News Release
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For Immediate Release
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Contact: Steven E. Wilson
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January 21, 2003
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Chief Financial Officer
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(304) 424-8704
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United Bankshares, Inc. Achieves Record Earnings
PARKERSBURG, WV-- United Bankshares, Inc. (NASDAQ: UBSI),
announced today record earnings for both the year and fourth quarter of 2002.
United’s 2002 annual earnings totaled a record $88.9 million, an 11.2% increase
over the $80.0 million earned for 2001. Diluted earnings per share were $2.06
for 2002 compared to $1.90 for 2001, an increase of 8.4% for the year. United
generated net income of $22.6 million for the fourth quarter of 2002, an
increase of 7.1% over the $21.1 million earned in the fourth quarter of 2001.
Diluted earnings per share for the fourth quarter of 2002 were 53˘, an increase
of 8.2% compared with 49˘ reported during the fourth quarter last year.
United’s
earnings performance produced a return on average assets of 1.59% and a return
on average shareholders’ equity of 16.73% for the year of 2002, as compared to
1.59% and 17.51%, respectively, for the year 2001. For the fourth quarter of
2002, the annualized return on average assets was 1.55% and the annualized
return on average shareholders’ equity was 16.39% compared with annualized returns
of 1.58% and 17.36%, respectively, for the fourth quarter of 2001. These key
financial performance indicators are reflective of United’s earnings strength
as United continues to compare very favorably with the best performing regional
banking companies in the nation.
Noninterest
income growth of 18.1% and 22.4% for the year and fourth quarter of 2002,
respectively, was driven primarily by increased mortgage-banking income. For
the fourth quarter of 2002, noninterest income, excluding security transactions,
totaled $22.8 million, an increase of $5.9 million or 35.2% from the fourth
quarter of 2001. The growth in noninterest income for both periods was
primarily the result of increased revenues from the mortgage-banking segment as
United’s mortgage subsidiary originated mortgage loans for sale in the
secondary market of over $1.0 billion during the fourth quarter and over $3.1
billion for the year ended December 31, 2002. Mortgage loan originations
increased by 40% and 36%, respectively, for the fourth quarter and year of 2002
when compared to the same periods of 2001. Income from mortgage-banking
operations increased $3.9 million or 51.6% for the fourth quarter of 2002 as
compared to the fourth quarter of 2001. On a linked-quarter basis,
mortgage-banking income for the fourth quarter of 2002 was 1.2% higher than the
$11.2 million earned for the third quarter of 2002. Also contributing to the
increase in noninterest income during the fourth quarter of 2002 was a $1.5
million increase in deposit service fees. Noninterest income, excluding
security transactions, for the year of 2002 was $79.7 million, an increase
of $17.0 million or 27.1% from the same
period in 2001 primarily due to increases of $9.6 million and $3.7 million in
mortgage-banking income and deposit services fees, respectively.
Trust and brokerage income also showed increases
quarter-over-quarter and year-over-year as estate and trust distribution fees
and brokerage commissions increased due to growth in both the number of
accounts and volume of transactions. Trust and brokerage revenues totaled $2.2
million for the fourth quarter, an increase of 14.5% compared to the fourth
quarter of 2001. For the year trust and brokerage income was up a healthy 8.3%
over 2001.
United
Bankshares, Inc. Achieves...
January 21, 2003
Page Two
Included in
the security transactions’ totals for 2002 and 2001 are recognized charges of
$7.0 million and $1.2 million, respectively, related to an other-than-temporary
decline in the fair value of retained interests in securitized assets for the
years ended December 31, 2002 and 2001.
The decline in the value of these available for sale securities was the
result of an increase in the level of prepayment and default activity during
the time periods, which negatively effected the valuation of those securities.
Also
contributing to United’s record earnings performance was increased
tax-equivalent net interest income for the fourth quarter and year of 2002 as
compared with the same periods of 2001. Tax-equivalent net interest income for
the fourth quarter of 2002 was $53.8 million, an increase of $2.8 million or
5.4% from the fourth quarter of 2001. The net interest margin for the fourth
quarter of 2002 was 3.96%, which is an 11 basis point contraction from the
previous year’s fourth quarter net interest margin of 4.07%. Tax-equivalent net
interest income for the year of 2002 reached $217.9 million, an increase of
$21.2 million or 10.8% from the prior year. The 2002 net interest margin
reflected a 3 basis point increase from 4.12% for 2001 to 4.15% for 2002. This
year’s increased tax-equivalent net interest income over last year’s results
was primarily due to increases in the volume of interest earning assets and
interest bearing liabilities from the Century Bancshares acquisition that was
consummated in December of 2001 and increases in average loans held for sale.
On a linked quarter basis, tax-equivalent net interest income decreased $2.7
million or 4.7% while the net interest margin decreased 30 basis points from
the third quarter of 2002. The third quarter 2002 results included a $1.1
million dividend payment plus interest during the quarter on a $10 million
trust preferred security previously classified as nonaccrual. As in the case
with many financial institutions, management anticipates that the net interest
margin will continue to contract in the coming months as United’s assets
reprice at historically low levels with little flexibility for a corresponding
decrease in rates paid on its interest-bearing liabilities.
United’s credit quality continues to
be sound, comparing favorably to national peer group averages. Nonperforming loans were $15.4 million or
0.43% of loans, net of unearned income at December 31, 2002 compared to $17.6
million or 0.50% of loans, net of unearned income at December 31, 2001. Net
charge-offs were $2.2 million for the fourth quarter of 2002, a decline from
$3.9 million for the fourth quarter of 2001.
Net charge-offs were $8.0 million for the year of 2002, down $2.6
million from net charge-offs of $10.6 million for the year of 2001. For the
quarters ended December 31, 2002 and 2001, the provision for loan losses was
$2.2 million and $4.0 million, respectively, while the provision for the year
was $7.9 million for 2002 as compared to $12.8 million for 2001. As of December
31, 2002, the allowance for loan losses was $47.4 million or 1.33% of loans,
net of unearned income, compared to 1.35% reported at December 31, 2001.
Noninterest
expense increased $8.2 million or 26.8% and $28.4 million or 24.5% during the
three and twelve-month periods ended December 31, 2002, respectively, as
compared to the same periods last year. Noninterest expense totaled $38.6
million for the fourth quarter of 2002 compared with $30.4 million for the
fourth quarter of 2001 and $38.7 million for the third quarter of 2002. For the
year 2002, noninterest expense amounted to $144.1 million as compared to $115.7
million for 2001. The noninterest expense increases for the year and the fourth
quarter over the same periods of last year were primarily due to increased
employee salaries and related benefits. The increase in salaries resulted from
record originations in the mortgage-banking segment
United
Bankshares, Inc. Achieves...
January 21, 2003
Page Three
where
compensation and incentives for personnel are tied to activity levels. The
increase in benefits was due to additional pension expense in 2002. United’s
net occupancy expense increased for both the year and fourth quarter of 2002
compared to the same periods of 2001 due to building and rental costs from the
additional branch locations added by the Century acquisition which was only
included in United’s results for one month of 2001. Other noninterest expense
reflected an increase of $0.93 million or 7.6% for the fourth quarter of 2002
and an increase of $7.0 million or 15.8% for the year as compared to the fourth
quarter and year of 2001, respectively. The increases in other expense for the
quarter and year were from the higher level of general operating expenses from
the Century acquisition. On a linked-quarter basis, noninterest expense
remained flat as it declined less than one-half of one percent. The efficiency
ratio was still very low at 49.66% and 47.59% for the fourth quarter and year
of 2002, respectively. This ratio compares very favorably to regional and
national peer group banking companies.
As a result of
United’s fourth quarter 2002 adoption of SFAS No. 147, which changed the
accounting rules for the recognition of goodwill amortization associated with
certain branch acquisitions, United ceased amortization of goodwill on branch
acquisitions that were acquisitions of businesses. The favorable reduction in
goodwill amortization expense was approximately $302 thousand. In accordance
with the adoption of SFAS No. 142 effective January 1, 2002, United ceased
amortization of goodwill associated with certain prior business combinations.
Prior to the adoption of SFAS No. 142, other noninterest expense for the fourth
quarter and year of 2001 included amortization of goodwill of $0.6 million and
$2.5 million, respectively.
During the fourth quarter, United’s Board of
Directors declared a cash dividend of 25˘ per share, which represented a 9%
increase over the 23˘ paid in the fourth quarter of 2001 and a 4% increase from
the 24˘ paid in the third quarter of 2002. Dividends per share of 95˘ for 2002
represented a 4% increase over the 91˘ per share paid for 2001. The year 2002 was the 29th consecutive year of
dividend increases to United shareholders.
United Bankshares, with $5.8 billion in assets,
presently has 85 full-service offices in West Virginia, Virginia, Maryland,
Ohio, and Washington, D.C. United
Bankshares stock is traded on the NASDAQ (National Association of Securities Dealers
Quotation System) National Market System under the quotation symbol
"UBSI".
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)
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Three Months Ended
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Year Ended
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December 31
2002
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December 31
2001
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December 31
2002
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December 31
2001
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EARNINGS SUMMARY:
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Interest income, taxable
equivalent
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$85,759
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$89,575
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$350,453
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$372,248
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Interest expense
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31,968
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38,542
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132,557
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175,507
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Net interest income, taxable
equivalent
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53,791
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51,033
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217,896
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196,741
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Taxable equivalent
adjustment
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2,670
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2,954
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10,975
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11,638
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Net interest income
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51,121
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48,079
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206,921
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185,103
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Provision for loan losses
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2,212
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4,046
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7,937
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12,833
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Income from mortgage banking
operations
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11,341
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7,481
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36,142
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26,518
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Gain (loss) on security
transactions
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(1,305)
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705
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(6,266)
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(518)
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Other noninterest income
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11,507
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9,422
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43,603
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36,205
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Noninterest expenses
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38,574
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30,414
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144,130
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115,745
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Income taxes
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9,325
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10,152
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39,400
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38,739
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Net income
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22,553
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21,075
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88,933
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79,991
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Net income adjusted for FAS
142 and 147 (1)
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22,327
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21,696
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88,933
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82,474
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Cash dividends paid
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10,526
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9,892
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40,388
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38,096
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PER COMMON SHARE:
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Net income:
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Basic
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0.53
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0.51
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2.09
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1.93
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Diluted
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0.53
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0.49
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2.06
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1.90
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Diluted adjusted for FAS 142 and 147 (1)
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0.52
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0.51
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2.06
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1.96
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Cash dividends paid
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0.25
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0.23
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0.95
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0.91
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Book value
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12.88
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11.80
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Closing market price
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29.06
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28.86
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Common shares outstanding:
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Actual, net of treasury shares
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42,031,968
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42,926,511
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Average basic
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42,155,892
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41,559,161
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42,537,980
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41,497,304
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Average diluted
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42,669,955
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42,217,513
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43,113,347
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42,064,919
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FINANCIAL RATIOS:
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Return on average assets
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1.55%
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1.58%
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1.59%
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1.59%
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Return on average shareholders’ equity
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16.39%
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17.36%
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16.73%
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17.51%
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Average equity to average assets
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9.47%
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9.11%
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9.51%
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9.06%
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Net interest margin
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3.96%
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4.07%
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4.15%
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4.12%
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December 31 2002
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December 31 2001
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PERIOD END BALANCES:
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Assets
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$5,792,019
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$5,631,775
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Earning assets
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5,454,471
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5,301,211
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Loans, net of unearned
income
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3,573,161
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3,502,334
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Loans held for sale
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582,718
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368,625
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Investment securities
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1,285,490
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1,428,716
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Total deposits
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3,900,848
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3,787,793
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Shareholders’ equity
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541,539
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506,529
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(1)As required,
United discontinued the amortization of goodwill in accordance with Financial
Accounting Standards Board
Statements No. 142 and No. 147. These amounts have been adjusted for periods prior to January
1, 2002 to present those
amounts on a comparable basis with the periods subsequent to
January 1, 2002.
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