United Bankshares: Credit Quality Still Looking Robust

In the ever-evolving landscape of regional banking, United Bankshares, Inc. (NASDAQ: UBSI) has emerged as a standout performer, balancing aggressive growth with disciplined risk management. As of Q2 2025, the company's credit quality metrics remain a cornerstone of its appeal, with non-performing loans (NPLs) at 0.28% of total loans and non-performing assets (NPAs) at 0.23% of total assets. These figures, while slightly elevated from March 2025 levels, underscore a portfolio that remains remarkably clean compared to industry peers. The allowance for loan and lease losses (ALLL) stands at 1.28% of loans, a conservative buffer that reflects management's proactive stance on credit risk.

Earnings Growth: A Tale of Strategic Acquisition and Operational Efficiency

United's Q2 2025 net income of $120.7 million—a record high—was fueled by the successful integration of Piedmont Bancorp, Inc., acquired in January 2025. The acquisition added $2.3 billion in loans and $1.1 billion in short-term investments, directly boosting net interest income (NII) to $274.5 million, a 6% quarter-over-quarter increase. The net interest margin (NIM) expanded to 3.81%, driven by higher loan yields and a favorable deposit cost environment.

While rising net charge-offs (NCOs) of $8.4 million in Q2 2025 (0.14% annualized) outpace the $1.3 million recorded in Q2 2024, this uptick is largely attributable to the expanded loan portfolio post-acquisition. The company's provision for credit losses in Q2 2025 was $5.9 million, a sharp decline from the $29.1 million in Q1 2025, which included one-time provisions for non-PCD loans from the Piedmont acquisition. This suggests that the initial integration challenges are subsiding, and asset quality is stabilizing.

Macro Risks: Navigating a Complex Environment

The broader macroeconomic backdrop remains a wildcard. Inflationary pressures, Federal Reserve rate hikes, and geopolitical tensions pose risks to credit quality. United's exposure to these factors is mitigated by its strong capital position: a 15.8% risk-based capital ratio and a 11.3% leverage ratio, both well above regulatory thresholds. Additionally, the company's diversified loan portfolio—spanning commercial, residential, and consumer segments—reduces sector-specific vulnerabilities.

However, the acquisition of Piedmont introduces integration risks. Management has acknowledged potential challenges in realizing cost synergies and maintaining customer retention in the Atlanta market. That said, the company's disciplined approach to provisioning and its focus on organic loan growth (up 6% year-to-date) provide a buffer against near-term uncertainties.

Investment Implications: A Buy for the Long-Term

For investors, United Bankshares presents a compelling case. The company's ability to grow earnings while maintaining robust credit metrics is rare in today's economic climate. Its strategic expansion into the Atlanta market, coupled with a conservative capital structure, positions it to outperform peers in both stable and volatile environments.

The key risks to monitor include a sharp rise in NCOs if economic conditions deteriorate and the success of integration efforts. However, given the company's track record of prudent risk management and its strong balance sheet, these risks appear manageable.

Conclusion

United Bankshares' Q2 2025 results reaffirm its status as a well-capitalized, operationally disciplined regional bank. While macroeconomic headwinds persist, the company's credit quality remains a standout, and its earnings growth trajectory is underpinned by strategic acquisitions and operational efficiency. For long-term investors seeking a resilient banking stock, United Bankshares offers a balanced mix of growth and stability.

Investment Rating: Buy
Target Price: $55–$58 (based on 12x forward P/E and 10% earnings growth assumptions).