FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended DECEMBER 31, 1994
Commission File Number: 0-13322
UNITED BANKSHARES, INC.
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(Exact name of registrant as specified in its charter)
WEST VIRGINIA 55-0641179
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (304) 424-8761
Securities registered pursuant to section 12(b) of the Act: NONE
Securities registered pursuant to 12(g) of the Act:
COMMON STOCK, $2.50 PAR VALUE
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(Title of Class)
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 report(s), and (2) has been subject to such
filing requirements for the past 90 days. YES [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of United Bankshares, Inc. common stock,
representing all of its voting stock, that was held by non-affiliates on January
31, 1995 was approximately $212,682,000.
As of January 31, 1995, United Bankshares, Inc. had 11,954,453 shares of
common stock outstanding with a par value of $2.50.
The registrant does not elect to incorporate by reference any documents
other than certain exhibits as part of the Form 10-K.
Page 1 of 132 pages. Index to Exhibits is on page 89 .
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UNITED BANKSHARES, INC.
FORM 10-K
(Continued)
As of the date of filing this Annual Report, neither the annual shareholders'
report for the year ended December 31, 1994, nor the proxy statement for the
annual United shareholders' meeting had been mailed to shareholders.
CROSS-REFERENCE INDEX
PART I Page
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Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . 10
PART II
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Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . 14
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1994 Compared to 1993 . . . . . . . . . . . . . . . . . . . . . . . . 17
Fourth Quarter Results . . . . . . . . . . . . . . . . . . . . . . . 21
The Effect of Inflation . . . . . . . . . . . . . . . . . . . . . . . 21
Interest Rate Sensitivity . . . . . . . . . . . . . . . . . . . . . . 22
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . 24
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1993 Compared to 1992 . . . . . . . . . . . . . . . . . . . . . . . . 26
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . 39
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
This item is omitted since it is not applicable.
2
UNITED BANKSHARES, INC.
FORM 10-K
(Continued)
CROSS-REFERENCE INDEX - CONTINUED
PART III Page
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Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . 71
Item 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . 77
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 71
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . 86
PART VI
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Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . 88
3
UNITED BANKSHARES, INC.
FORM 10-K, PART I
ITEM 1. BUSINESS
ITEM 2. PROPERTIES
The following discussion satisfies the reporting requirements of
Items 1 and 2.
4
DESCRIPTION OF UNITED BANKSHARES, INC.
Organizational History and Subsidiaries
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United Bankshares, Inc. ("United") is a West Virginia corporation
registered as a bank holding company pursuant to the Bank Holding Company Act of
1956, as amended. United was incorporated on March 26, 1982 and organized on
September 9, 1982. United began conducting business on May 1, 1984 with the
acquisition of three wholly-owned subsidiaries. On October 1, 1985, these three
subsidiaries were merged and on November 1, 1985, were renamed United National
Bank ("UNB").
Since that time UNB has acquired through merger or consolidation the
following banks: Heritage Bancorp, Inc. (a holding company); First National Bank
of Ripley; Kanawha Banking and Trust Company; Ohio Valley National Bank; Elk
National Bank; Montgomery National Bank, the sole subsidiary of Liberty
Bancshares Inc., a bank holding company; First Bank of Ceredo, the bank
subsidiary of Financial Future Corporation, a bank holding company; CB&T
Westover Bank and the Star City Branch of Community Bank & Trust, N. A.
On September 1, 1993, UBC Holding Company, ("UBC"), a United subsidiary,
was formed to effect the Financial Future Corporation transaction. UBC is a
second tier holding company with UNB currently being its only subsidiary.
United National Bank-North ("UNB-N"), now merged into UNB, was formed on
August 31, 1987, through the merger of Half Dollar Trust and Savings Bank, a
previously acquired subsidiary of United, and First National Bank of
Moundsville. Since that time the First National Bank of Weirton had also been
merged into UNB-N.
United National Bank-Central ("UNB-C"), now merged into UNB, was formed on
July 1, 1989, with the merger of Kanawha Union Bank, Webster County Bank and
Weston National Bank, all previously acquired subsidiaries of United.
On January 1, 1993, UNB-N and UNB-C were merged into and became a part of
UNB. Offices of UNB-N and UNB-C became branch offices of UNB.
On August 9, 1990, United acquired BankFirst Corporation ("BankFirst"), a
one bank holding company based in McLean, Virginia. BankFirst was merged with
UBF Holding Company, Inc. ("UBF"), a United subsidiary formed to effect this
acquisition. UBF acquired Bank First, N.A. ("Bank First"), the subsidiary of
BankFirst.
United National Bank-South ("UNB-S"), was formed on November 1, 1992, as a
part of United's acquisition of Summit Holding Corporation and their lead bank,
Raleigh County National Bank.
5
In late 1988, United chartered and capitalized United Venture Fund, Inc., a
West Virginia corporation which has qualified as a Capital Company under the
West Virginia Capital Company Act. This subsidiary makes loans and limited
equity investments, consistent with the Bank Holding Company Act, that will
result in or contribute to new jobs and/or industry in West Virginia.
Offices
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The headquarters of United are located in United Center at 500 Virginia
Street, East, Charleston, West Virginia.
The main office of UNB is located at 514 Market Street, Parkersburg, West
Virginia. United's corporate offices and UNB's executive offices are also
located in Parkersburg at Fifth and Avery Streets. UNB operates three branches
in the Parkersburg area, seven branches in the Charleston area, four branches in
the Morgantown West Virginia area, two branches in Vienna, West Virginia, three
branches in the Montgomery, West Virginia area, two branches in Ripley, West
Virginia, and five branches in the Huntington, West Virginia area. UNB owns all
of these facilities except for two in the Parkersburg area, and two in the
Charleston area which are leased under operating leases. UNB also owns and
operates six branches throughout West Virginia's northern panhandle. The main
facility of UNB's Wheeling area is leased from Ogden Newspapers, Inc. See Part
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III - Transactions with Management and Others. UNB also operates five branch
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facilities in central West Virginia. UNB owns all five of these offices.
Bank First conducts business from an office located at 1301 Beverly Road,
McLean, Virginia under a lease agreement.
The main office of UNB-S is located at 129 Main Street, Beckley, West
Virginia. UNB-S operates four branches in southern West Virginia. UNB-S owns all
of these facilities except for one in the Beckley area which is leased under an
operating lease.
Employees
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As of December 31, 1994 United and its subsidiaries had approximately 834
full-time equivalent employees and officers.
Business of United
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As a bank holding company registered under the Bank Holding Company Act of
1956, as amended, United's present business is the operation of its bank
subsidiaries. As of December 31, 1994, United's consolidated assets approximated
$1,787,641,000 and total shareholders' equity approximated $179,746,000.
6
United is permitted to acquire other banks and bank holding companies, as
well as thrift institutions. United is also permitted to engage in certain non-
banking activities which are closely related to banking under the provisions of
the Bank Holding Company Act and the Federal Reserve Board's Regulation Y.
Management continues to consider such opportunities as they arise and in this
regard, management from time to time makes inquiries, proposals, offers or
expressions of interest as to potential opportunities; although no agreements or
understandings to acquire other banks or bank holding companies or nonbanking
subsidiaries or to engage in other nonbanking activities, other than those
identified herein, presently exist. With regard to pending acquisitions, United
has executed a definitive merger agreement with First Commercial Bank,
Arlington, Virginia, dated as of March 7, 1995. For further discussion, see Note
Q, Notes to Consolidated Financial Statements.
Business of Subsidiary Banks
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All of United's subsidiary banks are full-service commercial banks and, as
such, engage in most types of business permitted by law and regulation. Included
among the banking services offered are the acceptance of deposits in checking,
savings, time and money market accounts; the making and servicing of personal,
commercial, floor plan and student loans; and the making of construction and
real estate loans. Also offered are individual retirement accounts, safe deposit
boxes, wire transfers and other standard banking products and services. As a
part of their lending function, UNB, UNB-S and Bank First offer credit card
services including accounts issued under the name of certain correspondent
banks.
UNB and UNB-S also maintain trust departments which act as trustees under
wills, trust and pension and profit sharing plans, as executors and
administrators of estates, and as guardians for estates of minors and
incompetents, and in addition perform a variety of investment and security
services. UNB trust services are available to customers of affiliate banks. UNB
provides services to its correspondent banks such as check clearing, safekeeping
and the buying and selling of federal funds.
UNB and UNB-S are members of a regional network of automated teller
machines known as the MAC ATM network while Bank First participates in the MOST
network. Through MAC and MOST, all of United's subsidiary banks are participants
in a network known as Cirrus which provides banking on a nationwide basis.
Competition
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United faces a high degree of competition in nearly all of the markets it
serves. These markets may generally be defined as Wood, Kanawha, Putnam,
Monongalia, Jackson, Cabell, Wayne, Hancock, Brooke, Ohio, Marshall, Gilmer,
Braxton, Lewis, Webster, Fayette and Raleigh Counties in West Virginia;
Lawrence, Belmont, Jefferson and Washington Counties in Ohio; and Fairfax County
in Virginia. United competes in
7
Ohio markets because of the close proximity to the Ohio border of certain
subsidiary offices. Included in United's markets are the Parkersburg
Metropolitan Statistical Area (MSA), the Charleston MSA, the Huntington MSA, the
Wheeling MSA and the Weirton MSA. These represent the five largest West
Virginia MSA's.
West Virginia banks are allowed unlimited branch banking throughout the
state. In addition, interstate acquisitions of and by West Virginia banks and
bank holding companies are permissible on a reciprocal basis. West Virginia also
allows reciprocal interstate acquisitions by thrift institutions. These
conditions serve to intensify competition within United's market.
As of December 31, 1994, there were 16 multi-bank holding companies and 33
one-bank holding companies in the State of West Virginia registered with the
Federal Reserve System. United presently ranks fourth among these bank holding
companies and second among holding companies headquartered in West Virginia
based on both asset and deposit size. These holding companies are headquartered
in various West Virginia cities and control banks throughout the state,
including banks which compete for business as well as for the acquisition of
additional banks.
Regulation and Supervision
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United, as a bank holding company, is subject to the restrictions of the
Bank Holding Company Act of 1956, as amended, and is registered pursuant to its
provisions. As such, United is subject to the reporting requirements of and
examination by the Board of Governors of the Federal Reserve System ("Board of
Governors").
The Bank Holding Company Act prohibits the acquisition by a bank holding
company of direct or indirect ownership of more than five percent of the voting
shares of any bank within the United States without prior approval of the Board
of Governors. With certain exceptions, a bank holding company also is prohibited
from acquiring direct or indirect ownership or control of more than five percent
of the voting shares of any company which is not a bank, and from engaging
directly or indirectly in business unrelated to the business of banking, or
managing or controlling banks.
The Board of Governors of the Federal Reserve System, in its Regulation Y,
permits bank holding companies to engage in non-banking activities closely
related to banking or managing or controlling banks. Approval of the Board of
Governors is necessary to engage in these activities or to make acquisitions of
corporations engaging in these activities. In addition, on a case by case basis,
the Board of Governors may approve other non-banking activities.
8
As a bank holding company doing business in West Virginia, United is also
subject to regulation and examination by the West Virginia Board of Banking and
Financial Institutions (the "West Virginia Banking Board") and must submit
annual reports to the department. Further, any acquisition application which
United must submit to the Board of Governors must also be submitted to the West
Virginia Banking Board for approval.
United is also registered under and is subject to the requirements of the
Securities Exchange Act of 1934, as amended.
UNB, UNB-S and Bank First, as national banking associations, are subject to
supervision, examination and regulation by the Office of the Comptroller of the
Currency. They are also members of the Federal Reserve System, and as such, are
subject to applicable provisions of the Federal Reserve Act and regulations
issued thereunder.
The deposits of United's three wholly-owned national banking subsidiaries
are insured by the Federal Deposit Insurance Corporation ("FDIC") to the extent
provided by law. Accordingly, these banks are also subject to regulation by the
FDIC.
9
UNITED BANKSHARES, INC.
FORM 10-K, PART I
ITEM 3. LEGAL PROCEEDINGS
Litigation
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The reader is directed to Note P - Notes to Consolidated Financial
Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
10
UNITED BANKSHARES, INC.
FORM 10-K, PART I
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
11
Dividends
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The shareholders of United are entitled to receive dividends when and as
declared by its Board of Directors. Dividends are paid quarterly. Aggregate
dividends were $1.06 per share in 1994, $.95 per share in 1993 and $.85 per
share in 1992. Dividends are paid out of funds legally available; therefore, the
payment of dividends is subject to the restrictions set forth in the West
Virginia Corporation Act.
Payment of Dividends by United is dependent upon payment of dividends to it
by its subsidiary banks. The ability of national banks to pay dividends is
subject to certain limitations imposed by the national banking laws. The Office
of the Comptroller of the Currency ("OCC") may prohibit dividends if it deems
the payment to be an unsafe or unsound banking practice. The OCC has issued
guidelines for dividend payments by national banks, emphasizing that proper
dividend size depends on the bank's earnings and capital. See Note C - Notes to
Consolidated Financial Statements.
Stock
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As of December 31, 1994, 20,000,000 shares of common stock, par value $2.50
per share, were authorized for United, of which 11,954,453 were issued and
outstanding including 137,520 shares held as treasury shares. These shares are
held by approximately 5,087 shareholders of record as of December 31, 1994. The
unissued portion of United's authorized common stock (subject to registration
approval by the SEC) and the treasury shares are available for issuance as the
Board of Directors determines advisable. United offers its shareholders the
opportunity to invest dividends in shares of United stock through its dividend
reinvestment plan. United has also established stock option plans and a stock
bonus plan as incentive for certain eligible officers. See PART III - Succession
------------
Management Stock Bonus Plan and Incentive Stock Option Plans. United offers an
employee stock purchase plan for all employees. See PART III - Employee Benefit
--------
Plans. While there are no present plans, understandings, arrangements or
agreements, except for the above incentive plans, to issue any additional shares
of United stock, additional shares could be issued for the purpose of raising
capital, in connection with acquisitions of other businesses, or for other
appropriate purposes.
The Board of Directors believes that the availability of authorized but
unissued common stock of United is of considerable value if opportunities should
arise for the acquisition of another business through the issuance of United's
stock. Shareholders do not have preemptive rights, which allows United to issue
additional authorized shares without first offering them to current
shareholders.
United has only one class of stock and all voting rights are vested in the
holders of United's stock. On all matters subject to a vote of shareholders, the
shareholders of United will be entitled to one vote for each share of common
stock owned. Shareholders of United have cumulative voting rights with regard to
election of directors. At the present time, no senior securities of United are
outstanding, nor does the Board of Directors presently contemplate issuing
senior securities.
12
There are no preemptive or conversion rights or, redemption or sinking fund
provisions with respect to United's Stock. All of the issued and outstanding
shares of United's stock are fully paid and non-assessable.
As a bank holding company, United is permitted by Regulation Y of the
Federal Reserve Board, under certain circumstances, to purchase up to 10% of its
common stock as treasury stock without obtaining prior approval of the Federal
Reserve Board. In March 1994, United approved a plan to repurchase up to $10
million of its common stock on the open market. The timing, price, and quantity
of any such purchases may be made at the discretion of the Company and the
program may be discontinued or suspended at any time. Through January 31, 1995,
378,900 shares have been repurchased at a cost of $7,030,086 and 238,880 shares
have been reissued for proceeds of $3,566,323 under this program. Total treasury
shares at January 31, 1995 amount to 140,020 at a cost of $3,403,979.
Market and Stock Prices of United
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United Bankshares, Inc. stock is traded over the counter on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ") under
the trading symbol UBSI.
The following table present the high and low prices of United's common
stock during the periods set forth below:
United Historical
Basis
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1995 High Low
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First Quarter through February 28, 1995 $24.50 $23.50
1994
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Fourth Quarter $24.75 $23.00
Third Quarter $25.75 $24.00
Second Quarter $26.75 $25.00
First Quarter $27.25 $25.50
1993
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Fourth Quarter $28.50 $25.25
Third Quarter $25.75 $21.50
Second Quarter $22.75 $19.75
First Quarter $23.50 $19.25
The prices listed above are based upon information available to United's
management from NASDAQ listings. No attempt has been made by United's management
to ascertain the prices for every sale of its stock during the periods
indicated. However, based on the information available, United's management
believes that the prices accurately represent the amounts at which United's
stock was traded during the periods indicated.
13
UNITED BANKSHARES, INC.
FORM 10-K, PART I
ITEM 6. SELECTED FINANCIAL DATA
14
UNITED BANKSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In Thousands Except for Per Share Data)
Five Year Summary
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1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Total interest income $121,157 $116,505 $113,502 $126,863 $135,712
Total interest expense 43,887 45,009 49,897 64,851 75,926
Net interest income 77,270 71,496 63,605 62,012 59,786
Provision for possible
loan losses 1,818 4,332 4,242 7,635 7,441
Other income 11,222 12,673 11,123 10,051 9,532
Other expenses 48,676 49,690 46,991 45,102 44,999
Income taxes 13,096 9,770 7,136 5,555 4,643
Income before cumulative
effect of accounting change 24,902 20,377 16,359 13,771 12,235
Net income 24,902 21,706 16,359 13,771 12,235
Cash dividends (1) 12,604 10,918 7,914 7,077 6,244
Per common share:
Income before cumulative
effect of accounting change 2.08 1.71 1.52 1.31 1.18
Net income 2.08 1.82 1.52 1.31 1.18
Cash dividends (1) 1.06 0.95 0.85 0.81 0.75
Book value per share 15.21 14.34 13.44 12.66 12.03
Return on average
shareholders' equity 13.98% 13.00% 11.60% 10.73% 9.96%
Return on average assets 1.42% 1.27% 1.09% 0.97% 0.85%
Average assets 1,753,324 1,706,639 1,496,148 1,417,506 1,434,057
Investment securities 360,883 430,427 390,017 311,298 334,253
Net loans 1,297,077 1,161,772 1,097,785 940,413 937,491
Total assets 1,787,641 1,720,184 1,688,903 1,425,006 1,443,024
Total deposits 1,434,852 1,430,529 1,411,892 1,212,619 1,220,482
Long-term borrowings 83,972 32,203 28,067 2,025 2,295
Total borrowings
and other liabilities 173,043 118,683 116,791 80,006 96,411
Shareholders' equity 179,746 170,972 160,220 132,381 126,131
(1) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation.
NOTE: As more fully discussed in Note B to the consolidated financial
statements, United acquired CB&T Westover Bank and the Star City Branch of
Community Bank & Trust, N. A. in September of 1993. Because this was a
purchase business combination, the financial information above includes
Westover and Star City only from the date of acquistion forward.
15
UNITED BANKSHARES, INC.
FORM 10-K, PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
16
UNITED BANKSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis presents 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 audited 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.
1994 COMPARED TO 1993
EARNINGS SUMMARY
For the year ended December 31, 1994, net income increased 14.7% to a record
$24,902,000. Net income per share of $2.08 for the year was up 14.3% from $1.82
in 1993. United's return on average assets of 1.42% makes United one of the
nation's most profitable regional banking companies. Dividends per share
increased 11.6% from $.95 in 1993 to a record level of $1.06 per share in 1994.
This was the twenty-first consecutive year of dividend increases to
shareholders. Core earnings, or earnings before taxes, security transactions,
cumulative effect of change in accounting principle and the provision for
possible loan losses, were strong and increased 19.7% for 1994 compared to 1993.
These strong core earnings are indicative of the 8.1% increase in net interest
income driven by an increase in average net earning assets with significant
growth of 8.6% in average net loans.
Factors contributing to the 1994 earnings increase include an improved net
interest margin, partially resulting from a $39,338,000 increase in average
earning assets from 1993, a lower loan loss provision due to improved credit
quality and increased earnings from 1993 acquisitions. The favorable impact of
the above items was partly offset by increased occupancy expenses, decreased fee
income from customer accounts for which a fee is charged and losses from the
sale of securities. United is in the process of realigning its interest rate
sensitivity for 1995 to a more interest-rate-neutral position. This investment
strategy may reduce current earnings, but will enhance United's future earnings
momentum.
Key performance measures improved significantly from 1993 and remained very
strong in comparison to industry standards. United's return on average assets of
1.42% makes United one of the nation's most profitable regional banking
companies. United has a strong capital position and is well positioned to take
advantage of future growth opportunities.
The following discussion explains in more detail the results of operations and
changes in financial condition by major category.
17
NET INTEREST INCOME
Net interest income represents the primary component of United's earnings. It is
the difference between interest and fee income related to earning assets and
interest expense incurred to fund these earning assets. Net interest income is
impacted by changes in the volume and mix of interest-earning assets and
interest-bearing liabilities, as well as changes in market interest rates. Such
changes, and their impact on net interest income in 1994, are explained below.
For the years ended December 31, 1994 and 1993, net interest income approximated
$77,270,000 and $71,496,000, respectively. On a tax-equivalent basis the net
interest margin was strong at 4.97% in 1994 and 4.75% in 1993. Higher average
loan volumes of $98 million contributed to the increase in net interest income.
United also experienced modest decreases in its overall cost of funds. At 4.97%,
United's net interest margin remains well above peer group averages.
Total interest income of $121,157,000 increased 4.0% in 1994 over 1993 as a
result of higher volumes of interest-earning assets. Comparing year-end 1994 to
year-end 1993, a moderate decrease in commercial loans of 4.6% and a slight
increase in consumer loans of 1.8%, which resulted from lower commercial and
consumer demand, were offset by significant mortgage loan growth of 16.4%.
Total interest expense decreased 2.5% in 1994. This decrease can be attributed
primarily to lower rates paid on interest-bearing funds. United's average
interest-bearing deposits increased only slightly or 0.5% in 1994, while its
average long-term borrowings increased 25.1% as United made greater use of these
funds in order to meet the demand for mortgage loan products with matching
maturities. The average cost of funds reflected the general downward trend in
market interest rates in 1994, falling from 3.44% in 1993 to 3.30% in 1994.
PROVISION FOR POSSIBLE LOAN LOSSES
United evaluates the adequacy of the allowance for loan losses on a quarterly
basis and its loan administration policies are focused upon the risk
characteristics of the loan portfolio. See Note F to the Consolidated Financial
Statements for a discussion of concentrations of credit risk.
Nonperforming loans were $6,036,000 at December 31, 1994 and $13,517,000 at
December 31, 1993, a decrease of 55.4%. The level of nonperforming assets
declined as a result of the recovering of the regional economy and management's
continual monitoring of problem loans. The components of nonperforming loans
include nonaccrual loans, loans which are contractually past due 90 days or more
as to interest or principal, but have not been put on a nonaccrual basis and
troubled debt restructurings. Loans past due 90 days or more decreased $173,000
or 7.0% during 1994; while troubled debt restructurings decreased $2,453,000 or
100.0% and nonaccrual loans decreased $4,855,000 or 56.5% since year-end 1993.
Nonperforming loans continue to decline and represented less than 0.34% of total
assets at the end of 1994, which is less one-half of the national peer levels.
18
At year-end 1994 and 1993 the allowance for possible loan losses was 1.54% and
1.61% of total loans, net of unearned income, respectively. As of December 31,
1994, the ratio of the allowance for loan losses to nonperforming loans was
331.5% as compared to 140.7% as of December 31, 1993.
Management believes that the allowance for loan losses of $20,008,000 as of
December 31, 1994, is adequate to provide for potential losses on existing loans
based on information currently available.
For the years ended December 31, 1994 and 1993 the provision for loan losses was
$1,818,000 and $4,332,000, respectively. The decrease can be attributed to the
general improvement in all areas of asset quality and the increased coverage
ratio of the allowance for loan losses to nonperforming loans. 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 include growth and composition of
the loan portfolio, known deterioration in certain classes of loans or
collateral, trends in delinquencies, and current economic conditions.
Total net charge-offs were $825,000 in 1994 and $1,773,000 in 1993, which
represents .07% and .16% of average loans for the respective years. United's
ratio of net charge-offs to average loans compares very favorably with its
peers.
Management is not aware of any potential problem loans, trends or uncertainties
which management reasonably expects will materially impact future operating
results, liquidity, or capital resources which have not been disclosed.
Additionally, management has disclosed all known material credits which cause
management to have serious doubts as to the ability of such borrowers to comply
with the loan repayments. Management is not aware of any current recommendations
by regulatory authorities which, if implemented, would have a material effect on
liquidity, capital resources or operations.
The Financial Accounting Standards Board has issued SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," and SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures." The requirements
of SFAS No.'s 114 and 118 are effective for fiscal years beginning after
December 15, 1994. SFAS No. 114 requires that impaired loans be measured based
on the present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's observable
market price or fair value of the collateral if the loan is collateral
dependent. SFAS No. 118 clarified creditor reporting of income on an impaired
loan and disclosure requirements. The adoption of SFAS No. 114, which will occur
in the first quarter of 1995, is not expected to have a material effect on
United's allowance for loan losses.
19
OTHER INCOME
Noninterest income has been and will continue to be an important factor for
improving United's profitability. Recognizing this importance, management
continues to evaluate areas where noninterest income can be enhanced. Other
income consists of all revenues which are not included in interest and fee
income related to earning assets. In 1994, other income, excluding securities
transactions, was flat when compared to 1993. The overall decrease in
noninterest income of $1,451,000 or 11.4% is primarily attributed to the net
losses on securities transactions.
Trust income increased $229,000 or 8.7% in 1994. This was due to repricing of
services and an increased volume of trust business.
Service charges, commissions and fees decreased by $194,000 or 2.2% in 1994.
This income consists of charges and fees related to various banking services
provided by United. The decrease was primarily due to a combination of decreased
activity in customer accounts and a decline in net account analysis fees.
Securities transactions resulted in a net loss of $872,000 in 1994 and a net
gain of $479,000 in 1993. As evidenced by the Statement of Cash Flows, the
volume of securities sold increased significantly in 1994. The primary reason
for this increased sales activity was to restructure a portion of the investment
portfolio to reflect current market rates in response to the rising interest
rate environment in order to enhance United's future earnings momentum.
On January 1, 1994, United adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities,"
(SFAS No. 115) which was effective for fiscal years beginning after December 15,
1993. The $872,000 of net securities losses for 1994 relates primarily to debt
securities losses of approximately $1,024,000 which were reclassified to
available for sale at January 1, 1994. For further details, see Note D to the
Consolidated Financial Statements.
OTHER EXPENSE
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. United's cost control efforts have been very successful with an
efficiency ratio of 53.2%, which is well below that reported by peer group
averages.
Other expense includes all items of expense other than interest expense, the
provision for possible loan losses, and income taxes. In total, other expenses
were flat in 1994, and management was successful in controlling costs. The
income statement reflects a 2.0% decrease in 1994 as compared to 1993.
Salaries and employee benefits expense decreased $176,000 or 1.0% in 1994. As of
December 31, 1994 and 1993, United employed 834 and 889 full-time equivalent
employees, respectively.
20
Net occupancy expense in 1994 exceeded 1993 levels by $390,000 or 8.7% primarily
due to decreased rental income from vacancies and an increase in real property
taxes.
Other expense decreased $1,228,000 or 5.4% in 1994 compared to 1993. The
decrease in other expenses for the year relates primarily to nonrecurring
expenses during 1993 which included certain merger expenses for the two
acquisitions consummated by United during 1993, a lower provision for other real
estate owned and the realization of further economies from recent mergers.
INCOME TAXES
For the year ended December 31, 1994, income taxes approximated $13,096,000
compared to $9,770,000 for 1993. This increase is principally the result of
lower levels of tax-exempt income and higher levels of pretax income, combined
with higher statutory federal tax rates in 1994. United's effective tax rates in
these two years were 34.5% and 32.4%, respectively.
At December 31, 1994, gross deferred tax assets totaled approximately $11.5
million. The allowance for loan losses and various accrued liabilities represent
the most significant temporary differences. Based on management's evaluation at
December 31, 1994, no valuation allowance has been allocated to deferred tax
assets.
FOURTH QUARTER RESULTS
Net income for the fourth quarter of 1994 was $6,156,000, an increase of 20.0%
from the $5,130,000 earned in the fourth quarter of 1993. On a per share basis,
fourth quarter earnings were $.51 per share in 1994 and $.43 per share in 1993.
Net income was higher in 1994 than in 1993 because of the factors previously
discussed herein relative to annual results.
Additional quarterly financial data for 1994 and 1993 may be found in Note S to
the Consolidated Financial Statements.
THE EFFECT OF INFLATION
United's income statements generally reflect the effects of inflation. Since
interest rates, loan demand, and deposit levels are related to inflation, the
resulting changes in the interest sensitive assets and liabilities are included
in net interest income. Similarly, operating expenses such as salaries, rents,
and maintenance include changing prices resulting from inflation. One item which
would not reflect inflationary changes is depreciation expense. Subsequent to
the acquisition of depreciable assets, inflation causes price levels to rise;
therefore, historically presented dollar values do not reflect this inflationary
condition. With inflation levels at relatively low levels and monetary and
fiscal policies being implemented to keep the inflation rate increases within an
acceptable range, management expects the impact of inflation would be minimal in
the near future.
21
INTEREST RATE SENSITIVITY
Interest sensitive assets and liabilities are defined as those assets or
liabilities that mature or are repriced within a designated time-frame. 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".
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 on page 23 of this report, 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 $124,816,000 or 7.53% 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 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.
Additionally, United has begun using 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. The interest rate swap transaction
involves the exchange of a floating rate payment based on the one month London
interbank offered rate (LIBOR) for a fixed rate receipt based on the U. S.
three year treasury note. The net pay and receive amount is calculated
22
The following table shows the interest rate sensitivity GAP as of December
31, 1994:
Interest Rate Sensitivity Gap
Days
--------------------------------- Total 1 - 5 Over 5
0 - 90 91 - 180 181 - 365 One Year Years Years Total
-------- --------- ---------- --------- -------- -------- ----------
ASSETS (In Thousands)
Interest-Earning Assets:
- -----------------------
Investment and Marketable
Equity Securities:
Taxable $25,472 $10,673 $45,222 $81,367 $162,115 $64,782 $308,264
Tax-exempt 1,440 2,953 5,883 10,276 21,379 20,964 52,619
Loans, net of unearned
income 527,711 81,089 129,862 738,662 409,341 149,074 1,297,077
--------- --------- --------- ---------- -------- -------- ----------
Total Interest-Earning Assets $554,623 $94,715 $180,967 $830,305 $592,835 $234,820 $1,657,960
========= ========= ========= ========== ======== ======== ==========
LIABILITIES
Interest-Bearing Funds:
- ----------------------
Savings and NOW accounts $658,187 $658,187 $658,187
Time deposits of $100,000
& over 22,654 $13,875 $11,504 48,033 $27,565 75,598
Other time deposits 114,102 91,208 81,641 286,951 169,525 456,476
Federal funds purchased,
repurchase agreements
and other short-term
borrowings 71,809 71,809 71,809
FHLB advances 73,972 10,000 83,972 83,972
--------- --------- --------- ---------- -------- -------- ----------
Total Interest-Bearing
Funds $940,724 $115,083 $93,145 $1,148,952 $197,090 $1,346,042
========= ========= ========= ========== ======== ======== ==========
Interest Sensitivity Gap ($386,101) ($20,368) $87,822 ($318,647) $395,745 $234,820 $311,918
========= ========= ========= ========== ======== ======== ==========
Cumulative Gap ($386,101) ($406,469) ($318,647) ($318,647) $77,098 $311,918 $311,918
========= ========= ========= ========== ======== ======== ==========
Cumulative Gap as a Percentage
of Total Earning Assets -23.29% -24.52% -19.22% -19.22% 4.65% 18.81% 18.81%
Management Adjustments 616,828 (41,121) (82,244) 493,463 (493,463) 0
Off-Balance Sheet Activities (50,000) (50,000) (50,000)
--------- --------- --------- ---------- -------- -------- ----------
Cumulative Management
Adjusted Gap and Off-Balance
Sheet Activities $180,727 $119,238 $124,816 $124,816 $27,098 $261,918 $261,918
========= ========= ========= ========== ======== ======== ==========
Cumulative Management
Adjusted Gap and Off-Balance
Sheet Activities as a Percentage
of Total Earning Assets 10.90% 7.19% 7.53% 7.53% 1.63% 15.80% 15.80%
23
on an underlying notional amount without the exchange of the underlying
principal amount. The interest rate swap subjects United to market risk
associated with changes in interest rates, as well as the risk that the
counterparty will fail to perform. Only the interest payments are exchanged, and
therefore, cash requirements and exposure to credit risk are significantly less
than the notional amount.
At December 31, 1994, the total notional amount of interest rate swaps in effect
was only $50 million. The current maturity of the swap portfolio is two years
and one month. During 1994, interest rate swaps reduced net interest income by
$1,000. United did not have interest rate swaps during 1993. For further
details, see Note M to the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
In the opinion of management, United maintains 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
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 generally 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 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
certificates of deposit.
24
Cash flows from operations in 1994 of $34,458,000 were 12.4% higher than the
$30,657,000 in 1993 as a result of a $3.2 million increase in net income. In
1994, investing activities resulted in a use of cash of $52,200,000 as compared
to 1993 in which investing activities resulted in a use of cash of $50,647,000.
The primary reason for the slight increase in the use of cash for investing
activities is that the $88.3 million increase in net loan originations was
almost entirely offset by a net $85.2 million in excess of proceeds from sales,
maturities and calls of securities over security purchases. Financing activities
resulted in a source of cash in 1994 of $39,655,000 primarily due to a
$47,633,000 increase in net borrowings from the FHLB of Pittsburgh and an
increase in deposits of $4,372,000. See the Consolidated Statement of Cash Flows
in the Consolidated Financial Statements.
United anticipates no problems in its ability to service 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 to it. See Note J, Notes to Consolidated Financial Statements.
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 should help to protect net interest income against
fluctuations in interest rates.
United also 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 10.16% in 1994 and 9.78% in 1993. United's risk-based
capital ratio was 15.52% in 1994 and 15.28% in 1993 which are both significantly
higher than the minimum regulatory requirements. United's Tier 1 capital and
leverage ratios of 14.27% and 9.55%, respectively, at December 31, 1994, are
also strong relative to its peers and are well above regulatory minimums.
COMMITMENTS
The following table indicates the outstanding loan commitments of United in the
categories stated:
December 31
1994
-------------
Lines of credit authorized,
but unused $244,975,000
Letters of Credit 15,022,000
------------
$259,997,000
============
Past experience has shown that, of the foregoing commitments, approximately 12-
15% would reasonably be expected to be funded within a one year period. For more
information, see Note M to the Consolidated Financial Statements.
25
1993 COMPARED TO 1992
EARNINGS SUMMARY
For the year ended December 31, 1993, net income increased 32.7% to $21,706,000.
Net income per share of $1.82 for the year was up 19.7% from 1992 levels.
United's return on average assets was 1.27%. Dividends declared per share
increased 11.8% from $.85 in 1992 to $.95 per share in 1993. Earnings before
taxes, security transactions, the cumulative effect of a change in accounting
principle and the provision for possible loan losses were strong and increased
24.4% for 1993 compared to 1992. This reflected a 12.4% improvement in net
interest income driven by a significant increase in average net earning assets.
Noninterest expenses were flat in 1993 as compared to 1992 as management was
effective in its ability to control expenses. Income taxes increased by 36.9%
from 1992, principally because of increased pretax income, decreases in income
from investment securities exempt from federal taxes and higher statutory
federal income tax rates. During 1993 the market price for United stock
increased from $20.00 to $26.50 or 31%.
Earnings for 1993 included certain nonrecurring income and expense items. The
nonrecurring income item, which is reported as a cumulative effect of change in
accounting principle of $1,329,000, is the result of United's adoption of SFAS
No. 109, "Accounting for Income Taxes," during the first quarter of 1993. For
further details, see Note K to the Consolidated Financial Statements. The
nonrecurring expense items were primarily the result of management's
conservative review of certain credits which resulted in additional provisions
being made to the reserve for other real estate owned and the allowance for loan
losses. Additional nonrecurring expenses resulted from the mergers consummated
by United.
The following discussion explains in more detail the results of operations and
changes in financial condition by major category.
NET INTEREST INCOME
For the years ended December 31, 1993 and 1992, net interest income approximated
$71,496,000 and $63,605,000, respectively. On a tax-equivalent basis the net
interest margin was strong at 4.75% in 1993 and 4.83% in 1992. Higher average
loan volumes of $143 million contributed to the increase in net interest income.
United also experienced significant decreases in its overall cost of funds. At
4.75%, United's net interest margin remained well above peer group averages.
Total interest income of $116,505,000 increased 2.6% in 1993 over 1992 as a
result of higher volumes of interest-earning assets. Comparing year-end 1993 to
year-end 1992, moderate decreases in commercial and consumer loans of 6.5% and
5.7%, respectively, which resulted from lower commercial and consumer demand,
were offset by significant mortgage loan growth of 15.3%.
26
Total interest expense decreased 9.8% in 1993. This decrease can be attributed
primarily to lower rates paid on interest-bearing funds. United's average
interest-bearing deposits increased 12.46% in 1993, while its average long-term
borrowings increased 160.88% as United made greater use of these funds in order
to meet the demand for mortgage loan products while matching maturities. The
average cost of funds reflected the general downward trend in market interest
rates in 1993, falling from 4.27% in 1992 to 3.44% in 1993.
PROVISION FOR POSSIBLE LOAN LOSSES
United evaluated the adequacy of the allowance for loan losses on a quarterly
basis and its loan administration policies are focused upon the risk
characteristics of the loan portfolio.
Nonperforming loans were $13,517,000 at December 31, 1993 and $15,955,000 at
December 31, 1992, a decrease of 15.3%. The components of nonperforming loans
include nonaccrual loans, loans which are contractually past due 90 days or more
as to interest or principal, but have not been put on a nonaccrual basis and
troubled debt restructurings.
At year-end 1993 and 1992 the allowance for possible loan losses was 1.61% and
1.43% of total loans, net of unearned income, respectively. As of December 31,
1993, the ratio of the allowance for loan losses to nonperforming loans was
140.7% as compared to 100.0% as of December 31, 1992.
For the years ended December 31, 1993 and 1992 the provision for loan losses was
$4,332,000 and $4,242,000, respectively. The provision for loan losses charged
to operations was based on management's evaluation of individual credits, the
past loan loss experience, and other factors which, in management's judgment,
deserved recognition in estimating possible loan losses. Such other factors
considered by management included growth and composition of the loan portfolio,
known deterioration in certain classes of loans or collateral, trends in
delinquencies, and current economic conditions.
Total net charge-offs were $1,773,000 in 1993 and $5,144,000 in 1992, which
represents .16% and .52% of average loans for the respective years. United's
ratio of net charge-offs to average loans compared very favorably with its
peers.
OTHER INCOME
Other income consists of all revenues which are not included in interest and fee
income related to earning assets. In 1993, other income increased by $1,550,000
or 13.94%. The overall increase in noninterest income is primarily attributed to
the October 20, 1992, acquisition of UNB-South and increased activity in
customer accounts for which a fee is charged.
Trust income increased $124,000 or 4.93% in 1993. This was due to repricing of
services and an increased volume of trust business.
27
Service charges, commissions and fees increased by $1,430,000 or 19.32% in 1993.
This income consisted of charges and fees related to various banking services
provided by United and was primarily due to a restructuring of fees and the
acquisition of UNB-South.
Securities transactions resulted in a net gain of $479,000 in 1993 and a net
gain of $403,000 in 1992. As evidenced by the Statement of Cash Flows in the
Consolidated Financial Statements, the volume of securities sold increased
significantly in 1993. The primary reason for this increased sales activity was
a one-time restructuring of the portfolio of an acquired subsidiary. Included in
the 1993 gains are debt securities gains of approximately $332,000 which were
realized primarily on sales of mortgage-backed security obligations which were
experiencing accelerated prepayments.
OTHER EXPENSE
Other expense included all items of expense other than interest expense, the
provision for possible loan losses, and income taxes. In total, other expenses
were flat in 1993, and management was successful in controlling costs. The
income statement reflected a 5.7% increase in 1993 as compared to 1992. The
increase was due to certain nonrecurring costs and certain other costs in
connection with the mergers of FFC, Westover and Star City into United during
1993. The October 20, 1992 acquisition of UNB-South also increased reported
expenses for 1993.
Salaries and employee benefits expense increased 6.26% in 1993 due to the
acquisitions of UNB-South, Westover and Star City. As of December 31, 1993 and
1992, United employed 889 and 879 full-time equivalent employees, respectively.
Other expense increased 5.63% in 1993 compared to 1992. This increase was mainly
due to the acquisition of UNB-South, nonrecurring merger expenses and provisions
for estimated losses on other real estate owned.
INCOME TAXES
For the year ended December 31, 1993, income taxes approximated $9,770,000
compared to $7,136,000 for 1992. This increase is principally the result of
lower levels of tax-exempt income and higher levels of pretax income, combined
with higher statutory federal tax rates in 1993. United's effective tax rates in
these two years were 32.4% and 30.4%, respectively.
Effective January 1, 1993, United prospectively adopted FASB Statement No. 109,
"Accounting for Income Taxes." Under Statement 109, the liability method is used
in accounting for income taxes. Under this method, deferred tax assets and
liabilities are determined based on the differences between the financial
reporting and the tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
28
Prior to the adoption of Statement 109, income tax expense was determined using
the deferred method. Deferred tax expense was based on items of income and
expense that were reported in different years in the financial statements and
tax returns and was measured at the tax rate in effect in the year the
differences originated.
As permitted by Statement 109, United has elected not to restate the financial
statements of any prior years. The effect of the change on pretax income for the
year ended December 31, 1993 was not material; however, the cumulative effect of
the change increased net income by $1,329,000 or $0.11 per share.
At December 31, 1993, gross deferred tax assets totaled approximately $10.4
million. The allowance for loan losses and various accrued liabilities
represented the most significant temporary differences. Based on management's
evaluation at December 31, 1993, no valuation allowance had been allocated to
deferred tax assets.
29
UNITED BANKSHARES, INC. AND SUBSIDIARIES
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL:
The following table shows the daily average balance of major categories of
assets and liabilities for each of the three years ended December 31, 1994, 1993
and 1992 with the interest and rate earned or paid on such amount.
Year Ended Year Ended Year Ended
December 31 December 31 December 31
1994 1993 1992
--------------------------- ---------------------------- ----------------------------
(Dollars in Average Avg. Average Avg. Average Avg.
Thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
---------- --------- ----- ---------- --------- ----- ---------- --------- -----
ASSETS
Earning assets:
Federal funds sold and securities
purchased under agreements to
resell and other short-term
investments $6,125 $250 4.08% $29,747 $898 3.02% $50,051 $1,860 3.72%
Investment Securities:
Taxable 345,166 18,589 5.39% 371,583 20,531 5.53% 288,014 19,333 6.71%
Tax exempt (1) 52,709 5,429 10.30% 59,307 6,360 10.72% 69,056 7,508 10.87%
---------- --------- ----- ---------- --------- ----- ---------- --------- -----
Total Securities 397,875 24,018 6.04% 430,890 26,891 6.24% 357,070 26,841 7.52%
Loans, net of unearned
income (1) (2) 1,231,525 99,850 8.11% 1,134,001 92,168 8.13% 990,999 88,121 8.89%
Allowance for possible loan
losses (19,595) (18,046) (14,453)
---------- ---------- ----------
Net Loans 1,211,930 8.24% 1,115,955 8.26% 976,546 9.02%
---------- --------- ----- ---------- --------- ----- ---------- --------- -----
Total earning assets 1,615,930 124,118 7.68% 1,576,592 119,957 7.61% 1,383,667 116,822 8.44%
--------- --------- ---------
Other assets 137,394 130,047 112,481
---------- ---------- ----------
TOTAL ASSETS $1,753,324 $1,706,639 $1,496,148
========== ========== ==========
LIABILITIES
Interest-Bearing Funds:
Interest-bearing deposits $1,199,355 $38,614 3.22% $1,193,622 $40,837 3.42% $1,061,358 $46,106 4.34%
Federal funds purchased,
repurchase agreements
and other short-term
borrowings 78,699 2,571 3.27% 75,496 2,152 2.85% 92,878 2,824 3.04%
FHLB advances 50,702 2,702 5.33% 40,528 2,020 4.98% 15,535 967 6.22%
---------- --------- ----- ---------- --------- ----- ---------- --------- -----
Total Interest-Bearing Funds 1,328,756 43,887 3.30% 1,309,646 45,009 3.44% 1,169,771 49,897 4.27%
--------- --------- ---------
Demand deposits 229,936 213,544 178,923
Accrued expenses and other
liabilities 16,567 16,474 6,385
---------- ---------- ----------
TOTAL LIABILITIES 1,575,259 1,539,664 1,355,079
Shareholders' Equity 178,065 166,975 141,069
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,753,324 $1,706,639 $1,496,148
========== ========== ==========
NET INTEREST INCOME $80,231 $74,948 $66,925
========= ========= =========
INTEREST SPREAD 4.38% 4.17% 4.17%
NET INTEREST MARGIN 4.97% 4.75% 4.83%
(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% in 1994 and 1993 and 34% in 1992.
(2) Nonaccruing loans are included in the daily average loan amounts
outstanding.
30
UNITED BANKSHARES, INC. AND SUBSIDIARIES
RATE/VOLUME ANALYSIS
The following table sets forth a summary of the changes in interest earned and
interest paid detailing the amounts attributable to (i) changes in volume
(change in the average volume times the prior year's average rate), (ii) changes
in rate (change in the average rate times the prior year's average volume), and
(iii) changes in rate/volume (change in the average volume times the change in
average rate).
1994 Compared to 1993 1993 Compared to 1992
----------------------------- -------------------------------
Increase (Decrease) Due to Increase (Decrease) Due to
----------------------------- -------------------------------
Rate/ Rate/
Volume Rate Volume Total Volume Rate Volume Total
------ ---- ------ ----- ------ ---- ------ -----
(In thousands) (In thousands)
Interest income:
Federal funds sold, securities purchased
under agreements to resell and other
short-term investments ($713) $315 ($250) ($648) ($705) ($225) ($32) ($962)
Investment securities:
Taxable (1,461) (520) 39 (1,942) 5,649 (3,543) (908) 1,198
Tax exempt (1) (708) (249) 26 (931) (1,060) (104) 16 (1,148)
Loans (1),(2) 7,929 (227) (20) 7,682 12,713 (7,532) (1,134) 4,047
------ ------ ---- ------ ------ ------ ----- -----
TOTAL INTEREST INCOME 5,047 (681) (205) 4,161 16,597 (11,404) (2,058) 3,135
------ ------ ---- ------ ------ ------ ----- -----
Interest expense:
Interest-bearing deposits 196 (2,387) (32) (2,223) 5,740 (9,764) (1,245) (5,269)
Federal funds purchased, repurchase
agreements, and other short-term
borrowings 91 317 11 419 (535) (214) 195 (554)
FHLB advances 507 142 33 682 1,555 (193) (427) 935
------ ------ ---- ------ ------ ------ ----- -----
TOTAL INTEREST EXPENSE 794 (1,928) 12 (1,122) 6,760 (10,171) (1,477) (4,888)
------ ------ ---- ------ ------ ------ ----- -----
NET INTEREST INCOME $4,253 $1,247 ($217) $5,283 $9,837 ($1,233) ($581) $8,023
====== ====== ==== ====== ====== ====== ===== ======
(1) Yields and interest income on tax exempt loans and investment securities are
computed on a fully tax-equivalent basis using the statutory federal income
tax rate of 35% in 1994 and 1993 and 34% in 1992.
(2) Nonaccruing loans are included in the daily average loan amounts
outstanding.
31
UNITED BANKSHARES, INC. AND SUBSIDIARIES
LOAN PORTFOLIO
TYPES OF LOANS
The following is a summary of loans outstanding at December 31, (Construction
loans are not shown separately due to the insignificant amounts in all periods
presented):
1994 1993 1992 1991 1990
---------- ---------- ---------- -------- --------
(In thousands)
Commercial, financial
and agricultural $208,491 $218,559 $218,370 $203,864 $229,430
Real estate 859,738 738,809 656,518 526,490 497,194
Consumer 233,866 229,847 246,673 226,657 226,705
Less: Unearned interest (5,018) (6,428) (7,824) (2,528) (3,651)
---------- ---------- ---------- -------- --------
Total loans 1,297,077 1,180,787 1,113,737 954,483 949,678
Allowance for possible
loan losses (20,008) (19,015) (15,952) (14,070) (12,187)
---------- ---------- ---------- -------- --------
TOTAL LOANS, NET $1,277,069 $1,161,772 $1,097,785 $940,413 $937,491
========== ========== ========== ======== ========
At December 31, 1994, United had $527,434,000 in single family residential real
estate loans and $300,679,000 in commercial real estate loans included in the
above total loans.
The following is a summary of loans outstanding as a percent of total loans at
December 31:
1994 1993 1992 1991 1990
---------- ---------- ---------- -------- --------
Commercial, financial
and agricultural 16.01% 18.41% 19.47% 21.30% 24.07%
Real estate 66.03% 62.23% 58.54% 55.02% 52.15%
Consumer 17.96% 19.36% 21.99% 23.68% 23.78%
---------- ---------- ---------- -------- --------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%
========== ========== ========== ======== ========
REMAINING LOAN MATURITIES
The following table shows the maturity of commercial, financial, and
agricultural loans outstanding as of December 31, 1994:
Less Than One To Greater Than
One Year Five Years Five Years Total
---------- ---------- ------------ --------
Commercial, financial
and agricultural $27,291 $88,087 $93,113 $208,491
========== ========== ============ ========
32
UNITED BANKSHARES, INC. AND SUBSIDIARIES
At December 31, 1994, commercial, financial and agricultural loans maturing
within one to five years and in more than five years are interest sensitive as
follows:
One to Over
Five Years Five Years
---------- ----------
(In thousands)
Outstanding with fixed interest rates $23,149 $24,470
Outstanding with adjustable rates 64,938 68,643
---------- ----------
$88,087 $93,113
========== ==========
RISK ELEMENTS
Nonperforming Loans
Nonperforming loans include loans on which no interest is currently being
accrued, loans which are past due 90 days or more as to principal or interest
payments, and loans for which the terms have been modified due to a
deterioration in the financial position of the borrower. Management is not aware
of any other significant loans, groups of loans, or segments of the loan
portfolio not included below where there are serious doubts as to the ability of
the borrowers to comply with the present loan repayment terms. The following
table summarizes nonperforming loans for the indicated periods.
December 31
---------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- --------- --------
(In thousands)
Nonaccrual loans $3,733 $8,588 $12,446 $11,719 $15,200
Troubled debt restructurings 2,453 1,355 1,928 2,063
Loans which are contractually past due 90
days or more as to interest or principal,
and are still accruing interest 2,303 2,476 2,154 3,525 5,578
---------- ---------- ---------- --------- --------
TOTAL $6,036 $13,517 $15,955 $17,172 $22,841
========== ========== ========== ========= ========
Loans are designated as nonaccrual when, in the opinion of management, the
collection of principal or interest is doubtful. This generally occurs when a
loan becomes 90 days past due as to principal or interest unless the loan is
both well secured and in the process of collection. When interest accruals are
discontinued, unpaid interest credited to income in the current year is
reversed, and unpaid interest accrued in prior years is charged to the allowance
for loan losses. See Note F to the consolidated financial statements for
additional information regarding nonperforming loans and credit risk
concentration.
33
UNITED BANKSHARES, INC. AND SUBSIDIARIES
INVESTMENT PORTFOLIO
The following is a summary of the amortized cost of investment securities held
to maturity at December 31, 1994 and all securities at December 31, 1993 and
1992:
1994 1993 1992
---------- ---------- ---------
(In thousands)
U.S. Treasury and other U.S. Government
agencies and corporations $84,843 $220,805 $215,511
States and political subdivisions 53,297 55,209 67,553
Mortgage-backed securities 97,644 131,322 78,710
Marketable equity securities 2,182 2,226
Other 7,062 20,909 26,017
-------- -------- --------
TOTAL INVESTMENT SECURITIES $242,846 $430,427 $390,017
======== ======== ========
The following is a summary of the amortized cost, unrealized gains and losses
and market value of available for sale securities at December 31, 1994:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
(In thousands)
U.S. Treasury and other U.S. Government
agencies and corporations $103,292 $127 $774 $102,645
Marketable equity securities 1,529 293 25 1,797
Other 13,898 2 305 13,595
--------- ---------- ---------- ---------
TOTAL AVAILABLE-FOR-SALE SECURITIES $118,719 $422 $1,104 $118,037
========= ========== ========== =========
The following table sets forth the maturities of the above securities at
December 31, 1994, and the weighted average yields of such securities
(calculated on the basis of the cost and the effective yields weighted for the
scheduled maturity of each security).
After 1 But After 5 But
Within 1 Year Within 5 Years Within 10 Years After 10 Years
------------------- -------------------- ------------------ ------------------
Amount Yield Amount Yield Amount Yield Amount Yield
------- ----- -------- ----- ------- ----- ------- -----
(In thousands)
U.S. Treasury and other
U.S. Government agencies
and corporations $50,388 6.45% $131,672 6.00% $5,428 6.16%
States and political
subdivisions (1) 10,277 11.66% 20,567 9.76% 8,492 8.63% 13,961 9.60%
Other 23,494 4.53% 32,501 6.19% 22,906 6.45% 41,197 6.40%
(1) Tax-equivalent adjustments (using a 35% federal rate) have been made in
calculating yields on obligations of states and political subdivisions.
NOTE: There are no securities with a single issuer whose book value in the
aggregate exceeds 10% of total shareholders' equity.
34
UNITED BANKSHARES, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
The following table shows the distribution of United's short-term borrowings and
the weighted average interest rates thereon at the end of each of the last three
years. Also provided are the maximum amount of borrowings and the average
amounts of borrowings as well as weighted average interest rates for the last
three years.
Federal Securities Sold
Funds Under Agreements
Purchased to Repurchase
--------- ----------------
(In thousands)
At December 31:
1994 $4,582 $67,227
1993 5,339 67,271
1992 8,218 64,233
Weighted average interest rate
at year end:
1994 5.7% 4.1%
1993 2.9% 2.7%
1992 3.1% 2.9%
Maximum amount outstanding at
any month's end:
1994 $25,089 $103,486
1993 7,509 85,515
1992 20,937 83,127
Average amount outstanding during
the year:
1994 $10,178 $68,521
1993 7,808 67,688
1992 20,016 70,972
Weighted average interest rate
during the year:
1994 4.3% 3.1%
1993 3.0% 2.8%
1992 3.3% 3.1%
At December 31, 1994, repurchase agreements include $66,780,000 in overnight
accounts. The remaining balance principally consists of agreements having
maturities ranging from 2-90 days. The rates offered on these funds vary
according to movements in the federal funds and short-term investment market
rates.
35
UNITED BANKSHARES, INC. AND SUBSIDIARIES
DEPOSITS
The average daily amount of deposits and rates paid on such deposits is
summarized for the years ended December 31:
1994 1993 1992
---------------- ---------------- ----------------
Amount Rate Amount Rate Amount Rate
---------- ---- ---------- ---- ---------- ----
(In thousands)
Noninterest bearing
demand deposits $229,936 $213,544 $178,923
Interest bearing
demand deposits 230,402 2.26% 222,226 2.59% 302,794 3.47%
Savings deposits 449,142 2.84% 444,788 3.06% 245,052 3.89%
Time deposits 519,811 3.97% 526,608 4.08% 513,512 5.06%
---------- ---------- ----------
TOTAL $1,429,291 3.22% $1,407,166 3.42% $1,240,281 4.34%
========== ========== ==========
Maturities of time certificates of deposit of $100,000 or more outstanding at
December 31, 1994 are summarized as follows:
(In thousands)
3 months or less $23,122
Over 3 through 6 months 12,212
Over 6 through 12 months 11,504
Over 12 months 28,760
-------
TOTAL $75,598
=======
RETURN ON EQUITY AND ASSETS
The following table shows selected consolidated operating and capital ratios for
each of the last three years ended December 31:
1994 1993 1992
------ ------ ------
Return on average assets 1.42% 1.27% 1.09%
Return on average equity 13.98% 13.00% 11.60%
Dividend payout ratio (1) 50.61% 50.30% 49.80%
Average equity to average
assets ratio 10.16% 9.78% 9.43%
(1) Based on historical results of United before the effects of restatements for
pooling of interests business combinations.
36
UNITED BANKSHARES, INC. AND SUBSIDIARIES
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes United's loan loss experience for each of the
five years ended December 31:
1994 1993 1992 1991 1990
---------- ---------- ---------- -------- --------
(In thousands)
Balance of allowance for possible loan
losses at beginning of year $19,015 $15,952 $14,070 $12,187 $10,137
Allowance of purchased company at date
of acquisition 504 2,784 198
Loans charged off:
Commercial, financial and agricultural 708 1,088 3,108 4,636 4,244
Real estate 65 649 1,477 175 321
Consumer and other 943 1,004 1,286 1,785 1,736
---------- ---------- ---------- -------- --------
TOTAL CHARGE-OFFS 1,716 2,741 5,871 6,596 6,301
Recoveries:
Commercial, financial and agricultural 577 438 168 403 407
Real estate 13 231 154 48 25
Consumer and other 301 299 405 393 280
---------- ---------- ---------- -------- --------
TOTAL RECOVERIES 891 968 727 844 712
---------- ---------- ---------- -------- --------
NET LOANS CHARGED OFF 825 1,773 5,144 5,752 5,589
Addition to allowance (1) 1,818 4,332 4,242 7,635 7,441
---------- ---------- ---------- -------- --------
BALANCE OF ALLOWANCE FOR POSSIBLE
LOAN LOSSES AT END OF YEAR $20,008 $19,015 $15,952 $14,070 $12,187
========== ========== ========== ======== ========
Loans outstanding at the end of period (gross) $1,302,095 $1,187,215 $1,121,561 $957,010 $953,329
========== ========== ========== ======== ========
Average loans outstanding during
period (net of unearned income) $1,231,525 $1,134,001 $990,999 $949,784 $910,685
========== ========== ========== ======== ========
Net charge-offs as a percentage of
average loans outstanding 0.07% 0.16% 0.52% 0.61% 0.61%
Allowance for possible loan losses as
a percentage of nonperforming loans 331.5% 140.7% 100.0% 81.9% 53.4%
(1) The amount charged to operations and the related balance in the allowance
for possible loan losses is based upon periodic evaluations of the loan
portfolio by management. These evaluations consider several factors
including, but not limited to, general economic conditions, loan portfolio
composition, prior loan loss experience and management's estimation of
future potential losses.
Quarterly reviews of individual loans as well as the loan portfolio as a
whole are made by management and the credit department. Management performs
extensive procedures in granting and monitoring loans on a continual basis.
Further, management believes that the allowance for possible loan losses is
adequate to absorb anticipated losses.
37
UNITED BANKSHARES, INC. AND SUBSIDIARIES
SUMMARY OF LOAN LOSS EXPERIENCE--Continued
Allocation of allowance for
possible loan losses at
years ending: 1994 1993 1992 1991 1990
------ ------- ------- ------- -------
Commercial, financial and
agricultural $7,526 $8,109 $6,406 $6,534 $5,750
Real estate 499 476 1,375 1,382 1,093
Consumer and other 1,313 1,733 5,481 5,434 4,694
------ ------- ------- ------- -------
Total $9,338 $10,318 $13,262 $13,350 $11,537
====== ======= ======= ======= =======
The portion of the allowance for loan losses that is not specifically
allocated to individual credits has been apportioned among the separate
loan portfolios based on the relative risk of each portfolio.
% of Loans Per Category
----------------------- 1994 1993 1992 1991 1990
------ ------- ------- ------- -------
Commercial, financial and
agricultural 80.60% 78.59% 48.30% 48.94% 49.84%
Real estate 5.34% 4.61% 10.37% 10.35% 9.47%
Consumer and other 14.06% 16.80% 41.33% 40.71% 40.69%
------ ------- ------- ------- -------
Total 100.00% 100.00% 100.00% 100.00% 100.00%
====== ======= ======= ======= =======
38
UNITED BANKSHARES, INC.
FORM 10-K, PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(A) - FINANCIAL STATEMENTS REQUIRED BY REGULATION S-X
YEAR ENDED DECEMBER 31, 1994
UNITED BANKSHARES, INC.
Page
Report of Independent Auditors............................................ 40
Consolidated Balance Sheets............................................... 42
Consolidated Statements of Income......................................... 43
Consolidated Statements of Changes in Shareholders' Equity................ 44
Consolidated Statements of Cash Flows..................................... 45
Notes to Consolidated Financial Statements................................ 46
39
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
Board of Directors and Shareholders
United Bankshares, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of United
Bankshares, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the financial statements of Financial Future
Corporation for 1992, which statements reflect total revenues constituting 10%
of the related consolidated totals in 1992. Those statements were audited by
other auditors whose report has been furnished to us, and our opinion, insofar
as it relates to data included for Financial Future Corporation for 1992, is
based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and, for 1992, the reports of other
auditors, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of United Bankshares,
Inc. and subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Notes D and K to the consolidated financial statements, United
Bankshares, Inc. changed its method of accounting for certain debt securities as
of January 1, 1994 and its method of accounting for income taxes in 1993.
/s/ Ernst & Young LLP
Charleston, West Virginia
February 10, 1995
40
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Financial Future Corporation and Subsidiaries
Ceredo, West Virginia
We have audited the accompanying consolidated balance sheets of Financial Future
Corporation and Subsidiaries as of December 31, 1992 and December 31, 1991, and
the related consolidated statements of income, changes in stockholders' equity,
and the consolidated statement of cash flows for each of the three years in the
period ended December 31, 1992. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Financial Future Corporation and Subsidiaries at December 31, 1992 and December
31, 1991, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 1992 in conformity
with generally accepted accounting principles.
/s/ Somerville & Company
January 25, 1993
41
CONSOLIDATED BALANCE SHEETS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
December 31
------------------------------
1994 1993
-------------- --------------
ASSETS
Cash and due from banks - Note C $82,763,000 $60,750,000
Interest-bearing deposits with other banks 100,000
-------------- --------------
Total cash and cash equivalents 82,763,000 60,850,000
Securities available for sale (at market)-Note D 118,037,000
Investment securities (market value--$ 231,461,000
and $ 438,223,000 at December 31, 1994 and 1993,
respectively-Note E 242,846,000 430,427,000
Gross loans - Note F 1,302,095,000 1,187,215,000
Less: Unearned income (5,018,000) (6,428,000)
-------------- --------------
Loans net of Unearned income 1,297,077,000 1,180,787,000
Less: Allowance for loan losses (20,008,000) (19,015,000)
-------------- --------------
Net loans 1,277,069,000 1,161,772,000
Bank premises and equipment - Note G 30,769,000 31,113,000
Interest receivable 10,943,000 10,542,000
Other assets - Notes H and K 25,214,000 25,480,000
-------------- --------------
TOTAL ASSETS $1,787,641,000 $1,720,184,000
============== ==============
LIABILITIES
Domestic deposits - Note I
Noninterest-bearing $244,591,000 $229,131,000
Interest-bearing 1,190,261,000 1,201,398,000
-------------- --------------
TOTAL DEPOSITS 1,434,852,000 1,430,529,000
Short-term borrowings - Note J
Federal funds purchased 4,582,000 5,339,000
Securities sold under agreements to repurchase 67,227,000 67,271,000
Long-term borrowings - Note J 83,972,000 32,203,000
Accrued expenses and other liabilities 17,262,000 13,870,000
-------------- --------------
TOTAL LIABILITIES 1,607,895,000 1,549,212,000
SHAREHOLDERS' EQUITY
Common stock, $2.50 par value;
Authorized--20,000,000 shares; issued and
outstanding --11,954,453 at December 31, 1994 and 1993,
including 137,520 and 27,720 shares in treasury, respectively 29,886,000 29,886,000
Surplus 32,331,000 32,616,000
Retained earnings - Note C 121,318,000 109,020,000
Net unrealized holding loss on securities available for sale - Note D (443,000)
Treasury stock (3,346,000) (550,000)
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY 179,746,000 170,972,000
COMMITMENTS AND CONTINGENCIES - Notes M and P
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,787,641,000 $1,720,184,000
============== ==============
See notes to consolidated financial statements.
42
CONSOLIDATED STATEMENTS OF INCOME
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Year Ended December 31
-----------------------------------
1994 1993 1992
----------- ----------- -----------
INTEREST INCOME
Interest and fees on loans - Note F $98,674,000 $90,942,000 $87,354,000
Interest on federal funds sold 250,000 805,000 1,628,000
Interest and dividends on securities:
Taxable 18,589,000 20,531,000 19,333,000
Exempt from federal taxes 3,529,000 4,134,000 4,955,000
Other interest income 115,000 93,000 232,000
----------- ----------- -----------
TOTAL INTEREST INCOME 121,157,000 116,505,000 113,502,000
----------- ----------- -----------
INTEREST EXPENSE
Interest on deposits 38,614,000 40,837,000 46,106,000
Interest on short-term borrowings - Note J 2,571,000 2,152,000 2,706,000
Interest on long-term borrowings - Note J 2,702,000 2,020,000 1,085,000
----------- ----------- -----------
TOTAL INTEREST EXPENSE 43,887,000 45,009,000 49,897,000
----------- ----------- -----------
NET INTEREST INCOME 77,270,000 71,496,000 63,605,000
PROVISION FOR POSSIBLE LOAN LOSSES - Note F 1,818,000 4,332,000 4,242,000
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 75,452,000 67,164,000 59,363,000
----------- ----------- -----------
OTHER INCOME
Trust department income 2,868,000 2,639,000 2,515,000
Service charges, commissions, and fees - Note N 8,636,000 8,830,000 7,400,000
Other income 590,000 725,000 805,000
Investment securities transactions (872,000) 479,000 403,000
----------- ----------- -----------
TOTAL OTHER INCOME 11,222,000 12,673,000 11,123,000
----------- ----------- -----------
OTHER EXPENSES
Salaries and employee benefits - Note L 22,081,000 22,257,000 20,946,000
Net occupancy expense - Note G 4,899,000 4,509,000 4,342,000
Other expense - Note N 21,696,000 22,924,000 21,703,000
----------- ----------- -----------
TOTAL OTHER EXPENSES 48,676,000 49,690,000 46,991,000
----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 37,998,000 30,147,000 23,495,000
INCOME TAXES - Note K 13,096,000 9,770,000 7,136,000
----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 24,902,000 20,377,000 16,359,000
CUMULATIVE EFFECT AS OF JANUARY 1, 1993 OF CHANGE
IN METHOD OF ACCOUNTING FOR INCOME TAXES - Note K 1,329,000
----------- ----------- -----------
NET INCOME $24,902,000 $21,706,000 $16,359,000
=========== =========== ===========
Earnings per common share:
Income before cumulative effect of change in accounting principle $2.08 $1.71 $1.52
Cumulative effect of change in method of accounting for income taxes 0.11
----------- ----------- -----------
Net income $2.08 $1.82 $1.52
=========== =========== ===========
Average common outstanding shares 11,993,062 11,922,521 10,737,688
=========== =========== ===========
See notes to consolidated financial statements.
43
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
UNITED BANKSHARES, INC. AND SUBSIDIARIES
For the Year Ended December 31
-------------------------------------------------------------------------------------------
Net Unrealized
Common Stock Holding Loss
----------------------- on Securities Total
Par Retained Available Treasury Shareholders'
Shares Value Surplus Earnings for Sale Stock Equity
---------- ----------- ----------- ------------ ----------- ----------- ------------
Balance at January 1, 1992 10,586,732 $26,467,000 $17,140,000 $90,370,000 ($121,000) ($1,474,000) $132,382,000
Common stock issued in
acquisition - Note B 1,357,526 3,394,000 15,471,000 2,505,000 21,370,000
Net income 16,359,000 16,359,000
Cash dividends ($.85 per share) (7,914,000) (7,914,000)
Cash dividends of pooled subsidiaries (583,000) (583,000)
Net change in aggregate
unrealized loss on
marketable equity securities 121,000 121,000
Sale of treasury stock 158,000 158,000
Purchase of treasury stock (1,729,000) (1,729,000)
Common stock options
exercised - Note L (6,000) 61,000 55,000
Pre-merger transactions of
pooled bank 180 1,000 1,000
---------- ----------- ----------- ------------ ----------- ----------- ------------
Balance at December 31, 1992 11,944,438 29,861,000 32,606,000 98,232,000 0 (479,000) 160,220,000
Net income 21,706,000 21,706,000
Cash dividends ($.95 per share) (10,918,000) (10,918,000)
Purchase of treasury stock (300,000) (300,000)
Common stock options
exercised - Note L (85,000) 229,000 144,000
Pre-merger transactions of
pooled bank 10,015 25,000 95,000 120,000
---------- ----------- ----------- ------------ ----------- ----------- ------------
Balance at December 31, 1993 11,954,453 29,886,000 32,616,000 109,020,000 0 (550,000) 170,972,000
Net income 24,902,000 24,902,000
Change in method of accounting
for securities - Note D 1,284,000 1,284,000
Cash dividends ($1.06 per share) (12,604,000) (12,604,000)
Net change in unrealized holding loss
on securities available for sale (1,727,000) (1,727,000)
Purchase of treasury stock (3,536,000) (3,536,000)
Common stock options
exercised - Note L (285,000) 740,000 455,000
---------- ----------- ----------- ------------ ----------- ----------- ------------
Balance at December 31, 1994 11,954,453 $29,886,000 $32,331,000 $121,318,000 ($443,000) ($3,346,000) $179,746,000
========== =========== =========== ============ =========== =========== ============
See notes to consolidated financial statements.
44
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Year Ended December 31
---------------------------------------
1994 1993 1992
----------- ----------- -----------
OPERATING ACTIVITIES
Net income $24,902,000 $21,706,000 $16,359,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Cumulative effect of change in accounting principle (1,329,000)
Provision for possible loan losses 1,818,000 4,332,000 4,242,000
Provision for possible OREO losses 100,000 496,000 786,000
Provision for depreciation 2,716,000 2,641,000 2,436,000
Amortization, net of accretion 2,904,000 2,095,000 101,000
Gain on sales of bank premises and equipment (245,000) (121,000) (49,000)
Net losses on sales of securities available for sale 872,000
Net gains on sales of investment securities (479,000) (403,000)
Deferred income tax benefit (1,112,000) (2,427,000) (675,000)
Originations of student loans (292,000) (1,041,000) (8,430,000)
Proceeds from sales of student loans 50,000 8,047,000
Changes in:
Interest receivable (401,000) 260,000 1,979,000
Other assets 1,032,000 2,406,000 (135,000)
Accrued expenses and other liabilities 2,164,000 2,068,000 922,000
----------- ----------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 34,458,000 30,657,000 25,180,000
----------- ----------- ------------
INVESTING ACTIVITIES
Proceeds from sales of investment securities 37,084,000 15,382,000
Proceeds from maturities and calls of investment securities 55,168,000 217,177,000 221,150,000
Purchases of investment securities (25,430,000) (272,329,000) (226,565,000)
Proceeds from sales of securities available for sale 66,351,000
Proceeds from maturities and calls of securities available for sale 69,885,000
Purchases of securities available for sale (98,871,000)
Net purchase of bank premises and equipment (2,052,000) (1,562,000) (731,000)
Net cash of acquired subsidiary (2,088,000) 16,312,000
Changes in:
Securities purchased under resell agreements 2,375,000
Loans (117,251,000) (28,929,000) (67,058,000)
----------- ----------- ------------
NET CASH USED IN INVESTING ACTIVITIES (52,200,000) (50,647,000) (39,135,000)
----------- ----------- ------------
FINANCING ACTIVITIES
Cash dividends paid (12,604,000) (10,918,000) (10,326,000)
Acquisition of treasury stock (3,536,000) (300,000) (1,729,000)
Sales of treasury stock 158,000
Proceeds from exercise of stock options 455,000 144,000 55,000
Issuance of common stock 120,000 1,000
Proceeds from long-term borrowings 51,769,000 4,136,000 28,067,000
Changes in:
Deposits 4,372,000 (40,872,000) 23,754,000
Federal funds purchased and securities
sold under agreements to repurchase (801,000) (943,000) 6,363,000
Interest-bearing demand notes issued
to United States Treasury (252,000)
----------- ----------- ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 39,655,000 (48,633,000) 46,091,000
----------- ----------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 21,913,000 (68,623,000) 32,136,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 60,850,000 129,473,000 97,337,000
----------- ----------- ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $82,763,000 $60,850,000 $129,473,000
=========== =========== ============
See notes to consolidated financial statements.
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
December 31, 1994
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of United Bankshares, Inc. and
subsidiaries (United) conform with generally accepted accounting principles. A
description of the significant accounting policies is presented below.
Basis of Presentation: The consolidated financial statements include the
- ----------------------
accounts of United Bankshares, Inc. and its wholly-owned subsidiaries. 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.
Certain amounts in the prior year's financial statements have been reclassified
to conform with the 1994 presentation. The reclassifications had no effect on
net income.
Securities: Management determines the appropriate classification of securities
- -----------
at the time of purchase. Debt securities that management has the intent and
United has the ability to hold to maturity are carried at amortized cost.
Securities to be held for indefinite periods of time and all marketable equity
securities are classified as available for sale and carried at fair value.
Unrealized holding gains and losses on securities classified as available for
sale are carried as a separate component of shareholders' equity net of deferred
income taxes.
Gains or losses on sales of securities are recognized by the specific
identification method and are reported separately in the statements of income.
Loans: Interest on loans is accrued and credited to operations using methods
- ------
that approximate a level yield on principal amounts outstanding. Loan
origination and commitment fees and related direct loan origination costs are
deferred and amortized as an adjustment of loan yield over the estimated life of
the related loan.
The accrual of interest income generally is discontinued when a loan becomes 90
days past due as to principal or interest. When interest accruals are
discontinued, unpaid interest recognized in income in the current year is
reversed, and interest accrued in prior years is charged to the allowance for
loan losses. Management may elect to continue the accrual of interest when the
estimated net realizable value of collateral exceeds the principal balance and
accrued interest, and the loan is in the process of collection.
46
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Allowance for Possible Loan Losses: In providing for loan losses, United
- -----------------------------------
considers all significant factors that affect the collectibility of loans. 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 include growth
and composition of the loan portfolio, known deterioration in certain classes of
loans or collateral, trends in delinquencies, and current economic conditions.
Bank Premises and Equipment: Bank premises and equipment are stated at cost,
- ----------------------------
less allowances for depreciation and amortization. The provision for
depreciation is computed principally by the straight-line method over the
estimated useful lives of the respective assets.
Other Assets: Other real estate owned (OREO), acquired principally through
- -------------
foreclosure on collateral securing loans made by United, is reported at the
lower of cost or fair value less costs estimated to sell and is included in
other assets. Any write-downs at the date of foreclosure are charged to the
allowance for possible loan losses. Expenses incurred in connection with
ownership, subsequent declines in estimated net realizable value, and realized
gains and losses upon sale of the properties are included in other expenses, or
other income, as appropriate.
United maintains an allowance for possible OREO losses. Such allowance is based
upon the estimated values of specific properties in consideration of prevailing
market conditions.
Income Taxes: Deferred income taxes are provided for temporary differences
- -------------
between the financial reporting and tax bases of assets and liabilities at
statutory tax rates.
United and its subsidiaries file consolidated federal and state income tax
returns. The subsidiaries provide for income taxes on a separate return basis
and remit amounts to the parent company deemed to be currently payable.
Trust Assets and Income: Assets held in a fiduciary or agency capacity for
- ------------------------
subsidiary bank customers are not included in the balance sheets since such
items are not assets of the subsidiary banks. Trust department income is
reported on a cash basis. Reporting such income on an accrual basis would not
materially affect United's consolidated financial position or its results of
operations as reported herein.
Cash Flow Information: For purposes of the statement of cash flows, United
- ----------------------
considers cash and due from banks and federal funds sold as cash and cash
equivalents. Interest paid approximated $43,478,000, $45,502,000 and $51,084,000
in 1994, 1993, and 1992, respectively. Income taxes paid approximated
$13,033,000, $10,363,000, and $8,068,000 in 1994, 1993, and 1992, respectively.
47
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Interest Rate Swaps: Interest rate swaps are utilized by United to manage
- --------------------
interest rate exposure. Income or expense derived from these instruments is
recognized as an adjustment to interest income of the underlying instrument.
Earnings Per Common Share: Earnings per common share is computed based on the
- --------------------------
weighted average number of common shares outstanding during the applicable
period. The dilutive effect of unexercised stock options is not included in the
computation because it is not material.
NOTE B--ACQUISITIONS
On October 20, 1992, United acquired all of the outstanding stock of Summit
Holding Corporation ("Summit") of Beckley, West Virginia, in a common stock
exchange accounted for using the purchase method of accounting. As of the date
of acquisition, Summit reported total consolidated assets of $208,130,000. The
results of operations of Summit, now UNB-South, have been included in the
consolidated results of operations from the date of acquisition.
On September 10, 1993, United acquired 100% of the common stock of Westover Bank
("Westover") and certain assets and liabilities of the Star City Branch which
was formerly owned and operated by another bank ("Star City"), both of which are
located in the Morgantown, West Virginia area, for cash of $8,300,000. As of the
date of acquisition, the acquirees had combined total assets of $68,482,000. The
acquisitions have been accounted for using the purchase method of accounting.
The results of operations of Westover and Star City, now branches of United
National Bank, ("UNB"), have been included in the consolidated results of
operations from the date of acquisition.
The purchase prices of these acquisitions and certain acquisitions made in prior
years were allocated to the identifiable tangible and intangible assets acquired
based upon their fair values at the acquisition dates. Intangible assets
relating to the estimated value of the deposit base of the acquired institutions
are being amortized on an accelerated basis over a 7 to 10 year period. The
excess of the purchase price over the fair market value of the net assets of the
banks acquired (goodwill) is being amortized on a straight-line basis over 15
years. Net intangible assets (deposit base intangibles and goodwill) of
approximately $10,276,000 and $12,269,000 at December 31, 1994 and 1993,
respectively, are included in other assets.
On October 21, 1992, United acquired Liberty Bancshares Inc. ("Liberty") of
Montgomery, West Virginia, in a transaction accounted for under the pooling of
interests method. Liberty reported consolidated total assets of $89,149,000 at
the date of acquisition.
On September 1, 1993 United acquired Financial Future Corporation ("FFC") of
Ceredo, West Virginia, in a transaction accounted for under the pooling of
interests method of accounting. At the acquisition date, FFC reported
consolidated assets of $135,665,000.
48
NOTE C--REGULATORY RESTRICTIONS
The subsidiary banks are required to maintain average reserve balances with
their respective Federal Reserve Bank. The average amount of those reserve
balances for the year ended December 31, 1994 was approximately $30,911,000.
The primary source of funds for the dividends paid by United Bankshares, Inc. is
dividends received from its subsidiary banks. Dividends paid by the subsidiary
banks are subject to restrictions by banking regulations. The most restrictive
provision requires approval by the Comptroller of the Currency if dividends
declared in any year exceed the year's net income, as defined, plus the retained
net profits of the two preceding years. During 1995, the retained net profits
available for distribution to United Bankshares, Inc., as dividends without
regulatory approval, are approximately $8,864,000, plus net income for the
interim periods through the date of declaration.
Under Federal Reserve regulation, the banking subsidiaries are also limited as
to the amount they may loan to affiliates, including the parent company. Loans
from the banking subsidiaries to the parent company are limited to 10% of the
banking subsidiaries' capital, and surplus, as defined, or $17,832,000 at
December 31, 1994, and must be secured by qualifying collateral.
NOTE D--SECURITIES AVAILABLE FOR SALE
Effective January 1, 1994, United adopted Financial Accounting Standards Board
Statement 115, "Accounting for Certain Investments in Debt and Equity
Securities," (SFAS No. 115) which was effective for fiscal years beginning after
December 15, 1993. In accordance with SFAS No. 115, prior period financial
statements have not been restated for the change in accounting principle. The
cumulative effect of adopting SFAS No. 115 as of January 1, 1994, was to
increase shareholders' equity by $1,284,000 for the net unrealized holding gains
on securities classified as available for sale which were previously carried at
amortized cost.
Gross realized gains and losses from sales of securities available for sale in
1994 were $152,000 and $1,024,000, respectively.
The book and estimated fair value of securities available for sale at December
31, 1994, by contractual maturity are as follows:
Estimated
Book Fair
Value Value
------------ ------------
Due in one year or less $ 57,934,000 $ 57,655,000
Due after one year through five years 45,408,000 44,991,000
Due after five years through ten years 1,040,000 1,043,000
Due after ten years 12,808,000 12,551,000
Marketable equity securities 1,529,000 1,797,000
------------ ------------
Total $118,719,000 $118,037,000
============ ============
49
NOTE D--SECURITIES AVAILABLE FOR SALE - continued
The amortized cost and estimated fair values of securities available for sale
are summarized as follows:
December 31, 1994
---------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
U.S. Treasury securities
and obligations of U.S.
Government corporations
and agencies $ 103,292,000 $ 127,000 $ 774,000 $ 102,645,000
Marketable equity
securities 1,529,000 293,000 25,000 1,797,000
Other 13,898,000 2,000 305,000 13,595,000
------------- --------- ----------- -------------
Total $ 118,719,000 $ 422,000 $ 1,104,000 $ 118,037,000
============= ========= =========== =============
NOTE E--INVESTMENT SECURITIES
The amortized cost and estimated fair values of investment securities are
summarized as follows:
December 31, 1994
----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
U.S. Treasury securities
and obligations of U.S.
Government corporations
and agencies $ 84,843,000 $ 66,000 $ 3,438,000 $ 81,471,000
State and political
subdivisions 53,297,000 971,000 1,076,000 53,192,000
Mortgage-backed
securities 97,644,000 7,805,000 89,839,000
Other 7,062,000 103,000 6,959,000
------------ ----------- ----------- ------------
Total $242,846,000 $ 1,037,000 $12,422,000 $231,461,000
============ =========== =========== ============
50
NOTE E--INVESTMENT SECURITIES - continued
December 31, 1993
-------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
U.S. Treasury securities
and obligations of U.S.
Government corporations
and agencies $220,805,000 $ 3,339,000 $ 227,000 $223,917,000
State and political
subdivisions 55,209,000 3,810,000 41,000 58,978,000
Mortgage-backed
securities 131,322,000 735,000 494,000 131,563,000
Marketable equity
securities 2,182,000 376,000 3,000 2,555,000
Other 20,909,000 303,000 2,000 21,210,000
------------ ----------- ---------- ------------
Total $430,427,000 $ 8,563,000 $ 767,000 $438,223,000
============ =========== ========== ============
The amortized cost and estimated fair value of debt securities at December 31,
1994, 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.
Estimated
Book Fair
Value Value
------------- -------------
Due in one year or less $ 11,317,000 $ 11,406,000
Due after one year through
five years 140,685,000 136,281,000
Due after five years
through ten years 36,565,000 33,994,000
Due after ten years 54,279,000 49,780,000
-------------- --------------
Total $ 242,846,000 $ 231,461,000
============== ==============
The table above includes $97,644,000 of mortgage-backed securities with an
estimated market value of $89,839,000. Maturities of the mortgage-backed
securities are based upon the estimated average life.
Gross realized gains from sales of securities were $496,000 and $519,000 and
gross realized losses were $17,000 and $116,000 in 1993 and 1992, respectively.
The book value of securities pledged to secure public deposits, securities sold
under agreements to repurchase, and for other purposes as required or permitted
by law, approximated $176,625,000 and $179,802,000 at December 31, 1994 and
1993, respectively.
51
NOTE F--LOANS
Major classifications of loans as of December 31 are as follows:
1994 1993
-------------- --------------
Commercial, financial, and
agricultural $ 208,491,000 $218,559,000
Real estate:
Single family residential 527,434,000 442,855,000
Commercial 300,679,000 267,936,000
Construction 16,919,000 12,687,000
Other 14,706,000 15,331,000
Installment 233,866,000 229,847,000
---------------- ----------------
TOTAL LOANS $ 1,302,095,000 $ 1,187,215,000
================ ================
An analysis of the allowance for possible loan losses follows:
Year Ended December 31
-------------------------------------------
1994 1993 1992
---- ---- ----
Balance at beginning of year $19,015,000 $15,952,000 $14,070,000
Allowance of purchased subsidiaries 504,000 2,784,000
Provision for possible loan losses 1,818,000 4,332,000 4,242,000
----------- ----------- -----------
20,833,000 20,788,000 21,096,000
Loans charged off 1,716,000 2,741,000 5,871,000
Less recoveries 891,000 968,000 727,000
----------- ----------- -----------
Net charge offs 825,000 1,773,000 5,144,000
----------- ----------- -----------
BALANCE AT END OF YEAR $20,008,000 $19,015,000 $15,952,000
=========== =========== ===========
The following is a summary of data on nonaccrual and restructured loans:
Troubled
Debt
Nonaccrual Restructurings
---------------------------- -------------------------
1994 1993 1994 1993
-------- -------- -------- --------
Aggregate recorded balances $ 3,733,000 $ 8,588,000 - $2,453,000
Commitments to lend additional funds - - - -
52
NOTE F--LOANS - continued
The amount of interest income which would have been recorded under the original
terms for the above loans classified as nonaccrual or troubled debt
restructurings was $346,000, $793,000 and $686,000 for the years ended December
31, 1994, 1993 and 1992, respectively. Amounts recorded as interest income for
these loans totaled $1,000, $183,000 and $224,000 for 1994, 1993 and 1992,
respectively.
For purposes of the above disclosure, troubled debt restructurings are loans for
which original terms have been modified in response to financial difficulties of
the borrower. Each of these loans is contractually current based on the revised
terms.
United has commercial real estate loans, including owner occupied, income
producing real estate and land development loans, of approximately $300,679,000
and $267,936,000 as of December 31, 1994 and 1993, 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.
In May 1993, the Financial Accounting Standards Board issued Statement No. 114,
(SFAS No. 114), "Accounting by Creditors for Impairment of a Loan," which was
amended by Statement No. 118 and is effective for fiscal years beginning after
December 15, 1994. SFAS No. 114 requires that loans be measured at the present
value of expected future cash flows using the loan's original effective interest
rate, or alternatively, at the loan's observable market price or the fair value
of the collateral for collateral dependent loans. United will adopt SFAS No.
114 in the first quarter of 1995 and does not anticipate that the new rule will
have a material impact on the allowance for loan losses.
United's subsidiary banks have made loans, in the normal course of business, to
the directors and officers of United and its subsidiaries, and to their
associates. Such related party loans were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons and did not involve more than
normal risk of collectibility. The aggregate dollar amount of these loans was
$57,310,000 and $48,613,000 at December 31, 1994 and 1993, respectively. During
1994, $45,873,000 of new loans were made and repayments totaled $37,176,000.
53
NOTE G--BANK PREMISES AND EQUIPMENT AND LEASES
Bank premises and equipment are summarized as follows:
December 31
-----------------------------
1994 1993
---- ----
Land $ 7,628,000 $ 8,156,000
Buildings and improvements 29,328,000 29,206,000
Leasehold improvements 5,180,000 4,876,000
Furniture, fixtures, and equipment 25,005,000 23,125,000
------------- -------------
67,141,000 65,363,000
Less allowance for depreciation
and amortization 36,372,000 34,250,000
------------- -------------
Net bank premises $ 30,769,000 $ 31,113,000
============= =============
United and certain banking subsidiaries have entered into various noncancelable
operating leases. These noncancelable operating leases are subject to renewal
options under various terms and some leases provide for periodic rate
adjustments based on cost-of-living index changes. Rent expense for
noncancelable operating leases approximated $1,746,000, $1,620,000 and
$1,932,000 for the years ended December 31, 1994, 1993, and 1992, respectively.
Future minimum payments, by year and in the aggregate, under non-cancelable
operating leases with initial or remaining terms of one year or more, for years
subsequent to December 31, 1994 consisted of the following:
1995 $ 1,652,000
1996 1,652,000
1997 1,567,000
1998 1,467,000
1999 1,369,000
Thereafter 3,387,000
-----------
Total minimum lease payments $11,094,000
===========
United owns an office tower facility, known as "United Square." United occupies
a portion of this building and leases the remainder under agreements expiring
principally in 1998. The principal tenant has an option to renew its lease
agreement on a year-to-year basis for an additional period of five years beyond
the expiration date. United Square, including the portion under such operating
lease, is included in bank premises as follows:
December 31
------------------------
1994 1993
---- ----
Bank premises $5,093,000 $4,873,000
Less accumulated depreciation 3,181,000 3,071,000
---------- ----------
Net bank premises $1,912,000 $1,802,000
========== ==========
54
NOTE G--BANK PREMISES AND EQUIPMENT AND LEASES - continued
Rental income under such operating leases approximated $986,000, $1,341,000, and
$1,505,000 for the years ended December 31, 1994, 1993, and 1992, respectively.
As of December 31, 1994, future minimum lease payments receivable under
noncancelable operating leases aggregated $984,000, of which $697,000 is due in
1995.
NOTE H--OTHER REAL ESTATE OWNED
The carrying value of other real estate owned (OREO) approximated $1,790,000 and
$2,486,000 at December 31, 1994 and 1993, respectively. Changes in the allowance
for possible OREO losses for each of the three years ended December 31 were as
follows:
1994 1993 1992
---- ---- ----
Balance, beginning of year $1,265,000 $ 802,000 $ 0
Allowance of purchased subsidiaries 28,000 72,000
Provision for possible OREO losses 100,000 496,000 786,000
Losses charged against allowance (200,000) (61,000) ( 56,000)
---------- ---------- ---------
BALANCE AT END OF YEAR $1,165,000 $1,265,000 $ 802,000
========== ========== =========
NOTE I--DEPOSITS
The book value of deposits consisted of the following:
December 31
---------------------------------
1994 1993
---- ----
Non-interest bearing checking $ 244,591,000 $ 229,131,000
Interest bearing checking 229,118,000 221,138,000
Regular savings 309,406,000 317,943,000
Money-market accounts 119,663,000 125,819,000
Time deposits under $100,000 456,476,000 463,538,000
Time deposits over $100,000 75,598,000 72,960,000
--------------- ---------------
TOTAL DEPOSITS $ 1,434,852,000 $ 1,430,529,000
=============== ===============
55
NOTE J--SHORT-TERM AND LONG-TERM BORROWINGS
During 1991, United's lead subsidiary, United National Bank (UNB), was approved
for membership in the Federal Home Loan Bank of Pittsburgh, (the FHLB). Since
becoming a member bank, UNB has purchased 102,405 shares of the FHLB stock at
par value. Such purchases entitle UNB to its pro rata share of the quarterly
dividends declared by the FHLB and provide an additional source of short-term
and long-term funding, in the form of collateralized advances. Based upon the
shares presently held by UNB, as well as its Qualifying Collateral and Mortgage
Assets Ratio, as defined in the Master Agreement with the FHLB (the Agreement),
at December 31, 1994, UNB is entitled to receive approximately $496,355,000 in
collateralized advances from the FHLB at prevailing interest rates, subject to
satisfying the Capital Stock Requirement provisions of the Agreement, as
defined.
UNB also has various unused lines of credit available from certain of its
correspondent banks in the aggregate amount of $44,650,000. These lines of
credit, which bear interest at prevailing market rates, permit UNB to borrow
funds in the overnight market, and are renewable annually provided that UNB does
not experience a material adverse change in its financial position or results of
operations.
Scheduled maturities of the FHLB advances and the contractual rates of interest
paid at December 31, 1994, which require monthly interest payments, are as
follows:
Interest
Book Rate
Maturity Value Range
-------- ----- -----
Overnight $ 68,900,000 6.61%
1995 15,072,000 6.14% to 6.44%
------------
Total $ 83,972,000
============
NOTE K--INCOME TAXES
Effective January 1, 1993, United changed its method of accounting for income
taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes." As permitted under the new
rules, prior years' financial statements were not restated. The cumulative
effect of the change increased net income by $1,329,000 or $0.11 per share and
is reported in the 1993 Statement of Income.
56
NOTE K--INCOME TAXES - continued
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
United's deferred tax assets and liabilities as of December 31, 1994 and 1993
are as follows:
1994 1993
----------- -----------
Deferred tax assets:
Allowance for loan losses $ 8,004,000 $ 7,604,000
Accrued benefits payable 354,000 347,000
Other accrued liabilities 1,951,000 1,400,000
Net deferred loan fees 471,000 520,000
Securities available for sale 239,000
Other real estate owned 493,000 513,000
----------- -----------
Total deferred tax assets 11,512,000 10,384,000
----------- -----------
Deferred tax liabilities:
Premises and equipment 1,450,000 1,512,000
Core deposit intangibles 999,000 1,285,000
Income tax allowance for
loan losses 798,000 1,012,000
Prepaid assets 171,000 219,000
Deferred mortgage points 741,000
Other 34,000 388,000
----------- -----------
Total deferred tax
liabilities 4,193,000 4,416,000
----------- -----------
Net deferred tax assets $ 7,319,000 $ 5,968,000
=========== ===========
The income tax provisions included in the consolidated statements of income are
summarized as follows:
Year Ended December 31
--------------------------------------------
1994 1993 1992
---- ---- ----
Liability Method Deferred Method
------------------------ ---------------
Current Expense:
Federal $12,022,000 $10,304,000 $ 6,387,000
State 2,186,000 1,893,000 1,424,000
Deferred Benefit:
Federal and State (1,112,000) (2,427,000) (675,000)
----------- ----------- -----------
Total expense $13,096,000 $ 9,770,000 $ 7,136,000
=========== =========== ===========
57
NOTE K--INCOME TAXES - continued
The components of the provision for the deferred income tax benefit for the
year ended December 31, 1992 under the deferred method of accounting for
income taxes are as follows:
Provision for possible loan losses $ 189,000
Provision for possible OREO losses (443,000)
Other items - net (421,000)
-----------
Deferred benefit $ (675,000)
===========
The following is a reconciliation of income tax expense to the amount
computed by applying the statutory federal income tax rate to income before
income taxes:
Year Ended December 31
--------------------------------------------------------
1994 1993 1992
---- ---- ----
Liability Method Deferred Method
------------------------------------------- ---------------
Amount % Amount % Amount %
------ - ------ - ------ -
Tax on income before taxes $13,299,000 35.0% $10,551,000 35.0% $ 7,989,000 34.0%
at statutory federal rate
Plus: State income taxes
net of federal tax
benefits 1,009,000 2.7 826,000 2.7 787,000 3.3
----------- ---- ----------- ---- ----------- ----
14,308,000 37.7 11,377,000 37.7 8,776,000 37.3
Increase (decrease)
resulting from:
Tax-exempt interest
income (1,830,000) (4.8) (2,069,000) (6.9) (1,975,000) (8.4)
Other items-net 618,000 1.6 462,000 1.6 335,000 1.5
----------- ---- ----------- ---- ----------- ----
Income Taxes $13,096,000 34.5% $ 9,770,000 32.4% $ 7,136,000 30.4%
=========== ==== =========== ==== =========== ====
Federal income tax expense (benefit) applicable to securities transactions
approximated ($305,000), $168,000, and $137,000 in 1994, 1993, and 1992,
respectively.
NOTE L--EMPLOYEE BENEFIT PLANS
United has a defined benefit retirement plan covering substantially all
employees. The benefits are based on years of service and the average of the
employee's highest five consecutive plan years of basic compensation paid
during the ten plan years preceding the date of determination. United's
funding policy is to contribute annually the maximum amount that can be
deducted for federal income tax purposes. Contributions are intended to
provide not only for benefits attributed to service to date, but also for
those expected to be earned in the future.
58
NOTE L--EMPLOYEE BENEFIT PLANS - continued
The following table sets forth the funded status of United's defined benefit
plan and amounts recognized in the respective consolidated balance sheets:
December 31
-----------------------
1994 1993
---- ----
Funded Status of Plan:
Vested benefit obligation $ 9,545,000 $ 8,324,000
Nonvested benefit obligation 254,000 253,000
------------ ------------
Accumulated benefit obligation $ 9,799,000 $ 8,577,000
============ ============
Projected benefit obligation for
services rendered to date $(12,258,000) $(11,405,000)
Plan assets at fair value, primarily
marketable securities 14,372,000 12,265,000
------------ ------------
Excess of plan assets over projected
benefit obligation 2,114,000 860,000
Unrecognized net gain from past experience
different from that assumed and effects of
changes in assumptions (1,824,000) (585,000)
Unrecognized prior service cost 490,000 621,000
Unrecognized transition asset (1,044,000) (1,082,000)
------------ ------------
Accrued pension liability included in
other liabilities $ (264,000) $ (186,000)
============ ============
Net periodic pension cost included the following components:
Year Ended December 31,
------------------------------------------
1994 1993 1992
---- ---- ----
Service cost $ 638,000 $ 502,000 $ 482,000
Interest cost on projected benefit
obligation 971,000 873,000 816,000
Actual loss(return) on plan assets 85,000 (1,292,000) (1,080,000)
Net amortization and deferral (1,245,000) 172,000 83,000
------------ ------------ ------------
Net periodic pension cost $ 449,000 $ 255,000 $ 301,000
============ ============ ============
The changes in unrecognized net gain, actual loss (return) on plan assets and
net amortization and deferral are primarily due to differences in the expected
return and the actual return or loss on plan assets and an increase in the
weighted average discount rate from 7.5% in 1993 to 8.5% in 1994.
59
NOTE L--EMPLOYEE BENEFIT PLANS - continued
The weighted average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation were approximately 8.5% and 4.5% at December 31, 1994 and 7.5% and
4.5% at December 31, 1993. The weighted average expected long-term rate of
return on plan assets was 9.0% for the years ended December 31, 1994, 1993 and
1992.
The United Savings and Stock Investment Plan (the Plan) is a deferred
compensation plan under Section 401(k) of the Internal Revenue Code. All
employees who complete one year of service are eligible to participate in the
Plan. Each participant may contribute from 1% to 10% of pre-tax earnings to
his/her account which may be invested in any of four investment options chosen
by the employee. United matches 100% of the first 2% of salary deferred and 25%
of the next 2% of salary deferred with United common stock. Vesting is 100% for
employee deferrals and the United match at the time the employee makes his/her
deferral. United's expense relating to the Plan approximated $336,000, $280,000
and $241,000 in 1994, 1993, and 1992, respectively.
The assets of United's defined benefit plan and 401(k) Plan each include
investments in United common stock. At December 31, 1994, the combined plan
assets included 178,317 shares of United common stock with a market value of
approximately $4,280,000.
United has certain deferred compensation plans covering various key employees.
Periodic charges are made to operations so that the present value of the
liability due each employee is fully recorded as of the date of their
retirement. Amounts charged to expense have not been significant in any year.
During 1988, United formed the 1988 Incentive Stock Option Plan for key
employees. Stock option grants are awarded at the fair market value of United's
common stock on the date of the grant. The options are immediately exercisable
and have a maximum duration of 10 years. Options need not be exercised in the
order granted. The final 20,000 options under this plan were granted in January
1992 at the then current market price of $13.25.
During 1991, United formed the 1991 Incentive Stock Option Plan for key
employees. Five hundred thousand (500,000) shares were allocated to the plan
with no more than 100,000 options to be awarded each year. Stock option grants
are awarded at the fair market value of United's common stock on the date of the
grant. The options may be exercised in accordance with a three year vesting
schedule and have a maximum duration of 10 years. Options need not be exercised
in the order granted. In November 1994, the Board granted 100,000 options at
the then current market price of $23.00.
60
NOTE L--EMPLOYEE BENEFIT PLANS - continued
The following is a summary of the 1988 Incentive Stock Option Plan activity:
Range of
Year Ended December 31, Exercise Prices
------------------------ ---------------
1994 1993 1992 High Low
---- ---- ---- ---- ---
Outstanding at beginning of year 86,250 95,700 80,000 $14.00 $11.00
Granted 20,000 14.00 11.00
Exercised 17,450 9,450 4,300 13.50 11.00
Forfeited ------- ------- -------
Outstanding at end of year 68,800 86,250 95,700 14.00 11.00
======= ======= =======
Exercisable at end of year 68,800 86,250 95,700 $14.00 $11.00
======= ======= =======
The following is a summary of the 1991 Incentive Stock Option Plan activity:
Range of
Year Ended December 31, Exercise Prices
------------------------ ---------------
1994 1993 1992 High Low
---- ---- ---- ---- ---
Outstanding at beginning of year 242,000 158,500 82,000 $27.00 $13.75
Granted 100,000 85,750 77,000 27.00 13.75
Exercised 16,750 2,250 500 19.75 13.75
Forfeited 9,375 27.00 13.75
------- ------- -------
Outstanding at end of year 315,875 242,000 158,500 27.00 13.75
======= ======= =======
Exercisable at end of year 157,313 97,250 40,500 $27.00 $13.75
======= ======= =======
United provides postretirement benefits for certain employees at subsidiaries
acquired in prior years. United accounts for such costs as expense when paid.
United's analysis indicates that accounting for such costs when paid does not
produce results materially different from those which would result if such costs
were accrued during the period of employee service. United does not anticipate
providing postretirement benefits to its currently active employees after
retirement except on a fully contributory basis.
61
NOTE L--EMPLOYEE BENEFIT PLANS - continued
In 1993, the Financial Accounting Standards Board issued Statement No. 112,
(SFAS No. 112), "Employers' Accounting for Postemployment Benefits," which is
effective for fiscal years beginning after December 15, 1993. The provisions of
SFAS No. 112 require employers to recognize the obligation to provide
postemployment benefits to former employees if the obligation is attributable to
the employees' services previously rendered, the employees' rights to those
benefits vest or accumulate, the payment of the benefit is probable, and the
amount can be reasonably estimated. United's analysis indicates that accounting
for such costs when paid does not produce results materially different from the
method of recognizing such costs as prescribed by SFAS No. 112.
NOTE M--COMMITMENTS AND CONTINGENT LIABILITIES
United is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers and to
alter its own exposure to fluctuations in interest rates. These financial
instruments include loan commitments, standby letters of credit and interest
rate swap agreements. The instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
financial statements.
United's maximum exposure to credit loss in the event of nonperformance by the
counterparty to the financial instrument for the loan commitments and standby
letters of credit is represented by the contractual amount of those instruments.
United uses the same policies in making commitments and conditional obligations
as it does for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require the payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The amount of collateral obtained, if deemed
necessary upon the extension of credit, is based on management's credit
evaluation of the counterparty. United had approximately $244,975,000 and
$216,789,000 of loan commitments outstanding as of December 31, 1994 and 1993,
respectively, with substantially all of them expiring within one year.
Standby letters of credit are agreements used by United's customers as a means
of improving their credit standing in their dealings with others. Under these
agreements, United guarantees certain financial commitments of its customers.
United has issued standby letters of credit of $15,022,000 and $21,030,000 as of
December 31, 1994 and 1993, respectively.
Management does not anticipate any material losses as a result of these loan
commitments, standby letters of credit and interest rate swap agreements.
62
NOTE M--COMMITMENTS AND CONTINGENT LIABILITIES - continued
In 1994 United entered into an interest rate swap agreement to manage its
interest rate exposure. The interest rate swap transaction involves the
exchange of a floating rate payment based on the one month London inter-bank
offered rate (LIBOR) for a fixed rate receipt based on the U. S. three year
treasury note. The net pay and receive amount is calculated on an underlying
notional amount without the exchange of the underlying principal amount. The
interest rate swap subjects United to market risk associated with changes in
interest rates, as well as the risk that the counterparty will fail to perform.
Only the interest payments are exchanged, and therefore, cash requirements and
exposure to credit risk are significantly less than the notional amount.
The notional amount shown below represents an agreed upon amount on which
calculations of amounts to be exchanged are based. It does not represent direct
credit exposure. United's credit exposure is limited to the net difference
between the calculated pay and receive amounts on the transaction which is
netted monthly.
The swap, which matures in 1997, is summarized as follows:
Receive fixed generic swap:
Notional value $50,000,000
Average receive rate during 1994 4.50%
Average pay Rate during 1994 4.50%
During 1994 the interest rate swap reduced interest income by $1,000. At
December 31, 1994, the estimated unrealized loss on the swap, which may reduce
interest income in future periods, approximated $3,120,000. A key assumption
utilized in computing the unrealized loss is that interest rates will remain at
the December 31, 1994 level throughout the term of the agreement.
NOTE N--OTHER INCOME AND EXPENSE
The following items of other income and expense exceeded one percent of total
revenue for the periods indicated:
Year Ended December 31
---------------------------------
1994 1993 1992
---- ---- ----
Other income:
-------------
Service charges and
fees on deposits $ 6,644,000 $ 7,168,000 $ 5,452,000
Other expense:
--------------
Data processing $ 1,973,000 $ 2,065,000 $ 2,101,000
Stationery and supplies 1,250,000 1,320,000 1,216,000
FDIC insurance expense 3,207,000 3,149,000 2,780,000
Legal and consulting 1,172,000 1,359,000
63
NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by United in estimating its fair
value disclosures for financial instruments:
Cash and Cash Equivalents: The carrying amounts reported in the balance sheet
- --------------------------
for cash and cash equivalents approximate those assets' fair values.
Securities: The estimated fair values of securities are based on quoted market
- -----------
prices, where available. If quoted market prices are not available, fair values
are based on quoted market prices of comparable instruments.
Loans: The estimated fair values of variable-rate loans that reprice frequently
- ------
with no significant change in credit risk are based on carrying values. The
fair values of certain mortgage loans (e.g., one-to-four family residential),
credit card loans, and other consumer loans are based on quoted market prices of
similar loans sold in conjunction with securitization transactions, adjusted for
differences in loan characteristics. The fair values of other loans (e.g.,
commercial real estate and rental property mortgage loans, commercial and
industrial loans, financial institution loans, and agricultural loans) are
estimated using discounted cash flow analyses, using interest rates currently
being offered for loans with similar terms to borrowers of similar credit
worthiness.
Off-Balance-Sheet Instruments: Fair values of United's loan commitments are
- ------------------------------
based on fees currently charged to enter into similar agreements, taking into
account the remaining terms of the agreements and the counterparties' credit
standing. The estimated fair values of these commitments approximate their
carrying values. The fair value of the interest rate swap agreement is
calculated with pricing models using current rate assumptions. A key assumption
utilized in computing the estimated fair value of the interest rate swap
agreement is that interest rates will remain at the December 31, 1994 level
throughout the term of the agreement.
Deposits: The fair values of demand deposits (e.g. interest and non-interest
- ---------
checking, regular savings, and certain types of money market accounts) are, by
definition, equal to the amount payable on demand at the reporting date (i.e.
their carrying amounts). The carrying amounts of variable-rate, fixed-term
money market accounts and certificates of deposits approximate their fair values
at the reporting date. Fair values of fixed-rate certificates of deposit are
estimated using a discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of aggregated expected
monthly maturities on time deposits.
Short-term Borrowings: The carrying amounts of federal funds purchased,
- ----------------------
borrowings under repurchase agreements, and other short-term borrowings
approximate their fair values.
64
NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS - continued
Long-term Borrowings: The fair values of United's long-term borrowings are
- ---------------------
estimated using discounted cash flow analyses, based on United's current
incremental borrowing rates for similar types of borrowing arrangements. The
carrying value of long-term borrowings approximates their fair value.
The estimated fair values of United's financial instruments are summarized
below:
December 31,1993 December 31,1993
------------------------------ ------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------------------------ ------------------------------
Cash and cash equivalents $ 82,763,000 $ 82,763,000 $ 60,850,000 $ 60,850,000
Securities available for sale 118,037,000 118,037,000
Securities 242,846,000 231,461,000 430,427,000 438,223,000
Loans 1,302,095,000 1,290,249,000 1,187,215,000 1,190,144,000
Deposits 1,434,852,000 1,429,302,000 1,430,529,000 1,434,105,000
Short-term borrowings 71,809,000 71,809,000 72,610,000 72,610,000
Long-term borrowings 83,972,000 83,932,000 32,203,000 32,526,000
Interest rate swap agreement 3,120,000
NOTE P--LITIGATION
In the normal course of business, United and its subsidiaries are currently
involved in various legal proceedings. Management is vigorously pursuing all
its legal and factual defenses and, after consultation with legal counsel,
believes that all such litigation will be resolved with no material effect on
its financial position or results of operations.
NOTE Q--SUBSEQUENT EVENT
United has entered into an agreement in principle with First Commercial Bank,
Arlington, Virginia ("First Commercial") to acquire First Commercial for stock
and cash of approximately $10,900,000. The transaction will be accounted for
using the purchase method of accounting. It is anticipated that the proposed
acquisition will be consummated during the fourth quarter of 1995. At December
31, 1994, First Commercial had $60,916,000 in total assets and $5,717,000 in
shareholders' equity. Proforma financial information regarding the effects of
the transaction would not be materially different from that reported herein.
65
NOTE R - UNITED BANKSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL
INFORMATION
Condensed Balance Sheets
December 31
----------------------------
1994 1993
------------ ------------
Assets
Cash $1,265,000 $753,000
Securities available for sale 2,887,000
Investment securities 677,000 2,140,000
Investment in subsidiaries
Bank subsidiaries 174,452,000 167,282,000
Non-bank subsidiaries 1,180,000 1,186,000
Other assets 243,000 399,000
------------ ------------
Total Assets $180,704,000 $171,760,000
============ ============
Liabilities
Accrued expenses and other liabilities $958,000 $788,000
Shareholders' Equity (including a net unrealized holding loss
of $443,000 on securities available for sale at December 31, 1994 179,746,000 170,972,000
------------ ------------
Total Liabilities and Shareholders' Equity $180,704,000 $171,760,000
============ ============
Condensed Statements of Income Year Ended December 31
--------------------------------------------
1994 1993 1994
------------ ------------ ------------
Income
Dividends from bank subsidiaries $17,525,000 $10,918,000 $10,314,000
Management fees
Bank subsidiaries 2,226,000 2,257,000 2,040,000
Non-bank subsidiaries 12,000 12,000 12,000
Other Income 238,000 210,000 130,000
------------ ------------ ------------
Total Income 20,001,000 13,397,000 12,496,000
Expenses
Operating expenses 2,953,000 2,860,000 2,879,000
------------ ------------ ------------
Income Before Income Taxes, Equity in
Undistributed Net Income of Subsidiaries and
Cumulative Effect of Change in Accounting Principle 17,048,000 10,537,000 9,617,000
Applicable income taxes (benefit) (73,000) (104,000) (188,000)
------------ ------------ ------------
Income Before Equity in Undistributed Net
Income of Subsidiaries and Cumulative
Effect of Change in Accounting Principle 17,121,000 10,641,000 9,805,000
Cumulative Effect as of January 1, 1993 of
Change in Accounting Principle (99,000)
------------ ------------ ------------
Income Before Equity in Undistributed
Net Income of Subsidiaries 17,121,000 10,542,000 9,805,000
Equity in undistributed net income of subsidiaries
Bank subsidiaries 7,755,000 11,143,000 6,526,000
Non-bank subsidiaries 26,000 21,000 28,000
------------ ------------ ------------
Net Income $24,902,000 $21,706,000 $16,359,000
============ ============ ============
66
NOTE R - UNITED BANKSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL
INFORMATION - CONTINUED
Condensed Statements of Cash Flows Year Ended December 31
-------------------------------------
1994 1993 1992
----------- ----------- -----------
Operating Activities
Net income $24,902,000 $21,706,000 $16,359,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed net income of subsidiaries (7,781,000) (11,164,000) (6,554,000)
Depreciation and net amortization 59,000 112,000 93,000
Net gain on sales of investment securities (107,000) (133,000)
Gain on sale of bank premises and equipment (49,000)
Net change in other assets and liabilities 96,000 30,000 (181,000)
----------- ----------- -----------
Net Cash Provided By Operating Activities 17,120,000 10,551,000 9,717,000
----------- ----------- -----------
Investing Activities
Net sales (purchases) of investment securities 123,000 793,000 (179,000)
Net purchases of securities available for sale (1,171,000)
Net change in securities purchased under
resell agreements 2,375,000
Proceeds from sale of bank premises and equipment 125,000
----------- ----------- -----------
Net Cash Provided By (Used In) Investing Activities (923,000) 793,000 2,196,000
----------- ----------- -----------
Financing Activities
Cash dividends paid (12,604,000) (10,918,000) (10,326,000)
Acquisition of treasury stock (3,536,000) (300,000) (1,729,000)
Sales of treasury stock 158,000
Proceeds from exercise of stock options 455,000 144,000 55,000
Issuance of common stock 120,000 1,000
----------- ----------- -----------
Net Cash (Used In) Financing Activities (15,685,000) (10,954,000) (11,841,000)
----------- ----------- -----------
Increase in Cash 512,000 390,000 72,000
Cash and Cash Equivalents at Beginning of Year 753,000 363,000 291,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $1,265,000 $753,000 $363,000
=========== =========== ===========
67
NOTE S - QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial data for 1994 and 1993 is summarized below (dollars in
thousands except for per share data):
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
1994
- ----
Interest income $28,533 $29,530 $31,306 $31,788
Interest expense 10,384 10,536 11,090 11,877
Net interest income 18,149 18,994 20,216 19,911
Provision for possible loan losses 450 468 450 450
Securities gains (losses) 107 45 (1,024)
Other noninterest income 3,113 2,929 2,882 3,170
Noninterest expense 11,667 11,888 12,728 12,393
Income taxes 3,158 3,402 3,478 3,058
Net income 6,094 6,210 6,442 6,156
Per share data:
- --------------
Average shares outstanding (000s) 11,930 11,942 11,921 11,956
Net income per share $0.51 $0.52 $0.54 $0.51
Dividends per share $0.26 $0.26 $0.27 $0.27
1993
- ----
Interest income $29,016 $28,667 $29,325 $29,497
Interest expense 11,516 11,233 11,140 11,120
Net interest income 17,500 17,434 18,185 18,377
Provision for possible loan losses 2,120 922 663 627
Securities gains 142 332 5
Other noninterest income 2,840 3,309 2,973 3,072
Noninterest expense 12,699 12,058 12,074 12,859
Income taxes 1,765 2,512 2,660 2,833
Income before cumulative effect
of accounting change 3,898 5,583 5,766 5,130
Cumulative effect of accounting change 1,329
Net income 5,227 5,583 5,766 5,130
Per share data:
- --------------
Average shares outstanding (000s) 11,924 11,922 11,920 11,924
Income before cumulative effect
of accounting change per share $0.33 $0.47 $0.48 $0.43
Net income per share $0.44 $0.47 $0.48 $0.43
Dividends per share $0.23 $0.23 $0.24 $0.25
68
UNITED BANKSHARES, INC.
FORM 10-K, PART II
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
This item is omitted since it is not applicable.
69
UNITED BANKSHARES, INC.
FORM 10-K, PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion satisfies the reporting requirements
of Items 10 through 13.
70
Principal Shareholders of United
- --------------------------------
The following table lists each shareholder of United who is the beneficial
owner of more than 5% of United's common stock, the only class of stock
outstanding, as of December 31, 1994.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class
------------------- -------------------- ----------
(1) United National Bank 980,734 8.30%
Trust Department
514 Market Street
Parkersburg WV 26101
(764,998 shares or
6.47% are registered
under the nominee name
of Cede & Co.)
(1) UNB is a wholly-owned subsidiary of United and its Trust
Department holds in fiduciary or agency capacity 980,734 shares of United's
stock. The voting and investment authority for the shares held by the Trust
Department is exercised by UNB's Board of Directors.
Board of Directors
- ------------------
The Bylaws of United provide that its Board of Directors shall consist of
not fewer than five nor more than thirty-five persons, as may be determined,
from time to time, by resolution adopted by the shareholders or by a majority of
the Board of Directors. The twenty-four (24) persons listed below have been
elected or appointed to serve as directors of United until the 1995 Annual
Meeting of shareholders and until their successors are elected and qualified.
Each director has served continuously to date as a director beginning in
the indicated year.
Directors have sole voting and investment authority of directly owned
shares. The total of directly owned shares also includes stock options granted
to executive officers pursuant to incentive stock option plans. For four of the
directors who are executive officers, direct ownership includes options to
purchase shares as follows: Richard Adams, 79,500 shares, Douglass H. Adams,
10,200 shares, Thomas A. McPherson, 16,200 shares and I. N. Smith, Jr., 14,250
shares. The options to purchase shares included in the direct ownership of all
executive officers as a group total 231,550. For the executive offices held by
them, see the section of this document captioned "Executive Officers."
Indirect shares for each individual director include those owned by
spouses and immediate family members, shares held in any trust of which a
director is a beneficiary, and shares held by a corporation which the director
controls. These shares do not include the Trust Shares referred to in a
following footnote.
71
RICHARD M. ADAMS, who is Chairman and Chief Executive Officer of both
United and UNB, became a director of United in 1984. Mr. Adams is 48 years old.
He owns 221,795 shares of United directly and 90,003 shares indirectly, the
total of which represents 2.64 percent of the total outstanding shares of
United. Of the 90,003 shares indirectly owned by Mr. Adams, 25,590 shares are in
the Stevenson Trust over which he exercises voting power, 33,747 shares owned by
the members of his immediate family and 30,666 shares are held in two family
trusts over which he exercises voting power but no investment authority. Messrs.
Richard M. Adams and Douglass H. Adams are brothers.
I. N. SMITH, JR., who is President of United, Vice Chairman of UNB, and
former President of UNB, became a director in 1986. Mr. Smith is 62 years old.
He owns 19,126 shares of United directly and 220,184 shares indirectly, the
total of which represents 2.03 percent of the total outstanding shares of
United. Of the 220,184 shares indirectly owned beneficially by Mr. Smith, 14,700
shares are owned by members of his immediate family and 4,000 shares are owned
by the mother of Mr. Smith over which he has power of attorney. The following
shares owned of record by others may be deemed to be owned by Mr. Smith under
the rules and regulations of the Securities and Exchange Commission: Kanawha
City Company 15,000 shares; Kanawha Company 56,000 shares; Roane Land Company
484 shares; Roxalana Land Company 75,000 shares; and West Virginia Coal Land
Company 55,000 shares.
DOUGLASS H. ADAMS, who is Executive Vice-President of United, became a
director in 1988. Mr. Adams is 56 years old. He owns 44,527 shares of United
directly and 2,514 shares indirectly, the total of which represents less than
one percent of the total outstanding shares of United. Messrs. Richard M. Adams
and Douglass H. Adams are brothers.
ROBERT G. ASTORG, who is a CPA and Managing Director of American Express
Tax & Business Service, Inc., a financial consultant and tax service, became
director in 1991. Mr. Astorg is 51 years old. He owns 12,164 shares of United
directly and 796 shares indirectly, the total of which represents less than one
percent of the total outstanding shares of United. Mr. Astorg is a former
Partner of Astorg and Altizer, CPAs.
THOMAS J. BLAIR, III, who is President and Chief Executive Officer of
Kelley, Gidley, Blair & Wolfe, Inc., former Chairman of the Board of UNB-
Central, Heritage and Weston National, became a director in 1988. Mr. Blair is
61 years old. He owns 130,725 shares of United directly and 7,100 shares
indirectly, the total of which represents 1.17 percent of the total outstanding
shares of United. Mr. Blair is a former president of the McDowell County Water
Company, which filed a voluntary petition under Chapter 11 of the United States
Bankruptcy Code on November 11, 1989. In previous proxy statements it was
disclosed that Mr. Blair was convicted of a series of seven (7) identical
statutory misdemeanors stemming from his company's alleged failure to establish
and maintain adequate and suitable water facilities and failure to perform such
service thereto as shall be reasonable, safe and sufficient for the service and
convenience of the public. Mr. Blair appealed his convictions. On December 14,
1993, the Supreme Court of Appeals of West Virginia set aside, reversed and
annulled the convictions.
72
HARRY L. BUCH, who is an Attorney at Law, and Partner with Bailey, Riley,
Buch & Harman, became a director in 1990. Mr. Buch is 64 years old. He owns
10,063 shares of United directly which represents less than one percent of the
total outstanding shares of United. Mr. Buch is a former Partner with Gompers,
Buch, McCarthy & McLure
R. TERRY BUTCHER, who is an Attorney at Law, and Partner with Butcher &
Butcher, became a director in 1988. Mr. Butcher is 47 years old. He owns 23,500
shares of United directly and 500 shares indirectly, the total of which
represents less than one percent of the total outstanding shares of United.
JOHN W. DUDLEY, who is President of J. W. Dudley Sons & Company, a retail
business, became a director in 1986. Mr Dudley is 48 years old. He owns 8,703
shares of United directly which represents less than one percent of the total
outstanding shares of United.
H. SMOOT FAHLGREN, who is Chief Executive Officer and former Chairman of
Fahlgren, Inc., became a director in 1984. Mr. Fahlgren is 64 years old. He owns
125,163 shares of United directly which represents 1.06 percent of the total
outstanding shares of United. Mr. Fahlgren is Mr. Graff's father-in-law.
THEODORE J. GEORGELAS, who is Chairman of the Board of Bank First, N.A.,
and President of Georgelas and Sons, Inc., a commercial real estate development
company, became a director in 1990. Mr. Georgelas is 48 years old. He directly
owns 49,666 shares of United which represents less than one percent of the total
outstanding shares of United.
JOSEPH N. GOMPERS, who is a CPA and Partner with Gompers and Associates,
CPA's, became a director in 1990. Mr. Gompers is 42 years old. He owns 7,947
shares of United directly which represents less than one percent of the total
outstanding shares of United.
C. E. GOODWIN, who is an Attorney at Law and Counsel with Goodwin &
Goodwin, became a director in 1985. Mr. Goodwin is 84 years old. He owns 15,620
shares of United directly and 1,272 shares indirectly, the total of which
represents less than one percent of the total outstanding shares of United.
F.T. GRAFF, JR., who is a practicing attorney and partner of Bowles Rice
McDavid Graff and Love, became a director of United in 1984. Mr. Graff is 55
years old. He owns 2,000 shares of United directly and 9,000 shares indirectly,
the total of which represents less than one percent of the total outstanding
shares of United. The indirectly owned shares are held by a bank in a trustee
account for Mr. Graff over which he exercises voting and dispositive power. Mr.
Graff is Mr. Fahlgren's son-in-law.
73
LEONARD A. HARVEY, who is a former Secretary of the West Virginia
Department of Commerce, Labor, and Environmental Resources, became a director of
United in 1990. Mr. Harvey is 68 years old. He owns 28,659 shares of United
directly and 859 shares indirectly, the total of which represents less than one
percent of the total outstanding shares of United.
ANDREW J. HOUVOURAS, who is President of A&L Industries, an investment
company, became a director of United in 1985. Mr. Houvouras is 75 years old. He
owns 424 shares of United directly and 27,054 shares indirectly, the total of
which represents less than one percent of the total outstanding shares of
United. The indirect shares are owned by a company in which Mr. Houvouras is a
partner.
RUSSELL L. ISAACS, who is the owner of Russell L. Isaacs and Company, a
consulting firm, became a director of United in 1984. Mr. Isaacs is 62 years
old. He owns 20,958 shares of United directly which represents less than one
percent of the total outstanding shares of United.
ROBERT P. MCLEAN, who is the President of Stanaford Acres, Inc. and Vice-
President of Sigmund-McLean, Inc. became a director of United in 1992. Mr.
McLean is 64 years old. He owns 4,153 shares of United directly and 1,303 shares
indirectly, the total of which represents less than one percent of the total
outstanding shares of United.
THOMAS A. MCPHERSON, who is an Executive Vice President of United and the
former President and Chief Executive Officer of UNB-C, became a director of
United in 1988. Mr. McPherson is 58 years old. He owns 68,001 shares of United
directly which represents less than one percent of the total outstanding shares
of United.
G. OGDEN NUTTING, who is the former Chairman of the Board of UNB-N and
President of The Ogden Newspapers, Inc., became a director of United in 1986.
Mr. Nutting is 59 years old. He owns 326,328 shares of United indirectly which
represents 2.76 percent of the total outstanding shares of United. The voting
and investment authority for the indirectly owned shares of Mr. Nutting are as
follows: he has beneficial ownership, through shared investment or voting
authority of 326,328 shares consisting of 20,952 shares held by Mr. Nutting as
co-trustee, and 277,376 shares registered in the name of The Ogden Newspapers,
Inc. of which Mr. Nutting is President. He is also a settlor and sole
beneficiary of a trust which contains 28,000 shares.
WILLIAM C. PITT, III, who is a hotel and resort developer, became a
director of United in 1987. Mr. Pitt is 50 years old. He owns 5,000 shares of
United directly which represents less than one percent of the total outstanding
shares of United.
74
CHARLES E. STEALEY, who is a private consultant and former Assistant Vice
President and Director of Administration of Olsten Corporation, became a
director of United in 1986. Mr. Stealey is 54 years old. He owns 30,668 shares
of United directly and 48,362 shares indirectly, the total of which represents
less than one percent of the total outstanding shares of United. Mr. Stealey's
mother holds 7,354 of the indirect shares over which Mr. Stealey has power of
attorney and the other 41,008 indirect shares are held in a trustee account for
Mr. Stealey over which he exercises voting and investment authority.
WARREN A. THORNHILL, III, who is an Attorney at Law, former Chairman of
the Board of Summit Holding Corporation and Raleigh County National Bank and
Chairman of UNB-S, became a director of United in 1992. Mr. Thornhill is 66
years old. He owns 131,997 shares of United directly and 92,730 shares
indirectly, the total of which represents 1.90 percent of the total shares
outstanding of United. Mr. Thornhill's indirectly owned shares are owned by the
members of his immediate family.
HAROLD L. WILKES, who is President of Little General Stores, Inc., a
convenience store chain, became a director of United in 1993. Mr. Wilkes is 54
years old. He directly owns 1,911 shares of United which represents less than
one percent of the total outstanding shares of United.
JAMES W. WORD, JR., who is President of Beckley Loan Company and Vice-
President of Beckley Loan and Industrial Corporation became a director of United
in 1992. He is 70 years old. He owns 31,743 shares of United directly and 27,737
shares indirectly, the total of which represents less than one percent of the
total outstanding shares of United. Mr. Word's indirectly owned shares are owned
by the members of his immediate family.
All directors and executive officers of United as a group, 30 persons, own
1,151,132 shares of United directly and 1,892,912 shares indirectly, the total
of which represents 25.76 percent of the total shares outstanding for United.
Included in indirectly owned shares is 980,734 shares of United common stock
held by UNB's Trust Department serving in a fiduciary or agency capacity (the
"Trust Shares"). The voting and investment authority for the Trust Shares held
by the Trust Department is exercised by UNB's Board of Directors. The members of
UNB's Board of Directors who are also directors or executive officers of United
are: Richard M. Adams, I. N. Smith, Jr., and Gary L. Ellis. In addition, the
total indirect shares includes 49,930 held by the Trust Department of UNB-S. Of
the 49,930 UNB-S's Trust shares, 43,297 shares are held in the nominee name of
Big Clock Investment Company which are voted by UNB-S's Board of Directors. The
members of UNB-S's Board who are also directors or executive officers of United
are Gary L. Ellis, Warren A. Thornhill, III, and Robert P. McLean.
75
Meetings and Committees of the Board of Directors
- -------------------------------------------------
The Board of Directors of United met six times during 1994. The Board
reviews management reports and general corporate policy. During the calendar
year ended December 31, 1994, each director of United attended more than 75% of
the total number of meetings of the Board and Board Committees on which he or
she served during the period he or she served as a director, except for G. Ogden
Nutting.
The Board has three standing committees--the Executive, Audit and
Compensation Committees. The Audit Committee met four times in 1994 to review
the quarterly reports of internal audit, all reports of external auditors, and
all reports of examination by federal and state bank regulatory authorities.
This committee consisted of: Robert G. Astorg, Chairman, R. Terry Butcher, C. E.
Goodwin and James W. Word, Jr.
The Executive Committee met seven times during 1994. The Executive
Committee may exercise the power of the Board of Directors between meetings of
the full Board of Directors or upon the call of the Chairman, as directed by the
Board and consistent with the provisions of West Virginia corporate law and
United's articles of incorporation and bylaws. The committee consisted, during
1994, of Richard M. Adams, Chairman, I. N. Smith, Jr., Thomas J. Blair, III,
Harry L. Buch, H. Smoot Fahlgren, Theodore J. Georgelas, Leonard A. Harvey,
Russell L. Isaacs, G. Ogden Nutting, William C. Pitt, III, Warren A. Thornhill,
III and F. T. Graff, Jr., who also serves as secretary for the Executive
Committee.
The Compensation Committee met two times during 1994. The Compensation
Committee makes recommendations regarding officer compensation and budgetary
matters to the Board of Directors. The committee consisted of the same members
as served on the Executive Committee except for Messrs. R. Adams and Smith. Mr.
Isaacs is chairman of the Compensation Committee.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
F.T. Graff, Jr., a member of the Board of Directors of United and the
Board's Compensation Committee, is a partner in the law firm of Bowles Rice
McDavid Graff & Love in Charleston, West Virginia. Bowles Rice McDavid Graff &
Love rendered legal services to United and UNB during 1994 and it is expected
that the firm will continue to render services to both in the future. The fees
paid to Bowles Rice McDavid Graff & Love represent less than 5% of that firm's
revenues for 1994.
Compensation of Directors
- -------------------------
Directors other than executive officers of United receive a retainer of
$550 per month without regard to meeting attendance. In addition, each outside
director receives a fee of $275 for each United Board Committee attended except
for Mr. Isaacs. Mr. Isaacs, as chairman of the Compensation Committee, receives
$550 for each committee meeting attended. Mr. Astorg, as chairman of the Audit
Committee, receives an additional retainer payment of $275 per month without
regard to meeting attendance.
76
SUMMARY COMPENSATION TABLE
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, the Company's chief executive
officer and each of the Company's other four most highly compensated executive
officers during last three fiscal years.
Long-term
Annual Compensation Compensation
Stock
Options All Other
Name and Principal Position Year Salary Bonus (#) Compensation(3)
- ----------------------------------------------- ---- -------- -------- ----------- ------------
Richard M. Adams Chairman of the Board 1994 $290,413 $130,000 14,500 $28,756 (2)
& Chief Executive Officer 1993 257,948 80,000 10,000 25,320
1992 243,340 80,000 17,500 22,319
I. N. Smith, Jr. President 1994 145,109 15,900 3,000 4,052 (1)
1993 145,109 15,000 3,000 4,046
1992 145,109 15,000 5,000 4,045
Gary L. Ellis Executive Vice President 1994 144,672 45,000 5,000 4,749 (1)
1993 137,493 30,000 5,000 3,554
1992 129,711 30,000 8,000 3,112
Steven E. Wilson Executive Vice President 1994 122,542 36,000 5,500 3,794 (1)
Chief Financial Officer 1993 113,540 25,000 4,000 2,783
& Treasurer 1992 107,113 25,000 6,500 2,560
Thomas A. McPherson Executive Vice President 1994 120,000 25,000 4,700 3,482 (1)
1993 120,000 15,000 3,500 3,368
1992 118,943 15,000 3,000 3,358
(1) All reported amounts indicate annual amounts accrued under the Company's
401(K) Plan.
(2) Included are $ 5,934 representing the Company's matching contribution to the
Company's 401(K) Plan and $ 22,822 accrued under a supplemental executive
retirement plan.
(3) The aggregate value of all perquisites and other personal benefits did not
exceed either $ 50,000 or 10% of the total annual salary and bonus reported
for the named executive officers; therefore, no disclosure has been made.
77
STOCK OPTION GRANTS TABLE
The following table sets forth information concerning individual grants of
options to purchase the Company's Common Stock made to the named executives in
1994.
Stock Option Grants in Last Fiscal Year
--------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
-------------------------------------------------------------- ----------------------------
Number of
Securities % of Total
Underlying Options Granted to Exercise or
Options All Employees Base Price Expiration 5% 10%
Name Granted (#) in Fiscal Year ($/Share) Date ($) ($)
- ------------------ ----------- ------------------- ----------- ----------- ------- -------
Richard M. Adams 14,500 (1) 14.50% 23.00 11/28/2004 209,735 531,512
I. N. Smith, Jr. 3,000 (1) 3.00% 23.00 11/28/2004 43,393 109,968
Gary L. Ellis 5,000 (1) 5.00% 23.00 11/28/2004 72,322 183,280
Steven E. Wilson 5,500 (1) 5.50% 23.00 11/28/2004 79,555 201,608
Thomas A. McPherson 4,700 (1) 4.70% 23.00 11/28/2004 67,983 172,283
(1) Granted from the 1991 Incentive Stock Option Plan. The option exercise price
is the market value of United's stock at the date the option was granted.
All options granted under this plan are exercisable in accordance with a
three year vesting schedule: 50% after the first year; 75% after the second
year and 100% after three years.
78
STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth certain information regarding individual
exercises of stock options during 1994 by each of the named executives.
Aggregate Stock Option Exercises in Last Fiscal Year
and FY-End Stock Option Value
------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised
Stock Option's In-the-Money Stock
at FY-End (#) Option's at FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized Unexercisable Unexercisable
- ------------------- --------------- --------- -------------------- -----------------------
Richard M. Adams 6,750 $92,813 57,500/ 22,000 $ 500,625/$ 25,125
I. N. Smith, Jr. 3,000 $36,750 9,000/ 5,250 $ 63,813/$ 6,188
Gary L. Ellis 3,000 $34,500 21,250/ 8,750 $ 171,188/$ 10,313
Steven E. Wilson 10,000 $119,375 7,500/ 8,500 $ 37,750/$ 9,750
Thomas A. McPherson 9,000/ 7,200 $ 63,563/$ 7,888
79
Executive Officers
- ------------------
Set forth below are the executive officers of United and relations that
exist with affiliates and others for the past five years.
Principal Occupation and
Banking Experience During
Name Age Present Position The Last Five Years
---- --- ---------------- -------------------------
Richard M. Adams 48 Chairman of the Chairman of the Board and
Board & Chief Chief Executive Officer-
Executive Officer- United; Chairman of the
United; Chairman Board, and Chief
of the Board & Executive Officer-UNB
Chief Executive
Officer - UNB
I.N. Smith, Jr. 62 President-United; President-United (1990
Vice-Chairman - to present); President-
UNB, Director - UNB (1990 to October
United and UNB 1991); Vice-Chairman-UNB
(November 1991 to present)
Douglass H. Adams 56 Executive Vice- Executive Vice-President,
President- United (1990 to present);
United; Director- President-Vienna Office of
United United National Bank (1990
to present)
David D. Addison 47 Executive Vice- Executive Vice-President and
President and Trust Officer-United (November
Trust Officer- 1991 to present); Senior Vice-
United; Senior President-UNB (January 1991
Vice-President- to present); Senior Vice-
UNB President-National Trust Co.
(June 1990 to December 1991);
Vice President-Wachovia
Bank & Trust Co. (June 1990)
Gary L. Ellis 53 Executive Vice- Executive Vice-President
President- United (1990 to present);
United; Director President-UNB (November
and President - 1991 to present); President
UNB; Director- Charleston Office, UNB
UNB-S (1990 to October 1991);
Executive Vice-President - UNB
(1990 to October 1991)
Chief Operating Officer -
UNB (1990 to October 1991)
80
Principal Occupation and
Banking Experience During
Name Age Present Position The Last Five Years
---- --- ---------------- -------------------------
James B. Hayhurst 48 Executive Vice- Executive Vice-President
President - -United (1990 to present);
United; Executive Executive Vice-President-
Vice-President- UNB (1990 to present);
UNB President-UNB Parkersburg
Offices (1990 to present)
Thomas A. 58 Executive Vice- Executive Vice-President-
McPherson President - United; United (1990 to present);
Director-United President and CEO - UNB-C
(1990 to December 1992)
Joseph Wm. Sowards 44 Executive Vice- Executive Vice President and
President and Secretary-United (1990 to
Secretary-United; present); Executive Vice-
Executive Vice- President-UNB (1990 to present)
President-UNB
Joe L. Wilson 46 Executive Vice- Executive Vice-President-United
President-United (1990 to present); President-
UNB-N (1990 to December 1992)
Steven E. Wilson 46 Executive Vice- Executive Vice-President and
President, Chief Chief Financial Officer-United
Financial Officer, (1990 to present); Treasurer-
and Treasurer- United (1990 to present);
United; Executive Executive Vice President
Vice-President, and Chief Financial Officer-
Chief Financial UNB (1990 to present)
Officer and
Secretary - UNB
Certain Reports
- ---------------
Section 16(a) of the Securities and Exchange Act of 1934 requires United's
directors and executive officers and persons who beneficially own more than ten
percent of United's stock (currently, to the best of United's knowledge, there
are no such persons) to file initial forms of beneficial ownership (Form 3),
statements of changes in beneficial ownership (Form 4) and annual statements of
beneficial ownership (Form 5) with the Securities and Exchange Commission
("SEC"). Persons filing such reports are required by SEC regulations to furnish
United with copies of all such beneficial ownership statements filed under
section 16(a) of the Exchange Act.
81
Based solely on a review of such reports and representations from United
directors and executive officers, United believes that during 1994 all such
reports were filed on a timely basis, with four exceptions: Director Leonard A.
Harvey did not file a Form 4 to report the purchase of 2,000 shares of common
stock in April 1994; Director Robert P. McLean did not file two Forms 4 to
report the purchase of 50 shares of common stock in February 1994 and 100 shares
of common stock in May 1994; and Directors Harry L. Buch and Joseph N. Gompers,
as co-trustees of United Trust in which they shared voting and dispositive power
of the 300,000 shares of common stock held in the trust, each failed to file one
Form 4 each in February 1994 to report the distribution of the United Trust
shares to the beneficiaries of the trust. Messrs. Harvey, McLean, Buch, and
Gompers each reported the transactions on a Form 5 filed with respect to 1994.
United's contributions to the Pension Plan, a defined benefit plan, are
not and cannot be calculated separately for specific participants by the Pension
Plan's actuary. No company contributions to the Pension Plan are included in the
amounts shown as aggregate or contingent forms of remuneration. See the section
captioned, Employee Benefit Plans, beginning on page 85.
As of December 31, 1994, the persons named in the table above had compiled
and credited service under the Pension Plan as follows: R. Adams 26 years; I.N.
Smith 35 years; G. Ellis 13 years; T. McPherson 32 years; S. Wilson 23 years.
Executive officers above are eligible to participate in the 401(K) Plan, a
defined contribution plan. Discretionary contributions made by the individuals
are matched in accordance with provisions of the plan as described under the
section entitled Employee Benefit Plans. Discretionary contributions, made from
the participant's regular pay, are reflected in Cash Compensation above.
United's matching contributions are not reflected in Cash Compensation. Both the
individual contributions and matching contributions are tax deferred income.
Officer Employment Contracts
- ----------------------------
Richard M. Adams, Chairman and Chief Executive Officer of United and UNB
entered into an employment contract with United effective April 11, 1986. This
contract was amended in 1989, again in January and November 1991, April 1992 and
again in November 1993. This most recent amendment also served to initiate a new
five year term. Under the contract Mr. Adams is required to devote his full-time
energies to performing his duties as Chairman and CEO on behalf of United and
UNB. The contract provides for a base compensation of $300,000 and additional
benefits consistent with the office. This base compensation may be increased but
not decreased. If the contract is terminated by Adams for change in control, or
for any reason other than mutual consent or criminal misconduct, Mr. Adams, or
his family or estate, is entitled to his base salary for the remainder of the
contract term.
82
On July 27, 1990, United also entered into a Supplemental Retirement Plan
with Mr. Adams. This plan provides for an annual supplemental retirement benefit
upon his reaching age 65 or upon the later termination of his employment with
United. The annual benefit will be equal to seventy percent of the average of
Mr. Adams' three highest base salaries during his employment with United,
reduced by benefits. The plan also provides for reduced benefits for early
retirement after age 62 as well as payments to his spouse in the event of his
death.
United and UNB entered into an employment agreement with I. N. Smith, Jr.,
President of United and Vice-Chairman of UNB, on December 17, 1985. The term of
the agreement extends until Mr. Smith reaches the age of 75. Until Smith becomes
65, he will be employed full-time by United as an executive officer and will
receive an annual salary of no less than $115,000. Upon reaching the age of 65
and until he reaches the age of 75, Mr. Smith shall render such consulting and
advisory services as United may request, and shall receive for such services an
annual fee of $36,000 from age 65 until he reaches age 70, and $30,000
thereafter. The agreement also contains provisions which address the issues of
disability, early retirement and the death of Mr. Smith. All of these events
carry reduced payment provisions. In addition, until Mr. Smith reaches age 65,
he has agreed to serve as, and United has agreed to use its best efforts to
nominate and elect him, a director of United and UNB.
Ohio Valley National Bank, (now a part of UNB as a result of its merger
with United) entered into a Salary Contribution Agreement with Douglass H.
Adams, Executive Vice President of United, on June 13, 1985. This agreement
provides at age 65 for an annual supplemental retirement equal to $30,000 for
life or fifteen years certain. This future liability is being funded with life
insurance. Provision is made for an early retirement benefit beginning at age 60
at a reduced percentage of the normal benefit. The agreement also provides for
payment to beneficiaries in the event of his death.
Change of Control Agreements
- ----------------------------
In March of 1994, United entered into agreements with G. Ellis, S. Wilson,
T. McPherson, J. Hayhurst and J. Wilson to encourage those executive officers
not to terminate their employment with United because of the possibility that
United might be acquired by another entity. The Board of Directors determined
that such an arrangement was appropriate, especially in view of the recent entry
of large regional bank holding companies into West Virginia. The agreements were
not undertaken in the belief that a change of control of United was imminent.
Generally, the agreements provide severance compensation to those officers
if their employment should end under certain specified conditions after a change
of control of United. Compensation is paid upon any involuntary termination
following a change of control unless the officer is terminated for cause. In
addition, compensation will be paid after a change of control if the officer
voluntarily terminates employment because of a decrease in the total amount of
the officer's
83
base salary below the level in effect on the date of consummation of the change
of control, without the officer's consent; a material reduction in the
importance of the officer's job responsibilities without the officer's consent;
geographical relocation of the officer without consent to an office more than
fifty (50) miles from the officer's location at the time of a change of control;
failure by United to obtain assumption of the contract by its successor or any
termination of employment within thirty-six (36) months after consummation of a
change of control which is effected for any reason other than good cause.
Under the agreements, a change of control is deemed to occur in the event
of a change of ownership of United which must be reported to the Securities and
Exchange Commission as a change of control, including but not limited to the
acquisition by any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities and Exchange Act of 1934 (the "Exchange Act")) of direct or
indirect "beneficial ownership" (as defined by Rule 13d-3 under the Exchange
Act) of twenty-five percent (25%) or more of the combined voting power of
United's then outstanding securities, or the failure during any period of two
(2) consecutive years of individuals who at the beginning of such period
constitute the Board for any reason to constitute at least a majority thereof,
unless the election of each director who was not a director at the beginning of
such period has been approved in advance by directors representing at least two-
thirds (2/3) of the directors at the beginning of the period.
Under the agreements, severance benefits include: (a) cash payment equal
to the officers monthly base salary in effect on either (i) the date of
termination; (ii) the date immediately preceding the change of control,
whichever is higher, multiplied by the number of full months between the date of
termination and the date that is thirty-six (36) months after the date of
consummation of the change of control; (b) payment of cash incentive award, if
any, under United's Incentive Plan; (c) continuing participation in employee
benefit plans and programs such as retirement, disability and medical insurance
for a period of thirty-six (36) months following the date of termination.
Succession Management Stock Bonus Plan
- --------------------------------------
In April 1989, the Executive Committee, which at that time also served as
the Compensation Committee, approved a management stock bonus plan. The purpose
of the plan is to retain certain key "junior" officers. The plan is intended to
encourage these individuals to stay with the company and to continue to develop
their potential for future management roles. The plan provides for grants of the
right to receive up to 500 shares per year, for five years, per officer. The
shares granted will be held in trust and the recipients have no ownership rights
until the shares are distributed. All granted stock was distributed to the
grantees at the beginning of 1994. In certain limited circumstances distribution
could have been earlier, such as, in the case of disability or death. Shares
have been purchased by United and are held in a trust account for this plan.
None of the individuals included in this plan were executive officers of United.
No grants have been made since 1990.
84
Incentive Stock Option Plan
- ---------------------------
In February, 1988, the Board adopted an incentive stock option ("ISO")
plan which was approved by United's shareholders at the 1988 annual meeting. The
ISO plan was conceived by United's Board in order to retain and motivate key
management executives of United. The class of eligible employees is executive
officers of United and its subsidiaries owning less than 10% of United's issued
and outstanding stock. The Executive Committee of United, in its sole
discretion, will award stock options to eligible employees, will determine the
conditions for exercise, and will administer the ISO plan generally. One hundred
thousand (100,000) shares were allocated to the plan, with options for no more
than 20,000 shares to be awarded each year. The option exercise price was the
fair market value of United's stock at the time the option is granted. The last
grants under this plan were awarded in 1992. All options granted are vested.
Messrs. R. Adams, Smith, S. Wilson, J. Wilson, Sowards and Ellis have exercised
options.
In April, 1991, the Board adopted an incentive stock option plan ("1991
Plan") which was approved by United's shareholders at the 1991 annual meeting.
The 1991 Plan is intended to attract and retain qualified and motivated
management. The class of eligible employees is officers of United and its
subsidiaries owning less than 10% of United's issued and outstanding stock. The
Executive Committee of United, in its sole discretion, will award stock options
to eligible employees and will administer the 1991 Plan generally. Five hundred
thousand (500,000) shares will be allocated to the plan, with options for no
more than 100,000 shares to be awarded each year. The option exercise price will
be the fair market value of United's stock at the time the option is granted.
In 1994, 100,000 shares were granted as follows: Richard M. Adams-14,500
shares; I. N. Smith, Jr.-3,000 shares; Gary L. Ellis-5,000 shares; Joe L.
Wilson-4,000 shares; Steven E. Wilson-5,500 shares; James B. Hayhurst-4,700
shares; Joseph Wm. Sowards-2,700 shares; Douglass H. Adams-2,700 shares; Thomas
A. McPherson-4,700 shares and David Addison-2,700 shares. Forty-four
nonexecutive officers received a total of 50,500 shares. These shares were
granted at the then current market price of $23.00. The options granted become
exercisable in accordance with a three year vesting schedule: 50% year one; 75%
year two and 100% year three. Messrs. Addison, Smith, S. Wilson and nine
nonexecutive officers have exercised options.
Employee Benefit Plans
- ----------------------
No directors or principal shareholders of United and its subsidiaries,
other than those persons who are salaried officers, participate in any type of
benefit plan of United.
United's subsidiaries provide, on a substantially non-contributory basis
for all full-time employees, life, disability, hospital and dental insurance.
Life insurance with value of 250% of base salary is provided to all full-time
employees, including executive officers. The premiums paid by the subsidiaries
for life insurance on any individual which has a face value greater than $50,000
is properly reported as compensation. These plans do not discriminate, in scope,
terms or operation, in favor of the executive officers of United or its
subsidiaries and are available generally to all salaried employees of United and
its subsidiaries.
85
a face value greater than $50,000 is properly reported as compensation.
These plans do not discriminate, in scope, terms or operation, in favor of the
executive officers of United or its subsidiaries and are available generally to
all salaried employees of United and its subsidiaries.
Each employee of United, or its participating subsidiaries, who completes
one year of eligible service and is 21 years of age is eligible to participate
in the Pension Plan. The plan is noncontributory on the part of the employee.
Vesting is attained with five years of participation.
Normal retirement benefits under the United Plan are equal to:
1.25% of Average Final Compensation* plus 0.5% of Average Final
Compensation in excess of Covered Compensation** multiplied by years of service
not to exceed 25.
*Average Final Compensation = The average of the highest five consecutive
plan years of basic compensation paid during the ten plan years preceding the
date of determination.
**Covered Compensation = The average of the last 35 years of the social
security wage base prior to Social Security retirement age.
Each employee of United, or its participating subsidiaries, who completes
one year of eligible service is eligible to participate in the United Savings
and Stock Investment Plan, a deferred compensation plan under Section 401(k) of
the Internal Revenue Code. Each participant may contribute from 1% to 10% of
pre-tax earnings to his/her account which may be invested in one to four
investment options chosen by the employee. United matches 100% of the first 2%
of salary deferred and 25% of the second 2% of salary deferred with United
stock. Vesting is 100% for employee deferrals and the company match at the time
the employee makes his/her deferral.
United employees may participate in an employee stock purchase plan
whereby its employees may purchase shares of United's common stock. Purchases
made by employees under this plan are coordinated by the Trust Department of
UNB, and involve stock purchased at market price for this purpose.
Transactions with Management and Others
- ---------------------------------------
United's subsidiaries have had, and expect to have in the future, banking
transactions with United and with its officers, directors, principal
shareholders, or their interests (entities in which they have more than a 10%
interest). The transactions were in the ordinary course of business and with
respect to loans were made on substantially the same terms, including interest
rates, collateral and repayment terms as those prevailing at the time for
comparable transactions. United's subsidiary banks are subject to federal
statutes and regulations governing loans to officers and directors and extend
loans in compliance with such laws and only with the approval of the Board of
Directors.
86
The building utilized by UNB to house its Rosemar Circle Branch in North
Parkersburg, West Virginia, is owned by Richard M. Adams, Chairman and Chief
Executive Officer of United and UNB, his brother, Douglass H. Adams, Executive
Vice President of United and their step-mother, Dorothy D. Adams. The Adams'
lease the land from UNB at a nominal annual rental and lease the branch facility
they constructed to UNB. The leases were entered into prior to UNB's ownership
of the branch facility and were assumed by UNB upon its acquisition of the
previous lessee, United Bank. Management believes the lease terms are comparable
with lease terms for similar property in the market area.
H. Smoot Fahlgren, a member of the Board of Directors of United, is Chief
Executive Officer of Fahlgren Martin, Inc., an advertising agency with its
headquarters in Parkersburg, West Virginia. The agency has provided the
advertising for United since 1978. United utilizes an aircraft owned by Mr.
Fahlgren, a member of United's Board of Directors. During 1994, Mr. Fahlgren
received $15,672 in compensation for these services. Payment for the advertising
by United to Fahlgren Martin, Inc. was less than 5% of that firm's revenues
during the year 1994.
F.T. Graff, Jr., a member of the Board of Directors of United, is a
partner in the law firm of Bowles Rice McDavid Graff & Love in Charleston, West
Virginia. Bowles Rice McDavid Graff & Love rendered legal services to United and
UNB during 1994 and it is expected that the firm will continue to render certain
services to both in the future. The fees paid to Bowles Rice McDavid Graff &
Love represent less than 5% of that firm's revenues for 1994.
R. Terry Butcher, a member of the Board of Directors of United, is a
partner in the law firm of Butcher & Butcher of Glenville, West Virginia.
Butcher & Butcher has rendered legal services to UNB, a United affiliate, during
1994 and it is expected that the firm will continue to render legal services in
the future. The fees paid to Butcher & Butcher represent less than 5% of the
firm's revenues for 1994.
UNB leases its northern region main banking premises from The Ogden
Newspapers, Inc. pursuant to a written lease agreement dated August 1, 1979 (the
"Lease"). The Ogden Newspapers, Inc. is a shareholder of United, and the voting
and investment authority for its shares are beneficially owned by its President,
G. Ogden Nutting who is a director of United. The Lease is on terms comparable
to market terms for similar rental space in Wheeling, West Virginia. The Lease
provides for five (5) successive options to renew and extend the terms of the
Lease for five (5) years each. United exercised its option to renew the Lease
for five (5) years in 1989 and again in 1994. In addition, during the year 1994
subsidiaries of United advertised, at market rates, in newspapers published by
The Ogden Newspaper, Inc. The fees paid in such advertising and the rent paid to
The Ogden Newspapers, Inc. represent less than 5% of that firm's revenue for the
year 1994.
87
UNITED BANKSHARES, INC.
FORM 10-K, PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
Page
(a) (1) and (2) Financial Statements and Financial
Statement schedules . . . . . . . . . . . . . . . . 39
(3) Listing of Exhibits - See the Exhibits'
Index . . . . . . . . . . . . . . . . . . . . . . . 89
(b) Reports on Form 8-K - There were no reports filed
on Form 8-K for the quarter ended December 31, 1994.
(c) Exhibits . . . . . . . . . . . . . . . . . . . . . 94
(d) Consolidated Financial Statement Schedules--All other
schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange
Commission are not required under the related
instructions or are inapplicable or pertain to items as
to which the required disclosures have been made
elsewhere in the financial statements and notes thereto,
and therefor have been omitted.
88
UNITED BANKSHARES, INC.
FORM 10-K
INDEX TO EXHIBITS
ITEM 14.
S-K Item 601 Sequential Page
Description Table Reference Number (a)
----------- --------------- ---------------
Articles of Incorporation and (3)
Bylaws:
(a) Bylaws (g)
(b) Articles of Incorporation (f)
Investments (4) N/A
Voting Trust Agreement (9) N/A
Material Contracts (10)
(a) Employment Agreement with
I. N. Smith, Jr. (b)
(b) Employment Agreement with
Richard M. Adams (e)
(c) Lease on Branch Office in
Charleston Town Center,
Charleston, West Virginia (b)
(d) Lease on United Center,
Charleston, West Virginia (h)
(e) Lease with Polymerland, Inc.
on UNB Square (h)
(f) Lease and Agreement between
Valley Savings and Loan
Company (Lessor) and Dorothy
Adams, Richard M. Adams and
Douglass H. Adams (Lessees) (c)
(g) Agreement between Dorothy
D. Adams (Lessors) and Valley
Savings and Loan Company (Lessees) (c)
89
S-K Item 601 Sequential Page
Description Table Reference Number (a)
----------- --------------- ---------------
(h) Employment Contract with
Douglass H. Adams (d)
(i) Employment Contract with
Thomas A. McPherson (d)
(j) Data processing contract
with FISERV 94
(k) Supplemental Retirement
Contract with Richard M.
Adams (i)
(l) Supplemental Retirement
Contract with Douglass H.
Adams (i)
(m) Executive Officer Change
of Control Agreements (j)
Statement Re: Computation of Per
Share Earnings (11) 128
Statement Re: Computation of
Ratios (12) N/A
Annual Report to Security Holders,
et al. (13) N/A
Letter Re: Change in accounting
principles (18) N/A
Previously Unfiled Documents (19) N/A
Subsidiaries of the Registrant (22) 129
Published Report Regarding Matters
Submitted to a Vote of Security
Holders (23) N/A
Consent of Ernst & Young LLP (23) 130
Consent of Somerville & Company (23) 131
Power of Attorney (25) N/A
Financial Data Schedule (27) 132
Additional Exhibits: (28) N/A
90
Footnotes
- ---------
(a) N/A = Not Applicable
(b) Incorporated into this filing by reference to Exhibit 10 of the
1985 Form 10-K for Intermountain Bankshares, Inc., File No. 0-12356
(c) Incorporated into this filing by reference to Exhibit 10 of the
1986 Form 10-K for United Bankshares, Inc., File No. 0-13322
(d) Incorporated into this filing by reference to Part II of Form S-4
Registration Statement of United Bankshares, Inc., Registration No.
33-19968 filed February 3, 1988
(e) Incorporated into this filing by reference to Exhibits to the 1988
10-K for United Bankshares, Inc., File No. 0-13322
(f) Incorporated into this filing by reference to Exhibits to the 1989
10-K for United Bankshares, Inc., File No. 0-13322
(g) Incorporated into this filing by reference to Exhibits to the 1990
10-K for United Bankshares, Inc., File No. 0-13322
(h) Incorporated into this filing by reference to Exhibits to the 1991
10-K for United Bankshares, Inc., File No. 0-13322
(i) Incorporated into this filing by reference to Exhibits to the 1992
10-K for United Bankshares, Inc., File No. 0-13322
(j) Incorporated into this filing by reference to Exhibits to the 1993
10-K for United Bankshares, Inc., File No. 0-13322
91
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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)
By /s/ Richard M. Adams
----------------------------------
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signatures Title Date
/s/ Richard M. Adams Chairman of the Board, March 21, 1995
- --------------------------- Director, Chief Execu-
tive Officer
/s/ I. N. Smith President and Director March 21, 1995
- ---------------------------
/s/ Steven E. Wilson Chief Financial Officer March 21, 1995
- --------------------------- Chief Accounting Officer
___________________________ Director March 21, 1995
/s/ Robert G. Astorg Director March 21, 1995
- ---------------------------
/s/ G. Ogden Nutting Director March 21, 1995
- ---------------------------
/s/ C. E. Goodwin Director March 21, 1995
- ---------------------------
/s/ Russell L. Isaacs Director March 21, 1995
- ---------------------------
/s/ Leonard A. Harvey Director March 21, 1995
- ---------------------------
/s/ John W. Dudley Director March 21, 1995
- ---------------------------
/s/ Harry L. Buch Director March 21, 1995
- ---------------------------
/s/ H. Smoot Fahlgren Director March 21, 1995
- ---------------------------
/s/ William C. Pitt, III Director March 21, 1995
- ---------------------------
/s/ Theodore J. Georgelas Director March 21, 1995
- ---------------------------
/s/ Charles E. Stealey Director March 21, 1995
- ---------------------------
/s/ R. Terry Butcher Director March 21, 1995
- ---------------------------
92
SIGNATURES
(continued)
Signatures Title Date
/s/ Robert P. McLean Director March 21, 1995
- ---------------------------
/s/ H. L. Wilkes Director March 21, 1995
- ---------------------------
/s/ Thomas A. McPherson Director March 21, 1995
- ---------------------------
/s/ W. A. Thornhill, III Director March 21, 1995
- ---------------------------
/s/ James W. Word, Jr. Director March 21, 1995
- ---------------------------
/s/ D. H. Adams Director March 21, 1995
- ---------------------------
93