What Happened?
Shares of regional banking company United Bankshares (NASDAQ: UBSI) jumped 3.7% in the afternoon session after the company reported record third-quarter earnings that surpassed Wall Street expectations, leading to an analyst upgrade.
The bank announced earnings of $130.7 million, or $0.92 per share, which was significantly higher than the average analyst estimate of about $0.81 per share. This result also marked a substantial increase from the $0.70 per share reported in the same quarter of the previous year. Revenue grew 23.1% year-over-year to $323.3 million, also beating forecasts. United's CEO, Richard M. Adams, Jr., noted that the record earnings were driven by continued organic growth and tightly managed expenses. In response to the strong performance, financial services firm Piper Sandler upgraded its rating on the stock from "Neutral" to "Overweight" and raised its price target.
After the initial pop the shares cooled down to $36.46, up 3.7% from previous close.
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What Is The Market Telling Us
United Bankshares’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 4.1% on the news that disclosures from two lenders raised concerns about deteriorating loan quality across the industry. The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.
United Bankshares is down 1.6% since the beginning of the year, and at $36.46 per share, it is trading 15.8% below its 52-week high of $43.29 from November 2024. Investors who bought $1,000 worth of United Bankshares’s shares 5 years ago would now be looking at an investment worth $1,401.
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