United Bankshares Inc (UBSI) March 2026 Conference Transcript

All right. Good afternoon, everyone. I'm Steve Moss, one of the bank analysts here at Raymond James, and with me today, I have the pleasure of hosting United Bank Shares, UBSI, and with me here to kick off the presentation is Rick Adams, their CEO. And so with that, Rick, I'll hand it over to you.

Thank you. I appreciate that. Again, Rick Adams, CEO, UBSI. I have with me today Mark Tatterson. He's our CFO. I have our Chief Operating Officer, Ross Draver, West Tracewell, SVP of Treasury. Appreciate everyone being here today. Appreciate Raymond James for inviting us. This is one of our favorite conferences of the year. I'm going to make a few comments to kick things off and then I'm going to turn it over to Mark who's going to do a little presentation. For those of you who aren't familiar with UBSI, we're a $34 billion banking company in the mid-Atlantic and southeast. We have over 240 locations, eight states, plus D.C. We go from Baltimore in the north down to Charleston, South Carolina in the south, and then from the coast over to Atlanta, Georgia in the west. We are a high-performing banking company with a low-risk profile. profile. We have a long history of success dating back to 1839 when we opened our doors on St. Patrick's Day. So we're two weeks away from our 187th birthday. We have an experience management team. We have one of the best footprints in the industry and we have the size and the culture that allows us to compete and win upstream and downstream. We've increased our dividend to shareholders for 52 consecutive years I don't think there's anything that captures the essence of our company quite like the dividend streak. I think it speaks to our consistency, to our discipline, to our ability to manage risk, and to our ability to execute at a high level. It shows that we've been able to protect against the asymmetric downside, but at the same time shows that we've been able to grow and innovate. It demonstrates our steadfast commitment to our mission, and it evidences the fact that we are a shareholder-driven organization. Let me touch just on 2025. 2025 is one of the best years in our company's long history. We had record earnings in 2025, and we outperformed peer medians in pretty much every profitability and risk management metric. Last year we reinstituted the buyback for the first time since 2022. Between the buyback and the dividend we returned $338 million of capital to our shareholders in 2025 and we are committed to being good stewards of our capital and focused on its efficient allocation. Also, 2025, I'd mentioned that we closed our 34th acquisition, Piedmont Bank Corp in Atlanta, Georgia. It couldn't be going any better, and I couldn't be any more excited about what I think we're going to be able to accomplish in that market. And when it comes to M&A, we are very disciplined on the front end, and we have a proven track record of execution on the back end. And our experience and expertise with M&A, I think, is a true competitive advantage. And with my job, I get to do a lot of media interviews, and one of the questions that I always like to get is, I usually do it at the end, is there anything about the United story that you think people are missing? And when I think about the financial outperformance that we had last year, I would have expected some more stock outperformance to go along with it. So I think there was a disconnect. So I do think that there are some things that people are missing about our story, and I'd like to share three of them with you this afternoon. The first thing is I think people are missing the organic growth story just a little bit. I mean, historically, people have viewed us as a growth-via-acquisition company, and I think, historically speaking, that's pretty fair. Initially, you know, we grew up in West Virginia. We needed M&A to build the franchise in the slower growth markets in and around West Virginia, and we needed M&A to eventually expand into higher growth markets like D.C. and the southeast. But today, through a combination of management focus, also a new footprint in some of the best banking markets in the country, we've become a much more balanced organization between organic and inorganic growth. We've grown loans now for 17 straight quarters. We've grown deposits 10 out of the 11 last quarters. And the growth strategy of most companies is either, you know, build or buy. And we are fortunate to have the dual growth strategies of build and buy. And I think it's also important to note that when we've driven this growth, we've been able to do it without sacrificing our underwriting or pricing disciplines. And our growth strategy always begins with quality. I can tell you that a dollar of growth at United is better than a dollar of growth in most other places. Now, I'm not saying, and I'm certainly not signaling, that we are out of the M&A business. It's been a big part of our story, but M&A is perhaps lower on the list of capital deployment priorities than it once was. And unlike many others out there today, we do not feel any pressure to rush out and do a deal to hit this window of M&A opportunity that exists. We love our long runway for organic growth. And because we're an experienced acquirer and because we have strong risk management practices, capital levels, and liquidity, we feel that the window for M&A is always open to us. And if you think back when we did announce our last deal in Atlanta, it was at a time when nobody was doing M&A, and sometimes that's the best time to be doing it. but for now we are more focused on organic growth the second thing I think people might be missing about our story is what I would refer to as the true DC story and you know when I stood here at this presentation a year ago our stock was in a little bit of a free fall and you know it's funny because earnings were great asset quality was great our land acquisition was closed converted it was going great everything was going great except for the stock and when I asked around to see where the selling pressure was coming from. The explanation I received was the four-letter word Doge, and investors were running at that time from any banks with exposure to D.C., and we are the go-to bank in the DMV, and Doge, along with pandemic-driven concerns with CRE and office, as well as government shutdowns, had people predicting the end of D.C. as we know And last year, I said in my remarks that it was important to look beyond the D.C. headlines, important to gain and maintain some perspective about what the true D.C. story is. And I also said that the concerns about D.C., at least in my opinion, were a bit overblown, and it turns out that they were. I mean, the deep recession that everybody said was imminent when I stood here last year, well, it didn't happen. The dire predictions about job losses in D.C., actual numbers weren't even close to what was predicted. And the hand-wringing about agencies leaving D.C., relocating to other parts of the country, well, that has not materialized either. Now, if we learn that the D.C. economy is not quite as bulletproof as maybe we once thought, I think that's fair. Can you point to some negative trends in the area? That's certainly true. But D.C. is a resilient, global city, capital of the United States of America. There's a lot of positive things that go along with that that are not going to go away. Empathies, global institutions, and the like. That's one of the wealthiest and most educated workforces anywhere. Growing industries like cyber, AI, IT, defense. Mayor, who is taking a balanced approach towards economic development. 20-plus colleges and universities, great restaurants, museums, performing arts venues. I can tell you that we do believe in D.C., and I think D.C. is going to be just fine. And even if D.C. does take a turn for the worst, UBSI will be just fine. And our deep market knowledge, our disciplined underwriting, our strong relationships with the best sponsors have kept our portfolio strong. And just as it was wrong, I think, to overreact about the D.C. economy, it was equally as wrong, I think, to paint all the banks that do business there with the same broad brush because they are not equal. The third thing that I think people are missing about our story is I think they're missing the southeast story a bit. And when I travel around, there's still some people that think of us as a West Virginia bank, and we are the dominant banking franchise in and around West Virginia. We have a long legacy there. We're the oldest company there. We have number one market share there. And then a lot of people think of us as a D.C. company. And over the last 35 years, we've built what I think is the best bank in the DMV. We bank the best customers. We're involved in the biggest deals. and we truly have become the community bank of the nation's capital but i don't think that people are fully aware of the franchise that we've built in the southeast and our southeastern franchise has now become the biggest part of our company we have more locations over 100 in the southeast than we do in either our legacy franchise or in the dc air we've got more loans there we have the production the growth is coming from there we have some of our largest relationships there. We've been recognized as the best bank in South Carolina for three years in a row. And I think we have one of the best regional bank footprints in the industry. We've got access to great core deposit markets, access to some of the best growth markets in the country, and our footprint gives us a great deal of geographic and industry diversification. And to close, I just say that we're continuing to perform at a high level.

I'm confident that we can continue to do that and the future looks bright for UBSI now I'm going to turn it over to mark who's going to go through a slide presentation for you today and then we'll be glad to answer any questions good afternoon and thank you Rick and thank you again to Raymond James and Steve Moss for hosting us today we really appreciate the coverage so our forward-looking statements disclosure can be seen on this slide you can just read that at your convenience if you're bored at night sometime but I wanted to start today with a general corporate overview of UBSI. So UBSI is a regional financial holding company with over 240 locations. And you can see on the map on the right-hand side, we do have locations now in Georgia, South Carolina, North Carolina, Virginia, Maryland, Washington, D.C., West Virginia, Ohio, and Pennsylvania. We are now the 38th largest bank in the U.S. by market cap. We have had 52 consecutive years of dividend increases to shareholders we've completed 34 acquisitions since 1982 and we've consistently been ranked as one of the most trustworthy banks in america by newsweek united is a member of a number of indices including the s p mid cap 400 the russell 2000 the dow jones dividend select index the s p high yield dividends aristocrats index and the nasdaq u.s dividend achiever 50 index these last three funds have very stringent dividend requirements you must meet in order to be eligible to be in the fund as you can see in the box on the bottom left united has about 34 billion in assets 25 billion in loans and about 27 billion in deposits next i wanted to discuss our highlights for 2025 and i'm not going to hit on all the bullet points but i did want to note that in 2025, we achieved record net income of $465 million, and we recorded diluted earnings per share of $3.27, which was also a record. Our returns were strong. We generated return on average assets of 1.14%, return on average equity of 8.63%, and return on tangible equity of 13.95%. If you look at the fourth bullet point on this slide, you can see that we did return $338 million in capital to shareholders through $212 million of common dividends and $126 million of share repurchases. We also closed our merger with Piedmont in 2025, and Piedmont was headquartered in the greater Atlanta area and brought us 16 offices and $2.4 billion in assets. On the acquisition topic, United does have a demonstrated history of successful acquisitions. You can see the last three mergers have really helped us build out our southeastern footprint. Carolina Financial got us a really nice branch network in North and South Carolina. Community Bankers Trust got us into the Richmond market, and Piedmont most recently provided an entry into the Georgia market. And these mergers really provided some geographic diversification and expansion into new markets that have very strong growth demographics. United has been a very strong performer for a long period of time. This slide shows our performance ratios over the last five years. As you can see, United has posted strong and consistent results. I previously mentioned our record earnings in 2025, and a large part of our financial success in 2025 was driven by our net interest margin expansion. Our last five quarters of margin data are shown in the table on the upper right. You can see that our margin increased from 3.49% at the end of 2024 up to 3.83% at the end of 2025. Another factor driving our success in 2025 was our ability to generate organic loan and deposit growth. So this slide shows our current loan mix and recent balance trends. During 2025, loans increased approximately $3 billion. Excluding the Piedmont merger-related balances, loans increased approximately $1 billion during the last fiscal year on an organic basis. Much of the growth in 2025 was driven by our newer southeastern markets. For example, we We grew loans approximately 20% in North Carolina in 2025, and we also grew loans in Georgia approximately 19% in 2025, so very strong growth rates coming out of our southeastern markets. This slide summarizes our loan portfolio by a major asset class in geography, and as Rick discussed in the opening, what we define as our southeastern markets now represent the largest part of our loan portfolio at 43%. This is followed by the Metro D.C. Baltimore market at 35%, and our legacy West Virginia, Ohio, Pennsylvania, and Shenandoah Valley markets at 19%. The graphic on the right shows a map with the shaded areas representing where we have loans outstanding. I think this really helps drive the point home with what Rick was highlighting in the beginning, that we've really grown to be a very solid Mid-Atlantic and Southeastern franchise. I want to talk about credit quality for a minute, so our credit quality remains solid with NPAs, the total assets, at 33 basis points at year-end. Net charge-offs were better than pure last year. We were 15 basis points in net charge-offs in the fourth quarter and only 19 basis points for the full year of 2025. We currently have a strong allowance of $298 million, representing about 1.2% of total loans. So the next two slides show our asset quality going back to 2007, which does capture the financial crisis and provides more of a longer-term view of credit. As you can see here, our non-current loans, which includes non-accrual and 90-plus days past due, significantly outperformed our Federal Reserve peer group through the crisis. Additionally, our loss content was also significantly less than peers during this time frame. As you can see, our underwriting held up very well during the last major recession and continues to be very strong. This slide shows our current deposit mix, and if you look at the upper left-hand corner, you will see that we increased deposits in 2025 by about $3.1 billion. To exclude the Piedmont-acquired balances on an organic basis, deposit growth was approximately $1 billion for the year. We do maintain about 24% of our deposit base in non-interest-bearing deposits, and with respect to deposit betas, our cumulative interest-bearing deposit beta is about 47% through this down cycle, while our total deposit beta is running at about 33%. Our capital position remains very strong, and we do substantially exceed the well-capitalized guidelines and the capital conservation buffers. Our CET1 is over 13%, and our tangible equity to tangible assets is at 10.9%. Both are well ahead of our peers. We have 4.3 million shares remaining under a board-approved share repurchase program, and that's as of February 28th. I would note, and Rick talked about this in the beginning as well, we were active with our buyback in 2025. During the year of 2025, we repurchased 3.6 million shares. We've also continued to be active in the buyback in 2026, and year-to-date we've repurchased 495,000 shares. My last two slides today show our outlook for 2026 and our investment thesis. So we are forecasting a mid-single-digit loan and deposit growth rate for 2026. We are projecting net interest income to be between $1.145 billion and $1.175 billion. For provision, we are using a planning assumption of approximately $48 million, and we do expect non-interest income to be between $125 million and $135 million. We always do a great job on the expense side, so we are always working on trying to cut expenses where we can and be very mindful of expense growth. So on the expenses, we do think expenses will be in the range of $615 to $630 million for the year. We are projecting an effective tax rate of approximately 21%. And finally, as we've said a couple times now, we do believe we do have a very significant excess capital position. Therefore, we do expect to be active in the buyback in 2026, although it will be market-dependent. The last slide I wanted to touch on today is our investment thesis for UBSI. We do believe we have one of the premier Mid-Atlantic and Southeast franchises with an attractive mix of high-growth MSAs and smaller, stable markets with a strong deposit base. We have consistently been a high-performing company with a culture of disciplined risk management and expense control and our 52 years of consecutive dividend increases evidences united strong profitability solid asset quality and songs and solid capital management over a very long period of time we do have an experienced management team with a proven track record of execution and we are committed to our mission of excellence in service to our employees our customers our communities and our shareholders and finally we do have an attractive valuation our current price to earnings ratio is at 11.8 times and that's based upon the median street estimates of three dollars

and fifty cents it's coming from bloomberg for 2026. so that concludes my portion of the presentation and rick and i would be happy to answer any questions that anyone has and we do appreciate your time and attention today thank you thanks mark and uh thanks rick and maybe just starting off uh one question to start it here is you know you touched on rick about being focused on organic growth maybe just gives us some update as to what you're seeing in the market for the loan pipeline loan pricing um obviously georgia's been going very well which i think a lot of people are aware of but maybe just a little update quarter date kind of what you guys are seeing

how things are going yeah uh you know our our pipelines continue uh to to be very strong uh they're down a little bit from where they were you know kind of uh second and third quarter last year but historically speaking our pipelines still are very strong um you know the southeast as mark said last year drove that growth i think that that we expect that to continue to be true in 2026. I think from a competitive perspective on the loan side, competition has definitely heated up. I don't think that that's a peculiar to the southeast. I think that's probably true across all of our different markets. I mean, even in West Virginia, we've seen some very aggressive of structure and pricing on the loan side, but I think that even with that increased competition, I think we're still going to be able to come in at the guidance that we've put out And then maybe just in terms of pricing, I know you guys have some give on deposits.

You guys definitely emphasized with me over time about holding a relatively stable margin. just kind of curious how you guys are thinking with you know the pricing's a little tighter how you guys may be doing some offsets on deposit on deposit side thanks steve we do think we'll have a relatively stable margin in the upcoming year i think there's some puts and takes rick talked about it being more competitive on on the loan side so far the deposit side while it's competitive it hasn't been extreme at this point and we don't have some of the back book of the loan portfolio that's going to continue to reprice in 2026 we've also looked at some opportunities on the investment side so we're sitting on a fair amount of cash right now and we've been putting a little bit of that to work and we expect to continue to put some that to work throughout the year so I think that could help the margin out as well so I think the growth will help drive it both on the loan and deposit side and I do think a little bit on the investment portfolio could help as well so overall we think it would be relatively stable but you may give a few basis points back here there in a quarter might see a basis point or two of expansion but overall we're projected to be relatively stable for the year appreciate that and then you know another question just in terms of thinking about you guys are running a 91 percent loan deposit ratio just kind of curious where you guys are maybe willing to take that um if you want to stay in this range or you want to go a bit higher i think we have always

historically run a pretty high maybe compared to some of our peers we've run higher in the past so So I think that we're comfortable where we are maybe a little bit higher than other folks are and a little bit room to grow. But we don't see that as something that's going to hamper our growth.

And then on capital here, you guys have been buying back very actively in the fourth quarter, bought back into January. You know, numbers show maybe a little bit less in February here. But, you know, you guys do have a 13.4 CET1 ratio.

I'm kind of curious where you guys are looking to run it going forward here. definitely a much more regulatory friendly environment a lot of guys talking 10.5 11 ct1 just kind of any color on that yeah we we haven't uh you know set or announced any any uh targets and that's a very um you know dynamic decision that depends on a lot of things we've kind of stayed away from putting a target out there but um it is something that we we talk about all the time and and we have uh you know since we got back into the buyback at the beginning of 2025 you know depending on you know what the stock has done we've changed you know where you know what our program is and and I think we're we're evaluating that again right now in this environment so it's very market specific for us but I can tell you that we you know historically have held a lot of capital it's just part of our conservative nature but I think that we realize that we've you know got even for United Standards a lot of capital right now and we are very much committed to putting that to work appreciate that and then you know definitely ricky touched on in terms of dc uh being an issue last year with doge and everything else you know what are you guys seeing in terms of dc office just kind of the activity um and where pricing maybe is these days yeah i mean you know first of all uh you know dc office is different um you know to to talk about dc office like it's the same everywhere it's very it's very different one of the things that we have been uh trying to communicate uh through the the pandemic is you know the the ground zero i think for the the office situation is is the is is downtown dc we don't have any uh exposure there it is still weak but um but i think there are some green shoots coming up i mean dc leads in office conversions. We just did a really nice one just finishing up. I think Ross just toured the building right beside us. One of the best sponsors in the entire country came in and read it. So I think that the mayor has a growth agenda that she's put out that is addressing some of the red tape that exists in D.C.

There are some legislation on the books that makes it difficult for some of the developers she's attacking that so I'm not trying to sugarcoat it by I do think the concerns are overblown but there are certainly concerns but I think I think DC is heading back in the in the right direction if there are any questions from the audience please please let me know run low on time here but I guess you know one more for me here just in terms In terms of, you know, talking on efficiencies here, just, you know, I know you guys like to keep costs under control, but just on the other side of, you know, what investments do you see that you need, tech or otherwise, that you guys are contemplating these days?

Yeah, I think one of our strengths is that historically we have been one of the more efficient banks out there, and it's a big part of our story, and certainly we are always committed to that. but at the same time we know that we have to invest and i'd say a few things one we did just renegotiate our core provider contract and we were able to obtain significant savings but rather than pass that through in in in the expenses in 2026 i think we're going to take that and invest that in new technologies we're taking a hard look now at what we need to do from a from a technology perspective, a talent perspective, a systems perspective, you know, we're at 34 billion now to get to 50, to get to 75, to get to 100. And when I talk to our peers that have gone through that process, everybody has the same advice as to get out in front of it. And because you have a lot of big changes and to be able to take those in bite-sized chunks, to be able to make those investments in in bite-sized chunks so i think that it's kind of across the board certainly technology is a big part talent is a big part um and then and then systems and and so we are putting together a multi-year plan in terms of what investments that we need to make in those categories one question so a question on the residential repricing profile and also

So, how are you able to get the core savings?

Do you want to take the price?

I could start on the Resi portfolio. So, yeah, it is about 25% of our book, I think is the number. And generally what we're trying to do is we're originating arms, so five, seven year arms. So typically not trying to put on 30 year fixed rate mortgages. If we're gonna put on any of that type of exposure, we usually do that through the investment portfolio, through like a pack, well-structured type of bond. So generally what we're gonna have, are going to be more of the arm products i'd have to go back and look at the specifics like on how much role is every year but generally it's got it's got a pretty good role profile just given that it is the arm products that we're typically buying and it's it's within our footprint but we're originating most of that within our footprint we also have some relationships with some mortgage companies that will occasionally pick up some of their five and seven within our our portfolio our geographies and on the uh the core i don't know that we have any ones here One thing that we did do different this time, we've never done it, we did use a consultant to help us negotiate that contract.

So I wasn't personally involved in it, so I don't know that I can speak to the particulars, but I know that that's something that we've never done, and we were very pleased with that process. So good question. I think we're out of time. I appreciate it, and there's a breakout if anybody has any further questions.