United Bankshares(UBSI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements for the six months ended June 30, 2025, reflect significant growth in assets, loans, and deposits, primarily due to the Piedmont Bancorp acquisition, leading to increased net income - Financial statements are prepared under GAAP for interim reporting and should be read with the 2024 Annual Report on Form 10-K[21] - The company's business activities are confined to a single reportable segment: community banking through its subsidiary, United Bank[23] Consolidated Balance Sheets As of June 30, 2025, total assets grew 9.2% to $32.78 billion, primarily due to the Piedmont acquisition, significantly increasing net loans, goodwill, deposits, and shareholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $32,783,363 | $30,023,545 | | Net loans and leases | $23,742,260 | $21,401,649 | | Goodwill | $2,018,910 | $1,888,889 | | Total Liabilities | $27,418,822 | $25,030,322 | | Total deposits | $26,335,874 | $23,961,859 | | Total Shareholders' Equity | $5,364,541 | $4,993,223 | Consolidated Statements of Income Q2 2025 net income increased to $120.7 million ($0.85 diluted EPS), driven by a 21.6% rise in net interest income, with six-month net income reaching $205.0 million despite higher provisions and expenses from the Piedmont acquisition Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $274,537 | $225,715 | $534,592 | $448,204 | | Provision for credit losses | $5,889 | $5,779 | $34,992 | $11,519 | | Net Income | $120,721 | $96,507 | $205,027 | $183,321 | | Diluted EPS | $0.85 | $0.71 | $1.44 | $1.35 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, cash and cash equivalents increased by $22.4 million, with operating activities providing cash, investing activities using cash primarily for loans, and financing activities providing cash from deposits Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $209,346 | $185,556 | | Net Cash (Used in)/Provided by Investing Activities | ($273,819) | $220,109 | | Net Cash Provided by/(Used in) Financing Activities | $86,921 | ($145,747) | | Increase in Cash and Cash Equivalents | $22,448 | $259,918 | Notes to Consolidated Financial Statements The notes detail financial statement support, including accounting standards, investment and loan portfolios, credit quality, and the $281.0 million Piedmont acquisition's impact on various accounts - On January 10, 2025, United acquired Piedmont Bancorp, Inc. for $281.0 million, adding $2.36 billion in assets, $2.08 billion in loans, and $2.11 billion in deposits, with preliminary goodwill of $130.0 million[36][42][47] - The allowance for loan and lease losses increased by $36.1 million from year-end 2024, including an $18.7 million provision for non-PCD loans from the Piedmont acquisition[42][118] - The company had $6.25 billion in loan commitments and $157.8 million in commercial and standby letters of credit outstanding as of June 30, 2025[141][142] - Shareholders approved the 2025 Equity Incentive Plan (EIP), replacing the 2020 plan, authorizing 3,000,000 shares for issuance[198] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant increases in assets, loans, and deposits, primarily from the Piedmont acquisition, driving Q2 2025 net income to $120.7 million and strengthening liquidity and capital positions - The acquisition of Piedmont Bancorp, Inc. on January 10, 2025, added approximately $2.4 billion in assets and is a primary driver of financial changes in 2025[236] - Management highlights the use of non-GAAP measures like tax-equivalent net interest income and return on average tangible equity for additional evaluation information[241][242] Financial Condition Total assets grew by $2.76 billion (9.2%) to $32.78 billion in H1 2025, primarily due to the Piedmont acquisition, significantly increasing portfolio loans, deposits, and shareholders' equity Change in Loan Portfolio (in thousands) | Loan Category | June 30, 2025 | Dec 31, 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Commercial, financial, and agricultural | $13,698,632 | $11,881,005 | $1,817,627 | 15.30% | | Residential real estate | $5,852,212 | $5,507,384 | $344,828 | 6.26% | | Construction & land development | $3,741,200 | $3,509,034 | $232,166 | 6.62% | | Total Loans, net of unearned income | $24,050,222 | $21,673,493 | $2,376,729 | 10.97% | Change in Deposit Portfolio (in thousands) | Deposit Category | June 30, 2025 | Dec 31, 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Demand deposits (Noninterest-bearing) | $6,627,265 | $6,135,413 | $491,852 | 8.02% | | Interest-bearing deposits | $19,708,609 | $17,826,446 | $1,882,163 | 10.56% | | Total deposits | $26,335,874 | $23,961,859 | $2,374,015 | 9.91% | Results of Operations Q2 2025 net income increased 25.1% YoY to $120.7 million, driven by a 21.6% rise in net interest income, with return on average tangible equity improving to 14.67%, despite higher credit loss provisions from the Piedmont acquisition Quarterly Performance Summary | Metric | Q2 2025 | Q2 2024 | Q1 2025 | | :--- | :--- | :--- | :--- | | Net Income (in millions) | $120.7 | $96.5 | $84.3 | | Diluted EPS | $0.85 | $0.71 | $0.59 | | Return on Average Assets (Ann.) | 1.49% | 1.32% | 1.06% | | Return on Average Tangible Equity (Ann.) | 14.67% | 13.12% | 10.61% | - Acquisition-related costs for the Piedmont merger were $1.32 million for Q2 2025 and $31.36 million for H1 2025, including a significant provision for credit losses on purchased loans[281] Liquidity and Capital Resources The company maintains sufficient liquidity and a strong capital position, with all regulatory capital ratios exceeding 'well-capitalized' thresholds, including a 13.42% Common Equity Tier 1 ratio, supported by substantial unused borrowing capacity Regulatory Capital Ratios (as of June 30, 2025) | Ratio | United's Ratio | Well-Capitalized Requirement | | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 13.42% | 6.5% | | Tier 1 Capital | 13.42% | 8.0% | | Total Risk-Based Capital | 15.83% | 10.0% | | Leverage Ratio | 11.33% | 5.0% | - During H1 2025, United repurchased 1,548,827 shares of its common stock at an average price of $33.81 per share[355] - The Board of Directors declared a cash dividend of $0.37 per share for Q2 2025, totaling $0.74 for the first six months of the year[357] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk, managed by ALCO using earnings simulation to assess net interest income sensitivity and monitoring extension risk in its $1.8 billion mortgage-related securities portfolio Estimated NII Sensitivity to Interest Rate Changes (1-Year Horizon) | Change in Interest Rates (bps) | % Change in NII (June 30, 2025) | % Change in NII (Dec 31, 2024) | | :--- | :--- | :--- | | +200 | 3.43% | 2.82% | | +100 | 2.13% | 1.75% | | -100 | (0.36%) | 0.26% | | -200 | (0.61%) | 0.40% | - The company's mortgage-related securities portfolio is structured to have moderate extension risk, with a +300 bps rate shock scenario extending the average life of the fixed-rate CMO portfolio from 4.8 to 6.5 years[370] Controls and Procedures As of June 30, 2025, the CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes in internal control over financial reporting during Q2 2025 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the period[376] - No changes in internal control over financial reporting occurred during the quarter that materially affected or are reasonably likely to materially affect the company's internal controls[379] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings arising from normal business operations, which management believes will not materially affect United's financial position - United is involved in various legal proceedings in the normal course of business, which management believes will be resolved with no material effect on the company's financial position[381] Risk Factors This section refers readers to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K for December 31, 2024, with no new or materially changed risks presented in this quarterly report - The report directs stakeholders to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, for a comprehensive understanding of potential risks[382] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, United repurchased 981,428 shares of common stock at an average price of $33.17 per share under the publicly announced 2022 repurchase plan Share Repurchases for Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 831,422 | $32.64 | | May 2025 | 6 | $32.86 | | June 2025 | 150,000 | $36.14 | | Total | 981,428 | $33.17 | - The share repurchases were executed under the 2022 Plan, authorizing the repurchase of up to 4,750,000 shares[384] Other Information During Q2 2025, no directors or executive officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or executive officers adopted, modified, or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the second quarter of 2025[388] Exhibits This section lists exhibits filed with Form 10-Q, including the Piedmont merger agreement, corporate governance documents, and CEO/CFO certifications required by Sarbanes-Oxley Act - Key exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and the Interactive Data File (inline XBRL)[389][390]