8-K: United Bankshares Inc. Reports Solid 2024 Earnings and Completes Piedmont Bancorp Acquisition

United Bankshares Inc. announced its fourth quarter and full-year 2024 financial results, highlighting strong earnings and the completion of the Piedmont Bancorp acquisition.

Summary

• United Bankshares Inc. reported fourth-quarter 2024 earnings of $94.4 million, or $0.69 per diluted share, and full-year earnings of $373.0 million, or $2.75 per diluted share.
• The company's annualized returns on average assets, average equity, and average tangible equity for the fourth quarter were 1.25%, 7.48%, and 12.03%, respectively.
• For the full year 2024, these returns were 1.26%, 7.61%, and 12.43%, respectively.
• Net interest income for the fourth quarter was $232.6 million, a 1% increase compared to both the third quarter of 2024 and the fourth quarter of 2023.
• The company completed its acquisition of Piedmont Bancorp, Inc. on January 10, 2025, adding approximately $2.4 billion in assets, $2.1 billion in loans, and $2.1 billion in deposits.
• Noninterest income for the fourth quarter decreased by $2.6 million compared to the third quarter, primarily due to lower mortgage loan servicing and banking income.
• Noninterest expense for the fourth quarter was flat compared to the third quarter, with merger-related expenses of $1.3 million.
• The company's effective tax rate was 22.0% for the fourth quarter of 2024, up from 20.6% in the third quarter.
• Non-performing loans were $73.4 million, or 0.34% of loans and leases, and total non-performing assets were $73.7 million, or 0.25% of total assets at December 31, 2024.
• The allowance for loan and lease losses was $271.8 million, or 1.25% of loans and leases, at the end of 2024.
• United's estimated risk-based capital ratio was 16.5% at December 31, 2024, with a Common Equity Tier 1 capital ratio of 14.2%.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong financial results, successful acquisition, and positive future outlook. There are some minor negatives, but the overall tone is optimistic and confident.

Positives

• United Bankshares achieved strong earnings and returns for 2024.
• The company has a long history of increasing dividends to shareholders.
• The acquisition of Piedmont Bancorp expands United's market presence.
• The company has a strong deposit base and market share in key regions.
• Asset quality remains sound with low non-performing assets.
• United Bankshares maintains a strong capital position and liquidity.
• The company has demonstrated a history of successful acquisitions.

Negatives

• Noninterest income decreased in the fourth quarter due to lower mortgage banking activity.
• Net interest margin decreased slightly from 3.52% to 3.49% quarter-over-quarter.
• Net charge-offs increased to $12.5 million for the year of 2024 compared to $6.7 million for the year of 2023.
• Non-performing assets increased from $65.4 million to $73.7 million quarter-over-quarter.

Risks

• The integration of Piedmont Bancorp may present challenges.
• Changes in interest rates and economic conditions could impact future performance.
• The company faces competitive pressures in the banking industry.
• Regulatory changes could affect the business.
• Mortgage banking revenue is subject to industry trends.
• The company is exposed to risks related to the commercial real estate market, particularly office loans.

Future Outlook

United Bankshares expects mid-single-digit loan and deposit growth in 2025, net interest income between $1.02 billion and $1.05 billion, non-interest income between $125 million and $135 million, non-interest expense between $600 million and $620 million, and an effective tax rate of approximately 20.5%.

Management Comments

• Richard M. Adams, Jr., United's Chief Executive Officer, stated that UBSI capped off a successful 2024 with another high quality quarter.
• He also noted that strong earnings, credit, and capital continue to be the story, and they received regulatory approval of their acquisition in Atlanta.
• Management is excited about the opportunities they see in front of them as they turn their sights towards 2025.

Industry Context

This announcement reflects a trend of consolidation in the banking industry, with United Bankshares expanding its footprint through the acquisition of Piedmont Bancorp. The results also highlight the importance of strong asset quality and capital management in the current economic environment. The company's focus on both high-growth and stable markets positions it well for future growth.

Comparison to Industry Standards

• United's return on average tangible equity of 12.43% for 2024 is strong compared to many regional banks, although some top-performing banks may achieve higher returns.
• The net interest margin of 3.49% is within the typical range for regional banks, but can vary based on asset mix and interest rate environment.
• The non-performing asset ratio of 0.25% is low, indicating strong asset quality compared to industry averages.
• The company's capital ratios are well above regulatory requirements, placing it in a strong position compared to many peers.
• The efficiency ratio of 52.67% is competitive, suggesting good cost management.
• Compared to peers such as Truist Financial Corporation (TFC) and Regions Financial Corporation (RF), United's growth strategy is more focused on acquisitions and organic growth in specific markets, while TFC and RF have a broader national presence.
• United's deposit market share in West Virginia and Washington D.C. is a key strength, outperforming many regional competitors in those specific markets.

Stakeholder Impact

• Shareholders will benefit from the increased earnings and continued dividend payments.
• Employees will be impacted by the integration of Piedmont Bancorp.
• Customers will have access to a broader range of services and locations.
• The company's strong financial position benefits creditors.
• The company's expansion will have a positive impact on the communities it serves.

Next Steps

• The company will focus on integrating Piedmont Bancorp into its operations.
• United will continue to monitor the economic environment and adjust its strategies as needed.
• The company will continue to evaluate opportunities for growth and expansion.
• The systems conversion for the Piedmont acquisition is anticipated to occur in March 2025.

Key Dates

Keywords

bank, earnings, acquisition, merger, financial results, net interest income, deposits, loans, asset quality, capital, Piedmont Bancorp, mortgage banking