United Bank Reports First Half Of 2020 Earnings And A Major Acquisition
During a year marked with unprecedented challenges, United Bankshares Inc. has managed to complete a major acquisition, significantly expand its business and continue to serve its clients’ needs.
United recently reported its earnings for Q2 and the first half of 2020.
Earnings for Q2 2020 were $52.7M as compared to earnings of $67.2M for Q2 2019. Earnings for the first half of 2020 were $92.9M as compared to earnings of $130.8M for the first half of 2019. The lower net income in 2020 was driven primarily by significant merger-related expenses from the acquisition of Carolina Financial Corp. and a higher provision for loan losses resulting from an adverse future macroeconomic forecast as a result of the coronavirus pandemic under the new Current Expected Credit Loss accounting standard.
The higher amount of provision expense resulting from the coronavirus is an issue affecting bank earnings nationwide. Diluted earnings per share were $0.44 and $0.84 for Q2 and the first half of 2020, respectively, as compared to diluted earnings per share of $0.66 and $1.28 for Q2 and the first half of 2019, respectively.
On May 1, United completed its acquisition of Carolina Financial Corp. As a result of the acquisition, Q2 and the first half of 2020 were impacted by two months of increased levels of average balances, income and expense as compared to Q2 and the first half of 2019. In addition, Q2 and the first half of 2020 included $46.4M and $48M, respectively, of merger-related expenses from the acquisition.
Q2 2020 results produced an annualized return on average assets of 0.87%, an annualized return on average equity of 5.4% and an annualized return on average tangible equity of 9.58%, respectively. For the first half of 2020, United’s annualized return on average assets was 0.85% while the annualized return on average equity was 5.16% and the annualized return on average tangible equity was 9.28%. United’s annualized returns on average assets, average equity and average tangible equity were 1.38%, 8.12% and 14.90%, respectively, for Q2 2019 while the annualized returns on average assets, average equity and average tangible equity were 1.36%, 8% and 14.78%, respectively, for the first half of 2019.
“During the second quarter of 2020, we successfully completed the acquisition of Carolina Financial Corporation, headquartered in Charleston, South Carolina, which broadens our footprint in the Southeast,” United CEO and Chairman of the Board Richard M. Adams said in a statement. “Core earnings for the second quarter of 2020 continued to be good despite the current economic environment and significant merger expenses related to the acquisition of Carolina Financial. In addition, United has continued its focus on meeting our customers’ needs during the COVID-19 pandemic by suspending residential property foreclosures, offering fee waivers, providing payment deferrals, and processing over 8,000 loans totaling approximately $1.3B under the government Paycheck Protection Program.”
At consummation, Carolina Financial had assets of approximately $5B, portfolio loans of $3.3B and deposits of $3.9B. The aggregate purchase price was approximately $817.9M. United issued 28 million shares in the transaction.
United also recorded an allowance for credit losses, including a reserve for unfunded commitments, of $50.6M on the loans and commitments acquired split between $19.8M for PCD loans and $30.8M for non-PCD loans. The estimated fair values of the acquired assets and assumed liabilities, including identifiable intangible assets, are preliminary as of June 30, 2020, and are subject to refinement as additional information relative to closing date fair values becomes available.
As of June 30, United had consolidated assets of approximately $26.2B.
United is the parent company of United Bank, the largest community bank headquartered in the D.C. Metro region. United Bank has 226 offices in West Virginia, Virginia, Ohio, Pennsylvania, Maryland, North Carolina, South Carolina, Georgia and the nation’s capital. United’s stock is traded on the Nasdaq Global Select Market under the quotation symbol "UBSI."
This feature was produced in collaboration between the Bisnow Branded Content Studio and United Bank. Bisnow news staff was not involved in the production of this content.