UNITED BANKSHARES INC/WV - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


[X]		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2004
Or

[ ]

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period

Commission File Number: 0-13322

United Bankshares, Inc.

(Exact name of registrant as specified in its charter)


West Virginia		55-0641179

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


300 United Center 500 Virginia Street, East Charleston, West Virginia		25301

(Address of Principal Executive Offices)		Zip Code

Registrant’s Telephone Number, including Area Code: (304) 424-8800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class - Common Stock, $2.50 Par Value; 43,540,731 shares outstanding as of April 30, 2004.

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

The March 31, 2004 and December 31, 2003, consolidated balance sheets of United Bankshares, Inc. and Subsidiaries, and the related consolidated statements of income for the three months ended March 31, 2004 and 2003, and the related consolidated statement of changes in shareholders’ equity for the three months ended March 31, 2004, and the related condensed consolidated statements of cash flows for the three months ended March 31, 2004 and 2003, and the notes to consolidated financial statements appear on the following pages.

CONSOLIDATED BALANCE SHEETS
UNITED BANKSHARES, INC. AND SUBSIDIARIES


	March 31			December 31
	2004			2003
(Dollars in thousands, except par value)	(Unaudited)			(Note 1)
Assets
Cash and due from banks	$	157,303		$	217,229
Interest-bearing deposits with other banks		25,040			32,280
Federal funds sold		2,192			5,432

Total cash and cash equivalents		184,535			254,941
Securities available for sale at estimated fair value (amortized cost-$1,199,191 at March 31, 2004 and $1,251,357 at December 31, 2003)		1,224,206			1,266,635
Securities held to maturity (estimated fair value-$250,867 at March 31, 2004 and $253,704 at December 31, 2003)		238,150			243,975
Loans held for sale		233,659			181,186
Loans		4,212,604			4,101,422
Less: Unearned income		(5,747	)		(5,403	)

Loans net of unearned income		4,206,857			4,096,019
Less: Allowance for loan losses		(50,474	)		(50,432	)

Net loans		4,156,383			4,045,587
Bank premises and equipment		45,395			46,354
Goodwill		167,583			169,655
Accrued interest receivable		26,935			27,098
Other assets		156,450			143,568

TOTAL ASSETS	$	6,433,296		$	6,378,999

Liabilities
Deposits:
Noninterest-bearing	$	926,978		$	937,512
Interest-bearing		3,225,653			3,244,860

Total deposits		4,152,631			4,182,372
Borrowings:
Federal funds purchased		104,545			90,540
Securities sold under agreements to repurchase		592,083			549,163
Other short-term borrowings		9,195			22,239
Federal Home Loan Bank borrowings		794,868			768,220
Other long-term borrowings		89,823			89,954
Accrued expenses and other liabilities		64,410			61,320

TOTAL LIABILITIES		5,807,555			5,763,808
Shareholders’ Equity
Common stock, $2.50 par value; Authorized-100,000,000 shares; issued- 44,320,832 at March 31, 2004 and December 31, 2003, including 693,628 and 631,232 shares in treasury at March 31, 2004 and December 31, 2003, respectively		110,802			110,802
Surplus		104,210			110,592
Retained earnings		418,447			405,859
Accumulated other comprehensive income		12,981			6,512
Treasury stock, at cost		(20,699	)		(18,574	)

TOTAL SHAREHOLDERS’ EQUITY		625,741			615,191

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,433,296		$	6,378,999

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
UNITED BANKSHARES, INC. AND SUBSIDIARIES


	Three Months Ended
	March 31
(Dollars in thousands, except per share data)	2004		2003
Interest income
Interest and fees on loans	$	58,482	$	60,680
Interest on federal funds sold and other short-term investments		76		388
Interest and dividends on securities:
Taxable		13,462		13,877
Tax-exempt		2,054		2,279

Total interest income		74,074		77,224
Interest expense
Interest on deposits		10,907		16,571
Interest on short-term borrowings		1,579		2,205
Interest on long-term borrowings		9,486		10,819

Total interest expense		21,972		29,595

Net interest income		52,102		47,629
Provision for loan losses		1,357		1,455

Net interest income after provision for loan losses		50,745		46,174
Other income
Income from mortgage banking operations		6,449		11,972
Fees from trust and brokerage services		2,570		2,275
Other service charges, commissions and fees		8,696		8,121
Security gains		714		866
Other income		1,628		361

Total other income		20,057		23,595
Other expense
Salaries and employee benefits		19,936		21,631
Net occupancy expense		3,702		3,316
Other expense		13,588		12,618

Total other expense		37,226		37,565

Income before income taxes		33,576		32,204
Income taxes		10,072		9,661

Net income	$	23,504	$	22,543

Earnings per common share:
Basic	$	0.54	$	0.54

Diluted	$	0.53	$	0.53

Dividends per common share	$	0.25	$	0.25

Average outstanding shares:
Basic		43,680,837		41,891,007
Diluted		44,258,584		42,355,229

See notes to consolidated unaudited financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands, except per share data)


	Three Months Ended March 31, 2004
	Common Stock										Accumulated
											Other					Total
			Par					Retained			Comprehensive		Treasury			Shareholders’
	Shares		Value		Surplus			Earnings			Income		Stock			Equity
Balance at January 1, 2004		44,320,832	$	110,802	$	110,592		$	405,859		$	6,512	($	18,574	)	$	615,191
Comprehensive income:
Net income		—		—		—			23,504			—		—			23,504
Other comprehensive income , net of tax:
Unrealized gain on securities of $6,794 net of reclassification adjustment for gains included in net income of $464		—		—		—			—			6,330		—			6,330
Amortization of the unrealized loss for securities transferred from the available for sale to the held to maturity investment portfolio		—		—		—			—			139		—			139

Total comprehensive income																	29,973
Purchase of treasury stock (310,627 shares)		—		—		—			—			—		(9,489	)		(9,489	)
Cash dividends ($0.25 per share)		—		—		—			(10,916	)		—					(10,916	)
Common stock options exercised (248,231 shares)		—		—		(6,382	)		—			—		7,364			982

Balance at March 31, 2004		44,320,832	$	110,802	$	104,210		$	418,447		$	12,981	($	20,699	)	$	625,741

See notes to consolidated unaudited financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
UNITED BANKSHARES, INC. AND SUBSIDIARIES

(Dollars in thousands)


	Three Months Ended
	March 31
	2004			2003
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	$	(20,697	)	$	135,824
INVESTING ACTIVITIES
Proceeds from maturities and calls of held to maturity securities		6,472			1,363
Purchases of investment securities held to maturity		(405	)
Proceeds from sales of securities available for sale		100,798			28,727
Proceeds from maturities and calls of securities available for sale		67,221			277,723
Purchases of securities available for sale		(117,387	)		(376,999	)
Purchase of bank-owned life insurance		(13,215	)		(30,000	)
Net purchases of bank premises and equipment		(979	)		(971	)
Net change in loans		(112,721	)		75,473

NET CASH USED IN INVESTING ACTIVITIES		(70,216	)		(24,684	)
FINANCING ACTIVITIES
Cash dividends paid		(10,929	)		(10,526	)
Proceeds from exercise of stock options		982			470
Acquisition of treasury stock		(9,489	)		(9,078	)
Repayment of long-term Federal Home Loan Bank borrowings		(55	)		(76	)
Changes in:
Deposits		(28,883	)		75,106
Federal funds purchased, securities sold under agreements to repurchase, short-term FHLB advances and other borrowings		68,881			(52,922	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		20,507			2,974

(Decrease) Increase in cash and cash equivalents		(70,406	)		114,114
Cash and cash equivalents at beginning of year		254,941			175,363

Cash and cash equivalents at end of period	$	184,535		$	289,477

See notes to consolidated unaudited financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

UNITED BANKSHARES, INC. AND SUBSIDIARIES

1. GENERAL

The accompanying unaudited consolidated interim financial statements of United Bankshares, Inc. and Subsidiaries (“United”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not contain all of the information and footnotes required by accounting principles generally accepted in the United States. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements presented as of March 31, 2004 and 2003 and for the three-month periods then ended have not been audited. The consolidated balance sheet as of December 31, 2003 has been extracted from the audited financial statements included in United’s 2003 Annual Report to Shareholders. The accounting and reporting policies followed in the presentation of these financial statements are consistent with those applied in the preparation of the 2003 Annual Report of United on Form 10-K. In the opinion of management, all adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made. Such adjustments are of a normal and recurring nature.

The accompanying consolidated interim financial statements include the accounts of United and its wholly owned subsidiaries. United considers all of its principal business activities to be bank related. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Dollars are shown in thousands, except per share and share data.

United has stock option plans for certain employees that are accounted for under the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related Interpretations. Because the exercise price at the date of the grant is equal to the market value of the stock, no compensation expense is recognized.

The following pro forma disclosures present United’s net income and diluted earnings per share, determined as if United had recognized compensation expense for its employee stock options under the fair value method under the provisions of FASB Statement No. 123 “Accounting for Stock Based Compensation”:


	Three Months Ended
	March 31,
	2004			2003
Net Income, as reported	$	23,504		$	22,543
Less pro forma expense related to options granted, net of tax		(254	)		(211	)

Pro forma net income	$	23,250		$	22,332

Pro forma net income per share:
Basic – as reported	$	0.54		$	0.54
Basic – pro forma	$	0.53		$	0.53
Diluted – as reported	$	0.53		$	0.53
Diluted – pro forma	$	0.53		$	0.53

2. INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities available for sale are summarized as follows:


	March 31, 2004
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	17,720	$	93			$	17,813
State and political subdivisions		66,054		3,369	$	10		69,413
Mortgage-backed securities		927,214		17,380		1,808		942,786
Marketable equity securities		180,540		4,873		446		184,967
Other		7,663		1,643		79		9,227

Total	$	1,199,191	$	27,358	$	2,343	$	1,224,206


	December 31, 2003
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	32,681	$	158	$	3	$	32,836
State and political subdivisions		70,532		3,008		120		73,420
Mortgage-backed securities		954,567		13,978		5,565		962,980
Marketable equity securities		12,843		1,503		101		14,245
Other		180,734		3,549		1,129		183,154

Total	$	1,251,357	$	22,196	$	6,918	$	1,266,635

The cumulative net unrealized gains on available for sale securities resulted in increases of $16,260 and $9,930 in shareholders’ equity, net of deferred income taxes at March 31, 2004 and December 31, 2003, respectively.

The amortized cost and estimated fair value of securities available for sale at March 31, 2004 and December 31, 2003 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Maturities of mortgage-backed securities are included below based upon an estimated average life.


	March 31, 2004				December 31, 2003
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	9,675	$	9,692	$	9,561	$	9,563
Due after one year through five years		31,454		36,913		36,424		41,535
Due after five years through ten years		157,960		160,354		193,802		195,623
Due after ten years		986,886		1,002,466		998,727		1,005,669
Marketable equity securities		13,216		14,781		12,843		14,245

Total	$	1,199,191	$	1,224,206	$	1,251,357	$	1,266,635

The amortized cost and estimated fair values of securities held to maturity are summarized as follows:


	March 31, 2004
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	11,956	$	1,645			$	13,601
State and political subdivisions		79,338		4,339	$	2		83,675
Mortgage-backed securities		924		59				983
Other		145,932		10,117		3,441		152,608

Total	$	238,150	$	16,160	$	3,443	$	250,867


	December 31, 2003
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	11,978	$	1,164			$	13,142
State and political subdivisions		80,607		3,718	$	2		84,323
Mortgage-backed securities		1,056		68				1,124
Other		150,334		8,673		3,892		155,115

Total	$	243,975	$	13,623	$	3,894	$	253,704

The amortized cost and estimated fair value of debt securities held to maturity at March 31, 2004 and December 31, 2003 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Maturities of mortgage-backed securities are included below based upon an estimated average life. There were no sales of held to maturity securities.


	March 31, 2004				December 31, 2003
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	1,231	$	1,241	$	6,229	$	6,290
Due after one year through five years		40,843		44,464		32,329		34,700
Due after five years through ten years		32,054		35,690		46,351		50,523
Due after ten years		164,022		169,472		159,066		162,191

Total	$	238,150	$	250,867	$	243,975	$	253,704


		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2004 (Unaudited) and December 31, 2003		5
Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, 2004 and 2003		6
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) for the Three Months Ended March 31, 2004		7
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2004 and 2003		8
Notes to Consolidated Financial Statements		9
Information required by Item 303 of Regulation S-K
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures about Market Risk		30
Item 4. Controls and Procedures		34
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		35
Item 2. Changes in Securities and Use of Proceeds		35
Item 3. Defaults Upon Senior Securities		35
EX-10 SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
EX-31.1 CERTIFICATION
EX-31.2 CERTIFICATION
EX-32.1 CERTIFICATION
EX-32.2 CERTIFICATION


		Page
Item 4. Submission of Matters to a Vote of Security Holders		35
Item 5. Other Information		35
Item 6. Exhibits and Reports on Form 8-K		36
Signatures		38
Exhibit Index		39

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