Investing.com -- Moody’s Ratings has confirmed all ratings and assessments for United Bank, a subsidiary of United Bankshares (NASDAQ: UBSI ), Inc. The affirmed ratings include the bank’s long-term and short-term local and foreign currency counterparty risk ratings of A3 and Prime-2, respectively. The bank’s long- and short-term local currency deposit ratings of A1 and Prime-1, respectively, and its long-term local currency issuer rating of Baa1 were also confirmed. The bank’s Baseline Credit Assessment (BCA) and adjusted BCA of a3 and long- and short-term Counterparty Risk Assessments of A2(cr) and Prime-1(cr), respectively, were also affirmed. Moody’s revised the bank’s long-term issuer and long-term deposit rating outlooks to stable from negative.
The affirmation of United’s ratings and the modification of its outlook to stable is a reflection of the bank’s strong solvency position, which is demonstrated by good levels of capital and profitability that offset its asset risk. The bank’s record of asset quality and the successful completion and initial integration of Piedmont Bancorp, Inc. in the first quarter of 2025 also contributed to this decision. The bank’s 14.0% tangible common equity (TCE)/risk-weighted assets (RWA) as of December 31, 2024, and average net income/tangible assets of 1.31% between 2020 and 2024 also played a role. However, the bank’s concentrated loan portfolio, which has 3.2 times tangible common equity (TCE) invested in commercial real estate (CRE) loans, and lower liquid banking assets relative to similarly rated peers, balance these strengths.
United’s commercial real estate portfolio is primarily concentrated in the Washington D.C. metro area, a market that has experienced stress for certain property types and classes. Despite this, the bank has shown a core competency in commercial real estate and construction lending, and its net charge-offs remain low compared to peers and the industry.
United’s liquidity is a relative weakness, given its comparatively low levels of balance sheet liquidity compared to similarly rated peers. As of December 31, 2024, liquid banking assets to tangible banking assets stood at 19%.
The affirmation also takes into account United’s core deposit funding, with 71% insured and collateralized deposits. This is sufficient at the current ratings level to offset funding pressures as depositors continue to switch to accounts that bear higher interest rates.
While an upgrade is not likely over the next 12-18 months due to United’s stable outlook and relatively high rating, positive rating pressure could emerge if capital is meaningfully built, strong asset quality performance is demonstrated, and United’s commercial real estate concentration is significantly reduced. It will also depend on core deposit strength being maintained to support low use of market funding while liquid resources increase from current levels.
United’s BCA and ratings could be downgraded if the holding company’s capital falls and is sustained below 12% of Moody’s-calculated TCE/RWA, profitability weakens on a sustained basis, asset quality deteriorates, or liquidity weakens. Ratings could also be downgraded if the bank’s deposit base markedly erodes or reliance on market funding increases.
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