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, 2022
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, 2022 United Bankshares, Inc. (“United”) announced its financial results for the first quarter of 2022. 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, 2022, issued by United Bankshares, Inc. |
|---|---|
| 99.2 | Slide presentation of financial information for the first quarter of 2022 |
| 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, 2022 | By: | /s/ W. Mark Tatterson |
| W. Mark Tatterson, Executive Vice<br> <br>President and Chief Financial Officer |
EX-99.1
EXHIBIT 99.1
News Release
| For Immediate Release | Contact: W. Mark Tatterson |
|---|---|
| April 26, 2022 | Chief Financial Officer |
| (800) 445-1347 ext. 8716 |
United Bankshares, Inc. Announces Earnings
for the First Quarter of 2022
WASHINGTON, D.C. and CHARLESTON, WV — United Bankshares, Inc. (NASDAQ: UBSI) (“United”), today reported earnings for the first quarter of 2022 of $81.7 million, or $0.60 per diluted share, as compared to earnings of $73.9 million, or $0.56 per diluted share, for the fourth quarter of 2021. The quarter was highlighted by strong 11% annualized loan growth (excluding Paycheck Protection Program loans), net interest margin expansion, and the resumption of United’s share repurchase program.
First quarter 2022 results produced annualized returns on average assets, average equity and average tangible equity, a non-GAAP measure, of 1.13%, 6.96% and 11.63%, respectively, compared to annualized returns on average assets, average equity, and average tangible equity of 1.04%, 6.44% and 10.87%, respectively, for the fourth quarter of 2021.
“We came out of the gate quickly and are off to a good start in 2022,” stated Richard M. Adams, Jr., United’s Chief Executive Officer. “We continue to experience promising loan growth in our new markets in the Southeast, as well as in our legacy markets, especially in the Greater Washington Region. We remain well capitalized, have sound liquidity levels, and maintain our longstanding commitments to strong risk management practices and credit underwriting discipline.”
Net Interest Income and Net InterestMargin
Net interest income for the first quarter of 2022 was relatively flat from the first quarter of 2021, increasing $542 thousand, or less than 1%, to $191.5 million. 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 2022 was also relatively flat from the first quarter of 2021, increasing $604 thousand, or less than 1%, to $192.6 million. United completed its acquisition of Community Bankers Trust Corporation (“Community Bankers Trust”) on December 3, 2021. The slight increase in net interest income and tax-equivalent net interest income was primarily due to the impact of higher average earning assets, driven by the Community Bankers Trust acquisition and lower interest expense on deposits. These increases were mostly offset by lower accretion on acquired loans, lower fee income from Paycheck Protection Program (“PPP”) loans and higher average interest-bearing deposit balances as a result of the Community Bankers Trust acquisition. Average earning assets for the first quarter of 2022 increased $2.5 billion, or 11%, from the first quarter of 2021 due to a $1.5 billion increase in average investment securities, a $739.3 million increase in average short-term investments and a $312.5 million increase in average net loans and loans held for sale. Average interest-bearing deposits for the first quarter of 2022 increased $1.2 billion, or 9%, from the first
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quarter of 2021; however, the yield on interest-bearing deposits decreased 13 basis points from the first quarter of 2021 to 0.24% for the first quarter of 2022. The net interest spread for the first quarter of 2022 decreased 28 basis points from the first quarter of 2021 to 2.86% due to a 40 basis point decrease in the average yield on earning assets partially offset by a 12 basis point decrease in the average cost of funds. Loan accretion on acquired loans was $4.1 million and $9.8 million for the first quarter of 2022 and 2021, respectively, a decrease of $5.7 million. Net PPP loan fee income of $4.1 million was recognized in the first quarter of 2022 as compared to $11.3 million for the first quarter of 2021. The net interest margin of 2.99% for the first quarter of 2022 was a decrease of 31 basis points from the net interest margin of 3.30% for the first quarter of 2021.
On a linked-quarter basis, net interest income for the first quarter of 2022 increased $7.8 million, or 4%, from the fourth quarter of 2021. Tax-equivalent net interest income for the first quarter of 2022 increased $7.9 million, or 4%, from the fourth quarter of 2021. The increase in net interest income and tax-equivalent net interest income was primarily due to an increase in average earning assets due to the full-quarter impact of the Community Bankers Trust acquisition and organic growth partially offset by lower acquired loan accretion and PPP loan fee income. Average earning assets increased approximately $1.1 billion, or 4%, from the fourth quarter of 2021 due to increases in average net loans and loans held for sale of $900.9 million and average securities of $796.3 million partially offset by a decrease in average short-term investments of $580.2 million. The net interest spread of 2.86% for the first quarter of 2022 increased 4 basis points from the fourth quarter of 2021 due to a 3 basis point increase in the average yield on earning assets and a 1 basis point decrease in the average cost of funds. Loan accretion on acquired loans decreased $2.1 million from the fourth quarter of 2021. Net PPP loan fee income for the first quarter of 2022 decreased $936 thousand from the fourth quarter of 2021. The net interest margin of 2.99% for the first quarter of 2022 was an increase of 5 basis points from the net interest margin of 2.94% for the fourth quarter of 2021.
Credit Quality
United’s asset quality continues to be sound. At March 31, 2022, non-performing loans were $79.9 million, or 0.43% of loans & leases, net of unearned income, down from $90.8 million, or 0.50% of loans & leases, net of unearned income, at December 31, 2021. Total non-performing assets of $93.5 million, including other real estate owned (“OREO”) of $13.6 million at March 31, 2022, represented 0.32% of total assets as compared to non-performing assets of $105.6 million, including OREO of $14.8 million, or 0.36% of total assets at December 31, 2021.
The provision for credit losses was a net benefit of $3.4 million for the first quarter of 2022 as compared to a provision for credit losses expense of $143 thousand for the first quarter of 2021. The decrease in the provision in relation to the prior year quarter was primarily driven by the impact of better performance trends within the loan portfolio. On a linked-quarter basis, the provision for credit losses for the first quarter of 2022 was a net benefit of $3.4 million compared to a net benefit of $7.4 million for the fourth quarter of 2021. The fourth quarter of 2021 included a provision for loan losses of $12.3 million recorded on purchased non-credit deteriorated (“non-PCD”) loans from Community Bankers Trust.
As of March 31, 2022, the allowance for loan & lease losses was $214.6 million, or 1.17% of loans & leases, net of unearned income, as compared to $216.0 million, or 1.20% of loans & leases, net of unearned income, at December 31, 2021. Net recoveries were $2.0 million for the first
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quarter of 2022 compared to net charge-offs of $4.5 million for the first quarter of 2021. Annualized net recoveries as a percentage of average loans & leases, net of unearned income were (0.04)% for the first quarter of 2022, compared to annualized net charge-offs of 0.10% for the first quarter of 2021. Net charge-offs were $125 thousand for the fourth quarter of 2021.
Noninterest Income
Noninterest income for the first quarter of 2022 was $46.0 million, which was a decrease of $46.6 million, or 50%, from the first quarter of 2021. The decrease in noninterest income was primarily driven by a $46.2 million decrease in income from mortgage banking activities mainly due to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower margin on loans sold in the secondary market. Income from bank-owned life insurance (“BOLI”) for the first quarter of 2022 was $2.2 million, an increase of $791 thousand from the first quarter of 2021. Fees from deposit services for the first quarter of 2022 were $10.1 million, an increase of $1.3 million from the first quarter of 2021.
On a linked-quarter basis, noninterest income for the first quarter of 2022 decreased $8.0 million, or 15%, from the fourth quarter of 2021. The decrease in noninterest income was primarily driven by a decrease of $8.1 million in income from mortgage banking activities mainly due to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower loan pipeline valuation. BOLI income increased $971 thousand from the fourth quarter of 2021 to $2.2 million. Fees from brokerage services increased $853 thousand from the fourth quarter of 2021 to $4.6 million.
Noninterest Expense
Noninterest expense for the first quarter of 2022 was $139.2 million, a decrease of $9.8 million, or 7%, from the first quarter of 2021. Employee compensation decreased $9.8 million due to lower employee commissions, incentives and overtime related to mortgage banking production partially offset by additional employees from the Community Bankers Trust acquisition. OREO expense decreased $3.5 million due to fewer declines in the fair value of OREO properties. Partially offsetting the decreases in noninterest expense was an increase in the expense for reserve for unfunded loan commitments of $4.5 million mainly due to an increase in outstanding loan commitments.
On a linked-quarter basis, noninterest expense for the first quarter of 2022 decreased $12.6 million, or 8%, from the fourth quarter of 2021 primarily due to a decrease of $8.9 million in employee compensation and $3.5 million in data processing. The decrease in employee compensation was primarily due to fewer employees as well as lower employee commissions, incentives and overtime related to mortgage banking production. The fourth quarter of 2021 also included $2.5 million of merger-related employee compensation expenses from the Community Bankers Trust acquisition. The decrease in data processing expense was primarily due to $3.5 million of merger-related expenses associated with the Community Bankers Trust acquisition recognized in the fourth quarter of 2021. Also included in noninterest expense were merger-related expenses of $508 thousand for the first quarter of 2022 as compared to $2.0 million for the fourth quarter of 2021.
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Income Tax Expense
For the first quarter of 2022, income tax expense was $20.1 million as compared to $27.6 million for the first quarter of 2021. The decrease of $7.5 million was primarily due to lower earnings and a lower effective tax rate. On a linked-quarter basis, income tax expense increased $607 thousand primarily due to higher earnings partially offset by a lower effective tax rate. United’s effective tax rate was 19.8% for the first quarter of 2022, 20.5% for the first quarter of 2021 and 20.9% for the fourth quarter of 2021.
Capital
United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 15.1% at March 31, 2022, while estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.0%, 13.0% and 10.4%, respectively. The March 31, 2022 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. During the first quarter of 2021, United repurchased, under a previously announced stock repurchase plan, approximately 306 thousand shares of its common stock at an average price per share of $32.52. United did not repurchase any shares of its common stock during the fourth quarter of 2021.
About United Bankshares,Inc.
As of March 31, 2022, United had consolidated assets of approximately $29.4 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”.
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 of itsMarch 31, 2022 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, 2022 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, reform of LIBOR; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, includingthose involving the OCC, Federal Reserve, FDIC, and CFPB; the effect of changes in the level of checking or savings account deposits on United’s funding costs and net interest margin; future provisions for credit losses on loans and debtsecurities; changes in nonperforming assets; risks relating to the merger with Community Bankers Trust, including the successful integration of operations of Community Bankers Trust, the expected growth opportunities and costs savings from themerger, and deposit attrition, operating costs, customer losses and business disruption following the merger; competition; and changes in legislation or regulatory requirements. For more information about factors that could cause actual results todiffer 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 on Form10-K for the year ended December 31, 2021, 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 of thedate 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 onrelated subjects in our filings with the SEC.
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March<br>2022 | March<br>2021 | December<br>2021 | |||||||
| EARNINGS SUMMARY: | |||||||||
| Interest income | $ | 202,795 | $ | 205,657 | $ | 195,194 | |||
| Interest expense | 11,293 | 14,697 | 11,516 | ||||||
| Net interest income | 191,502 | 190,960 | 183,678 | ||||||
| Provision for credit losses | (3,410 | ) | 143 | (7,405 | ) | ||||
| Noninterest income | 46,023 | 92,573 | 54,049 | ||||||
| Noninterest expense | 139,173 | 148,927 | 151,789 | ||||||
| Income before income taxes | 101,762 | 134,463 | 93,343 | ||||||
| Income taxes | 20,098 | 27,565 | 19,491 | ||||||
| Net income | $ | 81,664 | $ | 106,898 | $ | 73,852 | |||
| PER COMMON SHARE: | |||||||||
| Net income: | |||||||||
| Basic | $ | 0.60 | $ | 0.83 | $ | 0.56 | |||
| Diluted | 0.60 | 0.83 | 0.56 | ||||||
| Cash dividends | 0.36 | 0.35 | 0.36 | ||||||
| Book value | 33.77 | 33.54 | 34.60 | ||||||
| Closing market price | $ | 34.88 | $ | 38.58 | $ | 36.28 | |||
| Common shares outstanding: | |||||||||
| Actual at period end, net of treasury shares | 136,068,439 | 129,175,800 | 136,392,758 | ||||||
| Weighted average-basic | 136,058,328 | 128,635,740 | 130,939,640 | ||||||
| Weighted average-diluted | 136,435,229 | 128,890,861 | 131,295,816 | ||||||
| FINANCIAL RATIOS: | |||||||||
| Return on average assets | 1.13 | % | 1.64 | % | 1.04 | % | |||
| Return on average shareholders’ equity | 6.96 | % | 9.97 | % | 6.44 | % | |||
| Return on average tangible equity (non-GAAP)^(1)^ | 11.63 | % | 17.20 | % | 10.87 | % | |||
| Average equity to average assets | 16.22 | % | 16.41 | % | 16.22 | % | |||
| Net interest margin | 2.99 | % | 3.30 | % | 2.94 | % | |||
| March 31<br>2022 | December 31<br>2021 | March 31<br>2021 | |||||||
| PERIOD END BALANCES: | |||||||||
| Assets | $ | 29,365,511 | $ | 29,328,902 | $ | 27,030,755 | |||
| Earning assets | 25,958,745 | 26,083,089 | 24,023,292 | ||||||
| Loans & leases, net of unearned income | 18,392,086 | 18,023,648 | 17,365,891 | ||||||
| Loans held for sale | 340,040 | 504,416 | 808,134 | ||||||
| Investment securities | 5,020,712 | 4,295,749 | 3,402,922 | ||||||
| Total deposits | 23,474,301 | 23,350,263 | 21,396,474 | ||||||
| Shareholders’ equity | 4,595,140 | 4,718,628 | 4,332,698 |
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 | |||||||||
| March2022 | March2021 | December2021 | |||||||
| Interest & Loan Fees Income (GAAP) | $ | 202,795 | $ | 205,657 | $ | 195,194 | |||
| Tax equivalent adjustment | 1,109 | 1,047 | 1,037 | ||||||
| Interest & Fees Income (FTE) (non-GAAP) | 203,904 | 206,704 | 196,231 | ||||||
| Interest Expense | 11,293 | 14,697 | 11,516 | ||||||
| Net Interest Income (FTE) (non-GAAP) | 192,611 | 192,007 | 184,715 | ||||||
| Provision for Credit Losses | (3,410 | ) | 143 | (7,405 | ) | ||||
| Noninterest Income: | |||||||||
| Fees from trust services | 4,127 | 3,763 | 4,327 | ||||||
| Fees from brokerage services | 4,552 | 4,323 | 3,699 | ||||||
| Fees from deposit services | 10,148 | 8,896 | 10,509 | ||||||
| Bankcard fees and merchant discounts | 1,379 | 1,064 | 1,580 | ||||||
| Other charges, commissions, and fees | 759 | 759 | 753 | ||||||
| Income from bank-owned life insurance | 2,194 | 1,403 | 1,223 | ||||||
| Income from mortgage banking activities | 19,203 | 65,395 | 27,342 | ||||||
| Mortgage loan servicing income | 2,387 | 2,355 | 2,435 | ||||||
| Net (losses) gains on investment securities | (251 | ) | 2,609 | (39 | ) | ||||
| Other noninterest income | 1,525 | 2,006 | 2,220 | ||||||
| Total Noninterest Income | 46,023 | 92,573 | 54,049 | ||||||
| Noninterest Expense: | |||||||||
| Employee compensation | 62,621 | 72,412 | 71,542 | ||||||
| Employee benefits | 12,851 | 15,450 | 10,819 | ||||||
| Net occupancy | 11,187 | 10,941 | 10,653 | ||||||
| Data processing | 7,371 | 7,026 | 10,852 | ||||||
| Amortization of intangibles | 1,379 | 1,466 | 1,509 | ||||||
| OREO expense | 147 | 3,625 | 1,004 | ||||||
| Equipment expense | 7,335 | 6,044 | 6,819 | ||||||
| FDIC insurance expense | 2,673 | 2,000 | 2,626 | ||||||
| Mortgage loan servicing expense and impairment | 1,643 | 3,177 | 2,217 | ||||||
| Expense for reserve for unfunded loan commitments | 5,237 | 774 | 6,094 | ||||||
| Other noninterest expense | 26,729 | 26,012 | 27,654 | ||||||
| Total Noninterest Expense | 139,173 | 148,927 | 151,789 | ||||||
| Income Before Income Taxes (FTE)(non-GAAP) | 102,871 | 135,510 | 94,380 | ||||||
| Tax equivalent adjustment | 1,109 | 1,047 | 1,037 | ||||||
| Income Before Income Taxes (GAAP) | 101,762 | 134,463 | 93,343 | ||||||
| Taxes | 20,098 | 27,565 | 19,491 | ||||||
| Net Income | $ | 81,664 | $ | 106,898 | $ | 73,852 | |||
| MEMO: Effective Tax Rate | 19.75 | % | 20.50 | % | 20.88 | % |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Consolidated Balance Sheets | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2022Q-T-D Average | March 31, 2021Q-T-D Average | March 312022 | December 312021 | |||||||||
| Cash & Cash Equivalents | $ | 3,377,720 | $ | 2,583,986 | $ | 2,803,093 | $ | 3,758,170 | ||||
| Securities Available for Sale | 4,453,139 | 2,984,281 | 4,760,934 | 4,042,699 | ||||||||
| Less: Allowance for credit losses | 0 | 0 | 0 | 0 | ||||||||
| Net available for sale securities | 4,453,139 | 2,984,281 | 4,760,934 | 4,042,699 | ||||||||
| Securities Held to Maturity | 1,020 | 1,027 | 1,020 | 1,020 | ||||||||
| Less: Allowance for credit losses | (19 | ) | (23 | ) | (19 | ) | (19 | ) | ||||
| Net held to maturity securities | 1,001 | 1,004 | 1,001 | 1,001 | ||||||||
| Equity Securities | 12,528 | 10,893 | 12,357 | 12,404 | ||||||||
| Other Investment Securities | 242,694 | 219,937 | 246,420 | 239,645 | ||||||||
| Total Securities | 4,709,362 | 3,216,115 | 5,020,712 | 4,295,749 | ||||||||
| Total Cash and Securities | 8,087,082 | 5,800,101 | 7,823,805 | 8,053,919 | ||||||||
| Loans held for sale | 327,673 | 621,688 | 340,040 | 504,416 | ||||||||
| Commercial Loans & Leases | 13,986,982 | 13,298,719 | 14,072,235 | 13,809,735 | ||||||||
| Mortgage Loans | 2,989,438 | 3,114,722 | 3,048,679 | 3,008,410 | ||||||||
| Consumer Loans | 1,253,905 | 1,230,949 | 1,298,366 | 1,233,162 | ||||||||
| Gross Loans | 18,230,325 | 17,644,390 | 18,419,280 | 18,051,307 | ||||||||
| Unearned income | (27,766 | ) | (28,526 | ) | (27,194 | ) | (27,659 | ) | ||||
| Loans & Leases, net of unearned income | 18,202,559 | 17,615,864 | 18,392,086 | 18,023,648 | ||||||||
| Allowance for Loan & Lease Losses | (216,016 | ) | (235,795 | ) | (214,594 | ) | (216,016 | ) | ||||
| Net Loans | 17,986,543 | 17,380,069 | 18,177,492 | 17,807,632 | ||||||||
| Mortgage Servicing Rights | 22,855 | 21,186 | 23,089 | 23,144 | ||||||||
| Goodwill | 1,887,197 | 1,799,328 | 1,889,244 | 1,886,494 | ||||||||
| Other Intangibles | 23,928 | 26,311 | 23,034 | 24,413 | ||||||||
| Operating Lease<br>Right-of-Use Asset | 80,446 | 68,030 | 77,097 | 81,942 | ||||||||
| Other Real Estate Owned | 14,302 | 22,457 | 13,641 | 14,823 | ||||||||
| Bank Owned Life Insurance | 478,575 | 355,967 | 479,064 | 478,067 | ||||||||
| Other Assets | 435,921 | 395,979 | 519,005 | 454,052 | ||||||||
| Total Assets | $ | 29,344,522 | $ | 26,491,116 | $ | 29,365,511 | $ | 29,328,902 | ||||
| MEMO: Interest-earning Assets | $ | 26,052,404 | $ | 23,507,417 | $ | 25,958,745 | $ | 26,083,089 | ||||
| Interest-bearing Deposits | $ | 14,383,839 | $ | 13,184,728 | $ | 14,467,340 | $ | 14,369,716 | ||||
| Noninterest-bearing Deposits | 8,991,131 | 7,735,638 | 9,006,961 | 8,980,547 | ||||||||
| Total Deposits | 23,374,970 | 20,920,366 | 23,474,301 | 23,350,263 | ||||||||
| Short-term Borrowings | 133,987 | 142,155 | 136,370 | 128,844 | ||||||||
| Long-term Borrowings | 817,363 | 833,365 | 817,235 | 817,394 | ||||||||
| Total Borrowings | 951,350 | 975,520 | 953,605 | 946,238 | ||||||||
| Operating Lease Liability | 85,110 | 71,696 | 81,678 | 86,703 | ||||||||
| Other Liabilities | 173,312 | 176,784 | 260,787 | 227,070 | ||||||||
| Total Liabilities | 24,584,742 | 22,144,366 | 24,770,371 | 24,610,274 | ||||||||
| Preferred Equity | 0 | 0 | 0 | 0 | ||||||||
| Common Equity | 4,759,780 | 4,346,750 | 4,595,140 | 4,718,628 | ||||||||
| Total Shareholders’ Equity | 4,759,780 | 4,346,750 | 4,595,140 | 4,718,628 | ||||||||
| Total Liabilities & Equity | $ | 29,344,522 | $ | 26,491,116 | $ | 29,365,511 | $ | 29,328,902 | ||||
| MEMO: Interest-bearing Liabilities | $ | 15,335,189 | $ | 14,160,248 | $ | 15,420,945 | $ | 15,315,954 |
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>2022 | March<br>2021 | December<br>2021 | |||||||
| Quarterly Share Data: | |||||||||
| Earnings Per Share: | |||||||||
| Basic | $ | 0.60 | $ | 0.83 | $ | 0.56 | |||
| Diluted | $ | 0.60 | $ | 0.83 | $ | 0.56 | |||
| Common Dividend Declared Per Share | $ | 0.36 | $ | 0.35 | $ | 0.36 | |||
| High Common Stock Price | $ | 39.80 | $ | 41.61 | $ | 39.41 | |||
| Low Common Stock Price | $ | 33.58 | $ | 31.57 | $ | 33.34 | |||
| Average Shares Outstanding (Net of Treasury Stock): | |||||||||
| Basic | 136,058,328 | 128,635,740 | 130,939,640 | ||||||
| Diluted | 136,435,229 | 128,890,861 | 131,295,816 | ||||||
| Common Dividends | $ | 49,266 | $ | 45,254 | $ | 46,564 | |||
| Dividend Payout Ratio | 60.33 | % | 42.33 | % | 63.05 | % | |||
| March 31<br>2022 | December 312021 | March 31<br>2021 | |||||||
| EOP Share Data: | |||||||||
| Book Value Per Share | $ | 33.77 | $ | 34.60 | $ | 33.54 | |||
| Tangible Book Value Per Share (non-GAAP) ^(1)^ | $ | 19.72 | $ | 20.59 | $ | 19.38 | |||
| 52-week High Common Stock Price | $ | 42.50 | $ | 42.50 | $ | 41.61 | |||
| Date | 05/18/21 | 05/18/21 | 03/18/21 | ||||||
| 52-week Low Common Stock Price | $ | 31.74 | $ | 31.57 | $ | 20.57 | |||
| Date | 9/20/21 | 1/29/21 | 09/25/20 | ||||||
| EOP Shares Outstanding (Net of Treasury Stock): | 136,068,439 | 136,392,758 | 129,175,800 | ||||||
| Memorandum Items: | |||||||||
| EOP Employees (full-time equivalent) | 3,090 | 3,143 | 3,033 | ||||||
| Note: | |||||||||
| (1) Tangible Book Value Per Share: | |||||||||
| Total Shareholders’ Equity (GAAP) | $ | 4,595,140 | $ | 4,718,628 | $ | 4,332,698 | |||
| Less: Total Intangibles | (1,912,278 | ) | (1,910,907 | ) | (1,829,495 | ) | |||
| Tangible Equity (non-GAAP) | $ | 2,682,862 | $ | 2,807,721 | $ | 2,503,203 | |||
| ÷ EOP Shares Outstanding (Net of Treasury Stock) | 136,068,439 | 136,392,758 | 129,175,800 | ||||||
| Tangible Book Value Per Share (non-GAAP) | $ | 19.72 | $ | 20.59 | $ | 19.38 |
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>2022 | March<br>2021 | December2021 | |||||||
| Selected Yields and Net Interest Margin: | |||||||||
| Net Loans and Loans held for sale | 4.01 | % | 4.26 | % | 4.04 | % | |||
| Investment Securities | 1.72 | % | 1.93 | % | 1.72 | % | |||
| Money Market Investments/FFS | 0.31 | % | 0.34 | % | 0.28 | % | |||
| Average Earning Assets Yield | 3.16 | % | 3.56 | % | 3.13 | % | |||
| Interest-bearing Deposits | 0.24 | % | 0.37 | % | 0.26 | % | |||
| Short-term Borrowings | 0.55 | % | 0.51 | % | 0.52 | % | |||
| Long-term Borrowings | 1.27 | % | 1.23 | % | 1.23 | % | |||
| Average Liability Costs | 0.30 | % | 0.42 | % | 0.31 | % | |||
| Net Interest Spread | 2.86 | % | 3.14 | % | 2.82 | % | |||
| Net Interest Margin | 2.99 | % | 3.30 | % | 2.94 | % | |||
| Selected Financial Ratios: | |||||||||
| Return on Average Assets | 1.13 | % | 1.64 | % | 1.04 | % | |||
| Return on Average Shareholders’ Equity | 6.96 | % | 9.97 | % | 6.44 | % | |||
| Return on Average Tangible Equity (non-GAAP) ^(1)^ | 11.63 | % | 17.20 | % | 10.87 | % | |||
| Efficiency Ratio | 58.59 | % | 52.53 | % | 63.85 | % | |||
| Note: | |||||||||
| (1) Return on Average Tangible Equity: | |||||||||
| (a) Net Income (GAAP) | $ | 81,664 | $ | 106,898 | $ | 73,852 | |||
| (b) Number of Days | 90 | 90 | 92 | ||||||
| Average Total Shareholders’ Equity (GAAP) | $ | 4,759,780 | $ | 4,346,750 | $ | 4,551,634 | |||
| Less: Average Total Intangibles | (1,911,125 | ) | (1,825,639 | ) | (1,856,141 | ) | |||
| (c) Average Tangible Equity (non-GAAP) | $ | 2,848,655 | $ | 2,521,111 | $ | 2,695,493 | |||
| Return on Average Tangible Equity (non-GAAP) [(a) / (b)] x<br>365 or 366 / (c) | 11.63 | % | 17.20 | % | 10.87 | % | |||
| March 31<br>2022 | December 31<br>2021 | March 31<br>2021 | |||||||
| Selected Financial Ratios: | |||||||||
| Loans & Leases, net of unearned income / Deposit Ratio | 78.35 | % | 77.19 | % | 81.16 | % | |||
| Allowance for Loan & Lease Losses/ Loans & Leases, net of unearned<br>income | 1.17 | % | 1.20 | % | 1.33 | % | |||
| Allowance for Credit Losses ^(2)^/<br>Loans & Leases, net of unearned income | 1.37 | % | 1.37 | % | 1.45 | % | |||
| Nonaccrual Loans / Loans & Leases, net of unearned income | 0.19 | % | 0.20 | % | 0.28 | % | |||
| 90-Day Past Due Loans/ Loans & Leases, net of<br>unearned income | 0.08 | % | 0.10 | % | 0.09 | % | |||
| Non-performing Loans/ Loans & Leases, net of<br>unearned income | 0.43 | % | 0.50 | % | 0.67 | % | |||
| Non-performing Assets/ Total Assets | 0.32 | % | 0.36 | % | 0.50 | % | |||
| Primary Capital Ratio | 16.36 | % | 16.79 | % | 16.80 | % | |||
| Shareholders’ Equity Ratio | 15.65 | % | 16.09 | % | 16.03 | % | |||
| Price / Book Ratio | 1.03x | 1.05x | 1.15x | ||||||
| Price / Earnings Ratio | 14.57x | 12.82x | 11.63x | ||||||
| Note: | |||||||||
| (2) Includes allowances for loan losses and lending-related commitments. |
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Washington, D.C. and Charleston, WV
Stock Symbol: UBSI
(InThousands Except for Per Share Data)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March<br>2022 | March<br>2021 | December2021 | |||||||
| Mortgage Banking Segment Data: | |||||||||
| Applications | $ | 1,696,504 | $ | 2,630,426 | $ | 1,534,311 | |||
| Loans originated | 1,006,363 | 1,910,619 | 1,287,629 | ||||||
| Loans sold | $ | 1,170,124 | $ | 1,817,884 | $ | 1,273,014 | |||
| Purchase money % of loans closed | 73 | % | 43 | % | 69 | % | |||
| Realized gain on sales and fees as a % of loans sold | 2.98 | % | 4.16 | % | 3.02 | % | |||
| Net interest income | $ | 2,317 | $ | 2,650 | $ | 2,609 | |||
| Other income | 23,397 | 67,507 | 30,921 | ||||||
| Other expense | 25,448 | 41,183 | 29,147 | ||||||
| Income taxes | 57 | 5,940 | 876 | ||||||
| Net income | $ | 209 | $ | 23,034 | $ | 3,507 | |||
| March 312022 | December 312021 | March 312021 | |||||||
| Period End Mortgage Banking Segment Data: | |||||||||
| Locked pipeline | $ | 412,809 | $ | 448,889 | $ | 979,842 | |||
| Balance of loans serviced | $ | 3,623,207 | $ | 3,698,998 | $ | 3,585,890 | |||
| Number of loans serviced | 24,677 | 25,198 | 25,443 | ||||||
| March 312022 | December 312021 | March 312021 | |||||||
| Asset Quality Data: | |||||||||
| EOP Non-Accrual Loans | $ | 34,093 | $ | 36,028 | $ | 48,985 | |||
| EOP 90-Day Past Due Loans | 15,179 | 18,879 | 15,719 | ||||||
| EOP Restructured Loans ^(1)^ | 30,582 | 35,856 | 51,529 | ||||||
| Total EOP Non-performing Loans | $ | 79,854 | $ | 90,763 | $ | 116,233 | |||
| EOP Other Real Estate Owned | 13,641 | 14,823 | 18,690 | ||||||
| Total EOP Non-performing Assets | $ | 93,495 | $ | 105,586 | $ | 134,923 | |||
| Three Months Ended | |||||||||
| March<br>2022 | March<br>2021 | December2021 | |||||||
| Allowance for Loan & Lease Losses: | |||||||||
| Beginning Balance | $ | 216,016 | $ | 235,830 | $ | 210,891 | |||
| Initial allowance for acquired PCD loans | 0 | 0 | 12,629 | ||||||
| Gross Charge-offs | (1,476 | ) | (6,957 | ) | (4,205 | ) | |||
| Recoveries | 3,456 | 2,415 | 4,080 | ||||||
| Net Recoveries (Charge-offs) | 1,980 | (4,542 | ) | (125 | ) | ||||
| Provision for Loan & Lease Losses | (3,402 | ) | 294 | (7,379 | ) | ||||
| Ending Balance | 214,594 | 231,582 | 216,016 | ||||||
| Reserve for lending-related commitments | 36,679 | 20,024 | 31,442 | ||||||
| Allowance for Credit Losses ^(2)^ | $ | 251,273 | $ | 251,606 | $ | 247,458 |
Notes:
| (1) | Restructured loans with an aggregate balance of $13,568, $38,023, and $22,421 at March 31, 2022,<br>March 31, 2021 and December 31, 2021, respectively, were on nonaccrual status, but are not included in “EOP Non-Accrual Loans” above. Restructured loans with an aggregate balance of<br>$102 thousand at December 31, 2021 were 90 days past due, but not included in “EOP Non-Accrual Loans” above. |
|---|---|
| (2) | Includes allowances for loan losses and lending-related commitments. |
| --- | --- |
EX-99.2
First Quarter 2022 Earnings Review United Bankshares, Inc. April 26, 2022 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 Community Bankers Trust Corporation (“Community Bankers Trust”) and United that was completed on December 3, 2021; (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 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) reform of LIBOR; (5) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those involving the OCC, Federal Reserve, FDIC, and CFPB; (6) the effect of changes in the level of checking or savings account deposits on United’s funding costs and net interest margin; (7) future provisions for credit losses on loans and debt securities; (8) changes in nonperforming assets; (9) risks relating to the merger with Community Bankers Trust, including the successful integration of operations of Community Bankers Trust, the expected growth opportunities and costs savings from the Merger, and deposit attrition, operating costs, customer losses and business disruption following the Merger; (10) competition; and (11) 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 $81.7 million and Diluted Earnings Per Share of $0.60 Generated Return on Average Assets of 1.13%, Return on Average Equity of 6.96%, and Return on Average Tangible Equity* of 11.63% Achieved period end annualized loan growth of 10.8% (excluding PPP loans) 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 decreased 11.5% linked-quarter Net Interest Margin (FTE) increased from 2.94% to 2.99% (linked-quarter) Strong expense control with an efficiency ratio of 58.59% Capital position remains robust and liquidity remains sound Repurchased 710,785 shares during 1Q22 with an additional 640,000 shares repurchased in 2Q22 (through 4/25/22) 1Q22 HIGHLIGHTS *Non-GAAP measure. Refer to appendix.
ESXB New Franchise Footprint UBSI Source:S&P Global Market Intelligence Note:Locations include mortgage origination and servicing branches Charleston Greenville Asheville Lynchburg Charlottesville ESXB MERGER UPDATE Update Closed the merger with Community Bankers Trust Corporation (ESXB) on December 3, 2021 Strategically connects UBSI’s Mid-Atlantic and Southeast footprint Adds to existing presence in Washington D.C. MSA Expands footprint into the contiguous markets of Baltimore and Annapolis in Maryland, and Richmond, Lynchburg, and the Northern Neck of Virginia ESXB had total assets of ~$1.8 billion, portfolio loans of ~$1.3 billion, and deposits ~$1.5 billion Issued ~7.1 million shares of UBSI common stock Successfully completed the integration and core systems conversions Expense savings were in-line with announced targets and were fully realized beginning in 1Q22
Linked-Quarter (LQ) Net Income was $81.7 million in 1Q22 compared to $73.9 million in 4Q21, with diluted EPS of $0.60 in 1Q22 compared to $0.56 in 4Q21. Net Interest Income increased $7.8 million primarily due to increased average earning assets as a result of the full-quarter impact of the ESXB acquisition and organic growth. Offsetting the increase were declines in loan accretion on acquired loans and PPP loan fee income of $2.1 million and $0.9 million, respectively. Provision Expense was $(3.4) million in 1Q22 compared to $(7.4) million in 4Q21. Included within the 4Q21 total was provision expense of $12.3 million related to the purchased non-credit deteriorated loans acquired from ESXB. Noninterest Income decreased $8.0 million due primarily to a decrease of $8.1 million in income from mortgage banking activities. Noninterest Expense decreased $12.6 million primarily due to decreases of $8.9 million in employee compensation and $3.5 million in data processing. 4Q21 included merger-related expenses of $2.5 million in employee compensation and $3.5 million in data processing. EARNINGS SUMMARY
PERFORMANCE RATIOS *Non-GAAP measure. Refer to appendix. Strong profitability and expense control
Reported Net Interest Margin increased from 2.94% to 2.99% LQ. Linked-quarter Net Interest Income (FTE) was up $7.8 million primarily due to increased average earning assets as a result of the full-quarter impact of the ESXB acquisition and organic growth. Offsetting the increase were declines in loan accretion on acquired loans and PPP loan fee income of $2.1 million and $0.9 million, respectively. Year 1 of a +100 bps rate shock scenario shows projected NII up ~1.4%, and Year 2 shows projected NII up ~3.7% (compared to base case projections). Total remaining unamortized PPP fees (net of costs) were $6.2 million as of 3/31/22. Scheduled purchase accounting loan accretion is estimated at $8.8 million for the remainder of FY 2022 and $11.4 million for FY 2023. NET INTEREST INCOME AND MARGIN
Linked-Quarter loan balances increased $368 million primarily driven by Commercial loans and Construction & Land Development loans. Excluding the $113 million decline in PPP loans, total loans increased $481 million (10.8% annualized) compared to 4Q21. Loan balances within the North Carolina & South Carolina markets were up ~24.0% annualized in 1Q22 (excluding PPP). Non Owner Occupied CRE to Total Risk Based Capital was ~243% at 1Q22. CRE portfolio remains diversified among underlying collateral types. Total purchase accounting-related fair value discount on loans was $61 million as of 3/31/22. LOAN SUMMARY (EXCLUDES LOANS HELD FOR SALE) $ in millions
End of Period Balances (000s) 12/31/21 3/31/22 Non-Accrual Loans $36,028 $34,093 90-Day Past Due Loans $18,879 $15,179 Restructured Loans $35,856 $30,582 Total Non-performing Loans $90,763 $79,854 Other Real Estate Owned $14,823 $13,641 Total Non-performing Assets $105,586 $93,495 Non-performing Loans / Loans 0.50% 0.43% Non-performing Assets / Total Assets 0.36% 0.32% Annualized Net Charge-offs / Average Loans 0.00% (0.04)% Allowance for Loan & Lease Losses (ALLL) $216,016 $214,594 ALLL / Loans, net of earned income 1.20% 1.17% Allowance for Credit Losses (ACL)* $247,458 $251,273 ACL / Loans, net of earned income 1.37% 1.37% NPAs decreased $12.1 million, or 11.5%, compared to 4Q21. ACL increased $3.8 million LQ primarily driven by an increase in the reserve for lending-related commitments of $5.2 million. PPP loans are included within the ratios above ($302 million at 12/31/21 and $190 million at 3/31/22). CREDIT QUALITY *ACL is comprised of ALLL and the reserve for lending-related commitments
PPP Loan Activity Originated over 13,500 loans for $1.8 billion since program inception in 2020 Maintained an “all hands on deck” approach in order to assist as many customers as possible Outstandings decreased $113 million in 1Q22 Remaining outstandings at 3/31/22: Over 1,800 loans totaling $190 million Average loan balance: $103,275 Median loan balance: $25,032 PPP Fees Recognized, net of costs ($ millions)* 1Q21 2Q21 3Q21 4Q21 1Q22 $11.31 $9.02 $7.85 $5.04 $4.10 *Remaining unamortized fees of $6.2 million at 3/31/22. PPP Loans Outstanding ($ millions) 1Q21 2Q21 3Q21 4Q21 1Q22 $1,203 $790 $412 $302 $190 PAYCHECK PROTECTION PROGRAM (PPP)
Strong core deposit base with 38% of deposits in Non Interest Bearing accounts. LQ deposits increased $124 million with all categories except Time Deposits showing increases for the quarter. 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 6/30/21) MSA Total Deposits In Market ($000) Number of Branches Rank Washington, DC 10,389,699 63 7 Charleston, WV 1,458,733 8 2 Morgantown, WV 1,279,427 6 1 Myrtle Beach, SC 837,090 11 5 Richmond, VA 821,453 12 8 Parkersburg, WV 749,485 4 1 Hagerstown, MD 643,632 6 3 Charleston, SC 637,937 8 8 Wheeling, WV 520,225 6 2 Charlotte, NC 518,579 7 17 $ in millions Source: S&P Global Market Intelligence DEPOSIT SUMMARY
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 $10.4 billion in deposits. United has increased deposit market share in the D.C. MSA from #15 in 2013 to #7 in 2021, with total deposits increasing from $2.1 billion to $10.4 billion. Virginia- #7 in the state with $9.3 billion (including VA deposits within the D.C. MSA). North Carolina #17 in the state with $2.0 billion. Select MSAs: #17 in Charlotte #28 in Raleigh #13 in Wilmington #11 in Greenville #1 in Washington #8 in Rocky Mount #10 in Fayetteville South Carolina #10 in the state with $1.9 billion. Select MSAs: #8 in Charleston #5 in Myrtle Beach #13 in Greenville #16 in Columbia ATTRACTIVE DEPOSIT MARKET SHARE POSITION Source: S&P Global Market Intelligence; Data as of 6/30/21
End of Period Ratios / Values 12/31/21 3/31/22** Common Equity Tier 1 Ratio 13.4% 13.0% Tier 1 Capital Ratio 13.4% 13.0% Total Risk Based Capital Ratio 15.4% 15.1% Leverage Ratio 11.0% 10.4% Total Equity to Total Assets 16.1% 15.7% *Tangible Equity to Tangible Assets (non-GAAP) 10.2% 9.8% Book Value Per Share $34.60 $33.77 *Tangible Book Value Per Share (non-GAAP) $20.59 $19.72 Capital ratios remain significantly above regulatory “Well Capitalized” levels and exceed all internal capital targets. United repurchased 710,785 common shares during 1Q22 for $25.0 million as compared to no shares repurchased during 4Q21. From 4/01/22 through 4/25/22, United repurchased 640,000 common shares for $22.0 million. As of 4/25/22, there were 1,683,011 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) 12/31/21 3/31/22 Applications $1,534,311 $1,696,504 Loans Originated $1,287,629 $1,006,363 Loans Sold $1,273,014 $1,170,124 Purchase Money % 69% 73% Realized Gain on Sale Margin 3.02% 2.98% Locked Pipeline (EOP) $448,889 $412,809 Loans Held for Sale (EOP) $504,416 $340,040 Balance of Loans Serviced (EOP) $3,698,998 $3,623,207 Total Income $33,530 $25,714 Total Expense $29,147 $25,448 Income Before Tax $4,383 $266 Net Income After Tax $3,507 $209 Mortgage Banking Segment represents George Mason Mortgage and Crescent Mortgage Company. George Mason Mortgage, founded in 1980, is headquartered in the Washington D.C. MSA with 13 retail offices located throughout Virginia, Maryland, North Carolina, and South Carolina. Crescent Mortgage Company, founded in 1993, is headquartered in Atlanta, Georgia, and is primarily a correspondent/wholesale mortgage company approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers. The quarterly net fair value impact on mortgage banking derivatives and loans held for sale was $(6.8) million in 4Q21 and $(10.3) million in 1Q22. MORTGAGE BANKING
Select guidance is being provided for 2022. Our outlook may change if the expectations for these items vary from current expectations. Balance Sheet: Expect loan growth, excluding PPP loans and loans held for sale, to be in the mid single digits for the remainder of 2022 (annualized). Loan pipelines continue to be very strong. Expect to continue to opportunistically increase investment portfolio balances. Net Interest Income / Net Interest Margin: Expect the net interest margin, excluding PPP fees and loan purchase accounting accretion, to increase throughout 2022 (compared to 1Q22). Net interest income is expected to be in the range of $800 million to $820 million for FY 2022 (utilizing implied forward rate assumptions as of 3/31/22). Non Interest Income: Expect non interest income to be under pressure due to the slowdown in mortgage banking, with mortgage banking revenue expected to be considerably lower than previous guidance. Mortgage banking revenue will be subject to industry trends, gain on sale margins, and mix of secondary versus portfolio production. Recently, more production has shifted to portfolio product versus secondary market. Additionally, United is contemplating changes in NSF / overdraft fees which will likely reduce the non interest income run-rate by ~$5 million (annualized) beginning in 3Q22. Non Interest Expense: Expect non interest expense for FY 2022 to be in the range of $555 million to $565 million (lower than previous guidance due to lower mortgage-related expenses). Effective Tax Rate: Estimated at approximately 20.0%. Capital: Expect to remain active in the stock buyback program during 2022. 2022 OUTLOOK
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 / employee ownership 48 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 13.3x (based upon median 2022 street consensus estimate of $2.56 per Bloomberg) INVESTMENT THESIS
APPENDIX
Merger-related expense detail ESXB MERGER- ADDITIONAL INFORMATION 1Q21 2Q21 3Q21 4Q21 YTD 2021 1Q22 Provision --- --- --- $12.3 $12.3 --- Employee Comp. --- --- --- $2.6 $2.6 --- Data Processing --- --- --- $3.5 $3.5 --- Other Expense --- $0.2 $0.8 $2.0 $3.0 $0.5 Total --- $0.2 $0.8 $20.4 $21.4 $0.5 *In millions Day 1 purchase accounting marks (net mark) Other information 12/03/2021 Value Core Deposit Intangible $3.4 Allowance for Credit Losses (including unfunded) $25.9 Fair value mark (preliminary) Loans $(8.4) Investments $6.8 Trust Preferred Debt / Sub Debt $(0.4) Buildings / Land $0.3 Interest Bearing Deposits $2.7 FHLB Advances $0.5
(dollars in thousands) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 (1) Return on Average Tangible Equity (A) Net Income (GAAP) $106,898 $94,836 $92,152 $73,852 $81,664 (B) Number of Days in the Quarter 90 91 92 92 90 Average Total Shareholders' Equity (GAAP) $4,346,750 $4,378,898 $4,440,107 $4,551,634 $4,759,780 Less: Average Total Intangibles (1,825,639) (1,834,920) (1,833,449) (1,856,141) (1,911,125) (C) Average Tangible Equity (non-GAAP) $2,521,111 $2,543,978 $2,606,658 $2,695,493 $2,848,655 Formula: [(A) / (B)]*365 (or 366 for leap year) (C) Return on Average Tangible Equity (non-GAAP) 17.20% 9.58% 14.95% 14.03% 10.87% 11.63% RECONCILIATION OF NON-GAAP ITEMS
(dollars in thousands) 12/31/2021 3/31/2022 (2) Tangible Equity to Tangible Assets Total Assets (GAAP) $ 29,328,902 $ 29,365,511 Less: Total Intangibles (GAAP) (1,910,907) (1,912,278) Tangible Assets (non-GAAP) $ 27,417,995 $ 27,453,233 Total Shareholders' Equity (GAAP) $ 4,718,628 $ 4,595,140 Less: Total Intangibles (GAAP) (1,910,907) (1,912,278) Tangible Equity (non-GAAP) $ 2,807,721 $ 2,682,862 Tangible Equity to Tangible Assets (non-GAAP) 10.2% 9.8% (3) Tangible Book Value Per Share: Total Shareholders' Equity (GAAP) $ 4,718,628 $ 4,595,140 Less: Total Intangibles (GAAP) (1,910,907) (1,912,278) Tangible Equity (non-GAAP) $ 2,807,721 $ 2,682,862 ÷ EOP Shares Outstanding (Net of Treasury Stock) 136,392,758 136,068,439 Tangible Book Value Per Share (non-GAAP) $20.59 $19.72 RECONCILIATION OF NON-GAAP ITEMS (CONT.)