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United Bankshares Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 8, 2012 01:28PM
United Bankshares Inc. (UBSI) filed Quarterly Report for the period ended 2012-03-31.
Highlight of Business Operations:Loans held for sale increased $3.50 million or 89.67% as loan originations exceeded loan sales in the secondary market during the first three months of 2012. Portfolio loans, net of unearned income, were flat, decreasing $36.59 million or less than 1% from year-end 2011 mainly due to a $34.85 million or 1.84% decrease in residential real estate loans. In addition, the total commercial, financial and agricultural loans category decreased $8.09 million or less than 1% and consumer loans declined $3.87 million or 1.36%. Within the commercial, financial and agricultural loans category, commercial real estate loans increased $23.43 million while commercial loans (not secured by real estate) decreased $31.52 million. Partially offsetting these decreases in portfolio loans was an increase of $19.35 million or 3.52% in construction and land development loans.
Net interest income for the first three months of 2012 was $68.97 million, which was an increase of $9.60 million or 16.18% from the first quarter of 2011. The $9.60 million increase in net interest income occurred because total interest income increased $7.93 million while total interest expense declined $1.67 million from the first quarter of 2011. On a linked-quarter basis, net interest income for the first quarter of 2012 decreased $3.03 million or 4.20% from the fourth quarter of 2011. The $3.03 million decrease in net interest income occurred because total interest income declined $3.74 million while total interest expense declined $715 thousand from the fourth quarter of 2011. For the purpose of this remaining discussion, net interest income is presented on a tax-equivalent basis to provide a comparison among all types of interest earning assets. The tax-equivalent basis adjusts for the tax-favored status of income from certain loans and investments. Although this is a non-GAAP measure, Uniteds management believes this measure is more widely used within the financial services industry and provides better comparability of net interest income arising from taxable and tax-exempt sources. United uses this measure to monitor net interest income performance and to manage its balance sheet composition.
Tax-equivalent net interest income for the first quarter of 2012 was $70.64 million, an increase of $9.82 million or 16.15% from the first quarter of 2011. This increase in tax-equivalent net interest income was primarily attributable to an increase in average earning assets from the Centra acquisition. Average earning assets increased $1.24 billion or 19.83% from the first quarter of 2011. Average net loans increased $994.83 million or 19.31% for the first quarter of 2011. In addition, the average cost of funds declined 31 basis points from the first quarter of 2011. Partially offsetting the increases to tax-equivalent net interest income for the first quarter of 2012 was a decline of 39 basis points in the average yield on earning assets for the first quarter of 2012 as compared to the same quarter in 2011. The net interest margin for the first quarter of 2012 was 3.78%, which was a decrease of 14 basis points from a net interest margin of 3.92% for the first quarter of 2011.
On a linked-quarter basis, noninterest income for the first quarter of 2012 increased $4.45 million from the fourth quarter of 2011. Included in the results for the first quarter of 2012 and fourth quarter of 2011 were noncash, before-tax, other-than-temporary impairment charges of $1.38 million and $6.29 million, respectively. Excluding the results of the noncash, other-than-temporary impairment charges as well as net gains and losses from sales and calls of investment securities, noninterest income would have decreased $425 thousand or 2.33% on a linked-quarter basis. This decrease was due primarily to a decrease of $819 thousand or 7.36% in fees from deposit services mainly the result of a decline in overdraft fees. Partially offsetting this decrease was an increase of $668 thousand or 20.14% in income from trust and brokerage services due mainly to increases in volume and the value of assets under management.
For the three months ended March 31, 2012, cash of $32.94 million was provided by operating activities due mainly to net income of $21.01 million for the quarter. Net cash of $64.00 million was provided by investing activities which was primarily due to the net repayment of $32.60 million in portfolio loans and net proceeds of $32.52 million from the sales, calls and maturities of investment securities over purchases. During the first three months of 2012, net cash of $56.88 million was provided by financing activities due primarily to increases in deposits of $63.79 million and short-term borrowings of $8.57 million. Uses of cash for financing activities included the payment of cash dividends in the amount of $15.57 million for the quarter. The net effect of the cash flow activities was an increase in cash and cash equivalents of $153.83 million for the first three months of 2012.
Stocks Discussed: UBSI,