United Bankshares, Inc. Announces Increased Earnings

United Bankshares, Inc. Announces Increased Earnings

WASHINGTON, D.C. & CHARLESTON, W.Va.--(BUSINESS WIRE)-- United Bankshares, Inc. (NASDAQ: UBSI), today reported an increase in earnings for the fourth quarter and the year of 2012 as compared to the fourth quarter and year of 2011. Earnings for the fourth quarter of 2012 were $21.2 million or $0.42 per diluted share, up 5% from earnings of $20.3 million or $0.40 per diluted share for the fourth quarter of 2011. Earnings for the year of 2012 were $82.6 million or $1.64 per diluted share, an increase of 9% from earnings of $75.6 million or $1.61 per diluted share for the year of 2011.

"The year 2012 was another successful year for United," stated Richard M. Adams, United's Chairman of the Board and Chief Executive Officer. "Earnings rose from 2011 while the dividend to shareholders was increased for the 39th consecutive year. Only one other major banking company in the USA has achieved such a dividend record."


Fourth quarter of 2012 results produced a return on average assets of 1.01% and a return on average equity of 8.44%. For the year of 2012, United's return on average assets was 0.98% while the return on average equity was 8.35%. United's annualized returns on average assets and average equity were 0.94% and 8.17%, respectively, for the fourth quarter of 2011 while the returns on average assets and average equity was 0.97% and 8.50%, respectively, for the year of 2011.

The results for the fourth quarter and year of 2012 included noncash, before-tax, other-than-temporary impairment charges of $2.0 million and $7.4 million, respectively, on certain investment securities. In comparison, the results for the fourth quarter and year of 2011 included noncash, before-tax, other-than-temporary impairment charges of $6.3 million and $20.4 million, respectively, on certain investment securities. Also included in the results for the year of 2012 was an accrual of $3.3 million with respect to a settlement of claims asserted in class actions against United Bank, Inc. of West Virginia. In addition, United completed its acquisition of Centra Financial Holdings, Inc. (Centra) during the third quarter of 2011. As a result, comparisons for the year of 2012 to the year of 2011 are impacted by increased levels of average balances, income, and expense due to the acquisition. At consummation, Centra had assets of approximately $1.3 billion, loans of $1.0 billion, deposits of $1.1 billion and shareholders' equity of $131 million.

United's asset quality continues to outperform its peers. United's percentage of nonperforming loans to loans, net of unearned income of 1.43% at December 31, 2012 compares favorably to the most recently reported percentage of 2.86% at September 30, 2012 for United's Federal Reserve peer group. At December 31, 2012, nonperforming loans were $92.8 million, up from nonperforming loans of $79.7 million or 1.28% of loans, net of unearned income, at December 31, 2011. During the third quarter of 2012, loans totaling $20.5 million to two commercial customers were placed on nonaccrual status. The loss potential on these loans has been properly evaluated and allocated within the company's allowance for loan losses. As of December 31, 2012, the allowance for loan losses was $73.9 million or 1.13% of loans, net of unearned income, which was comparable to $73.9 million or 1.19% of loans, net of unearned income, at December 31, 2011. Total nonperforming assets of $142.3 million, including OREO of $49.5 million at December 31, 2012, represented 1.69% of total assets which also compares favorably to the most recently reported percentage of 2.21% at September 30, 2012 for United's Federal Reserve peer group.

United continues to be well-capitalized based on all regulatory guidelines. United's estimated risk-based capital ratio is 13.7% at December 31, 2012 while its Tier I capital and leverage ratios are 12.4% and 10.6%, 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 fourth quarter of 2012 was $71.3 million, a decrease of $2.4 million or 3% from the fourth quarter of 2011 due mainly to a decrease in the average yield on earning assets. The fourth quarter of 2012 average yield on earning assets decreased 22 basis points from the fourth quarter of 2011. In addition, average earning assets decreased $142.9 million or 2% from the fourth quarter of 2011 as average short-term investments and average investment securities declined $270.3 million and $83.8 million, respectively. Average net loans did increase $211.2 million or 3% for the fourth quarter of 2012 from the fourth quarter of 2011 partially offsetting the decreases in average short-term investments and investment securities. Partially offsetting the decreases to tax-equivalent net interest income for the fourth quarter of 2012 was a decline of 20 basis points in the average cost of funds as compared to the fourth quarter of 2011. The net interest margin for the fourth quarter of 2012 was 3.83%, which was a decrease of 5 basis points from a net interest margin of 3.88% for the fourth quarter of 2011.

Tax-equivalent net interest income for the year of 2012 was $284.1 million, an increase of $16.8 million or 6% from the year of 2011. This increase in tax-equivalent net interest income was primarily attributable to an increase in average earning assets from the Centra acquisition. Average earning assets increased $553.6 million or 8% from the year of 2011. Average net loans increased $600.9 million or 11% for the year of 2012. In addition, the average cost of funds declined 22 basis points from the year of 2011. Partially offsetting the increases to tax-equivalent net interest income for the year of 2012 was a decline of 25 basis points in the average yield on earning assets as compared to the year of 2011. The net interest margin for the year of 2012 was 3.81%, which was a decrease of 6 basis points from a net interest margin of 3.87% for the year of 2011.

On a linked-quarter basis, United's tax-equivalent net interest income for the fourth quarter of 2012 was flat from the third quarter of 2012, decreasing $262 thousand or less than 1% due mainly to a decrease in the average yield on earning assets. The fourth quarter of 2012 average yield on earning assets decreased 11 basis points while the average cost of funds decreased 9 basis points from the third quarter of 2012. Average earning assets were flat during the quarter as average net loans grew $101.4 million while average short-term investments and average investment securities decreased $54.5 million and $8.0 million, respectively. The net interest margin of 3.83% for the fourth quarter of 2012 was a decrease of 4 basis points from the net interest margin of 3.87% for the third quarter of 2012.

For the quarters ended December 31, 2012 and 2011, the provision for loan losses was $5.9 million and $4.3 million, respectively, while the provision for the year of 2012 was $17.9 million as compared to $17.1 million for the year of 2011. Net charge-offs were $5.8 million and $17.8 million for the fourth quarter and year of 2012, respectively, as compared to $3.9 million and $16.3 million for the same time periods in 2011. Annualized net charge-offs as a percentage of average loans were 0.36% and 0.28% for the fourth quarter and year of 2012, respectively. United's most recently reported Federal Reserve peer group's net charge-offs to average loans percentage was 0.64% for the third quarter of 2012.

Noninterest income for the fourth quarter of 2012 was $16.7 million, which was an increase of $4.9 million from the fourth quarter of 2011. Included in noninterest income for the fourth quarter of 2012 were noncash, before-tax, other-than-temporary impairment charges of $2.0 million on certain investment securities as compared to noncash, before-tax other-than-temporary impairment charges of $6.3 million on certain investment securities for the fourth quarter of 2011. 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 fourth quarter of 2012 would have increased $275 thousand or 2% from the fourth quarter of 2011. This increase for the fourth quarter of 2012 was due primarily to increases of $362 thousand in income from trust and brokerage services due to increases in volume and the value of assets under management and $469 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 $524 thousand in fees from deposit services.

Noninterest income for the year of 2012 was $66.3 million, which was an increase of $15.5 million from the year of 2011. Included in noninterest income for the year of 2012 were noncash, before-tax, other-than-temporary impairment charges of $7.4 million on certain investment securities as compared to noncash, before-tax, other-than-temporary impairment charges of $20.4 million on certain investment securities for the year of 2011. 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 year of 2012 would have increased $3.6 million or 5% from the year of 2011. This increase for the year of 2012 was due primarily to increases of $2.5 million in income from trust and brokerage services due to increases in volume and the value of assets under management and $1.5 million in mortgage banking income due to increased production and sales of mortgage loans in the secondary market.

On a linked-quarter basis, noninterest income for the fourth quarter of 2012 was flat from the third quarter of 2012, increasing $111 thousand or less than 1%. Included in the results for the fourth quarter of 2012 and third quarter of 2012 were noncash, before-tax, other-than-temporary impairment charges of $2.0 million and $2.3 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 would have decreased $337 thousand or 2% on a linked-quarter basis due primarily to a decrease of $492 thousand in income from trust and brokerage services due to a decrease in volume.

Noninterest expense for the fourth quarter of 2012 was $49.3 million, a decrease of $756 thousand or 2% from the fourth quarter of 2011. Merger expenses of $744 thousand related to the acquisition of Centra was included in the results for the fourth quarter of 2011. In addition, equipment expense for the fourth quarter of 2012 declined $728 thousand due to lower amounts of maintenance and depreciation expense. Partially offsetting these amounts were increases of $516 thousand and $404 thousand in employee compensation and benefits expense, respectively.

Noninterest expense for the year of 2012 was $204.7 million, an increase of $20.6 million or 11% from the year of 2011 as employee compensation increased $6.8 million due to additional employees from the Centra merger and employee benefits increased $3.8 million due mainly to an increase in pension costs. In addition, the increase was partially due to the previously mentioned litigation settlement accrual. The remainder of the increase in noninterest expense from the year of 2011 was due mainly to the additional offices and equipment from the Centra merger.

On a linked-quarter basis, noninterest expense for the fourth quarter of 2012 decreased $4.6 million or 9% from the third quarter of 2012. This decrease was due primarily to the litigation settlement accrual in the third quarter. In addition, data processing fees declined $666 thousand as United completed its conversion to a new servicer.

During the fourth quarter of 2012, United's Board of Directors declared a cash dividend of $0.31 per share. The 2012 dividend of $1.24 per share represented the 39th consecutive year of dividend increases for United shareholders.

United has consolidated assets of approximately $8.4 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 December 31, 2012 consolidated financial statements on Form 10-K. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2012 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

Year Ended

December 31

2012

December 31

2011

December 31

2012

December 31

2011

EARNINGS SUMMARY:

Interest income, taxable equivalent (non-GAAP)

$ 81,300

$ 87,261

$ 330,310

$ 323,109

Interest expense

9,996

13,537

46,190

55,794

Net interest income, taxable equivalent (non-GAAP)

71,304

73,724

284,120

267,315

Taxable equivalent adjustment

1,632

1,732

6,413

6,587

Net interest income (GAAP)

69,672

71,992

277,707

260,728

Provision for loan losses

5,947

4,268

17,862

17,141

Noninterest income

16,745

11,874

66,292

50,837

Noninterest expenses

49,273

50,029

204,656

184,048

Income taxes

9,983

9,312

38,874

34,766

Net income

$ 21,214

$ 20,257

$ 82,607

$ 75,610

PER COMMON SHARE:

Net income:

Basic

$ 0.42

$ 0.40

$ 1.64

$ 1.62

Diluted

0.42

0.40

1.64

1.61

Cash dividends

$ 0.31

$ 0.31

1.24

1.21

Book value

19.74

19.29

Closing market price

$ 24.34

$ 28.27

Common shares outstanding:

Actual at period end, net of treasury shares

50,276,573

50,212,948

Weighted average- basic

50,276,137

50,207,410

50,265,620

46,803,432

Weighted average- diluted

50,294,593

50,235,812

50,298,019

46,837,363

FINANCIAL RATIOS:

Return on average assets

1.01%

0.94%

0.98%

0.97%

Return on average shareholders' equity

8.44%

8.17%

8.35%

8.50%

Average equity to average assets

11.97%

11.56%

11.78%

11.44%

Net interest margin

3.83%

3.88%

3.81%

3.87%

December 31

2012

December 31

2011

December 31

2010

September 30

2012

PERIOD END BALANCES:

Assets

$ 8,420,013

$ 8,451,470

$ 7,155,719

$ 8,381,378

Earning assets

7,459,217

7,492,400

6,334,914

7,426,785

Loans, net of unearned income

6,511,416

6,230,777

5,260,326

6,422,613

Loans held for sale

17,762

3,902

6,869

12,905

Investment securities

729,402

824,219

794,715

766,713

Total deposits

6,752,986

6,819,010

5,713,534

6,753,924

Shareholders' equity

992,251

968,844

793,012

988,429

UNITED BANKSHARES, INC. AND SUBSIDIARIES

Washington, D.C. and Charleston, WV

Stock Symbol: UBSI


(In Thousands Except for Per Share Data)

Consolidated Statements of Income

Three Months Ended

December

December

September

June

March

2012

2011

2012

2012

2012

Interest & Loan Fees Income (GAAP)

$

79,668

$

85,529

$

81,336

$

81,105

$

81,788

Tax equivalent adjustment

1,632

1,732

1,552

1,560

1,669

Interest & Fees Income (FTE) (non-GAAP)

81,300

87,261

82,888

82,665

83,457

Interest Expense

9,996

13,537

11,322

12,050

12,822

Net Interest Income (FTE) (non-GAAP)

71,304

73,724

71,566

70,615

70,635

Provision for Loan Losses

5,947

4,268

4,346

3,436

4,133

Non-Interest Income:

Fees from trust & brokerage services

3,678

3,316

4,170

4,013

3,984

Fees from deposit services

10,606

11,130

10,521

10,393

10,312

Bankcard fees and merchant discounts

745

643

866

738

647

Other charges, commissions, and fees

539

559

513

600

577

Income from bank owned life insurance

1,248

1,339

1,247

1,255

1,289

Mortgage banking income

851

382

819

483

318

Other non-interest revenue

818

841

686

648

658

Net other-than-temporary impairment losses

(2,002)

(6,286)

(2,255)

(1,742)

(1,377)

Net gains (losses) on sales/calls of investment

securities

262

(50)

67

199

(82)

Total Non-Interest Income

16,745

11,874

16,634

16,587

16,326

Non-Interest Expense:

Employee compensation

18,272

17,756

17,258

17,965

17,907

Employee benefits

4,892

4,488

5,271

5,823

5,192

Net occupancy

5,005

5,018

5,060

5,321

5,042

Data processing

3,009

3,019

3,675

2,639

3,209

Amortization of intangibles

669

832

697

724

762

OREO expense

1,908

1,879

2,160

2,160

2,328

FDIC expense

1,525

1,496

1,489

1,495

1,555

Other expenses

13,993

15,541

18,259

15,125

14,267

Total Non-Interest Expense

49,273

50,029

53,869

51,252

50,262

Income Before Income Taxes (FTE) (non-GAAP)

32,829

31,301

29,985

32,514

32,566

Tax equivalent adjustment

1,632

1,732

1,552

1,560

1,669

Income Before Income Taxes (GAAP)

31,197

29,569

28,433

30,954

30,897

Taxes

9,983

9,312

9,099

9,905

9,887

Net Income

$

21,214

$

20,257

$

19,334

$

21,049

$

21,010