Business Overview and History
United Bankshares, Inc. (NASDAQ:UBSI) is a financial holding company that has built a formidable presence across the Mid-Atlantic and Southeastern United States. With a history spanning over five decades, United Bankshares has distinguished itself as one of the premier community banking institutions in the region, boasting a steadfast commitment to shareholder value and a remarkable track record of consecutive dividend increases.
United Bankshares, Inc. was incorporated on March 26, 1982, and organized on September 9, 1982, beginning operations on May 1, 1984, with the acquisition of three wholly-owned subsidiaries. Since its formation, the company has grown significantly through a series of strategic acquisitions, completing a total of thirty-three banking institution acquisitions to date. United operates primarily through its banking subsidiary, United Bank, which conducts business under the laws of Virginia. In addition to its banking operations, United owns nonbank subsidiaries that provide a range of community banking services, including asset management, real property title insurance, financial planning, mortgage banking, and brokerage services.
The company's growth trajectory has been particularly notable in recent years. Between 2014 and 2017, United completed three significant acquisitions that more than doubled its size. These included the acquisition of Virginia Commerce Bancorp, Inc. in January 2014, the Bank of Georgetown transaction in June 2016, and the Cardinal Financial Corporation acquisition in April 2017. This period of rapid expansion was followed by the acquisition of Carolina Financial Corporation, the parent company of CresCom Bank, in May 2020, which further extended United's footprint in the Southeast region.
Throughout its history, United has faced various challenges, particularly in obtaining regulatory approvals for its numerous acquisitions. The process has become increasingly complex over time, involving a comprehensive application review process where regulators assess the bank's capital levels, quality of management, overall condition, and compliance with various laws and regulations. To meet these regulatory requirements and supervisory expectations, United has invested substantial effort and resources in improving its systems, audit capabilities, staffing, and training.
Financial Performance and Strength
United Bankshares' financial performance has been consistently solid, with the company reporting net income of $373.0 million, or $2.75 per diluted share, for the full year 2024. This represents a 1.82% increase in net income compared to the previous year's figure of $366.31 million, or $2.71 per diluted share. The company's return on average assets (ROAA) and return on average equity (ROAE) for 2024 were 1.26% and 7.61%, respectively, while its return on average tangible equity, a non-GAAP measure, stood at 12.43%.
Revenue for the most recent fiscal year (2024) reached $1.03 billion, with operating cash flow of $445.45 million and free cash flow of $433.33 million. In the fourth quarter of 2024, United reported revenue of $262.72 million, a slight decrease of 0.6% from the same quarter in 2023, primarily due to lower mortgage banking income, partially offset by higher net interest income. However, net income for Q4 2024 increased by 19% year-over-year to $94.41 million.
United Bankshares' financial strength is further evidenced by its robust capital position, with a total risk-based capital ratio of 16.52% and a common equity tier 1 (CET1) ratio of 14.14% as of December 31, 2024. These ratios exceed the regulatory requirements for a well-capitalized financial institution, providing the company with the flexibility to pursue strategic growth opportunities while maintaining a strong foundation.
The company's liquidity position remains solid, with $2.29 billion in cash and cash equivalents as of December 31, 2024. United has access to $280 million in unused lines of credit from correspondent banks, a $20 million unsecured revolving line of credit, and $8.14 billion in additional borrowing capacity from the Federal Home Loan Bank. The debt-to-equity ratio stands at a conservative 0.126, indicating a strong balance sheet and financial flexibility.
Dividend History and Shareholder Returns
One of the defining characteristics of United Bankshares is its unwavering commitment to shareholder value, as exemplified by its remarkable dividend history. The company has increased its dividend to shareholders for 51 consecutive years, making it one of only two major banking companies in the United States to achieve such a distinguished track record. In 2024, United Bankshares paid dividends of $1.48 per share, up from $1.45 per share in the previous year, underscoring the company's dedication to rewarding its loyal shareholders.
This consistent dividend growth has contributed to United Bankshares' strong shareholder returns over the years. The company's stock has delivered a cumulative total return of 120.69% over the past five years, outperforming both the NASDAQ Bank Index and the S&P MidCap 400 Index during the same period.
Expansion and Growth Strategies
United Bankshares' growth strategy has been centered on strategic acquisitions, which have allowed the company to expand its geographic footprint and enhance its product and service offerings. The 2025 acquisition of Piedmont Bancorp, Inc. is a prime example of this approach, as it strengthened United's presence in the thriving Atlanta metropolitan area and further solidified its position as a leading community bank in the Southeast.
Beyond acquisitions, United Bankshares has also focused on organic growth, leveraging its diverse product suite and deep customer relationships to drive cross-selling opportunities and increase market share within its existing markets. The company's digital banking capabilities, including its secure online and mobile platforms, have also played a crucial role in meeting the evolving needs of its customer base and enhancing the overall banking experience.
Risk Factors and Challenges
As with any financial institution, United Bankshares faces a range of risks and challenges that it must navigate effectively. These include interest rate risk, credit risk, regulatory and compliance risks, and the ongoing competition within the banking industry. The company's ability to manage these risks and maintain its competitive edge will be crucial to its continued success.
Additionally, the economic and political landscape in the regions where United Bankshares operates can have a significant impact on the company's performance. Factors such as changes in unemployment rates, real estate values, and government policies can all influence the company's lending activities and overall financial health.
Business Segments and Operations
United Bankshares operates primarily in the community banking segment, which represents the core of its business operations. Through this segment, the company offers a full range of banking products and services, including checking, savings, time, and money market accounts, as well as various loan products such as commercial, real estate, and consumer loans. United also provides trust and brokerage services, safe deposit boxes, and wire transfers.
Net interest income is the primary source of revenue for the community banking segment. In 2024, the segment reported net interest income of $911.07 million, a slight decrease of 0.96% from the prior year. The provision for credit losses decreased to $25.15 million in 2024 from $31.15 million in 2023, primarily due to less severe reasonable and supportable forecast assumptions regarding future economic conditions.
Noninterest income for the community banking segment totaled $123.69 million in 2024, down 8.55% from 2023. This decline was mainly due to decreases in mortgage banking income and mortgage loan servicing income, partially offset by increases in fees from brokerage services and bank-owned life insurance income. Noninterest expense for the segment was $545.03 million in 2024, a decrease of 2.71% compared to the prior year, driven by lower FDIC insurance expense, mortgage loan servicing expense, and other operating costs, partially offset by increases in employee compensation and benefits.
Geographic Presence and Market Position
United Bankshares operates primarily in the Mid-Atlantic and Southeast regions of the United States, with a strong presence in West Virginia, Virginia, Maryland, North Carolina, South Carolina, and Georgia. The recent acquisition of Piedmont Bancorp, Inc. in January 2025 has further expanded the company's footprint in the Southeast, particularly in the greater Atlanta area.
The commercial banking industry in which United operates has seen a compound annual growth rate (CAGR) of approximately 3-5% over the past five years. United's strategic positioning in these growing markets, combined with its focus on community banking and personalized service, has allowed the company to capitalize on this industry growth and maintain its competitive edge.
Outlook and Conclusion
United Bankshares enters 2025 with a strong foundation, a proven track record, and a clear strategic vision. The company's recent acquisition of Piedmont Bancorp, Inc. has further enhanced its presence in the Southeast, positioning it to capitalize on the region's robust economic growth and thriving banking market.
With its unwavering commitment to shareholder value, demonstrated by its 51-year dividend increase streak, United Bankshares continues to be an attractive investment opportunity for those seeking both income and long-term capital appreciation. As the company navigates the evolving financial landscape, its disciplined approach to risk management, strategic expansion, and customer-centric focus will be crucial in driving its future success.
The company's strong liquidity position, conservative debt-to-equity ratio, and access to substantial credit lines provide a solid financial foundation for future growth. Moreover, United's consistent financial performance, even in the face of challenges such as lower mortgage banking income, demonstrates its resilience and ability to adapt to changing market conditions.
As United Bankshares continues to expand its presence in the Southeast and refine its community banking model, it is well-positioned to benefit from the ongoing growth in its target markets. The company's focus on maintaining a diverse product suite, enhancing its digital banking capabilities, and leveraging its strong customer relationships should contribute to sustained growth and shareholder value creation in the years to come.