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United Bankshares Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 29, 2012 05:24PM
United Bankshares Inc. (UBSI) filed Annual Report for the period ended 2011-12-31. Utd Bankshares has a market cap of $1.46 billion; its shares were traded at around $29.24 with a P/E ratio of 18.1 and P/S ratio of 4. The dividend yield of Utd Bankshares stocks is 4.3%.
Highlight of Business Operations:Uniteds total assets as of December 31, 2011 were $8.45 billion which was an increase of $1.30 billion or 18.11% from December 31, 2010, primarily the result of the acquisition of Centra Financial Holdings Inc. (Centra) on July 8, 2011. Portfolio loans increased $976.38 million or 18.56%, cash and cash equivalents increased $174.61 million or 37.85%, investment securities increased $29.50 million or 3.71%, goodwill increased $59.93 million or 19.22%, other assets increased $35.17 million or 11.17%, and bank premises and equipment increased $21.06 million or 38.04%. Loans available for sale decreased $2.97 million or 43.19%. The increase in total assets is reflected in a corresponding increase in total liabilities of $1.12 billion or 17.60% from year-end 2010. The increase in total liabilities was due mainly to an increase of $1.11 billion or 19.35% and $20.46 million or 3.53% in deposits and borrowings, respectively, mainly due to the Centra acquisition. Shareholders equity increased $175.83 million or 22.17% from year-end 2010 due primarily to the acquisition of Centra and the retention of earnings after paying dividends to shareholders.
Loans held for sale decreased $2.97 million or 43.19% as sales of loans exceeded loan originations in the secondary market during the year of 2011. Portfolio loans, net of unearned income, increased $976.38 million or 18.56% from year-end 2010 mainly as a result of the Centra acquisition which added approximately $1.02 billion, including purchase accounting amounts, in portfolio loans. Since year-end 2010, commercial, financial and agricultural loans increased $671.27 million or 23.66% as commercial real estate loans increased $497.37 million and commercial loans (not secured by real estate) increased $173.90 million. In addition, residential real estate loans and construction and land development loans increased $197.28 million or 11.60% and $78.94 million or 16.76%, respectively, while other consumer loans increased $29.37 million or 11.55%. The increases were due primarily to the Centra merger.
Tax-equivalent interest income for the year of 2011 was $323.11 million, a $6.18 million or 1.88% decrease from the year of 2010. This decrease was primarily attributable to a decrease of 23 basis points in the average yield on earning assets for the year of 2011 as compared to the year of 2010. Partially offsetting this decrease was an increase in average earning assets of $191.06 million or 2.85% for the year of 2011 due to the Centra merger. Average net loans increased $246.63 million or 4.57% for the year of 2011 while average investments decreased $89.94 million or 10.01%. Average short-term investments increased $34.37 million or 8.43% as a result of United placing its excess cash in an interest-bearing account with the Federal Reserve.
Cash flows provided by operations in 2011 were $118.57 million as compared to $100.83 million of cash provided by operations during 2010 due in large part to losses on securities transactions of $18.84 million in 2011 as compared to losses of $7.81 million in 2010. In addition, net income and provision for loan losses increased $3.66 million and $3.37 million from 2010 to 2011. In 2011, net cash of $158.34 million was provided by investing activities which was mainly due to net cash received of $49.09 million for the acquisition of Centra. In addition, net cash of $76.59 million was received for excess of net proceeds from sales, calls and maturities of investment securities over purchases. In 2010, net cash of $631.92 million was provided by investing activities which was primarily due to net cash received of $162.44 million for excess net proceeds from sales, calls and maturities of investment securities over purchases and the net repayment of $468.11 million in portfolio loans. During the year of 2011, net cash of $102.29 million was used in financing activities. Cash used in financing activities included a decrease in deposits of $24.27 million, the repayment of FHLB borrowings in the amount of $60.37 million and the payment of cash dividends in the amount of $54.34 million for the year of 2011. Sources of cash from financing activities included an increase in short-term borrowings in the amount of $32.99 million for the year of 2011. During the year of 2010, net cash of $721.13 million was used in financing activities due primarily to a decline of $257.57 million in deposits and the repayment of FHLB borrowings in the amount of $385.03 million during the year of 2010. Other uses of cash for financing activities included the payment of $52.26 million for cash dividends. The net effect of the cash flow activities was an increase in cash and cash equivalents of $174.61 million for the year of 2011 as compared to an increase in cash and cash equivalents of $11.62 million for the year of 2010. See the Consolidated Statement of Cash Flows in the Consolidated Financial Statements.
Uniteds total assets as of December 31, 2010 were $7.16 billion which was a decline of $649.38 million or 8.32% from December 31, 2009. The decrease was primarily the result of decreases in investment securities and portfolio loans of $172.21 million or 17.81% and $476.48 million or 8.31%, respectively. The decrease in investment securities was due mainly to a decline of $158.50 million or 19.53% in securities available for sale. This change in securities available for sale reflects $1.39 billion in sales, maturities and calls of securities, $1.24 billion in purchases, and an increase of $32.92 million in fair value. Securities held to maturity decreased $10.39 million or 13.41% from year-end 2009 due to calls and maturities of securities. Other investment securities declined $3.32 million or 4.27% from year-end 2009 due to the redemption of $3.48 million of FHLB stock and an other-than-temporary impairment charge of $1.29 million on an investment security during the fourth quarter of 2010. The decline in the loan portfolio was due mainly to a decline in each major loan category as loan demand was soft during 2010 due to poor economic conditions. Commercial, financial and agricultural loans declined $165.61 million or 5.51%. Within the commercial, financial and agricultural loans category, commercial real estate loans and commercial loans (not secured by real estate) decreased $95.64 million or 5.05% and $69.96 million or 6.31%, respectively. Residential real estate loans and construction loans declined $159.06 million or 8.55% and $88.67 million or 15.84%, respectively. Consumer loans decreased $64.09 million or 20.13%. Partially offsetting these decreases to total assets was an $11.62 million increase in cash and cash equivalents as United placed its excess cash in an interest-bearing account with the Federal Reserve. Of this total increase, interest-bearing deposits with other banks increased $30.87 million due mainly to the cash placed at the Federal Reserve while cash and due from banks decreased $19.25 million or 14.30% and federal funds sold were flat. During the year of 2010, net cash of $100.83 million and $631.92 million was provided by operating activities and investing activities, respectively. Net cash of $721.13 million was used in financing activities.
Stocks Discussed: UBSI,