UNITED BANKSHARES INC/WV (UBSI) FY 2022 MD&A

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

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

United desires to provide its shareholders with sound information about past performance and future trends. Consequently, any forward-looking statements contained in this report, in a report incorporated by reference to this report, or made by management of United in this report, in any other reports and filings, in press releases and in oral statements, involve numerous assumptions, risks and uncertainties. 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. Therefore, undue reliance should not be placed upon these estimates and statements. United cannot assure that any of these statements, estimates, or beliefs will be realized and actual results 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.

CORONAVIRUS (“COVID-19”) PANDEMIC

During 2020, and to a lesser extent in 2021, the COVID-19 pandemic had a severe disruptive impact on the U.S. and global economy. As the pandemic is ongoing and dynamic in nature, there are many uncertainties related to COVID-19 including, among other things, the ongoing impact to our customers, employees and vendors; the impact to the financial services and banking industry; and the impact to the economy as a whole as well as the effect of actions taken, or that may yet be taken, or inaction by governmental authorities to contain the outbreak or to mitigate its impact (both economic and health-related). Refer to our 2021 Form 10-K for further information regarding (i) the impact of the COVID-19 pandemic on our operations and our results thereof, as well as the impact on our financial position and (ii) legislative and regulatory actions taken related to the COVID-19 pandemic, particularly as they relate to the banking and financial services industry.

As the COVID-19 pandemic continues to be on-going, there continues to be uncertainties related to its magnitude, duration and persistent effects. This is particularly the case with the emergence, contagiousness and threat of new and different strains of the virus as well as the availability, acceptance and effectiveness of vaccines. However, United is currently unable to fully assess or predict the extent of the effects of COVID-19 on its operations and results in the future as the ultimate impact will depend on factors that are currently unknown and/or beyond our control.

ACQUISITIONS

On December 3, 2021, United acquired 100% of the outstanding common stock of Community Bankers Trust Corporation (“Community Bankers Trust”), a Virginia corporation headquartered in Richmond, Virginia. Immediately following the Merger, Essex Bank, a wholly-owned subsidiary of Community Bankers Trust, merged with and into United Bank, a wholly-owned subsidiary of United. United Bank survived the Bank Merger and continues to exist as a Virginia banking corporation. 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. The Community Bankers Trust merger was accounted for under the acquisition method of accounting. At consummation, Community Bankers Trust had assets of $1.79 billion, loans and leases, net of unearned income of $1.28 billion and deposits of $1.52 billion.

On May 1, 2020, United acquired 100% of the outstanding common stock of Carolina Financial Corporation (“Carolina Financial”), headquartered in Charleston, South Carolina. Immediately following the Merger, CresCom Bank, a wholly-owned subsidiary of Carolina Financial, merged with and into United Bank, a wholly-owned subsidiary of United (the “Bank Merger)”. United Bank survived the Bank Merger and continues to exist as a Virginia banking corporation. The acquisition of Carolina Financial afforded United the opportunity to expand its existing footprint in North Carolina and South Carolina. The merger resulted in a combined company with more than 200 locations in some of the best banking markets in the United States. CresCom Bank owned and operated Crescent Mortgage Company (“Crescent”), which is based in Atlanta. Crescent is approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers. As a result of the merger, Crescent became an indirectly-owned subsidiary of United. The Carolina Financial merger was accounted for under the acquisition method of accounting. At consummation, Carolina Financial had assets of $5.00 billion, loans and leases, net of unearned income of $3.29 billion and deposits of $3.87 billion.

37

The results of operations of Community Bankers Trust and Carolina Financial are included in the consolidated results of operations from their date of acquisition. As a result of the Community Bankers Trust acquisition, the year of 2022 was impacted by increased levels of average balances, income, and expense as compared to the year 2021. As a result of the Community Bankers Trust and Carolina Financial acquisitions, the year of 2021 was impacted by increased levels of average balances, income, and expense from both the Community Bankers Trust and Carolina Financial acquisition as compared to the year of 2020. In addition, the year of 2021 included $21.42 million of merger-related expenses from Community Bankers Trust acquisition as compared to $54.24 million of merger-related expenses from the Carolina Financial acquisition in the year of 2020.

TRANSITION FROM THE LONDON INTERBANK OFFERED RATE (“LIBOR”)

In 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, publicly announced its intention to stop persuading or compelling banks to submit the rates used to calculate LIBOR after 2021. ICE Benchmark Administration (the publisher of LIBOR) discontinued publication of the one-week and two-month U.S. Dollar LIBOR settings on December 31, 2021, and will cease the publication of overnight, one-month, three-month, six-month, and twelve-month U.S. Dollar LIBOR settings on June 30, 2023. It is assumed that LIBOR will either cease to be provided by any administrator or will no longer be representative of an acceptable market benchmark after these respective dates. Additionally, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have issued joint supervisory guidance encouraging banks to cease entering into any new contracts using LIBOR by December 31, 2021. Accordingly, United took steps to ensure compliance with the joint supervisory guidance, and no new contracts using LIBOR have been originated after December 31, 2021.

Working groups comprised of various regulators and other industry groups have been formed in the United States and other countries in order to provide guidance on this topic. In particular, the Alternative Reference Rates Committee (“ARRC”) has been formed in the United States by the Federal Reserve Board and the Federal Reserve Bank of New York. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative reference rate for U.S. Dollar LIBOR. The ARRC has also published recommended fall-back language for LIBOR-linked financial instruments, among numerous other areas of guidance. In addition, 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. At this time, however, it is unclear to what extent these recommendations will be broadly accepted by industry participants, whether they will continue to evolve, and what other alternatives may be adopted by the broader markets that utilize LIBOR as a reference rate. United has formed a project team comprised of individuals across various lines of business throughout the company to identify risks, monitor market developments, evaluate replacement benchmark alternatives, and manage the company’s transition away from LIBOR. At this time, United is prioritizing SOFR and Prime as the preferred alternatives to LIBOR; however, these preferred alternatives could change over time based on market developments.

United has loans, derivative contracts, borrowings, and other financial instruments that are directly or indirectly dependent on LIBOR. The transition from LIBOR will cause changes to payment calculations for existing contracts that use LIBOR as the reference rate. These changes will create various risks surrounding the financial, operational, compliance and legal aspects associated with changing certain elements of existing contracts. United will also be subject to risks surrounding changes to models and systems that currently use LIBOR reference rates, as well as market and strategic risks that could arise from the use of alternative reference rates. Additionally, United could face reputational risks if this transition is not managed appropriately with its customers. While the full impact of the transition is not yet known, failure to adequately manage the transition could have a material adverse effect on our business, financial condition and results of operations.

38

INTRODUCTION

The following discussion and analysis presents the more significant changes in financial condition as of December 31, 2022 and 2021 and the results of operations of United and its subsidiaries for each of the years then ended. This discussion and the consolidated financial statements and the notes to Consolidated Financial Statements include the accounts of United Bankshares, Inc. and its wholly-owned subsidiaries, unless otherwise indicated. 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. 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.

This discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes thereto, which are included elsewhere in this document.

USE OF NON-GAAP FINANCIAL MEASURES

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

Generally, United has presented a non-GAAP financial measure because it believes that this measure provides meaningful additional information to assist in the evaluation of United’s results of operations or financial position. Presentation of a non-GAAP financial measure is consistent with how United’s management evaluates its performance internally and this non-GAAP financial measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the banking industry. Specifically, this discussion contains certain references to 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. The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments. Although this is a non-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition.

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

However, this non-GAAP information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP. Where the non-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis. Investors should recognize that United’s presentation of this non-GAAP financial measure might not be comparable to a similarly titled measure at other companies.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of United conform with U.S. generally accepted accounting principles. In preparing the consolidated financial statements, management is required to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments, which are reviewed with the Audit Committee of the Board of Directors, are based on information available as

39

of the date of the financial statements. Actual results could differ from these estimates. These policies, along with the disclosures presented in the financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan and lease losses, the calculation of the income tax provision, and the use of fair value measurements to account for certain financial instruments to be the accounting areas that require the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available. The most significant accounting policies followed by United are presented in Note A, Notes to Consolidated Financial Statements.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is an estimate of the expected credit losses on financial assets measured at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit losses expected to arise over the life of the asset (contractual term). 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. 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. 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. Management’s evaluation of the adequacy of the allowance for loan losses and the appropriate provision for loan losses is based upon a quarterly evaluation of the loan portfolio. This evaluation is inherently subjective and requires significant estimates, including estimates related to the amounts and timing of future cash flows, value of collateral, losses on pools of homogeneous loans 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. The allowance allocated to specific credits and loan pools grouped by similar risk characteristics is reviewed on a quarterly basis and adjusted as necessary based upon subsequent changes in circumstances. In determining the components of the allowance for loan losses, management considers the risk arising in part from, but not limited to, 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. 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”). For a discussion of concentrations of credit risk, see Item 1, under the caption of Loan Concentrations in this Form 10-K.

Income Taxes

United’s calculation of income tax provision is inherently complex due to the various different tax laws and jurisdictions in which we operate and requires management’s use of estimates and judgments in its determination. The current income tax liability also includes income tax expense related to our uncertain tax positions as required in ASC Topic 740, “Income Taxes.” Changes to the estimated accrued taxes can occur due to changes in tax rates, implementation of new business strategies, resolution of issues with taxing authorities and recently enacted statutory, judicial and regulatory guidance. These changes can be material to the Company’s operating results for any particular reporting period. The analysis of the income tax provision requires the assessments of the relative risks and merits of the appropriate tax treatment of transactions, filing positions, filing methods and taxable income calculations after considering statutes, regulations, judicial precedent and other information. United strives to keep abreast of changes in the tax laws and the issuance of regulations which may impact tax reporting and provisions for income tax expense. United is also subject to audit by federal and state authorities. Because the application of tax laws is subject to varying interpretations, results of these audits may produce indicated liabilities which differ from United’s estimates and provisions. United continually evaluates its exposure to possible tax assessments arising from audits and records its estimate of probable exposure based on current facts and circumstances. The potential impact to United’s operating results for any of the changes cannot be reasonably estimated. See Note 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. ASC Topic 820 establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs in the methodology for determining fair value are observable or unobservable. Observable inputs reflect market-based information obtained from independent sources (Level 1 or Level 2), while unobservable inputs reflect management’s estimate of market data (Level 3). For assets and liabilities that are actively traded and have quoted prices or observable market data, a minimal amount of subjectivity concerning fair value is needed. Prices and values obtained from third party vendors that do not reflect forced liquidation or distressed sales are not adjusted by management. When quoted prices or observable market data are not available, management’s judgment is necessary to estimate fair value.

At December 31, 2022, approximately 15.67% of total assets, or $4.62 billion, consisted of financial instruments recorded at fair value. 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. 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. 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.

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. This increase was mainly due to an increase of $2.53 billion or 14.06% in portfolio loans and leases and an increase of $576.86 million or 13.43% in investment securities. These increases in assets were partially offset by a decrease of $2.58 billion or 68.69% in cash and cash equivalents and a decrease of $447.54 million or 88.72% in loans held for sale. Total liabilities increased $362.91 million or 1.47% from year-end 2021. Borrowings increased $1.41 billion or 149.23% and the allowance for lending-related commitments increased $14.75 million or 46.90%. Mostly offsetting these increases in liabilities was a $1.05 billion or 4.48% decrease in deposits and a $10.95 million or 12.63% decrease in the operating lease liability. Shareholders’ equity decreased $202.44 million or 4.29%.

The following discussion explains in more detail the changes in financial condition by major category.

Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2022 decreased $2.58 billion or 68.69% from year-end 2021. In particular, interest-bearing deposits with other banks decreased $2.59 billion or 74.63% as United placed less cash in an interest-bearing account with the Federal Reserve. Cash and due from banks increased $11.28 million or 3.99% from year-end 2021 while federal funds sold increased $152 thousand or 16.40%. During the year of 2022, net cash of $760.82 million and $105.32 million were provided by operating and financing activities, respectively, while net cash of $3.45 billion was used in investing activities. Further details related to changes in cash and cash equivalents are presented in the Consolidated Statements of Cash Flows.

41

Securities

Total investment securities at December 31, 2022 increased $576.86 million or 13.43%. Securities available for sale increased $499.23 million or 12.35%. This change in securities available for sale reflects $1.57 billion in purchases, $575.75 million in sales, maturities and calls of securities and a decrease of $481.01 million in market value. The majority of the purchase activity was related to securities of the U.S. Treasury and obligations of U.S. Government corporations and agencies, mortgage-backed securities, and asset-backed securities. Securities held to maturity were flat from year-end 2021. Equity securities were $7.63 million at December 31, 2022, a decrease of $4.78 million or 38.50% due mainly to sales. Other investment securities increased $82.40 million or 34.39% from year-end 2021 due to purchases of Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock as well as investment tax credits.

The following table summarizes the changes in the available for sale securities since year-end 2021:

The following table summarizes the changes in the held to maturity securities since year-end 2021:

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.

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. The portfolio consisted primarily of $1.37 billion in agency residential mortgage-backed securities with a fair value of $1.17 billion, $121.34 million in non-agency residential mortgage-backed securities with an estimated fair value of $111.97 million, and $627.77 million in commercial agency mortgage-backed securities with an estimated fair value of $562.55 million.

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, 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. In addition to the single issue trust preferred securities, the Company held positions in various other corporate securities, including asset-backed securities with an amortized cost of $943.81 million and a fair value of $911.61 million and other corporate securities, with an amortized cost of $563.43 million and a fair value of $525.54 million.

42

United’s available for sale single issue trust preferred securities had a fair value of $16.28 million as of December 31, 2022. Of the $16.28 million, $7.63 million or 46.83% were investment grade; $3.17 million or 19.50% were split rated; and $5.48 million or 33.67% were unrated. The two largest exposures accounted for 76.24% of the $16.28 million. These included Truist Bank at $6.93 million and Emigrant Bank at $5.48 million. All single issue trust preferred securities are currently receiving full scheduled principal and interest payments.

During 2022, United did not recognize any credit losses on its available for sale investment securities. 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. Based on a review of each of the securities in the available for sale investment portfolio, management concluded that it was more-likely-than-not that it would be able to realize the cost basis investment and appropriate interest payments on such securities. United has the intent and the ability to hold these securities until such time as the value recovers or the securities mature. As of December 31, 2022, there was no allowance for credit losses related to the Company’s available for sale securities. However, United acknowledges that any securities in an unrealized loss position may be sold in future periods in response to significant, unanticipated changes in asset/liability management decisions, unanticipated future market movements or business plan changes.

Further information regarding the amortized cost and estimated fair value of investment securities, including remaining maturities as well as a more detailed discussion of management’s 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. Loan sales in the secondary market exceeded originations during the year of 2022. Originations of loans for the year of 2022 were $1.90 billion while sales of loans were $2.20 billion. Loans held for sale were $56.88 million at December 31, 2022 as compared to $504.42 million at year-end 2021.

Portfolio Loans

Loans, net of unearned income, increased $2.53 billion or 14.06%. Since year-end 2021, commercial, financial and agricultural loans increased $471.64 million or 4.23%. In particular, commercial real estate loans increased $321.44 million or 4.18% while commercial loans (not secured by real estate) increased $150.21 million or 4.34%. Construction and land development loans increased $912.81 million or 45.32%, residential real estate loans increased $971.35 million or 26.31%, and consumer loans increased $173.06 million or 14.51% due to an increase in indirect automobile financing.

The following table summarizes the changes in the major loan classes since year-end 2021:

43

The following table shows the amount of loans acquired and outstanding by major loan classes as of December 31, 2022 and 2021:

The following table shows the maturity of loans and leases, outstanding as of December 31, 2022:

44

At December 31, 2022, for loans and leases due after one year, interest rate information is as follows:

More information relating to loans is presented in Note D, Notes to Consolidated Financial Statements.

Other Assets

Other assets increased $72.98 million or 31.52% from year-end 2021 as a result of a $106.31 million increase in deferred tax assets due to a decrease in the fair value of available-for-sale securities. In addition, dealer reserve increased $4.20 million and net pension asset increased $7.48 million primarily due to an increase in the discount rate used in the year-end valuation. Partially offsetting these increases in other assets were decreases of $12.60 million in income tax receivable due to timing differences, $12.82 million in other real estate owned properties (“OREO”) due to sales and write downs, $26.67 million in derivative assets, and $5.52 million in core deposit intangibles due to amortization.

Deposits

Deposits represent United’s primary source of funding. Total deposits at December 31, 2022 decreased $1.05 billion or 4.48%. In terms of composition, noninterest-bearing deposits decreased $296.88 million or 3.96% while interest-bearing deposits decreased $750.22 million or 4.73% from December 31, 2021.

Noninterest-bearing deposits, which consist of noninterest-bearing demand deposit and noninterest-bearing money market (“MMDA”) account balances, decreased $296.88 million from year-end 2021 due to a $139.87 million decrease in commercial noninterest-bearing deposits and a $148.83 million decrease in public funds noninterest-bearing deposits.

45

Interest-bearing deposits consist of interest-bearing transaction accounts, regular savings, interest-bearing MMDA, and time deposit account balances. Interest-bearing transaction accounts decreased $101.38 million or 1.94% since year-end 2021 as the result of a $182.47 million decrease in personal interest-bearing transaction accounts and a $20.84 million decrease in public funds interest-bearing transaction accounts partially offset by an increase of $101.94 million in nonpersonal interest-bearing transaction accounts. Regular savings accounts increased $36.90 million or 2.25% mainly as a result of a $43.52 million increase in personal savings accounts. Interest-bearing MMDAs decreased $62.48 million or less than 1%. In particular, commercial MMDAs decreased $27.94 million, brokered MMDAs decreased $31.86 million, and public funds MMDAs decreased $43.97 million while personal MMDAs increased $41.30 million.

Time deposits under $100,000 decreased $187.06 million or 18.14% from year-end 2021. This decrease in time deposits under $100,000 was the result of a $174.13 million decrease in fixed rate Certificates of Deposits (“CDs”) under $100,000, a $8.75 million decrease in CDs under $100,000 obtained through the use of deposit listing services, and a $4.60 million decrease in variable rate CDs.

Since year-end 2021, time deposits over $100,000 decreased $436.20 million or 27.24% as fixed rate CDs decreased $320.18 million, CDARS over $100,000 decreased $52.26 million, public funds CDs over $100,000 decreased $51.74 million, and brokered certificates of deposits decreased $11.27 million.

The table below summarizes the changes by deposit category since year-end 2021:

At December 31, 2022, the scheduled maturities of time deposits are as follows:

Maturities of estimated uninsured time deposits of $100,000 or more outstanding at December 31, 2022 are summarized as follows:

46

The amounts of uninsured time deposits of $100,000 or more outstanding at December 31, 2022 are based on estimates using the same methodologies and assumptions used for regulatory reporting requirements.

The average daily amount of deposits and rates paid on such deposits is summarized for the years ended December 31:

More information relating to deposits is presented in Note K, Notes to Consolidated Financial Statements.

Borrowings

Total borrowings at December 31, 2022 increased $1.41 billion or 149.23% since year-end 2021. During the year of 2022, short-term borrowings increased $31.85 million or 24.72% due to an increase in securities sold under agreements to repurchase. Long-term borrowings increased $1.38 billion or 168.86% from year-end 2021 due to an increase in FHLB advances.

The table below summarizes the change in the borrowing categories since year-end 2021:

For a further discussion of borrowings see Notes L and M, Notes to Consolidated Financial Statements.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at December 31, 2022 decreased $5.90 million or 3.02% from year-end 2021. In particular, accrued employee expenses and deferred compensation decreased $5.48 million and $2.77 million, respectively, and derivative liabilities decreased $3.13 million. Partially offsetting these decreases was a $7.48 million increase in interest payable due mainly to an increase in FHLB borrowings and rising interest rates.

Shareholders’ Equity

Shareholders’ equity at December 31, 2022 was $4.52 billion, which was a decrease of $202.44 million or 4.29% from year-end 2021.

47

Retained earnings increased $184.65 million or 13.28% from year-end 2021. Earnings net of dividends for the year of 2022 were $184.65 million.

Accumulated other comprehensive income decreased $327.84 million or 6,707.12% from year-end 2021 due to a decrease of $368.93 million in the fair value of United’s available for sale investment portfolio, net of deferred income taxes, primarily the result of an increase in market interest rates. Partially offsetting this decrease was a $36.66 million increase in the fair value of cash flow hedges, net of deferred income taxes. The after-tax accretion of pension costs was $2.75 million for the year of 2022 while the after-tax pension accounting adjustment at year-end 2022 resulted in an increase of $1.68 million.

Treasury stock increased $79.79 million or 46.76% from year-end 2021. During the year of 2022, United repurchased 2,259,546 shares of its common stock on the open market under repurchase plans approved by United’s Board of Directors at a cost of $78.38 million or an average price per share of $34.69.

RESULTS OF OPERATIONS

Overview

The following table sets forth certain consolidated income statement information of United:

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. Higher net income for the year 2022 compared to the year of 2021 was primarily driven by strong loan growth and net interest margin expansion primarily as a result of a rising rate environment.

As previously mentioned, United completed its acquisition of Community Bankers Trust on December 3, 2021. The results of operations for Community Bankers Trust are included in the consolidated results of operations from the date of the acquisition. In addition, the year of 2022 included merger-related expenses of $537 thousand related to the Community Bankers Trust acquisition compared to merger-related expenses of $21.42 million in 2021.

48

United’s return on average assets for the year of 2022 was 1.31% and the return on average shareholders’ equity was 8.25% as compared to 1.35% and 8.30% for the year of 2021. For the year of 2022, United’s return on average tangible equity, a non-GAAP measure, was 14.11%, as compared to 14.18% the year of 2021.

Net interest income for the year of 2022 was $896.43 million, an increase of $153.70 million or 20.69% from the prior year. Mainly, this increase in net interest income for 2022 compared to 2021 was 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 provision for credit losses was $18.82 million for the year 2022 as compared to a benefit of $23.97 million for the year 2021. Noninterest income was $153.26 million for the year of 2022 which was a decrease of $124.87 million or 44.90% from the year of 2021. Noninterest expense was $555.09 million which was a decrease of $26.89 million or 4.62%.

Income taxes for the year of 2022 were $96.16 million as compared to $95.12 million for the year of 2021. United’s effective tax rate was approximately 20.2% and 20.6% for years ended December 31, 2022 and 2021, respectively, as compared to 19.7% for 2020.

Business Segments

United operates in two business segments: community banking and mortgage banking.

Community Banking

Net income attributable to the community banking segment for the year of 2022 was $397.32 million compared to net income of $327.08 million for the year of 2021. The higher net income within the community banking segment in 2022 was due primarily to the impact of the Community Bankers Trust acquisition, organic loan growth and the positive impact of rising market interest rates on the net interest margin. The full year of 2022 was impacted by the Community Bankers Trust acquisition as compared to one month in 2021.

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. Generally, net interest income for the year of 2022 increased from the year of 2021 due to an increase in average earning assets as a result of the Community Bankers Trust acquisition, organic loan growth and an increase in the average yield on earning assets due to rising market interest rates.

Provision for credit losses was $18.82 million for the year of 2022 compared to a net benefit of $23.97 million for the same period of 2021. The increase in the provision for credit losses was primarily due to an increase in loans outstanding.

Noninterest income for the year of 2022 was relatively flat from the year of 2021, decreasing $877 thousand or less than 1%.

49

Noninterest expense was $472.81 million for the year ended December 31, 2022, compared to $443.49 million for the same period of 2021. The increase of $29.32 million in noninterest expense was primarily attributable to the additional employees and branch offices from the Community Bankers Trust acquisition as most major categories of noninterest expense showed increases.

Mortgage Banking

The mortgage banking segment reported a net loss of $7.22 million for the year of 2022 as compared to net income of $43.93 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 $69.31 million for the year of 2022 as compared to $183.22 million for the year of 2021. The decrease of $113.91 million in 2022 was due mainly to lower originations and sales of mortgage loans driven by the rising rate environment and a lower margin on loans sold in the secondary market. Noninterest expense was $88.98 million for the year of 2022 as compared to $138.51 million the year of 2021. 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.

Net Interest Income

Net interest income represents the primary component of United’s earnings. It is the difference between interest income from earning assets and interest expense incurred to fund these assets. Net interest income is impacted by changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as changes in market interest rates. Such changes, and their impact on net interest income in 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. The $153.70 million increase in net interest income occurred because total interest income increased $206.87 million while total interest expense increased $53.18 million from the year of 2021. Generally, interest income for the year of 2022 increased from the year of 2021 due mainly to a higher amount of interest earning assets, mainly as result of the Community Bankers Trust acquisition and organic loan growth, and an increase in the yield on those earning assets mainly as a result of a rise in market interest rates. Interest expense increased primarily due to an increase in the amount of interest-bearing funds, mainly as result of the Community Bankers Trust acquisition and to partially fund loan growth, as well as an increase in market interest rates which resulted in higher funding costs. For the purpose of this remaining discussion, net interest income is presented on a tax-equivalent basis to provide a comparison among all types of interest earning assets. The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments. Although this is a non-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition.

Tax-equivalent net interest income for the year of 2022 increased $153.95 million, or 20.61%, from the year of 2021. 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. These increases were partially offset by higher interest expense primarily driven by deposit rate repricing, lower Paycheck Protection Plan (“PPP”) loan fee income and lower acquired loan accretion income. The interest rate spread for the year of 2022 increased 30 basis points from the year of 2021 due to a 61 basis point increase in the average yield on earning assets partially offset by a 31 basis point increase in the average cost of funds. 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. Net PPP loan fee income was $9.62 million and $33.22 million for the year of 2022 and 2021, respectively, a decrease of $23.59 million. Acquired loan accretion income was $18.32 million and $33.86 million for the year of 2022 and 2021, respectively, a decrease of $15.54 million. 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 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 reconciles the difference between net interest income and tax-equivalent net interest income for the year ended December 31, 2022, 2021 and 2020.

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. 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.

52

The following table sets forth a summary for the periods indicated of the changes in consolidated interest earned and interest paid detailing the amounts attributable to (i) changes in volume (change in the average volume times the prior year’s average rate), (ii) changes in rate (change in the average rate times the prior year’s average volume), and (iii) changes in rate/volume (change in the average volume times the change in average rate).

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. 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 2022 was $18.83 million as compared to a net benefit of $23.72 million for the year of 2021. The higher amount of provision expense for 2022 compared to 2021 was mainly due to an increase in overall loans outstanding. Net charge-offs for the year of 2022 were $101 thousand as compared to $8.72 million for the year of 2021. The lower amount of net charge-offs for the year of 2022 as compared to the year of 2021 was primarily due to charge-offs recognized on several large commercial credits in 2021. Net charge-offs as a percentage of average loans and leases were zero and 0.05% for the year of 2022 and 2021, respectively.

As of December 31, 2022, nonperforming loans and leases were $58.64 million or 0.29% of loans and leases, net of unearned income as compared to $90.76 million or 0.50% of loans, net of unearned income at December 31, 2021. The components of nonperforming loans and leases include: 1) nonaccrual loans and leases, 2) loans and leases which are contractually past due 90 days or more as to interest or principal, but have not been put on a nonaccrual basis and 3) loans and leases whose terms have been restructured for economic or legal reasons due to financial difficulties of the borrowers.

53

Loans past due 90 days or more were $15.57 million at December 31, 2022, a decrease of $3.31 million or 17.55% from $18.88 million at year-end 2021. This decrease was primarily due to a large delinquent commercial credit brought current. At December 31, 2022, nonaccrual loans were $23.69 million, which was a decrease of $12.34 million or 34.26% from $36.03 million at year-end 2021. This decrease was due to the repayment of several mid-sized commercial nonaccrual loans as well as the return to accrual status for three commercial relationships. Restructured loans were $19.39 million at December 31, 2022, a decrease of $16.47 million or 45.93% from $35.86 million at year-end 2021. The decrease was mainly due to the repayment of six large commercial relationships during the year of 2022. The loss potential on these loans has been properly evaluated and allocated within the Company’s allowance for loan losses.

Nonperforming assets include nonperforming loans and leases and real estate acquired in foreclosure or other settlement of loans (“OREO”). Total nonperforming assets of $60.69 million, including OREO of $2.05 million at December 31, 2022, represented 0.21% of total assets.

United maintains an allowance for loan and lease losses and a reserve for lending-related commitments. The combined allowance for loan and lease losses and reserve for lending-related commitments is considered the allowance for credit losses. At December 31, 2022, the allowance for credit losses was $280.94 million as compared to $247.46 million at December 31, 2021.

At December 31, 2022, the allowance for loan and lease losses was $234.75 million as compared to $216.02 million at December 31, 2021. The increase in the allowance for loan and lease losses was due mainly to an increase in outstanding loans as well as lower forecasted Gross Domestic Product (“GDP”) and a higher forecasted unemployment rate within the reasonable and supportable forecast. This increase was offset slightly due to improvement in historical loss rates and a decrease in allocations established for individually assessed loans. As a percentage of loans and leases, net of unearned income, the allowance for loan losses was 1.14% at December 31, 2022 and 1.20% at December 31, 2021. The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 400.33% and 238.00% at December 31, 2022 and December 31, 2021, respectively. The increase in this ratio was due mainly to a decline in nonperforming loans.

The following table summarizes United’s credit loss experience for loan and leases losses, based on loan categories, for the year of 2022 and 2021:

54

United continues to evaluate risks which may impact its loan and lease portfolios. Reserves are initially determined based on losses identified from the PD/LGD and Cohort models which utilize the Company’s historical information. Then, any qualitative adjustments are applied to account for the Company’s view of the future and other factors. 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:

The following table presents the allocation of United’s allowance for credit losses for the years ended December 31:

The following is a summary of loans and leases outstanding as a percent of gross loans at December 31:

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 residential real estate reserve increased $9.82 million. The real estate construction and development loan pool reserve increased $8.99 million. The consumer loan pool reserve increased $2.75 million. Each of these increases were primarily due to increased outstanding balances. The allowance related to the commercial, financial & agricultural loan pool decreased $2.84 million. This decrease is due to improvement in historical loss rates and a decrease in allocations established for individually assessed loans.

56

An allowance is established for estimated lifetime losses for loans that are individually assessed. Nonperforming commercial loans and leases are regularly reviewed to identify expected credit losses. A loan is individually assessed for expected credit losses when the loan does not share similar characteristics with other loans in the portfolio. Measuring expected credit losses of a loan requires judgment and estimates, and the eventual outcomes may differ from those estimates. Expected credit losses are measured based upon the present value of expected future cash flows from the loan discounted at the loan’s effective rate or the fair value of collateral if the loan is collateral dependent. When the selected measure is less than the recorded investment in the loan, an expected credit loss has occurred. The allowance for loans and leases that were individually assessed was $1.27 million at December 31, 2022 and $6.53 million at December 31, 2021. In comparison to the prior year-end, this element of the allowance decreased $5.26 million due to repayment of individually assessed loans, improved borrowers’ financial conditions such that individual assessments were no longer necessary and improved collateral valuations.

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. The commercial loan portfolio is monitored for possible concentrations of credit in one or more industries. Management has lending limits as a percentage of capital per type of credit concentration in an effort to ensure adequate diversification within the portfolio. Most of United’s commercial loans are secured by real estate located in West Virginia, southeastern Ohio, Pennsylvania, Virginia, Maryland, North Carolina, South Carolina, and the District of Columbia. It is the opinion of management that these commercial loans do not pose any unusual risks and that adequate consideration has been given to these loans in establishing the allowance for credit losses.

The provision for credit losses related to held to maturity securities for the year of 2022 and 2021 was immaterial. 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. There was no provision for credit losses recorded on available for sale investment securities for the year of 2022 and 2021 and no allowance for credit losses on available for sale investment securities as of December 31, 2022 and 2021. Loan interest payment deferrals granted by United under the CARES Act ended on of January 1, 2022. Therefore, United released all of its remaining $8 thousand in reserves in the year of 2022 related to these loan interest payment deferrals granted under the CARES Act as compared to the release of $242 thousand in the year of 2021. The allowance for accrued interest receivables not expected to be collected as of December 31, 2021 was $8 thousand.

Management is not aware of any potential problem loans or leases, trends or uncertainties, which it reasonably expects, will materially impact future operating results, liquidity, or capital resources which have not been disclosed. Additionally, management has disclosed all known material credits, which cause management to have serious doubts as to the ability of such borrowers to comply with the loan repayment schedules.

Other Income

Other income consists of all revenues, which are not included in interest and fee income related to earning assets. Noninterest income has been and will continue to be an important factor for improving United’s profitability. Recognizing the importance, management continues to evaluate areas where noninterest income can be enhanced.

Noninterest income for the year of 2022 was $153.26 million, which was a decrease of $124.87 million or 44.90% from the year of 2021. The decrease was due mainly to a decrease in income from mortgage banking activities primarily as a result of lower mortgage loan originations and sales volume driven by a rising interest rate environment and a lower margin on loans sold in the secondary market.

57

Income from mortgage banking activities totaled $42.69 million for the year of 2022 compared to $171.69 million for the year of 2021. The decrease of $129.00 million or 75.14% for the year of 2022 was due mainly to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower margin on loans sold in the secondary market. 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.

United recognized a net gain of $776 thousand on investment securities’ activity in 2022 as compared to a net gain of $2.68 million on investment securities activity in 2021. In particular, United recognized a net gain of $1.36 million on an equity security without a readily determinable market value and a $589 thousand net loss on equity securities for the year of 2022 as compared to net gains of $1.55 million on the sales, calls and redemption of available-for-sale securities investment securities, $670 thousand on equity securities and $455 thousand on an equity security without a readily determinable market value for the year of 2021. In addition, United did not recognize any impairment on investment securities for the year of 2022 and 2021.

Fees from trust services for the year of 2022 were $17.22 million, an increase of $664 thousand or 4.01% from the year of 2021 due to an increase in managed assets.

Fees from brokerage services for the year of 2022 were $16.41 million, an increase of $853 thousand or 5.48% from the year of 2021 due to increased volume.

Fees from deposit services for the year of 2022 were $40.56 million, an increase of $1.87 million or 4.83% from the year of 2021. Debit card income increased $741 thousand and overdraft fees increased $713 thousand. Partially offsetting fees from deposit services was the impact of implemented changes to United’s overdraft policy during the third quarter of 2022.

Bankcard fees for the year of 2022 increased $1.10 million or 19.96% from the year of 2021 due mainly to an increase in interchange income from increased volume.

Income from bank-owned life insurance (“BOLI”) for the year of 2022 increased $2.35 million or 34.33% from the year of 2021 due to an increase of $2.64 million in death benefits and the addition of $30.64 million in BOLI from the Community Bankers Trust acquisition.

Other miscellaneous income decreased $700 thousand or 8.71% mainly due to an decrease in prepayment fees received on Delegated Underwriting and Servicing (“DUS”) securities.

Other Expense

Just as management continues to evaluate areas where noninterest income can be enhanced, it strives to improve the efficiency of its operations to reduce costs. Other expense includes all items of expense other than interest expense, the provision for credit losses and income tax expense. Noninterest expense for the year of 2022 was $555.09 million, which was a decrease of $26.89 million or 4.62% from the year of 2021.

Employee compensation for the year of 2022 decreased $37.56 million or 13.42% from the year of 2021. The decrease for 2022 was due mainly to lower employee commissions, incentives and overtime related to a decline in mortgage banking production partially offset by additional employees from the Community Bankers Trust acquisition.

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. 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. The determination of the projected benefit obligation and the associated periodic benefit expense involves significant judgment and estimation of future employee compensation levels, the discount rate and the expected long-term rate of return on plan assets. 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 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 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. The increase was due mainly to increases of $1.17 million in building maintenance expense and $998 thousand in depreciation due mainly to the offices added in the Community Bankers Trust acquisition partially offset by a decline of $479 thousand in building rental expense due to the closing of certain leased offices.

OREO expense for the year of 2022 decreased $3.23 million or 60.19% from the year of 2021 due mainly to fewer declines in the fair value of OREO properties.

Equipment expense increased $3.34 million or 12.86% for the year of 2022 as compared to the year of 2021. The increase was due mainly to higher maintenance costs of $2.32 million and depreciation expense of $684 thousand primarily due to the Community Bankers Trust acquisition.

Data processing expense decreased $1.45 million or 4.61% for the year of 2022 as compared to the year of 2021. The decrease for year of 2022 was due to $3.47 million of merger conversion and Community Bankers Trust contract termination costs included in the year of 2021.

Mortgage loan servicing expense and impairment for the year of 2022 decreased $5.15 million from the year of 2021. The decrease was due to the recovery of past temporary impairment and lower amortization expense of mortgage servicing rights.

Federal Deposit Insurance Corporation (“FDIC”) expense for the year of 2022 increased $3.64 million or 43.64% from the year of 2021 due to a higher assessment base.

Other expense for the year of 2022 increased $17.48 million or 14.46% from the year of 2021. The increase in other noninterest expense mainly resulted from higher amounts of certain general operating expenses primarily related to consulting and legal costs. Additionally, the expense for the reserve for unfunded loan commitments increased $2.71 million and charitable contributions increased $1.41 million from the year of 2021.

Income Taxes

For the year ended December 31, 2022, income taxes were $96.16 million, compared to $95.12 million for 2021, an increase of $1.04 million or 1.09%. The increase was due to higher earnings partially offset by a slightly lower effective tax rate. United’s effective tax rate was approximately 20.2% and 20.6% for years ended December 31, 2022 and 2021, respectively, as compared to 19.7% for 2020. For further details related to income taxes, see Note O, Notes to Consolidated Financial Statements.

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. Earnings for the first quarter of 2022, as compared to the first quarter of 2021, decreased primarily due to lower income from mortgage banking activities mainly as a result of the rising rate environment partially offset by lower noninterest expense associated with decreased mortgage banking production. Net interest income for the first quarter of 2022 was relatively flat from the first quarter of 2021, increasing $542 thousand, or less than 1%, to $191.50 million from net interest income of $190.96 million for the first three months of 2021. The slight increase of $542 thousand in net interest income occurred because total interest income decreased $2.86 million while total interest expense decreased $3.40 million from the first quarter of 2021. The provision for credit losses was a net benefit of $3.41 million for the first quarter of 2022

59

as compared to a provision for credit losses expense of $143 thousand for the first quarter of 2021. The decrease in the provision for credit losses was mainly due to the impact of better performance trends within the loan portfolio. Noninterest income was $46.02 million for the first three months of 2022, a decrease of $46.55 million or 50.28% from the first three months of 2021 due mainly to decreased income from mortgage banking activities due to a lower volume of mortgage loan originations and sales in the secondary market mainly the result of a rising interest rate environment. Noninterest expense for the first three months of 2022 decreased $9.75 million or 6.55% from the first three months of 2021 due mainly to lower employee compensation expense as a result of lower employee commissions, incentives and overtime related to mortgage banking production and lower OREO expense due to fewer declines in the fair value of OREO properties. Income taxes decreased $7.47 million or 27.09% for the first three months of 2022 as compared to the first three months of 2021 primarily due to lower earnings and a lower effective tax rate. The effective tax rate was 19.75% and 20.50% for the first quarter of 2022 and 2021, respectively.

Net income for the second quarter of 2022 was $95.61 million or $0.71 per diluted share, as compared to $94.84 million or $0.73 per diluted share for the prior year second quarter. Net interest income for the second quarter of 2022 was $214.90 million, which was an increase of $28.39 million or 15.22% from the second quarter of 2021. The $28.39 million increase in net interest income occurred because total interest income increased $27.59 million while total interest expense decreased $801 thousand from the second quarter of 2021. United’s provision for credit losses was a net benefit of $1.81 million for the second quarter of 2022 while the provision for credit losses was a net benefit of $8.88 million for the second quarter of 2021. The lower net benefit amount for 2022 compared to 2021 was mainly due to an increase in total loans outstanding. For the second quarter of 2022, noninterest income was $43.61 million, which was a decrease of $19.26 million or 30.63% from the second quarter of 2021. The decrease in noninterest income were primarily due to decreased income from mortgage banking activities due to a lower volume of mortgage loan originations and sales in the secondary market mainly the result of a rising interest rate environment. For the second quarter of 2022, noninterest expense increased $2.21 million or 1.59% from the second quarter of 2021 due mainly to an increase in the expense for the reserve for unfunded loan commitments as well as higher amounts of certain general operating expenses. 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.

Net income for the third quarter of 2022 was $102.59 million or $0.76 per diluted share, as compared to $92.15 million or $0.71 per diluted share for the prior year third quarter. Net interest income for the third quarter of 2022 was $240.62 million, which was an increase of $59.04 million or 32.52% from the third quarter of 2021. The $59.04 million increase in net interest income occurred because total interest income increased $69.60 million while total interest expense increased $10.56 million from the third quarter of 2021. 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. For the third quarter of 2022, noninterest income was $32.75 million, which was a decrease of $35.88 million or 52.28% from the third quarter of 2021 primarily due to decreased income from mortgage banking activities due to a lower volume of mortgage loan originations and sales in the secondary market mainly the result of a rising interest rate environment. 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. Income tax expense for the third quarter of 2022 was $25.92 million as compared to $23.60 million for the third quarter of 2021 primarily due to higher earnings partially offset by a slightly lower effective tax rate. United’s effective tax rate was 20.17% and 20.39% for the third quarter of 2022 and 2021, respectively.

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 interest income for the fourth quarter of 2022 was $249.40 million, which was an increase of $65.73 million or 35.78% from the fourth quarter of 2021. The $65.73 million increase in net interest income occurred because total interest income increased $112.55 million while total interest expense increased $46.82 million from the fourth quarter of 2021. 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. Partially offsetting the fourth quarter of 2021 net benefit was a provision for loan losses of $12.29 million recorded on purchased non-credit deteriorated (“non-PCD”) loans from Community Bankers Trust. Noninterest income for the fourth quarter of 2022 was $30.88 million, which was a decrease of $23.17 million, or 42.87%

60

from the fourth quarter of 2021. 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 expense for the fourth quarter of 2022 was $137.54 million, a decrease of $14.25 million, or 9.39%, from the fourth quarter of 2021 primarily due to decreases of $14.01 million in employee compensation and $3.39 million in data processing expense. The decrease in employee compensation was primarily due to lower employee commissions and incentives related to mortgage banking production and the impact of $2.53 million of merger-related expenses recognized in the fourth quarter of 2021. Data processing expense for the fourth quarter of 2021 included $3.47 million of merger-related expenses associated with the Community Bankers Trust acquisition. For the fourth quarter of 2022, income tax expense was $26.61 million as compared to $19.49 million for the fourth quarter of 2021. The increase of $7.12 million was primarily due to higher earnings and a slightly higher effective tax rate. 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. Since interest rates, loan demand and deposit levels are impacted by inflation, the resulting changes in the interest-sensitive assets and liabilities are included in net interest income. Similarly, operating expenses such as salaries, rents and maintenance include changing prices resulting from inflation. One item that would not reflect inflationary changes is depreciation expense. Subsequent to the acquisition of depreciable assets, inflation causes price levels to rise; therefore, historically presented dollar values do not reflect this inflationary condition. Inflationary pressure on consumers and uncertainty regarding the economy could result in changes in consumer and business spending, borrowing and savings habits. Such conditions could have a material adverse effect on the credit quality of our loans and our business, financial condition and results of operations. Management will monitor the impact of inflation as conditions warrant.

The Effect of Regulatory Policies and Economic Conditions

United’s business and earnings are affected by the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities. The Federal Reserve Board regulates the supply of money in order to influence general economic conditions. Among the instruments of monetary policy available to the Federal Reserve Board are (i) conducting open market operations in United States government obligations, (ii) changing the discount rate on financial institution borrowings, (iii) imposing or changing reserve requirements against financial institution deposits, and (iv) restricting certain borrowings and imposing or changing reserve requirements against certain borrowings by financial institutions and their affiliates. These methods are used in varying degrees and combinations to affect directly the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits.

United’s business and earnings are also affected by general and local economic conditions. Certain credit markets can experience difficult conditions and volatility. Downturns in the credit market can cause a decline in the value of certain loans and securities, a reduction in liquidity and a tightening of credit. A downturn in the credit market often signals a weakening economy that can cause job losses and thus distress on borrowers and their ability to repay loans. Uncertainties in credit markets and the economy present significant challenges for the financial services industry.

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.

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. Like all banks, United depends upon its ability to renew maturing deposits and other liabilities on a daily basis and to acquire new funds in a variety of markets. A significant source of funds available to United

61

is “core deposits”. Core deposits include certain demand deposits, statement and special savings and NOW accounts. These deposits are relatively stable, and they are the lowest cost source of funds available to United. Short-term borrowings have also been a significant source of funds. These include federal funds purchased and securities sold under agreements to repurchase as well as advances from the FHLB. Repurchase agreements represent funds which are obtained as the result of a competitive bidding process.

Liquid assets are cash and those items readily convertible to cash. All banks must maintain sufficient balances of cash and near-cash items to meet the day-to-day demands of customers and United’s cash needs. Other than cash and due from banks, the available for sale securities portfolio and maturing loans are the primary sources of liquidity.

The goal of liquidity management is to ensure the ability to access funding which enables United to efficiently satisfy the cash flow requirements of depositors and borrowers and meet United’s cash needs. Liquidity is managed by monitoring funds’ availability from a number of primary sources. Substantial funding is available from cash and cash equivalents, unused short-term borrowing and a geographically dispersed network of branches providing access to a diversified and substantial retail deposit market.

Short-term needs can be met through a wide array of outside sources such as correspondent and downstream correspondent federal funds and utilization of Federal Home Loan Bank advances.

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

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. 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 2021, net cash of $15.65 million was provided by investing activities which was primarily due to net loan repayments of $882.15 million and net cash of $39.42 million acquired in the Community Bankers Trust merger partially offset by $813.94 million of purchases of investment securities over proceeds from sales of investment securities and the purchase of $85.00 million of bank-owned life insurance policies. During the year of 2022, net cash of $105.32 million was provided by financing activities due primarily to net advances of $1.38 billion from long-term FHLB borrowings partially offset by a decline of $1.04 billion in deposits. Other uses of cash within funding activities for the year of 2022 were $193.04 million for cash dividends paid and $79.46 million for the acquisition of treasury stock. During the year of 2021, net cash of $923.91 million was provided by financing activities due primarily to net growth of $1.25 billion in deposits. This source of cash from funding activities was partially offset by net repayment of $40.21 million in short-term borrowings, net repayment of $97.79 million in long-term FHLB advances and cash dividends paid of $181.28 million for year of 2021. 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.

United enters into derivative contracts, mainly to protect against adverse interest rate movements on the value of certain assets or liabilities, under which it is required to either pay cash to or receive cash from counterparties depending on changes in interest rates. Derivative contracts are carried at fair value and not notional value on the consolidated balance sheet 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.

United is also a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include loan commitments and standby letters of credit. United’s maximum exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for the loan commitments and standby letters of credit is the contractual or notional amount of those instruments. United uses the same policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

62

The following table details the amounts of significant commitments and letters of credit as of December 31, 2022:

Commitments generally have fixed expiration dates or other termination clauses, generally within one year, and may require the payment of a fee. 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. There are no known trends, demands, commitments, or events that will result in or that are reasonably likely to result in United’s liquidity increasing or decreasing in any material way. United also has lines of credit available. See Notes 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.

United’s capital position is financially sound. United seeks to maintain a proper relationship between capital and total assets to support growth and sustain earnings. United has historically generated attractive returns on shareholders’ equity. United is well-capitalized based upon regulatory guidelines. United’s risk-based capital ratio is 14.37% 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. 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 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. This decrease is primarily due to a decrease of $327.84 million in accumulated other comprehensive income due mainly to an after-tax decrease in the fair value of available for sale securities as a result of a rising interest rate environment. In addition, treasury stock increased $79.79 million or 46.76% due to the repurchase of 2,259,546 shares of United common stock under stock repurchase plans approved by United’s Board of Directors. Partially offsetting these decreases was an increase of $184.65 million in retained earnings (net income less dividends declared).

United’s equity to assets ratio was 15.31% at December 31, 2022 as compared to 16.09% at December 31, 2021. The primary capital ratio, capital and reserves to total assets and reserves, was 16.11% at December 31, 2022 as compared to 16.79% at December 31, 2021. United’s average equity to average asset ratio was 15.83% at December 31, 2022 as compared to 16.26% at December 31, 2021. All of these financial measurements reflect a financially sound position.

63

During the fourth quarter of 2022, United’s Board of Directors declared a cash dividend of $0.36 per share. Dividends per share of $1.44 for the year of 2022 represented an increase over the $1.41 per share paid for 2021. Total cash dividends declared to common shareholders were $194.98 million for the year of 2022 as compared to $182.36 million for the year of 2021. The year 2022 was the forty-nineth consecutive year of dividend increases to United shareholders.