Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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. 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." The following factors, among others, could cause the actual results of United's operations to differ materially from its expectations: (1) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve and the trade and tariff policies; (2) general competitive, economic, political and market conditions and other factors that may affect future results of United, including changes in asset quality and credit risk; the economic impact of oil and gas prices; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms; (3) deposit attrition, client loss or revenue loss following completed mergers or acquisitions that may be greater than anticipated; (4) regulatory change risk resulting from new laws, rules, regulations, or accounting principles, including, without limitation, the possibility that regulatory agencies may require higher levels of capital above the current regulatory-mandated minimums and the possibility of changes in accounting standards, policies, principles and practices; (5) the cost and effects of cyber incidents or other failures, interruptions, or security breaches of United's systems and those of our customers or third-party providers; (6) competitive pressures on product pricing and services; (7) success, impact, and timing of United's business strategies, including market acceptance of any new products or services; (8) volatility and disruptions in global capital and credit markets; (10) operational, technological, cultural, regulatory, legal, credit and other risks associated with the exploration, consummation and integration of potential future acquisitions; (10) catastrophic events such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including public health crises and infectious disease outbreaks, as well as any government actions in response to such events; (11) geopolitical risk from terrorist activities and armed conflicts that may result in economic and supply disruptions, and loss of market and consumer confidence; (12) the risks of fluctuations in market prices for United common stock that may or may not reflect economic condition or performance of United; (13) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations; and any other risks described in the "Risk Factors" sections of this and other reports filed by United with the Securities and Exchange Commission.

United undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

INTRODUCTION

The following discussion and analysis presents the significant changes in financial condition and the results of operations of United and its subsidiaries for the periods indicated below. This discussion and the unaudited consolidated financial statements and the notes to unaudited Consolidated Financial Statements include the accounts of United Bankshares, Inc. and its wholly-owned subsidiaries, unless otherwise indicated. Management has evaluated all significant events and transactions that occurred after March 31, 2026, but prior to the date these financial statements were issued, for potential recognition or disclosure required in these financial statements.

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

ACQUISITION

On January 10, 2025, United consummated its acquisition of Atlanta-based Piedmont Bancorp, Inc. ("Piedmont"). At the acquisition date, Piedmont had total assets of approximately $2.4 billion, total loans of approximately $2.1 billion, total liabilities of approximately $2.2 billion, total deposits of approximately $2.1 billion, and total shareholders' equity of approximately $202 million. As a result of the Piedmont acquisition, the first quarter of 2025 included $30.0 million of pre-tax merger-related noninterest expenses and merger-related provision for credit losses.

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 common equity is calculated as GAAP total shareholders' equity minus total intangible assets. Tangible common equity can thus be considered a more conservative valuation of the company. When considering net income, a return on average tangible common 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 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.

United's critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of March 31, 2026 were unchanged from the policies disclosed in United's Annual Report on Form 10-K for the year ended December 31, 2025 within the section "Management's Discussion and Analysis of Financial Condition and Results of Operations."

FINANCIAL CONDITION

United's total assets as of March 31, 2026 were $33.71 billion, remaining steady from December 31, 2025. Investment securities increased $130.17 million or 3.83%, portfolio loans increased $154.02 million or less than 1% and bank-owned life insurance policies increased $4.18 million or less than 1%. Partially offsetting these increases in assets, cash and cash equivalents decreased $237.22 million or 9.33%, operating lease right-of-use assets decreased $1.47 million or 1.65%, and loans held for sale decreased $2.04 million or 6.53%. Total liabilities remained flat, increasing $52.96 million or less than 1% from year-end 2025. This increase in total liabilities was due mainly to an increase of $59.94 million or less than 1% in deposits, an increase of $24.51 million or 10.11% in accrued and other liabilities, and an increase of $1.97 million or 5.62% in the allowance for lending-related commitments. Partially offsetting these increases in liabilities was a $32.40 million or 16.32% decrease in securities sold under agreements to repurchase. Shareholders' equity was relatively flat from year-end 2025, decreasing $7.86 million or less than 1%.

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

Cash and Cash Equivalents

Cash and cash equivalents at March 31, 2026 decreased $237.22 million or 9.33% from year-end 2025. In particular, interest-bearing deposits with other banks decreased $258.67 million or 11.28%, as United placed less cash in an interest-bearing account with the Federal Reserve, while cash and due from banks increased $21.42 million or 8.65%. Federal funds sold increased $25 thousand or 1.84%. During the first three months of 2026, net cash of $160.86 million was provided by operating activities while net cash of $304.11 million and $93.96 million were used in investing and financing activities. See the unaudited Consolidated Statements of Cash Flows (unaudited) for data on cash and cash equivalents provided and used in operating, investing and financing activities for the first three months of 2026 and 2025.

Securities

Total investment securities at March 31, 2026 increased $130.17 million or 3.83%. Securities available for sale increased $152.62 million or 4.99%. This change in securities available for sale reflects $350.41 million in sales, maturities and calls of securities, $514.59 million in purchases, and a decrease of $13.21 million in market value. Equity securities were $12.25 million at March 31, 2026, a decrease of $22.51 million or 64.76% due mainly to the sale of equity securities totaling $26.65 million partially offset by the purchase of $4.16 million in equity securities during the first quarter of 2026. Other investment securities were flat, increasing $60 thousand or less than 1% from year-end 2025.

The following table summarizes the changes in the available for sale securities since year-end 2025:

The following table summarizes the changes in the held to maturity securities since year-end 2025:

At March 31, 2026, gross unrealized losses on available for sale securities were $226.45 million. Securities with the most significant gross unrealized losses at March 31, 2026 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities and corporate securities.

As of March 31, 2026, United's available for sale mortgage-backed securities had an amortized cost of $2.13 billion, with an estimated fair value of $1.99 billion. The portfolio consisted primarily of $1.67 billion in agency residential mortgage-backed securities with a fair value of $1.56 billion, $42.30 million in non-agency residential mortgage-backed securities with an estimated fair value of $38.55 million, and $413.08 million in commercial agency mortgage-backed securities with an estimated fair value of $390.55 million.

As of March 31, 2026, United's available for sale state and political subdivisions securities had an amortized cost of $569.15 million, with an estimated fair value of $510.65 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 March 31, 2026.

As of March 31, 2026, United's available for sale corporate securities had an amortized cost of $450.24 million, with an estimated fair value of $435.26 million. The portfolio consisted of $13.32 million in single issue trust preferred securities with an estimated fair value of $12.67 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 $204.17 million and a fair value of $202.04 million and other corporate securities, with an amortized cost of $232.75 million and a fair value of $220.54 million.

United's available for sale single issue trust preferred securities had a fair value of $12.67 million as of March 31, 2026. Of the $12.67 million, $7.42 million or 58.55% were investment grade rated and $5.25 million or 41.45% were unrated. The two largest exposures accounted for 100% of the $12.67 million. These included Truist Bank at $7.42 million and Emigrant Bank at $5.25 million. All single issue trust preferred securities are currently receiving full scheduled principal and interest payments.

During the first quarter of 2026, 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 March 31, 2026 is impaired. United believes the decline in value 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 March 31, 2026, 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 2 to the unaudited Notes to Consolidated Financial Statements.

Loans Held for Sale

Loans held for sale were $29.24 million at March 31, 2026, a decrease of $2.04 million or 6.53% from year-end 2025. Loan sales in the secondary market exceeded originations during the first three months of 2026. Loan originations for the first three months of 2026 were $87.05 million while loans sales were $89.10 million.

Portfolio Loans

Loans, net of unearned income, increased $154.02 million or less than 1% from year-end 2025. Since year-end 2025, commercial, financial and agricultural loans increased $171.54 million or 1.20% as a result of a $197.45 million or 1.88% increase in commercial real estate loans, which was partially offset by a $25.91 million or less than 1% decrease in commercial loans (not secured by real estate). Residential real estate loans increased $16.79 million while construction and land development loans decreased $28.91 million and consumer loans decreased $5.30 million.

The following table summarizes the changes in the major loan classes since year-end 2025:

For a further discussion of loans see Note 3 to the unaudited Notes to Consolidated Financial Statements.

Bank-Owned Life Insurance

The balance of bank-owned life insurance increased $4.18 million due to an increase in the cash surrender value of underlying policies.

Other Assets

Other assets remained relatively flat from year-end 2025, decreasing $999 thousand or less than 1% from year-end 2025 as prepaid assets decreased $5.06 million, income taxes receivable decreased $2.01 million due to timing differences and core deposit intangibles decreased $1.84 million due to amortization. Partially offsetting these decreases were increases in deferred tax assets of $4.41 million due mainly to the decrease in the fair value of available for sale securities, OREO of $1.53 million and accounts receivable of $1.79 million.

Deposits

Deposits represent United's primary source of funding. Total deposits at March 31, 2026 increased $59.94 million or less than 1% from year-end 2025. In terms of composition, noninterest-bearing deposits decreased $163.71 million or 2.49% while interest-bearing deposits increased $223.66 million or 1.09% from December 31, 2025.

Noninterest-bearing deposits consist of demand deposit and noninterest bearing money market ("MMDA") account balances. The $163.71 million decrease in noninterest-bearing deposits was due to a $156.81 million decrease in official checks and a $30.41 million decrease in commercial noninterest-bearing deposits. Partially offsetting these decreases was a $38.43 million increase in personal noninterest-bearing deposits and a $5.73 million increase in public funds noninterest-bearing deposits.

Interest-bearing deposits consist of interest-bearing transactions, regular savings, interest-bearing MMDA, and time deposit account balances. Interest-bearing transaction accounts decreased $39.74 million since year-end 2025 as the result of a $59.80 million decrease in public funds interest-bearing transaction accounts, partially offset by a $16.53 million increase in commercial interest-bearing transaction accounts. Regular savings accounts increased $20.89 million mainly as a result of a $27.94 million increase in personal savings accounts. Interest-bearing MMDAs increased $198.35 million. In particular, personal MMDAs increased $64.96 million while commercial MMDAs and public funds MMDAs increased $114.40 million and $18.99 million, respectively.

Time deposits under $100,000 increased $5.73 million or less than 1% from year-end 2025. This increase in time deposits under $100,000 was the result of a $26.26 million increase in fixed rate Certificates of Deposits ("CDs") under $100,000 and a $1.77 million increase in Certificate of Deposit Account Registry Service ("CDARS") under $100,000, partially offset by a $23.49 million decrease in variable rate CDs.

Since year-end 2025, time deposits over $100,000 increased $38.44 million or 1.14% as fixed rate CDs increased $56.84 million. Partially offsetting this increase was a $14.47 million decrease in variable rate CDs and a $5.47 million decrease in CDARS over $100,000.

The table below summarizes the changes by deposit category since year-end 2025:

2025, respectively.

Borrowings

Total borrowings at March 31, 2026 decreased $32.00 million or 4.38% since year-end 2025. During the first three months of 2026, short-term borrowings decreased $32.40 million or 16.32% due to a decrease in securities sold under agreements to repurchase. Long-term borrowings remained flat, increasing $399 thousand or less than 1% from year-end 2025.

The table below summarizes the change in the borrowing categories since year-end 2025:

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

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at March 31, 2026 increased $24.51 million or 10.11% from year-end 2025. In particular, income taxes payable increased $30.80 million due to timing differences, business franchise taxes increased $3.03 million, and accrued loan expenses increased $10.43 million. Partially offsetting these increases was a decrease of $16.69 million in incentives payable due to payments.

Shareholders' Equity

Shareholders' equity at March 31, 2026 was $5.49 billion, which was a decrease of $7.86 million or less than 1% from year-end 2025.

Retained earnings increased $71.03 million or 3.27% from year-end 2025. Earnings net of dividends for the first three months of 2026 were $71.03 million.

Accumulated other comprehensive income decreased $10.19 million or 7.33% from year-end 2025 due mainly to a decrease of $10.05 million in the fair value of United's available for sale investment portfolio, net of deferred income taxes. The fair value of cash flow hedges, net of deferred income taxes, decreased $136 thousand.

Treasury stock increased $70.91 million or 18.59%. During the first quarter of 2026, United repurchased 1,739,501 shares on the open market under a repurchase plan approved by United's Board of Directors at a cost of $69.43 million or an average share price of $39.92.

RESULTS OF OPERATIONS

Overview

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

Net income for the first quarter of 2026 was $124.20 million as compared to earnings of $84.31 million for the first quarter of 2025. Diluted earnings per share were $0.89 for the first quarter of 2026 and $0.59 for the first quarter of 2025. On a linked-quarter basis, net income for the fourth quarter of 2025 was $128.83 million or $0.91 per diluted share.

As previously mentioned, United completed its acquisition of Piedmont on January 10, 2025. The financial results of Piedmont are included in United's results from the acquisition date. As a result of the acquisition, United recorded acquisition-related costs for the Piedmont merger of $30.04 million, including a provision for credit losses of $18.73 million for purchased non-PCD loans for the first quarter of 2025.

United's annualized return on average assets for the first three months of 2026 was 1.49% and return on average shareholders' equity was 9.08% as compared to 1.06% and 6.47%, respectively, for the first three months of 2025. On a linked-quarter basis, United's annualized return on average assets for the fourth quarter of 2025 was 1.52% and return on average shareholders' equity was 9.31%. For the first three months of 2026, United's annualized return on average tangible common equity, a non-GAAP measure, was 14.40%, as compared to 10.61% for the first three months of 2025. On a linked-quarter basis, United's annualized return on average tangible common equity was 14.86% for the fourth quarter of 2025.

Net interest income for the first quarter of 2026 increased $22.46 million, or 8.64% from the first quarter of 2025. The increase of $22.46 million in net interest income occurred because total interest income increased $12.28 million while total interest expense decreased $10.18 million from the first quarter of 2025. Net interest income for the first quarter of 2026 decreased $4.94 million, or 1.72%, from the fourth quarter of 2025. The decrease of $4.94 million in net interest income occurred because total interest income decreased $14.12 million while total interest expense decreased $9.18 million from the fourth quarter of 2025.

The provision for credit losses was $7.78 million for the first quarter of 2026 as compared to $29.10 million for the first quarter of 2025. This decrease in the provision for credit losses was mainly due to the previously mentioned $18.73 million of provision recorded on purchased non-PCD loans from Piedmont during the first quarter of 2025. The provision for credit losses was $6.78 million for the fourth quarter of 2025.

For the first quarter of 2026, noninterest income increased $4.51 million or 15.26% and $3.13 million or 10.11% from the first quarter and fourth quarter of 2025, respectively. These increases were primarily due to increased fees from brokerage services and net gains on the sale of equity securities in the first quarter of 2026.

Noninterest expense for the first quarter of 2026 was flat, decreasing $759 thousand or less than 1% from the first quarter of 2025. The decrease was due mainly to merger-related expenses from the Piedmont acquisition incurred in the first quarter of 2025 being mostly offset by increases in employee compensation and employee benefits expenses during the first quarter of 2026. Noninterest expense for the first quarter of 2026 was also flat from the fourth quarter of 2025, increasing $1.10 million or less than 1% from the fourth quarter of 2025. The increase was primarily due to an increase in employee benefits expense mostly offset by decreases in data processing expense and the amortization of investment tax credits within other expense.

Income taxes increased $9.16 million or 40.49% for the first three months of 2026 as compared to the first three months of 2025 primarily due to higher earnings partially offset by a lower effective tax rate. On a linked-quarter basis, income taxes increased $720 thousand or 2.32% for the first quarter of 2026 as compared to the fourth quarter of 2025 due mainly to a higher effective tax rate partially offset by lower earnings. The effective tax rate was 20.38% and 21.16% for the first quarter of 2026 and 2025, respectively. The effective tax rate was 19.43% for the fourth quarter of 2025.

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 2026 and 2025, are presented below.

Net interest income for the first quarter of 2026 was $282.52 million, which was an increase of $22.46 million or 8.64% from the first quarter of 2025. The $22.46 million increase in net interest income occurred because total interest income increased $12.28 million while total interest expense decreased $10.18 million from the first quarter of 2025. On a linked-quarter basis, net interest income for the first quarter of 2026 decreased $4.94 million, or 1.72%, from the fourth quarter of 2025. The $4.94 million decrease in net interest income occurred because total interest income decreased $14.12 million while total interest expense decreased $9.18 million from the fourth quarter of 2025.

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 first quarter of 2026 was $283.30 million, an increase of $22.46 million or 8.61% from the first quarter of 2025. This increase in tax-equivalent net interest income was primarily due to an increase in average earning assets, mainly net loans, and a lower average cost of interest-bearing funds, mainly deposits. These increases to tax-equivalent net interest income were partially offset by an increase in average interest-bearing funds, mainly deposits, and a lower yield on average earning assets, mainly short-term investments. Average earning assets for the first quarter of 2026 increased $1.54 billion or 5.39% from the first quarter of 2025. The increase in average earning assets was due mainly to a $1.38 billion or 5.97% increase in average net loans as well as increases of $107.72 million or 5.05% and $48.75 million or 1.50% in average short-term investments and average investment securities, respectively. Average interest-bearing funds for the first quarter of 2026 increased $1.24 billion or 6.17% from the first quarter of 2025. In particular, average interest-bearing deposits increased $1.25 billion or 6.44% while average short-term borrowings increased $15.35 million or 9.19% and average long-term borrowings decreased $22.64 million or 4.08% from the first quarter of 2025. The average cost of funds for the first quarter of 2026 decreased 36 basis points due primarily to a decrease in interest rates from the first quarter of 2025. Most notably, the cost of average interest-bearing deposits decreased 36 basis points and the cost of average short-term and long-term borrowings decreased 32 basis points and 28 basis points, respectively, from the first quarter of 2025. The average yield on earning assets for the first quarter of 2026 decreased 13 basis points from the first quarter of 2025. In particular, the yield on average short-term investments decreased 76 basis points while the yield on average net loans and average investment securities declined 8 basis points and 15 basis points, respectively. For the first quarter of 2026, interest income and tax-equivalent net interest income included $7.47 million of acquired loan accretion income as compared to $5.99 million for the first quarter of 2025. The net interest margin of 3.80% for the first quarter of 2026 was an increase of 11 basis points from the net interest margin of 3.69% for the first quarter of 2025.

On a linked-quarter basis, tax-equivalent net interest income decreased $4.96 million or 1.72% from the fourth quarter of 2025. The net interest margin was 3.80% and 3.83% for first quarter of 2026 and the fourth quarter of 2025, respectively. The interest rate spread for the first quarter of 2026 increased 2 basis points to 3.06% from the fourth quarter of 2025 due to a 14 basis point decrease in the average cost of funds partially offset by a 12 basis point decrease in the yield on average earning assets. The decrease in the average cost of funds was primarily due to a 14 basis point decrease in the average rate paid on deposits. The decrease in the yield on average earning assets was primarily due to an 11 basis point decrease in the yield on average net loans, a 26 basis point decrease in the yield on average short-term investments and lower acquired loan accretion income. Acquired loan accretion income for the first quarter of 2026 decreased $988 thousand or 11.68% from the fourth quarter of 2025.

United's tax-equivalent net interest income also includes the impact of acquisition accounting fair value adjustments. The following table provides the discount/premium and net accretion impact to tax-equivalent net interest income for the three months ended March 31, 2026, March 31, 2025 and December 31, 2025:

The following tables reconcile the difference between net interest income and tax-equivalent net interest income for the three months ended March 31, 2026, March 31, 2025 and December 31, 2025.

The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month periods ended March 31, 2026 and 2025, respectively, with the interest and rate earned or paid on such amount. The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for the three-month period ended March 31, 2026 and 2025. Interest income on all loans and investment securities was subject to state income taxes.

The following table shows the unaudited consolidated daily average balance of major categories of assets and liabilities for the three-month periods ended March 31, 2026 and December 31, 2025, respectively, with the interest and rate earned or paid on such amount. The interest income and yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21% for the three-month period ended March 31, 2026 and December 31, 2025. Interest income on all loans and investment securities was subject to state income taxes.

Provision for Credit Losses

The provision for credit losses was $7.78 million for the first quarter of 2026 as compared to a provision for credit losses of $29.10 million for the first quarter of 2025. On a linked-quarter basis, the provision for credit losses for the fourth quarter of 2025 was $6.78 million. The provision for credit losses for the first quarter of 2025 included provision expense of $18.73 million recorded for purchased non-PCD loans from Piedmont. United's provision for credit losses relates to its portfolio of loans and leases, available-for-sale securities and held-to-maturity securities are discussed in more detail in the following paragraphs.

For the quarter ended March 31, 2026, the provision for loan and lease losses was $7.78 million as compared to a provision for loan and lease losses of $29.10 million for the quarter ended March 31, 2025. The lower amount of provision expense for the first quarter of 2026 compared to the first quarter of 2025 was mainly due to the previously mentioned provision expense of $18.73 million recorded for purchased non-PCD loans from Piedmont during the first quarter of 2025. Net charge-offs were $5.70 million for the first quarter of 2026 compared to net charge-offs of $8.04 million for the first quarter of 2025. The lower amount of net charge-offs for 2026 as compared to 2025 was primarily due to decreased charge-offs within the consumer and other commercial loan segments. On a linked-quarter basis, the provision for loan and lease losses for the fourth quarter of 2025 was $6.78 million. Net charge-offs were $9.31 million for the fourth quarter of 2025. Annualized net charge-offs as a percentage of average loans and leases, net of unearned income for the first quarter of 2026 was 0.15% as compared to annualized net charge-offs of 0.14% for the first quarter of 2025 and annualized net charge-offs of 0.15% for the fourth quarter of 2025.

The following table shows a summary of United's nonperforming assets including nonperforming loans and other real estate owned ("OREO") at March 31, 2026 and December 31, 2025:

United maintains an allowance for loan and lease losses and a reserve for lending-related commitments. The combined allowance for loan losses and reserve for lending-related commitments is considered the allowance for credit losses. At March 31, 2026, the allowance for credit losses was $336.65 million as compared to $332.59 million at December 31, 2025.

At March 31, 2026, the allowance for loan and lease losses was $299.60 million as compared to $297.52 million at December 31, 2025. The allowance for loan and lease losses at March 31, 2026 saw the largest increase in the reserves for the commercial real estate nonowner-occupied loan segment from year-end 2025 due to increased outstanding loan balances and an increased adjustment resulting from the reasonable and supportable forecast around economic and business conditions. The largest decrease in reserves at March 31, 2026 was for the real estate construction and development loan segment due to a decreased adjustment within the reasonable and supportable forecast around strength and growth of the segment. As a percentage of loans and leases, net of unearned income, the allowance for loan and lease losses was 1.20% at both March 31, 2026 and December 31, 2025. The ratio of the allowance for loan and lease losses to nonperforming loans and leases or coverage ratio was 291.34% and 293.22% at March 31, 2026 and December 31, 2025, respectively. The slight decrease in this ratio was due mainly to a larger increase in nonperforming loans as compared to the increase in the allowance for loan and lease losses.

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.

The first quarter of 2026 qualitative adjustments include analyses of the following:

United's review of the allowance for loan and lease losses at March 31, 2026 produced increased reserves in two of the four loan categories as compared to December 31, 2025. The allowance related to the commercial, financial & agricultural loan pool, consisting of the owner and non-owner occupied commercial real estate and other commercial loan segments, increased $5.75 million due to increased outstanding loan balances. The consumer loan segment reserve increased $738 thousand primarily due to an increase in the quarterly maximum loss experience utilized within the reasonable and supportable forecast adjustment. The real estate construction and development loan segment reserve decreased $4.09 million due to improvement in the reasonable and supportable adjustment. The residential real estate loan segment reserve decreased $319 thousand due to an improvement in historical loss rates.

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 $10.60 million at March 31, 2026 and $8.04 million at December 31, 2025. In comparison to year-end, this element of the allowance increased $2.57 million due to collateral weaknesses identified in several relationships which necessitated individually assessed reserves and increases to reserves previously identified.

Management believes that the allowance for credit losses of $336.65 million at March 31, 2026 is appropriate 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 United's footprint. 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 first quarter of 2026 and 2025 was immaterial. The allowance for credit losses related to held to maturity securities was $16 thousand as of March 31, 2026 as well as December 31, 2025. There was no provision for credit losses recorded on available for sale investment securities for the first quarter of 2026 and 2025 and no allowance for credit losses on available for sale investment securities as of March 31, 2026 and December 31, 2025.

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 first quarter of 2026 was $34.06 million, an increase of $4.51 million or 15.26% from the first quarter of 2025. This increase was driven by increases in fees from brokerage services and net gains on investment securities.

Fees from brokerage services for the first quarter of 2026 increased $1.76 million or 31.14% from the first quarter of 2025 due to higher volume driven by growth in the business.

Net gains on investment securities were $2.27 million for the first quarter of 2026 as compared to net gains on investment securities were $521 thousand for the first quarter of 2025. The net gains on investment securities in the first quarter of 2026 were primarily due to a net gain on the sale of equity securities whereas the net gains on investment securities in the first quarter of 2025 were due to an increase in the fair value of equity securities.

On a linked-quarter basis, noninterest income for the first quarter of 2026 increased of $3.13 million, or 10.11%, from the fourth quarter of 2025. Net gains on investment securities were $2.27 million for the first quarter of 2026 as compared to net losses on investment securities of $218 thousand for the fourth quarter of 2025. Net gains on investment securities for the first quarter of 2026 were primarily due to the above mentioned gains on sales of equity securities. Fees from brokerage services increased $1.45 million from the fourth quarter of 2025, primarily due to previously mentioned higher volume driven by growth in the business.

Other Expenses

Just as management continues to evaluate areas where noninterest income can be enhanced, it strives to improve the efficiency of its operations to reduce costs. Other expenses include all items of expense other than interest expense, the provision for credit losses, and income taxes. Noninterest expense for the first quarter of 2026 was $152.81 million which was relatively flat from the first quarter of 2025, decreasing $759 thousand or less than 1%. The first quarter of 2025 included $11.31 million of merger-rated expenses from the Piedmont acquisition.

Employee compensation for the first quarter of 2026 increased $2.63 million or 4.32% when compared to the first quarter of 2025. The increase in employee compensation was primarily due to higher employee incentives and higher brokerage commissions. Employee compensation for the first quarter of 2025 included $1.17 million in merger-related expenses.

Employee benefits expense for the first quarter of 2026 increased $2.69 million or 20.23% from the first quarter of 2025. This increase in employee benefits was primarily due to higher post-retirement benefit and Federal Insurance Contributions Act ("FICA") costs.

Data processing expense for the first quarter of 2026 decreased $1.45 million or 17.20% from the first quarter of 2025. The decrease in data processing was primarily due to technology contract renegotiations.

Other expense for the first quarter of 2026 decreased $5.43 million or 12.21% from the first quarter of 2025. Within other expense for the first quarter of 2026, merger-related expenses decreased $6.00 million and consulting fees declined $2.93 million from the first quarter of 2025. These decreases within other expense were partially offset by increases of $873 thousand in the amortization of investment tax credits and $811 thousand in business franchise taxes.

On a linked-quarter basis, noninterest expense for the first quarter of 2026 was relatively flat from the fourth quarter of 2025, increasing $1.10 million, or less than 1%. An increase in employee benefits of $3.01 million and an increase in Federal Deposit Insurance Corporation ("FDIC") insurance expense of $1.06 million was mostly offset by a $1.08 million decrease in data processing expense and a $1.79 million decrease in other expense. The increase in employee benefits was primarily due to higher FICA and post-retirement benefit costs. FDIC insurance expense for the fourth quarter of 2025 included a $1.2 million reduction of expense reflecting the FDIC's reduced estimates related to the special assessment. The decrease in data processing was primarily due to the previously mentioned technology contract renegotiations. Within other expense, the amortization of investment tax credits declined $920 thousand.

Income Taxes

For the first quarter of 2026, income tax expense was $31.79 million as compared to $22.63 million for the first quarter of 2025. The increase of $9.16 million was primarily due to higher earnings partially offset by a lower effective tax rate. On a linked-quarter basis, income tax expense increased $720 thousand primarily due to a higher effective tax rate partially offset by lower earnings. United's effective tax rate was 20.38% for the first quarter of 2026, 21.16% for the first quarter of 2025 and 19.43% for the fourth quarter of 2025.

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 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.

During the first quarter of 2026, United decreased its interest-bearing deposit balance at the FRB by $264.52 million to $1.97 billion. The change in the balance at the FRB was mostly the result of growth in loans of $154.34 million, net purchases of $164.18 million in available for sale debt securities and a net repayment of $32.40 million in securities sold under agreements to repurchase partially offset by a growth in total deposits of $59.95 million.

For the three months ended March 31, 2026, cash of $160.86 million was provided by operating activities due mainly to net income of $124.20 million. In addition, proceeds from the sale of mortgage loans in the secondary market exceeded originations by $4.60 million and the provision for loan losses was $7.78 million for the first quarter. Net cash of $304.11 million was used in investing activities which was primarily due to loan growth of $154.34 million and net purchases of investment securities of $145.46 million over proceeds from sales. During the first three months of 2026, net cash of $93.96 million was used in financing activities due primarily to net acquisition of $70.26 million in treasury stock, cash dividends paid of $53.38 million and the net repayment of securities sold under agreements to repurchase of $32.40 million partially offset by growth in deposits of $59.95 million. The net effect of the cash flow activities was a decrease in cash and cash equivalents of $237.22 million for the first three months of 2026.

At March 31, 2026, United had an unused borrowing amount at the FHLB of approximately $9.24 billion subject to delivery of collateral after certain trigger points and $4.89 billion without the delivery of additional collateral. United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $280 million, all of which was available at March 31, 2026. At March 31, 2026, United's borrowing capacity for the FRB Discount Window was $4.59 billion. United did not have any borrowings from the FRB's Discount Window during the first quarter of 2026.

United anticipates it can meet its obligations over the next 12 months and has no material commitments for capital expenditures. United also has lines of credit available. See Notes 8 and 9 to the accompanying unaudited Notes to Consolidated Financial Statements for more details regarding the amounts available to United under lines of credit.

The Asset Liability Committee monitors liquidity to ascertain that a liquidity position within certain prescribed parameters is maintained. No changes are anticipated in the policies of United's Asset Liability Committee.

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 15.54% at March 31, 2026 while its Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.27%, 13.27% and 11.24%, respectively. The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10.0%, a Common Equity Tier 1 capital ratio of 6.5%, a Tier 1 capital ratio of 8.0% and a leverage ratio of 5.0%.

Total shareholders' equity was $5.49 billion at March 31, 2026, which was a relatively flat from December 31, 2025, decreasing $7.86 million or less than 1%. This slight decrease was primarily due to a decrease of $10.19 million in accumulated other comprehensive loss and an increase of $70.91 million in treasury stock. During the first quarter of 2026, United repurchased 1,739,501 shares of its common stock at an average price of $39.92 per share. Partially offsetting these decreases to shareholders' equity was an increase of $71.03 million in retained earnings as a result of net earnings (net income less dividends declared) during the first quarter of 2026.

United's shareholders' equity to assets ratio was 16.28% at March 31, 2026 as compared to 16.33% at December 31, 2025. The primary capital ratio, capital and reserves to total assets and reserves, was 17.11% at March 31, 2026 as compared to 17.15% at December 31, 2025. United's average shareholders' equity to average asset ratio was 16.45% for the first quarter of 2026 as compared to 16.42% the first quarter of 2025.

During the first quarter of 2026, United's Board of Directors declared a cash dividend of $0.38 per share. Total cash dividends declared were $53.17 million for the first quarter of 2026 which was relatively flat from dividends declared of $53.34 million for the first quarter of 2025.