You are here

Press Release

United Bankshares, Inc. Announces Earnings for the Second Quarter and First Half of 2020

Company Release - 7/24/2020 7:50 AM ET

WASHINGTON & CHARLESTON, W. Va.--(BUSINESS WIRE)-- United Bankshares, Inc. (NASDAQ: UBSI) (“United”), today reported earnings for the second quarter and the first half of 2020. Earnings for the second quarter of 2020 were $52.7 million as compared to earnings of $67.2 million for the second quarter of 2019. Earnings for the first half of 2020 were $92.9 million as compared to earnings of $130.8 million for the first half of 2019. The lower amount of net income in 2020 was driven primarily by significant merger-related expenses from the Carolina Financial Corporation (“Carolina Financial”) acquisition and a higher provision for loan losses resulting from an adverse future macroeconomic forecast as a result of the coronavirus (“COVID-19”) pandemic under the new Current Expected Credit Loss (“CECL”) accounting standard. The higher amount of provision expense resulting from COVID-19 is an industry-wide issue affecting bank earnings nationwide. Diluted earnings per share were $0.44 and $0.84 for the second quarter and first half of 2020, respectively, as compared to diluted earnings per share of $0.66 and $1.28 for the second quarter and first half of 2019, respectively.

Second quarter of 2020 results produced an annualized return on average assets of 0.87%, an annualized return on average equity of 5.40% and an annualized return on average tangible equity of 9.58%, respectively. For the first half of 2020, United’s annualized return on average assets was 0.85% while the annualized return on average equity was 5.16% and the annualized return on average tangible equity was 9.28%. United’s annualized returns on average assets, average equity and average tangible equity were 1.38%, 8.12% and 14.90%, respectively, for the second quarter of 2019 while the annualized returns on average assets, average equity and average tangible equity were 1.36%, 8.00% and 14.78%, respectively, for the first half of 2019.

“During the second quarter of 2020, we successfully completed the acquisition of Carolina Financial Corporation, headquartered in Charleston, South Carolina, which broadens our footprint in the Southeast,” stated Richard M. Adams, United’s Chairman of the Board and Chief Executive Officer. “Core earnings for the second quarter of 2020 continued to be good despite the current economic environment and significant merger expenses related to the acquisition of Carolina Financial. In addition, United has continued its focus on meeting our customers’ needs during the COVID-19 pandemic by suspending residential property foreclosures, offering fee waivers, providing payment deferrals, and processing over 8,000 loans totaling approximately $1.3 billion under the government Paycheck Protection Program.”

On May 1, 2020, United completed its acquisition of Carolina Financial. The results of operations for Carolina Financial are included in the consolidated results of operations from the date of acquisition. As a result of the acquisition, the second quarter and first half of 2020 were impacted by two months of increased levels of average balances, income, and expense as compared to the second quarter and first half of 2019. In addition, the second quarter and first half of 2020 included $46.4 million and $48.0 million, respectively, of merger-related expenses from the acquisition.

Net interest income for the second quarter of 2020 was $170.6 million, which was an increase of $20.0 million or 13% from the second quarter of 2019. Tax-equivalent net interest income, which adjusts for the tax-favored status of income from certain loans and investments, for the second quarter of 2020 was $171.6 million, an increase of $20.0 million or 13% from the second quarter of 2019 due mainly to an increase in average earning assets from the Carolina Financial acquisition. Average earning assets for the second quarter of 2020 increased $4.5 billion or 26% from the second quarter of 2019 due mainly to a $3.4 billion or 24% increase in average net loans. Average short-term investments increased $778.1 million or 101% while average investment securities increased $315.6 million or 12%. In addition, the average cost of funds for the second quarter of 2020 decreased 84 basis points due primarily to a decline in interest rates from the second quarter of 2019. Partially offsetting the increases to tax-equivalent net interest income for the second quarter of 2020 was a decrease of 97 basis points in the average yield on earning assets as compared to the second quarter of 2019 due to the decline in market interest rates and the low yield on Paycheck Protection Program (“PPP”) loans. In addition, loan accretion on acquired loans was $9.5 million and $14.5 million for the second quarter of 2020 and 2019, respectively, a decline of $5.0 million. The net interest margin of 3.18% for the second quarter of 2020 was a decrease of 35 basis points from the net interest margin of 3.53% for the second quarter of 2019.

Net interest income for the first six months of 2020 was $312.1 million, which was an increase of $17.4 million or 6% from the first six months of 2019. Tax-equivalent net interest income for the first six months of 2020 was $313.9 million, an increase of $17.2 million or 6% from the first six months of 2019. This increase in tax-equivalent net interest income was primarily attributable to an increase in average earning assets from the Carolina Financial acquisition. Average earning assets increased $2.4 billion or 14% from the first six months of 2019 as average net loans increased $1.8 billion or 13%. Average short-term investments and average investment securities increased $376.8 million or 50% and $204.8 million or 8%, respectively. In addition, the average cost of funds for the first half of 2020 decreased 55 basis points due primarily to a decline in interest rates from the first half of 2019. Partially offsetting the increases to tax-equivalent net interest income for the first half of 2020 was a decrease of 67 basis points in the average yield on earning assets as compared to the first half of 2019 due to the decline in market interest rates and the low yield on the PPP loans. In addition, loan accretion on acquired loans was $19.1 million and $23.0 million for the first half of 2020 and 2019, respectively, a decline of $3.9 million. The net interest margin of 3.24% for the first half of 2020 was a decrease of 26 basis points from the net interest margin of 3.50% for the first half of 2019.

On a linked-quarter basis, net interest income for the second quarter of 2020 increased $29.1 million or 21% from the first quarter of 2020. United’s tax-equivalent net interest income for the second quarter of 2020 increased $29.3 million or 21% from the first quarter of 2020 due mainly to an increase in average earning assets from the Carolina Financial acquisition. Average earning assets increased $4.4 billion or 25% for the linked-quarter. Average net loans increased $3.2 billion or 23% while average investment securities increased $287.6 million or 11%. Average short-term investments increased $834.3 million or 117%. In addition, the average cost of funds for the second quarter of 2020 decreased 55 basis points due primarily to a decline in market interest rates from the first quarter of 2020. Loan accretion on acquired loans was flat at $9.5 million for the second quarter and first quarter of 2020. Partially offsetting the increases to tax-equivalent net interest income on a linked-quarter was a decrease of 51 basis points in the average yield on earning assets due mainly to the low yield on the PPP loans. The net interest margin of 3.18% for the second quarter of 2020 was a decrease of 12 basis points from the net interest margin of 3.30% for the first quarter of 2020.

For the quarters ended June 30, 2020 and 2019, the provision for credit losses was $45.9 million and $5.4 million, respectively, while the provision for the first six months of 2020 was $73.0 million as compared to $10.4 million for the first six months of 2019. These increases in 2020 were due mainly to a provision for loan losses of $29.0 million recorded on purchased non-credit deteriorated (“non-PCD”) loans from Carolina Financial and the impact from the reasonable and supportable forecasts for future macroeconomic scenarios used in the estimation of expected credit losses adversely impacted by the COVID-19 pandemic under the new CECL accounting standard adopted by United on January 1, 2020. Net charge-offs were $4.3 million and $5.9 million for the second quarter of 2020 and 2019, respectively. Net charge-offs were $11.0 million and $10.7 million for the first half of 2020 and 2019, respectively. Annualized net charge-offs as a percentage of average loans was 0.10% and 0.15% for the second quarter and first half of 2020, respectively. On a linked-quarter basis, the provision for loans losses increased $18.8 million due primarily to the provision expense recorded on the non-PCD loans acquired from Carolina Financial. Net charge-offs for the second quarter of 2020 decreased $2.3 million from the first quarter of 2020.

Noninterest income for the second quarter of 2020 was $88.4 million, which was an increase of $48.6 million or 122% from the second quarter of 2019. The increase was due mainly to an increase of $46.5 million in income from mortgage banking activities due to increased production and sales of mortgage loans in the secondary market as well as the addition of mortgage banking operations from the Carolina Financial acquisition. In addition, $1.5 million in mortgage servicing income was added as a result of the Carolina Financial acquisition.

Noninterest income for the first half of 2020 was $125.2 million, which was an increase of $54.2 million or 76% from the first half of 2019. The increase was due mainly to an increase of $50.5 million in income from mortgage banking activities due mainly to increased production and sales of mortgage loans in the secondary market and the addition of mortgage banking operations from the Carolina Financial acquisition. Net investment securities’ gains were $1.7 million for the first half of 2020 as compared to a net loss of $50 thousand for the first half of 2019, an increase of $1.8 million. In addition, $1.5 million in mortgage servicing income was added as a result of the Carolina Financial acquisition.

On a linked-quarter basis, noninterest income for the second quarter of 2020 increased $51.6 million or 140% from the first quarter of 2020 due mainly to an increase of $50.6 million in income from mortgage banking activities. The increase was due mainly to increased production and sales of mortgage loans in the secondary market as well as net gains on mortgage loan derivatives and the addition of mortgage banking operations from the Carolina Financial acquisition. Net investment securities’ gains were $1.5 million for the second quarter of 2020 as compared to a net gain of $196 thousand for the first quarter of 2020, an increase of $1.3 million. In addition, $1.5 million of mortgage servicing income was added in the second quarter of 2020 as a result of the Carolina Financial acquisition. Partially offsetting these increases was a decrease of $1.1 million in income from bank-owned life insurance policies (“BOLI”) due to the recognition of death benefits of $1.2 million in the first quarter of 2020.

Noninterest expense for the second quarter of 2020 was $149.4 million, an increase of $49.2 million or 49% from the second quarter of 2019 due mainly to the additional employees and branch offices from the Carolina Financial acquisition as most major categories of noninterest expense showed increases. In particular, employee compensation increased $24.4 million (some of which was due to higher employee incentives and commissions mainly related to the increased mortgage banking production), employee benefits increased $4.2 million, net occupancy expenses increased $1.7 million, data processing expense increased $10.4 million which included a contract termination penalty of $9.7 million, mortgage loan servicing and impairment expense increased $2.4 million (includes $710 thousand for impairment on mortgage servicing rights) and other expense increased $10.6 million. Within other expense, merger-related expenses associated with the Carolina Financial acquisition were $5.5 million and the expense for the reserve for unfunded commitments increased $2.7 million, which includes $1.8 million for the expense related to the reserve for the acquired unfunded commitments from Carolina Financial. Partially offsetting the increases to noninterest expense were decreases of $518 thousand in Federal Deposit Insurance Corporation (“FDIC”) insurance expense due to lower premiums. Also, included in noninterest expense for the second quarter of 2019 were penalties of $5.1 million to prepay long-term Federal Home Loan Bank (“FHLB”) advances.

Noninterest expense for the first half of 2020 was $250.5 million, an increase of $60.9 million or 32% from the first half of 2019 due mainly to the additional employees and branch offices from the Carolina Financial acquisition. Employee compensation increased $30.0 million. Otherwise, employee compensation increased due to higher employee incentives and commissions expense mainly related to the mortgage banking production. Employee benefits increased $5.6 million, net occupancy expenses increased $2.0 million, data processing expense increased $10.7 million which included the contract termination penalty of $9.7 million, mortgage loan servicing and impairment expense increased $2.5 million (includes $710 thousand for impairment on mortgage servicing rights) and other expense increased $15.7 million. Within other expense, merger-related expenses associated with the Carolina Financial acquisition were $7.1 million, the expense for the reserve for unfunded commitments increased $3.6 million (includes $1.8 million for the expense related to the reserve for the acquired unfunded loan commitments from Carolina Financial), and the amortization of income tax credits increased $2.4 million which reduces the effective tax rate. Partially offsetting the increases to noninterest expense were decreases of $1.4 million in FDIC insurance expense due to lower premiums and $536 thousand in other real estate owned (“OREO”) expense due to fewer declines in fair value of OREO properties. Also, included in noninterest expense for the first half of 2019 were penalties of $5.1 million to prepay long-term FHLB advances.

On a linked-quarter basis, noninterest expense for the second quarter of 2020 increased $48.2 million or 48% from the first quarter of 2019 due primarily to the added employees and branch offices from the Carolina Financial acquisition. In particular, employee compensation expense increased $24.1 million (some of which was due to higher employee incentives and commissions mainly related to the increased mortgage banking production), employee benefits increased $2.0 million, net occupancy expense increased $1.3 million, data processing expense increased $10.4 million which included the contract termination penalty of $9.7 million, mortgage loan servicing and impairment expense increased $2.4 million (includes $710 thousand for impairment on mortgage servicing rights) and other expenses increased $6.8 million. Within other expense, merger-related expenses increased $4.0 million and the expense for the reserve for unfunded commitments increased $2.1 million, which includes $1.8 million for the expense related to the reserve for the acquired unfunded loan commitments from Carolina Financial.

For the second quarter and first half of 2020, income tax expense was $11.0 million and $20.9 million as compared to $17.5 million and $34.9 million, respectively, for the second quarter and first half of 2019. These decreases were due to lower earnings and a lower effective tax rate, due mainly to income tax credits. On a linked-quarter basis, income tax expense increased $1.1 million due to higher earnings partially offset by a lower effective tax rate, due mainly to income tax credits from the first quarter of 2020. United’s effective tax rate was 17.3% for the second quarter of 2020, 20.7% for the second quarter of 2019 and 19.8% for the first quarter of 2020. For the first half of 2020 and 2019, United's effective tax rate was 18.4% and 21.0%, respectively.

United’s asset quality continues to be sound relative to the current economic environment. At June 30, 2020, nonperforming loans were $156.3 million, or 0.87% 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. Nonperforming loans of $37.9 million were added from the Carolina Financial acquisition. As of June 30, 2020, the allowance for loan losses was $215.1 million or 1.20% 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 $186.2 million, including OREO of $29.9 million at June 30, 2020, represented 0.71% of total assets as compared to nonperforming assets of $146.6 million or 0.75% at December 31, 2019.

United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 14.8% at June 30, 2020 while its estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 12.6%, 12.6% and 10.7%, respectively. The June 30, 2020 ratios reflects 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%.

As mentioned previously, United completed its acquisition of Carolina Financial during the second quarter of 2020. The acquisition of Carolina Financial expands United’s footprint in the Southeast region. At consummation, Carolina Financial had assets of approximately $5.0 billion, portfolio loans of $3.3 billion, and deposits of $3.9 billion. The aggregate purchase price was approximately $817.9 million. The number of shares issued in the transaction was 28.0 million. The preliminary purchase price has been allocated to the identifiable tangible and intangible assets resulting in preliminary additions to goodwill, trade name intangibles and core deposit intangibles of $316.8 million, $1.4 million and $3.0 million, respectively. United recorded fair value discounts of $51.6 million on the loans acquired, $562 thousand on investment securities, $272 thousand on OREO, $4.8 million on trust preferred issuances and $135 thousand on subordinated notes respectively, and premiums of $8.8 million on buildings acquired, $5.0 million on land acquired, $12.8 million on interest-bearing deposits, and $468 thousand on long-term FHLB advances, respectively. United also recorded an allowance for credit losses, including a reserve for unfunded commitments, of $50.6 million on the loans and commitments acquired split between $19.8 million for PCD loans and $30.8 million for non-PCD loans. The estimated fair values of the acquired assets and assumed liabilities, including identifiable intangible assets are preliminary as of June 30, 2020 and are subject to refinement as additional information relative to closing date fair values becomes available.

As of June 30, 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 226 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".

Cautionary Statements

The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing of its June 30, 2020 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 made as of June 30, 2020 and will adjust amounts preliminarily reported, if necessary.

Use of non-GAAP Financial Measures

This press release contains certain financial measures that are not recognized under U.S. generally accepted accounting principles ("GAAP"). Generally, United has presented these “non-GAAP” financial measures because it believes that these measures provide meaningful additional information to assist in the evaluation of United’s results of operations or financial position. Presentation of these non-GAAP financial measures is consistent with how United’s management evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the banking industry.

Specifically, this press release contains certain references to financial measures identified as tax-equivalent (FTE) net interest income, tangible equity, return on tangible equity and tangible book value per share. Management believes these non-GAAP financial measures to be helpful in understanding United’s results of operations or financial position.

Net interest income is presented in this press release on a tax-equivalent basis. The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments. Although this is a non-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 combines amounts 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 common equity 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 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 from merger and acquisition activity, the “permanent” items of common 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 these non-GAAP financial measures might not be comparable to similarly titled measures at other companies. These non-GAAP financial measures should not be considered a substitute 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 speak only 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 on assumptions 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 not be 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.” The following 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 and disruptions 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 of declines 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 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 debt securities; changes in nonperforming assets; the successful integration of operations of Carolina 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 filed with 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 Securities and 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

(In Thousands Except for Per Share Data)

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30
2020

 

June 30
2019

 

June 30
2020

 

June 30
2019

EARNINGS SUMMARY:

 

 

 

 

 

 

 

Interest income

$

198,717

 

$

199,245

 

$

379,199

 

$

388,342

Interest expense

 

28,115

 

 

48,692

 

 

67,079

 

 

93,621

Net interest income

 

170,602

 

 

150,553

 

 

312,120

 

 

294,721

Provision for credit losses

 

45,911

 

 

5,417

 

 

73,030

 

 

10,413

Noninterest income

 

88,390

 

 

39,795

 

 

125,196

 

 

71,018

Noninterest expenses

 

149,374

 

 

100,195

 

 

250,507

 

 

189,620

Income before income taxes

 

63,707

 

 

84,736

 

 

113,779

 

 

165,706

Income taxes

 

11,021

 

 

17,529

 

 

20,910

 

 

34,857

Net income

$

52,686

 

$

67,207

 

$

92,869

 

$

130,849

 

 

 

 

 

 

 

 

PER COMMON SHARE:

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

Basic

$

0.44

 

$

0.66

 

$

0.84

 

$

1.28

Diluted

 

0.44

 

 

0.66

 

 

0.84

 

 

1.28

Cash dividends

$

0.35

 

$

0.34

 

 

0.70

 

 

0.68

Book value

 

 

 

 

 

32.35

 

 

32.70

Closing market price

 

 

 

 

$

27.66

 

$

37.09

Common shares outstanding:

 

 

 

 

 

 

 

Actual at period end, net of treasury shares

 

 

 

 

 

129,755,395

 

 

101,963,030

Weighted average- basic

 

119,823,652

 

 

101,773,643

 

 

110,559,363

 

 

101,833,880

Weighted average- diluted

 

119,887,823

 

 

102,047,845

 

 

110,624,976

 

 

102,099,809

 

 

 

 

 

 

 

 

FINANCIAL RATIOS:

 

 

 

 

 

 

 

Return on average assets

 

0.87%

 

 

1.38%

 

 

0.85%

 

 

1.36%

Return on average shareholders’ equity

 

5.40%

 

 

8.12%

 

 

5.16%

 

 

8.00%

Return on average tangible equity (non-GAAP) (1)

 

9.58%

 

 

14.90%

 

 

9.28%

 

 

14.78%

Average equity to average assets

 

16.07%

 

 

17.02%

 

 

16.47%

 

 

17.02%

Net interest margin

 

3.18%

 

 

3.53%

 

 

3.24%

 

 

3.50%

 

 

 

 

 

 

 

 

 

June 30

2020

 

June 30
2019

 

December 31
2019

 

March 31
2020

PERIOD END BALANCES:

 

 

 

 

 

 

 

Assets

$

26,234,973

 

$

19,882,539

 

$

19,662,324

 

$

20,370,653

Earning assets

 

23,253,983

 

 

17,548,123

 

 

17,344,638

 

 

17,966,159

Loans & leases, net of unearned income

 

17,992,402

 

 

13,635,266

 

 

13,712,129

 

 

13,855,558

Loans held for sale

 

625,984

 

 

370,593

 

 

387,514

 

 

503,514

Investment securities

 

3,062,198

 

 

2,563,262

 

 

2,669,797

 

 

2,673,415

Total deposits

 

19,893,843

 

 

14,404,085

 

 

13,852,421

 

 

14,014,168

Shareholders’ equity

 

4,197,855

 

 

3,333,858

 

 

3,363,833

 

 

3,343,702

   
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

(In Thousands Except for Per Share Data)

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June

 

June

 

March

 

June

 

June

 

2020

 

2019

 

2020

 

2020

 

2019

Interest & Loan Fees Income (GAAP)

$

198,717

 

$

199,245

 

$

180,482

 

$

379,199

 

$

388,342

Tax equivalent adjustment

 

1,018

 

 

977

 

 

782

 

 

1,800

 

 

1,970

Interest & Fees Income (FTE) (non-GAAP)

 

199,735

 

 

200,222

 

 

181,264

 

 

380,999

 

 

390,312

Interest Expense

 

28,115

 

 

48,692

 

 

38,964

 

 

67,079

 

 

93,621

Net Interest Income (FTE) (non-GAAP)

 

171,620

 

 

151,530

 

 

142,300

 

 

313,920

 

 

296,691

 

 

 

 

 

 

 

 

 

 

Provision for Credit Losses

 

45,911

 

 

5,417

 

 

27,119

 

 

73,030

 

 

10,413

 

 

 

 

 

 

 

 

 

 

Non-Interest Income:

 

 

 

 

 

 

 

 

 

Fees from trust services

 

3,261

 

 

3,438

 

 

3,483

 

 

6,744

 

 

6,702

Fees from brokerage services

 

2,651

 

 

2,766

 

 

2,916

 

 

5,567

 

 

5,290

Fees from deposit services

 

8,055

 

 

8,464

 

 

7,957

 

 

16,012

 

 

16,517

Bankcard fees and merchant discounts

 

718

 

 

1,102

 

 

993

 

 

1,711

 

 

2,258

Other charges, commissions, and fees

 

610

 

 

576

 

 

518

 

 

1,128

 

 

1,097

Income from bank-owned life insurance

 

1,291

 

 

1,326

 

 

2,388

 

 

3,679

 

 

3,153

Income from mortgage banking activities

 

68,213

 

 

21,704

 

 

17,631

 

 

85,844

 

 

35,385

Mortgage loan servicing income

 

1,534

 

 

0

 

 

0

 

 

1,534

 

 

0

Net gains (losses) on investment securities

 

1,510

 

 

109

 

 

196

 

 

1,706

 

 

(50)

Other non-interest revenue

 

547

 

 

310

 

 

724

 

 

1,271

 

 

666

Total Non-Interest Income

 

88,390

 

 

39,795

 

 

36,806

 

 

125,196

 

 

71,018

 

 

 

 

 

 

 

 

 

 

Non-Interest Expense:

 

 

 

 

 

 

 

 

 

Employee compensation

 

68,664

 

 

44,301

 

 

44,541

 

 

113,205

 

 

83,250

Employee benefits

 

12,779

 

 

8,578

 

 

10,786

 

 

23,565

 

 

18,009

Net occupancy

 

10,318

 

 

8,667

 

 

9,062

 

 

19,380

 

 

17,418

Data processing

 

15,926

 

 

5,567

 

 

5,506

 

 

21,432

 

 

10,729

Amortization of intangibles

 

1,646

 

 

1,754

 

 

1,577

 

 

3,223

 

 

3,508

OREO expense

 

607

 

 

633

 

 

906

 

 

1,513

 

 

2,049

Equipment expense

 

5,004

 

 

3,675

 

 

3,845

 

 

8,849

 

 

6,990

FDIC insurance expense

 

2,782

 

 

3,300

 

 

2,400

 

 

5,182

 

 

6,600

Mortgage loan servicing expense and impairment

 

2,510

 

 

106

 

 

138

 

 

2,648

 

 

197

Prepayment penalties on FHLB borrowings

 

0

 

 

5,105

 

 

0

 

 

0

 

 

5,105

Other expenses

 

29,138

 

 

18,509

 

 

22,372

 

 

51,510

 

 

35,765

Total Non-Interest Expense

 

149,374

 

 

100,195

 

 

101,133

 

 

250,507

 

 

189,620

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes (FTE) (non-GAAP)

 

64,725

 

 

85,713

 

 

50,854

 

 

115,579

 

 

167,676

 

 

 

 

 

 

 

 

 

 

Tax equivalent adjustment

 

1,018

 

 

977

 

 

782

 

 

1,800

 

 

1,970

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes (GAAP)

 

63,707

 

 

84,736

 

 

50,072

 

 

113,779

 

 

165,706

 

 

 

 

 

 

 

 

 

 

Taxes

 

11,021

 

 

17,529

 

 

9,889

 

 

20,910

 

 

34,857

 

 

 

 

 

 

 

 

 

 

Net Income

$

52,686

 

$

67,207

 

$

40,183

 

$

92,869

 

$

130,849

 

 

 

 

 

 

 

 

 

 

MEMO: Effective Tax Rate

 

17.30%

 

 

20.69%

 

 

19.75%

 

 

18.38%

 

 

21.04%

 

UNITED BANKSHARES, INC. AND SUBSIDIARIES

Washington, D.C. and Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

June 30

 

June 30

 

 

 

 

 

 

 

 

2020

 

2019

 

June 30

 

December 31

 

June 30

 

 

Q-T-D Average

 

Q-T-D Average

 

2020

 

2019

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

Cash & Cash Equivalents

$

1,803,632

 

$

955,838

 

$

2,062,813

 

$

837,493

 

$

1,253,573

 

 

 

 

 

 

 

 

 

 

 

 

Securities Available for Sale

 

2,671,202

 

 

2,396,501

 

 

2,799,941

 

 

2,437,296

 

 

2,345,791

 

Less: Allowance for credit losses

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

Net available for sale securities

 

2,671,202

 

 

2,396,501

 

 

2,799,941

 

 

2,437,296

 

 

2,345,791

 

Securities Held to Maturity

 

1,235

 

 

7,315

 

 

1,235

 

 

1,446

 

 

6,461

 

Less: Allowance for credit losses

 

(10)

 

 

0

 

 

(14)

 

 

0

 

 

0

 

Net held to maturity securities

 

1,225

 

 

7,315

 

 

1,221

 

 

1,446

 

 

6,461

 

Equity Securities

 

8,940

 

 

13,082

 

 

9,875

 

 

8,894

 

 

9,098

 

Other Investment Securities

 

249,555

 

 

198,432

 

 

251,161

 

 

222,161

 

 

201,912

 

Total Securities

 

2,930,922

 

 

2,615,330

 

 

3,062,198

 

 

2,669,797

 

 

2,563,262

 

Total Cash and Securities

 

4,734,554

 

 

3,571,168

 

 

5,125,011

 

 

3,507,290

 

 

3,816,835

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

566,381

 

 

285,366

 

 

625,984

 

 

387,514

 

 

370,593

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Loans & Leases

 

11,795,853

 

 

9,504,143

 

 

13,043,554

 

 

9,399,170

 

 

9,525,321

 

Mortgage Loans

 

3,730,995

 

 

3,038,958

 

 

3,745,085

 

 

3,107,721

 

 

3,050,786

 

Consumer Loans

 

1,259,424

 

 

1,065,490

 

 

1,243,915

 

 

1,206,657

 

 

1,063,839

 

 

 

 

 

 

 

 

 

 

 

 

Gross Loans

 

16,786,272

 

 

13,608,591

 

 

18,032,554

 

 

13,713,548

 

 

13,639,946

 

Unearned income

 

(7,645)

 

 

(5,241)

 

 

(40,152)

 

 

(1,419)

 

 

(4,680)

 

 

 

 

 

 

 

 

 

 

 

 

Loans & Leases, net of unearned income

 

16,778,627

 

 

13,603,350

 

 

17,992,402

 

 

13,712,129

 

 

13,635,266

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan & Leases Losses

 

(170,947)

 

 

(76,682)

 

 

(215,121)

 

 

(77,057)

 

 

(76,400)

 

Net Loans

 

16,607,680

 

 

13,526,668

 

 

17,777,281

 

 

13,635,072

 

 

13,558,866

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Servicing Rights

 

21,171

 

 

0

 

 

20,200

 

 

0

 

 

0

 

Goodwill

 

1,679,530

 

 

1,478,014

 

 

1,794,779

 

 

1,478,014

 

 

1,478,014

 

Other Intangibles

 

29,153

 

 

34,386

 

 

31,108

 

 

29,931

 

 

33,439

 

Operating Lease Right-of-Use Asset

 

65,115

 

 

63,503

 

 

70,655

 

 

57,783

 

 

63,113

 

Other Real Estate Owned

 

17,797

 

 

16,264

 

 

29,947

 

 

15,515

 

 

14,469

 

Other Assets

 

681,219

 

 

540,485

 

 

760,008

 

 

551,205

 

 

547,210

 

Total Assets

$

24,402,600

 

$

19,515,854

 

$

26,234,973

 

$

19,662,324

 

$

19,882,539

 

 

 

 

 

 

 

 

 

 

 

 

MEMO: Interest-earning Assets

$

21,653,742

 

$

17,197,989

 

$

23,253,983

 

$

17,344,638

 

$

17,548,123

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing Deposits

$

11,600,243

 

$

9,753,724

 

$

12,797,269

 

$

9,231,059

 

$

10,073,420

 

Noninterest-bearing Deposits

 

6,412,124

 

 

4,240,050

 

 

7,096,574

 

 

4,621,362

 

 

4,330,665

 

Total Deposits

 

18,012,367

 

 

13,993,774

 

 

19,893,843

 

 

13,852,421

 

 

14,404,085

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Borrowings

 

144,866

 

 

136,230

 

 

176,168

 

 

374,654

 

 

122,159

 

Long-term Borrowings

 

2,070,557

 

 

1,879,154

 

 

1,633,891

 

 

1,838,029

 

 

1,783,567

 

Total Borrowings

 

2,215,423

 

 

2,015,384

 

 

1,810,059

 

 

2,212,683

 

 

1,905,726

 

 

 

 

 

 

 

 

 

 

 

 

Operating Lease Liability

 

68,917

 

 

67,240

 

 

74,435

 

 

61,342

 

 

66,821

 

Other Liabilities

 

184,604

 

 

118,469

 

 

258,781

 

 

172,045

 

 

172,049

 

Total Liabilities

 

20,481,311

 

 

16,194,867

 

 

22,037,118

 

 

16,298,491

 

 

16,548,681

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Equity

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

Common Equity

 

3,921,289

 

 

3,320,987

 

 

4,197,855

 

 

3,363,833

 

 

3,333,858

 

Total Shareholders' Equity

 

3,921,289

 

 

3,320,987

 

 

4,197,855

 

 

3,363,833

 

 

3,333,858

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities & Equity

$

24,402,600

 

$

19,515,854

 

$

26,234,973

 

$

19,662,324

 

$

19,882,539

 

 

 

 

 

 

 

 

 

 

 

 

MEMO: Interest-bearing Liabilities

$

13,815,666

 

$

11,769,108

 

$

14,607,328

 

$

11,443,742

 

$

11,979,146

 

 

UNITED BANKSHARES, INC. AND SUBSIDIARIES

Washington, D.C. and Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June

 

June

 

March

 

June

 

June

Quarterly/Year-to-Date Share Data:

2020

 

2019

 

2020

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

Basic

$

0.44

 

$

0.66

 

$

0.40

 

$

0.84

 

$

1.28

Diluted

$

0.44

 

$

0.66

 

$

0.40

 

$

0.84

 

$

1.28

 

 

 

 

 

 

 

 

 

 

Common Dividend Declared Per Share:

$

0.35

 

$

0.34

 

$

0.35

 

$

0.70

 

$

0.68

 

 

 

 

 

 

 

 

 

 

High Common Stock Price

$

33.12

 

$

39.88

 

$

39.07

 

$

39.07

 

$

39.88

Low Common Stock Price

$

21.52

 

$

35.42

 

$

19.67

 

$

19.67

 

$

30.67

 

 

 

 

 

 

 

 

 

 

Average Shares Outstanding (Net of Treasury Stock):

 

 

 

 

 

 

 

 

 

Basic

 

119,823,652

 

 

101,773,643

 

 

101,295,073

 

 

110,559,363

 

 

101,833,880

Diluted

 

119,887,823

 

 

102,047,845

 

 

101,399,181

 

 

110,624,976

 

 

102,099,809

 

 

 

 

 

 

 

 

 

 

Memorandum Items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Dividends

$

45,416

 

$

34,688

 

$

35,604

 

$

81,020

 

$

69,447

 

 

 

 

 

 

 

 

 

 

Dividend Payout Ratio

 

86.20%

 

 

51.61%

 

 

88.60%

 

 

87.24%

 

 

53.07%

 

June 30

June 30

March 31

EOP Share Data:

2020

2019

2020

 

 

 

 

Book Value Per Share

$

32.35

$

32.70

$

32.87

Tangible Book Value Per Share (non-GAAP) (1)

$

18.28

$

17.87

$

18.06

 

 

 

 

52-week High Common Stock Price

$

40.70

$

39.95

$

40.70

Date

11/05/19

08/21/18

11/05/19

52-week Low Common Stock Price

$

19.67

$

29.13

$

19.67

Date

03/23/20

12/27/18

03/23/20

 

 

 

 

EOP Shares Outstanding (Net of Treasury Stock):

 

129,755,395

 

101,963,030

 

101,723,600

 

 

 

 

Memorandum Items:

 

 

 

 

 

 

 

EOP Employees (full-time equivalent)

 

3,039

 

2,212

 

2,206

 

 

 

 

Note:

 

 

 

(1) Tangible Book Value Per Share:

 

 

 

Total Shareholders' Equity (GAAP)

$

4,197,855

$

3,333,858

$

3,343,702

Less: Total Intangibles

 

(1,825,887)

 

(1,511,453)

 

(1,506,368)

Tangible Equity (non-GAAP)

$

2,371,968

$

1,822,405

$

1,837,334

÷ EOP Shares Outstanding (Net of Treasury Stock)

 

129,755,395

 

101,963,030

 

101,723,600

Tangible Book Value Per Share (non-GAAP)

$

18.28

$

17.87

$

18.06

 

 

 

 

 

UNITED BANKSHARES, INC. AND SUBSIDIARIES

Washington, D.C. and Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June

June

 

March

 

June

 

June

 

Selected Yields and Net Interest Margin:

2020

2019

 

2020

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

Net Loans

4.21%

5.10%

 

4.60%

 

4.38%

 

5.01%

 

Investment Securities

2.44%

2.90%

 

2.70%

 

2.56%

 

2.91%

 

Money Market Investments/FFS

0.49%

2.81%

 

2.23%

 

1.04%

 

3.00%

 

Average Earning Assets Yield

3.70%

4.67%

 

4.21%

 

3.93%

 

4.60%

 

Interest-bearing Deposits

0.67%

1.46%

 

1.19%

 

0.90%

 

1.41%

 

Short-term Borrowings

0.54%

1.79%

 

1.34%

 

0.93%

 

1.69%

 

Long-term Borrowings

1.68%

2.70%

 

2.21%

 

1.95%

 

2.73%

 

Average Liability Costs

0.82%

1.66%

 

1.37%

 

1.07%

 

1.62%

 

Net Interest Spread

2.88%

3.01%

 

2.84%

 

2.86%

 

2.98%

 

Net Interest Margin

3.18%

3.53%

 

3.30%

 

3.24%

 

3.50%

 

 

 

 

 

 

 

 

 

 

 

Selected Financial Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Assets

0.87%

1.38%

 

0.82%

 

0.85%

 

1.36%

 

Return on Average Common Equity

5.40%

8.12%

 

4.82%

 

5.16%

 

8.00%

 

Return on Average Tangible Equity (non-GAAP) (1)

9.58%

14.90%

 

8.77%

 

9.28%

 

14.78%

 

Efficiency Ratio

57.68%

52.64%

 

56.71%

 

57.28%

 

51.85%

 

Note:

 

 

 

 

 

 

 

 

 

(1) Return on Average Tangible Equity:

 

 

 

 

 

 

 

 

 

(a) Net Income (GAAP)

$52,686

$67,207

 

$ 40,183

 

$92,869

 

$130,849

 

 

 

 

 

 

 

 

 

 

 

(b) Number of days

91

91

 

91

 

182

 

181

 

 

 

 

 

 

 

 

 

 

 

Average Total Shareholders' Equity (GAAP)

$3,921,289

$3,220,987

 

$3,350,652

 

$3,620,425

 

$3,299,061

 

Less: Average Total Intangibles

(1,708,683)

(1,512,400)

 

(1,507,272)

 

(1,607,977)

 

(1,513,279)

 

(c) Average Tangible Equity (non-GAAP)

$2,212,606

$1,808,587

 

$1,843,380

 

$2,012,448

 

$1,785,782

 

 

 

 

 

 

 

 

 

 

 

Return on Tangible Equity (non-GAAP)

[(a) / (b)] x 365 / (c)

 

9.58%

 

14.90%

 

 

8.77%

 

 

9.28%

 

 

14.78%

 

 

June 30

June 30

March 31

December 31

 

2020

2019

2020

2019

Loan / Deposit Ratio

90.44%

94.66%

98.87%

98.99%

Allowance for Loan & Lease Losses/ Loans, net of unearned income

1.20%

0.56%

1.12%

0.56%

Allowance for Credit Losses (1)/ Loans, net of unearned income

1.26%

0.57%

1.17%

0.57%

Nonaccrual Loans / Loans, net of unearned income

0.38%

0.52%

0.46%

0.46%

90-Day Past Due Loans/ Loans, net of unearned income

0.06%

0.09%

0.05%

0.07%

Non-performing Loans/ Loans, net of unearned income

0.87%

1.05%

0.96%

0.96%

Non-performing Assets/ Total Assets

0.71%

0.79%

0.73%

0.75%

Primary Capital Ratio

16.72%

17.09%

17.08%

17.44%

Shareholders' Equity Ratio

16.00%

16.77%

16.41%

17.11%

Price / Book Ratio

0.85

x

1.13

x

0.70

x

1.17

x

Price / Earnings Ratio

15.74

x

14.08

x

14.56

x

15.14

x

 
Note:
(1) Includes allowances for loan losses and lending-related commitments.

UNITED BANKSHARES, INC. AND SUBSIDIARIES

Washington, D.C. and Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data and Number of Loans Serviced)

 

 

Three Months Ended

 

Six Months Ended

 

June

 

June

 

March

 

June

 

June

Mortgage Banking Segment Data:

2020

 

2019

 

2020

 

2020

 

2019

Applications

$

2,189,008

 

$

1,278,000

 

$

2,054,000

 

$

4,243,008

 

$

2,144,000

Loans originated

 

1,692,297

 

 

801,926

 

 

904,949

 

 

2,597,246

 

 

1,256,514

Loans sold

$

1,636,063

 

$

680,986

 

$

793,392

 

$

2,429,455

 

$

1,138,178

Purchase money % of loans closed

 

42%

 

 

81%

 

 

49%

 

 

44%

 

 

83%

Realized gain on sales and fees as a % of loans sold

 

2.49%

 

 

2.76%

 

 

2.82%

 

 

2.60%

 

 

2.76%

Net interest income

$

2,246

 

$

111

 

$

949

 

$

3,195

 

$

166

Other income

 

71,013

 

 

23,501

 

 

21,190

 

 

92,203

 

 

39,607

Other expense

 

35,261

 

 

18,771

 

 

20,757

 

 

56,018

 

 

33,613

Income taxes

 

6,946

 

 

1,004

 

 

273

 

 

7,219

 

 

1,286

Net income

$

31,052

 

$

3,837

 

$

1,109

 

$

32,161

 

$

4,874

 

 

June

 

 

June

 

 

December

 

 

March

Period End Mortgage Banking Segment Data:

2020

 

2019

 

2019

 

2020

Locked pipeline

$

889,275

 

$

305,843

 

$

143,465

 

$

739,322

Balance of loans serviced

$

3,552,292

 

$

0

 

$

0

 

$

0

Number of loans serviced

 

25,609

 

 

0

 

 

0

 

 

0

 

June

June

December

March

Asset Quality Data:

2020

2019

2019

2020

 

 

 

 

 

EOP Non-Accrual Loans

$

67,669

$

71,123

$

63,209

$

64,036

EOP 90-Day Past Due Loans

 

11,150

 

12,729

 

9,494

 

7,051

EOP Restructured Loans (1)

 

77,436

 

58,750

 

58,369

 

61,470

Total EOP Non-performing Loans

$

156,255

$

142,602

$

131,072

$

132,557

 

 

 

 

 

EOP Other Real Estate Owned

 

29,947

 

14,469

 

15,515

 

15,849

Total EOP Non-performing Assets

$

186,202

$

157,071

$

146,587

$

148,406

 

Three Months Ended

Six Months Ended

 

June

June

March

June

June

Allowance for Loan Losses:

2020

2019

2020

2020

2019

Beginning Balance

$

154,923

$

76,886

$

77,057

$

77,057

$

76,703

Cumulative Effect Adjustment for CECL

 

0

 

0

 

57,442

 

57,442

 

0

 

 

154,923

 

76,886

 

134,499

 

134,499

 

76,703

Initial allowance for acquired PCD loans

 

18,635

 

0

 

0

 

18,635

 

0

Gross Charge-offs

 

(5,634)

 

(7,588)

 

(8,761)

 

(14,395)

 

(14,002)

Recoveries

 

1,290

 

1,685

 

2,073

 

3,363

 

3,286

Net Charge-offs

 

(4,344)

 

(5,903)

 

(6,688)

 

(11,032)

 

(10,716)

Provision for Loan & Lease Losses

 

45,907

 

5,417

 

27,112

 

73,019

 

10,413

Ending Balance

$

215,121

$

76,400

$

154,923

$

215,121

$

76,400

Reserve for lending-related commitments

 

11,946

 

1,752

 

7,742

 

11,946

 

1,752

Allowance for Credit Losses (2)

$

227,067

$

78,152

$

162,665

$

227,067

$

78,152

Notes

(1)

Restructured loans with an aggregate balance of $59,916, $48,586, $51,775 and $48,387 at June 30, 2020, June 30, 2019, March 31, 2020 and December 31, 2019, respectively, were on nonaccrual status, but are not included in “EOP Non-Accrual Loans” above.

(2)

Includes allowances for loan losses and lending-related commitments.

 

W. Mark Tatterson
Chief Financial Officer
(800) 445-1347 ext. 8716

Source: United Bankshares, Inc.