United Bankshares Inc (UBSI) Reports Q3 2023 Earnings: A Detailed Analysis
UBSI reported Q3 2023 earnings of $96.2 million, or $0.71 per diluted share, compared to $92.5 million, or $0.68 per diluted share, for Q2 2023.
Net interest income for Q3 2023 increased by $992 thousand, or less than 1%, from Q2 2023.
The provision for credit losses was $5.9 million for Q3 2023, compared to $11.4 million for Q2 2023.
Noninterest income for Q3 2023 decreased by $1.5 million, or 4%, from Q2 2023.
United Bankshares Inc (NASDAQ:UBSI) released its Q3 2023 earnings report on October 25, 2023. The company reported earnings of $96.2 million, or $0.71 per diluted share, compared to earnings of $92.5 million, or $0.68 per diluted share, for Q2 2023. Despite the challenging environment, UBSI demonstrated resilient performance with accelerated growth and profitability.
Performance and Challenges
UBSI's Q3 2023 results produced annualized returns on average assets, average equity, and average tangible equity of 1.31%, 8.14%, and 13.71%, respectively. This is an improvement from Q2 2023, which saw returns of 1.26%, 7.96%, and 13.47%, respectively. However, these figures were lower than the Q3 2022 returns of 1.41%, 8.96%, and 15.46%, respectively.
Financial Achievements
Net interest income for Q3 2023 increased by $992 thousand, or less than 1%, from Q2 2023. This was primarily due to the impact of rising market interest rates on earning assets, a change in the asset mix to higher earning assets, and lower average balances of long-term borrowings. However, this was partially offset by higher interest expense driven by deposit rate repricing and higher average balances of interest-bearing deposits.
Income Statement Analysis
The provision for credit losses was $5.9 million for Q3 2023, a significant decrease from $11.4 million for Q2 2023. This decrease was mainly due to a decrease in qualitative adjustments and the impact of reasonable and supportable forecasts of future macroeconomic conditions, partially offset by additional provision expense due to loan growth.
Noninterest income for Q3 2023 decreased by $1.5 million, or 4%, from Q2 2023. This decrease was primarily due to a decrease in mortgage loan servicing income of $9.0 million, partially offset by lower net losses on investment securities of $7.2 million.
Balance Sheet and Cash Flow Statement Highlights
As of September 30, 2023, UBSI's non-performing loans were $42.7 million, or 0.20% of loans & leases, net of unearned income. Total non-performing assets were $45.9 million, including OREO of $3.2 million, or 0.16% of total assets. The allowance for loan & lease losses was $254.9 million, or 1.21% of loans & leases, net of unearned income.
Company's Performance Analysis
Despite the challenging environment, UBSI demonstrated resilient performance with accelerated growth and profitability. The company's effective management of its assets and liabilities, coupled with its strong capital, liquidity, and asset quality positions, contributed to its robust performance in Q3 2023.
However, the decrease in noninterest income and the increase in net interest income indicate that the company may need to adjust its strategies to optimize its income sources. Furthermore, the decrease in the provision for credit losses suggests that the company has been effective in managing its credit risk.
Overall, UBSI's Q3 2023 earnings report shows a resilient performance amidst a challenging environment. The company's strong financial position and effective risk management strategies have enabled it to maintain its profitability and deliver value to its shareholders.
This article first appeared on GuruFocus.
