United Bankshares reports record earnings for first quarter of 2021
CHARLESTON — United Bankshares has reported record earnings for the first quarter of 2021 of $106.9 million, or 83 cents per diluted share, up significantly from earnings of $40.2 million, or 40 cents per diluted share for the first quarter of 2020.
First quarter of 2021 results produced annualized returns on average assets, average equity and average tangible equity of 1.64 percent, 9.97 percent and 17.20 percent, respectively, compared to annualized returns on average assets, average equity and average tangible equity of 0.82 percent, 4.82 percent and 8.77 percent, respectively, for the first quarter of 2020.
Record earnings for the first quarter of 2021, as compared to the first quarter of 2020, were primarily due to higher income from mortgage banking activities, driven by an elevated volume of mortgage loan originations and sales in the secondary market, the impact of the Carolina Financial Corp. acquisition and a lower provision for credit losses primarily due to better performance trends within the loan portfolio and an improved future macroeconomic forecast under the Current Expected Credit Loss accounting standard.
“The first quarter of 2021 was another great quarter for United Bankshares, and UBSI continues to be one of the best performing regional banking companies in the nation,” stated Richard M. Adams, United’s Chairman of the Board and Chief Executive Officer. “We earned record net income of $107 million, record diluted earnings per share of 83 cents and delivered an annualized return on average assets of 1.64 percent. Our credit quality and regulatory ratios remain strong and position us well for continued growth as the economy recovers from the effects of the COVID-19 pandemic.”
The results of operations for Carolina Financial are included in the consolidated results of operations from the date of acquisition, May 1, 2020. As a result of the acquisition, the first quarter of 2021 reflected higher average balances, income, and expense as compared to the first quarter of 2020. The first quarter of 2020 included merger-related expenses of $1.6 million.
Net interest income for the first quarter of 2021 was $191.0 million, which was an increase of $49.4 million or 35 percent from the first quarter of 2020, primarily due to an increase in average earning assets from the Carolina Financial acquisition and Paycheck Protection Program loans.
On a linked-quarter basis, net interest income for the first quarter of 2021 was relatively flat from the fourth quarter of2020, decreasing $1 million or less than 1 percent.
At March 31, nonperforming loans were $116.2 million, or 0.67 percent of loans and leases, net of unearned income, down from $132.2 million, or 0.75 percent of loans and leases, net of unearned income, at Dec. 31.
On a linked-quarter basis, the provision for credit losses for the first quarter of 2021 decreased $16.6 million from $16.8 million for the fourth quarter of 2020.
As of March 31, the allowance for loan losses was $231.6 million or 1.33 percent of loans & leases, net of unearned income, as compared to $235.8 million or 1.34 percent of loans & leases, net of unearned income, at Dec. 31.
Noninterest income for the first quarter of 2021 was $92.6 million, which was an increase of $55.8 million or 152 percent from the first quarter of 2020.
Noninterest expense for the first quarter of 2021 was $148.9 million, an increase of $47.8 million or 47 percent from the first quarter of 2020. Employee compensation increased $27.9 million from the first quarter of 2020 due to the Carolina Financial acquisition as well as due to higher employee incentives and commissions expense mainly related to higher mortgage banking production.
On a linked-quarter basis, noninterest expense for the first quarter of 2021 decreased $7.2 million or 5 percent from the fourth quarter of 2020 primarily due to decreases of $4.6 million in employee compensation and $5.1 million in other expenses.
Employee compensation declined from the fourth quarter of 2020 primarily due a decline in expenses for salaries (fewer employees), incentives and commissions (lower mortgage banking production) recognized in the first quarter of 2021.
United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 15.7 percent at March 31 while estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 13.5 percent, 13.5 percent and 10.4 percent, respectively.
As of March 31, 2021, United had consolidated assets of approximately $27.0 billion. United is the parent company of United Bank, the largest community bank headquartered in the D.C. Metro region. United Bank has 223 offices in West Virginia, Virginia, Ohio, Pennsylvania, Maryland, North Carolina, South Carolina, Georgia, and the nation’s capital. United Stock is traded on the NASDAQ Global Select Market under the quotation symbol UBSI.