UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

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

For Quarter Ended June 30, 2008

Or

[  ]   Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period _______

Commission File Number: 0-13322

United Bankshares, Inc.

(Exact name of registrant as specified in its charter)

West Virginia		55-0641179
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
300 United Center
500 Virginia Street, East
Charleston, West Virginia		25301
(Address of Principal Executive Offices)		Zip Code

Registrant’s Telephone Number, including Area Code: (304) 424-8800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
   Yes [ X ] No [   ]

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

Large accelerated filer [ X ]		Accelerated filer [   ]
Non-accelerated filer [   ]		Smaller reporting company [   ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
    Yes [   ] No [ X ]

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

Class - Common Stock, $2.50 Par Value; 43,277,687 shares outstanding as of July 31, 2008.

UNITED BANKSHARES, INC. AND SUBSIDIARIES

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) June 30, 2008 and December 31, 2007			4
Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 2008 and 2007			5
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) for the Six Months Ended June 30, 2008			6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2008 and 2007			7
Notes to Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			30
Item 3. Quantitative and Qualitative Disclosures about Market Risk			48
Item 4. Controls and Procedures			51
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			52
Item 1A. Risk Factors			52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 3. Defaults Upon Senior Securities			53
Item 4. Submission of Matters to a Vote of Security Holders			53
Item 5. Other Information			54
Item 6. Exhibits			54
Signatures			56
Exhibits			57
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

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

CONSOLIDATED BALANCE SHEETS
UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except par value)			June 30			December 31
		2008				2007
		(Unaudited)				(Note 1)
Assets
Cash and due from banks		$	190,121			$	202,586
Interest-bearing deposits with other banks			26,645				10,559
Federal funds sold			10,484				17,506
Total cash and cash equivalents			227,250				230,651
Securities available for sale at estimated fair value (amortized cost-$1,203,090 at June 30, 2008 and $1,163,014 at December 31, 2007)			1,174,929				1,156,561
Securities held to maturity (estimated fair value-$137,111 at June 30, 2008 and $158,165 at December 31, 2007)			139,805				157,228
Other investment securities			82,154				80,975
Loans held for sale			4,199				1,270
Loans			5,852,718				5,800,561
Less: Unearned income			(6,734	)			(7,077	)
Loans net of unearned income			5,845,984				5,793,484
Less: Allowance for loan losses			(57,033	)			(50,456	)
Net loans			5,788,951				5,743,028
Bank premises and equipment			60,149				61,680
Goodwill			312,371				312,111
Accrued interest receivable			33,939				38,238
Other assets			224,725				212,997
TOTAL ASSETS		$	8,048,472			$	7,994,739
Liabilities
Deposits:
Noninterest-bearing		$	877,940			$	913,427
Interest-bearing			4,595,039				4,436,323
Total deposits			5,472,979				5,349,750
Borrowings:
Federal funds purchased			92,155				97,074
Securities sold under agreements to repurchase			519,601				499,989
Federal Home Loan Bank borrowings			934,108				1,012,272
Other short-term borrowings			1,307				5,000
Other long-term borrowings			185,363				195,890
Allowance for lending-related commitments			2,128				8,288
Accrued expenses and other liabilities			67,967				65,277
TOTAL LIABILITIES			7,275,608				7,233,540
Shareholders’ Equity
Common stock, $2.50 par value; Authorized-100,000,000 shares; issued-44,320,832 at June 30, 2008 and December 31, 2007, including 1,050,555 and 1,086,106 shares in treasury at June 30, 2008 and December 31, 2007, respectively			110,802				110,802
Surplus			97,900				98,405
Retained earnings			626,732				602,185
Accumulated other comprehensive loss			(26,095	)			(12,480	)
Treasury stock, at cost			(36,475	)			(37,713	)
TOTAL SHAREHOLDERS’ EQUITY			772,864				761,199
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	8,048,472			$	7,994,739

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except per share data)		Three Months Ended								Six Months Ended
		June 30								June 30
		2008				2007				2008				2007
Interest income
Interest and fees on loans			$88,405				$84,559				$183,266				$167,871
Interest on federal funds sold and other short-term investments			220				599				492				1,104
Interest and dividends on securities:
Taxable			14,868				13,184				30,021				26,614
Tax-exempt			2,926				3,360				6,186				6,735
Total interest income			106,419				101,702				219,965				202,324
Interest expense
Interest on deposits			30,183				34,228				65,312				67,398
Interest on short-term borrowings			3,750				7,124				10,580				14,626
Interest on long-term borrowings			9,334				7,530				18,643				14,818
Total interest expense			43,267				48,882				94,535				96,842
Net interest income			63,152				52,820				125,430				105,482
Provision for credit losses			4,351				850				6,451				1,200
Net interest income after provision for credit losses			58,801				51,970				118,979				104,282
Other income
Fees from trust and brokerage services			4,553				3,763				8,492				7,309
Fees from deposit services			10,002				7,869				19,085				15,047
Bankcard fees and merchant discounts			1,734				1,444				3,292				2,806
Other service charges, commissions, and fees			589				347				1,077				678
Income from bank-owned life insurance			1,012				1,327				2,321				2,786
Income from mortgage banking			156				162				249				323
Security (losses) gains			(46	)			165				909				322
Gain on termination of interest rate swaps associated with prepayment of FHLB advances			---				787				---				787
Other income			1,183				661				2,368				1,383
Total other income			19,183				16,525				37,793				31,441
Other expense
Salaries and employee benefits			18,941				14,794				37,969				29,648
Net occupancy expense			3,974				3,114				8,271				6,570
Equipment expense			2,488				1,357				4,282				2,808
Data processing expense			2,397				2,232				5,200				3,953
Bankcard processing expense			1,469				1,221				2,818				2,412
Prepayment penalty on FHLB advance			---				786				---				786
Other expense			12,208				8,992				24,295				17,814
Total other expense			41,477				32,496				82,835				63,991
Income before income taxes			36,507				35,999				73,937				71,732
Income taxes			11,360				11,487				23,094				22,813
Net income			$ 25,147				$ 24,512				$ 50,843				$ 48,919
Earnings per common share:
Basic			$0.58				$0.60				$1.18				$1.20
Diluted			$0.58				$0.60				$1.17				$1.19
Dividends per common share			$0.29				$0.28				$0.58				$0.56
Average outstanding shares:
Basic			43,264,809				40,677,396				43,255,830				40,811,074
Diluted			43,419,616				40,935,684				43,419,276				41,103,158

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except per share data)

Six Months Ended June 30, 2008

Accumulated

Common Stock

Other

Total

Par

Retained

Comprehensive

Treasury

Shareholders’

Shares

Value

Surplus

Earnings

Income (Loss)

Stock

Equity

Balance at January 1, 2008

44,320,832

$110,802

$98,405

$602,185

($12,480

)

($37,713

)

$761,199

Cumulative effect of adopting EITF 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split- Dollar Life Insurance Arrangements”

–

–

–

(936

)

–

–

(936

)

Effect of changing pension plan measurement date pursuant to SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, net of tax

–

–

–

(270

)

–

–

(270

)

Comprehensive income:

Net income

–

–

–

50,843

–

–

50,843

Other comprehensive income, net of tax:

Unrealized loss on securities of $13,519 net of reclassification adjustment for gains included in net income of $591

–

–

–

–

(14,110

)

–

(14,110

)

Unrealized loss on cash flow hedge, net of tax of $573

–

–

–

–

(1,065

)

–

(1,065

)

Accretion of the unrealized loss for securities transferred from the available for sale to the held to maturity investment portfolio

–

–

–

–

92

–

92

Pension plan’s amortization of transition asset, prior service cost, and actuarial loss, net of tax of $3

–

–

–

–

6

–

6

Change in pension asset, net of tax of $788

–

–

–

–

1,462

–

1,462

Total comprehensive income

37,228

Stock based compensation expense

–

–

277

–

–

–

277

Purchase of treasury stock (617 shares)

–

–

–

–

–

(7

)

(7

)

Distribution of treasury stock for deferred compensation plan (209 shares)

–

–

–

–

–

6

6

Cash dividends ($0.58 per share)

–

–

–

(25,090

)

–

–

(25,090

)

Common stock options exercised (35,959 shares)

–

–

(782

)

–

–

1,239

457

Balance at June 30, 2008

44,320,832

$110,802

$97,900

$626,732

($26,095

)

($36,475

)

$772,864

See notes to consolidated unaudited financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands)

		Six Months Ended
		June 30
		2008				2007
NET CASH PROVIDED BY OPERATING ACTIVITIES			$  50,032				$  45,675
INVESTING ACTIVITIES
Proceeds from maturities and calls of securities held to maturity			17,533				47,607
Purchases of securities held to maturity			---				(363	)
Proceeds from sales of securities available for sale			536				996
Proceeds from maturities and calls of securities available for sale			336,025				224,986
Purchases of securities available for sale			(376,577	)			(224,732	)
Net purchases of bank premises and equipment			(768	)			(1,365	)
Net change in other investment securities			(294	)			3,574
Net change in loans			(51,677	)			(8,317	)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES			(75,222	)			42,386
FINANCING ACTIVITIES
Cash dividends paid			(25,081	)			(22,968	)
Excess tax benefits from stock-based compensation arrangements			315				435
Acquisition of treasury stock			(7	)			(21,577	)
Proceeds from exercise of stock options			408				1,149
Proceeds from issuance of long-term Federal Home Loan Bank borrowings			200,000				253,900
Repayment of long-term Federal Home Loan Bank borrowings			(60,164	)			(229,053	)
Redemption of debt related to trust preferred securities			(10,310	)			---
Distribution of treasury stock for deferred compensation plan			6				---
Changes in:
Deposits			123,622				(121,201	)
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings			(207,000	)			11,320
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			21,789				(127,995	)
Decrease in cash and cash equivalents			(3,401	)			(39,934	)
Cash and cash equivalents at beginning of year			230,651				259,013
Cash and cash equivalents at end of period			$227,250				$219,079

See notes to consolidated unaudited financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

1. GENERAL

The accompanying unaudited consolidated interim financial statements of United Bankshares, Inc. and Subsidiaries (“United”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not contain all of the information and footnotes required by accounting principles generally accepted in the United States. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements presented as of June 30, 2008 and 2007 and for the three-month and six-month periods then ended have not been audited. The consolidated balance sheet as of December 31, 2007 has been extracted from the audited financial statements included in United’s 2007 Annual Report to Shareholders. The accounting and reporting policies followed in the presentation of these financial statements are consistent with those applied in the preparation of the 2007 Annual Report of United on Form 10-K. In the opinion of management, all adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made. Such adjustments are of a normal and recurring nature.

The accompanying consolidated interim financial statements include the accounts of United and its wholly owned subsidiaries. United considers all of its principal business activities to be bank related. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Dollars are in thousands, except per share and share data or unless otherwise noted.

New Accounting Standards

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

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

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

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

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

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

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

In September 2006, the FASB published Statement No. 158 (SFAS 158), “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires employers to recognize in their statement of financial position an asset for a plan’s overfunded status or a liability for a plan’s underfunded status. United is also required to recognize fluctuations in the funded status in the year in which the changes occur through comprehensive income. United adopted the recognition and disclosure provisions of SFAS 158 on December 31, 2006. The effect of adopting SFAS 158 on United’s financial condition at December 31, 2006 has been included in the accompanying consolidated financial statements. SFAS 158 also requires employers to measure the funded

status of a plan as of the end of the employers’ fiscal year. On January 1, 2008, United changed the measurement date for its defined pension plan from September 30 to December 31 for its 2008 financial statements as required. As a result, United recorded a cumulative effect adjustment of $270 to retained earnings. See Note 14 for additional information regarding United’s adoption of SFAS 158.

In September 2006, the FASB also issued Statement No. 157 (SFAS 157), “Fair Value Measurements” which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. United adopted SFAS 157 on January 1, 2008. The adoption of this statement did not have a material impact on United’s consolidated financial statements. See Note 12 for additional information regarding United’s adoption of SFAS 157.

2. MERGERS & ACQUISITIONS

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

The preliminary purchase price has been allocated to the identifiable tangible and intangible assets resulting in preliminary additions to goodwill and core deposit intangibles of approximately $148 million and $11 million, respectively. The estimated fair values of the acquired assets and liabilities, including identifiable intangible assets, are subject to refinement as additional information becomes available. Any subsequent adjustments to the fair values of assets and liabilities acquired, identifiable intangible assets, or other purchase accounting adjustments will result in adjustments to goodwill within the first 12 months following the date of acquisition.

As a result of the merger, United assumed approximately $2.5 million of liabilities to provide severance benefits to terminated employees of Premier. A balance of $811 thousand remains as of June 30, 2008 for the assumed liabilities to provide severance benefits to terminated employees of Premier.

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

3. INVESTMENT SECURITIES

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

		June 30, 2008
						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies		$	28,420			$	106			$	9			$	28,517
State and political subdivisions			116,523				1,815				319				118,019
Mortgage-backed securities			896,656				4,187				14,114				886,729
Marketable equity securities			7,165				12				999				6,178
Corporate securities			154,326				2,043				20,883				135,486
Total		$	1,203,090			$	8,163			$	36,324			$	1,174,929

		December 31, 2007
						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies		$	42,689			$	188			$	8			$	42,869
State and political subdivisions			117,713				2,349				53				120,009
Mortgage-backed securities			846,037				4,173				4,105				846,105
Marketable equity securities			6,752				85				521				6,316
Corporate securities			149,823				2,572				11,133				141,262
Total		$	1,163,014			$	9,367			$	15,820			$	1,156,561

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

		Less than 12 months								12 months or longer
		Market				Unrealized				Market				Unrealized
		Value				Losses				Value				Losses
June 30, 2008
Treasuries and agencies		$	21,484			$	9				---				---
State and political			24,461				319				---				---
Mortgage-backed			501,820				13,010				26,046			$	1,104
Marketable equity securities			1,605				650				294				349
Corporate securities			84,926				16,042					19,662				4,841
Total		$	634,296				$30,030				$46,002				$6,294

		Less than 12 months								12 months or longer
		Market				Unrealized				Market				Unrealized
		Value				Losses				Value				Losses
December 31, 2007
Treasuries and agencies			---				---			$	2,989			$	8
State and political		$	1,815			$	5				9,776				48
Mortgage-backed			58,244				594				407,397				3,511
Marketable equity securities			1,338				422				101				99
Corporate securities			85,849				10,132				14,504				1,001
Total		$	147,246			$	11,153			$	434,767			$	4,667

Gross unrealized losses on available for sale securities were $36,324 at June 30, 2008. Securities in a continuous unrealized loss position for twelve months or more at June 30, 2008 consisted primarily of corporate securities. These corporate securities were mainly investment grade single issuer or pooled trust preferred securities of financial institutions. The Company had no exposure to real estate investment trusts (REITS) in its investment portfolio. The unrealized loss on the mortgage-backed securities portfolio relates primarily to AAA securities issued by FHMLC, FNMA, GNMA, and various other private label issuers. Management does not believe any individual security with an unrealized loss as of June 30, 2008 is other than temporarily impaired. United believes the decline in value is attributable to tight market liquidity, distressed sales, and changes in market interest rates, not the credit quality of the issuers. United has the intent and the ability to hold these securities until such time as the value recovers or the securities mature. However, United acknowledges that any impaired securities may be sold in future periods in response to significant, unanticipated changes in asset/liability management decisions, unanticipated future market movements or business plan changes.

At June 30, 2008, United’s mortgage-related available for sale securities portfolio had an amortized cost of $896,656. Approximately $670 million or 75% of these securities were FHLMC and FNMA mortgage-backed securities and collateralized mortgage obligations (CMOs). The remainder of the portfolio consisted of approximately $216 million in whole-loan CMOs and approximately $10 million in GNMA securities. The whole-loan CMO portfolio consisted entirely of senior class certificates, with approximately 69% of the loans originated prior to 2005 and 73% of the loans originated prior to 2006. Whole-loan CMOs are private label pooled mortgage loans that do not meet certain size and credit criteria to be guaranteed by government sponsored agencies with credit enhancements to ensure investors receive timely interest payments. The whole-loan CMO portfolio includes Alt-A loan securities. Alt-A loan securities totaled approximately $24 million at June 30, 2008, 90% of which represented the super-senior tranches. Alt-A loans are a classification of mortgages where the risk profile falls between prime and subprime. United did not invest in subprime whole-loan securities.

The amortized cost and estimated fair value of securities available for sale at June 30, 2008 and December 31, 2007 by contractual maturity are shown on the following page. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.

		June 30, 2008								December 31, 2007
						Estimated								Estimated
		Amortized				Fair				Amortized				Fair
		Cost				Value				Cost				Value
Due in one year or less		$	27,802			$	27,832			$	40,627			$	40,668
Due after one year through five years			67,139				67,641				82,214				82,315
Due after five years through ten years			198,900				197,988				195,981				196,808
Due after ten years			902,084				875,290				837,440				830,454
Marketable equity securities			7,165				6,178				6,752				6,316
Total		$	1,203,090			$	1,174,929			$	1,163,014			$	1,156,561

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

		June 30, 2008
						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies		$	11,514			$	1,169				---			$	12,683
State and political subdivisions			42,527				873			$	11				43,389
Mortgage-backed securities			146				9				---				155
Corporate securities			85,618				163				4,897				80,884
Total		$	139,805			$	2,214			$	4,908			$	137,111

		December 31, 2007
						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies		$	11,572			$	1,316				---			$	12,888
State and political subdivisions			59,466				1,043			$	4				60,505
Mortgage-backed securities			165				10				---				175
Corporate securities			86,025				564			$	1,992				84,597
Total		$	157,228			$	2,933			$	1,996			$	158,165

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2008 and December 31, 2007 by contractual maturity are shown on the following page. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.

		June 30, 2008								December 31, 2007
						Estimated								Estimated
		Amortized				Fair				Amortized				Fair
		Cost				Value				Cost				Value
Due in one year or less		$	15,409			$	15,421			$	8,624			$	8,652
Due after one year through five years			21,829				22,148				35,964				36,623
Due after five years through ten years			20,632				21,382				26,568				27,495
Due after ten years			81,935				78,160				86,072				85,395
Total		$	139,805			$	137,111			$	157,228			$	158,165

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $1,169,516 and $1,002,234 at June 30, 2008 and December 31, 2007, respectively.

4. LOANS

Major classifications of loans are as follows:

		June 30,				December 31,
		2008				2007
Commercial, financial and agricultural		$	1,201,191			$	1,210,049
Real estate:
Single-family residential			1,873,971				1,882,498
Commercial			1,581,838				1,507,541
Construction			622,416				601,323
Other			236,375				239,907
Installment			336,927				359,243
Total gross loans		$	5,852,718			$	5,800,561

The table above does not include loans held for sale of $4,199 and $1,270 at June 30, 2008 and December 31, 2007, respectively. Loans held for sale consist of single-family residential real estate loans originated for sale in the secondary market.

United’s subsidiary banks have made loans, in the normal course of business, to the directors and officers of United and its subsidiaries, and to their affiliates. Such related party loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and did not involve more than normal risk of collectibility. The aggregate dollar amount of these loans was $140,556 and $126,432 at June 30, 2008 and December 31, 2007, respectively.

5. ALLOWANCE FOR CREDIT LOSSES

United maintains an allowance for loan losses and an allowance for lending-related commitments such as unfunded loan commitments and letters of credit. The allowance for lending-related commitments of $2,128 and $8,288 at June 30, 2008 and December 31, 2007, respectively, is separately classified as a liability on the balance sheet. The methodology for calculation of the unfunded commitments liability was changed to be more consistent with the historical utilization of unfunded commitments which resulted in a decrease of $6,160 from year-end 2007. The combined allowances for loan losses and lending-related commitments are

referred to as the allowance for credit losses.

The allowance for credit losses is management’s estimate of the probable credit losses inherent in the lending portfolio. Management’s evaluation of the adequacy of the allowance for credit losses and the appropriate provision for credit losses is based upon a quarterly evaluation of the loan portfolio and lending-related commitments. This evaluation is inherently subjective and requires significant estimates, including the amounts and timing of future cash flows, value of collateral, losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends, all of which are susceptible to constant and significant change. The allowance allocated to specific credits and loan pools grouped by similar risk characteristics is reviewed on a quarterly basis and adjusted as necessary based upon subsequent changes in circumstances. In determining the components of the allowance for credit losses, management considers the risk arising in part from, but not limited to, charge-off and delinquency trends, current economic and business conditions, lending policies and procedures, the size and risk characteristics of the loan portfolio, concentrations of credit, and other various factors. Loans deemed to be uncollectible are charged against the allowance for credit losses, while recoveries of previously charged-off amounts are credited to the allowance for credit losses. Credit expenses related to the allowance for credit losses and the allowance for lending-related commitments are reported in the provision for credit losses in the income statement.

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

		Three Months Ended								Six Months Ended
		June 30								June 30
		2008				2007				2008				2007
Balance at beginning of period			$ 59,050				$ 52,385				$ 58,744				$ 52,371
Provision			4,351				850				6,451				1,200
			63,401				53,235				65,195				53,571
Loans charged-off			(4,484	)			(2,231	)			(6,517	)			(2,848	)
Less: Recoveries			244				216				483				497
Net Charge-offs			(4,240	)			(2,015	)			(6,034	)			(2,351	)
Balance at end of period			$ 59,161				$ 51,220				$ 59,161				$ 51,220

6. RISK ELEMENTS

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

Nonperforming assets are summarized as follows:

		June 30,				December 31,
		2008				2007
Nonaccrual loans		$	33,676			$	14,115
Loans past due 90 days or more and still accruing interest			15,696				14,210
Total nonperforming loans			49,372				28,325
Other real estate owned			9,618				6,365
Total nonperforming assets		$	58,990			$	34,690

Loans are designated as impaired when, in the opinion of management, the collection of principal and interest in accordance with the contractual terms of the loan agreement is not probable. At June 30, 2008, the recorded investment in loans that were considered to be impaired was $54,351 (of which $33,676 were on a nonaccrual basis). Included in this amount is $32,217 of impaired loans for which the related allowance for credit losses is $5,121 and $22,134 of impaired loans that do not have an allowance for credit losses due to management’s estimate that the fair value of the underlying collateral of these loans is sufficient for full repayment of the loan and interest. At December 31, 2007, the recorded investment in loans that were considered to be impaired was $30,952 (of which $14,115 were on a nonaccrual basis). Included in this amount were $24,097 of impaired loans for which the related allowance for credit losses was $3,615, and $6,855 of impaired loans that did not have an allowance for credit losses. The average recorded investment in impaired loans during the six months ended June 30, 2008 and for the year ended December 31, 2007 was approximately $42,718 and $28,908, respectively.

United recognized interest income on impaired loans of approximately $341 and $678 for the quarter and six months ended June 30, 2008, respectively, and $378 and $654 for the quarter and six months ended June 30, 2007, respectively. Substantially all of the interest income was recognized using the accrual method of income recognition. The amount of interest income that would have been recorded under the original terms for the above loans and nonaccrual loans was $850 and $1,632 for the quarter and six months ended June 30, 2008, respectively, and $551 and $1,015 for the quarter and six months ended June 30, 2007, respectively.

7. INTANGIBLE ASSETS

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

		As of June 30, 2008
		Gross Carrying				Accumulated				Net Carrying
		Amount				Amortization				Amount
Amortized intangible assets:
Core deposit intangible assets			$ 30,995				($22,075	)		$	8,920
Goodwill not subject to amortization										$	312,371

		As of December 31, 2007
		Gross Carrying				Accumulated				Net Carrying
		Amount				Amortization				Amount
Amortized intangible assets:
Core deposit intangible assets			$ 30,995				($20,117	)		$	10,878
Goodwill not subject to amortization										$	312,111

United incurred amortization expense of $940 and $1,958 for the quarter and six months ended June 30, 2008, respectively, and $383 and $790 for the quarter and six months ended June 30, 2007, respectively, related to intangible assets. The table presented below sets forth the anticipated amortization expense for intangible assets for each of the next five years:

Year		Amount
2008			$ 3,494
2009			2,561
2010			1,884
2011			1,362
2012 and thereafter			1,577

8. SHORT-TERM BORROWINGS

Federal funds purchased and securities sold under agreements to repurchase are a significant source of funds for the Company. United has various unused lines of credit available from certain of its correspondent banks in the aggregate amount of $250,000. These lines of credit, which bear interest at prevailing market rates, permit United to borrow funds in the overnight market, and are renewable annually subject to certain conditions. At June 30, 2008, federal funds purchased were $92,155 while securities sold under agreements to repurchase were $519,601.

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

United Bank (VA) participates in the Treasury Investment Program, which is essentially the U.S. Treasury’s savings account for companies depositing employment and other tax payments. The bank retains the funds in an open-ended interest-bearing note until the Treasury withdraws or “calls” the funds. A maximum note balance is established and that amount must be collateralized at all times. All tax deposits or a portion of the tax deposits up to the maximum balance are generally available as a source of short-term investment funding. As of June 30, 2008, United Bank (VA) had an outstanding balance of $1,307 and had additional funding available of $3,693.

9. LONG-TERM BORROWINGS

United’s subsidiary banks are members of the Federal Home Loan Bank (FHLB). Membership in the FHLB makes available short-term and long-term borrowings from collateralized advances. All FHLB borrowings

are collateralized by a mix of single-family residential mortgage loans, commercial loans and investment securities. At June 30, 2008, United had an unused borrowing amount of $1,180,194 available subject to delivery of collateral after certain trigger points.

Advances may be called by the FHLB or redeemed by United based on predefined factors and penalties.

At June 30, 2008, $934,108 of FHLB advances with a weighted-average interest rate of 3.09% is scheduled to mature within the next eleven years.

The scheduled maturities of borrowings are as follows:

Year	Amount
2008		$	216,415
2009			180,000
2010			384,685
2011			60,000
2012 and thereafter			93,008
Total		$	934,108

United has a total of ten statutory business trusts that were formed for the purpose of issuing or participating in pools of trust preferred capital securities (Capital Securities) with the proceeds invested in junior subordinated debt securities (Debentures) of United. The Debentures, which are subordinate and junior in right of payment to all present and future senior indebtedness and certain other financial obligations of United, are the sole assets of the trusts and United’s payment under the Debentures is the sole source of revenue for the trusts. At June 30, 2008 and December 31, 2007, the outstanding balances of the Debentures were $185,363 and $195,890 respectively, and were included in the category of long-term debt on the Consolidated Balance Sheets entitled “Other long-term borrowings”. The Capital Securities are not included as a component of shareholders’ equity in the Consolidated Balance Sheets. United fully and unconditionally guarantees each individual trust’s obligations under the Capital Securities.

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

Under the provisions of the subordinated debt, United has the right to defer payment of interest on the subordinated debt at any time, or from time to time, for periods not exceeding five years. If interest payments on the subordinated debt are deferred, the dividends on the Capital Securities are also deferred. Interest on the subordinated debt is cumulative.

10. COMMITMENTS AND CONTINGENT LIABILITIES

United is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers and to alter its own exposure to fluctuations in interest rates. These financial instruments include loan commitments, standby letters of credit, and commercial letters of credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount

recognized in the financial statements.

United’s maximum exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for the loan commitments and standby letters of credit is the contractual or notional amount of those instruments. United uses the same policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Collateral may be obtained, if deemed necessary, based on management’s credit evaluation of the counterparty.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily, and historically do not, represent future cash requirements. The amount of collateral obtained, if deemed necessary upon the extension of credit, is based on management’s credit evaluation of the counterparty. United had approximately $1,914,470 and $1,945,818 of loan commitments outstanding as of June 30, 2008 and December 31, 2007, respectively, the majority of which expire within one year.

Commercial and standby letters of credit are agreements used by United’s customers as a means of improving their credit standing in their dealings with others. Under these agreements, United guarantees certain financial commitments of its customers. A commercial letter of credit is issued specifically to facilitate trade or commerce. Typically, under the terms of a commercial letter of credit, a commitment is drawn upon when the underlying transaction is consummated as intended between the customer and a third party. United has issued commercial letters of credit of $3,159 and $1,580 as of June 30, 2008 and December 31, 2007, respectively. A standby letter of credit is generally contingent upon the failure of a customer to perform according to the terms of an underlying contract with a third party. United has issued standby letters of credit of $129,563 and $144,314 as of June 30, 2008 and December 31, 2007, respectively. In accordance with FIN 45, United has determined that substantially all of its letters of credit are renewed on an annual basis and that the fair value of these letters of credit is immaterial.

11. DERIVATIVE FINANCIAL INSTRUMENTS

United uses derivative instruments to aid against adverse prices or interest rate movements on the value of certain assets or liabilities and on future cash flows. These derivatives may consist of interest rate swaps, caps, floors, collars, futures, forward contracts, written and purchased options. United also executes derivative instruments with its commercial banking customers to facilitate its risk management strategies.

United accounts for its derivative financial instruments in accordance with FASB Statement No. 133 (SFAS No. 133), “Accounting for Derivative Instruments and Hedging Activities”, as amended. SFAS No. 133 requires all derivative instruments to be carried at fair value on the balance sheet. United usually designates derivative instruments used to manage interest rate risk as hedge relationships with certain assets, liabilities or cash flows being hedged. Certain derivatives used for interest rate risk management are not designated in a SFAS No. 133 relationship.

Under the provisions of SFAS No. 133, United has both fair value hedges and cash flow hedges as of June 30, 2008. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the

fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments designated in hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

For a fair value hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to the hedged financial instrument. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a fair value hedge are offset in current period earnings. For a cash flow hedge, the fair value of the interest rate swap is recognized on the balance sheet as either a freestanding asset or liability with a corresponding adjustment to other comprehensive income within shareholders’ equity, net of tax. Subsequent adjustments due to changes in the fair value of a derivative that qualifies as a cash flow hedge are offset to other comprehensive income, net of tax. The portion of a hedge that is ineffective is recognized immediately in earnings.

At inception of a hedge relationship, United formally documents the hedged item, the particular risk management objective, the nature of the risk being hedged, the derivative being used, how effectiveness of the hedge will be assessed and how the ineffectiveness of the hedge will be measured. United also assesses hedge effectiveness at inception and on an ongoing basis using regression analysis. Hedge ineffectiveness is measured by using the change in fair value method. The change in fair value method compares the change in the fair value of the hedging derivative to the change in the fair value of the hedged exposure, attributable to changes in the benchmark rate. The portion of a hedge that is ineffective is recognized immediately in earnings. Prior to January 1, 2006, United used the shortcut method for interest rate swaps that met the criteria as defined under SFAS No. 133. Effective January 1, 2006, United adopted an internal policy of accounting for all new derivative instruments entered thereafter whereby the shortcut method would no longer be used.

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

The tables on the following page set forth certain information regarding the interest rate derivatives portfolio used for interest-rate risk management purposes and designated as accounting hedges under SFAS 133 at June 30, 2008.

Derivative Classifications and Hedging Relationships
June 30, 2008

		Notional				Derivative
		Amount				Asset				Liability
Derivatives Designated as Fair Value Hedges:
Hedging Commercial Loans		$	14,500				---			$	555
Total Derivatives Designated as Fair Value Hedges:		$	14,500				---			$	555
Derivatives Designated as Cash Flow Hedges:
Hedging FHLB Borrowings		$	234,685				---			$	981
Total Derivatives Designated as Cash Flow Hedges:		$	234,685				---			$	981
Total Derivatives Used in Interest Rate Risk Management and Designated in SFAS 133 Relationships:		$	249,185				---			$	1,536

Derivative Instruments
June 30, 2008

						Average
		Notional				Receive				Average				Estimated
		Amount				Rate				Pay Rate				Fair Value
Fair Value Hedges:
Pay Fixed Swap (Commercial Loans)		$	14,500				---				6.27	%		$	(555	)
Total Derivatives Used in Fair Value Hedges		$	14,500											$	(555	)
Cash Flow Hedges:
Pay Fixed Swap (FHLB Borrowing)		$	234,685				---				3.79	%		$	(981	)
Total Derivatives Used in Cash Flow Hedges		$	234,685											$	(981	)
Total Derivatives Used for Interest Rate Risk Management and Designated in SFAS 133 Relationships		$	249,185											$	(1,536	)

The derivative portfolio also includes derivative financial instruments not included in hedge relationships. These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. Gains and losses on other derivative financial instruments are included in noninterest income and noninterest expense, respectively.

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

		Other Derivative Instruments
		June 30, 2008
		Net Derivative				Net Gains
		Asset (Liability)				(Losses)
Other Derivative Instruments:
Interest Rate Risk Management		$	(599	)		$	(599	)
Customer Risk Management			599				599
Total Other Derivative Instruments		$	---			$	---

12. FAIR VALUE MEASUREMENTS

United adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157), on January 1, 2008 to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. SFAS 157 clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In February of 2008, the FASB issued Staff Position No. 157-2 (FSP 157-2) which delayed the effective date of SFAS 157 for certain nonfinancial assets and nonfinancial liabilities except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis. FSP 157-2 defers the effective date of SFAS 157 for such nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Thus, United has only partially applied SFAS 157. Those items affected by FSP 157-2 include other real estate owned (OREO), goodwill and core deposit intangibles.

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

		Level 1 –		Valuation is based on quoted prices in active markets for identical assets and liabilities.
		Level 2 –		Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.
		Level 3 –		Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

When determining the fair value measurements for assets and liabilities, United looks to active and observable markets to price identical assets or liabilities whenever possible and classifies such items in Level 1. When identical assets and liabilities are not traded in active markets, United looks to market observable data for similar assets and liabilities and classifies such items as Level 2. Nevertheless, certain assets and liabilities are not actively traded in observable markets and United must use alternative valuation techniques

using unobservable inputs to determine a fair value and classifies such items as Level 3. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

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

Securities available for sale: Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that considers observable market data (Level 2). Any securities available for sale not valued based upon the methods above are considered Level 3.

Derivatives: United utilizes interest rate swaps in order to hedge exposure to interest rate risk and variability of cash flows associated to changes in the underlying interest rate of the hedged item. United utilizes third-party vendors for derivative valuation purposes. These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves (Level 2). Valuation adjustments to derivative fair values for liquidity and credit risk are also taken into consideration, as well as the likelihood of default by United and derivative counterparties, the net counterparty exposure and the remaining maturities of the positions.

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2008:

						Fair Value Measurements at June 30, 2008 Using
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		Balance as of				Assets				Inputs				Inputs
Description		June 30, 2008				(Level 1)				(Level 2)				(Level 3)
Assets
Available-for-sale securities		$	1,174,929			$	52,117			$	1,117,812			$	5,000
Derivative financial assets			599				---				599				---
Liabilities
Derivative financial liabilities			2,135				---				2,135				---

The following table presents additional information about financial assets and liabilities measured at fair value at June 30, 2008 on a recurring basis and for which United has utilized Level 3 inputs to determine fair value:

		Available-for-
		sale
		securities
Beginning Balance		$	5,504
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)			---
Included in other comprehensive income			---
Purchases, issuances, and settlements			---
Transfers in and/or out of Level 3			(504	)
Ending Balance		$	5,000
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at reporting date			---

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

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

Loans held for sale: Loans held for sale are carried at the lower of cost or market value. These loans currently consist of one-to-four family residential loans originated for sale in the secondary market. Fair value is based on the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2). As such, United records any fair value adjustments on a nonrecurring basis. No nonrecurring fair value adjustments were recorded on loans held for sale during the quarter ended June 30, 2008. Gains and losses on the sale of loans are recorded within income from mortgage banking on the Consolidated Statements of Income.

Impaired Loans: Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Fair value is measured based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is

considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Impaired loans allocated to the Allowance for Loan Losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses expense on the Consolidated Statements of Income.

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

Carrying value at June 30, 2008

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Balance as of

Identical

Observable

Unobservable

June 30,

Assets

Inputs

Inputs

YTD

Description

2008

(Level 1)

(Level 2)

(Level 3)

Losses

Assets

Impaired Loans

$

32,217

—

$

1,131

$

31,086

$

863

13. STOCK BASED COMPENSATION

On May 15, 2006, United’s shareholders approved the 2006 Stock Option Plan. A total of 1,500,000 shares of United’s authorized but unissued common stock are allocated for the 2006 Stock Option Plan. Each plan year, 400,000 options will be available for award to eligible employees; however, not all 400,000 options are required to be awarded in that year. All options granted under the 2006 Stock Option Plan will be non-statutory stock options (NSOs), i.e. options that do not qualify as incentive stock options under Section 422 of the Internal Revenue Code. Subject to certain change in control provisions, recipients of options will be fully vested in and permitted to exercise options granted under the 2006 Stock Option Plan three years from the grant date. As of June 30, 2008, 254,550 shares have been granted under the 2006 Stock Option Plan resulting in the recognition of compensation expense of $277 thousand for the first six months of 2008 which was included in salaries and employee benefits expense in the Consolidated Statement of Income. A Form S-8 was filed on October 25, 2006 with the Securities and Exchange Commission to register all the shares available for the 2006 Stock Option Plan.

United currently has options outstanding from various option plans other than the 2006 Stock Option Plan (the “Prior Plans”); however, no common shares of United stock are available for grants under the Prior Plans as these plans have expired. Awards outstanding under the Prior Plans will remain in effect in accordance with their respective terms. The maximum term for options granted under the plans is ten (10) years.

The fair value of the options for 2007 was estimated at the date of grant using a binomial lattice option pricing model with the following weighted-average assumptions: risk-free interest rates of 4.09%; dividend yield of 3.00%; volatility factors of the expected market price of United’s common stock of 0.2954; and a weighted-average expected option life of 5.89 years, respectively. The fair value of the 10,000 options

granted during the second quarter of 2008 was estimated at the date of grant using a binomial lattice option pricing model with the following weighted-average assumptions: risk-free interest rates of 3.14%; dividend yield of 3.00%; volatility factors of the expected market price of United’s common stock of 0.3297; and a weighted-average expected option life of 5.89 years, respectively. SFAS 123R defines a lattice modal as a model that produces an estimated fair value based on the assumed changes in prices of a financial instrument over successive periods of time. A binomial lattice model assumes at least two price movements are possible in each period of time.

A summary of option activity under the Plans as of June 30, 2008, and the changes during the first six months of 2008 are presented below:

		Six Months Ended June 30, 2008
										Weighted Average
						Aggregate				Remaining
						Intrinsic				Contractual				Exercise
		Shares				Value				Term (Yrs.)				Price
Outstanding at January 1, 2008			1,921,457												$27.38
Granted			10,000												28.23
Exercised			35,959												11.59
Forfeited or expired			9,773												29.24
Outstanding at June 30, 2008			1,885,725				$3,441				5.2				$27.68
Exercisable at June 30, 2008			1,631,175				$3,441				4.5				$27.66

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

										Weighted-Average
										Grant Date Fair
		Shares								Value Per Share
Nonvested at January 1, 2008			244,550							$7.06
Granted			10,000							7.25
Vested			---							---
Forfeited or expired			---							---
Nonvested at June 30, 2008			254,550							$7.07

In addition to the stock options detailed above, United has outstanding stock options related to a deferred compensation plan assumed in the 1998 merger with George Mason Bankshares, Inc. (GMBS). The stock options granted under this deferred compensation plan were to former directors of GMBS. These options carry no exercise cost, contain no expiration date, and are eligible for dividends. Other than additional options granted through reinvestment of dividends received, United does not issue additional options under this deferred compensation plan. Options outstanding at June 30, 2008 were 20,125. Options granted through the reinvestment of dividends during the first six months of 2008 were 408. No options were exercised during the first six months of 2008. United records compensation expense for this plan based on the number of options outstanding and United’s quoted market price of its common stock with an equivalent adjustment to the associated liability.

Cash received from options exercised under the Plans for the six months ended June 30, 2008 and 2007 was $408 thousand and $1.15 million, respectively. During the six months ended June 30, 2008 and 2007, 35,959 and 105,773 shares, respectively, were issued in connection with stock option exercises. All shares issued in connection with stock option exercises were issued from available treasury stock for the six months ended June 30, 2008 and 2007. The total intrinsic value of options exercised under the Plans during the six months ended June 30, 2008 and 2007 was $526 thousand and $1.63 million, respectively.

SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under previous standards. While the company cannot estimate what those amounts will be in the future (because they depend on, among other things, the date employees exercise stock options), United recognized cash flows from financing activities of $315 thousand and $435 thousand from excess tax benefits related to share-based compensation for the six months ended June 30, 2008 and 2007, respectively.

14. EMPLOYEE BENEFIT PLANS

United has a defined benefit retirement plan covering substantially all employees. Pension benefits are based on years of service and the average of the employee’s highest five consecutive plan years of basic compensation paid during the ten plan years preceding the date of determination. United’s funding policy is to contribute annually the maximum amount that can be deducted for federal income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future.

In September of 2007, after a recommendation by United’s Pension Committee and approval by United’s Board of Directors, the United Bankshares, Inc. Pension Plan (the Plan) as it relates to participation was amended. The decision to change the participation rules for the Plan follows current industry trends, as many large and medium size companies have taken similar steps. The amendment provides that employees hired on or after October 1, 2007, will not be eligible to participate in the Plan. However, new employees will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) plan. This change has absolutely no impact on current employees (those hired prior to October 1, 2007). They will continue to participate in the Plan, with no change in benefit provisions, and will continue to be eligible to participate in United’s Savings and Stock Investment 401(k) Plan.

Included in accumulated other comprehensive income at December 31, 2007 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized transition asset of $526 ($319 net of tax), unrecognized prior service costs of $8 ($5 net of tax) and unrecognized actuarial losses of $10,899 ($6,604 net of tax). The amortization of these items expected to be recognized in net periodic pension cost during the fiscal year ended December 31, 2008 is $175 ($105 net of tax), $1 ($1 net of tax), and $193 ($119 net of tax), respectively.

In September 2006, the FASB published Statement No. 158 (SFAS 158), “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, an amendment of FASB Statements No. 87, 88, 106, and 132R. The measurement date provisions of SFAS 158 require employers to measure the funded status of a plan as of the end of the employers’ fiscal year, with limited exceptions. United adopted the measurement date provisions of SFAS 158 as of January 1, 2008, as required. As a result, United recognized

a net periodic pension cost of $270, net of tax, for the period between the prior measurement date of September 30, 2007 and December 31, 2007 as a separate adjustment of the opening balance of retained earnings on January 1, 2008.

Net periodic pension cost for the three and six months ended June 30, 2008 and 2007 included the following components:

		Three Months Ended								Six Months Ended
(In thousands)		June 30								June 30
		2008				2007				2008				2007
Service cost		$	539			$	537			$	1,077			$	1,068
Interest cost			925				866				1,850				1,723
Expected return on plan assets			(1,913	)			(1,798	)			(3,825	)			(3,577	)
Amortization of transition asset			(43	)			(44	)			(87	)			(87	)
Recognized net actuarial loss			48				148				96				294
Amortization of prior service cost			---				---				---				---
Net periodic pension (benefit) cost		$	(444	)		$	(291	)		$	(889	)		$	(579	)
Weighted-Average Assumptions:
Discount rate			6.25	%			6.00	%			6.25	%			6.00	%
Expected return on assets			8.50	%			8.50	%			8.50	%			8.50	%
Rate of compensation increase			3.25	%			3.25	%			3.25	%			3.25	%