal acquisition. Pension expense declined $588 thousand.

Net occupancy expense decreased $2.86 million or 7.60% for first nine months of 2018 as compared to the same period in the prior year. 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. Net occupancy was flat for the third quarter of 2018, decreasing only $91 thousand or less than 1% from the third quarter of 2017.

~~Data processing expense increased $2.76 million or 18.46% for the first nine months of 2018 as compared to the same period in the prior year~~ due to ~~additional processing as~~lower fees from a ~~result of the Cardinal acquisition.~~

new contract.

Federal Deposit Insurance Corporation (FDIC) insurance expense for the ~~third~~second quarter and first ~~nine months~~half of ~~2018~~2019 increased ~~$1.99 million~~$458 thousand and ~~$3.16~~$1.91 million, respectively, from the same periods in ~~2017~~2018 as United Bank is now considered a large institution and subject to increased assessment rates.

Other real estate owned (OREO) expense for the first half of 2019 increased $547 thousand or 36.42% from the first half of 2018 due to combination of higher net losses on sales of OREO properties, more declines in the values of OREO properties and increased maintenance costs.

Equipment expense for the first half of 2019 increased $554 thousand or 8.61% from the first half of 2018 due to increased maintenance costs.

Other expense for the ~~third~~second quarter and first half of 2019 increased $979 thousand or 5.17% and $1.25 million or 3.35% from the second quarter and first half of 2018, ~~decreased $857 thousand or 4.28% from~~respectively due mainly to the ~~third quarter~~

write-off

of 2017. Included in other expense for the third quarter of 2017 were merger-related expenses of $434 thousand. The remainder of the decrease from prior year is due to a decline of $511 thousand in business franchise taxes.

income tax credits.

On a linked-quarter basis, noninterest expense for the ~~third quarter of 2018 was flat from the~~ second quarter of ~~2018, decreasing $95 thousand~~2019 increased $10.77 million or ~~less than 1%.~~12.04% from the first quarter of 2019 due in large part to the previously mentioned prepayment penalties on FHLB advances of $5.11 million. In ~~particular,~~addition, employee compensation ~~and employee benefits decreased $1.81~~increased $5.35 million ~~and $653 thousand, respectively,~~ as a result of ~~lower~~higher commissions expense ~~and fewer employees~~ related to ~~a decrease~~an increase in production and sales of mortgage loans at George ~~Mason. Mostly~~Mason and other expense increased $1.30 million due primarily to increased consulting and legal expenses. Partially offsetting these increases were decreases of $853 thousand in ~~noninterest~~employee benefits due mainly to a decline in pension expense ~~was an increase~~and $783 thousand in ~~FDIC insurance~~other real estate owned (OREO) expense ~~of $688 thousand~~ due to ~~United Bank now being considered a large institution as previously mentioned. In addition, equipment expense increased $613 thousand, data processing expense increased $251 thousand,~~fewer declines in the values of OREO ~~expense increased $365 thousand, and net occupancy expense increased $197 thousand.~~

properties.

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Income Taxes

For the ~~third~~second quarter and first ~~nine months~~half of ~~2018,~~2019, income tax expense was ~~$17.93~~$17.53 million and ~~$55.07~~$34.86 million, respectively, as compared to ~~$27.84~~$19.24 million and ~~$67.36~~$37.14 million, respectively, in ~~the third~~second quarter and first ~~nine months~~half of ~~2017.~~2018. The decreases in ~~2018~~2019 were mainly due to a decline in the effective tax rate ~~as a result of~~due in large part to the ~~Tax Cuts and Jobs Act of 2017 (the Tax Act) partially offset by an increase in earnings.~~previously mentioned income tax credits. On a linked-quarter basis, income tax expense for the ~~third quarter of 2018 decreased $1.32 million from the~~ second quarter of ~~2018~~2019 increased $201 thousand from the first quarter of 2019 mainly due to ~~lower~~higher earnings. United’s effective tax rate was ~~21.77% and~~20.69% for the second quarter of 2019, 22.50% for the ~~third quarter and~~ second quarter of 2018 ~~respectively~~ and ~~32.91%~~21.40% for the ~~third~~first quarter of ~~2017.~~2019. For the first ~~nine months~~half of ~~2018~~2019 and ~~2017,~~2018, United’s effective tax rate was ~~22.25%~~21.04% and ~~33.68%~~22.49%, respectively. ~~The lower effective tax rate for the time periods in 2018 was due to the impact of the Tax Act.~~ 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 and
Off-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 Form

10-K

for the year ended December 31, ~~2017~~2018 for disclosures with respect to United’s fixed and determinable contractual obligations. There have been no material changes outside the ordinary course of business since

year-end ~~2017~~

2018 in the specified contractual obligations disclosed in United’s Annual Report on Form

10-K.

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~~June 30, ~~2018~~2019 do not present the amounts that may ultimately be paid under these contracts, they are excluded from the contractual obligations table in the ~~2017~~2018 Form

10-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 with

off-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 for

on-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 of

off-balance

sheet commitments is included in Note 10 to the unaudited Notes to Consolidated Financial Statements.

Liquidity

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.

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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 the

day-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~~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.

For the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, cash of ~~$218.77~~$31.79 million was provided by operating activities due mainly to net income of ~~$192.39~~$130.85 million for the first ~~nine months~~six months. Partially offsetting net income were net originations of ~~2018. In addition, proceeds from the sales of~~$120.75 million in mortgage loans ~~in the secondary market exceeded originations by $50.88 million.~~held for sale. Net cash of ~~$592.24~~$177.36 million was used in investing activities which was primarily due to ~~$248.62~~net loan growth of $203.90 million partially offset by $23.70 million of ~~loan growth and $341.36 million of~~ net

~~purchases~~ proceeds on sales of investments over ~~proceeds from sales.~~purchases. During the first ~~nine~~six months of ~~2018,~~2019, net cash of ~~$38.02~~$378.75 million was ~~used in~~provided by financing activities due primarily to ~~repayments~~net growth of ~~$148.08~~$409.73 million in deposits and net advances of $285.00 million in long-term FHLB advances. These funding activities were partially offset by a net repayment of $229.17 million in short-term borrowings and cash dividends paid of ~~$107.05 million and the repurchase of treasury stock for $51.32~~$69.73 million for the first ~~nine~~six months of ~~2018. Partially offsetting is a growth in deposits of $261.53 million and a net repayment long-term FHLB advances of $15.00 million.~~

2019. The net effect of the cash flow activities was ~~a decrease~~an increase in cash and cash equivalents of ~~$411.48~~$233.18 million for the first ~~nine~~six months of ~~2018.~~

2019.

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 8 and 9 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 ~~14.64%~~14.32% at ~~September~~June 30, ~~2018~~2019 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are ~~12.40%~~12.17%, ~~12.40%~~12.17% and ~~10.26%~~10.18%, respectively. The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10.0%, a Common Equity Tier 1 capital ratio of 6.5%, a Tier 1 capital ratio of 8.0% and a leverage ratio of 5.0%.

Total shareholders’ equity was ~~$3.25~~$3.33 billion at ~~September~~June 30, ~~2018,~~2019, which was ~~relatively flat~~an increase of $82.23 million or 2.53% from December 31, ~~2017, increasing $10.60 million or less than 1%.~~2018. This ~~slight~~ increase was primarily due to the retention of earnings.

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United’s equity to assets ratio was ~~16.94%~~16.77% at ~~September~~June 30, ~~2018~~2019 as compared to ~~17.00%~~16.89% at December 31, ~~2017.~~2018. The primary capital ratio, capital and reserves to total assets and reserves, was ~~17.28%~~17.09% at ~~September~~June 30, ~~2018~~2019 as compared to ~~17.34%~~17.23% at December 31, ~~2017.~~2018. United’s average equity to average asset ratio was ~~17.13%~~17.02% for the ~~third~~second quarter of ~~2018~~2019 as compared to ~~17.25%~~17.51% the ~~third~~second quarter of ~~2017.~~2018. United’s average equity to average asset ratio was ~~17.43%~~also 17.02% for the first ~~nine months~~half of ~~2018~~2019 as compared to ~~16.58%~~17.58% for the first ~~nine months~~half of ~~2017.~~2018. All of these financial measurements reflect a financially sound position.

During the ~~third~~second quarter of ~~2018,~~2019, United’s Board of Directors declared a cash dividend of $0.34 per share. Cash dividends were ~~$1.02~~$0.68 per common share for the first ~~nine~~six months of ~~2018.~~2019. Total cash dividends declared were ~~$35.30~~$34.69 million for the ~~third~~second quarter of 2019 and $69.45 million for the first six months of 2019 as compared to $35.58 million for the second quarter of 2018 and ~~$106.64~~$71.33 million for the first ~~nine~~six months of ~~2018 as compared to $34.64 million for the third quarter of 2017 and $96.04 million for the first nine months of 2017.~~

~~Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

2018.

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), 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 a

one-year

and

two-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.

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 and

off-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

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balance sheet items and projects their behavior over an extended period of time. United closely monitors the sensitivity of its assets and liabilities on an

on-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~~June 30, ~~2018~~2019 and December 31, ~~2017:~~

Change in Interest Rates
(basis points)
   Percentage Change in Net Interest Income
   September 30, 2018 December 31, 2017
+200
   (1.89 %) (1.22 %)
+100
   (0.90 %) (0.48 %)
-100
   1.60 % (0.18 %)
-200
   (0.26 %) —

2018:


Change in Interest Rates (basis points)	Percentage Change in Net Interest Income
Change in Interest Rates (basis points)	June 30, 2019			December 31, 2018
+200		(1.97	%)		(2.71	%)
+100		(0.70	%)		(1.29	%)
-100		0.44	%		0.97	%
-200		(1.80	%)		(0.97	%)

At ~~September~~June 30, ~~2018,~~2019, 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 decrease by ~~0.90%~~0.70% over one year as compared to a decrease of ~~0.48%~~1.29% at December 31, ~~2017.~~2018. A 200 basis point immediate, sustained upward shock in the yield curve

would decrease net interest income by an estimated ~~1.89%~~1.97% over one year as of ~~September~~June 30, ~~2018,~~2019, as compared to a decrease of ~~1.22%~~2.71% as of December 31, ~~2017.~~2018. A 100 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated ~~1.60%~~0.44% over one year as of ~~September~~June 30, 2018 as compared to ~~a decrease~~an increase of ~~0.18%~~0.97%, over one year as of December 31, ~~2017.~~2018. A 200 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated ~~0.26%~~1.80% over one year as of ~~September~~June 30, ~~2018. With the federal funds rate at 1.50% at~~2019 as compared to a decrease of 0.97% over one year as of December 31, ~~2017, management believed a 200 basis point immediate, sustained decline in rates was highly unlikely.~~

2018.

In addition to the one year earnings sensitivity analysis, a

two-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 ~~0.85%~~1.78% in year two as of ~~September~~June 30, ~~2018.~~2019. A 200 basis point immediate, sustained upward shock in the yield curve would increase net interest income by an estimated ~~1.48%~~2.83% in year two as of ~~September~~June 30, ~~2018.~~2019. A 100 basis point immediate, sustained downward shock in the yield curve would ~~increase~~decrease net interest income by an estimated ~~0.05%~~2.85% in year two as of ~~September~~June 30, ~~2018.~~2019. A 200 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated ~~4.20%~~8.15% in year two as of ~~September~~June 30, ~~2018.~~

2019.

This analysis does not include the potential increased refinancing activities, which should lessen the negative impact on net income from falling rates. 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.

To further aid in interest rate management, United’s subsidiary bank is a member of the Federal Home Loan Bank (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 Topic 815, “Derivatives and Hedging.”

Table of Contents

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~~June 30, ~~2018,~~2019, United’s mortgage related securities portfolio had an amortized cost of ~~$1.5~~$1.4 billion, of which approximately ~~$961 million~~$1 billion or ~~63%~~73% were fixed rate collateralized mortgage obligations (CMOs). These fixed rate CMOs consisted primarily of planned amortization class (PACs),

sequential-pay

and accretion directed (VADMs) bonds having an average life of approximately ~~4.3~~3.4 years and a weighted average yield of ~~2.67%~~2.75%, under current projected prepayment assumptions. These securities are expected to have very little extension risk in a rising rate environment. Current models show that ~~in rates up~~an immediate, sustained upward shock of 300 basis points, the average life of these securities would only extend to ~~4.8~~4.1 years. The projected price decline of the fixed rate CMO portfolio in rates up 300 basis points would be ~~11.7%~~9.8%, or less than the price decline of a5-

year treasury note. By comparison, the price decline of a

30-year

current coupon mortgage backed security (MBS) ~~in rates higher by~~given an immediate, sustained upward shock of 300 basis points would be approximately ~~19.4%~~15.1%.

United had approximately ~~$261~~$182 million in balloon and other securities with a projected yield of ~~2.30%~~2.41% and a projected average life of ~~3.8~~4.1 years on ~~September~~June 30, ~~2018.~~2019. This portfolio consisted primarily of Fannie Mae Delegated Underwriting and Servicing (DUS) mortgage backed securities (MBS) with a weighted average loan age (WALA) of ~~4.5~~4.6 years and a weighted average maturity (WAM) of ~~4.2~~4.4 years.

United had approximately ~~$119~~$23 million in

15-year

mortgage backed securities with a projected yield of ~~2.56%~~3.00% and a projected average life of ~~3.8~~3.2 years as of ~~September~~June 30, ~~2018.~~2019. This portfolio consisted of seasoned

15-year

mortgage paper with a weighted average loan age (WALA) of ~~5.1~~7.1 years and a weighted average maturity (WAM) of 10 years.

United had approximately ~~$86~~$47 million in

20-year

mortgage backed securities with a projected yield of ~~2.80%~~2.71% and a projected average life of ~~5.4~~4.5 years on ~~September~~June 30, ~~2018.~~2019. This portfolio consisted of seasoned

20-year

mortgage paper with a weighted average loan age (WALA) of ~~5.5~~5.8 years and a weighted average maturity (WAM) of ~~14.1~~13.7 years.

United had approximately ~~$67~~$57 million in

30-year

mortgage backed securities with a projected yield of ~~3.02%~~2.90% and a projected average life of ~~7.9~~5.4 years on ~~September~~June 30, ~~2018.~~2019. This portfolio consisted of seasoned

30-year

mortgage paper and Home Equity Conversion Mortgages with a weighted average loan age (WALA) of ~~2.4~~2.8 years and a weighted average maturity (WAM) of 2827.4 years.

The remaining 3%6% of the mortgage related securities portfolio at ~~September~~June 30, ~~2018,~~2019, included adjustable rate securities (ARMs),

10-year

mortgage backed pass-through securities and other fixed rate mortgage backed securities.

Table of Contents~~Item 4. CONTROLS AND PROCEDURES~~

Item 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~September~~June 30, ~~2018,~~2019, an evaluation was performed under the supervision of and with the participation of United’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (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~~June 30, ~~2018~~2019 were effective in ensuring that information required to be disclosed in the Quarterly Report on Form

10-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 that occurred during the quarter ended ~~September~~June 30, ~~2018,~~2019, or in other factors that have materially affected or are reasonably likely to materially affect United’s internal control over financial reporting.

Table of Contents

PART ~~II—~~II - OTHER INFORMATION

~~Item 1. LEGAL PROCEEDINGS~~

Item 1.

LEGAL PROCEEDINGS

~~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 Form

10-K

for the year ended December 31, ~~2017~~2018 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 Form

10-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 Form

10-K

for the year ended December 31, ~~2017.~~

~~Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

2018.

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no United equity securities sales during the quarter ended ~~September~~June 30, ~~2018~~2019 that were not registered. The table below includes certain information regarding United’s purchase of its common shares during the quarter ended ~~September~~June 30, ~~2018:~~

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 – 7/31/2018
   389,400    $ 37.02    389,400    648,100
8/01 – 8/31/2018
   4    $ 38.01    0    648,100
9/01 – 9/30/2018
   25,000    $ 36.83    25,000    623,100







Total
   414,404    $ 37.01    414,400

2019:


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)
4/01 – 4/30/2019		31,500	$	36.19		31,500		2,096,500
5/01 – 5/31/2019		15,004	$	36.50		15,000		2,081,500
6/01 – 6/30/2019		120,100	$	36.17		120,100		1,961,400

Total		166,604	$	36.20		166,600

(1)

Includes shares exchanged in connection with the exercise of stock options and the vesting of restricted shares under United’s long-term incentive plans. Shares are purchased or vested pursuant to the terms of the applicable plan and not pursuant to a publicly announced stock repurchase plan. No shares were exchanged by participants in United’s long-term incentive plans for the quarter ended ~~September~~June 30, ~~2018.~~

2019.

(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~~June 30, ~~2018,~~2019, the following shares were purchased for the deferred compensation plan: ~~August 2018~~May 2019 – 4 shares at an average price of ~~$38.01.~~

$37.49.

(3)

In ~~August~~November of ~~2017,~~2018, United’s Board of Directors approved a repurchase plan to repurchase up to ~~2 million~~3,352,000 shares of United’s common stock on the open market (the ~~2017~~2018 Plan). The timing, price and quantity of purchases under the ~~plan~~plans are at the discretion of management and the plan may be discontinued, suspended or restarted at any time depending on the facts and circumstances.

Table of Contents~~Item 3. DEFAULTS UPON SENIOR SECURITIES~~

Item 3.

DEFAULTS UPON SENIOR SECURITIES

None.

~~Item 4. MINE SAFETY DISCLOSURES~~

Item 4.

MINE SAFETY DISCLOSURES

None.

~~Item 5. OTHER INFORMATION~~

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

Index to exhibits required by Item 601 of Regulation

S-K


~~Exhibit~~ ~~No.~~		~~Description~~
Exhibit No.			Description
~~2.1~~
	2.1		Agreement and Plan of Reorganization by and among United Bankshares, UBV Holding Company, LLC and Cardinal Financial Corporation (incorporated into this filing by reference to Exhibit 2.1 to the Form8-K dated August 17, 2016 and filed August 18, 2016 for United Bankshares, Inc., File No. 0-13322)

~~3.1~~
	3.1		Articles of Incorporation (incorporated into this filing by reference to a Quarterly Report on Form10-Q dated March 31, 2017 and filed May 9, 2017 for United Bankshares, Inc., FileNo.0-13322)

~~3.2~~
	3.2		Bylaws (incorporated into this filing by reference to a Current Report on Form8-K dated January 25, 2010 and filed January 29, 2010 for United Bankshares, Inc., FileNo.0-13322)

~~31.1~~
	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~~
	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~~
	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~~
	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~~
	101		Interactive data file ~~(XBRL)~~(Inline XBRL) (filed herewith)

Table of Contents

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:~~	~~November 8, 2018~~		~~/s/ Richard M. Adams~~
			~~Richard M. Adams, Chairman of the Board and Chief Executive Officer~~

~~Date:~~	~~November 8, 2018~~		~~/s/ W. Mark Tatterson~~ UNITED BANKSHARES, INC.
		(Registrant)

Date:	August 9, 2019	/s/ Richard M. Adams
		Richard M. Adams, Chairman of the Board and Chief Executive Officer

Date:	August 9, 2019	/s/ W. Mark Tatterson
		W. Mark Tatterson, Executive Vice President and Chief Financial Officer


(Dollars in thousands, except par value)	September 30 2018			December 31 2017
	(Unaudited)			(Note 1)
Assets
Cash and due from banks	$	191,809		$	196,742
Interest-bearing deposits with other banks		1,062,078			1,468,636
Federal funds sold		799			789

Total cash and cash equivalents		1,254,686			1,666,167
Securities available for sale at estimated fair value (amortized cost-$2,230,884 at September 30, 2018 and $1,900,684 at December 31, 2017)		2,178,567			1,888,756
Securities held to maturity (estimated fair value-$19,619 at September 30, 2018 and $20,018 at December 31, 2017)		20,351			20,428
Equity securities at estimated fair value		9,845			0
Other investment securities		166,749			162,461
Loans held for sale (at fair value-$231,310 at September 30, 2018 and $263,308 at December 31, 2017)		234,196			265,955
Loans		13,286,711			13,027,337
Less: Unearned income		(9,971	)		(15,916	)

Loans net of unearned income		13,276,740			13,011,421
Less: Allowance for loan losses		(76,941	)		(76,627	)

Net loans		13,199,799			12,934,794
Bank premises and equipment		99,748			104,894
Goodwill		1,478,014			1,478,380
Accrued interest receivable		60,057			52,815
Other assets		485,631			484,309

TOTAL ASSETS	$	19,187,643		$	19,058,959

Liabilities
Deposits:
Noninterest-bearing	$	4,470,815		$	4,294,687
Interest-bearing		9,620,357			9,535,904

Total deposits		14,091,172			13,830,591
Borrowings:
Federal funds purchased		25,790			16,235
Securities sold under agreements to repurchase		153,718			311,352
Federal Home Loan Bank borrowings		1,284,781			1,271,531
Other long-term borrowings		234,590			242,446
Reserve for lending-related commitments		1,144			679
Accrued expenses and other liabilities		145,320			145,595

TOTAL LIABILITIES		15,936,515			15,818,429
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-105,226,986 and 105,069,821 at September 30, 2018 and December 31, 2017, respectively, including 1,421,150 and 29,173 shares in treasury at September 30, 2018 and December 31, 2017, respectively		263,068			262,675
Surplus		2,133,157			2,129,077
Retained earnings		984,062			891,816
Accumulated other comprehensive loss		(76,660	)		(42,025	)
Treasury stock, at cost		(52,499	)		(1,013	)

TOTAL SHAREHOLDERS’ EQUITY		3,251,128			3,240,530

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	19,187,643		$	19,058,959


	June 30 2019			December 31 2018
	(Unaudited)			(Note 1)
Assets
Cash and due from banks	$	198,171		$	187,886
Interest-bearing deposits with other banks		1,054,589			831,707
Federal funds sold		813			803

Total cash and cash equivalents		1,253,573			1,020,396
Securities available for sale at estimated fair value (amortized cost-$2,324,286 at June 30, 2019 and $2,360,884 at December 31, 2018)		2,345,791			2,337,039
Securities held to maturity (estimated fair value-$6,483 at June 30, 2019 and $18,655 at December 31, 2018)		6,461			19,999
Equity securities at estimated fair value		9,098			9,734
Other investment securities		201,912			176,955
Loans held for sale (at fair value-$365,440 at June 30, 2019 and $247,104 at December 31, 2018)		370,593			249,846
Loans		13,639,946			13,429,532
Less: Unearned income		(4,680	)		(7,310	)

Loans net of unearned income		13,635,266			13,422,222
Less: Allowance for loan losses		(76,400	)		(76,703	)

Net loans		13,558,866			13,345,519
Bank premises and equipment		94,545			95,245
Operating lease right-of-use assets		63,113			0
Goodwill		1,478,014			1,478,014
Accrued interest receivable		60,934			60,597
Other assets		439,639			457,154

TOTAL ASSETS	$	19,882,539		$	19,250,498


Liabilities
Deposits:
Noninterest-bearing	$	4,330,665		$	4,416,815
Interest-bearing		10,073,420			9,577,934

Total deposits		14,404,085			13,994,749
Borrowings:
Federal funds purchased		0			23,400
Securities sold under agreements to repurchase		122,159			152,927
Federal Home Loan Bank (FHLB) borrowings		1,548,032			1,439,198
Other long-term borrowings		235,535			234,905
Reserve for lending-related commitments		1,752			1,389
Operating lease liabilities		66,821			0
Accrued expenses and other liabilities		170,297			152,306

TOTAL LIABILITIES		16,548,681			15,998,874

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-105,413,508 and 105,239,121 at June 30, 2019 and December 31, 2018, respectively, including 3,450,478 and 2,915,633 shares in treasury at June 30, 2019 and December 31, 2018, respectively		263,534			263,098
Surplus		2,137,459			2,134,462
Retained earnings		1,073,390			1,013,037
Accumulated other comprehensive loss		(20,367	)		(57,019	)
Treasury stock, at cost		(120,158	)		(101,954	)

TOTAL SHAREHOLDERS’ EQUITY		3,333,858			3,251,624

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	19,882,539		$	19,250,498


(Dollars in thousands)	Three Months Ended September 30					Nine Months Ended September 30
	2018			2017		2018			2017
Net income	$	64,412		$	56,738	$	192,392		$	132,606
Change in net unrealized (loss) gain onavailable-for-sale (AFS) securities, net of tax		(7,579	)		1,964		(30,853	)		8,443
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		918			717		2,703			2,107

Comprehensive income, net of tax	$	57,753		$	59,421	$	164,246		$	143,160


	Six Months Ended June 30, 2019
											Accumulated
	Common Stock										Other						Total
			Par					Retained			Comprehensive			Treasury			Shareholders’
	Shares		Value		Surplus			Earnings			Income (Loss)			Stock			Equity
Balance at January 1, 2019		105,239,121	$	263,098	$	2,134,462		$	1,013,037		$	(57,019	)	$	(101,954	)	$	3,251,624
Cumulative effect of adopting Accounting Standard Update 2016-02		0		0		0			(1,049	)		0			0			(1,049	)
Reclass due to adopting Accounting Standard Update 2017-12		0		0		0			0			50			0			50
Comprehensive income
Net income		0		0		0			63,642			0			0			63,642
Other comprehensive income, net of tax		0		0		0			0			17,699			0			17,699

Total comprehensive income, net of tax																		81,341
Stock based compensation expense		0		0		1,113			0			0			0			1,113
Purchase of treasury stock (365,702 shares)		0		0		0			0			0			(12,072	)		(12,072	)
Cash dividends ($0.34 per share)		0		0		0			(34,759	)		0			0			(34,759	)
Grant of restricted stock (126,427 shares)		126,427		316		(316	)		0			0			0			0
Common stock options exercised (33,816 shares)		33,816		84		559			0			0			0			643

Balance at March 31, 2019		105,399,364		263,498		2,135,818			1,040,871			(39,270	)		(114,026	)		3,286,891
Comprehensive income:
Net income		0		0		0			67,207			0			0			67,207
Other comprehensive income, net of tax		0		0		0			0			18,903			0			18,903

Total comprehensive income, net of tax																		86,110
Stock based compensation expense		0		0		1,198			0			0			0			1,198
Purchase of treasury stock (166,604 shares)		0		0		0			0			0			(6,032	)		(6,032	)
Cash dividends ($0.34 per share)		0		0		0			(34,688	)		0			0			(34,688	)
Forfeiture of restricted stock (2,539 shares)		0		0		100			0			0			(100	)		0
Common stock options exercised (14,144 shares)		14,144		36		343			0			0			0			379

Balance at June 30, 2019		105,413,508	$	263,534	$	2,137,459		$	1,073,390		$	(20,367	)	$	(120,158	)	$	3,333,858


	Nine Months Ended September 30, 2018
					Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders’ Equity
	Common Stock
	Shares		Par Value
Balance at January 1, 2018		105,069,821	$	262,675	$	2,129,077		$	891,816		($	42,025	)	($	1,013	)	$	3,240,530
Cumulative effect of adopting Accounting Standard Update2016-01									136			(136	)					0
Reclass due to adopting Accounting Standard Update2018-02									6,353			(6,353	)					0
Comprehensive income:
Net income		0		0		0			192,392			0			0			192,392
Other comprehensive income, net of tax:		0		0		0			0			(28,146	)		0			(28,146	)

Total comprehensive income, net of tax																		164,246
Stock based compensation expense		0		0		3,016			0			0			0			3,016
Purchase of treasury stock (1,387,750 shares)		0		0		0			0			0			(51,323	)		(51,323	)
Distribution of treasury stock from deferred compensation plan (26 shares)		0		0		0			0			0			1			1
Cash dividends ($1.02 per share)		0							(106,635	)		0			0			(106,635	)
Grant of restricted stock (97,004 shares)		97,004		243		(243	)		0			0			0			0
Forfeiture of restricted stock (4,253 shares)		0		0		164			0			0			(164	)		0
Common stock options exercised (60,161 shares)		60,161		150		1,143			0			0			0			1,293

Balance at September 30, 2018		105,226,986	$	263,068	$	2,133,157		$	984,062		($	76,660	)	($	52,499	)	$	3,251,128


	Six Months Ended June 30, 2018
											Accumulated
	Common Stock										Other						Total
			Par					Retained			Comprehensive			Treasury			Shareholders’
	Shares		Value		Surplus			Earnings			Income (Loss)			Stock			Equity
Balance at January 1, 2018		105,069,821	$	262,675	$	2,129,077		$	891,816		($	42,025	)	($	1,013	)	$	3,240,530
Cumulative effect of adopting Accounting Standard Update 2016-01		0		0		0			136			(136	)		0			0
Reclass due to adopting Accounting Standard Update 2018-02		0		0		0			6,353			(6,353	)		0			0
Comprehensive income:
Net income		0		0		0			61,706			0			0			61,706
Other comprehensive income, net of tax		0		0		0			0			(16,039	)		0			(16,039	)

Total comprehensive income, net of tax																		45,667
Stock based compensation expense		0		0		968			0			0			0			968
Purchase of treasury stock (10,842 shares)		0		0		0			0			0			(404	)		(404	)
Cash dividends ($0.34 per share)		0							(35,748	)		0			0			(35,748	)
Grant of restricted stock (97,004 shares)		97,004		243		(243	)		0			0			0			0
Forfeiture of restricted stock (683 shares)		0		0		27			0			0			(27	)		0
Common stock options exercised (15,043 shares)		15,043		37		263			0			0			0			300

Balance at March 31, 2018		105,181,868		262,955		2,130,092			924,263			(64,553	)		(1,444	)		3,251,313
Comprehensive income:
Net income		0		0		0			66,274			0			0			66,274
Other comprehensive income, net of tax		0		0		0			0			(5,448	)		0			(5,448	)

Total comprehensive income, net of tax																		60,826
Stock based compensation expense		0		0		1,024			0			0			0			1,024
Purchase of treasury stock (962,504 shares)		0		0		0			0			0			(35,580	)		(35,580	)
Cash dividends ($0.34 per share)		0		0		0			(35,584	)		0			0			(35,584	)
Forfeiture of restricted stock (2,170 shares)		0		0		82			0			0			(82	)		0
Common stock options exercised (27,046 shares)		27,046		67		499			0			0			0			566

Balance at June 30, 2018		105,208,914	$	263,022	$	2,131,697		$	954,953		$	(70,001	)	($	37,106	)	$	3,242,565


	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


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		24,774
Core deposit intangibles		28,724
George Mason trade name intangible		1,080
Other assets		135,383

Total identifiable assets	$	4,070,235
Identifiable liabilities:
Deposits	$	3,349,812
Short-term borrowings		96,215
Long-term borrowings		220,119
Unfavorable lease liability		2,281
Other liabilities		39,474

Total identifiable liabilities		3,707,901

Fair value of net assets acquired including identifiable intangible assets		362,334

Resulting goodwill	$	612,920


	September 30, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cumulative OTTI in AOCI (1)
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	103,237	$	0	$	1,672	$	101,565	$	0
State and political subdivisions		258,656		440		6,850		252,246		0
Residential mortgage-backed securities
Agency		973,307		541		30,201		943,647		0
Non-agency		4,086		486		0		4,572		86
Commercial mortgage-backed securities
Agency		557,211		71		13,630		543,652		0
Asset-backed securities		223,350		638		386		223,602		0
Trust preferred collateralized debt obligations		6,176		253		275		6,154		2,586
Single issue trust preferred securities		8,748		127		771		8,104		0
Other corporate securities		96,113		51		1,139		95,025		0

Total	$	2,230,884	$	2,607	$	54,924	$	2,178,567	$	2,672


	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cumulative OTTI in AOCI (1)
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	114,735	$	385	$	362	$	114,758	$	0
State and political subdivisions		303,101		3,197		2,429		303,869		0
Residential mortgage-backed securities
Agency		821,857		2,096		9,360		814,593		0
Non-agency		4,969		543		0		5,512		86
Commercial mortgage-backed securities
Agency		457,107		1,059		3,309		454,857		0
Asset-backed securities		109,829		148		7		109,970		0
Trust preferred collateralized debt obligations		37,856		542		4,129		34,269		20,770
Single issue trust preferred securities		13,417		368		1,225		12,560		0
Other corporate securities		28,101		407		18		28,490		0
Marketable equity securities		9,712		179		13		9,878		0

Total	$	1,900,684	$	8,924	$	20,852	$	1,888,756	$	20,856


	Three Months Ended September 30				Nine Months Ended September 30
	2018		2017		2018		2017
Proceeds from sales and calls	$	109,093	$	64,257	$	283,953	$	631,561
Gross realized gains		93		1,781		1,314		2,840
Gross realized losses		207		1,314		1,604		1,396


	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
Net losses recognized during the period	$	(38	)	$	(102	)
Net losses recognized during the period on equity securities sold		(2	)		(4	)
Unrealized gains recognized during the period on equity securities still held at period end		0			50
Unrealized losses recognized during the period on equity securities still held at period end		36			148


	September 30, 2018		December 31, 2017
Commercial, financial and agricultural:
Owner-occupied commercial real estate	$	1,336,434	$	1,361,629
Nonowner-occupied commercial real estate		4,341,501		4,451,298
Other commercial loans		1,932,919		1,998,979

Total commercial, financial & agricultural		7,610,854		7,811,906
Residential real estate		3,387,268		2,996,171
Construction & land development		1,379,985		1,504,907
Consumer:
Bankcard		9,530		10,314
Other consumer		899,074		704,039

Total gross loans	$	13,286,711	$	13,027,337


Accretable yield at the beginning of the period	$	39,098
Accretion (including cash recoveries)		(8,371	)
Additions		691
Net reclassifications to accretable fromnon-accretable		9,112
Disposals (including maturities, foreclosures, and charge-offs)		(3,323	)

Accretable yield at the end of the period	$	37,207


	Troubled Debt Restructurings For the Three Months Ended
	September 30, 2018
	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		5		7,420		7,364
Residential real estate		1		272		272
Construction & land development		0		0		0
Consumer:
Bankcard		0		0		0
Other consumer		0		0		0

Total		6	$	7,692	$	7,636


	Troubled Debt Restructurings For the Nine Months Ended
	September 30, 2018						September 30, 2017
	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		0	$	0	$	0		1	$	5,333	$	5,333
Nonowner-occupied		0		0		0		0		0		0
Other commercial		9		16,992		16,890		8		24,102		22,291
Residential real estate		3		7,225		7,225		0		0		0
Construction & land development		0		0		0		1		1,456		1,400
Consumer:
Bankcard		0		0		0		0		0		0
Other consumer		0		0		0		0		0		0

Total		12	$	24,217	$	24,115		10	$	30,891	$	29,024


Age Analysis of Past Due Loans As of September 30, 2018
	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	$	11,089	$	18,009	$	29,098	$	1,307,336	$	1,336,434	$	1,431
Nonowner-occupied		17,182		17,557		34,739		4,306,762		4,341,501		2,015
Other commercial		7,413		49,467		56,880		1,876,039		1,932,919		1,326
Residential real estate		35,646		30,519		66,165		3,321,103		3,387,268		9,941
Construction & land development		3,406		17,069		20,475		1,359,510		1,379,985		642
Consumer:
Bankcard		649		177		826		8,704		9,530		177
Other consumer		7,874		763		8,637		890,437		899,074		502

Total	$	83,259	$	133,561	$	216,820	$	13,069,891	$	13,286,711	$	16,034


Age Analysis of Past Due Loans
As of December 31, 2017
(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	$	7,968	$	13,663	$	21,631	$	1,339,998	$	1,361,629	$	458
Nonowner-occupied		10,398		20,448		30,846		4,420,452		4,451,298		634
Other commercial		11,533		68,476		80,009		1,918,970		1,998,979		940
Residential real estate		35,300		28,637		63,937		2,932,234		2,996,171		6,519
Construction & land development		1,615		17,190		18,805		1,486,102		1,504,907		385
Consumer:
Bankcard		449		186		635		9,679		10,314		186
Other consumer		9,288		968		10,256		693,783		704,039		775

Total	$	76,551	$	149,568	$	226,119	$	12,801,218	$	13,027,337	$	9,897


Loans on Nonaccrual Status
	September 30, 2018		December 31, 2017
Commercial real estate:
Owner-occupied	$	16,578	$	13,205
Nonowner-occupied		15,542		19,814
Other commercial		48,141		67,536
Residential real estate		20,578		22,118
Construction & land development		16,427		16,805
Consumer:
Bankcard		0		0
Other consumer		261		193

Total	$	117,527	$	139,671


As of September 30, 2018
	Commercial Real Estate
	Owner- occupied		Nonowner- occupied		Other Commercial		Construction & Land Development
Grade:
Pass	$	1,266,769	$	4,197,966	$	1,827,465	$	1,302,968
Special mention		15,221		60,293		13,528		4,715
Substandard		54,444		83,242		90,023		72,302
Doubtful		0		0		1,903		0

Total	$	1,336,434	$	4,341,501	$	1,932,919	$	1,379,985


	Impaired Loans
	For the Nine Months Ended
	September 30, 2018				September 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate:
Owner-occupied	$	69,009	$	1,101	$	70,477	$	1,227
Nonowner-occupied		105,199		928		121,811		551
Other commercial		55,124		1,020		57,047		632
Residential real estate		27,210		501		21,397		219
Construction & land development		43,464		707		40,344		1,046
Consumer:
Bankcard		0		0		0		0
Other consumer		29		0		29		0
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	6,876	$	18	$	12,141	$	393
Nonowner-occupied		11,158		251		13,492		108
Other commercial		47,736		380		71,736		685
Residential real estate		13,946		247		14,904		58
Construction & land development		6,944		60		2,195		63
Consumer:
Bankcard		0		0		0		0
Other consumer		0		0		0		0
Total:
Commercial real estate:
Owner-occupied	$	75,885	$	1,119	$	82,618	$	1,620
Nonowner-occupied		116,357		1,179		135,303		659
Other commercial		102,860		1,400		128,783		1,317
Residential real estate		41,156		748		36,301		277
Construction & land development		50,408		767		42,539		1,109
Consumer:
Bankcard		0		0		0		0
Other consumer		29		0		29		0


Allowance for Loan Losses For the Three Months Ended September 30, 2018
	Commercial Real Estate				Other Commercial		Residential Real Estate		Construction & Land Development		Consumer		Allowance for Estimated Imprecision			Total
	Owner- occupied		Nonowner- occupied		Other Commercial		Residential Real Estate		Construction & Land Development		Consumer		Allowance for Estimated Imprecision			Total
Allowance for Loan Losses:
Beginning balance	$	3,213	$	6,183	$	48,191	$	10,380	$	6,592	$	2,419	$	157		$	77,135
Charge-offs		1,478		0		4,432		365		110		659		0			7,044
Recoveries		415		395		394		558		134		146		0			2,042
Provision		2,391		22		291		1,067		480		575		(18	)		4,808

Ending balance	$	4,541	$	6,600	$	44,444	$	11,640	$	7,096	$	2,481	$	139		$	76,941


			Fair Value at September 30, 2018 Using
Description	Balance as of September 30, 2018		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 securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	101,565	$	0	$	101,565	$	0
State and political subdivisions		252,246		0		252,246		0
Residential mortgage-backed securities
Agency		943,647		0		943,647		0
Non-agency		4,572		0		4,572		0
Commercial mortgage-backed securities
Agency		543,652		0		543,652		0
Asset-backed securities		223,602		0		223,602		0
Trust preferred collateralized debt obligations		6,154		0		0		6,154
Single issue trust preferred securities		8,104		0		8,104		0
Other corporate securities		95,025		6,879		88,146		0

Total available for sale securities		2,178,567		6,879		2,165,534		6,154
Equity securities:
Financial services industry		173		173		0		0
Equity mutual funds (1)		5,073		5,073		0		0
Other equity securities		4,599		4,599		0		0

Total equity securities		9,845		9,845		0		0
Loans held for sale		231,310		0		0		231,310
Derivative financial assets:
Interest rate swap contracts		4,042		0		4,042		0
Forward sales commitments		0		0		0		0
Interest rate lock commitments		3,991		0		0		3,991
TBA mortgage-backed securities		1,161		0		1,161		0

Total derivative financial assets		9,194		0		5,203		3,991
Liabilities
Derivative financial liabilities:
Forward sales commitments		197		0		197		0

Total derivative financial liabilities		197		0		197		0


			Fair Value at December 31, 2017 Using
Description	Balance as of December 31, 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	$	114,758	$	0	$	114,758	$	0
State and political subdivisions		303,869		0		303,869		0
Residential mortgage-backed securities
Agency		814,593		0		814,593		0
Non-agency		5,512		0		5,512		0
Commercial mortgage-backed securities
Agency		454,857		0		454,857		0
Asset-backed securities		109,970		0		109,970		0
Trust preferred collateralized debt obligations		34,269		0		0		34,269
Single issue trust preferred securities		12,560		0		12,560		0
Other corporate securities		28,490		0		28,490		0

Total available for sale debt securities		1,878,878		0		1,844,609		34,269
Available for sale equity securities:
Financial services industry		3,545		331		3,214		0
Equity mutual funds (1)		6,332		6,332		0		0
Other equity securities		1		1		0		0

Total available for sale equity securities		9,878		6,664		3,214		0

Total available for sale securities		1,888,756		6,664		1,847,823		34,269
Loans held for sale		263,308		0		0		263,308
Derivative financial assets:
Interest rate swap contracts		538		0		538		0
Interest rate lock commitments		4,561		0		2		4,559

Total derivative financial assets		5,099		0		540		4,559
Liabilities
Derivative financial liabilities:
Interest rate swap contracts		165		0		165		0
TBA mortgage-backed securities		312		0		312		0

Total derivative financial liabilities		477		0		477		0


	Available-for-sale Securities
	Trust preferred collateralized debt obligations
	September 30, 2018			December 31, 2017
Balance, beginning of period	$	34,269		$	33,552
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		28			9
Included in other comprehensive income		1,157			8,757
Purchases, issuances, and settlements		0			0
Sales		(29,300	)		(8,049	)
Transfers in and/or out of Level 3		0			0

Balance, end of period	$	6,154		$	34,269

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


Description	Three Months Ended September 30, 2018			Three Months Ended September 30, 2017
Assets
Loans held for sale
Income from mortgage banking activities	$	(5,929	)	$	(5,090	)


Description	Nine Months Ended September 30, 2018			Nine Months Ended September 30, 2017
Assets
Loans held for sale
Income from mortgage banking activities	$	(2,838	)	$	(7,529	)


Description	Balance as of September 30, 2018		Carrying value at September 30, 2018						YTD Losses
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
							Significant Unobservable Inputs (Level 3)
Assets
Loans held for sale	$	2,886	$	0	$	2,886	$	0	$	0
Impaired Loans		109,582		0		98,171		11,411		4,177
OREO		18,786		0		18,786		0		796
Description	Balance as of December 31, 2017		Carrying value at December 31, 2017						YTD Losses
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
							Significant Unobservable Inputs (Level 3)
Assets
Loans held for sale	$	2,647	$	0	$	2,647	$	0	$	14
Impaired Loans		88,637		0		70,950		17,687		12,291
OREO		24,348		0		24,151		197		4,200


			Carrying value at June 30, 2019
Description	Balance as of June 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		YTD Gains (Losses)
Assets
Loans held for sale	$	5,153	$	0	$	5,153	$	0	$	(4	)
Impaired Loans		76,577		0		65,604		10,973		4,781
OREO		14,469		0		14,391		78		(340	)


			Carrying value at December 31, 2018
Description	Balance as of December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		YTD Gains (Losses)
Assets
Loans held for sale	$	2,742	$	0	$	2,742	$	0	$	(3	)
Impaired Loans		121,355		0		108,899		12,456		(12,301	)
OREO		16,865		0		16,865		0		(910	)