United Bankshares(UBSI) - 2025 Q1 - Quarterly Report

Financial Position - United's total assets increased by $2.76 billion or 9.21% to $32.79 billion as of March 31, 2025, primarily due to the acquisition of Piedmont Bancorp, which added $2.30 billion in assets[243] - Total liabilities increased by $2.44 billion or 9.76%, driven mainly by a $2.40 billion or 10.03% rise in deposits[243] - Shareholders' equity grew by $321.23 million or 6.43% from year-end 2024, largely due to the Piedmont acquisition[243] - Total deposits increased by $2.40 billion or 10.03% to $26.36 billion, largely driven by the Piedmont acquisition which contributed $2.11 billion[262] - Total shareholders' equity increased by $321.23 million or 6.43% to $5.31 billion at March 31, 2025, primarily due to the Piedmont acquisition[337] Loan and Asset Management - Portfolio loans rose by $2.19 billion or 10.10%, while cash and cash equivalents increased by $317.94 million or 13.87%[243] - Loans held for sale decreased by $15.72 million or 35.43% to $28.64 million from year-end 2024, with loan sales exceeding originations[256] - Portfolio loans increased by $2.19 billion or 10.10% from year-end 2024, primarily due to the Piedmont acquisition, which added $2.01 billion in portfolio loans[257] - The allowance for loan and lease losses increased to $310.42 million as of March 31, 2025, compared to $271.84 million at December 31, 2024[302] - Total nonperforming assets decreased to $71,250 as of March 31, 2025, from $73,727 at December 31, 2024[301] Income and Expenses - Net income for Q1 2025 was $84.31 million, a decrease of 2.89% from $86.81 million in Q1 2024, with diluted earnings per share at $0.59 compared to $0.64 in Q1 2024[274] - Net interest income increased by $37.57 million, or 16.88%, to $260.06 million in Q1 2025, driven by a $34.47 million increase in interest income and a $3.10 million decrease in interest expense compared to Q1 2024[278] - Noninterest income decreased by $2.66 million, or 8.25%, to $29.55 million in Q1 2025, mainly due to lower mortgage banking activity[280] - Noninterest expense increased by $12.83 million, or 9.12%, to $153.57 million in Q1 2025, largely due to $11.31 million in merger-related expenses from the Piedmont acquisition[281] Credit Losses and Provisions - The provision for credit losses rose to $29.10 million in Q1 2025, significantly higher than $5.74 million in Q1 2024, primarily due to $18.73 million related to the Piedmont acquisition[279] - For Q1 2025, the provision for credit losses was $29.10 million, significantly higher than $5.74 million in Q1 2024, and compared to $6.69 million in Q4 2024[299] - The net charge-offs for Q1 2025 were $8.04 million, up from $2.07 million in Q1 2024[300] Tax and Dividends - The effective tax rate for Q1 2025 was 21.16%, compared to 19.78% in Q1 2024, reflecting a higher effective tax rate despite lower earnings[282] - In Q1 2025, United declared a cash dividend of $0.37 per share, totaling $53.34 million, an increase of $3.12 million or 6.22% from Q1 2024[339] Interest Rate Risk Management - United's risk-based capital ratio was 15.69% at March 31, 2025, well above the regulatory requirement of 10.0% for well-capitalized institutions[336] - United's interest rate risk management strategy includes the use of derivative instruments such as interest rate swaps to protect against adverse price movements[350] - The company utilizes Federal Home Loan Bank advances to manage interest rate risk and match maturities of earning assets[349] - Extension risk is a concern for United, as rising interest rates may lead to reduced returns on mortgage-related securities due to delayed prepayments[351] Securities and Investments - Total investment securities increased by $54.70 million or 1.68%, with Piedmont contributing $94.43 million upon acquisition[246] - As of March 31, 2025, gross unrealized losses on available-for-sale securities were $286.60 million, primarily in agency residential mortgage-backed securities[248] - United's available-for-sale mortgage-backed securities had an amortized cost of $1.81 billion, with an estimated fair value of $1.63 billion[249] - United's mortgage-related securities portfolio had an amortized cost of $1.8 billion as of March 31, 2025, with 46% in fixed rate collateralized mortgage obligations (CMOs)[353] - The projected yield for fixed rate CMOs is 2.84% with an average life of approximately 4.8 years under current prepayment assumptions[353] Performance Metrics - The annualized return on average assets for Q1 2025 was 1.06%, down from 1.19% in Q1 2024, while the return on average shareholders' equity decreased to 6.47% from 7.25%[276] - Average earning assets increased by $2.48 billion, or 9.51%, in Q1 2025, primarily due to a $1.94 billion increase in average net loans[287] - The net interest margin improved to 3.69% in Q1 2025, up 25 basis points from 3.44% in Q1 2024[288] - The interest spread for Q1 2025 was 2.83%, compared to 2.49% in Q1 2024[297] - The allowance for credit losses was $346.99 million as of March 31, 2025, deemed adequate for expected losses on existing loans[308]