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):
January 28, 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 January 28, 2021 United Bankshares, Inc. (“United”) announced its financial results for the fourth quarter and year of 2020. 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 January 28, 2021, issued by United Bankshares, Inc. |
|---|---|
| 99.2 | Slide presentation of financial information for the fourth quarter of 2020 |
| 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: January 28, 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 |
|---|---|
| January 28, 2021 | Chief Financial Officer |
| (800) 445-1347 ext. 8716 |
United Bankshares, Inc. Announces Record Earnings
for the Year 2020
WASHINGTON, D.C. and CHARLESTON, WV-- United Bankshares, Inc. (NASDAQ: UBSI) (“United”), today reported earnings for the fourth quarter and the year of 2020. Earnings for the fourth quarter of 2020 were $92.4 million, or $0.71 per diluted share, as compared to earnings of $63.3 million, or $0.62 per diluted share for the fourth quarter of 2019. Earnings for the year of 2020 were a record $289.0 million as compared to earnings of $260.1 million for the year of 2019. Earnings per diluted share for the year of 2020 were $2.40 as compared to earnings per diluted share of $2.55 for the year of 2019.
Fourth quarter 2020 results produced annualized returns on average assets, average equity and average tangible equity of 1.41%, 8.51% and 14.72%, respectively compared to annualized returns on average assets, average equity and average tangible equity of 1.29%, 7.42% and 13.38%, respectively, for the fourth quarter of 2019. For the year of 2020, United’s returns on average assets, average equity and average tangible equity were 1.20%, 7.30% and 12.90%, respectively compared to returns on average assets, average equity and average tangible equity of 1.34%, 7.80% and 14.26%, respectively, for the year of 2019.
The record net income for the year of 2020, as compared to the year of 2019, was primarily due to higher income from mortgage banking activities, driven by an elevated volume of mortgage loan originations and sales in the secondary market, as well as the impact of the Carolina Financial Corporation (“Carolina Financial”) acquisition. Partially offsetting these increases in net income was higher provision for credit losses resulting from an adverse future macroeconomic forecast as a result of the coronavirus (“COVID-19”) pandemic under the Current Expected Credit Loss (“CECL”) accounting standard and merger-related expenses related to the Carolina Financial acquisition.
“During the many challenges of 2020, United delivered a strong performance for our shareholders, our team members, our customers and our communities,” stated Richard M. Adams, United’s Chairman of the Board and Chief Executive Officer. “For 2020, we earned a record $289 million, increased our dividend for the 47^th^ consecutive year, successfully completed the largest acquisition in our company’s history with Carolina Financial, and maintained our focus on meeting the needs of our customers, our employees and our communities during the COVID-19 pandemic. We enter 2021 with strong credit quality and regulatory ratios that position us well for continued success.”
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 fourth quarter and year of 2020 reflected higher average balances, income, and expense as compared to the fourth quarter and year of 2020. In addition, the fourth quarter and year of 2020 included merger-related expenses of $558 thousand and $54.2 million, respectively, as compared to $589 thousand for both the fourth quarter and year of 2019.
United Bankshares, Inc. Announces...
January 28, 2021
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Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2020 was $192.0 million, which was an increase of $50.7 million or 36% from the fourth quarter of 2019, 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 fourth quarter of 2020 increased $50.9 million or 36% from the fourth quarter of 2019 to $193.0 million. Average earning assets for the fourth quarter of 2020 increased $6.0 billion or 35% from the fourth quarter of 2019 due to a $4.4 billion increase in average net loans and loans held for sale, a $1.2 billion increase in average short-term investments and a $395.1 million increase in average investment securities. The net interest spread for the fourth quarter of 2020 increased 36 basis points from the fourth quarter of 2019 due to a 102 basis point decrease in the average cost of funds primarily due to the decline in market interest rates from the fourth quarter of 2019. The increase in the net interest spread was partially offset by a 66 basis point decrease in the average yield on earning assets from the fourth quarter of 2019 due to the decline in market interest rates and the lower yield on PPP loans. Loan accretion on acquired loans was $10.9 million and $8.6 million for the fourth quarter of 2020 and 2019, respectively, an increase of $2.3 million, primarily driven by the accretion on loans acquired from the Carolina Financial acquisition. The net interest margin of 3.33% for the fourth quarter of 2020 was an increase of 4 basis points from the net interest margin of 3.29% for the fourth quarter of 2019.
Net interest income for the year of 2020 was $689.8 million, which was an increase of $111.9 million or 19% from the year of 2019, primarily due to an increase in average earning assets from the Carolina Financial acquisition. Tax-equivalent net interest income for the year of 2020 was $693.7 million, an increase of $112.0 million or 19% from the year of 2019. Average earning assets for the year of 2020 increased $4.2 billion or 25% from the year of 2019 due to a $3.2 billion increase in average net loans and loans held for sale, a $767.9 million increase in average short-term investments and a $293.2 million increase in average investment securities. The net interest spread for the year of 2020 increased 8 basis points from the year of 2019 due to an 80 basis point decrease in the average cost of funds partially offset by a 72 basis point decrease in the average yield on earning assets. Loan accretion on acquired loans was $41.8 million and $38.8 million for the year of 2020 and 2019, respectively, an increase of $3.0 million. The net interest margin of 3.24% for the year of 2020 was a decrease of 15 basis points from the net interest margin of 3.39% for the year of 2019.
On a linked-quarter basis, net interest income for the fourth quarter of 2020 increased $6.3 million or 3% from the third quarter of 2020. United’s tax-equivalent net interest income for the fourth quarter of 2020 also increased $6.3 million or 3% from the third quarter of 2020. The net interest spread for the fourth quarter of 2020 increased 21 basis points from the third quarter of 2020 due to an 18 basis point decrease in the average cost of funds and a 3 basis point increase in the average yield on earning assets. PPP loan fee income increased $2.2 million to $7.0 million in the fourth quarter of 2020 from the third quarter of 2020, driven by loan forgiveness. Average earning assets decreased approximately $302.1 million or 1% from the third quarter of 2020, driven by a decrease in average net loans and loans held for sale of $165.3 million and average short-term investments of $199.8 million from the third quarter of 2020. Loan accretion on acquired loans decreased approximately $815 thousand from the third quarter of 2020. The net interest margin of 3.33% for the fourth quarter of 2020 was an increase of 15 basis points from the net interest margin of 3.18% for the third quarter of 2020.
United Bankshares, Inc. Announces...
January 28, 2021
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Credit Quality
United’s asset quality continues to be sound relative to the current economic environment. At December 31, 2020, nonperforming loans were $132.2 million, or 0.75% of loans & leases, net of unearned income, as compared to nonperforming loans of $131.1 million, or 0.96% of loans & leases, net of unearned income, at December 31, 2019. As of December 31, 2020, the allowance for loan losses was $235.8 million or 1.34% of loans & leases, net of unearned income, as compared to $77.1 million or 0.56% of loans & leases, net of unearned income, at December 31, 2019. The increase in the allowance for loan losses was due to the adoption of CECL, the impact of COVID-19 and the loans acquired from Carolina Financial. Total nonperforming assets of $154.8 million, including OREO of $22.6 million at December 31, 2020, represented 0.59% of total assets as compared to nonperforming assets of $146.6 million or 0.75% of total assets at December 31, 2019.
For the quarters ended December 31, 2020 and 2019, the provision for credit losses was $16.8 million and $5.9 million, respectively. The increase in the provision in relation to the prior year quarter was driven by the impact from the reasonable and supportable forecasts of future macroeconomic conditions used in the estimation of expected credit losses adversely impacted by the COVID-19 pandemic under CECL. The provision for the year of 2020 was $106.6 million as compared to $21.3 million for the year of 2019. In addition to the impact of reasonable and supportable forecasts on reserves, the increase year over year was also driven by the provision for credit losses of $29.0 million recorded on purchased non-credit deteriorated (“non-PCD”) loans from the Carolina Financial acquisition. Net charge-offs were $6.9 million and $5.9 million for the fourth quarter of 2020 and 2019, respectively. Net charge-offs were $23.6 million and $21.0 million for the year of 2020 and 2019, respectively. Annualized net charge-offs as a percentage of average loans & leases, net of unearned income were 0.16% and 0.14% for the fourth quarter and year of 2020, respectively. On a linked-quarter basis, the provision for credit losses remained flat at $16.8 million.
Noninterest Income
Noninterest income for the fourth quarter of 2020 was $94.1 million, which was an increase of $56.8 million or 153% from the fourth quarter of 2019. The increase was driven by a $53.2 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 fourth quarter of 2020 also included $2.3 million in mortgage loan servicing income.
Noninterest income for the year of 2020 was $354.7 million, which was an increase of $204.3 million or 136% from the year of 2019. The increase was due mainly to an increase of $189.1 million in income from mortgage banking activities. Net gains on investment securities were $3.2 million for the year of 2020 as compared to a net gain of $175 thousand for the year of 2019, an increase of approximately $3.0 million. Noninterest income for the year of 2020 also included $6.2 million in mortgage loan servicing income and a $2.2 million gain on the sale of a bank premises.
United Bankshares, Inc. Announces...
January 28, 2021
Page Four
On a linked-quarter basis, noninterest income for the fourth quarter of 2020 decreased $41.4 million or 31% from the third quarter of 2020 primarily due to a decrease of $38.7 million in income from mortgage banking activities. Mortgage loan originations and sales volumes remained strong in the fourth quarter of 2020. The decrease in the fourth quarter of 2020 in relation to the third quarter of 2020 was primarily due to lower balances and volume of loans held for sale and loan commitments. The third quarter of 2020 also included a $2.2 million gain on the sale of a bank premises.
Noninterest Expense
Noninterest expense for the fourth quarter of 2020 was $156.1 million, an increase of $59.2 million or 61% from the fourth quarter of 2019. Employee compensation increased $32.6 million from the fourth quarter of 2019 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 fourth quarter of 2019 due to a $10.8 million increase in other expense, a $3.4 million increase in mortgage loan servicing expense and impairment, a $3.0 million increase in employee benefits, a $2.9 million increase in equipment expense and a $2.2 million increase in net occupancy expense. Within other expense, the largest drivers of the increase included an increase in the expense for the reserve for unfunded commitments of $3.3 million and an increase in the amortization of income tax credits of $1.9 million. The increases in employee benefits, equipment expense and occupancy expense were mainly from the Carolina Financial acquisition.
Noninterest expense for the year of 2020 was $578.2 million, an increase of $195.6 million or 51% from the year of 2019. Employee compensation increased $100.7 million from the year of 2019 due to the Carolina Financial acquisition as well as due to higher employee incentives and commissions expense mainly related to higher mortgage banking production. Additional employee benefit expense of $13.1 million and occupancy expense of $6.5 million were recognized in the year of 2020 mainly from the Carolina Financial acquisition. Data processing expense increased $13.2 million (including the Carolina Financial data processing contract termination penalty of $9.7 million recorded in the second quarter of 2020), mortgage loan servicing expense and impairment increased $9.0 million (including $1.4 million temporary impairment on mortgage servicing rights) and prepayment penalties on the early payoff of long-term FHLB advances increased $5.3 million. Other expense also increased $39.1 million due to an increase in merger-related expenses of $10.7 million associated with the Carolina Financial acquisition, an increase in the expense for the reserve for unfunded commitments of $11.0 million, and an increase in the amortization of income tax credits of $5.7 million which reduces the effective tax rate.
On a linked-quarter basis, noninterest expense for the fourth quarter of 2020 decreased $15.5 million or 9% from the third quarter of 2020 due primarily to the $10.4 million in prepayment penalties on the early payoff of three long-term FHLB advances recognized in the third quarter of 2020. Additionally, employee compensation decreased $7.5 million due a decline in salaries expense as a result of fewer employees and lower employee incentives and commissions expense recognized in the fourth quarter of 2020 related primarily to mortgage banking production.
United Bankshares, Inc. Announces...
January 28, 2021
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Income Tax Expense
For the fourth quarter and year of 2020, income tax expense was $20.8 million and $70.7 million as compared to $12.5 million and $64.3 million, respectively, for the fourth quarter and year of 2019. The increase in the comparative quarter and year periods was due to overall higher earnings. On a linked-quarter basis, income tax expense decreased $8.1 million due to lower earnings and a lower effective tax rate primarily as a result of an increased benefit from income tax credits. United’s effective tax rate was 18.4% for the fourth quarter of 2020, 16.5% for the fourth quarter of 2019 and 21.8% for the third quarter of 2020. For the year of 2020 and 2019, United’s effective tax rate was 19.7% and 19.8%, respectively.
Regulatory Capital
United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 15.6% at December 31, 2020 while its estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.3%, 13.3% and 10.3%, respectively. The December 31, 2020 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 December 31, 2020, United had consolidated assets of approximately $26.2 billion. United is the parent company of United Bank, the largest community bank headquartered in the D.C. Metro region. United Bank has 230 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...
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Cautionary Statements
The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing ofits December 31, 2020 consolidated financial statements on Form 10-K. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions andestimates made as of December 31, 2020 and will adjust amounts preliminarily reported, if necessary.
Use of non-GAAP Financial Measures
This press release contains certain financialmeasures that are not recognized under U.S. generally accepted accounting principles (“GAAP”). Generally, United has presented these “non-GAAP” financial measures because it believes thatthese measures provide meaningful additional information to assist in the evaluation of United’s results of operations or financial position. Presentation of these non-GAAP financial measures isconsistent with how United’s management evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in theevaluation of companies in the banking industry.
Specifically, this press release contains certain references tofinancial measures identified as tax-equivalent (FTE) net interest income, tangible equity, return on 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 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, 2019, 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
FINANCIAL SUMMARY
(InThousands Except for Per Share Data)
| Three Months Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December<br><br><br>2020 | December<br><br><br>2019 | December<br><br><br>2020 | December<br><br><br>2019 | |||||
| EARNINGS SUMMARY: | ||||||||
| Interest income | $ | 208,914 | $ | 183,869 | $ | 798,382 | $ | 762,562 |
| Interest expense | 16,925 | 42,586 | 108,609 | 184,640 | ||||
| Net interest income | 191,989 | 141,283 | 689,773 | 577,922 | ||||
| Provision for credit losses | 16,751 | 5,867 | 106,562 | 21,313 | ||||
| Noninterest income | 94,082 | 37,242 | 354,746 | 150,484 | ||||
| Noninterest expense | 156,117 | 96,900 | 578,217 | 382,654 | ||||
| Income before income taxes | 113,203 | 75,758 | 359,740 | 324,439 | ||||
| Income taxes | 20,833 | 12,473 | 70,717 | 64,340 | ||||
| Net income | $ | 92,370 | $ | 63,285 | $ | 289,023 | $ | 260,099 |
| PER COMMON SHARE: | ||||||||
| Net income: | ||||||||
| Basic | $ | 0.71 | $ | 0.62 | $ | 2.40 | $ | 2.55 |
| Diluted | 0.71 | 0.62 | 2.40 | 2.55 | ||||
| Cash dividends | $ | 0.35 | $ | 0.35 | 1.40 | 1.37 | ||
| Book value | 33.27 | 33.12 | ||||||
| Closing market price | $ | 32.40 | $ | 38.66 | ||||
| Common shares outstanding: | ||||||||
| Actual at period end, net of treasury shares | 129,188,507 | 101,553,671 | ||||||
| Weighted average-basic | 129,371,600 | 101,250,489 | 120,017,247 | 101,585,599 | ||||
| Weighted average-diluted | 129,479,390 | 101,537,640 | 120,090,232 | 101,852,577 | ||||
| FINANCIAL RATIOS: | ||||||||
| Return on average assets | 1.41% | 1.29% | 1.20% | 1.34% | ||||
| Return on average shareholders’ equity | 8.51% | 7.42% | 7.30% | 7.80% | ||||
| Return on average tangible equity (non-GAAP) ^(1)^ | 14.72% | 13.38% | 12.90% | 14.26% | ||||
| Average equity to average assets | 16.54% | 17.39% | 16.39% | 17.13% | ||||
| Net interest margin | 3.33% | 3.29% | 3.24% | 3.39% | ||||
| **** | December 31<br> <br>2020 | **** | December 31<br> <br>2019 | **** | December 31<br> <br>2018 | **** | September 30<br> <br>2020 | |
| PERIOD END BALANCES: | ||||||||
| Assets | $ | 26,184,247 | $ | 19,662,324 | $ | 19,250,498 | $ | 25,931,308 |
| Earning assets | 23,172,403 | 17,344,638 | 16,971,602 | 22,903,067 | ||||
| Loans & leases, net of unearned income | 17,591,413 | 13,712,129 | 13,422,222 | 17,930,231 | ||||
| Loans held for sale | 718,937 | 387,514 | 249,846 | 812,084 | ||||
| Investment securities | 3,186,184 | 2,669,797 | 2,543,727 | 3,007,263 | ||||
| Total deposits | 20,585,160 | 13,852,421 | 13,994,749 | 20,251,539 | ||||
| Shareholders’ equity | 4,297,620 | 3,363,833 | 3,251,624 | 4,267,441 |
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 | ||||||||||
| December | December | September | June | March | ||||||
| 2020 | 2019 | 2020 | 2020 | 2020 | ||||||
| Interest & Loan Fees Income (GAAP) | $ | 208,914 | $ | 183,869 | $ | 210,269 | $ | 198,717 | $ | 180,482 |
| Tax equivalent adjustment | 1,042 | 851 | 1,046 | 1,018 | 782 | |||||
| Interest & Fees Income (FTE) (non-GAAP) | 209,956 | 184,720 | 211,315 | 199,735 | 181,264 | |||||
| Interest Expense | 16,925 | 42,586 | 24,605 | 28,115 | 38,964 | |||||
| Net Interest Income (FTE) (non-GAAP) | 193,031 | 142,134 | 186,710 | 171,620 | 142,300 | |||||
| Provision for Credit Losses | 16,751 | 5,867 | 16,781 | 45,911 | 27,119 | |||||
| Noninterest Income: | ||||||||||
| Fees from trust services | 3,585 | 3,597 | 3,574 | 3,261 | 3,483 | |||||
| Fees from brokerage services | 3,125 | 2,468 | 3,066 | 2,651 | 2,916 | |||||
| Fees from deposit services | 9,501 | 8,549 | 9,320 | 8,055 | 7,957 | |||||
| Bankcard fees and merchant discounts | 1,129 | 1,154 | 1,226 | 718 | 993 | |||||
| Other charges, commissions, and fees | 753 | 576 | 715 | 610 | 518 | |||||
| Income from bank-owned life insurance | 1,479 | 2,906 | 2,059 | 1,291 | 2,388 | |||||
| Income from mortgage banking activities | 70,793 | 17,547 | 109,457 | 68,213 | 17,631 | |||||
| Mortgage loan servicing income | 2,334 | 0 | 2,345 | 1,534 | 0 | |||||
| Net gain on the sale of bank premises | 0 | 0 | 2,229 | 0 | 0 | |||||
| Net gains on investment securities | 589 | 109 | 860 | 1,510 | 196 | |||||
| Other noninterest income | 794 | 336 | 617 | 547 | 724 | |||||
| Total Noninterest Income | 94,082 | 37,242 | 135,468 | 88,390 | 36,806 | |||||
| Noninterest Expense: | ||||||||||
| Employee compensation | 77,001 | 44,399 | 84,455 | 68,664 | 44,541 | |||||
| Employee benefits | 12,103 | 9,121 | 13,202 | 12,779 | 10,786 | |||||
| Net occupancy | 10,979 | 8,734 | 10,944 | 10,318 | 9,062 | |||||
| Data processing | 7,280 | 5,727 | 6,708 | 15,926 | 5,506 | |||||
| Amortization of intangibles | 1,691 | 1,754 | 1,691 | 1,646 | 1,577 | |||||
| OREO expense | 3,069 | 1,450 | 1,166 | 607 | 906 | |||||
| Equipment expense | 6,396 | 3,522 | 5,616 | 5,004 | 3,845 | |||||
| FDIC insurance expense | 2,250 | 1,005 | 2,700 | 2,782 | 2,400 | |||||
| Mortgage loan servicing expense and impairment | 3,482 | 119 | 3,301 | 2,510 | 138 | |||||
| Prepayment penalties on FHLB borrowings | 0 | 0 | 10,385 | 0 | 0 | |||||
| Other expenses | 31,866 | 21,069 | 31,425 | 29,138 | 22,372 | |||||
| Total Noninterest Expense | 156,117 | 96,900 | 171,593 | 149,374 | 101,133 | |||||
| Income Before Income Taxes (FTE) (non-GAAP) | 114,245 | 76,609 | 133,804 | 64,725 | 50,854 | |||||
| Tax equivalent adjustment | 1,042 | 851 | 1,046 | 1,018 | 782 | |||||
| Income Before Income Taxes (GAAP) | 113,203 | 75,758 | 132,758 | 63,707 | 50,072 | |||||
| Taxes | 20,833 | 12,473 | 28,974 | 11,021 | 9,889 | |||||
| Net Income | $ | 92,370 | $ | 63,285 | $ | 103,784 | $ | 52,686 | $ | 40,183 |
| MEMO: Effective Tax Rate | 18.40% | 16.46% | 21.82% | 17.30% | 19.75% |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Consolidated Statements of Income | ||||||
|---|---|---|---|---|---|---|
| Year Ended | ||||||
| December | December | |||||
| 2020 | 2017 | |||||
| Interest & Loan Fees Income (GAAP) | 798,382 | 762,562 | 717,715 | $ 623,806 | ||
| Tax equivalent adjustment | 3,888 | 3,735 | 4,328 | 8,429 | ||
| Interest & Fees Income (FTE) (non-GAAP) | 802,270 | 766,297 | 722,043 | 632,235 | ||
| Interest Expense | 108,609 | 184,640 | 129,070 | 74,809 | ||
| Net Interest Income (FTE) (non-GAAP) | 693,661 | 581,657 | 592,973 | 557,426 | ||
| Provision for Credit Losses | 106,562 | 21,313 | 22,013 | 28,406 | ||
| Noninterest Income: | ||||||
| Fees from trust services | 13,903 | 13,873 | 12,930 | 11,801 | ||
| Fees from brokerage services | 11,758 | 10,136 | 9,347 | 7,730 | ||
| Fees from deposit services | 34,833 | 33,768 | 33,973 | 33,622 | ||
| Bankcard fees and merchant discounts | 4,066 | 4,674 | 5,168 | 4,795 | ||
| Other charges, commissions, and fees | 2,596 | 2,241 | 2,228 | 2,057 | ||
| Income from bank-owned life insurance | 7,217 | 7,339 | 5,045 | 5,110 | ||
| Income from mortgage banking activities | 266,094 | 76,951 | 58,109 | 58,907 | ||
| Mortgage loan servicing income | 6,213 | 0 | 0 | 0 | ||
| Net gain on the sale of bank premises | 2,229 | 0 | 2,763 | 0 | ||
| Net gains (losses) on investment securities | 3,155 | 175 | (2,618 | 5,584 | ||
| Other noninterest income | 2,682 | 1,327 | 1,767 | 2,039 | ||
| Total Noninterest Income | 354,746 | 150,484 | 128,712 | 131,645 | ||
| Noninterest Expense: | ||||||
| Employee compensation | 274,661 | 173,962 | 164,468 | 166,393 | ||
| Employee benefits | 48,870 | 35,745 | 36,172 | 34,997 | ||
| Net occupancy | 41,303 | 34,850 | 36,462 | 39,067 | ||
| Data processing | 35,420 | 22,232 | 23,800 | 21,019 | ||
| Amortization of intangibles | 6,605 | 7,016 | 8,039 | 7,772 | ||
| OREO expense | 5,748 | 5,336 | 3,444 | 6,003 | ||
| Equipment expense | 20,861 | 14,210 | 13,846 | 10,528 | ||
| FDIC insurance expense | 10,132 | 8,070 | 11,464 | 7,051 | ||
| Mortgage loan servicing expense and impairment | 9,431 | 423 | 271 | 263 | ||
| Prepayment penalties on FHLB borrowings | 10,385 | 5,105 | 0 | 0 | ||
| Other expenses | 114,801 | 75,705 | 70,213 | 74,316 | ||
| Total Noninterest Expense | 578,217 | 382,654 | 368,179 | 367,409 | ||
| Income Before Income Taxes (FTE) (non-GAAP) | 363,628 | 328,174 | 331,493 | 293,256 | ||
| Tax equivalent adjustment | 3,888 | 3,735 | 4,328 | 8,429 | ||
| Income Before Income Taxes (GAAP) | 359,740 | 324,439 | 327,165 | 284,827 | ||
| Taxes | 70,717 | 64,340 | 70,823 | 134,246 | ||
| Net Income | 289,023 | 260,099 | 256,342 | $ 150,581 | ||
| MEMO: Effective Tax Rate | 19.66% | 19.83% | 21.65% | 47.13% |
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 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 2020 | December 2019 | December 31 | December 31 | December 31 | ||||||
| Q-T-D Average | Q-T-D Average | 2020 | 2019 | 2018 | ||||||
| Cash & Cash Equivalents | $ | 2,048,915 | $ | 777,007 | $ | 2,209,068 | $ | 837,493 | $ | 1,020,396 |
| Securities Available for Sale | 2,849,102 | 2,463,101 | 2,953,359 | 2,437,296 | 2,337,039 | |||||
| Less: Allowance for credit losses | 0 | 0 | 0 | 0 | 0 | |||||
| Net available for sale securities | 2,849,102 | 2,463,101 | 2,953,359 | 2,437,296 | 2,337,039 | |||||
| Securities Held to Maturity | 1,235 | 1,463 | 1,235 | 1,446 | 19,999 | |||||
| Less: Allowance for credit losses | (21) | 0 | (23) | 0 | 0 | |||||
| Net held to maturity securities | 1,214 | 1,463 | 1,212 | 1,446 | 19,999 | |||||
| Equity Securities | 10,399 | 8,984 | 10,718 | 8,894 | 9,734 | |||||
| Other Investment Securities | 218,741 | 210,855 | 220,895 | 222,161 | 176,955 | |||||
| Total Securities | 3,079,456 | 2,684,403 | 3,186,184 | 2,669,797 | 2,543,727 | |||||
| Total Cash and Securities | 5,128,371 | 3,461,410 | 5,395,252 | 3,507,290 | 3,564,123 | |||||
| Loans held for sale | 720,896 | 368,966 | 718,937 | 387,514 | 249,846 | |||||
| Commercial Loans & Leases | 13,296,380 | 9,347,641 | 13,165,497 | 9,399,170 | 9,447,420 | |||||
| Mortgage Loans | 3,269,073 | 3,052,045 | 3,197,274 | 3,107,721 | 2,979,787 | |||||
| Consumer Loans | 1,253,421 | 1,195,999 | 1,259,812 | 1,206,657 | 1,002,325 | |||||
| Gross Loans | 17,818,874 | 13,595,685 | 17,622,583 | 13,713,548 | 13,429,532 | |||||
| Unearned income | (38,502) | (2,823) | (31,170) | (1,419) | (7,310) | |||||
| Loans & Leases, net of unearned income | 17,780,372 | 13,592,862 | 17,591,413 | 13,712,129 | 13,422,222 | |||||
| Allowance for Loan & Leases Losses | (225,918) | (77,073) | (235,830) | (77,057) | (76,703) | |||||
| Net Loans | 17,554,454 | 13,515,789 | 17,355,583 | 13,635,072 | 13,345,519 | |||||
| Mortgage Servicing Rights | 20,766 | 0 | 20,955 | 0 | 0 | |||||
| Goodwill | 1,794,997 | 1,478,014 | 1,796,848 | 1,478,014 | 1,478,014 | |||||
| Other Intangibles | 27,580 | 30,837 | 26,923 | 29,931 | 36,947 | |||||
| Operating Lease<br>Right-of-Use Asset | 72,090 | 59,031 | 69,520 | 57,783 | 0 | |||||
| Other Real Estate Owned | 26,316 | 18,472 | 22,595 | 15,515 | 16,865 | |||||
| Other Assets | 771,233 | 532,561 | 777,634 | 551,205 | 559,184 | |||||
| Total Assets | $ | 26,116,703 | $ | 19,465,080 | $ | 26,184,247 | $ | 19,662,324 | $ | 19,250,498 |
| MEMO: Interest-earning Assets | $ | 23,122,784 | $ | 17,165,071 | $ | 23,172,403 | $ | 17,344,638 | $ | 16,971,602 |
| Interest-bearing Deposits | $ | 13,018,640 | $ | 9,281,403 | $ | 13,179,900 | $ | 9,231,059 | $ | 9,577,934 |
| Noninterest-bearing Deposits | 7,495,594 | 4,647,907 | 7,405,260 | 4,621,362 | 4,416,815 | |||||
| Total Deposits | 20,514,234 | 13,929,310 | 20,585,160 | 13,852,421 | 13,994,749 | |||||
| Short-term Borrowings | 144,177 | 132,621 | 142,300 | 374,654 | 351,327 | |||||
| Long-term Borrowings | 901,655 | 1,836,423 | 864,369 | 1,838,029 | 1,499,103 | |||||
| Total Borrowings | 1,045,832 | 1,969,044 | 1,006,669 | 2,212,683 | 1,850,430 | |||||
| Operating Lease Liability | 75,805 | 62,662 | 73,213 | 61,342 | 0 | |||||
| Other Liabilities | 161,580 | 118,702 | 221,585 | 172,045 | 153,695 | |||||
| Total Liabilities | 21,797,451 | 16,079,718 | 21,886,627 | 16,298,491 | 15,998,874 | |||||
| Preferred Equity | 0 | 0 | 0 | 0 | 0 | |||||
| Common Equity | 4,319,252 | 3,385,362 | 4,297,620 | 3,363,833 | 3,251,624 | |||||
| Total Shareholders’ Equity | 4,319,252 | 3,385,362 | 4,297,620 | 3,363,833 | 3,251,624 | |||||
| Total Liabilities & Equity | $ | 26,116,703 | $ | 19,465,080 | $ | 26,184,247 | $ | 19,662,324 | $ | 19,250,498 |
| MEMO: Interest-bearing Liabilities | $ | 14,064,472 | $ | 11,250,447 | $ | 14,186,569 | $ | 11,443,742 | $ | 11,428,364 |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| December | ||||||
| Quarterly Share Data: | 2020 | |||||
| Earnings Per Share: | ||||||
| Basic | 0.71 | 0.62 | 0.80 | 0.44 | $ 0.40 | |
| Diluted | 0.71 | 0.62 | 0.80 | 0.44 | $ 0.40 | |
| Common Dividend Declared Per Share | 0.35 | 0.35 | 0.35 | 0.35 | $ 0.35 | |
| High Common Stock Price | 32.86 | 40.70 | 30.07 | 33.12 | $ 39.07 | |
| Low Common Stock Price | 21.19 | 36.09 | 20.57 | 21.52 | $ 19.67 | |
| Average Shares Outstanding (Net of Treasury Stock): | ||||||
| Basic | 129,371,600 | 101,250,489 | 129,373,154 | 119,823,652 | 101,295,073 | |
| Diluted | 129,479,390 | 101,537,640 | 129,454,966 | 119,887,823 | 101,399,181 | |
| Common Dividends | 45,442 | 35,543 | 45,414 | 45,416 | $ 35,604 | |
| Dividend Payout Ratio | 49.20% | 56.16% | 43.76% | 86.20% | 88.60% | |
| YTD Share Data: | ||||||
| Earnings Per Share: | ||||||
| Basic | 2.40 | 2.55 | 2.46 | $ 1.54 | ||
| Diluted | 2.40 | 2.55 | 2.45 | $ 1.54 | ||
| Common Dividend Declared Per Share | 1.40 | 1.37 | 1.36 | $ 1.33 | ||
| Average Shares Outstanding (Net of Treasury Stock): | ||||||
| Basic | 120,017,247 | 101,585,599 | 104,015,976 | 97,502,633 | ||
| Diluted | 120,090,232 | 101,852,577 | 104,298,825 | 97,890,078 | ||
| Common Dividends | 171,876 | 139,508 | 141,610 | $ 131,755 | ||
| Dividend Payout Ratio | 59.47% | 53.64% | 55.24% | 87.50% | ||
| **** | December 31 | December 31 | September 30 | June 30 | March 31 | |
| EOP Share Data: | 2020 | |||||
| Book Value Per Share | 33.27 | 33.12 | 32.89 | 32.35 | $ 32.87 | |
| Tangible Book Value Per Share (non-GAAP) ^(1)^ | 19.15 | 18.27 | 18.84 | 18.28 | $ 18.06 | |
| 52-week High Common Stock Price | 39.07 | 40.70 | 40.70 | 40.70 | $ 40.70 | |
| Date | 01/02/20 | 11/05/19 | 11/05/19 | 11/05/19 | 11/05/19 | |
| 52-week Low Common Stock Price | 19.67 | 30.67 | 19.67 | 19.67 | $ 19.67 | |
| Date | 03/23/20 | 01/02/19 | 03/23/20 | 03/23/20 | 03/23/20 | |
| EOP Shares Outstanding (Net of Treasury Stock): | 129,188,507 | 101,553,671 | 129,762,348 | 129,755,395 | 101,723,600 | |
| Memorandum Items: | ||||||
| EOP Employees (full-time equivalent) | 3,051 | 2,204 | 3,137 | 3,039 | 2,206 | |
| Note: | ||||||
| (1) Tangible Book Value Per Share: | ||||||
| Total Shareholders’ Equity (GAAP) | 4,297,620 | 3,363,833 | 4,267,441 | 4,197,855 | $ 3,343,702 | |
| Less: Total Intangibles | (1,823,771) | (1,507,945) | (1,823,129) | (1,825,887) | (1,506,368) | |
| Tangible Equity (non-GAAP) | 2,473,849 | 1,855,888 | 2,444,312 | 2,371,968 | $ 1,837,334 | |
| ÷ EOP Shares Outstanding (Net of Treasury Stock) | 129,188,507 | 101,553,671 | 129,762,348 | 129,755,395 | 101,723,600 | |
| Tangible Book Value Per Share (non-GAAP) | 19.15 | 18.27 | 18.84 | 18.28 | $ 18.06 |
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)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Selected Yields and Net Interest Margin: | December<br>2020 | December<br>2019 | September<br>2020 | June<br>2020 | March<br>2020 | |||||
| Net Loans and Loans held for sale | 4.18% | 4.65% | 4.17% | 4.21% | 4.60% | |||||
| Investment Securities | 2.08% | 2.74% | 2.17% | 2.44% | 2.70% | |||||
| Money Market Investments/FFS | 0.42% | 2.57% | 0.42% | 0.49% | 2.23% | |||||
| Average Earning Assets Yield | 3.62% | 4.28% | 3.59% | 3.70% | 4.21% | |||||
| Interest-bearing Deposits | 0.43% | 1.33% | 0.54% | 0.67% | 1.19% | |||||
| Short-term Borrowings | 0.55% | 1.52% | 0.44% | 0.54% | 1.34% | |||||
| Long-term Borrowings | 1.15% | 2.35% | 1.65% | 1.68% | 2.21% | |||||
| Average Liability Costs | 0.48% | 1.50% | 0.66% | 0.82% | 1.37% | |||||
| Net Interest Spread | 3.14% | 2.78% | 2.93% | 2.88% | 2.84% | |||||
| Net Interest Margin | 3.33% | 3.29% | 3.18% | 3.18% | 3.30% | |||||
| Selected Financial Ratios: | ||||||||||
| Return on Average Assets | 1.41% | 1.29% | 1.56% | 0.87% | 0.82% | |||||
| Return on Average Shareholders’ Equity | 8.51% | 7.42% | 9.68% | 5.40% | 4.82% | |||||
| Return on Average Tangible Equity (non-GAAP)<br>^(1)^ | 14.72% | 13.38% | 16.94% | 9.58% | 8.77% | |||||
| Efficiency Ratio | 54.57% | 54.28% | 53.43% | 57.68% | 56.71% | |||||
| Note: | ||||||||||
| (1) Return on Average Tangible Equity: | ||||||||||
| (a) Net Income (GAAP) | $ | 92,370 | $ | 63,285 | $ | 103,784 | $ | 52,686 | $ | 40,183 |
| (b) Number of days | 92 | 92 | 92 | 91 | 91 | |||||
| Average Total Shareholders’ Equity (GAAP) | $ | 4,319,252 | $ | 3,385,362 | $ | 4,263,111 | $ | 3,921,289 | $ | 3,350,652 |
| Less: Average Total Intangibles | (1,822,577) | (1,508,851) | (1,826,057) | (1,708,683) | (1,507,272) | |||||
| (c) Average Tangible Equity (non-GAAP) | $ | 2,496,675 | $ | 1,876,511 | $ | 2,437,054 | $ | 2,212,606 | $ | 1,843,380 |
| Return on Average Tangible Equity (non-GAAP) [(a) / (b)] x<br>366 or 365 / (c) | 14.72% | 13.38% | 16.94% | 9.58% | 8.77% |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December | December | December | December | |||||||||
| 2020 | 2019 | 2018 | 2017 | |||||||||
| Selected Yields and Net Interest Margin: | ||||||||||||
| Net Loans and Loans held for sale | 4.27% | 4.85% | 4.77% | 4.56% | ||||||||
| Investment Securities | 2.33% | 2.86% | 2.73% | 2.63% | ||||||||
| Money Market Investments/FFS | 0.65% | 2.91% | 2.29% | 1.23% | ||||||||
| Average Earning Assets Yield | 3.75% | 4.47% | 4.36% | 4.07% | ||||||||
| Interest-bearing Deposits | 0.67% | 1.41% | 0.97% | 0.54% | ||||||||
| Short-term Borrowings | 0.70% | 1.67% | 1.00% | 0.51% | ||||||||
| Long-term Borrowings | 1.76% | 2.56% | 2.34% | 1.80% | ||||||||
| Average Liability Costs | 0.80% | 1.60% | 1.15% | 0.69% | ||||||||
| Net Interest Spread | 2.95% | 2.87% | 3.21% | 3.38% | ||||||||
| Net Interest Margin | 3.24% | 3.39% | 3.58% | 3.58% | ||||||||
| Selected Financial Ratios: | ||||||||||||
| Return on Average Assets | 1.20% | 1.34% | 1.36% | 0.85% | ||||||||
| Return on Average Shareholders’ Equity | 7.30% | 7.80% | 7.84% | 5.09% | ||||||||
| Return on Average Tangible Equity (non-GAAP)<br>^(1)^ | 12.90% | 14.26% | 14.65% | 9.18% | ||||||||
| Loans & Leases, net of unearned income / Deposit Ratio | 85.46% | 98.99% | 95.91% | 94.08% | ||||||||
| Allowance for Loan & Lease Losses/ Loans & Leases, net of unearned<br>income | 1.34% | 0.56% | 0.57% | 0.59% | ||||||||
| Allowance for Credit Losses ^(2)^/<br>Loans & Leases, net of unearned income | 1.45% | 0.57% | 0.58% | 0.59% | ||||||||
| Nonaccrual Loans / Loans & Leases, net of unearned income | 0.36% | 0.46% | 0.51% | 0.84% | ||||||||
| 90-Day Past Due Loans/ Loans & Leases, net of<br>unearned income | 0.08% | 0.07% | 0.11% | 0.08% | ||||||||
| Non-performing Loans/ Loans & Leases, net of<br>unearned income | 0.75% | 0.96% | 1.06% | 1.30% | ||||||||
| Non-performing Assets/ Total Assets | 0.59% | 0.75% | 0.83% | 1.01% | ||||||||
| Primary Capital Ratio | 17.22% | 17.44% | 17.23% | 17.34% | ||||||||
| Shareholders’ Equity Ratio | 16.41% | 17.11% | 16.89% | 17.00% | ||||||||
| Price / Book Ratio | 0.97 | x | 1.17 | x | 0.98 | x | 1.13 | x | ||||
| Price / Earnings Ratio | 13.50 | x | 15.14 | x | 12.71 | x | 22.59 | x | ||||
| Efficiency Ratio | 55.36% | 52.53% | 51.32% | 53.98% | ||||||||
| Notes: | ||||||||||||
| (1) Return on Average Tangible Equity: | ||||||||||||
| (a) Net Income (GAAP) | $ | 289,023 | $ | 260,099 | $ | 256,342 | $ | 150,581 | ||||
| Average Total Shareholders’ Equity (GAAP) | $ | 3,956,969 | $ | 3,336,075 | $ | 3,268,944 | $ | 2,959,293 | ||||
| Less: Average Total Intangibles | (1,716,738) | (1,511,501) | (1,519,174) | (1,319,109) | ||||||||
| (b) Average Tangible Equity (non-GAAP) | $ | 2,240,231 | $ | 1,824,574 | $ | 1,749,770 | $ | 1,640,184 | ||||
| Return on Average Tangible Equity (non-GAAP) [(a) /<br>(b)] | 12.90% | 14.26% | 14.65% | 9.18% | ||||||||
| (2) Includes allowances for<br>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 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December | December | September | June | March | ||||||
| 2020 | 2019 | 2020 | 2020 | 2020 | ||||||
| Mortgage Banking Segment Data: | ||||||||||
| Applications | $ | 2,284,532 | $ | 896,000 | $ | 3,460,687 | $ | 2,189,008 | $ | 2,054,000 |
| Loans originated | 1,979,284 | 777,312 | 2,071,717 | 1,692,297 | 904,949 | |||||
| Loans sold | $ | 2,065,400 | $ | 800,400 | $ | 1,898,539 | $ | 1,636,063 | $ | 793,392 |
| Purchase money % of loans closed | 49% | 66% | 48% | 42% | 49% | |||||
| Realized gain on sales and fees as a % of loans sold | 4.10% | 2.84% | 4.26% | 2.49% | 2.82% | |||||
| Net interest income | $ | 2,918 | $ | 547 | $ | 2,740 | $ | 2,246 | $ | 949 |
| Other income | 73,082 | 19,946 | 110,900 | 71,013 | 21,190 | |||||
| Other expense | 41,193 | 18,419 | 43,417 | 35,261 | 20,757 | |||||
| Income taxes | 5,656 | 192 | 14,823 | 6,946 | 273 | |||||
| Net income | $ | 29,151 | $ | 1,882 | $ | 55,400 | $ | 31,052 | $ | 1,109 |
| Year Ended | ||||||||||
| December | December | December | December | |||||||
| 2020 | 2019 | 2018 | 2017 | |||||||
| Mortgage Banking Segment Data: | ||||||||||
| Applications | $ | 9,988,227 | $ | 4,330,000 | $ | 3,912,000 | $ | 3,337,000 | ||
| Loans originated | 6,648,247 | 2,941,722 | 2,619,454 | 2,333,895 | ||||||
| Loans sold | $ | 6,393,394 | $ | 2,804,451 | $ | 2,608,242 | $ | 2,350,813 | ||
| Purchase money % of loans closed | 47% | 72% | 83% | 82% | ||||||
| Realized gain on sales and fees as a % of loans sold | 3.63% | 2.86% | 2.72% | 2.80% | ||||||
| Net interest income | $ | 8,853 | $ | 916 | $ | 1,315 | $ | (69) | ||
| Other income | 276,185 | 83,884 | 68,555 | 58,532 | ||||||
| Other expense | 140,628 | 72,288 | 72,632 | 62,072 | ||||||
| Income taxes (benefit) | 27,698 | 2,355 | (505) | (901) | ||||||
| Net income (loss) | $ | 116,712 | $ | 10,157 | $ | (2,257) | $ | (2,708) | ||
| December 31 | December 31 | September 30 | June 30 | March 31 | ||||||
| 2020 | 2019 | 2020 | 2020 | 2020 | ||||||
| Period End Mortgage Banking Segment Data: | ||||||||||
| Locked pipeline | $ | 989,640 | $ | 143,465 | $ | 1,398,898 | $ | 889,275 | $ | 739,322 |
| Balance of loans serviced | $ | 3,587,953 | $ | 0 | $ | 3,551,157 | $ | 3,552,292 | $ | 0 |
| Number of loans serviced | 25,614 | 0 | 25,813 | 25,609 | 0 |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| December 31 | December 31 | September 30 | June 30 | March 31 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2020 | 2020 | ||||||
| Asset Quality Data: | ||||||||||
| EOP Non-Accrual Loans | $ | 62,718 | $ | 63,209 | $ | 71,312 | $ | 67,669 | $ | 64,036 |
| EOP 90-Day Past Due Loans | 13,832 | 9,494 | 12,583 | 11,150 | 7,051 | |||||
| EOP Restructured Loans ^(1)^ | 55,657 | 58,369 | 68,381 | 77,436 | 61,470 | |||||
| Total EOP Non-performing Loans | $ | 132,207 | $ | 131,072 | $ | 152,276 | $ | 156,255 | $ | 132,557 |
| EOP Other Real Estate Owned | 22,595 | 15,515 | 25,696 | 29,947 | 15,849 | |||||
| Total EOP Non-performing Assets | $ | 154,802 | $ | 146,587 | $ | 177,972 | $ | 186,202 | $ | 148,406 |
| Three Months Ended | ||||||||||
| December | December | September | June | March | ||||||
| 2020 | 2019 | 2020 | 2020 | 2020 | ||||||
| Allowance for Loan Losses: | ||||||||||
| Beginning Balance | $ | 225,812 | $ | 77,098 | $ | 215,121 | $ | 154,923 | $ | 77,057 |
| Cumulative Effect Adjustment for CECL | 0 | 0 | 0 | 0 | 57,442 | |||||
| 225,812 | 77,098 | 215,121 | 154,923 | 134,499 | ||||||
| Initial allowance for acquired PCD loans | 0 | 0 | 0 | 18,635 | 0 | |||||
| Gross Charge-offs | (10,120) | (9,704) | (8,468) | (5,634) | (8,761) | |||||
| Recoveries | 3,203 | 3,796 | 2,820 | 1,290 | 2,073 | |||||
| Net Charge-offs | (6,917) | (5,908) | (5,648) | (4,344) | (6,688) | |||||
| Provision for Loan & Lease Losses | 16,935 | 5,867 | 16,339 | 45,907 | 27,112 | |||||
| Ending Balance | $ | 235,830 | $ | 77,057 | $ | 225,812 | $ | 215,121 | $ | 154,923 |
| Reserve for lending-related commitments | 19,250 | 1,733 | 15,960 | 11,946 | 7,742 | |||||
| Allowance for Credit Losses (2) | $ | 255,080 | $ | 78,790 | $ | 241,772 | $ | 227,067 | $ | 162,665 |
| Year Ended | ||||||||||
| December | December | December | December | |||||||
| 2020 | 2019 | 2018 | 2017 | |||||||
| Allowance for Loan Losses: | ||||||||||
| Beginning Balance | $ | 77,057 | $ | 76,703 | $ | 76,627 | $ | 72,771 | ||
| Cumulative Effect Adjustment for CECL | 57,442 | 0 | 0 | 0 | ||||||
| 134,499 | 76,703 | 76,627 | 72,771 | |||||||
| Initial allowance for acquired PCD loans | 18,635 | 0 | 0 | 0 | ||||||
| Gross Charge-offs | (32,983) | (29,110) | (28,606) | (32,863) | ||||||
| Recoveries | 9,386 | 8,151 | 6,669 | 8,313 | ||||||
| Net Charge-offs | (23,597) | (20,959) | (21,937) | (24,550) | ||||||
| Provision for Loan & Lease Losses | 106,293 | 21,313 | 22,013 | 28,406 | ||||||
| Ending Balance | $ | 235,830 | $ | 77,057 | $ | 76,703 | $ | 76,627 | ||
| Reserve for lending-related commitments | 19,250 | 1,733 | 1,389 | 679 | ||||||
| Allowance for Credit Losses (2) | $ | 255,080 | $ | 78,790 | $ | 78,092 | $ | 77,306 |
Notes:
| (1) | Restructured loans with an aggregate balance of $41,185, $53,665, $59,916, $51,775 and $48,387 at<br>December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively, were on nonaccrual status, but are not included in “EOP Non-Accrual<br>Loans” above. |
|---|---|
| (2) | Includes allowances for loan losses and lending-related commitments. |
| --- | --- |
EX-99.2
United Bankshares, Inc. Fourth Quarter & Fiscal Year 2020 Earnings Review January 28, 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 (i) the merger (the “Merger”) between Carolina Financial Corporation (“Carolina Financial”) and United that was completed on May 1, 2020; (ii) United’s plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts; (iii) the effect of the COVID-19 pandemic; and (iv) 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 businesses of United and Carolina Financial may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; (2) the expected growth opportunities or cost savings from the Merger may not be fully realized or may take longer to realize than expected; (3) deposit attrition, operating costs, customer losses and business disruption following the Merger, including adverse effects on relationships with employees, may be greater than expected; (4) 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; (5) 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; (6) legislative or regulatory changes, including changes in accounting standards, that may adversely affect the businesses in which United is engaged; (7) the interest rate environment may further compress margins and adversely affect net interest income; (8) results may be adversely affected by continued diversification of assets and adverse changes to credit quality; (9) competition from other financial services companies in United's markets could adversely affect operations; and (10) 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.
2020 HIGHLIGHTS Achieved record Net Income of $289.0 million for FY 2020. Diluted Earnings Per Share were $2.40 for the year Reported record mortgage banking revenue, net income, and volume Generated Return on Average Assets of 1.20%, Return on Average Equity of 7.30%, and Return on Average Tangible Equity* of 12.90% (inclusive of merger-related expenses) Continue to support our customers’ needs through new loan originations, loan deferrals, PPP loans, and other accommodations Closed the merger with Carolina Financial on May 1, 2020 and successfully completed the integration and core systems conversions Increased dividends to shareholders for the 47th consecutive year (current dividend yield of 4.2% based upon recent prices) Strong expense control with an efficiency ratio of 55.4% Capital position remains robust and liquidity remains sound *Non GAAP measure. Refer to appendix.
MERGER UPDATE - CAROLINA FINANCIAL Closed the merger with Carolina Financial (CARO) on May 1, 2020 Continues United’s strategic expansion in the Carolinas with a financially compelling acquisition of a high-performing bank CARO had total assets of ~$5.0 billion, portfolio loans of ~$3.3 billion, and deposits of ~$3.9 billion Issued ~28.0 million shares of United’s common stock Successfully completed second core systems conversion during Q3 2020 (legacy CARO customers). First core systems conversion was successfully completed in Q2 2020 (legacy Carolina Trust customers). New Franchise Footprint Merger Update United 150 Locations CARO 73 Branches
EARNINGS SUMMARY Linked-Quarter (LQ) Net Income was $92.4 million in 4Q20 compared to $103.8 million in 3Q20, with diluted EPS of $0.71 in 4Q20 compared to $0.80 in 3Q20. Net Interest Income increased $6.3 million compared to 3Q20 due mainly to a decrease in interest expense of $7.7 million and an increase in PPP loan fee income of $2.2 million. Provision Expense was essentially flat compared to 3Q20. Non-Interest Income decreased $41.4 million due primarily to a decrease of $38.7 million in income from mortgage banking activities. 3Q20 also included a $2.2 million gain on the sale of a bank premises. Non-Interest Expense decreased $15.5 million due primarily to the $10.4 million in prepayment penalties on the early payoff of three FHLB advances recognized during 3Q20. Additionally, employee compensation decreased $7.5 million mainly due to the lower commissions expense related to the decrease in mortgage banking activity.
PERFORMANCE RATIOS Strong profitability and expense control. FY 2017 was impacted by $26.8 million in pre-tax merger related expenses and $37.7 million in additional tax expense related to the Tax Act. FY 2020 was impacted by COVID-19, CECL ACL build, pre-tax merger-related expenses of $54.2 million, and breakage fees of $10.4 million on three FHLB advance payoffs, largely offset by strong mortgage banking income. *Non GAAP measure. Refer to appendix.
NET INTEREST INCOME AND MARGIN Reported Net Interest Margin increased from 3.18% to 3.33% LQ. Linked-quarter Net Interest Income increase was driven by lower funding costs and an increase in PPP loan fee income of $2.2 million. Total remaining PPP fee income (net of costs) is $22.6 million as of 12/31/20 (not including any new PPP loan production in 2021). Scheduled purchase accounting loan accretion is estimated at $20 million for FY 2021 and $16 million for FY 2022. $ in millions
LOAN SUMMARY (excludes Loans Held for Sale) Linked-Quarter loan balances decreased $345 million driven primarily by declines in Residential Real Estate loans and Paycheck Protection Program loans. Non Owner Occupied CRE to Total Risk Based Capital was 231% at 4Q20. CRE portfolio remains diversified among underlying collateral types. Total purchase accounting-related fair value discount on loans is $92 million. Total COVID-19 loan deferrals have declined from $3.3 billion (~18% of total loans) at 6/30/20 to $0.4 billion (~2% of total loans) as of 12/31/20. $ in millions
CREDIT QUALITY End of Period Balances (000s) 9/30/20 12/31/20 Non-Accrual Loans $71,312 $62,718 90-Day Past Due Loans $12,583 $13,832 Restructured Loans $68,381 $55,657 Total Non-performing Loans $152,276 $132,207 Other Real Estate Owned $25,696 $22,595 Total Non-performing Assets $177,972 $154,802 Non-performing Loans / Loans 0.85% 0.75% Non-performing Assets / Total Assets 0.69% 0.59% Net Charge-offs / Average Loans 0.12% 0.16% Allowance for Loan & Lease Losses (ALLL) $225,812 $235,830 ALLL / Loans, net of earned income 1.26% 1.34% Allowance for Credit Losses (ACL) $241,772 $255,080 ACL / Loans, net of earned income 1.35% 1.45% NPAs decreased $23.2 million compared to 3Q20. United adopted CECL effective 01/01/20. ACL increased $13.3 million LQ with the percentage of ACL/Loans increasing from 1.35% to 1.45%. Day 1 CARO ACL impact was $50.6 million (2Q20). PPP loans are included within total loans in the ratio calculations shown above.
COMMERCIAL LOAN PORTFOLIO DETAILS Diversified portfolio with strong underwriting practices and ongoing monitoring Portfolio Portfolio Balance ($ MM) % Total Loans % Deferring 12/31/20 % Deferring 10/15/20 % Deferring 6/30/20 Retail CRE 1,295 7.3% 2.3% 15.3% 50.8% Hotels 716 4.1% 18.0% 35.8% 70.9% Healthcare & Senior Living 328 1.9% 0.3% 1.9% 11.1% Entertainment & Recreation 304 1.7% 8.4% 18.0% 36.8% Restaurants 212 1.2% 0.2% 2.5% 24.1% Energy (Direct & Indirect) 133 0.8% 0.6% 0.1% 5.9% Total commercial deferrals have declined from $3.0 billion (~22% of total commercial loans) at 6/30/20 to $0.3 billion (~2% of total commercial loans) as of 12/31/20. Retail CRE: Top 20 loans make up ~36% of the total balance. Average LTV for the top 20 is ~58%, and majority are anchored by nationally recognized essential businesses. Hotels: Top 20 loans make up ~42% of the total balance. Average LTV for the top 20 is ~55%. As of 12/31/20, the allowance for the hotel portfolio was $27.2 million. Select Portfolios Data as of 12/31/20 unless otherwise noted. LTVs calculated using current balances with most recently available collateral values.
CONSUMER LOAN PORTFOLIO DETAILS Solid consumer portfolio with product & geographic diversification Consumer deferrals total $74 million, or 1.7% of total consumer loans as of 12/31/20 (down from $285 million, or 6.0% of total consumer loans at 6/30/20) Portfolio Portfolio Balance ($ MM) % Total Loans Weighted Average FICO % Deferring 12/31/20 % Deferring 10/15/20 % Deferring 6/30/20 Residential Mortgage 2,648 15.0% 751 2.1% 2.4% 6.8% Indirect Auto 1,161 6.6% 747 1.3% 1.7% 6.1% Home Equity 451 2.6% 741 0.4% 0.6% 1.7% Other Consumer 62 0.3% 736 1.4% 2.1% 0.5% Data as of 12/31/20 unless otherwise noted. FICO scores based on most recently available system data (mix of scores at origination and more recent updates).
PAYCHECK PROTECTION PROGRAM (PPP) Originated over 8,900 loans for $1.3 billion Maintained an “all hands on deck” approach in order to assist as many customers as possible Outstandings declined $104 million in 4Q20, driven by forgiveness from the SBA Remaining outstandings at 12/31/20: Over 8,700 loans totaling $1.2 billion Average loan balance: $135,200 Median loan balance: $35,100 Approved to borrow from the Federal Reserve under the Paycheck Protection Program Liquidity Facility (PPPLF), but no borrowings to date PPP Loan Activity- 2020 New Round- 2021 Actively participating in the new round of PPP for first draw and second draw loans As of 1/26/21, applications totaling ~$225 million have been submitted to United 2Q20 3Q20 4Q20 $4.48 $4.80 $6.98 PPP Fees Recognized, net of costs ($ millions)* *Remaining net fees of $22.6 million at 12/31/20 (not including any new PPP loan production in 2021). PPP Loans Outstanding ($ millions) 2Q20 3Q20 4Q20 $1,265 $1,286 $1,182
DEPOSIT SUMMARY Strong core deposit base with 36% of deposits in Non Interest Bearing accounts. LQ deposits increased $333 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 Market share data as of 6/30/20 Source: S&P Global Market Intelligence Top 10 Deposit Markets by MSA 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 9/30/20 12/31/20** Common Equity Tier 1 Ratio 13.0% 13.3% Tier 1 Capital Ratio 13.0% 13.3% Total Risk Based Capital Ratio 15.2% 15.6% Leverage Ratio 10.1% 10.3% Total Equity to Total Assets 16.5% 16.4% *Tangible Equity to Tangible Assets (non GAAP) 10.1% 10.2% Book Value Per Share $32.89 $33.27 *Tangible Book Value Per Share (non GAAP) $18.84 $19.15 Capital ratios remain significantly above regulatory “Well Capitalized” levels and exceed all internal capital targets. During the fourth quarter, United repurchased 660,000 common shares for $20.7 million. As of 12/31/20, there were 3,340,000 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 derivatives and loans held for sale was $(14.2) million in 4Q20 and $28.1 million in 3Q20. Three Months Ended Full Year (000s) 9/30/20 12/31/20 2019 2020 Applications $3,460,687 $2,284,532 $4,330,000 $9,988,227 Loans Originated $2,071,717 $1,979,284 $2,941,722 $6,648,247 Loans Sold $1,898,539 $2,065,400 $2,804,451 $6,393,394 Purchase Money % 48% 49% 72% 47% Realized Gain on Sale Margin 4.26% 4.10% 2.86% 3.63% Locked Pipeline (EOP) $1,398,898 $989,640 $143,465 $989,640 Loans Held for Sale (EOP) $812,084 $718,937 $387,514 $718,937 Balance of Loans Serviced (EOP) $3,551,157 $3,587,953 $0 $3,587,953 Total Income $113,640 $76,000 $84,800 $285,038 Total Expense $43,417 $41,193 $72,288 $140,628 Income Before Tax $70,223 $34,807 $12,512 $144,410 Net Income After Tax $55,400 $29,151 $10,157 $116,712
2021 OUTLOOK Loans & Deposits: Expect the majority of PPP loan forgiveness to occur in the first half of 2021. Expect loan growth, excluding PPP forgiveness and new PPP originations, to be in the low to mid single digits. 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 first half of 2021. Non-Interest Expense: Expect minimal merger-related expenses in 2021 with a continued focus on merger-related efficiencies and cost savings from legacy operations. 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 4.2% (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 15.5x (based upon median 2021 street consensus estimate of $2.13 per Bloomberg)
Appendix
“SAFE, SOUND, AND SECURE SINCE 1839” Source: Federal Reserve BHCPR. NET CHARGEOFFS/AVERAGE LOANS Outperformed peers during the Great Recession Conservative credit culture and experienced management team remain intact United has increased dividends to shareholders for 47 consecutive years Capital levels remain strong and above peers: CET1 ratio of 13.3% and TE/TA ratio of 10.2% Liquidity buffers sufficient to withstand significant stress: cash, unpledged investments, and secured borrowing capacity = ~28% of total assets at 12/31/20
2020 COVID-19 RESPONSE Branches Operating on a drive-up and walk-up basis, or by appointment Employees Majority working remotely - 85% of non-retail staff has remote capabilities Continued to pay 100% of regular salaries for all employees All standalone locations remain open Paid bonuses to certain employees required to report to work Implemented “A/B” shift schedule to alternate staff each day Continue to see steady branch traffic across the footprint Customers and Communities Supporting customer needs with our balance sheet ~2,500 commercial loans totaling $3.0 billion ($0.3 billion currently in deferral as of 12/31/20) ~3,400 consumer loans totaling $290 million ($74 million currently in deferral as of 12/31/20) Fee waivers ATM and mobile deposit limits raised Continuing to go above and beyond to assist clients and community organizations with any needs during this time PPP loan program- originated over 8,900 notes for ~$1.3 billion in 2020. Actively processing new requests in 2021 2020 loan production of >$5.0 billion (excluding mortgage companies) Supporting customer needs through deferrals and modifications Suspended new property foreclosures and repossessions Participating in the Main Street Lending Program
CARO Merger – Additional Information Category 1Q20 2Q20 3Q20 4Q20 YTD Provision --- $29.0 --- --- $29.0 Employee Comp. --- $0.4 $2.1 --- $2.5 Data Processing --- $9.7 --- --- $9.7 Other Expense $1.6 $7.3 $3.6 $0.5 $13.0 Total $1.6 $46.4 $5.7 $0.5 $54.2 Merger-Related Expense Detail Other Information Fair Value Mark (preliminary) Loans $(47.4) Investments $(0.6) Other Real Estate Owned $(0.3) Trust Preferred Debt / Sub Debt $(4.9) Buildings / Land $10.3 Interest Bearing Deposits $12.8 FHLB Advances $0.5 *In millions 5/01/20 Value Preliminary Goodwill $318.8 Trade Name Intangible $0.2 Core Deposit Intangible $3.4 Allowance for Credit Losses (including unfunded) $50.6 Day 1 Purchase Accounting Marks (net mark)
Reconciliation of non-GAAP Items January 2021 (dollars in thousands) 2016 2017 2018 2019 2020 (1) Return on Average Tangible Equity Net Income (GAAP) $147,083 $150,581 $256,342 $260,099 $289,023 Average Total Shareholders' Equity (GAAP) $1,918,887 $2,959,293 $3,268,944 $3,336,075 $3,956,969 Less: Average Total Intangibles (820,558) (1,319,109) (1,519,175) (1,511,501) (1,716,738) Average Tangible Equity (non-GAAP) $1,098,329 $1,640,184 $1,749,769 $1,824,574 $2,240,231 Formula: Net Income/Average Tangible Equity Return on Average Tangible Equity (non-GAAP) 13.39% 9.18% 14.65% 14.26% 12.90%
Reconciliation of non-GAAP Items (cont.) January 2021 (dollars in thousands) 9/30/2020 12/31/2020 (2) Tangible Equity to Tangible Assets Total Assets (GAAP) $ 25,931,308 $ 26,184,247 Less: Total Intangibles (GAAP) (1,823,129) (1,823,771) Tangible Assets (non-GAAP) $ 24,108,179 $ 24,360,476 Total Shareholders' Equity (GAAP) $ 4,267,441 $ 4,297,620 Less: Total Intangibles (GAAP) (1,823,129) (1,823,771) Tangible Equity (non-GAAP) $ 2,444,312 $ 2,473,849 Tangible Equity to Tangible Assets (non-GAAP) 10.1% 10.2% (3) Tangible Book Value Per Share: Total Shareholders' Equity (GAAP) $ 4,197,855 $ 4,297,620 Less: Total Intangibles (GAAP) (1,825,887) (1,823,771) Tangible Equity (non-GAAP) $ 2,371,968 $ 2,473,849 ÷ EOP Shares Outstanding (Net of Treasury Stock) 129,755,395 129,188,507 Tangible Book Value Per Share (non-GAAP) $18.28 $19.15