United Bankshares Inc. Reports Second Quarter and First Half 2024 Results

CHARLESTON — United Bankshares Inc. (NASDAQ: UBSI) this week reported second-quarter 2024 earnings of $96.5 million, or $0.71 per diluted share.

In the second quarter, the annualized rate of return on average assets, average equity and average tangible capital was 1.32%, 7.99% and 13.12%, respectively.

“UBSI continues to deliver exceptional results” said Richard M. Adams Jr., United CEO. “In the second quarter, we saw growth in profitability, capital, loans and deposits, as well as declines in expenses and non-performing assets. We anticipate continued success in the second half of the year and are excited about our recent announcement to acquire Piedmont Bancorp Inc. in Atlanta.”

In the second quarter of 2024, United announced that it had entered into a definitive merger agreement with Piedmont Bancorp Inc. The combined organization will have more than $32 billion in assets and a network of more than 240 locations in eight states and Washington, D.C. The merger is expected to close in late fourth quarter 2024 or early first quarter 2025.

First-quarter 2024 earnings were $86.8 million, or $0.64 per diluted share, and the annualized return on average assets, average equity and average tangible capital were 1.19%, 7.25% and 11.98%, respectively.

Second quarter 2023 earnings were $92.5 million, or $0.68 per diluted share, and the annualized return on average assets, average equity and average tangible capital were 1.26%, 7.96% and 13.47%, respectively.

Net interest income for the second quarter of 2024 increased $3.2 million, or 1%, compared to the first quarter. Tax-equivalent net interest income for the second quarter of 2024 also increased $3.2 million, or 1%, compared to the first quarter. The increase in net interest income and tax-equivalent net interest income was driven by higher profitability on average net loans and loans held for sale, organic loan growth and a decrease in average long-term loans, partially offset by higher interest expense due to the impact of changes in deposit prices.

Average net loans and loans held for sale increased $127.6 million, or 2% year over year, compared with the first quarter. Average long-term loans decreased $209.8 million, or 14%, compared with the first quarter of 2024.

The provision for credit losses was $5.8 million in the second quarter of 2024 compared to $5.7 million in the first quarter.

Noninterest income for the second quarter of 2024 decreased $2 million, or 6%, compared to the first quarter. The decrease was primarily due to a $1.4 million decrease in mortgage banking income, reflecting lower mortgage loan sales volume and margins.

Noninterest expense decreased $6 million, or 4%, in the second quarter of 2024 compared to the first quarter. The decrease in noninterest expense was primarily due to a $2.5 million decrease in employee benefits, $1.4 million in Federal Deposit Insurance Corporation insurance costs and smaller decreases in other noninterest expense categories. Other noninterest expense was $32.8 million in the second quarter of 2024 compared to $33.5 million in the first quarter. The decrease was due to lower amounts for certain general operating expenses, partially offset by $1.3 million in merger-related charges related to the Piedmont acquisition.

Second-quarter 2024 earnings were $96.5 million, or $0.71 per diluted share, compared to earnings of $92.5 million, or $0.68 per diluted share, for the second quarter of 2023.

Second-quarter 2024 net interest income of $225.7 million decreased slightly by $1.7 million, or less than 1%, compared to the second quarter of 2023. Second-quarter 2024 tax-equivalent net interest income of $226.6 million decreased slightly by $2 million, or less than 1%, compared to the second quarter of 2023. The slight decreases were primarily due to higher interest expense due to the repricing of deposit rates, an increase in average interest-bearing deposits and a decrease in acquired loan income. This decrease was largely offset by the impact of rising market interest rates on earning assets, organic loan growth and a decrease in average long-term loans.

Acquired loan accretion income for the second quarter of 2024 decreased $671,000 compared to the second quarter of 2023. Average net loans and loans held for sale increased $912 million compared to the second quarter of 2023. Average long-term loans decreased $1 billion compared to the second quarter of 2023. Net interest margin for the second quarter of 2024 and 2023 was 3.50% and 3.51%, respectively.

The provision for credit losses was $5.8 million in the second quarter of 2024 compared to $11.4 million in the second quarter of 2023.

Noninterest income for the second quarter of 2024 was $30.2 million, a decrease of $5 million, or 14%, compared to the second quarter of 2023. Mortgage servicing income decreased $9.1 million due to a gain of $8.1 million on the sale of mortgage servicing rights in the second quarter of 2023. Mortgage banking income decreased $4 million compared to the second quarter of 2023, primarily due to lower mortgage origination and sale volume and lower valuations of mortgage derivatives at quarter end. Net losses on investment securities were $218,000 for the second quarter of 2024, which included a gain of $6.9 million on the VISA stock exchange, partially offset by a loss of $6.8 million on the sale of AFS investment securities. Investment securities net losses for the second quarter of 2023 were $7.3 million due to a $7.2 million loss on the sale of AFS investment securities. Brokerage fees increased $1 million compared to the second quarter of 2023, primarily due to higher volume.

Earnings for the first six months of 2024 were $183.3 million, or $1.35 per diluted share, compared to earnings of $190.8 million, or $1.41 per diluted share, for the first six months of 2023.

Net interest income for the first half of 2024 decreased $13.6 million, or 3%, compared to the first half of 2023.

Tax-equivalent net interest income for the first half of 2024 decreased $14.1 million, or 3%, compared to the first half of 2023. The decreases in net interest income and tax-equivalent net interest income were primarily due to higher interest expense due to the revaluation of deposit rates, an increase in average interest-bearing deposits and a decrease in acquired loan income. These decreases were partially offset by the impact of rising market interest rates on earning assets, organic loan growth and a decrease in average long-term loans.

Average interest-bearing deposits increased $1.3 billion compared to the first half of 2023. Credit growth income for the first half of 2024 was $4.9 million, down $1.3 million compared to the first half of 2023.

Average net loans and loans held for sale increased by $856.2 million compared to the first half of 2023. Average long-term loans decreased by $967.1 million compared to the first half of 2023. Net interest margin for the first half of 2024 and 2023 was 3.47% and 3.57%, respectively.

The provision for credit losses was $11.5 million in H1 2024 compared to $18.3 million in H1 2023.

Noninterest income for the first six months of 2024 was $62.4 million, a decrease of $5.5 million, or 8%, compared to the first six months of 2023. Mortgage servicing income decreased $10.5 million compared to the first half of 2023, driven by the previously mentioned sale of MSRs. Mortgage banking income decreased $5.1 million compared to the first half of 2023, primarily due to lower mortgage origination and sale volumes and lower quarter-end valuations of mortgage derivatives and mortgage loans held for sale. Investment securities net losses were $317,000 for the first half of 2024, which included a $6.9 million gain on the VISA stock exchange, partially offset by a $6.8 million loss on the sale of AFS investment securities. Investment securities net losses for the first six months of 2023 were $7.7 million, driven by a $7.2 million loss on the sale of AFS investment securities. Brokerage fees increased $2.1 million compared to the first half of 2023, primarily due to higher volume.

Noninterest expense for the first half of 2024 was $275.5 million, an increase of $2.8 million, or 1%, compared to the first half of 2023, driven by an increase in employee compensation of $3.9 million, other noninterest expense of $2.9 million and FDIC insurance costs of $2.4 million, partially offset by decreases in unfunded loan obligation reserve costs of $4.5 million and mortgage loan servicing costs of $1.6 million.

The increase in employee compensation was due to higher employee incentives, base salaries and severance benefits related to the previously announced consolidation of the mortgage supply channel. The increase in other noninterest expenses was primarily due to a $2 million increase in tax credit amortization, $1.3 million of merger-related expenses incurred in the second quarter of 2024 and higher amounts for certain general operating expenses.

United’s asset quality continues to be strong. As of June 30, nonperforming loans were $65.3 million, or 0.3% of loans and leases, net of unearned income. Total nonperforming assets were $67.5 million, including other real estate held of $2.2 million, or 0.23% of total assets, at June 30, 2024. As of December 31, 2023, nonperforming loans were $45.5 million, or 0.21% of loans and leases, net of unearned income. Total nonperforming assets were $48.1 million, including OREO of $2.6 million, or 0.16% of total assets, at December 31, 2023.

United continues to be well capitalized in accordance with regulatory guidelines. United’s estimated risk-based capital ratio is 15.8% as of June 30, reflecting United’s election of a five-year transition provision, permitted by the Federal Reserve Board and other federal banking agencies in response to the COVID-19 pandemic, to delay the full impact of CECL on regulatory capital by two years, followed by a three-year transition period.

During 2024 and 2023, United did not repurchase any common shares.

As of June 30, United had consolidated assets of approximately $30 billion and is the 38th largest U.S. banking company by market capitalization. United is the parent company of United Bank, which includes more than 225 offices located in West Virginia, Ohio, Virginia, Maryland, North Carolina, South Carolina, Pennsylvania, Georgia and Washington, D.C.

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