United Bankshares Q1 2025 Earnings: A Glimpse of Structural Resilience Amid Cyclical Noise

United Bankshares (NASDAQ: UBSI) delivered a mixed but fundamentally encouraging performance in Q1 2025, with record net interest income and loan growth overshadowing merger-related headwinds. While diluted EPS of $0.59 fell short of Q1 2024’s $0.64, the results beat market expectations, reflecting resilience in core operations amid strategic expansion. This report underscores the bank’s ability to navigate cyclical pressures while capitalizing on structural opportunities in regional banking.

Key Financial Highlights

The quarter’s standout achievement was net interest income, which surged to a record $260.1 million—up 12% quarter-over-quarter and 17% year-over-year. This growth was driven by a $1.9 billion increase in average earning assets following the acquisition of Piedmont Bancorp, coupled with a 17-basis-point decline in deposit costs. The net interest margin expanded to 3.69%, a 25-basis-point improvement year-over-year, highlighting disciplined balance sheet management.

Loan growth also accelerated, with average net loans rising 8% sequentially to $23.86 billion. The Piedmont acquisition added $1.5 billion in loans and opened a gateway to Atlanta, where United Bankshares now competes with larger regional players. Total loans grew 10% year-over-year, a strong sign of organic momentum in key markets like West Virginia and Ohio.

Drivers of Performance: Merger Synergies vs. Costs

The Piedmont acquisition, completed in late 2024, is both a blessing and a burden. While it boosted earning assets and loan portfolios, it also triggered $30 million in merger-related expenses and credit loss provisions. The $18.7 million provision for Piedmont’s non-PCD loans—a legacy issue—compressed EPS by $0.17. However, management emphasized that these costs are temporary, and the integration has already unlocked synergies.

Lower deposit rates were a critical tailwind. The cost of interest-bearing deposits fell 25 basis points year-over-year, reducing interest expense and allowing the bank to reinvest in higher-yielding assets. This dynamic is particularly notable given the Federal Reserve’s pause in rate hikes, which could extend the window for margin expansion.

Challenges: The Cost of Growth

Noninterest income declined 8% year-over-year to $29.6 million, mainly due to a $2.8 million drop in mortgage banking revenue—a sector still recovering from pandemic-era volatility. Meanwhile, noninterest expenses jumped 14% to $153.6 million, driven by $11.3 million in merger-related costs. These figures suggest that while the bank is investing aggressively in growth, short-term profitability faces pressure.

Credit quality, however, remains a bright spot. Non-performing loans fell to 0.29% of total loans, near historical lows, while the allowance for loan losses rose to 1.30%—a prudent buffer reflecting the acquired portfolio’s risk profile. This stability supports the bank’s “well-capitalized” status, with a risk-based capital ratio of 15.7%.

Market Context and Outlook

Investors have rewarded United Bankshares’ structural strengths. Despite the Q1 earnings headwinds, the stock has outperformed the KBW Regional Bank Index by 12% year-to-date, reflecting confidence in its long-term strategy. Management’s restart of share repurchases—567,000 shares in Q1 at an average price of $34.93—adds further credibility to its capital allocation discipline.

CEO Richard Adams highlighted the Atlanta market’s potential, where United Bankshares now holds $2.2 billion in loans. With organic loan growth of 9% year-over-year and a 3.69% net interest margin, the bank is well-positioned to capitalize on regional demand while mitigating risks through geographic diversification.

Conclusion

United Bankshares’ Q1 results reveal a bank balancing cyclical challenges with structural ambition. While merger-related costs and lower noninterest income dampened near-term profitability, the core business—driven by record net interest income and robust loan growth—remains on track. The Atlanta expansion and disciplined rate management suggest that UBSI is building a foundation for sustained growth, even as macroeconomic uncertainties linger.

With a net interest margin expanding by 25 basis points year-over-year and a loan portfolio growing at 10% annually, the bank’s fundamentals align with the Federal Reserve’s prolonged pause in rate hikes. The $30 million in merger-related expenses, though painful in the short term, are likely a one-time drag, while credit metrics and capital ratios provide reassurance. For investors, UBSI’s performance underscores the value of a focused regional strategy in an era of banking consolidation—a theme that could define outperformance in the years ahead.