<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Prospectus Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
UNITED BANKSHARES, INC.
(Name of Registrant as Specified In Its Charter)
UNITED BANKSHARES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
UNITED BANKSHARES, INC. P. O. BOX 1508 UNITED SQUARE FIFTH AND AVERY STREETS
PARKERSBURG, WEST VIRGINIA 26102 (304) 424-8800
NOTICE OF 1994 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its Board of Directors,
the 1994 Annual Meeting of Shareholders of UNITED BANKSHARES, INC. ("United")
will be held at The University of Charleston, 2300 MacCorkle Avenue, S.E.,
Charleston, West Virginia, on May 16, 1994, at 4:00 p.m., local time, for the
purpose of considering and voting upon the following matters:
1. To elect twenty (20) persons to serve as Directors of United. The nominees
selected by the current Board of Directors are listed in the accompanying Proxy
Statement for this Annual Meeting.
2. To act upon any other business which may properly come before this Annual
Meeting or any adjournment or adjournments thereof. The Board of Directors at
present knows of no other business to come before this Annual Meeting.
The close of business on March 11, 1994, has been fixed by the Board of
Directors as the record date for determining shareholders entitled to notice of
and to vote at this Annual Meeting.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
REGARDLESS OF YOUR PLANS TO ATTEND THIS MEETING. IF YOU DO ATTEND, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
TWO INDIVIDUALS, WHO ARE NOT DIRECTORS OF UNITED, HAVE BEEN NAMED IN THE
PROXY TO VOTE THE SHARES REPRESENTED BY PROXY. IF YOU WISH TO CHOOSE SOME OTHER
PERSON TO ACT AS YOUR PROXY, MARK OUT THE PRINTED NAME AND WRITE IN THE NAME OF
THE PERSON YOU SELECT.
By Order of the Board of Directors
Richard M. Adams Chairman of the Board
and Chief Executive Officer
April 8, 1994
<PAGE>
UNITED BANKSHARES, INC. P. O. BOX 1508 UNITED SQUARE FIFTH AND AVERY STREETS
PARKERSBURG, WEST VIRGINIA 26102 (304) 424-8800
PROXY STATEMENT
1994 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 16, 1994
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of United Bankshares, Inc. ("United") for its
1994 Annual Meeting of Shareholders (the "1994 Annual Meeting") to be held May
16, 1994.
A proxy for use by the shareholders of United in connection with the 1994
Annual Meeting accompanies this Proxy Statement, which is being mailed to the
shareholders of United on or about April 8, 1994. The proxy will be voted in
accordance with the specifications made thereon by the United shareholder. See
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS. If a shareholder does not
specify how the shareholder's proxy is to be voted, a properly executed proxy
will be voted "FOR" the proposal presented herein, the election of United
directors.
As of the date of mailing of this Proxy Statement, the Board of Directors of
United is not aware of any other business to be acted upon at the 1994 Annual
Meeting, and it is not anticipated that other matters will be brought before
that meeting. However, if any other matters should be brought before the 1994
Annual Meeting, it is intended that, unless otherwise specified on the proxy of
the United shareholder, the persons appointed as proxies may vote thereon
according to their judgment in light of conditions then prevailing and the
recommendations of the Board of Directors of United.
Any shareholder of United has the right to revoke his or her proxy at any
time before it is voted (i) by giving written notice to the Chairman of United,
(ii) by submitting a subsequently dated Proxy or (iii) by appearing at the 1994
Annual Meeting and voting in person.
This proxy solicitation is made by the Board of Directors of United, and the
costs of soliciting proxies will be paid by United. In addition to soliciting
by mail, directors, officers and regular employees of United and its
subsidiaries, who will receive no compensation for their services other than
their regular salaries and fees, may solicit proxies by telephone, telegraph or
personal interview. Brokers, fiduciaries, custodians and other nominees have
been requested to forward solicitation materials to the beneficial owners of
United common stock held in their names and are to be reimbursed for their
reasonable expenses in so doing. In order to facilitate and expedite
distribution of these proxy solicitation materials to brokers, fiduciaries,
custodians, nominee holders and institutional investors, United has retained
Corporate Investor Communications, Inc. of Carlstadt, New Jersey ("CIC").
Pursuant to a retention letter dated March 25, 1993, CIC will contact all
broker and other nominee accounts identified on United's shareholder mailing
list in order to facilitate determination of the number of sets of proxy
materials such accounts require for purposes of forwarding the same to the
beneficial owners. CIC will then assist in the delivery of proxy materials to
these accounts for distribution. CIC will also assist in distribution of proxy
materials to institutional investors. CIC will follow-up with the brokers,
other nominee accounts and institutional investors, requesting return of
proxies. United is not retaining CIC to solicit proxies from registered holders
or from non-objecting beneficial owners. CIC's fee for the above services is
$3,000, plus reasonable disbursements which may include the broker search,
printing, postage, courier charges, filing reports, data transmissions and
other expenses approved by United.
<PAGE>
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
Only shareholders of record at the close of business on March 11, 1994, are
entitled to notice of and to vote at the 1994 Annual Meeting. On that date,
there were 11,932,078 shares of the common stock of United issued and
outstanding, net of treasury shares, which shares were held by approximately
4,954 shareholders.
Each shareholder is entitled to one vote for each share owned on each matter
brought before the 1994 Annual Meeting. In the election of directors, a
shareholder of United may cast one vote for each share owned for each nominee.
However, every shareholder of United also has the right of cumulative voting,
in person or by proxy, in the election of directors. Cumulative voting gives
each shareholder the right to aggregate all votes which he or she is entitled
to cast in the election of directors and to cast all votes for one candidate or
distribute those votes among as many candidates and in such manner as the
shareholder desires. Assuming the number of directors is twenty (20), as
proposed by the current Board of Directors of United, each shareholder of
United has the right to cast twenty (20) votes in the election of directors for
each share of the common stock of United the shareholder held on the record
date. IF YOU WISH TO EXERCISE, BY PROXY, YOUR RIGHT TO CUMULATIVE VOTING IN THE
ELECTION OF DIRECTORS, YOU MUST PROVIDE A PROXY SHOWING HOW YOUR VOTES ARE TO
BE DISTRIBUTED AMONG ONE OR MORE CANDIDATES.
Unless contrary instructions are given by a shareholder who signs and returns
a proxy, all votes for the election of directors represented by such proxy will
be divided equally among the twenty (20) nominees set forth in this Proxy
Statement. However, if cumulative voting is invoked by one or more
shareholders, the votes represented by other proxies may be cumulated, at the
direction of the persons appointed as proxies with the recommendations of the
Board of Directors of United, in order to elect to the Board of Directors the
maximum number of nominees set forth in this Proxy Statement.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROPOSALS FOR ANNUAL MEETING............................................... 1
INTRODUCTION............................................................. 1
ELECTION OF DIRECTORS...................................................... 1
Nominees for Board of Directors.......................................... 1
Meetings and Committees of the Board of Directors........................ 4
Compensation of Directors................................................ 4
Principal Shareholder of United.......................................... 5
Beneficial Ownership of Securities by Executive Officers................. 5
EXECUTIVE COMPENSATION..................................................... 6
Board Compensation Committee Report...................................... 6
Summary Compensation Table............................................... 7
Stock Option Grants Table................................................ 8
Stock Option Exercises and Year-End Value Table.......................... 8
Officer Employment Contracts............................................. 8
Change of Control Agreements............................................. 9
Succession Management Stock Bonus Plan................................... 10
Incentive Stock Option Plan.............................................. 10
Employee Benefit Plans................................................... 11
Compensation Committee Interlocks and Insider Participation.............. 11
Transactions with Management and Others.................................. 12
PERFORMANCE GRAPHS......................................................... 13
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS................................... 14
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING.............................. 14
SELECTED FINANCIAL DATA.................................................... 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................................................ 16
</TABLE>
AUDITED FINANCIAL STATEMENTS
See separate report accompanying this proxy statement
FORM 10-K
A copy of the 1993 Form 10-K Annual Report filed with the Securities and
Exchange Commission pursuant to Section 13 of the Securities Exchange Act of
1934 will be forwarded to shareholders at no charge, upon written request.
Shareholders desiring a copy should direct their request to the Secretary,
United Bankshares, Inc., United Square, Fifth and Avery Streets, Parkersburg,
West Virginia 26102.
Registrar and
Transfer Agent: Independent Auditors:
Mellon Bank, N.A. Ernst & Young
P. O. Box 444 P. O. Box 2906
Pittsburgh, PA 15230 Charleston, WV 25330
<PAGE>
PROPOSALS FOR ANNUAL MEETING
INTRODUCTION
These proxy materials are being supplied in conjunction with the 1994 Annual
Meeting of Shareholders of United Bankshares, Inc. ("United"). United is a West
Virginia corporation registered as a bank holding company pursuant to the Bank
Holding Company Act of 1956, as amended. Effective January 1, 1993, United
merged its two subsidiary banks, United National Bank-North and United National
Bank-Central into United National Bank. The offices of United National-North
and United National Bank-Central became branch offices of United National Bank.
United currently owns three subsidiary banks: United National Bank ("UNB"),
United National Bank-South, and Bank First, N.A.
ELECTION OF DIRECTORS
NOMINEES FOR BOARD OF DIRECTORS
The Bylaws of United provide that its Board of Directors shall consist of not
fewer than five nor more than thirty-five persons, as may be determined, from
time to time, by resolution adopted by the shareholders or by a majority of the
Board of Directors. The twenty (20) persons listed below have been elected or
appointed to serve as directors of United until the 1994 Annual Meeting. The
individuals identified below are the nominees for election at the 1994 Annual
Meeting to serve until the 1995 Annual Meeting or until their successors are
elected and qualified. Each nominee is currently a director and has served
continuously to date as a director beginning in the indicated year.
Beneficial ownership of United's securities by directors as set forth below
is as of March 31, 1994.
Directors have sole voting and investment authority of directly owned shares.
The total of directly owned shares also includes stock options granted to
executive officers pursuant to incentive stock option plans. For two of the
directors who are executive officers, direct ownership includes options to
purchase shares as follows: Richard Adams, 71,750 shares and I. N. Smith, Jr.,
14,250 shares. The options to purchase shares included in the direct ownership
of all executive officers as a group total 207,250.
Indirect shares for each individual director include those owned by spouses
and immediate family members, shares held in trust of which a director is a
beneficiary, and shares held by a corporation which the director controls.
These shares do not include the Trust Shares discussed herein.
RICHARD M. ADAMS, who is Chairman and Chief Executive Officer of both United
and UNB, became a director of United in 1984. Mr. Adams is 47 years old. He
owns 206,368 shares of United directly and 94,214 shares indirectly, the total
of which represents 2.52 percent of the total outstanding shares of United. Of
the 94,214 shares indirectly owned by Mr. Adams, 30,590 shares are in the
Stevenson Trust over which he exercises voting power, 32,958 shares owned by
the members of his immediate family and 30,666 shares are held in two family
trusts over which he exercises voting power but no investment authority.
Messrs. Richard M. Adams and Douglass H. Adams are brothers.
I. N. SMITH, JR., who is President of United, Vice Chairman of UNB, and
former President of UNB, became a director in 1986. Mr. Smith is 61 years old.
He owns 18,583 shares of United directly and 225,184 shares indirectly, the
total of which represents 2.04 percent of the total outstanding shares of
United. Of the 225,184 shares indirectly owned by Mr. Smith, 14,700 shares are
owned by members of his immediate family and 4,000 shares are owned by the
mother of Mr. Smith over which he has power of attorney. The following shares
owned of record by others may be deemed to be owned by Mr. Smith under the
rules and regulations of the Securities and Exchange Commission: Kanawha City
Company 20,000 shares; Kanawha Company 56,000 shares; Roane Land Company 484
shares; Roxalana Land Company 75,000 shares; and West Virginia Coal Land
Company 55,000 shares.
1
<PAGE>
ROBERT G. ASTORG, who is a CPA and Managing Director of IDS, a financial
consultant and tax service, became a director in 1991. Mr. Astorg is 50 years
old. He owns 12,000 shares of United directly and 700 shares indirectly, the
total of which represents less than one percent of the total outstanding shares
of United.
THOMAS J. BLAIR, III, who is President and Chief Executive Officer of Kelley,
Gidley, Blair & Wolfe, Inc., former Chairman of the Board of UNB-Central,
Heritage and Weston National, became a director in 1988. Mr. Blair is 60 years
old. He owns 130,725 shares of United directly and 7,100 shares indirectly, the
total of which represents 1.16 percent of the total outstanding shares of
United. Mr. Blair is a former president of the McDowell County Water Company,
which filed a voluntary petition under Chapter 11 of the United States
Bankruptcy Code on November 11, 1989. In previous proxy statements it was
disclosed that Mr. Blair was convicted of a series of seven (7) identical
statutory misdemeanors stemming from his company's alleged failure to establish
and maintain adequate and suitable water facilities and failure to perform such
service thereto as shall be reasonable, safe and sufficient for the service and
convenience of the public. Mr. Blair appealed his convictions. On December 14,
1993, the Supreme Court of Appeals of West Virginia set aside, reversed and
annulled the convictions.
HARRY L. BUCH, who is an Attorney at Law, and Partner with Gompers, Buch,
McCarthy & McLure, became a director in 1990. Mr. Buch is 63 years old. He owns
14,063 shares of United directly which represents less than one percent of the
total outstanding shares of United.
JOHN W. DUDLEY, who is President of J. W. Dudley Sons & Company, a retail
business, became a director in 1986. Mr Dudley is 47 years old. He owns 8,703
shares of United directly which represents less than one percent of the total
outstanding shares of United.
H. SMOOT FAHLGREN, who is Chairman and former Chief Executive Officer of
Fahlgren, Inc., became a director in 1984. Mr. Fahlgren is 63 years old. He
owns 119,723 shares of United directly and 3,721 shares indirectly, which
represents 1.04 percent of the total outstanding shares of United. Mr. Fahlgren
is Mr. Graff's father-in-law.
THEODORE J. GEORGELAS, who is Chairman of the Board of Bank First, N.A., and
President of Georgelas and Sons, Inc., a commercial real estate development
company, became a director in 1990. Mr. Georgelas is 47 years old. He directly
owns 55,666 shares of United which represents less than one percent of the
total outstanding shares of United.
C. E. GOODWIN, who is an Attorney at Law and Counsel with Goodwin & Goodwin,
became a director in 1985. Mr. Goodwin is 83 years old. He owns 15,120 shares
of United directly and 1,272 shares indirectly, the total of which represents
less than one percent of the total outstanding shares of United.
F.T. GRAFF, JR., who is a practicing attorney and partner of Bowles Rice
McDavid Graff and Love, became a director of United in 1984. Mr. Graff is 54
years old. He owns 2,000 shares of United directly and 9,000 shares indirectly,
the total of which represents less than one percent of the total outstanding
shares of United. The indirectly owned shares are held by a bank in a trustee
account for Mr. Graff over which he exercises voting and dispositive power. Mr.
Graff is Mr. Fahlgren's son-in-law.
LEONARD A. HARVEY, who is a former Secretary of the West Virginia Department
of Commerce, Labor, and Environmental Resources, became a director of United in
1990. Mr. Harvey is 67 years old. He owns 26,659 shares of United directly and
859 shares indirectly, the total of which represents less than one percent of
the total outstanding shares of United.
ANDREW J. HOUVOURAS, who is President of A&L Industries, an investment
company, became a director of United in 1985. Mr. Houvouras is 74 years old. He
owns 407 shares of United directly and 27,453 shares indirectly, the total of
which represents less than one percent of the total outstanding shares of
United. The indirect shares are owned by a company in which Mr. Houvouras is a
partner.
2
<PAGE>
RUSSELL L. ISAACS, who is the owner of Russell L. Isaacs and Company, a
consulting firm, became a director of United in 1984. Mr. Isaacs is 61 years
old. He owns 20,958 shares of United directly which represents less than one
percent of the total outstanding shares of United.
ROBERT P. MCLEAN, who is the President of Stanaford Acres, Inc. and Vice-
President of Sigmund-McLean, Inc. became a director of United in 1992. Mr.
McLean is 63 years old. He owns 3,508 shares of United directly and 1,271
shares indirectly, the total of which represents less than one percent of the
total outstanding shares of United.
G. OGDEN NUTTING, who is the former Chairman of the Board of UNB-N and
President of The Ogden Newspapers, Inc., became a director of United in 1986.
Mr. Nutting is 58 years old. He owns 326,328 shares of United indirectly which
represents 2.74 percent of the total outstanding shares of United. The voting
and investment authority for the indirectly owned shares of Mr. Nutting are as
follows: he has beneficial ownership, through shared investment or voting
authority of 326,328 shares consisting of 20,952 shares held by Mr. Nutting as
co-trustee, and 277,376 shares registered in the name of The Ogden Newspapers,
Inc. of which Mr. Nutting is President. He is also a settlor and sole
beneficiary of a trust which contains 28,000 shares.
WILLIAM C. PITT, III, who is a hotel and resort developer, became a director
of United in 1987. Mr. Pitt is 49 years old. He owns 5,000 shares of United
directly which represents less than one percent of the total outstanding shares
of United.
CHARLES E. STEALEY, who is a private consultant and former Assistant Vice
President and Director of Administration of Olsten Corporation, became a
director of United in 1986. Mr. Stealey is 53 years old. He owns 31,068 shares
of United directly and 47,962 shares indirectly, the total of which represents
less than one percent of the total outstanding shares of United. Mr. Stealey's
mother holds 7,354 of the indirect shares over which Mr. Stealey has power of
attorney and the other 40,608 indirect shares are held in a trustee account for
Mr. Stealey over which he exercises voting and investment authority.
WARREN A. THORNHILL, III, who is an Attorney at Law, former Chairman of the
Board of Summit Holding Corporation and Raleigh County National Bank and
Chairman of UNB-S, became a director of United in 1992. Mr. Thornhill is 65
years old. He owns 112,154 shares of United directly and 112,573 shares
indirectly, the total of which represents 1.88 percent of the total shares
outstanding of United.
HAROLD L. WILKES, who is President of Little General Stores, Inc., a
convenience store chain, became a director of United in 1993. Mr. Wilkes is 53
years old. He directly owns 1,836 shares of United which represents less than
one percent of the total outstanding shares of United.
JAMES W. WORD, JR., who is President of Beckley Loan Company and Vice-
President of Beckley Loan and Industrial Corporation became a director of
United in 1992. He is 70 years old. He owns 32,543 shares of United directly
and 26,328 shares indirectly, the total of which represents less than one
percent of the total outstanding shares of United.
All directors and executive officers of United as a group, 28 persons, own
1,054,442 shares of United directly and 1,770,784 shares indirectly, the total
of which represents 23.69 percent of the total shares outstanding for United.
Included in indirectly owned shares are 882,262 shares of United common stock
held by UNB's Trust Department serving in a fiduciary or agency capacity (the
"Trust Shares"). The voting and investment authority for the Trust Shares held
by the Trust Department is exercised by UNB's Board of Directors. The members
of UNB's Board of Directors who are also directors or executive officers of
United are: Richard M. Adams, I. N. Smith, Jr., and Gary L. Ellis. In addition,
the total indirect shares includes 49,930 shares held by the Trust Department
of UNB-S of which 43,297 shares are held in the nominee name of Big Clock
Investment Company and are voted by UNB-S's Board of Directors. The members of
UNB-S's Board who are also directors or executive officers of United are Gary
L. Ellis, Warren A. Thornhill, III, and Robert P. McLean.
3
<PAGE>
Other nominations may be made only if such nominations are made in accordance
with the procedures set forth in Article II, Section 5 of the Restated Bylaws
of United, which section, in full, is set forth below:
Section 5. NOMINATION OF DIRECTORS. Directors shall be nominated by
the Board prior to the giving of notice of any meeting of shareholders
wherein directors are to be elected. Additional nominations of
directors may be made by any shareholder; provided that such nomination
or nominations must be made in writing, signed by the shareholder and
received by the Chairman or President no later than ten (10) days from
the date the notice of the meeting of shareholders was mailed; however,
in the event that notice is mailed less than thirteen (13) days prior
to the meeting, such nomination or nominations must be received no
later than three (3) days prior to any meeting of the shareholders
wherein directors are to be elected.
If any nominee set forth above is unable to serve, which the Board of
Directors has no reason to expect, the persons named in the accompanying proxy
intend to vote for the balance of those nominees set forth above and, if they
deem it advisable, for a substitute nominee named by the Board of Directors of
United.
It is the intention of the persons named in the accompanying proxy, unless
the proxy specifies otherwise (or except under the circumstances involving
cumulative voting in the election of directors described above) to vote "FOR"
the resolution to elect the twenty (20) nominees to serve as directors of
United until the 1995 Annual Meeting of shareholders and until their successors
are elected and qualified.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of United met six times during 1993. The Board reviews
management reports and general corporate policy. During the calendar year ended
December 31, 1993, each director of United attended more than 75% of the total
number of meetings of the Board and Board Committees on which he or she served
during the period he or she served as a director, except for Mrs. Wehrle.
The Board has three standing committees--the Executive, Audit, and
Compensation. The Audit Committee met four times in 1993 to review the
quarterly reports of internal audit, all reports of external auditors, and all
reports of examination by federal and state bank regulatory authorities. This
committee consisted of: Robert G. Astorg, Chairman, R. Terry Butcher, C. E.
Goodwin, and James W. Word, Jr.
The Executive Committee met four times during 1993. The Executive Committee
may exercise the power of the Board of Directors between meetings of the full
Board of Directors or upon the call of the Chairman, as directed by the Board
and consistent with the provisions of West Virginia corporate law. The
committee consisted, during 1993, of Richard M. Adams, I. N. Smith, Jr., Thomas
J. Blair, III, Harry L. Buch, H. Smoot Fahlgren, Theodore J. Georgelas, Leonard
A. Harvey, Russell L. Isaacs, G. Ogden Nutting, William C. Pitt, III, Warren A.
Thornhill, III and F. T. Graff, Jr., who also serves as secretary for the
Executive Committee.
The Compensation Committee met two times during 1993. The Compensation
Committee makes recommendations regarding officer compensation and budgetary
matters to the Board of Directors. The committee consisted of the same members
as served on the Executive Committee except for Messrs. R. Adams and Smith.
COMPENSATION OF DIRECTORS
Directors other than Executive Officers of United receive a retainer of $550
per month without regard to meeting attendance. In addition, each outside
director receives a fee of $275 for each United Board Committee attended except
for Mr. Isaacs who receives $550 as chairman of the Compensation Committee and
Mr. Astorg who receives $275 per month as chairman of the Audit Committee.
United utilizes an aircraft owned by Mr. Fahlgren, a member of United's Board
of Directors. During 1993, Mr. Fahlgren received $20,889 in compensation for
these services.
4
<PAGE>
PRINCIPAL SHAREHOLDER OF UNITED
The following table lists each shareholder of United who is the beneficial
owner of more than 5% of United's common stock, the only class of stock
outstanding, as of March 31, 1994.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------------------ -------------------- ----------
<S> <C> <C>
(1) United National Bank Trust Depart-
ment 514 Market Street Parkersburg WV
26101 (133,805 or 1.12% are regis-
tered under the nominee name of
Parbanc Co.) 882,262 7.40%
</TABLE>
- --------
(1) UNB is a wholly-owned subsidiary of United and its Trust Department holds
in fiduciary or agency capacity 882,262 shares of United's stock. The voting
and investment authority for the shares held by the Trust Department is
exercised by UNB's Board of Directors.
BENEFICIAL OWNERSHIP OF SECURITIES BY EXECUTIVE OFFICERS
The following table sets forth certain information regarding the named
executives beneficial ownership of Common Stock of the Company as of March 31,
1994:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OF THE COMPANY
BENEFICIALLY OWNED
-------------------------------
TITLE OF PERCENT
CLASS NAME OF OFFICER NUMBER(1) OF CLASS
-------- --------------- ----------- ---------
<S> <C> <C> <C>
Common Stock Richard M. Adams 300,582 2.52%
Common Stock I.N. Smith, Jr. 243,767 2.04%
Common Stock Gary L. Ellis 32,254 0.27%
Common Stock Thomas A. McPherson 62,545 0.52%
Common Stock Steven E. Wilson 31,448 0.26%
</TABLE>
(1) The amounts shown represent the total shares owned directly by such named
executive officers together with shares which are owned indirectly. The
indirect shares include shares which are issuable upon the exercise of all
stock options currently exercisable and those shares owned by spouses and
immediate family members, shares held in trust in which the executive is a
beneficiary, and shares held by a corporation which the executive controls.
5
<PAGE>
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for administration of United
Bankshares, Inc.'s (United's) Executive Compensation programs. This includes
recommendations related to base salary, short term incentives and long term
stock option incentives for all Executive Officers of the Company.
The Compensation Committee's Executive Compensation policies, developed based
on competitive information, are designed to provide competitive levels of
compensation that integrate pay with United's annual and long term performance
goals and assist in attracting and retaining qualified executives.
Periodically the Committee retains the services of nationally recognized
compensation consulting firms to do an extensive review of the compensation
program for all Executive Officers.
William M. Mercer, Inc. reported to the Committee that the total compensation
plan for 1993 for all Executive Officers was reasonable and competitive in view
of the company's performance and the contribution of those officers to that
performance.
Executive Officers are paid base salaries determined by the value of their
position compared to published survey data, information gathered on competing
banks of similar size and the officer's individual performance level.
The short term Incentive Plan stresses reward for achievement of performance
goals set each year. Each Executive Officer participates in a pool of funds set
aside for this purpose. Participation level is based on a rating system tied to
accomplishment of assigned goals as well as a specific formula which relates
the incentive award to a percentage of salary range midpoint. Company
performance must exceed peer performance to activate compensation incentives.
The United management team should share the same goals as its shareholders.
Toward this end, the long term Incentive Stock Option Plan is designed to
provide an ownership opportunity to key management personnel. Stock ownership
provides an ever important stockholder perspective necessary for successful
management of the company. Awards are based on industry guidelines which relate
base compensation to stock price. Grant calculations are tested for
reasonableness against competitive industry data, keeping in mind cumulative
ownership targets.
Mercer reported that stock option grants to Executive Officers have generally
been conservative over the last five years when compared to general industry
and practices for major regional banking organizations. The most recent share
allocations as a percentage of outstanding shares have been consistent with
competitive practices in the banking industry.
Peer group performance analysis is a continual process at United. Data
provided by the Federal Reserve Bank Holding Company Performance Report is
analyzed quarterly. Proxy data on an appropriate group of individual financial
institutions is used to evaluate operating performance and profitability.
United consistently performs well compared to peer.
Base pay for Richard Adams, Chief Executive Officer was determined to be
slightly below the median when compared to published compensation surveys from
Cole (a division of Wyatt Data Services) and the Bank Administration Institute.
Mr. Adams is awarded a pro-rata share of the established short term incentive
pool based on his performance rating assigned by the Committee. The Mercer
report concluded that total cash compensation for the position of CEO is
appropriate in view of performance levels attained for companies of similar
size.
Stock option shares granted to Mr. Adams were determined to be competitive
when compared by Mercer to the grant practices of a broad spectrum of banking
organizations.
6
<PAGE>
Adams at age 47 has served the company for 25 years; 19 of those years he has
been responsible for motivating and building the organization.
United's stock price over the past 19 years of the current administration has
moved from $3.00 per share to a high of $28.50 per share for an average
annualized increase of 41%. The stock charts on the following pages show how
United's stock price has performed over two different time periods compared to
two index groups. The two year chart shows United with significant price growth
which out performed both index groups.
Dividends have increased from $.11 cents per share to $.95 cents per share or
at a 40% average annualized rate. United's pay for performance compensation
program emphasizing written performance objectives has been a major contributor
to our ability to consistently enhance long-term shareholder value.
No member of the Committee is a former or current officer or employee of
United.
COMPENSATION COMMITTEE
<TABLE>
<S> <C> <C>
Thomas J. Blair, III Warren A. Thornhill, III Harry L. Buch
Russell L. Isaacs H. Smoot Fahlgren G. Ogden Nutting
Theodore J. Georgelas William C. Pitt, III F. T. Graff, Jr.
Leonard A. Harvey
</TABLE>
SUMMARY COMPENSATION TABLE
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, the Company's chief executive
officer and each of the Company's other four most highly compensated executive
officers during the last three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------
STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION (3)
- ----------------------------------------------- ---- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Adams Chairman of the Board 1993 $257,948 $80,000 10,000 $25,320(2)
& Chief Executive Officer 1992 243,340 80,000 17,500 22,319
1991 229,287 75,000 21,750 19,861
I. N. Smith, Jr. President 1993 145,109 15,000 3,000 4,046(1)
1992 145,109 15,000 5,000 4,045
1991 144,053 15,000 5,800 3,387
Gary L. Ellis Executive Vice President 1993 137,493 30,000 5,000 3,554(1)
1992 129,711 30,000 8,000 3,112
1991 122,644 25,000 8,700 2,246
Thomas A. McPhersonn Executive Vice President 1993 120,000 15,000 3,500 3,368(1)
1992 118,943 15,000 3,000 3,358
1991 115,203 15,000 5,000 2,899
Steven E. Wilson Executive Vice President 1993 113,540 25,000 4,000 2,783(1)
Chief Financial Officer 1992 107,113 25,000 6,500 2,560
& Treasurer 1991 100,000 20,000 7,250 1,829
</TABLE>
- --------
(1) All reported amounts indicate annual amounts accrued under the Company's
401(K) Plan.
(2) Included are $5,682 representing the Company's matching contribution to the
Company's 401(K) Plan and $19,638 accrued under a supplemental executive
retirement plan.
(3) The aggregate value of all perquisites and other personal benefits did not
exceed either $50,000 or 10% of the total annual salary and bonus reported
for the named executive officers, therefore, no disclosure has been made.
7
<PAGE>
STOCK OPTION GRANTS TABLE
The following table sets forth information concerning individual grants of
options to purchase the Company's Common Stock made to the named executives in
1993.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------------
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
---------------------------------------------------- ---------------
% OF TOTAL
OPTIONS GRANTED TO EXERCISE OR
OPTIONS ALL EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ------------------- ---------- ------------------ ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Adams 10,000(1) 11.66% 27.00 11/22/2003 169,800 430,310
I.N. Smith, Jr. 3,000(1) 3.50% 27.00 11/22/2003 50,940 129,093
Gary L. Ellis 5,000(1) 5.83% 27.00 11/22/2003 84,900 215,155
Thomas A. McPherson 3,500(1) 4.08% 27.00 11/22/2003 59,430 150,608
Steven E. Wilson 4,000(1) 4.66% 27.00 11/22/2003 67,920 172,124
</TABLE>
- --------
(1) Granted from the 1991 incentive Stock Option Plan. The option exercise
price is the market value of United's stock at the date the option was
granted. All options granted under this plan are exercisable in accordance
with a three year vesting schedule: 50% after the fist year: 75% after the
second year and 100% after three years.
STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth certain information regarding individual
exercises of stock options during 1993 by each of the named executives.
<TABLE>
<CAPTION>
AGGREGATE STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END STOCK OPTION VALUE
-----------------------------------------------------------------------------------------
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
STOCK OPTIONS'S AT FY-END (#) MONEY STOCK OPTION'S AT FY-END ($)
----------------------------- ----------------------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------- --------------- -------- ----------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Richard M. Adams 53,000/18,750 $643,563/$79,375
I.N. Smith, Jr. 2,000 $17,000 8,750/ 5,500 $ 96,313/$22,250
Gary L. Ellis 2,700 $41,175 19,000/ 9,000 $218,000/$35,000
Thomas A. McPherson 5,500/ 6,000 $ 57,250/$22,250
Steven E. Wilson 4,750 $54,188 13,250/ 7,250 $148,875/$28,625
</TABLE>
OFFICER EMPLOYMENT CONTRACTS
Richard M. Adams, Chairman and Chief Executive Officer of United and UNB
entered into an employment contract with United effective April 11, 1986. This
contract was amended in 1989, again in January and November 1991, in April 1992
and again in November 1993. This most recent amendment also served to initiate
a new five year term. Under the contract Mr. Adams is required to devote his
full-time energies to performing his duties as Chairman and CEO on behalf of
United and UNB. The contract provides for a base compensation of $300,000 and
additional benefits consistent with the office. This base compensation may be
increased but not decreased. If the contract is terminated by Mr. Adams for
change in control, or for any reason other than mutual consent or criminal
misconduct, Mr. Adams, or his family or estate, is entitled to his base salary
for the remainder of the contract term.
8
<PAGE>
On July 27, 1990, United also entered into a Supplemental Retirement Plan
with Mr. Adams. This plan provides for an annual supplemental retirement
benefit upon his reaching age 65 or upon the later termination of his
employment with United. The annual benefit will be equal to seventy percent of
the average of Mr. Adams' three highest base salaries during his employment
with United, reduced by benefits. The plan also provides for reduced benefits
for early retirement after age 62 as well as payments to his spouse in the
event of his death.
United and UNB entered into an employment agreement with I. N. Smith, Jr.,
President of United and Vice-Chairman of UNB, on December 17, 1985. The term of
the agreement extends until Mr. Smith reaches the age of 75. Until Mr. Smith
becomes 65, he will be employed full-time by United as an executive officer and
will receive an annual salary of no less than $115,000. Upon reaching the age
of 65 and until he reaches the age of 75, Mr. Smith shall render such
consulting and advisory services as United may request, and shall receive for
such services an annual fee of $36,000 from age 65 until he reaches age 70, and
$30,000 thereafter. The agreement also contains provisions which address the
issues of disability, early retirement and the death of Mr. Smith. All of these
events carry reduced payment provisions. In addition, until Mr. Smith reaches
age 65, he has agreed to serve as a director of United and UNB, and United has
agreed to use its best efforts to nominate and elect him.
Ohio Valley National Bank, (now a part of UNB as a result of its merger with
United) entered into a Salary Contribution Agreement with Douglass H. Adams,
Executive Vice President of United, on June 13, 1985. This agreement provides
at age 65 for an annual supplemental retirement equal to $30,000 for life or
fifteen years certain. This future liability is being funded with life
insurance. Provision is made for an early retirement benefit beginning at age
60 at a reduced percentage of the normal benefit. The agreement also provides
for payment to beneficiaries in the event of his death.
CHANGE OF CONTROL AGREEMENTS
In March of 1994, United entered into agreements with Gary L. Ellis, Steven
E. Wilson, Thomas A. McPherson, James B. Hayhurst, Jr. and Joe L. Wilson to
encourage those executive officers to maintain employment with United because
of the possibility that United might be acquired by another entity. The Board of
Directors determined that such an arrangement was appropriate, especially in
view of the recent entry of large regional bank holding companies into West
Virginia and the volatile banking market anticipated in West Virginia with the
advent of interstate banking. The agreements were not undertaken in the belief
that a change of control of United was imminent.
Generally, the agreements provide severance compensation to those officers if
their employment should end under certain specified conditions after a change
of control of United. Compensation is paid upon any involuntary termination
following a change of control unless the officer is terminated for cause. In
addition, compensation will be paid after a change of control if the officer
voluntarily terminates employment because of a decrease in the total amount of
the officer's base salary below the level in effect on the date of consummation
of the change of control, without the officer's consent; a material reduction
in the importance of the officer's job responsibilities without the officer's
consent; geographical relocation of the officer without consent to an office
more than fifty (50) miles from the officer's location at the time of a change
of control; failure by United to obtain assumption of the contract by its
successor or any termination of employment within thirty-six (36) months after
consummation of a change of control which is effected for any reason other than
good cause.
Under the agreements, a change of control is deemed to occur in the event of
a change of ownership of United which must be reported to the Securities and
Exchange Commission as a change of control, including but not limited to the
acquisition by any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities and Exchange Act of 1934 (the "Exchange Act")) of direct or
indirect "beneficial ownership" (as defined by Rule 13d-3 under the Exchange
Act) of twenty-five percent (25%) or more of the combined voting power of
United's then outstanding securities, or the failure during any period of two
(2) consecutive years of
9
<PAGE>
individuals who at the beginning of such period constitute the Board for any
reason to constitute at least a majority thereof, unless the election of each
director who was not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds (2/3) of the
directors at the beginning of the period.
Under the agreements, severance benefits include: (a) cash payment equal to
the officers monthly base salary in effect on either (i) the date of
termination; (ii) the date immediately preceding the change of control,
whichever is higher, multiplied by the number of full months between the date
of termination and the date that is thirty-six (36) months after the date of
consummation of the change of control; (b) payment of cash incentive award, if
any, under United's Incentive Plan; (c) continuing participation in employee
benefit plans and programs such as retirement, disability and medical insurance
for a period of thirty-six (36) months following the date of termination.
The agreements do not effect the right of United to terminate the officer, or
change the salary or benefits of the officer, with or without good cause, prior
to any change of control; provided, however, any termination or change which
takes place after discussions have commenced which result in a change of
control will be presumed to be a violation of the agreement and will entitle
the officer to the benefits under the agreement, absent clear and convincing
evidence to the contrary.
SUCCESSION MANAGEMENT STOCK BONUS PLAN
In April 1989, the Executive Committee, which at that time also served as the
Compensation Committee, approved a management stock bonus plan. The purpose of
the plan was to retain certain key "junior" officers. The plan was intended to
encourage these individuals to stay with the company and to continue to develop
their potential for future management roles. The plan provided for grants of
the right to receive up to 500 shares per year, for five years, per officer.
All granted stock was distributed to the grantees at the beginning of 1994. The
shares granted were held in trust and the recipients had no ownership rights
until the shares were distributed. In certain limited circumstances
distribution could have been earlier, such as, in the case of disability or
death. Shares had been purchased by United and were held in a trust account for
this plan. None of the individuals included in this plan are executive officers
of United. No grants have been made since 1990.
INCENTIVE STOCK OPTION PLAN
In February, 1988, the Board adopted an incentive stock option ("ISO") plan
which was approved by United's shareholders at the 1988 annual meeting. The ISO
plan was conceived by United's Board in order to retain and motivate key
management executives of United. The class of eligible employees is executive
officers of United and its subsidiaries owning less than 10% of United's issued
and outstanding stock. The Executive Committee of United, in its sole
discretion, awarded stock options to eligible employees, determined the
conditions for exercise, and administered the ISO plan generally. One hundred
thousand (100,000) shares were allocated to the plan, with options for no more
than 20,000 shares to be awarded each year. The option exercise price was the
fair market value of United's stock at the time the option was granted. The
last grants under this plan were awarded in 1992. All options granted are
vested. Messrs. Smith, S. Wilson and Ellis have exercised options.
In April, 1991, the Board adopted an incentive stock option plan ("1991
Plan") which was approved by United's shareholders at the 1991 annual meeting.
The 1991 Plan is intended to attract and retain qualified and motivated
management. The class of eligible employees is officers of United and its
subsidiaries owning less than 10% of United's issued and outstanding stock. The
Executive Committee of United, in its sole discretion, will award stock options
to eligible employees and will administer the 1991 Plan generally. Five hundred
thousand (500,000) shares were allocated to the plan, with options for no more
than 100,000 shares to be awarded each year. The option exercise price will be
the fair market value of United's stock at the time the option is granted.
10
<PAGE>
In 1993, 85,750 shares were granted as follows: Richard M. Adams--10,000
shares; I. N. Smith, Jr.--3,000 shares; Gary L. Ellis--5,000 shares; Joe L.
Wilson--3,000 shares; Steven E. Wilson--4,000 shares; James B. Hayhurst--3,250
shares; Joseph Wm. Sowards--2,000 shares; Douglass H. Adams--2,000 shares;
Thomas A. McPherson--3,500 shares and David Addison--2,000 shares. Forty-one
non-executive officers received a total of 48,000 shares. These shares were
granted at the then current market price of $27.00. The options granted become
exercisable in accordance with a three year vesting schedule: 50% year one; 75%
year two and 100% year three. Mr. Addison and two nonexecutive officers have
exercised options.
EMPLOYEE BENEFIT PLANS
No directors or principal shareholders of United and its subsidiaries, other
than those persons who are salaried officers, participate in any type of
benefit plan of United.
United's subsidiaries provide, on a substantially non-contributory basis for
all full-time employees, life, disability, hospital and dental insurance. Life
insurance with value of 250% of base salary is provided to all full-time
employees, including executive officers. The premiums paid by United for life
insurance on any individual which has a face value greater than $50,000 is
properly reported as compensation. These plans do not discriminate, in scope,
terms or operation, in favor of the executive officers of United or its
subsidiaries and are available generally to all salaried employees of United
and its subsidiaries.
Each employee of United, or its participating subsidiaries, who completes one
year of eligible service and is 21 years of age is eligible to participate in
the Pension Plan. The plan is noncontributory on the part of the employee.
Vesting is attained with five years of participation.
Normal retirement benefits under the United Plan are equal to:
1.25% of Average Final Compensation*
plus
0.5% of Average Final Compensation in excess of Covered Compensation**
multiplied by years of service not to exceed 25
*Average Final Compensation = The average of the highest five consecutive
plan years of basic compensation paid during the ten plan years preceding the
date of determination.
**Covered Compensation = The average of the last 35 years of the social
security wage base prior to social security retirement age.
Each employee of United, who completes one year of eligible service, is
eligible to participate in the United Savings and Stock Investment Plan, a
deferred compensation plan under Section 401(k) of the Internal Revenue Code.
Each participant may contribute from 1% to 10% of pre-tax earnings to his/her
account which may be invested in any of four investment options chosen by the
employee. United matches 100% of the first 2% of salary deferred and 25% of the
second 2% of salary deferred with United stock. Vesting is 100% for employee
deferrals and the company match at the time the employee makes his/her
deferral.
United employees may participate in an employee stock purchase plan whereby
its employees may purchase shares of United's common stock. Purchases made by
employees under this plan are coordinated by the Trust Department of UNB, and
involve stock purchased at market price for this purpose.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
F.T. Graff, Jr., a member of the Board of Directors of United and the Board's
Compensation Committee, is a partner in the law firm of Bowles Rice McDavid
Graff & Love in Charleston, West Virginia. Bowles
11
<PAGE>
Rice McDavid Graff & Love rendered legal services to United and UNB during 1993
and it is expected that the firm will continue to render certain services to
both in the future. The fees paid to Bowles Rice McDavid Graff & Love represent
less than 5% of that firm's revenues for 1993.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
United's subsidiaries have had, and expect to have in the future, banking
transactions with United and with its officers, directors, principal
shareholders, or their interests (entities in which they have more than a 10%
interest). The transactions were in the ordinary course of business and with
respect to loans were made on substantially the same terms, including interest
rates, collateral and repayment terms as those prevailing at the time for
comparable transactions. United's subsidiary banks are subject to federal
statutes and regulations governing loans to officers and directors and extend
loans in compliance with such laws and only with the approval of the Board of
Directors.
The building utilized by UNB to house its Rosemar Circle Branch in North
Parkersburg, West Virginia, is owned by Richard M. Adams, Chairman and Chief
Executive Officer of United and UNB, his brother, Douglass H. Adams, Executive
Vice President of United and their step-mother, Dorothy D. Adams. The Adams'
lease the land from UNB at a nominal annual rental and lease the branch
facility they constructed to UNB. The leases were entered into prior to UNB's
ownership of the branch facility and were assumed by UNB upon its acquisition
of the previous lessee, United Bank. Management believes the lease terms are
comparable with lease terms for similar property in the market area.
H. Smoot Fahlgren, a member of the Board of Directors of United, is President
of Fahlgren, Inc., an advertising agency with its headquarters in Parkersburg,
West Virginia. The agency has provided the advertising for United since 1978.
During 1993, payment for the advertising by United to Fahlgren, Inc. was less
than 5% of that firm's revenues during the year 1993.
F.T. Graff, Jr., a member of the Board of Directors of United, is a partner
in the law firm of Bowles Rice McDavid Graff & Love in Charleston, West
Virginia. Bowles Rice McDavid Graff & Love rendered legal services to United
and UNB during 1993 and it is expected that the firm will continue to render
certain services to both in the future. The fees paid to Bowles Rice McDavid
Graff & Love represent less than 5% of that firm's revenues for 1993.
UNB leases its Wheeling branch premises from The Ogden Newspapers, Inc.
pursuant to a written lease agreement dated August 1, 1979 (the "Lease"). The
Ogden Newspapers, Inc. is a shareholder of United, and the voting and
investment authority for its shares are beneficially owned by its President, G.
Ogden Nutting who is a director of United. Management believes the Lease is on
terms comparable to market terms for similar rental space in Wheeling, West
Virginia. The Lease provides for five (5) successive options to renew and
extend the terms of the Lease for five (5) years each. United exercised its
option to renew the Lease for five (5) years in 1989. In addition, during the
year 1993 subsidiaries of United advertised, at market rates, in newspapers
published by The Ogden Newspaper, Inc. The fees paid in such advertising and
the rent paid to The Ogden Newspapers, Inc. represent less than 5% of that
firm's revenue for the year 1993.
12
<PAGE>
PERFORMANCE GRAPHS
The following graphs compare (i) United's cumulative total shareholder return
on its common stock for the period beginning January 1992 and ending March 15,
1994, with the cumulative return of the Standard and Poor's Midcap 400 Index
and with the NASDAQ OTC Index Banks; and (ii) United's cumulative total
shareholder return on its common stock for the five year period ending December
31, 1993, with the cumulative total return of the Standard and Poor's Midcap
400 Index and with the NASDAQ OTC Index Banks. There is no assurance that
United's common stock performance will continue in the future with the same or
similar trends as depicted in the graphs. The graphs shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934 except to the extent United specifically
incorporates these graphs by reference, and shall not otherwise be filed under
such Acts.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF TWO YEAR CUMULATIVE RETURN
AMONG UBS, S&P MID-CAP INDEX AND OTC BANK INDEX
<CAPTION>
NASDAQ
Measurement period UBS S&P Midcap OTC Bank
(Fiscal year Covered) Index Index
<S> <C> <C> <C>
Measurement PT-
12/31/91 $100 $100 $100
FQE 3/31/92 $113.62 $103.25 $113.07
FQE 6/30/92 $123.21 $ 99.81 $125.63
FQE 9/30/92 $143.16 $ 98.53 $130.18
FQE 12/31/92 $147.52 $108.52 $151.75
FQE 3/31/93 $158.11 $110.79 $173.72
FQE 6/30/93 $154.84 $114.61 $173.40
FQE 9/30/93 $179.06 $119.05 $193.85
FQE 12/31/93 $186.08 $122.37 $194.98
FQE 3/15/94 $189.65 $123.89 $196.67
</TABLE>
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG UBS, S&P MID-CAP INDEX AND NASDAQ OTC BANK INDEX
<CAPTAIN>
NASDAQ
Measurement period UBS S&P Midcap OTC
(Fiscal year Covered) Index Index
<S> <C> <C> <C>
Measurement PT-
12/31/91 $100 $100 $100
FYE 12/31/89 $ 92.98 $131.41 $ 89.83
FYE 12/31/90 $ 78.76 $120.80 $ 58.56
FYE 12/31/91 $104.42 $177.08 $ 80.53
FYE 12/31/92 $150.88 $193.96 $122.43
FYE 12/31/93 $196.40 $216.69 $158.38
</TABLE>
13
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Ernst & Young, Charleston, West Virginia, served as the independent certified
public accountants for United and its subsidiaries during 1993. The independent
auditors for 1994 have not yet been selected. A member of the firm will be
available to respond to shareholder inquiries at the annual meeting.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Presently, the next annual meeting of United shareholders is scheduled for
May 15, 1995. Any shareholder proposals to be presented at that 1995 Annual
Meeting must be received at the principal office of United no later than
December 7, 1994. If the scheduled date for the 1995 Annual Meeting is changed
by more than thirty (30) days, shareholders will be informed of the new meeting
date and the revised date by which shareholder proposals must be received.
By Order of the Board of
Directors
RICHARD M. ADAMS CHAIRMAN OF THE
BOARD AND CHIEF EXECUTIVE
OFFICER
14
<PAGE>
UNITED BANKSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
FIVE YEAR SUMMARY
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total interest income... $ 116,505 $ 113,502 $ 126,863 $ 135,712 $ 131,055
Total interest expense.. 45,009 49,897 64,851 75,926 74,236
Net interest income..... 71,496 63,605 62,012 59,786 56,819
Provision for possible
loan losses............ 4,332 4,242 7,635 7,441 4,178
Other income............ 12,673 11,123 10,051 9,532 8,477
Other expenses.......... 49,690 46,991 45,102 44,999 43,151
Income taxes............ 9,770 7,136 5,555 4,643 4,577
Income before cumulative
effect of accounting
change................. 20,377 16,359 13,771 12,235 13,390
Net income.............. 21,706 16,359 13,771 12,235 13,390
Cash dividends (1)...... 10,918 7,914 7,077 6,244 4,953
Per common share:
Income before
cumulative effect
of accounting
change................ 1.71 1.52 1.31 1.18 1.31
Net income............. 1.82 1.52 1.31 1.18 1.31
Cash dividends (1)..... 0.95 0.85 0.81 0.75 0.64
Book value per share... 14.34 13.44 12.66 12.03 11.51
Return on average
shareholders' equity... 13.00% 11.60% 10.73% 9.96% 11.80%
Return on average
assets................. 1.27% 1.09% 0.97% 0.85% 0.99%
Average assets.......... 1,706,639 1,496,148 1,417,506 1,434,057 1,356,398
Investment securities... 430,427 390,017 311,298 334,253 340,089
Net loans............... 1,161,772 1,097,785 940,413 937,491 870,772
Total assets............ 1,720,184 1,688,903 1,425,006 1,443,024 1,382,236
Total deposits.......... 1,430,529 1,411,892 1,212,619 1,220,482 1,180,341
Long-term borrowings.... 32,203 28,067 2,025 2,295
Total borrowings and
other liabilities...... 118,683 116,791 80,006 96,411 83,841
Shareholders' equity.... 170,972 160,220 132,381 126,131 118,055
</TABLE>
- --------
(1) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation.
NOTE: As more fully discussed in Note B to the consolidated financial
statements, United acquired CB&T Westover Bank and the Star City Branch
of Community Bank & Trust, N.A. in September of 1993. Because this was a
purchase business combination, the financial information above includes
Westover and Star City only from the date of acquisition forward.
NOTE: As discussed in Note J to the consolidated financial statements, in 1993
United prospectively adopted the provisions of SFAS No. 109, Accounting
for Income Taxes.
15
<PAGE>
UNITED BANKSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis presents the significant changes in
financial condition and the results of operations of United and its
subsidiaries for the periods indicated below. This discussion and analysis
should be read in conjunction with the audited financial statements and
accompanying notes thereto, which are included elsewhere in this document. All
references to United in this discussion and analysis are considered to refer to
United and its wholly-owned subsidiaries, unless otherwise indicated.
MERGER HIGHLIGHTS AND SUMMARY
On September 10, 1993, United acquired 100% of the common stock of Westover
Bank ("Westover") and certain assets and liabilities of the Star City Branch
("Star City") which was formerly owned and operated by another bank, both of
which are located in the Morgantown, West Virginia area. As a result of these
purchase acquisitions consummated during 1993 and internal growth, United
reached total assets of $1,720,184,000 at December 31, 1993.
The September 1, 1993 acquisition of Financial Future Corporation ("FFC") was
accounted for under the pooling of interests method of accounting. Accordingly,
United's Consolidated Financial Statements and related Notes, as well as
information presented herein, have been restated to include FFC as though it
were acquired at the beginning of the earliest period presented.
Because the acquisition of Westover and Star City was accounted for using the
purchase method of accounting, the results of operations of Westover and Star
City are included in United's Consolidated Financial Statements only from the
date of acquisition forward. Refer to Note B to the Consolidated Financial
Statements for additional discussion of mergers and acquisitions.
1993 COMPARED TO 1992
EARNINGS SUMMARY
For the year ended December 31, 1993, net income increased 32.7% to a record
$21,706,000. Net income per share of $1.82 for the year was up 19.7% from $1.52
in 1992. United's return on average assets of 1.27% makes United one of the
nation's most profitable regional banking companies. Dividends per share
increased 11.8% from $.85 in 1992 to a record level of $.95 per share in 1993.
This was the twentieth consecutive year of dividend increases to shareholders.
Core earnings, or earnings before taxes, security transactions, cumulative
effect of change in accounting principle and the provision for possible loan
losses were strong and increased 24.4% for 1993 compared to 1992. These strong
core earnings are indicative of the 12.4% increase in net interest income
driven by a significant increase in average net earning assets. Noninterest
expenses were flat in 1993 as compared to 1992 as management was effective in
controlling expenses. Income taxes increased by 36.9% from 1992, principally
because of increased pretax income, decreases in income from investment
securities exempt from federal taxes and higher statutory federal tax rates.
During 1993 the market price for United stock increased from $20.00 to $26.25
or 31%. United has a strong capital position and is well positioned for future
growth opportunities.
Earnings for 1993 include certain nonrecurring income and expense items. The
nonrecurring income item, which is reported as a cumulative effect of change in
accounting of $1,329,000, is the result of United's adoption of SFAS No. 109,
"Accounting for Income Taxes," during the first quarter of 1993. For further
details, see Note J to the Consolidated Financial Statements. The nonrecurring
expense items were primarily the result of management's conservative review of
certain credits which resulted in additional provisions being made to the
reserve for other real estate owned and the allowance for loan losses.
Additional nonrecurring expenses resulted from the mergers consummated by
United.
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<PAGE>
The following discussion explains in more detail the results of operations
and changes in financial condition by major category.
NET INTEREST INCOME
Net interest income represents the primary component of United's earnings. It
is the difference between interest and fee income related to earning assets and
interest expense incurred to fund these earning assets. Net interest income is
impacted by changes in the volume and mix of interest-earning assets and
interest-bearing liabilities, as well as by changes in market interest rates.
Such changes, and their impact on net interest income in 1993, are explained
below.
For the years ended December 31, 1993 and 1992, net interest income
approximated $71,496,000 and $63,605,000, respectively. On a tax-equivalent
basis the net interest margin was strong at 4.70% in 1993 and 4.78% in 1992.
Higher average loan volumes of $143 million contributed to the increase in net
interest income. United also experienced significant decreases in its overall
cost of funds. At 4.70%, United's net interest margin remains well above peer
group averages.
Total interest income of $116,505,000 increased 2.6% in 1993 over 1992 as a
result of higher volumes of interest-earning assets. Comparing year-end 1993 to
year-end 1992, moderate decreases in commercial and consumer loans of 6.5% and
5.7%, respectively, which resulted from lower commercial and consumer demand,
were offset by significant mortgage loan growth of 15.3%.
Total interest expense decreased 9.8% in 1993. This decrease can be
attributed primarily to lower rates paid on interest-bearing funds. United's
average interest-bearing deposits increased 12.46% in 1993, while its average
long-term borrowings increased 160.88% as United made greater use of these
funds in order to meet the demand for mortgage loan products while matching
maturities. The average cost of funds reflected the general downward trend in
market interest rates in 1993, falling from 4.27% in 1992 to 3.44% in 1993.
PROVISION FOR POSSIBLE LOAN LOSSES
In order to maintain a balance in the allowance for possible loan losses
which is sufficient to absorb potential loan losses, a charge to expense is
made. This charge is known as the provision for possible loan losses. For the
years ended December 31, 1993 and 1992 the provision for possible loan losses
was $4,332,000 and $4,242,000, respectively. Management believes that the
allowance for loan losses of $19,015,000 as of December 31, 1993, is adequate
to provide for potential losses on existing loans based on information
currently available. The provision for loan losses charged to operations is
based on management's evaluation of individual credits, the past loan loss
experience, and other factors which, in management's judgment, deserve
recognition in estimating possible loan losses. Such other factors considered
by management include growth and composition of the loan portfolio, known
deterioration in certain classes of loans or collateral, trends in
delinquencies, and current economic conditions. United evaluates the adequacy
of the allowance for possible loan losses on a quarterly basis and its loan
administration policies are focused upon the risk characteristics of the loan
portfolio. See Note E to the Consolidated Financial Statements for a discussion
of concentrations of credit risk.
Total net charge-offs were $1,773,000 in 1993 and $5,144,000 in 1992, which
represents .16% and .52% of average loans for the respective years. United's
ratio of net charge-offs to average loans compares very favorably with its
peers.
Management is not aware of any potential problem loans, trends or
uncertainties which management reasonably expects will materially impact future
operating results, liquidity, or capital resources which have not been
disclosed. Additionally, management has disclosed all known material credits
which cause management to have serious doubts as to the ability of such
borrowers to comply with the loan repayments. Management is not aware of any
current recommendations by regulatory authorities which, if implemented, would
have a material effect on liquidity, capital resources or operations.
17
<PAGE>
Nonperforming loans were $13,517,000 at December 31, 1993 and $15,955,000 at
December 31, 1992, a decrease of 15.3%. The components of nonperforming loans
include nonaccrual loans, loans which are contractually past due 90 days or
more as to interest or principal, but have not been put on a nonaccrual basis
and troubled debt restructurings.
At year-end 1993 and 1992 the allowance for possible loan losses was 1.61%
and 1.43% of total loans, net of unearned income, respectively. As of December
31, 1993, the ratio of the allowance for loan losses to nonperforming loans was
140.7% as compared to 100.0% as of December 31, 1992.
OTHER INCOME
Other income consists of all revenues which are not included in interest and
fee income related to earning assets. In 1993, other income increased by
$1,550,000 or 13.94%. United's emphasis on improving noninterest income is
showing positive results. The overall increase in noninterest income is
primarily attributed to the October 20, 1992, acquisition of UNB-South and
increased activity in customer accounts for which a fee is charged.
Trust income increased $124,000 or 4.93% in 1993. This was due to repricing
of services and an increased volume of trust business.
Service charges, commissions and fees increased by $1,430,000 or 19.32% in
1993. This income consists of charges and fees related to various banking
services provided by United and was primarily due to a restructuring of fees
and the acquisition of UNB-South.
Securities transactions resulted in a net gain of $479,000 in 1993 and a net
gain of $403,000 in 1992. As evidenced by the Statement of Cash Flows, the
volume of securities sold increased significantly in 1993. The primary reason
for this increased sales activity was a one-time restructuring of the portfolio
of an acquired subsidiary. Included in the 1993 gains are debt securities gains
of approximately $332,000 which were realized primarily on sales of mortgage-
backed security obligations which were experiencing accelerated prepayments. On
January 1, 1994, United will adopt Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities,"
(SFAS No. 115) which is effective for fiscal years beginning after December 15,
1993. At December 31, 1993, management had not designated any securities as
available-for-sale. However, a one-time significant reclassification is
expected coincident with the adoption of SFAS No. 115 in 1994. For further
details, see Note D to the Consolidated Financial Statements.
OTHER EXPENSE
Other expense includes all items of expense other than interest expense, the
provision for possible loan losses, and income taxes. In total, other expenses
were flat in 1993, and management was successful in controlling costs. The
income statement reflects a 5.7% increase in 1993 as compared to 1992. The
increase was due to certain nonrecurring costs and certain other costs in
connection with the mergers of FFC, Westover and Star City into United during
1993. The October 20, 1992 acquisition of UNB-South also increased reported
expenses for 1993.
Salaries and employee benefits expense increased 6.26% in 1993 due to the
acquisitions of UNB-South, Westover and Star City. As of December 31, 1993 and
1992, United employed 889 and 879 full-time equivalent employees, respectively.
Other expense increased 5.63% in 1993 compared to 1992. This increase was
mainly due to the acquisition of UNB-South, nonrecurring merger expenses and
provisions for estimated losses on other real estate owned.
United and its affiliates provide certain health care and life insurance
benefits to existing retirees. The cost of these retiree benefits is recognized
when paid and the resulting expense is not materially different from
18
<PAGE>
the expenses which would have resulted under the provisions of SFAS No. 106.
United does not anticipate providing postretirement benefits to its currently
active employees after retirement except on a fully contributory basis.
INCOME TAXES
For the year ended December 31, 1993, income taxes approximated $9,770,000
compared to $7,136,000 for 1992. This increase is principally the result of
lower levels of tax-exempt income and higher levels of pretax income, combined
with higher statutory federal tax rates in 1993. United's effective tax rates
in these two years were 32.4% and 30.4%, respectively.
Effective January 1, 1993, United prospectively adopted FASB Statement No.
109, "Accounting for Income Taxes." Under Statement 109, the liability method
is used in accounting for income taxes. Under this method, deferred tax assets
and liabilities are determined based on the differences between the financial
reporting and the tax bases of assets and liabilities and are measured using
the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. Prior to the adoption of Statement 109, income tax expense
was determined using the deferred method. Deferred tax expense was based on
items of income and expense that were reported in different years in the
financial statements and tax returns and was measured at the tax rate in effect
in the year the differences originated.
As permitted by Statement 109, United has elected not to restate the
financial statements of any prior years. The effect of the change on pretax
income for the year ended December 31, 1993 was not material; however, the
cumulative effect of the change increased net income by $1,329,000 or $0.11 per
share.
At December 31, 1993, gross deferred tax assets totaled approximately $10.4
million. The allowance for loan losses and various accrued liabilities
represent the most significant temporary differences. Based on management's
evaluation at December 31, 1993, no valuation allowance has been allocated to
deferred tax assets. Management's quarterly evaluation considers the expected
reversal period of the assets and existing deferred tax liabilities as well as
taxes paid by United in the carryback years. Management's analysis indicates
that realization of certain assets may be dependent on future events. After
considering historical amounts of financial reporting and taxable income, the
period over which future taxable income is expected to be necessary and
budgeted future operating results, management has concluded that it is more
likely than not that the deferred tax assets at December 31, 1993 will be
realized. Currently, management does not expect that the implementation of tax
planning strategies will be necessary to ensure realization.
FOURTH QUARTER RESULTS
Net income for the fourth quarter of 1993 was $5,130,000, an increase of
27.11% from the $4,036,000 earned in the fourth quarter of 1992. On a per share
basis, fourth quarter earnings were $.43 per share in 1993 and $.34 per share
in 1992. Net income was higher in 1993 than in 1992 because of the factors
previously discussed herein relative to annual results and the purchase
acquisition of Westover and Star City in September 1993.
Additional quarterly financial data may be found in Note P, Notes to
Consolidated Financial Statements.
THE EFFECT OF INFLATION
United's income statements generally reflect the effects of inflation. Since
interest rates, loan demand, and deposit levels are related to inflation, the
resulting changes in the interest-sensitive assets and liabilities are included
in net interest income. Similarly, operating expenses such as salaries, rents,
and maintenance include changing prices resulting from inflation. One item
which would not reflect inflationary changes is depreciation expense.
Subsequent to the acquisition of depreciable assets, inflation causes price
levels to rise; therefore, historically presented dollar values do not reflect
this inflationary condition. With inflation levels at relatively low levels and
with interest rate forecasts indicating these low levels may continue,
management expects the impact of inflation would be minimal in the near future.
19
<PAGE>
INTEREST RATE SENSITIVITY
Interest sensitive assets and liabilities are defined as those assets or
liabilities that mature or are repriced within a designated time frame. The
principal function of asset and liability management is to maintain an
appropriate relationship between those assets and liabilities that are
sensitive to changing market interest rates. This relationship has become very
important, given the volatility in interest rates over the last several years,
due to the potential impact on earnings. United closely monitors the
sensitivity of its assets and liabilities on an on-going basis and projects the
effect of various interest rate changes on its net interest margin.
The difference between rate sensitive assets and rate sensitive liabilities
for specified periods of time is known as the "gap".
A primary objective of Asset/Liability Management is controlling interest
rate risk. At United, interest rate risk is managed to minimize the impact of
fluctuating interest rates on earnings. As shown in the interest rate
sensitivity gap table on page 21 of this report, United was liability sensitive
(excess of liabilities over assets) in the one year horizon. United, however,
has not experienced the kind of earnings volatility indicated from the
cumulative gap. This is because a significant portion of United's retail
deposit base does not reprice on a contractual basis. Management has estimated,
based upon historical analyses, that savings deposits are less sensitive to
interest rate changes than are other forms of deposits. The GAP table presented
herein has been adapted to show the estimated differences in interest rate
sensitivity which result when the retail deposit base is assumed to reprice in
a manner consistent with historical trends. (See Management Adjustments in the
GAP table). Using these estimates, United was asset sensitive in the one year
horizon in the amount of $179,090,000 or a 11.17% ratio of the cumulative gap
to related earning assets. The primary method of measuring the sensitivity of
earnings to changing market interest rates is to simulate expected cash flows
using varying assumed interest rates while also adjusting the timing and
magnitude of non-contractual deposit repricing to more accurately reflect
anticipated pricing behavior. These simulations include adjustments for the lag
in prime loan repricing and the spread and volume elasticity of interest-
bearing deposit accounts, regular savings and money market deposit accounts. To
aid in interest rate management, United's lead bank, UNB, is a member of the
Federal Home Loan Bank of Pittsburgh (FHLB). The use of FHLB advances provides
United with a low cost means to match maturities of earning assets and
interest-bearing funds to achieve a desired interest rate spread over the life
of the earning assets.
LIQUIDITY AND CAPITAL RESOURCES
In the opinion of management, United maintains liquidity which is sufficient
to satisfy its depositors' requirements and the credit needs of its customers.
Like all banks, United depends upon its ability to renew maturing deposits and
other liabilities on a daily basis and to acquire new funds in a variety of
markets. A significant source of funds available to United are "core deposits".
Core deposits include certain demand deposits, statement and special savings
and NOW accounts. These deposits are relatively stable and they are the lowest
cost source of funds available to United. Short-term borrowings have also been
a significant source of funds. These include federal funds purchased and
securities sold under agreements to repurchase. Repurchase agreements represent
funds which are obtained as the result of a competitive bidding process.
20
<PAGE>
The following table shows the interest rate sensitivity gap as of December
31, 1993:
INTEREST RATE SENSITIVITY GAP
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------------------------------------------------------------
DAYS TOTAL 1-5 OVER 5
0-90 91-180 181-365 ONE YEAR YEARS YEARS TOTAL
--------- --------- --------- ---------- --------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-Earning Assets:
Federal funds sold and
securities
purchased under
agreements to
resell and other
short-term
investments........ $ 100 $ 100 $ 100
Investment and
Marketable Equity
Securities:
Taxable............ 64,573 $ 30,302 $ 51,343 146,218 $ 190,354 $ 38,548 375,120
Tax-exempt......... 3,514 2,083 4,469 10,066 27,987 17,155 55,208
Loans, net of unearned
income............. 493,448 82,423 132,494 708,365 362,188 101,680 1,172,233
--------- --------- --------- ---------- --------- --------- ----------
Total Interest-Earning
Assets................. $ 561,635 $ 144,808 $ 188,306 $ 864,749 $ 580,529 $ 157,383 $1,602,661
========= ========= ========= ========== ========= ========= ==========
LIABILITIES
Interest-Bearing Funds:
Savings and NOW
accounts........... $ 670,000 $ 670,000 $ 670,000
Time deposits of
$100,000 & over.... 31,493 $ 19,795 $ 17,062 68,350 $ 4,610 72,960
Other time deposits... 142,942 112,131 95,957 351,030 106,805 $ 603 458,438
Federal funds
purchased,
repurchase
agreements and
other short-term
borrowings......... 72,610 72,610 72,610
FHLB advances......... 11,900 80 5,152 17,132 15,071 32,203
--------- --------- --------- ---------- --------- --------- ----------
Total Interest-Bearing
Funds.................. $ 928,945 $ 132,006 $ 118,171 $1,179,122 $ 126,486 $ 603 $1,306,211
========= ========= ========= ========== ========= ========= ==========
Interest Sensitivity
Gap.................... $(367,310) $ (17,198) $ 70,135 $ (314,373) $ 454,043 $ 156,780 $ 296,450
========= ========= ========= ========== ========= ========= ==========
Cumulative Gap.......... $(367,310) $(384,508) $(314,373) $ (314,373) $ 139,670 $ 296,450 $ 296,450
========= ========= ========= ========== ========= ========= ==========
Cumulative Gap as a
Percentage of Total
Earning Assets......... -22.92% -23.99% -19.62% -19.62% 8.71% 18.50% 18.50%
Management Adjustments.. 616,828 (41,121) (82,244) 493,463 (493,463) 0
Cumulative Management
Adjusted Gap........... 249,518 191,199 179,090 179,090 139,670 296,450 296,450
Cumulative Management
Adjusted Gap as a
Percentage of Total
Earning Assets......... 15.57% 11.93% 11.17% 11.17% 8.71% 18.50% 18.50%
</TABLE>
21
<PAGE>
Liquid assets are cash and those items readily convertible to cash. All banks
must maintain sufficient balances of cash and near-cash items to meet the day-
to-day demands of customers. Other than cash and due from banks, the securities
portfolio and maturing loans are the primary sources of liquidity.
The goal of liquidity management is to ensure the ability to access funding
which enables United to efficiently satisfy the cash flow requirements of
depositors and borrowers and meet United's cash needs. Liquidity is managed by
monitoring funds availability from a number of primary sources. Substantial
funding is available from cash and cash equivalents, unused short-term
borrowings and a geographically dispersed network of subsidiary banks providing
access to a diversified and substantial retail deposit market.
Short-term needs can be met through a wide array of sources such as
correspondent and downstream correspondent federal funds and utilization of
Federal Home Loan Bank advances.
Other sources of liquidity available to United to provide long-term as well
as short-term funding alternatives, in addition to FHLB advances, are long-term
certificates of deposit, lines of credit, and borrowings secured by bank
premises or stock of United's subsidiaries. United has no intention at this
time to utilize any long-term funding sources other than FHLB advances and
long-term certificate of deposits.
Cash flows from operations in 1993 of $30,657,000 were 21.8% higher than the
$25,180,000 in 1992 as a result of a $5.3 million increase in net income. In
1993, investing activities resulted in a use of cash of $50,647,000 as compared
to 1992 in which investing activities resulted in a use of cash of $39,135,000.
The primary reason for the increase in the use of cash for investing activities
is a $18.4 million change in net cash received(paid) in acquisitions. Financing
activities resulted in a use of cash in 1993 of $48,633,000 due to a
$23,931,000 decrease in net borrowings from the FHLB of Pittsburgh and a
decrease in deposits of $40,872,000. For more information see the Consolidated
Statement of Cash Flows.
United anticipates no problems in its ability to service its obligations over
the next 12 months and has no material commitments for capital expenditures.
There are no known trends, demands, commitments, or events that will result in
or that are reasonably likely to result in United's liquidity increasing or
decreasing in any material way. United also has significant lines of credit
available to it. See Note I, Notes to Consolidated Financial Statements.
The asset and liability committee monitors liquidity to ascertain that a
strong liquidity position is maintained. In addition, variable rate loans are a
priority. These policies should help to protect net interest income against
fluctuations in interest rates.
United also seeks to maintain a proper relationship between capital and total
assets in order to support growth and sustain earnings. United's average equity
to average asset ratio was 9.78% in 1993 and 9.43% in 1992. United's risk-based
capital ratio was 15.28% in 1993 and 14.06% in 1992 which are both
significantly higher than the minimum regulatory requirements. United's Tier 1
capital and leverage ratios of 14.03% and 9.28%, respectively, at December 31,
1993, are also strong relative to its peers and are well above regulatory
minimums.
COMMITMENTS
The following table indicates the outstanding loan commitments of United in
the categories stated:
<TABLE>
<CAPTION>
DECEMBER 31
1993
------------
<S> <C>
Lines of credit authorized, but unused.... $216,789,000
Letters of Credit......................... 21,030,000
------------
$237,819,000
============
</TABLE>
22
<PAGE>
Past experience has shown that, of the foregoing commitments, approximately
12-15% would reasonably be expected to be funded within a one year period. For
more information, see Note L to the Consolidated Financial Statements.
1992 COMPARED TO 1991
EARNINGS SUMMARY
For the year ended December 31, 1992, net income increased 18.8% to
$16,359,000. Net income per share of $1.52 for the year was up 15.9% from 1991
levels. United's return on average assets was 1.09%. Dividends declared per
share increased 4.94% from $.81 in 1991 to $.85 per share in 1992. Earnings
before taxes, security transactions and the provision for possible loan losses
were strong and increased 3.09% for 1992 compared to 1991. This reflected a
2.57% improvement in net interest income driven by significant loan growth and
downward movements in market interest rates. Noninterest expenses increased by
4.19% in 1992. Management was effective in its ability to control expenses.
This was true even with UNB-South's expenses being included in the 1992
operating results from the effective date of acquisition forward but not in the
corresponding periods of 1991 and an increase in the FDIC insurance premium of
approximately $900,000. Income taxes increased by 28.5% from their 1991 level
due primarily to increased pretax income.
The following discussion explains in more detail the results of operations
and changes in financial condition by major category.
NET INTEREST INCOME
Net interest income represents the primary component of United's earnings. It
is the difference between interest and fee income related to earning assets and
interest expense incurred to carry interest-bearing liabilities. Net interest
income is impacted by changes in the volume and mix of interest-earning assets
and interest-bearing liabilities, as well as by changes in market interest
rates. Such changes, and their impact on net interest income in 1992, are
explained below.
For the years ended December 31, 1992 and 1991, net interest income
approximated $63,605,000 and $62,012,000, respectively. On a tax-equivalent
basis the net interest margin was 4.78% in 1992 and 4.98% in 1991. Higher
average loan volumes of $41.2 million and higher average investment security
volumes of $2.9 million contributed to the increase in net interest income.
United's unadjusted liability-sensitive gap position resulted in significant
decreases in the overall cost of funds. At 4.78% United's net interest margin
remained well above peer group averages.
Total interest income of $113,500,000 was down 10.53% in 1992 as a result of
the rapid decline in interest rates. Higher volumes were achieved in
commercial, installment and mortgage lending, as they increased 13.61%, 22.56%
and 7.94%, respectively, from year-end 1991 to year-end 1992.
Total interest expense was down 23.06% in 1992. This decrease can be
attributed primarily to lower rates paid on interest-bearing funds. United's
interest-bearing deposits rose an average of 1.52% in 1992, while its short-
term borrowings increased an average of 27.10%. The average cost of funds
reflected the general downward trend in interest rates, falling from 6.72% to
5.80%.
PROVISION FOR POSSIBLE LOAN LOSSES
For the years ended December 31, 1992 and 1991 the provision for possible
loan losses was $4,242,000 and $7,635,000, respectively. Management believed
that the allowance for loan losses as of December 31, 1992, was adequate to
provide for potential losses on loans based on information available. United
evaluated the adequacy of the allowance for possible loan losses on a quarterly
basis and its loan administration policies were focused upon the risk
characteristics of the loan portfolio.
23
<PAGE>
Total net charge-offs were $5,144,000 and $5,752,000 in 1992 and 1991,
respectively, which represents .52% of average loans in 1992 and .61% in 1991.
United's ratio of net charge-offs to average loans compared very favorably with
its peers.
Nonperforming loans were $15,955,000 at December 31, 1992 and $17,172,000 at
December 31, 1991. The components of nonperforming loans include nonaccrual
loans, loans which are contractually past due 90 days or more as to interest or
principal, but have not been put on a nonaccrual basis, and troubled debt
restructurings.
At year-end 1992 and 1991 the allowance for possible loan losses was 1.43%
and 1.50% of total loans, net of unearned income, respectively. As of December
31, 1992, the ratio of the allowance for loan losses to nonperforming loans was
100.0% as compared to 81.9% as of December 31, 1991.
OTHER INCOME
Other income consists of all revenues which are not included in interest and
fee income related to earning assets. In 1992 other income increased by 10.67%.
Trust income increased 18.30% in 1992. This was due to a significant
repricing of services and a greater volume of trust business.
Other charges, commissions and fees increased by 2.95% in 1992 over 1991.
This income consisted of charges and fees related to various banking services
provided by United and was primarily due to increased activity in those
accounts for which a fee is charged.
Securities transactions resulted in gains of $403,000 and $447,000 in 1992
and 1991, respectively. As evidenced by the Statement of Cash Flows, the volume
of securities sold was insignificant for both years.
OTHER EXPENSES
Other expenses include all items of expense other than interest expense, the
provision for possible loan losses, and income taxes. In total, other expenses
decreased by 4.2% in 1992. Management was successful in controlling costs. This
was true even with UNB-South's expenses being included in the 1992 operating
results from the effective date of acquisition forward but not in the
corresponding periods of 1991 and an increase in the FDIC insurance premium of
approximately $900,000. Salaries and employee benefits expense increased 2.71%
in 1992. As of December 31, 1992 and 1991, United employed 879 and 796 full-
time equivalent employees, respectively.
Net occupancy expense decreased 5.57% in 1992 compared to 1991.
Other expenses increased 13.23% in 1992 compared to 1991. This increase was
mainly due to the FDIC insurance costs and write-downs of other real estate
owned. Also UNB-South expenses, which were not included in 1991 operating
results, were included in 1992 results beginning October 20, 1992.
INCOME TAXES
For the year ended December 31, 1992, income taxes approximated $7,136,000
compared to $5,555,000 for the year 1991. This increase is the result of lower
amounts of tax-exempt income and increased pretax income. United's effective
tax rates in these two years were 30.4% and 28.7%, respectively. Additional
details appear in Note J, Notes to Consolidated Financial Statements.
24
<PAGE>
UNITED BANKSHARES, INC.
PROXY FOR 1994 ANNUAL SHAREHOLDERS' MEETING
Know all men by these presents that the undersigned shareholder(s) of United
Bankshares, Inc., Charleston, West Virginia does hereby nominate, constitute,
and appoint Gary L. Ellis and Steven E. Wilson, or either of them, with full
power to act alone as the true and lawful attorneys for the undersigned with
full power of substitution for and in the name, place and stead of the
undersigned to vote all the common stock of United Bankshares, Inc., standing
in the undersigned's name on its books on March 11, 1994, at the 1994 Annual
Meeting of Shareholders to be held at the University of Charleston, 2300
MacCorkle Avenue, S.E., Charleston, West Virginia on May 16, 1994, at 4:00 p.m.
local time or any adjournments thereof, with all the powers the undersigned
would possess if personally present as follows:
The undersigned acknowledges receipt of the Notice and Proxy Statement dated
April 8, 1994, and hereby revokes all proxies previously given by the
undersigned for said meeting.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" THE PROPOSITIONS LISTED BELOW UNLESS
OTHERWISE INDICATED. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
PROPOSALS BELOW. IF ANY MATTER SHALL PROPERLY COME BEFORE THE MEETING, OR ANY
ADJOURNMENTS THEREOF, THIS PROXY WILL BE VOTED ON SUCH MATTERS IN ACCORDANCE
WITH THE JUDGMENT OF THE ABOVE PROXIES, BASED UPON THE CONDITIONS THEN
PREVAILING AND ANY RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Unless a different allocation is indicated, the proxies will vote your total
cumulative vote ratably for the directors for whom you are voting unless
directed otherwise by the Board of Directors of United Bankshares, Inc.
This proxy is solicited on behalf of the Board of Directors of United
Bankshares, Inc. and may be revoked prior to its exercise.
PLEASE MARK, DATE, SIGN AND RETURN IMMEDIATELY. ALL JOINT OWNERS MUST SIGN.
<PAGE>
(Continued from reverse side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING TWENTY NOMINEES:
A. ELECTION OF DIRECTORS.
FOR AGAINST ABSTAIN
[_] [_] [_]
Richard M. Adams, Robert G. Astorg, Thomas J. Blair, III, Harry L. Buch, John
W. Dudley, H. Smoot Fahlgren, Theodore J. Georgelas, C. E. Goodwin, F. T.
Graff, Jr., Leonard A. Harvey, Andrew T. Houvouras, Russell L. Isaacs, Robert
P. McLean, G. Ogden Nutting, William C. Pitt, III, I. N. Smith, Jr., Charles E.
Stealey, Warren A. Thornhill, III, Harold L. Wilkes, and James W. Word, Jr. as
directors.
If you wish to withhold your vote for any of the above nominees, so indicate by
striking the name of the nominee.
- -------------------------------------------------------------------------------
B. TO TRANSACT OTHER
BUSINESS THAT MAY
PROPERLY COME BEFORE
THE MEETING.
FOR AGAINST ABSTAIN
[_] [_] [_]
DATE: ------------------------, 1994
- ------------------------------------
- ------------------------------------
(Signature or Signatures)
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title. If more than one trustee,
all should sign.
