2021 Management’s Discussion and Analysis of Financial Condition and Results of Operations Assets Cash and due from banks Interest-bearing deposits with other banks Federal funds sold Total cash and cash equivalents Securities available for sale at estimated fair value (amortized cost-$1,654,657 at September 30, 2017 and $1,277,639 at December 31, 2016) Securities held to maturity (estimated fair value-$19,909 at September 30, 2017 and $31,178 at December 31, 2016) Other investment securities Loans held for sale (at fair value-$311,186 at September 30, 2017 and $0 at December 31, 2016) Loans Less: Unearned income Loans net of unearned income Less: Allowance for loan losses Net loans Bank premises and equipment Goodwill Accrued interest receivable Other assets TOTAL ASSETS Liabilities Deposits: Noninterest-bearing Interest-bearing Total deposits Borrowings: Federal funds purchased Securities sold under agreements to repurchase Federal Home Loan Bank borrowings Other long-term borrowings Reserve for lending-related commitments Accrued expenses and other liabilities TOTAL LIABILITIES Shareholders’ Equity Preferred stock, $1.00 par value;Authorized-50,000,000 shares, none issued Common stock, $2.50 par value;Authorized-200,000,000 shares;issued-105,011,878 and 81,068,252 at September 30, 2017 and December 31, 2016, respectively, including 28,752 and 28,278 shares in treasury at September 30, 2017 and December 31, 2016, respectively Surplus Retained earnings Accumulated other comprehensive loss Treasury stock, at cost TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY Interest income Interest and fees on loans Interest on federal funds sold and other short-term investments Interest and dividends on securities: Taxable Tax-exempt Total interest income Interest expense Interest on deposits Interest on short-term borrowings Interest on long-term borrowings Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Other income Fees from trust and brokerage services Fees from deposit services Bankcard fees and merchant discounts Other service charges, commissions, and fees Income from bank-owned life insurance Income from mortgage banking activities Other income Total other-than-temporary impairment losses Portion of loss recognized in other comprehensive income Net other-than-temporary impairment losses Net gains on sales/calls of investment securities Net investment securities gains Total other income Other expense Employee compensation Employee benefits Net occupancy expense Other real estate owned (OREO) expense Equipment expense Data processing expense Bankcard processing expense FDIC insurance expense Other expense Total other expense Income before income taxes Income taxes Net income Earnings per common share: Basic Diluted Dividends per common share Average outstanding shares: Basic Diluted Net income Change in net unrealized gain (loss) onavailable-for-sale (AFS) Accretion of the net unrealized loss on the transfer of AFS securities toheld-to-maturity (HTM) securities, net of tax Change in pension plan assets, net of tax Comprehensive income, net of tax Balance at January 1, 2017 Comprehensive income: Net income Other comprehensive income, net of tax: Total comprehensive income, net of tax Stock based compensation expense Acquisition of Cardinal Financial Corporation (23,690,589 shares) Purchase of treasury stock (82 shares) Distribution of treasury stock from deferred compensation plan (28 shares) Cash dividends ($0.99 per share) Grant of restricted stock (89,475 shares) Forfeiture of restricted stock (420 shares) Common stock options exercised (163,562 shares) Balance at September 30, 2017 NET CASH PROVIDED BY OPERATING ACTIVITIES INVESTING ACTIVITIES Proceeds from maturities and calls of securities held to maturity Proceeds from sales of securities available for sale Proceeds from maturities and calls of securities available for sale Purchases of securities available for sale Purchases of bank premises and equipment Proceeds from sales of bank premises and equipment Purchases of other investment securities Proceeds from sales and redemptions of other investment securities Proceeds from the sales of OREO properties Acquisition of subsidiaries, net of cash paid Net change in loans NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FINANCING ACTIVITIES Cash dividends paid Acquisition of treasury stock Proceeds from exercise of stock options Repayment of long-term Federal Home Loan Bank borrowings Proceeds from issuance of long-term Federal Home Loan Bank borrowings Distribution of treasury stock for deferred compensation plan Changes in: Deposits Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES Increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of period Supplemental information Noncash investing activities: Transfers of loans to OREO United Bank. For the second quarter and first half of 2021, United did not record any acquisition-related costs associated with the Carolina Financial Merger as compared to acquisition-related costs of $46,449 and $48,009 for the second quarter and first half of 2020. The acquisition of Carolina Financial affords United the opportunity to expand its existing footprint in North Carolina and South Carolina. Carolina Financial had banking locations in North Carolina and South Carolina. As of the Acquisition Date, Carolina Financial had $5,004,990 in total assets, $3,292,635 in loans and leases, net of unearned income and $3,873,183 in deposits. acquired assets and assumed liabilities, including identifiable intangible assets Contractually required principal and interest at acquisition Contractual cash flows not expected to be collected Expected cash flows at acquisition Interest component of expected cash flows Basis in acquired loans at acquisition – estimated fair value from Carolina Financial as of the Acquisition Date: Purchase price: Value of common shares issued (23,690,589 shares) Fair value of stock options assumed Cash for fractional shares Total purchase price Identifiable assets: Cash and cash equivalents Investment securities Loans held for sale Loans Premises and equipment Core deposit intangibles George Mason trade name intangible Other assets Total identifiable assets Identifiable liabilities: Deposits Short-term borrowings Long-term borrowings Unfavorable lease liability Other liabilities Total identifiable liabilities Preliminary fair value of net assets acquired including identifiable intangible assets Preliminary resulting goodwill Total Revenues (1) Net Income Contractually required principal and interest at acquisition Contractual cash flows not expected to be collected Expected cash flows at acquisition Interest component of expected cash flows Basis in acquired loans at acquisition – estimated fair value Purchase price: Value of common shares issued (6,527,746 shares) Fair value of stock options assumed Cash for fractional shares Total purchase price Identifiable assets: Cash and cash equivalents Investment securities Loans Premises and equipment Core deposit intangibles Other assets Total identifiable assets Identifiable liabilities: Deposits Short-term borrowings Long-term borrowings Other liabilities Total identifiable liabilities Fair value of net assets acquired including identifiable intangible assets Resulting goodwill U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Non-agency Commercial mortgage-backed securities Agency Asset-backed securities Trust preferred collateralized debt obligations Single issue trust preferred securities Other corporate securities Marketable equity securities Total U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Non-agency Commercial mortgage-backed securities Agency Asset-backed securities Trust preferred collateralized debt obligations Single issue trust preferred securities Other corporate securities Marketable equity securities Total U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Non-agency Commercial mortgage-backed securities Agency Asset-backed securities Trust preferred collateralized debt obligations Single issue trust preferred securities Marketable equity securities Total U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Non-agency Commercial mortgage-backed securities Agency Asset-backed securities Trust preferred collateralized debt obligations Single issue trust preferred securities Marketable equity securities Total available to the municipality. The majority of the portfolio was rated AA or higher, and 2021. 2021. 2021. Class Senior – Bank Mezzanine – Bank (now in senior position) Mezzanine – Bank Mezzanine – Bank & Insurance (combination) Totals Balance of cumulative credit losses at beginning of period Additional credit losses on securities for which OTTI was previously recognized Reductions during the period for securities for which the amount previously recognized in other comprehensive income was recognized in earnings Balance of cumulative credit losses at end of period at June 30, 2021. Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years Marketable equity securities Total U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Single issue trust preferred securities Other corporate securities Total U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Single issue trust preferred securities Other corporate securities Total second quarter. There were no Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years Total its cost method securities. AND LEASES Commercial, financial and agricultural: Owner-occupied commercial real estate Nonowner-occupied commercial real estate Other commercial loans Total commercial, financial & agricultural Residential real estate Construction & land development Consumer: Bankcard Other consumer Total gross loans Accretable yield at the beginning of the period Accretion (including cash recoveries) Additions Net reclassifications to accretable from non-accretable Disposals (including maturities, foreclosures, and charge-offs) Accretable yield at the end of the period United considers a loan to be past due when it is 30 days or more past its contractual payment due date. loan will not be placed on nonaccrual status. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and unpaid interest accrued in prior years is charged to the allowance for Generally, a loan is categorized as a TDR if a concession is granted and there is deterioration in the financial condition of the borrower. The portfolio of TDR loans is monitored monthly. Commercial real estate: Owner-occupied Nonowner-occupied Other commercial Residential real estate Construction & land development Consumer: Bankcard Other consumer Total Commercial real estate: Owner-occupied Nonowner-occupied Other commercial Residential real estate Construction & land development Consumer: Bankcard Other consumer Total Troubled Debt Restructurings Commercial real estate: Owner-occupied Nonowner-occupied Other commercial Residential real estate Construction & land development Consumer: Bankcard Other consumer Total 2020. The recorded investment amounts presented were as of the June 30, 2020 balance sheet date. Commercial real estate: Owner-occupied Nonowner-occupied Other commercial Residential real estate Construction & land development Consumer: Bankcard Other consumer Total Commercial real estate: Owner-occupied Nonowner-occupied Other commercial Residential real estate Construction & land development Consumer: Bankcard Other consumer Total Contents Commercial real estate: Owner-occupied Nonowner-occupied Other commercial Residential real estate Construction & land development Consumer: Bankcard Other consumer Total nonaccrual loans was insignificant during the three and six months ended June 30, 2021 and 2020. As of September 30, 2017 Grade: Pass Special mention Substandard Doubtful Total As of December 31, 2016 Grade: Pass Special mention Substandard Doubtful Total As of September 30, 2017 Grade: Pass Special mention Substandard Doubtful Total As of December 31, 2016 Grade: Pass Special mention Substandard Doubtful Total $71. There were 0 consumer mortgage loans secured by residential real estate pr specific review. Allowance for Allowance for Loan Losses: Beginning balance Charge-offs Recoveries Provision Ending balance Amortized intangible assets: Core deposit intangible assets Non-amortized intangible assets: George Mason trade name Goodwill not subject to amortization Amortized intangible assets: Core deposit intangible assets Goodwill not subject to amortization Goodwill at December 31, 2016 Addition to goodwill from Bank of Georgetown acquisition Preliminary addition to goodwill from Cardinal acquisition Goodwill at September 30, 2017 Year 2017 2018 2019 2020 2021 and thereafter 2020: Year 2017 2018 2019 2020 2021 and thereafter Total 2021 and December 31, 2020, respectively. nine years. net basis approximate 0. Derivatives designated as hedging instruments Fair Value Hedges: Interest rate swap contracts (hedging commercial loans) Total derivatives designated as hedging instruments Derivatives not designated as hedging instruments Interest rate swap contracts TBA mortgage-backed securities Interest rate lock commitments Total derivatives not designated as hedging instruments Total asset derivatives Derivatives designated as hedging instruments Fair Value Hedges: Interest rate swap contracts Total derivatives designated as hedging instruments Derivatives not designated as hedging instruments Interest rate swap contracts Forward loan sales commitments Interest rate lock commitments Total derivatives not designated as hedging instruments Total liability derivatives 2020. Derivatives in hedging relationships Fair Value Hedges: Interest rate swap contracts Total derivatives in hedging relationships Derivatives not designated as hedging instruments Forward loan sales commitments TBA mortgage-backed securities Interest rate lock commitments Total derivatives not designated as hedging instruments Total derivatives Derivatives in fair value hedging relationships Fair Value Hedges: Interest rate swap contracts Cash Flow Hedges: Forward loan sales commitments Total derivatives in hedging relationships Derivatives not designated as hedging instruments Forward loan sales commitments TBA mortgage-backed securities Interest rate lock commitments Total derivatives not designated as hedging instruments Total derivatives Level 1 Level 2 Level 3 actual sale or immediate settlement of the asset or liability. Additionally, there are inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement. statements. which is measured using valuations from investors for loans with similar characteristics (“Level 2”) with some adjusted for the Company’s actual sales experience versus the investor’s indicated Description Assets Available for sale debt securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Non-agency Commercial mortgage-backed securities Agency Asset-backed securities Trust preferred collateralized debt obligations Single issue trust preferred securities Other corporate securities Total available for sale debt securities Available for sale equity securities: Financial services industry Equity mutual funds (1) Other equity securities Total available for sale equity securities Total available for sale securities Loans held for sale Derivative financial assets: Interest rate swap contracts Interest rate lock commitments TBA mortgage-backed securities Total derivative financial assets Liabilities Description Derivative financial liabilities: Interest rate swap contracts Forward sales commitments Interest rate lock commitments Total derivative financial liabilities Description Assets Available for sale debt securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies State and political subdivisions Residential mortgage-backed securities Agency Non-agency Asset-backed securities Commercial mortgage-backed securities Agency Trust preferred collateralized debt obligations Single issue trust preferred securities Other corporate securities Total available for sale debt securities Available for sale equity securities: Financial services industry Equity mutual funds (1) Other equity securities Total available for sale equity securities Total available for sale securities Derivative financial assets: Interest rate swap contracts Liabilities Derivative financial liabilities: Interest rate swap contracts Contents 2020. Balance, beginning of period Total gains or losses (realized/unrealized): Included in earnings (or changes in net assets) Included in other comprehensive income Sales Balance, end of period 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 Balance, beginning of period Acquired in Cardinal merger Originations Sales Total gains or losses during the period recognized in earnings Transfers in and/or out of Level 3 Balance, end of period 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 Balance, beginning of period Acquired in Cardinal merger Transfers other Balance, end of period 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 Description Assets Loans held for sale Income from mortgage banking activities Description Assets Loans held for sale 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 2020 other than those intangible assets recorded in the acquisition of Carolina Financial in the second quarter of 2020. Description Assets Impaired Loans OREO Description Assets Impaired Loans OREO September 30, 2017 Cash and cash equivalents Securities available for sale Securities held to maturity Other securities Loans held for sale Loans Derivative financial assets Deposits Short-term borrowings Long-term borrowings Derivative financial liabilities December 31, 2016 Cash and cash equivalents Securities available for sale Securities held to maturity Other securities Loans held for sale Loans Derivative financial assets Deposits Short-term borrowings Long-term borrowings Derivative financial liabilities during any calendar year is Outstanding at January 1, 2017 Assumed in Cardinal merger Granted Exercised Forfeited or expired Outstanding at September 30, 2017 Exercisable at September 30, 2017 Nonvested at January 1, 2017 Granted Vested Forfeited or expired Nonvested at September 30, 2017 2021: Outstanding at January 1, 2017 Granted Vested Forfeited Outstanding at September 30, 2017 2020. Service cost Interest cost Expected return on plan assets Recognized net actuarial loss Net periodic pension (benefit) cost Weighted-Average Assumptions: Discount rate Expected return on assets Rate of compensation increase (prior to age 45) Rate of compensation increase Net Income Available for sale (“AFS”) securities: AFS securities with OTTI charges during the period Related income tax effect Less: OTTI charges recognized in net income Related income tax benefit Reclassification of previous noncredit OTTI to credit OTTI Related income tax benefit Net unrealized (losses) gains on AFS securities with OTTI AFS securities – all other: Change in net unrealized gain on AFS securities arising during the period Related income tax effect Net reclassification adjustment for (gains) losses included in net income Related income tax expense (benefit) Net effect of AFS securities on other comprehensive income Held to maturity (“HTM”) securities: Accretion on the unrealized loss for securities transferred from AFS to the HTM investment portfolio prior to call or maturity Related income tax expense Net effect of HTM securities on other comprehensive income Pension plan: Recognized net actuarial loss Related income tax benefit Net effect of change in pension plan asset on other Total change in other comprehensive income Total Comprehensive Income Balance at January 1, 2017 Other comprehensive income before reclassification Amounts reclassified from accumulated other comprehensive income Net current-period other comprehensive income, net of tax Balance at September 30, 2017 Details about AOCI Components Affected Line Item in the Statement Where Net Income is Presented Available for sale (“AFS”) securities: Reclassification of previous noncredit OTTI Net reclassification adjustment for losses Related income tax effect Pension plan: Recognized net actuarial loss Related income tax effect Total reclassifications for the period Distributed earnings allocated to common stock Undistributed earnings allocated to common stock Net earnings allocated to common shareholders Average common shares outstanding Equivalents from stock options Average diluted shares outstanding Earnings per basic common share Earnings per diluted common share Description Issuance Date Interest Rate Maturity Date Century Trust United Statutory Trust III United Statutory Trust IV United Statutory Trust V United Statutory Trust VI Premier Statutory Trust II Premier Statutory Trust III Premier Statutory Trust IV Premier Statutory Trust V Centra Statutory Trust I Centra Statutory Trust II Virginia Commerce Trust II Virginia Commerce Trust III Cardinal Statutory Trust I UFBC Capital Trust I Trust preferred securities Through its community banking segment, United offers a full range of products and services through various delivery channels. In particular, the community banking segment includes both commercial and consumer lending and provides customers with such products as commercial loans, real estate loans, business financing and consumer loans. In addition, this segment provides customers with several choices of deposit products including demand deposit accounts, savings accounts and certificates of deposit as well as investment and financial advisory services to businesses and individuals, including financial planning, retirement/estate planning, and investment management. The mortgage banking segment engages primarily in the origination and acquisition of residential mortgages for sale into the secondary market though United’s mortgage banking subsidiaries, George Mason and Crescent. Crescent may retain servicing rights on their mortgage loans sold. At certain times, Crescent may purchase rights to service loans from third parties. These rights are known as mortgage servicing rights Net interest income Provision for loans losses Other income Other expense Income taxes Net income (loss) Total assets (liabilities) Average assets (liabilities) Net interest income Provision for loans losses Other income Other expense Income taxes Net income (loss) Total assets (liabilities) Average assets (liabilities) Net interest income Provision for loans losses Other income Other expense Income taxes Net income (loss) Total assets (liabilities) Average assets (liabilities) Net interest income Provision for loans losses Other income Other expense Income taxes Net income (loss) Total assets (liabilities) Average assets (liabilities) June 30, 2021. New York. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative reference rate for U.S. Dollar LIBOR. The ARRC has also published recommended fall-back language for LIBOR-linked financial instruments, among numerous other areas of guidance. At this time, however, it is unclear to what extent these recommendations will be broadly accepted by industry participants, whether they will continue to evolve, and what other alternatives may be adopted by the broader markets that utilize LIBOR as a reference rate. United has formed a project team comprised of individuals across various lines of business throughout the company to identify risks, monitor market developments, evaluate replacement benchmark alternatives, and manage the company’s transition away from LIBOR. of United Bankshares, Inc. and its wholly-owned subsidiaries, unless otherwise indicated. Management has evaluated all significant events and transactions that occurred after Where the 2.24%. 2020. (“FHLB”) stock. U.S. Treasury securities and obligations of U.S. State and political subdivisions Mortgage-backed securities Asset-backed securities Marketable equity securities Trust preferred collateralized debt obligations Single issue trust preferred securities Corporate securities Total available for sale securities, at fair value U.S. Treasury securities and obligations of U.S. State and political subdivisions Mortgage-backed securities Single issue trust preferred securities Other corporate securities Total held to maturity securities, at amortized cost agency commercial mortgage-backed securities. Description (1) SECURITY 1 SECURITY 2 SECURITY 5 SECURITY 6 SECURITY 7 SECURITY 8 SECURITY 14 SECURITY 15 SECURITY 17 SECURITY 18 SECURITY 22 Desc. 1 2 5 6 7 8 14 15 17 18 22 Security Emigrant Bank Bank of America M&T Bank During the or 5.62% increase in construction and land development loans. Loans held for sale Commercial, financial, and agricultural: Owner-occupied commercial real estate Nonowner-occupied commercial real estate Other commercial loans Total commercial, financial, and agricultural Residential real estate Construction & land development Consumer: Bankcard Other consumer Total gross loans Less: Unearned income Total Loans, net of unearned income Originated Acquired Total gross loans Originated Acquired Total gross loans differences. decreased $11.16 million. Demand deposits Interest-bearing checking Regular savings Money market accounts Time deposits under $100,000 Time deposits over $100,000(1) Total deposits as payments exceeded new borrowings. Federal funds purchased Short-term securities sold under agreements to repurchase Long-term securities sold under agreements to repurchase Short-term FHLB advances Long-term FHLB advances Issuances of trust preferred capital securities Total borrowings loan expenses. 2021. 2020. For the second quarter and first half of 2021, United’s annualized return on average tangible equity was 14.95% and 16.06%, respectively, as compared to 9.58% and 9.28% for the second quarter and first half of 2020, respectively. 2020. Carolina Financial acquisition as well as due to higher employee incentives and commissions expense mainly related to higher mortgage banking production. 2020. Net income attributable to the community banking segment for the first 2020. The higher net income within the community banking segment was due primarily to the impact of the Carolina Financial acquisition and a lower provision for credit losses. Carolina Financial acquisition as most major categories of noninterest expense showed increases. production as well as the additional expense associated with the mortgage banking employees added from the Carolina Financial acquisition. 2020. 2020. 2021. The following table provides the discount/premium and net accretion impact to Loan accretion Certificates of deposit Long-term borrowings Total Loan accretion Certificates of deposit Long-term borrowings Tax-equivalent net interest income 2020: Net interest income, GAAP basis Tax-equivalent adjustment (1) Tax-equivalent net interest income Net interest income, GAAP basis Tax-equivalent adjustment (1) Tax-equivalent net interest income ASSETS Earning Assets: Federal funds sold and securities purchased under agreements to resell and other short-term investments Investment Securities: Taxable Tax-exempt Total Securities Loans, net of unearned income (2) Allowance for loan losses Net loans Total earning assets Other assets TOTAL ASSETS LIABILITIES Interest-Bearing Funds: Interest-bearing deposits Short-term borrowings Long-term borrowings Total Interest-Bearing Funds Noninterest-bearing deposits Accrued expenses and other liabilities TOTAL LIABILITIES SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY NET INTEREST INCOME INTEREST SPREAD NET INTEREST MARGIN ASSETS Earning Assets: Federal funds sold and securities repurchased under agreements to resell and other short-term investments Investment Securities: Taxable Tax-exempt Total Securities Loans, net of unearned income (2) Allowance for loan losses Net loans Total earning assets Other assets TOTAL ASSETS LIABILITIES Interest-Bearing Funds: Interest-bearing deposits Short-term borrowings Long-term borrowings Total Interest-Bearing Funds Non-interest bearing deposits Accrued expenses and other liabilities TOTAL LIABILITIES SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY NET INTEREST INCOME INTEREST SPREAD NET INTEREST MARGIN Nonaccrual Loans Originated Acquired Loans which are contractually past due 90 days or more as to interest or principal, and are still accruing interest Originated Acquired Restructured loans Originated Acquired Total nonperforming loans Other real estate owned TOTAL NONPERFORMING ASSETS at December 31, 2020. supportable forecast period. reasonable and supportable forecast. those estimates. United’s loan administration policies are focused on the risk characteristics of the loan portfolio in terms of loan approval and credit quality. The commercial loan portfolio is monitored for possible concentrations of credit in one or more industries. Management has lending limits as a percentage of capital per type of credit concentration in an effort to ensure adequate diversification within the portfolio. Most of United’s commercial loans are secured by real estate located in West Virginia, southeastern Ohio, Pennsylvania, Virginia, Maryland, North Carolina, South Carolina and the District of Columbia. It is the opinion of management that these commercial loans do not pose any unusual risks and that adequate consideration has been given to these loans in establishing the allowance for credit losses. 2020. Both differences from the second quarter and first half of 2020 were due mainly to changes in income from mortgage banking activities. $1.19 million. activities. 2020. production. Carolina Financial acquisition. The increase in FICA expense was also due to the higher commissions and incentives expense. 2020. 2020. Capital Resources 2021. 2020. Change in Interest Rates (basis points) +200 +100 -100 -200 2020: the yield curve would decrease net interest income by an estimated 1.37% over one year as of June 30, 2021 as compared to a decrease of 0.05% over one year as of December 31, 2020. 2021. A 200 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated 6.29% in year two as of June 30, 2021. Period 7/01 – 7/31/2017 8/01 – 8/31/2017 9/01 – 9/30/2017 Total ☒ SeptemberJune 30, 2017☐ 0-13322 (304)(and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation (§and post such files). Act:Act.Large accelerated filer ☒ Accelerated filer ☐ ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐ Indicatenumber of registrant had outstanding of each of the issuer’s classes of common stock, as$2.50 par value per share, outstanding. Item 1. 4 5 7 8 9 10 11 6160 84 86 �� 88 88 88 88 89 89 89 Item 1. 90 Item 1A.90Item 2.90Item 3.91Item 4.91Item 5.91Item 6.9192SeptemberJune 30, 20172021 and December 31, 2016,2020, consolidated balance sheets of United Bankshares, Inc. and Subsidiaries (“United” or the “Company”), consolidated statements of income and comprehensive income for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, the related consolidated statement of changes in shareholders’ equity for the ninethree and six months ended SeptemberJune 30, 2017,2021 and 2020, the related condensed consolidated statements of cash flows for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, and the notes to consolidated financial statements appear on the following pages.(Dollars in thousands, except par value) September 30
2017 December 31
2016 (Unaudited) (Note 1) $ 212,692 $ 175,468 1,533,558 1,258,334 787 725 1,747,037 1,434,527 1,649,634 1,259,214 20,335 33,258 166,756 111,166 315,031 8,445 13,156,854 10,356,719 (16,386 ) (15,582 ) 13,140,468 10,341,137 (74,926 ) (72,771 ) 13,065,542 10,268,366 104,311 75,909 1,487,607 863,767 51,607 39,400 522,118 414,840 $ 19,129,978 $ 14,508,892 $ 4,134,019 $ 3,171,841 9,741,278 7,625,026 13,875,297 10,796,867 25,800 22,235 316,236 237,316 1,272,115 897,707 242,131 224,319 804 1,044 133,752 93,657 15,866,135 12,273,145 0 0 262,530 202,671 2,126,914 1,205,778 909,556 872,990 (34,163 ) (44,717 ) (994 ) (975 ) 3,263,843 2,235,747 $ 19,129,978 $ 14,508,892
2020 $ 306,648 $ 297,369 3,369,823 1,910,876 925 823 3,677,396 2,209,068 3,277,074 2,953,359 989 1,212 11,507 10,718 221,931 220,895 576,827 718,937 16,921,652 17,622,583 (33,651 ) (31,170 ) 16,888,001 17,591,413 (217,545 ) (235,830 ) 16,670,456 17,355,583 171,361 175,824 66,635 69,520 1,810,040 1,796,848 22,540 20,955 60,877 66,832 623,293 584,496 $ 27,190,926 $ 26,184,247 $ 8,283,454 $ 7,405,260 13,283,937 13,179,900 21,567,391 20,585,160 127,745 142,300 533,365 584,532 280,657 279,837 20,897 19,250 70,546 73,213 196,612 202,335 22,797,213 21,886,627 0 0 335,414 334,523 2,901,591 2,894,471 1,316,607 1,205,395 10,523 22,370 (170,422 ) (159,139 ) 4,393,713 4,297,620 $ 27,190,926 $ 26,184,247 (Dollars in thousands, except per share data) Three Months Ended Nine Months Ended September 30 September 30 2017 2016 2017 2016 $ 155,819 $ 112,273 $ 405,660 $ 314,936 4,874 1,107 11,345 2,371 9,406 8,764 26,226 24,728 1,484 993 4,057 2,685 171,583 123,137 447,288 344,720 14,227 7,723 35,281 21,278 430 553 1,149 1,132 6,650 3,792 16,717 10,232 21,307 12,068 53,147 32,642 150,276 111,069 394,141 312,078 7,279 6,988 21,429 18,690 142,997 104,081 372,712 293,388 5,052 4,891 14,683 14,552 8,744 8,306 24,978 24,669 1,332 1,551 3,432 3,754 535 500 1,533 1,725 1,403 2,541 3,878 4,913 20,385 982 43,597 2,499 311 249 1,626 1,050 0 0 (60 ) 339 0 0 0 (372 ) 0 0 (60 ) (33 ) 467 1 5,214 251 467 1 5,154 218 38,229 19,021 98,881 53,380 44,308 24,213 123,240 69,123 9,578 7,483 27,372 21,380 9,364 6,919 30,061 20,945 2,713 1,342 4,651 4,654 3,057 2,097 7,493 6,162 5,597 3,857 14,971 11,004 449 480 1,356 1,283 1,540 2,086 5,062 6,341 20,046 14,300 57,425 44,796 96,652 62,777 271,631 185,688 84,574 60,325 199,962 161,080 27,836 18,846 67,356 53,103 $ 56,738 $ 41,479 $ 132,606 $ 107,977 (Dollars in thousands, except per share data) Three Months Ended
June 30 Six Months Ended
June 30 $ 182,741 $ 179,311 $ 371,414 $ 338,165 1,757 1,868 3,650 5,833 13,846 16,241 27,372 33,210 1,842 1,297 3,407 1,991 200,186 198,717 405,843 379,199 11,012 19,249 22,997 46,726 182 196 360 654 2,475 8,670 5,009 19,699 13,669 28,115 28,366 67,079 186,517 170,602 377,477 312,120 (8,879 ) 45,911 (8,736 ) 73,030 195,396 124,691 386,213 239,090 4,193 3,261 7,956 6,744 3,654 2,651 7,977 5,567 9,396 8,055 18,292 16,012 1,368 718 2,432 1,711 775 610 1,534 1,128 1,658 1,291 3,061 3,679 36,943 68,213 102,338 85,844 2,386 1,534 4,741 1,534 24 1,510 2,633 1,706 2,449 547 4,455 1,271 62,846 88,390 155,419 125,196 68,557 68,664 140,969 113,205 14,470 12,779 29,920 23,565 10,101 10,318 21,042 19,380 372 607 3,997 1,513 5,830 5,004 11,874 8,849 6,956 15,926 13,982 21,432 3,599 2,510 6,776 2,648 478 392 878 869 1,800 2,782 3,800 5,182 26,788 30,392 54,640 53,864 138,951 149,374 287,878 250,507 119,291 63,707 253,754 113,779 24,455 11,021 52,020 20,910 $ 94,836 $ 52,686 $ 201,734 $ 92,869 -– continued(Dollars in thousands, except per share data) Three Months Ended Nine Months Ended September 30 September 30 2017 2016 2017 2016 $ 0.54 $ 0.54 $ 1.39 $ 1.49 $ 0.54 $ 0.54 $ 1.39 $ 1.48 $ 0.33 $ 0.33 $ 0.99 $ 0.99 104,760,153 76,218,573 95,040,664 72,413,246 105,068,122 76,647,773 95,450,626 72,746,363 $ 0.73 $ 0.44 $ 1.56 $ 0.84 $ 0.73 $ 0.44 $ 1.56 $ 0.84 128,750,851 119,823,652 128,693,616 110,559,363 129,033,988 119,887,823 128,946,280 110,624,976 (Dollars in thousands) Three Months Ended Nine Months Ended September 30 September 30 2017 2016 2017 2016 $ 56,738 $ 41,479 $ 132,606 $ 107,977
securities, net of tax 1,964 (4,865 ) 8,443 7,944 2 2 4 4 717 777 2,107 2,235 $ 59,421 $ 37,393 $ 143,160 $ 118,160
June 30
June 30 $ 94,836 $ 52,686 $ 201,734 $ 92,869 13,837 27,834 (22,528 ) 45,420 (6,044 ) (1,272 ) 8,943 (1,272 ) 869 1,113 1,738 2,225 $ 103,498 $ 80,361 $ 189,887 $ 139,242 (Unaudited)(Dollars in thousands, except per share data) Nine Months Ended September 30, 2017 Accumulated Common Stock Other Total Par Retained Comprehensive Treasury Shareholders’ Shares Value Surplus Earnings Income (Loss) Stock Equity 81,068,252 $ 202,671 $ 1,205,778 $ 872,990 ($ 44,717 ) ($ 975 ) $ 2,235,747 0 0 0 132,606 0 0 132,606 0 0 0 0 10,554 0 10,554 143,160 0 0 2,589 0 0 0 2,589 23,690,589 59,226 916,028 0 0 0 975,254 0 0 0 0 0 (1 ) (1 ) 0 0 0 0 0 1 1 0 0 (96,040 ) 0 0 (96,040 ) 89,475 224 (224 ) 0 0 0 0 0 0 19 0 0 (19 ) 0 163,562 409 2,724 0 0 0 3,133 105,011,878 $ 262,530 $ 2,126,914 $ 909,556 ($ 34,163 ) ($ 994 ) $ 3,263,843
Other 133,809,374 $ 334,523 $ 2,894,471 $ 1,205,395 $ 22,370 $ (159,139 ) $ 4,297,620 0 0 0 106,898 0 0 106,898 0 0 0 0 (20,509 ) 0 (20,509 ) 86,389 0 0 1,688 0 0 0 1,688 0 0 0 0 0 (11,210 ) (11,210 ) 0 0 0 (45,254 ) 0 0 (45,254 ) 180,901 452 (452 ) 0 0 0 0 145,621 365 3,100 0 0 0 3,465 134,135,896 335,340 2,898,807 1,267,039 1,861 (170,349 ) 4,332,698 0 0 0 94,836 0 0 94,836 0 0 0 0 8,662 0 8,662 103,498 0 0 1,892 0 0 0 1,892 0 0 0 (45,268 ) 0 0 (45,268 ) 0 0 73 0 0 (73 ) 0 1,443 4 (4 ) 0 0 0 0 28,324 70 823 0 0 0 893 134,165,663 $ 335,414 $ 2,901,591 $ 1,316,607 $ 10,523 $ (170,422 ) $ 4,393,713
Other 105,494,290 $ 263,736 $ 2,140,175 $ 1,132,579 $ (34,869 ) $ (137,788 ) $ 3,363,833 0 0 0 (44,331 ) 0 0 (44,331 ) 0 0 0 40,183 0 0 40,183 0 0 0 0 18,698 0 18,698 58,881 0 0 1,253 0 0 0 1,253 0 0 0 0 0 (608 ) (608 ) 0 0 0 (35,604 ) 0 0 (35,604 ) 175,495 439 (439 ) 0 0 0 0 0 0 35 0 0 (35 ) 0 14,694 36 242 0 0 0 278 105,684,479 264,211 2,141,266 1,092,827 (16,171 ) (138,431 ) 3,343,702 0 0 0 52,686 0 0 52,686 0 0 0 0 27,675 0 27,675 80,361 0 0 1,369 0 0 0 1,369 28,031,501 70,079 747,751 0 0 0 817,830 0 0 0 0 0 0 0 0 0 0 (45,416 ) 0 0 (45,416 ) 300 1 8 0 0 0 9 133,716,280 $ 334,291 $ 2,890,394 $ 1,100,097 $ 11,504 $ (138,431 ) $ 4,197,855 (Dollars in thousands) Nine Months Ended September 30 2017 2016 $ 125,151 $ 125,948 12,929 5,039 245,065 103,411 386,496 264,834 (630,061 ) (385,030 ) (11,115 ) (4,150 ) 13 229 (51,941 ) (61,193 ) 14,393 47,285 4,908 15,435 44,531 29,330 369,233 (111,723 ) 384,451 (96,533 ) (86,709 ) (71,129 ) (1 ) (1 ) 3,296 4,668 (845,207 ) (725,077 ) 815,000 795,000 1 1 (269,742 ) 265,183 186,270 (36,889 ) (197,092 ) 231,756 312,510 261,171 1,434,527 857,335 $ 1,747,037 $ 1,118,506 $ 3,829 $ 19,228 $ 351,959 $ 72,099 215 210 39,294 164,850 361,699 248,856 (759,335 ) (159,548 ) 1,250 1,042 (1,305 ) (514 ) 7,558 97,177 (14,199 ) (110,191 ) (50,000 ) 0 0 1,186 (6,537 ) (6,831 ) 1,560 278 2,703 5,106 0 629,107 710,855 (1,028,035 ) 293,758 (157,307 ) (90,715 ) (71,862 ) (11,210 ) (608 ) 4,361 288 (550,000 ) (828,000 ) 500,000 250,000 984,730 2,159,196 (14,555 ) (198,486 ) 822,611 1,310,528 1,468,328 1,225,320 2,209,068 837,493 $ 3,677,396 $ 2,062,813 $ 2,261 $ 18,925 (7,190 ) 4,173,843 6,002 4,301,885 13,192 316,765 (GAAP)(“GAAP”) and with the instructions for FormSeptemberJune 30, 20172021 and 20162020 and for the three-month and nine-month 20162020 has been extracted from the audited financial statements included in United’s 20162020 Annual Report to Shareholders. The accounting and reporting policies followedNotes to Consolidated Financial Statements appearing in the presentation of these financial statements are consistent with those applied in the preparation of the 2016United’s 2020 Annual Report of United on Form10-K. To conform to the 2017 presentation, certain reclassifications have been made to prior period amounts, had no impact on net income, comprehensive income, or stockholders’ equity.includes descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. In the opinion of management, allany adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made. Such adjustments are of a normal and recurring nature.considers all of its principaloperates in two business activities to be bank related.segments: community banking and mortgage banking. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Dollars areInformation is presented in these notes to the unaudited consolidated interim financial statements with dollars expressed in thousands, except per share or unless otherwise noted.2017,2020, the FASB issued ASU2017-12, “Targeting Improvement to Accounting2020-06,Hedging Activities.” Thisconvertible debt instruments and convertible preferred stock that require the separation of a convertible debt instrument into a debt component and an equity or derivative component. The ASU also amends ASC 815 and its objectives are to improve the transparency and understandability of information conveyed to financial statement users aboutderivative scope exception guidance for contracts in an entity’s risk management activitiesown equity. The amendments remove three settlement conditions that are required for equity contracts to qualify for the derivative scope exception. In addition, the ASU expands disclosure requirements for convertible instruments and simplifies areas of the guidance for dilutedbetter aligning the entity’s financial reporting for hedging relationships with those risk management activities and reduce the complexity and simplify the application of hedge accounting by preparers.amendments. ASU2017-122020-06interim and annual reporting periodspublic business entities for fiscal years beginning after December 15, 2018; early adoption is permitted.2021, including interim periods within those fiscal years. Entities may elect to adopt the amendments through either a modified retrospective method of transition or a fully retrospective method of transition. ASU2017-122020-06July 2017,March 2020, the FASB issued ASU2017-11, “Part I, Accounting for Certain Financial Instruments with Down Round Features and Part II, Replacement2020-04,Indefinite DeferralEffects of Reference Rate Reform on Financial Reporting.” The ASU provides “optional expedients and exceptions for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Enticesapplying generally accepted accounting principles under ASC Topic 848 to contract modifications and Certain Mandatorily Redeemable Noncontrolling interests with a Scope Exception.hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.” Part I of this ASU simplifies the accounting for financial instruments that include down round features while the amendments in Part II, which do not have an accounting effect, address the difficulty of navigating the guidance in ASC 480, “Distinguishing Liabilities from Equity”, due to the existence of extensive pending content in the Codification. ASU2017-112020-04and annual reportingfiscal periods within those fiscal years, beginning after December 15, 2018;2020; early adoption is permitted. ASU2017-11 is not expected to have a material impact on the Company’s financial condition or results of operations.In May 2017, the FASB issued ASUNo. 2017-09, “Stock Compensation, Scope of Modification Accounting.” This ASU clarifies when changes to the terms of conditions of a share-based payment award must be accounted for asmodifications. Companies will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. The new guidance should reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications, as the guidance will allow companies to make certainnon-substantive changes to awards without accounting for them as modifications. It does not change the accounting for modifications. ASUNo. 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017; early adoption is permitted. ASUNo. 2017-09 is not expected to have a material impact on the Company’s financial condition or results of operations.In March 2017, the FASB issued ASU2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU2017-07 amends ASC 715, “Compensation - Retirement Benefits” and will change how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. ASU2017-07 is effective for2020-012018, with early adoption permitted. Management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.In January 2017, the FASB issued ASU2017-04, “Intangibles – Goodwill and Other (topic 350).” ASU2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU2017-04 is effective for United on January 1, 2020, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.In January 2017, the FASB issued ASU2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” ASU2017-01 changes the definition of a business to assist entities with evaluation when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. ASU2017-01 is effective for United on January 1, 2018, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.In August 2016, the FASB issued ASU2016-15, “Classification of Certain Cash Receipts and Cash Payments.” ASU2016-15 amends ASC topic 230 to add and clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows as a result of diversity in practice and in certain circumstances, financial statement restatements. Entities should apply ASU2016-15 using a retrospective transition method to each period presented. ASU2016-15 is effective for United on January 1, 2018, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.In June 2016, the FASB issued ASU2016-13, “Financial Instruments – Credit Losses.” ASU2016-13 changes the impairment model for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances foravailable-for-sale debt securities rather than reduce the carrying amount under the current other-than-temporary impairment (OTTI) model. ASU2016-13 also simplifies the accounting model for purchased credit-impaired debt securities and loans. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reportingperiod in which the guidance is effective. ASU2016-13 is effective for United on January 1, 2020, with early adoption permitted, and management is currently evaluating the possible impact this standard may have on the Company’s financial condition or results of operations.In March 2016, the FASB issued ASU2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” United adopted ASU2016-09 on January 1, 2017 utilizing the modified retrospective method. ASU2016-09 changes certain aspects of accounting for share-based payments to employees. The new guidance, amongst other things, requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. The requirement to report those income tax effects in earnings was applied to settlements occurring on or after January 1, 2017 and the impact of applying that guidance reduced reporting income tax expense by $146 and $960 for the three and nine months ended September 30, 2017, respectively. ASU2016-09 also allows an employer to repurchase more of an employee’s shares than it could previously for tax withholding purposes without triggering liability accounting and make a policy election to account for forfeitures as they occur. The Company will continue to estimate the number of awards expected to be forfeited and adjust the estimate when it is no longer probable that the employee will fulfill the service condition, as was previously required. ASU2016-09 also requires that all incometax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award’s vesting period. United elected to apply that change in cash flow classification on a retrospective basis, which resulted in an $2,083 increase to net cash from operating activities and a corresponding decrease to net cash from financing activities in the accompanying Consolidated Statement of Cash Flows for the first nine months of 2016. The recognition of excess tax benefits and deficiencies in the income statement was adopted prospectively.2021. The adoption of ASU2016-09 did not have a material impact on the Company’s financial condition or results of operations.February 2016,August 2018, the FASB issued ASU2016-02, “Leases 842). ASU2016-02 includes a lessee accounting model that recognizes two types This update amends ASC Topic 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other post retirement plans. The ASU’s changes related to disclosures are part of leases, finance leases and operating leases, while lessor accounting will remain largely unchanged from the current GAAP.FASB’s disclosure framework project, which the FASB launched in 2014 to improve effectiveness of disclosures in notes to financial statements. ASU2016-02 requires, amongst other things, that a lessee recognize on the balance sheet aright-of-use asset and a lease liability for leases with terms of more than twelve months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or operating lease. ASU2016-022019 and management is currently evaluating the impact this standard may have on the Company’s financial condition or results of operations.In January 2016, the FASB issued ASU2016-01, “Financial Instruments Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU2016-01 makes changes to the classification and measurement of investments in equity securities, the presentation of certain fair value changes for financial liabilities measured at fair value under the fair value option and disclosure of fair value of instruments. In addition, ASU2016-01 clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses onavailable-for-sale debt securities. ASU2016-01 is effective for United on January 1, 2018 and is2021. The adoption did not expected to have a significantmaterial impact on the Company’s financial condition or results of operations.In May 2014, the FASB issued ASU2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU2014-09 supersedes the revenue recognition requirements in ASC topic 605, “Revenue Recognition”, and most industry-specific guidance throughout the ASC. The amendments require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new revenue recognition standard sets forth a five step principle-based approach for determining revenue recognition. ASU2014-09 will be effective for United on January 1, 2018. The Company intends to adopt the amendments of ASU2014-09 beginning January 1, 2018 through the modified-retrospective transition method with a cumulative effect adjustment to opening retained earnings. TheCompany’s revenue is comprised of net interest income and noninterest income. As the standard does not apply to revenue associated with financial instruments, net interest income and gains and losses from securities are not impacted by the standard. Thus far, we have identified revenue streams within the scope of the guidance and analyzed those revenue streams to determine the impact of the standard. We have reviewed and evaluated a number of revenue contracts to determine the impact the new recognition methods will have on revenue recognition. Based on this review, ASU2014-09 may require the Company to change how it recognizes certain recurring revenue streams related to noninterest income including fees from trust and brokerage services. Although we currently do not expect this standard to have a material impact on the timing or amount of revenue, we are still assessing the potential impact on the Company’s consolidated financial statements.CardinalApril 21, 2017 (Cardinal May 1, 2020 (“Acquisition Date)Date”), United acquired 100% of the outstanding shares of Carolina Financial Corporation (“Carolina Financial”), a Delaware corporation headquartered in Charleston, South Carolina. Carolina Financial was merged with and into United (the “Carolina Financial Merger”), pursuant to the terms of the Agreement and Plan of Merger, dated November 17, 2019, by and between United and Carolina Financial (the “Carolina Financial Agreement”). Upon completion of the Carolina Financial Merger, Carolina Financial ceased to exist and United survived and continues to exist as a West Virginia corporation.CardinalCarolina Financial Corporation (Cardinal)was converted into the right to receive 1.13 shares of United common stock, par value $2.50 per share. Also pursuant to the Carolina Financial Agreement, as of the effective time of the Carolina Financial Merger, each outstanding Carolina Financial stock option, whether vested or unvested as of the date of the Carolina Financial Merger, at such option holder’s election, (i) vested and converted into an option to acquire United common stock adjusted based on the 1.13 exchange ratio, or (ii) was entitled to receive cash consideration equal to the difference between (a) the option’s exercise price and (b) $28.99, representing the volume weighted average trading price of the Carolina Financial common stock on NASDAQ for the twenty full trading days ending on the second trading day immediately preceding the closing date (the “CFC Closing Price”) multiplied by the number of shares of Carolina Financial common stock subject to such stock option. Also, at the effective time of the Carolina Financial Merger, each restricted stock grant, restricted stock unit grant or any other award of a share of Carolina Financial common stock subject to vesting, repurchase or other lapse restriction under a Carolina Financial stock plan (other than a stock option) (each, a “Stock Award”) that was outstanding immediately prior to the effective time of the Carolina Financial Merger, vested in accordance with the terms of the Carolina Financial stock plan and at the election of the holder (i) converted into the right to receive shares of United common stock based on the 1.13 exchange ratio or (ii) converted into cash in an amount equal to the CFC Closing Price multiplied by the shares of Carolina Financial common stock subject to the Stock Award.headquartered in Tysons Corner, Virginia. The acquisition of Cardinal expands United’s existing footprint in the Washington, D.C. Metropolitan Statistical Area. At consummation, Cardinal had assets of $4,136,008, loans of $3,313,033 and deposits of $3,344,740. Cardinal also operated George Mason Mortgage, LLC (George Mason), a residential mortgage lending companywhich is based in Fairfax, Virginia with offices located in Virginia, Maryland, North Carolina, South Carolina and the District of Columbia.Atlanta, Georgia. As a result of the merger, George Mason became an indirectly-ownedCresCom Bank Merger, Crescent is now a wholly-owned subsidiary of United.mergerCarolina Financial Merger was accounted for under the acquisition method of accounting. The results of operations of CardinalCarolina Financial are included in the consolidated results of operations from the Cardinal Acquisition Date.approximately $975,254,$817,877, including common stock valued at $972,499,$815,997, stock options assumed valued at $2,741,$1,833, and cash paid for fractional shares of $14.$47. The number of shares issued in the transaction was 23,690,589,28,031,501, which were valued based on the closing market price of $41.05$29.11 for United’s common shares on April 21, 2017.May 1, 2020. The preliminary purchase price preliminary additions to goodwill, core deposit intangibles and the George MasonCrescent trade name intangible of $622,513, $28,723$332,026, $3,408, and $1,230,$196, respectively. The goodwill recognized results from the expected synergies and potential earnings from the combination of United and Carolina Financial. The core deposit intangibles are expected to beintangible is being amortized on an accelerated basis over ten years. The George MasonCrescent trade name provides a source of market recognition to attract potential clients and retain existing relationships. United believes the George MasonCrescent trade name provides a competitive advantage and is likely going to be used into perpetuity and thus will not be subject to amortization, but rather be evaluated for impairment.CardinalCarolina Financial acquisition is expected to be deductible for tax purposes. United used an independent third party to help determine the fair values of the assets and liabilities acquired from Cardinal.Carolina Financial. As a result of the merger, United recorded preliminary fair value discounts of $144,434$47,425 on the loans and leases acquired, $2,281$620 on leases and $8,738investment securities, $272 on OREO, $4,831 on trust preferred issuances and $135 on subordinated notes, respectively, and premiums of $4,408$5,908 on buildings acquired, $4,357 on land acquired, $5,072$12,818 on interest-bearing deposits, and $10,740$468 on long-term FHLB advances, respectively. United also recorded an allowance for credit losses, including a reserve for unfunded commitments, of $50,562 on the loans and commitments acquired split between $19,797 for purchased credit deteriorated (“PCD”) loans and $30,765 forremaining discountdiscounts and premium amounts, except for discount on the land and OREO acquired, are being accreted or amortized on an accelerated or straight-line basis, based on the type of asset or liability, over each asset’s or liability’s estimated remaining life at the time of acquisition except for loans and land. The discount on loans will be accreted into income based on the effective yield method. The premium on land will not be amortized.acquisition. At SeptemberJune 30, 2017,2021, the discounts on leasessubordinated debt and trust preferred issuances had an average estimated remaining life of 6.006.50 years and 16.9715.75 years, respectively, and the premiums on the buildings, and interest-bearing deposits and the FHLB advances each had an average estimated remaining life of 5.0030.50 years, and 4.814.10 years, respectively. United assumed approximately $1,825 of liabilities to provide severance benefits to terminated employees of Cardinal, which has no remaining balance as of September 30, 2017. The estimated fair values of theare preliminaryand goodwill were considered final as of SeptemberJune 30, 20172021.are subjectleases acquired from Carolina Financial were recorded at their fair value at the Acquisition Date based on a discounted cash flow methodology. The estimated fair value incorporates adjustments related to refinementmarket loss assumptions and prevailing market interest rates for comparable assets and other market factors such as additional information relativeliquidity from the perspective of a market participant. Also, acquired portfolio loans and leases were evaluated upon acquisition and classified as either PCD, which indicates that the loan has experienced a more-than-insignificant deterioration in credit quality since origination, orclosingrisk grades, delinquency, nonperforming status, current or previous troubled debt restructurings or bankruptcies, watch list credits and other qualitative factors that indicated a deterioration in credit quality since origination. For PCD loans and leases, an initial allowance is determined based on the same methodology as other portfolio loans and leases. This initial allowance for credit losses is allocated to individual PCD loans and leases and added to the acquisition date fair values becomes available. Any subsequent adjustments to establish the fair valuesinitial amortized cost basis for the PCD loans and leases. The difference between the unpaid principal balance (“UPB”), or par value, of PCD loans and leases and the amortized cost basis is considered to relate to noncredit factors and resulted in a discount of $7,212 at Acquisition Date. This discount is being recognized through interest income on a level-yield method over the life of the loans which is estimated to be a weighted-average of 4.6 years. Forassetsloans and liabilities assumed, identifiable intangible assets, or other purchase accounting adjustments will result in adjustments to goodwill withinleases, the measurement period followingdifferences between the date of acquisition.In many cases, determining the estimatedinitial fair value ofand the acquired assets and assumed liabilities required United to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations related to the fair valuation of acquired loans. The fairUPB, or par value, of the acquired loans was based on the present value of the expected cash flows. Periodic principal and interest cash flows were adjusted for expected losses and prepayments, then discounted to determine the present value and summed to arrive at the estimated fair value. For such loans, the excess of cash flows expected at acquisition over the estimated fair value isare recognized as interest income on a level-yield basis over the remaining lives of the loans. The difference between contractually required payments at acquisitionrelated loans and the cash flows expectedleases which is estimated to be collecteda weighted-average of 7.3 years. The total fair value mark on theacquisition reflects the impact of estimatedAcquisition Date was $40,213. At the Acquisition Date, an initial allowance for expected credit losses and other factors, such as prepayments. In accordanceof $28,948 was recorded with GAAP, there was no carry-over of Cardinal’s previously established allowancea corresponding charge to the provision for loan losses.The acquired loans were divided into loans with evidence of credit quality deterioration, which are accounted for under ASC topic310-30 (acquired impaired) and loans that do not meet this criteria, which are accounted for under ASC topic310-20 (acquired performing). Acquired impaired loans have experienced a deterioration of credit quality from origination to acquisition for which it is probable that United will be unable to collect all contractually required payments receivable, including both principal and interest. Subsequent decreaseslosses in the expected cash flows require United to evaluateConsolidated Statements of Income. Subsequent changes in the need for additions to the Company’s allowance for credit losses. Subsequent improvements in expected cash flows generally resultlosses related to PCD andrecognitionprovision for credit losses.loans.In conjunction withdifference between the Cardinal merger,purchase price and the acquired loan portfolio was accounted for at fair value as follows: April 21, 2017 $ 4,211,734 (56,176 ) 4,155,558 (986,959 ) $ 3,168,599 Included in the above table is information related to acquired impaired loans. Specifically, contractually required principal and interest, cash flows expected to be collected and estimated fairpar value of portfolio PCD loans and leases acquired impaired loans were $132,837, $108,275, and $86,696, respectively. $ 1,023,531 18,635 7,212 $ 1,049,378 Cardinal’sCarolina Financial’s common equity and the preliminary amounts of acquired identifiable assets and liabilities assumed as of the Cardinal Acquisition Date were as follows: $ 972,499 2,741 14 975,254 44,545 395,829 271,301 3,168,599 24,208 28,723 1,230 135,383 $ 4,069,818 $ 3,349,812 96,215 220,119 2,281 48,650 3,717,077 352,741 $ 622,513 $ 815,997 1,833 47 817,877 629,154 580,791 65,757 3,246,940 79,127 9,861 196 3,408 20,123 159,218 $ 4,794,575 $ 3,884,977 332,000 42,738 9,861 39,148 4,308,724 485,851 $ 332,026 for the nine months ended September 30, 2017 include operating results of acquired assets and assumed liabilities subsequent to the Cardinal Acquisition Date. The operations of United’s metropolitan Washington D.C.North Carolina and South Carolina geographic area, which primarily includes the acquired operations of Cardinal,Carolina Financial and Crescent Mortgage provided $157,326$104,069 in total revenues which represents net(net interest income plus other income,income), and $81,817$53,632 in net income fromfor the period from the Cardinal Acquisition Date to September 30, 2017.first six months of 2021. These amounts are included in United’s consolidated financial statements as of and for the ninesix months ended SeptemberJune 30, 2017. Cardinal’s2021. Carolina Financial’s results of operations prior to the Cardinal Acquisition Date are not included in United’s consolidated financial statements.The following table presents certain unaudited pro forma information for the results of operations for the nine months ended September 30, 2017 and 2016, as if the Cardinal merger had occurred on January 1, 2017 and 2016, respectively. These results combine the historical results of Cardinal into United’s consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair valuation adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on the indicated date nor are they intended to represent or be indicative of future results of operations. In particular, no adjustments have been made to eliminate the amount of Cardinal’s provision for credit losses for 2017 and 2016 that may not have been necessary had the acquired loans been recorded at fair value as of the beginning of 2017 and 2016. Additionally, United expects to achieve operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts. Proforma
Nine Months Ended
September 30 2017 2016 $ 573,790 $ 585,223 136,104 160,731 (1)Represents net interest income plus other incomeBank of GeorgetownAfter the close of business on June 3, 2016 (BOG Acquisition Date), United acquired 100% of the outstanding common stock of Bank of Georgetown, a privately held community bank headquartered in Washington, D.C. With this transaction, United continues to expand its existing footprint in the D.C. Metro Region. The results of operations of Bank of Georgetown are included in the consolidated results of operations from the BOG Acquisition Date.At consummation, Bank of Georgetown had assets of $1,278,837, loans of $999,773, and deposits of $971,369. The transaction was accounted for under the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the BOG Acquisition Date.The aggregate purchase price was $264,505, including common stock valued at $253,799, stock options assumed valued at $10,696, and cash paid for fractional shares of $10. The number of shares issued in the transaction was 6,527,746, which were valued based on the closing market price of $38.88 for United’s common shares on June 3, 2016. The purchase price has been allocated to the identifiable tangible and intangible assets resulting in additions to goodwill and core deposit intangibles of $152,845 and $9,058, respectively. The core deposit intangibles are being amortized over ten years.Because the consideration paid was greater than the net fair value of the acquired assets and liabilities, the Company recorded goodwill as part of the acquisition. None of the goodwill from the Bank of Georgetown acquisition is expected to be deductible for tax purposes. United used an independent third party to help determine the fair values of the assets and liabilities acquired from the Bank of Georgetown. As a result of the merger, United recorded fair value discounts of $43,072 on the loans acquired and $1,550 on leasehold improvements, respectively, and premiums on interest-bearing deposits acquired of $316 and a premium on long-term FHLB advances of $2,659. The remaining discount and premium amounts are being amortized or accreted on an accelerated basis over each asset’s or liability’s estimated remaining life at the time of acquisition. At September 30, 2017, the premium on the interest-bearing deposits and the FHLB advances had an estimated remaining life of 0.33 years and 7.92 years, respectively. United assumed approximately $300 of liabilities to provide severance benefits to terminated employees of Bank of Georgetown, which has no remaining balance as of September 30, 2017. The measurement period has closed and the estimated fair values of the acquired assets and assumed liabilities, including identifiable intangible assets were considered final as of June 30, 2017.In many cases, determining the estimated fair value of the acquired assets and assumed liabilities required United to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations related to the fair valuation of acquired loans. The fair value of the acquired loans was based on the present value of the expected cash flows. Periodic principal and interest cash flows were adjusted for expected losses and prepayments, then discounted to determine the present value and summed to arrive at the estimated fair value. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with GAAP, there was no carry-over of Bank of Georgetown’s previously established allowance for loan losses.In conjunction with the Bank of Georgetown merger, the acquired loan portfolio was accounted for at fair value as follows: June 3, 2016 $ 1,275,398 (33,980 ) 1,241,418 (274,548 ) $ 966,870 Included in the above table is information related to acquired impaired loans. Specifically, contractually required principal and interest, cash flows expected to be collected and estimated fair value of acquired impaired loans were $138,125, $117,564, and $95,570, respectively.The consideration paid for Bank of Georgetown’s common equity and the fair value of acquired identifiable assets and liabilities assumed as of the BOG Acquisition Date were as follows: $ 253,799 10,696 10 264,505 29,340 219,783 966,870 5,574 9,058 31,605 $ 1,262,230 $ 971,685 101,021 67,659 11,532 1,151,897 110,333 $ 154,172 and all marketable equity securities are classified as available for sale and carried at estimated fair value. The amortized cost, and estimated fair values, and allowance for credit losses of securities available for sale are summarized as follows. September 30, 2017 Gross Gross Estimated Cumulative Amortized Unrealized Unrealized Fair OTTI in Cost Gains Losses Value AOCI (1) $ 115,224 $ 864 $ 222 $ 115,866 $ 0 305,096 2,567 2,522 305,141 0 715,003 3,819 4,122 714,700 0 5,259 587 0 5,846 86 420,115 2,081 1,404 420,792 0 13,422 10 3 13,429 0 38,186 317 6,844 31,659 20,770 13,404 404 1,341 12,467 0 18,998 256 0 19,254 0 9,950 541 11 10,480 0 $ 1,654,657 $ 11,446 $ 16,469 $ 1,649,634 $ 20,856 December 31, 2016 Gross Gross Estimated Cumulative Amortized Unrealized Unrealized Fair OTTI in Cost Gains Losses Value AOCI (1) $ 95,247 $ 698 $ 159 $ 95,786 $ 0 196,350 1,364 4,902 192,812 0 585,208 3,999 5,111 584,096 0 6,629 426 12 7,043 86 304,635 1,948 1,242 305,341 0 217 0 0 217 0 48,558 729 15,735 33,552 25,952 13,363 284 2,170 11,477 0 14,996 66 0 15,062 0 12,436 1,398 6 13,828 0 $ 1,277,639 $ 10,912 $ 29,337 $ 1,259,214 $ 26,038 (1)Non-credit related other-than-temporary impairment in accumulated other comprehensive income. Amounts arebefore-tax.
Cost
Unrealized
Gains
Unrealized
Losses
For Credit
Losses
Fair $ 14,908 $ 242 $ 3 $ 0 $ 15,147 592,778 22,585 1,317 0 614,046 973,328 17,216 5,542 0 985,002 39,792 15 204 0 39,603 634,647 21,212 3,302 0 652,557 489,901 714 1,182 0 489,433 18,249 188 1,020 0 17,417 457,829 6,183 143 0 463,869 $ 3,221,432 $ 68,355 $ 12,713 $ 0 $ 3,277,074
Cost
Unrealized
Gains
Unrealized
Losses
For Credit
Losses
Fair $ 65,804 $ 543 $ 3 $ 0 $ 66,344 538,082 27,330 252 0 565,160 905,230 24,134 473 0 928,891 21,639 137 0 0 21,776 644,774 31,009 638 0 675,145 297,834 204 3,415 0 294,623 18,230 167 1,370 0 17,027 376,753 7,648 8 0 384,393 $ 2,868,346 $ 91,172 $ 6,159 $ 0 $ 2,953,359 available-for-sale available for sale which were in an unrealized loss position at SeptemberJune 30, 20172021 and December 31, 2016. Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Value Losses Value Losses September 30, 2017 $ 27,053 $ 128 $ 19,932 $ 94 83,310 896 38,004 1,626 351,936 3,410 31,690 712 0 0 0 0 228,307 1,218 12,272 186 6,760 3 0 0 0 0 29,544 6,844 0 0 4,365 1,341 0 0 352 11 $ 697,366 $ 5,655 $ 136,159 $ 10,814 Less than 12 months 12 months or longer Fair Unrealized Fair Unrealized Value Losses Value Losses December 31, 2016 $ 24,101 $ 159 $ 0 $ 0 116,300 4,902 0 0 309,376 5,111 0 0 0 0 218 12 162,479 1,242 0 0 0 0 0 0 0 0 28,579 15,735 0 0 8,185 2,170 357 6 0 0 $ 612,613 $ 11,420 $ 36,982 $ 17,917 Marketable equity securities consist mainly of equity securities of financial institutions and mutual funds within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries. 2020.
Losses
Losses
Losses $ 0 $ 0 $ 252 $ 3 $ 252 $ 3 63,639 1,254 4,920 63 68,559 1,317 393,743 5,542 0 0 393,743 5,542 20,261 204 0 0 20,261 204 117,331 3,302 0 0 117,331 3,302 143,276 272 145,807 910 289,083 1,182 0 0 0 0 0 0 0 0 13,188 1,020 13,188 1,020 47,259 143 0 0 47,259 143 $ 785,509 $ 10,717 $ 164,167 $ 1,996 $ 949,676 $ 12,713
Losses
Losses
Losses $ 297 $ 3 $ 0 $ 0 $ 297 $ 3 30,480 252 0 0 30,480 252 131,114 467 3,867 6 134,981 473 0 0 0 0 0 0 83,395 638 0 0 83,395 638 0 0 266,104 3,415 266,104 3,415 0 0 0 0 0 0 0 0 13,804 1,370 13,804 1,370 8,494 8 0 0 8,494 8 $ 253,780 $ 1,368 $ 283,775 $ 4,791 $ 537,555 $ 6,159 thoseany sales and calls. Gains or losses on sales and calls of available for sale securities were recognized by the specific identification method. The realized losses relate to sales $ 131,464 $ 280,780 $ 400,993 $ 413,706 0 1,565 1,542 1,818 0 98 98 177 SeptemberJune 30, 2017,2021, gross unrealized losses on available for sale securities were $16,469$12,713 on 375113 securities of a total portfolio of 8221,005 available for sale securities. Securities in anwith the most significant gross unrealized loss positionlosses at SeptemberJune 30, 20172021 consisted primarily of pooled trust preferred collateralized debt obligations (“Trup Cdos”), single issue trust preferred securities and agency residential mortgage-backed securities. The Trup Cdos and the single issue trust preferred securities relate mainly to securities of financial institutions. The state and political subdivisions securities relate to securities issued by various municipalities. The agency residential mortgage-backed securities relate to residential properties and provide a guaranty of full and timely payments of principal and interest by the issuing agency. agency commercial mortgage-backed securities.other-than-temporarily impaired, (“OTTI”), management considered the severity and the duration of the loss in conjunction with United’s positive intent and the more likely than not ability to hold these securities to recovery of their cost basis or maturity.$305,096$592,778 at SeptemberJune 30, 2017.2021. As of SeptemberJune 30, 2017,2021, approximately 75%59% of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any meansless than one percent ofno securities within the portfolio waswere rated below investment grade as of SeptemberJune 30, 2017.2021. In addition to monitoring the credit ratings of these securities, management also evaluates the financial performance of the underlying issuers on an ongoing basis. Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities were other-than-temporarily impairedhad credit losses at SeptemberJune 30, 2017.$1,135,118$1,607,975 at SeptemberJune 30, 2017.2021. Of the $1,135,118$1,607,975 amount, $420,115$634,647 was related to agency commercial mortgage-backed securities and $715,003$973,328 was related to agency residential mortgage-backed securities. Each of the agency mortgage-backed securities provides a guarantee of full and timely payments of principal and interest by the issuing agency. Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities were other-than-temporarily impairedhad credit losses at SeptemberJune 30, 2017.$5,259$39,792 at SeptemberJune 30, 2017.2021. Of the $5,259 amount, $627$39,792, 100% was rated above investment grade and $4,632 was rated below investment grade. Approximately 18% of the portfolio includes collateral that was originated during the year of 2005 or before. The remaining 82% includes collateral that was originated in the years of 2006 and 2007. The entire portfolio of thenon-agency residential mortgage-backed securities are either the senior or super-senior tranches of their respective structure.AAA. Based upon management’s analysis and judgment, it was determined that none0ne of thewere other-than-temporarily impairedhad credit losses at SeptemberJune 30, 2017.thirdsecond quarter of 2017,2021, it was determined that none of the single issue trust preferred securities were other-than-temporarily impaired. All single issue trust preferredhad credit losses. are currently receiving interest payments. The available for sale single issue trust preferred securities’ ratings ranged fromlow of Ba1 to a high ofBBB-. Thetotal amortized cost balance of available for sale single issue trust preferred securities as$457,829. The majority of September 30, 2017the portfolio consisted of $3,017 indebt issuances of corporations representing a variety of industries, including financial institutions. Of the $457,829 total amortized cost balance, 86% had at least one rating above investment grade, bonds, $4,680 in split-rated bonds and $5,707 in unrated bonds. All of the unrated bonds were in an unrealized loss position for twelve months or longer as of September 30, 2017.Trust preferred collateralized debt obligations (Trup Cdos)In order to determine how and when the Company recognizes OTTI, the Company first assesses its intentions regarding any sale of securities as well as the likelihood that it would be required to sell prior to recovery of the amortized cost. As of September 30, 2017, the Company has determined that it does not intend to sell any pooled trust preferred security and that it is not more likely than not that the Company will be required to sell such securities before recovery of their amortized cost.To determine a net realizable value and assess whether other-than-temporary impairment existed, management performed detailed cash flow analysis to determine whether, in management’s judgment, it2% was more likely that United would not recover the entire amortized cost basis of the security. The Company discounts the security-specificcash flow projection at the security-specific interest rate and compares the present value to the amortized cost. Management’s cash flow analysis was performed for each security and considered the current deferrals and defaults within the underlying collateral, the likelihood that current deferrals would cure or ultimately default, potential future deferrals and defaults, potential prepayments, cash reserves, excess interest spread, credit analysis of the underlying collateral and the priority of payments in the cash flow structure. The underlying collateral analysis for each issuer took into consideration multiple factors including capital adequacy, earnings trends and asset quality. After completing its analysis of estimated cash flows, management determined that none of the Trup Cdos experienced an adverse change in cash flows during the third quarter of 2017, as the expected discounted cash flows from these particular securities were greater than or equal to the discounted cash flows originally expected at purchase or from the previous date of other-than-temporary impairment (cash flows are discounted at the contractual coupon rate for purposes of assessing OTTI).There was no credit-related other-than-temporary impairment recognized in earnings for the third quarter of 2017 related to these securities. The balance of noncredit-related other-than-temporary impairment recognized on United’s Trup Cdos portfolio was $20,770 at September 30, 2017.The following is a summary of the available for sale Trup Cdos as of September 30, 2017: Amortized Cost Amortized
Cost Fair
Value Unrealized
Loss Investment
Grade Split
Rated Below
Investment
Grade $ 5,208 $ 5,287 $ (79 ) $ 3,410 $ 0 $ 1,798 6,428 5,518 910 0 0 6,428 22,656 17,918 4,738 0 0 22,656 3,894 2,936 958 0 0 3,894 $ 38,186 $ 31,659 $ 6,527 $ 3,410 $ 0 $ 34,776 While a large difference remains between the fair value and amortized cost, the Company believes the remaining unrealized losses are related to the illiquid market for Trup Cdos rather than an adverse change in expected cash flows. The expected future cash flow substantiates the return of the remaining amortized cost of the security. The Company believes the following evidence supports the position that the remaining unrealized loss is related to the illiquid market for Trup Cdos:The market for new issuance of Trup Cdos was robust from 2000 to 2007 with an estimated $60 billion in new issuance. The new market issuances came to an abrupt halt in 2007.The secondary market for Trup Cdos ultimately became illiquid and although the market has improved, trading activity remains limited on these securities. In making this determination, the Company holds discussions with institutional traders to identify trends in the number and type of transactions related to the Trup Cdos.The presence of a below-investment grade rating severely limits the pool of available buyers and contributes to the illiquidity of the market.Trup Cdos have a more complex structure than most debt instruments, making projections of tranche returns difficult fornon-specialists in the product. Deferral features available to the underlying issuers within each pool are unique to these securities. Additionally, it can be difficult for market participants to predict whether deferrals will ultimately cure or ultimately default. Due to the lack of transparency, market participants will require a higher risk premium, thus resulting in higher required discount rates.The variability of cash flows at the time the securities were originated was expected to be very limited. Due to the financial crisis, Trup Cdos have experienced more substantive variability of cash flows compared to expectations, resulting in a higher risk premium when evaluating discount rates.The limited, yet relevant, observable inputs indicate that market yield requirements for Trup Cdos, on a credit-adjusted basis, remained very high relative to discount rates at purchase and compared to other similarly rated debt securities.Overall, the Company believes the lack of new issuances, illiquid secondary market, limited pool of buyers, below investment grade ratings,rated, and complex structures are the key drivers of the remaining unrealized losses in the Company’s Trup Cdos and the robust expected cash flow analysis substantiates the return of the remaining amortized cost under ASC topic 320.Management also considered the ratings of the Company’s bonds in its portfolio and the extent of downgrades in United’s impairment analysis. However, management considered it imperative to independently perform its own credit analysis based on cash flows as described. The ratings of the investment grade Trup Cdos in the table above range from a low of AA to a high of Aaa. The below investment grade Trup Cdos range from a low of C to a high of Ba2.On the Trup Cdos that have not been deemed to be other-than-temporarily impaired, the collateralization ratios range from a low of 105.4% to a high of 414.5%, with a median of 260.0%, and a weighted average of 283.8%. The collateralization ratio is defined as the current performing collateral in a security, divided by the current balance of the specific tranche the Company owns, plus any debt which is senior or pari passu with the Company’s security’s priority level. Performing collateral excludes the balance of any issuer that has either defaulted or has deferred its interest payment. It is not uncommon for the collateralization of a security that is not other-than-temporarily impaired to be less than 100% due to the excess spread built into the securitization structure.Except for the debt securities that have already been deemed to be other-than-temporarily impaired, management does not believe any other individual security with an unrealized loss as of September 30, 2017 is other-than-temporarily impaired.12% was unrated. For these securities, United believes the decline in value resulted from changes in market interest rates, credit spreads and liquidity, not a change in the expected contractual cash flows. Based on a review of each of the securities in the investment portfolio, management concluded that it expected to recover the amortized cost basis of the investment in such securities.Equity securitiesThe amortized cost of United’s equity securities was $9,950 at September 30, 2017. For equitycorporate securities, management has evaluated the near-term prospects of the investment in relation to the severity and duration of any impairmentunrealized loss. Based upon management’s analysis and based on that evaluation, managementjudgment, it was determined that no equity securities were other-than-temporarily impaired at September 30, 2017.Other investment securities (cost method)During the third quarter of 2017, United also evaluated all of its cost method investments to determine if certain events or changes in circumstances during the third quarter of 2017 had a significant adverse effect on the fair value of any of its cost method securities. United determined that there were no events or changes in circumstances during the third quarter which would have an adverse effect on the fair value of any of its cost method securities. Therefore, no impairment was recorded.Below is a progressionnone of the corporate securities had credit losses on securities which United has recorded other-than-temporary charges. These charges were recorded through earnings and other comprehensive income. Three Months Ended
September 30 Nine Months Ended
September 30 2017 2016 2017 2016 $ 22,162 $ 22,162 $ 22,162 $ 23,773 0 0 0 33 (4,102 ) 0 (4,102 ) (1,644 ) $ 18,060 $ 22,162 $ 18,060 $ 22,162 SeptemberJune 30, 20172021 and December 31, 20162020 by contractual maturity are shown as follows. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties. September 30, 2017 December 31, 2016 Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value $ 57,720 $ 57,622 $ 53,286 $ 53,330 370,020 371,007 296,181 297,385 342,176 343,326 213,094 213,791 874,791 867,199 702,642 680,880 9,950 10,480 12,436 13,828 $ 1,654,657 $ 1,649,634 $ 1,277,639 $ 1,259,214
Cost
Fair
Cost
Fair $ 72,479 $ 72,978 $ 150,575 $ 151,651 596,359 611,994 495,922 514,441 688,537 702,870 688,264 714,416 1,864,057 1,889,232 1,533,585 1,572,851 $ 3,221,432 $ 3,277,074 $ 2,868,346 $ 2,953,359 amortized cost and estimated fair values of securities held to maturity are summarized as follows: September 30, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value $ 5,215 $ 400 $ 0 $ 5,615 5,674 12 0 5,686 26 4 0 30 9,400 0 842 8,558 20 0 0 20 $ 20,335 $ 416 $ 842 $ 19,909 December 31, 2016 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value $ 5,295 $ 570 $ 0 $ 5,865 8,598 17 0 8,615 30 5 0 35 19,315 0 2,672 16,643 20 0 0 20 $ 33,258 $ 592 $ 2,672 $ 31,178 Even though the market value of theheld-to-maturityUnited’s equity securities was $11,507 at June 30, 2021 and $10,718 at December 31, 2020. $ 24 $ 43 $ 734 $ 65 0 1 788 7 24 43 51 114 0 (1 ) (105 ) (56 ) portfolio is less thansecuritiesunrealized loss has no impactsecond quarter of 2021 had a significant adverse effect on the net worth or regulatory capital requirementsfair value of United. Asany of September 30, 2017,itsCompany’s largestheld-to-maturity single-issue trust preferred exposure was to SunTrust Bank ($7,424). The twoheld-to-maturity single-issue trust preferred exposures with at least one rating below investment grade included SunTrust Bank ($7,424) and Royal Bank of Scotland ($976).gross realized gainsother events or losseschanges in circumstances during the second quarter which would have an adverse effect on calls and sales of held to maturity securities included in earnings for the third quarter and first nine months of 2017 and 2016.The amortized cost and estimated fair value of debt securities held to maturity at September 30, 2017 and December 31, 2016 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties. September 30, 2017 December 31, 2016 Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value $ 0 $ 0 $ 1,040 $ 1,041 9,189 9,600 8,268 8,850 5,726 5,382 3,585 3,589 5,420 4,927 20,365 17,698 $ 20,335 $ 19,909 $ 33,258 $ 31,178 $1,312,813$1,912,762 and $1,137,408$1,942,087 at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. September 30,
2017 December 31,
2016 $ 1,364,757 $ 1,049,885 4,686,183 3,425,453 1,757,741 1,613,437 7,808,681 6,088,775 3,050,868 2,403,437 1,599,632 1,255,738 13,775 14,187 683,898 594,582 $ 13,156,854 $ 10,356,719 $ 1,589,701 $ 1,622,687 4,981,226 5,017,727 3,657,772 4,054,418 10,228,699 10,694,832 3,587,057 3,899,885 1,929,052 1,826,349 7,940 8,937 1,168,904 1,192,580 (33,651 ) (31,170 ) $ 16,888,001 $ 17,591,413 $315,031$576,827 and $8,445$718,937 at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. The increase was due to the acquisition of Cardinal and it mortgage banking subsidiary, George Mason. Loans held for sale consist of single-family residential real estate loans originated for sale in the secondary market.The outstanding balances in the table above include previously acquired impaired loans with a recorded investment of $227,754 or 1.73% of total gross loans at September 30, 2017 and $171,596 or 1.66% of total gross loans at December 31, 2016. The contractual principal in these acquired impaired loans was $310,609 and $231,096 at September 30, 2017 and December 31, 2016, respectively. The balances above do not include future accretable net interest (i.e. the difference between the undiscounted expected cash flows and the recorded investment in the loan) on the acquired impaired loans.Activity for the accretable yield for the first nine months of 2017 follows: $ 29,165 (11,312 ) 17,444 2,727 (2,367 ) $ 35,657 banks havebank has made loans to the directors and officers of United and its subsidiaries, and to their affiliates. The aggregate dollar amount of these loans was $364,774$32,791 and $255,476$35,756 at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively.loancredit losses. United’s method of income recognition for loans and leases that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectibility of principal is in doubt. Nonaccrual loans and leases will not normally be returned to accrual status unless all past due principal and interest has been paid and the borrower has evidenced their ability to meet the contractual provisions of the note.SeptemberJune 30, 2017,2021, United has 238 eligible loan modifications in deferral under section 4013, “Temporary Relief from Troubled Debt Restructurings,” of the CARES Act on $66,364 of loans outstanding, down from 1,002 eligible loan modifications in deferral on $399,857 of loans outstanding at December 31, 2020.$46,132$47,271 as compared to $21,152$55,657 as of December 31, 2016.2020. Of the $46,132$47,271 aggregate balance of TDRs at SeptemberJune 30, 2017, $29,7172021, $32,471 was on nonaccrual, status$46 was 90 days or more past due and included in the “Loans on Nonaccrual Status” on the following pages.$1,362 was$21,152$55,657 aggregate balance of TDRs at December 31, 2016, $11,1062020, $41,185 was on nonaccrual status and $197 was“Loansappropriate categories in the “Age Analysis of Past Due Loans” table on Nonaccrual Status” on the followinga subsequent page. As of SeptemberJune 30, 2017,2021, there were no commitmentswas a commitment to lend additional funds of $125 to debtorsa debtor owing receivablesa receivable whose terms have been modified in TDRs. At Septembera TDR. During the second quarter and first six months of 2021, advances totaling $13 were made to this debtor under a loan that had been previously modified.2017, United had restructured loans in the amount of $2,043 that were modified by a reduction in the interest rate, $4,507 that were modified by a combination of a reduction in the interest rate2021 and December 31, 2020 and the principal and $39,582 that was modified by a change in terms.A loan acquired and accountedreasons for under ASC topic310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality” is reported as an accruing loan and a performing asset.No loans were restructured during the three months ended September 30, 2017. modification: $ 10,204 $ 10,774 0 2,346 200 214 20 22 4,465 0 5,546 4,414 26,836 37,887 $ 47,271 $ 55,657 werehave been restructured during the three months ended SeptemberJune 30, 2016,2021 and 2020, segregated by class of loans: Troubled Debt Restructurings For the Three Months Ended September 30, 2016 Number of
Contracts Pre-
Modification
Outstanding
Recorded
Investment Post-
Modification
Outstanding
Recorded
Investment 0 $ 0 $ 0 0 0 0 1 110 110 0 0 0 0 0 0 0 0 0 0 0 0 1 $ 110 $ 110
Contracts
Outstanding
Recorded
Investment
Modification
Outstanding
Recorded
Investment
Contracts
Outstanding
Recorded
Investment
Modification
Outstanding
Recorded
Investment 0 $ 0 $ 0 18 $ 10,628 $ 10,586 1 5,413 5,364 6 2,259 2,248 1 181 181 14 3,169 3,090 0 0 0 19 3,889 3,872 0 0 0 9 2,562 2,557 0 0 0 0 0 0 0 0 0 3 69 36 2 $ 5,594 $ 5,545 69 $ 22,576 $ 22,389 werehave been restructured during the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, segregated by class of loans: Troubled Debt Restructurings For the Nine Months Ended September 30, 2017 September 30, 2016 Number of
Contracts Pre-
Modification
Outstanding
Recorded
Investment Post-
Modification
Outstanding
Recorded
Investment Number of
Contracts Pre-
Modification
Outstanding
Recorded
Investment Post-
Modification
Outstanding
Recorded
Investment 1 $ 5,333 $ 5,333 1 $ 1,190 $ 1,184 0 0 0 0 0 0 8 24,102 22,291 5 2,250 1,725 0 0 0 1 1,400 1,400 1 1,456 1,400 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 $ 30,891 $ 29,024 7 $ 4,840 $ 4,309 During the first nine months of 2017, $29,024 of restructured loans were modified by a change in terms. During the third quarter and first nine months of 2016, $110 and $2,909, respectively, of restructured loans were modified by a change in loan terms. In addition, during the first nine months of 2016, $1,400 of restructured loans were modified by a combination of a reduction in the interest rate and an extension of the maturity date. In some instances, the post-modification balance on the restructured loans is larger than thepre-modification balance due to the advancement of monies for items such as delinquent taxes on real estate property. The loans were evaluated individually for allocation within United’s allowance for loan losses. The modifications had an immaterial impact on the financial condition and results of operations for United.
Contracts
Outstanding
Recorded
Investment
Modification
Outstanding
Recorded
Investment
Contracts
Outstanding
Recorded
Investment
Modification
Outstanding
Recorded
Investment 1 $ 940 $ 1,106 21 $ 18,579 $ 18,345 2 6,349 6,292 6 2,259 2,248 1 181 181 18 3,667 3,322 0 0 0 19 3,889 3,872 0 0 0 12 4,607 4,570 0 0 0 0 0 0 0 0 0 3 69 36 4 $ 7,470 $ 7,579 79 $ 33,070 $ 32,393 ninesix months ended SeptemberJune 30, 2017. Three Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017 (In thousands) Number of
Contracts Recorded
Investment Number of
Contracts Recorded
Investment 0 $ 0 0 $ 0 0 0 0 0 1 1,495 1 1,495 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 $ 1,495 1 $ 1,495 No loans2021. The recorded investment amounts presented were as of the June 30, 2021 balance sheet date.
Contracts
Investment
Contracts
Investment 0 $ 0 0 $ 0 0 0 0 0 0 0 0 0 1 0 1 0
Contracts
Investment
Contracts
Investment 1 0 2 0 0 0 0 0 0 0 0 0 2 $ 0 3 $ 0 SeptemberJune 30, 2016 subsequently defaulted, resulting in a principalcharge-off2020 and had charge-offs during the three months and first ninesix months ended SeptemberJune 30, 2016.
Contracts
Investment
Contracts
Investment 0 $ 0 0 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 1 690 1 690 0 0 0 0 0 0 0 0 1 $ 690 1 $ 690 Age Analysis
Past Due
more Past
Due
Due
Other
Receivables
More Past
Due &
Accruing $ 4,735 $ 19,849 $ 24,584 $ 1,565,117 $ 1,589,701 $ 832 5,753 25,720 31,473 4,949,753 4,981,226 1,876 38,932 13,444 52,376 3,605,396 3,657,772 1,028 19,763 23,145 42,908 3,544,149 3,587,057 8,361 1,637 3,386 5,023 1,924,029 1,929,052 133 41 189 230 7,710 7,940 189 11,938 2,101 14,039 1,154,865 1,168,904 1,762 $ 82,799 $ 87,834 $ 170,633 $ 16,751,019 $ 16,921,652 $ 14,181
Past Due
more Past
Due
Due
Other
Receivables
More Past
Due &
Accruing $ 4,556 $ 28,479 $ 33,035 $ 1,589,652 $ 1,622,687 $ 0 6,837 29,292 36,129 4,981,598 5,017,727 1,284 13,796 26,274 40,070 4,014,348 4,054,418 1,001 Past Due LoansAs of September 30, 2017 30-89
Days
Past Due 90 Days or
more Past
Due Total Past
Due Current &
Other (1) Total
Financing
Receivables Recorded
Investment
>90 Days
& Accruing $ 9,704 $ 6,912 $ 16,616 $ 1,348,141 $ 1,364,757 $ 0 7,686 20,797 28,483 4,657,700 4,686,183 0 13,589 79,342 92,931 1,664,810 1,757,741 802 33,654 25,564 59,218 2,991,650 3,050,868 5,298 3,351 17,852 21,203 1,578,429 1,599,632 14,828 385 210 595 13,180 13,775 210 8,087 1,305 9,392 674,506 683,898 1,111 $ 76,456 $ 151,982 $ 228,438 $ 12,928,416 $ 13,156,854 $ 22,249 (1)Other includes loans with a recorded investment of $227,754 acquired and accounted for under ASC topic310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality”.Age Analysis of Past Due LoansAs of December 31, 2016(In thousands) 30-89
Days
Past Due 90 Days or
more Past
Due Total Past
Due Current &
Other (1) Total
Financing
Receivables Recorded
Investment
>90 Days
& Accruing $ 5,850 $ 3,981 $ 9,831 $ 1,040,054 $ 1,049,885 $ 94 9,288 20,847 30,135 3,395,318 3,425,453 172 15,273 42,766 58,039 1,555,398 1,613,437 2,518 29,976 25,991 55,967 2,347,470 2,403,437 4,216 3,809 7,779 11,588 1,244,150 1,255,738 33 422 141 563 13,624 14,187 141 10,015 1,712 11,727 582,855 594,582 1,412 $ 74,633 $ 103,217 $ 177,850 $ 10,178,869 $ 10,356,719 $ 8,586 (1)Other includes loans with a recorded investment of $171,596 acquired and accounted for under ASC topic310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality”.
Past Due
more Past
Due
Due
Other
Receivables
More Past
Due &
Accruing 32,743 24,892 57,635 3,842,250 3,899,885 8,574 1,919 5,885 7,804 1,818,545 1,826,349 461 362 156 518 8,419 8,937 156 14,765 2,757 17,522 1,175,058 1,192,580 2,356 $ 74,978 $ 117,735 $ 192,713 $ 17,429,870 $ 17,622,583 $ 13,832 Loans
Related
Allowance
for Credit
Losses
More Past
Due &
Accruing
Related
Allowance for
Credit Losses
More Past
Due &
Accruing $ 19,017 $ 19,017 $ 832 $ 28,479 $ 28,479 $ 0 23,844 20,404 1,876 28,008 16,070 1,284 12,416 9,191 1,028 25,273 13,149 1,001 14,784 13,790 8,361 16,318 14,769 8,574 3,253 3,253 133 5,424 4,484 461 0 0 189 0 0 156 339 339 1,762 401 401 2,356 $ 73,653 $ 65,994 $ 14,181 $ 103,903 $ 77,352 $ 13,832 Nonaccrual Status September 30,
2017 December 31,
2016 $ 6,912 $ 3,887 20,797 20,675 78,540 40,248 20,266 21,775 3,024 7,746 0 0 194 300 $ 129,733 $ 94,631 assignselected the practical expedient to measure expected credit quality indicatorslosses on collateral dependent loans and leases based on the difference between the loan’s amortized cost and the collateral’s fair value, adjusted for selling costs. The following table presents the amortized cost basis of pass, special mention, substandardcollateral-dependent loans and doubtfulleases in which repayment is expected to its loans. be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty, by class of loans and leases as of June 30, 2021 and December 31, 2020:
Property
Assets
Property $ 0 $ 44 $ 0 $ 17,266 $ 19,017 $ 36,327 12,985 0 2,096 8,931 16,922 40,934 0 14,966 0 0 1,634 16,600 19,085 0 0 0 0 19,085 0 0 5,114 0 812 5,926 0 0 0 0 0 0 0 0 0 0 0 0 $ 32,070 $ 15,010 $ 7,210 $ 26,197 $ 38,385 $ 118,872
Property
Assets
Property $ 1,480 $ 138 $ 0 $ 18,097 $ 21,737 $ 41,452 16,400 0 2,898 10,167 18,230 47,695 5,424 20,429 0 258 2,345 28,456 21,006 229 34 0 803 22,072 39 0 17,408 0 746 18,193 0 0 0 0 0 0 0 0 0 0 1 1 $ 44,349 $ 20,796 $ 20,340 $ 28,522 $ 43,862 $ 157,869 internally assigns a grade based onanalyzes loans individually to classify the creditworthinessloans as to credit risk. Review and analysis of criticized (special mention-rated loans in the borrower.amount of $1,000 or greater) and classified (substandard-rated and worse in the amount of $500 and greater) loans is completed once per quarter. Review of notes with committed exposure of $2,000 or greater is completed at least annually. For loans with a consumer credit exposure, United internally assigns a grade based upon an individual loan’s delinquency status. United reviews and updates, as necessary, these grades on a quarterly basis.30-89questionable and improbable.questionable. A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the loan, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing. Generally, there are not any loans with a consumer credit exposure that are classified as doubtful. Usually, they are Loans classified as doubtful are also considered impaired.The following tables set forth United’s credit quality indicators information,loans:Credit Quality IndicatorsCorporate Credit Exposure Commercial Real Estate Other
Commercial Construction
& Land
Development Owner-
occupied Nonowner-
occupied $ 1,282,657 $ 4,544,799 $ 1,611,250 $ 1,498,656 23,827 44,080 47,450 19,872 58,273 97,304 98,933 81,104 0 0 108 0 $ 1,364,757 $ 4,686,183 $ 1,757,741 $ 1,599,632 Commercial Real Estate Other
Commercial Construction
& Land
Development Owner-
occupied Nonowner-
occupied $ 963,503 $ 3,284,497 $ 1,463,797 $ 1,126,742 20,490 36,462 26,537 52,327 65,892 104,494 122,893 76,669 0 0 210 0 $ 1,049,885 $ 3,425,453 $ 1,613,437 $ 1,255,738 Credit Quality IndicatorsConsumer Credit Exposure Residential
Real Estate Bankcard Other
Consumer $ 2,999,614 $ 13,180 $ 674,447 18,953 385 8,134 32,301 210 1,317 0 0 0 $ 3,050,868 $ 13,775 $ 683,898 Residential
Real Estate Bankcard Other
Consumer $ 2,348,017 $ 13,624 $ 582,704 18,240 422 10,132 36,995 141 1,746 185 0 0 $ 2,403,437 $ 14,187 $ 594,582 Loans are designatedloans is as impaired when, in the opinionfollows:
amortized cost
basis
term loans $ 97,374 $ 284,405 $ 154,354 $ 158,806 $ 178,273 $ 621,459 $ 25,214 $ 426 $ 1,520,311 0 0 0 2,166 734 19,044 941 0 22,885 0 62 44 0 1,398 43,732 700 252 46,188 0 0 0 0 0 317 0 0 317 $ 97,374 $ 284,467 $ 154,398 $ 160,972 $ 180,405 $ 684,552 $ 26,855 $ 678 $ 1,589,701 0 0 0 0 (44 ) (166 ) 0 0 (210 ) 0 0 0 0 12 72 0 0 84 $ 0 $ 0 $ 0 $ 0 $ (32 ) $ (94 ) $ 0 $ 0 $ (126 )
amortized cost
basis
term loans $ 280,779 $ 152,851 $ 162,027 $ 198,610 $ 282,214 $ 443,312 $ 22,303 $ 0 $ 1,542,096 0 1,206 3,772 754 2,013 20,792 0 453 28,990 1,935 62 0 1,117 3,788 43,354 864 149 51,269 0 0 0 0 0 332 0 0 332 $ 282,714 $ 154,119 $ 165,799 $ 200,481 $ 288,015 $ 507,790 $ 23,167 $ 602 $ 1,622,687 0 0 0 0 0 (2,195 ) 0 0 (2,195 ) 0 0 0 0 0 795 0 0 795 $ 0 $ 0 $ 0 $ 0 $ 0 $ (1,400 ) $ 0 $ 0 $ (1,400 )
amortized cost
basis
term loan $ 506,071 $ 895,827 $ 571,698 $ 508,960 $ 428,608 $ 1,663,763 $ 105,766 $ 2,078 $ 4,682,771 0 0 114,003 0 382 68,707 0 0 183,092 0 735 13,814 6,995 1,124 92,695 0 0 115,363 0 0 0 0 0 0 0 0 0 $ 506,071 $ 896,562 $ 699,515 $ 515,955 $ 430,114 $ 1,825,165 $ 105,766 $ 2,078 $ 4,981,226 0 0 0 0 0 (3,101 ) 0 0 (3,101 ) 0 0 0 0 0 303 0 0 303 $ 0 $ 0 $ 0 $ 0 $ 0 $ (2,798 ) $ 0 $ 0 $ (2,798 )
amortized cost
basis
term loans $ 929,001 $ 592,109 $ 596,260 $ 481,894 $ 502,417 $ 1,496,135 $ 118,404 $ 2,112 $ 4,718,332 0 105,104 0 391 8,902 78,591 0 0 192,988 392 14,620 7,435 1,564 10,824 71,572 0 0 106,407 0 0 0 0 0 0 0 0 0 $ 929,393 $ 711,833 $ 603,695 $ 483,849 $ 522,143 $ 1,646,298 $ 118,404 $ 2,112 $ 5,017,727 (38 ) 0 (300 ) 0 (3,394 ) (2,402 ) 0 0 (6,134 ) 0 0 0 0 0 1,023 0 0 1,023 $ (38 ) $ 0 $ (300 ) $ 0 $ (3,394 ) $ (1,379 ) $ 0 $ 0 $ (5,111 )
and leases
amortized cost
basis
term loans $ 758,865 $ 898,082 $ 353,707 $ 129,477 $ 96,778 $ 112,242 $ 1,214,646 $ 2,257 $ 3,566,054 25 67 147 1,196 1,003 4,852 41,972 73 49,335 8 1,047 807 2,234 455 21,876 15,532 284 42,243 0 0 0 0 0 140 0 0 140 $ 758,898 $ 899,196 $ 354,661 $ 132,907 $ 98,236 $ 139,110 $ 1,272,150 $ 2,614 $ 3,657,772 0 0 (31 ) (100 ) (6 ) (2,447 ) (40 ) 0 (2,624 ) 0 0 14 85 16 1,714 0 0 1,829 $ 0 $ 0 $ (17 ) $ (15 ) $ 10 $ (733 ) $ (40 ) $ 0 $ (795 )
and leases
amortized cost
basis
term loans $ 1,702,787 $ 370,059 $ 200,588 $ 112,170 $ 119,582 $ 257,638 $ 1,172,699 $ 2,668 $ 3,938,191 333 �� 384 4,754 1,300 138 8,231 40,048 86 55,274 1,649 830 2,241 2,606 6,565 30,308 16,222 360 60,781 0 0 0 0 37 135 0 0 172 $ 1,704,769 $ 371,273 $ 207,583 $ 116,076 $ 126,322 $ 296,312 $ 1,228,969 $ 3,114 $ 4,054,418 0 0 (959 ) (23 ) (3,525 ) (12,843 ) 0 0 (17,350 ) 94 864 18 12 684 2,789 0 0 4,461 $ 94 $ 864 $ (941 ) $ (11 ) $ (2,841 ) $ (10,054 ) $ 0 $ 0 $ (12,889 )
amortized cost
basis $ 395,401 $ 628,539 $ 475,986 $ 407,397 $ 221,041 $ 1,019,262 $ 404,177 $ 3,044 $ 3,554,847 0 0 265 0 179 5,068 730 0 6,242 0 0 393 424 3,196 21,571 270 114 25,968 0 0 0 0 0 0 0 0 0 $ 395,401 $ 628,539 $ 476,644 $ 407,821 $ 224,416 $ 1,045,901 $ 405,177 $ 3,158 $ 3,587,057 0 0 (30 ) 0 (116 ) (5,260 ) 0 0 (5,406 ) 0 0 0 0 0 821 0 0 821 $ 0 $ 0 $ (30 ) $ 0 $ (116 ) $ (4,439 ) $ 0 $ 0 $ (4,585 )
amortized cost
basis
term loans $ 603,714 $ 624,142 $ 640,535 $ 292,700 $ 282,547 $ 975,913 $ 436,728 $ 4,224 $ 3,860,503 0 267 0 192 2,325 6,623 800 0 10,207 0 282 440 3,263 3,516 20,967 201 227 28,896 0 0 0 0 0 279 0 0 279 $ 603,714 $ 624,691 $ 640,975 $ 296,155 $ 288,388 $ 1,003,782 $ 437,729 $ 4,451 $ 3,899,885 0 0 0 0 (1 ) (1,759 ) 0 0 (1,760 ) 0 0 0 101 0 961 1 0 1,063 $ 0 $ 0 $ 0 $ 101 $ (1 ) $ (798 ) $ 1 $ 0 $ (697 )
amortized cost
basis
term loans $ 282,876 $ 507,181 $ 501,304 $ 267,413 $ 93,005 $ 86,486 $ 167,545 $ 0 $ 1,905,810 0 0 0 2,419 550 1,221 995 0 5,185 386 0 278 941 0 15,706 746 0 18,057 0 0 0 0 0 0 0 0 0 $ 283,262 $ 507,181 $ 501,582 $ 270,773 $ 93,555 $ 103,413 $ 169,286 $ 0 $ 1,929,052 0 0 0 0 0 (255 ) 0 0 (255 ) 0 0 0 0 0 48 0 0 48 $ 0 $ 0 $ 0 $ 0 $ 0 $ (207 ) $ 0 $ 0 $ (207 )
amortized cost
basis
term loans $ 420,977 $ 663,113 $ 304,579 $ 127,377 $ 83,252 $ 53,713 $ 145,431 $ 0 $ 1,798,442 0 0 4,689 557 0 1,420 995 0 7,661 0 250 1,535 0 216 17,499 746 0 20,246 0 0 0 0 0 0 0 0 0 $ 420,977 $ 663,363 $ 310,803 $ 127,934 $ 83,468 $ 72,632 $ 147,172 $ 0 $ 1,826,349 0 0 0 0 0 (2,027 ) 0 0 (2,027 ) 0 0 0 0 0 1,513 0 0 1,513 $ 0 $ 0 $ 0 $ 0 $ 0 $ (514 ) $ 0 $ 0 $ (514 )
amortized cost
basis $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 7,710 $ 0 $ 7,710 0 0 0 0 0 0 41 0 41 0 0 0 0 0 0 189 0 189 0 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 7,940 $ 0 $ 7,940 0 0 0 0 0 0 (106 ) 0 (106 ) 0 0 0 0 0 0 30 0 30 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ (76 ) $ 0 $ (76 )
amortized cost
basis $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 8,419 $ 0 $ 8,419 0 0 0 0 0 0 362 0 362 0 0 0 0 0 0 156 0 156 0 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 8,937 $ 0 $ 8,937 0 0 0 0 0 0 (221 ) 0 (221 ) 0 0 0 0 0 0 52 0 52 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ (169 ) $ 0 $ (169 )
amortized cost
basis
term loans $ 241,796 $ 380,844 $ 311,882 $ 170,348 $ 48,919 $ 12,089 $ 3,017 $ 0 $ 1,168,895 0 0 0 0 0 6 1 0 7 0 2 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 $ 241,796 $ 380,846 $ 311,882 $ 170,348 $ 48,919 $ 12,095 $ 3,018 $ 0 $ 1,168,904 0 (395 ) (505 ) (263 ) (80 ) (136 ) (7 ) 0 (1,386 ) 0 34 25 38 8 103 2 0 210 $ 0 $ (361 ) $ (480 ) $ (225 ) $ (72 ) $ (33 ) $ (5 ) $ 0 $ (1,176 )
amortized cost
basis
term loans $ 419,768 $ 401,958 $ 231,172 $ 74,550 $ 34,435 $ 7,466 $ 6,110 $ 0 $ 1,175,459 0 0 0 0 0 14,763 2 0 14,765 3 0 0 0 0 2,352 0 0 2,355 0 0 0 0 0 1 0 0 1 �� $ 419,771 $ 401,958 $ 231,172 $ 74,550 $ 34,435 $ 24,582 $ 6,112 $ 0 $ 1,192,580 (136 ) (1,013 ) (1,040 ) (393 ) (228 ) (484 ) (2 ) 0 (3,296 ) 3 74 113 30 43 216 0 0 479 $ (133 ) $ (939 ) $ (927 ) $ (363 ) $ (185 ) $ (268 ) $ (2 ) $ 0 $ (2,817 ) SeptemberJune 30, 20172021 and December 31, 2016,2020, other real estate owned (“OREO”) included in other assets in the Consolidated Balance Sheets was $26,826$18,474 and $31,510,$22,595, respectively. OREO consists of real estate acquired in foreclosure or other settlement of loans. Such assets are carried at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. Any adjustment to the fair value at the date of transfer isSeptemberJune 30, 2017 and December 31, 2016,2021, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $116 and $660, respectively.Themanagement’san estimate of the probableexpected credit losses inherenton financial assets measured at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowanceportfolio.interest payment deferrals granted by United under the CARES Act, United assessed the collectability of the accrued interest receivables on these deferring loans and leases. As a result of this assessment, United recorded an allowance for credit losses of $29 and $250 for accrued interest receivables not expected to be collected as of June 30, 2021 and December 31, 2020, respectively. For purposesall classes of determiningloans and leases receivable, the general allowance,accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due, unless the loan is well secured and in the process of collection. Interest received on nonaccrual loans and leases, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Owner-occupied $ 3,823 $ 5,001 Nonowner-occupied 13,671 15,989 11,678 12,320 9,730 12,558 6,693 7,314 Bankcard 0 0 Other consumer 2,993 3,211 $ 48,588 $ 56,393 (29 ) (250 ) $ 48,559 $ 56,143 $ 11 $ 83 $ 12 $ 100 4 38 40 45 2 33 8 45 21 64 49 134 0 0 0 0 0 0 0 0 42 27 106 67 $ 80 $ 245 $ 215 $ 391 is segregated by product typemix, delinquency level or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors. A reversion to recognize differing risk profiles among categories. It is further segregated by credit grade fornon-homogenous loan pools and delinquency for homogeneous loan pools. The outstanding principal balance within each pool is multiplied by historical loss data occurs via a straight-line method during the loss emergence period (which isyear following the periodtime between the event that triggers a loss and the confirmation and/or charge off of that loss) and certain qualitative factors to derive the general loss allocation per pool. Specific loss allocations are calculated for commercial loans in excess of $500,000 in accordance with ASC topic 310. Default/Loss Given Default (PD/LGD) owner-occupied commercial real estate owner-occupied loans and commercial other commercial loans and leases are similar in that they are normally dependent upon the borrower’s internal cash flow from operations to service debt. Nonowner-occupied commercialCommercial real estate nonowner-occupied loans differ in that cash flow to service debt is normally dependent on external income from third parties for use of the real estate such as rents, leases and room rates. Residential real estate loans are dependent upon individual borrowers who are affected by changes in general economic conditions, demand for housing and resulting residential real estate valuation. Construction and land development loans are impacted mainly by demand whether for new residential housing or for retail, industrial, office and other types of commercial construction within a given area. Consumer loan pool risk characteristics are influenced by general, regional and local economic conditions.deemedthat do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be uncollectibleprovided substantially through the operation or sale of the collateral, but may also include othercharged againstbased on the allowance for loan losses, while recoveries of previouslycharged-off amounts are credited to the allowance for loan losses. For commercial loans, when a loan or a portion of a loan is identified to contain a loss, acharge-off recommendation is directed to management tocharge-off all or a portion of that loan. Generally, any unsecured commercial loan more than six months delinquent in payment of interest must becharged-off in full. If secured, thecharge-off is generally made to reduce the loan balance to a level equal to the liquidationfair value of the collateral when payment of principalat the reporting date, adjusted for selling costs as appropriate. These individually evaluated loans are removed from their respective pools and interest is six months delinquent. Any commercialtypically represent collateral dependent loans. In addition, the Company individually evaluates “reasonably expected” TDRs, which are identified by the Company as a loan secured or unsecured, on whichexpected to be classified as a principal or interest payment has not been made within 90 days, is reviewed monthly for appropriate action.For consumer loans,closed-end retail loans thatTDR.past due 120 cumulative days delinquent fromestimated over the contractual due date andopen-end loans 180 cumulative days delinquent from the contractual due date arecharged-off. Any consumer loan on which a principal or interest payment has not been made within 90 days is reviewed monthly for appropriate action. For aone-to-four familyopen-end orclosed-end residential real estate loan, home equity loan, orhigh-loan-to-value loan that has reached 180 or more days past due, management evaluates the collateral position andcharges-off any amount that exceeds the valueterm of the collateral. On retail creditsloans and leases, adjusted for which the borrower is in bankruptcy, allamounts deemed unrecoverable are charged off within 60 daysexpected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the receipt offollowing applies: management has a reasonable expectation at the notification. On retail credits effectedreporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by fraud, a loan ischarged-off within 90 days of the discovery of the fraud. In the event of the borrower’s deathUnited.if repayment within the required timeframe is uncertain, the loan is generallycharged-off as soon as the amount of the loss is determined.For loansleases acquired through the completion of a transfer, including loans and leases acquired in a business combination, that havehad evidence of deterioration of credit quality since origination (“PCI”) and accounted for which itunder ASC Topic 310, an entity did not have to reassess whether any loans and leases previously accounted for as PCI meet the definition of purchased credit deteriorated (“PCD”) loans and leases upon adoption of ASC Topic 326. Any changes in the allowance for credit losses for these loans and leases were accounted for as an adjustment to the loan’s amortized cost basis and not as a cumulative-effect adjustment to an entity’s beginning retained earnings.probable, at acquisition, that United will be unable to collect all contractually required payments receivable are initiallyestimated and recorded at fair value (as determined by the present valueas credit loss expense. The subsequent measurement of expected future cash flows) with no valuation allowance. The difference betweencredit losses for all acquired loans is the undiscounted cash flowssame as the subsequent measurement of expected at acquisitioncredit losses for originated loans. For allowance for credit losses under ASC Topic 326 calculation purposes, United includes its acquired loans and leases in their relevant pool unless they meet the investment in the loan, or the “accretable yield,” is recognized as interest income on a level-yield method over the life of the loan. Contractually required paymentscriteria for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or a valuation allowance. Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows are recognized as impairment. Valuation allowances on these impaired loans reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not to be received). For the three and nine months ended September 30, 2017, there-estimation of the expected cash flows related to loans acquired that have evidence of deterioration of credit quality resulted in a reversal of provision for loan losses expense of $43 and $415, respectively, as compared to a reversal of provision for loan losses expense of $1,130 and provision for loan losses expense of $160, respectively, for the three and nine months ended September 30, 2016.$804$20,897 and $1,044$19,250 at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively, is separately classified on the balance sheet and is included in other liabilities. The combined allowance for loan losses and reserve for lending-related commitments are referred to asis considered the allowance for credit losses.Allowance for Loan LossesFor the Three Months Ended September 30, 2017 Commercial Real Estate Construction Owner-
occupied Nonowner-
occupied Other
Commercial Residential Real
Estate & Land
Development Consumer Estimated
Imprecision Total $ 5,129 $ 7,099 $ 37,287 $ 12,479 $ 7,514 $ 2,715 $ 760 $ 72,983 518 0 4,854 299 54 632 0 6,357 397 168 156 60 89 151 0 1,021 230 (472 ) 8,782 (1,385 ) 452 281 (609 ) 7,279 $ 5,238 $ 6,795 $ 41,371 $ 10,855 $ 8,001 $ 2,515 $ 151 $ 74,926 Allowance for Loan Losses and Carrying Amount
Commercial
Real
Estate
Development
for
Estimated
Imprecision
occupied
occupied
Consumer $ 21,074 $ 47,902 $ 84,504 $ 24,991 $ 38,329 $ 271 $ 14,511 $ 0 $ 231,582 (67 ) (0 ) (1 ) (5,193 ) (119 ) (71 ) (680 ) 0 (6,131 ) 78 50 482 168 4 24 104 0 910 (1,782 ) (5,906 ) (5,104 ) 6,085 (3,067 ) 30 928 0 (8,816 ) $ 19,303 $ 42,046 $ 79,881 $ 26,051 $ 35,147 $ 254 $ 14,863 $ 0 $ 217,545
Commercial
Real
Estate
Development
for
Estimated
Imprecision
occupied
occupied
Consumer $ 23,354 $ 49,150 $ 78,138 $ 29,125 $ 39,077 $ 322 $ 16,664 $ 0 $ 235,830 (210 ) (3,101 ) (2,624 ) (5,406 ) (255 ) (106 ) (1,386 ) 0 (13,088 ) 84 303 1,829 821 48 30 210 0 3,325 (3,925 ) (4,306 ) 2,538 1,511 (3,723 ) 8 (625 ) 0 (8,522 ) $ 19,303 $ 42,046 $ 79,881 $ 26,051 $ 35,147 $ 254 $ 14,863 $ 0 $ 217,545
Commercial
Real
Estate
Development
for
Estimated
Imprecision
occupied
occupied
Consumer $ 5,554 $ 8,524 $ 47,325 $ 8,997 $ 3,353 $ 74 $ 2,933 $ 297 $ 77,057 9,737 9,023 (4,829 ) 13,097 14,817 28 10,745 (297 ) 52,321 1,843 121 938 174 2,045 0 0 0 5,121 1,955 6,418 7,032 652 2,570 0 8 0 18,635 (2,195 ) (6,134 ) (17,350 ) (1,760 ) (2,027 ) (221 ) (3,296 ) 0 (32,983 ) 795 1,023 4,461 1,063 1,513 52 479 0 9,386 5,665 30,175 40,561 6,902 16,806 389 5,795 0 106,293 $ 23,354 $ 49,150 $ 78,138 $ 29,125 $ 39,077 $ 322 $ 16,664 $ 0 $ 235,830 September 30, 2017 Community Banking Mortgage Banking Total Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization $ 98,358 ($ 52,062 ) $ 0 ($ 0 ) $ 98,358 ($ 52,062 ) $ 0 $ 1,230 $ 1,230 $ 1,466,152 $ 21,455 $ 1,487,607 December 31, 2016 Community Banking Total Gross Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization $ 69,635 ($ 46,681 ) $ 69,635 ($ 46,681 ) $ 863,767 $ 863,767
Carrying
Amount
Amortization
Carrying
Amount
Amortization
Carrying
Amount
Amortization $ 101,767 ($ 79,053 ) $ 0 $ 0 $ 101,767 ($ 79,053 ) $ 0 $ 1,080 $ 1,080 0 196 196 $ 0 $ 1,276 $ 1,276 $ 1,804,725 $ 5,315 $ 1,810,040
Carrying
Amount
Amortization
Carrying
Amount
Amortization
Carrying
Amount
Amortization $ 101,767 ($ 76,120 ) $ 0 $ 0 $ 101,767 ($ 76,120 ) $ 0 $ 1,080 $ 1,080 0 196 196 $ 0 $ 1,276 $ 1,276 $ 1,791,533 $ 5,315 $ 1,796,848 Community
Banking Mortgage
Banking Total $ 863,767 $ 0 $ 863,767 1,327 0 1,327 601,058 21,455 622,513 $ 1,466,152 $ 21,455 $ 1,487,607 United incurred amortization expense on intangible assets
Banking
Banking $ 1,791,533 $ 5,315 $ 1,796,848 13,192 0 13,192 $ 1,804,725 $ 5,315 $ 1,810,040 2016: Amount $ 7,772 8,039 7,015 6,309 22,542 $ 5,866 4,983 4,680 3,255 2,942 3,921 $ 23,401 $ 0 $ 22,338 $ 0 0 20,123 0 20,123 3,111 1,891 6,335 1,891 (2,339 ) (1,104 ) (4,500 ) (1,104 ) $ 24,173 $ 20,910 $ 24,173 $ 20,910 $ (1,383 ) $ 0 $ (1,383 ) $ 0 Aggregate additions charged and recoveries credited to operations MSRs impairment (629 ) (710 ) (629 ) (710 ) $ (1,633 ) $ (710 ) $ (1,633 ) $ (710 ) MSRs, net of valuation allowance $ 22,540 $ 20,200 $ 22,540 $ 20,200
Ended
June 30, 2021
Ended
June 30, 2020 Net occupancy expense $ 5,328 $ 5,895 Net occupancy expense (358 ) (189 ) $ 4,970 $ 5,706
June 30, 2021
Ended
June 30, 2020 Net occupancy expense $ 10,677 $ 10,961 Net occupancy expense (655 ) (394 ) $ 10,022 $ 10,567 $ 66,635 $ 69,520 Operating lease liabilities $ 70,546 $ 73,213 5.8 years 2.37 % $ 5,581 $ 5,722 1,839 8,549 $ 11,027 $ 10,739 6,282 12,332 $ 10,221 $ 20,172 17,074 16,196 13,616 12,723 9,096 8,242 6,362 5,516 18,842 15,330 75,211 78,179 (4,665 ) (4,966 ) $ 70,546 $ 73,213 $264,000.$230,000. These lines of credit, which bear interest at prevailing market rates, permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions. At SeptemberJune 30, 2017,2021, United did 0t have any federal funds purchased were $25,800 while total securities sold under agreements to repurchase (“REPOs”) were$316,236. Included in the $316,236 of total REPOs is a wholesale REPOs of $50,000, assumed in the Virginia Commerce merger. This wholesale REPO is scheduled to mature in May of 2018. $127,745. The securities sold under agreements to repurchase were accounted for as collateralized financial transactions. They were recorded at the amounts at which the securities were acquired or sold plus accrued interest.SeptemberJune 30, 2017,2021, United had no0 outstanding balance under this line of credit.9.banks are membersbank is a member of the Federal Home Loan Bank (“FHLB”). Membership in the FHLB makes available short-term and long-term borrowings from collateralized advances. All FHLB borrowings are collateralized by a mix of single-family residential mortgage loans, commercial loans and investment securities. At SeptemberJune 30, 2017,2021, United had an unused borrowing amount of approximately $3,724,772$7,005,031 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.SeptemberJune 30, 2017, $1,272,1152021, $533,365 of FHLB advances with a weighted-average contractual interest rate of 1.43%0.34% and a weighted-average effective interest rate of 0.55% are scheduled to mature within the next eightfour years. Overnight funds of $200,000 with an interest rate of 1.27% are included in the $1,272,115 above at September 30, 2017. Amount $ 815,000 131,776 187,809 42,247 95,283 $ 1,272,115 $ 500,000 22,159 0 0 11,206 $ 533,365 SeptemberJune 30, 2017,2021, United had a total of fifteen19 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 SeptemberJune 30, 20172021 and December 31, 2016,2020, the outstanding balance of the Debentures was $242,131$270,792 and $224,319, respectively,$269,972, respectively. United also assumed $10,000 in aggregate principal amount ofFor reporting periods prior to June 30, 2017,Trust Preferred Securities qualified as Tier 1 regulatory capital under thefully-phased in “Basel III Capital Rules” as published by United’s primary federal regulator, the Federal Reserve, in July of 2013. The “Basel IIIUnited is unable to consider the Capital Rules” established a new comprehensive capital framework for U.S. banking organizations. Because United was lessthan $15 billion in total consolidated assets,Securities or the Basel III Capital Rules grandfathered United’s Trust Preferred Securitiessubordinated notes as Tier 1 capital, underbut rather the limitations for restricted capital elements in the general risk-based capital rules. As a result, beginning in 2015 (the adoption date), United’s Trust PreferredCapital Securities was subject to a limit of 25 percent of Tier 1 capital elements excluding anynon-qualifying capital instruments and after all regulatory capital deductions and adjustments applied to Tier 1 capital, which is substantially similar to the limit in the general risk-based capital rules. Trust preferred securities no longer included in United’s Tier 1 capital could besubordinated notes are included as a component of United’s Tier 2 capital. United can include the Capital Securities and subordinated notes in its Tier 2 capital on a permanent basis withoutphase-out.However, with the acquisitionbasis.$4,118,868$6,368,974 and $2,823,396$5,730,876 of loan commitments outstanding as of SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively, approximately half43% of which contractually expire within one year. Included in the SeptemberJune 30, 20172021 amount are commitments to extend credit of $407,610$597,304 related to George Mason’s mortgage loan funding commitments of United’s mortgage banking segment and are of a short-term nature.As of September 30, 2017, United had no outstanding$3,055 and $5,092 of commercial letters of credit and $9outstanding as of June 30, 2021 and December 31, 2016.2020, 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 $148,742$151,289 and $121,584$134,916 as of SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. In accordance with the Contingencies Topic of the FASB Accounting Standards Codification, United has determined that substantially all of its letters of credit are renewed on an annual basis and the fees associated with these letters of credit are immaterial.George MasonGeorge Mason hasUnited’s mortgage banking segment had a reserve of $575$1,209 and $1,216 as of SeptemberJune 30, 2017.George Mason’sUnited’s mortgage banking segment’s third party investors to meet the terms of their forward sales contracts. George MasonUnited’s mortgage banking segment works with third-party investors that are generally well-capitalized, are investment grade and exhibit strong financial performance to mitigate this risk. United does not expect any third-party investor to fail to meet its obligation.11.United uses derivative instruments to help manage 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.the Derivatives and Hedging topic of the FASB Accounting Standards Codification. The Derivatives and Hedging topic requireASC Topic 815 which requires all derivative instruments to be carried at fair value on the balance sheet. United has designated certain derivative instruments used to manage interest rate risk as hedge relationships with certain assets, liabilities or cash flows being hedged. Certain derivatives used for interest rate risk management are not designated in a hedge relationship.Forfair valuenew interest rate swap derivative designated as a cash flow hedge. The notional amount of the cash flow hedge derivative totaled $250,000. The derivative is intended to hedge the fair valuechanges in cash flows associated with floating rate FHLB borrowings. United is required torecognized on10 years with an expiration date in June 2030. During the balance sheetthird quarter of 2020, United entered into an additional interest rate swap derivative designated as either a freestanding asset or liability with a corresponding adjustment to the hedged financial instrument. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a fair value hedge are offset in current period earnings. For a cash flow hedge. The notional amount of the cash flow hedge derivative totaled $250,000. The derivative is intended to hedge the fair valuechanges in cash flows associated with floating rate FHLB borrowings. United is required torecognized on the balance sheet as either a freestanding asset4 years with an expiration date in August 2024. As of June 30, 2021, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or liability with a corresponding adjustmentlosses pertaining 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 reclassification from AOCI to income because the forecasted transactions became probable of not occurring. United estimates that $1,352 will be reclassified from AOCI as an increase to interest expense over the nextoffset to other comprehensive income, net of tax. The portion of a hedge thathedged is ineffective is recognized immediately in earnings. The portion of a hedge that is ineffective is recognized immediately in earnings.George Masonits mortgage banking subsidiaries enters into interest rate lock commitments to finance residential mortgage loans with its customers. These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by United. Interest value.sells mortgage loansis subject to the Dodd-Frank Act clearing requirement for eligible derivatives. United has executed and cleared eligible derivatives through the London Clearing House (“LCH”). Variation margin at the LCH is distinguished aseither a best efforts or mandatory delivery basis. For loans sold on a mandatory delivery basis, United enters into forward mortgage-backed securities (the “residual hedge”) to mitigate the effectprior day value, rather thanrisk. Bothswap derivatives cleared through the rate lock commitment under mandatory delivery and the residual hedge are recorded atLCH include $500,000 for asset derivatives as of June 30, 2021. The related fair value through earnings and are not designated as accounting hedges. At the closing of the loan, the loan commitment derivative expires and United recordson a loan held for sale at fair value and continues to mark these assets to market under the election of fair value option. United closes out of the trading mortgage-backed securities assigned within the residual hedge and replaces the securities with a forward sales contract once a price has been accepted by an investor and recorded at fair value.The derivative portfolio also includes derivative financial instruments not included in hedge relationships. These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. For derivatives that are not designated in a hedge relationship, changes in the fair value of the derivatives are recognized in earnings in the same period as the change in fair value. Gains and losses on other derivative financial instruments are included in noninterest income and noninterest expense, respectively.SeptemberJune 30, 20172021 and December 31, 2016. Asset Derivatives September 30, 2017 December 31, 2016 Balance
Sheet
Location Notional
Amount Fair
Value Balance
Sheet
Location Fair
Value Other assets $ 14,762 $ 40 Other assets $ 24 $ 14,762 $ 40 $ 24 Other assets $ 0 $ 0 Other assets $ 2,267 Other assets 322,500 501 Other assets 0 Other assets 169,588 7,027 Other assets 0 $ 492,088 $ 7,528 $ 2,267 $ 506,850 $ 7,568 $ 2,291 Liability Derivatives September 30, 2017 December 31, 2016 Balance
Sheet
Location Notional
Amount Fair
Value Balance
Sheet
Location Fair
Value
(hedging commercial loans) Other liabilities $ 76,869 $ 480 Other liabilities $ 338 $ 76,869 $ 480 $ 338 Other liabilities $ 0 $ 0 Other liabilities $ 2,267 Other liabilities 50,063 257 Other liabilities 0 Other liabilities 65,862 291 Other liabilities 0 $ 115,925 $ 548 $ 2,267 $ 192,794 $ 1,028 $ 2,605 Other assets $ 500,000 $ 16,037 Other assets $ 500,000 $ 4,378 $ 500,000 $ 16,037 $ 500,000 $ 4,378 $ 500,000 $ 16,037 $ 500,000 $ 4,378 Other assets $ 32,166 $ 546 Other assets $ 62,418 $ 1,581 Other assets 98,709 296 Other assets 0 0 Other assets 703,161 17,438 Other assets 973,350 38,332 $ 834,036 $ 18,280 $ 1,035,768 $ 39,913 $ 1,334,036 $ 34,317 $ 1,535,768 $ 44,291 Other liabilities $ 74,748 $ 4,484 Other liabilities $ 77,011 $ 6,782 $ 74,748 $ 4,484 $ 77,011 $ 6,782 $ 74,748 $ 4,484 $ 77,011 $ 6,782 Other liabilities $ 60,406 $ 249 Other liabilities $ 0 $ 0 Other liabilities 684,000 1,868 789,000 6,276 $ 744,406 $ 2,117 $ 789,000 $ 6,276 $ 819,154 $ 6,601 $ 866,011 $ 13,058
of Condition
the Hedged
of Fair Value Hedging
Adjustment Included
in the Carrying
Amount of the Hedged
Assets/(Liabilities)
Fair Value Hedging
Adjustment Remaining for
any Hedged Assets/
(Liabilities) for which
Hedge Accounting has
been Discontinued Loans, net of unearned income $ 75,523 $ (4,484 ) $ 0
of Condition
the Hedged Assets/
(Liabilities)
of Fair Value Hedging
Adjustment Included
in the Carrying
Amount of the Hedged
Assets/(Liabilities)
Fair Value Hedging
Adjustment Remaining for
any Hedged Assets/
(Liabilities) for which
Hedge Accounting has
been Discontinued Loans, net of unearned income $ 77,810 $ (6,782 ) $ 0 ninesix months ended SeptemberJune 30, 20172021 and 20162020 are presented as follows: Three Months Ended Income Statement
Location September 30,
2017 September 30,
2016 Interest income/(expense ) $ (208 ) $ (385 ) $ (208 ) $ (385 ) Income from Mortgage
Banking Activities
(257 ) 0 Income from Mortgage
Banking Activities
123 0 Income from Mortgage
Banking Activities
(4,484 ) 0 $ (4,618 ) $ 0 $ (4,826 ) $ (385 ) Nine Months Ended Income Statement
Location September 30,
2017 September 30,
2016 Interest income/(expense ) $ (648 ) $ 353 Other income 0 0 $ (648 ) $ 353 Income from Mortgage
Banking Activities
(427 ) 0 Income from Mortgage
Banking Activities
2,907 0 Income from Mortgage
Banking Activities
(3,465 ) 0 $ (985 ) $ 0 $ (1,633 ) $ 353 12.
2021
2020 Interest on long-term borrowings $ (363 ) $ 0 Interest and fees on loans $ (558 ) $ (277 ) $ (921 ) $ (277 ) Income from Mortgage Banking Activities $ 1,706 $ (553 ) Income from Mortgage Banking Activities (19,459 ) 17,204 Income from Mortgage Banking Activities (8,996 ) (1,527 ) $ (26,749 ) $ 15,124 $ (27,670 ) $ 14,847
2021
2020 Interest on long-term borrowings $ (586 ) $ 0 Interest and fees on loans $ (793 ) $ (720 ) $ (1,379 ) $ (720 ) Income from Mortgage Banking Activities $ (1,284 ) $ 207 Income from Mortgage Banking Activities 4,704 (1,771 ) Income from Mortgage Banking Activities (15,987 ) 12,169 $ (12,567 ) $ 10,605 $ (13,946 ) $ 9,885 byin ASC topicTopic 820, which also clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.The Fair Value Measurements and Disclosures topic - Valuation is based on quoted prices in active markets for identical assets and liabilities. - 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. - Valuation is based on prices, inputs and model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.not0t 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 not0t actively traded in observable markets and United must use alternative valuation techniques using unobservable inputs to determine a fair value and classifies such items as Level 3. For assets and liabilities that are not0t actively traded, the fair value measurement is based primarily upon estimates that require significant judgment. Therefore, the results may not0t be realized in anAssets and Liabilities Measured at Fair Value on a Recurring BasistopicTopic 820, the following describes the valuation techniques used by United to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:(Level 1)(“Level 1”). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Using a market approach valuation methodology, third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considersbased on observable market data (Level 2)inputs, which include benchmark yields, reported trades, issuer spreads, benchmark securities, and “To Be Announced” prices (“Level 2”). Management internally reviews the fair values provided by third party vendors on a monthly basis. Management’s review consists of comparing fair values assignedManagement also performs a quarterly price testing analysis at the individual security level which compares the pricing provided by the third party vendors to trades and offerings observed by management. The review requires some degreean independent pricing source’s valuation of judgment as to the number or percentage of securities to review on the part of management which could fluctuate based on results of past reviews and in comparison to current expectations. Exceptionssame securities. Variances that are deemed to be material are reviewed by management. Additionally, to further assess the reliability of the information received from third party vendors, management obtains documentation from third party vendors related to the sources, methodologies, and inputs utilized in valuing securities classified as Level 2. Management analyzes this information to ensure the underlying assumptions appear reasonable. Management also obtains an independent service auditor’s report from third party vendors to provide reasonable assurance that appropriate controls are in place over the valuation process. Uponcompleting its review of the pricing from third party vendors at SeptemberJune 30, 2017,2021, management determined that the prices provided by its third party pricing source were reasonable and in line with management’s expectations for the market values of these securities. Therefore, prices obtained from third party vendors that did not reflect forced liquidation or distressed sales were not adjusted by management at SeptemberJune 30, 2017.2021. Management utilizes a number of factors to determine if a market is inactive, all of which may require a significant level of judgment. Factors that management considers include: a significant widening of theconsiders its valuation ofdoes not have any Trup Cdos The Fair Value Measurements and Disclosures topic assumes that fair values of financial assets are determined in an orderly transaction and not a forced liquidation or distressed sale at the measurement date. Based on financial market conditions, United feels that the fair values obtained from its third party vendor reflect forced liquidation or distressed sales for these Trup Cdos due to decreased volume and trading activity. Additionally, management held discussions with institutional traders to identify trends in the number and type of transactions related to the Trup Cdos sector. Based upon management’s review of the market conditions for Trup Cdos, it was determined that an income approach valuation technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs is more representative of fair value than the valuation technique used by United’s third party vendor. The present value technique discounts expected future cash flows of a security to arrive at a present value. Management considers the following items when calculating the appropriate discount rate: the implied rate of return when the market was last active, changes in the implied rate of return as markets moved from very active to inactive, recent changes in credit ratings, and recent activity showing that the market has built in increased liquidity and credit premiums. Management’s internal credit review of each security was also factored in to determine the appropriate discount rate. The credit review considered each security’s collateral, subordination, excessspread, priority of claims, principal and interest. Discount margins used in the valuation at September 30, 2017 ranged from LIBOR plus 3.25% to LIBOR plus 6.00%. Management completed a sensitivity analysis on the fair value of its Trup Cdos. Given a comprehensive 200 basis point increase in the discount rates, the total fair value of these securities would decline by approximately 18%, or $5,741.pricing. These valuations fall into thepricing (“Level 3”). The unobservable input for Level 3 category. The unobservable inputvaluations is the Company’s historical sales prices. TheFor June 30, 2021, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.27%0.11% to 0.40%0.31% with a weighted average increase of 0.36%0.21%.United’s derivative portfolio also includes derivative financial instruments not included in hedge relationships. These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. United utilizes third-party vendors for derivative valuation purposes. These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves (Level 2)(“Level 2”). Valuation adjustments to derivative fair values for liquidity and credit risk are also taken into consideration, as well as the likelihood of default by United and derivative counterparties, the net counterparty exposure and the remaining maturities of the positions. Values obtained from third party vendors are typically not adjusted by management. Management internally reviews the derivative values provided by third party vendors on a quarterly basis. All derivative values are tested for reasonableness by management utilizing a net present value calculation.tax. The portiontax and reclassified into earnings in the same line associated with the forecasted transaction when the forecasted transaction affects earnings.George Mason entersUnited’s mortgage banking subsidiaries enter into contractual interest rate lock commitments to extend credit to borrowers with fixed expiration dates. The commitments become effective when the borrowersGeorge Mason entersUnited’s mortgage banking subsidiaries enter into either a forward sales contract to sell loans to investors when using best efforts or a TBA mortgage-backed security under mandatory delivery. As TBA mortgage-backed securities are actively traded in an open market, TBA mortgage-backed securities fall into a Level 1 category. The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. Under the Company’s best efforts model, the rate lock commitments to borrowers and the forward sales contracts to investors through to the date the loan closes are undesignated derivatives and accordingly, are marked to fair value through earnings. These valuations fall into a Level 2 category. For residential mortgage loans sold in the mortgage banking segment, the interest rate lock commitments are recorded at fair valuepricing. These valuations fall into thepricing (“Level 3”). The unobservable input for Level 3 category. The unobservable inputvaluations is the Company’s historical sales prices. TheFor June 30, 2021, the range of historical sales prices increased the investor’s indicated pricing by a range of 0.27%0.11% to 0.40%0.31% with a weighted average increase of 0.36%0.21%.SeptemberJune 30, 20172021 and December 31, 2016,2020, segregated by the level of the valuation inputs within the fair value hierarchy. Fair Value at September 30, 2017 Using Balance as of
September 30,
2017 Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) $ 115,866 $ 0 $ 115,866 $ 0 305,141 0 305,141 0 714,700 0 714,700 0 5,846 0 5,846 0 420,792 0 420,792 0 13,429 0 13,429 0 31,659 0 0 31,659 12,467 0 12,467 0 19,254 0 19,254 0 1,639,154 0 1,607,495 31,659 3,016 401 2,615 0 6,250 6,250 0 0 1,214 1,214 0 0 10,480 7,865 2,615 0 1,649,634 7,865 1,610,110 31,659 311,186 0 0 311,186 40 0 40 0 7,027 0 0 7,027 501 501 0 0 7,568 501 40 7,027 Fair Value at September 30, 2017 Using Balance as of
September 30,
2017 Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) 480 0 480 0 257 0 257 0 291 0 291 0 1,028 0 1,028 0 (1)The equity mutual funds are within a rabbi trust for the payment of benefits under a deferred compensation plan for certain keyofficers $ 15,147 $ 0 $ 15,147 $ 0 614,046 0 614,046 0 985,002 0 985,002 0 39,603 0 39,603 0 652,557 0 652,557 0 489,433 0 489,433 0 17,417 0 17,417 0 463,869 5,983 457,886 0 Total available for sale securities 3,277,074 5,983 3,271,091 0 169 169 0 0 5,445 5,445 0 0 5,893 5,893 0 0 Total equity securities 11,507 11,507 0 0 576,827 0 44,553 532,274 United and its subsidiaries. Fair Value at December 31, 2016 Using Balance as of
December 31,
2016 Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) $ 95,786 $ 0 $ 95,786 $ 0 192,812 0 192,812 0 584,096 0 584,096 0 7,043 0 7,043 0 217 0 217 0 305,341 0 305,341 0 33,552 0 0 33,552 11,477 0 11,477 0 15,062 0 15,062 0 1,245,386 0 1,211,834 33,552 10,735 1,372 9,363 0 1,820 1,820 0 0 1,273 1,273 0 0 13,828 4,465 9,363 0 1,259,214 4,465 1,221,197 33,552 2,291 0 2,291 0 2,605 0 2,605 0 (1)The equity mutual funds are within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries. 16,037 0 16,037 0 546 0 546 0 296 0 0 296 17,438 0 2,888 14,550 Total derivative financial assets 34,317 0 19,471 14,846 4,484 0 4,484 0 249 0 0 249 1,868 0 124 1,744 Total derivative financial liabilities 6,601 0 4,608 1,993 $ 66,344 $ 0 $ 66,344 $ 0 565,160 0 565,160 0 928,891 0 928,891 0 21,776 0 21,776 0 675,145 0 675,145 0 294,623 0 294,623 0 17,027 0 17,027 0 384,393 6,207 378,186 0 Total available for sale securities 2,953,359 6,207 2,947,152 0 Financial services industry 134 134 0 0 Equity mutual funds (1) 4,602 4,602 0 0 Other equity securities 5,982 5,982 0 0 Total equity securities 10,718 10,718 0 0 698,341 0 43,608 654,733 Interest rate swap contracts 4,378 0 4,378 0 Forward sales commitments 1,581 0 1,581 0 TBA mortgage-backed securities 0 0 0 0 Interest rate lock commitments 38,332 0 6,321 32,011 Total derivative financial assets 44,291 0 12,280 32,011 Interest rate swap contracts 6,782 0 6,782 0 TBA mortgage-backed securities 6,276 0 6,276 0 13,058 0 13,058 0 no0 transfers between Level 1 and Level 2 for financial assets and liabilities measured at fair value on a recurring basis during the ninesix months ended SeptemberJune 30, 20172021 and the year ended December 31, 2016.SeptemberJune 30, 20172021 and December 31, 20162020 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value: Available-for-sale
Securities Trust preferred
collateralized debt obligations September 30,
2017 December 31,
2016 $ 33,552 $ 34,686 9 0 6,148 (1,134 ) (8,050 ) 0 $ 31,659 $ 33,552 $ 0 $ 0 Loans held for sale September 30,
2017 December 31,
2016 $ 0 $ 0 271,301 0 1,644,943 0 (1,639,737 ) 0 41,929 0 (7,250 ) 0 $ 311,186 $ 0 $ 0 $ 0 Derivative Financial Assets
Interest Rate Lock Commitments September 30,
2017 December 31,
2016 $ 0 $ 0 10,393 0 (3,366 ) 0 $ 7,027 $ 0 $ 0 $ 0
2020 $ 654,733 $ 384,375 2,888,337 5,699,581 (3,090,988 ) (5,652,693 ) 80,192 223,470 (0 ) (0 ) $ 532,274 $ 654,733 $ 0 $ 0
2020 $ 0 $ 0 296 0 $ 296 $ 0 $ 0 $ 0
Commitments
2020 $ 32,011 $ 4,518 (17,461 ) 27,493 $ 14,550 $ 32,011 $ 0 $ 0 $ 0 $ 0 249 0 $ 249 $ 0 $ 0 $ 0
2020 $ 0 $ 0 1,744 0 $ 1,744 $ 0 $ 0 $ 0 Income from mortgage banking activities $ 6,075 $ 8,846 Income from mortgage banking activities $ (11,776 ) $ 10,471
Principal
Balance
Value
Over/(Under)
Unpaid
Principal
Balance
Principal
Balance
Value
Over/(Under)
Unpaid
Principal
Balance $ 562,200 $ 576,827 $ 14,627 $ 672,458 $ 698,341 $ 25,883 Fair Value OptionUnited elected the fair value option for the loans held for sale in its mortgage banking segment to mitigate a divergence between accounting losses and economic exposure.The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected: Three Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017 $ (5,090 ) $ (7,529 ) The following table reflects the difference between the aggregate fair value and the remaining contractual principal outstanding for financial instruments for which the fair value option has been elected: September 30, 2017 December 31, 2016 Unpaid
Principal
Balance Fair
Value Fair Value
Over/(Under)
Unpaid
Principal
Balance Unpaid
Principal
Balance Fair
Value Fair Value
Over/(Under)
Unpaid
Principal
Balance $ 303,953 $ 311,186 $ 7,233 $ 0 $ 0 $ 0 Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisLoansPrior to January 1, 2021, loans held for sale within the community banking segment that arewere delivered on a best efforts basis arewere carried at the lower of cost or fair value. TheAs previously mentioned, United elected the fair value isoption for all loans held for sale as of January 1, 2021. Under the lower of cost or fair value accounting method, the fair value of loans held for sale within the community banking segment was based on the price secondary markets are currently offeringoffered at the time for similar loans using observable market data which iswas not materially different than cost due to the short duration between origination and sale (Level 2)(“Level 2”). As such, United recordsrecorded any fair value adjustments for these loans held for sale on a nonrecurring basis. No nonrecurring fair value adjustments were recorded on loans held for sale during the nine months ended September 30, 2017. Gains and losses on sale of loans arewere recorded within income from mortgage banking activities on the Consolidated Statements of Income.Impaired: Loans evaluated individually are designated as impaired when,not also included in the judgment ofcollective evaluation. When management based on current information and events, itdetermines that foreclosure is probable that all amounts due accordingor when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the contractual termsoperation or sale of the loan agreement will not be collected. Impairment is measuredcollateral, expected credit losses are based upon the present value of expected future cash flows from the loan discounted at the loan’s effective rate and the loan’s observable market price oron the fair value of the collateral ifat the loan is collateral dependent.reporting date, adjusted for selling costs as appropriate. Fair value is measured using a market approach based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an appraisal conducted by an independent, licensed appraiser outside of the Company using comparable property sales (Level 2)(“Level 2”). However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial(Level 3)(“Level 3”). For impairedindividually assessed loans, a specific reserve is established through the Allowanceallowance for Loan Losses,loan losses, if necessary, by estimating the fair value of the underlying collateral on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses expense on the Consolidated Statements of Income.OREO:(Level 2)(“Level 2”). In contrast, valuation of ongoing construction assets requires some degree of professional judgment. In conducting an appraisal for ongoing construction property, the appraiser develops two appraised amounts: an “as is” appraised value and a “completed” value. Based on professional judgment and their knowledge of the particular situation, management determines the appropriate fair value to be utilized for such property (Level 3)(“Level 3”). As a matter of policy, valuations are reviewed at least annually and appraisals are generally updated on aAssets:Assetsusing a market approach and compares the fair value to its carrying value. If the carrying value exceeds the fair value,United may elect to perform a step two testqualitative analysis to determine whether or not it is performed whereby the implied fair value is computed by deductingmore-likely-than not that the fair value of all tangible and intangible net assets froma reporting unit is less than its carrying amount. If United elects to bypass this qualitative analysis, or concludes via qualitative analysis that it isunit.unit to compare to its carrying value as step one. If the fair value is greater than the carrying value, then the reporting unit’s goodwill is deemed not to be impaired. If the fair value is less than the carrying value, then a second step is performed which measures the amount of impairment by comparing the carrying amount of the goodwill to its implied fair value. If the implied fair value of the goodwill exceeds the carrying amount, there is no impairment. If the carrying amount exceeds the implied fair value of goodwill, an impairment charge is recorded for the excess. At each reporting date, the Company considers potential indicators of impairment. United performed its annual goodwill impairment test on the Company’s reporting units as of September 30, 2020. The goodwill impairment test did not identify any goodwill impairment. In subsequent periods,Other than those intangible assets recorded in the acquisitions of Cardinal in the second quarter of 2017 and Bank of Georgetown in the second quarter of 2016, noNaN other fair value measurement of intangible assets was made during the first ninesix months of 20172021 and 2016. Carrying value at September 30, 2017 Balance as of
September 30,
2017 Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) YTD
Losses $ 105,900 $ 0 $ 74,852 $ 31,048 $ 9,045 26,826 0 26,743 83 2,904 Carrying value at December 31, 2016 Balance as of
December 31,
2016 Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) YTD
Losses $ 80,505 $ 0 $ 27,609 $ 52,896 $ 5,119 31,510 0 31,510 0 2,086 $ 17,893 $ 0 $ 13,591 $ 4,302 $ (1,430 ) 18,474 0 18,474 0 (3,528 ) 24,630 0 0 24,630 (250 ) $ 20,596 $ 0 $ 20,596 $ 0 $ (197 ) 37,498 0 14,467 23,031 1,318 22,595 0 22,595 0 (1,618 ) 20,955 0 0 20,955 (1,383 ) securities:securitiesconsidersconsider observable market data. Any securities held to maturity, not valued based upon the methods above, are valued based on a discounted cash flow methodology using appropriately adjusted discount rates reflecting nonperformance and liquidity risks. Other securities consist mainly of shares of Federal Home Loan Bank and Federal Reserve Bank stock that do not have readily determinable fair values and are carried at cost.Loans:impairedPCD loans, fair value is assumed to equal United’s carrying value, which represents the present value of expected future principal and interest cash flows, as adjusted for any Allowance for LoanCredit Losses recorded for these loans.Deposits: Fair Value Measurements Carrying
Amount Fair Value Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) $ 1,747,037 $ 1,747,037 $ 0 $ 1,747,037 $ 0 1,649,634 1,649,634 7,865 1,610,110 31,659 20,335 19,909 0 16,889 3,020 166,756 158,418 0 0 158,418 315,031 315,031 0 3,845 311,186 13,065,542 12,550,352 0 0 12,550,352 7,568 7,568 501 40 7,027 13,875,297 13,859,205 0 13,859,205 0 492,036 492,036 0 492,036 0 1,364,246 1,328,753 0 1,328,753 0 1,028 1,028 0 1,028 0 $ 1,434,527 $ 1,434,527 $ 0 $ 1,434,527 $ 0 1,259,214 1,259,214 4,465 1,221,197 33,552 33,258 31,178 0 28,158 3,020 111,166 105,608 0 0 105,608 8,445 8,445 0 8,445 0 10,268,366 10,122,486 0 0 10,122,486 2,291 2,291 0 2,291 0 10,796,867 10,785,294 0 10,785,294 0 209,551 209,551 0 209,551 0 1,172,026 1,142,782 0 1,142,782 0 2,605 2,605 0 2,605 0 13. $ 3,677,396 $ 3,677,396 $ 0 $ 3,677,396 $ 0 3,277,074 3,277,074 5,983 3,271,091 0 989 1,020 0 0 1,020 11,507 11,507 11,507 0 0 221,931 210,834 0 0 210,834 576,827 576,827 0 44,553 532,274 16,670,456 16,153,015 0 0 16,153,015 34,317 34,317 0 19,471 14,846 22,540 24,630 0 0 24,630 21,567,391 21,555,714 0 21,555,714 0 127,745 127,745 0 127,745 0 814,022 768,278 0 768,278 0 6,601 6,601 0 4,608 1,993 $ 2,209,068 $ 2,209,068 $ 0 $ 2,209,068 $ 0 2,953,359 2,953,359 6,207 2,947,152 0 1,212 1,235 0 215 1,020 10,718 10,718 10,718 0 0 220,895 209,850 0 0 209,850 718,937 718,937 0 64,204 654,733 17,355,583 16,559,797 0 0 16,559,797 44,291 44,291 0 12,280 32,011 20,955 20,955 0 0 20,955 20,585,160 20,583,607 0 20,583,607 0 142,300 142,300 0 142,300 0 864,369 815,991 0 815,991 0 13,058 13,058 0 13,058 0 18, 2016,12, 2020, United’s shareholders approved the 20162020 Long-Term Incentive Plan (2016(“2020 LTI Plan)Plan”). The 20162020 LTI Plan became effective as of May 18, 2016 and replaced the 2011 Long-Term Incentive Plan (2011 LTI Plan) which expired during the second quarter of 2016.13, 2020. An award granted under the 20162020 LTI Plan may consist of any(SARs)(“SARs”), restricted stock, restricted stock units, performance units or other-stock-based award. These awards all relate to the common stock of United. The maximum number of shares of United common stock which may be issued under the 20162020 LTI Plan is 1,700,000.2,300,000. The 20162020 LTI Plan will be administered by a board committee appointed by United’s Board of Directors (the Board)“Board”). Unless otherwise determined by the Board, the Compensation Committee of the Board (the Committee)“Committee”) shall administer the 20162020 LTI Plan. Any and all shares may be issued in respect of any of the types of awards, provided that (1) the aggregate number of shares that may be issued in respect of restricted stock awards, and restricted stock unit awards which are settled in shares is 500,000, and (2) the aggregate number of shares that may be issued pursuant to stock options is 1,200,000. The shares to be offered under the 2016 LTI Plan may be authorized and unissued shares or treasury shares. The maximum number of options and SARs,stock appreciation rights, in the aggregate, which may be awarded to any individual key employee during any calendar year is 100,000. The maximum number of stock options and SARs,stock appreciation rights, in the aggregate, which may be awarded to any10,000.10,000 or, if such Award is payable in cash, the Fair Market Value equivalent thereof. The maximum number of shares of restricted stock or shares subject to a restricted stock units award that may be granted50,000225,000 shares to any individual key employee and 5,00010,000 shares to any individual20162020 LTI Plan provides that all awards of restricted stock and restricted stock units will vest as the Committee determines in the award agreement, provided thatAwards grantedUnited adopted a clawback policy that applies to named executive officers ofand other executive officers and permits the Committee to cancel certain awards and to recoup gains realized from previous awards should United typically will havebe required to prepare an accounting restatement due to materially inaccurate performance based vesting conditions.metrics. A FormJulyMay 29, 20162020 with the Securities and Exchange Commission to register all the shares which were available for the 20162020 LTI Plan. During the first nine months of 2017, a total of 253,417non-qualified stock options and 89,475 shares of restricted stock were granted underThe$909$1,892 and $2,589$3,580 related to the nonvested awards under United’s Long-Term Incentive Plans was incurred for the thirdsecond quarter and first ninesix months of 2017,2021, respectively, as compared to the compensation expense of $720$1,369 and $2,050$2,622 related to the nonvested awards under United’s Long-Term Incentive Plans incurred for the thirdsecond quarter and first ninesix months of 2016,2020, respectively. Compensation expense was included in employee compensation in the unaudited Consolidated Statements of Income.20162020 LTI Plan (the Prior Plans)“Prior Plans”); however, no0 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.SeptemberJune 30, 2017,2021, and the changes during the first ninesix months of 20172021 are presented below: Nine Months Ended September 30, 2017 Weighted Average Shares Aggregate
Intrinsic
Value Remaining
Contractual
Term (Yrs.) Exercise
Price 1,411,735 $ 28.05 153,602 21.47 253,417 45.27 (163,562 ) 20.93 (2,962 ) 38.81 1,652,230 $ 12,602 5.8 $ 30.76 1,138,309 $ 11,964 4.5 $ 26.64 1,904,557 $ 34.14 49,978 32.51 (173,945 ) 28.65 (110,229 ) 28.69 1,670,361 $ 5,358 5.3 $ 35.02 1,315,307 $ 4,654 4.8 $ 34.91 ninesix months of 2017: Shares Weighted-Average
Grant Date Fair Value
Per Share 430,278 $ 6.84 253,417 8.85 (168,274 ) 6.64 (1,500 ) 8.85 513,921 $ 7.89 544,905 $ 6.93 49,978 5.65 (239,659 ) 7.32 (170 ) 5.65 355,054 $ 6.49 ninesix months ended SeptemberJune 30, 20172021 and 2016, 163,5622020, 173,945 and 248,67714,994 shares, respectively, were issued in connection with stock option exercises. All shares issued in connection with stock option exercises for the ninesix months ended SeptemberJune 30, 20172021 and 20162020 were issued from authorized and unissued stock. The total intrinsic value of options exercised under the Plans during the ninesix months ended SeptemberJune 30, 20172021 and 20162020 was $3,078$1,644 and $4,670$249 respectively.20112020 LTI Plan, United may award restricted common shares to key employees andhave a four-year time-based vesting period. Recipientswill vest no sooner than 1/3 per year over the first three anniversaries of the award.SeptemberJune 30, 2017: Number of
Shares Weighted-Average
Grant Date Fair Value
Per Share 137,268 $ 33.61 89,475 45.27 (53,950 ) 32.23 (420 ) 45.30 172,373 $ 40.07 14.2021:
Grant Date Fair Value
Per Share 340,976 $ 35.41 182,344 35.97 (129,061 ) 36.90 (1,971 ) 36.70 392,288 $ 35.18
Grant Date Fair Value
Per Share 0 $ 0.00 136,896 35.65 0 0.00 0 0.00 136,896 $ 35.65 a majority of all employees.qualified employees hired prior to October 1, 2007. Pension benefits are based on years of service and the average of the employee’s highest five consecutive plan years of basic compensation paid during the ten plan years preceding the date of determination. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. DuringNaN discretionary contributions were made during the third quarter of 2017, United made a discretionary contribution of $10,000 to the Plan.In September of 2007, after a recommendation by United’s Pension Committee and approval by United’s Board of Directors, the United Bankshares, Inc. Pension Plan (the Plan) was amended to change the participation rules. The decision to change the participation rules for the Plan followed current industry trends, as many large and medium size companies had taken similar steps. The amendment provides that employees hired on or after October 1, 2007, will not be eligible to participate in the Plan. However, new employees will be eligible to participate in United’s Savings and Stock Investment 401(k) plan. This change had no impact on current employees hired prior to October 1, 2007 as they will continue to participate in the Plan, with no change in benefit provisions, and will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) plan.As of December 31, 2016, United changed the method used to estimate the interest cost component of net periodic benefit cost for the Plan. Under the previous method, appropriate spot rates were used to discount the projected benefit obligation (PBO) cash flows based on date of measurement. Then, a single aggregated discount rate was calculated such that the present value of the PBO remained the same. This rate is technically a weighted-average of the spot rates. This single discount rate was applied to the interest and service costs as well. Under the full yield curve approach, separate discount rates are used to calculate the present value for each projected cash flow. This does not have any impact on the present value of the PBO as the PBO was originally discounted with spot rates. The adoption of this method concerns the manner in which it affects interest and service costs. This new method constitutes a change in an accounting estimate under the provisions of ASC topic 250, “Accounting Changes and Error Corrections,” that is inseparable from a change in accounting principle and was accounted for prospectively, with the resulting change impacting the recognition of net periodic pension cost beginning January 1, 2017. The impact of this accounting change on United’s net periodic pension cost for the third quarter and first ninesix months of 2017 was a decline of $2522021 and $748, respectively, in expense from the amount that would have been recorded under the previous method.20162020 are unrecognized actuarial losses of $53,991$65,426 ($34,01450,182 net of tax) that have not yet been recognized in net periodic pension cost. The amortizationninesix months ended SeptemberJune 30, 20172021 and 20162020 included the following components: Three Months Ended
September 30 Nine Months Ended
September 30 2017 2016 2017 2016 $ 574 $ 614 $ 1,705 $ 1,829 1,293 1,471 3,837 4,383 (2,072 ) (2,034 ) (6,148 ) (6,058 ) 1,111 1,161 3,298 3,458 $ 906 $ 1,212 $ 2,692 $ 3,612 4.49 % 4.75 % 4.49 % 4.75 % 7.00 % 7.25 % 7.00 % 7.25 % 3.50 % 3.50 % 3.50 % 3.50 % 3.00 % 3.00 % 3.00 % 3.00 % 15. $ 758 $ 715 $ 1,508 $ 1,430 1,031 1,286 2,051 2,573 (2,957 ) (2,630 ) (5,881 ) (5,259 ) 1,589 1,442 3,161 2,884 $ 421 $ 813 $ 839 $ 1,628 2.81 % 3.42 % 2.81 % 3.42 % 6.25 % 6.75 % 6.25 % 6.75 % 5.00 % 5.00 % 5.00 % 5.00 % 4.00 % 4.00 % 4.00 % 4.00 % 3.50 % 3.50 % 3.50 % 3.50 % SeptemberJune 30, 2017, United has provided a liability for $2,405 of unrecognized tax benefits related to various federal2021 and state income tax matters. The entire amount of unrecognized tax benefits, if recognized, would impact United’s effective tax rate. Over the next 12 months, the statute of limitations will close on certain income tax periods. However, at this time, United cannot reasonably estimate the amount of tax benefits it may recognize over the next 12 months.United is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2014, 2015 and 2016 and certain State Taxing authorities for the years ended December 31, 2014 through 2016.As of September 30, 2017 and 2016,2020, the total amount of accrued interest related to uncertain tax positions was $548$722 and $792,$718, respectively. United accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes.16.ninesix months ended SeptemberJune 30, 20172021 and 20162020 are as follows: Three Months Ended
September 30 Nine Months Ended
September 30 2017 2016 2017 2016 $ 56,738 $ 41,479 $ 132,606 $ 107,977 0 0 (60 ) (77 ) 0 0 22 28 0 0 60 33 0 0 (22 ) (12 ) 0 0 0 415 0 0 0 (150 ) 0 0 0 237 3,584 (7,599 ) 14,846 12,356 (1,326 ) 2,735 (5,493 ) (4,489 ) (467 ) (1 ) (1,444 ) (251 ) 173 0 534 91 1,964 (4,865 ) 8,443 7,707 1,964 (4,865 ) 8,443 7,944 2 2 6 6 (0 ) (0 ) (2 ) (2 ) 2 2 4 4 1,111 1,161 3,298 3,458 (394 ) (384 ) (1,191 ) (1,223 )
comprehensive income 717 777 2,107 2,235 2,683 (4,086 ) 10,554 10,183 $ 59,421 $ 37,393 $ 143,160 $ 118,160
June 30
June 30 18,040 37,756 (27,927 ) 60,859 (4,203 ) (8,797 ) 6,507 (14,180 ) (0 ) (1,466 ) (1,444 ) (1,641 ) 0 341 336 382 (8,243 ) (1,659 ) 11,074 (1,659 ) 1,921 387 (2,580 ) 387 363 0 586 0 (85 ) 0 (137 ) 0
June 30 1,589 1,442 3,161 2,884 (720 ) (329 ) (1,423 ) (659 ) ninesix months ended SeptemberJune 30, 20172021 are as follows:Changes in Accumulated Other Comprehensive Income (AOCI) by Component(a)For the Nine Months Ended September 30, 2017 Unrealized
Gains/Losses
on AFS
Securities Accretion on
the unrealized
loss for
securities
transferred
from AFS to
the HTM Defined
Benefit
Pension
Items Total ($ 10,297 ) ($ 51 ) ($ 34,369 ) ($ 44,717 ) 9,353 4 0 9,357 (910 ) 0 2,107 1,197 8,443 4 2,107 10,554 ($ 1,854 ) ($ 47 ) ($ 32,262 ) ($ 34,163 ) Reclassifications out of Accumulated Other Comprehensive Income (AOCI)For the Nine Months Ended September 30, 2017 Amount
Reclassified
from AOCI
to credit OTTI $ 0 Total other-than-temporary impairment losses
(gains) included in net income (1,444 ) Net gains on sales/calls of investment securities (1,444 ) Total before tax 534 Tax expense (910 ) Net of tax 3,298 (a) 3,298 Total before tax (1,191 ) Tax expense 2,107 Net of tax $ 1,197
Gains/Losses
on AFS
Securities
Gains/Losses
on Cash
Hedges
Benefit
Pension $ 65,205 $ 3,358 $ (46,193 ) $ 22,370 (21,420 ) 8,494 0 (12,926 ) (1,108 ) 449 1,738 1,079 (22,528 ) 8,943 1,738 (11,847 ) $ 42,677 $ 12,301 $ (44,455 ) $ 10,523 (a)
Reclassified
from AOCI $ (1,444 ) (1,444 ) 336 (1,108 ) $ 586 586 (137 ) 449 3,161 (a) 3,161 (1,423 ) 1,738 $ 1,079 (a) net periodic pension costchanges in plan assets (see Note 14,16, Employee Benefit Plans)17. Three Months Ended Nine Months Ended September 30 September 30 2017 2016 2017 2016 $ 34,587 $ 25,174 $ 95,871 $ 73,242 22,065 16,234 36,518 34,545 $ 56,652 $ 41,408 $ 132,389 $ 107,787 104,760,153 76,218,573 95,040,664 72,413,246 307,969 429,200 409,962 333,117 105,068,122 76,647,773 95,450,626 72,746,363 $ 0.54 $ 0.54 $ 1.39 $ 1.49 $ 0.54 $ 0.54 $ 1.39 $ 1.48 18. $ 45,085 $ 45,298 $ 90,153 $ 80,785 49,478 7,262 111,007 11,840 $ 94,563 $ 52,560 $ 201,160 $ 92,625 128,750,851 119,823,652 128,693,616 110,559,363 283,137 64,171 252,664 65,613 129,033,988 119,887,823 128,946,280 110,624,976 $ 0.73 $ 0.44 $ 1.56 $ 0.84 $ 0.73 $ 0.44 $ 1.56 $ 0.84 (VIEs)(“VIEs”) are entities that either have a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest (i.e., ability to make significant decisions, through voting rights, right to receive the expected residual returns of the entity, and obligation to absorb the expected losses of the entity). VIEs can be structured as corporations, trusts, partnerships, or other legal entities. United’s business practices include relationships with certain VIEs. For United, the business purpose of these relationships primarily consists of funding activities in the form of issuing trust preferred securities.fifteen19 statutory business trusts that were created for the purpose of raising funds that originally qualified for Tier I regulatory capital. As previously discussed, with the acquisition of Cardinal, these trusts now are considered Tier II regulatory capital. These trusts, of which several were acquired through bank acquisitions, issued or participated in pools of trust preferred capital securities to third-party investors with the proceeds invested in junior subordinated debt securities of United. The Company, through a small capital contribution, owns 100% of the voting equity shares of each trust. The assets, liabilities, operations, and cash flows of each trust are solely related to the issuance, administration, and repayment of the preferred equity securities held by third-party investors. United fully and unconditionally guarantees the obligations of each trust and is obligated to redeem the junior subordinated debentures upon maturity. Amount of
Capital
Securities Issued March 23, 2000 $ 8,800 10.875% Fixed March 8, 2030 December 17, 2003 $ 20,000 3-month LIBOR + 2.85% December 17, 2033 December 19, 2003 $ 25,000 3-month LIBOR + 2.85% January 23, 2034 July 12, 2007 $ 50,000 3-month LIBOR + 1.55% October 1, 2037 September 20, 2007 $ 30,000 3-month LIBOR + 1.30% December 15, 2037 September 25, 2003 $ 6,000 3-month LIBOR + 3.10% October 8, 2033 May 16, 2005 $ 8,000 3-month LIBOR + 1.74% June 15, 2035 June 20, 2006 $ 14,000 3-month LIBOR + 1.55% September 23, 2036 December 14, 2006 $ 10,000 3-month LIBOR + 1.61% March 1, 2037 September 20, 2004 $ 10,000 3-month LIBOR + 2.29% September 20, 2034 June 15, 2006 $ 10,000 3-month LIBOR + 1.65% July 7, 2036 December 19, 2002 $ 15,000 6-month LIBOR + 3.30% December 19, 2032 December 20, 2005 $ 25,000 3-month LIBOR + 1.42% February 23, 2036 July 27, 2004 $ 20,000 3-month LIBOR + 2.40% September 15, 2034 December 30, 2004 $ 5,000 3-month LIBOR + 2.10% March 15, 2035 December 17, 2003 $ 20,000 3-month LIBOR + 2.85% December 17, 2033 December 19, 2003 $ 25,000 January 23, 2034 July 12, 2007 $ 50,000 October 1, 2037 September 20, 2007 $ 30,000 December 15, 2037 September 25, 2003 $ 6,000 3-month LIBOR + 3.10% October 8, 2033 May 16, 2005 $ 8,000 June 15, 2035 June 20, 2006 $ 14,000 September 23, 2036 December 14, 2006 $ 10,000 March 1, 2037 September 20, 2004 $ 10,000 September 20, 2034 June 15, 2006 $ 10,000 July 7, 2036 December 19, 2002 $ 15,000 December 19, 2032 December 20, 2005 $ 25,000 February 23, 2036 July 27, 2004 $ 20,000 September 15, 2034 December 30, 2004 $ 5,000 March 15, 2035 December 19, 2002 $ 5,000 Prime + 0.50% December 31, 2032 November 5, 2003 $ 10,000 January 7, 2034 October 12, 2004 $ 6,000 October 18, 2034 December 28, 2006 $ 5,000 January 30, 2037 September 26, 2003 $ 10,000 September 30, 2033 subsidiaries,subsidiary, also makes limited partner equity investments in various low income housing and community development partnerships sponsored by independent third-parties. United invests in these partnerships to either realize tax credits on its consolidated federal income tax return or for purposes of earning a return on its investment. These partnerships are considered VIEs as the limited partners lack a controlling financial interest in the entities through their inability to make decisions that have a significant effect on the operations and success of the partnerships. United’s limited partner interests in these entities is immaterial, however; these partnerships are not consolidated as United is not deemed to be As of September 30, 2017 As of December 31, 2016 Aggregate
Assets Aggregate
Liabilities Risk Of
Loss(1) Aggregate
Assets Aggregate
Liabilities Risk Of
Loss(1) $ 266,560 $ 257,605 $ 8,955 $ 240,668 $ 232,583 $ 8,085 $ 295,246 $ 284,503 $ 10,743 $ 295,466 $ 284,788 $ 10,678 (1) 19.As a result of the Cardinal acquisition, now operates in two2 business segments: community banking and mortgage banking. Prior to the Cardinal acquisition, United’s business activities were confined to just one reportable segment of community banking.Mason.Mason)Mason and Crescent) with short-term funds to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest based on the primeninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows: At and For the Three Months Ended September 30, 2017 Community
Banking Mortgage
Banking Other Consolidated $ 152,886 $ (36 ) $ (2,574 ) $ 150,276 7,279 0 0 7,279 18,373 19,936 (80 ) 38,229 74,553 24,036 (1,937 ) 96,652 29,490 (1,332 ) (322 ) 27,836 $ 59,937 $ (2,804 ) $ (395 ) $ 56,738 $ 18,780,395 $ 350,483 $ (900 ) $ 19,129,978 18,620,035 321,744 (13,994 ) 18,927,785 At and For the Three Months Ended September 30, 2016 Community
Banking Other Consolidated $ 113,033 $ (1,964 ) $ 111,069 6,988 0 6,988 19,666 (645 ) 19,021 63,009 (232 ) 62,777 19,729 (883 ) 18,846 $ 42,973 $ (1,494 ) $ 41,479 $ 14,364,797 $ (20,101 ) $ 14,344,696 14,182,202 (22,633 ) 14,159,569 At and For the Nine Months Ended September 30, 2017 Community
Banking Mortgage
Banking Other Consolidated $ 401,044 $ 54 $ (6,957 ) $ 394,141 21,429 0 0 21,429 53,409 42,329 3,143 98,881 215,935 42,744 12,952 271,631 73,214 (39 ) (5,819 ) 67,356 $ 143,875 $ (322 ) $ (10,947 ) $ 132,606 $ 18,780,395 $ 350,483 $ (900 ) $ 19,129,978 17,020,928 187,118 (20,402 ) 17,187,644 At and For the Nine Months Ended September 30, 2016 Community
Banking Other Consolidated $ 317,835 $ (5,757 ) $ 312,078 18,690 0 18,690 55,323 (1,943 ) 53,380 186,322 (634 ) 185,688 55,580 (2,477 ) 53,103 $ 112,566 $ (4,589 ) $ 107,977 $ 14,364,797 $ (20,101 ) $ 14,344,696 13,125,973 (21,575 ) 13,104,398
Banking
Banking $ 183,400 $ 2,871 $ (2,106 ) $ 2,352 $ 186,517 (8,879 ) 0 0 0 (8,879 ) 24,072 39,765 1,132 (2,123 ) 62,846 103,429 36,391 (1,098 ) 229 138,951 23,149 1,280 26 0 24,455 $ 89,773 $ 4,965 $ 98 $ 0 $ 94,836 $ 26,831,380 $ 720,912 $ 32,619 $ (393,985 ) $ 27,190,926 26,661,453 729,114 26,090 (410,699 ) 27,005,958
Banking
Banking $ 167,703 $ 2,246 $ (2,556 ) $ 3,209 $ 170,602 45,911 0 0 0 45,911 20,301 71,013 47 (2,971 ) 88,390 106,477 35,261 7,398 238 149,374 5,841 6,946 (1,766 ) 0 11,021 $ 29,775 $ 31,052 $ (8,141 ) $ 0 $ 52,686 $ 25,924,599 $ 730,637 $ 25,678 $ (445,941 ) $ 26,234,973 24,198,414 660,483 16,574 (472,871 ) 24,402,600
Banking
Banking $ 370,597 $ 5,521 $ (4,244 ) $ 5,603 $ 377,477 (8,736 ) 0 0 0 (8,736 ) 50,460 107,272 2,653 (4,966 ) 155,419 213,446 77,574 (3,779 ) 637 287,878 44,351 7,220 449 0 52,020 $ 171,996 $ 27,999 $ 1,739 $ 0 $ 201,734 $ 26,831,380 $ 720,912 $ 32,619 $ (393,985 ) $ 27,190,926 26,409,142 722,997 24,709 (406,747 ) 26,750,101
Banking
Banking $ 308,123 $ 3,195 $ (5,245 ) $ 6,047 $ 312,120 73,030 0 0 0 73,030 39,868 92,203 56 (6,931 ) 125,196 186,941 56,018 8,432 (884 ) 250,507 16,191 7,219 (2,500 ) 0 20,910 $ 71,829 $ 32,161 $ (11,121 ) $ 0 $ 92,869 $ 25,924,599 $ 730,637 $ 25,678 $ (445,941 ) $ 26,234,973 21,825,005 513,431 21,756 (374,811 ) 21,985,381 harborhaven for such disclosure,disclosure; in other words, protection from unwarranted litigation if actual results are not the same as management expectations.ActualForward-looking statements can be identified by the use of the words “expect,” “may,” “could,” “intend,” “project,” “estimate,” “believe,” “anticipate,” and other words of similar meaning. Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect, such as statements about the potential impacts of thecouldmay differ materially from those containedcontemplated in these “forward-looking statements.” United undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or impliedotherwise.statementsprovision for credit losses as required by CECL contributed to an increased provision for credit losses for the year of 2020. Also, in United’s mortgage banking segment, a market disruption caused by thefactors including,sources, such as, but not limited to: changesto, insufficient funds and overdraft fees, ATM fees, account maintenance fees, etc. Should the pandemic and the global response escalate further as outbreaks occur, it is possible that the Company could reduce such fees in future periods; however, at this time, the Company is unable to project the materiality of such an impact on the results of operations in future periods.conditions; business conditionsimpact may affect its borrowers’ ability to repay in future periods.industry; movementscorporation. Community Bankers Trust had approximately $1.75 billion in interest rates; competitive pressures on product pricing and services; success and timingassets as of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving banking industry standards.ACQUISITIONSApril 21, 2017,May 1, 2020, United acquired 100% of the outstanding common stock of CardinalCarolina Financial Corporation (“Cardinal”Carolina Financial”), headquartered in Tysons Corner, Virginia.Charleston, South Carolina. Immediately following the merger, CresCom Bank, a wholly-owned subsidiary of Carolina Financial, merged with and into United Bank (the “CresCom Bank Merger”). United Bank survived the CresCom Bank Merger and continues to exist as a Virginia banking corporation. The acquisition of Cardinal expands United’sCarolinaWashington, D.C. Metropolitan Statistical Areabest banking markets in the United States. CresCom Bank owned and operated Crescent Mortgage Company (“MSA”). Cardinal also operated George Mason Mortgage, LLC (“George Mason”Crescent”), a residential mortgage lending companywhich is based in Fairfax, VirginiaAtlanta. Crescent is approved to originate loans in 48 states partnering with offices located in Virginia, Maryland, North Carolina, South Carolinacommunity banks, credit unions and the District of Columbia.mortgage brokers. As a result of the merger, George MasonCrescent became an indirectly-owned subsidiary of United. The CardinalCarolina Financial merger was accounted for under the acquisition method of accounting. At consummation, CardinalCarolina Financial had assets of $4.14$5.00 billion, portfolio loans and leases, net of $3.31unearned income of $3.29 billion and deposits of $3.34$3.87 billion.In addition, after the close of business on June 3, 2016, United acquired 100% of the outstanding common stock of Bank of Georgetown, a privately held community bank headquartered in Washington, D.C. acquisition of Bank of Georgetown enhances United’s existing footprint in the Washington, D.C. MSA. The merger was accounted for under the acquisition method of accounting. At consummation, Bank of Georgetown had assets of approximately $1.28 billion, loans of $999.77 million, and deposits of $971.37 million.Both the results of operations of Cardinal and Bank of GeorgetownCarolina Financial are included in the consolidated results of operations from their respective datesits date of acquisition. As a result of the CardinalCarolina Financial acquisition, the thirdsecond quarter and first ninesix months of 20172021 were impacted by increased levels of average balances, income, and expense as compared to the thirdsecond quarter and first ninesix months of 2016 which were impacted by increased levels of average balances, income, and expense due to the Bank of Georgetown acquisition.2020. In addition, the thirdsecond quarter and first ninesix months of 20172020 included $532 thousand$46.45 million and $24.99$48.01 million, respectively, of merger-related expenses from the Cardinal acquisitionCarolina Financial acquisition.third quarterFederal Deposit Insurance Corporation have issued joint supervisory guidance encouraging banks to cease entering into any new contracts using LIBOR by December 31, 2021.first nine months of 2016 included $924 thousandother industry groups have been formed in the United States and $5.61 million, respectively, of merger-related expensesother countries in order to provide guidance on this topic. In particular, the Alternative Reference Rates Committee (“ARRC”) has been formed in the United States by the Federal Reserve Board and the Federal Reserve Bank of Georgetown acquisition.SeptemberJune 30, 2017,2021, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.a certain financial measuremeasures that isare not recognized under GAAP. Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with eachthisathisaa financial measuremeasures identified asincome.income and return on average tangible equity. Management believes thisthesemeasure, if significant,measures to be helpful in understanding United’s results of operations or financial position.TheseUnited’s critical accounting policies along withinvolving the disclosures presentedsignificant judgments and assumptions used in the financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determinationpreparation of the allowance for credit losses, the valuation of investment securities and the related other-than-temporary impairment analysis, the accounting for acquired loans and the calculation of the income tax provision to be the accounting areas that require the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.Allowance for Credit LossesAs explained in Note 6, Allowance for Credit Losses to the unaudited Consolidated Financial Statements as of June 30, 2021 were unchanged from theallowance policies disclosed in United’s Annual Report on Formloan losses represents management’s estimate of the probable credit losses inherent inyear ended December 31, 2020 within the lending portfolio.Determining the allowance for loan losses requires management to make estimates of losses that are highly uncertain and require a high degree of judgment. At September 30, 2017, the allowance for loan losses was $74.9 million and is subject to periodic adjustment based on management’s assessment of current probable losses in the loan portfolio. Such adjustment from period to period can have a significant impact on United’s consolidated financial statements. To illustrate the potential effect on the financial statements of our estimates of the allowance for loan losses, a 10% increase in the allowance for loan losses would have required $7.5 million in additional allowance (funded by additional provision for credit losses), which would have negatively impacted the third quarter of 2017 net income by approximately $4.9 million,after-tax or $0.05 diluted per common share. Management’s evaluation of the adequacy of the allowance for loan losses and the appropriate provision for loan losses is based upon a quarterly evaluation of the loan portfolio. This evaluation is inherently subjective and requires significant estimates, including estimates related to the amounts and timing of future cash flows, value of collateral, losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends, all of which are susceptible to constant and significant change. The allowance allocated to specific credits and loan pools grouped by similar risk characteristics is reviewed on a quarterly basis and adjusted as necessary based upon subsequent changes in circumstances. In determining the components of the allowance for loan losses, management considers the risk arising in part from, but not limited to,charge-off and delinquency trends, current economic and business conditions, lending policies and procedures, the size and risk characteristics of the loan portfolio, concentrations of credit, and other various factors. The methodology used to determine the allowance for loan losses is described in Note 6. A discussion of the factors leading to changes in the amount of the allowance for credit losses is included in the Provision for Credit Losses section of this Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A). Additional information relating to United’s loans is included in Note 4, Loans to the unaudited Consolidated Financial Statements.Investment SecuritiesAccounting estimates are used in the presentationOperations.”SeptemberJune 30, 20172021 were $19.13$27.19 billion, which was an increase of $4.62$1.01 billion or 31.85%3.84% from December 31, 2016, primarily the result2020. This increase was mainly due to an increase of the acquisition of Cardinal on April 21, 2017. Portfolio loans increased $2.80$1.47 billion or 27.07%,66.47% in cash and cash equivalents, increased $312.51and an increase of $325.32 million or 21.78%,10.21% in investment securities increased $433.09securities. These increases in assets were partially offset by a $703.41 million or 30.85%, goodwill increased $623.844.00% decrease in portfolio loans and a $142.11 million or 72.22%, other assets increased $107.28 million or 25.86%, bank premises and equipment increased $28.40 million or 37.42% and interest receivable increased $12.21 million or 30.98% due primarily to the Cardinal merger.19.77% decrease in loans held for sale. Total liabilities increased $3.59 billion or29.28% fromyear-end 2016. This increase in total liabilities was due mainly to an increase of $3.08 billion or 28.51% and $474.71$910.59 million or 34.36%4.16% fromdepositsborrowings and borrowings, respectively, mainly due to the Cardinal acquisition.a $5.72 million or 2.83% decrease in accrued expenses and other liabilities. Shareholders’ equity increased $1.03 billion$96.09 million or 45.98% fromyear-end 2016 due primarily to the acquisition of Cardinal.SeptemberJune 30, 20172021 increased $312.51 million$1.47 billion or 21.78%66.47% from 2016. Of this total increase,$275.22 million$1.46 billion or 21.87%76.35% as United placed more cash in an interest-bearing account with the Federal Reserve whileReserve. Cash and cash and due from banksequivalents increased $37.22$9.28 million or 21.21% and fed3.12% while federal funds sold increased $62$102 thousand or 8.55%12.39%. During the first ninesix months of 2017,2021, net cash of $125.15$351.96 million and $384.45$293.76 million waswere provided by operating activities and investing activities, respectively, while $197.09net cash of $822.61 million was used inprovided by financing activities. See the unaudited Consolidated Statements of Cash Flows for data on cash and cash equivalents provided and used in operating, investing and financing activities for the first ninesix months of 20172021 and 2016.SeptemberJune 30, 20172021 increased $433.09$325.32 million or 30.85% fromyear-end 2016. Cardinal added $395.83million in investment securities, including purchase accounting amounts, upon consummation of the acquisition.10.21%. Securities available for sale increased $390.42$323.72 million or 31.01%10.96%. This change in securities available for sale reflects $378.05 million acquired from Cardinal, $630.12$399.55 million in sales, maturities and calls of securities, $630.06$759.34 million in purchases, and an increasedecrease of $13.40$29.37 million in market value. The majority of the purchase activity was related to mortgage-backed securities, corporate securities, asset-backed securities and state and political subdivisions securities. Securities held to maturity decreased $12.92 milliondeclined $223 thousand or 38.86%18.40% from 2016callsmaturities and maturitiescalls of securities. Equity securities were $11.51 million at June 30, 2021, an increase of $789 thousand or 7.36% due mainly to net purchases. Other investment securities increased $55.59were flat, increasing $1.04 million or 50.01%less than 1% from 2016. Cardinal added $14.27 millionother investment securities. Otherwise,tax credits. Partially offsetting this increase in investment tax credits was a decrease in Federal ReserveHome Loan Bank (FRB) stock increased $33.28 million and FHLB stock increased $7.30 million. 2016: September 30 December 31 (Dollars in thousands) 2017 2016 $ Change % Change
Government corporations and agencies $ 115,866 $ 95,786 $ 20,080 20.96 % 305,141 192,812 112,329 58.26 % 1,141,338 896,480 244,858 27.31 % 13,429 217 13,212 6,088.48 % 10,480 13,828 (3,348 ) (24.21 %) 31,659 33,552 (1,893 ) (5.64 %) 12,467 11,477 990 8.63 % 19,254 15,062 4,192 27.83 % $ 1,649,634 $ 1,259,214 $ 390,420 31.01 % $ 15,147 $ 66,344 $ (51,197 ) (77.17 %) 614,046 565,160 48,886 8.65 % 1,677,162 1,625,812 51,350 3.16 % 489,433 294,623 194,810 66.12 % 17,417 17,027 390 2.29 % 463,869 384,393 79,476 20.68 % $ 3,277,074 $ 2,953,359 $ 323,715 10.96 % 2016:(Dollars in thousands) September 30
2017 December 31
2016 $ Change % Change
Government corporations and agencies $ 5,215 $ 5,295 $ (80 ) (1.51 %) 5,674 8,598 (2,924 ) (34.01 %) 26 30 (4 ) (13.33 %) 9,400 19,315 (9,915 ) (51.33 %) 20 20 0 0.00 % $ 20,335 $ 33,258 $ (12,923 ) (38.86 %) $ 970 (1 ) $ 1,192 (2 ) $ (222 ) (18.62 %) 19 20 (1 ) (5.00 %) $ 989 $ 1,212 $ (223 ) (18.40 %) SeptemberJune 30, 2017,2021, gross unrealized losses on available for sale securities were $16.47$12.71 million. Securities in anwith the most significant gross unrealized loss positionlosses at SeptemberJune 30, 20172021 consisted primarily of Trup Cdos, single issue trust preferred securities and agency residential mortgage-backed securities. The Trup Cdos and the single issue trust preferred securities relate mainly to securities of financial institutions. The agency residential mortgage-backed securities relate to residential properties and provide a guaranty of full and timely payments of principal and interest by the issuing agency.SeptemberJune 30, 2017,2021, United’s available for sale mortgage-backed securities had an amortized cost of $1.14$1.65 billion, with an estimated fair value of $1.14$1.68 billion. The portfolio consisted primarily of $715.03$973.33 million in agency residential mortgage-backed securities with a fair value of $714.73$985.00 million, $5.26$39.79 million in$5.85$39.60 million, and $420.12$634.65 million in commercial agency mortgage-backed securities with an estimated fair value of $420.79$652.56 million.SeptemberJune 30, 2017,2021, United’s available for sale corporate securities had an amortized cost of $103.38$965.98 million, with an estimated fair value of $95.87$970.72 million. The portfolio consisted primarily of $38.19 million in Trup Cdos with a fair value of $31.66 million and $22.80$18.25 million in single issue trust preferred securities with an estimated fair value of $21.03$17.42 million. In addition to the single issue trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of $13.42$489.90 million and a fair value of $13.43$489.43 million and marketable equityother corporate securities, with an amortized cost of $9.95$457.83 million and a fair value of $10.48 million, only one of which was individually significant.The Trup Cdos consisted of pools of trust preferred securities issued by trusts related primarily to financial institutions and to a lesser extent, insurance companies. The Company has no exposure to Real Estate Investment Trusts (REITs) in its investment portfolio. The Company owns both senior and mezzanine tranches in the Trup Cdos; however, the Company does not own any income notes. The senior and mezzanine tranches of Trup Cdos generally have some protection from defaults in the form of over-collateralization and excess spread revenues, along with waterfall structures that redirect cash flows in the event certain coverage test requirements have failed. Generally, senior tranches have the greatest protection, with mezzanine tranches subordinated to the senior tranches, and income notes subordinated to the mezzanine tranches. The fair value of senior tranches represents $5.29 million of the Company’s pooled securities, while mezzanine tranches represent $26.37$463.87 million. Of the $26.37 million in mezzanine tranches, $5.52 million are now in the Senior position as the Senior notes have been paid to a zero balance. As of September 30, 2017, Trup Cdos with a fair value of $3.17 million were investment grade, and the remaining $28.49 million were below investment grade. In terms of capital adequacy, the Company allocates additional risk-based capital to the below investment grade securities. As of September 30, 2017, $21.00 million.$17.42 million as of June 30, 2021. Of the $21.03$17.42 million, $4.12$11.49 million or 19.60%65.97% were investment grade; $9.42$1.00 million or 44.85%5.73% were split rated; $3.10and $4.93 million or 14.77% were below investment grade; and $4.36 million or 20.78%28.30% were unrated. The two largest exposures accounted for 53.50%70.32% of the $21.03$17.42 million. These included SunTrustTruist Bank at $6.87$7.32 million and Emigrant Bank at $4.36$4.93 million. All single-issuesingle issue trust preferred securities are currently receiving full scheduled principal and interest payments.The following two tables provide a summary of Trup Cdos as of September 30, 2017: Tranche Class Moodys S&P Fitch Amortized
Cost Basis Fair
Value Unrealized
Loss
(Gain) Cumulative
Credit-
Related
OTTI Dollars in thousands Senior Sr Ca NR WD $1,798 $2,115 $ (317 ) $ 1,219 Senior (org Mezz) B Ca NR WD 6,429 5,519 910 7,398 Mezzanine C-2 Caa1 NR C 1,978 1,300 678 184 Mezzanine C-1 Ca NR C 1,916 1,636 280 1,316 Mezzanine B-1 Caa1 NR C 4,493 3,601 892 41 Mezzanine B-1 Ca NR C 3,676 3,122 554 1,651 Mezzanine B-1 Ba2 NR CCC 3,300 2,625 675 422 Mezzanine B Caa3 NR C 6,436 5,000 1,436 3,531 Mezzanine B-1 Caa1 NR C 2,250 1,920 330 750 Senior A-3 Aaa NR AA 3,410 3,171 239 0 Mezzanine B-1 B1 NR CCC 2,500 1,650 850 0 $ 38,186 $ 31,659 $ 6,527 $ 16,512 (1)Securities that are no longer owned by the Company have been removed from the tables. # of Issuers
Currently
Performing
(1) Deferrals
as % of
Original
Collateral Defaults
as a % of
Original
Collateral Expected
Deferrals
and Defaults
as a % of
Remaining
Performing
Collateral (2) Projected
Recovery/
Cure Rates
on
Deferring
Collateral Excess
Subordination
as % of
Performing
Collateral Amortized
Cost as a
% of Par
Value Discount
as a % of
Par Value
(3) 5 6.3% 13.3 % 7.9 % 25 - 90% (73.5 )% 57.0% 43.0 % 7 0.0% 11.1 % 5.0 % N/A (104.7 )% 45.4% 54.6 % 39 0.0% 9.8 % 5.7 % N/A 0.2 % 91.3% 8.7 % 39 0.0% 15.9 % 5.6 % N/A (21.9 )% 58.5% 41.5 % 18 0.0% 12.0 % 5.4 % N/A (7.8 )% 84.8% 15.2 % 22 0.0% 22.4 % 5.2 % N/A (28.5 )% 68.3% 31.7 % 37 3.1% 7.1 % 6.0 % 0 - 90% 10.5 % 88.0% 12.0 % 18 0.8% 13.2 % 6.7 % 90% (33.1 )% 64.4% 35.6 % 26 0.0% 7.4 % 6.1 % N/A (1.6 )% 75.0% 25.0 % 28 1.0% 15.2 % 5.4 % 15% 76.2 % 100.0% 0.0 % 28 1.5% 4.8 % 5.5 % 50% 6.6 % 100.0% 0.0 % (1)“Performing” refers to all outstanding issuers less issuers that have either defaulted or are currently deferring their interest payment.(2)“Expected Deferrals and Defaults” refers to projected future defaults on performing collateral and does not include the projected defaults on deferring collateral.(3)The “Discount” in the table above represents the Par Value less the Amortized Cost. This metric generally approximates the level of OTTI that has been incurred on these securities.The Company defines “Excess Subordination” as all outstanding collateral less the sum of (i) 100% of the defaulted collateral, (ii) the sum of the projected net loss amounts for each piece of the deferring but not defaulted collateral and (iii) the amount of each Trup Cdo’s debt that is either senior to or pari passu with our security’s priority level.The calculation of excess subordination in the above table does not consider the OTTI the Company has recognized on these securities. While the ratio of excess subordination provides some insight on overall collateralization levels, the Company completes an expected cash flow analysis each quarter to determine whether an adverse change in future cash flows has occurred under ASC 320. The standard specifies that a cash flow projection can be present-valued at the security specific effective interest rate and the resulting present value compared to the amortized cost in order to quantify the credit component of impairment. The Company utilizes the cash flow models to determine the net realizable value and assess whether additional OTTI has occurred.While the ratio of excess subordination provides some insight on overall collateralization levels, the Company does not utilize this ratio to calculate OTTI. The ratio of excess subordination represents only one component of the projected cash flow. The Company believes the excess subordination is limited as it does not consider the following:Waterfall structure and redirection of cash flowsExcess interest spreadCash reservesThe collateral backing of a particular tranche can be increased by decreasing the more senior liabilities of the Trup Cdo tranche. This occurs when collateral deterioration due to defaults and deferrals triggers alternative waterfall provisions of the cash flow. The waterfall structure of the bond requires the excess spread to be rerouted away from the most junior classes of debt (which includes the income notes) in order to pay down the principal of the most senior liabilities. As these senior liabilities are paid down, the senior and mezzanine tranches become better secured (due to the rerouting away from the income notes). Therefore, variances will exist between the calculated excess subordination measure and the amount of OTTI recognized due to the impact of the specific structural features of each bond as it relates to the cash flow models.The following is a summary of available for sale single-issue trust preferred securities as of September 30, 2017: Moodys S&P Fitch Amortized Cost Fair Value Unrealized
Loss/
(Gain) (Dollars in thousands) NR NR WD $ 5,707 $ 4,366 $ 1,341 Ba1 NR BBB- 4,680 4,819 (139 ) NR BBB- BBB- 3,017 3,282 (265 ) $ 13,404 $ 12,467 $ 937 Additionally, the Company owns two single-issue trust preferred securities that are classified asheld-to-maturity and include at least one rating below investment grade. These securities include SunTrust Bank ($7.42 million) and Royal Bank of Scotland ($976 thousand).third quarterfirst six months of 2017,2021, United did not recognize any other-than-temporary impairment charges.credit losses on its available for sale investment securities. Management does not believe that any individual security with an unrealized loss as of SeptemberJune 30, 20172021 is other-than-temporarily impaired. United believes the decline in value resulted from changes in market interest rates, credit spreads and liquidity, not an adverse change in the expected contractual cash flows.a deterioration of credit. Based on a review of each of the securities in the available for sale investment portfolio, management concluded that it was more likely than not probable that it would be unableable to realize the cost basis investment and appropriate interest payments on such securities. United has the intent and the ability to hold these securities until such time as the value recovers or the securities mature. As of June 30, 2021, there was no allowance for credit losses related to the Company’s available for sale securities. However, United acknowledges that any impaired securities in an unrealized loss position may be sold in future periods in response to significant, unanticipated changes in asset/liability management decisions, unanticipated future market movements or business plan changes.other-than-temporary impairment analysis, is presented in Note 3 to the unaudited Notes to Consolidated Financial Statements.increased $306.59decreased $142.11 million or 3,630.38% due mainly to the acquisition of Cardinal and its mortgage banking subsidiary, George Mason.19.77% from originations exceeded loan sales in the secondary market exceeded originations during the first ninesix months of 2017.2021. Loan originations for the first ninesix months of 20172021 were $1.72$3.58 billion while loans sales were $1.67$3.72 billion. Loans held for sale were $315.03$576.83 million at SeptemberJune 30, 20172021 as compared to $8.45$718.94 million at 2016.increased $2.80 billiondecreased $703.41 million or 27.07% from4.00%. Since 2016 mainly as a result of the Cardinal acquisition which added $3.17 billion, including purchase accounting amounts, in portfolio loans. Sinceyear-end 2016,increased $1.72 billiondecreased $466.13 million or 28.25%4.36% as commercial real estate loans increased $1.58 billiona result of a $396.65 million or 35.21% and9.78% decrease in commercial loans (not secured by real estate) increased $144.30and a $69.49 million or 8.94%. In addition, residential1.05% decrease in commercial real estate loans. Residential real estate loans and otherdecreased $312.83 million or 8.02% while consumer loans increased $647.43decreased $24.67 million or 26.94% and $88.90 million or 14.60%, respectively, while construction and land development loans increased $343.89 million or 27.39%. These increases were2.05% due primarily to the Cardinal acquisition. Otherwise, portfolioa decrease in indirect automobile financing. Partially offsetting these decreases in loans, net of unearned income, declined $369.23was a $102.70 million fromyear-end 2016. 2016: September 30 December 31 (Dollars in thousands) 2017 2016 $ Change % Change $ 315,031 $ 8,445 $ 306,586 3,630.38 % $ 1,364,757 $ 1,049,885 $ 314,872 29.99 % 4,686,183 3,425,453 1,260,730 36.80 % 1,757,741 1,613,437 144,304 8.94 % $ 7,808,681 $ 6,088,775 $ 1,719,906 28.25 % 3,050,868 2,403,437 647,431 26.94 % 1,599,632 1,255,738 343,894 27.39 % 13,775 14,187 (412 ) (2.90 %) 683,898 594,582 89,316 15.02 % $ 13,156,854 $ 10,356,719 $ 2,800,135 27.04 % (16,386 ) (15,582 ) (804 ) 5.16 % $ 13,140,468 $ 10,341,137 $ 2,799,331 27.07 % The following table summarizes the outstanding balances of portfolio loans originated and acquired, by type, as of September 30, 2017 and December 31, 2016: September 30, 2017 (In thousands) Commercial,
financial and
agricultural Residential real
estate Construction &
land development Consumer Total $ 4,459,221 $ 1,973,839 $ 1,056,959 $ 690,711 $ 8,180,730 3,349,460 1,077,029 542,673 6,962 4,976,124 $ 7,808,681 $ 3,050,868 $ 1,599,632 $ 697,673 $ 13,156,854 December 31, 2016 (In thousands) Commercial,
financial and
agricultural Residential real
estate Construction &
land development Consumer Total $ 4,457,470 $ 1,914,273 $ 1,095,972 $ 603,781 $ 8,071,496 1,631,305 489,164 159,766 4,988 2,285,223 $ 6,088,775 $ 2,403,437 $ 1,255,738 $ 608,769 $ 10,356,719 $ 576,827 $ 718,937 $ (142,110 ) (19.77 %) $ 1,589,701 $ 1,622,687 $ (32,986 ) (2.03 %) 4,981,226 5,017,727 (36,501 ) (0.73 %) 3,657,772 4,054,418 (396,646 ) (9.78 %) $ 10,228,699 $ 10,694,832 $ (466,133 ) (4.36 %) 3,587,057 3,899,885 (312,828 ) (8.02 %) 1,929,052 1,826,349 102,703 5.62 % 7,940 8,937 (997 ) (11.16 %) 1,168,904 1,192,580 (23,676 ) (1.99 %) $ 16,921,652 $ 17,622,583 $ (700,931 ) (3.98 %) (33,651 ) (31,170 ) (2,481 ) 7.96 % $ 16,888,001 $ 17,591,413 $ (703,412 ) (4.00 %) $107.28$38.80 million or 25.86%6.64% from 2016. The Cardinal acquisition added $135.38assets plus an additional $28.72real estate owned properties (“OREO”) due to sales and write downs and $2.93 million in core deposit intangibles and $1.23 million for the George Mason trade name intangible. The cash surrender value of bank-owned life insurance policies increased $37.66 million, of which $33.50 million was acquired from Cardinal while the remaining increase was due to an increase in the cash surrender value. Deferred tax assets increased $30.77 million due mainly to the deferred taxes recorded on the purchase accounting adjustments in the Cardinal acquisition. The remainder of the increase in other assets is the result of an increase of $5.28 million in derivative assets from George Mason, an increase of $4.26amortization and $1.45 million in income taxes receivabletax receivables due to a timing difference in payments and an increase of $4.94 million in accounts receivable. Partially offsetting these increases was a decrease of $4.68 million in OREO due to sales and declines in the fair values of properties.SeptemberJune 30, 20172021 increased $3.08 billion$982.23 million or 28.51% fromyear-end 2016 as a result of the Cardinal acquisition. Cardinal added $3.35 billion in deposits, including purchase accounting amounts.4.77%. In terms of composition, noninterest-bearing deposits increased $962.18$878.19 million or 30.34%11.86% while interest-bearing deposits increased $2.12 billion or 27.75%were relatively flat from December 31, 2016. Organically,2020, increasing $104.04 million or less than 1%.declined $269.74consist of demand deposit and noninterest bearing money market (“MMDA”) account balances. The $878.19 million fromyear-end 2016.The increase in noninterest-bearing deposits was due mainly to increases in commercial noninterest-bearing deposits of $793.09$457.31 million or 32.65% and11.25%, personal noninterest-bearing deposits of $92.09$122.06 million or 16.03% as a result of the Cardinal acquisition. Public funds11.10% and public noninterest-bearing deposits increased $37.42of $3.02 million or 37.07%2.31%.All major categories In addition, sweep activity to noninterest bearing MMDAs increased $280.39 million or 14.18%.depositschecking (“NOW”), regular savings, interest-bearing MMDA, and time deposit account balances. Interest-bearing MMDAs increased from$414.25 million or 5.06% since 2016 as the resultthe Cardinal acquisition. Interest-bearing checking$22.17 million in brokered MMDAs. NOW accounts increased $418.90$12.38 million or 23.56%1.55% since$110.68$91.62 million increase in personal NOW accounts, a $136.72 million increase in commercial interest-bearing checkingNOW accounts, and a $252.31$97.29 million increase in public funds NOW accounts.interest-bearing checkingsavings accounts and a $17.29 million increase in commercial savings accounts. Regular savings increased $342.61 million or 47.50% due to the Cardinal acquisition. Interest-bearing MMDAs increased $617.08 million or 19.58% as commercial MMDAs increased $526.03 million or 28.59% and personal MMDAs increased $81.74 million or 7.03%. increased $128.41decreased $83.02 million or 18.53% due mainly to an increase8.47% from(CDs) of $89.24decreased $103.43 million, due to the Cardinal acquisition. Time depositsand public funds CDs over $100,000 increased $609.25 million or 47.57% due to increases in brokered deposits of $163.45 million, fixed rate CDs of $255.88 million,decreased $81.22 million. In addition, Certificate of Deposit Account Registry Service (CDARS) balances of $88.09 million and public funds(“CDARS”) CDs of $95.64 million, all as a result of the Cardinal acquisition.following table below summarizes the changes in theby deposit categoriescategory since 2016:(Dollars in thousands) September 30
2017 December 31
2016 $ Change % Change $ 4,134,019 $ 3,171,841 $ 962,178 30.33 % 2,197,058 1,778,156 418,902 23.56 % 1,063,830 721,224 342,606 47.50 % 3,768,979 3,151,896 617,083 19.58 % 821,417 693,005 128,412 18.53 % 1,889,994 1,280,745 609,249 47.57 % $ 13,875,297 $ 10,796,867 $ 3,078,430 28.51 % $ 6,026,206 $ 5,428,398 $ 597,808 11.01 % 812,018 799,635 12,383 1.55 % 1,424,220 1,283,823 140,397 10.94 % 10,859,968 10,165,334 694,634 6.83 % 896,973 979,988 (83,015 ) (8.47 %) 1,548,006 1,927,982 (379,976 ) (19.71 %) $ 21,567,391 $ 20,585,160 $ 982,231 4.77 % (1) $935,197$623,652 and $536,507$889,334 at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively.SeptemberJune 30, 2017 increased $474.712021 decreased $64.90 million or 34.36% during6.45% sinceninesix months of 2017. Cardinal added $316.33 million, including purchase accounting amounts, upon consummation of the acquisition. Sinceyear-end 2016,2021, short-term borrowings increased $282.49decreased $14.56 million or 134.80%10.23% due to increases of $200.00 million and $78.92 milliona decline in short-term FHLB advances and short-term securities sold under agreements to repurchase, respectively. In addition, federal funds purchased increased $3.57 million. Cardinal added $96.21 million in short-term borrowings, all of which was repaid prior toquarter-end.repurchase. Long-term borrowings increased $192.22decreased $50.35 million or 16.40% since5.82% from 2016 asincreased $174.41 million and issuances of trust preferred capital securities increased $17.81 million. Cardinal added $220.12 million in long-term borrowings, $20 million of which was repaid prior toquarter-end. 2016:(Dollars in thousands) September 30
2017 December 31
2016 $ Change % Change $ 25,800 $ 22,235 $ 3,565 16.03 % 266,236 187,316 78,920 42.13 % 50,000 50,000 0 0.00 % 200,000 0 200,000 100.00 % 1,072,115 897,707 174,408 19.43 % 242,131 224,319 17,812 7.94 % $ 1,856,282 $ 1,381,577 $ 474,705 34.36 % $ 127,745 $ 142,300 $ (14,555 ) (10.23 %) 533,365 584,532 (51,167 ) (8.75 %) 9,865 9,865 0 0.00 % 270,792 269,972 820 0.30 % $ 941,767 $ 1,006,669 $ (64,902 ) (6.45 %) 810 and 911 to the unaudited Notes to Consolidated Financial Statements.SeptemberJune 30, 2017 increased $40.102021 decreased $5.72 million or 42.81%2.83% from 2016. Cardinal added $50.93 million including an unfavorable lease liability of $2.28 million.deferred compensation increased $14.33income tax payable decreased $3.88 million dividendsand business franchise taxes decreased $4.33 million both due to timing differences. In addition, interest payable increased $9.33decreased $2.01 million, accrued mortgage escrowemployee expenses decreased $6.20 million as a result of $6.13 million decrease in incentives payable and derivative liabilities increased $6.05 million, other accrued expenses increased $8.12 million and income taxes payable increased $6.75decreased $6.66 million. Partially offsetting these increasesdecreases was an increase of $18.57 million in accounts payable associated with George Mason due to timing differences and an increase of $6.95 million in accrued expenses and other liabilities was a decrease of $10.72 million in the pension liability due to a $10 million payment in the third quarter of 2017 and a decline of $1.58 million in derivative liabilities due to a change in fair value.SeptemberJune 30, 20172021 was $4.39 billion, which was an increase of $96.09 million or 2.24% from$1.03 billion$111.21 million or 45.98%9.23% from December 31, 2016 mainly as a result of the Cardinal acquisition. The Cardinal transaction added approximately $975.25 million in shareholders’ equity as 23,690,589 shares were issued from United’s authorized but unissued shares for the merger at a cost of approximately $972.50 million.ninesix months of 20172021 were $36.57$111.21 million.increased $10.55decreased $11.85 million or 52.96% froman increasea decrease of $8.44$22.53 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes. Partially offsetting this decrease was a $8.94 million increase in the fair of cash flow hedges, net of deferred income taxes. The after taxnon-credit portion$2.11$1.74 million for the first ninesix months of 2017.thirdsecond quarter of 20172021 was $56.74$94.84 million or $0.54$0.73 per diluted share, as compared to $41.48$52.69 million or $0.54$0.44 per diluted share for the prior year thirdsecond quarter. Net income for the first ninesix months of 20172021 was $132.61$201.73 million or $1.39$1.56 per diluted share compared to $107.98$92.87 million or $1.48$0.84 per share for the first ninesix months of 2016.As previously mentioned, United completed its acquisition2020. Earnings for the second quarter and first half of Cardinal on April 21, 2017. The financial results of Cardinal are included in United’s results from the acquisition date. As a result of the acquisition, the first nine months and third quarter of 2017 were impacted for increased levels of average balances, income, and expense2021, as compared to the second quarter and first nine monthshalf of 2020, were benefited by lower provision for credit losses primarily due to better performance trends within the loan portfolio and thirdan improved future macroeconomic forecast under the Current Expected Credit Loss (“CECL”) accounting standard. The second quarter and first half of 2016 and two full months in2020 were also affected by significant merger-related expenses from the Carolina Financial Corporation (“Carolina Financial”) acquisition.2017.In addition, as previously mentioned, United completed its acquisition of Bank of Georgetown on June 3, 2016. The financial results of Bank of Georgetown were included in United’s results from the acquisition date. As a result, the first nine months and third quarter of 2016 were impacted by increased levels of average balances, income, and expense. The third quarter and first nine months of 2017 included $532 thousand and $24.99 million, respectively, of merger-related expenses from the Cardinal acquisition and the third quarter and first nine months of 2016 included $924 thousand and $5.61 million, respectively, of merger-related expenses from the Bank of Georgetown acquisition.For the third quarter of 2017,2021, United’s annualized return on average assets was 1.19%1.41% and return on average shareholders’ equity was 6.89%8.69% as compared to 1.17%0.87% and 8.10%5.40% for the thirdsecond quarter of 2016.2020. United’s annualized return on average assets for the first ninesix months of 20172021 was 1.03%1.52% and return on average shareholders’ equity was 6.22%9.32% as compared to 1.10%0.85% and 7.73% for the first nine months of 2016. United’s Federal Reserve peer group’s (bank holding companies with total assets over $10 billion) most recently reported average return on assets and average return on equity were 0.96% and 8.28%, respectively,5.16% for the first six months of 2017. $ 94,836 $ 52,686 $ 201,734 $ 92,869 91 91 181 182 $ 4,378,898 $ 3,921,289 $ 4,363,053 $ 3,620,425 (1,834,920 ) (1,708,683 ) (1,830,305 ) (1,607,977 ) $ 2,543,978 $ 2,212,606 $ 2,532,748 $ 2,012,448 14.95 % 9.58 % 16.06 % 9.28 % thirdsecond quarter of 20172021 was $394.14$186.52 million, which was an increase of $39.21$15.92 million, or 35.30%9.33%, from the thirdsecond quarter of 2016.2020. The increase in net interest income occurred because total interest income increased $48.45$1.47 million while total interest expense only increased $9.24decreased $14.45 million from the thirdsecond quarter of 2016.2020. Net interest income for the first nine monthshalf of 20172021 was $394.14$377.48 million, an increase of $82.06$65.36 million or 26.30%20.94% from the prior year’s first nine months.half of 2020. The increase in net interest income occurred because total interest income increased $102.57$26.64 million while total interest expense only increased $20.51decreased $38.71 million from the first ninesix months of 2016.$7.28a net reduction in expense of $8.88 million and $21.43$8.74 million for the thirdsecond quarter and first nine monthshalf of 2017,2021, respectively, as compared to $6.99while the provision for credit losses was an expense of $45.91 million and $18.69$73.03 million, respectively, for the thirdsecond quarter and first nine monthshalf of 2016, respectively.2020. These decreases in the provision for credit losses were mainly due to the impact of better performance trends within the loan portfolio as wellthirdsecond quarter of 2017,2021, noninterest income was $38.23$62.85 million, which was a decrease of $25.54 million or 28.90% from the second quarter of 2020 primarily driven by a decrease in income from mortgage banking activities due primarily to the$19.21$30.22 million or 100.98% from the third quarter of 2016. Noninterest income for the first nine months of 2017 was $98.88 million which was an increase of $45.50 million or 85.24%24.14% from the first ninesix months of 2016. Theseincreases from 2016 were mainly2020 which was primarily due to additionalincreased income from mortgage banking activities due to an elevated volume of mortgage loan originations and sales in the secondary market as a resultwell as the addition of mortgage banking operations from the CardinalCarolina Financial acquisition. For the thirdsecond quarter of 2017,2021, noninterest expense decreased $10.42 million or 6.98% from the second quarter of 2020 primarily due to a decrease in data processing expense which included a contract termination penalty incurred in the second quarter of 2020 associated with the Carolina Financial acquisition. For the first six months of 2021, noninterest expense increased $33.88$37.37 million or 53.96% from the third quarter of 2016. For the first nine months of 2017, noninterest expense increased $85.94 million or 46.28%14.92% from the first ninesix months of 2016. These increases from 2016 were2020 due mainly to the Cardinal acquisition.thirdsecond quarter of 20172021 were $27.84$24.46 million as compared to $18.85$11.02 million for the thirdsecond quarter of 2016.2020. For the first ninesix months of 20172021 and 2016,2020 income tax expense was $67.36$52.02 million and $53.10$20.91 million, respectively. These increases for 2017 were due to higher earnings and a higher effective tax rate. For the quarters ended SeptemberJune 30, 20172021 and 2016,2020, United’s effective tax rate was 32.91%20.50% and 31.24%17.30%, respectively. The effective tax rate for the first ninesix months of 20172021 and 20162020 was 33.68%20.50% and 32.97%18.38%, respectively.As a result of the Cardinal acquisition, now operates in two business segments: community banking and mortgage banking. Prior to the Cardinal acquisition, United’s business activities were confined to just one reportable segment of community banking.thirdsecond quarter of 20172021 was $59.94$89.77 million compared to net income of $42.97$29.78 million for the thirdsecond quarter of 2016.Net interest income increased $39.85 million to $152.89 million for the third quarter of 2017, compared to $113.03 million for the same period of 2016. Generally, net interest income for the third quarter of 2017 increased from the third quarter of 2016 because of the earning assets added from the Cardinal acquisition. Provision for loan losses was $7.28 million for the three months ended September 30, 2017 compared to a provision of $6.99 million for the same period of 2016. Noninterest income decreased $1.29 million for the third quarter of 2017 to $18.37 million as compared to $19.67 million for the third quarter of 2016. The decrease was mainly due to a decline of $1.14 million in income from bank-owned life insurance policies due to death benefits recorded in the third quarter of 2016. Noninterest expense was $74.55 million for the third quarter of 2017, compared to $63.01 million for the same period of 2016. The increase of $11.54 million in noninterest expense was primarily attributable to increases in branches, staffing and merger-related expenses from the Cardinal acquisition.nine monthshalf of 20172021 was $143.88$172.00 million compared to net income of $112.57$71.83 million for the first nine monthshalf of 2016.$83.21$15.70 million to $401.04$183.40 million for the first nine monthssecond quarter of 2017,2021, compared to $317.84$167.70 million for the same period of 2016.2020. Net interest income increased $62.47 million to $370.60 million for the first half of 2021, compared to $308.12 million for the same period of 2020. Generally, net interest income for the second quarter and first ninesix months of 20172021 increased from the second quarter and first ninesix months of 2016 because2020 due to an increase in average earning assets as a result of the Carolina Financial acquisition, PPP loan activity and to a larger decline in the average cost of funds as compared to the average yield on earning assets added from the Cardinal acquisition. assets.loancredit losses was $21.43a reduction in expense of $8.88 million for the ninethree months ended SeptemberJune 30, 20172021 compared to a provision expense of $18.69$45.91 million for the same period of 2016. 2020. Provision for credit losses was a reduction in expense of $8.74 million for the six months ended June 30, 2021 compared to a provision expense of $73.03 million for the same period of 2020. The decreases for the second quarter and first half of 2021 were due mainly to a provision for credit losses of $28.95 million recorded on purchaseddecreased by $1.91increased $3.77 million for the second quarter of 2021 to $24.07 million as compared to $20.30 million for the second quarter of 2020. Noninterest income for the first half of 2021 increased $10.59 million to $53.41$50.46 million for the first nine monthshalf of 20172021 as compared to $55.32$39.87 million for the first nine monthshalf of 2016.2020. The increases in 2021 were due mainly to increased fees from trust services, fees from brokerage services, fees from deposit services, bankcard fees and merchant discounts and other miscellaneous income.of $1.04 million in incomedata processing expense from bank-owned life insurance policies due to death benefits recorded in the thirdsecond quarter of 2016.2020, which included a significant contract termination penalty associated with the Carolina Financial acquisition. Noninterest expense was $215.94$213.45 million for the ninesix months ended SeptemberJune 30, 2017,2021, compared to $186.32$186.94 million for the same period of 2016.2020. The increase of $29.61 million in noninterest expense for the first six months of 2021 was primarily attributable to increases in branches, staffingthe additional employees and merger-related expensesbranch offices from the Cardinal acquisition.a net lossincome of $2.80$4.97 million and $322 thousand$28.00 million for the thirdsecond quarter and the first half of 2021, respectively, as compared to net income of $31.05 million and $32.16 million for the second quarter and first nine monthshalf of 2017, respectively.2020. Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was $19.94 million and $42.33$39.77 million for the thirdsecond quarter of 2021 as compared to $71.01 million for the second quarter of 2020. The decrease of $31.25 million was due mainly to a decline in the fair value of derivatives associated with mortgage loan commitments although sales activity increased. Noninterest income for the first half of 2021 was $107.27 million as compared to $92.20 million for the first half of 2020. The increase of $15.07 million for the first half of 2021 was due mainly to increased sales of mortgage loans in the secondary market and the addition of mortgage banking operations from the Carolina Financial acquisition. Noninterest expense was $36.39 million and $77.57 million for the second quarter and first nine monthshalf of 2017, respectively. Noninterest expense was $24.042021 as compared $35.26 million and $42.74$56.02 million for the thirdsecond quarter and first nine monthshalf of 2017, respectively.2020. Noninterest expense consists mainly of salaries, commissions and benefits of mortgage segment employees. There is no comparisonThe increases in 2021 were due mainly to results for 2016 because United did not have ahigher employee incentives and commissions related to the increased mortgage banking segment in 2016. $ 200,186 $ 198,717 $ 205,657 13,669 28,115 14,697 186,517 170,602 190,960 (8,879 ) 45,911 143 62,846 88,390 92,573 138,951 149,374 148,927 119,291 63,707 134,463 24,455 11,021 27,565 $ 94,836 $ 52,686 $ 106,898 $ 405,843 $ 379,199 28,366 67,079 377,477 312,120 (8,736 ) 73,030 155,419 125,196 287,878 250,507 253,754 113,779 52,020 20,910 $ 201,734 $ 92,869 20172021 and 2016,2020, are presented below.thirdsecond quarter of 20172021 was $150.28$186.52 million, which was an increase of $39.21$15.92 million or 35.30%9.33% from the thirdsecond quarter of 2016.2020. The $39.21$15.92 million increase in net interest income occurred because total interest income increased $48.45$1.47 million while total interest expense only increased $9.24decreased $14.45 million from the thirdsecond quarter of 2016.2020. Net interest income for the first nine monthshalf of 20172021 was $394.14$377.48 million, which was an increase of $82.06$65.36 million or 26.30%20.94% from the first nine monthshalf of 2016.2020. The $82.06$65.36 million increase in net interest income occurred because total interest income increased $102.57$26.64 million while total interest expense only increased $20.51decreased $38.71 million from the first nine monthshalf of 2016.2020. On a linked-quarter basis, net interest income for the third quarter of 2017 increased $14.03 million or 10.30% from the second quarter of 2017.2021 decreased $4.44 million or 2.33% from the first quarter of 2021. The $14.03$4.44 million increasedecrease in net interest income occurred because total interest income increased $16.64decreased $5.47 million while total interest expense onlydecreased $1.03 million from the first quarter of 2021. $2.61 million from the second quarter and first half of 2017.2020 due to a larger decline in the cost of average interest-bearing liabilities in comparison to the yield on averagethirdsecond quarter and first nine monthshalf of 20172021 increased from the thirdsecond quarter and first nine monthshalf of 2016 because2020 due to an increase in earning assets, mainly as a result of the earning assets added from the Cardinal acquisition. In addition,Carolina Financial acquisition and PPP loan accretion on acquired loans for the third quarter and first nine months of 2017 increased from the same time periods last year and the second quarter of 2017.activity, while interest expense decreased primarily due to a decline in market interest rates which resulted in lower funding costs. For the purpose of this remaining discussion, net interest income is presented on athirdsecond quarter of 20172021 was $152.37$187.59 million, an increase of $39.74$15.97 million or 35.29%9.31% from the thirdsecond quarter of 2016 due mainly to an increase in average earning assets from the Cardinal acquisition.2020. Average earning assets for the thirdsecond quarter of 20172021 increased $3.97$2.31 billion or 31.53%10.69% from the thirdsecond quarter of 20162020 due mainly to a $3.18 billion$419.95 million or 30.66%2.45% increase in average net loans. Averageloans and leases, including loans held for sale, a $1.36 billion or 87.61% increase in average short-term investments increased $436.66and a $537.20 million or 53.90% while18.33% increase in average investment securities increased $360.25 million or 25.15%.securities. The thirdnet interest spread for the second quarter of 2017 average yield on earning assets2021 increased 2210 basis points from the thirdsecond quarter of 20162020 due to additional loan accretion of $7.68 million on acquired loans and higher market interest rates. Partially offsetting the increases totax-equivalent net interest income for the third quarter of 2017 was an increase of 19a 43 basis pointspoint decrease in the average cost of funds partially offset by a 33 basis point decrease in average yield on earning assets. Net PPP loan fee income of $9.02 million was recognized in the second quarter of 2021 driven primarily by loan forgiveness by the SBA, as compared to $4.48 million for the thirdsecond quarter of 2016 due to2020. Loan accretion on acquired loans and leases was $9.67 million and $9.55 million for the higher market interest rates.second quarter of 2021 and 2020, respectively, an increase of $120 thousand. The net interest margin of 3.65%3.14% for the thirdsecond quarter of 20172021 was an increasea decrease of 94 basis points from the net interest margin of 3.56%3.18% for the thirdsecond quarter of 2016.ninesix months of 20172021 was $400.31$379.60 million, an increase of $83.67$65.68 million or 26.42%20.92% from the first ninesix months of 2016.2020. This increase inCardinalCarolina Financial acquisition. Average earning assets increased $3.53$4.26 billion or 30.25%21.90% from the first ninesix months of 20162020 as average net loans and leases, including loans held for sale, increased $2.51$2.24 billion or 25.66%14.40%. Average short-term investments and average investment securities increased $1.47 billion or 129.69% and $555.70 million or 19.94%, respectively. Net PPP loan fee income of $20.33 million was recognized in the first half of 2021 driven primarily by loan forgiveness, as compared to $4.48 million for the first nine monthshalf of 2017. Average investment securities increased $340.92 million or 26.26%.2020. In addition, the average cost of funds for the first half of 2021 decreased 67 basis points due primarily to a decline in interest rates from the first half of 2020. Partially offsetting the increases tonine monthshalf of 20172021 was an increasea decrease of 1547 basis points in the average cost of fundsyield on earning assets as compared to the first nine monthshalf of 2016 due to higher market interest rates. In addition, the first nine months of 2017 average yield on earning assets decreased a basis point from the first nine months of 20162020 due to the replacementdecline in market interest rates and the low yield on the PPP loans. In addition, loan accretion on acquired loans was $19.47 million and $19.10 million for the first half of maturing higher-yielding investment securities with those at a lower current interest rate despite2021 and 2020, respectively, an increase of $11.64 million from accretion on acquired loans.$374 thousand. The net interest margin of 3.52%3.22% for the first nine monthshalf of 20172021 was a decrease of 102 basis points from the net interest margin of 3.62%3.24% for the first nine monthshalf of 2016. United’stax-equivalent net interest income for the thirdsecond quarter of 2017 increased $13.612021 decreased $4.44 million or 9.81%2.33% from the first quarter of 2021. The net interest spread for the second quarter of 2021 of 2.98% decreased 16 basis points from the first quarter of 2021 due to a 19 basis point decrease in the average yield on earning assets partially offset by a 3 basis point decrease in the average cost of funds. Net PPP loan fee income for the second quarter of 2021 decreased $2.29 million from the first quarter of 2021. Average earning assets increased $460.32 million, or 1.96%, from the first quarter of 2021 due mainly to increases in the average yield onshort-term investments of $616.06 million and the average balance of earning assets. The third quarter of 2017 average yield on earning assets increased 25 basis points from the second quarter of 2017 due to additional loan accretion of $5.45 million on acquired loans. Average earning assets increased $426.47 million or 2.64% for the linked-quarter due to the Cardinal acquisition. Average net loans increased $492.64 million or 3.78% while average investment securities increased $40.60of $252.01 million or 2.32%. Average short-term investments decreased $106.77partially offset by a decrease in average net loans and leases, including loans held for sale of $407.75 million or 7.89%. Partially offsetting the increases totax-equivalent net interest income for the third quarter of 2017 was an increase of 7 basis points in the average cost of funds as compared to the second quarter of 2017 due to higher market interest rates.driven primarily by PPP loan forgiveness. The net interest margin of 3.65%3.14% for the thirdsecond quarter of 20172021 was an increasea decrease of 2116 basis points from the net interest margin of 3.44%3.30% for the secondfirst quarter of 2017.SeptemberJune 30, 2017, September2021, June 30, 20162020 and March 31, 2021 and the six months ended June 30, 2021 and June 30, 2017 and the nine months ended September 30, 2017 and September 30, 2016: Three Months Ended September 30 September 30 June 30 (Dollars in thousands) 2017 2016 2017 $ 12,805 $ 5,121 $ 7,355 817 63 776 268 22 197 $ 13,890 $ 5,206 $ 8,328 Nine Months Ended September 30 September 30 (Dollars in thousands) 2017 2016 $ 24,395 $ 12,750 1,640 63 348 328 $ 26,383 $ 13,141 $ 9,669 $ 9,549 $ 9,800 1,050 2,611 1,449 174 488 174 $ 10,893 $ 12,648 $ 11,423 $ 19,469 $ 19,095 2,499 2,752 348 756 $ 22,316 $ 22,603 SeptemberJune 30, 2017, September2021, June 30, 20162020 and March 31, 2021 and the six months ended June 30, 2021 and June 30, 2017 and the nine months ended September 30, 2017 and September 30, 2016. Three Months Ended September 30 September 30 June 30 (Dollars in thousands) 2017 2016 2017 $ 150,276 $ 111,069 $ 136,245 2,092 1,556 2,512 $ 152,368 $ 112,625 $ 138,757 Nine Months Ended September 30 September 30 (Dollars in thousands) 2017 2016 $ 394,141 $ 312,078 6,168 4,562 $ 400,309 $ 316,640 $ 186,517 $ 170,602 $ 190,960 1,075 1,018 1,047 $ 187,592 $ 171,620 $ 192,007 $ 377,477 $ 312,120 2,122 1,800 $ 379,599 $ 313,920 (1) 35%.21% for the three months and six months ended June 30, 2021 and 2020 and the three months ended March 31, 2021. All interest income on loans and investment securities was subject to state income taxes.SeptemberJune 30, 20172021 and 2016,2020, 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 a35%.21% for the three-month and Three Months Ended Three Months Ended September 30, 2017 September 30, 2016 (Dollars in thousands) Average
Balance Interest
(1) Avg. Rate
(1) Average
Balance Interest
(1) Avg. Rate
(1) $ 1,246,742 $ 4,874 1.55 % $ 810,081 $ 1,107 0.54 % 1,533,444 9,406 2.45 % 1,270,734 8,764 2.76 % 259,189 2,284 3.52 % 161,651 1,527 3.78 % 1,792,633 11,690 2.61 % 1,432,385 10,291 2.87 % 13,607,933 157,111 4.59 % 10430,449 113,295 4.32 % (73,031 ) (71,493 ) 13,534,902 4.61 % 10,358,956 4.35 % 16,574,277 $ 173,675 4.16 % 12,601,422 $ 124,693 3.94 % 2,353,508 1,558,147 $ 18,927,785 $ 14,159,569 $ 9,837,967 $ 14,227 0.57 % $ 7,255,184 $ 7,723 0.42 % 325,631 430 0.52 % 519,807 553 0.42 % 1,364,417 6,650 1.93 % 1,171,599 3,792 1.29 % 11,528,015 21,307 0.73 % 8,946,590 10,068 0.54 % 4,036,653 3,105,273 97,575 71,670 15,662,243 12,123,533 3,265,542 2,036,036 $ 18,927,785 $ 14,159,569 $ 152,368 $ 112,625 3.43 % 3.40 % 3.65 % 3.56 %
(1) $ 2,905,604 $ 1,757 0.24 % $ 1,548,759 $ 1,868 0.49 % 3,114,902 13,846 1.78 % 2,703,980 16,241 2.40 % 353,223 2,331 2.64 % 226,942 1,641 2.89 % 3,468,125 16,177 1.87 % 2,930,922 17,882 2.44 % 17,825,433 183,327 4.12 % 17,345,008 179,985 4.17 % (231,422 ) (170,947 ) 17,594,011 4.18 % 17,174,061 4.21 % 23,967,740 $ 201,261 3.37 % 21,653,742 $ 199,735 3.70 % 3,038,218 2,748,858 $ 27,005,958 $ 24,402,600 $ 13,219,572 $ 11,012 0.33 % $ 11,600,243 $ 19,249 0.67 % 136,801 182 0.54 % 144,866 196 0.54 % 814,151 2,475 1.22 % 2,070,557 8,670 1.68 % 14,170,524 13,669 0.39 % 13,815,666 28,115 0.82 % 8,227,147 6,412,124 229,389 253,521 22,627,060 20,481,311 4,378,898 3,921,289 $ 27,005,958 $ 24,402,600 $ 187,592 $ 171,620 2.98 % 2.88 % 3.14 % 3.18 % (1) 35%21%.(2) Nine Months Ended Nine Months Ended September 30, 2017 September 30, 2016 (Dollars in thousands) Average
Balance Interest
(1) Avg. Rate
(1) Average
Balance Interest
(1) Avg. Rate
(1) $ 1,282,589 $ 11,345 1.18 % $ 599,695 $ 2,371 0.53 % 1,412,221 26,226 2.48 % 1,162,082 24,728 2.84 % 227,171 6,242 3.66 % 136,386 4,130 4.04 % 1,639,392 32,468 2.64 % 1,298,468 28,858 2.96 % 12,360,252 409,643 4.43 % 9,852,670 318,053 4.31 % (72,904 ) (74,198 ) 12,287,348 4.46 % 9,778,472 4.34 % 15,209,329 $ 453,456 3.99 % 11,676,635 $ 349,282 4.00 % 1,978,315 1,427,763 $ 17,187,644 $ 13,104,398 $ 9,024,232 $ 35,281 0.52 % $ 6,815,863 $ 21,278 0.42 % 298,213 1,149 0.52 % 396,769 1,132 0.38 % 1,286,583 16,717 1.74 % 1,100,741 10,232 1.24 % 10,609,028 53,147 0.67 % 8,313,373 32,642 0.52 % 3,639,507 2,856,807 90,112 67,820 14,338,647 11,238,000 2,848,997 1,866,398 $ 17,187,644 $ 13,104,398 $ 400,309 $ 316,640 3.32 % 3.48 % 3.52 % 3.62 %
(1) $ 2,599,276 $ 3,650 0.28 % $ 1,131,633 $ 5,833 1.04 % 3,018,633 27,372 1.81 % 2,620,604 33,210 2.53 % 324,183 4,312 2.66 % 166,512 2,520 3.03 % 3,342,816 31,684 1.90 % 2,787,116 35,730 2.56 % 18,030,354 372,631 4.16 % 15,708,515 339,436 4.34 % (233,597 ) (152,515 ) 17,796,757 4.22 % 15,556,000 4.38 % 23,738,849 $ 407,965 3.46 % 19,474,749 $ 380,999 3.93 % 3,011,252 2,510,632 $ 26,750,101 $ 21,985,381 $ 13,202,246 $ 22,997 0.35 % $ 10,439,513 $ 46,726 0.90 % 139,463 360 0.52 % 141,146 654 0.93 % 823,705 5,009 1.23 % 2,036,660 19,699 1.95 % 14,165,414 28,366 0.40 % 12,617,319 67,079 1.07 % 7,982,751 5,519,584 238,883 228,053 22,387,048 18,364,956 4,363,053 3,620,425 $ 26,750,101 $ 21,985,381 $ 379,599 $ 313,920 3.06 % 2.86 % 3.22 % 3.24 % (1) 35%21%.(2) LoanCredit Lossesquartersquarter ended SeptemberJune 30, 2017 and 2016,2021, the provision for loan and lease losses was $7.28a reduction in expense of $8.82 million and $6.99as compared to provision expense of $45.91 million respectively.for the quarter ended June 30, 2020. The provision for loan and lease losses for the first ninesix months of 2017 and 20162021 was $21.43a reduction in expense of $8.52 million and $18.69as compared to provision expense of $73.02 million respectively.for the first six months of 2020. Net charge-offs were $5.34$5.22 million for the thirdsecond quarter of 20172021 as compared to net charge-offs of $6.78$4.34 million for the same quarter in 2016.2020. Net charge-offs for the first ninesix months of 20172021 were $19.27$9.76 million as compared to $21.76$11.03 million for the first ninesix months of 2016.2020. The higher amountslower amount of provision expense for the periods in 20172021 compared to the same periods in 2016 were2020 was mainly due to an increasea provision for loan losses of $28.95 million recorded on purchasedimpaired loans necessitating specific allowance allocation. The lower amountsthe estimation of net charge-offs for the periods in 2017 compared tothe same periods in 2016 were due to thecharge-off in 2016 of a large loan relationship which had deteriorated to the point ofnon-collectability.expected credit losses. On a linked-quarter basis, the provision for loan losses decreased $9.11 million due mainly to better performance trends within the loan portfolio as wellnetsupportable forecasts for future macroeconomic scenarios used in the estimation of expected credit losses. Net charge-offs decreased $972 thousand and $2.81 million, respectively, fromfor the second quarter of 2017 due mainly to providing for additional allowance allocation needs within2021 increased $679 thousand from the existing portfolio and recognitionfirst quarter of charge-offs on previously impaired loans.2021. Annualized net charge-offs as a percentage of average loans were 0.16% and 0.21% for the third quarter and first nine months of 2017, respectively.At September 30, 2017, nonperforming loans were $168.40 million or 1.28% of loans,leases, net of unearned income were 0.12% and 0.11% for the second quarter and first half of 2021, respectively, compared to 0.10% and 0.15% for the second quarter and first half of 2020. Annualized net charge-offs as a percentage of average loans and leases, net of unearned income was 0.10% for the first quarter of 2021.of $113.26and leases were $102.59 million or 1.10%0.61% of loans and leases, net of unearned income as compared to $132.21 million or 0.75% of loans and leases, net of unearned income at December 31, 2016.2020. The components of nonperforming loans and leases include: 1) nonaccrual loans and leases, 2) loans and leases which are contractually past due 90 days or more as to interest or principal, but have not been put on a nonaccrual basis and 3) loans and leases whose terms have been restructured for economic or legal reasons due to financial difficulties of the borrowers.and still on accrual were $22.25$14.14 million at SeptemberJune 30, 2017 which was2021, an increase of $13.66$303 thousand or 2.19% from $13.83 million at159.13%34.34% from $8.59$62.72 million at 2016. The increasedelinquencyrepayment of a $14.83 million credit atquarter-end. At September 30, 2017,three large commercial nonaccrual loans were $100.02 million, an increase as well as the$16.49 million or 19.74% from $83.53 million atyear-end 2016. This increase was due to the downgradethree commercial relationships and transfer totroubled debt restructuring designations for three large commercial nonaccrual of several oil, gas and coal industry relationships within the Company’s loan portfolio.loans. Restructured loans were $46.13$47.27 million at SeptemberJune 30, 2017, an increase2021, a decrease of $24.98$8.39 million or 118.10%15.07% from $21.15$55.66 million at 2016. Ten loans totaling $30.89 million were restructured during the first nine months of 2017. Two of the restructured loans totaling $20.99 million were associated with an oil, gas and coal industry-related relationship.remaining differencedecrease was mainly due to repaymentsthe repayment of four large commercial relationships and acharge-off.(OREO)(“OREO”). Total nonperforming assets of $195.22$121.06 million, including OREO of $26.83$18.47 million at SeptemberJune 30, 2017,2021, represented 1.02%0.45% of total assets.The following table summarizes nonperforming assets for the indicated periods. September 30, December 31, (In thousands) 2017 2016 2015 2014 2013 2012 $ 93,731 $ 77,111 $ 83,146 $ 64,312 $ 58,121 $ 66,711 6,285 6,414 8,043 10,739 3,807 4,848 21,464 7,763 11,462 10,868 10,015 13,819 785 823 166 807 1,029 4,249 44,695 21,115 23,890 22,234 8,157 3,175 1,437 37 0 0 0 0 $ 168,397 $ 113,263 $ 126,707 $ 108,960 $ 81,129 $ 92,802 26,826 31,510 32,228 38,778 38,182 49,484 $ 195,223 $ 144,773 $ 158,935 $ 147,738 $ 119,311 $ 142,286 Loans are designated as impaired when, in the opinion of management, the collection of principal and interest in accordance with the loan contract is doubtful. At September 30, 2017, impaired loans were $420.46 million, which was an increase of $112.02 million or 36.32% from $308.44 million at December 31, 2016. This increase was due mainly to the acquired impaired loans from Cardinal and the Company’s exposure to the oil, gas and coal industry. Acquired impaired loans are accounted for under ASC Subtopic310-30. The recorded investment balance and the contractual principal balance of the acquired impaired loans were $227.75 million and $310.61 million, respectively, at September 30, 2017 as compared to $171.60 million and $231.10 million, respectively, at December 31, 2016. For the acquired impaired loans accounted for under ASC310-30, the difference between the contractually required payments due and the cash flows expected to be collected, considering the impact of prepayments, is referred to as the non-accretable difference (the credit mark). The credit mark is not recognized in income. The remaining credit mark was $70.75 million and $58.88 million at September 30, 2017 and December 31, 2016, respectively. For further details regarding impaired loans, see Note 5 to the unaudited Consolidated Financial Statements.are referred to asis considered the allowance for credit losses. At SeptemberJune 30, 2017 and December 31, 2016,2021, the allowance for credit losses was $75.73$238.44 million and $73.82as compared to $255.08 million respectively.SeptemberJune 30, 2017,2021, the allowance for loan and lease losses was $74.93$217.55 million as compared to $72.78$235.83 million at December 31, 2016.2020. The decrease in the allowance for loan and lease losses was due to better trends within the loan portfolio as well0.57%1.29% at SeptemberJune 30, 20172021 and 0.70%1.34% at December 31, 2016, respectively.2020. The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 44.49%212.06% and 64.25%178.38% at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. The Company’s detailed methodologyincrease in this ratio was due mainly to a larger decline in nonperforming loans and analysis indicated a minimal increaseleases than in the allowance for loan losses primarily becauseand lease losses. offsettingchanges withinreal GDP and the unemployment rate to loss rates to forecasts of those variables. The reasonable and supportable forecast selection is subjective in nature and requires more judgment compared to the other components of the allowance. Assumptions for the economic variables were the following:ratesdata occurs via a straight-line method during the year following thereduced loss allocations on impaired loans.collectibility.collectability. Other commercial loans and leases not specifically reviewed on an individual basis are evaluated based on historical loss percentages applied to loan pools that have been segregated by risk. Allocations for loans and leases other than commercial loans and leases are made based upon historical loss experience adjusted for current environmental conditions. The allowance for credit losses includes estimated probable inherent but unidentifiedlifetime losses within the portfolio due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower’s financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet fully manifested themselves in loss allocation factors. In addition, a portion of the allowance accounts for the inherent imprecision in the allowance for credit losses analysis. company-wide review of the allowance for loan and lease losses at SeptemberJune 30, 20172021 produced increaseddecreased allocations in oneeach of the four loan categories.categories as compared to December 31, 2020. The allocation related to the commercial, financial & agricultural loan pool decreased $9.41 million. The residential real estate allocation increased $8.16 million primarily due to an increase in other commercial loans deemed impaired necessitating specific allowance allocation. Offsetting these increases was a decrease in the allocation related to thedecreased $3.07 million. The real estate construction and development loan pool of $2.60 million due to recognition of losses previously allocated. The residential real estate loan pool allocation decreased $2.92 million due to improvement in the Bank’s collateral position for a significant relationship and reduction of impairment allocation required.$3.93 million. The consumer loan pool also experienced a decreasedecreased $1.87 million. Each of $290 thousandthese decreases were primarily due to an improvement in historical loss rates. In summary, the overall level of the allowance for loan losses was relatively stable in comparison toyear-end 2016 as a result of offsetting factorsimproved economic conditions and improved expectations within the portfolio as described above.probable creditestimated lifetime losses on impairedfor loans via specific allocations.that are individually assessed. Nonperforming commercial loans and leases are regularly reviewed to identify impairment.expected credit losses. A loan or lease is impairedindividually assessed for expected credit losses when based on current information and events, it is probable that the Company willloan does not be able to collect all amounts contractually due.share similar characteristics with other loans in the portfolio. Measuring impairmentexpected credit losses of a loan requires judgment and estimates, and the eventual outcomes may differ fromImpairment isExpected credit losses are measured based upon the present value of expected future cash flows from the loan discounted at the loan’s effective rate, the loan’s observable market price or the fair value of collateral if the loan is collateral dependent. When the selected measure is less than the recorded investment in the loan, an impairmentexpected credit loss has occurred. The allowance for impaired loans and leases that were individually assessed was $26.75$3.44 million at SeptemberJune 30, 20172021 and $23.42$7.78 million2016.2020. In comparison to the priorincreaseddecreased by $3.33$4.34 million primarily due to increased specificcommercial, financial & agriculturalprobable credit losses on individually assessed loans as well as repayment of individually assessed loans.$75.73$238.44 million at SeptemberJune 30, 20172021 is adequate to provide for probableexpected losses on existing loans and lending-related commitments based on information currently available. Note 6 to the accompanying unaudited Notes to Consolidated Financial Statements provides a progression of the allowance for loan losses by portfolio segment.thirdsecond quarter of 20172021 was $38.23$62.85 million, an increasea decrease of $19.21$25.54 million or 100.98%28.90% from the thirdsecond quarter of 2016.2020. Noninterest income for the first nine monthshalf of 20172021 was $98.88$155.42 million, which was an increase of $45.50$30.22 million or 85.24%24.14% from the first nine monthshalf of 2016.$20.39$36.94 million for the thirdsecond quarter of 20172021 compared to $982 thousand$68.21 million for the same period of 2016.2020, a decline of $31.27 million or 45.84%. The decrease was due mainly to a decline in the fair value of derivatives associated with a declining interest rate lock commitment pipeline although sales activity increased. For the three months ended June 30, 2021 and 2020, mortgage loan sales were $1.88 billion and $1.59 billion, respectively. For the first nine monthshalf of 20172021 and 2016,2020, income from mortgage banking activities was $43.60$102.34 million and $2.50$85.84 million, respectively. The increasesincrease of $16.48 million for 2017 are the resultfirst half of 2021 was due mainly to increased sales of mortgage loans in the acquisitionsecondary market and the addition of Cardinal and, in particular, the acquisition of its mortgage banking subsidiary, George Mason.operations from the Carolina Financial acquisition. For the threesix months ended SeptemberJune 30, 20172021 and 2016,2020, mortgage loan sales were $908.60 million and $43.32 million, respectively. For the nine months ended September 30, 2017 and 2016, mortgage loan sales were $1.67$3.72 billion and $112.70$2.21 billion, respectively.respectively.Forfrom the thirdsecond quarter and first half of 2017, fees2020 due to increased mortgage servicing activity.depositbrokerage services were $8.74for the second quarter and first half of 2021 increased $1.00 million or 37.83% and $2.41 million or 43.29%, respectively, from the second quarter and first half of 2020. This increase was due to an increased volume of transactions.of $438 thousand or 5.27% from the third quarter of 2016. In particular, overdraft fees and ATM income increased $167 thousand and $160 thousand, respectively. in managed assets.nine monthshalf of 2017 were $24.982021 increased $1.34 million anor 16.65% and $2.28 million or 14.24%, respectively, from the second quarter and first half of 2020. Generally, the increase was due primarily to higher income from overdraft fees, debit card and automated teller machine (“ATM”) fees due to the waiving of $309fees towards the end of the first quarter and during the second quarter of 2020 as a result of the1.25%90.53% and $721 thousand or 42.14%, respectively, from the second quarter and first nine monthshalf of 2016. In particular, debit card income2020. This increase was due to an increased $236 thousand during the first nine monthsvolume of 2017.Partially offsetting these increases to noninterest income was a decline in income from bank-owned life insurance policies. transactions.third quarter and first nine monthshalf of 2017 decreased $1.142021 was $3.06 million, a decrease of $618 thousand or 44.79% and $1.04 million or 21.07%, respectively,16.80% from the third quarter and first nine monthshalf of 2016. These decreases were2020 due to a decrease in death benefits. For the first half of 2020, United recognized death benefits recorded in the third quarterfrom BOLI of 2016.third quarter of 2017 decreased $2.28 million or 5.62% from the second quarter of 20172021 decreased $29.73 million, or 32.11%, from the first quarter of 2021 primarily due mainly to a declinedecrease of $2.15$28.45 million in income from mortgage banking activities despite increased production and sales of mortgage loans in the secondary market. The decline was due mainly to the impact of Accounting Standards Codification (ASC) 815 “Derivatives and Hedging” (ASC815-10-S99-1), formerly Staff Accounting Bulletin (SAB) 109, accounting requirement to record unrealized gains associated with George Mason’s locked mortgage loan pipeline which creates a timing difference in the recognition of income as the loans are sold. The impact of ASC815-10-S99-1 resulted in a decline of $4.48 million in income for the third quarter of 2017 versus an increase of $1.02 million in income for the second quarter of 2017.loancredit losses, and income taxes. Noninterest expense increased $33.88decreased $10.42 million or 53.96%6.98% for the thirdsecond quarter of 20172021 compared to the same period in 2016.2020. For the first nine monthshalf of 2017,2021, noninterest expense increased $85.94was $287.88 million, which was an increase of $37.37 million or 46.28%14.92% from the first nine monthshalf of 2016. Generally, these increases in 2017 from 2016 were the result of additional general operating expenses and increased merger-related charges from the Cardinal acquisition.third quarterfirst half of 20172021 increased $20.10$27.76 million or 82.99%24.53% from the third quarterfirst half of 2016. Employee compensation increased $54.12 million or 78.29%2020. The increase for the first nine monthshalf of 2017 when compared to the first nine months of 2016. Merger severance charges of $12.78 million from the Cardinal acquisition were included in first nine months of 2017 as compared to $670 thousand in the first nine of 2016 from the Bank of Georgetown acquisition. Otherwise, base salaries for the third quarter and first nine months of 2017 increased $9.37 million or 44.67% and $19.49 million or 32.41%, respectively, from the same time periods in 20162021 was due mainly to additional employees from the CardinalCarolina Financial acquisition. The remainder of the increase in employee compensation for the third quarter and first nine monthshalf of 20172021 was due mainly to higher employee commissions and incentives and commissions expense mainlyprimarily related to the increased mortgage banking production of George Mason.thirdsecond quarter of 20172021 increased $2.10$1.69 million or 28.00%13.23% from the thirdsecond quarter of 2016.2020. Employee benefits expense for the first nine monthshalf of 20172021 increased $5.99$6.36 million or 28.03%26.97% as compared to the first nine monthshalf of 2016.2020. The increases for thirdthe second quarter and first nine monthshalf of 20172021 were due in large part to additional health insurance expense of $1.11 million and $2.68 million, respectively, from the same time periods last yearprimarily due to higher premiums and additional employees from the Cardinal acquisition. In addition,levels of Federal Insurance Contributions Act (FICA)(“FICA”), health insurance and postretirement expense for third quarter and first nine months of 2017 increased $784 thousand and $2.69 million, respectively, from the third quarter and first nine months of 2016 due mainly to the additional employees from the Cardinal acquisition$2.45$1.66 million or 35.34%8.58% for the first half of 2021 as compared to the same period in 2020. The increases were due primarily to increases in building depreciation and $9.12maintenance expenses mainly as a result of the offices added in the Carolina Financial acquisition.43.52%34.18% for the thirdsecond quarter and first ninesix months of 2017,2021, respectively, as compared to the same periods in the prior year.2020. The increases were due mainly to additional building rentalhigher maintenance costs and depreciation expense fromprimarily due to the offices added in the CardinalCarolina Financial acquisition. Included in net occupancyfirst nine months of 2017 were charges of $5.93 million for the termination of leases and the reduction in the value of leasehold improvements for closed offices in the Cardinal acquisition as compared to charges of $1.58 million in the thirdsecond quarter and first nine monthshalf of 2016 for the termination of leases for closed offices in the Bank of Georgetown acquisition.Other real estate owned (OREO) expense for the third quarter of 2017 increased $1.37 million or 102.16% from the third quarter of 2016 due to declines in the fair value on OREO properties.Data processing expense increased $1.74 million or 45.11% and $3.97 million or 36.05% for the third quarter and first nine months of 2017,2021, respectively, as compared to the second quarter and first half of 2020. These decreases were due mainly to a $9.66 million penalty in the second quarter of 2020 to terminate the contract with Carolina Financial’s data processor.prior year2020. The increases were due to additional processingan increase in mortgage servicing activity as a result of the Cardinal acquisition.acquisition of Carolina Financial and Crescent Mortgage. In addition, United recorded a $250 thousand temporary impairment charge, net of recoveries on its mortgage servicing rights during the results for first nine months of 2017 included a penalty of $525 thousand for the termination of Cardinal’s data processing contract.Federal Deposit Insurance Corporation (FDIC) insurance expense for the thirdsecond quarter and first nine monthshalf of 2017 decreased $5462021 as compared to a temporary impairment charge on its mortgage servicing rights of $710 thousand or 26.17% and $1.28 million or 20.17%, respectively, fromduring the thirdsecond quarter and first nine monthshalf of 2016 due to lower premiums.thirdsecond quarter of 2017 increased $5.752021 decreased $3.60 million or 40.18%11.86% from the thirdsecond quarter of 2016. Other expense for the first nine months of 2017 increased $12.63 million or 28.19% from the first nine months of 2016.2020. Included in other expense for the thirdsecond quarter and first nine months of 2017 were merger-related expenses of $434 thousand and $5.83$5.52 million respectively,for the Carolina Financial acquisition as compared to merger-related expenses of $620$183 thousand and $2.78 million, respectively for the thirdannounced Community Bankers Trust merger in the second quarter and first nine months of 2016. Amortization of core deposit intangibles increased $1.12 million and $2.60 million2021. The expense for the thirdreserve for unfunded commitments for the second quarter and first nine months of 2017, respectively, as compared2021 decreased $2.17 million from the same time period in 2020 due to a $1.84 million expense related to the same periods in 2016 due to the additional core deposit intangibles addedreserve for acquired unfunded commitments from Carolina Financial which was recorded in the Cardinal acquisition. Business and occupation (B&O) taxes increased $1.32 million and $2.47 million for the thirdsecond quarter and first nine months of 2017, respectively, as compared to the same periods in 2016.third quarter of 2017 decreased $15.49 million or 13.81% from the second quarter of 2017 generally2021 decreased $9.98 million, or 6.70%, from the first quarter of 2021 primarily due to decreases of $3.86 million in employee compensation and $3.25 million in OREO expense. Employee compensation declined from the first quarter of 2021 primarily due to a decline of $22.62 million in merger-related expenses. Partially offsetting this decrease was an increasecommissions and incentives mainly related to mortgage banking operations while the decline in OREO expense of $2.19 millionwas due mainly to fewer declines in the fair value of OREO properties.thirdsecond quarter and first half of 2017,2021, income tax expense was $27.84$24.46 million and $52.02 million, respectively, as compared to $18.85$11.02 million for the third quarter of 2016. This increase was mainly due to higher earnings and a higher effective tax rate as the result of a reduction$20.91 million, respectively, in the income tax expense for the thirdsecond quarter and first half of 2016 due to an increase in United’s deferred tax rate. For the first nine months of 2017, income tax expense was $67.36 million as compared to $53.10 million for the first nine months of 20162020. These increases were due to higher earnings and a higher effective tax rate. On a linked-quarter basis, income tax expense increased $8.53decreased $3.11 million due to higherlower earnings partially offset by a decline infrom the effective tax rate due to the Cardinal acquisition.first quarter of 2021. United’s effective tax rate was 32.91% for the third quarter of 2017, 34.25%20.50% for the second quarter of 2017 and 31.24%2021, 17.30% for the thirdsecond quarter of 2016.2020 and 20.50% for the first quarter of 2021. For the first nine monthshalf of 20172021 and 2016,2020, United’s effective tax rate was 33.68%20.50% and 32.97%18.38%, respectively. For further details related to income taxes, see Note 1517 of the unaudited Notes to Consolidated Financial Statements contained within this document.Contractual Obligations, Commitments, Contingent LiabilitiesOff-Balance Sheet ArrangementsUnited has various financial obligations, including contractual obligations and commitments, that may require future cash payments. Please refer to United’s Annual Report on Form10-K for the year ended December 31, 2016 for disclosures with respect to United’s fixed and determinable contractual obligations. As previously mentioned, United completed its acquisition of Cardinal during the second quarter of 2017. As such, United assumed the financial obligations of Cardinal, including contractual obligations and commitments, which also may require future payments. Otherwise, there have been no material changes outside the ordinary course of business sinceyear-end 2016 in the specified contractual obligations disclosed in United’s Annual Report on Form10-K.As of September 30, 2017, United recorded a liability for uncertain tax positions, including interest and penalties, of $2.41 million in accordance with ASC topic 740. This liability represents an estimate of tax positions that United hastaken in its tax returns which may ultimately not be sustained upon examination by tax authorities. Since the ultimate amount and timing of any future cash settlements cannot be predicted with reasonable certainty, this estimated liability is excluded from the contractual obligations table in the 2016 Form10-K report.United also enters into derivative contracts, mainly to protect against adverse interest rate movements on the value of certain assets or liabilities, under which it is required to either pay cash to or receive cash from counterparties depending on changes in interest rates. Derivative contracts are carried at fair value and not notional value on the consolidated balance sheet. Because the derivative contracts recorded on the balance sheet at September 30, 2017 do not present the amounts that may ultimately be paid under these contracts, they are excluded from the contractual obligations table in the 2016 Form10-K report. Further discussion of derivative instruments is presented in Note 11 to the unaudited Notes to Consolidated Financial Statements.United is a party to financial instruments withoff-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include loan commitments and standby letters of credit. United’s maximum exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for the loan commitments and standby letters of credit is the contractual or notional amount of those instruments. United uses the same policies in making commitments and conditional obligations as it does foron-balance sheet instruments. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Further discussion ofoff-balance sheet commitments is included in Note 10 to the unaudited Notes to Consolidated Financial Statements.Liquidityninefirst six months ended SeptemberJune 30, 2017,2021, cash of $125.15$351.96 million was provided by operating activities due mainly to net income of $132.61$201.73 million. In addition, mortgage banking activities added cash of $142.11 million forto the first nine monthsnet income amount as sales of 2017.mortgage loans in the secondary market exceeded originations. Net cash of $384.45$293.76 million was provided by investing activities which was primarily due to net loan repayments on loans of $369.23$710.86 million partially offset by $364.82 million of purchases of investment securities over proceeds from sales and the $50.00 million purchase of bank-owned life insurance policies. During the first half of 2021, net cash of $44.53 million provided in the acquisition of Cardinal. During the first nine months of 2017, net cash of $197.09$822.61 million was used inprovided by financing activities due primarily to a declinenet growth of $984.73 million in deposits of $269.74 million,deposits. These funding activities were partially offset by the net repayment of $50.00 million in long-term borrowingsFHLB advances, cash dividends paid of $30.21$90.72 million, and net repurchases of $11.21 million of United common stock for the paymentfirst six months of cash dividends in the amount of $86.71 million. Partially offsetting these decreases to cash were net proceeds of $200.00 million in short-term FHLB borrowings.2021. The net effect of the cash flow activities was an increase in cash and cash equivalents of $312.51 million$1.47 billion for the first ninesix months of 2017.There are no known trends, demands, commitments, or events that will result in or that are reasonably likely to result in United’s liquidity increasing or decreasing in any material way. United also has lines of credit available. See Notes 810 and 911 to the accompanying unaudited Notes to Consolidated Financial Statements for more details regarding the amounts available to United under lines of credit.Capital Resources14.26%15.93% at SeptemberJune 30, 20172021 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 11.99%13.66%, 11.99%13.66% and 10.09%10.33%, respectively. The June 30, 2021 ratios reflects United’s election of a five-year transition provision, allowed by the Federal Reserve Board and other federal banking agencies in response to the$3.26$4.39 billion at SeptemberJune 30, 2017, increasing $1.03 billion2021, which was an increase of $96.09 million or 45.98%2.24% from December 31, 20162020. This increase is primarily due to an increase of $111.21 million in retained earnings (net income less dividends declared). Partially offsetting this increase was a decrease of $11.85 million in accumulated other comprehensive income due mainly to anCardinal acquisition. fair value of available for sale securities. Treasury stock increased $11.28 million or 7.09% due to the repurchase of 306,204 shares of United common stock under a stock repurchase plan approved by United’s Board of directors in November of 2019.17.06%16.16% at SeptemberJune 30, 20172021 as compared to 15.41%16.41% at December 31, 2016.2020. The primary capital ratio, capital and reserves to total assets and reserves, was 17.39%16.89% at SeptemberJune 30, 20172021 as compared to 15.84%17.22% at December 31, 2016.2020. United’s average equity to average asset ratio was 17.25%16.21% for the thirdsecond quarter of 20172021 as compared to 14.38%16.07% the thirdsecond quarter of 2016.2020. United’s average equity to average asset ratio was 16.58% for the first nine months of 2017 as compared to 14.24%16.31% for the first half of 2016.2021 as compared to 16.47% the first half of 2020. All of these financial measurements reflect a financially sound position.thirdsecond quarter of 2017,2021, United’s Board of Directors declared a cash dividend of $0.33$0.35 per share. Cash dividends were $0.99$0.70 per common share for the first ninesix months of 2017.2021. Total cash dividends declared were $34.64$45.27 million for the thirdsecond quarter of 20172021 and $96.04$90.52 million for the first ninesix months of 20172021 as compared to $25.22$45.42 million and $73.38 million, respectively, for the thirdsecond quarter of 2020 and $81.02 million for the first ninesix months of 2016.Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK(ALCO)(“ALCO”), which includes senior management representatives and reports to the Board of Directors, monitors and manages interest rate risk to maintain an acceptable level of change to net interest income as a result of changes in interest rates. Policy established for interest rate risk is stated in terms of the change in net interest income over aSeptemberJune 30, 20172021 and December 31, 2016: Percentage Change in Net Interest Income September 30,
2017 December 31,
2016 (0.22%) (2.05%) (0.02%) (1.05%) 0.22% 1.87% — — 2.60% (4.32%) 1.16% (2.61%) (0.82%) 0.03% (1.37%) (0.05%) SeptemberJune 30, 2017,2021, given an immediate, sustained 100 basis point upward shock to the yield curve used in the simulation model, net interest income for United is estimated to decreaseincrease by 0.02%1.16% over one year as compared to a decrease of 1.05%2.61% at December 31, 2016.2020. A 200 basis point immediate, sustained upward shock in the yield curve would decreaseincrease net interest income by an estimated 0.22%2.60% over one year as of SeptemberJune 30, 2017,2021, as compared to a decrease of 2.05%4.32% as of December 31, 2016.2020. A 100 basis point immediate, sustained downward shock in the yield curve would increasedecrease net interest income by an estimated 0.22%0.82% over one year as of SeptemberJune 30, 20172021 as compared to an increase of 1.87%0.03%, over one year as of December 31, 2016. With the federal funds rate at 1.25% at September 30, 2017 and 0.75% at December 31, 2016, management believed a2020. A 200 basis point immediate, sustained declinedownward shock in rates was highly unlikely.2.58%4.94% in year two as of SeptemberJune 30, 2017.2021. A 200 basis point immediate, sustained upward shock in the yield curve would increase net interest income by an estimated 4.80%9.74% in year two as of SeptemberJune 30, 2017.2021. A 100 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated 1.95%4.95% in year two as of SeptemberJune 30, 2017.banks are membersbank is a member of the Federal Home Loan Bank (FHLB)(“FHLB”). The use of FHLB advances provides United with a low risk means of matching maturities of earning assets and interest-bearing funds to achieve a desired interest rate spread over the life of the earning assets. In addition, United uses credit with large regional banks and trust preferred securities to provide funding.topicTopic 815, “Derivatives and Hedging.”SeptemberJune 30, 2017,2021, United’s mortgage related securities portfolio had an amortized cost of $1.1$1.6 billion, of which approximately $664$614.6 million or 58%37% were fixed rate collateralized mortgage obligations (CMOs)(“CMOs”). These fixed rate CMOs consisted primarily of planned amortization class (PACs)(“PACs”),(VADMs)(“VADMs”) bonds having an average life of approximately 3.93.5 years and a weighted average yield of 2.51%1.94%, 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 only extend to 4.65.3 years. The projected price decline of the fixed rate CMO portfolio in rates up 300 basis points would be 11.3%12.2%, or less than the price decline of a current(MBS) given an immediate, sustained upward shock of(“MBS”) in rates higher by 300 basis points would be approximately 16.9%22.8%.$257$585.8 million in balloon and other securitiesfixed rate Commercial Mortgage Backed Securities (“CMBS”) with a projected yield of 2.12%2.14% and a projected average life of 4.15.3 years on SeptemberJune 30, 2017.2021. This portfolio consisted primarily of Freddie Mac Multifamily K securities and Fannie Mae Delegated Underwriting and Servicing (DUS) mortgage backed(“DUS”) securities (MBS) with a weighted average loan age (WALA)maturity (“WAM”) of 3.8 years and a weighted average maturity (WAM) of 4.48.2 years.$63$17.3 million in3.72.6 years as of SeptemberJune 30, 2017.2021. This portfolio consisted of seasoned(WALA)(“WALA”) of 4.78.5 years and a weighted average maturity (WAM)(“WAM”) of 9.97.7 years.$69$192.5 million in2.68%1.41% and a projected average life of 5 years on SeptemberJune 30, 2017.2021. This portfolio consisted of seasoned(WALA)(“WALA”) of 5.11.5 years and a weighted average maturity (WAM)(“WAM”) of 14.518.4 years.$65$159.9 million in2.60%2.22% and a projected average life of 5.54.4 years on SeptemberJune 30, 2017.2021. This portfolio consisted of seasoned and Home Equity Conversion Mortgages with a weighted average loan age (WALA)(“WALA”) of 2.33.5 years and a weighted average maturity (WAM)(“WAM”) of 26.324.2 years.2%5% of the mortgage related securities portfolio at Septemberon June 30, 2017,2021, included adjustablefloating rate securities (ARMs),10-yearCMO, CMBS and mortgage backed pass-through securitiessecurities.SeptemberJune 30, 2017,2021, an evaluation was performed under the supervision of and with the participation of United’s management, including the Chief Executive Officer (CEO)(“CEO”) and Chief Financial Officer (CFO)(“CFO”), of the effectiveness of the design and operation of United’s disclosure controls and procedures. Based on that evaluation, United’s management, including the CEO and CFO, concluded that United’s disclosure controls and procedures as of SeptemberJune 30, 20172021 were effective in ensuring that information required to be disclosed in the Quarterly Report on FormSeptemberJune 30, 2017,2021, or in other factors that have materially affected or are reasonably likely to materially affect United’s internal control over financial reporting.Item 1A.RISK FACTORS20162020 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 There are no material changes from the risk factors disclosed in United’s Annual Report on Form10-K for the year ended December 31, 2016.Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSSeptemberJune 30, 20172021 that were not registered. The table below includes certain information regarding United’s purchase of its common shares during the quarter ended SeptemberJune 30, 2017: Total Number
of Shares
Purchased
(1)(2) Average
Price Paid
per Share Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans (3) Maximum Number
of Shares that May
Yet be Purchased
Under the Plans (3) 0 $ 00.00 0 2,000,000 4 $ 41.58 0 2,000,000 0 $ 00.00 0 2,000,000 4 $ 41.58 0 0 $ 00.00 0 3,033,796 1,915 $ 41.38 0 3,033,796 0 $ 00.00 0 3,033,796 1,915 $ 41.38 0 (1) stock optionlong-term incentive plans. Shares are purchased pursuant to the terms of the applicable stock option plan and not pursuant to a publicly announced stock repurchase plan. For the quarter ended SeptemberJune 30, 2017, no2021 – 1,912 shares at an average price of $41.39 were exchanged by participants in United’s stock optionlong-term incentive plans.(2) SeptemberJune 30, 2017,2021, the following shares were purchased for the deferred compensation plan: August 2017May 2021 – 43 shares at an average price of $41.58.$38.67.(3) August of 2017,October 2019, United’s Board of Directors approved a repurchase plan to repurchase up to 2 million4,000,000 shares of United’s common stock on the open market (the 2017 Plan)“2019 Plan”). The timing, price and quantity of purchases under the planplans are at the discretion of management and the plan may be discontinued, suspended or restarted at any time depending on the facts and circumstances.Item 3.DEFAULTS UPON SENIOR SECURITIES (a) (b) Item 6.EXHIBITS UNITED BANKSHARES, INC. (Registrant) Date: November20172021 Richard M. Adams, Chairman of the Board and Chief Executive Officer Date: November20172021 W. Mark Tatterson, Executive Vice President and Chief
Financial Officer92