United Bankshares(US:UBSI)2019-07-26 18:06Financial Data and Key Metrics Changes - The company reported a 10.5% increase in earnings year-over-year for the first six months of 2019, totaling $7 million or $0.32 per share, an increase of $671,000 compared to the same period in 2018 [7] - Net income for the second quarter of 2019 was $3.5 million, with an annualized return on assets of 1.01% and return on equity of 9.79% [14][15] - The tax-equivalent net interest margin was 3.69% for the second quarter, slightly lower than 3.73% for the same period in 2018 [11][18] Business Line Data and Key Metrics Changes - Loan growth, excluding PCI loans, increased approximately $57 million or just under 6% year-over-year, with a $30.5 million increase for the first six months, representing just over 6% annualized growth [8] - Non-interest-bearing deposits grew by $28.4 million, or 18.7% year-over-year, compared to 9.7% growth for the same period from June 2017 to June 2018 [9] - Non-interest income increased by 43.1% on a linked quarter basis, driven by gains on the sale of securities and increases in service charges and mortgage loan income [11][12] Market Data and Key Metrics Changes - The average balance of non-interest-bearing deposits grew by $15.2 million year-over-year, contributing to the stability of the net interest margin despite rising funding costs [19] - The company noted that 61.7% of its loan portfolio is adjustable rate, which may benefit from anticipated lower interest rates [21] Company Strategy and Development Direction - The company is focused on maintaining demand deposit growth and improving its funding mix to lower costs, especially in a declining interest rate environment [28] - There is an emphasis on enhancing customer service through digital banking platforms and call centers to gain profitable market share [29] - The management is considering stock buybacks and remains open to M&A opportunities, although the market is currently quiet [40][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain growth rates and improve profitability despite a challenging interest rate environment [27][30] - The company is committed to a disciplined approach to growth and pricing, aiming to lower funding costs and improve efficiency [28][66] - Management anticipates a rebound in loan growth and net interest income in the upcoming quarters, despite recent challenges [83] Other Important Information - The company recorded a provision for loan losses of $125,000 in the second quarter of 2019, reflecting improved asset quality compared to the previous year [16] - One-time costs of $254,000 impacted net income for the second quarter, but management expects these costs to improve future run rates [15] Q&A Session Summary Question: Timing of loan growth and interest income impact - Management noted significant loan growth occurred towards the end of the quarter, which should positively impact interest income in the upcoming quarter [37] Question: Loan growth expectations for the year - Management confirmed expectations for loan growth around 6% for the year, with a strong pipeline of projects [38] Question: Update on M&A and capital strategy - Management is considering stock buybacks and remains open to M&A discussions, although activity is currently slow [39] Question: Outlook for net interest margin - Management anticipates the net interest margin to remain stable in the 3.69% to 3.77% range for the next quarter [52] Question: Provisioning and asset quality concerns - Management indicated no significant deterioration in credit quality and expects to budget for an additional $400,000 in provisions for the second half of the year [73] Question: Operating expenses outlook - Management suggested operating expenses in the second half of the year would be around $8.5 million per quarter [79]