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What changed in UNITED BANKSHARES INC/WV's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UNITED BANKSHARES INC/WV's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+389 added−440 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in UNITED BANKSHARES INC/WV's 2023 10-K

389 paragraphs added · 440 removed · 304 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+17 added−31 removed144 unchanged
Biggest changeThe guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.
Biggest changeThe guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors. 16 In April and May of 2016, the Federal Reserve Board, other federal banking agencies and the SEC (the “Agencies”) jointly published proposed rulemaking designed to implement provisions of the Dodd-Frank Act prohibiting incentive compensation arrangements that would encourage inappropriate risk taking at a covered institution, which includes a bank or bank holding company with $1 billion or more of assets, such as United.
United is listed on the NASDAQ Global Select Market under the quotation symbol “UBSI,” and is subject to the rules of the NASDAQ for listed companies. SEC regulations require us to disclose certain types of business and financial data on a regular basis to the SEC and to our shareholders.
United is listed on the NASDAQ Global Select Market under the quotation symbol “UBSI,” and is subject to the rules of the NASDAQ for listed companies. 10 SEC regulations require us to disclose certain types of business and financial data on a regular basis to the SEC and to our shareholders.
In addition to these regular examinations, United Bank must furnish to regulatory authorities quarterly reports containing full and accurate statements of its affairs. 11 United is also under the jurisdiction of the SEC and certain state securities commissions in regard to the offering and sale of its securities.
In addition to these regular examinations, United Bank must furnish to regulatory authorities quarterly reports containing full and accurate statements of its affairs. United is also under the jurisdiction of the SEC and certain state securities commissions in regard to the offering and sale of its securities.
This limitation may be waived by the Commissioner of Banking by showing good cause. 17 Consumer Laws and Regulations In addition to the banking laws and regulations discussed above, bank subsidiaries are also subject to certain consumer laws and regulations that are designed to protect consumers in transactions with banks.
This limitation may be waived by the Commissioner of Banking by showing good cause. Consumer Laws and Regulations In addition to the banking laws and regulations discussed above, bank subsidiaries are also subject to certain consumer laws and regulations that are designed to protect consumers in transactions with banks.
These limitations did not impact our regulatory capital during any of the reported periods. In addition, under the general risk-based capital rules, the effects of accumulated other comprehensive income items included in capital were excluded for the purposes of determining regulatory capital ratios.
These limitations did not impact our regulatory capital during any of the reported periods. 13 In addition, under the general risk-based capital rules, the effects of accumulated other comprehensive income items included in capital were excluded for the purposes of determining regulatory capital ratios.
It is the intent of the underwriting guidelines and standards to minimize loan losses by carefully investigating the credit history of each applicant, verify the source of repayment and the ability of the applicant to repay, collateralize those loans in which collateral is deemed to be required, exercise care in the documentation of the application, review, approval, and origination process, and administer a comprehensive loan collection program. 6 United’s underwriting standards and practices are designed to originate both fixed and variable rate loan products in a manner which is consistent with the prudent banking practices applicable to these exposures.
It is the intent of the underwriting guidelines and standards to minimize loan losses by carefully investigating the credit history of each applicant, verify the source of repayment and the ability of the applicant to repay, collateralize those loans in which collateral is deemed to be required, exercise care in the documentation of the application, review, approval, and origination process, and administer a comprehensive loan collection program. 5 United’s underwriting standards and practices are designed to originate both fixed and variable rate loan products in a manner which is consistent with the prudent banking practices applicable to these exposures.
United Bank was considered a “well capitalized” institution as of December 31, 2022. Well-capitalized institutions are permitted to engage in a wider range of banking activities, including among other things, the accepting of “brokered deposits,” and the offering of interest rates on deposits higher than the prevailing rate in their respective markets.
United Bank was considered a “well capitalized” institution as of December 31, 2023. Well-capitalized institutions are permitted to engage in a wider range of banking activities, including among other things, the accepting of “brokered deposits,” and the offering of interest rates on deposits higher than the prevailing rate in their respective markets.
Our strategy embodies our core values of integrity, teamwork, hard work, and caring, and foster positive attitudes, communication, goal attainment, personal growth, and the pursuit of United’s mission of excellence in service to our shareholders, our customers, our communities, and our employees. 8 Focusing on talent selection and developing top talent remains a strong pillar of our organization.
Our strategy embodies our core values of integrity, teamwork, hard work, and caring, and foster positive attitudes, communication, goal attainment, personal growth, and the pursuit of United’s mission of excellence in service to our shareholders, our customers, our communities, and our employees. 7 Focusing on talent selection and developing top talent remains a strong pillar of our organization.
Training is provided to managers annually to prepare them for difficult conversations, analyzing team compensation, and maintaining fairness, among other topics. 9 We are committed to providing a safe and healthy work environment for our employees and offer services to foster the best physical, mental, and social well-being of our workforce.
Training is provided to managers annually to prepare them for difficult conversations, analyzing team compensation, and maintaining fairness, among other topics. 8 We are committed to providing a safe and healthy work environment for our employees and offer services to foster the best physical, mental, and social well-being of our workforce.
In 2022, 100% of new hires completed implicit bias training and new supervisors participated in cultivating inclusive team workshops. DE&I employee liaisons were selected through an application process, received training on courageous conversations, and then held open forums with local colleagues related to various DE&I topics.
In 2023, 100% of new hires completed implicit bias training and new supervisors participated in cultivating inclusive team workshops. DE&I employee liaisons were selected through an application process, received training on courageous conversations, and then held open forums with local colleagues related to various DE&I topics.
Historically, and at December 31, 2022, United has not offered “teaser rate” loans, and had no loan portfolio products which were specifically designed for “sub-prime” borrowers. Management defines “sub-prime” borrowers as consumer borrowers with a credit score of less than 660.
Historically, and at December 31, 2023, United has not offered “teaser rate” loans, and had no loan portfolio products which were specifically designed for “sub-prime” borrowers. Management defines “sub-prime” borrowers as consumer borrowers with a credit score of less than 660.
In August 2016, United announced the Cardinal Financial Corporation acquisition which closed April 2017. 4 Business of Subsidiaries United, through its subsidiaries, engages primarily in community banking and mortgage banking offering most types of business permitted by law and regulation.
In August 2016, United announced the Cardinal Financial Corporation acquisition which closed April 2017. 3 Business of Subsidiaries United, through its subsidiaries, engages primarily in community banking and mortgage banking offering most types of business permitted by law and regulation.
These loans are for single-family, owner-occupied residences with either adjustable or fixed rate terms, with a variety of maturities tailored to effectively serve its markets. Crescent Mortgage Company (“Crescent”), a wholly-owned subsidiary of United Bank, is primarily a correspondent/wholesale mortgage company approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers.
These loans are for single-family, owner-occupied residences with either adjustable or fixed rate terms, with a variety of maturities tailored to effectively serve its markets. Crescent Mortgage Company (“Crescent”), a wholly-owned subsidiary of United Bank, is a mortgage company approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers.
GAAP (as of January 2020) to implement CECL before the end of 2020 the option to delay for two years an estimate of the effect of CECL on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option).
GAAP (as of January 2020) to implement CECL before the end of 2020 the option to delay for two years an estimate of the effect of CECL on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). We elected to adopt the five-year transition option.
Office of the Commissioner of Banks and 76 bank holding companies operating in the State of South Carolina registered with the Federal Reserve System and the South Carolina State Board of Financial Institutions.
Office of the Commissioner of Banks and 99 bank holding companies operating in the State of South Carolina registered with the Federal Reserve System and the South Carolina State Board of Financial Institutions.
Loan Concentrations United has commercial loans, including real estate and owner-occupied, income-producing real estate and land development loans, of approximately $14.2 billion as of December 31, 2022. These loans are primarily secured by real estate located in West Virginia, southeastern Ohio, southwestern Pennsylvania, Virginia, Maryland, North Carolina, South Carolina and the District of Columbia.
Loan Concentrations United has commercial loans, including real estate and owner-occupied, income-producing real estate and land development loans, of approximately $14.8 billion as of December 31, 2023. These loans are primarily secured by real estate located in West Virginia, southeastern Ohio, southwestern Pennsylvania, Virginia, Maryland, North Carolina, South Carolina and the District of Columbia.
The final rules implement the “pay versus performance” disclosure requirements mandated by Section 953(a) of the Dodd-Frank Act. Disclosure related to these final rules will be effective for United’s proxy statement filed in 2023.
The final rules implement the “pay versus performance” disclosure requirements mandated by Section 953(a) of the Dodd-Frank Act. Disclosure related to these final rules was effective for United’s proxy statement filed in 2023.
The loans generally do not exceed an 80% loan to value ratio at the loan origination date and most are at a variable rate of interest. These loans are considered to be of normal risk. Also included in the category of real estate mortgage loans are home equity loans.
The loans generally do not exceed an 80% loan to value ratio at the loan origination date and are at either a variable rate or fixed rate of interest. These loans are considered to be of normal risk. Also included in the category of real estate mortgage loans are home equity loans.
For the years of 2021 and 2020, United realized net gains on sales of securities of $2.8 million and $3.2 million, respectively. Human Capital At United, one of our key competitive advantages is our people. Investment in our human capital is a top priority for the Company.
For the years of 2022 and 2021, United realized net gains on sales of securities of $2 thousand and $2.8 million, respectively. Human Capital At United, one of our key competitive advantages is our people. Investment in our human capital is a top priority for the Company.
Business of United As a financial holding company, United’s present businesses are community banking and mortgage banking. As of December 31, 2022, United’s consolidated assets approximated $29.5 billion and total shareholders’ equity approximated $4.5 billion. United is permitted to acquire other banks and bank holding companies, as well as thrift institutions.
Business of United As a financial holding company, United’s present businesses are community banking and mortgage banking. As of December 31, 2023, United’s consolidated assets approximated $29.9 billion and total shareholders’ equity approximated $4.8 billion. United is permitted to acquire other banks and bank holding companies, as well as thrift institutions.
In November 2019, the federal banking agencies adopted a rule revising the scope of commercial real estate mortgages subject to a 150% risk weight. In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (the standards are commonly referred to as “Basel IV”).
In November 2019, the federal banking agencies adopted a rule revising the scope of commercial real estate mortgages subject to a 150% risk weight. In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms.
We elected to adopt the five-year transition option. 14 The Basel III Capital Rules prescribe a standardized approach for risk weightings that expanded the risk-weighting categories from the general risk-based capital rules to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures (and higher percentages for certain other types of interests), and resulting in higher risk weights for a variety of asset categories.
The Basel III Capital Rules prescribe a standardized approach for risk weightings that expanded the risk-weighting categories from the general risk-based capital rules to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures (and higher percentages for certain other types of interests), and resulting in higher risk weights for a variety of asset categories.
United does not have a loan classification concentration in the restaurants, hotel and accommodations industry. As of December 31, 2022, approximately $1.2 billion or 5.57% of United’s total loan portfolio were to hotels and other traveler accommodations. In addition, United does not have a loan classification concentration in the mining, quarrying and oil and gas extraction industry.
United does not have a loan classification concentration in the restaurants, hotel and accommodations industry. As of December 31, 2023, approximately $1.3 billion or 5.98% of United’s total loan portfolio were to hotels and other traveler accommodations. In addition, United does not have a loan classification concentration in the mining, quarrying and oil and gas extraction industry.
As of December 31, 2022, approximately $9.6 billion or 46.38% of United’s total loan portfolio were for real estate and construction. The loans were originated by United’s subsidiary bank using underwriting standards as set forth by management.
As of December 31, 2023, approximately $9.9 billion or 46.4% of United’s total loan portfolio were for real estate and construction. The loans were originated by United’s subsidiary bank using underwriting standards as set forth by management.
As of December 31, 2022, approximately $185.5 million or less than 1% of United’s total loan portfolio were for the purpose of extracting, manufacturing and distributing oil, coal and natural gas. Secondary Markets United generally originates loans within the primary market area of United Bank.
As of December 31, 2023, approximately $162.6 million or less than 1% of United’s total loan portfolio were for the purpose of extracting, manufacturing and distributing oil, coal and natural gas. Secondary Markets United generally originates loans within the primary market area of United Bank.
These conditions serve to intensify competition within United’s market. 10 As of December 31, 2022, there were 67 bank holding companies operating in the State of West Virginia registered with the Federal Reserve System and the West Virginia Board of Banking and Financial Institutions, 115 bank holding companies operating in the Commonwealth of Virginia registered with the Federal Reserve System and the Virginia State Corporation Commission, 88 bank holding companies operating in the State of North Carolina registered with the Federal Reserve System and the N.C.
These conditions serve to intensify competition within United’s market. 9 As of December 31, 2023, there were 58 bank holding companies operating in the State of West Virginia registered with the Federal Reserve System and the West Virginia Board of Banking and Financial Institutions, 64 bank holding companies operating in the Commonwealth of Virginia registered with the Federal Reserve System and the Virginia State Corporation Commission, 66 bank holding companies operating in the State of North Carolina registered with the Federal Reserve System and the N.C.
Effective January 1, 2015, under the Basel III Capital Rules, the current prompt corrective action requirements for an institution to be “well-capitalized” is a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a CET1 ratio of 6.5% or greater and a Tier 1 leverage ratio of 5 percent or greater.
FDICIA establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. 14 Effective January 1, 2015, under the Basel III Capital Rules, the current prompt corrective action requirements for an institution to be “well-capitalized” is a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a CET1 ratio of 6.5% or greater and a Tier 1 leverage ratio of 5 percent or greater.
Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low- and moderate-income individuals and communities. Depository institutions are periodically examined for compliance with the CRA and are assigned ratings.
Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low- and moderate-income individuals and communities. Depository institutions are periodically examined for compliance with the CRA and are assigned ratings. Banking regulators take into account CRA ratings when considering approval of a proposed transaction.
United Bank also offers an automated telephone banking system, Telebanc, which allows customers to access their personal account(s) or business account(s) information from a touch-tone telephone. 5 Lending Activities United’s loan and lease portfolio, net of unearned income, increased $2.5 billion or 14.06% in 2022 due mainly to substantial loan growth in almost all major categories of loans.
United Bank also offers an automated telephone banking system, Telebanc, which allows customers to access their personal account(s) or business account(s) information from a touch-tone telephone. 4 Lending Activities United’s loan and lease portfolio, net of unearned income, increased $800.9 million or 3.90% in 2023 due mainly to loan growth in almost all major categories of loans.
The Dodd-Frank Act includes, among other things, provisions creating a Financial Services Oversight Council to identify emerging systemic risks and improve interagency cooperation; centralizing the responsibility for 12 consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which is responsible for implementing, examining and enforcing compliance with federal consumer financial laws; permanently raising the current standard maximum deposit insurance amount to $250,000; establishing strengthened capital standards for banks, and disallowing trust preferred securities as qualifying for Tier 1 capital (subject to certain grandfather provisions for existing trust preferred securities); establishing new minimum mortgage underwriting standards; granting the Federal Reserve Board the power to regulate debit card interchange fees; and implementing corporate governance changes.
The Dodd-Frank Act includes, among other things, provisions creating a Financial Services Oversight Council to identify emerging systemic risks and improve interagency cooperation; centralizing the responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which is responsible for implementing, examining and enforcing compliance with federal consumer financial laws; permanently raising the current standard maximum deposit insurance amount to $250,000; establishing strengthened capital standards for banks, and disallowing trust preferred securities as qualifying for Tier 1 capital (subject to certain grandfather provisions for existing trust preferred securities); establishing new minimum mortgage underwriting standards; granting the Federal Reserve Board the power to regulate debit card interchange fees; and implementing corporate governance changes. 11 On May 24, 2018, President Trump signed into law the “Economic Growth, Regulatory Relief, and Consumer Protection Act (the EGRRCPA Act)” which provides certain limited amendments to the Dodd-Frank Act, as well as certain targeted modifications to other post-financial crisis regulatory requirements.
Obligations of states and political subdivisions are comprised of primarily “investment grade” rated municipal securities. Interest and dividends on securities for the years of 2022, 2021, and 2020 were $114.5 million, $61.9 million, and $66.8 million, respectively. For the year of 2022, United realized net gains on sales of securities of $2 thousand.
Obligations of states and political subdivisions are comprised of primarily “investment grade” rated municipal securities. Interest and dividends on securities for the years of 2023, 2022, and 2021 were $151.1 million, $114.5 million, and $61.9 million, respectively. For the year of 2023, United realized net losses on sales of securities of $7.7 million.
The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing. 18 Incentive Compensation The Federal Reserve Board reviews, as part of its regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as United, that are not “large, complex banking organizations.” These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
Incentive Compensation The Federal Reserve Board reviews, as part of its regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as United, that are not “large, complex banking organizations.” These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
The acquisition of Community Bankers Trust enhanced United’s existing presence in the DC Metro MSA and took United into new markets including Baltimore, Annapolis, Lynchburg, Richmond, and the Northern Neck of Virginia. It also strategically connected our Mid-Atlantic and Southeast footprints. See Note B—Notes to Consolidated Financial Statements for a discussion of United’s merger with Community Bankers Trust.
The acquisition of Community Bankers Trust enhanced United’s existing presence in the DC Metro MSA and took United into new markets including Baltimore, Annapolis, Lynchburg, Richmond, and the Northern Neck of Virginia. It also strategically connected our Mid-Atlantic and Southeast footprints.
As of December 31, 2022, United and its subsidiaries had 2,765 employees and officers. Of the 2,765 employees and officers, 2,331 are employed in the community banking segment, 366 are employed in the mortgage banking segment and 68 are in a general support and administrative function for the Company.
As of December 31, 2023, United and its subsidiaries had 2,635 employees and officers. Of the 2,635 employees and officers, 2,298 are employed in the community banking segment, 265 are employed in the mortgage banking segment and 72 are in a general support and administrative function for the Company.
Depending on the pricing in the marketplace, servicing rights are either sold or retained. 7 During 2022, United originated $1.9 billion of real estate loans for sale in the secondary market and sold $2.2 billion of loans designated as held for sale in the secondary market. Net gains on the sales of these loans during 2022 were $41.3 million.
Depending on the pricing in the marketplace, servicing rights are either sold or retained. 6 During 2023, United originated $860.9 million of real estate loans for sale in the secondary market and sold $861.5 million of loans designated as held for sale in the secondary market. Net gains on the sales of these loans during 2023 were $25.9 million.
In November 2021, the federal banking agencies adopted a final rule, with compliance by May 1, 2022, that requires banking organizations to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.
In November 2021, the federal banking agencies adopted a final rule, with compliance by May 1, 2022, that requires banking organizations to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States. 17 In July 2023, the SEC issued a final rule, “Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure,” which requires registrants to provide investors, through enhanced and standardized disclosures, greater insight into material cybersecurity incidents and the registrants’ cybersecurity risk management, strategy and governance.
As of December 31, 2022, approximately $406.8 million or 1.98% of United’s loan portfolio were real estate loans that met the regulatory definition of a high loan-to-value loan.
As of December 31, 2023, approximately $526.4 million or 2.46% of United’s loan portfolio were real estate loans that met the regulatory definition of a high loan-to-value loan.
Among other things, FDICIA authorizes regulatory authorities to take “prompt corrective action” with respect to depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
Among other things, FDICIA authorizes regulatory authorities to take “prompt corrective action” with respect to depository institutions that do not meet minimum capital requirements.
The EGRRCPA Act primarily amends several other laws, including the Truth in Lending Act (TILA), Federal Credit Union Act, Federal Deposit Insurance Act, Fair Credit Reporting Act (FCRA) and Securities Act of 1933.
In addition, the legislation establishes new consumer protections and amends various securities- and investment company-related requirements. The EGRRCPA Act primarily amends several other laws, including the Truth in Lending Act (TILA), Federal Credit Union Act, Federal Deposit Insurance Act, Fair Credit Reporting Act (FCRA) and Securities Act of 1933.
In addition, at certain times, Crescent may purchase or sell rights to service mortgage loans from or to third parties. United Brokerage Services, Inc., a wholly-owned subsidiary of United Bank, is a fully-disclosed broker/dealer and a Registered Investment Advisor with the Financial Industry Regulatory Authority (“FINRA”), the Securities and Exchange Commission, and a member of the Securities Investor Protection Corporation.
United Brokerage Services, Inc., a wholly-owned subsidiary of United Bank, is a fully-disclosed broker/dealer and a Registered Investment Advisor with the Financial Industry Regulatory Authority (“FINRA”), the Securities and Exchange Commission, and a member of the Securities Investor Protection Corporation.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits or making loans to such customers. United’s bank subsidiary must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing customer relations.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits or making loans to such customers.
Department of the Treasury, issued the priorities for anti-money laundering and countering the financing of terrorism policy required under the AMLA.
Department of the Treasury, issued the priorities for anti-money laundering and countering the financing of terrorism policy required under the AMLA. The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing.
The loan and lease portfolio is mainly comprised of commercial, real estate and consumer loans including credit card and home equity loans. Since year-end 2021, commercial, financial and agricultural loans increased $471.6 million or 4.23%. In particular, commercial real estate loans increased $321.4 million or 4.18% while commercial loans (not secured by real estate) increased $150.2 million or 4.34%.
The loan and lease portfolio is mainly comprised of commercial, real estate and consumer loans including credit card and home equity loans. Since year-end 2022, commercial, financial and agricultural loans increased $264.5 million or 2.28%. In particular, commercial real estate loans increased $304.7 million or 3.80% while commercial loans (not secured by real estate) decreased $40.1 million or 1.11%.
Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties.
If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties.
Within commercial loans (not secured by real estate), Payment Protection Program (“PPP”) loans declined $267.4 million. Construction and land development loans increased $912.8 million or 45.32%, residential real estate loans increased $971.4 million or 26.31%, and consumer loans increased $173.1 million or 14.51% due to an increase in indirect automobile financing.
Within commercial loans (not secured by real estate), Payment Protection Program (“PPP”) loans declined $14.8 million. Construction and land development loans increased $221.3 million or 7.56%, residential real estate loans increased $608.3 million or 13.05%, and consumer loans decreased $301.1 million or 22.05% due mainly to a decrease in indirect automobile financing.
Anti-Money Laundering and the USA Patriot Act A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing.
Banks with more than $10 billion in assets, such as United Bank, are subject to supervision by the CFPB with respect to these federal consumer financial laws. Anti-Money Laundering and the USA Patriot Act A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing.
These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations. The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.
Cybersecurity The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes.
We will continue to evaluate the impact of any changes to the regulations implementing the CRA and their impact to our financial condition, results of operations, and/or liquidity, which cannot be predicted at this time.
Most of the rule’s requirements will be applicable beginning January 1, 2026. The remaining requirements, including the data reporting requirements, will be applicable on January 1, 2027. We will evaluate the impact of these changes to these new CRA rules and their impact to our financial condition, results of operations, and/or liquidity, which is not known at this time.
Under the Basel framework, these standards generally became effective on January 1, 2022, with an aggregate output floor phasing in through January 1, 2027. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to United or United Bank.
Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to United or United Bank. In July 2023, the federal banking regulators proposed revisions to the Basel III Capital Rules to implement the Basel Committee’s 2017 standards and make other changes to the Basel III Capital Rules.
As discussed above, the Dodd-Frank Act centralized responsibility for consumer financial protection by creating the CFPB, and giving it responsibility for implementing, examining and enforcing compliance with federal consumer protection laws. The CFPB has broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans, and credit cards.
The CFPB has broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans, and credit cards. The CFPB’s functions include investigating consumer complaints, rulemaking, supervising and examining banks’ consumer transactions, and enforcing rules related to consumer financial products and services.
As a result of the new rule, the FDIC insurance costs of insured depository institutions, including United Bank, would generally increase. 13 United’s FDIC insurance expense totaled $12.0 million, $8.3 million, and $10.1 million in 2022, 2021 and 2020, respectively.
As a result of this final rule, United accrued $12.0 million in the fourth quarter of 2023 to pay the special assessment over the next eight assessment periods. United expects the special assessments will be tax deductible. United’s FDIC insurance expense totaled $30.4 million, $12.0 million, and $8.3 million in 2023, 2022 and 2021, respectively.
Removed
On May 24, 2018, President Trump signed into law the “Economic Growth, Regulatory Relief, and Consumer Protection Act (the EGRRCPA Act)” which provides certain limited amendments to the Dodd-Frank Act, as well as certain targeted modifications to other post-financial crisis regulatory requirements. In addition, the legislation establishes new consumer protections and amends various securities- and investment company-related requirements.
Added
In addition, at certain times, Crescent may purchase or sell rights to service mortgage loans from or to third parties. During the fourth quarter of 2023, Crescent exited the third-party origination (“TPO”) business.
Removed
The impact of Basel IV on us will depend on the manner in which it is implemented by the federal bank regulators.
Added
As a result of the new rule, the FDIC insurance costs of insured depository institutions, including United Bank, would generally increase. 12 On November 16, 2023, the FDIC Board of Directors approved a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.
Removed
Banking regulators take into account CRA ratings when considering approval of a proposed transaction. 15 In the third quarter of 2022, United Bank received a Community Reinvestment Act (“CRA”) Performance Evaluation from the Federal Reserve Bank of Richmond (the “FRB”) with a rating of “Needs to Improve.” Based on its performance on the individual components of the CRA exam, United Bank received a rating of “Satisfactory.” These individual components were a “High Satisfactory” rating for the Lending Test, an “Outstanding” rating for the Investment Test and a “High Satisfactory” rating for the Service Test.
Added
The Federal Deposit Insurance Act (“FDI Act”) requires the FDIC to take this action in connection with the systemic risk determination announced on March 12, 2023.
Removed
United Bank’s final overall rating, however, was downgraded to “Needs to Improve” as a result of a Fair Housing Act violation cited in the Washington DC Metropolitan Statistical Area following a FRB fair lending examination of United Bank and its wholly-owned subsidiary, George Mason Mortgage, LLC. This matter was also the subject of an investigation by the Department of Justice.
Added
The special assessment did not apply to any banking organization (defined to include FDIC-insured financial institutions that are not subsidiaries of a holding company and FDIC–insured financial institutions that are subsidiaries of a holding company with one or more FDIC–insured financial institution subsidiaries) with less than $5 billion in total consolidated assets.
Removed
The Department of Justice, however, has advised United Bank in writing that it has completed its review of this matter and determined that the circumstances of this matter do not require enforcement action by the Department of Justice at this time.
Added
The FDIC estimated that of the total cost of the failures of Silicon Valley Bank and Signature Bank of approximately $16.3 billion was attributable to the protection of uninsured depositors.
Removed
The FRB Performance Evaluation states that “United Bank management has taken action to address the deficiencies and committed to taking further voluntary corrective actions to prevent further violations.” A “Needs to Improve” rating results in restrictions on certain expansionary activities, including certain mergers and acquisitions and the establishment of bank branches.
Added
The assessment base for the special assessment is equal to an insured depository institution’s (“IDI’s”) estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion, applicable either to the IDI, if an IDI is not a subsidiary of a holding company, or at the banking organization level, to the extent that an IDI is part of a holding company with one or more subsidiary IDIs.
Removed
These restrictions will remain in place until the FRB issues a higher CRA rating following a subsequent CRA examination. The next CRA examination commenced in October 2022 and United Bank is awaiting the results. The precise timing of any results therefrom will not be known until later.
Added
The special assessment will be collected at an annual rate of approximately 13.4 basis points for an anticipated total of eight quarterly assessment periods. The special assessment will be collected beginning with the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024) with an invoice payment date of June 28, 2024.
Removed
The Office of the Comptroller of the Currency (“OCC”), the Federal Reserve Board and the FDIC issued a joint notice of proposed rulemaking on May 5, 2022, proposing revisions to the CRA regulations. Comments on the proposed rulemaking were due by August 5, 2022.
Added
Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC could: (1) cease collection early, if it has collected enough to recover actual or estimated losses; (2) extend the special assessment collection period one or more quarters beyond the initial eight-quarter collection period, if actual or estimated losses exceed the amounts collected; and (3) impose a final shortfall special assessment on a one-time basis after the receiverships for Silicon Valley Bank and Signature Bank terminate, if actual losses exceed the amounts collected.
Removed
In September, 2022, legislation was introduced to significantly revise the CRA to add a number of new substantive and procedural requirements. This legislation may delay the pending proposed rulemaking by the banking regulators.
Added
The proposal introduces revised credit risk, equity risk, operational risk, credit valuation adjustment risk and market risk requirements, among other changes.
Removed
The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) The CARES Act, which became law on March 27, 2020, provided over $2 trillion to combat the coronavirus (“COVID-19”) and stimulate the economy.
Added
However, the revised capital requirements of the proposed rule would not apply to United or United Bank because they have less than $100 billion in total consolidated assets and trading assets and liabilities below the threshold for market risk requirements.
Removed
Many of the CARES Act’s programs, including the Paycheck Protection Program (“PPP”), are dependent upon the direct involvement of U.S. financial institutions and have been implemented through rules and guidance adopted by federal departments and agencies, including the U.S.
Added
In 2023, United Bank received a CRA Performance Evaluation from the Federal Reserve Bank of Richmond (the “FRB”) with a rating of “Satisfactory.” On October 24, 2023, the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency (“OCC”) published a final CRA rule that creates a modernized rule for the banking industry.
Removed
Department of Treasury, the Federal Reserve and other federal banking agencies, including those with direct supervisory jurisdiction over United and United Bank. Furthermore, as the on-going COVID-19 pandemic evolves, federal regulatory authorities continue to issue additional guidance with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19.
Added
The final rule updates the CRA regulations to achieve the following key goals: (1) encourage banks to expand access to credit, investment, and banking services in LMI communities; (2) adapt to changes in the banking industry, including mobile and online banking; (3) provide greater clarity and consistency in the application of the CRA regulations; and (4) tailor CRA evaluations and data collection to bank size and type.
Removed
On December 27, 2020, then President Trump signed into law the 2021 Consolidated Appropriations Act (the “CAA”), an approximately $900 billion bill, which extended several provisions of the CARES Act as well as provided additional COVID-19 relief.
Added
United’s bank subsidiary must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing customer relations. 15 As discussed above, the Dodd-Frank Act centralized responsibility for consumer financial protection by creating the CFPB, and giving it responsibility for implementing, examining and enforcing compliance with federal consumer protection laws.
Removed
In particular, the CAA extended weekly unemployment benefits, provided another round of economic stimulus payments to individuals and families, lengthened temporary suspensions and modifications of several-bank related provisions and provided more aid to small businesses. On March 11, 2021, President Joe Biden signed into law the $1.9 trillion American Rescue Plan Act of 2021.
Added
The final rule required United to adopt a clawback policy within 60 days after such listing standard became effective. In June 2023, the New York Stock Exchange and Nasdaq Stock Market adopted these required listing standards mandated by Section 954 of the Dodd-Frank Act, which were effective on October 2, 2023.
Removed
The legislation included additional stimulus checks to eligible individuals and an extension of the $300-per-week supplement to federal unemployment benefits through September 6, 2021. The legislation also allocates funding to small businesses, state and local governments, and COVID-19 vaccination and testing and tracing efforts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

42 edited+7 added−19 removed124 unchanged
Biggest changeWhile we conduct security assessments on our higher risk third parties, we cannot be sure that their information security protocols are sufficient to withstand a cyber-attack or other security breach. 24 Any cyber-attack or other security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information could severely damage our reputation, erode confidence in the security of our systems, products and services, expose us to the risk of litigation and liability, disrupt our operations and have a material adverse effect on our business.
Biggest changeAny cyber-attack or other security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information could severely damage our reputation, erode confidence in the security of our systems, products and services, expose us to the risk of litigation and liability, disrupt our operations and have a material adverse effect on our business. 22 United’s business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, its business and a negative impact on results of operations.
United’s stock price can fluctuate significantly in response to a variety of factors, including, among other things: • Actual or anticipated negative variations in quarterly results of operations; • Negative recommendations by securities analysts; • Poor operating and stock price performance of other companies that investors deem comparable to United; • News reports relating to negative trends, concerns and other issues in the financial services industry or the economy in general; • Negative perceptions in the marketplace regarding United and/or its competitors; • New technology used, or services offered, by competitors; • Adverse changes in interest rates or a lending environment with prolonged low interest rates; • Adverse changes in the real estate market; • Negative economic news; • Failure to integrate acquisitions or realize anticipated benefits from acquisitions; • Adverse changes in government regulations; and • Geopolitical conditions such as acts or threats of terrorism or military conflicts.
United’s stock price can fluctuate significantly in response to a variety of factors, including, among other things: • Actual or anticipated negative variations in quarterly results of operations; • Negative recommendations by securities analysts; • Poor operating and stock price performance of other companies that investors deem comparable to United; • News reports relating to negative trends, concerns and other issues in the financial services industry or the economy in general; • Negative perceptions in the marketplace regarding United and/or its competitors; 26 • New technology used, or services offered, by competitors; • Adverse changes in interest rates or a lending environment with prolonged low interest rates; • Adverse changes in the real estate market; • Negative economic news; • Failure to integrate acquisitions or realize anticipated benefits from acquisitions; • Adverse changes in government regulations; and • Geopolitical conditions such as acts or threats of terrorism or military conflicts.
See “Regulation and Supervision” in Item 1, “Business,” of this Form 10-K for additional detail and further discussion of these matters. 28 Acquisitions may be delayed, impeded, or prohibited due to regulatory issues Acquisitions by financial institutions, including us, are subject to approval by a variety of federal and state regulatory agencies (collectively, “regulatory approvals”).
See “Regulation and Supervision” in Item 1, “Business,” of this Form 10-K for additional detail and further discussion of these matters. Acquisitions may be delayed, impeded, or prohibited due to regulatory issues Acquisitions by financial institutions, including us, are subject to approval by a variety of federal and state regulatory agencies (collectively, “regulatory approvals”).
In such events, we could experience significant loan losses, which could have a material adverse effect on our financial condition and results of operations. 23 Certain of our credit exposures are concentrated in industries that may be more susceptible to the long-term risks of climate change, natural disasters or global pandemics.
In such events, we could experience significant loan losses, which could have a material adverse effect on our financial condition and results of operations. Certain of our credit exposures are concentrated in industries that may be more susceptible to the long-term risks of climate change, natural disasters or global pandemics.
The new standard requires the recognition of credit losses on loans, leases and other financial assets based on an entity’s current estimate of expected losses over the lifetime of each loan, lease or other financial asset, referred to as the Current Expected Credit Loss (“CECL”) model as opposed to the previous “incurred loss” model, which required recognition of losses on loans, leases and other financial assets only when those losses had incurred.
The new standard requires the recognition of credit losses on loans, leases and other financial assets based on an entity’s current estimate of expected losses over the lifetime of each loan, lease or other financial asset, 20 referred to as the Current Expected Credit Loss (“CECL”) model as opposed to the previous “incurred loss” model, which required recognition of losses on loans, leases and other financial assets only when those losses had incurred.
See the section captioned “Loans” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations elsewhere in this report for further discussion related to commercial and industrial, energy, construction and commercial real estate loans. OPERATIONAL RISKS United’s information systems may experience an interruption or breach in security.
See the section captioned “Loans” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations elsewhere in this report for further discussion related to commercial and industrial, energy, construction and commercial real estate loans. 21 OPERATIONAL RISKS United’s information systems may experience an interruption or breach in security.
Poor quality services could damage United’s reputation with its customers. In addition, these third party service providers are sources of operational and informational security risk to United, including risks associated with operational errors, information system interruptions or breaches, and unauthorized disclosures of sensitive or confidential client or customer information.
Poor quality services could damage United’s reputation with its customers. 23 In addition, these third party service providers are sources of operational and informational security risk to United, including risks associated with operational errors, information system interruptions or breaches, and unauthorized disclosures of sensitive or confidential client or customer information.
MARKET AND INTEREST RATE RISKS Changes in economic and political conditions could adversely affect our earnings, as our borrowers’ ability to repay loans and the value of the collateral securing our loans decline . United’s success depends, to a certain extent, upon local and national economic and political conditions, as well as governmental monetary policies.
MARKET, LIQUIDITY AND INTEREST RATE RISKS Changes in economic and political conditions could adversely affect our earnings, as our borrowers’ ability to repay loans and the value of the collateral securing our loans decline . United’s success depends, to a certain extent, upon local and national economic and political conditions, as well as governmental monetary policies.
New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. A change in accounting standards may adversely affect reported financial condition and results of operations. 30 United could face unanticipated environmental liabilities or costs related to real property owned or acquired through foreclosure.
New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. A change in accounting standards may adversely affect reported financial condition and results of operations. United could face unanticipated environmental liabilities or costs related to real property owned or acquired through foreclosure.
If repurchase and indemnity demands increase and such demands are valid claims and are in excess of United’s provision for potential losses, its liquidity, results of operations and financial condition may be adversely affected. 22 CREDIT RISKS There are no assurances as to adequacy of the allowance for credit losses.
If repurchase and indemnity demands increase and such demands are valid claims and are in excess of United’s provision for potential losses, its liquidity, results of operations and financial condition may be adversely affected. CREDIT RISKS There are no assurances as to adequacy of the allowance for credit losses.
United serves the Ohio counties of Lawrence, Belmont, Jefferson and Washington and Fayette county in Pennsylvania primarily because of their close proximity to the Ohio and Pennsylvania borders and United banking offices located in those counties or in nearby West Virginia. United’s Virginia markets include the Maryland, northern Virginia and Washington, D.C.
United serves the Ohio counties of Lawrence, Belmont, Jefferson and Washington and Fayette county in Pennsylvania primarily because of their close proximity to the Ohio and Pennsylvania borders and United banking offices located in those counties or in nearby West Virginia. United’s Virginia markets 24 include the Maryland, northern Virginia and Washington, D.C.
The lack of empirical data surrounding the credit and other financial risks posed 31 by climate change render it impossible to predict how specifically climate change may impact our financial condition and results of operations; however, the physical effects of climate change may also directly impact us.
The lack of empirical data surrounding the credit and other financial risks posed by climate change render it impossible to predict how specifically climate change may impact our financial condition and results of operations; however, the physical effects of climate change may also directly impact us.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Item 1B. UNRESOLVED STAFF COMMENTS None
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. 29 Item 1B. UNRESOLVED STAFF COMMENTS None
Such conditions could have a material adverse effect on the credit quality of our loans and our business, financial condition and results of operations. 26 The value of certain investment securities is volatile and future declines in value could have a materially adverse effect on future earnings and regulatory capital.
Such conditions could also have a material adverse effect on the credit quality of our loans and our business, financial condition and results of operations. The value of certain investment securities is volatile and future declines in value could have a materially adverse effect on future earnings and regulatory capital.
United is subject to extensive federal and state regulation, supervision and examination which vests significant discretion in the various regulatory authorities. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not shareholders.
REGULATORY AND LITIGATION RISKS United is subject to extensive government regulation and supervision. United is subject to extensive federal and state regulation, supervision and examination which vests significant discretion in the various regulatory authorities. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not shareholders.
Continued volatility in the fair value for certain investment securities, whether caused by changes in market conditions, interest rates, credit risk of the issuer, the expected yield of the security, or actual defaults in the portfolio could result in significant fluctuations in the value of the securities as well as any regulatory rulemaking such as the Volcker Rule which could exclude or limit the holdings of certain investment securities.
Continued volatility in the fair value for certain investment securities, whether caused by changes in market conditions, interest rates, credit risk of the issuer, the expected yield of the security, or actual defaults in the portfolio could result in significant fluctuations in the value of the securities as well as any regulatory rulemaking could exclude or limit the holdings of certain investment securities.
United, through its mortgage banking subsidiary, Crescent, acts as servicer for approximately $3.4 billion of mortgage loans owned by third parties as of December 31, 2022. As a servicer for those loans, United has certain contractual obligations, including foreclosing on defaulted mortgage loans or, to the extent applicable, considering alternatives to foreclosure such as loan modifications or short sales.
United, through its mortgage banking subsidiary, Crescent, acts as servicer for approximately $1.2 billion of mortgage loans owned by third parties as of December 31, 2023. As a servicer for those loans, United has certain contractual obligations, including foreclosing on defaulted mortgage loans or, to the extent applicable, considering alternatives to foreclosure such as loan modifications or short sales.
The payment of these dividends by its subsidiaries is also restricted by federal and state banking laws and regulations. As of December 31, 2022, approximately $276.2 million was available for dividend payments from United Bank to United without regulatory approval. 29 An investment in United common stock is not an insured deposit.
The payment of these dividends by its subsidiaries is also restricted by federal and state banking laws and regulations. As of December 31, 2023, approximately $372.1 million was available for dividend payments from United Bank to United without regulatory approval. An investment in United common stock is not an insured deposit.
Failure to do so could substantially harm United’s business. 25 United often purchases services from vendors under agreements that typically can be terminated on a periodic basis. There can be no assurance, however, that vendors will be able to meet their obligations under these agreements or that United will be able to compel them to do so.
United often purchases services from vendors under agreements that typically can be terminated on a periodic basis. There can be no assurance, however, that vendors will be able to meet their obligations under these agreements or that United will be able to compel them to do so.
United has entered into subcontracts for the supply of current and future services, such as data processing, mortgage loan processing and servicing, and certain property management functions. These services must be available on a continuous and timely basis and be in compliance with any regulatory requirements.
United has entered into subcontracts for the supply of current and future services, such as data processing, mortgage loan processing and servicing, and certain property management functions. These services must be available on a continuous and timely basis and be in compliance with any regulatory requirements. Failure to do so could substantially harm United’s business.
Any failure, interruption or breach in security of these systems, whether due to severe weather, natural disasters, cyber-attack, acts of war or terrorism, criminal activity or other factors, could result in failures or disruptions in general ledger, deposit, loan, customer relationship management and other systems.
United relies heavily on communications and information systems to conduct its business. Any failure, interruption or breach in security of these systems, whether due to severe weather, natural disasters, cyber-attack, acts of war or terrorism, criminal activity or other factors, could result in failures or disruptions in general ledger, deposit, loan, customer relationship management and other systems.
The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair United’s business operations.
The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair United’s business operations. This report is qualified in its entirety by these risk factors.
Implementation of changes to asset risk weightings for risk based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy and could limit United’s ability to make distributions, including paying dividends. 21 United’s earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies .
Implementation of changes to asset risk weightings for risk based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy and could limit United’s ability to make distributions, including paying dividends.
Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. United has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, or other institutional clients.
United has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, or other institutional clients.
While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. 20 In the normal course of business, United and its subsidiaries are routinely subject to examinations and challenges from federal and state tax authorities regarding the amount of taxes due in connection with investments that the Company has made and the businesses in which United has engaged.
In the normal course of business, United and its subsidiaries are routinely subject to examinations and challenges from federal and state tax authorities regarding the amount of taxes due in connection with investments that the Company has made and the businesses in which United has engaged.
United may be terminated as a servicer of mortgage loans, be required to repurchase a mortgage loan or reimburse investors for credit losses on a mortgage loan, or incur costs, liabilities, fines and other sanctions if we fail to satisfy our servicing obligations, including our obligations with respect to mortgage loan foreclosure actions .
This could adversely affect the borrower’s earnings and ability to repay its loan, which could have a material adverse effect on our financial condition and results of operations. 19 United may be terminated as a servicer of mortgage loans, be required to repurchase a mortgage loan or reimburse investors for credit losses on a mortgage loan, or incur costs, liabilities, fines and other sanctions if we fail to satisfy our servicing obligations, including our obligations with respect to mortgage loan foreclosure actions .
Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
The CFPB has broad rulemaking authority to administer and carry out the provisions of the Dodd-Frank Act with respect to financial institutions that offer covered financial products and services to consumers.
Compliance with any such change may impact the business operations of depository institutions offering consumer financial products or services, including United Bank . The CFPB has broad rulemaking authority to administer and carry out the provisions of the Dodd-Frank Act with respect to financial institutions that offer covered financial products and services to consumers.
RISKS RELATED TO ACQUISITION ACTIVITY Potential acquisitions may disrupt our business and dilute shareholder value We generally seek merger or acquisition partners that are culturally similar and have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded services.
For more information concerning United’s interest rate risk model and policy, see the discussion in Quantitative and Qualitative Disclosures About Market Risk included in Part II, under Item 7A of this Form 10-K. 25 RISKS RELATED TO ACQUISITION ACTIVITY Potential acquisitions may disrupt our business and dilute shareholder value We generally seek merger or acquisition partners that are culturally similar and have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded services.
Provisions of federal banking laws, including regulatory approval requirements, could make it more difficult to be acquired by a third party, even if perceived to be beneficial to United’s shareholders. These provisions effectively inhibit a non-negotiated merger or other business combination, which could adversely affect the market price of United’s common stock.
Provisions of federal banking laws, including regulatory approval requirements, could make it more difficult to be acquired by a third party, even if perceived to be beneficial to United’s shareholders.
In addition, United may elect to raise additional capital to support the Company’s business or to finance acquisitions, if any, or United may otherwise elect to raise additional capital.
United is required by federal and state regulatory authorities to maintain adequate levels of capital to support the Company’s operations. In addition, United may elect to raise additional capital to support the Company’s business or to finance acquisitions, if any, or United may otherwise elect to raise additional capital.
Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. See the section captioned “Regulation and Supervision” included in Item 1.
Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. See the section captioned “Regulation and Supervision” included in Item 1. While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur.
There is a risk that aggressive competition could result in United controlling a smaller share of these markets. A decline in market share could lead to a decline in net income which would have a negative impact on shareholder value. United may be adversely affected by the soundness of other financial institutions.
There is a risk that aggressive competition could result in United controlling a smaller share of these markets. A decline in market share could lead to a decline in net income which would have a negative impact on shareholder value. United is subject to liquidity risk. We require liquidity to meet our deposit and debt obligations as they come due.
Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on United’s business, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations.
Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on United’s business, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations. 28 Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to United’s environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
We also rely on numerous other third-party service providers to conduct other aspects of our business operations and face similar risks relating to them.
We also rely on numerous other third-party service providers to conduct other aspects of our business operations and face similar risks relating to them. While we conduct security assessments on our higher risk third parties, we cannot be sure that their information security protocols are sufficient to withstand a cyber-attack or other security breach.
The challenges made by tax authorities may result in adjustments to the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions. If any such challenges are made and are not resolved in the Company’s favor, they could have a material adverse effect on United’s financial condition and results of operations.
The challenges made by tax authorities may result in adjustments to the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions.
Those policies determine to a significant extent our cost of funds for lending and investing. Changes in those policies are beyond our control and are difficult to predict. Federal Reserve policies can also affect our borrowers, potentially increasing the risk that they may fail to repay their loans.
Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and interest-bearing deposits and can also affect the value of financial instruments we hold. Those policies determine to a significant extent our cost of funds for lending and investing. Changes in those policies are beyond our control and are difficult to predict.
Economic and inflationary pressure on consumers and uncertainty regarding continuing economic improvement could result in changes in consumer and business spending, borrowing and savings habits.
Consequently, declines in the economy in our market area could have a material adverse effect on our financial condition and results of operations. In addition, economic and inflationary pressure on consumers and uncertainty regarding the economy could result in changes in consumer and business spending, borrowing and savings habits.
For example, a tightening of the money supply by the Federal Reserve could reduce the demand for a borrower’s products and services. This could adversely affect the borrower’s earnings and ability to repay its loan, which could have a material adverse effect on our financial condition and results of operations.
Federal Reserve policies can also affect our borrowers, potentially increasing the risk that they may fail to repay their loans. For example, a tightening of the money supply by the Federal Reserve could reduce the demand for a borrower’s products and services.
The Consumer Financial Protection Bureau (“CFPB”) may reshape the consumer financial laws through rulemaking and enforcement of the prohibitions against unfair, deceptive and abusive business practices. Compliance with any such change may impact the business operations of depository institutions offering consumer financial products or services, including United Bank .
If any such challenges are made and are not resolved in the Company’s favor, they could have a material adverse effect on United’s financial condition and results of operations. 18 The Consumer Financial Protection Bureau (“CFPB”) may reshape the consumer financial laws through rulemaking and enforcement of the prohibitions against unfair, deceptive and abusive business practices.
GENERAL RISKS United may elect or be compelled to seek additional capital in the future, but capital may not be available when it is needed. United is required by federal and state regulatory authorities to maintain adequate levels of capital to support the Company’s operations.
These provisions effectively inhibit a non-negotiated merger or other business combination, which could adversely affect the market price of United’s common stock. 27 GENERAL RISKS United may elect or be compelled to seek additional capital in the future, but capital may not be available when it is needed.
The policies of the Federal Reserve impact United significantly. The Federal Reserve regulates the supply of money and credit in the United States. Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and interest-bearing deposits and can also affect the value of financial instruments we hold.
United’s earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies . The policies of the Federal Reserve impact United significantly. The Federal Reserve regulates the supply of money and credit in the United States.
Removed
This report is qualified in its entirety by these risk factors. 19 REGULATORY AND LITIGATION RISKS Our Needs to Improve rating under The Community Reinvestment Act may restrict our operations and limit our ability to pursue certain strategic opportunities.
Added
Our access to funding sources in amounts adequate to finance our activities or on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy generally.
Removed
In the third quarter of 2022, United Bank received a Community Reinvestment Act (“CRA”) Performance Evaluation from the Federal Reserve Bank of Richmond (the “FRB”) with a rating of “Needs to Improve.” Based on its performance on the individual components of the CRA exam, the Bank received a rating of “Satisfactory.” These individual components were a “High Satisfactory” rating for the Lending Test, an “Outstanding” rating for the Investment Test and a “High Satisfactory” rating for the Service Test.
Added
A substantial majority of our liabilities are demand, savings, interest checking and money market deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial portion of our assets are loans, which cannot be called or sold in the same time frame.
Removed
The Bank’s final overall rating, however, was downgraded to “Needs to Improve” as a result of a Fair Housing Act violation cited in the Washington DC Metropolitan Statistical Area following a FRB fair lending examination of the Bank and its wholly-owned subsidiary, George Mason Mortgage, LLC. This matter was also the subject of an investigation by the Department of Justice.
Added
We may not be able to replace maturing deposits and advances as necessary in the future, especially if a large number of our depositors sought to withdraw their accounts, regardless of the reason.
Removed
The Department of Justice, however, has advised the Bank in writing that it has completed its review of this matter and determined that the circumstances of this matter do not require enforcement action by the Department of Justice at this time.
Added
Our access to deposits may be negatively impacted by, among other factors, periods of low interest rates or higher interest rates, which could promote increased competition for deposits or provide customers with alternative investment options.
Removed
The FRB Performance Evaluation states that “United Bank management has taken action to address the deficiencies and committed to taking further voluntary corrective actions to prevent further violations.” A “Needs to Improve” rating results in restrictions on certain expansionary activities, including certain mergers and acquisitions and the establishment of bank branches.
Added
Additionally, negative news about us or the banking industry in general could negatively impact market and/or customer perceptions of our company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits.
Removed
These restrictions will remain in place until the FRB issues a higher CRA rating following a subsequent CRA examination. The next CRA examination commenced in October 2022 and United Bank is awaiting the results. The precise timing of any results therefrom will not be known until later. United is subject to extensive government regulation and supervision.
Added
Furthermore, as we and other regional banking organizations experienced in 2023, the failure of other financial institutions may cause deposit outflows as customers spread deposits among several different banks so as to maximize their amount of FDIC insurance, move deposits to banks deemed “too big to fail” or remove deposits from the banking system entirely.
Removed
United’s business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, its business and a negative impact on results of operations. United relies heavily on communications and information systems to conduct its business.
Added
A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations. United may be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
Removed
Consequently, declines in the economy in our market area could have a material adverse effect on our financial condition and results of operations. While recent economic conditions have seen improving trends since the onset of the COVID-19 pandemic, there can be no assurance that this improvement will continue.
Removed
Evolving responses from federal and state governments and other regulators, and our customers or our third-party partners or vendors, to new challenges such as climate change have impacted and could continue to impact the economic and political conditions under which we operate.
Removed
For more information concerning United’s interest rate risk model and policy, see the discussion in Quantitative and Qualitative Disclosures About Market Risk included in Part II, under Item 7A of this Form 10-K. 27 Uncertainty relating to the LIBOR determination process and LIBOR discontinuance may adversely affect our results of operations.
Removed
The London Interbank Offered Rate (“LIBOR”) and certain other “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform. These reforms may cause such benchmarks to perform differently than in the past or have other consequences, which cannot be predicted.
Removed
The United Kingdom’s Financial Conduct Authority and the administrator of LIBOR have announced that the publication of the most commonly used U.S. dollar LIBOR settings will cease to be published or cease to be representative after June 30, 2023. The publication of all other LIBOR settings ceased to be published as of December 31, 2021.
Removed
The bank regulatory agencies indicated that entering into new contracts that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks and that they would examine bank practices accordingly.
Removed
The Adjustable Interest Rate (LIBOR) Act, enacted in March 2022, provides a statutory framework to replace U.S. dollar LIBOR with a benchmark rate based on the Secured Overnight Financing Rate (“SOFR”) for contracts governed by U.S. law that have no or ineffective fallback, and in December 2022, the Federal Reserve Board adopted related implementing rules.
Removed
United has taken steps to ensure that no new contracts using LIBOR were originated after December 31, 2021. At this time, United intends to prioritize SOFR and Prime as the preferred alternatives to LIBOR; however, these preferred alternatives could change over time based on market developments.
Removed
There can be no assurances on which benchmark rate(s) may replace LIBOR or how LIBOR will be determined for purposes of financial instruments that are currently referencing LIBOR when it ceases to exist.
Removed
The discontinuance of LIBOR may result in uncertainty or differences in the calculation of the applicable interest rate or payment amount depending on the terms of the governing documents, may adversely affect the value of our floating rate obligations, loans, deposits, derivatives, and other financial instruments tied to LIBOR rates and may also increase operational and other risks to the Company and the industry.
Removed
In addition, the implementation of LIBOR reform proposals may result in increased compliance costs and operational costs, including costs related to continued participation in LIBOR and the transition to a replacement reference rate or rates. We cannot reasonably estimate the expected cost.
Removed
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to United’s environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeUnited operates two hundred and twenty (220) full service offices—forty-seven (47) offices located throughout West Virginia, one hundred (100) offices in the Shenandoah Valley region, the Northern Neck, the Richmond and Lynchburg metropolitan areas of Virginia and the Northern Virginia, Maryland and Washington, D.C. metropolitan area, forty-three (43) offices in the Mountains, Piedmont, Coastal Plains and Tidewater regions of North Carolina, twenty-five (25) offices in the Coastal, Midlands, and Upstate regions of South Carolina, four (4) offices in southwestern Pennsylvania and one (1) office in southeastern Ohio.
Biggest changeUnited operates two hundred and nineteen (219) full service offices—forty-seven (47) offices located throughout West Virginia, ninety-nine (99) offices in the Shenandoah Valley region, the Northern Neck, the Richmond and Lynchburg metropolitan areas of Virginia and the Northern Virginia, Maryland and Washington, D.C. metropolitan area, forty-three (43) offices in the Mountains, Piedmont, Coastal Plains and Tidewater regions of North Carolina, twenty-five (25) offices in the Coastal, Midlands, and Upstate regions of South Carolina, four (4) offices in southwestern Pennsylvania and one (1) office in southeastern Ohio.
United owns all four (4) of its Pennsylvania facilities. 32 In Ohio, United owns its one branch. United leases operations centers in the Charleston, West Virginia and Chantilly, Virginia areas and owns two operations centers in the Morgantown, West Virginia area and Washington, North Carolina.
United owns all four (4) of its Pennsylvania facilities. In Ohio, United owns its one branch. United leases operations centers in the Charleston, West Virginia and Chantilly, Virginia areas and owns two operations centers in the Morgantown, West Virginia area and Washington, North Carolina. 31
United owns forty-one (41) of its West Virginia facilities while leasing six (6) of its offices under operating leases. In Virginia, United leases forty-four (44) of its branches under operating leases while owning thirty-eight (38) branches. United owns three (3) branches and leases eight (8) of its branches under operating leases in Maryland.
United owns forty-one (41) of its West Virginia facilities while leasing six (6) of its offices under operating leases. In Virginia, United leases forty-two (42) of its branches under operating leases while owning thirty-eight (38) branches. United owns three (3) branches and leases nine (9) of its branches under operating leases in Maryland.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. 33 UNITED BANKSHARES, INC. FORM 10-K, PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 32 UNITED BANKSHARES, INC. FORM 10-K, PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Ending 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 United Bankshares, Inc. 100.00 92.95 119.74 106.01 123.35 143.14 NASDAQ Bank Index 100.00 83.83 104.26 96.44 137.82 115.38 S&P Mid-Cap Index 100.00 88.90 112.17 127.48 159.01 138.18 35 Issuer Repurchases The table below includes certain information regarding United’s purchase of its common shares during the three months ended December 31, 2022: Period Total Number of Shares Purchased (1) (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans (3) Maximum Number of Shares that May Yet be Purchased Under the Plans (3) 10/01 – 10/31/2022 0 $ 00.00 0 4,371,239 11/01 – 11/30/2022 0 $ 00.00 0 4,371,239 12/01 – 12/31/2022 5 $ 42.82 0 4,371,239 Total 5 $ 42.82 (1) Includes shares exchanged in connection with the exercise of stock options or the vesting of restricted stock under United’s long-term incentive plans.
Biggest changePeriod Ending 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 United Bankshares, Inc. 100.00 128.82 114.05 132.70 153.99 149.17 NASDAQ Bank Index 100.00 124.37 115.04 164.41 137.64 132.91 S&P Mid-Cap Index 100.00 126.17 143.39 178.85 155.42 180.90 34 Issuer Repurchases The table below includes certain information regarding United’s purchase of its common shares during the three months ended December 31, 2023: Period Total Number of Shares Purchased (1) (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans (3) Maximum Number of Shares that May Yet be Purchased Under the Plans (3) 10/01 – 10/31/2023 0 $ 00.00 0 4,371,239 11/01 – 11/30/2023 7 $ 27.37 0 4,371,239 12/01 – 12/31/2023 0 $ 00.00 0 4,371,239 Total 7 $ 27.37 (1) Includes shares exchanged in connection with the exercise of stock options or the vesting of restricted stock under United’s long-term incentive plans.
As of December 31, 2022, United still has 4,371,239 shares available for repurchase under the 2022 Plan. The Board of Directors believes that the availability of authorized but unissued common stock of United is of considerable value if opportunities should arise for the acquisition of other businesses through the issuance of United’s stock.
As of December 31, 2023, United still has 4,371,239 shares available for repurchase under the 2022 Plan. The Board of Directors believes that the availability of authorized but unissued common stock of United is of considerable value if opportunities should arise for the acquisition of other businesses through the issuance of United’s stock.
The cumulative total shareholder return assumes a $100 investment on December 31, 2017 in the common stock of United and each index and the cumulative return is measured as of each subsequent fiscal year-end. There is no assurance that United’s common stock performance will continue in the future with the same or similar trends as depicted in the graph.
The cumulative total shareholder return assumes a $100 investment on December 31, 2018 in the common stock of United and each index and the cumulative return is measured as of each subsequent fiscal year-end. There is no assurance that United’s common stock performance will continue in the future with the same or similar trends as depicted in the graph.
Holders of the common stock will not have preemptive rights with respect to the preferred stock. 34 There are no preemptive or conversion rights or, redemption or sinking fund provisions with respect to United’s stock. All of the issued and outstanding shares of United’s stock are fully paid and non-assessable.
Holders of the common stock will not have preemptive rights with respect to the preferred stock. 33 There are no preemptive or conversion rights or, redemption or sinking fund provisions with respect to United’s stock. All of the issued and outstanding shares of United’s stock are fully paid and non-assessable.
The following graph compares United’s cumulative total shareholder return (assuming reinvestment of dividends) on its common stock for the five-year period ending December 31, 2022, with the cumulative total return (assuming reinvestment of dividends) of the Standard and Poor’s Midcap 400 Index and with the NASDAQ Bank Index.
The following graph compares United’s cumulative total shareholder return (assuming reinvestment of dividends) on its common stock for the five-year period ending December 31, 2023, with the cumulative total return (assuming reinvestment of dividends) of the Standard and Poor’s Midcap 400 Index and with the NASDAQ Bank Index.
Shares are purchased pursuant to the terms of the applicable plan and not pursuant to a publicly announced stock repurchase plan. For the quarter ended December 31, 2022 – no shares were exchanged by participants in United’s long-term incentive plans.
Shares are purchased pursuant to the terms of the applicable plan and not pursuant to a publicly announced stock repurchase plan. For the quarter ended December 31, 2023 – no shares were exchanged by participants in United’s long-term incentive plans.
On May 11, 2022, the Board of Directors approved a new repurchase plan (the “2022 Plan”) to repurchase up to 4,750,000 shares of United’s common stock on the open market. The 2022 Plan replaced the 2019 Plan. During 2022, United repurchased 378,761 shares under the 2022 Plan.
On May 11, 2022, the Board of Directors approved a new repurchase plan (the “2022 Plan”) to repurchase up to 4,750,000 shares of United’s common stock on the open market. The 2022 Plan replaced the 2019 Plan. During 2022, United repurchased 378,761 shares under the 2022 Plan. United did not repurchase any shares in 2023.
United’s common stock is traded over the counter on the National Association of Securities Dealers Automated Quotations System, Global Select Market (“NASDAQ”) under the trading symbol UBSI. The closing sale price reported for United’s common stock on February 22, 2023, the last practicable date, was $40.85.
United’s common stock is traded over the counter on the National Association of Securities Dealers Automated Quotations System, Global Select Market (“NASDAQ”) under the trading symbol UBSI. The closing sale price reported for United’s common stock on February 22, 2024, the last practicable date, was $34.36.
The outstanding shares are held by approximately 9,485 shareholders of record, as well as 50,813 shareholders in street name as of January 31, 2023. The unissued portion of United’ s authorized common stock (subject to registration approval by the SEC) and the treasury shares are available for issuance as the Board of Directors determines advisable.
The outstanding shares are held by approximately 9,233 shareholders of record, as well as 43,255 shareholders in street name as of January 31, 2024. The unissued portion of United’ s authorized common stock (subject to registration approval by the SEC) and the treasury shares are available for issuance as the Board of Directors determines advisable.
For the quarter ended December 31, 2022, the following shares were purchased for the deferred compensation plan: December 2022 – 5 shares at an average price of $42.82. (3) In May of 2022, United’s Board of Directors approved a new repurchase plan to repurchase up to 4,750,000 shares of United’s common stock on the open market (the “2022 Plan”).
For the quarter ended December 31, 2023, the following shares were purchased for the deferred compensation plan: November 2023 – 7 shares at an average price of $27.37. (3) In May of 2022, United’s Board of Directors approved a repurchase plan to repurchase up to 4,750,000 shares of United’s common stock on the open market (the “2022 Plan”).
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock As of January 31, 2023, 200,000,000 shares of common stock, par value $2.50 per share, were authorized for United, of which 142,011,832 were issued, including 7,266,438 shares held as treasury shares.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock As of January 31, 2024, 200,000,000 shares of common stock, par value $2.50 per share, were authorized for United, of which 134,952,678 were issued, including 7,308,583 shares held as treasury shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes the changes in the major loan classes since year-end 2021: (Dollars in thousands) December 31 2022 December 31 2021 $ Change % Change Loans held for sale $ 56,879 $ 504,416 $ (447,537 ) (88.72 %) Commercial, financial, and agricultural: Owner-occupied commercial real estate $ 1,724,927 $ 1,733,176 $ (8,249 ) (0.48 %) Nonowner-occupied commercial real estate 6,286,974 5,957,288 329,686 5.53 % Other commercial loans 3,612,568 3,462,361 150,207 4.34 % Total commercial, financial, and agricultural $ 11,624,469 $ 11,152,825 $ 471,644 4.23 % Residential real estate 4,662,911 3,691,560 971,351 26.31 % Construction & land development 2,926,971 2,014,165 912,806 45.32 % Consumer: Bankcard 9,273 8,913 360 4.04 % Other consumer 1,356,539 1,183,844 172,695 14.59 % Total gross loans $ 20,580,163 $ 18,051,307 $ 2,528,856 14.01 % Less: Unearned income (21,997 ) (27,659 ) 5,662 (20.47 %) Total Loans, net of unearned income $ 20,558,166 $ 18,023,648 $ 2,534,518 14.06 % 43 The following table shows the amount of loans acquired and outstanding by major loan classes as of December 31, 2022 and 2021: December 31, 2022 December 31, 2021 (In thousands) Originated Acquired Total Originated Acquired Total Commercial, financial, and agricultural: Owner-occupied commercial real estate $ 1,031,330 $ 693,597 $ 1,724,927 $ 864,795 $ 868,381 $ 1,733,176 Nonowner-occupied commercial real estate 4,515,059 1,771,915 6,286,974 3,925,144 2,032,144 5,957,288 Other commercial loans 3,110,273 502,295 3,612,568 2,555,285 907,076 3,462,361 Total commercial, financial, and agricultural $ 8,656,662 $ 2,967,807 $ 11,624,469 $ 7,345,224 $ 3,807,601 $ 11,152,825 Residential real estate 3,999,088 663,823 4,662,911 2,795,608 895,952 3,691,560 Construction & land development 2,618,810 308,161 2,926,971 1,502,804 511,361 2,014,165 Consumer: Bankcard 9,273 0 9,273 8,913 0 8,913 Other consumer 1,346,699 9,840 1,356,539 1,166,719 17,125 1,183,844 Total gross loans $ 16,630,532 $ 3,949,631 $ 20,580,163 $ 12,819,268 $ 5,232,039 $ 18,051,307 The following table shows the maturity of loans and leases, outstanding as of December 31, 2022: (In thousands) Less Than One Year One To Five Years Five to Fifteen Years Greater than Fifteen Years Total Commercial, financial and agricultural: Owner-occupied commercial real estate $ 95,831 $ 824,297 $ 775,783 $ 29,016 $ 1,724,927 Nonowner-occupied commercial real estate 631,850 3,569,350 1,950,518 135,256 6,286,974 Other commercial loans 626,754 2,217,213 670,943 97,658 3,612,568 Total commercial, financial, and agricultural $ 1,354,435 $ 6,610,860 $ 3,397,244 $ 261,930 $ 11,624,469 Residential real estate 104,812 532,659 682,355 3,343,085 4,662,911 Construction & land development 913,146 1,614,349 304,817 94,659 2,926,971 Consumer: Bankcard 0 4,102 5,171 0 9,273 Other consumer 14,391 670,548 670,399 1,201 1,356,539 Total $ 2,386,784 $ 9,432,518 $ 5,059,986 $ 3,700,875 $ 20,580,163 44 At December 31, 2022, for loans and leases due after one year, interest rate information is as follows: (In thousands) One To Five Years Five to Fifteen Years Greater than Fifteen Years Total Commercial, financial and agricultural: Owner-occupied commercial real estate Outstanding with fixed interest rates $ 677,411 $ 318,456 $ 9,433 $ 1,005,300 Outstanding with adjustable interest rates 146,886 457,327 19,583 623,796 Total owner-occupied 824,297 775,783 29,016 1,629,096 Nonowner-occupied commercial real estate Outstanding with fixed interest rates $ 2,602,677 $ 1,144,298 $ 15,540 $ 3,762,515 Outstanding with adjustable interest rates 966,673 806,220 119,716 1,892,609 Total non-owner occupied 3,569,350 1,950,518 135,256 5,655,124 Other commercial loans Outstanding with fixed interest rates $ 1,788,957 $ 468,944 $ 58,019 $ 2,315,920 Outstanding with adjustable interest rates 428,256 201,999 39,639 669,894 Total other commercial 2,217,213 670,943 97,658 2,985,814 Residential real estate Outstanding with fixed interest rates $ 352,727 $ 262,619 $ 1,680,827 $ 2,296,173 Outstanding with adjustable interest rates 179,932 419,736 1,662,258 2,261,926 Total residential real estate 532,659 682,355 3,343,085 4,558,099 Construction Outstanding with fixed interest rates $ 495,230 $ 113,745 $ 81,833 $ 690,808 Outstanding with adjustable interest rates 1,119,119 191,072 12,826 1,323,017 Total construction 1,614,349 304,817 94,659 2,013,825 Consumer: Bankcard Outstanding with fixed interest rates $ 622 $ 252 $ 0 $ 874 Outstanding with adjustable interest rates 3,480 4,919 0 8,399 Total bankcard 4,102 5,171 0 9,273 Other consumer Outstanding with fixed interest rates $ 670,309 $ 670,261 $ 1,201 $ 1,341,771 Outstanding with adjustable interest rates 239 138 0 377 Total other consumer 670,548 670,399 1,201 1,342,148 Total outstanding with fixed interest rates $ 6,587,933 $ 2,978,575 $ 1,846,853 $ 11,413,361 Total outstanding with adjustable rates $ 2,844,585 $ 2,081,411 $ 1,854,022 $ 6,780,018 Total $ 9,432,518 $ 5,059,986 $ 3,700,875 $ 18,193,379 More information relating to loans is presented in Note D, Notes to Consolidated Financial Statements.
Biggest changeThe following table summarizes the changes in the major loan classes since year-end 2022: (Dollars in thousands) December 31 2023 December 31 2022 $ Change % Change Loans held for sale $ 56,261 $ 56,879 $ (618 ) (1.09 %) Commercial, financial, and agricultural: Owner-occupied commercial real estate $ 1,598,231 $ 1,724,927 $ (126,696 ) (7.35 %) Nonowner-occupied commercial real estate 6,718,343 6,286,974 431,369 6.86 % Other commercial loans 3,572,440 3,612,568 (40,128 ) (1.11 %) Total commercial, financial, and agricultural $ 11,889,014 $ 11,624,469 $ 264,545 2.28 % Residential real estate 5,271,236 4,662,911 608,325 13.05 % Construction & land development 3,148,245 2,926,971 221,274 7.56 % Consumer: Bankcard 9,962 9,273 689 7.43 % Other consumer 1,054,728 1,356,539 (301,811 ) (22.25 %) Total Loans and leases $ 21,373,185 $ 20,580,163 $ 793,022 3.85 % Less: Unearned income (14,101 ) (21,997 ) 7,896 (35.90 %) Total Loans and leases, net of unearned income $ 21,359,084 $ 20,558,166 $ 800,918 3.90 % The following table shows the amount of loans acquired and outstanding by major loan classes as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 (In thousands) Originated Acquired Total Originated Acquired Total Commercial, financial, and agricultural: Owner-occupied commercial real estate $ 999,471 $ 598,760 $ 1,598,231 $ 1,031,330 $ 693,597 $ 1,724,927 Nonowner-occupied commercial real estate 5,096,074 1,622,269 6,718,343 4,515,059 1,771,915 6,286,974 Other commercial loans 3,144,321 428,119 3,572,440 3,110,273 502,295 3,612,568 Total commercial, financial, and agricultural $ 9,239,866 $ 2,649,148 $ 11,889,014 $ 8,656,662 $ 2,967,807 $ 11,624,469 Residential real estate 4,731,392 539,844 5,271,236 3,999,088 663,823 4,662,911 Construction & land development 2,998,152 150,093 3,148,245 2,618,810 308,161 2,926,971 Consumer: Bankcard 9,962 0 9,962 9,273 0 9,273 Other consumer 1,048,428 6,299 1,054,728 1,346,699 9,840 1,356,539 Total Loans and leases $ 18,027,801 $ 3,345,384 $ 21,373,185 $ 16,630,532 $ 3,949,631 $ 20,580,163 41 The following table shows the maturity of loans and leases, outstanding as of December 31, 2023: (In thousands) Less Than One Year One To Five Years Five to Fifteen Years Greater than Fifteen Years Total Commercial, financial and agricultural: Owner-occupied commercial real estate $ 120,013 $ 806,380 $ 646,165 $ 25,673 $ 1,598,231 Nonowner-occupied commercial real estate 1,130,592 3,804,852 1,680,261 102,638 6,718,343 Other commercial loans 898,817 1,929,157 642,509 101,957 3,572,440 Total commercial, financial, and agricultural $ 2,149,422 $ 6,540,389 $ 2,968,935 $ 230,268 $ 11,889,014 Residential real estate 179,087 539,068 578,548 3,974,533 5,271,236 Construction & land development 843,468 1,986,371 230,291 88,115 3,148,245 Consumer: Bankcard 1,955 7,900 107 0 9,962 Other consumer 16,466 762,925 274,020 1,317 1,054,728 Total Loans and leases $ 3,190,398 $ 9,836,653 $ 4,051,901 $ 4,294,233 $ 21,373,185 At December 31, 2023, for loans and leases due after one year, interest rate information is as follows: (In thousands) One To Five Years Five to Fifteen Years Greater than Fifteen Years Total Commercial, financial and agricultural: Owner-occupied commercial real estate Outstanding with fixed interest rates $ 687,804 $ 232,859 $ 8,458 $ 929,121 Outstanding with adjustable interest rates 118,576 413,306 17,215 549,097 Total owner-occupied 806,380 646,165 25,673 1,478,218 Nonowner-occupied commercial real estate Outstanding with fixed interest rates $ 2,895,188 $ 979,938 $ 17,601 $ 3,892,727 Outstanding with adjustable interest rates 909,664 700,323 85,037 1,695,024 Total non-owner occupied 3,804,852 1,680,261 102,638 5,587,751 Other commercial loans Outstanding with fixed interest rates $ 1,623,875 $ 411,164 $ 66,882 $ 2,101,921 Outstanding with adjustable interest rates 305,282 231,345 35,075 571,702 Total other commercial 1,929,157 642,509 101,957 2,673,623 Residential real estate Outstanding with fixed interest rates $ 338,212 $ 242,599 $ 1,974,362 $ 2,555,173 Outstanding with adjustable interest rates 200,856 335,949 2,000,171 2,536,976 Total residential real estate 539,068 578,548 3,974,533 5,092,149 Construction Outstanding with fixed interest rates $ 654,280 $ 101,523 $ 73,413 $ 829,216 Outstanding with adjustable interest rates 1,332,091 128,768 14,702 1,475,561 Total construction 1,986,371 230,291 88,115 2,304,777 Consumer: Bankcard Outstanding with fixed interest rates $ 788 $ 0 $ 0 $ 788 Outstanding with adjustable interest rates 7,112 107 0 7,219 Total bankcard 7,900 107 0 8,007 Other consumer Outstanding with fixed interest rates $ 762,473 $ 273,989 $ 1,317 $ 1,037,779 Outstanding with adjustable interest rates 452 31 0 483 Total other consumer 762,925 274,020 1,317 1,038,262 Total outstanding with fixed interest rates $ 6,962,620 $ 2,242,072 $ 2,142,033 $ 11,346,725 Total outstanding with adjustable rates $ 2,874,033 $ 1,809,829 $ 2,152,200 $ 6,836,062 Total $ 9,836,653 $ 4,051,901 $ 4,294,233 $ 18,182,787 42 More information relating to loans is presented in Note D, Notes to Consolidated Financial Statements.
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 and leases based on historical loss experience, and consideration of qualitative factors such as current economic trends, all of which are susceptible to constant and significant change.
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 and leases based on historical loss experience, and consideration of qualitative factors such as current economic trends, all of which are susceptible to constant and 37 significant change.
In determining the components of the allowance for loan losses, management considers the risk arising in part from, but not limited to, qualitative factors which include charge-off and delinquency trends, current business conditions and reasonable and supportable economic forecasts, lending policies and procedures, the size and risk characteristics of the loan portfolio, concentrations of credit, and other various factors.
In determining the components of the allowance for loan and lease losses, management considers the risk arising in part from, but not limited to, qualitative factors which include charge-off and delinquency trends, current business conditions and reasonable and supportable economic forecasts, lending policies and procedures, the size and risk characteristics of the loan portfolio, concentrations of credit, and other various factors.
Specifically, this discussion contains certain references to financial measures identified as tax-equivalent (“FTE”) net interest income and return on average tangible equity. Management believes these non-GAAP financial measures to be helpful in understanding United’s results of operations or financial position. Net interest income is presented in this discussion on a tax-equivalent basis.
Specifically, this discussion contains certain references to financial measures identified as tax-equivalent (“FTE”) net interest income and return on average tangible equity. Management believes these non-GAAP financial measures to be helpful in understanding United’s results of operations or financial position. 36 Net interest income is presented in this discussion on a tax-equivalent basis.
In preparing the consolidated financial statements, management is required to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments, which are reviewed with the Audit Committee of the Board of Directors, are based on information available as 39 of the date of the financial statements.
In preparing the consolidated financial statements, management is required to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments, which are reviewed with the Audit Committee of the Board of Directors, are based on information available as of the date of the financial statements.
Such allowance is based on the credit losses expected to arise over the life of the asset (contractual term). Determining the allowance for loan losses requires management to make estimates of expected credit losses that are highly uncertain and require a high degree of judgment.
Such allowance is based on the credit losses expected to arise over the life of the asset (contractual term). Determining the allowance for loan and lease losses requires management to make estimates of expected credit losses that are highly uncertain and require a high degree of judgment.
United cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.” United undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. 36 The discussion in Item 1A, “Risk Factors,” lists some of the factors that could cause United’s actual results to vary materially from those expressed or implied by any forward-looking statements, and such discussion is incorporated into this discussion by reference.
United cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.” United undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. 35 The discussion in Item 1A, “Risk Factors,” lists some of the factors that could cause United’s actual results to vary materially from those expressed or implied by any forward-looking statements, and such discussion is incorporated into this discussion by reference.
See Notes L and M to the accompanying unaudited Notes to Consolidated Financial Statements for more details regarding the amounts available to United under lines of credit. The Asset Liability Committee monitors liquidity to ascertain that a liquidity position within certain prescribed parameters is maintained. No changes are anticipated in the policies of United’s Asset Liability Committee.
See Notes K and L to the accompanying unaudited Notes to Consolidated Financial Statements for more details regarding the amounts available to United under lines of credit. The Asset Liability Committee monitors liquidity to ascertain that a liquidity position within certain prescribed parameters is maintained. No changes are anticipated in the policies of United’s Asset Liability Committee.
The December 31, 2022 ratios reflects United’s election of a five-year transition provision, allowed by the Federal Reserve Board and other federal banking agencies in response to the COVID-19 pandemic, to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period.
The December 31, 2023 ratios reflects United’s election of a five-year transition provision, allowed by the Federal Reserve Board and other federal banking agencies in response to the COVID-19 pandemic, to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period.
It is the opinion of management that these commercial loans do not pose any unusual risks and that adequate consideration has been given to these loans in establishing the allowance for credit losses. The provision for credit losses related to held to maturity securities for the year of 2022 and 2021 was immaterial.
It is the opinion of management that these commercial loans do not pose any unusual risks and that adequate consideration has been given to these loans in establishing the allowance for credit losses. The provision for credit losses related to held to maturity securities for the year of 2023 and 2022 was immaterial.
Derivative contracts are carried at fair value and not notional value on the consolidated balance sheet and therefore do not represent the amounts that may ultimately be paid under these contracts. Further discussion of derivative instruments is included in Note S, Notes to Consolidated Financial Statements.
Derivative contracts are carried at fair value and not notional value on the consolidated balance sheet and therefore do not represent the amounts that may ultimately be paid under these contracts. Further discussion of derivative instruments is included in Note R, Notes to Consolidated Financial Statements.
In the normal course of business, United through its Asset Liability Committee evaluates these as well as other alternative funding strategies that may be utilized to meet short-term and long-term funding needs. See Notes L and M, Notes to Consolidated Financial Statements.
In the normal course of business, United through its Asset Liability Committee evaluates these as well as other alternative funding strategies that may be utilized to meet short-term and long-term funding needs. See Notes K and L, Notes to Consolidated Financial Statements.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on March 1, 2022 (the 2021 Form 10-K) for a discussion and analysis of the more significant factors that affected periods prior to 2021.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on March 1, 2023 (the 2022 Form 10-K ) for a discussion and analysis of the more significant factors that affected periods prior to 2022.
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.
Management’s evaluation of the adequacy of the allowance for loan and lease losses and the appropriate provision for loan and lease losses is based upon a quarterly evaluation of the loan portfolio.
The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for the years ended December 31, 2022, 2021, and 2020. Interest income on all loans and investment securities was subject to state taxes.
The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for the years ended December 31, 2023, 2022, and 2021. Interest income on all loans and investment securities was subject to state taxes.
United has the intent and the ability to hold these securities until such time as the value recovers or the securities mature. As of December 31, 2022, there was no allowance for credit losses related to the Company’s available for sale 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 December 31, 2023, there was no allowance for credit losses related to the Company’s available for sale securities.
Further discussion of commitments is included in Note R, Notes to Consolidated Financial Statements. United anticipates it can meet its obligations over the next 12 months and has no material commitments for capital expenditures.
Further discussion of commitments is included in Note Q, Notes to Consolidated Financial Statements. United anticipates it can meet its obligations over the next 12 months and has no material commitments for capital expenditures.
Management has evaluated all significant events and transactions that occurred after December 31, 2022, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.
Management has evaluated all significant events and transactions that occurred after December 31, 2023, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.
In 2022, net cash of $3.45 billion was used in investing activities which was primarily due to net loan growth of $2.37 billion and net purchases of $1.09 billion of investment securities over proceeds from sales of investment securities.
In 2022, net cash of $3.45 billion was used in investing activities which was primarily due to loan growth of $2.37 billion and purchases of $1.09 billion of investment securities over proceeds from sales, calls and maturities of investment securities.
United uses certain valuation methodologies to measure the fair value of the assets within United’s pension plan which are presented in Note P, Notes to Consolidated Financial Statements. The funded status of United’s pension plan is based upon the fair value of the plan assets compared to the projected benefit obligation.
United uses certain valuation methodologies to measure the fair value of the assets within United’s pension plan which are presented in Note O, Notes to Consolidated Financial Statements. The funded status of 55 United’s pension plan is based upon the fair value of the plan assets compared to the projected benefit obligation.
The following table provides the discount/premium and net accretion impact to tax-equivalent net interest income for the year ended December 31, 2022, 2021 and 2020.
The following table provides the discount/premium and net accretion impact to tax-equivalent net interest income for the year ended December 31, 2023, 2022 and 2021.
Management believes that the allowance for credit losses of $280.94 million at December 31, 2022 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available. United’s loan administration policies are focused on the risk characteristics of the loan portfolio in terms of loan approval and credit quality.
Management believes that the allowance for credit losses of $303.94 million at December 31, 2023 is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available. United’s loan administration policies are focused on the risk characteristics of the loan portfolio in terms of loan approval and credit quality.
All interest income on loans and investment securities was subject to state income taxes. 51 The following table shows the consolidated daily average balance of major categories of assets and liabilities for each of the three years ended December 31, 2022, 2021 and 2020 with the consolidated interest and rate earned or paid on such amount.
All interest income on loans and investment securities was subject to state income taxes. 48 The following table shows the consolidated daily average balance of major categories of assets and liabilities for each of the three years ended December 31, 2023, 2022, and 2021 with the consolidated interest and rate earned or paid on such amount.
Most of these financial instruments valued using unobservable market information were loans held for sale at our mortgage banking segment. At December 31, 2022, only $561 thousand or less than 1% of total liabilities were recorded at fair value. This entire amount was valued using methodologies involving observable market data.
Most of these financial instruments valued using unobservable market information were loans held for sale at our mortgage banking segment. At December 31, 2023, only $678 thousand or less than 1% of total liabilities were recorded at fair value. This entire amount was valued using methodologies involving observable market data.
If United assumes a 1% increase or decrease in the discount rate while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease by approximately $3.15 million and increase by approximately $3.61 million, respectively.
If United assumes a 1% increase or decrease in the discount rate while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease by approximately $2.18 million and increase by approximately $2.61 million, respectively.
Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 (Dollars in thousands) Average Balance Interest (1) Avg. Rate (1) Average Balance Interest (1) Avg. Rate (1) Average Balance Interest (1) Avg.
Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 (Dollars in thousands) Average Balance Interest (1) Avg. Rate (1) Average Balance Interest (1) Avg. Rate (1) Average Balance Interest (1) Avg.
If United assumes a 1% increase or decrease in the estimation of future employee compensation levels while 58 keeping all other assumptions constant, the benefit cost associated with the pension plan would increase by approximately $909 thousand and decrease by approximately $849 thousand, respectively.
If United assumes a 1% increase or decrease in the estimation of future employee compensation levels while keeping all other assumptions constant, the benefit cost associated with the pension plan would increase by approximately $604 thousand and decrease by approximately $572 thousand, respectively.
Noninterest expense consists mainly of salaries, commissions, and benefits of mortgage segment employees. The decrease in 2022 was primarily due to a decrease in employee compensation due to lower employee incentives and commissions related to a decrease in mortgage banking production. The following discussion explains in more detail the consolidated results of operations by major category.
Noninterest expense consists mainly of salaries, commissions, and benefits of mortgage segment employees. The decrease in 2023 was due mainly to lower employee commissions and incentives related to the decreased mortgage banking production. The following discussion explains in more detail the consolidated results of operations by major category.
At December 31, 2022, the allowance for loan losses was $234.75 million and is subject to periodic adjustment based on management’s assessment of expected credit losses in the loan portfolio. Such adjustment from period to period can have a significant impact on United’s consolidated financial statements.
At December 31, 2023, the allowance for loan and lease losses was $259.24 million and is subject to periodic adjustment based on management’s assessment of expected credit losses in the loan portfolio. Such adjustment from period to period can have a significant impact on United’s consolidated financial statements.
Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was $69.31 million for the year of 2022 as compared to $183.22 million for the year of 2021.
Noninterest income, which consists mainly of realized and unrealized gains associated with the fair value of commitments and loans held for sale, was $49.36 million for the year of 2023 as compared to $69.31 million for the year of 2022.
The allowance for credit losses related to held to maturity securities was $18 thousand as of December 31, 2022 as compared to $19 thousand as of December 31, 2021.
The allowance for credit losses related to held to maturity securities was $17 thousand as of December 31, 2023 as compared to $18 thousand as of December 31, 2022.
Prices and values obtained from third party vendors that do not reflect forced liquidation or distressed sales are not adjusted by management. When quoted prices or observable market data are not available, management’s judgment is necessary to estimate fair value. At December 31, 2022, approximately 15.67% of total assets, or $4.62 billion, consisted of financial instruments recorded at fair value.
Prices and values obtained from third party vendors that do not reflect forced liquidation or distressed sales are not adjusted by management. When quoted prices or observable market data are not available, management’s judgment is necessary to estimate fair value. At December 31, 2023, approximately 13.04% of total assets, or $3.90 billion, consisted of financial instruments recorded at fair value.
The net interest margin of 3.50% for the year of 2022 was an increase of 41 basis points from the net interest margin of 3.09% for the year of 2021. 50 United’s tax-equivalent net interest income also includes the impact of acquisition accounting fair value adjustments.
The net interest margin of 3.56% for the year of 2023 was an increase of 6 basis points from the net interest margin of 3.50% for the year of 2022. United’s tax-equivalent net interest income also includes the impact of acquisition accounting fair value adjustments.
(2) net of allowance for credit losses of $19 thousand. At December 31, 2022, gross unrealized losses on available for sale securities were $470.06 million. Securities with the most significant gross unrealized losses at December 31, 2022 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities, asset-backed securities and other corporate securities.
(2) net of allowance for credit losses of $18 thousand. At December 31, 2023, gross unrealized losses on available for sale securities were $363.60 million. Securities with the most significant gross unrealized losses at December 31, 2023 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities, asset-backed securities and other corporate securities.
United’s effective tax rate was 21.06% for the fourth quarter of 2022 and 20.88% for the fourth quarter of 2021. Additional quarterly financial data for 2022 and 2021 may be found in Note Z, Notes to Consolidated Financial Statements. The Effect of Inflation United’s income statements generally reflect the effects of inflation.
United’s effective tax rate was 23.81% for the fourth quarter of 2023 and 21.06% for the fourth quarter of 2022. Additional quarterly financial data for 2023 and 2022 may be found in Note Y, Notes to Consolidated Financial Statements. The Effect of Inflation United’s income statements generally reflect the effects of inflation.
As of December 31, 2022, United’s available for sale state and political subdivisions securities had an amortized cost of $820.17 million, with an estimated fair value of $709.53 million. The portfolio relates to securities issued by various municipalities located throughout the United States, and no securities within the portfolio were rated below investment grade as of December 31, 2022.
As of December 31, 2023, United’s available for sale state and political subdivisions securities had an amortized cost of $613.59 million, with an estimated fair value of $533.83 million. The portfolio relates to securities issued by various municipalities located throughout the United States, and no securities within the portfolio were rated below investment grade as of December 31, 2023.
See Note O, Notes to Consolidated Financial Statements for information regarding United’s ASC Topic 740 disclosures. 40 Use of Fair Value Measurements United determines the fair value of its financial instruments based on the fair value hierarchy established in ASC Topic 820, whereby the fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
Use of Fair Value Measurements United determines the fair value of its financial instruments based on the fair value hierarchy established in ASC Topic 820, whereby the fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
Year Ended (Dollars in thousands) December 31 2022 December 31 2021 December 31 2020 Net interest income (GAAP) $ 896,431 $ 742,734 $ 689,773 Tax-equivalent adjustment (non-GAAP) (1) 4,467 4,218 3,888 Tax-equivalent net interest income (non-GAAP) $ 900,898 $ 746,952 $ 693,661 (1) The tax-equivalent adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21% for 2022, 2021, and 2020.
Year Ended (Dollars in thousands) December 31 2023 December 31 2022 December 31 2021 Net interest income (GAAP) $ 919,924 $ 896,431 $ 742,734 Tax-equivalent adjustment (non-GAAP) (1) 4,014 4,467 4,218 Tax-equivalent net interest income (non-GAAP) $ 923,938 $ 900,898 $ 746,952 (1) The tax-equivalent adjustment combines amounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21% for 2023, 2022, and 2021.
Assumptions for the economic variables were the following: Ø The forecast for real GDP shifted downward in the fourth quarter, from a projection of 1.20% for 2023 as of mid-September 2022 to 0.50% for 2023 as of mid-December with projections of 1.60% for 2024 and 1.80% for 2025.
Assumptions for the economic variables were the following: Ø The forecast for real GDP shifted slightly in the fourth quarter, from a projection of 1.50% for 2024 as of mid-September 2023 to 1.40% for 2024 as of mid-December with a projection of 1.80% for 2025.
Further information regarding the amortized cost and estimated fair value of investment securities, including remaining maturities as well as a more detailed discussion of management’s impairment analysis, is presented in Note C, Notes to Consolidated Financial Statements. Loans Held For Sale Loans held for sale decreased $447.54 million or 88.72% from year-end 2021.
Further information regarding the amortized cost and estimated fair value of investment securities, including remaining maturities as well as a more detailed discussion of management’s impairment analysis, is presented in Note B, Notes to Consolidated Financial Statements. Loans Held For Sale Loans held for sale decreased $618 thousand or 1.09% from year-end 2022.
Year Ended (Dollars in thousands) December 31 2022 December 31 2021 December 31 2020 Loan accretion $ 18,315 $ 33,857 $ 41,766 Certificates of deposit 2,765 4,305 7,925 Long-term borrowings (262 ) 684 1,278 Total $ 20,818 $ 38,846 $ 50,969 The following table reconciles the difference between net interest income and tax-equivalent net interest income for the year ended December 31, 2022, 2021 and 2020.
Year Ended (Dollars in thousands) December 31 2023 December 31 2022 December 31 2021 Loan accretion $ 11,548 $ 18,315 $ 33,857 Certificates of deposit 1,119 2,765 4,305 Long-term borrowings (1,353 ) (262 ) 684 Total $ 11,314 $ 20,818 $ 38,846 The following table reconciles the difference between net interest income and tax-equivalent net interest income for the year ended December 31, 2023, 2022 and 2021.
The methodology used to determine the allowance for loan losses is described in Note A, Notes to Consolidated Financial Statements. A discussion of the factors leading to changes in the amount of the allowance for loan losses is included in the Provision for Credit Losses section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).
A discussion of the factors leading to changes in the amount of the allowance for loan and lease losses is included in the Provision for Credit Losses section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).
The increase in net interest income and tax-equivalent net interest income was primarily due to the impact of rising market interest rates on earning assets, an increase in average earning assets from the Community Bankers Trust acquisition as well as organic loan growth and a change in the asset mix to higher earning assets.
The increase in tax-equivalent net interest income was primarily due to the impact of rising market interest rates on earning assets, organic loan growth and a change in the asset mix to higher earning assets.
As of December 31, 2022, United’s available for sale corporate securities had an amortized cost of $1.52 billion, with an estimated fair value of $1.45 billion. The portfolio consisted of $17.34 million in single issue trust preferred securities with an estimated fair value of $16.28 million.
As of December 31, 2023, United’s available for sale corporate securities had an amortized cost of $1.21 billion, with an estimated fair value of $1.17 billion. The portfolio consisted of $16.38 million in single issue trust preferred securities with an estimated fair value of $15.14 million.
Of this total, approximately 98.92% or $4.57 billion of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. Approximately 1.08% or $50.11 million of these financial instruments were valued using unobservable market information or Level 3 measurements.
Of this total, approximately 98.63% or $3.85 billion of these financial instruments used valuation methodologies involving observable market data, collectively Level 1 and Level 2 measurements, to determine fair value. Approximately 1.37% or $53.60 million of these financial instruments were valued using unobservable market information or Level 3 measurements.
Noninterest income has been and will continue to be an important factor for improving United’s profitability. Recognizing the importance, management continues to evaluate areas where noninterest income can be enhanced. Noninterest income for the year of 2022 was $153.26 million, which was a decrease of $124.87 million or 44.90% from the year of 2021.
Noninterest income has been and will continue to be an important factor for improving United’s profitability. Recognizing the importance, management continues to evaluate areas where noninterest income can be enhanced. Noninterest income for the year of 2023 was $135.26 million, which was a decrease of $18.00 million or 11.75% from the year of 2022.
As of December 31, 2022, United’s available for sale mortgage-backed securities had an amortized cost of $2.12 billion, with an estimated fair value of $1.85 billion.
As of December 31, 2023, United’s available for sale mortgage-backed securities had an amortized cost of $1.83 billion, with an estimated fair value of $1.60 billion.
(2) Nonaccruing loans are included in the daily average loan amounts outstanding.
(2) Nonaccruing loans and loans held for sale are included in the daily average loan amounts outstanding.
Quarterly Results Net income for the first quarter of 2022 was $81.66 million as compared to earnings of $106.90 million for the first quarter of 2021.
Quarterly Results Net income for the first quarter of 2023 was $98.31 million as compared to earnings of $81.66 million for the first quarter of 2022.
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 $23.47 million in additional allowance (funded by additional provision for loan losses), which would have negatively impacted the year of 2022 net income by approximately $18.54 million, after-tax or $0.14 diluted per common share.
To illustrate the potential effect on the financial statements of our estimates of the allowance for loan and lease losses, a 10% increase in the allowance for loan and lease losses would have required $25.92 million in additional allowance (funded by additional provision for loan and lease losses), which would have negatively impacted the year of 2023 net income by approximately $20.48 million, after-tax or $0.15 diluted earnings per common share.
The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10.0%, a Common Equity Tier 1 capital ratio of 6.5%, a Tier 1 capital ratio of 8.0% and a leverage ratio of 5.0%. Total shareholders’ equity was $4.52 billion at December 31, 2022, which was a decrease of $202.44 million or 4.29% from December 31, 2021.
The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10.0%, a Common Equity Tier 1 capital ratio of 6.5%, a Tier 1 capital ratio of 8.0% and a leverage ratio of 5.0%. 60 Total shareholders’ equity was $4.77 billion at December 31, 2023, which was an increase of $255.05 million or 5.65% from December 31, 2022.
Net income for the fourth quarter of 2022 was $99.77 million or $0.74 per diluted share as compared to earnings of $73.85 million or $0.56 per diluted share for the fourth quarter of 2021.
Net income for the fourth quarter of 2023 was $79.39 million or $0.59 per diluted share as compared to earnings of $99.77 million or $0.74 per diluted share for the fourth quarter of 2022.
Forward-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 the COVID-19 pandemic.
Forward-looking statements can be identified by the use of the words “expect,” “may,” “could,” “intend,” “project,” “estimate,” “believe,” “anticipate,” and other words of similar meaning. Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect. Therefore, undue reliance should not be placed upon these estimates and statements.
Regulatory policies and economic conditions have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future; however, United cannot accurately predict the nature, timing or extent of any effect such policies or economic conditions may have on its future business and earnings.
Regulatory policies and economic conditions have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future; however, United cannot accurately predict the nature, timing or extent of any effect such policies or economic conditions may have on its future business and earnings. 58 Liquidity and Capital Resources In the opinion of management, United maintains liquidity that is sufficient to satisfy its depositors’ requirements and the credit needs of its customers.
United does not believe that any changes in the unobservable inputs used to value the financial instruments mentioned above would have a material impact on United’s results of operations, liquidity, or capital resources. See Note W for additional information regarding ASC Topic 820 and its impact on United’s financial statements.
United does not believe that any changes in the unobservable inputs used to value the financial instruments mentioned above would have a material impact on United’s results of operations, liquidity, or capital resources.
If current conditions underlying any qualitative adjustment factor were deemed to be materially different than historical conditions, an adjustment was made for that factor. 55 The year of 2022 qualitative adjustments include analyses of the following: • Current conditions – United considered the impact of inflation, rising interest rates, increased oil and gas prices and the potential impact of the geopolitical situation when making determinations related to factor adjustments, such as changes in economic and business conditions; collateral values for dependent loans; past due, nonaccrual and adversely classified loans and leases; concentrations of credit and external factors. • Reasonable and supportable forecasts – The forecast is determined on a portfolio-by-portfolio basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables.
The year of 2023 qualitative adjustments include analyses of the following: • Current conditions – United considered the impact of inflation, interest rates, the potential impact of the geopolitical situation, the banking regulatory environment and a potential government shutdown when making determinations related to factor adjustments, such as changes in economic and business conditions; collateral values for dependent loans; past due, nonaccrual and adversely classified loans and leases; concentrations of credit and external factors. • Reasonable and supportable forecasts – The forecast is determined on a portfolio-by-portfolio basis by relating the correlation of real GDP and the unemployment rate to loss rates to forecasts of those variables.
Mortgage loan sales were $2.20 billion in the year of 2022 as compared to $6.41 billion in the year of 2021. Mortgage loans originated for sale were $1.90 billion for the year of 2022 as compared to $6.19 billion for the year of 2021.
Mortgage loan sales were $861.52 million in the year of 2023 as compared to $2.20 billion in the year of 2022. Mortgage loans originated for sale were $860.90 million for the year of 2023 as compared to $1.90 billion for the year of 2022.
The provision for credit losses was $16.37 million for the fourth quarter of 2022 as compared to a net benefit of $7.41 million for the fourth quarter of 2021. The increase in the provision for credit losses was primarily due to loan growth and the impact of reasonable and supportable forecasts of future macroeconomic conditions.
The provision for credit losses was $6.88 million for the fourth quarter of 2023 as compared to a provision for credit losses of $16.37 million for the fourth quarter of 2022. The decrease in the provision for credit losses was primarily due the impact of reasonable and supportable forecasts of future macroeconomic conditions.
The average daily amount of deposits and rates paid on such deposits is summarized for the years ended December 31: 2022 2021 2020 Interest Interest Interest Amount Expense Rate Amount (1) Expense Rate Amount (2) Expense Rate (Dollars in thousands) Noninterest-bearing $ 7,580,624 $ 0 0.00 % $ 6,709,510 $ 0 0.00 % $ 5,153,258 $ 0 0.00 % Interest-bearing transaction and money market 11,540,192 67,240 0.58 % 11,010,496 23,498 0.21 % 8,897,140 40,322 0.45 % Regular savings 1,744,841 2,427 0.14 % 1,455,305 2,085 0.14 % 1,149,201 2,087 0.18 % Time deposits 2,181,353 10,570 0.48 % 2,462,044 16,037 0.65 % 2,952,944 36,170 1.22 % TOTAL $ 23,047,010 $ 80,237 0.35 % $ 21,637,355 $ 41,620 0.19 % $ 18,152,543 $ 78,579 0.43 % (1) For the year of 2021, $1,571,758 was reclassed from noninterest-bearing accounts to interest-bearing transaction accounts.
The average daily amount of deposits and rates paid on such deposits is summarized for the years ended December 31: 2023 2022 2021 Interest Interest Interest Amount Expense Rate Amount Expense Rate Amount (1) Expense Rate (Dollars in thousands) Noninterest-bearing $ 6,475,051 $ 0 0.00 % $ 7,580,624 $ 0 0.00 % $ 6,709,510 $ 0 0.00 % Interest-bearing transaction and money market 11,397,302 299,306 2.63 % 11,540,192 67,240 0.58 % 11,010,496 23,498 0.21 % Regular savings 1,520,201 3,128 0.21 % 1,744,841 2,427 0.14 % 1,455,305 2,085 0.14 % Time deposits 2,865,258 88,660 3.09 % 2,181,353 10,570 0.48 % 2,462,044 16,037 0.65 % TOTAL $ 22,257,812 $ 391,094 1.76 % $ 23,047,010 $ 80,237 0.35 % $ 21,637,355 $ 41,620 0.19 % (1) For the year of 2021, $1,571,758 was reclassed from noninterest-bearing accounts to interest-bearing transaction accounts.
Cash flows provided by operations in 2022 were $760.82 million due mainly to net income of $379.63 million for the year of 2022. In 2021, cash flows provided by operations were $609.54 million due mainly to net income of $367.74 million for the year of 2021.
Cash flows provided by operations in 2023 were $435.24 million due mainly to net income of $366.31 million for the year of 2023. In 2022, cash flows provided by operations were $760.82 million due mainly to net income of $379.63 million for the year of 2022.
United’s provision for credit losses relates to its portfolio of loans and leases, held to maturity securities and interest receivable on loans which are discussed in more detail in the following paragraphs.
United’s provision for credit losses relates to its portfolio of loans and leases, held to maturity securities and interest receivable on loans which are discussed in more detail in the following paragraphs. The provision for loan and lease losses for the year of 2023 was $31.15 million as compared to $18.83 million for the year of 2022.
Any material effect on the financial statements related to these critical accounting areas is further discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. 2022 COMPARED TO 2021 United’s total assets as of December 31, 2022 were $29.49 billion, which was an increase of $160.48 million or less than 1% from December 31, 2021.
See Note V for additional information regarding ASC Topic 820 and its impact on United’s financial statements. 38 Any material effect on the financial statements related to these critical accounting areas is further discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. 2023 COMPARED TO 2022 United’s total assets as of December 31, 2023 were $29.93 billion, which was an increase of $437.10 million or 1.48% from December 31, 2022.
(2) Nonaccruing loans are included in the daily average loan amounts outstanding. Provision for Credit Losses United’s provision for credit losses was $18.82 million for the year of 2022 while the provision for credit losses was a net benefit of $23.97 million for the year of 2021.
(2) Nonaccruing loans and loans held for sale are included in the daily average loan amounts outstanding. Provision for Credit Losses United’s provision for credit losses was $31.15 million for the year of 2023 while the provision for credit losses was $18.82 million for the year of 2022.
If United assumes a 1% increase or decrease in the expected long-term rate of return on plan assets while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease and increase by approximately $2.07 million, respectively. Net occupancy expense increased $3.10 million or 7.36% for the year of 2022 as compared to the prior year.
If United assumes a 1% increase or decrease in the expected long-term rate of return on plan assets while keeping all other assumptions constant, the benefit cost associated with the pension plan would decrease by and increase by approximately $1.62 million, respectively.
Management is not aware of any potential problem loans or leases, trends or uncertainties, which it reasonably expects, will materially impact future operating results, liquidity, or capital resources which have not been disclosed.
Management is not aware of any potential problem loans or leases, trends or uncertainties, which it reasonably expects, will materially impact future operating results, liquidity, or capital resources which have not been disclosed. Other Income Other income consists of all revenues, which are not included in interest and fee income related to earning assets.
Rate (1) ASSETS Earning Assets: Federal funds sold, securities repurchased under agreements to resell & other short-term investments $ 1,597,108 $ 22,950 1.44 % $ 3,162,814 $ 8,734 0.28 % $ 1,501,771 $ 9,780 0.65 % Investment Securities: Taxable 4,532,713 105,780 2.33 % 3,193,414 54,678 1.71 % 2,700,416 61,808 2.29 % Tax-exempt 410,037 10,983 2.68 % 352,843 9,129 2.59 % 217,836 6,285 2.89 % Total Securities 4,942,750 116,763 2.36 % 3,546,257 63,807 1.80 % 2,918,252 68,093 2.33 % Loans and leases, net of unearned income (2) 19,389,485 866,744 4.47 % 17,714,288 726,794 4.10 % 17,151,291 724,397 4.22 % Allowance for credit losses (216,104 ) (225,740 ) (186,640 ) Net loans and leases 19,173,381 4.52 % 17,488,548 4.16 % 16,964,651 4.27 % Total earning assets 25,713,239 $ 1,006,457 3.91 % 24,197,619 $ 799,335 3.30 % 21,384,674 $ 802,270 3.75 % Other assets 3,360,609 3,058,476 2,752,396 TOTAL ASSETS $ 29,073,848 $ 27,256,095 $ 24,137,070 LIABILITIES Interest-Bearing Funds: Interest-bearing deposits (3) $ 15,466,386 $ 80,237 0.52 % $ 14,927,845 $ 41,620 0.28 % $ 12,999,285 $ 78,579 0.60 % Short-term borrowings 140,773 1,785 1.27 % 132,489 693 0.52 % 145,768 1,027 0.70 % Long- term borrowings 1,014,655 23,537 2.32 % 819,440 10,070 1.23 % 1,645,783 29,003 1.76 % Total Interest-Bearing Funds 16,621,814 105,559 0.64 % 15,879,774 52,383 0.33 % 14,790,836 108,609 0.73 % Noninterest-bearing deposits (3) 7,580,624 6,709,510 5,153,258 Accrued expenses and other liabilities 269,970 236,123 236,007 TOTAL LIABILITIES 24,472,408 22,825,407 20,180,101 SHAREHOLDERS’ EQUITY 4,601,440 4,430,688 3,956,969 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 29,073,848 $ 27,256,095 $ 24,137,070 NET INTEREST INCOME $ 900,898 $ 746,952 $ 693,661 INTEREST SPREAD 3.27 % 2.97 % 3.02 % NET INTEREST MARGIN 3.50 % 3.09 % 3.24 % (1) The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for 2022, 2021 and 2020.
Rate (1) ASSETS Earning Assets: Federal funds sold, securities repurchased under agreements to resell & other short-term investments $ 900,077 $ 47,069 5.23 % $ 1,597,108 $ 22,950 1.44 % $ 3,162,814 $ 8,734 0.28 % Investment Securities: Taxable 4,125,467 144,420 3.50 % 4,532,713 105,780 2.33 % 3,193,414 54,678 1.71 % Tax-exempt 294,802 8,411 2.85 % 410,037 10,983 2.68 % 352,843 9,129 2.59 % Total Securities 4,420,269 152,831 3.46 % 4,942,750 116,763 2.36 % 3,546,257 63,807 1.80 % Loans and leases, net of unearned income (2) 20,909,248 1,205,434 5.77 % 19,389,485 866,744 4.47 % 17,714,288 726,794 4.10 % Allowance for credit losses (245,386 ) (216,104 ) (225,740 ) Net loans and leases 20,663,862 5.83 % 19,173,381 4.52 % 17,488,548 4.16 % Total earning assets 25,984,208 $ 1,405,334 5.41 % 25,713,239 $ 1,006,457 3.91 % 24,197,619 $ 799,335 3.30 % Other assets 3,311,450 3,360,609 3,058,476 TOTAL ASSETS $ 29,295,658 $ 29,073,848 $ 27,256,095 LIABILITIES Interest-Bearing Funds: Interest-bearing deposits (3) $ 15,782,761 $ 391,094 2.48 % $ 15,466,386 $ 80,237 0.52 % $ 14,927,845 $ 41,620 0.28 % Short-term borrowings 182,936 6,449 3.53 % 140,773 1,785 1.27 % 132,489 693 0.52 % Long- term borrowings 1,923,924 83,853 4.36 % 1,014,655 23,537 2.32 % 819,440 10,070 1.23 % Total Interest-Bearing Funds 17,889,621 481,396 2.69 % 16,621,814 105,559 0.64 % 15,879,774 52,383 0.33 % Noninterest-bearing deposits (3) 6,475,051 7,580,624 6,709,510 Accrued expenses and other liabilities 276,883 269,970 236,123 TOTAL LIABILITIES 24,641,555 24,472,408 22,825,407 SHAREHOLDERS’ EQUITY 4,654,103 4,601,440 4,430,688 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 29,295,658 $ 29,073,848 $ 27,256,095 NET INTEREST INCOME $ 923,938 $ 900,898 $ 746,952 INTEREST SPREAD 2.72 % 3.27 % 2.97 % NET INTEREST MARGIN 3.56 % 3.50 % 3.09 % (1) The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for 2023, 2022 and 2021.
Income taxes for the second quarter of 2022 were $23.53 million as compared to $24.46 million for the second quarter of 2021. For the quarters ended June 30, 2022 and June 30, 2021, United’s effective tax rate was 19.75% and 20.50%, respectively.
Income taxes for the third quarter of 2023 were $24.78 million as compared to $25.92 million for the third quarter of 2022. For the quarters ended September 30, 2023 and June 30, 2023, United’s effective tax rate was 20.49% and 20.23%, respectively.
The net effect of the cash flow activities was a decrease in cash and cash equivalents of $2.58 billion for the year of 2022 as compared to an increase in cash and cash equivalents of $1.55 billion for the year of 2021. See the Consolidated Statement of Cash Flows in the Consolidated Financial Statements.
The net effect of the cash flow activities was an increase in cash and cash equivalents of $422.29 million for the year of 2023 as compared to a decrease in cash and cash equivalents of $2.58 billion for the year of 2022.
Such changes, and their impact on net interest income in 2022 and 2021, are presented below. Net interest income for the year of 2022 was $896.43 million, which was an increase of $153.70 million or 20.69% from the year of 2021.
Such changes, and their impact on net interest income in 2023 and 2022, are presented below. Net interest income for the year of 2023 was $919.92 million, which was an increase of $23.49 million or 2.62% from the year of 2022.
Average earning assets for the year of 2022 increased $1.52 billion, or 6.26%, from the year of 2021 due to a $1.68 billion increase in average net loans and loans held for sale and a $1.40 billion increase in average investment securities partially offset by a $1.57 billion decrease in average short-term investments.
Average earning assets for the year of 2023 increased $270.97 million, or 1.05%, from the year of 2022 due to a $1.49 billion increase in average net loans, including loans held for sale, partially offset by a $697.03 million decrease in average short-term investments and a $522.48 million decrease in average investment securities.
The following table presents the allocation of United’s allowance for credit losses for the years ended December 31: 2022 2021 (in thousands) Commercial, financial & agricultural: Owner-occupied commercial real estate $ 13,945 $ 14,443 Nonowner-occupied commercial real estate 38,543 42,156 Other commercial 79,706 78,432 Total commercial, financial & agricultural 132,194 135,031 Residential real estate 36,227 26,404 Construction & land development 48,390 39,395 Consumer: Bankcard 561 317 Other consumer 17,374 14,869 Allowance for loan losses $ 234,746 $ 216,016 Reserve for lending-related commitments 46,189 31,442 Allowance for credit losses $ 280,935 $ 247,458 The following is a summary of loans and leases outstanding as a percent of gross loans at December 31: 2022 2021 Commercial, financial & agricultural: Owner-occupied commercial real estate 8.38 % 9.60 % Nonowner-occupied commercial real estate 30.55 % 33.00 % Other commercial 17.55 % 19.18 % Total commercial, financial & agricultural 56.48 % 61.78 % Residential real estate 22.66 % 20.45 % Construction & land development 14.22 % 11.16 % Consumer: Bankcard 0.05 % 0.05 % Other consumer 6.59 % 6.56 % Total 100.00 % 100.00 % United’s review of the allowance for loan and lease losses at December 31, 2022 produced increased reserves in three of the four loan categories as compared to December 31, 2021.
The following table presents the allocation of United’s allowance for credit losses for the years ended December 31: 2023 2022 (in thousands) Commercial, financial & agricultural: Owner-occupied commercial real estate $ 11,895 $ 13,945 Nonowner-occupied commercial real estate 57,935 38,543 Other commercial 75,007 79,706 Total commercial, financial & agricultural 144,837 132,194 Residential real estate 41,167 36,227 Construction & land development 59,913 48,390 Consumer: Bankcard 810 561 Other consumer 12,510 17,374 Allowance for loan losses $ 259,237 $ 234,746 Reserve for lending-related commitments 44,706 46,189 Allowance for credit losses $ 303,943 $ 280,935 The following is a summary of loans and leases outstanding as a percent of gross loans at December 31: 2023 2022 Commercial, financial & agricultural: Owner-occupied commercial real estate 7.48 % 8.38 % Nonowner-occupied commercial real estate 31.43 % 30.55 % Other commercial 16.72 % 17.55 % Total commercial, financial & agricultural 55.63 % 56.48 % Residential real estate 24.66 % 22.66 % Construction & land development 14.73 % 14.22 % Consumer: Bankcard 0.05 % 0.05 % Other consumer 4.93 % 6.59 % Total 100.00 % 100.00 % 53 United’s review of the allowance for loan and lease losses at December 31, 2023 produced increased reserves in three of the four loan categories as compared to December 31, 2022.
Employee benefits expense for the year of 2022 decreased $7.93 million or 14.71% as compared to the year of 2021. For the year of 2022, postretirement expense, which includes expense associated with United’s pension plan, supplemental early retirement plans (“SERPs”) and Savings and Stock Investment Plan (“401K plan”), decreased $8.25 million from the year of 2021.
For the year of 2023, postretirement expense, which includes expense associated with United’s pension plan, supplemental early retirement plans (“SERPs”) and Savings and Stock Investment Plan (“401K plan”), decreased $2.09 million from the year of 2022.
The provision for credit losses was $7.67 million for the third quarter of 2022 while the provision for credit losses was a net benefit of $7.83 million for the third quarter of 2021.
The provision for credit losses was $5.95 million for the third quarter of 2023 while the provision for credit losses was $7.67 million for the third quarter of 2022.
United’s risk-based capital ratio is 14.37% at December 31, 2022 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 12.30%, 12.30% and 10.79%, respectively.
United’s risk-based capital ratio is 15.38% at December 31, 2023 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.14%, 13.14% and 11.39%, respectively.
RESULTS OF OPERATIONS Overview The following table sets forth certain consolidated income statement information of United: Year Ended (Dollars in thousands except per share amounts) 2022 2021 2020 Interest income $ 1,001,990 $ 795,117 $ 798,382 Interest expense 105,559 52,383 108,609 Net interest income 896,431 742,734 689,773 Provision for credit losses 18,822 (23,970 ) 106,562 Noninterest income 153,261 278,128 354,775 Noninterest expense 555,087 581,979 578,246 Income before income taxes 475,783 462,853 359,740 Income taxes 96,156 95,115 70,717 Net income $ 379,627 $ 367,738 $ 289,023 PER COMMON SHARE: Net income: Basic $ 2.81 $ 2.84 $ 2.40 Diluted 2.80 2.83 2.40 Net income for the year 2022 was $379.63 million or $2.80 per diluted share, an increase of $11.89 million or 3.23% from $367.74 million or $2.83 per diluted share for the year of 2021.
RESULTS OF OPERATIONS Overview The following table sets forth certain consolidated income statement information of United: Year Ended Dollars in thousands except per share amounts) 2023 2022 2021 Interest income $ 1,401,320 $ 1,001,990 $ 795,117 Interest expense 481,396 105,559 52,383 Net interest income 919,924 896,431 742,734 Provision for credit losses 31,153 18,822 (23,970 ) Noninterest income 135,258 153,261 278,128 Noninterest expense 560,224 555,087 581,979 Income before income taxes 463,805 475,783 462,853 Income taxes 97,492 96,156 95,115 Net income $ 366,313 $ 379,627 $ 367,738 PER COMMON SHARE: Net income: Basic $ 2.72 $ 2.81 $ 2.84 Diluted 2.71 2.80 2.83 45 Net income for the year 2023 was $366.31 million or $2.71 per diluted share, a decrease of $13.31 million or 3.51% from $379.63 million or $2.80 per diluted share for the year of 2022.
Management believes that any decline in value on an individual security with an unrealized loss as of December 31, 2022 resulted from changes in market interest rates, credit spreads and liquidity, not a deterioration of credit.
During 2023, United did not recognize any credit losses on its available for sale investment securities. Management does not believe that any individual security with an unrealized loss as of December 31, 2023 is impaired. United believes the decline in value resulted from changes in market interest rates, credit spreads and liquidity, not a deterioration of credit.
Although this is a non-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition.
The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments. Although this is a non-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources.
For the third quarter of 2022, noninterest expense decreased $5.08 million or 3.58% from the third quarter of 2021 due mainly to lower employee compensation expense as a result of lower employee commissions, incentives and overtime related to mortgage banking production.
Noninterest expense for the first three months of 2023 decreased $1.76 million or 1.26% from the first three months of 2022 due mainly to lower employee compensation expense as a result of lower employee commissions and incentives related to mortgage banking production and a lower employee headcount.
Net interest income increased $159.27 million to $890.58 million for the year of 2022, compared to $731.31 million for the same period of 2021.
Net interest income increased $36.90 million to $927.48 million for the year of 2023, compared to $890.58 million for the same period of 2022.
The decrease in noninterest income was driven primarily by a $22.72 million decrease in income from mortgage banking activities mainly due to lower mortgage loan origination and sale volume and a lower margin on loans sold in the secondary market.
Noninterest income was $32.74 million for the first three months of 2023, a decrease of $13.28 million or 28.86% from the first three months of 2022 due mainly to decreased income from mortgage banking activities primarily due to lower mortgage loan origination and sale volume and a lower margin on loans sold in the secondary market.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

29 edited+1 added−0 removed23 unchanged
Biggest changeUnited closely monitors the sensitivity of its assets and liabilities on an on-going basis and projects the effect of various interest rate changes on its net interest margin. 64 The following table shows United’s estimated earnings sensitivity profile as of December 31, 2022 and December 31, 2021: Change in Interest Rates Percentage Change in Net Interest Income (basis points) December 31, 2022 December 31, 2021 +200 (6.83%) 4.61% +100 (3.00%) 2.70% -100 2.12% (0.98%) -200 2.16% (2.42%) At December 31, 2022, given an immediate, sustained 100 basis point upward shock to the yield curve used in the simulation model, net interest income for United is estimated to decrease by 3.00% over one year as compared to an increase of 2.70% at December 31, 2021.
Biggest changeThe following table shows United’s estimated earnings sensitivity profile as of December 31, 2023 and December 31, 2022: Change in Interest Rates Percentage Change in Net Interest Income (basis points) December 31, 2023 December 31, 2022 +200 (0.28%) (6.83%) +100 0.24% (3.00%) -100 2.66% 2.12% -200 4.35% 2.16% At December 31, 2023, given an immediate, sustained 100 basis point upward shock to the yield curve used in the simulation model, net interest income for United is estimated to increase by 0.24% over one year as compared to a decrease by 3.00% at December 31, 2022.
United accounts for its derivative activities in accordance with the provisions of ASC Topic 815, “Derivatives and Hedging.” Extension Risk A key feature of most mortgage loans is the ability of the borrower to repay principal earlier than scheduled. This is called a prepayment. Prepayments arise primarily due to sale of the underlying property, refinancing, or foreclosure.
United accounts for its derivative activities in accordance with the provisions of ASC Topic 815, “Derivatives and Hedging.” 62 Extension Risk A key feature of most mortgage loans is the ability of the borrower to repay principal earlier than scheduled. This is called a prepayment. Prepayments arise primarily due to sale of the underlying property, refinancing, or foreclosure.
Current models show that an immediate, sustained upward shock of 300 basis points, the average life of these securities would only extend to 6.5 years. The projected price decline of the fixed rate CMO portfolio in rates up 300 basis points would be 15%, or less than the price decline of a 7-year treasury note.
Current models show that given an immediate, sustained upward shock of 300 basis points, the average life of these securities would only extend to 6.5 years. The projected price decline of the fixed rate CMO portfolio in rates up 300 basis points would be 15.6%, or less than the price decline of a 7- year treasury note.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.
In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 framework). Based on our assessment, we believe that, as of December 31, 2022, the Company’s internal control over financial reporting is effective based on those criteria.
In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 framework). Based on our assessment, we believe that, as of December 31, 2023, the Company’s internal control over financial reporting is effective based on those criteria.
Opinion on Internal Control over Financial Reporting We have audited United Bankshares, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
Opinion on Internal Control over Financial Reporting We have audited United Bankshares, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
Ernst & Young LLP (“Ernst & Young”), the independent registered public accounting firm who audited the Company’s consolidated financial statements, has also issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.
Ernst & Young LLP (“Ernst & Young”), the independent registered public accounting firm who audited the Company’s consolidated financial statements, has also issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.
In our opinion, United Bankshares, Inc . and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.
In our opinion, United Bankshares, Inc . and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated March 1, 2023 expressed an unqualified opinion thereon.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 29, 2024 expressed an unqualified opinion thereon.
These fixed rate CMOs consisted primarily of planned amortization class (“PACs”), sequential-pay and accretion directed (“VADMs”) bonds having an average life of approximately 5.5 years and a weighted average yield of 2.12%, under current projected prepayment assumptions. These securities are expected to have moderate extension risk in a rising rate environment.
These fixed rate CMOs consisted primarily of planned amortization class (PACs), sequential-pay and accretion directed (VADMs) bonds having an average life of approximately 5.5 years and a weighted average yield of 2.10%, under current projected prepayment assumptions. These securities are expected to have moderate extension risk in a rising rate environment.
Compared to the one year analysis, United is projected to show improved performance in year two within the upward rate shock scenarios. Given an immediate, sustained 100 basis point upward shock to the yield curve used in the simulation model, net interest income for United is estimated to increase by 0.75% in year two as of December 31, 2022.
Compared to the one year analysis, United is projected to show improved performance in year two within the upward rate shock scenarios. Given an immediate, sustained 100 basis point upward shock to the yield curve used in the simulation model, net interest income for United is estimated to increase by 2.47% in year two as of December 31, 2023.
A 200 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated 8.34% in year two as of December 31, 2022.
A 200 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated 1.34% in year two as of December 31, 2023.
A 200 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated 2.16% over one year as of December 31, 2022 as compared to a decrease of 2.42% over one year as of December 31, 2021. In addition to the one year earnings sensitivity analysis, a two-year analysis is also performed.
A 200 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated 4.35% over one year as of December 31, 2023 as compared to an increase of 2.16% over one year as of December 31, 2022. In addition to the one year earnings sensitivity analysis, a two-year analysis is also performed.
A 100 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated 2.12% over one year as of December 31, 2022 as compared to a decrease of 0.98%, over one year as of December 31, 2021.
A 100 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated 2.66% over one year as of December 31, 2023 as compared to an increase of 2.12%, over one year as of December 31, 2022.
The remaining 2% of the mortgage related securities portfolio on December 31, 2022, included floating rate CMO, CMBS and mortgage backed securities. 66 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of United Bankshares, Inc.
The remaining 3% of the mortgage related securities portfolio on December 31, 2023, included floating rate CMO, CMBS and mortgage backed securities. 63 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of United Bankshares, Inc.
A 200 basis point immediate, sustained upward shock in the yield curve would decrease net interest income by an estimated 6.83% over one year as of December 31, 2022, as compared to an increase of 4.61% as of December 31, 2021.
A 200 basis point immediate, sustained upward shock in the yield curve would decrease net interest income by an estimated 0.28% over one year as of December 31, 2023, as compared to a decrease of 6.83% as of December 31, 2022.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Charleston, West Virginia March 1, 2023 68
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Charleston, West Virginia February 29, 2024 65
A 200 basis point immediate, sustained upward shock in the yield curve would increase net interest income by an estimated 0.08% in year two as of December 31, 2022. A 100 basis point immediate, sustained downward shock in the yield curve would decrease net interest income by an estimated 2.32% in year two as of December 31, 2022.
A 200 basis point immediate, sustained upward shock in the yield curve would increase net interest income by an estimated 3.85% in year two as of December 31, 2023. A 100 basis point immediate, sustained downward shock in the yield curve would increase net interest income by an estimated 0.05% in year two as of December 31, 2023.
If interest rates rise, United’s holdings of mortgage-related securities may experience reduced returns if the borrowers of the underlying mortgages pay off their mortgages later than anticipated.
If interest rates rise, United’s holdings of mortgage-related securities may experience reduced returns if the borrowers of the underlying mortgages pay off their mortgages later than anticipated. This is generally referred to as extension risk.
This portfolio consisted primarily of Freddie Mac Multifamily K securities and Fannie Mae Delegated Underwriting and Servicing (“DUS”) securities with a weighted average maturity (“WAM”) of 8 years. United had approximately $27.8 million in 15-year mortgage backed securities with a projected yield of 2.02% and a projected average life of 4.8 years as of December 31, 2022.
This portfolio consisted primarily of Freddie Mac Multifamily K securities and Fannie Mae Delegated Underwriting and Servicing (DUS) securities with a weighted average maturity (WAM) of 8.4 years. United had approximately $23.8 million in 15-year mortgage backed securities with a projected yield of 1.99% and a projected average life of 4.5 years as of December 31, 2023.
Mark Tatterson Executive Vice President and Chief Financial Officer March 1, 2023 67 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of United Bankshares, Inc.
Mark Tatterson Executive Vice President and Chief Financial Officer February 29, 2024 64 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of United Bankshares, Inc.
By comparison, the price decline of a 30-year 5% coupon mortgage backed security (“MBS”) in rates higher by 300 basis points would be approximately 18.9%. United had approximately $600.6 million in fixed rate Commercial Mortgage Backed Securities (CMBS) with a projected yield of 2.02% and a projected average life of 4.7 years on December 31, 2022.
By comparison, the price decline of a 30-year 5.5% current coupon mortgage backed security (MBS) in rates higher by 300 basis points would be approximately 12.2%. United had approximately $490.8 million in fixed rate Commercial mortgage backed Securities (CMBS) with a projected yield of 2.01% and a projected average life of 4.8 years on December 31, 2023.
This portfolio consisted of seasoned 15-year mortgage paper with a weighted average loan age (“WALA”) of 3.3 years and a weighted average maturity (“WAM”) of 12 years. United had approximately $353.7 million in 20-year mortgage backed securities with a projected yield of 1.82% and a projected average life of 7.1 years on December 31, 2022.
This portfolio consisted of seasoned 15-year mortgage paper with a weighted average loan age (WALA) of 4 years and a weighted average maturity (WAM) of 11.3 years. United had approximately $325.4 million in 20-year mortgage backed securities with a projected yield of 1.82% and a projected average life of 6.6 years on December 31, 2023.
Interest sensitive assets and liabilities are defined as those assets or liabilities that mature or are repriced within a designated time frame. The principal function of managing interest rate risk is to maintain an appropriate relationship between those assets and liabilities that are sensitive to changing market interest rates.
The principal function of managing interest rate risk is to maintain an appropriate relationship between those assets and liabilities that are sensitive to changing market interest rates.
This portfolio consisted of seasoned 20-year mortgage paper with a weighted average loan age (“WALA”) of 1.8 years and a weighted average maturity (“WAM”) of 18.1 years. United had approximately $162.1 million in 30-year mortgage backed securities with a projected yield of 2.46% and a projected average life of 7.8 years on December 31, 2022.
This portfolio consisted of seasoned 20-year mortgage paper with a weighted average loan age (WALA) of 2.8 years and a weighted average maturity (WAM) of 17 years. United had approximately $154.7 million in 30-year mortgage backed securities with a projected yield of 2.62% and a projected average life of 7.6 years on December 31, 2023.
This portfolio consisted of seasoned 30-year mortgage paper with a weighted average loan age (“WALA”) of 2.7 years and a weighted average maturity (“WAM”) of 24.6 years.
This portfolio consisted of seasoned 30-year mortgage paper with a weighted average loan age (WALA) of 4.3 years and a weighted average maturity (WAM) of 23.8 years.
These assumptions are inherently uncertain and, as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and management’s strategies.
These assumptions are inherently uncertain and, as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income.
Moreover, earnings-simulation analysis considers the relative sensitivities of these balance sheet items and projects their behavior over an extended period of time.
Moreover, earnings-simulation analysis considers the relative sensitivities of these balance sheet items and projects their behavior over an extended period of time. United closely monitors the sensitivity of its assets and liabilities on an on-going basis and projects the effect of various interest rate changes on its net interest margin.
This is generally referred to as extension risk. 65 At December 31, 2022, United’s mortgage related securities portfolio had an amortized cost of $2.1 billion, of which approximately $934.1 million or 44% were fixed rate collateralized mortgage obligations (“CMOs”).
At December 31, 2023, United’s mortgage related securities portfolio had an amortized cost of $1.8 billion, of which approximately $786.5 million or 43% were fixed rate collateralized mortgage obligations (CMOs).
Added
Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and management’s strategies. 61 Interest sensitive assets and liabilities are defined as those assets or liabilities that mature or are repriced within a designated time frame.

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