-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K+SQOjNv7U/o+WLt4SfPDG3klUn1N16LRWSIPJYRSfF9173rAsFORi8Nqpwi06qI s5HgEZ56S9+85Yn61WNU9A== 0000950132-96-000291.txt : 19960515 0000950132-96-000291.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950132-96-000291 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED BANKSHARES INC/WV CENTRAL INDEX KEY: 0000729986 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 550641179 STATE OF INCORPORATION: WV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13322 FILM NUMBER: 96562773 BUSINESS ADDRESS: STREET 1: 300 UNITED CTR STREET 2: 500 VIRGINIA ST E CITY: CHARLESTON STATE: WV ZIP: 25301 BUSINESS PHONE: 3044248761 MAIL ADDRESS: STREET 1: 300 UNITED CT STREET 2: 500 VIRGINIA SUITE CITY: CHARLESTON STATE: WV ZIP: 25301 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________________ FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1996 Commission File Number: 0-13322 United Bankshares, Inc. ----------------------- (Exact name of registrant as specified in its charter) West Virginia 55-0641179 ------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 300 United Center 500 Virginia Street, East Charleston, West Virginia 25301 ------------------------- ----- (Address of Principal Executive Offices) Zip Code Registrant's Telephone Number, including Area Code: (304) 424-8761 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class-- Common Stock,$2.50 Par Value; 15,146,184 shares outstanding as of April 30, 1996. 1 UNITED BANKSHARES, INC. AND SUBSIDIARIES FORM 10-Q TABLE OF CONTENTS Page ---- PART I. FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements - ----------------------------------------------------------------- Consolidated Balance Sheets (Unaudited) March 31, 1996 and December 31, 1995 .........................6 Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, 1996 and 1995 ...................7 Consolidated Statement of Changes in Shareholders' Equity (Unaudited) for the Three Months Ended March 31, 1996 ...............................................8 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 1996 and 1995 ...........9 Notes to Consolidated Financial Statements ..................10 Information required by Item 303 of Regulation S-K Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................20 PART II. OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings..........................Not Applicable - ------------------------- Item 2. Changes in Securities......................Not Applicable - ----------------------------- Item 3. Defaults Upon Senior Securities ...........Not Applicable - --------------------------------------- 2 UNITED BANKSHARES, INC. AND SUBSIDIARIES FORM 10-Q TABLE OF CONTENTS--Continued Page ---- Item 4. Submission of Matters to a Vote of Security Holders The following matter was submitted to a vote of security holders at a special meeting of Shareholders of the Registrant held on Thursday, March 28, 1996: (1) To approve, ratify and confirm the Agreement of Plan of Merger dated August 18, 1995, between Eagle Bancorp, Inc. and United Bankshares, Inc. and the transaction contemplated. There were 9,043,534 affirmative votes cast, 10,970 negative votes and 123,963 abstaining votes. _________________________________________________________________ Item 5. Other Information ........................Not Applicable _________________________________________________________________ Item 6. Exhibits and Reports on Form 8-K _________________________________________________________________ (a) Exhibits required by Item 601 of Regulation S-K Exhibit 11 - Computation of Earnings Per Share.......29 Exhibit 27 - Financial Data Schedule.................30 (b) Reports on Form 8-K - On April 12, 1996, United Bankshares, Inc. consummated the merger with Eagle Bancorp, Inc. in an exchange accounted for under the pooling of interests method of accounting. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED BANKSHARES, INC. ----------------------- (Registrant) Date May 14, 1996 /s/ Richard M. Adams --------------------- --------------------------- Richard M. Adams, Chairman of the Board and Chief Executive Officer Date May 14, 1996 /s/ Steven E. Wilson --------------------- --------------------------- Steven E. Wilson, Executive Vice President, Treasurer and Chief Financial Officer 4 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) The March 31, 1996 and December 31, 1995, consolidated balance sheets of United Bankshares, Inc. and Subsidiaries, and the related consolidated statements of income for the three months ended March 31, 1996 and 1995, and the related consolidated statement of changes in shareholders' equity for the three months ended March 31, 1996, and the related condensed consolidated statements of cash flows for the three months ended March 31, 1996 and 1995, and the notes to consolidated financial statements appear on the following pages. 5 CONSOLIDATED BALANCE SHEETS(UNAUDITED) UNITED BANKSHARES, INC. AND SUBSIDIARIES
March 31 December 31 1996 1995 -------------- --------------- ASSETS Cash and due from banks $ 74,392,000 $ 78,909,000 -------------- -------------- Total cash and cash equivalents 74,392,000 78,909,000 Securities available for sale at estimated fair value (amortized cost-$203,737,000 at March 31, 1996 and $194,696,000 at December 31, 1995) 204,922,000 196,718,000 Securities held to maturity(estimated fair value -$107,627,000 at March 31, 1996 and $114,390,000 at December 31, 1995) 107,064,000 112,755,000 Loans Commercial, financial, and agricultural 211,422,000 218,800,000 Real estate: Single family residential 575,909,000 570,635,000 Commercial 319,000,000 328,226,000 Construction 21,610,000 21,232,000 Other 13,106,000 14,056,000 Installment 221,602,000 225,077,000 -------------- -------------- 1,362,649,000 1,378,026,000 Less: Unearned income (3,999,000) (4,021,000) -------------- -------------- Loans net of unearned income 1,358,650,000 1,374,005,000 Less: Allowance for loan losses (20,126,000) (20,017,000) -------------- -------------- Net loans 1,338,524,000 1,353,988,000 Bank premises and equipment 30,479,000 30,575,000 Interest receivable 12,439,000 11,981,000 Other assets 30,635,000 30,517,000 -------------- -------------- TOTAL ASSETS $1,798,455,000 $1,815,443,000 ============== ============== LIABILITIES Domestic deposits Noninterest-bearing $ 221,007,000 $ 238,568,000 Interest-bearing 1,259,269,000 1,234,698,000 -------------- -------------- TOTAL DEPOSITS 1,480,276,000 1,473,266,000 Short-term borrowings Federal funds purchased 27,462,000 26,378,000 Securities sold under agreements to repurchase 60,267,000 55,789,000 Federal Home Loan Bank borrowings 33,900,000 Accrued expenses and other liabilities 26,436,000 24,888,000 -------------- -------------- TOTAL LIABILITIES 1,594,441,000 1,614,221,000 SHAREHOLDERS' EQUITY Common stock, $2.50 par value; Authorized-20,000,000 shares; issued and outstanding-12,156,530 at March 31, 1996 and 12,156,571 at December 31, 1995, including 150,270 and 140,520 shares in treasury at March 31, 1996 and December 31, 1995, respectively 30,391,000 30,391,000 Surplus 37,258,000 37,466,000 Retained earnings 139,480,000 135,580,000 Net unrealized holding gain on securities available for sale 770,000 1,315,000 Treasury stock (3,885,000) (3,530,000) -------------- -------------- TOTAL SHAREHOLDERS' EQUITY 204,014,000 201,222,000 -------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,798,455,000 $1,815,443,000 ============== ==============
See notes to consolidated financial statements. 6 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) UNITED BANKSHARES, INC. AND SUBSIDIARIES
Three Months Ended March 31 ------------------------ 1996 1995 ----------- ---------- INTEREST INCOME Interest and fees on loans $30,173,000 $27,672,000 Interest on federal funds sold 54,000 237,000 Interest and dividends on securities: Taxable 3,880,000 4,595,000 Exempt from federal taxes 628,000 837,000 Other interest income 17,000 26,000 ----------- ----------- TOTAL INTEREST INCOME 34,752,000 33,367,000 ----------- ----------- INTEREST EXPENSE Interest on deposits 12,416,000 11,123,000 Interest on short-term borrowings 932,000 848,000 Interest on Federal Home Loan Bank borrowings 518,000 970,000 ----------- ----------- TOTAL INTEREST EXPENSE 13,866,000 12,941,000 ----------- ----------- NET INTEREST INCOME 20,886,000 20,426,000 PROVISION FOR POSSIBLE LOAN LOSSES 450,000 450,000 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 20,436,000 19,976,000 ----------- ----------- OTHER INCOME Trust department income 795,000 779,000 Other charges, commissions, and fees 2,335,000 2,197,000 Other income 136,000 163,000 ----------- ----------- TOTAL OTHER INCOME 3,266,000 3,139,000 ----------- ----------- OTHER EXPENSES Salaries and employee benefits 5,819,000 5,590,000 Net occupancy expense 1,234,000 1,190,000 Other expense 5,205,000 5,856,000 ----------- ----------- TOTAL OTHER EXPENSES 12,258,000 12,636,000 ----------- ----------- INCOME BEFORE INCOME TAXES 11,444,000 10,479,000 INCOME TAXES 3,940,000 3,582,000 ----------- ----------- NET INCOME $ 7,504,000 $ 6,897,000 =========== =========== Earnings per common share $0.62 $0.58 =========== =========== Dividends per share $0.30 $0.29 =========== =========== Average outstanding shares 12,079,072 11,882,415 =========== ===========
See notes to consolidated financial statements. 7 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) UNITED BANKSHARES, INC. AND SUBSIDIARIES
Three Months Ended March 31, 1996 ----------------------------------------------------------------------------------------------- Net Unrealized Common Stock Gain on ------------------------- Securities Total Par Retained Available Treasury Shareholders' Shares Value Surplus Earnings for Sale Stock Equity ----------- ------------ ----------- ------------- ---------- ------------ -------------- Balance at January 1, 1996 12,156,571 $30,391,000 $37,466,000 $135,580,000 $1,315,000 ($3,530,000) $201,222,000 Net Income 7,504,000 7,504,000 Cash dividends ($.30 per share) (3,604,000) (3,604,000) Net change in unrealized gain on securities available for sale (545,000) (545,000) Purchase of treasury stock (829,000) (829,000) Common stock options exercised (208,000) 474,000 266,000 Fractional shares adjustment (41) ---------- ----------- ----------- ----------- ---------- ----------- ------------- Balance at March 31, 1996 12,156,530 $30,391,000 $37,258,000 $139,480,000 $ 770,000 ($3,885,000) $204,014,000 ========== =========== =========== ============ ========== =========== =============
See notes to consolidated financial statements 8 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNITED BANKSHARES, INC. AND SUBSIDIARIES
Three Months Ended March 31 --------------------------- 1996 1995 ----------- ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES $ 9,538,000 $ 11,493,000 INVESTING ACTIVITIES Proceeds from maturities and calls of investment securities 5,699,000 4,305,000 Proceeds from maturities and calls of securities available for sale 33,330,000 16,973,000 Purchases of securities available for sale (42,217,000) (5,011,000) Net purchase of bank premises and equipment (573,000) (268,000) Changes in: Loans 15,144,000 (1,202,000) ------------ ------------ NET CASH PROVIDED BY INVESTING ACTIVITIES 11,383,000 14,797,000 ------------ ------------ FINANCING ACTIVITIES Cash dividends paid (3,604,000) (3,427,000) Acquisition of treasury stock (829,000) (573,000) Proceeds from exercise of stock options 266,000 130,000 Repayment of Federal Home Loan Bank advances (33,900,000) (40,072,000) Changes in: Deposits 7,067,000 39,225,000 Federal funds purchased and securities sold under agreements to repurchase 5,562,000 (2,749,000) ------------ ------------ NET CASH (USED IN) FINANCING ACTIVITIES (25,438,000) (7,466,000) ------------ ------------ (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS (4,517,000) 18,824,000 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 78,909,000 82,763,000 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 74,392,000 $101,587,000 ============ ============
See notes to consolidated financial statements. 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) UNITED BANKSHARES, INC. AND SUBSIDIARIES 1. GENERAL The accompanying unaudited consolidated interim financial statements of United Bankshares, Inc. and Subsidiaries ("United") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial information does not contain all of the information and footnotes required by generally accepted accounting principles. The financial statements presented in this report have not been audited. The accounting and reporting policies followed in the presentation of these financial statements are consistent with those applied in the preparation of the 1995 annual report of United Bankshares, Inc. on Form 10-K. In the opinion of management, adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made. Such adjustments are of a normal and recurring nature. In May 1995, the Financial Accounting Standards Board ("FASB"), issued Statement No. 122, "Accounting for Mortgage Servicing Rights" (SFAS No. 122), an Amendment to Statement No. 65, "Accounting for Certain Banking Activities." SFAS No. 122 requires financial institutions to recognize as separate assets rights to service mortgage loans for others, whether those rights were acquired through purchase or through origination and subsequent sale of loans with servicing rights retained. Financial institutions are required to allocate the total cost of the mortgage loans to the mortgage servicing rights and the loans, based on their relative fair values, if it is practicable to estimate those fair values. Financial institutions are required to periodically assess capitalized servicing rights for impairment based on the fair value of those rights. SFAS No. 122 is to be applied prospectively for years beginning after December 15, 1995, with earlier application encouraged. Historically, United has not engaged in significant mortgage banking activities and does not generally originate or acquire loans for resale. United, in connection with the merger of Eagle Bancorp, Inc. ("Eagle") with and into United and the related merger of Eagle's wholly-owned subsidiary, First Empire Federal Savings and Loan Association ("First Empire") with and into United National Bank, United's lead bank, is awaiting final regulatory approval to operate United Mortgage Company, Inc. The business of United Mortgage Company, Inc. will be the origination and acquisition of residential real estate loans for resale, the conducting of mortgage loan servicing activities for certain loans, and generally the activities commonly conducted by a mortgage banking company. United has not yet completed the complex analysis required to 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES estimate the impact of these new rules and anticipates that it will conform with the new rules in the second quarter of 1996 in conjunction with the merger of Eagle and the commencement of operations of United Mortgage Company, Inc. United anticipates that the adoption of SFAS No. 122 will not have a significant impact on United's financial condition or results of operations. In October 1995, the FASB issued Statement No. 123, (SFAS No. 123), "Accounting for Stock-Based Compensation," which is effective for fiscal years beginning after December 15, 1995. SFAS No. 123 defines a fair value based method of accounting for stock-based compensation plans. Under the fair value method, compensation expense is measured based upon the estimated value of the award as of the grant date and is recognized over the service period. SFAS No. 123 provides companies with the option of accounting for stock-based compensation under APB Opinion No. 25, "Accounting for Stock Issued to Employees," or applying the provisions of SFAS No. 123. United has decided to continue to apply the provisions of APB No. 25 to account for stock- based compensation. The disclosure requirements of SFAS No. 123 require entities applying APB Opinion No. 25 to provide pro forma disclosures of net income and earnings per share as if the fair value method of accounting had been applied. The disclosure requirements of SFAS No. 123 are not applicable to interim reporting. 2. BASIS OF PRESENTATION The accompanying consolidated interim financial statements include the accounts of United and its wholly-owned subsidiaries, UBC Holding Company, Inc. and its wholly-owned subsidiary, United National Bank ("UNB"), United Bank, and United Venture Fund, Inc. ("UVF"). United considers all of its principal business activities to be bank related. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. 3. ACQUISITION On April 12, 1996, United consummated the merger with Eagle Bancorp, Inc., Charleston, West Virginia ("Eagle"), in a common stock exchange accounted for under the pooling of interests method of accounting. United exchanged 1.15 shares of United common stock for each of the 2,729,377 common shares of Eagle or 3,138,704 shares. As of the date of acquisition, Eagle reported total assets of $392,620,000, total net loans of $366,885,000 and deposits of $301,606,000. 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES The following represents selected pro forma financial information regarding the effects of the transaction as though it had occurred at the beginning of the earliest period presented:
Quarter Ending Quarter Ending Year Ending March 31, 1996 March 31, 1995 December 31, 1995 --------------- --------------- ------------------ Total interest income $ 42,230,000 $ 40,732,000 $ 165,815,000 Total interest expense 17,682,000 16,684,000 70,167,000 Net interest income 24,548,000 24,048,000 95,648,000 Income before income taxes 12,666,000 12,363,000 50,599,000 Income from continuing operations 8,088,000 8,165,000 32,817,000 Earnings per common share 0.53 0.54 2.18 Return on average assets 1.47% 1.50% 1.52% Return on average equity 13.00% 14.26% 13.86% Net loans 1,702,820,000 1,711,025,000 1,730,457,000 Total assets 2,191,915,000 2,205,292,000 2,210,230,000 Total deposits 1,781,882,000 1,779,083,000 1,773,009,000 Total equity 248,184,000 243,211,000 245,147,000
The data set forth above is not necessarily indicative of the results of operations or the combined financial position of United that would have resulted had the merger been consummated at the beginning of the applicable periods indicated, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. 4. SECURITIES AVAILABLE FOR SALE The book and estimated fair value of securities available for sale at March 31, 1996, by contractual maturity are as follows:
Estimated Amortized Fair Cost Value ------------ ------------ Due in one year or less $103,710,000 $104,063,000 Due after one year through five years 64,477,000 64,777,000 Due after five years through ten years 169,000 171,000 Due after ten years 32,619,000 31,748,000 Marketable equity securities 2,762,000 4,163,000 ------------ ------------ Total $203,737,000 $204,922,000 ============ ============
The preceding table includes $26,073,000 of mortgage-backed securities at estimated fair value with an amortized cost of $26,715,000. Maturities of mortgage-backed securities are based upon the estimated average life. 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES The amortized cost and estimated fair values of securities available for sale are summarized as follows:
March 31, 1996 -------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------ ---------- ---------- ------------ U.S. Treasury securities and obligations of U.S. Government corporations and agencies $162,294,000 $ 981,000 $ 345,000 $162,930,000 Mortgage-backed securities 26,715,000 11,000 653,000 26,073,000 Marketable equity securities 2,762,000 1,401,000 4,163,000 Other 11,966,000 12,000 222,000 11,756,000 ------------ ---------- ---------- ------------ Total $203,737,000 $2,405,000 $1,220,000 $204,922,000 ============ ========== ========== ============
At March 31, 1996, the cumulative net unrealized holding gain on available for sale securities resulted in an increase of $770,000 to shareholders' equity. The book and estimated fair value of securities available for sale at December 31, 1995, by contractual maturity are as follows:
Estimated Amortized Fair Cost Value ------------ ------------ Due in one year or less $105,885,000 $106,262,000 Due after one year through five years 52,928,000 53,684,000 Due after five years through ten years 169,000 172,000 Due after ten years 33,052,000 32,779,000 Marketable equity securities 2,662,000 3,821,000 ------------ ------------ Total $194,696,000 $196,718,000 ============ ============ The amortized cost and estimated fair values of securities available for sale are summarized as follows: December 31, 1995 ----------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------ ----------- ------------ ------------ U.S. Treasury securities and obligations of U.S. Government corporations and agencies $150,460,000 $1,438,000 $ 341,000 $151,557,000 Mortgage-backed securities 27,766,000 23,000 54,000 27,735,000 Marketable equity securities 2,662,000 1,159,000 3,821,000 Other 13,808,000 21,000 224,000 13,605,000 ------------ ---------- ------------ ------------ Total $194,696,000 $2,641,000 $ 619,000 $196,718,000 ============ ========== ============ ============
13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES 5. SECURITIES HELD-TO-MATURITY The amortized cost and estimated fair values of investment securities are summarized as follows:
March 31, 1996 ------------------------------------------------------ Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- ----------- ------------ ------------ U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 12,126,000 $ $ 209,000 $ 11,917,000 State and political subdivisions 40,217,000 1,651,000 66,000 41,802,000 Mortgage-backed securities 52,816,000 174,000 987,000 52,003,000 Other 1,905,000 1,905,000 ------------ ----------- ------------ ------------ otal $107,064,000 $1,825,000 $ 1,262,000 $107,627,000 ============ ========== ============ ============
December 31, 1995 ----------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- ----------- ------------ ------------ U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 12,146,000 $ 13,000 $ 169,000 $ 11,990,000 State and political subdivisions 43,324,000 2,124,000 33,000 45,415,000 Mortgage-backed securities 55,389,000 316,000 616,000 55,089,000 Other 1,896,000 1,896,000 ------------ ---------- ------------ ------------ Total $112,755,000 $2,453,000 $ 818,000 $114,390,000 ============ ========== ============ ============
The amortized cost and estimated fair value of debt securities at March 31, 1996, and December 31, 1995, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
March 31, 1996 December 31, 1995 -------------------------- -------------------------- Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value ------------ ------------ ------------ ------------ Due in one year or less $ 11,431,000 $ 11,426,000 $ 9,247,000 $ 9,325,000 Due after one year through five years 48,166,000 48,341,000 54,070,000 54,430,000 Due after five years through ten years 26,327,000 26,684,000 27,568,000 28,356,000 Due after ten years 21,140,000 21,176,000 21,870,000 22,279,000 ------------ ------------ ------------ ------------ Total $107,064,000 $107,627,000 $112,755,000 $114,390,000 ============ ============ ============ ============
14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES The preceding table includes $52,816,000 of mortgage-backed securities with an estimated fair value of $52,003,000 at March 31, 1996 and mortgage-backed securities of $55,389,000 with an estimated fair value of 55,089,000 at December 31, 1995. Maturities of the mortgage-backed securities are based upon the estimated average life. There were no sales of held to maturity securities. The amortized cost of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $158,062,000 and $176,855,000 at March 31, 1996 and December 31, 1995, respectively. 6. NONPERFORMING LOANS Nonperforming loans are summarized as follows:
March 31 December 31 1996 1995 -------- ----------- (in thousands) Loans past due 90 days or more and still accruing interest $ 4,208 $ 4,155 Nonaccrual loans 4,196 4,934 ------ ------ $ 8,404 $ 9,089 ======= =======
7. ALLOWANCE FOR POSSIBLE LOAN LOSSES The adequacy of the allowance for possible loan losses is based on management's evaluation of the relative risks inherent in the loan portfolio. A progression of the allowance for possible loan losses for the periods presented is summarized as follows:
Three Months Ended March 31, ------------------- 1996 1995 -------- -------- (in thousands) Balance at beginning of period $20,017 $20,008 Provision charged to expense 450 450 ------- ------- 20,467 20,458 Loans charged-off (499) (439) Less recoveries 158 139 ------- ------- Net Charge-offs (341) (300) ------- ------- Balance at end of period $20,126 $20,158 ======= =======
15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES Effective January 1, 1995, United adopted Financial Accounting Standards Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan,"(SFAS No. 114), as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures," collectively SFAS 114. As a result of applying the new rules prescribed by SFAS No. 114, certain loans are being reported at the present value of their expected future cash flows using the loan's effective interest rate, or as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. At the time of adoption of SFAS No. 114, United had approximately $8,000,000 of loans which were considered impaired in accordance with the guidelines prescribed by SFAS No. 114. The adoption of SFAS No. 114 did not have a material impact on the allowance for loan losses, the provision for possible loan losses or the charge-off policy. Impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, or at the fair value of the loan's collateral if the loan is deemed "collateral dependent". A valuation allowance is required to the extent that the measure of the impaired loans is less than the recorded investment. Impaired loans are specifically reviewed loans for which it is probable that the creditor will be unable to collect all amounts due according to the terms of the loan agreement. The specific factors that influence management's judgement in determining when a loan is impaired include the classification of the loan as "substandard" or worse, the financial strength of the borrower, and the net realizable value of the collateral. A specifically reviewed loan is not impaired during a period of "minimum delay" in payment, regardless of the amount of shortfall, if the ultimate collectibility of all amounts due is expected. United defines "minimum delay" as past due less than 90 days. SFAS 114 does not apply to smaller balance, larger groups of homogeneous loans such as consumer installment, bank card and real estate mortgage loans, which are collectively evaluated for impairment. Impaired loans are therefore primarily business loans, which include commercial loans and income property. United applies the measurement methods described above to these business and commercial loans on a loan-by-loan basis. Smaller balance populations of business loans, loans with a balance of $100,000 or less, which are not specifically reviewed in accordance with United's normal credit review procedures, are also excluded from the application of SFAS 114. United's charge-off policy for impaired loans is consistent with its policy for loan charge-offs to the allowance; impaired loans are charged-off when the impaired loan, or a portion thereof, is considered uncollectible or is transferred to other real estate owned. 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES SFAS 118 allows a creditor to use existing methods for recognizing interest income on an impaired loan. Consistent with United's existing method of income recognition for loans, interest receipts on impaired loans, except those classified also as nonaccrual, are recognized as interest income using the accrual method of income recognition. United's method of income recognition for impaired loans that are classified as nonaccrual is to recognize interest income on the cash method of income recognition or apply the cash receipt to principal when the ultimate collectibility of principal is in doubt. The average recorded investment in impaired loans during the quarter ended March 31, 1996 and for the year ended December 31, 1995 was approximately $8,319,000 and $9,545,000, respectively. For the quarter ended March 31, 1996, United recognized interest income on those impaired loans of approximately $143,000, substantially all of which was recognized using the accrual method of income recognition. At March 31, 1996, the recorded investment in loans that are considered to be impaired under SFAS No. 114 was $8,728,000 (of which $4,133,000 were on a nonaccrual basis). Included in this amount is $5,209,000 of impaired loans for which the related allowance for credit losses is $1,277,000 and $3,519,000 of impaired loans that do not have an allowance for credit losses due to management's estimate that the fair value of the underlying collateral of these loans is sufficient for full repayment of the loan and interest. The impact of adopting SFAS 114, as amended by SFAS 118, was therefore immaterial to the financial condition and operations of United as of and for the quarter ended March 31, 1996. The amount of interest income which would have been recorded under the original terms for the above loans was $218,000 and $247,000 for the quarter ended March 31, 1996 and 1995, respectively. Amounts recorded as interest income for these loans totaled $145,000 and $111,000 for the quarter ended march 31, 1996 and 1995, respectively. United has commercial real estate loans, including owner occupied, income producing real estate and land development loans, of approximately $319,000,000 and $328,226,000 as of March 31, 1996 and December 31, 1995, respectively. The loans are primarily secured by real estate located in West Virginia, Southeastern Ohio, and Virginia. The loans were originated by United's subsidiary banks using underwriting standards as set forth by management. United's loan administration policies are focused on the risk characteristics of the loan portfolio, including commercial real estate loans, in terms of loan approval and credit quality. It is the opinion of management that these loans do not pose any unnecessary risks and that adequate consideration has been given to the above loans in establishing the allowance for loan losses. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES 8. EARNING ASSETS AND INTEREST-BEARING LIABILITIES The following table shows the daily average balance of major categories of assets and liabilities for each of the three month periods ended March 31, 1996, and March 31, 1995, with the interest rate earned or paid on such amount.
Three Months Ended Three Months Ended March 31 March 31 1996 1995 --------------------------- --------------------------- (Dollars in Average Avg. Average Avg. Thousands) Balance Interest Rate Balance Interest Rate ASSETS Earning Assets: Federal funds sold and securities purchased under agreements to resell and other short-term investments $ 3,874 $ 54 5.64% $ 15,418 $ 237 6.23% Investment Securities: Taxable 259,799 3,880 5.97% 302,681 4,621 6.11% Tax-exempt (1) 41,141 966 9.39% 52,183 1,288 9.87% ---------- ------- ---- ---------- -------- ---- Total Securities 300,940 4,846 6.44% 354,864 5,909 6.66% Loans, net of unearned income (1) (2) 1,375,623 30,489 8.91% 1,295,547 27,967 8.75% Allowance for possible loan losses (20,095) (20,149) ---------- ---------- Net loans 1,355,528 9.05% 1,275,398 8.89% ---------- ------ ---- ---------- -------- ---- Total earning assets 1,660,342 $35,389 8.57% 1,645,680 $34,113 8.39% ------- ---- -------- ---- Other assets 140,552 135,934 ---------- ---------- TOTAL ASSETS $1,800,894 $1,781,614 ========== ========== LIABILITIES Interest-Bearing Funds: Interest-bearing deposits $1,233,636 $12,416 4.05% $1,215,174 $11,123 3.71% Federal funds purchased, repurchase agreements and other short-term borrowings 82,476 932 4.54% 76,139 854 4.55% FHLB advances 37,398 518 5.57% 62,651 964 6.24% ---------- ------- ---- ---------- -------- ---- Total Interest-Bearing Funds 1,353,510 13,866 4.12% 1,353,964 12,941 3.88% ------- ---- -------- ---- Demand deposits 220,524 224,920 Accrued expenses and other liabilities 22,329 19,747 ---------- ---------- TOTAL LIABILITIES 1,596,363 1,598,631 Shareholders' Equity 204,531 182,983 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,800,894 $1,781,614 ========== ========== NET INTEREST INCOME $21,523 $21,172 ======= ======== INTEREST SPREAD 4.45% 4.51% NET INTEREST MARGIN 5.21% 5.20%
(1) The interest income and the yields on nontaxable loans and investment securities are presented on a tax-equivalent basis using the statutory federal income tax rate of 35%. (2) Nonaccruing loans are included in the daily average loan amounts outstanding. 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued UNITED BANKSHARES, INC. AND SUBSIDIARIES 9. COMMITMENTS AND CONTINGENT LIABILITIES There are outstanding commitments which include, among other things, commitments to extend credit and letters of credit undertaken in the normal course of business. Outstanding standby letters of credit amounted to approximately $15,428,000 and $16,533,000 at March 31, 1996 and December 31, 1995, respectively. United and its subsidiaries are currently involved, in the normal course of business, in various legal proceedings. Management is vigorously pursuing all of its legal and factual defenses and, after consultation with legal counsel, believes that all such litigation will be resolved without material effect on financial position or results of operations. 19 UNITED BANKSHARES, INC. AND SUBSIDIARIES Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS United Bankshares, Inc. ("United") is a multi-bank holding company. United's wholly-owned banking subsidiaries include UBC Holding Company, Inc. and its wholly-owned subsidiary, United National Bank ("UNB"), and United Bank. United also owns all of the stock of United Venture Fund, Inc. ("UVF"). UVF is a West Virginia Capital Company formed to make loans and equity investments in qualified companies under the West Virginia Capital Company Act and to promote economic welfare and development in the State of West Virginia. United is a registered bank holding company subject to the supervision of and examination by the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. Its present business is the operation of its wholly-owned subsidiaries. The following discussion and analysis present the significant changes in financial condition and the results of operations of United and its subsidiaries for the periods indicated below. This discussion and analysis should be read in conjunction with the unaudited financial statements and accompanying notes thereto which are included elsewhere in this document. All references to United in this discussion and analysis are considered to refer to United and its wholly-owned subsidiaries, unless otherwise indicated. The following Earnings Summary is a broad overview of the financial condition and results of operations and is not intended to replace the more detailed discussion which is presented under specific headings on the following pages. EARNINGS SUMMARY Net income for the first quarter of 1996 was a record $7.50 million or $.62 per share compared to $6.90 million or $.58 per share for the first quarter of 1995. This represents a 8.70% increase in net income and a 6.90% increase in earnings per share. United's annualized return on average assets of 1.66% and return on average shareholders' equity of 14.88% both compare excellently with regional and national peer groups. United has strong core earnings driven by a net interest margin of 5.21% for the first three months of 1996. Net interest income increased 2.25% and showed improvement for the first three months of 1996 as compared to the same period for 1995. The provision for possible loan losses remained level when comparing the first three months of 1996 to the first three months of 1995 due to good asset quality and slightly increased charge-offs. Noninterest income 20 increased 4.05% for the first quarter of 1996 when compared to the first three months of 1995. This overall increase in noninterest income is primarily attributed to an increase in other customer charges. Noninterest expenses decreased 2.99% for the first quarter compared to the same period in 1995. This decrease was due to the FDIC insurance premiums decrease. Management's cost containment efforts have continued to be successful in controlling core noninterest expenses. Income taxes were higher for the first quarter than for the same period of 1995, with an effective tax rate of 34.4% as compared to 34.2% for first quarter of 1995. The following discussion explains in more detail the results of operations and changes in financial condition by major category. NET INTEREST INCOME Net interest income strengthened slightly in the first quarter of 1996, when compared to the same period of 1995. The net interest margin is the main factor in United's profitability momentum. Net interest income before the provision for possible loan losses increased $460,000 or 2.25% the first quarter of 1996 as compared to the first quarter of 1995. The increase is largely due to an interest recovery of $343,000 on a nonaccrual loan. Excluding the one time adjustment, net interest income increased slightly due to the repricing of variable rate loans at higher interest rates. United's tax-equivalent net interest margin rose from 5.20% in the first quarter of 1995 to 5.21% in the first quarter of 1996. Additionally, the tax-equivalent net interest margin showed an improvement over that achieved for the year ended December 31, 1995 of 5.15%. The combination of higher average volumes of loans at slightly higher rates compared to the first three months of 1995 have helped United generate a slightly stronger interest margin. PROVISION FOR POSSIBLE LOAN LOSSES For both of the quarters ended March 31, 1996 and 1995, the provision for possible loan losses was $450,000. The allowance for possible loan losses as a percentage of loans, net of unearned income, held at 1.5% at March 31, 1996, as compared to December 31, 1995, and March 31, 1995. Credit quality is another major factor in United's excellent profitability. United's continued improvement in credit quality is evidenced by the low level of nonperforming assets at the end of the first quarter of 1996. Charge-offs exceeded recoveries during the first quarter of 1996 and 1995 and resulted in net charge-offs of $341,000 and $300,000, respectively. Note 7 to the accompanying unaudited consolidated financial statements provides a progression of the allowance for possible loan losses. Loans, net of unearned income, remained relatively flat compared to year end 1995. 21 Nonperforming loans were $8,404,000 at March 31, 1996 and $9,089,000 at year-end 1995. Nonperforming loans, as a percentage of loans, net of unearned income, decreased from 0.66% to 0.62% when comparing these two respective periods. The components of nonperforming loans include nonaccrual loans and loans which are contractually past due 90 days or more as to interest or principal, but have not been put on a nonaccrual basis. Loans past due 90 days or more increased $53,000 or 1.28% during the first quarter of 1996; while nonaccrual loans decreased $738,000 or 14.96% since year-end 1995. With the decrease in nonperforming loans, total nonperforming assets represented less than 0.47% of total assets at the end of the first quarter. As of March 31, 1996, the ratio of the allowance for loan losses to nonperforming loans was 239.5% as compared to 220.2% as of December 31, 1995. Accordingly, management believes that the allowance for loan losses of $20,126,000 as of March 31, 1996, is adequate to provide for potential losses on existing loans based on information currently available. United evaluates the adequacy of the allowance for possible loan losses on a quarterly basis. The provision for loan losses charged to operations is based on management's evaluation of individual credits, the past loan loss experience, and other factors which, in management's judgment, deserve recognition in estimating possible loan losses. Such other factors considered by management, among other things, include growth and composition of the loan portfolio, known deterioration in certain classes of loans or collateral, trends in delinquencies, and current economic conditions. United's loan administration policies are focused upon the risk characteristics of the loan portfolio, both in terms of loan approval and credit quality. OTHER INCOME Other income consists of all revenues which are not included in interest and fee income related to earning assets. Noninterest income has been and will continue to be an important factor for improving United's profitability. Recognizing the importance, management continues to evaluate areas where noninterest income can be enhanced. The increase realized in total noninterest income for the first quarter of 1996, was $127,000 or 4.05%. The increase in noninterest income was in the areas of trust income and fees from customer accounts for which a fee is charged. Trust income increased from the first quarter of 1995 by 2.05%, while other customer charges increased by $138,000 or 6.28% due to return check charges and bankcard fees. 22 OTHER EXPENSES Just as management continues to evaluate areas where noninterest income can be enhanced, it strives to improve the efficiency of its operations and thus reduce operating costs. Other expenses include all items of expense other than interest expense, the provision for possible loan losses, and income taxes. Other expenses decreased $378,000 or 2.99% to $12,258,000 in the first quarter of 1996 as compared to $12,636,000 for the first quarter of 1995. Total salaries and benefits increased by 4.10% or $229,000, for the first quarter of 1996 when compared to the same period of 1995. In addition, net occupancy expense increased only $44,000 or 3.70% when compared to the first quarter of 1995. Other expenses decreased $651,000 or 11.12% for the first quarter of 1996 as compared to the same period of 1995. The decrease in other expenses for the quarter related primarily to lower FDIC insurance premiums and professional fees, which were offset by higher advertising, data processing and operational charge-offs. The overall decrease in other expenses was a result of certain nonrecurring merger expenses being incurred in the first quarter of 1995, but not in the first quarter of 1996. The nonrecurring merger related expenses incurred in the first quarter of 1995 were in connection with the acquisition of First Commercial Bank consummated by United in the fourth quarter of 1995. INCOME TAXES Income tax expense for the three months ended March 31, 1996 and 1995 was $3,940,000 and $3,582,000, respectively. This increase of 9.99% for the quarter was the result of increased pretax income and decreased tax-exempt income. United's effective tax rate was 34.4% for the first quarter of 1996 compared to 34.2% for the first quarter of 1995. INTEREST RATE SENSITIVITY Interest sensitive assets and liabilities are defined as those assets or liabilities that mature or are repriced within a designated timeframe. The principal function of asset and liability management is to maintain an appropriate relationship between those assets and liabilities that are sensitive to changing market interest rates. This relationship has become very important, given the volatility in interest rates over the last several years, due to the potential impact on earnings. United closely monitors the sensitivity of its assets and liabilities on an on-going basis and projects the effect of various interest rate changes on its net interest margin. The difference between rate sensitive assets and rate sensitive liabilities for specified periods of time is known as the "gap". 23 A primary objective of Asset/Liability Management is managing interest rate risk. At United, interest rate risk is managed to minimize the impact of fluctuating interest rates on earnings. As shown in the interest rate sensitivity gap table contained herein, United was liability sensitive (excess of liabilities over assets) in the one year horizon. United, however, has not experienced the kind of earnings volatility indicated from the cumulative gap. This is because a significant portion of United's retail deposit base does not reprice on a contractual basis. Management has estimated, based upon historical analyses, that savings deposits are less sensitive to interest rate changes than are other forms of deposits. The GAP table presented herein has been adapted to show the estimated differences in interest rate sensitivity which result when the retail deposit base is assumed to reprice in a manner consistent with historical trends. (See Management Adjustments in the GAP table.) Using these estimates, United was asset sensitive in the one year horizon in the amount of $134,502,000 or 8.05% of the cumulative gap to related earning assets. The primary method of measuring the sensitivity of earnings to changing market interest rates is to simulate expected cash flows using varying assumed interest rates while also adjusting the timing and magnitude of non-contractual deposit repricing to more accurately reflect anticipated pricing behavior. These simulations include adjustments for the lag in prime loan repricing and the spread and volume elasticity of interest-bearing deposit accounts, regular savings and money market deposit accounts. To aid in interest rate management, United's lead bank, UNB, is a member of the Federal Home Loan Bank of Pittsburgh (FHLB). The use of FHLB advances provides United with a relatively low risk means to match maturities of earning assets and interest-bearing funds to achieve a desired interest rate spread over the life of the earning assets, as of March 31, 1996, United had no FHLB advances. Additionally, United uses certain off-balance-sheet instruments known as interest rate swaps, to further aid in interest rate risk management. The use of interest rate swaps is a cost effective means of synthetically altering the repricing structure of balance sheet items. At March 31, 1996, the total notional amount of interest rate swaps in effect was $50 million. The current maturity of the swap portfolio is ten months. During the first quarter of 1996, interest rate swaps reduced net interest income by $130,000 as compared to a decrease of $196,000 for the same period in 1995. LIQUIDITY AND CAPITAL RESOURCES United maintains, in the opinion of management, liquidity which is sufficient to satisfy its depositors' requirements and the credit needs of its customers. Like all banks, United depends upon its ability to renew maturing deposits and other liabilities on a daily basis and to acquire new funds in a variety of markets. A significant source of funds available to United are "core deposits." Core 24 deposits include certain demand deposits, statement and special savings and NOW accounts. These deposits are relatively stable and they are the lowest cost source of funds available to United. Short-term borrowings have also been a significant source of funds. These include federal funds purchased and securities sold under agreements to repurchase. Repurchase agreements represent funds which are obtained as the result of a competitive bidding process. Liquid assets are cash and those items readily convertible to cash. All banks must maintain sufficient balances of cash and near-cash items to meet the day- to-day demands of customers. Other than cash and due from banks, the available- for-sale securities portfolio and maturing loans and investments are the primary sources of liquidity. The goal of liquidity management is to ensure the ability to access funding which enables United to efficiently satisfy the cash flow requirements of depositors and borrowers and meet United's cash needs. Liquidity is managed by monitoring funds availability from a number of primary sources. Substantial funding is available from cash and cash equivalents, unused short-term borrowings and a geographically dispersed network of subsidiary banks providing access to a diversified and substantial retail deposit market. Short-term needs can be met through a wide array of sources such as correspondent and downstream correspondent federal funds and utilization of Federal Home Loan Bank advances. Other sources of liquidity available to United to provide long-term as well as short-term funding alternatives, in addition to FHLB advances, are long-term certificates of deposit, lines of credit, and borrowings secured by bank premises or stock of United's subsidiaries. United has no intention at this time to utilize any long-term funding sources other than FHLB advances and long-term certificate of deposits. For the three months ended March 31, 1996, United generated $9,538,000 of cash from operations, which is indicative of solid earnings performance. During the same period, net cash of $11,383,000 was provided by investing activities which was primarily due to the proceeds from loan payoffs. During the first three months of 1996, financing activities resulted in a use of cash of $25,438,000, primarily due to the repayment of $33,900,000 of FHLB advances. Slight increases in deposits and other short-term borrowings partially offset the repayment of the FHLB advances. The net effect of this activity was a decrease in cash and cash equivalents of $4,517,000 for the first three months of 1996. 25 UNITED BANKSHARES, INC. AND SUBSIDIARIES The following table shows the interest rate sensitivity GAP as of March 31, 1996: Interest Rate Sensitivity Gap
Days ---------------------------------- Total 1-5 Over 5 0 - 90 91 - 180 181 - 365 One Year Years Years Total --------- --------- ---------- ---------- --------- ------------- ---------- (In Thousands) ASSETS Interest-Earning Assets: Investment and Marketable Equity Securities: Taxable $ 64,345 $ 25,055 $ 36,322 $ 125,722 $ 65,842 $ 80,205 $ 271,769 Tax-exempt 3,443 2,515 2,898 8,856 14,237 17,034 40,217 Loans, net of unearned income 467,766 80,373 142,325 690,464 520,728 147,458 1,258,650 --------- --------- ---------- ---------- --------- -------- ---------- Total Interest-Earning Assets $ 535,554 $ 107,943 $ 181,545 $ 825,042 $ 600,897 $244,697 $1,670,636 ========= ========= ========== ========== ========= ======== ========== LIABILITIES Interest-Bearing Funds: Savings and NOW accounts $ 600,174 $ 600,174 $ 600,174 Time deposits of $100,000 & over 47,741 $ 26,252 $ 24,249 92,242 $ 26,806 119,048 Other time deposits 136,437 103,832 120,640 360,909 170,530 $ 8,608 540,047 Federal funds purchased, repurchase agreements and other short-term borrowings 87,729 87,729 87,729 --------- --------- ---------- ---------- --------- -------- ---------- Total Interest-Bearing Funds $ 866,081 $ 130,084 $ 144,889 $1,141,054 $ 197,336 $ 8,608 $1,346,998 ========= ========= ========== ========== ========= ======== ========== Interest Sensitivity Gap $(330,527) $ (22,141) $ 36,656 $ (316,012) $ 403,561 $236,089 $ 323,638 ========= ========= ========== ========== ========= ======== ========== Cumulative Gap $(330,527) $(352,668) $ (316,012) $ (316,012) $ 87,549 $323,638 $ 323,638 ========= ========= ========== ========== ========= ======== ========== Cumulative Gap as a Percentage of Total Earning Assets -19.78% -21.11% -18.92% -18.92% 5.24% 19.37% 19.37% Management Adjustments 563,143 (37,562) (75,067) 450,514 (450,514) 0 Off-Balance Sheet Activities (50,000) (50,000) 0 0 --------- --------- ---------- ---------- --------- -------- ---------- Cumulative Management Adjusted Gap and Off-Balance Sheet Activities $ 182,616 $ 122,913 $ 134,502 $ 134,502 $ 87,549 $323,638 $ 323,638 ========= ========= ========== ========== ========= ======== ========== Cumulative Management Adjusted Gap and Off-Balance Sheet Activities as a Percentage of Total Earning Assets 10.93% 7.36% 8.05% 8.05% 5.24% 19.37% 19.37%
26 UNITED BANKSHARES, INC. AND SUBSIDIARIES The following table shows the interest rate sensitivity GAP as of December 31, 1995: Interest Rate Sensitivity Gap
Days ---------------------------------- Total 1-5 Over 5 0 - 90 91 - 180 181 - 365 One Year Years Years Total --------- --------- ---------- ---------- --------- -------- ------ (In Thousands) ASSETS Interest-Earning Assets: Investment and Marketable Equity Securities: Taxable $ 34,328 $ 33,456 $ 54,674 $ 122,458 $ 92,779 $ 51,255 $ 266,492 Tax-exempt 3,462 2,546 2,919 8,927 14,460 19,594 42,981 Loans, net of unearned income 515,788 76,320 132,531 724,639 461,601 187,766 1,374,006 --------- --------- ---------- ---------- --------- -------- ---------- Total Interest-Earning Assets $ 553,578 $ 112,322 $ 190,124 $ 856,024 $ 568,840 $258,615 $1,683,479 ========= ========= ========== ========== ========= ======== ========== LIABILITIES Interest-Bearing Funds: Savings and NOW accounts $ 602,098 $ 602,098 $ 602,098 Time deposits of $100,000 & over 39,910 $ 17,972 $ 17,941 75,823 $ 26,068 101,891 Other time deposits 128,868 91,538 109,222 327,628 193,851 $ 9,230 530,709 Federal funds purchased, repurchase agreements and other short-term borrowings 82,167 82,167 82,167 FHLB advances 33,900 33,900 33,900 --------- --------- ---------- ---------- --------- -------- ---------- Total Interest-Bearing Funds $ 884,943 $ 109,510 $ 127,163 $1,121,616 $ 219,919 $ 9,230 $1,350,765 ========= ========= ========== ========== ========= ======== ========== Interest Sensitivity Gap $(331,365) $ 2,812 $ 62,961 $ (265,592) $ 348,921 $249,385 $ 332,714 ========= ========= ========== ========== ========= ======== ========== Cumulative Gap $(331,365) $(328,553) $ (265,592) $ (265,592) $ 83,329 $332,714 $ 332,714 ========= ========= ========== ========== ========= ======== ========== Cumulative Gap as a Percentage of Total Earning Assets -19.68% -19.52% -15.78% -15.78% 4.95% 19.76% 19.76% Management Adjustments 564,955 (37,664) (75,327) 451,964 (451,964) 0 Off-Balance Sheet Activities (50,000) (50,000) (50,000) 0 --------- --------- ---------- ---------- --------- -------- ---------- Cumulative Management Adjusted Gap and Off-Balance Sheet Activities $ 183,590 $ 148,738 $ 136,372 $ 136,372 $ 83,329 $332,714 $ 332,714 ========= ========= ========== ========== ========= ======== ========== Cumulative Management Adjusted Gap and Off-Balance Sheet Activities as a Percentage of Total Earning Assets 10.91% 8.84% 8.10% 8.10% 4.95% 19.76% 19.76%
27 United anticipates no difficulty in meeting its obligations over the next 12 months and has no material commitments for capital expenditures. There are no known trends, demands, commitments, or events that will result in or that are reasonably likely to result in United's liquidity increasing or decreasing in any material way. United also has significant lines of credit available. The Asset and Liability Committee monitors liquidity to ascertain that a strong liquidity position is maintained. In addition, variable rate loans are a priority. These policies help to protect net interest income against fluctuations in interest rates. No changes are anticipated in the policies of United's Asset and Liability Committee. Total shareholders' equity increased $2,792,000 to $204,014,000, which is an increase of 1.39% from December 31, 1995. United's equity to assets ratio was 11.34% at March 31, 1996 and 11.08% at December 31, 1995. Capital and reserves to total assets increased from 12.19% at December 31, 1995, to 12.46% at March 31, 1996. The first quarter dividend of $.30 per common share represents an increase of 3.4% over the $.29 paid for first quarter of 1995. Total cash dividends paid were $3,604,000 for the first quarter of 1996, an increase of 5.16% over the $3,427,000 paid for the first quarter of 1995. United seeks to maintain a proper relationship between capital and total assets in order to support growth and sustain earnings. United's average equity to average asset ratio was 11.36% at March 31, 1996 and 10.27% at March 31, 1995. United's risk-based capital ratios of 16.47% at March 31, 1996 and 15.91% at December 31, 1995, are both significantly higher then the minimum regulatory requirements. United's Tier I capital and leverage ratios of 15.22% and 10.57%, respectively, at March 31, 1996, are also well above regulatory minimum requirements. 28 EX-11 2 COMPUTATION OF EARNINGS Exhibit 11 Statement Re: Computation of Earnings Per Share UNITED BANKSHARES, INC. AND SUBSIDIARIES
For the Quarter Ended March 31 ------------------------ 1996 1995 ----------- ---------- PRIMARY: - -------- Average Number of Common Shares 12,007,548 11,809,055 Average Number of Common Share Equivalents 71,524 73,360 ----------- ----------- Average Shares and Share Equivalents Outstanding 12,079,072 11,882,415 =========== =========== Net Income $ 7,504,000 $ 6,897,000 Preferred Dividends ----------- ----------- Available to Common Shares $ 7,504,000 $ 6,897,000 =========== =========== Earnings Per Common Share: $ 0.62 $ 0.58 =========== =========== FULLY DILUTED: - -------------- Average Number of Common Shares 12,007,548 11,809,055 Average Number of Common Share Equivalents 71,524 85,929 ----------- ----------- Average Shares and Share Equivalents Outstanding 12,079,072 11,894,984 =========== =========== Net Income $ 7,504,000 $ 6,897,000 Preferred Dividends ----------- ----------- Available to Common Shares $ 7,504,000 $ 6,897,000 =========== =========== Earnings Per Common Share $ 0.62 $ 0.58 =========== ===========
EX-27 3 FINANCIAL DATA SCHEDULE
9 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 74,392,000 0 0 0 204,922,000 107,064,000 107,627,000 1,358,650,000 20,126,000 1,798,455,000 1,480,276,000 87,729,000 26,436,000 0 0 0 30,391,000 173,623,000 1,798,455,000 30,173,000 4,508,000 71,000 34,752,000 12,416,000 13,866,000 20,886,000 450,000 0 12,258,000 11,444,000 11,444,000 0 0 7,504,000 0.62 0.62 5.21 4,196,000 4,208,000 0 0 20,017,000 499,000 158,000 20,126,000 8,460,000 0 11,666,000
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