Exhibit 99.1
United Bankshares, Inc. Announces Increase In
Earnings for the First Quarter of 2003
PARKERSBURG, W.Va.--(BUSINESS WIRE)--April 17, 2003--United
Bankshares, Inc. (NASDAQ: UBSI), today reported diluted earnings per
share of 53(cents) for the first quarter of 2003, which represented a
6% increase from diluted earnings per share of 50(cents) for first
quarter of 2002. United generated net income of $22.5 million for the
first quarter of 2003, an increase of 3% above the $21.8 million
earned in the first quarter of 2002.
First quarter of 2003 results produced a return on average assets
of 1.60% and a return on average equity of 16.67%, as compared to
1.61% and 17.19%, respectively, for the first quarter of 2002. These
financial performance ratios are indicative of United's earnings
strength as United continues to compare favorably to regional banking
companies.
Growth in noninterest income was largely responsible for the
increased net earnings for the first quarter of 2003 above last year's
first quarter results. Noninterest income, excluding security
transactions, for the first quarter of 2003 increased $6.5 million or
40% from the first quarter of 2002 driven primarily by increased
mortgage banking activity. Also contributing to the rise in
noninterest income were fees from deposit services, which increased
$966 thousand or 14% for the first quarter of 2003 as compared to the
first quarter of 2002. On a linked-quarter basis, noninterest income,
excluding security transactions, was relatively flat due to decreases
in deposit services and other income, which offset an increase in
mortgage banking income.
Income from mortgage banking operations increased $5.5 million or
86% from the first quarter of 2002 as lower interest rates favorably
impacted mortgage refinancing and home purchasing. Mortgage loans sold
in the secondary market during the first quarter of 2003 increased
$469.1 million or 72% from the first quarter of 2002 while loan
originations increased $513.3 million or 101% when compared to the
first quarter of 2002. Mortgage loans sold in the secondary market
during the first quarter of 2003 increased $115.2 million or 11% while
loans originated for sale declined $49.5 million or 5% from the fourth
quarter of 2002.
United realized a net gain of $866 thousand from security
transactions in the first quarter of 2003 as compared to a net losses
of $304 thousand in the first quarter of 2002 and $1.3 million in the
fourth quarter of 2002. Included in the security transactions' totals
for the respective quarters of 2003 and 2002 are recognized charges of
$35 thousand, $325 thousand and $1.6 million related to an
other-than-temporary decline in the fair value of retained interests
in securitized assets as of March 31, 2003, March 31, 2002 and
December 31, 2002, respectively. The decline in the value of these
available for sale securities was the result of an increase in the
level of prepayment and default activity during the time periods,
which negatively effected the valuation of those securities to varying
degrees during the respective periods.
Noninterest expense increased $5.5 million or 17% for the first
quarter of 2003 as compared to the prior year's first quarter
primarily due to increased employee salaries and benefits related to
the additional volume at the mortgage banking operations. On a
linked-quarter basis, noninterest expense for the first quarter of
2003 declined $1.0 million or 3% from the fourth quarter of 2002 due
mainly to a lower level of net occupancy and general operating
expenses. United's efficiency ratio did increase for the first quarter
of 2003 mostly the result of a compressing margin. However, the
efficiency ratio of 50.6% still compares favorably to peer group
banking companies.
As is the case with many financial institutions, United continues
to experience compression in its net interest margin. Assets are
repricing at historically low levels with little flexibility for a
corresponding decrease in rates paid on interest-bearing liabilities
while a weak economy and an uncertain geopolitical climate are
hindering loan growth. Tax-equivalent net interest income for the
first quarter of 2003 was $50.2 million, a decrease of $3.3 million or
6% from the first quarter of 2002. The net interest margin for the
first quarter 2003 was 3.76%, a 40 basis points decline from the first
quarter of 2002's net interest margin of 4.16%. On a linked quarter
basis, tax-equivalent net interest income decreased $3.6 million or 7%
while the net interest margin decreased 20 basis points from 3.96% in
the fourth quarter of 2002.
Although sluggish economic conditions caused an increase in
nonperforming loans during the first quarter of 2003, United's credit
quality continues to compare favorably with national peer averages. At
March 31, 2003, nonperforming loans were $16.6 million or 0.47% of
loans, net of unearned income compared to $15.4 million or 0.43% of
loans, net of unearned income at December 31, 2002. Net charge-offs
were $1.9 million for the first quarter of 2003, a slight increase
from $1.7 million for the first quarter of 2002 but down from $2.2
million for the fourth quarter of 2002. For the quarter ended March
31, 2003, the provision for loan losses was $1.5 million as compared
to $2.2 million for both the first quarter and fourth quarter of 2002.
As of March 31, 2003, the allowance for loan losses was $47.0 million
or 1.34% of loans, net of unearned income, compared to 1.33% at
December 31, 2002.
During the quarter, United's Board of Directors declared a cash
dividend of 25(cents) per share, a 9% increase over the 23(cents) per
share declared in the first quarter of 2002. The 2003 annualized first
quarter dividend of 25(cents) per share equals $1, which would
represent the 30th consecutive year of dividend increases for United
shareholders.
United recently signed a definitive merger agreement to acquire
Sequoia Bancshares, Inc. of Bethesda, Maryland, with assets of
approximately $547 million. The purchase price of 75% stock and 25%
cash is estimated to approximate $112 million, including the value
assigned to the stock options of Sequoia. United does not anticipate
that the acquisition will dilute earnings in the first full year of
operations. The transaction, which is expected to close during the
fourth quarter of 2003, will increase United's Virginia franchise to
more than $3 billion in assets. Following completion of the proposed
merger with Sequoia, United will have consolidated assets of over $6.4
billion with 97 full service offices in West Virginia, Virginia,
Maryland, Ohio, and Washington, D.C. Consummation of the proposed
merger is subject to certain conditions, among them, regulatory
approval and approval by the shareholders of Sequoia.
United Bankshares, with $5.8 billion in assets, presently has 85
full-service offices in West Virginia, Virginia, Maryland, Ohio, and
Washington, D.C. United Bankshares stock is traded on the NASDAQ
(National Association of Securities Dealers Quotation System) National
Market System under the quotation symbol "UBSI".
This press release contains certain forward-looking statements,
including certain plans, expectations, goals and projections, which
are subject to numerous assumptions, risks and uncertainties. Actual
results could differ materially from those contained in or implied by
such statements for a variety of factors including: changes in
economic conditions; movements in interest rates; competitive
pressures on product pricing and services; success and timing of
business strategies; the nature and extent of governmental actions and
reforms; and rapidly changing technology evolving banking industry
standards.
UNITED BANKSHARES, INC. AND SUBSIDIARIES
FINANCIAL SUMMARY
(In Thousands Except for Per Share Data)
Three Months Ended
------------------------------------
March 31 March 31 December 31
2003 2002 2002
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EARNINGS SUMMARY:
Interest income, taxable
equivalent $79,790 $88,041 $85,759
Interest expense 29,595 34,590 31,968
Net interest income, taxable
equivalent 50,195 53,451 53,791
Taxable equivalent adjustment 2,566 2,803 2,670
Net interest income 47,629 50,648 51,121
Provision for loan losses 1,455 2,227 2,212
Income from mortgage banking
operations 11,972 6,450 11,341
Gain (loss) on security
transactions 866 (304) (1,305)
Other noninterest income 10,757 9,791 11,507
Noninterest expenses 37,565 32,030 38,574
Income taxes 9,661 10,507 9,325
Net income 22,543 21,821 22,553
Cash dividends declared 10,426 9,869 10,526
PER COMMON SHARE:
Net income:
Basic 0.54 0.51 0.53
Diluted 0.53 0.50 0.53
Cash dividends declared 0.25 0.23 0.25
Book value 12.98 11.81 12.88
Closing market price 27.70 29.53 29.06
Common shares outstanding:
Actual, net of treasury
shares 41,744,719 42,812,217 42,031,968
Average basic 41,891,007 42,899,060 42,155,892
Average diluted 42,355,229 43,548,650 42,669,955
FINANCIAL RATIOS:
Return on average assets 1.60% 1.61% 1.55%
Return on average shareholders'
equity 16.67% 17.19% 16.39%
Average equity to average assets 9.59% 9.39% 9.47%
Net interest margin 3.76% 4.16% 3.96%
March 31 March 31 December 31,
2003 2002 2002
--------------- ----------- -----------
PERIOD END BALANCES:
Assets $5,816,539 $5,557,581 $5,792,019
Earning assets 5,449,356 5,290,237 5,454,471
Loans, net of unearned income 3,495,781 3,491,455 3,573,161
Loans held for sale 478,706 223,388 582,718
Investment securities 1,350,286 1,473,583 1,285,490
Total deposits 3,975,954 3,818,901 3,900,848
Shareholders' equity 541,873 505,636 541,539