10-Q: United Bankshares Reports Strong Q3 Earnings, Driven by Piedmont Acquisition

United Bankshares, Inc. reported a significant increase in net income and total assets for the third quarter and first nine months of 2025, largely propelled by the acquisition of Piedmont Bancorp, Inc.

Summary

• Net income for the third quarter of 2025 increased to $130.75 million, up from $95.27 million in Q3 2024.
• Diluted earnings per share for Q3 2025 were $0.92, compared to $0.70 in Q3 2024.
• For the first nine months of 2025, net income reached $335.78 million, an increase from $278.59 million in 9M 2024, with diluted EPS of $2.36 (vs. $2.06 in 9M 2024).
• Total assets grew by $3.38 billion (11.27%) to $33.41 billion as of September 30, 2025, primarily due to the Piedmont acquisition which added $2.30 billion.
• Net interest income for Q3 2025 rose by $49.86 million (21.65%) to $280.12 million compared to Q3 2024.
• The provision for credit losses increased to $12.10 million in Q3 2025 from $6.94 million in Q3 2024, and to $47.09 million in 9M 2025 from $18.46 million in 9M 2024, including $18.73 million for purchased non-PCD loans from Piedmont.
• Net charge-offs for Q3 2025 were $20.01 million, significantly higher than $3.60 million in Q3 2024, primarily due to $16.50 million in charge-offs on two commercial real estate nonowner-occupied (CRE NOO) loans.
• Noninterest income for Q3 2025 increased by $11.26 million (35.26%) to $43.20 million, driven by net gains on investment securities.
• Shareholders' equity increased by $452.49 million (9.06%) to $5.45 billion, with $280.95 million attributed to the Piedmont acquisition.
• The allowance for loan and lease losses increased by $28.21 million (10.38%) to $300.05 million at September 30, 2025, compared to December 31, 2024.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong earnings growth, significant asset and deposit expansion from the Piedmont acquisition, and robust capital ratios. However, concerns arise from the notable increase in provision for credit losses, specific large charge-offs in commercial real estate, and substantial unrealized losses on available-for-sale securities, which temper the overall positive outlook.

Positives

• Net income for Q3 2025 increased by 37.25% year-over-year to $130.75 million.
• Diluted EPS for Q3 2025 increased by 31.43% year-over-year to $0.92.
• Total assets grew by 11.27% to $33.41 billion, significantly boosted by the Piedmont Bancorp acquisition.
• Net interest income increased by 21.65% in Q3 2025 and 20.08% in 9M 2025, reflecting growth in earning assets and effective balance sheet management.
• Return on average tangible equity, a non-GAAP measure, was strong at 15.45% for Q3 2025 and 13.63% for 9M 2025.
• Noninterest income saw a substantial increase of 35.26% in Q3 2025, primarily due to net gains on investment securities and higher brokerage service fees.
• Deposits increased by $2.92 billion (12.19%), with organic growth of $816.29 million, indicating strong customer relationships and funding stability.
• The company maintains a strong capital position, exceeding all regulatory well-capitalized guidelines with a risk-based capital ratio of 15.67% and a Common Equity Tier 1 capital ratio of 13.40%.

Negatives

• Provision for credit losses increased significantly to $12.10 million in Q3 2025 (from $6.94 million in Q3 2024) and $47.09 million in 9M 2025 (from $18.46 million in 9M 2024).
• Net charge-offs for Q3 2025 were $20.01 million, a substantial increase from $3.60 million in Q3 2024, including $16.50 million from two specific CRE NOO loans.
• The ratio of allowance for loan and lease losses to nonperforming loans and leases (coverage ratio) decreased to 256.75% at September 30, 2025, from 370.36% at December 31, 2024, indicating a larger increase in nonperforming loans relative to the allowance.
• Nonperforming loans increased to $116.87 million at September 30, 2025, from $73.40 million at December 31, 2024.
• Gross unrealized losses on available-for-sale securities were $234.51 million at September 30, 2025, primarily due to higher interest rates.
• Mortgage loan servicing income decreased by $8.96 million in 9M 2025 due to the sale of the remaining mortgage servicing portfolio in H2 2024.
• Mortgage banking activities income decreased due to lower origination and sale volume.

Risks

• Duration of U.S. government shutdown and effects of changes in trade and monetary/fiscal policies, including Federal Reserve interest rate policies.
• General competitive, economic, political, and market conditions, including changes in asset quality and credit risk.
• Inability to sustain revenue and earnings growth.
• Changes in interest rates and capital markets, and inflation.
• Customer borrowing, repayment, investment, and deposit practices.
• Impact, extent, and timing of technological changes.
• Capital management activities and other actions of the Federal Reserve Board and legislative/regulatory actions.
• Risks related to the acquisition and integration of Piedmont Bancorp, Inc., including failure to realize expected growth opportunities or cost savings, and reputational risk.
• Deposit attrition, client loss, or revenue loss following completed mergers or acquisitions.
• Regulatory change risk from new laws, rules, regulations, or accounting principles, including potential for higher capital requirements.
• Cost and effects of cyber incidents or other failures, interruptions, or security breaches of systems.
• Competitive pressures on product pricing and services.
• Success, impact, and timing of business strategies, including market acceptance of new products or services.
• Volatility and disruptions in global capital and credit markets.
• Operational, technological, cultural, regulatory, legal, credit, and other risks associated with potential future acquisitions.
• Catastrophic events such as natural disasters, public health crises, and infectious disease outbreaks.
• Geopolitical risk from terrorist activities and armed conflicts.
• Fluctuations in market prices for common stock that may not reflect economic condition or performance.
• Nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations.

Future Outlook

Management anticipates continued growth in net interest income and profitability, while actively monitoring and managing interest rate risk and credit quality. The company expects to achieve operating cost savings and other business synergies from the Piedmont acquisition, which are not yet fully reflected in pro forma amounts. United will continue to evaluate and apply new accounting standards and legislative provisions, such as the OBBBA, but does not expect a material impact on consolidated financial statements from these changes.

Management Comments

• Management believes that the allowance for credit losses of $332.69 million at September 30, 2025, is adequate to provide for expected losses on existing loans and lending-related commitments based on information currently available.
• Management does not believe that any individual security with an unrealized loss as of September 30, 2025, is impaired, attributing the decline in value to changes in market interest rates, credit spreads, and liquidity, not a deterioration of credit.
• Management has the intent and the ability to hold available-for-sale securities until such time as the value recovers or the securities mature.
• Management is vigorously pursuing all its legal and factual defenses and, after consultation with legal counsel, believes that all such litigation will be resolved with no material effect on United's financial statements.
• Management is not aware of any potential problem loans or leases, trends or uncertainties, which it reasonably expects, will materially impact future operating results, liquidity, or capital resources which have not been disclosed.

Industry Context

United Bankshares' strong performance, particularly in net interest income and asset growth, reflects a successful integration of the Piedmont Bancorp acquisition, positioning it for expanded market presence. The increase in provision for credit losses and specific charge-offs, especially in commercial real estate, aligns with broader industry concerns regarding potential credit quality deterioration in certain segments amid higher interest rates and economic uncertainties. The significant unrealized losses on available-for-sale securities are a common challenge across the banking sector due to the rapid rise in interest rates, impacting balance sheet valuations, though management asserts no credit impairment. The company's robust capital ratios demonstrate resilience compared to regulatory standards.

Comparison to Industry Standards

• The filing does not provide specific comparisons to global benchmarks or named comparable companies/projects.
• United's annualized return on average assets of 1.57% for Q3 2025 and return on average tangible equity of 15.45% for Q3 2025 are generally competitive within the regional banking sector, often exceeding the average for many community banks.
• The risk-based capital ratio of 15.67% and Common Equity Tier 1 capital ratio of 13.40% at September 30, 2025, significantly surpass the regulatory requirements for a well-capitalized financial institution (10.0% and 6.5% respectively), indicating a strong capital buffer relative to industry peers.

Corporate Governance

Legal Proceedings

• United and its subsidiaries are currently involved in various legal proceedings in the normal course of business.
• Management assesses liabilities and contingencies quarterly, establishing accruals for probable and estimable losses.
• Management believes all such litigation will be resolved with no material effect on United's financial statements.

Related Party Transactions

• Loans to directors and officers of United and its subsidiaries, and their affiliates, totaled $32.71 million at September 30, 2025, and $22.70 million at December 31, 2024.

Stakeholder Impact

• Shareholders: Positive impact from increased net income and diluted EPS, and a declared cash dividend of $0.37 per share. However, increased credit loss provisions and specific charge-offs, along with unrealized losses on securities, could be a concern.
• Employees: The Piedmont acquisition led to additional employees, potentially impacting compensation and benefits.
• Customers: Expanded product and service offerings through the Piedmont acquisition and continued community banking services.
• Creditors: Strong capital position and liquidity provide assurance, but increased nonperforming loans and credit loss provisions warrant monitoring.

Next Steps

• Continue to evaluate and apply the provisions of The One Big Beautiful Bill Act (OBBBA).
• Monitor the potential impact of evolving trade policies and geopolitical events.
• Ongoing assessment of liabilities and contingencies in connection with all pending or threatened claims and litigation.
• Asset Liability Committee to continue monitoring liquidity and interest rate risk within Board-approved policy guidelines.
• Annual goodwill impairment test performed as of September 30, 2025, with no impairment identified.

Key Dates

Recommendation

United Bankshares demonstrates strong financial performance with significant growth in net income, assets, and deposits, largely driven by the successful integration of Piedmont Bancorp. The improved net interest margin and robust capital ratios are positive indicators of operational efficiency and financial stability. However, the notable increase in the provision for credit losses, particularly the substantial charge-offs in the commercial real estate nonowner-occupied (CRE NOO) segment, and the significant unrealized losses on available-for-sale securities, introduce elements of caution. While management asserts no credit impairment on securities and has adequate allowances for loan losses, these factors suggest potential headwinds in asset quality and market value sensitivity. Given the mixed signals of strong growth tempered by emerging credit quality concerns and market valuation challenges, a 'hold' recommendation is appropriate for investors to monitor the trajectory of asset quality and the impact of interest rate environment on the securities portfolio.

Keywords

Banking, Financial Services, Community Banking, SEC Filing, 10-Q, Earnings Report, Net Interest Income, Credit Losses, Acquisition, Piedmont Bancorp, Commercial Real Estate, Deposits, Loans, Interest Rates, Shareholders Equity, UBSI