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 26, 2023
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<br> <br>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<br> <br>Symbol(s) | Name of each exchange<br> <br>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 26, 2023 United Bankshares, Inc. (“United”) announced its financial results for the first quarter of 2023. 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 26, 2023, issued by United Bankshares, Inc. |
|---|---|
| 99.2 | Slide presentation of financial information for the first quarter of 2023 |
| 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 26, 2023 | 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 26, 2023 | Chief Financial Officer |
| (800) 445-1347 ext. 8716 |
United Bankshares, Inc. Announces Earnings
for the First Quarter of 2023
WASHINGTON, D.C. and CHARLESTON, WV-- United Bankshares, Inc. (NASDAQ: UBSI) (“United”), today reported earnings for the first quarter of 2023 of $98.3 million, or $0.73 per diluted share, as compared to earnings of $99.8 million, or $0.74 per diluted share, for the fourth quarter of 2022. Earnings for the first quarter of 2022 were $81.7 million, or $0.60 per diluted share.
First quarter of 2023 results produced annualized returns on average assets, average equity and average tangible equity, a non-GAAP measure, of 1.35%, 8.72% and 14.97%, respectively, compared to annualized returns on average assets, average equity and average tangible equity of 1.36%, 8.80% and 15.28%, respectively, for the fourth quarter of 2022. Annualized returns on average assets, average equity and average tangible equity were 1.13%, 6.96% and 11.63%, respectively, for the first quarter of 2022.
“Consistency, conservatism, and trust were the leading themes for UBSI in the first quarter,” stated Richard M. Adams, Jr., United’s Chief Executive Officer. “We continued to deliver strong financial performance, highlighted by a Return on Average Assets of 1.35%, a net interest margin of 3.63%, and an efficiency ratio of 51.46%. Our capital levels remain among the strongest in the industry, our asset quality metrics reflect our conservative underwriting, and our liquidity levels have us well-positioned to meet the challenges of the current environment.”
Adams further stated, “And as for trust, United was named during the first quarter by Newsweek magazine as the most trusted banking company in the nation. Trust is critical to the success of any organization, and this is especially true in banking. We are honored to receive this recognition, and appreciate the level of trust we have earned with our stakeholders.”
1
United Bankshares, Inc. Announces…
April 26, 2023
Page Two
First quarter of 2023 compared to the fourth quarter of 2022
Net interest income for the first quarter of 2023 decreased $15.1 million, or 6%, from the fourth quarter of 2022. 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 2023 also decreased $15.1 million, or 6%, from the fourth quarter of 2022. The decrease in net interest income and tax-equivalent net interest income was primarily due to higher interest expense driven by deposit rate repricing and higher average balances of long-term borrowings as well as lower acquired loan accretion income. This decrease in net interest income and tax-equivalent net interest income was partially offset by higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets. The interest rate spread for the first quarter of 2023 decreased 47 basis points from the fourth quarter of 2022 to 2.93% due to an 80 basis point increase in the average cost of funds partially offset by a 33 basis point increase in the yield on earning assets. The average yield on interest-bearing deposits increased 67 basis points to 1.83% from the fourth quarter of 2022. Average long-term borrowings increased $890.1 million, or 58%, from the fourth quarter of 2022. Acquired loan accretion income decreased $1.6 million to $3.1 million for the first quarter of 2023. The average yield on net loans and loans held for sale increased 37 basis points to 5.55% from the fourth quarter of 2022. An increase in average earning assets of $435.4 million, or 2%, from the fourth quarter of 2022 was driven by an increase in average net loans and loans held for sale of $327.9 million and an increase of $200.0 million in average short-term investments partially offset by a decrease of $92.5 million in average investment securities. The net interest margin of 3.63% for the first quarter of 2023 was a decrease of 24 basis points from the net interest margin of 3.87% for the fourth quarter of 2022.
The provision for credit losses was $6.9 million for the first quarter of 2023 as compared to $16.4 million for the fourth quarter of 2022. The provision for credit losses in the first quarter of 2023 was primarily driven by an increase in the allowance for loan & lease losses mainly due to a change in qualitative factors and the impact of reasonable and supportable forecasts of future macroeconomic conditions.
Noninterest income for the first quarter of 2023 increased $1.9 million, or 6%, from the fourth quarter of 2022. The increase in noninterest income was primarily due to an increase of $1.8 million in income from mortgage banking activities mainly due to a higher quarter end loan pipeline valuation.
Noninterest expense for the first quarter of 2023 was flat from the fourth quarter of 2022, decreasing $123 thousand, or less than 1%. The decrease in noninterest expense was primarily driven by a decrease in the expense for the reserve for unfunded loan commitments of $3.9 million and a decrease in employee compensation of $2.1 million. These decreases were partially offset by increases in employee benefits of $3.1 million, other noninterest expense of $1.6 million and FDIC insurance expense of $1.3 million. The decrease in the expense for the reserve for unfunded loan commitments was driven by a decrease in the outstanding balance of loan commitments at quarter end. The decrease in employee compensation was primarily driven by lower employee commissions related to mortgage banking production and lower employee incentives. The increase in employee benefits was due to a combination of higher Federal Insurance Contributions Act (FICA) and postretirement plan costs. Other noninterest expense in the fourth quarter of 2022 included a $3.9 million partial recovery of a prior accrual that related to a litigation matter with a former commercial customer which was settled during the fourth quarter. The increase in FDIC insurance expense was primarily due to a higher assessment rate.
For the first quarter of 2023, income tax expense was $24.4 million as compared to $26.6 million for the fourth quarter of 2022. The decrease of $2.2 million was due to a lower effective tax rate and lower earnings. United’s effective tax rate was 19.9% and 21.1% for the first quarter of 2023 and fourth quarter of 2022, respectively.
2
United Bankshares, Inc. Announces…
April 26, 2023
Page Three
First quarter of 2023 compared to the first quarter of 2022
Earnings for the first quarter of 2023 were $98.3 million, or $0.73 per diluted share, as compared to earnings of $81.7 million, or $0.60 per diluted share, for the first quarter of 2022.
Net interest income for the first quarter of 2023 increased $42.8 million, or 22%, from the first quarter of 2022. Tax-equivalent net interest income for the first quarter of 2023 also increased $42.8 million, or 22%, from the first quarter of 2022. The increase in net interest income and tax-equivalent net interest income was primarily due to the impact of rising market interest rates on earning assets, organic loan growth and a change in the asset mix to higher earning assets. These increases were partially offset by higher interest expense primarily driven by deposit rate repricing and higher average balances of long-term borrowings as well as lower income from Paycheck Protection Program (“PPP”) loan fees and acquired loan accretion. The interest rate spread for the first quarter of 2023 increased 4 basis points from the first quarter of 2022 to 2.93% due to a 194 basis point increase in the average yield on earning assets mostly offset by a 190 basis point increase in the average cost of funds. Average earning assets for the first quarter of 2023 increased $125.3 million, or less than 1%, from the first quarter of 2022 due to a $2.1 billion increase in average net loans and loans held for sale mostly offset by a $2.1 billion decrease in average short-term investments. The average yield on interest-bearing deposits increased 161 basis points to 1.83% from the first quarter of 2022. Average long-term borrowings increased $1.6 billion, or 195.8%, from the first quarter of 2022. Net PPP loan fee income was $210 thousand and $4.1 million for the first quarter of 2023 and 2022, respectively, a decrease of $3.9 million. Acquired loan accretion income was $3.1 million and $4.1 million for the first quarter of 2023 and 2022, respectively, a decrease of $1.0 million. The net interest margin of 3.63% for the first quarter of 2023 was an increase of 64 basis points from the net interest margin of 2.99% for the first quarter of 2022.
The provision for credit losses was $6.9 million for the first quarter of 2023 as compared to a net benefit of $3.4 million for the first quarter of 2022. The provision for credit losses in the first quarter of 2023 was primarily driven by an increase in the allowance for loan & lease losses mainly due to a change in qualitative factors and the impact of reasonable and supportable forecasts of future macroeconomic conditions.
Noninterest income for the first quarter of 2023 was $32.7 million, which was a decrease of $13.3 million, or 29%, from the first quarter of 2022. The decrease in noninterest income was driven by a $12.8 million decrease in income from mortgage banking activities mainly due to lower mortgage loan origination and sale volume and a lower margin on loans sold in the secondary market.
Noninterest expense for the first quarter of 2023 was $137.4 million, a decrease of $1.8 million, or 1%, from the first quarter of 2022 primarily due to decreases of $7.2 million in employee compensation and $2.6 million in the expense for the reserve for unfunded loan commitments partially offset by an increase of $4.6 million in other noninterest expense and an increase of $1.9 million in FDIC expense. The decrease in employee compensation was primarily due to lower employee commissions and incentives related to mortgage banking production as well as a lower employee headcount. The increase in other noninterest expense was primarily driven by higher amounts of certain general operating expenses. The increase in FDIC insurance expense was primarily due to a higher assessment rate.
For the first quarter of 2023, income tax expense was $24.4 million as compared to $20.1 million for the first quarter of 2022. The increase of $4.4 million was primarily due to higher earnings and a slightly higher effective tax rate. United’s effective tax rate was 19.9% for the first quarter of 2023 and 19.8% for the first quarter of 2022.
3
United Bankshares, Inc. Announces…
April 26, 2023
Page Four
Credit Quality
United’s asset quality continues to be sound. At March 31, 2023, non-performing loans were $42.4 million, or 0.21% of loans & leases, net of unearned income. Total non-performing assets were $46.5 million, including other real estate owned (“OREO”) of $4.1 million, or 0.15% of total assets at March 31, 2023. At December 31, 2022, non-performing loans were $58.6 million, or 0.29% of loans & leases, net of unearned income. Total non-performing assets were $60.7 million, including OREO of $2.1 million, or 0.21% of total assets at December 31, 2022.
On January 1, 2023, United adopted ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures” which eliminated the accounting guidance on troubled debt restructurings and enhanced creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty. After the adoption of ASU 2022-02, United no longer considers accruing restructured loans that are fewer than 90 days past due as non-performing loans or non-performing assets. December 31, 2022 non-performing loans and non-performing assets included $9.1 million of troubled debt restructurings that were on accruing status and fewer than 90 days past due but classified as non-performing loans and non-performing assets. Restructured loans that are on non-accrual or 90-day past due are included in the respective non-performing loan and non-performing asset categories at March 31, 2023. Refer to our first quarter 2023 Form 10-Q for additional information related to our adoption of this ASU.
As of March 31, 2023, the allowance for loan & lease losses was $240.5 million, or 1.17% of loans & leases, net of unearned income, as compared to $234.7 million, or 1.14% of loans & leases, net of unearned income, at December 31, 2022. Net charge-offs were $1.1 million for the first quarter of 2023 compared to net recoveries of $2.0 million for the first quarter of 2022. Annualized net charge-offs (recoveries) as a percentage of average loans & leases, net of unearned income were 0.02% and (0.04)% for the first quarter of 2023 and 2022, respectively. Net charge-offs were $1.2 million for the fourth quarter of 2022.
Capital
United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 14.7% at March 31, 2023, while estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 12.5%, 12.5% and 10.8%, respectively. The March 31, 2023 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%.
During the first quarter of 2022, United repurchased, under a previously announced stock repurchase plan, approximately 711 thousand shares of its common stock at an average price per share of $35.15. United did not repurchase any shares of its common stock during the first quarter of 2023.
4
United Bankshares, Inc. Announces…
April 26, 2023
Page Five
About United Bankshares, Inc.
As of March 31, 2023, United had consolidated assets of approximately $30.2 billion. United is the parent company of United Bank which comprises nearly 250 offices in Virginia, Maryland, Washington, D.C., North Carolina, South Carolina, Georgia, Pennsylvania, West Virginia, and Ohio. United’s stock is traded on the NASDAQ Global Select Market under the quotation symbol “UBSI”.
5
Cautionary Statements
The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing of itsMarch 31, 2023 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 estimates madeas of March 31, 2023 and will adjust amounts preliminarily reported, if necessary.
Use of non-GAAPFinancial Measures
This press release contains certain financial measures that are not recognized under U.S. generally acceptedaccounting principles (“GAAP”). Generally, United has presented these “non-GAAP” financial measures because it believes that these measures provide meaningful additional information toassist in the evaluation of United’s results of operations or financial position. Presentation of these non-GAAP financial measures is consistent with how United’s management evaluates itsperformance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the banking industry.
Specifically, this press release contains certain references to financial measures identified astax-equivalent (FTE) net interest income, average tangible equity, return on average tangible equity and tangible book value per share. Management believes thesenon-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 a non-GAAPmeasure, 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-exemptsources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition. The tax-equivalent adjustment combines amounts of interest income on federallynontaxable loans and investment securities using the statutory federal income tax rate of 21%.
Tangible equity is calculated asGAAP total shareholders’ equity minus total intangible assets. Tangible equity can thus be considered the most conservative valuation of the company. Tangible equity is also presented on a per common share basis and considering net income, areturn on average tangible equity. Management provides these amounts to facilitate 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 frommerger and acquisition activity, the “permanent” items of 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 asreconciliation 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
Inthis report, we have made various statements regarding current expectations or forecasts of future events, which speak only as of the date the statements are made. These statements are “forward-looking statements” within the meaning of thePrivate 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 theofficers 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 on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect. Therefore, undue reliance should not beplaced 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 uncertainty as to the extent of the duration, scope and impacts of theCOVID-19 pandemic on United, its colleagues, the communities United serves, and the domestic and global economy; uncertainty in U.S. fiscal and monetary policies, including the interest rate policies of theFederal Reserve Board; volatility and disruptions in global capital and credit markets, interest rate, securities market and monetary supply fluctuations; increasing rates of inflation and slower growth rates; reform of LIBOR; the nature, extent,timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those involving the Federal Reserve, FDIC, and CFPB; the effect of changes in the level of checking or savings account depositson United’s funding costs and net interest margin; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; competition; and changes in legislation or regulatory requirements. For more information aboutfactors that could cause actual results to differ materially from United’s expectations, refer to its reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in the Annual Report onForm 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov. Further, any forward-looking statement speaks only as ofthe 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 makeon related subjects in our filings with the SEC.
6
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>2023 | March<br>2022 | December<br>2022 | |||||||
| EARNINGS SUMMARY: | |||||||||
| Interest income | $ | 329,303 | $ | 202,795 | $ | 307,741 | |||
| Interest expense | 94,983 | 11,293 | 58,337 | ||||||
| Net interest income | 234,320 | 191,502 | 249,404 | ||||||
| Provision for credit losses | 6,890 | (3,410 | ) | 16,368 | |||||
| Noninterest income | 32,744 | 46,025 | 30,879 | ||||||
| Noninterest expense | 137,419 | 139,175 | 137,542 | ||||||
| Income before income taxes | 122,755 | 101,762 | 126,373 | ||||||
| Income taxes | 24,448 | 20,098 | 26,608 | ||||||
| Net income | $ | 98,307 | $ | 81,664 | $ | 99,765 | |||
| PER COMMON SHARE: | |||||||||
| Net income: | |||||||||
| Basic | $ | 0.73 | $ | 0.60 | $ | 0.74 | |||
| Diluted | 0.73 | 0.60 | 0.74 | ||||||
| Cash dividends | 0.36 | 0.36 | 0.36 | ||||||
| Book value | 34.14 | 33.77 | 33.52 | ||||||
| Closing market price | $ | 35.20 | $ | 34.88 | $ | 40.49 | |||
| Common shares outstanding: | |||||||||
| Actual at period end, net of treasury shares | 134,936,551 | 136,068,439 | 134,745,122 | ||||||
| Weighted average-basic | 134,411,166 | 136,058,328 | 134,267,532 | ||||||
| Weighted average-diluted | 134,840,328 | 136,435,229 | 134,799,436 | ||||||
| FINANCIAL RATIOS: | |||||||||
| Return on average assets | 1.35 | % | 1.13 | % | 1.36 | % | |||
| Return on average shareholders’ equity | 8.72 | % | 6.96 | % | 8.80 | % | |||
| Return on average tangible equity (non-GAAP)^(1)^ | 14.97 | % | 11.63 | % | 15.28 | % | |||
| Average equity to average assets | 15.49 | % | 16.22 | % | 15.45 | % | |||
| Net interest margin | 3.63 | % | 2.99 | % | 3.87 | % | |||
| March 31<br>2023 | December 31<br>2022 | March 31<br>2022 | |||||||
| PERIOD END BALANCES: | |||||||||
| Assets | $ | 30,182,241 | $ | 29,489,380 | $ | 29,365,511 | |||
| Earning assets | 26,826,111 | 26,135,400 | 25,958,745 | ||||||
| Loans & leases, net of unearned income | 20,612,159 | 20,558,166 | 18,392,086 | ||||||
| Loans held for sale | 68,176 | 56,879 | 340,040 | ||||||
| Investment securities | 4,777,587 | 4,872,604 | 5,020,712 | ||||||
| Total deposits | 22,284,586 | 22,303,166 | 23,474,301 | ||||||
| Shareholders’ equity | 4,606,537 | 4,516,193 | 4,595,140 |
Note: (1) See information under the “Selected Financial Ratios” table for a reconciliation of non-GAAP measure.
7
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 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March2023 | March2022 | December2022 | |||||||
| Interest & Loan Fees Income (GAAP) | $ | 329,303 | $ | 202,795 | $ | 307,741 | |||
| Tax equivalent adjustment | 1,135 | 1,109 | 1,149 | ||||||
| Interest & Fees Income (FTE) (non-GAAP) | 330,438 | 203,904 | 308,890 | ||||||
| Interest Expense | 94,983 | 11,293 | 58,337 | ||||||
| Net Interest Income (FTE) (non-GAAP) | 235,455 | 192,611 | 250,553 | ||||||
| Provision for Credit Losses | 6,890 | (3,410 | ) | 16,368 | |||||
| Noninterest Income: | |||||||||
| Fees from trust services | 4,780 | 4,127 | 4,411 | ||||||
| Fees from brokerage services | 4,200 | 4,552 | 3,729 | ||||||
| Fees from deposit services | 9,362 | 10,148 | 9,510 | ||||||
| Bankcard fees and merchant discounts | 1,707 | 1,379 | 1,673 | ||||||
| Other charges, commissions, and fees | 1,138 | 759 | 805 | ||||||
| Income from bank-owned life insurance | 1,891 | 2,194 | 1,402 | ||||||
| Income from mortgage banking activities | 6,384 | 19,203 | 4,620 | ||||||
| Mortgage loan servicing income | 2,276 | 2,387 | 2,218 | ||||||
| Net (losses) gains on investment securities | (405 | ) | (251 | ) | 51 | ||||
| Other noninterest income | 1,411 | 1,527 | 2,460 | ||||||
| Total Noninterest Income | 32,744 | 46,025 | 30,879 | ||||||
| Noninterest Expense: | |||||||||
| Employee compensation | 55,414 | 62,621 | 57,537 | ||||||
| Employee benefits | 13,435 | 12,851 | 10,296 | ||||||
| Net occupancy | 11,833 | 11,187 | 11,455 | ||||||
| Data processing | 7,473 | 7,371 | 7,463 | ||||||
| Amortization of intangibles | 1,279 | 1,379 | 1,379 | ||||||
| OREO expense | 667 | 182 | 202 | ||||||
| Net (gains) losses on the sale of OREO properties | (43 | ) | (33 | ) | 1,062 | ||||
| Equipment expense | 6,996 | 7,335 | 6,868 | ||||||
| FDIC insurance expense | 4,587 | 2,673 | 3,248 | ||||||
| Mortgage loan servicing expense and impairment | 1,884 | 1,643 | 1,826 | ||||||
| Expense for the reserve for unfunded loan commitments | 2,600 | 5,237 | 6,492 | ||||||
| Other noninterest expense | 31,294 | 26,729 | 29,714 | ||||||
| Total Noninterest Expense | 137,419 | 139,175 | 137,542 | ||||||
| Income Before Income Taxes (FTE)(non-GAAP) | 123,890 | 102,871 | 127,522 | ||||||
| Tax equivalent adjustment | 1,135 | 1,109 | 1,149 | ||||||
| Income Before Income Taxes (GAAP) | 122,755 | 101,762 | 126,373 | ||||||
| Taxes | 24,448 | 20,098 | 26,608 | ||||||
| Net Income | $ | 98,307 | $ | 81,664 | $ | 99,765 | |||
| MEMO: Effective Tax Rate | 19.92 | % | 19.75 | % | 21.06 | % |
8
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
Consolidated Balance Sheets
| March 2023Q-T-D Average | March 2022Q-T-D Average | March 312023 | December 312022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash & Cash Equivalents | $ | 1,238,563 | $ | 3,377,720 | $ | 1,918,693 | $ | 1,176,652 | ||||
| Securities Available for Sale | 4,450,510 | 4,453,139 | 4,419,413 | 4,541,925 | ||||||||
| Less: Allowance for credit losses | 0 | 0 | 0 | 0 | ||||||||
| Net available for sale securities | 4,450,510 | 4,453,139 | 4,419,413 | 4,541,925 | ||||||||
| Securities Held to Maturity | 1,020 | 1,020 | 1,020 | 1,020 | ||||||||
| Less: Allowance for credit losses | (18 | ) | (19 | ) | (18 | ) | (18 | ) | ||||
| Net held to maturity securities | 1,002 | 1,001 | 1,002 | 1,002 | ||||||||
| Equity Securities | 7,767 | 12,528 | 7,792 | 7,629 | ||||||||
| Other Investment Securities | 333,256 | 242,694 | 349,380 | 322,048 | ||||||||
| Total Securities | 4,792,535 | 4,709,362 | 4,777,587 | 4,872,604 | ||||||||
| Total Cash and Securities | 6,031,098 | 8,087,082 | 6,696,280 | 6,049,256 | ||||||||
| Loans held for sale | 41,015 | 327,673 | 68,176 | 56,879 | ||||||||
| Commercial Loans & Leases | 15,048,023 | 13,986,982 | 14,998,881 | 14,986,117 | ||||||||
| Mortgage Loans | 4,215,807 | 2,989,438 | 4,283,339 | 4,158,226 | ||||||||
| Consumer Loans | 1,400,008 | 1,253,905 | 1,348,678 | 1,435,820 | ||||||||
| Gross Loans | 20,663,838 | 18,230,325 | 20,630,898 | 20,580,163 | ||||||||
| Unearned income | (21,243 | ) | (27,766 | ) | (18,739 | ) | (21,997 | ) | ||||
| Loans & Leases, net of unearned income | 20,642,595 | 18,202,559 | 20,612,159 | 20,558,166 | ||||||||
| Allowance for Loan & Lease Losses | (234,809 | ) | (216,016 | ) | (240,491 | ) | (234,746 | ) | ||||
| Net Loans | 20,407,786 | 17,986,543 | 20,371,668 | 20,323,420 | ||||||||
| Mortgage Servicing Rights | 20,739 | 22,855 | 19,987 | 21,022 | ||||||||
| Goodwill | 1,888,889 | 1,887,197 | 1,888,889 | 1,888,889 | ||||||||
| Other Intangibles | 18,442 | 23,928 | 17,618 | 18,897 | ||||||||
| Operating Lease<br>Right-of-Use Asset | 74,163 | 80,446 | 76,884 | 71,144 | ||||||||
| Other Real Estate Owned | 2,211 | 14,302 | 4,086 | 2,052 | ||||||||
| Bank Owned Life Insurance | 480,690 | 478,575 | 482,098 | 480,184 | ||||||||
| Other Assets | 547,256 | 435,921 | 556,555 | 577,637 | ||||||||
| Total Assets | $ | 29,512,289 | $ | 29,344,522 | $ | 30,182,241 | $ | 29,489,380 | ||||
| MEMO: Interest-earning Assets | $ | 26,177,730 | $ | 26,052,404 | $ | 26,826,111 | $ | 26,135,400 | ||||
| Interest-bearing Deposits | $ | 15,186,632 | $ | 15,908,260 | $ | 15,576,926 | $ | 15,103,488 | ||||
| Noninterest-bearing Deposits | 6,897,030 | 7,466,710 | 6,707,660 | 7,199,678 | ||||||||
| Total Deposits | 22,083,662 | 23,374,970 | 22,284,586 | 22,303,166 | ||||||||
| Short-term Borrowings | 166,614 | 133,987 | 170,094 | 160,698 | ||||||||
| Long-term Borrowings | 2,417,999 | 817,363 | 2,788,103 | 2,197,656 | ||||||||
| Total Borrowings | 2,584,613 | 951,350 | 2,958,197 | 2,358,354 | ||||||||
| Operating Lease Liability | 78,729 | 85,110 | 81,394 | 75,749 | ||||||||
| Other Liabilities | 194,997 | 173,312 | 251,527 | 235,918 | ||||||||
| Total Liabilities | 24,942,001 | 24,584,742 | 25,575,704 | 24,973,187 | ||||||||
| Preferred Equity | 0 | 0 | 0 | 0 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| Common Equity | 4,570,288 | 4,759,780 | 4,606,537 | 4,516,193 | ||||||||
| Total Shareholders’ Equity | 4,570,288 | 4,759,780 | 4,606,537 | 4,516,193 | ||||||||
| Total Liabilities & Equity | $ | 29,512,289 | $ | 29,344,522 | $ | 30,182,241 | $ | 29,489,380 | ||||
| MEMO: Interest-bearing Liabilities | $ | 17,771,245 | $ | 16,859,610 | $ | 18,535,123 | $ | 17,461,842 |
9
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>2023 | March<br>2022 | December<br>2022 | |||||||
| Quarterly Share Data: | |||||||||
| Earnings Per Share: | |||||||||
| Basic | $ | 0.73 | $ | 0.60 | $ | 0.74 | |||
| Diluted | $ | 0.73 | $ | 0.60 | $ | 0.74 | |||
| Common Dividend Declared Per Share | $ | 0.36 | $ | 0.36 | $ | 0.36 | |||
| High Common Stock Price | $ | 42.45 | $ | 39.80 | $ | 44.15 | |||
| Low Common Stock Price | $ | 33.35 | $ | 33.58 | $ | 35.73 | |||
| Average Shares Outstanding (Net of Treasury Stock): | |||||||||
| Basic | 134,411,166 | 136,058,328 | 134,267,532 | ||||||
| Diluted | 134,840,328 | 136,435,229 | 134,799,436 | ||||||
| Common Dividends | $ | 48,720 | $ | 49,266 | $ | 48,603 | |||
| Dividend Payout Ratio | 49.56 | % | 60.33 | % | 48.72 | % | |||
| March 31<br>2023 | December 31<br>2022 | March 31<br>2022 | |||||||
| EOP Share Data: | |||||||||
| Book Value Per Share | $ | 34.14 | $ | 33.52 | $ | 33.77 | |||
| Tangible Book Value Per Share (non-GAAP) ^(1)^ | $ | 20.01 | $ | 19.36 | $ | 19.72 | |||
| 52-week High Common Stock Price | $ | 44.15 | $ | 44.15 | $ | 42.50 | |||
| Date | 11/11/22 | 11/11/22 | 5/18/21 | ||||||
| 52-week Low Common Stock Price | $ | 33.11 | $ | 33.11 | $ | 31.74 | |||
| Date | 5/2/22 | 5/2/22 | 09/20/21 | ||||||
| EOP Shares Outstanding (Net of Treasury Stock): | 134,936,551 | 134,745,122 | 136,068,439 | ||||||
| Memorandum Items: | |||||||||
| EOP Employees (full-time equivalent) | 2,836 | 2,856 | 3,090 | ||||||
| Note: | |||||||||
| (1) Tangible Book Value Per Share: | |||||||||
| Total Shareholders’ Equity (GAAP) | $ | 4,606,537 | $ | 4,516,193 | $ | 4,595,140 | |||
| Less: Total Intangibles | (1,906,507 | ) | (1,907,786 | ) | (1,912,278 | ) | |||
| Tangible Equity (non-GAAP) | $ | 2,700,030 | $ | 2,608,407 | $ | 2,682,862 | |||
| ÷ EOP Shares Outstanding (Net of Treasury Stock) | 134,936,551 | 134,745,122 | 136,068,439 | ||||||
| Tangible Book Value Per Share (non-GAAP) | $ | 20.01 | $ | 19.36 | $ | 19.72 |
10
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended<br>March 2023 | Three Months Ended<br>March 2022 | Three Months Ended<br>December 2022 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Average Balances and Yields: | AverageBalance | Interest^(1)^ | AverageRate^(1)^ | AverageBalance | Interest^(1)^ | AverageRate^(1)^ | AverageBalance | Interest^(1)^ | AverageRate^(1)^ | |||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Earning Assets: | ||||||||||||||||||||||||
| Federal funds sold and securities purchased under agreements to resell and other short-term<br>investments | $ | 936,394 | $ | 10,983 | 4.76 | % | $ | 3,028,826 | $ | 2,329 | 0.31 | % | $ | 736,412 | $ | 8,946 | 4.82 | % | ||||||
| Investment securities: | ||||||||||||||||||||||||
| Taxable | 4,404,864 | 36,259 | 3.29 | % | 4,264,820 | 17,505 | 1.64 | % | 4,508,813 | 34,568 | 3.07 | % | ||||||||||||
| Tax-exempt | 387,671 | 2,740 | 2.83 | % | 444,542 | 2,688 | 2.42 | % | 376,198 | 2,717 | 2.89 | % | ||||||||||||
| Total securities | 4,792,535 | 38,999 | 3.26 | % | 4,709,362 | 20,193 | 1.72 | % | 4,885,011 | 37,285 | 3.05 | % | ||||||||||||
| Loans and loans held for sale, net of unearned income ^(2)^ | 20,683,610 | 280,456 | 5.49 | % | 18,530,232 | 181,382 | 3.96 | % | 20,340,792 | 262,659 | 5.13 | % | ||||||||||||
| Allowance for loan losses | (234,809 | ) | (216,016 | ) | (219,933 | ) | ||||||||||||||||||
| Net loans and loans held for sale | 20,448,801 | 5.55 | % | 18,314,216 | 4.01 | % | 20,120,859 | 5.18 | % | |||||||||||||||
| Total earning assets | 26,177,730 | $ | 330,438 | 5.10 | % | 26,052,404 | $ | 203,904 | 3.16 | % | 25,742,282 | $ | 308,890 | 4.77 | % | |||||||||
| Other assets | 3,334,559 | 3,292,118 | 3,367,082 | |||||||||||||||||||||
| TOTAL ASSETS | $ | 29,512,289 | $ | 29,344,522 | $ | 29,109,364 | ||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||||||||
| Interest-bearing deposits | $ | 15,186,632 | $ | 68,592 | 1.83 | % | $ | 15,908,260 | $ | 8,561 | 0.22 | % | $ | 15,166,408 | $ | 44,265 | 1.16 | % | ||||||
| Short-term borrowings | 166,614 | 1,157 | 2.82 | % | 133,987 | 181 | 0.55 | % | 154,894 | 874 | 2.24 | % | ||||||||||||
| Long-term borrowings | 2,417,999 | 25,234 | 4.23 | % | 817,363 | 2,551 | 1.27 | % | 1,527,904 | 13,198 | 3.43 | % | ||||||||||||
| Total interest-bearing liabilities | 17,771,245 | 94,983 | 2.17 | % | 16,859,610 | 11,293 | 0.27 | % | 16,849,206 | 58,337 | 1.37 | % | ||||||||||||
| Noninterest-bearing deposits | 6,897,030 | 7,466,710 | 7,507,329 | |||||||||||||||||||||
| Accrued expenses and other liabilities | 273,726 | 258,422 | 254,451 | |||||||||||||||||||||
| TOTAL LIABILITIES | 24,942,001 | 24,584,742 | 24,610,986 | |||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | 4,570,288 | 4,759,780 | 4,498,378 | |||||||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 29,512,289 | $ | 29,344,522 | $ | 29,109,364 | ||||||||||||||||||
| NET INTEREST INCOME | $ | 235,455 | $ | 192,611 | $ | 250,553 | ||||||||||||||||||
| INTEREST RATE SPREAD | 2.93 | % | 2.89 | % | 3.40 | % | ||||||||||||||||||
| NET INTEREST MARGIN | 3.63 | % | 2.99 | % | 3.87 | % | ||||||||||||||||||
| (1) | The interest income and the yields on federally nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 21%. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| (2) | Nonaccruing loans are included in the daily average loan amounts outstanding. | |||||||||||||||||||||||
| --- | --- |
11
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>2023 | March<br>2022 | December2022 | ||||||||||
| Selected Financial Ratios: | ||||||||||||
| Return on Average Assets | 1.35 | % | 1.13 | % | 1.36 | % | ||||||
| Return on Average Shareholders’ Equity | 8.72 | % | 6.96 | % | 8.80 | % | ||||||
| Return on Average Tangible Equity (non-GAAP) ^(1)^ | 14.97 | % | 11.63 | % | 15.28 | % | ||||||
| Efficiency Ratio | 51.46 | % | 58.59 | % | 49.07 | % | ||||||
| Price / Earnings Ratio | 12.10 | x | 14.57 | x | 13.71 | x | ||||||
| Note: | ||||||||||||
| (1) Return on Average Tangible Equity: | ||||||||||||
| (a) Net Income (GAAP) | $ | 98,307 | $ | 81,664 | $ | 99,765 | ||||||
| (b) Number of Days | 90 | 90 | 92 | |||||||||
| Average Total Shareholders’ Equity (GAAP) | $ | 4,570,288 | $ | 4,759,780 | $ | 4,498,378 | ||||||
| Less: Average Total Intangibles | (1,907,331 | ) | (1,911,125 | ) | (1,908,656 | ) | ||||||
| (c) Average Tangible Equity (non-GAAP) | $ | 2,662,957 | $ | 2,848,655 | $ | 2,589,722 | ||||||
| Return on Average Tangible Equity (non-GAAP)\ [(a) / (b)]<br>x 365 / (c) | 14.97 | % | 11.63 | % | 15.28 | % | ||||||
| March 31<br>2023 | December 31<br>2022 | March 31<br>2022 | ||||||||||
| Selected Financial Ratios: | ||||||||||||
| Loans & Leases, net of unearned income / Deposit Ratio | 92.50 | % | 92.18 | % | 78.35 | % | ||||||
| Allowance for Loan & Lease Losses/ Loans & Leases, net of unearned<br>income | 1.17 | % | 1.14 | % | 1.17 | % | ||||||
| Allowance for Credit Losses ^(2)^/<br>Loans & Leases, net of unearned income | 1.40 | % | 1.37 | % | 1.37 | % | ||||||
| Nonaccrual Loans / Loans & Leases, net of unearned income | 0.14 | % | 0.12 | % | 0.19 | % | ||||||
| 90-Day Past Due Loans/ Loans & Leases, net of<br>unearned income | 0.06 | % | 0.08 | % | 0.08 | % | ||||||
| Non-performing Loans/ Loans & Leases, net of<br>unearned income | 0.21 | % | 0.29 | % | 0.43 | % | ||||||
| Non-performing Assets/ Total Assets | 0.15 | % | 0.21 | % | 0.32 | % | ||||||
| Primary Capital Ratio | 16.07 | % | 16.11 | % | 16.36 | % | ||||||
| Shareholders’ Equity Ratio | 15.26 | % | 15.31 | % | 15.65 | % | ||||||
| Price / Book Ratio | 1.03 | x | 1.21 | x | 1.03 | x |
Note:
| (2) | Includes allowances for loan losses and lending-related commitments. |
|---|
12
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>2023 | March<br>2022 | December2022 | |||||||
| Mortgage Banking Segment Data: | |||||||||
| Applications | $ | 505,840 | $ | 1,696,504 | $ | 447,951 | |||
| Loans originated | 312,077 | 1,006,363 | 399,706 | ||||||
| Loans sold | $ | 301,476 | $ | 1,170,124 | $ | 396,735 | |||
| Purchase money % of loans closed | 92 | % | 73 | % | 85 | % | |||
| Realized gain on sales and fees as a % of loans sold | 2.17 | % | 2.98 | % | 1.82 | % | |||
| Net interest income | $ | 2,122 | $ | 2,317 | $ | 2,654 | |||
| Other income | 10,861 | 23,397 | 10,693 | ||||||
| Other expense | 15,085 | 25,448 | 17,097 | ||||||
| Income taxes | (424 | ) | 57 | (810 | ) | ||||
| Net (loss) income | $ | (1,678 | ) | $ | 209 | $ | (2,940 | ) | |
| March 312023 | December 312022 | March 312022 | |||||||
| Period End Mortgage Banking Segment Data: | |||||||||
| Locked pipeline | $ | 92,639 | $ | 68,654 | $ | 412,809 | |||
| Balance of loans serviced | $ | 3,280,741 | $ | 3,381,485 | $ | 3,623,207 | |||
| Number of loans serviced | 22,436 | 23,510 | 24,677 |
13
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| March 312023 | December 312022 | March 31<br>2022 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Asset Quality Data: | |||||||||
| EOP Non-Accrual Loans | $ | 29,296 | $ | 23,685 | $ | 34,093 | |||
| EOP 90-Day Past Due Loans | 13,105 | 15,565 | 15,179 | ||||||
| EOP Restructured Loans (1) | n/a | 19,388 | 30,582 | ||||||
| Total EOP Non-performing Loans | $ | 42,401 | $ | 58,638 | $ | 79,854 | |||
| EOP Other Real Estate Owned | 4,086 | 2,052 | 13,641 | ||||||
| Total EOP Non-performing Assets | $ | 46,487 | $ | 60,690 | $ | 93,495 | |||
| Three Months Ended | |||||||||
| March 312023 | March 312022 | December 312022 | |||||||
| Allowance for Loan & Lease Losses: | |||||||||
| Beginning Balance | $ | 234,746 | $ | 216,016 | $ | 219,611 | |||
| Gross Charge-offs | (2,936 | ) | (1,476 | ) | (2,968 | ) | |||
| Recoveries | 1,791 | 3,456 | 1,734 | ||||||
| Net (Charge-offs) Recoveries | (1,145 | ) | 1,980 | (1,234 | ) | ||||
| Provision for Loan & Lease Losses | 6,890 | (3,402 | ) | 16,369 | |||||
| Ending Balance | $ | 240,491 | $ | 214,594 | $ | 234,746 | |||
| Reserve for lending-related commitments | 48,789 | 36,679 | 46,189 | ||||||
| Allowance for Credit Losses (2) | $ | 289,280 | $ | 251,273 | $ | 280,935 |
Notes:
| (1) | On January 1, 2023, United adopted ASU 2022-02, “Troubled<br>Debt Restructurings and Vintage Disclosures” which eliminated the accounting guidance on troubled debt restructurings and enhanced creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers<br>experiencing financial difficulty. After the adoption of ASU 2022-02, United no longer considers accruing restructured loans that are fewer than 90 days past due as<br>non-performing loans or non-performing assets. December 31, 2022 and March 31, 2022 non-performing loans and non-performing assets included $9,127 and $17,014, respectively, of troubled debt restructurings that were on accruing status and fewer than 90 days past due but classified as<br>non-performing loans and non-performing assets. Restructured loans that are on non-accrual or<br>90-days past due are included in the above respective non-performing loan and non-performing asset categories at March 31,<br>2023. |
|---|
Restructured loans with an aggregate balance of $7,186 and $13,568 at December 31, 2022 and March 31, 2022, respectively, were on nonaccrual status, but are not included in “EOP Non-Accrual Loans” above. Restructured loans with an aggregate balance of $3,075 at December 31, 2022 were 90 days past due, but not included in “EOP 90-Day Past Due Loans” above.
| (2) | Includes allowances for loan losses and lending-related commitments. |
|---|
14
EX-99.2
First Quarter 2023 Earnings Review United Bankshares, Inc. April 26, 2023 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 (i) United’s plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts; (ii) the effect of the COVID-19 pandemic; and (iii) 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 uncertainty as to the extent of the duration, scope and impacts of the COVID-19 pandemic on United, its colleagues, the communities United serves, and the domestic and global economy; (2) uncertainty in U.S. fiscal and monetary policies, including the interest rate policies of the Federal Reserve Board; (3) volatility and disruptions in global capital and credit markets; (4) interest rate, securities market and monetary supply fluctuations; (5) increasing rates of inflation and slower growth rates; (6) reform of LIBOR; (7) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those involving the Federal Reserve, FDIC, and CFPB; (8) the effect of changes in the level of checking or savings account deposits on United’s funding costs and net interest margin; (9) future provisions for credit losses on loans and debt securities; (10) changes in nonperforming assets; (11) competition; and (12) changes in legislation or regulatory requirements. 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. IMPORTANT INFORMATION
Achieved Net Income of $98.3 million and Diluted Earnings Per Share of $0.73 Generated Return on Average Assets of 1.35%, Return on Average Equity of 8.72%, and Return on Average Tangible Equity* of 14.97% Ranked #1 most trustworthy bank in Newsweek’s list of “Most Trustworthy Companies in America 2023” Quarterly dividend of $0.36 per share equates to a yield of ~4.2% (based upon recent prices) Asset quality remains sound and Non-Performing Assets remained low at 0.15% of Total Assets Strong expense control with an efficiency ratio of 51.46% Capital position remains robust and liquidity remains sound 1Q23 HIGHLIGHTS *Non-GAAP measure. Refer to appendix.
Linked-Quarter (LQ) Net Income was $98.3 million in 1Q23 compared to $99.8 million in 4Q22, with diluted EPS of $0.73 in 1Q23 compared to $0.74 in 4Q22. Net Interest Income decreased $15.1 million primarily due to higher interest expense driven by deposit rate repricing and higher average balances of FHLB borrowings as well as lower acquired loan accretion income. The decrease in net interest income was partially offset by higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets. Provision Expense was $6.9 million in 1Q23 compared to $16.4 million in 4Q22. The provision expense for 1Q23 was primarily driven by a change in qualitative factors and the impact of reasonable and supportable forecasts of future macroeconomic conditions. Noninterest Income increased $1.9 million primarily due to an increase of $1.8 million in income from mortgage banking activities mainly due to a higher quarter end loan pipeline valuation. Noninterest Expense decreased $0.1 million. The expense for reserve for unfunded loan commitments decreased $3.9 million and employee compensation decreased $2.1 million. Partially offsetting these decreases were increases in employee benefits of $3.1 million, other noninterest expense of $1.6 million and FDIC insurance expense of $1.3 million. EARNINGS SUMMARY
PERFORMANCE RATIOS *Non-GAAP measure. Refer to appendix. Strong profitability and expense control
Reported Net Interest Margin decreased from 3.87% to 3.63% LQ. Linked-quarter Net Interest Income (FTE) was down $15.1 million primarily due to higher interest expense driven by deposit rate repricing and higher average balances of FHLB borrowings as well as lower acquired loan accretion income. The decrease in net interest income was partially offset by higher interest income on earning assets driven by rising market interest rates and a change in the asset mix to higher earning assets. Approximately ~58% of the loan portfolio is fixed rate and ~42% is adjustable rate, while ~28% of the total portfolio is projected to reprice within the next 3 months. ~25% of the securities portfolio is floating rate. Securities balances of approximately ~$480 million with an average yield of ~2.4% are projected to roll off over the remainder of 2023, with ~$930 million at 2.9% in 2024. HTM securities are immaterial at $1.0 million, or 0.0% of total securities. The duration of the AFS portfolio is 4.2 years. Scheduled purchase accounting loan accretion is estimated at $7.4 million for the remainder of FY 2023 and $8.5 million for FY 2024. NET INTEREST INCOME AND MARGIN
Linked-Quarter loan balances increased $51 million primarily driven by Non Owner Occupied CRE loans and Residential Real Estate loans. Loan growth continues to be led by the North Carolina & South Carolina markets, with loan balances up 9.3% annualized in 1Q23. Non Owner Occupied CRE to Total Risk Based Capital was ~255% at 1Q23. CRE portfolio remains diversified among underlying collateral types. Office loans within Non Owner Occupied CRE total $1.05 billion (~5% of total loans). Top 25 Office loans make up ~40% of total Office balances. Weighted average LTV at origination for the Top 25 was ~62%. United has been disciplined in its approach to underwriting Office loans. The stringent underwriting process focuses on the underlying tenants, lease terms, sponsor support, location, property class, amenities, etc. Weighted average FICO of all consumer-related loan sectors is ~752. Total purchase accounting-related fair value discount on loans was $44 million as of 3/31/23. LOAN SUMMARY (EXCLUDES LOANS HELD FOR SALE) $ in millions
End of Period Balances (000s) 12/31/22 3/31/23 Non-Accrual Loans $23,685 $29,296 90-Day Past Due Loans $15,565 $13,105 Restructured Loans* $19,388 n/a Total Non-performing Loans $58,638 $42,401 Other Real Estate Owned $2,052 $4,086 Total Non-performing Assets $60,690 $46,487 Non-performing Loans / Loans 0.29% 0.21% Non-performing Assets / Total Assets 0.21% 0.15% Annualized Net Charge-offs / Average Loans 0.02% 0.02% Allowance for Loan & Lease Losses (ALLL) $234,746 $240,491 ALLL / Loans, net of earned income 1.14% 1.17% Allowance for Credit Losses (ACL)** $280,935 $289,280 ACL / Loans, net of earned income 1.37% 1.40% December 31, 2022 NPAs included ~$9.1M of performing TDRs that are no longer considered NPAs after the adoption of ASU 2022-02 (footnote below). Excluding the impact of the adoption of ASU 2022-02, NPAs would have decreased ~$5.1 million. ACL increased $8.3 million LQ primarily due to a change in qualitative factors and the impact of reasonable and supportable forecasts of future macroeconomic conditions. PPP loans are included within the ratios above ($35 million at 12/31/22 and $29 million at 3/31/23). CREDIT QUALITY *On January 1, 2023, United adopted ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures” which eliminated the accounting guidance on troubled debt restructurings and enhanced creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty. After the adoption of ASU 2022-02, United no longer considers accruing restructured loans that are fewer than 90 days past due as non-performing loans or non-performing assets **ACL is comprised of ALLL and the reserve for lending-related commitments
Strong core deposit base with 30% of deposits in Non Interest Bearing accounts. LQ deposits decreased $19 million driven by declines in Non Interest Bearing accounts and Interest Bearing Transaction accounts, partially offset by increases in Time Deposits. Brokered deposits total $522 million (only 2.3% of total deposits). Cumulative interest bearing deposit beta of ~37% and total deposit beta of ~25% since 1Q22. Enviable deposit franchise with an attractive mix of both high growth MSA’s and stable, rural markets with a dominant market share position. Top 10 Deposit Markets by MSA (as of 6/30/22) MSA Total Deposits In Market ($000) Number of Branches Rank Washington, DC 10,167,928 60 7 Charleston, WV 1,442,649 7 2 Morgantown, WV 1,215,804 6 2 Myrtle Beach, SC 881,399 11 5 Richmond, VA 818,349 12 9 Parkersburg, WV 738,802 4 1 Hagerstown, MD 657,411 6 3 Charlotte, NC 534,710 7 16 Wheeling, WV 520,156 6 2 Charleston, SC 519,950 8 11 $ in millions Source: S&P Global Market Intelligence DEPOSIT SUMMARY
Deposit Account Details ($ in millions) End of Period Ratios / Values 3/31/23 % of Total Deposits Estimated Uninsured Deposits (less affiliate and collateralized deposits) $7,333 33% Estimated Insured/Collateralized Deposits $14,952 67% Total Deposits $22,285 100% No borrowings from the FRB Discount Window or BTFP during 1Q23. Ample additional liquidity sources over and above those shown in the table above for contingency purposes. LIQUIDITY POSITION & ADDITIONAL DEPOSIT DETAIL *Does not include other sources of liquidity such as the FRB’s Bank Term Funding Program (BTFP), Fed Funds Lines, additional Reciprocal Deposit capacity, etc. Available Liquidity ($ in millions) 3/31/23 Cash & Cash Equivalents $1,919 Unpledged AFS Securities $1,303 Available FHLB Borrowing Capacity $2,198 Available FRB Discount Window Borrowing Capacity $2,843 Subtotal $8,263 Additional FHLB Capacity (with delivery of collateral) $3,621 Additional Brokered Deposit Capacity (based on internal policy) $2,820 Total Liquidity* $14,704 Liquidity remains strong with a granular deposit base and geographic diversification. Average deposit account size is ~$35 thousand with >600 thousand total deposit accounts. Total estimated uninsured/uncollateralized deposits declined from 37% at 12/31/22.
West Virginia #2 in the state (second only to Truist) with $6.1 billion in deposits. United ranks #1 or #2 in deposit market share within its top 5 largest markets in the state. 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. Washington D.C. MSA #1 regional bank (#7 overall) with $10.2 billion in deposits. United has increased deposit market share in the D.C. MSA from #15 in 2013 to #7 in 2022, with total deposits increasing from $2.1 billion to $10.2 billion. Virginia- #7 in the state with $9.2 billion (including VA deposits within the D.C. MSA). North Carolina #18 in the state with $2.2 billion. Select MSAs: #16 in Charlotte #26 in Raleigh #14 in Wilmington #11 in Greenville #1 in Washington #8 in Rocky Mount #10 in Fayetteville South Carolina #11 in the state with $1.9 billion. Select MSAs: #11 in Charleston #5 in Myrtle Beach #12 in Greenville #16 in Columbia ATTRACTIVE DEPOSIT MARKET SHARE POSITION Source: S&P Global Market Intelligence; Data as of 6/30/22
End of Period Ratios / Values 12/31/22 3/31/23** Common Equity Tier 1 Ratio 12.3% 12.5% Tier 1 Capital Ratio 12.3% 12.5% Total Risk Based Capital Ratio 14.4% 14.7% Leverage Ratio 10.8% 10.8% Total Equity to Total Assets 15.3% 15.3% *Tangible Equity to Tangible Assets (non-GAAP) 9.5% 9.5% Book Value Per Share $33.52 $34.14 *Tangible Book Value Per Share (non-GAAP) $19.36 $20.01 Capital ratios remain significantly above regulatory “Well Capitalized” levels and exceed all internal capital targets. United did not repurchase any common shares during 4Q22 or 1Q23. As of 3/31/23, there were 4,371,239 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. CAPITAL RATIOS AND PER SHARE DATA
Three Months Ended (000s) 12/31/22 3/31/23 Applications $447,951 $505,840 Loans Originated $399,706 $312,077 Loans Sold $396,735 $301,476 Purchase Money % 85% 92% Realized Gain on Sale Margin 1.82% 2.17% Locked Pipeline (EOP) $68,654 $92,639 Loans Held for Sale (EOP) $56,879 $68,176 Balance of Loans Serviced (EOP) $3,381,485 $3,280,741 Total Income $13,347 $12,983 Total Expense $17,097 $15,085 Income Before Tax $(3,750) $(2,102) Net Income After Tax $(2,940) $(1,678) 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 10 offices located throughout Virginia, Maryland, 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 $0.3 million in 4Q22 and $1.4 million in 1Q23. MORTGAGE BANKING
Select guidance is being provided for 2023. Our outlook may change if the expectations for these items vary from current expectations. Balance Sheet: Expect loan growth, excluding loans held for sale, to be in the low to mid single digits for the remainder of 2023 (annualized). Expect investment portfolio balances to decrease ~$450 million for the remainder of 2023. Expect deposit growth in the low single digits for the remainder of 2023. Net Interest Income / Net Interest Margin: Net interest income (non-FTE) expected to be in the range of $915 million to $935 million for 2023 (assumes an additional 25 bps fed funds rate increase in 2023). Expect the net interest margin to be under pressure in 2023 due to deposit remixing and late-cycle deposit rate increases. Expect full-cycle total deposit beta of ~38%. Provision Expense: Asset quality remains sound. Provision expense will be dependent on the future economic outlook, future credit trends within United’s portfolio, and loan growth. Expect near term net charge-offs to remain low. Current planning assumption for provision expense is $30 million for FY 2023. Non Interest Income: Expect non interest income to be in the range of $125 million to $135 million for 2023. Mortgage banking revenue will be subject to industry trends. Non Interest Expense: Expect non interest expense to be in the range of $555 million to $565 million. Effective Tax Rate: Estimated at approximately ~20.0%. Capital: Stock buyback will be market dependent. United’s capital position remains robust. 2023 OUTLOOK
Premier Mid-Atlantic and Southeast franchise with an attractive mix of high growth MSAs and smaller stable markets with a dominant market share position Consistently high-performing company with a culture of disciplined risk management and expense control 49 consecutive years of dividend increases evidences United’s strong profitability, solid asset quality, and sound capital management over a very long period of time Experienced management team with a proven track record of execution Committed to our mission of excellence in service to our employees, our customers, our shareholders and our communities Attractive valuation with a current Price-to-Earnings Ratio of 12.1x (based upon median 2023 street consensus estimate of $2.80 per Bloomberg) INVESTMENT THESIS
APPENDIX
(dollars in thousands) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 (1) Return on Average Tangible Equity (A) Net Income (GAAP) $81,664 $95,613 $102,585 $99,765 $98,307 (B) Number of Days in the Quarter 90 91 92 92 90 Average Total Shareholders' Equity (GAAP) $4,759,780 $4,606,186 $4,542,100 $4,498,378 $4,570,288 Less: Average Total Intangibles (1,911,125) (1,911,705) (1,910,054) (1,908,656) (1,907,331) (C) Average Tangible Equity (non-GAAP) $2,848,655 $2,694,481 $2,632,046 $2,589,722 $2,662,957 Formula: [(A) / (B)]*365 (or 366 for leap year) (C) Return on Average Tangible Equity (non-GAAP) 11.63% 14.23% 15.46% 15.28% 14.97% RECONCILIATION OF NON-GAAP ITEMS
(dollars in thousands) 12/31/2022 3/31/2023 (2) Tangible Equity to Tangible Assets Total Assets (GAAP) $ 29,489,380 $ 30,182,241 Less: Total Intangibles (GAAP) (1,907,786) (1,906,507) Tangible Assets (non-GAAP) $ 27,581,594 $ 28,275,734 Total Shareholders' Equity (GAAP) $ 4,516,193 $ 4,606,537 Less: Total Intangibles (GAAP) (1,907,786) (1,906,507) Tangible Equity (non-GAAP) $ 2,608,407 $ 2,700,030 Tangible Equity to Tangible Assets (non-GAAP) 9.5% 9.5% (3) Tangible Book Value Per Share: Total Shareholders' Equity (GAAP) $ 4,516,193 $ 4,606,537 Less: Total Intangibles (GAAP) (1,907,786) (1,906,507) Tangible Equity (non-GAAP) $ 2,608,407 $ 2,700,030 ÷ EOP Shares Outstanding (Net of Treasury Stock) 134,745,122 134,936,551 Tangible Book Value Per Share (non-GAAP) $19.36 $20.01 RECONCILIATION OF NON-GAAP ITEMS (CONT.)