United Bankshares, Inc. Announces Increased Earnings

Thu Apr 25, 2013 7:50am EDT

* Reuters is not responsible for the content in this press release.

United Bankshares, Inc. Announces Increased Earnings

United Bankshares, Inc. (NASDAQ: UBSI), today reported an increase in earnings for the first quarter of 2013 as compared to the first quarter of 2012. Earnings for the first quarter of 2013 were $21.6 million or $0.43 per diluted share while earnings for the first quarter of 2012 were $21.0 million or $0.42 per diluted share.

United’s first quarter of 2013 results produced an annualized return on average assets of 1.05% and an annualized return on average equity of 8.72%. United’s annualized returns on average assets and average equity were 1.00% and 8.63%, respectively, for the first quarter of 2012.

United’s asset quality continues to outperform its peers. United’s percentage of nonperforming loans to loans, net of unearned income of 1.35% at March 31, 2013 compares favorably to the most recently reported percentage of 2.55% at December 31, 2012 for United’s Federal Reserve peer group. At March 31, 2013, nonperforming loans were $87.4 million, down from nonperforming loans of $92.8 million or 1.43% of loans, net of unearned income, at December 31, 2012. As of March 31, 2013, the allowance for loan losses was $74.2 million or 1.15% of loans, net of unearned income, as compared to $73.9 million or 1.13% of loans, net of unearned income, at December 31, 2012. Total nonperforming assets of $136.3 million, including OREO of $48.9 million at March 31, 2013, represented 1.64% of total assets which also compares favorably to the most recently reported percentage of 1.97% at December 31, 2012 for United’s Federal Reserve peer group.

United continues to be well-capitalized based upon regulatory guidelines. United’s estimated risk-based capital ratio is 13.8% at March 31, 2013 while its estimated Tier I capital and leverage ratios are 12.6% and 10.8%, respectively. The regulatory requirements for a well-capitalized financial institution are a risk-based capital ratio of 10%, a Tier I capital ratio of 6% and a leverage ratio of 5%.

Tax-equivalent net interest income for the first quarter of 2013 was $68.3 million, a decrease of $2.3 million or 3% from the first quarter of 2012 due mainly to a decrease in the average yield on earning assets. The first quarter of 2013 average yield on earning assets decreased 19 basis points from the first quarter of 2012. In addition, average earning assets decreased $138.5 million or 2% from the first quarter of 2012 as average short-term investments and average investment securities declined $312.6 million and $77.0 million, respectively. Average net loans did increase $251.1 million or 4% for the first quarter of 2013 from the first quarter of 2012 to somewhat mitigate the decreases in average short-term investments and investment securities. Partially offsetting the decreases to tax-equivalent net interest income for the first quarter of 2013 was a decline of 19 basis points in the average cost of funds as compared to the first quarter of 2012. The net interest margin for the first quarter of 2013 was 3.75%, which was a decrease of 3 basis points from a net interest margin of 3.78% for the first quarter of 2012.

On a linked-quarter basis, United’s tax-equivalent net interest income for the first quarter of 2013 decreased $3.0 million or 4% from the fourth quarter of 2012 due mainly to a decrease in the average yield on earning assets. The first quarter of 2013 average yield on earning assets declined 9 basis points while the average cost of funds only decreased 2 basis points from the fourth quarter of 2012. Average earning assets were flat, decreasing $48.7 million or less than 1% during the quarter. Average net loans and average investments were flat for the quarter as well. Average net loans increased $2.3 million while average investments increased $372 thousand. Average short-term investments decreased $51.4 million or 19% for the quarter. The net interest margin of 3.75% for the first quarter of 2013 was a decrease of 8 basis points from the net interest margin of 3.83% for the fourth quarter of 2012.

For the quarters ended March 31, 2013 and 2012, the provision for loan losses was $5.2 million and $4.1 million, respectively. Net charge-offs were $4.9 million for the first quarter of 2013 as compared to $4.0 million for the first quarter of 2012. Annualized net charge-offs as a percentage of average loans were 0.31% for the first quarter of 2013 as compared to 0.64% for United’s Federal Reserve peer group for the year of 2012. On a linked-quarter basis, the provision for loans losses decreased $760 thousand while net charge-offs decreased $864 thousand from the fourth quarter of 2012.

Noninterest income for the first quarter of 2013 was $18.3 million, which was an increase of $2.0 million from the first quarter of 2012. Included in noninterest income for the first quarter of 2013 were noncash, before-tax, other-than-temporary impairment charges of $834 thousand on certain investment securities as compared to noncash, before-tax other-than-temporary impairment charges of $1.4 million on certain investment securities for the first quarter of 2012. Excluding the results of the noncash, other-than-temporary impairment charges as well as net gains and losses from sales and calls of investment securities, noninterest income for the first quarter of 2013 increased $1.3 million or 7% from the first quarter of 2012. This increase for the first quarter of 2013 was due primarily to increases of $1.1 million in income from bank-owned life insurance policies due a death benefit and $647 thousand in mortgage banking income due to increased production and sales of mortgage loans in the secondary market. Partially offsetting these increases was a decrease of $688 thousand in fees from deposit services.

On a linked-quarter basis, noninterest income for the first quarter of 2013 increased $1.6 million from the fourth quarter of 2012. Included in the results for the first quarter of 2013 and fourth quarter of 2012 were noncash, before-tax, other-than-temporary impairment charges of $834 thousand and $2.0 million, respectively. Excluding the results of the noncash, other-than-temporary impairment charges as well as net gains and losses from sales and calls of investment securities, noninterest income increased $557 thousand or 3% on a linked-quarter basis due primarily to an increase of $1.1 million in income from bank-owned life insurance policies due to the previously mentioned death benefit. Partially offsetting this increase was a decrease of $982 thousand in fees from deposit services.

Noninterest expense for the first quarter of 2013 was $48.2 million, a decrease of $2.0 million or 4% from the first quarter of 2012. Employee compensation for the first quarter of 2013 declined $1.3 million due mainly to a decline in employees as a result of the merger of two banking subsidiaries last year. In addition, other real estate owned (OREO) expense decreased $1.1 million as reductions to fair value and losses on sales declined from the first quarter of 2012. Partially offsetting these decreases was an increase of $801 thousand in employee benefits expense due mainly to higher pension and health insurance costs. Also included in noninterest expense for the first quarter of 2013 was an increase in merger expenses of $763 thousand.

On a linked-quarter basis, noninterest expense for the first quarter of 2013 decreased $1.0 million from the fourth quarter of 2012. Employee compensation expense declined $1.7 million due to lower commissions and incentives while OREO expense decreased $638 thousand as reductions to fair value and losses on sales declined. Partially offsetting these decreases was an increase of $1.1 million in employee benefits expense due mainly to higher pension costs and payroll taxes. Also, merger expenses increased $781 thousand from the fourth quarter of 2012.

During the first quarter of 2013, United’s Board of Directors declared a cash dividend of $0.31 per share. The annualized 2013 dividend of $1.24 equates to a yield of approximately 5% based on recent UBSI market prices. The year of 2012 represented the 39th consecutive year of dividend increases for United shareholders.

On January 30, 2013, United announced the signing of a definitive merger agreement with Virginia Commerce Bancorp, Inc. (“VCBI”) headquartered in Arlington, Virginia. VCBI has twenty-eight (28) banking offices, one residential mortgage origination office and one wealth management office located in the Northern Virginia suburbs of Washington, D.C. Consummation of the merger is subject to approval of the shareholders of United and VCBI, the receipt of all required regulatory approvals, as well as other customary conditions.

United has consolidated assets of approximately $8.3 billion with 115 full service offices in West Virginia, Virginia, Maryland, Ohio, Pennsylvania and Washington, D.C. United Bankshares stock is traded on the NASDAQ Global Select Market under the quotation symbol "UBSI".

Cautionary Statements

The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing of its March 31, 2013 consolidated financial statements on Form 10-Q. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of March 31, 2013 and will adjust amounts preliminarily reported, if necessary.

Forward-Looking Statements

This press release contains certain forward-looking statements, including certain plans, expectations, goals and projections, which are subject to numerous assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of factors including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving banking industry standards.

UNITED BANKSHARES, INC. AND SUBSIDIARIES

FINANCIAL SUMMARY

(In Thousands Except for Per Share Data)

  Three Months Ended
March 31

2013

  March 31

2012

  December 31

2012

EARNINGS SUMMARY:
Interest income, taxable equivalent (non-GAAP) $ 77,849 $ 83,457 $ 81,300
Interest expense 9,503 12,822 9,996
Net interest income, taxable equivalent (non-GAAP) 68,346 70,635 71,304
Taxable equivalent adjustment 1,524 1,669 1,632
Net interest income (GAAP) 66,822 68,966 69,672
Provision for loan losses 5,187 4,133 5,947
Noninterest income 18,348 16,326 16,745
Noninterest expenses 48,249 50,262 49,273
Income taxes 10,155 9,887 9,983
Net income $ 21,579 $ 21,010 $ 21,214
 
PER COMMON SHARE:
Net income:
Basic $ 0.43 $ 0.42 $ 0.42
Diluted 0.43 0.42 0.42
Cash dividends 0.31 0.31 0.31
Book value 19.87 19.42 19.74
Closing market price $ 26.61 $ 28.86 $ 24.34
Common shares outstanding:
Actual at period end, net of treasury shares 50,337,922 50,274,104 50,276,573
Weighted average- basic 50,301,875 50,235,374 50,276,137
Weighted average- diluted 50,331,503 50,300,538 50,294,593
 
FINANCIAL RATIOS:
Return on average assets 1.05 % 1.00 % 1.01 %
Return on average shareholders’ equity 8.72 % 8.63 % 8.44 %
Average equity to average assets 12.10 % 11.60 % 11.97 %
Net interest margin 3.75 % 3.78 % 3.83 %
 
March 31

2013

March 31

2012

December 31

2012

PERIOD END BALANCES:
Assets $ 8,313,828 $ 8,529,469 $ 8,420,013
Earning assets 7,373,622 7,573,097 7,459,217
Loans, net of unearned income 6,466,762 6,194,187 6,511,416
Loans held for sale 7,041 7,401 17,762
Investment securities 750,215 790,936 729,402
Total deposits 6,682,712 6,881,610 6,752,986
Shareholders’ equity 1,000,249 976,303 992,251
 
UNITED BANKSHARES, INC. AND SUBSIDIARIES

Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

     
Consolidated Statements of Income
Three Months Ended
March March December
  2013     2012     2012  
 
Interest & Loan Fees Income (GAAP) $ 76,325 $ 81,788 $ 79,668
Tax equivalent adjustment   1,524     1,669     1,632  
Interest & Fees Income (FTE) (non-GAAP) 77,849 83,457 81,300
Interest Expense   9,503     12,822     9,996  
Net Interest Income (FTE) (non-GAAP) 68,346 70,635 71,304
 
Provision for Loan Losses 5,187 4,133 5,947
 
Non-Interest Income:
Fees from trust & brokerage services 3,830 3,984 3,678
Fees from deposit services 9,624 10,312 10,606
Bankcard fees and merchant discounts 797 647 745
Other charges, commissions, and fees 561 577 539
Income from bank owned life insurance 2,389 1,289 1,248
Mortgage banking income 965 318 851
Other non-interest revenue 876 658 818
Net other-than-temporary impairment losses (834 ) (1,377 ) (2,002 )
Net gains (losses) on sales/calls of investment

securities

  140     (82 )  

262

 
Total Non-Interest Income 18,348 16,326 16,745
 
Non-Interest Expense:
Employee compensation 16,604 17,907 18,272
Employee benefits 5,993 5,192 4,892
Net occupancy 5,191 5,042 5,005
Data processing 2,731 3,209 3,009
Amortization of intangibles 534 762 669
OREO expense 1,270 2,328 1,908
FDIC expense 1,559 1,555 1,525
Other expenses   14,367     14,267     13,993  
Total Non-Interest Expense   48,249     50,262     49,273  
 
Income Before Income Taxes (FTE) (non-GAAP)   33,258     32,566     32,829  
 
Tax equivalent adjustment   1,524     1,669     1,632  
 
Income Before Income Taxes (GAAP) 31,734 30,897 31,197
 
Taxes   10,155     9,887     9,983  
 
Net Income $ 21,579   $ 21,010   $ 21,214  
 
MEMO: Effective Tax Rate 32.00 % 32.00 % 32.00 %
UNITED BANKSHARES, INC. AND SUBSIDIARIES

Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

       
Consolidated Balance Sheets
March 31 March 31
2013 2012 March 31 December 31
Q-T-D Average Q-T-D Average   2013     2012  
 
Cash & Cash Equivalents $ 363,161 $ 664,743 $ 362,647 $ 432,077
 
Securities Available for Sale 636,420 688,880 650,640 625,625
Securities Held to Maturity 43,317 58,999 43,266 43,467
Other Investment Securities   58,898     67,813     56,309     60,310  
Total Securities   738,635     815,692     750,215     729,402  
Total Cash and Securities   1,101,796     1,480,435     1,112,862     1,161,479  
 
Loans Held for Sale 10,830 4,905 7,041 17,762
 
Commercial Loans 4,689,363 4,375,024 4,696,991 4,726,292
Mortgage Loans 1,482,234 1,545,793 1,481,796 1,490,306
Consumer Loans   296,939     301,076     294,783     301,182  
 
Gross Loans 6,468,536 6,221,893 6,473,570 6,517,780
 
Unearned Income   (6,766 )   (6,574 )   (6,808 )   (6,364 )
 
Loans, Net of Unearned Income 6,461,770 6,215,319 6,466,762 6,511,416
 
Allowance for Loan Losses (74,410 ) (73,142 ) (74,158 ) (73,901 )
 
Goodwill 375,583 371,638 375,583 375,583
Other Intangibles   9,852     12,726     9,573     10,107  
Total Intangibles 385,435 384,364 385,156 385,690
 
Real Estate Owned 48,559 51,373 48,850 49,484
Other Assets   361,652     379,556     367,315     368,083  
Total Assets $ 8,295,632   $ 8,442,810   $ 8,313,828   $ 8,420,013  
 
MEMO: Earning Assets $ 7,360,062   $ 7,498,574   $ 7,373,622   $ 7,459,217  
 
Interest-bearing Deposits $ 4,904,286 $ 5,163,834 $ 4,872,367 $ 4,928,575
Noninterest-bearing Deposits   1,731,775     1,637,543     1,810,345     1,824,411  
Total Deposits 6,636,061 6,801,377 6,682,712 6,752,986
 
Short-term Borrowings 313,360 270,647 268,884 314,962
Long-term Borrowings   284,883     345,323     284,850     284,926  
Total Borrowings 598,243 615,970 553,734 599,888
 
Other Liabilities   57,475     45,781     77,133     74,888  
Total Liabilities   7,291,779     7,463,128     7,313,579     7,427,762  
 
Preferred Equity --- --- --- ---
Common Equity   1,003,853     979,682     1,000,249     992,251  
Total Shareholders' Equity   1,003,853     979,682     1,000,249     992,251  
 
Total Liabilities & Equity $ 8,295,632   $ 8,442,810   $ 8,313,828   $ 8,420,013  
 
MEMO: Interest-bearing Liabilities $ 5,502,529   $ 5,779,804   $ 5,426,101   $ 5,528,463  
UNITED BANKSHARES, INC. AND SUBSIDIARIES

Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

     
Three Months Ended
March March December
Quarterly Share Data:   2013     2012     2012  
 
Earnings Per Share:
Basic $ 0.43 $ 0.42 $ 0.42
Diluted $ 0.43 $ 0.42 $ 0.42
 
Common Dividend Declared Per Share $ 0.31 $ 0.31 $ 0.31
 
High Common Stock Price $ 27.24 $ 30.91 $ 25.80
Low Common Stock Price $ 24.80 $ 27.36 $ 23.02
 
Average Shares Outstanding (Net of Treasury Stock):
Basic 50,301,875 50,235,374 50,276,137
Diluted 50,331,503 50,300,538 50,294,593
 
Memorandum Items:
 
Tax Applicable to Security Sales/Calls $ 49 $ (29 ) $ 92
 
Common Dividends $ 15,605 $ 15,570 $ 15,587
 
Dividend Payout Ratio 72.32 % 74.11 % 73.48 %
 
March March December
EOP Share Data:   2013     2012     2012  
 
Book Value Per Share $ 19.87 $ 19.42 $ 19.74
Tangible Book Value Per Share (1) $ 12.22 $ 11.71 $ 12.06
 
52-week High Common Stock Price $ 29.45 $ 30.91 $ 30.91
Date 04/02/12 03/19/12 03/19/12
52-week Low Common Stock Price $ 22.54 $ 18.78 $ 22.54
Date 08/02/12 09/22/11 08/02/12
 
EOP Shares Outstanding (Net of Treasury Stock): 50,337,922 50,274,104 50,276,573
 
Memorandum Items:
 
EOP Employees (full-time equivalent) 1,527 1,637 1,529
 
Note:
(1) Tangible Book Value Per Share:
Total Shareholders' Equity (GAAP) $ 1,000,249 $ 976,303 $ 992,251
Less: Total Intangibles   (385,156 )   (387,766 )   (385,690 )
Tangible Equity (non-GAAP) $ 615,093 $ 588,537 $ 606,561
÷ EOP Shares Outstanding (Net of Treasury Stock) 50,337,922 50,274,104 50,276,573
Tangible Book Value Per Share (non-GAAP) $ 12.22 $ 11.71 $ 12.06
 
UNITED BANKSHARES, INC. AND SUBSIDIARIES

Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

     
Three Months Ended
March March December
2013   2012   2012  
Selected Yields and Net Interest Margin:
Net Loans 4.61 % 5.02 % 4.74 %
Investment Securities 2.59 % 3.08 % 2.65 %
Money Market Investments/FFS 0.23 % 0.26 % 0.39 %
Average Earning Assets Yield 4.28 % 4.47 % 4.37 %
Interest-bearing Deposits 0.58 % 0.67 % 0.60 %
Short-term Borrowings 0.26 % 0.09 % 0.16 %
Long-term Borrowings 3.31 % 4.83 % 3.36 %
Average Liability Costs 0.70 % 0.89 % 0.72 %
Net Interest Spread 3.58 % 3.58 % 3.65 %
Net Interest Margin 3.75 % 3.78 % 3.83 %
 
Selected Financial Ratios:
 
Return on Average Common Equity 8.72 % 8.63 % 8.44 %
Return on Average Assets 1.05 % 1.00 % 1.01 %
Loan / Deposit Ratio 96.77 % 90.10 % 96.42 %
Allowance for Loan Losses/ Loans, net of unearned income 1.15 % 1.19 % 1.13 %
Allowance for Credit Losses (1)/ Loans, net of unearned income 1.18 % 1.22 % 1.16 %
Nonaccrual Loans / Loans, net of unearned income 1.14 % 1.00 % 1.10 %
90-Day Past Due Loans/ Loans, net of unearned income 0.13 % 0.16 % 0.28 %
Non-performing Loans/ Loans, net of unearned income 1.35 % 1.23 % 1.43 %
Non-performing Assets/ Total Assets 1.64 % 1.48 % 1.69 %
Primary Capital Ratio 12.83 % 12.23 % 12.57 %
Shareholders' Equity Ratio 12.03 % 11.45 % 11.78 %
Price / Book Ratio 1.34 x 1.49 x 1.23 x
Price / Earnings Ratio 15.52 x 17.27 x 14.82 x
Efficiency Ratio 53.15 % 53.35 % 52.01 %
 
Note: (1) Includes allowances for loan losses and lending-related commitments.
 
UNITED BANKSHARES, INC. AND SUBSIDIARIES

Charleston, WV

Stock Symbol: UBSI

(In Thousands Except for Per Share Data)

     
March March December
Asset Quality Data:   2013     2012     2012  
 
EOP Non-Accrual Loans $ 73,811 $ 62,037 $ 71,559
EOP 90-Day Past Due Loans 8,301 9,816 18,068
EOP Restructured Loans (2)   5,309     4,335     3,175  
Total EOP Non-performing Loans $ 87,421 $ 76,188 $ 92,802
 
EOP Other Real Estate & Assets Owned   48,850     49,864     49,484  
Total EOP Non-performing Assets $ 136,271   $ 126,052   $ 142,286  
 
Three Months Ended
March March December
Allowance for Credit Losses:(1)   2013     2012     2012  
Beginning Balance $ 75,557 $ 75,727 $ 75,536
Provision for Credit Losses (3)   5,416     4,015     5,815  
80,973 79,742 81,351
Gross Charge-offs (5,184 ) (4,734 ) (6,180 )
Recoveries   254     739     386  
Net Charge-offs   (4,930 )   (3,995 )   (5,794 )
Ending Balance $ 76,043   $ 75,747   $ 75,557  
 
Note: (1) Includes allowances for loan losses and lending-related commitments.

(2) Restructured loans with an aggregate balance of $375, $2,283 and $375 at March 31, 2013, March 31, 2012 and December 31, 2012, respectively, were on nonaccrual status, but are not included in the “EOP Non-Accrual Loans.”

(3) Includes the Provision for Loan Losses and a provision for lending-related commitments included in Other Expenses.

United Bankshares, Inc.
Steven E. Wilson, 800-445-1347, ext. 8704
Chief Financial Officer