Exhibit 99.1
United Bankshares, Inc. Announces Earnings
Growth for the Second Quarter and First Half of 2003
PARKERSBURG, W.Va--(BUSINESS WIRE)--July 18, 2003--United
Bankshares, Inc. (NASDAQ: UBSI), today reported an increase in
earnings for the second quarter and the first half of 2003. Diluted
earnings per share were 54(cents) for the second quarter of 2003, up
6% from diluted earnings per share of 51(cents) for the second quarter
of 2002. Second quarter net income was $22.8 million compared to $22.2
million for the second quarter of 2002. Diluted earnings per share
were $1.07 for the first half of 2003, which also represented a 6%
increase from diluted earnings per share of $1.01 for the first half
of 2002. Net income for the first six months of 2003 totaled $45.3
million compared to $44.0 million for the prior year's first six
months.
Second quarter of 2003 results produced a return on average assets
of 1.63% and a return on average equity of 16.67%, as compared to
1.62% and 17.02%, respectively, for the second quarter of 2002. For
the first half of 2003, United's return on average assets was 1.62%
while the return on average equity was 16.67% as compared to 1.62% and
17.10%, respectively, for the first half of 2002. These financial
performance ratios are indicative of United's earnings strength as
United continues to compare favorably to peer group banking companies.
Increased noninterest income continued to be the leading
contributor to the earnings growth for the second quarter and first
half of 2003 from last year's results. Noninterest income, excluding
security transactions, for the second quarter and first half of 2003
increased $9.3 million or 53% and $15.8 million or 47%, respectively,
from the second quarter and first half of 2002. These increases were
driven primarily by increased mortgage banking production as further
discussed below. Also contributing to the rise in noninterest income
were fees from deposit services, which increased $1.1 million and $2.1
million or 14% for the second quarter and first six months of 2003,
respectively, as compared to the same periods in 2002. On a
linked-quarter basis, noninterest income, excluding security
transactions, increased $4.1 million or 18% due to increases in income
from mortgage banking operations, deposit services and bank-owned life
insurance policies.
Income from mortgage banking operations for the second quarter of
2003 increased $7.1 million or 100% from the second quarter of 2002 as
historically low interest rates favorably impacted mortgage
refinancing and home purchasing. Mortgage loans sold in the secondary
market during the second quarter of 2003 increased $714.6 million or
135% from the second quarter of 2002, while loan originations
increased $725.0 million or 123% when compared to the second quarter
of 2002. For the first six months of 2003, mortgage loans sold in the
secondary market increased $1.2 billion or 100%, while loan
originations also increased $1.2 billion or 112% from the first six
months of 2002. As a result of this increased mortgage loan activity,
income from mortgage banking operations for the first half of 2003
increased $12.6 million or 93% from the first half of 2002. On a
linked-quarter basis, income from mortgage banking operations
increased $2.3 million or 19%. Mortgage loans sold in the secondary
market during the second quarter of 2003 increased $121.1 million or
11%, while loans originated for sale increased $293.3 million or 29%
from the first quarter of 2003. United anticipates that this trend
should continue through 2003.
United realized a net gain of $931 thousand and $1.8 million from
security transactions in the second quarter and first half of 2003 as
compared to net losses of $289 thousand and $593 thousand in the
second quarter and first half of 2002 related to an
other-than-temporary decline in the fair value of retained interests
in securitized assets. Included in the security transactions' totals
for the first half of 2003 is a recognized impairment charge of $35
thousand as compared to recognized impairment charges of $780 thousand
for the first half of 2002. No impairment charge related to securities
was recorded in the second quarter of 2003 as compared to a recognized
impairment charge of $455 thousand for the second quarter of 2002. On
a linked-quarter basis, United recognized an impairment charge of $35
thousand in the first quarter of 2003. 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 affected the valuation of those securities to varying
degrees during the respective periods.
Noninterest expense increased $5.8 million and $11.3 million or
17% for the second quarter and first half of 2003, respectively, as
compared to the prior year's second quarter and first six months. On a
linked-quarter basis, noninterest expense for the second quarter of
2003 increased $3.0 million or 8% from the first quarter of 2003.
These increases in noninterest expense were primarily due to increased
employee commissions expense as a result of additional loan
origination volume at the mortgage banking operations as compensation
is tied to loan production levels. United's efficiency ratio has been
increasing over the last few quarters from traditionally low levels
mainly as a result of a compressing net interest margin. However,
during the most recent quarter, the efficiency ratio increased due to
the increased expenses of the mortgage banking operations as a result
of the higher loan production levels. The efficiency ratio of 52.2%
and 51.4% for the second quarter and first half of 2003, respectively,
still compares favorably to peer group banking companies.
The combination of historically low interest rates, global
uncertainties and a weak domestic economy continue to pressure the net
interest margin of most financial institutions. However, on a
linked-quarter basis, United's tax-equivalent net interest income for
the second quarter of 2003 was relatively stable at $50.2 million
while the net interest margin was 3.83%, an increase of 7 basis points
from 3.76% in the first quarter of 2003. Compared to last year's
results, United's tax-equivalent net interest income for the second
quarter of 2003 decreased by $4.0 million or 7% from the second
quarter of 2002. The net interest margin of 3.83% for the second
quarter of 2003 was a 39 basis points decline from the second quarter
of 2002's net interest margin of 4.22%. Tax-equivalent net interest
income for the first six months of 2003 was $100.3 million, a decrease
of $7.3 million or 7% from the prior year's first six months. The net
interest margin for the first half of 2003 was 3.79% as compared to a
net interest margin of 4.19% during the same period last year.
Credit quality continues to compare favorably against peer group
averages, despite sluggish economic conditions. At June 30, 2003,
nonperforming loans were $13.4 million or 0.38% of loans, net of
unearned income compared to $15.4 million or 0.43% of loans, net of
unearned income at December 31, 2002. For the quarter, nonperforming
loans declined $3.2 million or 19% from the totals at March 31, 2003.
Net charge-offs were $2.4 million for the second quarter of 2003, an
increase from $1.8 million for the second quarter of 2002. Net
charge-offs for the first half of 2003 were $4.3 million, as compared
to $3.6 million for the first half of 2002. For the quarters ended
June 30, 2003 and 2002, the provision for loan losses was $2.3 million
and $1.7 million, respectively, while the provision for the first six
months was $3.8 million for 2003 as compared to $3.9 million for 2002.
As of June 30, 2003, the allowance for loan losses was $46.8 million
or 1.33% of loans, net of unearned income, which was the same
percentage 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 second quarter of 2002. The annualized first
half dividend of 50(cents) per share equals $1.00, which would
represent the 30th consecutive year of dividend increases for United
shareholders. In addition, the Board of Directors approved a new plan
to repurchase up to 1.65 million shares of United's common stock on
the open market effective upon completion of the 2002 repurchase plan.
Treasury stock acquired under the stock repurchase plan represents
approximately 4% of the issued and outstanding shares of United.
United's recently announced agreement to acquire Sequoia
Bancshares, Inc. of Bethesda, Maryland, with assets of approximately
$539 million at June 30, 2003, is progressing towards obtaining
applicable regulatory and shareholder approvals. 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
and United's total franchise to more than $6.4 billion in consolidated
assets.
United Bankshares, with approximately $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 Six Months Ended
------------------- -------------------
June June June June
30 30 30 30
2003 2002 2003 2002
------------------- -------------------
EARNINGS SUMMARY:
Interest income,
taxable equivalent $76,717 $87,517 $156,507 $175,558
Interest expense 26,567 33,322 56,162 67,912
Net interest income,
taxable equivalent 50,150 54,195 100,345 107,646
Taxable equivalent
adjustment 2,456 2,779 5,022 5,582
Net interest income 47,694 51,416 95,323 102,064
Provision for loan
losses 2,296 1,675 3,751 3,902
Income from mortgage
banking operations 14,267 7,148 26,239 13,598
Gain (loss) on
security
transactions 931 (289) 1,797 (593)
Other noninterest
income 12,593 10,411 23,350 20,202
Noninterest expenses 40,610 34,829 78,175 66,859
Income taxes 9,774 9,976 19,435 20,483
Net income 22,805 22,206 45,348 44,027
Cash dividends
declared 10,373 9,801 20,799 19,670
PER COMMON SHARE:
Net income:
Basic 0.55 0.52 1.09 1.03
Diluted 0.54 0.51 1.07 1.01
Cash dividends 0.25 0.23 0.50 0.46
Book value 13.20 12.53
Closing market price 28.63 29.38
Common shares
outstanding:
Actual at period
end, net of
treasury shares 41,461,389 42,560,428
Weighted average-
basic 41,597,646 42,691,886 41,752,969 42,793,408
Weighted average-
diluted 42,067,728 43,391,049 42,220,476 43,466,954
FINANCIAL RATIOS:
Return on average
assets 1.63% 1.62% 1.62% 1.62%
Return on average
shareholders' equity 16.67% 17.02% 16.67% 17.10%
Average equity to
average assets 9.80% 9.54% 9.69% 9.47%
Net interest margin 3.83% 4.22% 3.79% 4.19%
June 30 June 30 December 31 March 31
2003 2002 2002 2003
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PERIOD END BALANCES:
Assets 5,753,006 5,625,130 $5,792,019 $5,816,539
Earning assets 5,392,191 5,294,863 5,454,471 5,449,356
Loans, net of
unearned income 3,515,307 3,590,305 3,573,161 3,495,781
Loans held for sale 548,767 284,230 582,718 478,706
Investment securities 1,313,804 1,412,112 1,285,490 1,350,286
Total deposits 3,851,967 3,815,311 3,900,848 3,975,954
Shareholders' equity 547,094 533,183 541,539 541,873