UBSI.NASDAQUnited Bankshares Inc/wv
10-K: United Bankshares Inc. Reports Annual Results: Asset Growth and Strategic Acquisitions Highlight 2023
Sentiment:
Annual Report
United Bankshares Inc. reports a slight increase in consolidated assets and highlights strategic acquisitions in its 2023 annual report.
Summary
- United Bankshares Inc. (UBSI) reported consolidated assets of approximately $29.9 billion and total shareholders' equity of approximately $4.8 billion as of December 31, 2023.
- The company's loan and lease portfolio, net of unearned income, increased by $800.9 million or 3.90% in 2023.
- Commercial real estate loans increased by $304.7 million or 3.80%, while commercial loans (not secured by real estate) decreased by $40.1 million or 1.11%.
- Residential real estate loans increased by $608.3 million or 13.05%, and consumer loans decreased by $301.1 million or 22.05%.
- Net income for 2023 was $366.31 million, or $2.71 per diluted share, a decrease of $13.31 million or 3.51% from 2022.
- The company's return on average assets for 2023 was 1.25%, and the return on average shareholders' equity was 7.87%.
- Net interest income for 2023 was $919.92 million, an increase of $23.49 million or 2.62% from 2022.
- The provision for credit losses was $31.15 million for 2023, compared to $18.82 million for 2022.
- Noninterest income was $135.26 million for 2023, a decrease of $18.00 million or 11.75% from 2022.
- Noninterest expense for 2023 was $560.22 million, a slight increase of $5.14 million or less than 1% from 2022.
- The company plans to consolidate its mortgage delivery channels in early 2024, exiting the third-party origination (TPO) business.
Sentiment
Score: 6
Explanation: The document presents a mixed sentiment. While asset growth and strategic acquisitions are positive, the decrease in net income and increase in provision for credit losses indicate potential challenges.
Positives
- The loan and lease portfolio experienced substantial growth, indicating strong lending activity.
- Net interest income increased, reflecting effective management of earning assets.
- The company maintains a well-capitalized position, exceeding regulatory requirements.
- Strategic acquisitions have broadened the company's footprint in desirable banking markets.
- The company is committed to nurturing an inclusive culture that is reflective of the communities it serves.
Negatives
- Net income decreased by 3.51% compared to the previous year.
- Noninterest income declined by 11.75%, primarily due to lower mortgage banking income.
- The provision for credit losses increased, reflecting a more cautious outlook on loan quality.
- Consumer loans decreased by $301.12 million or 22.05% due to a decrease in indirect automobile financing.
Risks
- The company is subject to extensive government regulation and supervision, which could lead to additional costs and limitations.
- Credit risk in the loan portfolio could result in significant loan losses.
- Interruptions or breaches in security of information systems could damage the company's reputation and result in financial liability.
- Changes in economic and political conditions could adversely affect earnings.
- The company faces strong competition in all of the markets it serves.
Future Outlook
United plans to complete a consolidation of its mortgage delivery channels during the early part of 2024. Management continues to consider opportunities to acquire other banks and bank holding companies, as well as thrift institutions and to engage in certain non-banking activities which are closely related to banking.
Industry Context
The report provides insights into United Bankshares' performance within the context of the broader banking industry, including competition, regulatory changes, and economic conditions. The company faces competition from 58 bank holding companies operating in the State of West Virginia, 64 bank holding companies operating in the Commonwealth of Virginia, 66 bank holding companies operating in the State of North Carolina and 99 bank holding companies operating in the State of South Carolina.
Legal Proceedings
- United and its subsidiaries are currently involved in various legal proceedings in the normal course of business.
Related Party Transactions
- Uniteds subsidiary bank has made loans, in the normal course of business, to the directors and officers of United and its subsidiaries, and to their associates.
- Uniteds subsidiary banks have received deposits, in the normal course of business, from the directors and officers of United and its subsidiaries, and their associates.
Stakeholder Impact
- Shareholders: The report provides information relevant to assessing the company's financial performance and future prospects, impacting investment decisions.
- Employees: The report discusses human capital management strategies, compensation, and benefits, affecting employee morale and retention.
- Customers: The report outlines the range of banking services offered, potentially influencing customer satisfaction and loyalty.
- Communities: The report mentions the Community Reinvestment Act and diversity, equity, and inclusion initiatives, reflecting the company's commitment to serving its communities.
Next Steps
- Complete consolidation of mortgage delivery channels in early 2024.
- Continue to evaluate opportunities to acquire other banks and bank holding companies, as well as thrift institutions and to engage in certain non-banking activities which are closely related to banking.
Key Dates
| Date | Description |
|---|---|
| 1956 | Bank Holding Company Act of 1956 |
| 1977 | Community Reinvestment Act of 1977 |
| 1982-03-26 | United was incorporated |
| 1982-09-09 | United was organized |
| 1984-05-01 | United began conducting business |
| 1991 | Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) |
| 1995 | Private Securities Litigation Act of 1995 |
| 2001 | USA PATRIOT Act of 2001 |
| 2010-07-21 | Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law |
| 2011-04 | FDIC implemented rulemaking under the Dodd-Frank Act to reform the deposit insurance assessment system |
| 2012-10 | FDIC announced revised changes to some of the definitions used to determine assessment rates for large and highly complex insured depository institutions |
| 2013-04-01 | Rule generally applies to FDIC-regulated banks with assets greater than $10 billion and took effect |
| 2014-01 | United closed its acquisition of Virginia Commerce Bancorp, Inc. |
| 2015-01-01 | Effective date of Basel III Capital Rules |
| 2016-06 | United closed its acquisition of Bank of Georgetown |
| 2016-08 | United announced the Cardinal Financial Corporation acquisition |
| 2017-04 | United closed the Cardinal Financial Corporation acquisition |
| 2017-12 | Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms |
| 2018-05-24 | President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (the EGRRCPA Act) |
| 2018-09-30 | The Deposit Insurance Fund Reserve Ratio reached 1.36%, exceeding the statutorily required minimum reserve ratio of 1.35% |
| 2018-12-28 | Surcharges on insured depository institutions with total consolidated assets of $10 billion or more (large banks) ceased |
| 2019-02 | Federal bank regulatory agencies issued a final rule (the 2019 CECL Rule) that revised certain capital regulations to account for changes to credit loss accounting under U.S. GAAP |
| 2019-07 | Federal bank regulators adopted final rules (the Capital Simplifications Rules) that, among other things, eliminated the standalone prior approval requirement in the Basel III Capital Rules for any repurchase of common stock |
| 2019-10 | Uniteds Board of Directors approved a stock repurchase plan (the 2019 Plan) to repurchase up to 4,000,000 shares of the Companys common stock |
| 2019-11 | Federal banking agencies adopted a rule revising the scope of commercial real estate mortgages subject to a 150% risk weight |
| 2020-01 | Banking organizations that were required under U.S. GAAP (as of January 2020) to implement CECL before the end of 2020 the option to delay for two years an estimate of the effect of CECL on regulatory capital, relative to the incurred loss methodologys effect on regulatory capital, followed by a three-year transition period (five-year transition option) |
| 2020-05-01 | United completed its acquisition of Carolina Financial Corporation |
| 2021-01 | The Anti-Money Laundering Act of 2020 (AMLA), which amends the Bank Secrecy Act of 1970 (BSA), was enacted |
| 2021-06 | The Financial Crimes Enforcement Network issued the priorities for anti-money laundering and countering the financing of terrorism policy required under the AMLA |
| 2021-12-03 | United completed its acquisition of Community Bankers Trust Corporation |
| 2021-12-31 | The publication of the one-week and two-month U.S. Dollar LIBOR settings were discontinued |
| 2022-05-11 | The Board of Directors approved a new repurchase plan (the 2022 Plan) to repurchase up to 4,750,000 shares of Uniteds common stock on the open market |
| 2022-08 | The SEC adopted final rules requiring public companies to disclose the relationship between the executive compensation actually paid to the companys named executive officers (NEOs) and the companys financial performance |
| 2022-10 | The SEC adopted the final clawback rule mandated by Section 954 of the Dodd-Frank Act directing national securities exchanges and associations, including the NASDAQ, to implement listing standards that require listed companies to adopt policies mandating the recovery or clawback of excess incentive-based compensation |
| 2022-10-18 | The FDIC adopted a final rule to increase initial base deposit insurance assessment rates for insured depository institutions by 2 basis points, beginning with the first quarterly assessment period of 2023 |
| 2022-12-31 | The IRA imposes a new 1% excise tax on the fair market value of stock repurchased after |
| 2023-01-01 | The increased assessment rate schedules would remain in effect unless and until the reserve ratio of the Deposit Insurance Fund meets or exceeds 2 percent |
| 2023-06 | The New York Stock Exchange and Nasdaq Stock Market adopted these required listing standards mandated by Section 954 of the Dodd-Frank Act, which were effective on October 2, 2023 |
| 2023-06-30 | Publication of the remaining overnight, one-month, three-month, six-month, and twelve-month U.S. Dollar LIBOR settings were discontinued |
| 2023-07 | The federal banking regulators proposed revisions to the Basel III Capital Rules to implement the Basel Committees 2017 standards and make other changes to the Basel III Capital Rules |
| 2023-07 | The SEC issued a final rule, Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, which requires registrants to provide investors, through enhanced and standardized disclosures, greater insight into material cybersecurity incidents and the registrants cybersecurity risk management, strategy and governance |
| 2023-10-02 | The New York Stock Exchange and Nasdaq Stock Market adopted these required listing standards mandated by Section 954 of the Dodd-Frank Act, which were effective |
| 2023-10-24 | The Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency (OCC) published a final CRA rule that creates a modernized rule for the banking industry |
| 2023-11-16 | The FDIC Board of Directors approved a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank |
| 2023-11-17 | United adopted a clawback policy |
| 2023-12-01 | Each listed issuer was required to adopt a policy relating to the recovery of erroneously awarded compensation no later than |
| 2023-12-31 | United accrued $12.0 million in the fourth quarter of 2023 to pay the special assessment over the next eight assessment periods |
| 2023-12-31 | United plans to complete a consolidation of its mortgage delivery channels during the early part of 2024 |
| 2024-01-01 | Most of the rules requirements will be applicable beginning |
| 2024-01-01 | We will evaluate the impact of these changes to these new CRA rules and their impact to our financial condition, results of operations, and/or liquidity, which is not known at this time |
| 2024-01-01 | United elected to adopt the five-year transition option |
| 2024-01-01 | The Capital Simplification Rules took effect for United and United Bank as of |
| 2026-01-01 | Most of the rules requirements will be applicable beginning |
| 2027-01-01 | The remaining requirements, including the data reporting requirements, will be applicable on |
Keywords
financial holding company, community banking, mortgage banking, loan portfolio, net interest income, credit losses, capital adequacy, acquisitions, United Bankshares, UBSI
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