8-K
UNITED BANKSHARES INC/WV (UBSI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 23, 2021
United Bankshares, Inc.
(Exact name of registrant as specified in its charter)
| West Virginia | No. 002-86947 | 55-0641179 |
|---|---|---|
| (State or other jurisdiction of<br> <br>incorporation or organization) | (Commission File Number) | (I.R.S. Employer<br> <br>Identification No.) |
| 300 United Center | ||
| --- | ||
| 500 Virginia Street, East | ||
| Charleston, West Virginia 25301 | ||
| (Address of Principal Executive Offices) |
(304) 424-8800
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $2.50 per share | UBSI | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On April 23, 2021 United Bankshares, Inc. (“United”) announced its financial results for the first quarter of 2021. A copy of the press release is attached as Exhibit 99.1 to this report. The press release is being furnished under Item 2.02 of this Form 8-K.
Item 9.01. Financial Statements and Exhibits
(c) The following exhibits are being furnished herewith:
| 99.1 | Press Release, dated April 23, 2021, issued by United Bankshares, Inc. |
|---|---|
| 99.2 | Slide presentation of financial information for the first quarter of 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UNITED BANKSHARES, INC. | ||
|---|---|---|
| Date: April 23, 2021 | By: | /s/ W. Mark Tatterson |
| W. Mark Tatterson, Executive Vice | ||
| President and Chief Financial Officer |
EX-99.1
EXHIBIT 99.1
News Release
| For Immediate Release | Contact: W. Mark Tatterson |
|---|---|
| April 23, 2021 | Chief Financial Officer |
| (800) 445-1347 ext. 8716 |
United Bankshares, Inc. Announces Record Earnings
for the First Quarter of 2021
WASHINGTON, D.C. and CHARLESTON, WV-- United Bankshares, Inc. (NASDAQ: UBSI) (“United”), today reported record earnings for the first quarter of 2021 of $106.9 million, or $0.83 per diluted share, up significantly from earnings of $40.2 million, or $0.40 per diluted share for the first quarter of 2020.
First quarter of 2021 results produced annualized returns on average assets, average equity and average tangible equity of 1.64%, 9.97% and 17.20%, respectively, compared to annualized returns on average assets, average equity and average tangible equity of 0.82%, 4.82% and 8.77%, respectively, for the first quarter of 2020.
Record earnings for the first quarter of 2021, as compared to the first quarter of 2020, were primarily due to higher income from mortgage banking activities, driven by an elevated volume of mortgage loan originations and sales in the secondary market, the impact of the Carolina Financial Corporation (“Carolina Financial”) acquisition and a lower provision for credit losses primarily due to better performance trends within the loan portfolio and an improved future macroeconomic forecast under the Current Expected Credit Loss (“CECL”) accounting standard.
“The first quarter of 2021 was another great quarter for United Bankshares, and UBSI continues to be one of the best performing regional banking companies in the nation,” stated Richard M. Adams, United’s Chairman of the Board and Chief Executive Officer. “We earned record net income of $107 million, record diluted earnings per share of $0.83 and delivered an annualized return on average assets of 1.64%. Our credit quality and regulatory ratios remain strong and position us well for continued growth as the economy recovers from the effects of the COVID-19 pandemic.”
The results of operations for Carolina Financial are included in the consolidated results of operations from the date of acquisition, May 1, 2020. As a result of the acquisition, the first quarter of 2021 reflected higher average balances, income, and expense as compared to the first quarter of 2020. The first quarter of 2020 included merger-related expenses of $1.6 million. There were no merger-related expenses incurred in the first quarter of 2021.
United Bankshares, Inc. Announces...
April 23, 2021
Page Two
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2021 was $191.0 million, which was an increase of $49.4 million or 35% from the first quarter of 2020, primarily due to an increase in average earning assets from the Carolina Financial acquisition and Paycheck Protection Program (“PPP”) loans. Tax-equivalent net interest income, a non-GAAP measure which adjusts for the tax-favored status of income from certain loans and investments, for the first quarter of 2021 increased $49.7 million or 35% from the first quarter of 2020 to $192.0 million. The net interest spread for the first quarter of 2021 increased 30 basis points from the first quarter of 2020 due to a 95 basis point decrease in the average cost of funds partially offset by a 65 basis point decrease in the average yield on earning assets, reflecting the decline in market interest rates. Average earning assets for the first quarter of 2021 increased $6.2 billion or 36% from the first quarter of 2020 due to a $4.1 billion increase in average net loans and loans held for sale, a $1.6 billion increase in average short-term investments and a $572.8 million increase in average investment securities. PPP loan fee income of $11.3 million was recognized in the first quarter of 2021 driven primarily by loan forgiveness. The net interest margin of 3.30% for the first quarter of 2021 was flat from the first quarter of 2020.
On a linked-quarter basis, net interest income for the first quarter of 2021 was relatively flat from the fourth quarter of 2020, decreasing $1.0 million or less than 1%. United’s tax-equivalent net interest income for the first quarter of 2021 was also relatively flat from the fourth quarter of 2020. The net interest spread for the first quarter of 2021 of 3.14% remained flat from the fourth quarter of 2020 due to equal 6 basis point decreases in the average cost of funds and the average yield on earning assets. PPP loan fee income for the first quarter of 2021 increased $4.3 million from the fourth quarter of 2020, driven primarily by higher loan forgiveness. Average earning assets increased approximately $384.6 million or 2% from the fourth quarter of 2020, due mainly to increases in average investment securities of $136.7 million and average short-term investments of $521.6 million partially offset by a decrease in average net loans and loans held for sale of $273.6 million. Loan accretion on acquired loans decreased $1.1 million from the fourth quarter of 2020. The net interest margin of 3.30% for the first quarter of 2021 was a decrease of 3 basis points from the net interest margin of 3.33% for the fourth quarter of 2020.
Credit Quality
United’s asset quality continues to be sound relative to the current economic environment. At March 31, 2021, nonperforming loans were $116.2 million, or 0.67% of loans & leases, net of unearned income, down from $132.2 million, or 0.75% of loans & leases, net of unearned income, at December 31, 2020. Total nonperforming assets of $134.9 million, including OREO of $18.7 million at March 31, 2021, represented 0.50% of total assets as compared to nonperforming assets of $154.8 million, including OREO of $22.6 million or 0.59% of total assets at December 31, 2020.
United Bankshares, Inc. Announces...
April 23, 2021
Page Three
The provision for credit losses was $143 thousand and $27.1 million for the first quarter of 2021 and 2020, respectively. On a linked-quarter basis, the provision for credit losses for the first quarter of 2021 decreased $16.6 million from $16.8 million for the fourth quarter of 2020. The decrease in the provision in relation to the prior year quarter and in relation to the linked-quarter was primarily driven by the impact of better performance trends within the loan portfolio and improvements in the reasonable and supportable forecasts of future macroeconomic conditions on the estimate of expected credit losses under CECL.
As of March 31, 2021, the allowance for loan losses was $231.6 million or 1.33% of loans & leases, net of unearned income, as compared to $235.8 million or 1.34% of loans & leases, net of unearned income, at December 31, 2020. Net charge-offs were $4.5 million and $6.7 million for the first quarter of 2021 and 2020, respectively. Annualized net charge-offs as a percentage of average loans & leases, net of unearned income were 0.10% for the first quarter of 2021, compared to 0.20% for the first quarter of 2020. Net charge-offs were $6.9 million for the fourth quarter of 2020.
Noninterest Income
Noninterest income for the first quarter of 2021 was $92.6 million, which was an increase of $55.8 million or 152% from the first quarter of 2020. The increase was driven primarily by a $47.8 million increase in income from mortgage banking activities due to an elevated volume of mortgage loan originations and sales in the secondary market as well as the addition of mortgage banking operations from the Carolina Financial acquisition. Noninterest income for the first quarter of 2021 also included $2.4 million in mortgage loan servicing income as a result of the Carolina Financial acquisition and a $2.4 million increase in net gains on investment securities in relation to the first quarter of 2020.
On a linked-quarter basis, noninterest income for the first quarter of 2021 decreased $1.5 million or 2% from the fourth quarter of 2020 primarily due to a decrease of $5.4 million in income from mortgage banking activities. Mortgage loan originations and sales volumes remained strong in the first quarter of 2021, but down from the fourth quarter of 2020. Noninterest income for the first quarter of 2021 included a $2.0 million increase in net gains on investment securities and a $1.2 million increase in fees from brokerage services in relation to the fourth quarter of 2020.
Noninterest Expense
Noninterest expense for the first quarter of 2021 was $148.9 million, an increase of $47.8 million or 47% from the first quarter of 2020. Employee compensation increased $27.9 million from the first quarter of 2020 due to the Carolina Financial acquisition as well as due to higher employee incentives and commissions expense mainly related to higher mortgage banking production. Additionally, noninterest expense increased from the first quarter of 2020 due to increases of $4.7 million in employee benefits, $3.0 million in mortgage loan servicing expense and impairment, $2.7 million in OREO expense, $2.2 million in equipment expense, $1.9 million in net occupancy expense and $4.4 million in other expenses. Within other expenses, the largest driver of the increase was an increase in the amortization of income tax credits of $1.2 million. The increase in OREO expense was due mainly to declines in the fair value of OREO properties while the increases in employee benefits, mortgage loan servicing expense and impairment, equipment expense and net occupancy expense were mainly from the Carolina Financial acquisition.
United Bankshares, Inc. Announces...
April 23, 2021
Page Four
On a linked-quarter basis, noninterest expense for the first quarter of 2021 decreased $7.2 million or 5% from the fourth quarter of 2020 primarily due to decreases of $4.6 million in employee compensation and $5.1 million in other expenses. Employee compensation declined from the fourth quarter of 2020 primarily due a decline in expenses for salaries (fewer employees), incentives and commissions (lower mortgage banking production) recognized in the first quarter of 2021. Within other expenses, the largest driver of the decrease was a decrease in the expense for the reserve for unfunded commitments of $2.5 million.
Income Tax Expense
For the first quarter of 2021, income tax expense was $27.6 million as compared to $9.9 million for the first quarter of 2020. The increase in the comparative quarter was due to higher earnings and a higher effective tax rate. On a linked-quarter basis, income tax expense increased $6.7 million primarily due to higher earnings and a higher effective tax rate. United’s effective tax rate was 20.5% for the first quarter of 2021, 19.8% for the first quarter of 2020 and 18.4% for the fourth quarter of 2020.
Regulatory Capital
United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 15.7% at March 31, 2021 while estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.5%, 13.5% and 10.4%, respectively. The March 31, 2021 ratios reflect United’s election of a five-year transition provision, allowed by the Federal Reserve Board and other federal banking agencies in response to the COVID-19 pandemic, to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period. The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10.0%, a Common Equity Tier 1 capital ratio of 6.5%, a Tier 1 capital ratio of 8.0% and a leverage ratio of 5.0%.
About United Bankshares, Inc.
As of March 31, 2021, United had consolidated assets of approximately $27.0 billion. United is the parent company of United Bank, the largest community bank headquartered in the D.C. Metro region. United Bank has 223 offices in West Virginia, Virginia, Ohio, Pennsylvania, Maryland, North Carolina, South Carolina, Georgia, and the nation’s capital. United’s stock is traded on the NASDAQ Global Select Market under the quotation symbol “UBSI”.
United Bankshares, Inc. Announces...
April 23, 2021
Page Five
Cautionary Statements
The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing ofits March 31, 2021 consolidated financial statements on Form 10-Q. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimatesmade as of March 31, 2021 and will adjust amounts preliminarily reported, if necessary.
Use ofnon-GAAP Financial Measures
This press release contains certainfinancial measures that are not recognized under U.S. generally accepted accounting principles (“GAAP”). Generally, United has presented these “non-GAAP” financial measures because itbelieves that these measures provide meaningful additional information to assist in the evaluation of United’s results of operations or financial position. Presentation of these non-GAAP financialmeasures is consistent with how United’s management evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interestedparties in the evaluation of companies in the banking industry.
Specifically, this press release contains certainreferences to financial measures identified as tax-equivalent (FTE) net interest income, tangible equity, return on tangible equity and tangible book value per share. 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 press release 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 anon-GAAP measure, United’s management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition. The tax-equivalent adjustment combinesamounts of interest income on federally nontaxable loans and investment securities using the statutory federal income tax rate of 21%.
Tangible common equity is calculated as GAAP total shareholders’ equity minus total intangible assets. Tangible commonequity can thus be considered the most conservative valuation of the company. Tangible common equity is also presented on a per common share basis and considering net income, a return on average tangible equity. Management provides these amounts tofacilitate the understanding of as well as to assess the quality and composition of United’s capital structure. By removing the effect of intangible assets that result from merger and acquisition activity, the “permanent” items ofcommon equity are presented. These measures, along with others, are used by management to analyze capital adequacy and performance.
Where non-GAAP financial measures are used, the comparable GAAP financial measure,as well as reconciliation to that comparable GAAP financial measure can be found in the attached financial information tables to this press release. Investors should recognize that United’s presentation of thesenon-GAAP financial measures might not be comparable to similarly titled measures at other companies. These non-GAAP financial measures should not be considered asubstitute for GAAP basis measures and United strongly encourages a review of its condensed consolidated financial statements in their entirety.
Forward-Looking Statements
In this report, we have made various statements regarding current expectations or forecasts of future events, which speakonly as of the date the statements are made. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are also made from time-to-time in press releases and in oral statements made by the officers of the Company. 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 onassumptions and estimates, which although believed to be reasonable, may turn out to be incorrect, such as statements about the potential impacts of the COVID-19 pandemic. Therefore, undue reliance should notbe 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.” Thefollowing factors, among others, could cause the actual results of United’s operations to differ materially from its expectations: the effect of the COVID-19 pandemic, including the negative impacts anddisruptions on United’s colleagues, the communities United serves, and the domestic and global economy, which may have an adverse effect on United’s business; current and future economic and market conditions, including the effects ofdeclines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve Board; the effect of changes in thelevel of checking or savings account deposits on United’s funding costs and net interest margin; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; the successful integration of operations ofCarolina Financial Corporation; competition; and changes in legislation or regulatory requirements. For more information about factors that could cause actual results to differ materially from United’s expectations, refer to its reports filedwith the Securities and Exchange Commission, including the discussion under “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securitiesand Exchange Commission and available on its website at www.sec.gov. Further, any forward-looking statement speaks only as of the date on which it is made, and United undertakes no obligation to publicly update any forward-looking statements,whether as a result of new information, future events, or otherwise. You are advised to consult further disclosures United may make on related subjects in our filings with the SEC.
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended | ||||
|---|---|---|---|---|
| March<br>2021 | ||||
| EARNINGS SUMMARY: | ||||
| Interest income | 205,657 | 180,482 | $ 208,914 | |
| Interest expense | 14,697 | 38,964 | 16,925 | |
| Net interest income | 190,960 | 141,518 | 191,989 | |
| Provision for credit losses | 143 | 27,119 | 16,751 | |
| Noninterest income | 92,573 | 36,806 | 94,082 | |
| Noninterest expense | 148,927 | 101,133 | 156,117 | |
| Income before income taxes | 134,463 | 50,072 | 113,203 | |
| Income taxes | 27,565 | 9,889 | 20,833 | |
| Net income | 106,898 | 40,183 | $ 92,370 | |
| PER COMMON SHARE: | ||||
| Net income: | ||||
| Basic | 0.83 | 0.40 | $ 0.71 | |
| Diluted | 0.83 | 0.40 | 0.71 | |
| Cash dividends | 0.35 | 0.35 | 0.35 | |
| Book value | 33.54 | 32.87 | 33.27 | |
| Closing market price | 38.58 | 23.08 | $ 32.40 | |
| Common shares outstanding: | ||||
| Actual at period end, net of treasury shares | 129,175,800 | 101,723,600 | 129,188,507 | |
| Weighted average-basic | 128,635,740 | 101,295,073 | 129,371,600 | |
| Weighted average-diluted | 128,890,861 | 101,399,181 | 129,479,390 | |
| FINANCIAL RATIOS: | ||||
| Return on average assets | 1.64% | 0.82% | 1.41% | |
| Return on average shareholders’ equity | 9.97% | 4.82% | 8.51% | |
| Return on average tangible equity (non-GAAP)^(1)^ | 17.20% | 8.77% | 14.72% | |
| Average equity to average assets | 16.41% | 17.10% | 16.54% | |
| Net interest margin | 3.30% | 3.30% | 3.33% | |
| March 31<br>2021 | ||||
| PERIOD END BALANCES: | ||||
| Assets | 27,030,755 | 20,370,653 | $ 26,184,247 | |
| Earning assets | 24,023,292 | 17,966,159 | 23,172,403 | |
| Loans & leases, net of unearned income | 17,365,891 | 13,855,558 | 17,591,413 | |
| Loans held for sale | 808,134 | 503,514 | 718,937 | |
| Investment securities | 3,402,922 | 2,673,415 | 3,186,184 | |
| Total deposits | 21,396,474 | 14,014,168 | 20,585,160 | |
| Shareholders’ equity | 4,332,698 | 3,343,702 | 4,297,620 |
All values are in US Dollars.
Note: (1) See information under the “Selected Financial Ratios” table for a reconciliation of non-GAAP measure.
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
Consolidated Statements of Income
| Three Months Ended | ||||
|---|---|---|---|---|
| March<br>2021 | ||||
| Interest & Loan Fees Income (GAAP) | 205,657 | 180,482 | $ 208,914 | |
| Tax equivalent adjustment | 1,047 | 782 | 1,042 | |
| Interest & Fees Income (FTE) (non-GAAP) | 206,704 | 181,264 | 209,956 | |
| Interest Expense | 14,697 | 38,964 | 16,925 | |
| Net Interest Income (FTE) (non-GAAP) | 192,007 | 142,300 | 193,031 | |
| Provision for Credit Losses | 143 | 27,119 | 16,751 | |
| Noninterest Income: | ||||
| Fees from trust services | 3,763 | 3,483 | 3,585 | |
| Fees from brokerage services | 4,323 | 2,916 | 3,125 | |
| Fees from deposit services | 8,896 | 7,957 | 9,501 | |
| Bankcard fees and merchant discounts | 1,064 | 993 | 1,129 | |
| Other charges, commissions, and fees | 759 | 518 | 753 | |
| Income from bank-owned life insurance | 1,403 | 2,388 | 1,479 | |
| Income from mortgage banking activities | 65,395 | 17,631 | 70,793 | |
| Mortgage loan servicing income | 2,355 | 0 | 2,334 | |
| Net gains on investment securities | 2,609 | 196 | 589 | |
| Other noninterest income | 2,006 | 724 | 794 | |
| Total Noninterest Income | 92,573 | 36,806 | 94,082 | |
| Noninterest Expense: | ||||
| Employee compensation | 72,412 | 44,541 | 77,001 | |
| Employee benefits | 15,450 | 10,786 | 12,103 | |
| Net occupancy | 10,941 | 9,062 | 10,979 | |
| Data processing | 7,026 | 5,506 | 7,280 | |
| Amortization of intangibles | 1,466 | 1,577 | 1,691 | |
| OREO expense | 3,625 | 906 | 3,069 | |
| Equipment expense | 6,044 | 3,845 | 6,396 | |
| FDIC insurance expense | 2,000 | 2,400 | 2,250 | |
| Mortgage loan servicing expense and impairment | 3,177 | 138 | 3,482 | |
| Other expenses | 26,786 | 22,372 | 31,866 | |
| Total Noninterest Expense | 148,927 | 101,133 | 156,117 | |
| Income Before Income Taxes (FTE) (non-GAAP) | 135,510 | 50,854 | 114,245 | |
| Tax equivalent adjustment | 1,047 | 782 | 1,042 | |
| Income Before Income Taxes (GAAP) | 134,463 | 50,072 | 113,203 | |
| Taxes | 27,565 | 9,889 | 20,833 | |
| Net Income | 106,898 | 40,183 | $ 92,370 | |
| MEMO: Effective Tax Rate | 20.50% | 19.75% | 18.40% |
All values are in US Dollars.
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
Consolidated Balance Sheets
| March2021<br>Q-T-D Average | March2020<br>Q-T-D Average | March 31<br>2021 | December 31<br>2020 | |||||
|---|---|---|---|---|---|---|---|---|
| Cash & Cash Equivalents | $ | 2,583,986 | $ | 899,899 | $ | 2,963,138 | $ | 2,209,068 |
| Securities Available for Sale | 2,984,281 | 2,410,653 | 3,171,663 | 2,953,359 | ||||
| Less: Allowance for credit losses | 0 | 0 | 0 | 0 | ||||
| Net available for sale securities | 2,984,281 | 2,410,653 | 3,171,663 | 2,953,359 | ||||
| Securities Held to Maturity | 1,027 | 1,238 | 1,020 | 1,235 | ||||
| Less: Allowance for credit losses | (23) | (4) | (23) | (23) | ||||
| Net held to maturity securities | 1,004 | 1,234 | 997 | 1,212 | ||||
| Equity Securities | 10,893 | 9,004 | 11,054 | 10,718 | ||||
| Other Investment Securities | 219,937 | 222,419 | 219,208 | 220,895 | ||||
| Total Securities | 3,216,115 | 2,643,310 | 3,402,922 | 3,186,184 | ||||
| Total Cash and Securities | 5,800,101 | 3,543,209 | 6,366,060 | 5,395,252 | ||||
| Loans held for sale | 621,688 | 306,435 | 808,134 | 718,937 | ||||
| Commercial Loans & Leases | 13,298,719 | 9,423,190 | 13,126,945 | 13,165,497 | ||||
| Mortgage Loans | 3,114,722 | 3,102,307 | 3,021,289 | 3,197,274 | ||||
| Consumer Loans | 1,230,949 | 1,240,713 | 1,252,087 | 1,259,812 | ||||
| Gross Loans | 17,644,390 | 13,766,210 | 17,400,321 | 17,622,583 | ||||
| Unearned income | (28,526) | (624) | (34,430) | (31,170) | ||||
| Loans & Leases, net of unearned income | 17,615,864 | 13,765,586 | 17,365,891 | 17,591,413 | ||||
| Allowance for Loan & Leases Losses | (235,795) | (134,084) | (231,582) | (235,830) | ||||
| Net Loans | 17,380,069 | 13,631,502 | 17,134,309 | 17,355,583 | ||||
| Mortgage Servicing Rights | 21,186 | 0 | 22,018 | 20,955 | ||||
| Goodwill | 1,799,328 | 1,478,014 | 1,804,038 | 1,796,848 | ||||
| Other Intangibles | 26,311 | 29,258 | 25,457 | 26,923 | ||||
| Operating Lease<br>Right-of-Use Asset | 68,030 | 57,776 | 69,369 | 69,520 | ||||
| Other Real Estate Owned | 22,457 | 15,564 | 18,690 | 22,595 | ||||
| Other Assets | 751,946 | 537,495 | 782,680 | 777,634 | ||||
| Total Assets | $ | 26,491,116 | $ | 19,599,253 | $ | 27,030,755 | $ | 26,184,247 |
| MEMO: Interest-earning Assets | $ | 23,507,417 | $ | 17,295,754 | $ | 24,023,292 | $ | 23,172,403 |
| Interest-bearing Deposits | $ | 13,184,728 | $ | 9,278,782 | $ | 13,302,704 | $ | 13,179,900 |
| Noninterest-bearing Deposits | 7,735,638 | 4,627,044 | 8,093,770 | 7,405,260 | ||||
| Total Deposits | 20,920,366 | 13,905,826 | 21,396,474 | 20,585,160 | ||||
| Short-term Borrowings | 142,155 | 137,427 | 145,200 | 142,300 | ||||
| Long-term Borrowings | 833,365 | 2,002,763 | 814,195 | 864,369 | ||||
| Total Borrowings | 975,520 | 2,140,190 | 959,395 | 1,006,669 | ||||
| Operating Lease Liability | 71,696 | 61,355 | 73,531 | 73,213 | ||||
| Other Liabilities | 176,784 | 141,230 | 268,657 | 221,585 | ||||
| Total Liabilities | 22,144,366 | 16,248,601 | 22,698,057 | 21,886,627 | ||||
| Preferred Equity | 0 | 0 | 0 | 0 | ||||
| Common Equity | 4,346,750 | 3,350,652 | 4,332,698 | 4,297,620 | ||||
| Total Shareholders’ Equity | 4,346,750 | 3,350,652 | 4,332,698 | 4,297,620 | ||||
| Total Liabilities & Equity | $ | 26,491,116 | $ | 19,599,253 | $ | 27,030,755 | $ | 26,184,247 |
| MEMO: Interest-bearing Liabilities | $ | 14,160,248 | $ | 11,418,972 | $ | 14,262,099 | $ | 14,186,569 |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| Quarterly Share Data: | March<br>2021 | March<br>2020 | December<br>2020 | |||
| Earnings Per Share: | ||||||
| Basic | $ | 0.83 | $ | 0.40 | $ | 0.71 |
| Diluted | $ | 0.83 | $ | 0.40 | $ | 0.71 |
| Common Dividend Declared Per Share | $ | 0.35 | $ | 0.35 | $ | 0.35 |
| High Common Stock Price | $ | 41.61 | $ | 39.07 | $ | 32.86 |
| Low Common Stock Price | $ | 31.57 | $ | 19.67 | $ | 21.19 |
| Average Shares Outstanding (Net of Treasury Stock): | ||||||
| Basic | 128,635,740 | 101,295,073 | 129,371,600 | |||
| Diluted | 128,890,861 | 101,399,181 | 129,479,390 | |||
| Common Dividends | $ | 45,254 | $ | 35,604 | $ | 45,442 |
| Dividend Payout Ratio | 42.33% | 88.60% | 49.20% | |||
| EOP Share Data: | March 31<br>2021 | March 31<br>2020 | December<br>2020 | |||
| Book Value Per Share | $ | 33.54 | $ | 32.87 | $ | 33.27 |
| Tangible Book Value Per Share (non-GAAP) ^(1)^ | $ | 19.38 | $ | 18.06 | $ | 19.15 |
| 52-week High Common Stock Price | $ | 41.61 | $ | 40.70 | $ | 39.07 |
| Date | 03/18/21 | 11/05/19 | 01/02/20 | |||
| 52-week Low Common Stock Price | $ | 20.57 | $ | 19.67 | $ | 19.67 |
| Date | 09/25/20 | 03/23/20 | 03/23/20 | |||
| EOP Shares Outstanding (Net of Treasury Stock): | 129,175,800 | 101,723,600 | 129,188,507 | |||
| Memorandum Items: | ||||||
| EOP Employees (full-time equivalent) | 3,033 | 2,206 | 3,051 | |||
| Note: | ||||||
| (1) Tangible Book Value Per Share: | ||||||
| Total Shareholders’ Equity (GAAP) | $ | 4,332,698 | $ | 3,343,702 | $ | 4,297,620 |
| Less: Total Intangibles | (1,829,495) | (1,506,368) | (1,823,771) | |||
| Tangible Equity (non-GAAP) | $ | 2,503,203 | $ | 1,837,334 | $ | 2,473,849 |
| ÷ EOP Shares Outstanding (Net of Treasury Stock) | 129,175,800 | 101,723,600 | 129,188,507 | |||
| Tangible Book Value Per Share (non-GAAP) | $ | 19.38 | $ | 18.06 | $ | 19.15 |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March<br>2021 | March<br>2020 | December<br>2020 | |||||||
| Selected Yields and Net Interest Margin: | |||||||||
| Net Loans and Loans held for sale | 4.26% | 4.60% | 4.18% | ||||||
| Investment Securities | 1.93% | 2.70% | 2.08% | ||||||
| Money Market Investments/FFS | 0.34% | 2.23% | 0.42% | ||||||
| Average Earning Assets Yield | 3.56% | 4.21% | 3.62% | ||||||
| Interest-bearing Deposits | 0.37% | 1.19% | 0.43% | ||||||
| Short-term Borrowings | 0.51% | 1.34% | 0.55% | ||||||
| Long-term Borrowings | 1.23% | 2.21% | 1.15% | ||||||
| Average Liability Costs | 0.42% | 1.37% | 0.48% | ||||||
| Net Interest Spread | 3.14% | 2.84% | 3.14% | ||||||
| Net Interest Margin | 3.30% | 3.30% | 3.33% | ||||||
| Selected Financial Ratios: | |||||||||
| Return on Average Assets | 1.64% | 0.82% | 1.41% | ||||||
| Return on Average Shareholders’ Equity | 9.97% | 4.82% | 8.51% | ||||||
| Return on Average Tangible Equity (non-GAAP) ^(1)^ | 17.20% | 8.77% | 14.72% | ||||||
| Loans & Leases, net of unearned income / Deposit Ratio | 81.16% | 98.87% | 85.46% | ||||||
| Allowance for Loan & Lease Losses/ Loans & Leases, net of unearned<br>income | 1.33% | 1.12% | 1.34% | ||||||
| Allowance for Credit Losses ^(2)^/<br>Loans & Leases, net of unearned income | 1.45% | 1.17% | 1.45% | ||||||
| Nonaccrual Loans / Loans & Leases, net of unearned income | 0.28% | 0.46% | 0.36% | ||||||
| 90-Day Past Due Loans/ Loans & Leases, net of<br>unearned income | 0.09% | 0.05% | 0.08% | ||||||
| Non-performing Loans/ Loans & Leases, net of<br>unearned income | 0.67% | 0.96% | 0.75% | ||||||
| Non-performing Assets/ Total Assets | 0.50% | 0.73% | 0.59% | ||||||
| Primary Capital Ratio | 16.80% | 17.08% | 17.22% | ||||||
| Shareholders’ Equity Ratio | 16.03% | 16.41% | 16.41% | ||||||
| Price / Book Ratio | 1.15 | x | 0.70 | x | 0.97 | x | |||
| Price / Earnings Ratio | 11.63 | x | 14.56 | x | 11.35 | x | |||
| Efficiency Ratio | 52.53% | 56.71% | 54.57% | ||||||
| Notes: | |||||||||
| (1) Return on Average Tangible Equity: | |||||||||
| (a) Net Income (GAAP) | $ | 106,898 | $ | 40,183 | $ | 92,370 | |||
| (b) Number of Days | 90 | 91 | 92 | ||||||
| Average Total Shareholders’ Equity (GAAP) | $ | 4,346,750 | $ | 3,350,652 | $ | 4,319,252 | |||
| Less: Average Total Intangibles | (1,825,639) | (1,507,272) | (1,822,577) | ||||||
| (c) Average Tangible Equity (non-GAAP) | $ | 2,521,111 | $ | 1,843,380 | $ | 2,496,675 | |||
| Return on Average Tangible Equity (non-GAAP) [(a) / (b)] x<br>365 or 366 / (c) | 17.20% | 8.77% | 14.72% | ||||||
| (2) Includes allowances for loan losses and lending-related commitments. |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March<br>2021 | March<br>2020 | December 2020 | ||||
| Mortgage Banking Segment Data: | ||||||
| Applications | $ | 2,630,426 | $ | 2,054,000 | $ | 2,284,532 |
| Loans originated | 1,910,619 | 904,949 | 1,979,284 | |||
| Loans sold | $ | 1,817,884 | $ | 793,392 | $ | 2,065,400 |
| Purchase money % of loans closed | 43% | 49% | 49% | |||
| Realized gain on sales and fees as a % of loans sold | 4.16% | 2.82% | 4.10% | |||
| Net interest income | $ | 2,650 | $ | 949 | $ | 2,918 |
| Other income | 67,507 | 21,190 | 73,082 | |||
| Other expense | 41,183 | 20,757 | 41,193 | |||
| Income taxes | 5,940 | 273 | 5,656 | |||
| Net income | $ | 23,034 | $ | 1,109 | $ | 29,151 |
| March 31<br>2021 | March 31<br>2020 | December 31<br>2020 | ||||
| Period End Mortgage Banking Segment Data: | ||||||
| Locked pipeline | $ | 979,842 | $ | 739,322 | $ | 989,640 |
| Balance of loans serviced | $ | 3,585,890 | $ | 0 | $ | 3,587,953 |
| Number of loans serviced | 25,443 | 0 | 25,614 | |||
| March 31<br>2021 | March 31<br>2020 | December 31<br>2020 | ||||
| Asset Quality Data: | ||||||
| EOP Non-Accrual Loans | $ | 48,985 | $ | 64,036 | $ | 62,718 |
| EOP 90-Day Past Due Loans | 15,719 | 7,051 | 13,832 | |||
| EOP Restructured Loans ^(1)^ | 51,529 | 61,470 | 55,657 | |||
| Total EOP Non-performing Loans | $ | 116,233 | $ | 132,557 | $ | 132,207 |
| EOP Other Real Estate Owned | 18,690 | 15,849 | 22,595 | |||
| Total EOP Non-performing Assets | $ | 134,923 | $ | 148,406 | $ | 154,802 |
| Three Months Ended | ||||||
| March<br>2021 | March<br>2020 | December<br>2020 | ||||
| Allowance for Loan Losses: | ||||||
| Beginning Balance | $ | 235,830 | $ | 77,057 | $ | 225,812 |
| Cumulative Effect Adjustment for CECL | 0 | 57,442 | 0 | |||
| 235,830 | 134,499 | 225,812 | ||||
| Initial allowance for acquired PCD loans | 0 | 0 | 0 | |||
| Gross Charge-offs | (6,957) | (8,761) | (10,120) | |||
| Recoveries | 2,415 | 2,073 | 3,203 | |||
| Net Charge-offs | (4,542) | (6,688) | (6,917) | |||
| Provision for Loan & Lease Losses | 294 | 27,112 | 16,935 | |||
| Ending Balance | $ | 231,582 | $ | 154,923 | $ | 235,830 |
| Reserve for lending-related commitments | 20,024 | 7,742 | 19,250 | |||
| Allowance for Credit Losses ^(2)^ | $ | 251,606 | $ | 162,665 | $ | 255,080 |
Notes:
| (1) | Restructured loans with an aggregate balance of $38,023, $51,775 and $41,185 at March 31, 2021,<br>March 31, 2020 and December 31, 2020, respectively, were on nonaccrual status, but are not included in “EOP Non-Accrual Loans” above. |
|---|---|
| (2) | Includes allowances for loan losses and lending-related commitments. |
| --- | --- |
EX-99.2
United Bankshares, Inc. First Quarter 2021 Earnings Review April 23, 2021 Exhibit 99.2
Forward-Looking Statements This presentation and statements made by United Bankshares, Inc. (“United”) and its management contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about United’s plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects,” or words of similar meaning generally intended to identify forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations managements of United and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of United. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward-looking statements because of possible uncertainties. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the effects of changing regional and national economic conditions, including the impact of the COVID-19 pandemic, and the negative impacts and disruptions on United’s customers, the communities it serves and the domestic and global economy; (2) current and future economic and market conditions, including the effects of high unemployment rates, United States fiscal debt, budget and tax matters and any slowdown in global economic growth; (3) legislative or regulatory changes, including changes in accounting standards, that may adversely affect the businesses in which United is engaged; (4) the interest rate environment may further compress margins and adversely affect net interest income; (5) results may be adversely affected by continued diversification of assets and adverse changes to credit quality; (6) competition from other financial services companies in United's markets could adversely affect operations; and (7) the economic slowdown could continue to adversely affect credit quality and loan originations. Additional factors, that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed United’s reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available on the SEC's Internet site (http://www.sec.gov). United cautions that the foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements concerning United or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. United does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.
1Q21 HIGHLIGHTS Achieved record quarterly Net Income of $106.9 million and record quarterly Diluted Earnings Per Share of $0.83 Generated Return on Average Assets of 1.64%, Return on Average Equity of 9.97%, and Return on Average Tangible Equity* of 17.20% Reported strong mortgage banking revenue, net income, and volume Continue to support our customers’ needs through new loan originations, loan deferrals, PPP loans, and other accommodations Quarterly dividend of $0.35 per share equates to a yield of 3.6% (based upon recent prices) Asset quality remains sound and Non Performing Assets decreased 12.8% linked-quarter Strong expense control with an efficiency ratio of 52.5% Capital position remains robust and liquidity remains sound *Non GAAP measure. Refer to appendix.
EARNINGS SUMMARY Linked-Quarter (LQ) Net Income was $106.9 million in 1Q21 compared to $92.4 million in 4Q20, with diluted EPS of $0.83 in 1Q21 compared to $0.71 in 4Q20. Net Interest Income decreased $1.0 million due mainly to a decrease in the net interest margin of 3 basis points and a decrease in accretion on acquired loans of $1.1 million, offset by an increase in PPP loan fee income of $4.3 million. Provision Expense decreased $16.6 million compared to 4Q20 driven by better performance trends within the loan portfolio and an improved future macroeconomic forecast under CECL. Noninterest Income decreased $1.5 million due primarily to a decrease of $5.4 million in income from mortgage banking activities. 1Q21 also included an increase of $2.0 million in net gains on investment securities. Noninterest Expense decreased $7.2 million due primarily to employee compensation decreasing $4.6 million (fewer employees and lower commissions expense related to the decrease in mortgage banking activity) and a decline of $2.5 million in the expense for the reserve for unfunded commitments.
PERFORMANCE RATIOS Strong profitability and expense control. 1Q20 was impacted by COVID-19 and CECL ACL build. 2Q20 was impacted by pre-tax merger-related expenses of $46.4 million and additional ACL build. *Non GAAP measure. Refer to appendix.
NET INTEREST INCOME AND MARGIN Reported Net Interest Margin decreased from 3.33% to 3.30% LQ. Excluding purchase accounting loan accretion, linked-quarter Net Interest Income was up $0.1 million, with PPP loan fee income increasing $4.3 million. Total remaining unamortized PPP fees (net of costs) is $24.9 million as of 3/31/21. Scheduled purchase accounting loan accretion is estimated at $14 million for the remainder of FY 2021 and $16 million for FY 2022. $ in millions
LOAN SUMMARY (excludes Loans Held for Sale) Linked-Quarter loan balances decreased $223 million driven primarily by declines in Residential Real Estate loans and Non Owner Occupied CRE loans, while Revolving Line of Credit balances within Commercial loans were down for the quarter as well. Non Owner Occupied CRE to Total Risk Based Capital was 225% at 1Q21. CRE portfolio remains diversified among underlying collateral types. Total purchase accounting-related fair value discount on loans is $84 million. Total COVID-19 loan deferrals have declined from $3.3 billion (~18% of total loans) at 6/30/20 to $0.2 billion (~1% of total loans) as of 3/31/21. $ in millions
CREDIT QUALITY End of Period Balances (000s) 12/31/20 3/31/21 Non-Accrual Loans $62,718 $48,985 90-Day Past Due Loans $13,832 $15,719 Restructured Loans $55,657 $51,529 Total Non-performing Loans $132,207 $116,233 Other Real Estate Owned $22,595 $18,690 Total Non-performing Assets $154,802 $134,923 Non-performing Loans / Loans 0.75% 0.67% Non-performing Assets / Total Assets 0.59% 0.50% Annualized Net Charge-offs / Average Loans 0.16% 0.10% Allowance for Loan & Lease Losses (ALLL) $235,830 $231,582 ALLL / Loans, net of earned income 1.34% 1.33% Allowance for Credit Losses (ACL) $255,080 $251,606 ACL / Loans, net of earned income 1.45% 1.45% NPAs decreased $19.9 million, or 12.8%, compared to 4Q20. ACL decreased $3.5 million LQ with the percentage of ACL/Loans remaining flat at 1.45%. PPP loans are included within total loans in the ratio calculations shown above. United adopted CECL effective 01/01/20.
SELECT LOAN PORTFOLIO DETAILS Diversified portfolio with strong underwriting practices and ongoing monitoring Portfolio Portfolio Balance ($ MM) % Total Loans Commercial Retail CRE 1,281 7.4% Hotels 787 4.5% Healthcare & Senior Living 316 1.8% Entertainment & Recreation 276 1.6% Restaurants 229 1.3% Energy (Direct & Indirect) 133 0.8% Consumer Residential Mortgage 2,538 14.6% Indirect Auto 1,141 6.6% Home Equity 426 2.4% Other Consumer 57 0.3% Total commercial deferrals have declined to $154 million (~1% of total commercial loans) as of 3/31/21. Retail CRE: Top 20 loans make up ~36% of the total balance. Average LTV for the top 20 is ~57%, and majority are anchored by nationally recognized essential businesses. Hotels: Top 20 loans make up ~39% of the total balance. Average LTV for the top 20 is ~55%. Of the remaining commercial deferrals, ~63% are related to the hospitality industry. As of 3/31/21, the allowance for the hotel portfolio was $29.1 million. Consumer deferrals total $39 million, or ~1% of total consumer loans as of 3/31/21. Weighted average FICO score for the consumer portfolio is 748 (based on most recently available system data). Data as of 3/31/21. LTVs calculated using current balances with most recently available collateral values.
PAYCHECK PROTECTION PROGRAM (PPP) Originated over 12,200 loans for $1.7 billion since program inception in 2020 Maintained an “all hands on deck” approach in order to assist as many customers as possible Outstandings increased $21 million in 1Q21 (new originations of $377 million & paydowns of $356 million) Remaining outstandings at 3/31/21: Over 8,900 loans totaling $1.2 billion Average loan balance: $134,500 Median loan balance: $34,604 Approved to borrow from the Federal Reserve under the Paycheck Protection Program Liquidity Facility (PPPLF), but no borrowings to date PPP Loan Activity 2Q20 3Q20 4Q20 1Q21 $4.48 $4.80 $6.98 $11.31 PPP Fees Recognized, net of costs ($ millions)* *Remaining unamortized fees of $24.9 million at 3/31/21. PPP Loans Outstanding ($ millions) 2Q20 3Q20 4Q20 1Q21 $1,265 $1,286 $1,182 $1,203
DEPOSIT SUMMARY Strong core deposit base with 38% of deposits in Non Interest Bearing accounts. LQ deposits increased $811 million. Enviable deposit franchise with an attractive mix of both high growth MSA’s and stable, rural markets with a dominant market share position. $ in millions Source: S&P Global Market Intelligence Top 10 Deposit Markets by MSA (as of 6/30/20) MSA Total Deposits In Market ($000) Number of Branches Rank Washington, DC 9,469,606 63 6 Charleston, WV 1,250,516 8 2 Morgantown, WV 1,151,176 6 1 Charleston, SC 858,882 8 6 Myrtle Beach, SC 675,753 11 5 Parkersburg, WV 662,593 4 1 Charlotte, NC 537,482 10 14 Hagerstown, MD 473,909 6 4 Wheeling, WV 461,563 7 2 Beckley, WV 417,295 6 2
ATTRACTIVE DEPOSIT MARKET SHARE POSITION West Virginia #2 in the state (second only to Truist) with $5.3 billion in deposits. United ranks #1 or #2 in deposit market share within its top 5 largest markets in the state. North Carolina #17 in the state with $1.9 billion. Select MSAs: #14 in Charlotte #26 in Raleigh #13 in Wilmington #11 in Greenville #1 in Washington #7 in Rocky Mount #11 in Fayetteville Washington D.C. MSA #1 community bank (#6 overall) with $9.5 billion in deposits. United has increased deposit market share in the D.C. MSA from #15 in 2013 to #6 in 2020, with total deposits increasing from $2.1 billion to $9.5 billion. Virginia- #7 in the state with $7.5 billion (including VA deposits within the D.C. MSA). South Carolina #9 in the state with $2.0 billion. Select MSAs: #6 in Charleston #5 in Myrtle Beach #11 in Greenville #12 in Columbia United continues to build franchise value with an attractive mix of both high growth MSA’s and stable, rural markets with a dominant market share position. Further growth opportunities exist to expand our presence in some of the most desirable banking markets in the nation. These dynamics uniquely position our franchise and contribute to making United one of the most valuable banking companies in the Southeast and Mid-Atlantic. Source: S&P Global Market Intelligence Data as of 6/30/20
CAPITAL RATIOS & PER SHARE DATA End of Period Ratios / Values 12/31/20 3/31/21** Common Equity Tier 1 Ratio 13.3% 13.5% Tier 1 Capital Ratio 13.3% 13.5% Total Risk Based Capital Ratio 15.6% 15.7% Leverage Ratio 10.3% 10.4% Total Equity to Total Assets 16.4% 16.0% *Tangible Equity to Tangible Assets (non GAAP) 10.2% 9.9% Book Value Per Share $33.27 $33.54 *Tangible Book Value Per Share (non GAAP) $19.15 $19.38 Capital ratios remain significantly above regulatory “Well Capitalized” levels and exceed all internal capital targets. During 1Q21, United repurchased 306,204 common shares for $10.0 million as compared to 660,000 common shares for $20.7 million in 4Q20. As of 3/31/21, there were 3,033,796 shares available to be repurchased under the approved plan. *Non GAAP measure. Refer to appendix. **Regulatory ratios are estimates as of the earnings release date.
MORTGAGE BANKING Mortgage Banking Segment represents George Mason Mortgage and Crescent Mortgage Company. George Mason Mortgage, founded in 1980, is headquartered in the Washington D.C. MSA with 13 retail offices located throughout Virginia, Maryland, North Carolina, and South Carolina. Crescent Mortgage Company, founded in 1993, is headquartered in Atlanta, Georgia, and is primarily a correspondent/wholesale mortgage company approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers. The quarterly net fair value impact on mortgage banking derivatives and loans held for sale was $(11.5) million in 1Q21 and $(14.2) million in 4Q20. Three Months Ended (000s) 12/31/20 3/31/21 Applications $2,284,532 $2,630,426 Loans Originated $1,979,284 $1,910,619 Loans Sold $2,065,400 $1,817,884 Purchase Money % 49% 43% Realized Gain on Sale Margin 4.10% 4.16% Locked Pipeline (EOP) $989,640 $979,842 Loans Held for Sale (EOP) $718,937 $808,134 Balance of Loans Serviced (EOP) $3,587,953 $3,585,890 Total Income $76,000 $70,157 Total Expense $41,193 $41,183 Income Before Tax $34,807 $28,974 Net Income After Tax $29,151 $23,034
2021 OUTLOOK Loans & Deposits: Expect loan growth, excluding PPP forgiveness and new PPP originations, to be in the low to mid single digits. Pipelines continue to be strong, particularly in the North Carolina and South Carolina markets. Expect further decreases in the cost of interest bearing deposits in 2021. Mortgage Banking Revenue: Expect Mortgage Banking Revenue to remain relatively strong in the second quarter of 2021. Non-Interest Expense: Continue to focus on merger-related efficiencies and cost savings from legacy operations. Consolidated seven offices in 1Q21. Tax Rate: Estimated at approximately 20.5%. Select guidance is being provided for 2021. Our outlook may change if the expectations for these items vary from current expectations.
INVESTMENT THESIS Excellent franchise with long-term growth prospects Current income opportunity with a dividend yield of 3.6% (based upon recent prices) High-performance bank with a low-risk profile Experienced management team with a proven track record of execution High level of insider ownership 47 consecutive years of dividend increases evidences United’s strong profitability, solid asset quality, and sound capital management over a very long period of time Attractive valuation with a current Price-to-Earnings Ratio of 15.9x (based upon median 2021 street consensus estimate of $2.43 per Bloomberg)
M&A HISTORY Four most recent transactions: Company Location Completion Date Total Assets Carolina Financial Corporation Charleston, SC 5/1/2020 $5.0 billion Cardinal Financial Corporation McLean, VA 4/21/2017 $4.1 billion Bank of Georgetown Washington, DC 6/3/2016 $1.3 billion Virginia Commerce Bancorp, Inc. Arlington, VA 1/31/2014 $2.8 billion 32 Acquisitions completed since 1982
Appendix
Reconciliation of non-GAAP Items April 2021 (dollars in thousands) 3/31/2020 6/30/2020 9/30/2020 12/31/2020 3/31/2021 (1) Return on Average Tangible Equity (A) Net Income (GAAP) $40,183 $52,686 $103,784 $92,370 $106,898 (B) Number of Days in the Quarter 91 91 92 92 90 Average Total Shareholders' Equity (GAAP) $3,350,652 $3,921,289 $4,263,111 $4,319,252 $4,346,750 Less: Average Total Intangibles (1,507,272) (1,708,683) (1,826,057) (1,822,577) (1,825,639) (C) Average Tangible Equity (non-GAAP) $1,843,380 $2,212,606 $2,437,054 $2,496,675 $2,521,111 Formula: [(A) / (B)]*365 (or 366 for leap year) (C) Return on Average Tangible Equity (non-GAAP) 8.77% 9.58% 16.94% 14.72% 17.20%
Reconciliation of non-GAAP Items (cont.) April 2021 (dollars in thousands) 12/31/2020 3/31/2021 (2) Tangible Equity to Tangible Assets Total Assets (GAAP) $ 26,184,247 $ 27,030,755 Less: Total Intangibles (GAAP) (1,823,771) (1,829,495) Tangible Assets (non-GAAP) $ 24,360,476 $ 25,201,260 Total Shareholders' Equity (GAAP) $ 4,297,620 $ 4,332,698 Less: Total Intangibles (GAAP) (1,823,771) (1,829,495) Tangible Equity (non-GAAP) $ 2,473,849 $ 2,503,203 Tangible Equity to Tangible Assets (non-GAAP) 10.2% 9.9% (3) Tangible Book Value Per Share: Total Shareholders' Equity (GAAP) $ 4,297,620 $ 4,332,698 Less: Total Intangibles (GAAP) (1,823,771) (1,829,495) Tangible Equity (non-GAAP) $ 2,473,849 $ 2,503,203 ÷ EOP Shares Outstanding (Net of Treasury Stock) 129,188,507 129,175,800 Tangible Book Value Per Share (non-GAAP) $19.15 $19.38