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United Bankshares Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 25, 2011 01:23PM
United Bankshares Inc. (UBSI) filed Annual Report for the period ended 2010-12-31.
Highlight of Business Operations:
As a bank holding company registered under the Bank Holding Company Act of 1956, as amended, Uniteds present business is community banking. As of December 31, 2010, Uniteds consolidated assets approximated $7.2 billion and total shareholders equity approximated $793 million.
Uniteds loan portfolio, net of unearned income, decreased $476.5 million to $5.3 billion in 2010. The loan portfolio is comprised of commercial, real estate and consumer loans including credit card and home equity loans. All classifications of loans declined for 2010. Commercial real estate loans and commercial loans (not secured by real estate) decreased $95.6 million or 5.0% and $70.0 million or 6.3%, respectively. Residential real estate loans decreased $159.1 million or 8.6% and construction loans declined $88.7 million or 15.8%. Consumer loans decreased $64.1 million or 20.1%.
As of December 31, 2010, approximately $319.1 million or 6.1% of Uniteds loan portfolio were real estate loans that met the regulatory definition of a high loan-to-value loan. A high loan-to-value real estate loan is defined as any loan, line of credit, or combination of credits secured by liens on or interests in real estate that equals or exceeds a certain percentage established by Uniteds primary regulator of the real estates appraised value, unless the loan has other appropriate credit support. The certain percentage varies depending on the loan type and collateral. Appropriate credit support may include mortgage insurance, readily marketable collateral, or other acceptable collateral that reduces the loan-to-value ratio below the certain percentage. Of the $319.1 million, $125.0 million is secured by first deeds of trust on residential real estate with $113.7 million of that total falling in a loan-to-value (LTV) range of 90% to 100% and $11.3 million above a LTV of 100%; $67.9 million is secured by subordinate deeds of trust on residential real estate with $55.4 million between a LTV of 90% to 100% and $12.5 million above a LTV of 100%; and $126.2 million is secured by commercial real estate generally ranging from the regulatory limit for the type of commercial real estate up to a LTV of 100%. Of the $126.2 million high loan to value commercial loans, $37.3 million are classified as Other Construction Loans and Land Loans, $47.6 million are Non-residential Secured, $14.3 million are Commercial Owner occupied properties, $15.7 million are 1-4 family Residential Secured first lien properties, and $4.4 million are Residential Construction Loans. The remaining $6.9 million are spread out in three different categories, none of which are material.
During 2010, United originated $49.2 million of real estate loans for sale in the secondary market and sold $47.6 million of loans designated as held for sale in the secondary market. Net gains on the sales of these loans during 2010 were $662 thousand.
Uniteds investment portfolio is comprised of a significant amount of mortgage-backed securities. United has a small amount of U.S. Treasury securities and obligations of U.S. Agencies and Corporations. Obligations of States and Political Subdivisions are comprised of primarily AAA rated municipal securities. Interest and dividends on securities for the years of 2010, 2009, and 2008 were $39.3 million, $55.5 million, and $71.0 million, respectively. For the years of 2010, 2009 and 2008, United recognized net losses on security transactions of $7.8 million, $14.7 million and $9.4 million, respectively. In the year 2010, United recognized other-than-temporary impairment charges of $9.8 million on certain investment securities consisting primarily of $7.3 million on pooled trust preferred collateralized debt obligations (TRUP CDOs), $1.2 million on collateralized mortgage obligations (CMOs) and $1.3 million on a certain investment security carried at cost. In the year 2009, United recognized other-than-temporary impairment charges of $15.0 million on certain investment securities consisting primarily of $8.0 million on a single-issue trust preferred security and $5.4 million on pooled trust preferred collateralized debt obligations (TRUP CDOs).
FDIC-insured institutions through October 31, 2009. Under one component of this program, the Transaction Account Guaranty Program (TAGP), the FDIC temporarily provided a full guarantee on all noninterest-bearing transaction accounts held by any depositor, regardless of dollar amount, through December 31, 2009. The $250,000 deposit insurance coverage limit was scheduled to return to $100,000 on January 1, 2010, but was extended by congressional action until December 31, 2013. The TLGP expired on December 31, 2010 while the TAGP expired on June 30, 2010. As discussed on the following page, separate temporary unlimited coverage for noninterest-bearing transaction accounts became effective on December 31, 2010 and will last until December 31, 2012.
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