United Bankshares Inc (UBSI) Reports Mixed Results Amidst Economic Challenges
Net Income: Q4 2023 net income was $79.4 million, down from $99.8 million in Q4 2022. Full-year net income for 2023 was $366.3 million, a decrease from $379.6 million in 2022.
Earnings Per Share (EPS): Q4 EPS stood at $0.59, compared to $0.74 in the same quarter last year. Annual EPS was $2.71 for 2023, down from $2.80 in 2022.
Net Interest Income: Increased by $1.2 million in Q4 2023 compared to Q3 2023, but decreased by $19.7 million compared to Q4 2022.
Provision for Credit Losses: Rose to $6.9 million in Q4 2023, up from $5.9 million in Q3 2023 and down from $16.4 million in Q4 2022.
Noninterest Income: Remained flat from Q3 2023 to Q4 2023, but increased by $2.8 million compared to Q4 2022.
Noninterest Expense: Increased by $17.1 million in Q4 2023 from Q3 2023, primarily due to the $12.0 million FDIC special assessment.
Asset Quality: Non-performing loans were 0.21% of total loans at the end of 2023, an improvement from 0.29% at the end of 2022.
On January 26, 2024, United Bankshares Inc (NASDAQ:UBSI) released its 8-K filing, announcing its financial results for the fourth quarter and full year of 2023. United Bankshares Inc, a financial holding company that operates primarily through its community banking segment, faced a challenging economic environment in 2023, marked by a special FDIC assessment and fluctuating interest rates.
Financial Performance Overview
For the fourth quarter of 2023, United Bankshares Inc reported a net income of $79.4 million, or $0.59 per diluted share, a decrease from the $99.8 million, or $0.74 per diluted share, reported in the same period of the previous year. The company's net interest income for the quarter increased slightly from the third quarter of 2023, driven by organic loan growth and higher yields on loans. However, it faced a significant year-over-year decrease due to higher interest expenses associated with deposit rate repricing.
The provision for credit losses increased to $6.9 million in the fourth quarter, up from $5.9 million in the previous quarter, reflecting the impact of future macroeconomic conditions and loan growth. Noninterest income remained relatively flat compared to the third quarter but saw an increase from the fourth quarter of 2022, bolstered by a gain from the payoff of a fixed-rate commercial loan.
Noninterest expense for the fourth quarter rose by 13% from the third quarter, primarily due to the FDIC's special assessment, which added approximately $12.0 million in expenses. Despite these challenges, United Bankshares Inc's asset quality improved, with non-performing loans decreasing to 0.21% of total loans by the end of 2023.
Annual Performance and Capital Strength
For the full year of 2023, United Bankshares Inc earned $366.3 million, or $2.71 per diluted share, compared to $379.6 million, or $2.80 per diluted share, in 2022. The company's net interest income for the year increased by 3% from 2022, benefiting from rising market interest rates on earning assets and organic loan growth.
United Bankshares Inc's capital ratios remained strong, with an estimated risk-based capital ratio of 15.4% at the end of 2023, well above the regulatory requirement for a well-capitalized financial institution. The company did not repurchase any shares of its common stock during 2023, in contrast to the repurchase of approximately 2.3 million shares in 2022.
Looking Ahead
Despite the economic headwinds and the additional expenses incurred due to the FDIC's special assessment, United Bankshares Inc's CEO expressed pride in the company's performance, highlighting loan and deposit growth, margin expansion, and strong asset quality metrics and capital levels.
Investors and stakeholders will be closely monitoring how United Bankshares Inc navigates the evolving economic landscape, particularly with respect to interest rate changes and their impact on the banking sector's profitability.
For more detailed information, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from United Bankshares Inc for further details.
This article first appeared on GuruFocus.
