UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarter Ended ~~September 30, 2007~~March 31, 2008


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period

Commission File Number: 0-13322

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) 424-8800

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.

YesþNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a ~~non-accelerated filer.~~smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and ~~large accelerated filer”~~“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Large accelerated filer~~þ ~~Accelerated Filer~~o ~~Non-accelerated Filer~~o


Large accelerated filerþ	Accelerated filero	Non-accelerated filero	Smaller reporting companyo
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yeso Noþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class — Common Stock, $2.50 Par Value;~~43,212,399~~43,263,513shares outstanding as of~~October 31, 2007~~April 30, 2008.

UNITED BANKSHARES, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited) ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006~~2007		4

Consolidated Statements of Income (Unaudited) for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~		5

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) for the ~~Nine~~Three Months Ended ~~September 30, 2007~~March 31, 2008		6

Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~		7

Notes to Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2829

Item 3. Quantitative and Qualitative Disclosures about Market Risk		4745

Item 4. Controls and Procedures		5048

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		5149

Item 1A. Risk Factors		5149

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		5149

Item 3. Defaults Upon Senior Securities		5250

Item 4. Submission of Matters to a Vote of Security Holders		5250

Item 5. Other Information		5250

Item 6. Exhibits		5250

Signatures		5351

Exhibits		5452
~~Exhibit 31.1~~EX-31.1
~~Exhibit 31.2~~EX-31.2
~~Exhibit 32.1~~EX-32.1
~~Exhibit 32.2~~EX-32.2

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

The ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, consolidated balance sheets of United Bankshares, Inc. and Subsidiaries (“United” or the “Company”), consolidated statements of income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ the related consolidated statement of changes in shareholders’ equity for the ~~nine~~three months ended ~~September 30, 2007,~~March 31, 2008, the related condensed consolidated statements of cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS

UNITED BANKSHARES, INC. AND SUBSIDIARIES


(Dollars in thousands, except par value)							March 31			December 31
							2008			2007
	September 30			December 31			(Unaudited)			(Note 1)
	2007			2006
(Dollars in thousands, except par value)	(Unaudited)			(Note 1)
Assets
Cash and due from banks	$	167,228		$	217,562		$	191,101		$	202,586
Interest-bearing deposits with other banks		24,789			22,882			26,926			10,559
Federal funds sold		12,444			18,569			10,863			17,506

Total cash and cash equivalents		204,461			259,013			228,890			230,651
Securities available for sale at estimated fair value (amortized cost-$1,102,410 at September 30, 2007 and $1,016,840 at December 31, 2006)		1,098,548			1,010,252
Securities held to maturity (estimated fair value-$158,350 at September 30, 2007 and $215,678 at December 31, 2006)		158,252			212,296
Securities available for sale at estimated fair value (amortized cost-$1,157,315 at March 31, 2008 and $1,163,014 at December 31, 2007)								1,152,757			1,156,561
Securities held to maturity (estimated fair value-$152,345 at March 31, 2008 and $158,165 at December 31, 2007)								151,040			157,228
Other investment securities		66,469			52,922			77,285			80,975
Loans held for sale		954			2,041			1,851			1,270
Loans		5,593,245			4,813,708			5,812,492			5,800,561
Less: Unearned income		(6,919	)		(6,961	)		(7,080	)		(7,077	)

Loans net of unearned income		5,586,326			4,806,747			5,805,412			5,793,484
Less: Allowance for loan losses		(50,353	)		(43,629	)		(56,811	)		(50,456	)

Net loans		5,535,973			4,763,118			5,748,601			5,743,028
Bank premises and equipment		62,026			38,111			60,935			61,680
Goodwill		312,857			167,421			311,978			312,111
Accrued interest receivable		38,835			34,508			36,874			38,238
Other assets		207,313			177,916			216,763			212,997

TOTAL ASSETS	$	7,685,688		$	6,717,598		$	7,986,974		$	7,994,739


Liabilities
Deposits:
Noninterest-bearing	$	874,696		$	903,207		$	881,135		$	913,427
Interest-bearing		4,471,530			3,924,985			4,538,376			4,436,323

Total deposits		5,346,226			4,828,192			5,419,511			5,349,750
Borrowings:
Federal funds purchased		78,405			97,720			111,695			97,074
Securities sold under agreements to repurchase		575,206			460,858			560,960			499,989
Federal Home Loan Bank borrowings		643,672			533,899			850,191			1,012,272
Other short-term borrowings		2,007			3,688			1,319			5,000
Other long-term borrowings		206,459			85,301			185,471			195,890
Allowance for lending-related commitments		8,264			8,742			2,239			8,288
Accrued expenses and other liabilities		70,180			65,106			84,435			65,277

TOTAL LIABILITIES		6,930,419			6,083,506			7,215,821			7,233,540
Shareholders’ Equity
Common stock, $2.50 par value; Authorized-100,000,000 shares; issued-44,320,832 at September 30, 2007 and December 31, 2006, including 1,138,504 and 3,261,931 shares in treasury at September 30, 2007 and December 31, 2006, respectively		110,802			110,802
Common stock, $2.50 par value; Authorized-100,000,000 shares; issued-44,320,832 at March 31, 2008 and December 31, 2007, including 1,059,881 and 1,086,106 shares in treasury at March 31, 2008 and December 31, 2007, respectively								110,802			110,802
Surplus		99,145			93,680			97,904			98,405
Retained earnings		598,770			559,257			614,133			602,185
Accumulated other comprehensive loss		(13,904	)		(15,791	)		(14,884	)		(12,480	)
Treasury stock, at cost		(39,544	)		(113,856	)		(36,802	)		(37,713	)

TOTAL SHAREHOLDERS’ EQUITY		755,269			634,092			771,153			761,199

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	7,685,688		$	6,717,598		$	7,986,974		$	7,994,739

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES


(Dollars in thousands, except per share data)											Three Months Ended
											March 31
	Three Months Ended					Nine Months Ended					2008		2007
	September 30					September 30
(Dollars in thousands, except per share data)	2007		2006			2007		2006

Interest income
Interest and fees on loans	$	99,240	$	84,288		$	267,111	$	242,537		$	94,861	$	83,312
Interest on federal funds sold and other short-term investments		876		515			1,980		1,235			272		505
Interest and dividends on securities:
Taxable		13,832		13,934			40,446		43,371			15,153		13,430
Tax-exempt		3,361		3,698			10,096		11,334			3,260		3,375

Total interest income		117,309		102,435			319,633		298,477			113,546		100,622

Interest expense
Interest on deposits		40,176		32,312			107,574		84,807			35,129		33,170
Interest on short-term borrowings		8,220		7,142			22,846		23,029			6,830		7,502
Interest on long-term borrowings		9,801		8,052			24,619		25,111			9,309		7,288

Total interest expense		58,197		47,506			155,039		132,947			51,268		47,960

Net interest income		59,112		54,929			164,594		165,530			62,278		52,662
Provision for credit losses		1,550		571			2,750		1,169			2,100		350

Net interest income after provision for credit losses		57,562		54,358			161,844		164,361			60,178		52,312

Other income
Fees from trust and brokerage services		3,788		3,190			11,097		9,857			3,939		3,546
Fees from deposit services		9,087		7,367			24,134		21,575			9,083		7,178
Other service charges, commissions, and fees		2,285		1,785			5,769		5,202			2,046		1,693
Income from bank-owned life insurance		1,179		1,181			3,965		3,285			1,309		1,459
Income from mortgage banking		124		236			447		615			93		161
Security gains (losses)		172		(134	)		494		(3,071	)
(Loss) Gain on termination of interest rate swaps associated with prepayment of FHLB advances		—		(7,659	)		787		(4,599	)
Security gains												955		157
Other income		691		248			2,074		1,437			1,185		722

Total other income		17,326		6,214			48,767		34,301			18,610		14,916

Other expense
Salaries and employee benefits		17,452		15,740			46,830		46,789			19,028		14,854
Net occupancy expense		3,823		3,031			10,393		9,458			4,297		3,456
Equipment expense		2,059		1,567			4,867		4,599			1,794		1,451
Data processing expense		2,448		1,477			6,401		4,428			2,803		1,721
Bankcard processing expense		1,445		1,257			3,857		3,507			1,349		1,191
Prepayment penalties on FHLB advance		—		8,261			786		8,261
Other expense		11,795		8,881			29,879		27,523			12,087		8,822

Total other expense		39,022		40,214			103,013		104,565			41,358		31,495

Income before income taxes		35,866		20,358			107,598		94,097			37,430		35,733
Income taxes		10,063		6,193			32,876		29,863			11,734		11,326

Net income	$	25,803	$	14,165		$	74,722	$	64,234		$	25,696	$	24,407

Earnings per common share:
Basic	$	0.60	$	0.34		$	1.80	$	1.54		$	0.59	$	0.60

Diluted	$	0.60	$	0.34		$	1.79	$	1.53		$	0.59	$	0.59


Dividends per common share	$	0.28	$	0.27		$	0.84	$	0.81		$	0.29	$	0.28


Average outstanding shares:
Basic		42,731,909		41,373,945			41,458,388		41,658,678			43,246,852		40,946,236
Diluted		42,998,484		41,775,111			41,811,493		42,075,862			43,418,571		41,272,213

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

Nine Months Ended September 30, 2007
Accumulated
Common Stock Other Total
Par Retained Comprehensive Treasury Shareholders’
(Dollars in thousands, except per share data) Shares Value Surplus Earnings Income (Loss) Stock Equity

Balance at January 1, 2007 44,320,832 $ 110,802 $ 93,680 $ 559,257 ($15,791 ) ($113,856 ) $ 634,092
Cumulative effect of adopting FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, at January 1, 2007 — — — (300 ) — — (300 )
Comprehensive income:
Net income — — — 74,722 — — 74,722
Other comprehensive income, net of tax:
Unrealized gain on securities of $2,091 net of reclassification adjustment for gains included in net income of $321 — — — — 1,770 — 1,770
Unrealized loss on cash flow hedge, net of tax of $1,600 — — — — (2,972 ) — (2,972 )
Termination of cash flow hedge, net of tax of $1,033 — — — — 1,919 — 1,919
Remaining unrealized loss related to the call of securities previously transferred from available for sale to held to maturity investment portfolio — — — — 778 — 778
Accretion of the unrealized loss for securities transferred from the available for sale to the held to maturity investment portfolio — — — — 203 — 203
Pension plan’s amortization of transition asset, prior service cost, and actuarial loss, net of tax of $125 — — — — 189 — 189

Total comprehensive income 76,609
Acquisition of Premier Community Bankshares, Inc. (2,684,068 shares) — — 8,443 — — 93,707 102,150
Purchase of treasury stock (746,472 shares) — — — — — (25,869 ) (25,869 )
Distribution of treasury stock for deferred compensation plan (2,000 shares) — — — — — 59 59
Cash dividends ($0.84 per share) — — — (34,909 ) — — (34,909 )
Common stock options exercised (183,831 shares) — — (2,978 ) — — 6,415 3,437

Balance at September 30, 2007 44,320,832 $ 110,802 $ 99,145 $ 598,770 ($13,904 ) ($39,544 ) $ 755,269

(Dollars in thousands, except per share data)


	Three Months Ended March 31, 2008
											Accumulated
	Common Stock										Other						Total
			Par					Retained			Comprehensive			Treasury			Shareholders’
	Shares		Value		Surplus			Earnings			Income (Loss)			Stock			Equity

Balance at January 1, 2008		44,320,832	$	110,802	$	98,405		$	602,185			($12,480	)		($37,713	)	$	761,199

Cumulative effect of adopting EITF 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split- Dollar Life Insurance Arrangements”		—		—		—			(936	)		—			—			(936	)
Effect of changing pension plan measurement date pursuant to SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, net of tax		—		—		—			(270	)		—			—			(270	)
Comprehensive income:
Net income		—		—		—			25,696			—			—			25,696
Other Comprehensive income, net of tax:
Unrealized gain on securities of $1,852 net of reclassification adjustment for gains included in net income of $621		—		—		—			—			1,231			—			1,231
Unrealized loss on cash flow hedge, net of tax of $2,771		—		—		—			—			(5,146	)		—			(5,146	)
Accretion of the unrealized loss for securities transferred from the available for sale to the held to maturity investment portfolio		—		—		—			—			46			—			46
Pension plan’s amortization of transition asset, prior service cost, and actuarial loss, net of tax of $2		—		—		—			—			3			—			3
Change in pension asset, net of tax of $788		—		—		—			—			1,462			—			1,462

Total comprehensive income																		23,292
Stock based compensation expense		—		—		137			—			—			—			137
Purchase of treasury stock (138 shares)		—		—		—			—			—			(4	)		(4	)
Distribution of treasury stock for deferred compensation plan (199 shares)		—		—		—			—			—			6			6
Cash dividends ($0.29 per share)		—		—		—			(12,542	)		—			—			(12,542	)
Common stock options exercised (26,164 shares)		—		—		(638	)		—			—			909			271


Balance at March 31, 2008		44,320,832	$	110,802	$	97,904		$	614,133			($14,884	)		($36,802	)	$	771,153

See notes to consolidated unaudited financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

Nine Months Ended
September 30
(Dollars in thousands) 2007 2006

NET CASH PROVIDED BY OPERATING ACTIVITIES $ 67,820 $ 54,453

INVESTING ACTIVITIES

Proceeds from maturities and calls of securities held to maturity 56,287 13,672
Proceeds from sales of securities held to maturity 475 —
Purchases of securities held to maturity (445 ) (587 )
Proceeds from sales of securities available for sale 9,587 135,381
Proceeds from maturities and calls of securities available for sale 493,245 277,647
Purchases of securities available for sale (558,412 ) (222,645 )
Net purchases of bank premises and equipment (2,107 ) (2,391 )
Net cash of acquired subsidiary (35,778 ) —
Net change in other investment securities (8,978 ) 9,545
Net change in loans (32,141 ) (103,046 )

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (78,267 ) 107,576

FINANCING ACTIVITIES

Cash dividends paid (34,335 ) (33,907 )
Excess tax benefits from stock-based compensation arrangements 796 499
Acquisition of treasury stock (24,885 ) (36,503 )
Net proceeds from issuance of trust preferred securities 82,475 —
Proceeds from exercise of stock options 2,416 5,561
Distribution of treasury stock for deferred compensation plan 59 35
Proceeds from long-term Federal Home Loan Bank borrowings 333,900 200,000
Repayment of long-term Federal Home Loan Bank borrowings (234,127 ) (252,067 )
Changes in:
Deposits (198,834 ) 133,103
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings 28,430 (214,176 )

NET CASH USED IN FINANCING ACTIVITIES (44,105 ) (197,455 )

Decrease in cash and cash equivalents (54,552 ) (35,426 )

Cash and cash equivalents at beginning of year 259,013 207,962

Cash and cash equivalents at end of period $ 204,461 $ 172,536

(Dollars in thousands)


	Three Months Ended
	March 31
	2008			2007

NET CASH PROVIDED BY OPERATING ACTIVITIES	$	31,878		$	37,802

INVESTING ACTIVITIES
Proceeds from maturities and calls of securities held to maturity		6,236			8,019
Purchases of securities held to maturity		—			(288	)
Proceeds from sales of securities available for sale		268			563
Proceeds from maturities and calls of securities available for sale		123,610			85,015
Purchases of securities available for sale		(118,135	)		(73,160	)
Net purchases of bank premises and equipment		(370	)		(719	)
Net change in other investment securities		4,599			(667	)
Net change in loans		(7,324	)		90,140

NET CASH PROVIDED BY INVESTING ACTIVITIES		8,884			108,903


FINANCING ACTIVITIES
Cash dividends paid		(12,535	)		(11,517	)
Excess tax benefits from stock-based compensation arrangements		244			343
Acquisition of treasury stock		(4	)		(10,909	)
Proceeds from exercise of stock options		223			1,045
Proceeds from issuance of long-term Federal Home Loan Bank borrowings		—			25,000
Repayment of long-term Federal Home Loan Bank borrowings		(81	)		(76	)
Redemption of debt related to trust preferred securities		(10,310	)		—
Distribution of treasury stock for deferred compensation plan		6			—
Changes in:
Deposits		70,023			(86,620	)
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings		(90,089	)		(102,807	)

NET CASH USED IN FINANCING ACTIVITIES		(42,523	)		(185,541	)


Decrease in cash and cash equivalents		(1,761	)		(38,836	)

Cash and cash equivalents at beginning of year		230,651			259,013


Cash and cash equivalents at end of period	$	228,890		$	220,177

See notes to consolidated unaudited financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

1. GENERAL

The accompanying unaudited consolidated interim financial statements of United Bankshares, Inc. and Subsidiaries (“United”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not contain all of the information and footnotes required by accounting principles generally accepted in the United States. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements presented as of ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ and for the three-month ~~and nine-month~~ periods then ended have not been audited. The consolidated balance sheet as of December 31, ~~2006~~2007 has been extracted from the audited financial statements included in United’s ~~2006~~2007 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 ~~2006~~2007 Annual Report of United on Form 10-K. To conform to the 2008 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 considers all of its principal business activities to be bank related. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Dollars are in thousands, except per share and share ~~data.~~data or unless otherwise noted.

New Accounting Standards

In March 2008, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 161 (SFAS 161), “Disclosures about Derivative Instruments and Hedging Activities” which amends FASB Statement No. 133. SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. United is currently assessing the impact this statement will have on its consolidated financial statements.

In December 2007, the FASB issued FASB Statement No. 141-revised 2007 (SFAS 141R),“Business Combinations” which amends FASB Statement 141 (SFAS 141). SFAS 141R aims to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. SFAS 141R is effective for business combinations for which the acquisition date is on or after fiscal years beginning after December 15, 2008. Early adoption is not permitted.

In December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests in Consolidated

Financial Statements (SFAS 160). SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 will be effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. Based on management’s preliminary analysis, the adoption of SFAS 160 is not expected to have a significant impact on United’s consolidated financial statements.

In September 2006, the FASB issued EITF Issue No. 06-4 (EITF 06-4), “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements”, which will require employers with endorsement split-dollar arrangements that provide a post-retirement life insurance benefit to record an obligation for this benefit and recognize an ongoing expense. EITF 06-4 applies for fiscal years beginning after December 15, 2007, with an earlier adoption permitted. United adopted EITF 06-4 on January 1, 2008, as required and a cumulative effect adjustment was recorded in retained earnings.

In March 2007, the Emerging Issues Task Force (EITF) of the FASB ratified EITF Issue No. 06-10, “Accounting for Collateral Assignment Split-Dollar Life Insurance Agreements.” EITF 06-10 provides guidance for determining a liability for the postretirement benefit obligation as well as recognition and measurement of the associated asset on the basis of the terms of the collateral assignment agreement. EITF 06-10 was effective for fiscal years beginning after December 31, 2007. United adopted EITF 06-10 as of January 1, 2008, as required. The adoption of this standard did not have an impact on United’s financial statements since United does not have any collateral assignment split-dollar life insurance agreements.

In February 2007, the ~~Financial Standards Board (FASB)~~FASB issued Statement No. 159 (SFAS 159), “The Fair Value Option for Financial Assets and Financial Liabilities” which provides companies with an option to report selected financial assets and liabilities at fair value. With this Standard, the FASB expects to reduce both the complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate the comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The Statement does not eliminate disclosure requirements included in accounting standards. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. United ~~does~~decided to not ~~expect~~report any existing financial assets or liabilities at fair value that are not already reported, thus the adoption of this statement ~~will~~did not have a material impact on ~~its~~United’s consolidated financial statements.

In September 2006, the FASB published Statement No. 158 (SFAS 158), “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires employers to recognize in their statement of financial position an asset for a plan’s overfunded status or a liability for a plan’s underfunded status. United is also required to recognize fluctuations in the funded status in the year in which the changes occur through comprehensive

income. United adopted the recognition and disclosure provisions of SFAS 158 on December 31, 2006. ~~See Note 13 for additional information regarding~~The effect of adopting SFAS 158 on United’s ~~adoption of~~financial condition at December 31, 2006 has been included in the accompanying consolidated financial statements. SFAS ~~158. SFAS~~158 also requires employers to measure the funded status of a plan as of the end of the employers’ fiscal ~~year, with limited exceptions, and will be effective~~year. On January 1, 2008, United changed the

measurement date for ~~United for the fiscal year ending~~its defined pension plan from September 30 to December 31 ~~2008.~~for its 2008 financial statements as required. As a result, United recorded a cumulative effect adjustment of $270 to retained earnings. See Note 14 for additional information regarding United’s adoption of SFAS 158.

In September 2006, the FASB also issued Statement No. 157 (SFAS 157), “Fair Value Measurements” which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, ~~2007, with earlier adoption permitted.~~2007. United ~~is currently assessing the impact this statement will have~~adopted SFAS 157 on ~~its consolidated financial statements.~~

In July 2006, the FASB issued FASB Interpretation (FIN) No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”, to address the noncomparability in reporting tax assets and liabilities resulting from a lack of specific guidance in FASB Statement No. 109 (SFAS 109), “Accounting for Income Taxes”, on the uncertainty in income taxes recognized in an enterprise’s financial statements. United has adopted FIN 48 as of January 1, ~~2007, as required. The cumulative effect of adopting FIN 48 was recorded in retained earnings.~~2008. The adoption of ~~FIN 48 did not have a significant impact on United’s consolidated financial statements. See Note 14 for additional information regarding United’s adoption of FIN 48.~~

In March 2006, the FASB issued Statement No. 156 (SFAS 156), “Accounting for Servicing of Financial Assets”. SFAS 156 amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS 156 permits, but does not require, an entity to choose either the amortization method or the fair value measurement method for measuring each class of separately recognized servicing assets and servicing liabilities. SFAS 156 was effective for United on January 1, 2007. The implementation of SFAS 156this statement did not have a material impact on United’s consolidated financial statements.

In February 2006, the FASB issued Statement No. 155 (SFAS 155), “Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140”. SFAS 155 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, to permit fair value remeasurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS 155 amends SFAS No. 140, “Accounting for the Impairment or Disposal of Long-Lived Assets”, to allow a qualifying special-purpose entity (SPE) to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. United adopted SFAS 155 on January 1, 2007, as required. Its implementation did not have a material impact on United’s consolidated financial statements.

On January 1, 2006, United adopted FASB Statement No. 123—revised 2004 (SFAS 123R), ''Share-Based Payment’’ which replaced Statement of Financial Accounting Standards No. 123 (SFAS 123), “Accounting for Stock-Based Compensation’’ and superseded APB Opinion No. 25 (APB 25), ''Accounting for Stock Issued to Employees” and amended FASB Statement No. 95, “Statement of Cash Flows.’’ Under this transition method, compensation cost to be recognized beginning in the first quarter of 2006 would include: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006,

based on the grant-date fair value estimated in accordance with the original provision of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Results for prior periods were not restated. Due to modification on December 30, 2005 to accelerate unvested options under United’s existing stock option plans and the fact that no new options were granted in 2006 and the first nine months of 2007, United did not recognize any compensation cost for 2006 and the first nine months of 2007. See Note 12 for additional information regarding United’s adoption of SFAS ~~123R.~~157.

2. MERGERS & ACQUISITIONS

~~At the opening of business on~~On July 14, 2007, United acquired 100% of the outstanding common stock of Premier Community Bankshares, Inc. (Premier) of Winchester, Virginia. The results of operations of Premier, which are not significant, are included in the consolidated results of operations from the date of acquisition. Because the results of operations of Premier are not significant, pro forma information is not ~~being~~ provided. The acquisition of Premier ~~expands~~expanded United’s presence in the rapidly growing and economically attractive Metro DC area and ~~affords~~afforded United the opportunity to enter new Virginia markets in the Winchester, Harrisonburg and Charlottesville areas.

At consummation, Premier had assets of approximately $911 million, loans of $759 million, deposits of $716 million and shareholders’ equity of $71 million. Premier’s net income was $1.8 million or 31¢ per diluted share for the second quarter of 2007 and $3.6 million or 60¢ per diluted share for the first half of 2007. The transaction was accounted for under the purchase method of accounting.

The aggregate purchase price was approximately $200 million, including $98 million of cash, common stock valued at $97 million, and vested stock options exchanged valued at $5 million. The number of shares issued in the transaction were 2,684,068, which were valued based on the average market price of United’s common shares over the period including the two days before and after the terms of the acquisition were agreed to and announced. The value of the vested stock options was determined using the Black-Scholes option pricing model based upon 241,428 options exchanged. The following weighted average assumptions were used to determine the value of the options exchanged: risk-free interest rate of 4.96%, expected dividend yield of 3.00%, volatility factor of the expected market price of United’s common stock of 0.219 and a weighted expected option life of 2.1 years. The preliminary purchase price has been allocated to the identifiable tangible and intangible assets resulting in preliminary additions to goodwill and core deposit intangibles of approximately $148 million and $11 million, respectively. ~~In the merger, United assumed approximately $2.5 million of liabilities to provide severance benefits to terminated employees of Premier.~~ The estimated fair values of the acquired assets and liabilities, including identifiable intangible assets, are subject to refinement as additional information becomes available. Any subsequent adjustments to the fair values of assets and liabilities acquired, identifiable intangible assets, or other purchase accounting adjustments will result in adjustments to goodwill within the first 12 months following the date of acquisition.

As a result of the merger, United assumed approximately $2.5 million of liabilities to provide severance benefits to terminated employees of Premier. A balance of $876 thousand remains as of March 31, 2008 for the assumed liabilities to provide severance benefits to terminated employees of Premier.

Statement of Position 03-3 (SOP 03-3), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer” requires acquired impaired loans for which it is probable that the investor will be unable to collect all contractually required payments receivable to be recorded at the present value of amounts expected to be received and prohibits carrying over or creating valuation allowances in the initial accounting for these loans. Loans carried at fair value, mortgage loans held for sale, and loans to borrowers in good standing under revolving credit agreements are excluded from the scope of SOP 03-3. The impact of recording the impaired loans acquired from Premier on July 14, 2007 at fair value was not significant. Additional disclosures required by SOP 03-3 are not provided because of the insignificant impact.

3. INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities available for sale are summarized below:


	March 31, 2008
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	31,095	$	205		—	$	31,300
State and political subdivisions		117,218		3,512	$	5		120,725
Mortgage-backed securities		847,565		12,117		5,207		854,475
Marketable equity securities		6,978		24		675		6,327
Corporate securities		154,459		2,642		17,171		139,930

Total	$	1,157,315	$	18,500	$	23,058	$	1,152,757


	December 31, 2007
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	42,689	$	188	$	8	$	42,869
State and political subdivisions		117,713		2,349		53		120,009
Mortgage-backed securities		846,037		4,173		4,105		846,105
Marketable equity securities		6,752		85		521		6,316
Corporate securities		149,823		2,572		11,133		141,262

Total	$	1,163,014	$	9,367	$	15,820	$	1,156,561

Provided below and on the following ~~page:~~

September 30, 2007
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value

U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 40,068 $ 166 $ 26 $ 40,208
State and political subdivisions 118,583 1,553 553 119,583
Mortgage-backed securities 795,945 2,177 7,380 790,742
Marketable equity securities 6,585 191 177 6,599
Other 141,229 2,921 2,734 141,416

Total $ 1,102,410 $ 7,008 $ 10,870 $ 1,098,548

December 31, 2006
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value

U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 7,993 — $ 85 $ 7,908
State and political subdivisions 110,261 $ 2,176 201 112,236
Mortgage-backed securities 777,133 822 11,896 766,059
Marketable equity securities 6,200 439 43 6,596
Other 115,253 2,619 419 117,453

Total $ 1,016,840 $ 6,056 $ 12,644 $ 1,010,252

~~Provided below~~page is a summary of securities available-for-sale which were in an unrealized loss position at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006:~~2007:


	Less than 12 months				12 months or longer				Less than 12 months				12 months or longer
	Market		Unrealized		Market		Unrealized		Market		Unrealized		Market		Unrealized
	Value		Losses		Value		Losses		Value		Losses		Value		Losses
September 30, 2007
March 31, 2008
Treasuries and agencies		—		—	$	3,963	$	26		—		—		—		—
State and political	$	21,400	$	159		27,260		394	$	2,299	$	5		—		—
Mortgage-backed		67,078		448		536,485		6,932		161,432		3,907	$	46,996	$	1,300
Marketable equity securities		750		109		132		68		1,819		439		308		236
Other		62,451		2,148		19,928		586
Corporate securities										86,473		13,442		20,271		3,729

Total	$	151,679	$	2,864	$	587,768	$	8,006	$	252,023	$	17,793	$	67,575	$	5,265

December 31, 2006
Treasuries and agencies	$	1,978	$	3	$	3,905	$	82
State and political		3,452		22		25,651		179
Mortgage-backed		35,437		167		663,361		11,729
Marketable equity securities		—		—		158		43
Other		—		—		25,637		419

Total	$	40,867	$	192	$	718,712	$	12,452


	Less than 12 months				12 months or longer
	Market		Unrealized		Market		Unrealized
	Value		Losses		Value		Losses
December 31, 2007
Treasuries and agencies		—		—	$	2,989	$	8
State and political	$	1,815	$	5		9,776		48
Mortgage-backed		58,244		594		407,397		3,511
Marketable equity securities		1,338		422		101		99
Corporate securities		85,849		10,132		14,504		1,001

Total	$	147,246	$	11,153	$	434,767	$	4,667

Gross unrealized losses on available for sale securities were ~~$10,870~~$23,058 at ~~September 30, 2007.~~March 31, 2008. Securities in a continuous unrealized loss position for twelve months or more at March 31, 2008 consisted primarily of ~~mortgage-backed~~corporate securities. These corporate securities were mainly investment grade single issuer or pooled trust preferreds of financial institutions. The unrealized loss on the mortgage-backed securities portfolio relates primarily to AAA securities issued by FNMA, ~~FHLMC,~~ GNMA, and various ~~other~~ private label issuers. Management does not believe any individual security with an unrealized loss as of ~~September 30, 2007~~March 31, 2008 is other than temporarily impaired. United believes the decline in value is attributable to tight market liquidity, distressed sales, and changes in market interest rates, ~~and~~ not the credit quality of the issuers. 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.

As previously reported, at March 31, 2006, as part of a balance sheet repositioning strategy, management specifically identified approximately $86 million of impaired, low-yielding, fixed rate investment securities for sale. Since United did not have the positive intent to hold these securities to recovery, United recognized a loss of approximately $2.93 million in the first quarter of 2006 related to these securities. These securities were subsequently sold on April 4, 2006.

The amortized cost and estimated fair value of securities available for sale at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006~~2007 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, 2007				December 31, 2006				March 31, 2008				December 31, 2007
			Estimated				Estimated				Estimated				Estimated
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value

Due in one year or less	$	19,337	$	19,359	$	4,427	$	4,424	$	30,891	$	30,975	$	40,627	$	40,668
Due after one year through five years		109,487		109,053		106,890		105,431		75,026		76,327		82,214		82,315
Due after five years through ten years		183,767		182,568		214,164		212,051		190,526		193,145		195,981		196,808
Due after ten years		783,234		780,969		685,159		681,750		853,894		845,983		837,440		830,454
Marketable equity securities		6,585		6,599		6,200		6,596		6,978		6,327		6,752		6,316

Total	$	1,102,410	$	1,098,548	$	1,016,840	$	1,010,252	$	1,157,315	$	1,152,757	$	1,163,014	$	1,156,561

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


	September 30, 2007								March 31, 2008
			Gross		Gross		Estimated				Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value

U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	11,600	$	865		—	$	12,465	$	11,543	$	1,963		—	$	13,506
State and political subdivisions		60,623		963	$	2		61,584		53,771		1,357	$	8		55,120
Mortgage-backed securities		176		8		—		184		157		11		—		168
Other		85,853		659		2,395		84,117
Corporate securities										85,569		477		2,495		83,551

Total	$	158,252	$	2,495	$	2,397	$	158,350	$	151,040	$	3,808	$	2,503	$	152,345


	December 31, 2006								December 31, 2007
			Gross		Gross		Estimated				Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value

U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	11,682	$	914		—	$	12,596	$	11,572	$	1,316		—	$	12,888
State and political subdivisions		62,703		1,537		—		64,240		59,466		1,043	$	4		60,505
Mortgage-backed securities		234		7		—		241		165		10		—		175
Other		137,677		2,112	$	1,188		138,601
Corporate securities										86,025		564		1,992		84,597

Total	$	212,296	$	4,570	$	1,188	$	215,678	$	157,228	$	2,933	$	1,996	$	158,165

The amortized cost and estimated fair value of debt securities held to maturity at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006~~2007 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, 2007				December 31, 2006				March 31, 2008				December 31, 2007
			Estimated				Estimated				Estimated				Estimated
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value

Due in one year or less	$	3,400	$	3,410	$	1,726	$	1,741	$	15,662	$	15,910	$	8,624	$	8,652
Due after one year through five years		42,088		42,817		42,016		43,116		24,440		24,511		35,964		36,623
Due after five years through ten years		25,136		25,789		27,357		28,219		25,704		27,052		26,568		27,495
Due after ten years		87,628		86,334		141,197		142,602		85,234		84,872		86,072		85,395

Total	$	158,252	$	158,350	$	212,296	$	215,678	$	151,040	$	152,345	$	157,228	$	158,165

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 ~~$959,253~~$1,068,366 and ~~$948,623~~$1,002,234 at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively.

4. LOANS

Major classifications of loans are as follows:


	September 30,		December 31,		March 31,		December 31,
	2007		2006		2008		2007
Commercial, financial and agricultural	$	1,071,706	$	954,024	$	1,233,411	$	1,210,049
Real estate:
Single-family residential		1,877,510		1,720,794		1,857,278		1,882,498
Commercial		1,442,874		1,146,007		1,524,599		1,507,541
Construction		640,116		523,042		618,643		601,323
Other		189,137		119,973		233,826		239,907
Installment		371,902		349,868		344,735		359,243

Total gross loans	$	5,593,245	$	4,813,708	$	5,812,492	$	5,800,561

The table above does not include loans held for sale of ~~$954~~$1,851 and ~~$2,041~~$1,270 at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively. Loans held for sale consist of single-family residential real estate loans originated for sale in the secondary market.

United’s subsidiary banks have made loans, in the normal course of business, to the directors and officers of United and its subsidiaries, and to their affiliates. Such related party loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and did not involve more than normal risk of collectibility. The aggregate dollar amount of these loans was ~~$114,492~~$142,042 and ~~$122,150~~$126,432 at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively.

5. ALLOWANCE FOR CREDIT LOSSES

United maintains an allowance for loan losses and an allowance for lending-related commitments such as unfunded loan commitments and letters of credit. The allowance for lending-related commitments of ~~$8,264~~$2,239 and ~~$8,742~~$8,288 at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively, is separately classified as a liability on the balance ~~sheet and is included~~sheet. The methodology for calculation of the unfunded commitments liability was changed to be more consistent with the historical utilization of unfunded commitments which resulted in ~~other liabilities.~~the decrease of $6,049 from year-end 2007. The combined allowances for loan losses and lending-related commitments are referred to as the allowance for credit losses.

The allowance for credit losses is management’s estimate of the probable credit losses inherent in the lending portfolio. Management’s evaluation of the adequacy of the allowance for credit losses and the appropriate provision for credit losses is based upon a quarterly evaluation of the loan portfolio and lending-related commitments. This evaluation is inherently subjective and requires significant estimates, including 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 credit 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. Loans deemed to be uncollectible are

charged against the allowance for credit losses, while recoveries of previously charged-off amounts are credited to the allowance for credit losses. Credit expenses related to the allowance for credit losses and the allowance for lending-related commitments are reported in the provision for credit losses in the income statement.

A progression of the allowance for credit losses, which includes the allowance for credit losses and the allowance for lending-related commitments, for the periods presented is summarized as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30						September 30						March 31
	2007			2006			2007			2006			2008			2007
Balance at beginning of period	$	51,220		$	52,895		$	52,371		$	52,871		$	58,744		$	52,371
Allowance of purchased subsidiaries		7,648			—			7,648			—
Provision for credit losses		1,550			571			2,750			1,169
Provision														2,100			350

		60,418			53,466			62,769			54,040			60,844			52,721
Loans charged-off		(2,104	)		(1,168	)		(4,952	)		(2,482	)		(2,033	)		(617	)
Less: Recoveries		303			238			800			978			239			281

Net Charge-offs		(1,801	)		(930	)		(4,152	)		(1,504	)		(1,794	)		(336	)

Balance at end of period	$	58,617		$	52,536		$	58,617		$	52,536		$	59,050		$	52,385

6. RISK ELEMENTS

Nonperforming assets include loans on which no interest is currently being accrued, principal or interest has been in default for a period of 90 days or more and for which the terms have been modified due to deterioration in the financial position of the borrower. Loans are designated as nonaccrual when, in the opinion of management, the collection of principal or interest is doubtful. This generally occurs when a loan becomes 90 days past due as to principal or interest unless the loan is both well secured and in the process of collection. When interest accruals are discontinued, unpaid interest credited to income in the current year is reversed, and unpaid interest accrued in prior years is charged to the allowance for credit losses. Other real estate owned consists of property acquired through foreclosure and is stated at the lower of cost or fair value less estimated selling costs.

Nonperforming assets are summarized as follows:


	September 30,		December 31,		March 31,		December 31,
	2007		2006		2008		2007
Nonaccrual loans	$	8,958	$	5,755	$	25,103	$	14,115
Loans past due 90 days or more and still accruing interest		13,827		8,432		12,375		14,210

Total nonperforming loans		22,785		14,187		37,478		28,325
Other real estate owned		5,338		4,231		7,043		6,365

Total nonperforming assets	$	28,123	$	18,418	$	44,521	$	34,690

Loans are designated as impaired when, in the opinion of management, the collection of principal and interest in accordance with the contractual terms of the loan agreement is not probable. At ~~September 30,~~March 31, 2008, the recorded investment in loans that were considered to be impaired was $44,420 (of which $25,103 were

on a nonaccrual basis). Included in this amount is $24,652 of impaired loans for which the related allowance for credit losses is $5,811 and $19,768 of impaired loans that do not have an allowance for credit losses due to management’s estimate that the fair value of the underlying collateral of these loans is sufficient for full repayment of the loan and interest. At December 31, 2007, the recorded investment in loans that were considered to be impaired was ~~$29,848~~$30,952 (of which $8,958 were on a nonaccrual basis). Included in this amount is $23,296 of impaired loans for which the related allowance for credit losses is $4,083 and $6,552 of impaired loans that do not have an allowance for credit losses. At December 31, 2006, the recorded investment in loans that were considered to be impaired was $21,963 (of which $5,755$14,115 were on a nonaccrual basis). Included in this amount were ~~$15,193~~$24,097 of impaired loans for which the related allowance for credit losses was ~~$3,000,~~$3,615, and ~~$6,770~~$6,855 of impaired loans that did not have an allowance for credit losses. The average recorded investment in impaired loans during the ~~nine~~three months ended ~~September 30, 2007~~March 31, 2008 and for the year ended December 31, ~~2006~~2007 was approximately ~~$27,347~~$37,307 and ~~$26,503,~~$28,908, respectively.

For the quarters ended March 31, 2008 and 2007, United recognized interest income on impaired loans of approximately ~~$481~~$299 and ~~$1,151 for the quarter and nine months ended September 30, 2007, respectively, and $467 and $1,726 for the quarter and nine months ended September 30, 2006,~~$439, respectively. Substantially all of the interest income was recognized using the accrual method of income recognition. The amount of interest income that would have been recorded under the original terms for the above loans and nonaccrual loans was ~~$496~~$798 and ~~$1,464~~$549 for the ~~quarter~~quarters ended March 31, 2008 and ~~nine months ended September 30,~~ 2007, ~~respectively, and $376 and $1,041 for the quarter and nine months ended September 30, 2006,~~ respectively.

all contractually required payments receivable to be recorded at the present value of amounts expected to be received and prohibits carrying over or creating valuation allowances in the initial accounting for these loans. Loans carried at fair value, mortgage loans held for sale, and loans to borrowers in good standing under revolving credit agreements are excluded from the scope of SOP 03-3. The amount of impaired loans acquired from Premier on July 14, 2007 was not significant. Additional disclosures required by SOP 03-3 are not provided because the amount was not significant.

7. ~~INTANGIBLE ASSETS~~GOODWILL AND OTHER INTANGIBLES

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


	As of September 30, 2007							As of March 31, 2008
	Gross Carrying		Accumulated			Net Carrying		Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
Amortized intangible assets:
Core deposit intangible assets	$	30,995		($19,040	)	$	11,955	$	30,995		($21,135	)	$	9,860


Goodwill not subject to amortization						$	312,857						$	311,978

As of December 31, 2006
Gross Carrying Accumulated Net Carrying
Amount Amortization Amount
Amortized intangible assets:
Core deposit intangible assets $ 19,890 ($17,250 ) $ 2,640

Goodwill not subject to amortization $ 167,421

~~During the third quarter of 2007, United acquired Premier adding preliminary amounts of $147,879 to goodwill and $11,105 to core deposit intangible assets.~~


	As of December 31, 2007
	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount
Amortized intangible assets:
Core deposit intangible assets	$	30,995		($20,117	)	$	10,878


Goodwill not subject to amortization						$	312,111

United incurred amortization expense of ~~$1,000~~$1,018 and ~~$1,790~~$407 for the ~~quarter~~quarters ended March 31, 2008 and ~~nine months ended September 30,~~ 2007, ~~respectively, and $459 and $1,453 for the quarter and nine months ended September 30, 2006, respectively, related to intangible assets.~~respectively. The table presented below sets forth the anticipated amortization expense for intangible assets for each of the ~~years subsequent to 2006:~~next five years:


Year	Amount		Amount
2007	$	2,853
2008		3,509	$	3,494
2009		2,561		2,561
2010		1,884		1,884
2011+		2,938
2011				1,362
2012 and thereafter				1,577

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 $200,000. These lines of credit, which bear interest at prevailing market rates,

permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions. At ~~September 30, 2007,~~March 31, 2008, federal funds purchased were ~~$78,405~~$111,695 while securities sold under agreements to repurchase were ~~$575,206.~~$560,960.

United has available funds of $70,000 with two unrelated financial institutions to provide for general liquidity needs. Both are unsecured revolving lines of credit. One has a one-year renewable term while the other line of credit has a two-year renewable term. Each line of credit carries an indexed floating rate of interest. At ~~September 30, 2007,~~March 31, 2008, United had no outstanding balance under these lines of credit.

In July of 2007, United borrowed funds totaling $50,000 on these two lines of credit to temporarily fund a portion of the cash consideration for the Premier acquisition. At the funding date, the weighted-average interest rate was 5.97% on the borrowings. United repaid the amounts in September 2007.

United Bank (VA) participates in the Treasury Investment Program, which is essentially the U.S. Treasury’s savings account for companies depositing employment and other tax payments. The bank retains the funds in an open-ended interest-bearing note until the Treasury withdraws or “calls” the funds. A maximum note balance is established and that amount must be collateralized at all times. All tax deposits or a portion of the tax deposits up to the maximum balance are generally available as a source of short-term investment funding. As of ~~September 30, 2007,~~March 31, 2008, United Bank (VA) had an outstanding balance of ~~$2,007~~$1,319 and had additional funding available of ~~$2,993.~~$3,681.

9. LONG-TERM BORROWINGS

United’s subsidiary banks are members of the Federal Home Loan Bank (FHLB). Membership in the FHLB makes available short-term and long-term borrowings from collateralized advances. All FHLB borrowings are collateralized by a mix of single-family residential mortgage loans, commercial loans and investment securities. At ~~September 30, 2007,~~March 31, 2008, United had an unused borrowing amount of ~~$1,196,660~~approximately $1,324,250 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. In June 2007, United prepaid two $100 million long-term FHLB advances and terminated two interest rate swaps associated with the advances. United recognized a $787 thousand before-tax gain on the termination of the swaps. In addition, United prepaid approximately $28.9 million of a $100 million long-term convertible FHLB advance. United incurred a before-tax charge of approximately $786 thousand to prepay the debt. United replaced the $228.9 million of debt with a 3-year FHLB advance and an associated interest rate swap with a total effective cost of 5.25%. The debt prepaid had an average total effective cost of 5.40% and a remaining maturity of 6.25 years. United’s management believes that the prepayment of these borrowings and the termination of the interest rate swaps will improve United’s future net interest margin and enhance future earnings as well as reducing interest rate risk by shortening the term.

During the first quarter of 2006, as part of the balance sheet repositioning, United prepaid a $50 million variable interest rate FHLB advance and terminated a fixed interest rate swap associated with the advance. United recognized a $3.06 million before-tax gain on the termination of the swap. No prepayment penalty was incurred in connection with the early repayment of the advance.

At ~~September 30, 2007, $643,672~~March 31, 2008, $850,191 of FHLB advances with a weighted-average interest rate of ~~5.18% is~~2.98% are scheduled to mature within the next ~~twelve~~eleven years.

The scheduled maturities of borrowings are as follows:


Year	Amount		Amount
2007	$	75,000
2008		110,437	$	282,423
2009		50,000		80,000
2010		355,000		384,685
2011 and thereafter		53,235
2011				60,000
2012 and thereafter				43,083


Total	$	643,672	$	850,191

~~As of September 30, 2007,~~

United ~~had~~has a total of ~~eleven~~ten statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (Capital Securities) with the proceeds invested in junior subordinated debt securities (Debentures) of United. The Debentures, which are subordinate and junior in right of payment to all present and future senior indebtedness and certain other financial obligations of United, are the sole assets of the trusts and United’s payment under the Debentures is the sole source of revenue for the trusts. At ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, the outstanding balances of the Debentures were ~~$206,308~~$185,471 and ~~$85,301~~$195,890, respectively, and were 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.

In January of 2008, United redeemed the Capital Securities of United Statutory Trust II. As part of the redemption, United retired the $10,310 principal amount of 8.59% Junior Subordinated Debentures issued by United Statutory Trust II.

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.

The ~~Capital~~Trust Preferred Securities currently qualify as Tier 1 capital of United for regulatory purposes. ~~In March of 2005, the banking regulatory agencies issued guidance, which did not change the regulatory capital treatment for the Trust Preferred Securities.~~

In July of 2007, United, through a wholly-owned subsidiary, United Statutory Trust V, participated in a Capital Securities offering of a third party in the amount of $50 million to help fund the acquisition of Premier. The proceeds were invested in junior subordinated debt of United paying interest quarterly at a fixed rate of 6.67% for the first five years and then at a floating rate equal to 3-month LIBOR plus 155 basis points thereafter.

In September of 2007, United, through a wholly-owned subsidiary, United Statutory Trust VI, participated in a Capital Securities offering of a third party in the amount of $30 million to help repay the short-term borrowings used to temporarily fund the acquisition of Premier. The proceeds were invested in junior subordinated debt of United paying interest quarterly at a fixed rate of 6.60% for the first five years and then at a floating rate equal 3 month LIBOR plus 130 basis points thereafter. Under the terms of the transactions, both Capital Securities will have a maturity of 30 years, and are redeemable after five years with certain

~~exceptions. For regulatory purposes, both the $50 million and the $30 million issuance of Capital Securities qualify as Tier I capital in accordance with current regulatory reporting requirements.~~

As part of the acquisition of Premier on July 14, 2007, United assumed all the obligations of Premier and its subsidiaries. Premier had a total of four statutory business trusts that were formed for the purpose of issuing or participating in Capital Securities with the proceeds invested in Debentures of Premier. At merger, the outstanding balance of Premier’s Debentures was approximately $39 million. The Capital Securities assumed in the Premier acquisition qualify as Tier 1 capital of United under current regulatory reporting requirements.

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 ~~commercial letters of credit.~~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 ~~$1,903,091~~approximately $1,950,350 and ~~$1,734,299~~$1,945,818 of loan commitments outstanding as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively, ~~the majority~~substantially all of which expire within one year.

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. United has issued commercial letters of credit of ~~$1,105~~$3,164 and ~~$525~~$1,580 as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively. 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 ~~$144,632~~$140,668 and ~~$112,367~~$144,314 as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively. In accordance with FIN 45, United has determined that substantially all of its letters of credit are renewed on an annual basis and ~~that~~ the ~~fair value of~~fees associated with these letters of credit isare immaterial.

11. DERIVATIVE FINANCIAL INSTRUMENTS

United uses derivative instruments to help aid against adverse prices 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 FASB Statement No. 133 (SFAS No. 133), “Accounting for Derivative Instruments and Hedging Activities”, as amended. SFAS No. 133 requires all derivative instruments to be carried at fair value on the balance sheet. United usually designates 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 SFAS No. 133 hedge relationship.

Under the provisions of SFAS No. 133, United has both fair value hedges and cash flow hedges as of ~~September 30, 2007.~~March 31, 2008. 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 in current period earnings. 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.

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. Prior to January 1, 2006, United used the shortcut method for interest rate swaps that met the criteria as defined under SFAS No. 133. Effective January 1, 2006, United adopted an internal policy of accounting for all new derivative instruments entered thereafter whereby the shortcut method would no longer ~~using the short-cut method to account for future hedging relationships entered into.~~be used.

For derivatives that are not designated in a hedge relationship, changes in the fair value of the derivatives are recognized in earnings in the same period as the change in ~~the~~ fair value.

~~In June 2007, United terminated two fixed interest rate swap designated as cash flow hedges associated~~

with the repayment of two $100 million variable interest rate FHLB advances that were being hedged. United recognized a $787 thousand before-tax gain on the termination of the swaps. In addition, United prepaid approximately $28.9 million of a $100 million long-term convertible FHLB advance. United replaced the $228.9 million of debt with a 3-year variable-interest rate FHLB advance and an associated fixed interest rate swap designated as a cash flow hedge. During the first quarter of 2006, as part of a balance sheet repositioning strategy, United terminated a fixed interest rate swap designated as a cash flow hedge associated with the repayment of a $50 million variable interest rate FHLB advance that was being hedged. United recognized a $3.06 million before-tax gain on the termination of the swap.

The following tables set forth certain information regarding the interest rate derivatives portfolio used for interest-rate risk management purposes and designated as accounting hedges under SFAS 133 at ~~September 30, 2007:~~March 31, 2008.

Derivative Classifications and Hedging Relationships
~~September 30, 2007~~March 31, 2008


	Notional		Derivative
	Amount		Asset		Liability		Notional		Derivative
							Amount		Asset		Liability
Derivatives Designated as Fair Value Hedges:
Hedging Commercial Loans	$	14,187	$	50	$	218	$	14,500		—	$	1,123


Total Derivatives Designated as Fair Value Hedges:	$	14,187	$	50	$	218	$	14,500		—	$	1,123


Derivatives Designated as Cash Flow Hedges:
Hedging FHLB Borrowings	$	228,900	$	—	$	3,957	$	234,685		—	$	7,260


Total Derivatives Designated as Cash Flow Hedges:	$	228,900	$	—	$	3,957	$	234,685		—	$	7,260


Total Derivatives Used in Interest Rate Risk Management and Designated in SFAS 133 Relationships:	$	243,087	$	50	$	4,175	$	249,185		—	$	8,383

Derivative Instruments
~~September 30, 2007~~March 31, 2008


													Average
	Notional		Average		Average			Estimated			Notional		Receive		Average			Estimated
	Amount		Receive Rate		Pay Rate			Fair Value			Amount		Rate		Pay Rate			Fair Value
Fair Value Hedges:
Pay Fixed Swap (Commercial Loans)	$	14,187		—		6.27	%		($168	)	$	14,500		—		6.27	%	$	(1,123	)

Total Derivatives Used in Fair Value Hedges	$	14,187							($168	)	$	14,500						$	(1,123	)

Cash Flow Hedges:
Pay Fixed Swap (FHLB Borrowing)	$	228,900		—		5.26	%		($3,957	)	$	234,685		—		3.79	%	$	(7,260	)

Total Derivatives Used in Cash Flow Hedges	$	228,900							($3,957	)	$	234,685						$	(7,260	)


Total Derivatives Used for Interest Rate Risk Management and Designated in SFAS 133 Relationships	$	243,087							($4,125	)	$	249,185						$	(8,383	)

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. Gains and losses on other derivative financial instruments are included in noninterest income and noninterest expense, respectively.

A summary of derivative financial instruments not in hedge relationships by type of activity is as follows:


	Other Derivative Instruments
	March 31, 2008
	Net Derivative			Net Gains
	Asset (Liability)			(Losses)
Other Derivative Instruments:
Interest Rate Risk Management	$	(791	)	$	(791	)
Customer Risk Management		791			791


Total Other Derivative Instruments	$	—		$	—

12. FAIR VALUE MEASUREMENTS

United adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157), on January 1, 2008 to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. SFAS 157 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. In February of 2008, the FASB issued Staff Position No. 157-2 (FSP 157-2) which delayed the effective date of SFAS 157 for certain nonfinancial assets and nonfinancial liabilities except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis. FSP 157-2 defers the effective date of SFAS 157 for such nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Thus, United has only partially

applied SFAS 157. Those items affected by FSP 157-2 include other real estate owned (OREO), goodwill and core deposit intangibles.

SFAS 157 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect United’s market assumptions. The three levels of the fair value hierarchy under SFAS 157 based on these two types of inputs are as follows:

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

Level 2 – Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.

Level 3 – Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

When determining the fair value measurements for assets and liabilities, United looks to active and observable markets to price identical assets or liabilities whenever possible and classifies such items in Level 1. When identical assets and liabilities are not traded in active markets, United looks to market observable data for similar assets and liabilities and classifies such items as Level 2. Nevertheless, certain assets and liabilities are not actively traded in observable markets and United must use alternative valuation techniques using unobservable inputs to determine a fair value and classifies such items as Level 3. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

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: Securities available for sale 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. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considers observable market data (Level 2). Any securities available for sale not valued based upon the methods above are considered Level 3.

Derivatives: United utilizes interest rate swaps in order to hedge exposure to interest rate risk and variability of cash flows associated to changes in the underlying interest rate of the hedged item. 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.

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2008:


			Fair Value Measurements at March 31, 2008 Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Balance as of		Assets		Inputs		Inputs
Description	March 31, 2008		(Level 1)		(Level 2)		(Level 3)
Assets
Available-for-sale securities	$	1,152,757	$	57,651	$	1,089,601	$	5,505
Derivative financial assets		791		—		791		—

Liabilities
Derivative financial liabilities		9,174		—		9,174		—

The following table presents additional information about financial assets and liabilities measured at fair value at March 31, 2008 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value:


	Available-for-
	sale
	securities
Beginning Balance	$	5,372

Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		—
Included in other comprehensive income		133
Purchases, issuances, and settlements		—
Transfers in and/or out of Level 3		—

Ending Balance	$	5,505

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		—

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

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

Loans held for sale: Loans held for sale are carried at the lower of cost or market value. These loans currently consist of one-to-four family residential loans originated for sale in the secondary market. 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 on a nonrecurring basis. No nonrecurring fair value adjustments were recorded on loans held for sale during the quarter ended March

31, 2008. Gains and losses on the sale of loans are recorded within income from mortgage banking 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. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Fair value is measured 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 income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (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). Impaired loans allocated to the Allowance for Loan Losses are measured at fair value 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.

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

Carrying value at March 31, 2008

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Balance as of

Identical

Observable

Unobservable

March 31,

Assets

Inputs

YTD

Description

2008

(Level 1)

(Level 2)

(Level 3)

Losses

Assets

Impaired Loans

24,652

—

709

23,943

693

~~12.~~13. STOCK BASED COMPENSATION

On January 1, 2006, United adopted Statement of Financial Accounting Standards 123R (SFAS 123R) using the modified prospective transition method. Under this transition method, compensation cost to be recognized beginning in the first quarter of 2006 included: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Results for prior periods will not be restated.

On December 30, 2005, the Executive Committee of the Board of Directors of United approved the accelerated vesting of all unvested stock options granted prior to December 30, 2005 to United employees, including Executive Officers, under the 2001 Stock Option Plan. As a result of the vesting acceleration, options to purchase 547,626 shares of United common stock became exercisable immediately. United recognized a pre-tax expense of approximately $21 thousand in the fourth quarter of 2005 for those accelerated options that were “in-the-money”, that is, the option’s exercise price was less than the market value of United’s stock. Due to the modification to accelerate the unvested options, United did not recognize any compensation cost for year 2006. In addition, no new options were granted during 2006 and the first nine months of 2007. Accordingly, the adoption of SFAS 123R had no impact on United’s consolidated statements of income or net income per share.

At its March 20, 2006 regular meeting, United’s Board of Directors approved the adoption of the 2006 Stock Option Plan and directed that the 2006 Stock Option Plan be submitted to United’s shareholders for approval at its Annual Meeting of Shareholders (the 2006 Annual Meeting). At the 2006 Annual Meeting, held on May 15, 2006, United’s shareholders approved the 2006 Stock Option Plan. ~~The 2006 Stock Option Plan thus became effective at the time of the shareholders’ approval.~~ A total of 1,500,000 shares of United’s authorized but unissued common stock are allocated for the 2006 Stock Option Plan. Each plan year, 400,000 options will be available for award to eligible employees; however, not all 400,000 options are required to be awarded in that year. All options granted under the 2006 Stock Option Plan will be non-statutory stock options (NSOs), i.e., options that do not qualify as incentive stock options under Section 422 of the Internal Revenue Code. Subject to certain change in control provisions, recipients of options will be fully vested in and permitted to exercise options granted under the 2006 Stock Option Plan three years from the grant date. As of ~~September 30, 2007, no~~March 31, 2008, 244,550 shares have been granted under the 2006 Stock Option ~~Plan. Any stock options granted under~~Plan resulting in the recognition of compensation expense of $137 thousand for the first quarter of 2008 which

was included in salaries and employee benefits expense in the Consolidated Statement of Income. A Form S-8 was filed on October 25, 2006 with the Securities and Exchange Commission to register all the shares available for the 2006 Stock Option ~~Plan in the future will be subject to the provisions of SFAS 123R.~~Plan.

United currently has options outstanding from various option plans other than the 2006 Stock Option 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.

The fair value option of the options for 2007 was estimated at the date of grant using a binomial lattice option pricing model with the following weighted-average assumptions: risk-free interest rates of 4.09%; dividend yield of 3.00%; volatility factors of the expected market price of United’s common stock of 0.2954; and a weighted-average expected option life of 5.89 years, respectively. SFAS 123R defines a lattice model as a model that produces an estimated fair value based on the assumed changes in prices of a financial instrument over successive periods of time. A binomial lattice model assumes at least two price movements are possible in each period of time.

A summary of option activity under the Plans as of ~~September 30, 2007,~~March 31, 2008, and the changes during the first ~~nine~~three months of ~~2007 are~~2008 is presented below:

Nine Months Ended September 30, 2007
Weighted Average
Aggregate Remaining
Intrinsic Contractual Exercise
Shares Value Term (Yrs.) Price
Outstanding at January 1, 2007 1,732,200 $ 28.00
Granted — —
Exercised 183,831 18.50
Assumed in acquisition of subsidiary 224,528 13.95
Forfeited or expired 24,050 32.11

Outstanding at September 30, 2007 1,748,847 $ 9,281 5.1 $ 27.14

Exercisable at September 30, 2007 1,748,847 $ 9,281 5.1 $ 27.14


	Three Months Ended March 31, 2008
					Weighted Average
			Aggregate		Remaining
			Intrinsic		Contractual		Exercise
	Shares		Value		Term (Yrs.)		Price
Outstanding at January 1, 2008		1,921,457					$	27.38
Granted		—						—
Exercised		26,164						8.48
Forfeited or expired		3,252						32.92

Outstanding at March 31, 2008		1,892,041	$	5,107		5.4	$	27.63


Exercisable at March 31, 2008		1,647,491	$	5,107		4.8	$	27.61

The following table summarizes the status of United’s nonvested awards during the first three months of 2008:


			Weighted-Average
			Grant Date Fair
	Shares		Value Per Share
Nonvested at January 1, 2008		244,550	$	7.06
Granted		—		—
Vested		—		—
Forfeited or expired		—		—

Nonvested at March 31, 2008		244,550	$	7.06

In addition to the stock options detailed above, United has outstanding stock options related to a deferred compensation plan assumed in the 1998 merger with George Mason Bankshares, Inc. (GMBS). The stock

options granted under this deferred compensation plan were to former directors of GMBS. These options carry no exercise cost, contain no expiration date, and are eligible for dividends. Other than additional options granted through reinvestment of dividends received, United does not issue additional options under this deferred compensation plan. Options outstanding at ~~September 30, 2007~~March 31, 2008 were ~~19,547.~~19,922. Options granted through the reinvestment of dividends during the first ~~nine~~three months of ~~2007~~2008 were ~~460.~~205. No options were exercised during the first ~~nine~~three months of ~~2007.~~2008. United records compensation expense for this plan based on the number of options outstanding and United’s quoted market price of its common stock with an equivalent adjustment to the associated liability.

Cash received from options exercised under the Plans for the ~~nine~~three months ended ~~September 30,~~March 31, 2008 and 2007 was $223 thousand and ~~2006 was $2.42 million and $5.56~~$1.05 million, respectively. During the ~~nine~~three months ended ~~September 30,~~March 31, 2008 and 2007, 26,164 and ~~2006, 183,831 and 235,547~~81,228 shares, respectively, were issued in connection with stock option exercises. All shares issued in connection with stock option exercises were issued from available treasury stock for the ~~nine~~three months ended ~~September 30, 2007~~March 31, 2008 and ~~2006.~~2007. The total intrinsic value of options exercised under the Plans during the ~~nine~~three months ended ~~September 30,~~March 31, 2008 and 2007 was $465 thousand and ~~2006 was $2.74 million and $3.10~~$1.22 million, respectively.

SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under previous standards. ~~This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.~~ While the company cannot estimate what those amounts will be in the future (because they depend on, among other things, the date employees exercise stock options), United recognized cash flows from financing activities of ~~$796~~$244 thousand and ~~$499~~$343 thousand from excess tax benefits related to share-based compensation for the ~~nine~~three months ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively.

~~13.~~14. EMPLOYEE BENEFIT PLANS

United has a defined benefit retirement plan covering substantially all 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. United’s funding policy is to contribute annually the maximum amount that can be deducted for federal income tax purposes. 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.

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) as it relates to participation was amended. The decision to change the participation rules for the Plan follows current industry trends, as many large and medium size companies have 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 continue to be eligible to participate in United’s Savings and Stock Investment 401(k) plan. This change has absolutely no impact on current employees (those hired prior to October 1, 2007). 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 ~~Saving~~Savings and Stock Investment 401(k) Plan.

On December 31, 2006, United adopted the recognition and disclosure provision of Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”. SFAS 158 requires United to recognize the funded status of its defined benefit post-retirement plan in the statement of financial position, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The adjustment to accumulated other comprehensive income at adoption represents the net unrecognized actuarial losses, unrecognized prior service costs, and unrecognized transition obligation remaining from the initial adoption of SFAS 87, all of which were previously netted against the plan’s funded status in United’s statement of financial positions pursuant to the provisions of SFAS 87. These amounts will be subsequently recognized as net periodic pension cost pursuant to United’s historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension cost in the same periods will be recognized as a component of other comprehensive income. Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income at adoption of Statement 158.

The incremental effects of adopting the provision of Statement 158 on United’s statement of financial position at December 31, 2006 are presented in the following table. The adoption of Statement 158 had no effect on United’s consolidated statement of income for the year of 2006 and it will not affect United’s operating results in future periods.

At December 31, 2006
Prior to Adopting Effect of Adopting As Reported at
Statement 158 Statement 158 December 31, 2006
Net pension asset 40,165 (13,217 ) $ 26,948
Deferred income taxes 8,058 5,206 13,264
Accumulated other comprehensive income (7,780 ) (8,011 ) (15,791 )

Included in accumulated other comprehensive income at December 31, ~~2006~~2007 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized transition asset of ~~$701~~$526 ($~~425~~319 net of

tax), unrecognized prior service costs of $9$8 ($65 net of tax) and unrecognized actuarial losses of ~~$13,909 ($8,430~~$10,899

($6,604 net of tax). The ~~expected~~ amortization of ~~the transition asset, prior service cost, and actuarial loss included in accumulated other comprehensive income~~these items expected to be recognized in net periodic pension cost during the ~~Income Statement for the~~fiscal year ended December 31, ~~2007~~2008 is $175 ($105 net of tax), $1 ($1 net of tax), and ~~$593~~$193 ($~~356~~119 net of tax), respectively.

In September 2006, the FASB published Statement No. 158 (SFAS 158), “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, an amendment of FASB Statements No. 87, 88, 106, and 132R. The measurement date provisions of SFAS 158 require employers to measure the funded status of a plan as of the end of the employers’ fiscal year, with limited exceptions. United adopted the measurement date provisions of SFAS 158 as of January 1, 2008, as required. As a result, United recognized a net periodic pension cost of $270, net of tax, for the period between the prior measurement date of September 30, 2007 and December 31, 2007 as a separate adjustment of the opening balance of retained earnings on January 1, 2008.

Net periodic pension cost for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ included the following components:


	Three Months Ended						Nine Months Ended
	September 30						September 30						Three Months Ended
(In thousands)	2007			2006			2007			2006			March 31
													2008			2007
Service cost	$	543		$	540		$	1,611		$	1,602		$	538		$	531
Interest cost		876			818			2,599			2,427			925			857
Expected return on plan assets		(1,818	)		(1,197	)		(5,395	)		(3,552	)		(1,912	)		(1,778	)
Amortization of transition asset		(44	)		(44	)		(131	)		(131	)		(44	)		(43	)
Recognized net actuarial loss		150			233			444			693			48			146
Amortization of prior service cost		1			1			1			1			—			—

Net periodic pension (benefit) cost	$	(292	)	$	351		$	(871	)	$	1,040		$	(445	)	$	(287	)

Weighted-Average Assumptions:
Discount rate		6.00	%		6.00	%		6.00	%		6.00	%		6.25	%		6.00	%
Expected return on assets		8.50	%		8.50	%		8.50	%		8.50	%		8.50	%		8.50	%
Rate of compensation increase		3.25	%		3.25	%		3.25	%		3.25	%		3.25	%		3.25	%

~~14.~~15. INCOME TAXES

In ~~July 2006, the~~accordance with FASB ~~issued~~ Interpretation (FIN) No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”, ~~to address concerns regarding comparability in reported~~United records a liability for uncertain income tax ~~assets and liabilities in an enterprise’s financial statements resulting from a lack of specific guidance in FASB Statement No. 109 (SFAS 109), “Accounting for Income Taxes”. FIN 48 prescribes~~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. United has adopted FIN 48 as of January 1, 2007, as required. The cumulative effect of adopting FIN 48 was $300 thousand which was recorded in retained earnings. Also, certain amounts have been reclassified in the statement of financial position in order to comply with the requirements of the statement.

As of ~~September 30, 2007,~~March 31, 2008, United has provided a liability for ~~$5.9 million~~$7,953 of unrecognized tax benefits related to various federal and state income tax matters. ~~Of this~~The entire amount ~~the amount that~~of unrecognized tax benefits, if recognized, would impact United’s effective tax ~~rate, if recognized, is $5.7 million.~~rate. Over the next 12 months, the statute of limitations will close on certain income tax ~~returns filed by an acquired subsidiary.~~returns. However, at this time, United cannot reasonably estimate the amount of tax benefits it may recognize over the next 12 months.

United is currently open to audit under the statute of limitations by the Internal Revenue Service and State Taxing authorities for the years ended December 31, 2004 through 2006. ~~During~~As of March 31, 2008, the ~~third quarter of 2007, United reduced its income tax reserve by $1.06 million due to the expiration of the statute of limitations for examinations of certain years.~~total

2527

Asamount of ~~January 1, 2007, United~~ accrued ~~$450 thousand of~~ interest related to uncertain tax ~~positions. As of September 30, 2007, the total amount of accrued interest~~positions was ~~$458 thousand.~~$758. United accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes.

~~15.~~16. COMPREHENSIVE INCOME

The components of total comprehensive income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ are as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30						September 30						March 31
(In thousands)	2007			2006			2007			2006			2008			2007
Net Income	$	25,803		$	14,165		$	74,722		$	64,234		$	25,696		$	24,407
Securities available for sale:
Net change in unrealized losses on available for sale securities arising during the period		7,412			13,872			3,217			1,452
Related income tax effect		(2,594	)		(4,855	)		(1,126	)		(508	)
Net reclassification adjustment for (gains) losses included in net income		(172	)		134			(494	)		3,071
Related income tax expense (benefit)		60			(47	)		173			(1,075	)
Net change in unrealized gains on available for sale securities arising during the period														2,849			3,025
Related income tax benefit														(997	)		(1,059	)
Net reclassification adjustment for (gains) included in net income														(955	)		(70	)
Related income tax expense														334			25

Net effect on other comprehensive loss		4,706			9,104			1,770			2,940
Net effect on other comprehensive income														1,231			1,921

Securities held to maturity:
Unrealized loss related to the call of securities previously transferred from the available for sale to the held to maturity investment portfolio		29			—			1,197			—			—			241
Related income tax benefit		(10	)		—			(419	)		—
Related income tax expense														—			(84	)
Accretion on the unrealized loss for securities transferred from the available for sale to the held to maturity investment portfolio prior to call or maturity		70			165			312			511			71			142
Related income tax expense		(24	)		(58	)		(109	)		(179	)		(25	)		(50	)

Net effect on other comprehensive income		65			107			981			332			46			249

Cash flow hedge derivatives:
Unrealized gain (loss) on cash flow hedge		(4.018	)		(2,500	)		(4,572	)		(2,499	)
Related income tax (benefit) expense		1,406			875			1,600			874
Termination of cash flow hedge		—			—			2,952			(2,077	)
Related income tax expense		—			—			(1,033	)		727
Unrealized loss on cash flow hedge														(7,917	)		(615	)
Related income tax benefit														2,771			215

Net effect on other comprehensive income		(2,612	)		(1,625	)		(1,053	)		(2,975	)		(5,146	)		(400	)

FASB 158 pension plan:
Change in pension asset														2,250			—
Related income tax expense														(788	)		—
Amortization of transition asset		(44	)		—			(131	)		—			(43	)		(43	)
Related income tax expense		16			—			52			—			18			18
Amortization of prior service cost		1			—			1			—
Related income tax benefit		—			—			—			—
Recognized net actuarial loss		150			—			444			—			48			146
Related income tax benefit		(60	)		—			(177	)		—			(20	)		(58	)

Net effect on other comprehensive income		63			—			189			—			1,465			63

Total change in other comprehensive income		2,222			7,586			1,887			297			(2,404	)		1,833

Total Comprehensive Income	$	28,025		$	21,751		$	76,609		$	64,531		$	23,292		$	26,240

2628

~~16.~~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				Three Months Ended
	September 30				September 30				March 31
	2007		2006		2007		2006		2008		2007
Basic
Net Income	$	25,803	$	14,165	$	74,722	$	64,234	$	25,696	$	24,407

Average common shares outstanding		42,731,909		41,373,945		41,458,388		41,658,678		43,246,852		40,946,236

Earnings per basic common share	$	0.60	$	0.34	$	1.80	$	1.54	$	0.59	$	0.60

Diluted
Net Income	$	25,803	$	14,165	$	74,722	$	64,234	$	25,696	$	24,407

Average common shares outstanding		42,731,909		41,373,945		41,458,388		41,658,678		43,246,852		40,946,236
Equivalents from stock options		266,575		401,166		353,105		417,184		171,719		325,977

Average diluted shares outstanding		42,998,484		41,775,111		41,811,493		42,075,862		43,418,571		41,272,213

Earnings per diluted common share	$	0.60	$	0.34	$	1.79	$	1.53	$	0.59	$	0.59


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

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, involves 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; 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.

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 consolidated financial statements and the notes to consolidated financial statements include the accounts of United Bankshares, Inc. and its wholly-owned subsidiaries, unless otherwise indicated.

On July 14, 2007, United acquired 100% of the outstanding common stock of Premier Community Bankshares, Inc. (Premier) of Winchester, Virginia. The results of operations of Premier, which are not significant, are included in the consolidated results of operations from the date of acquisition. However, comparisons for the first quarter of 2008 to the first quarter of 2007 are impacted by increased levels of reported average balance sheet, income, and expense results due to the acquisition. At consummation, Premier had assets of approximately $911 million, loans of $759 million, deposits of $716 million and shareholders’ equity of $71 million. The transaction was accounted for under the purchase method of accounting.

On January 1, 2008, United adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157) to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. SFAS 157 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. FAS 157 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. When quoted prices or observable market data are not available, management’s judgment is necessary to estimate fair value.

At March 31, 2008, approximately 14.75% of total assets, or $1.18 billion, consisted of financial instruments recorded at fair value. Of this total, approximately 97.44% or $1.15 billion of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. Approximately 2.56% or $29.45 million of these financial instruments were valued using unobservable market information or Level 3 measurements. At March 31, 2008, only $9.17 million or less than 1% of total liabilities was recorded at fair value. This entire amount was valued using methodologies involving observable market data. United does not consider its use of unobservable inputs in determining fair value to be significant and thus, does not believe that any changes in these inputs would have a material impact on United’s results of operations, liquidity, or capital resources. See Note 12 for additional information regarding SFAS 157 and its impact on United’s financial statements.

This discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes thereto, which are included elsewhere in this document.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of United conform with accounting principles generally accepted in the United States. 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 are based on information available as of

the date of the financial statements. Actual results could differ from these estimates. These policies, along with the disclosures presented in the other financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for credit losses, the valuation of derivative instruments, 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.

The allowance for credit losses ~~represents~~is management’s estimate of the probable credit losses inherent in the loan portfolio. Management’s evaluation of the adequacy of the allowance for credit losses and the appropriate provision for credit losses is based on a quarterly evaluation of the portfolio. This evaluation is inherently subjective and requires significant estimates, including the amounts and timing of estimated future cash flows, estimated losses on pools of loans based on historical loss experience, and consideration of current economic trends, all of which are susceptible to constant and significant change. The amounts allocated to specific credits and loan pools grouped by similar risk characteristics are reviewed on a quarterly basis and adjusted as necessary based upon subsequent changes in circumstances. In determining the components of the allowance for credit 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. 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. The methodology used to determine the allowance for credit losses is described in Note 5 to the unaudited consolidated financial statements. 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 Discussion and Analysis of Financial Condition and Results of Operations.

United uses derivative instruments as part of its risk management activities to help protect the value of certain assets and liabilities against adverse price or interest rate movements. All derivative instruments are carried at fair value on the balance sheet. The valuation of these derivative instruments is considered critical because carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are provided by third party sources. Because the majority of the derivative instruments are used to protect the value of other assets and liabilities on the balance sheet, changes in the value of the derivative instruments are typically offset by changes in the value of the assets and liabilities being hedged, although income statement volatility can occur if the derivative instruments are not effective in hedging changes in the value of those assets and liabilities.

United’s calculation of income tax provision is complex and requires the use of estimates and judgments in its determination. As part of United’s analysis and implementation of business strategies, consideration is given to tax laws and regulations which may affect the transaction under evaluation. This analysis includes the amount and timing of the realization of income tax liabilities or benefits. 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.

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

The following is a broad overview of the financial condition and results of operations and is not intended to replace the more detailed discussion, which is presented under specific headings on the following pages.

FINANCIAL CONDITION

United’s total assets as of ~~September 30,~~March 31, 2008 were $7.99 billion which was relatively flat from year-end 2007, ~~were $7.69 billion, an increase of $968.09~~declining $7.77 million or ~~14.41% from year-end 2006,~~less than 1%. The slight decline was primarily the result of the acquisition of Premier Community Bankshares, Inc. (Premier) on July 14, 2007. Investment securities increased $47.80 million or 3.75%, total portfolio loans increased $779.58 million or 16.22%, bank premises and equipment increased $23.92 million or 62.75%, goodwill increased $145.44 million or 86.87% and other assets increased $29.40 million or 16.52% due primarily to the Premier merger. Cashdecreases in cash and cash equivalents ~~decreased $54.55~~and investment securities of $1.76 million and $13.68 million, respectively. Both decreases were less than 1%. Portfolio loans were relatively flat as well, growing $11.93 million or ~~21.06%~~less than 1%. The ~~increase~~slight decrease in total assets is reflected in a corresponding ~~increase~~decrease in total liabilities of ~~$846.91~~$17.72 million or ~~13.92%~~less than 1% from year-end ~~2006.~~2007. The ~~increase~~decrease in total liabilities was due mainly to a reduction of $100.59 million or 5.56% in borrowings. Partially offsetting this decrease in borrowings was an increase in deposits of ~~$518.03~~$69.76 million or ~~10.73%~~1.30% and ~~$324.28~~accrued expenses and other liabilities of $19.16 million or ~~27.45% in deposits and borrowings, respectively, mainly due to the Premier acquisition.~~29.35%. Shareholders’ equity increased ~~$121.18~~$9.95 million or ~~19.11%~~1.31% from year-end ~~2006 due primarily to the~~

~~acquisition of Premier.~~2007. The following discussion explains in more detail the changes in financial condition by major category.

Cash and Cash Equivalents

Cash and cash equivalents ~~decreased $54.55~~at March 31, 2008 were relatively flat from year-end 2007, decreasing $1.76 million or ~~21.06% during the first nine months of 2007.~~less than 1%. Of this total decrease, cash and due from banks ~~decreased $50.33 million or 23.14%~~ and federal funds sold decreased ~~$6.13~~$11.49 million or ~~32.99%. Interest-bearing~~5.67% and $6.64 million or 37.95%, respectively, while interest-bearing deposits with other banks increased ~~$1.91 million or 8.33%.~~$16.37 million. During the first ~~nine~~three months of ~~2007,~~2008, net cash of ~~$67.82~~$31.88 million and $8.88 million was provided by operating ~~activities.~~activities and investing activities, respectively. Net cash of ~~$78.27 million and $44.11~~$42.52 million was used in ~~investing 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~~three months of ~~2007~~2008 and ~~2006.~~2007.

Securities

Total investment securities at ~~September 30, 2007 increased $47.80~~March 31, 2008 were relatively flat, decreasing $13.68 million or ~~3.75%~~less than 1% from year-end ~~2006. Premier added approximately $36 million in investment securities, including purchase accounting amounts, at merger.~~2007. Securities available for sale ~~increased $88.30~~were relatively flat, decreasing $3.80 million or ~~8.74%~~less than 1%. This change in securities available for sale reflects ~~$502.61~~$123.81 million in sales, maturities and calls of securities, ~~$558.41~~$118.14 million in purchases, and an increase of ~~$2.72~~$1.89 million in market value. ~~Premier added approximately $31 million in available for sale securities.~~ Securities held to maturity decreased ~~$54.04~~$6.19 million or ~~25.46%~~3.94% from year-end ~~2006~~2007 due to calls and maturities of securities. Other investment securities decreased $3.69 million or 4.56% due to a redemption of FHLB stock. The amortized cost and estimated fair value of investment securities, including types and remaining maturities, is presented in Note 3 to the unaudited Notes to Consolidated Financial Statements.

Loans

Loans held for sale ~~decreased $1.09 million~~increased $581 thousand or ~~53.26%~~45.75% as loan originations exceeded loan sales in the secondary market ~~exceeded originations~~ during the first ~~nine~~three months of ~~2007.~~2008. Portfolio loans, net of unearned income, ~~increased $779.58~~were relatively flat, increasing $11.93 million or ~~16.22%~~less than 1% from year-end ~~2006 mainly as a result of the Premier acquisition which added approximately $751 million, including purchase accounting amounts,~~2007 due to increases in ~~portfolio loans. Since year-end 2006, commercial real estate loans and~~ commercial loans (not secured by real estate) ~~increased $296.87~~of $23.36 million or ~~25.90% and $117.68 million or 12.34%, respectively. Loans secured by other real estate increased $69.16 million or 57.65%~~1.93%, construction loans ~~increased $117.07~~of $17.32 million or ~~22.38%~~2.88%, and commercial real estate loans of $17.06 million or 1.13%. These increases were partially offset by decreases from year-end 2007 in single-family residential real estate loans ~~increased $156.72~~of $25.22 million or ~~9.11%~~1.34%, ~~and consumer~~installment loans ~~increased $22.03~~of $14.06 million or ~~6.30%~~4.04% and other real estate loans of $6.08 million or 2.53%. ~~The increases were due primarily to the Premier merger.~~

The following table ~~below~~ summarizes the changes in the loan categories since year-end ~~2006:~~2007:


	September 30			December 31									March 31			December 31
(Dollars in thousands)	2007			2006			$ Change			% Change			2008			2007			$ Change			% Change
Loans held for sale	$	954		$	2,041		$	(1,087	)		(53.26	%)	$	1,851		$	1,270		$	581			45.75	%


Commercial, financial, and agricultural	$	1,071,706		$	954,024		$	117,682			12.34	%	$	1,233,411		$	1,210,049		$	23,362			1.93	%
Real Estate:
Single family residential		1,877,510			1,720,794			156,716			9.11	%		1,857,278			1,882,498			(25,220	)		(1.34	%)
Commercial		1,442,874			1,146,007			296,867			25.90	%		1,524,599			1,507,541			17,058			1.13	%
Construction		640,116			523,042			117,074			22.38	%		618,643			601,323			17,320			2.88	%
Other		189,137			119,973			69,164			57.65	%		233,826			239,907			(6,081	)		(2.53	%)
Consumer		371,902			349,868			22,034			6.30	%		344,735			359,243			(14,508	)		(4.04	%)
Less: Unearned income		(6,919	)		(6,961	)		42			(0.60	%)		(7,080	)		(7,077	)		(3	)		0.04	%

Total Loans, net of unearned income	$	5,586,326		$	4,806,747		$	779,579			16.22	%	$	5,805,412		$	5,793,484		$	11,928			0.21	%

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

~~Goodwill~~

Goodwill increased $145.44 million or 86.87% since December 31, 2006. The Premier acquisition added approximately $148 million. Goodwill was reduced in the third quarter of 2007 by $2.28 million due to expiration of the statute of limitations for income tax matters related to a prior acquisition that were previously recorded as a part of the purchase price allocation.

Other Assets

Other assets increased ~~$29.40~~$3.77 million or ~~16.52%~~1.77% from year-end ~~2006. The Premier merger added approximately $12~~2007 due mainly to increases of $3.32 million in ~~other~~deferred tax assets, ~~at merger plus an additional $11.11~~$2.42 million in ~~core deposit intangibles. The~~the funded status of United’s pension plan, and $1.31 million in the cash surrender value of bank-owned life insurance ~~policies increased $10.56~~policies. Partially offsetting these increases from year-end 2007 was a decrease in income taxes receivable of $1.59 million ~~as approximately $7~~and a decrease in core deposit intangibles of $1.02 million ~~was acquired from Premier while the remaining increase was~~ due to an increase in the cash surrender value. Investment in nonconsolidated subsidiaries increased $3.76 million during the year due to two new statutory trust subsidiaries formed in the third quarter of 2007 for the purpose of participating in pools of trust preferred capital securities.amortization.

Deposits

Total deposits at ~~September 30, 2007~~March 31, 2008 increased ~~$518.03~~$69.76 million or ~~10.73%~~1.30% since year-end ~~2006 as a result of the Premier acquisition. Premier added approximately $717 million in deposits, including purchase accounting amounts.~~2007. In terms of composition, noninterest-bearing deposits decreased ~~$28.51~~$32.29 million or ~~3.16%~~3.54% while interest-bearing deposits increased ~~$546.55~~$102.05 million or ~~13.92%~~2.30% from ~~year-end 2006.~~

December 31, 2007. The decrease in noninterest-bearing deposits was due mainly to a decrease in official checks of ~~$44.42~~$17.63 million ~~as a result of~~due to a large amount of loan proceeds checks at year-end ~~2006.~~2007. Commercial ~~noninterest-bearing~~noninterest bearing deposits ~~increased $22.05~~declined $6.16 million or ~~3.85% due mainly to the Premier acquisition. Personal noninterest-bearing deposits declined $3.23 million or 1.31%~~1.01% as customers shifted money into interest-bearing products. Personal noninterest bearing deposits were relatively flat from year-end 2007, declining $1.36 million or less than 1%.

3133

The increase in interest-bearing deposits was due mainly to ~~the Premier merger as all major categories of interest-bearing deposits increased. Time deposits under $100,000 increased $272.26 million,~~a growth in time deposits over $100,000 of $63.01 million or 6.61% and time deposits under $100,000 of $22.41 million or 1.44%. Regular savings balances increased ~~$163.69~~$8.19 million ~~interest-bearing~~or 2.52%. Interest bearing money market accounts (MMDAs) ~~increased $60.23~~were relatively flat, increasing $5.44 million ~~NOW accounts increased $34.40 million and regular savings increased $15.96 million.~~or less than 1%. This increase in interest-bearing deposits was due likely to the volatility in the stock market as well as aggressive pricing on large commercial time deposits.

The ~~following~~ table below summarizes the changes in the deposit categories since year-end ~~2006:~~2007:


	September 30		December 31								March 31		December 31
(Dollars In thousands)	2007		2006		$ Change			% Change			2008		2007		$ Change			% Change
Demand deposits	$	365,005	$	429,504	$	(64,499	)		(15.02	%)	$	376,838	$	409,109	$	(32,271	)		(7.89	%)
Interest-bearing checking		194,028		159,628		34,400			21.55	%		177,677		174,666		3,011			1.72	%
Regular savings		333,602		317,642		15,960			5.02	%		332,921		324,728		8,193			2.52	%
Money market accounts		1,925,523		1,829,300		96,223			5.26	%		1,935,401		1,929,985		5,416			0.28	%
Time deposits under $100,000		1,590,102		1,317,839		272,263			20.66	%		1,579,883		1,557,478		22,405			1.44	%
Time deposits over $100,000		937,966		774,279		163,687	��		21.14	%		1,016,791		953,784		63,007			6.61	%

Total deposits	$	5,346,226	$	4,828,192	$	518,034			10.73	%	$	5,419,511	$	5,349,750	$	69,761			1.30	%

Borrowings

Total borrowings at ~~September 30, 2007 increased $324.28~~March 31, 2008 decreased $100.59 million or ~~27.45%~~5.56% during the first ~~nine~~three months of ~~2007. Premier added approximately $114 million at merger.~~2008. Since year-end ~~2006,~~2007, short-term borrowings ~~increased $48.35~~decreased $90.09 million or ~~7.09%~~8.70% due to ~~an increase of $114.35~~a $162 million reduction in overnight FHLB borrowings. Federal funds purchased increased $14.62 million or 15.06% while securities sold under agreements to ~~repurchase. This increase was partially offset by reductions of $45~~repurchase increased $60.97 million ~~in overnight FHLB borrowings and $19.32 million in federal funds purchased. Premier added approximately $20 million in short-term borrowings at merger.~~or 12.19% since year-end 2007. Long-term borrowings ~~increased $275.93~~decreased $10.50 million or ~~55.27% since year-end 2006 as long term FHLB advances increased $154.77 million or 37.39%. Premier added approximately $55 million in FHLB advances. During~~1.36% due to the ~~third~~redemption during the quarter ~~of 2007, United participated in two pools~~ of trust preferred capital securities totaling $80 million with the proceeds invested in junior subordinated debt securities of United. The proceeds of the issuance were used to help fund the cash portion of the acquisition price for Premier. In addition, United assumed approximately $39 million of junior subordinated debt securities in the ~~Premier merger.~~

In June 2007, United prepaid two $100 million long-term FHLB advances and terminated two interest rate swaps associated with the advances. In addition, United prepaid approximately $28.9 million of a $100 million long-term convertible FHLB advance. United incurred a before-tax chargeamount of approximately $786 thousand to prepay the debt and a before-tax gain of $787 thousand on the termination of the interest rate swaps. United replaced the $228.9 million of debt with a 3-year FHLB advance and an associated interest rate swap.$10 million.

The table below summarizes the change in the borrowing categories since year-end ~~2006:~~2007:


	September 30		December 31								March 31		December 31
(Dollars In thousands)	2007		2006		$ Change			% Change			2008		2007		$ Change			% Change
Federal funds purchased	$	78,405	$	97,720	$	(19,315	)		(19.77	%)	$	111,695	$	97,074	$	14,621			15.06	%
Securities sold under agreements to repurchase		575,206		460,858		114,348			24.81	%		560,960		499,989		60,971			12.19	%
Overnight FHLB advances		75,000		120,000		(45,000	)		(37.50	%)		272,000		434,000		(162,000	)		(37.33	%)
TT&L note option		2,007		3,688		(1,681	)		(45.58	%)		1,319		5,000		(3,681	)		(73.62	%)
Long-term FHLB advances		568,672		413,899		154,773			37.39	%		578,191		578,272		(81	)		(0.01	%)
Issuances of trust preferred capital securities		206,308		85,301		121,007			141.86	%		185,471		195,890		(10,419	)		(5.32	%)
Obligation under a capital lease agreement		151		—		151			100.00	%

Total borrowings	$	1,505,749	$	1,181,466	$	324,283			27.45	%	$	1,709,636	$	1,810,225	$	(100,589	)		(5.56	%)

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 30, 2007~~March 31, 2008 increased ~~$5.07~~$19.16 million or ~~7.79%~~29.35% from year-end ~~2006. Premier added approximately $12~~2007 mainly as a result of an increase in income taxes payable of $11.27 million ~~at merger. Otherwise, the~~due to a timing difference

in payments. In addition, derivative ~~liability associated with interest rate swaps~~liabilities increased ~~$1.70~~$8.39 million due to a change in ~~value. Partially offsetting these increases~~value and a liability was ~~a decrease~~recorded for split dollar life insurance policies based on the adoption of ~~$8.99 million in income taxes~~EITF 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements”. Interest payable decreased $922 thousand due to a ~~timing difference~~decline in borrowings and interest rates and other accrued expenses declined $1.32 million due to payments.

Shareholders’ Equity

Shareholders’ equity at ~~September 30, 2007~~March 31, 2008 increased ~~$121.18~~$9.95 million or ~~19.11%~~1.31% from ~~year-end 2006~~December 31, 2007 as United continued to balance capital adequacy and the return to shareholders. The increase in shareholders’ equity was due mainly ~~as a result of the Premier acquisition. The Premier transaction added approximately $102 million as 2,684,068 shares were issued from treasury for the merger at a cost of $93.71 million. Earnings~~to earnings net of dividends declared which equaled $13.16 million for the ~~first nine months of 2007 were $39.81 million.~~

During the first nine months of 2007, a total of 718,500 shares at a cost of $24.87 million were repurchased under a plan approved by United’s Board of Directors in May of 2006 to repurchase up to 1.7 million shares of United’s common stock on the open market. Since its inception, United has repurchased a total of 1,377,800 shares under the plan as of September 30, 2007.quarter.

Accumulated other comprehensive income ~~increased $1.89~~decreased $2.40 million due mainly to ~~an increase~~a decline of ~~$1.77~~$5.15 million, net of deferred income taxes, in the fair value of cash flow hedges. The fair value of United’s available for sale investment portfolio ~~which was partially offset by a decrease of $1.05~~increased $1.23 million, net of deferred ~~income taxes, in the fair value adjustments on cash flow hedges.~~taxes.

RESULTS OF OPERATIONS

Overview

Net income for the first ~~nine~~three months ~~and third quarter~~ of ~~2007~~2008 was ~~$74.72~~$25.70 million or ~~$1.79~~$0.59 per diluted share ~~and $25.80~~compared to $24.41 million or ~~$0.60~~$0.59 per ~~diluted~~ share ~~respectively. As previously mentioned, United completed its~~

acquisition of Premier Community Bankshares, Inc. (Premier) during the third quarter of 2007. The financial results of Premier are included in United’s results from the July 14, 2007 acquisition date.

~~Net income~~ for the first nine months and third quarter of 2006 was $64.23 million or $1.53 per diluted share and $14.17 million or $0.34 per diluted share, respectively. The results for the third quarter of 2006 included significant charges to prepay certain Federal Home Loan Bank (FHLB) long-term advances and terminate interest rate swaps associated with these advances. In addition to these significant charges, the results for the first ninethree months of 2006 included the results of a repositioning of United’s balance sheet in the first quarter of 2006. The balance sheet repositioning resulted in a loss from the sale of investment securities and a gain on the termination of an interest rate swap associated with the prepayment of an FHLB advance. Further information is provided in a more detailed discussion below.

2007. United’s annualized return on average assets for the first ~~nine~~three months of ~~2007~~2008 was ~~1.45%~~1.30% and return on average shareholders’ equity was ~~14.81%~~13.35% as compared to ~~1.29%~~1.51% and ~~13.38%~~15.44% for the first ~~nine~~three months of ~~2006. For the third quarter of 2007,~~2007. United’s ~~annualized~~returns compare very favorably to its most recently reported peer group banking companies’ (bank holding companies with total assets between $5 and $10 billion) average return on ~~average~~ assets ~~was 1.37% while the~~of 0.69% and average return on ~~average~~ equity ~~was 13.91% as compared to 0.85% and 8.83%, respectively, for the third quarter~~ of ~~2006.~~7.14%.

Tax-equivalent net interest income for the first ~~nine~~three months of ~~2007~~2008 was ~~$176.90~~$66.24 million, ~~which was flat~~an increase of $9.57 million or 16.88% from the prior year’s first ~~nine~~three months. ~~Tax-equivalent net interest income increased $4.50 million or 7.65% for the third quarter of 2007 as compared to the same period of 2006.~~ The provision for credit losses was ~~$2.75~~$2.10 million for the first ~~nine~~three months of ~~2007~~2008 as compared to ~~$1.17~~$350 thousand for the first three months of 2007. Noninterest income was $18.61 million for the first ~~nine~~three months of ~~2006. For~~2008, up $3.69 million or 24.77% when compared to the ~~quarters ended September 30, 2007 and 2006,~~first three months of 2007. Noninterest expense increased $9.86 million or 31.32% for the ~~provision for credit losses was $1.55 million and $571~~three months of 2008 compared to same period in 2007. Income taxes increased $408 thousand ~~respectively.~~

~~Noninterest income was $48.77 million~~or 3.60% for the first ~~nine~~three months of 2007, up $14.47 million from the first nine months of 2006. Included in total noninterest income for the first nine months of 2007 was a before-tax gain of $787 thousand on the termination of interest rate swaps associated with the prepayment of FHLB advances as compared to a before-tax loss of $4.60 million for the first nine months of 2006. In addition, United’s income from investment security transactions increased $3.57 million for the first nine months of 20072008 as compared to the ~~same period last year as United incurred a net loss on security transactions of $2.93 million in the~~ first quarter of 2006 due to an other than temporary impairment on approximately $86 million of low-yielding fixed rate investment securities which United subsequently sold as part of its balance sheet repositioning. For the third quarter of 2007, noninterest income was $17.33 million, an increase of $11.11 million from the third quarter of 2006. The increase resulted mainly from a before-tax loss of $7.66 million on the termination of an interest rate swap associated with the prepayment of an FHLB advance during the third quarter of 2006.

~~Noninterest expense decreased $1.55 million or 1.48% for the first nine~~three months of 2007 compared to the same period in 2006. Results for the first nine months of 2007 included $1.33 million of expenses and integration costs related to the Premier merger. Results for the first nine months of 2007 and 2006 both included penalties to prepay FHLB advances of $786 thousand and $8.26 million, respectively. For the third quarter of 2007, noninterest expense decreased $1.19 million or 2.96% from the third quarter of 2006. Included in the results for the third quarter of 2007 were expenses related to the Premier merger while the results for the third quarter of 2006 included penalties to prepay FHLB advances. Merger expenses and related integration costs of the Premier acquisition were $1.01 million for the third quarter of 2007. United’s

effective tax rate was ~~30.55%~~31.35% and ~~31.74%~~31.70% for the first ~~nine~~three months of 2008 and 2007, ~~and 2006, respectively, and 28.06% and 30.42% for the third quarter of 2007 and 2006,~~ respectively. During the third quarter of 2007, United reduced its income tax reserve by $1.06 million due to the expiration of the statute of limitations for examinations of certain years which resulted in a lower estimated effective tax rate for 2007.

Net Interest Income

Tax-equivalent net interest income for the first nine months of 2007 was $176.90 million which was virtually flat from the prior year’s first nine months. Average earning assets increased $148.39 million or 2.43% as average net loans increased $255.16 million or 5.45% due mainly to the Premier acquisition. In addition, the average yield on earning assets for the first nine months of 2007 increased 31 basis points from the first nine months of 2006 due to higher interest rates. However, as a result of the higher interest rates, the average cost of funds for the first nine months of 2007 increased 41 basis points from the first nine months of 2006. In addition, for the nine months ended September 30, 2007, interest income from United’s asset securitization decreased $1.22 million or 34.07% from the same period in 2006. The net interest margin for the first nine months of 2007 was 3.78%, down 9 basis points from a net interest margin of 3.87% during the same period last year.

~~Tax-equivalent net interest income for the third~~ quarter of ~~2007~~2008 was ~~$63.32~~$66.24 million, an increase of ~~$4.50~~$9.57 million or ~~7.65%~~16.88% from the ~~third~~first quarter of ~~2006.~~2007. This increase in tax-equivalent net interest income was primarily attributable to a ~~$672.12 million~~$1.13 billion or ~~11.08%~~18.81% increase in average earning assets resulting primarily from the Premier acquisition. Average net loans increased ~~$663.08 million~~$1.03 billion or ~~14.03%~~21.82% while average investment securities ~~declined $26.13~~increased $105.99 million or ~~2.01%~~8.33%. ~~In addition,~~Additionally, the average cost of funds for the first quarter of 2008 declined 56 basis points from the first quarter of 2007 due to a decrease in market interest rates and the refinancing of long-term debt during the second and fourth quarters of 2007. However, the average yield on

earning assets ~~for the third quarter of 2007 increased 20~~declined 42 basis points ~~from~~due to the ~~third quarter of 2006. Partially offsetting these increases to net~~decrease in market interest ~~income was a 26 basis point increase in the cost of funds from the third quarter of 2006.~~rates. The net interest margin for the ~~third~~first quarter of ~~2007~~2008 was ~~3.75%~~3.72%, down 127 basis points from a net interest margin of ~~3.87%~~3.79% for the ~~third~~first quarter of ~~2006.~~2007.

On a linked-quarter basis, United’s tax-equivalent net interest income for the ~~third~~first quarter of 2008 increased $1.25 million or 1.92% from the fourth quarter of 2007 ~~increased $6.42~~due mainly to a $155.67 million or ~~11.27% from the second quarter of 2007. This increase in tax-equivalent net interest income was due primarily to a $736.72 million or 12.28%~~2.23% increase in average earning assets ~~resulting mainly from~~for the ~~Premier acquisition.~~quarter. Average net loans ~~increased $672.06~~grew $121.37 million or ~~14.25% and~~2.17% while average investment securities increased ~~$37.20~~$38.77 million or ~~3.00%~~2.89%. ~~In addition,~~Additionally, the average ~~yield on earning assets increased 11~~cost of funds declined 51 basis points ~~for~~on a linked-quarter basis due to a decrease in market interest rates and the ~~quarter.~~refinancing of long-term debt late in the fourth quarter of 2007. Partially offsetting these increases to net interest income was ~~an 8~~a decrease of 41 basis ~~point increase~~points in the ~~cost of funds from the second~~first quarter of ~~2007.~~2008 average yield on earning assets due to the decline in market interest rates. The net interest margin of 3.72% for the ~~third~~first quarter of ~~2007~~2008 was an increase of ~~3.75% was a decrease of 5~~one basis ~~points~~point from the net interest margin of ~~3.80%~~3.71% for the ~~second~~fourth quarter of 2007.

~~Tables 1 and 2 below show~~The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month period ended March 31, 2008 and ~~nine-month periods ended September 30,~~ 2007, ~~and 2006,~~ 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 35%. The interest income and yield on state nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory state income ~~tax~~ rate of 8.75% in 2008 and 9%. in 2007.

~~Table 1~~


	Three Months Ended								Three Months Ended
Table 1																	Three Months Ended								Three Months Ended
	September 30, 2007								September 30, 2006								March 31, 2008								March 31, 2007
	Average					Avg.			Average					Avg.			Average					Avg.			Average					Avg.
(Dollars in thousands)	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate

ASSETS
Earning Assets:
Federal funds sold and securities repurchased under agreements to resell and other short-term investments	$	73,025		$	876		4.76	%	$	37,862		$	515		5.41	%	$	35,225		$	272		3.10	%	$	36,433		$	505		5.62	%
Investment Securities:
Taxable		1,055,455			13,832		5.24	%		1,074,752			13,934		5.19	%		1,147,964			15,153		5.28	%		1,049,836			13,430		5.12	%
Tax-exempt (1) (2)		221,351			4,549		8.22	%		228,185			4,918		8.62	%		230,055			4,411		7.67	%		222,196			4,552		8.19	%

Total Securities		1,276,806			18,381		5.76	%		1,302,937			18,852		5.79	%		1,378,019			19,564		5.68	%		1,272,032			17,982		5.65	%
Loans, net of unearned income (1) (2) (3)		5,436,915			102,262		7.47	%		4,768,835			86,959		7.25	%		5,774,545			97,670		6.79	%		4,742,343			86,146		7.34	%
Allowance for loan losses		(49,088	)							(44,087	)							(50,629	)							(43,603	)

Net loans		5,387,827					7.54	%		4,724,748					7.31	%		5,723,916					6.86	%		4,698,740					7.41	%

Total earning assets		6,737,658		$	121,519		7.17	%		6,065,547		$	106,326		6.97	%		7,137,160		$	117,506		6.61	%		6,007,205		$	104,633		7.03	%

Other assets		759,307								560,501								785,414								554,125

TOTAL ASSETS	$	7,496,965							$	6,626,048							$	7,922,574							$	6,561,330


LIABILITIES
Interest-Bearing Funds:
Interest-bearing deposits	$	4,391,017		$	40,176		3.63	%	$	3,897,572		$	32,312		3.29	%	$	4,474,910		$	35,129		3.16	%	$	3,855,911		$	33,170		3.49	%
Short-term borrowings		712,609			8,220		4.58	%		680,201			7,142		4.17	%		991,345			6,830		2.77	%		678,696			7,502		4.48	%
Long-term borrowings		714,870			9,801		5.44	%		497,516			8,052		6.42	%		779,881			9,309		4.80	%		506,497			7,288		5.84	%

Total Interest-Bearing Funds		5,818,496			58,197		3.97	%		5,075,289			47,506		3.71	%		6,246,136			51,268		3.30	%		5,041,104			47,960		3.86	%

Noninterest-bearing deposits		876,034								852,850								840,443								811,765
Accrued expenses and other liabilities		66,534								61,216								61,581								67,523

TOTAL LIABILITIES		6,761,064								5,989,355								7,148,160								5,920,392
SHAREHOLDERS’ EQUITY		735,901								636,693								774,414								640,938

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	7,496,965							$	6,626,048							$	7,922,574							$	6,561,330

NET INTEREST INCOME				$	63,322							$	58,820							$	66,238							$	56,673


INTEREST SPREAD							3.20	%							3.26	%							3.31	%							3.17	%

NET INTEREST MARGIN							3.75	%							3.87	%							3.72	%							3.79	%


(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 35%.

(2)		The interest income and the yields on state nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory state income tax rate of ~~9%.~~

~~(3)~~		~~Nonaccruing loans are included~~8.75% in ~~the daily average loan amounts outstanding.~~

~~Table 2~~

Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2006
Average Avg. Average Avg.
(Dollars in thousands) Balance Interest Rate Balance Interest Rate

ASSETS

Earning Assets:
Federal funds sold and securities repurchased under agreements to resell and other short-term investments $ 51,807 $ 1,980 5.11 % $ 39,856 $ 1,235 4.14 %
Investment Securities:
Taxable 1,041,117 40,446 5.18 % 1,147,628 43,371 5.04 %
Tax-exempt (1) (2) 221,716 13,631 8.20 % 233,930 15,062 8.59 %

Total Securities 1,262,833 54,077 5.71 % 1,381,558 58,433 5.64 %
Loans, net of unearned income (1) (2) (3) 4,982,200 275,883 7.40 % 4,725,633 250,216 7.08 %
Allowance for loan losses (45,560 ) (44,153 )

Net loans 4,936,640 7.47 % 4,681,480 7.14 %

Total earning assets 6,251,280 $ 331,940 7.10 % 6,102,894 $ 309,884 6.79 %

Other assets 624,307 558,016

TOTAL ASSETS $ 6,875,587 $ 6,660,910

LIABILITIES

Interest-Bearing Funds:
Interest-bearing deposits $ 4,040,301 $ 107,574 3.56 % $ 3,792,935 $ 84,807 2.99 %
Short-term borrowings 679,128 22,846 4.50 % 776,772 23,029 3.96 %
Long-term borrowings 582,512 24,619 5.65 % 512,314 25,111 6.55 %

Total Interest-Bearing Funds 5,301,941 155,039 3.91 % 5,082,021 132,947 3.50 %

Non-interest bearing deposits 831,739 875,556
Accrued expenses and other liabilities 67,190 61,668
TOTAL LIABILITIES 6,200,870 6,019,245
SHAREHOLDERS’ EQUITY
674,717 641,665

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 6,875,587 $ 6,660,910

NET INTEREST INCOME
$ 176,901 $ 176,937

INTEREST SPREAD
3.19 % 3.29 %

NET INTEREST MARGIN
3.78 % 3.87 %


~~(1)~~		~~The interest income~~2008 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 35%.~~

~~(2)~~		~~The interest income and the yields on state nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory state income tax rate of~~ 9%. in 2007.

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

Provision for Credit Losses

For the quarters ended March 31, 2008 and 2007, the provision for credit losses was $2.10 million and $350 thousand, respectively. Net charge-offs were $1.79 million for the first quarter of 2008 as compared to net charge-offs of $336 thousand for the same quarter in 2007. The increase of $1.46 million was due largely to

an increase in the number of loans charged off due primarily to deteriorating economic conditions. The largest amount charged off during the first quarter of 2008 was $400 thousand on a residential real estate construction loan. Annualized net charge-offs as a percentage of average loans were 0.13% for the first quarter of 2008. This ratio compares very favorably to United’s most recently reported peer group banking companies’ net charge-offs to average loans percentage of 0.45%.

At ~~September 30, 2007,~~March 31, 2008, nonperforming loans were ~~$22.79~~$37.48 million or ~~0.41%~~0.65% of loans, net of unearned income compared to nonperforming loans of ~~$14.19~~$28.33 million or ~~0.30%~~0.49% of loans, net of unearned income at December 31, ~~2006,~~2007, respectively. ~~The increase was due largely to nonperforming loans of $5.63 million added from the Premier merger.~~ The components of nonperforming loans include nonaccrual loans and

loans, which are contractually past due 90 days or more as to interest or principal, but have not been put on a nonaccrual basis. At ~~September 30, 2007,~~March 31, 2008, nonaccrual loans were ~~$8.96~~$25.10 million, an increase of ~~$3.20~~$10.99 million or 77.85% from ~~$5.76~~$14.12 million at year-end ~~2006. Premier added $2.23~~2007. The increase for the quarter was due mainly to $9.11 million inof loans to five customers being placed on nonaccrual ~~loans.~~status as of March 31, 2008. The loss potential on these loans has been properly evaluated and allocated within the company’s allowance for loan losses. Loans past due 90 days or more were ~~$13.83~~$12.38 million at ~~September 30, 2007, an increase~~March 31, 2008, a decline of ~~$5.40~~$1.84 million or 12.91% from ~~$8.43~~$14.21 million at year-end ~~2006. Premier added $3.40~~2007. The reduction was due to one large consumer credit of $3.45 million inbeing placed on nonaccrual status while loans ~~past due 90 days or more. Otherwise, the additional increase in nonaccrual loans and loans~~totaling $1.96 million to four customers became past due 90 days or more were due mainly to the addition of certain residential real estate construction credits originated by a former United loan officer with an outstanding balance of $3.67 million being either 90-plus days delinquent or on nonaccrual status as of September 30, 2007.at March 31, 2008. Total nonperforming assets of ~~$28.12~~$44.52 million, including OREO of ~~$5.34~~$7.04 million at ~~September 30, 2007,~~March 31, 2008, represented ~~0.37%~~0.56% of total assets at the end of the ~~third~~first quarter which compares favorably to ~~United’s~~the most recently reported ~~peer group banking companies’ (bank holding companies with total assets between $5 and $10 billion)~~ percentage of ~~0.45%.~~0.60% for United’s peer group. For a summary of nonperforming assets, see Note 6 to the unaudited Notes to Consolidated Financial Statements.

At ~~September 30, 2007,~~March 31, 2008, impaired loans were ~~$29.85~~$44.42 million, which was an increase of ~~$7.89~~$13.47 million or 43.51% from the ~~$21.96~~$30.95 million in impaired loans at December 31, ~~2006.~~2007. This increase in impaired loans was due primarily to the addition of ~~two large collateralized commercial credits with a total balance of $7.32 million and to an increase of $2.92 million from the above mentioned certain~~several residential real estate construction ~~credits. Charge-offs of $1.30 million and $3.02~~loans totaling approximately $6.88 million. The loans are collateralized by land, some with partially completed homes. In addition, two large commercial credits totaling $6.59 million were ~~recognized on the real estate construction credits~~added during the ~~third~~first quarter ~~and first nine months~~ of ~~2007, respectively, which were previously reported as impaired with specific allowances allocated in the company’s allowance for~~2008. Each credit ~~losses.~~is collateralized by motor vehicle inventory. Based on current information and events, United believes it is probable that the borrowers will not be able to repay all amounts due according to the contractual terms of the loan ~~agreements~~agreements. The loss potential on these loans has been properly evaluated and ~~therefore, specific allowances in~~allocated within the company’s allowance for ~~credit losses have been allocated for all of these loans.~~loan losses. For further details regarding impaired loans, see Note 6 to the unaudited Consolidated Financial Statements.

United maintains an allowance for loan losses and an allowance for lending-related commitments. The combined allowances for loan losses and lending-related commitments are referred to as the allowance for credit losses. United evaluates the adequacy of the allowance for credit losses and its loan administration policies are focused upon the risk characteristics of the loan portfolio. United’s process for evaluating the allowance is a formal company-wide process that focuses on early identification of potential problem credits and procedural discipline in managing and accounting for those credits. This process determines the appropriate level of the allowance for credit losses, allocation among loan types and lending-related commitments, and the resulting provision for credit losses.

United maintains an allowance for loan losses and an allowance for lending-related commitments. The combined allowances for loan losses and lending-related commitments are referred to as the allowance for credit losses. At ~~September 30, 2007,~~March 31, 2008, the allowance for credit losses was ~~$58.62~~$59.05 million as compared to ~~$52.37~~$58.74 million at December 31, ~~2006.~~2007. As a percentage of loans, net of unearned income, the allowance for credit losses was ~~1.05%~~1.02% at ~~September 30, 2007~~March 31, 2008 and ~~1.09%~~1.01% of loans, net of unearned income at December 31, ~~2006.~~2007. The ratio of

the allowance for credit losses to nonperforming loans was ~~257.3%~~157.6% and ~~369.2%~~207.4% at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively.

~~The provision~~Allocations are made for credit losses for the first nine months of 2007 and 2006 was $2.75 million and $1.17 million, respectively. For the quarters ended September 30, 2007 and 2006, the provision for credit losses was $1.55 million and $571 thousand, respectively. Net charge-offs for the first nine months of 2007 were $4.15 million as compared to $1.50 million for the first nine months of 2006. Net charge-offs were $1.80

million for the third quarter of 2007 as compared to net charge-offs of $930 thousand for the same quarter in 2006. Annualized net charge-offs as a percentage of average loans were 0.13% and 0.11% for the third quarter and first nine months of 2007, respectively. These ratios also compare favorably to United’s most recently reported peer group banking companies’ net charge-offs to average loans percentage of 0.18% for the quarter and 0.21% year-to-date. The increase in net charge-offs from last year’s third quarter and first nine months was due mainly to the charge-offs of $1.30 million and $3.02 million for the third quarter and first nine months of 2007 on the residential real estate construction credits mentioned above. Note 5 to the accompanying unaudited Notes to Consolidated Financial Statements provides a progression of the allowance for credit losses.

~~In determining the adequacy of the allowance for credit losses, management makes allocations to~~ specific commercial loans ~~classified by management as to the level~~based upon management’s estimate of ~~risk. Management determines the loan’s risk by considering~~ the borrowers’ ability to repay ~~the collateral securing the credit~~ and other ~~borrower-specific~~ factors ~~that may impact~~impacting collectibility. Specific loss allocations are based on the present value of expected future cash flows using the loan’s effective interest rate, or as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent. Other commercial loans not specifically reviewed on an individual basis are evaluated based on historical loss percentages applied to loan pools ~~which are grouped~~that have been segregated by ~~similar risk characteristics using management’s internal risk ratings.~~risk. Allocations for ~~these~~loans other than commercial ~~loan pools~~loans are ~~determined~~made based upon historical loss experience adjusted for current conditions and risk factors. Allocations for loans, other than commercial loans, are developed by applying historical loss experience adjusted for current conditions and risk factors to loan pools grouped by similar risk characteristics. While allocations are made to specific loans and pools of loans, the allowance is available for all credit losses.conditions. The ~~allowance for imprecision is a relatively small component of the total~~ allowance for credit losses includes estimated probable inherent but undetected 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 ~~recognizes~~risk factors that have not yet fully manifested themselves in loss allocation factors. In addition, a portion of the ~~normal variance resulting from~~allowance accounts for the ~~process of estimation. Differences between actual loan~~inherent imprecision in the allowance for credit losses analysis. Over the past several years, United has grown through acquisition, and accordingly, expanded the geographic area in which it operates. As a result, historical loss experience ~~and~~data used to establish allocation estimates ~~are reviewed on a quarterly basis and adjustments are made~~might not precisely correspond to ~~those estimates.~~the current portfolio in these other geographic areas.

United’s formal company-wide process at ~~September 30, 2007~~March 31, 2008 produced increased allocations in three of the four loan categories. The components of the allowance allocated to commercial loans increased by ~~$4.5~~$2.34 million due to the impact of ~~the acquired loans from Premier,~~ increased loan ~~outstandings net of the acquisition~~volume and ~~higher~~an increase in qualitative ~~factors. Consumer loans~~factors for business and economic conditions. The real estate loan pool allocations increased ~~$221~~$167 thousand also as a result of ~~the Premier acquisition.~~a small increase in actual loss rates. The real estate construction loan pool allocations rose during the ~~first nine months~~quarter by ~~$2.4~~$2.58 million primarily due to ~~the Premier acquisition and a special~~an allocation of ~~$834~~$1.80 million ~~related~~ to recognize increased risk inherent in the ~~single family residential construction loan pool.~~present real estate market environment due to declining real estate values and consumer demand for certain properties. The components of the allowance allocated to ~~real estate~~consumer loans decreased by ~~$204~~$16 thousand due to reductions in ~~high loan to value outstandings, as well as changes in loan volume and qualitative factors.~~overall outstanding balances. The methodology for calculation of the unfunded commitments liability ~~decreased by $478 thousand~~was changed to ~~$8.3 million.~~be more consistent with industry practice and this resulted in a decrease of $6.05 million to $2.24 million at March 31, 2008.

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 bank 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 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 ~~$4.1~~$5.81 million at ~~September 30, 2007~~March 31, 2008 and ~~$3.0~~$3.61 million at December 31, ~~2006.~~2007. Compared to the prior year-end, this element of the allowance increased by ~~$1.1~~$2.20 million due to ~~the combination of the Premier acquisition~~an increase in impaired loans and ~~higher~~increased specific allocations ~~in the commercial and real estate construction and development loan pools.~~on certain impaired loans as a result of lower collateral values.

An allowance is also recognized for imprecision inherent in loan loss migration models and other estimates of loss. There are many factors affecting the allowance for loan losses and allowance for lending-related commitments; some are quantitative while others require qualitative judgment. Although management believes its methodology for determining the allowance adequately considers all of the potential factors to

identify and quantify probable losses in the portfolio, the process includes subjective elements and is therefore susceptible to change. This estimate for imprecision has been established to recognize the variance, within a reasonable margin, of the loss estimation process. The estimate for imprecision ~~decreased~~increased at ~~September 30, 2007~~March 31, 2008 by ~~$177 thousand~~$1.29 million to ~~$1.5~~$2.40 million. This represents ~~only 2.53%~~4.06% of the bank’s total allowance for credit loss and in as much as this variance approximates a pre-determined narrow parameter, the methodology has confirmed that the ~~Company’s~~Bank’s allowance for credit loss is at an appropriate level.

Management believes that the allowance for credit losses of ~~$58.62~~$59.05 million at ~~September 30, 2007~~March 31, 2008 is adequate to provide for probable losses on existing loans and loan-related commitments based on information currently available. Note 5 to the accompanying unaudited Notes to Consolidated Financial Statements provides a progression of the allowance for credit losses.

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~~southeastern Ohio, Virginia and Maryland. 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 ~~was $48.77 million~~ for the first nine months of 2007, up $14.47 million when compared to the first nine months of 2006. Included in total noninterest income for the first nine months of 2007 was a before-tax gain of $787 thousand on the termination of interest rate swaps associated with the prepayment of FHLB advances as compared to a before-tax loss of $4.60 million for the first nine months of 2006. In addition, United’s income from investment security transactions increased $3.57 million for the first nine

~~months of 2007 as compared to the same period last year as United incurred a net loss on security transactions of $2.93 million in~~ the first quarter of ~~2006 due to~~2008 was $18.61 million, which was an ~~other than temporary impairment on approximately $86 million~~increase of low-yielding fixed rate investment securities which United subsequently sold as part of its balance sheet repositioning. Excluding the results of the interest rate swap terminations and investment security transactions, noninterest income for the first nine months of 2007 would have increased $5.52$3.69 million or ~~13.14%~~24.77% from the first ~~nine months of 2006.~~

~~For the third~~ quarter of 2007, noninterest income was $17.33 million, an increase of $11.11 million from the third quarter of 2006. The increase was mainly due to a before-tax loss of approximately $7.66 million in the third quarter of 2006 on the termination of interest rate swaps associated with the prepayment of FHLB advances. Excluding the amounts associated with interest rate swap terminations and security transactions, noninterest income for the third quarter of 2007 would have increased $3.15 million or 22.47% from the third quarter of 2006.2007.

The ~~rise~~increase in noninterest income ~~in the first nine months of 2007~~ from the ~~same period in 2006 was due in large part to~~previous year’s first quarter primarily resulted from an increase ~~of $2.56 million or 11.86%~~ in fees from deposit services of $1.91 million or 26.54% due mainly ~~as a result of United’s~~to the High Performance Checking program and the Premier acquisition. ~~For the third quarter of 2007, fees from deposit services increased $1.72 million or 23.35% as compared to the same period in 2006.~~ In particular, insufficient funds (NSF) fees increased ~~$2.12~~$1.33 million, ~~and $1.35 million during the first nine months and third quarter of 2007, respectively, and~~ check card fees increased ~~$821~~$404 thousand ~~and $391 thousand, respectively. Deposit service charges~~ and account analysis fees ~~declined $266~~increased $114 thousand ~~and $243 thousand, respectively,~~ for the first ~~nine months~~quarter of ~~2007~~2008 as compared to the ~~same period in 2006. For the third~~first quarter of ~~2007, deposit service charges and account analysis fees declined $60 thousand and $94 thousand, respectively, compared to the third quarter of 2006.~~2007.

Revenue from trust and brokerage services ~~for the first nine months of 2007~~ grew ~~$1.24 million or 12.58% from the first nine months of 2006. For the third quarter of 2007, revenue from trust and brokerage services grew $598~~$393 thousand or ~~18.75% from the prior year’s third quarter.~~11.08% due to increased volume. United continues its efforts to broaden the scope and activity of its trust and brokerage service areas, especially in the northern Virginia market, to provide additional sources of fee income that complement United’s traditional banking products and services. The northern Virginia market provides a relatively large number

of potential customers with high per capita incomes.

Income from bank-owned life insurance ~~increased $680~~decreased $150 thousand or ~~20.70% for~~10.28% in the first ~~nine months~~quarter of 2008 from the first quarter of 2007 due to a decrease in the cash surrender value.

Mortgage banking income decreased $68 thousand or 42.24% due to fewer mortgage loan sales in the secondary market during the first quarter of 2008 as compared to last year’s first ~~nine months due to an increase in the cash surrender value, but was relatively flat for the third quarter of 2007 as compared to the third quarter of 2006.~~

~~Mortgage banking income decreased $168 thousand or 27.32% for the first nine months of 2007 from the same period in 2006 due to fewer sales.~~quarter. Mortgage loan sales were ~~$32.19~~$1.76 million in the first ~~nine~~three months ~~2007~~of 2008 as compared to ~~$40.90~~$10.49 million in the first ~~nine~~three months of ~~2006. Mortgage banking income~~2007.

Gains on investment securities transactions for the ~~third~~first quarter of ~~2007 decreased $112~~2008 increased $798 thousand ~~or 47.46% when compared to~~from the ~~same period in 2006 due once again to fewer sales. Mortgage loan sales were $9.47 million in the third~~first quarter of ~~2007 as compared~~2007. The increase was due mainly to ~~$18.60 million in~~a $917 thousand gain related to Visa’s initial public offering and the ~~third~~subsequent partial redemption during the first quarter of ~~2006.~~

~~Fees from bankcard transactions increased $507 thousand or 12.64% and $310 thousand or 22.03% for the~~

~~first nine months and third quarter~~2008 of ~~2007 as compared to the same time periods last year due to increased volume.~~Visa shares held by United.

Other income increased ~~$637 thousand and $443~~$463 thousand for the first ~~nine months and third~~ quarter of ~~2007, respectively. Income~~2008 due mainly to an increase of $595 thousand from derivatives not in a hedging relationship. A corresponding amount of expense is included in other expense in the income statement. Fees from the outsourcing of official checks ~~processing for~~decreased $121 thousand from the first ~~nine months and third~~ quarter of ~~2007 increased $477 thousand and $101 thousand, respectively, over the same periods last year.~~2007.

On a linked-quarter basis, noninterest income for the first quarter of 2008 increased ~~$801 thousand~~$9.63 million from the ~~second~~fourth quarter of 2007. Included in the results ~~from~~for the ~~second~~fourth quarter of 2007 was ~~the previously mentioned~~a before-tax ~~gain~~loss of ~~$787 thousand~~$8.90 million on the termination of an interest rate ~~swaps~~swap associated with the prepayment of a FHLB ~~advances.~~advance. Included in the results for the first quarter of 2008 was the previously mentioned $917 thousand gain related to the Visa shares. Excluding the results of ~~the interest rate swap terminations and investment~~ security transactions (which includes the partial redemption of the Visa shares) and the swap termination, noninterest income ~~for the third quarter of 2007~~ would have ~~increased $1.58 million or 10.15% from the second quarter of 2007 as deposit service fees increased $1.22 million or 15.48% and bankcard transaction fees increased $272~~decreased $789 thousand or ~~18.85%.~~4.28% on a linked-quarter basis. This decrease was primarily due to a decline of $618 thousand or 6.37% in fees from deposit services due to seasonality and a decline of $378 thousand or 8.76% in revenue from trust and brokerage services due to less volume.

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.

~~For~~ Noninterest expense for the first ~~nine months~~quarter of ~~2007, noninterest expenses decreased $1.55~~2008 was $41.36 million, an increase of $9.86 million or ~~1.48%~~31.32% from the first ~~nine months~~quarter of ~~2006. Results~~2007.

The increase in noninterest expense for the first ~~nine months~~quarter of ~~2007 included expenses related~~2008 was primarily due to the Premier merger. Results for the first nine months of 2007 and 2006 both included penalties to prepay FHLB advances. Merger expenses and related integration costs of the Premier acquisition were $1.33 million for the first nine months of 2007. United incurred before-tax penalties of $786 thousand and $8.26 million to prepay FHLB advances during the first nine months of 2007 and 2006, respectively.

~~Noninterest expenses decreased $1.19~~a $4.17 million or ~~2.96% for the third quarter of 2007~~28.10% increase in salaries and benefits expense as compared to the same period last year. The increase in 2006. Included in the results for the third quarter of 2007 were expenses related to the Premier merger while the results for the third quarter of 2006 included penalties to prepay FHLB advances. Merger expenses and related integration costs of the Premier acquisition were $1.01 million for the third quarter of 2007. United incurred before-tax penalties of approximately $8.26 million to prepay FHLB advances during the third quarter of 2006.

~~Salaries~~salaries and benefits expense ~~for the first nine months of 2007~~ was flat from the first nine months of 2006, increasing $41 thousand or less than 1%. Salaries increased $1.83 million or 5.06% due mainly to the additional employees from the Premier merger while benefits expense decreased $1.13 million or 12.21% due to a decrease of $1.99 million in pension expense. During the third quarter of 2006, United made a significant contribution to its pension plan as allowed by the Pension Protection Act of 2006. This large contribution has resulted in decreased pension expense for United in the year 2007 as compared to 2006. Salaries and benefits expense for the third quarter of 2007 increased $1.71 million or 10.88% from the third quarter of 2006. Salaries increased $1.52 million or 12.21% due mainly to the additional employees from the Premier merger. ~~Pension~~Of this total increase, salaries and employee incentives increased $3.45 million while benefits expense increased $630 thousand. Specifically within benefits expense were increases in health insurance costs and employment taxes of $318 thousand and $238 thousand, respectively. Also included in salaries and benefits expense for the ~~third~~first quarter of ~~2007 decreased $565 thousand from~~2008 was expense for stock options of $137 thousand. No expense for stock options was incurred in the ~~same~~first quarter of 2007.

4241

~~period in 2006.~~

Net occupancy expense for the first ~~nine months and third~~ quarter of ~~2007~~2008 increased ~~$935~~$841 thousand or ~~9.89% and $792 thousand or 26.13%~~24.33% from the first ~~nine months and third~~ quarter of ~~2006, respectively.~~2007. The ~~increases were~~increase was due mainly to additional building depreciation, building rental expense, and ~~real property taxes~~building maintenance from the branches added in the Premier merger. Equipment expense increased $343 thousand or 23.64% during the same time periods due mainly to increases in depreciation and maintenance primarily as a result of the Premier acquisition.

Data processing expense increased ~~$1.97~~$1.08 million or ~~44.56% and $971 thousand or 65.74%~~62.87% for the first ~~nine months and third~~ quarter of ~~2007, respectively,~~2008 as compared to the first ~~nine months and third~~ quarter of ~~2006.~~2007. The ~~increases were~~increase was primarily due to additional outsourcing of processing functions and a change in processing procedures in addition to the Premier merger. The outsourcing of functions was partially offset by a reduction in personnel expense while the change in processing procedures is expected to result in future cost savings as United meets the requirements of Check 21.

Other expenses increased ~~$2.36~~$3.27 million or ~~8.56% and $2.91 million or 32.81%~~37.01% for the first ~~nine months and third~~ quarter of ~~2007~~2008 as compared to the ~~first nine months and third quarter~~same period of ~~2006. Included in other expenses for~~ 2007 ~~are merger and related integration costs of $1.33 million and $1.01 million for~~due primarily to the Premier ~~acquisition. In addition, amortization~~merger. Several general operating expenses such as postage, telephone, ATM processing, office supplies, advertising and business franchise taxes increased as a result of the additional branches from the Premier merger. None of the increases were individually significant. Amortization of core deposit intangibles for the first ~~nine months and third~~quarter of 2008 increased $610 thousand from the first quarter of 2007 ~~increased $337 thousand and $542 thousand, respectively, from the same time periods in 2006 due to~~as a result of the Premier merger. Other expenses of note that increased for the first nine months and third quarter of 2007 from last year’s results were loan collection, armored carrier, postage, ATM and bankcard processing costs. Marketing and related costs of United’s High Performance Checking program declined $759 thousand and $55 thousand in the first nine months and third quarter of 2007, respectively, as compared to the first nine months and third quarter of 2006.

On a linked-quarter basis, noninterest expense for the ~~third~~first quarter of ~~2007 increased $6.53~~2008 decreased $3.56 million from the ~~second~~fourth quarter of 2007 due mainly to before-tax penalties of $4.33 million to prepay FHLB advances during the ~~Premier merger. Accordingly, most major categories~~fourth quarter of 2007. Excluding the prepayment penalties, noninterest expense ~~showed increases. In particular,~~for the first quarter of 2008 would have increased $773 thousand or 1.91% from the fourth quarter of 2007 as salaries and employee benefits expense increased ~~$2.82 million, net occupancy expense~~$995 thousand or 5.52%. Salaries for the first quarter of 2008 increased ~~$709~~$379 thousand ~~equipment expense~~or 2.61% due to a higher level of base salaries for employees. Employee benefits expenses increased ~~$702~~$740 thousand ~~core deposit amortization increased $618~~or 28.89% due to increases for the quarter in employment taxes of $274 thousand, pension costs of $211 thousand, and ~~armored carrier expense increased $468 thousand all mainly the result of the Premier merger. Merger expenses and related integration~~health insurance costs of $210 thousand.

Income Taxes

For the ~~Premier acquisition~~first quarter of 2008, income taxes were ~~$1.01~~$11.73 million as compared to $11.33 million for the ~~third quarter of 2007 as compared to $263 thousand for the second~~first quarter of 2007. ~~Included in noninterest expense for~~For the ~~second quarter of~~quarters ended March 31, 2008 and 2007, ~~was a before-tax penalty of $786 thousand~~United’s effective tax rates were 31.35% and 31.70%, respectively. For further details related to ~~prepay approximately $28.9 million of a $100 million long-term convertible FHLB advance.~~

~~As previously discussed in~~income taxes, see Note 1115 of the unaudited Notes to Consolidated Financial Statements contained within this document, United adopted SFAS 123R on January 1, 2006 using the modified prospective transition method. SFAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value based method and the recording of such expense in our consolidated statements of income. Under this transition method, compensation cost to be recognized beginning in the first quarter of 2006 included: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Results for prior periods were not restated. Due to a

modification on December 30, 2005 to accelerate any unvested options under United’s existing stock option plans and the fact that no new options have been granted during 2006 and the first nine months of 2007, United did not recognize any compensation cost for the third quarter and first nine months of 2007 and 2006.

The 2006 Stock Option Plan was approved by United’s shareholders on May 15, 2006. As of September 30, 2007, no stock options have been granted under the 2006 Stock Option Plan. Any stock options granted under the 2006 Stock Option Plan in the future will be subject to the provisions of SFAS 123R. A Form S-8 was filed on October 25, 2006 with the Securities and Exchange Commission to register all the shares available for the 2006 Stock Option Plan.

~~Income Taxes~~

For the first nine months of 2007 and 2006, income taxes were $32.88 million and $29.86 million, respectively. For the third quarter of 2007, income taxes were $10.06 million as compared to $6.19 million for the third quarter of 2006. During the third quarter of 2007, United reduced its income tax reserve by $1.06 million due to the expiration of the statute of limitations for examinations of certain years. United’s effective tax rates for the first nine months of 2007 and 2006 were 30.55% and 31.74%, respectively. For the quarters ended September 30, 2007 and 2006, United’s effective tax rates were 28.06% and 30.42%, respectively.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, ~~2006~~2007 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 ~~2006~~2007 in the specified contractual obligations disclosed in the Annual Report on Form 10-K.

On January 1, 2007, United adopted the provisions of FIN 48. As of ~~September 30, 2007,~~March 31, 2008, United recorded a liability for uncertain tax positions, including interest and penalties, of ~~$5.9~~$7.95 million in accordance with FIN

48. This liability represents an estimate of tax positions that United has taken in its tax returns which may ultimately not be sustained upon examination by tax authorities. Since the ultimate amount and timing of any future cash settlements cannot be predicted with reasonable certainty, this estimated liability is excluded from the contractual obligations table.

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~~contacts are carried at fair value and not notional value on the consolidated balance sheet. 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. ~~To help attract these lower cost deposits, United introduced its High Performance Checking program during the first quarter of 2006.~~ Short-term borrowings have also been a significant source of funds. These include federal funds purchased and securities sold under agreements to repurchase as well as advances from the FHLB. Repurchase agreements represent funds which are obtained as the result of a competitive bidding process.

Liquid assets are cash and those items readily convertible to cash. All banks must maintain sufficient balances of cash and near-cash items to meet 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~~funds’ availability from a number of primary sources. Substantial funding is available from cash and cash equivalents, unused short-term borrowing and a geographically dispersed network of branches providing access to a diversified and substantial retail deposit market.

Short-term needs can be met through a wide array of outside sources such as correspondent and downstream

correspondent federal funds and utilization of Federal Home Loan Bank advances.

Other sources of liquidity available to United to provide long-term as well as short-term funding alternatives, in addition to FHLB advances, are long-term certificates of deposit, lines of credit, borrowings that are secured by bank premises or stock of United’s subsidiaries and issuances of trust preferred securities. In the normal course of business, United through its Asset Liability Committee evaluates these as well as other alternative funding strategies that may be utilized to meet short-term and long-term funding needs.

For the ~~nine~~three months ended ~~September 30, 2007,~~March 31, 2008, cash of ~~$67.82~~$31.88 million was provided by operating activities. Net cash of ~~$78.27~~$8.88 million was ~~used in~~provided by investing activities which was ~~mainly~~primarily due to net cash ~~paid~~received of ~~$35.78~~$11.98 million for ~~the acquisition~~excess net proceeds from sales, calls and maturities of ~~Premier and net cash used for loan growth of $32.14 million.~~investment securities over purchases. During the first ~~nine~~three months of ~~2007,~~2008, net cash of ~~$44.11~~$42.52 million was used in financing activities due primarily to ~~a decline in deposits of $198.83 million and~~ the repayment of overnight FHLB borrowings ~~and federal funds purchased~~

in the amount of ~~$45~~$162 million ~~and $38.67 million, respectively.~~during the quarter. Other uses of cash for financing activities included the payment of ~~$34.34~~$12.54 million ~~and $24.89 million, respectively,~~ for cash dividends and ~~acquisitions~~the redemption of ~~United shares under~~a trust preferred issuance in the ~~stock repurchase program.~~amount of $10.31 million. Cash provided by financing activities included a growth in deposits of $70.02 million and an increase in federal funds purchased and securities sold under agreements to repurchase of ~~$114.35~~$14.62 million and ~~net proceeds of $99.77~~$60.97 million, ~~and $82.48 million, respectively, from long-term FHLB borrowings and trust preferred issuances.~~respectively. The net effect of the cash flow activities was a decrease in cash and cash equivalents of ~~$54.55~~$1.76 million for the first ~~nine~~three months of ~~2007.~~2008.

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 significant 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 line 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. Based on regulatory requirements, United and its banking subsidiaries are categorized as “well capitalized” institutions. United’s risk-based capital ratios of ~~11.26%~~10.79% at ~~September 30, 2007~~March 31, 2008 and ~~11.15%~~10.76% at December 31, ~~2006,~~2007, were both significantly higher than the minimum regulatory requirements. United’s Tier I capital and leverage ratios of ~~10.18%~~9.74% and ~~8.84%~~8.33%, respectively, at ~~September 30,~~March 31, 2007, are also well above regulatory minimum requirements.

Total shareholders’ equity was ~~$755.27~~$771.15 million, an increase of ~~$121.18~~$9.95 million or ~~19.11%~~1.31% from December 31, ~~2006.~~2007. United’s equity to assets ratio was ~~9.83%~~9.66% at ~~September 30, 2007~~March 31, 2008 as compared to ~~9.44%~~9.52% at December 31, ~~2006.~~2007. The primary capital ratio, capital and reserves to total assets and reserves, was ~~10.51%~~10.32% at ~~September 30, 2007~~March 31,

2008 as compared to ~~10.14%~~10.18% at December 31, ~~2006.~~2007. United’s average equity to average asset ratio was ~~9.82% and 9.61%~~9.77% for both of the quarters ended ~~September 30, 2007~~March 31, 2008 and ~~2006, respectively. For the first nine months of 2007 and 2006, the average equity to average assets ratio was 9.81% and 9.63%, respectively.~~2007. All of these financial measurements reflect a financially sound position.

During the ~~third~~first quarter of ~~2007,~~2008, United’s Board of Directors declared a cash dividend of ~~$0.28~~$0.29 per share. ~~Cash dividends were $0.84 per common share for the first nine months of 2007.~~ Total cash dividends declared were ~~$12.09 million for the third quarter of 2007 and $34.91~~$12.54 million for the first ~~nine months~~quarter of ~~2007,~~2008, an increase of ~~8.34% and 3.59%~~$1.09 million or 9.52% over ~~comparable periods~~the first quarter of ~~2006.~~2007. The year ~~2007~~2008 is expected to be the ~~thirty-fourth~~thirty-fifth consecutive year of dividend increases to United shareholders.

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 interest rate risk management is to maintain an appropriate relationship between those assets and liabilities that are sensitive to changing market interest rates. The difference between rate sensitive assets and rate sensitive liabilities for specified periods of time is known as the “GAP.” Earnings-simulation analysis captures not only the potential of these interest sensitive assets and liabilities to mature or reprice but also the probability that they will do so. Moreover, earnings-simulation analysis considers the relative sensitivities of these balance sheet items and projects their behavior over an extended period of time. United closely monitors the sensitivity of its assets and liabilities on 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 30, 2007~~March 31, 2008 and December 31, ~~2006:~~2007:


Change in
Interest Rates	Percentage Change in Net Interest Income		Percentage Change in Net Interest Income
(basis points)	September 30, 2007	December 31, 2006	March 31, 2008	December 31, 2007
+200	2.07%	3.04%	3.27%	2.37%
+100	1.09%	1.50%	1.78%	1.71%
-100	-0.29%	-0.76%	-2.57%	-0.60%
-200	-3.50%	-5.11%	-8.25%	-3.33%

At ~~September 30, 2007,~~March 31, 2008, 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 ~~1.09%~~1.78% over one year as compared to an increase of ~~1.50%~~1.71% at December 31, ~~2006.~~2007. A 200 basis point immediate, sustained upward shock in the yield curve would increase net interest income by aan estimated ~~2.07%~~3.27% over one year as of ~~September 30, 2007,~~March 31, 2008, as compared to an increase of ~~3.04%~~2.37% as of December 31, ~~2006.~~2007. A 100 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by a estimated 0.29% over one year as of September 30, 2007, as compared to a decrease of 0.76% as of December 31, 2006. Aand 200 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated ~~3.50%~~2.57% and 8.25%, respectively, over one year as compared to a decrease of ~~5.11%~~0.60% and 3.33%, respectively, over one year as of December 31, ~~2006.~~2007.

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 banks are members 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 SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” During the year of 2007, United realized a net loss of $8.11 million in connection with the termination of interest rate swaps. This was done to improve future earnings.

During 1999, to better manage risk, United sold fixed-rate residential mortgage loans in a securitization transaction. In that securitization, United retained a subordinated interest that represented United’s right to future cash flows arising after third party investors in the securitization trust have received the return for

which they contracted. United does not receive annual servicing fees from this securitization because the loans are serviced by an independent third-party. The investors and the securitization trust have no recourse to United’s other assets for failure of debtors to pay when due; however, United’s retained interests are subordinate to investors’ interests. The book value and fair value of the subordinated interest are subject to credit, prepayment, and interest rate risks on the underlying fixed-rate residential mortgage loans in the securitization.

At the date of securitization, key economic assumptions used in measuring the fair value of the subordinated interest were as follows: a weighted average life of 5.3 years, expected cumulative default rate of 15%, and residual cash flows discount rates of 8% to 18%. At ~~June 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, the fair values of the subordinated interest and the cost of the available for sale securities ~~was~~were zero.

At ~~September 30, 2007,~~March 31, 2008, the principal balances of the residential mortgage loans held in the securitization trust were approximately ~~$7.89~~$7.0 million. Principal amounts owed to third party investors and to United in the securitization were approximately ~~$3.00~~$2.7 million and ~~$4.89~~$4.3 million, respectively, at ~~September 30, 2007.~~March 31, 2008. The weighted average term to maturity of the underlying mortgages approximated ~~12.5~~9.1 years as of ~~September 30, 2007.~~March 31, 2008. During the ~~three and nine months ended September 30, 2007,~~first quarter of 2008, United received cash of ~~$780~~$646 thousand ~~and $2.37 million, respectively,~~ from its subordinated interest in the securitization.

The amount of future cash flows from United’s subordinated interest is highly dependent upon future prepayments and defaults. Accordingly, the amount and timing of future cash flows to United is uncertain at this time.

The following table presents quantitative information about delinquencies, net credit losses, and components of the underlying securitized fixed-rate residential mortgage loans:


	September 30,			December 31,		March 31,			December 31,
	2007			2006		2008			2007
Total principal amount of loans	$	7,890		$	10,382	$	7,000		$	7,393
Principal amount of loans 60 days or more past due		135			114		305			86
Year-to-date average balances		9,192			13,000		7,219			8,817
Year-to-date net credit (recoveries) losses		(73	)		369		(216	)		(66	)

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 ~~decline.~~declines. The rate of prepayments on underlying mortgages will affect the price and volatility of mortgage-related securities and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If interest rates rise, United’s holdings of mortgage- related securities may experience reduced returns if the borrowers of the underlying mortgages pay off their mortgages later than anticipated. This is generally referred to as extension risk.

At ~~September 30, 2007,~~March 31, 2008, United’s mortgage related securities portfolio had an amortized cost of ~~$796~~$848 million, of which approximately ~~$712~~$743 million or ~~89%~~88% were fixed rate collateralized mortgage obligations (CMOs). These fixed rate CMOs consisted primarily of planned amortization class (PACs) and accretion directed (VADMs) bonds having an average life of approximately ~~2.3~~2.2 years and a weighted average yield of ~~4.69%~~4.83%, under current projected prepayment assumptions. These securities are expected to have very little extension risk in a rising rate environment. Current models show that given an immediate, sustained upward shock of 300 basis points, the average life of these securities would extend to ~~2.5~~2.6 years. The projected price decline of the fixed rate CMO portfolio in rates up 300 basis points would be ~~6.41%~~6.66%, less than the price decline of a 3 year ~~Treasury~~treasury note. By comparison, the price decline of a 30-year current coupon mortgage backed security (MBS) in rates higher by 300 basis points would be approximately 17%.

United had approximately ~~$15~~$14 million in 30-year mortgage backed securities with a projected yield of ~~6.63%~~6.61% and a projected average life of ~~4.5~~3.8 years on ~~September 30, 2007.~~March 31, 2008. These bonds are projected to be good risk/reward securities in stable rates, rates down moderately and rates up moderately due to the high yield and premium book price. However, should rates increase 300 basis points, the average life will extend and these bonds will experience significant price depreciation, but not as significant as current coupon pools.

The remaining 9%10% of the mortgage related securities portfolio at ~~September 30, 2007,~~March 31, 2008, included adjustable rate securities (ARMs), balloon securities, and 10-year, 15-year and ~~15-year~~20-year mortgage backed pass-through securities.

Item 4. CONTROLS AND PROCEDURES

As of ~~September 30, 2007,~~March 31, 2008, 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 30, 2007~~March 31, 2008 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. There have been no changes in United’s internal control over financial reporting that occurred during the quarter ended ~~September 30, 2007,~~March 31, 2008, or in other factors that has materially affected or is reasonably likely to materially affect United’s internal control over financial reporting.

5048

PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In the normal course of business, United and its subsidiaries are currently involved in various legal proceedings. Management is vigorously pursuing all its legal and factual defenses and, after consultation with legal counsel, believes that all such litigation will be resolved with no material effect on United’s financial position.

Item 1A. RISK FACTORS

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, ~~2006~~2007 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, ~~2006.~~2007.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no United equity securities ~~sales~~sold during the ~~first nine months of 2007~~quarter ended March 31, 2008 that were not registered. The table below includes certain information regarding United’s purchase of its common shares during the quarter ended ~~September 30, 2007:~~March 31, 2008:

Total Number of Maximum Number of
Total Number Average Shares Purchased as Shares that May Yet
of Shares Price Paid Part of Publicly be Purchased Under
Period Purchased (1) per Share Announced Plans (2) the Plans (2)

7/01 — 7/31/2007 105,024 $ 31.48 105,000 322,200
8/01 — 8/31/2007 13 $ 32.22 — 322,200
9/01 — 9/30/2007 28 $ 29.42 — 322,200

Total 105,065 $ 31.48 105,000


					Total Number of
					Shares
	Total Number				Purchased as		Maximum Number
	of Shares		Average		Part of Publicly		of Shares that May
	Purchased		Price Paid		Announced		Yet be Purchased
Period	(1) (2)		per Share		Plans (3)		Under the Plans (3)

1/01 – 1/31/2008		28	$	32.03		—		322,200
2/01 – 2/29/2008		78	$	26.59		—		322,200
3/01 – 3/31/2008		32	$	31.38		—		322,200

Total		138	$	28.80		—


(1)		Includes shares exchanged in connection with the exercise of stock options under United’s stock option plans. Shares are purchased pursuant to the terms of the applicable stock option plan and not pursuant to a publicly announced stock repurchase plan. For the quarter ended March 31, 2008, no shares were exchanged by participants in United’s stock option plans.


(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 three months ended ~~September 30, 2007,~~March 31, 2008, the following shares were purchased for the deferred compensation plan: ~~July 2007 — 24 shares at an average price of $34.92; August 2007 — 13 shares at an average price of $32.22; and September 2007 —~~January 2008 – 28 shares at an average price of ~~$29.42.~~

		$32.03; February 2008 – 78 shares at an average price of $26.59; and March 2008 – 32 shares at an average price of $31.38.
~~(2)~~
(3)		In May of 2006, United’s Board of Directors approved a repurchase plan to repurchase up to 1.7 million shares of United’s common stock on the open market (the 2006 Plan). The timing, price and quantity of purchases under the plan are at the discretion of management and the plan may be discontinued, suspended or restarted at any time depending on the facts and circumstances.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

Item 5. OTHER INFORMATION

	(a)		None.

	(b)		No changes were made to the procedures by which security holders may recommend nominees to United’s Board of Directors.

Item 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K


Exhibit 3.1		Articles of Incorporation (incorporated by reference to Exhibits to the 1989 Form 10-K of United Bankshares, Inc., File No. 0-13322)


Exhibit 3.2		Bylaws (incorporated by reference to Exhibits to the 1990 Form 10-K of United Bankshares, Inc., File No. 0-13322)


Exhibit 31.1		Certification as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer


Exhibit 31.2		Certification as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer


Exhibit 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


Exhibit 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

5250

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 7, 2007~~April 30, 2008	/s/ Richard M. Adams
	Richard M. Adams, Chairman of
	the Board and Chief Executive Officer



Date: ~~November 7, 2007~~April 29, 2008	/s/ Steven E. Wilson
	Steven E. Wilson, Executive
	Vice President, Treasurer, Secretary and Chief Financial Officer

5351


	Nine Months Ended September 30, 2007
											Accumulated
	Common Stock										Other						Total
			Par					Retained			Comprehensive			Treasury			Shareholders’
(Dollars in thousands, except per share data)	Shares		Value		Surplus			Earnings			Income (Loss)			Stock			Equity


Balance at January 1, 2007		44,320,832	$	110,802	$	93,680		$	559,257			($15,791	)		($113,856	)	$	634,092
Cumulative effect of adopting FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, at January 1, 2007		—		—		—			(300	)		—			—			(300	)
Comprehensive income:
Net income		—		—		—			74,722			—			—			74,722
Other comprehensive income, net of tax:
Unrealized gain on securities of $2,091 net of reclassification adjustment for gains included in net income of $321		—		—		—			—			1,770			—			1,770
Unrealized loss on cash flow hedge, net of tax of $1,600		—		—		—			—			(2,972	)		—			(2,972	)
Termination of cash flow hedge, net of tax of $1,033		—		—		—			—			1,919			—			1,919
Remaining unrealized loss related to the call of securities previously transferred from available for sale to held to maturity investment portfolio		—		—		—			—			778			—			778
Accretion of the unrealized loss for securities transferred from the available for sale to the held to maturity investment portfolio		—		—		—			—			203			—			203
Pension plan’s amortization of transition asset, prior service cost, and actuarial loss, net of tax of $125		—		—		—			—			189			—			189

Total comprehensive income																		76,609
Acquisition of Premier Community Bankshares, Inc. (2,684,068 shares)		—		—		8,443			—			—			93,707			102,150
Purchase of treasury stock (746,472 shares)		—		—		—			—			—			(25,869	)		(25,869	)
Distribution of treasury stock for deferred compensation plan (2,000 shares)		—		—		—			—			—			59			59
Cash dividends ($0.84 per share)		—		—		—			(34,909	)		—			—			(34,909	)
Common stock options exercised (183,831 shares)		—		—		(2,978	)		—			—			6,415			3,437

Balance at September 30, 2007		44,320,832	$	110,802	$	99,145		$	598,770			($13,904	)		($39,544	)	$	755,269


	As of December 31, 2006
	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount
Amortized intangible assets:
Core deposit intangible assets	$	19,890		($17,250	)	$	2,640

Goodwill not subject to amortization						$	167,421


	At December 31, 2006
	Prior to Adopting			Effect of Adopting			As Reported at
	Statement 158			Statement 158			December 31, 2006
Net pension asset		40,165			(13,217	)	$	26,948
Deferred income taxes		8,058			5,206			13,264
Accumulated other comprehensive income		(7,780	)		(8,011	)		(15,791	)


					Total Number of		Maximum Number of
	Total Number		Average		Shares Purchased as		Shares that May Yet
	of Shares		Price Paid		Part of Publicly		be Purchased Under
Period	Purchased (1)		per Share		Announced Plans (2)		the Plans (2)

7/01 — 7/31/2007		105,024	$	31.48		105,000		322,200
8/01 — 8/31/2007		13	$	32.22		—		322,200
9/01 — 9/30/2007		28	$	29.42		—		322,200


Total		105,065	$	31.48		105,000