United Bankshares announces 2Q earnings
CHARLESTON — United Bankshares Inc. has reported earnings for the second quarter and first half of 2022.
The company this week announced second quarter earnings of $95.6 million, or $0.71 per diluted share, compared to earnings of $81.7 million, or $0.60 per diluted share, for the first quarter of 2022 and $94.8 million, or $0.73 per diluted share, for the second quarter of 2021.
Earnings for the first six months of 2022 were $177.3 million, or $1.30 per diluted share, as compared to earnings of $201.7 million, or $1.56 per diluted share, for the same period in 2021.
Annualized loan growth, excluding Paycheck Protection Program loans, was 15% for the second quarter and 13% for the first half of 2022. The second-quarter net interest margin of 3.38% increased 39 basis points from the first quarter of 2022. Non-performing loans as a percentage of loans and leases, net of unearned income, was 0.37% at June 30, 2022.
Second quarter 2022 results produced annualized returns on average assets, average equity and average tangible equity of 1.32%, 8.33% and 14.23%, respectively, compared to annualized returns of 1.13%, 6.96% and 11.63%, respectively, for the first quarter of 2022.
“During the second quarter, we continued our strong momentum from the beginning of the year and are well positioned for the second half of 2022,” said Richard M. Adams Jr., United’s chief executive officer. “We had meaningful net interest margin expansion and continue to experience promising loan growth in our markets. We remain well-capitalized with solid asset quality, have sound liquidity levels and maintain our longstanding commitments to strong risk management practices, credit underwriting discipline and meeting our customers’ needs.”
Net interest income for the second quarter increased $23.4 million, or 12%, from the first quarter of 2022, primarily due to rising market interest rates and a change in the asset mix.
The interest rate spread of 3.24% for the second quarter increased 38 basis points from the first quarter due to a 42-basis-point increase in the average yield on earning assets partially offset by a 4-basis-point increase in the average cost of funds.
A decrease in average earning assets of $426 million, or 2%, from the first quarter, driven by a decrease of $1.3 billion in short-term investments, was partially offset by increases in higher yielding average net loans and loans held for sale of $489.9 million and average investment securities of $375.8 million. The net interest margin of 3.38% for the second quarter of 2022 was an increase of 39 basis points from 2.99% for the first quarter of 2022.
The provision for credit losses was a net benefit of $1.8 million for the second quarter of 2022, compared to $3.4 million for the first quarter of 2022. The net benefit in the second quarter reflects continued strong performance trends within the loan portfolio partially offset by loan growth and the impact of reasonable and supportable forecasts of future macroeconomic conditions.
Noninterest income for the second quarter decreased $2.4 million, or 5%, from the first, primarily due to a decrease of $6.8 million in income from mortgage banking activities mainly due to lower mortgage loan origination and sale volume driven by the rising rate environment and a lower margin on loans sold in the secondary market. Income from bank-owned life insurance increased $1.9 million from the first quarter to $4.1 million primarily due to the recognition of death benefits.
Noninterest expense for the second quarter increased $2 million, or 1%, from the first quarter of 2022 as a result of higher amounts of certain general operating expenses.
United continues to be well- capitalized based on regulatory guidelines. The company’s estimated risk-based capital ratio is 14.8% as of June 30, while estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 12.7%, 12.7% and 10.5%, respectively. The ratios reflect 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 current expected credit losses 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%, a Common Equity Tier 1 capital ratio of 6.5%, a Tier 1 capital ratio of 8% and a leverage ratio of 5%.
During the first half of 2022 and 2021, United repurchased, under a previously announced stock repurchase plan, shares of its common stock. During the second quarter of 2022, United repurchased approximately 1.5 million shares of its common stock at an average price per share of $34.47. United did not repurchase any shares of its common stock during the second quarter of 2021. During the first half of 2022, United repurchased approximately 2.3 million shares of its common stock at an average price per share of $34.69. During the first half of 2021, United repurchased approximately 306,000 shares of its common stock at an average price per share of $32.52.
As of June 30, United had consolidated assets of approximately $28.8 billion. United is the parent company of United Bank, which comprises nearly 250 offices in West Virginia, Ohio, Virginia, Maryland, North Carolina, South Carolina, Georgia, Pennsylvania and Washington, D.C. United’s stock is traded on the NASDAQ Global Select Market under the quotation symbol “UBSI.”