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United Bankshares Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 7, 2010 08:12AM
United Bankshares Inc. (UBSI) filed Quarterly Report for the period ended 2010-03-31.
Highlight of Business Operations:
Uniteds total assets as of March 31, 2010 were $7.62 billion which was a decline of $189.86 million or 2.43% from December 31, 2009. The decrease was primarily the result of decreases in investment securities and portfolio loans of $52.92 million or 5.47% and $135.05 million or 2.35%, respectively. Partially offsetting these decreases in total assets was a $6.59 million or 1.47% increase in cash and cash equivalents. The decrease in total assets is reflected in a corresponding decrease in total liabilities of $197.36 million or 2.80% from year-end 2009. The decrease in total liabilities was due mainly to reductions of $179.20 million or 3.00% and $21.92 million or 2.20% in deposits and borrowings, respectively, while accrued expenses and other liabilities increased $3.69 million or 4.89% from year-end 2009. Shareholders equity was flat, increasing $7.50 million or less than 1% from year-end 2009.
Total investment securities at March 31, 2010 decreased $52.92 million or 5.47% from year-end 2009. Securities available for sale declined $48.97 million or 6.03%. This change in securities available for sale reflects $141.45 million in sales, maturities and calls of securities, $93.62 million in purchases, and an increase of $514 thousand in market value. Securities held to maturity decreased $6.02 million or 7.77% from year-end 2009 due to calls and maturities of securities. Other investment securities increased $2.07 million or 2.66% from year-end 2009. The amortized cost and estimated fair value of investment securities, including types and remaining maturities, is presented in Note 2 to the unaudited Notes to Consolidated Financial Statements.
Loans held for sale decreased $3.33 million or 63.04% as loan sales exceeded loan originations in the secondary market during the first three months of 2010. Portfolio loans, net of unearned income, decreased $135.05 million or 2.35% from year-end 2009 due mainly to decreases in commercial real estate loans, single family residential real estate loans, and consumer loans of $49.41 million or 3.05%, $39.65 million or 2.13% and $23.82 million or 7.48%, respectively. In addition, commercial loans (not secured by real estate) decreased $20.47 million or 1.85% and construction loans declined $9.17 million or 1.64% from year-end 2009. These decreases were partially offset by an increase from year-end 2009 in other real estate loans of $7.29 million or 2.65%.
The decrease in interest-bearing deposits was due mainly to declines in time deposits over $100,000 of $148.77 million or 11.22% and time deposits under $100,000 of $93.99 million or 6.67%. The $148.77 million decrease in time deposits over $100,000 was mostly due to decreases of $95.99 million in Certificate of Deposit Account Registry Service (CDARS) balances, $24.74 million in brokered deposits and $19.19 million in fixed-rate certificate of deposits (CDs) over $100,000. The $93.99 million decrease in time deposits under $100,000 was mainly the result of decreases in CDARS balances of $38.47 million, fixed-rate CDs of $37.40 million and variable CDs of $20.55 million. Interest-bearing checking deposits decreased $5.30 million or 2.06%. Partially offsetting these decreases in interest-bearing deposits were increases of $104.87 million or 6.89% in interest-bearing money market accounts (MMDAs) and $19.46 million or 5.58% in regular savings balances.
The provision for credit losses was $6.87 million for the first three months of 2010 as compared to $8.03 million for the first three months of 2009. Noninterest income was $15.57 million for the first three months of 2010, up $183 thousand or 1.19% when compared to the first three months of 2009. Noninterest expense increased $1.94 million or 4.63% for the first three months of 2010 compared to the same period in 2009. Income taxes increased $11.18 million for the first three months of 2010 as compared to the first three months of 2009. As mentioned above, United recorded a benefit associated with net operating loss carryforwards and a positive adjustment to income tax expense as a result of a concluded tax examination during the first quarter of 2009. The income tax benefit recorded in the first quarter of 2009 related to these two events was $11.51 million. The effective tax rate for the first quarter of 2010 was 31.50%. Excluding the tax expense reduction, the effective tax rate for the first quarter of 2009 would have been 31.51%.
Net interest income for the first three months of 2010 was $60.48 million, which was relatively flat from the first quarter of 2009, decreasing $438 thousand or less than 1%. The slight decrease of $438 thousand in net interest income occurred because total interest income declined $10.61 million while total interest expense declined $10.17 million from the first quarter of 2009. On a linked-quarter basis, net interest income for the first quarter of 2010 was also relatively flat from the fourth quarter of 2009, declining $543 thousand or less than 1%. The $543 thousand decrease in net interest income occurred because total interest income declined $4.09 million while total interest expense declined $3.54 million from the fourth quarter of 2009. 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