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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of report (Date of earliest event reported): February 18, 1998
UNITED BANKSHARES, INC.
(Exact name of Registrant as specified in its charter)
WEST VIRGINIA 0-13322 55-0641179
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number Identification Number)
300 UNITED CENTER, 500 VIRGINIA STREET, EAST
CHARLESTON, WEST VIRGINIA 25301
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (304) 424-8761
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
On February 18, 1998, United Bankshares, Inc. ("United") and Fed One
Bancorp, Inc. ("Fed One") entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Fed One, based in Wheeling, West Virginia, operates 12
banking offices in West Virginia and Ohio through its subsidiary, Fed One Bank.
The Merger Agreement provides for the merger of Fed One into a wholly-owned
subsidiary of United (the "Merger") and contemplates the merger of Fed One Bank
into United National Bank (the "Bank Merger"). Pursuant to the Merger Agreement,
all of the shares of common stock of Fed One ("Fed One Common Stock")
outstanding immediately prior to the consummation of the Merger (subject to
certain exceptions) will be converted into the right to receive 0.75 of a share
(subject to adjustment, as provided in the Merger Agreement, the "Exchange
Ratio") of common stock of United ("United Common Stock"). The Exchange Ratio is
subject to adjustment as a result of a stock split, stock dividend,
recapitalization or similar transaction with respect to United Common Stock,
including a proposed stock dividend declared by United and payable on March 27,
1998, to shareholders of record of United as of March 13, 1998. The Exchange
Ratio is also subject to adjustment at the election of United in the event that
Fed One elects to terminate the Merger Agreement because the average price of
the United Common Stock during a specified period falls below a certain level.
It is anticipated that the transaction will be treated as a "pooling of
interests" for accounting purposes. The Merger is subject to regulatory
approvals, the approval of the shareholders of Fed One, the approval of the
shareholders of United of a proposed amendment to United's Restated Articles of
Incorporation increasing the authorized United Common Stock, and the
satisfaction of various other terms and conditions as set forth in the Merger
Agreement. Upon the consummation of the Merger, United has agreed to cause Mr.
Alan E. Groover, Chief Executive Officer of Fed One, to become a director of
United.
As a condition to the Merger Agreement, United and Fed One have entered
into a Stock Option Agreement pursuant to which Fed One has granted United an
option to purchase up to 474,800 shares (19.9%) of Fed One Common Stock at a
purchase price of $33.50 per share upon the occurrence of certain events as set
forth in the Stock Option Agreement.
The press release issued by United and Fed One in connection with the
announcement of the Merger Agreement and certain investor presentation materials
are attached as exhibits hereto.
This Current Report on Form 8-K, including the investor presentation
materials, contains certain forward looking statements with respect to the
financial condition, results of operations and business of United and Fed One on
a combined basis after the proposed merger. These forward looking statements
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involve certain risks and uncertainties. Factors that may cause actual results
to differ materially from those contemplated by such forward looking statements
include, among others, the following possibilities: (1) expected cost savings
from the proposed merger cannot be fully realized or realized within the
expected time frame; (2) costs or difficulties related to the integration of the
businesses of United and Fed One are greater than expected; (3 revenues
following the proposed merger are lower than expected; (4) competitive pressure
among depository institutions increases significantly; (5) changes in the
interest rate environment reduce interest margins; (6) general economic
conditions, either nationally or in the states in which the combined company
will be doing business, are less favorable than expected; or (7) legislation or
regulatory changes adversely affect the businesses in which the combined company
would be engaged.
Fed One Bancorp, Inc.
Selected Financial Data
December 31
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1997 1996 1995
(Dollars in million, except for shares)
Assets
Total Assets $366.8 $341.9 $334.3
Loans receivable, net of 166.1 133.4 119.5
allowances for loan losses
Deposits 258.9 249.7 241.6
Total Shareholders' Equity 40.6 40.0 42.1
Net Income 3.2 2.3 3.3
Diluted Earnings Per Share(1) $1.36 $0.94 ---
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(1) Earnings per share amounts reflect the adoption of Statement of
Financial Accounting Standards No. 128, Earnings Per Share.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(a) Not applicable.
(b) Not applicable.
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(c) Exhibits.
99.1 Press Release, dated February 18, 1998,
announcing the proposed merger.
99.2 Investor presentation materials used by
United relating to the proposed merger.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
UNITED BANKSHARES, INC.
By: /s/ Joseph Sowards
Joseph Sowards
Executive Vice President
Date: February 18, 1998
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Exhibit Index
Exhibit No. Description
99.1 Press Release, dated February 18,
1998, announcing the proposed
merger.
99.2 Investor presentation materials used
by United relating to the proposed
merger.
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NEWS
RELEASE
UNITED BANKSHARES, INC.
DATE: February 18, 1998 FOR IMMEDIATE RELEASE
FROM: United Bankshares, Inc. Fed One Bancorp, Inc.
514 Market Street 21 12th Street
Parkersburg, WV 26101 Wheeling, WV 26003
CONTACT: Steven E. Wilson Lisa DiCarlo
Executive Vice President Senior Vice President
and Chief Financial Officer and Treasurer
(304) 424-8800 (304) 234-1100
UNITED BANKSHARES, INC. AND FED ONE BANCORP, INC.
ANNOUNCE AGREEMENT TO MERGE AND CREATE
$4 BILLION BANKING COMPANY
COMBINED COMPANY TO RANK AMONG NATION'S TOP 100 IN MARKET CAPITALIZATION
United Bankshares, Inc. (UBSI), and Fed One Bancorp, Inc. (FOBC),
jointly announced today the signing of a definitive agreement to merge. The
transaction will add approximately $367 million in assets and twelve full
service banking offices to United's franchise to bring total company assets to
$4 billion and total offices to eighty-two.
The agreement will be structured as a pooling of interests and will
provide for a tax-free exchange of 0.75 of a share of United common stock for
each common share of Fed One. Based on United's February 17th closing stock
price, the transaction would have a value of approximately $36.47 per share, or
an aggregate consideration of approximately $92 million based on Fed One's 2.5
million common shares outstanding.
UNITED
BANKSHARES,INC.
THE CHALLENGE TO BE THE BEST NEVER ENDS
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United Bankshares, Inc....
February 18, 1998
Page Two
Richard M. Adams, Chairman and Chief Executive Officer of United, said,
"Fed One's franchise significantly enhances United's market share in the
northern panhandle of West Virginia. In addition, this will represent United's
first entry into the state of Ohio. We expect the transaction to be nondilutive
to earnings per share and should enhance our franchise value. The merger will
strengthen United's current offices in the Wheeling and Morgantown areas and
will allow United to add offices in the eastern Ohio region. Further, following
the combination United will rank in the top 100 banking companies in the Nation
in terms of market capitalization."
Fed One's Chairman, President and Chief Executive Officer, Alan E.
Groover, said, "I am quite pleased that Fed One is joining United. We will now
be able to offer our customers many new financial products and services
including cash management and trust services." Groover will become a member of
United Bankshares' Board of Directors.
Fed One has issued a stock option to United that allows United to
purchase up to 19.9% of Fed One's common shares under certain circumstances.
Following completion of the proposed merger with Fed One, United will
have consolidated assets of over $4 billion with 82 full service offices in West
Virginia, Ohio, Virginia, Maryland and Washington, D.C. As part of the merger,
Fed One Bank, the subsidiary of Fed One, will be merged with United National
Bank, United's lead banking subsidiary. The proposed merger is expected to close
early in the fourth quarter of 1998.
United is currently awaiting final regulatory approval and the approval
of its shareholders and the shareholders of George Mason Bankshares, Inc.,
Fairfax, Virginia, to consummate its merger with George Mason early in the
second quarter of 1998. The merger with George Mason, with $1 billion assets,
will add to United's existing Northern Virginia presence and represents an
in-market transaction that will give United twenty-seven offices in this strong
economic area.
The common stock of United Bankshares and Fed One are traded
on the NASDAQ (National Association of Securities Dealers Quotation System)
National Market System under the quotation symbols "USBI" and "FOBC",
respectively.
UNITED BANKSHARES, INC.
MERGER WITH
FED ONE BANCORP, INC.
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This presentation contains certain forward looking statements with respect to
the financial condition, results of operations and business of United
Bankshares, Inc. and Fed One Bancorp, Inc. on a combined basis after the
proposed merger. These forward looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially from
those contemplated by such forward looking statements include, among others, the
following possibilities: (1) expected cost savings from the proposed merger
cannot be fully realized or realized within the expected time frame; (2) costs
or difficulties related to the integration of the businesses of United
Bankshares, Inc. and Fed One Bancorp, Inc. are greater than expected; (3)
revenues following the proposed merger are lower than expected: (4) competitive
pressure among depository institutions increases significantly ; (5) changes in
the interest rate environment reduce interest margins; (6) general economic
conditions, either nationally or in the states in which the combined company
will be doing business, are less favorable than expected; or (7) legislation or
regulatory changes adversely affect the businesses in which the combined company
would be engaged.
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PRESENTATION OVERVIEW:
|X| STRATEGIC IMPACT
|X| FRANCHISE OVERVIEW
|X| MARKET SHARE ANALYSIS
|X| FED ONE OVERVIEW
|X| COMBINED OPERATIONS
|X| TRANSACTION STRUCTURE
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STRATEGIC IMPACT
|X| INCREASES UNITED'S ASSETS TO OVER $4.0 BILLION
|X| REPRESENTS AN IN-MARKET TRANSACTION
|X| INCREASES UNITED'S MARKET SHARE IN NORTHERN WEST VIRGINIA
|X| REPRESENTS UNITED'S FIRST ENTRY INTO THE STATE OF OHIO
|X| ADDS TO SHAREHOLDER VALUE
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FRANCHISE OVERVIEW
[Map showing 12 offices of Fed One Bancorp in West Virginia
(9 offices) and Ohio (3 offices).]
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MARKET SHARE ANALYSIS
|X| COMBINATION OF FED ONE AND UNITED BANKSHARES RESULTS IN A 22% DEPOSIT
MARKET SHARE IN THE NORTHERN PANHANDLE AND A 14% DEPOSIT MARKET SHARE
IN THE MORGANTOWN MARKET.
|X| MERGING WITH FED ONE WILL GIVE UNITED BANKSHARES A FOOTHOLD IN
EASTERN OHIO.
|X| POST-MERGER, UNITED BANKSHARES WILL BE OVER $4 BILLION IN TOTAL
ASSETS.
|X| AS AN IN-MARKET TRANSACTION, 73% OF FED ONE'S BRANCHES AND 75% OF
FED ONE'S DEPOSITS ARE IN CURRENT UNITED MARKETS.
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FED ONE OVERVIEW:
|X| TOTAL ASSETS -- $367 MILLION
|X| 12 FULL SERVICE OFFICES -- 9 IN WEST VIRGINIA; 3 IN OHIO
|X| NPA'S/ASSETS = 0.36%
|X| RESERVES/NPA'S(%)= 111.94%
|X| RETURN ON AVERAGE ASSETS(%)= 0.92%
|X| RETURN ON AVERAGE EQUITY(%) = 8.18%
DATA AS OF/OR FOR THE 12 MONTHS ENDED 12/31/97
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COMBINED OPERATIONS:
UNITED COMBINED
DOLLARS IN MILLIONS BANKSHARES(1) FED ONE COMPANY
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ASSETS $3,726 $367 $4,093
LOANS 2,607 166 2,773
DEPOSITS 2,925 259 3,184
SHAREHOLDERS' EQUITY 356 41 397
FULL SERVICE OFFICES 70 12 82
Data as of 12/31/97
(1) includes pro forma George Mason Bankshares, Inc.
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TRANSACTION SUMMARY
|X| CONSIDERATION: 0.75 UNITED SHARES FOR EACH FED ONE SHARE
|X| TERMS: FIXED EXCHANGE RATIO
TAX-FREE EXCHANGE
19.9% STOCK OPTION
WALKAWAY - 20% BELOW INDEX
|X| ACCOUNTING TREATMENT: POOLING OF INTERESTS
|X| SHARES ISSUED: 1,892,386
|X| EXPECTED CLOSING: FOURTH QUARTER 1998
|X| IMPLIED MULTIPLES:
12/31/97 BOOK VALUE: 206%
1998 ESTIMATED EARNINGS: 24.31X
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Transaction Structure
|X| Financial Impact:
- Total Assets to over $4 billion
- Nondilutive on earnings per share in 1999
- Accretive to earnings in following years
|X| Strategies for Earnings Enhancement:
o Expense Saving:
- Audit & legal fees - Insurance
- Data Processing - Corporate overhead
- Back room operations - Marketing
- Director fees - Close duplicate offices
- Regulatory fees
o Revenue Enhancements:
- Establish trust services
- Redeploy earning assets at higher rates
- Evaluate service charge structure
- Expand cash management services
|X| Fed One adds:
o Strong branch network in good locations in northern West Virginia
o First entry into the state of Ohio
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EXPECTED COST SAVINGS
Estimated
Savings
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Personnel Expense $1,915,438
Professional Fees 337,489
Occuoancy Expense 706,665
Structural Expense 487,234
Other Expenses 583,356
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Total Expense Savings $4,030,182
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