United Bankshares, Inc. Announces Earnings for the Fourth Quarter and Year of 2006.WASHINGTON & CHARLESTON, W.Va. -- United Bankshares, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : UBSI), announced today earnings for the fourth quarter and year of 2006. Fourth quarter earnings were $25.0 million or 60o per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share while earnings for the year of 2006 were $89.2 million or $2.13 per diluted share. The results for the year of 2006 included significant charges to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. certain long-term debt Long-Term DebtLoans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. in the third quarter. United earned $25.7 million or 60o per diluted share and $100.4 million or $2.33 per diluted share for the fourth quarter and year of 2005, respectively. Tax-equivalent net interest income for the fourth quarter of 2006 was $58.1 million, a decrease of $3.2 million or 5% from the fourth quarter of 2005. The average yield on earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin increased 59 basis points from the fourth quarter of 2005; however, the average cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. increased 85 basis points due to higher interest rates. Average earning assets were relatively flat from the fourth quarter of 2005 as average loan growth of $138.8 million or 3% was more than offset by a decline in average investment securities of $193.9 million or 13%. In addition, interest income from United's subordinated interest in a prior asset securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. decreased $810 thousand for the fourth quarter of 2006 as compared to the fourth quarter of 2005. The net interest margin for the fourth quarter of 2006 was 3.85%, down 18 basis points from a net interest margin of 4.03% for the fourth quarter of 2005. Tax-equivalent net interest income for the year of 2006 was $235.0 million, an increase of $1.6 million or less than 1% from the prior year due mainly to average loan growth of $232.5 million or 5%. For the year of 2006, interest income from United's asset securitization increased $580 thousand from the year of 2005. In addition, the average yield on earning assets for the year of 2006 increased 80 basis points from the year of 2005; however, the average cost of funds increased by 101 basis points due to higher interest rates. As a result, the net interest margin for the year of 2006 was 3.86%, down 8 basis points from a net interest margin of 3.94% for last year. On a linked-quarter basis, United's tax-equivalent net interest income for the fourth quarter of 2006 declined $714 thousand or 1% from the third quarter of 2006. The slight decrease was due primarily to a $44.2 million or less than 1% decrease in average earning assets and a 7 basis point increase in the cost of funds for the quarter. Average loans and investments declined $26.4 million or less than 1% and $ 26.0 million or 2% for the quarter, respectively. However, period-end net loans at December 31, 2006 grew $56.7 million for the quarter or 5% annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. as commercial loans increased $79.9 million or 12% annualized from September 30, 2006. Interest income from United's subordinated interest in a prior asset securitization declined $378 thousand in the fourth quarter of 2006 as compared to the third quarter of 2006. Partially offsetting these decreases to net interest income for the fourth quarter of 2006 was a 5 basis point increase in the average yield on earning assets. The net interest margin of 3.85% for the fourth quarter of 2006 was down 2 basis points from a net interest margin of 3.87% for the third quarter of 2006. Noninterest income for the fourth quarter of 2006 was $14.7 million, an increase of $1.4 million or 11% from the fourth quarter of 2005. The rise in noninterest income from the previous year's fourth quarter was primarily due to an increase of $462 thousand in fees from deposit services mainly as a result of United's High Performance Checking program, which was introduced during the first quarter of 2006. During the fourth quarter of 2006, United received additional residual income Residual Income (also called Passive Income) is income earned on an ongoing basis for effort done once in the past. of $450 thousand from prior third party asset securitizations as compared to last year's fourth quarter. Revenue from trust and brokerage services increased $320 thousand or 12% for the fourth quarter of 2006 due to increased volume and a larger customer base. Noninterest income for the year of 2006 was $49.0 million, a decrease of $3.6 million from the year of 2005. Included in total noninterest income for the year of 2006 was a net before-tax loss of $4.6 million on the termination of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. associated with the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of FHLB FHLB Federal Home Loan Bank advances in the first and third quarters of 2006. In addition, United's income from investment security transactions declined $3.9 million for the year of 2006 as compared to last year as United incurred a net loss on security transactions of $2.9 million in the first quarter of 2006 due to an other than temporary impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on approximately $86 million of low-yielding fixed rate investment securities which United sold as part of a balance sheet repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. . Excluding the results of investment security transactions and interest rate swap terminations, noninterest income for the year of 2006 would have increased $4.9 million or 9% from the year of 2005. Leading the way was an increase in revenue from trust and brokerage services of $1.9 million or 17% for the year of 2006 as compared to the year of 2005. In addition, fees from deposit services rose $1.3 million or 5% for the year of 2006 due mainly to United's High Performance Checking program. Other income also increased $1.3 million for the year as United received additional residual income of $519 thousand from prior third party asset securitizations and income of $816 thousand from the outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. of its official checks processing which United initiated in 2006. On a linked-quarter basis, noninterest income for the fourth quarter of 2006 increased $8.5 million from the third quarter of 2006 due to a before-tax loss of approximately $7.7 million on a termination of an interest rate swap associated with the prepayment of a FHLB advance in the third quarter. Excluding the loss on the termination of the interest rate swap and losses associated with security transactions, noninterest income for the fourth quarter of 2006 would have increased $830 thousand or 6% from the third quarter of 2006. This increase was primarily due to additional residual income of $500 thousand from prior third party asset securitizations. In addition, fees from deposit services increased $135 thousand for the fourth quarter of 2006 as compared to the third quarter of 2006. Noninterest expense for the fourth quarter of 2006 was $32.6 million, an increase of $1.3 million or 4% from the fourth quarter of 2005. This rise in noninterest expense was primarily due to marketing and related costs of approximately $562 thousand to promote its High Performance Checking program. In addition, salaries and benefits expense increased $537 thousand or 4% due to higher base salaries, pension and health insurance costs. Noninterest expense for the year of 2006 was $137.2 million, an increase of $16.0 million from the year of 2005 due mainly to an increase of $7.9 million in before-tax penalties to prepay FHLB advances. Excluding these penalties, noninterest expense for the year of 2006 would have increased $8.2 million or 7% from the year of 2005. The increase in noninterest expense was primarily due to an increase of $3.1 million or 5% in salaries and benefits expense. Salaries expense increased $1.9 million or 4% as a result of the higher salaries and commissions while pension and health care coverage costs increased $411 thousand or 18% and $379 thousand or 9%, respectively. In addition, United incurred marketing and related costs of approximately $2.7 million during the year of 2006 to launch and to promote its High Performance Checking program. Consulting and bankcard bank·card n. A card issued by a bank authorizing the holder to receive bank services and often functioning as a debit card. processing fees increased $920 thousand and $905 thousand, respectively. On a linked-quarter basis, noninterest expense for the fourth quarter of 2006 decreased $7.6 million from the third quarter of 2006 due mainly to before-tax penalties of approximately $8.2 million to prepay $200 million of FHLB advances during the third quarter. Otherwise, noninterest expense for the fourth quarter of 2006 increased $655 thousand or 2% from the third quarter of 2006 due mainly to increases in several general operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , none of which was individually significant. At December 31, 2006, nonperforming loans were $14.2 million or 0.30% of loans, net of unearned income Unearned Income Any income that comes from investments and other sources unrelated to employment services. Notes: Examples of unearned income include interest from a savings account, bond interest, tips, alimony, and dividends from stock. as compared to nonperforming loans of $13.6 million or 0.29% of loans, net of unearned income at September 30, 2006 and $13.2 million or 0.28% of loans, net of unearned income at December 31, 2005, respectively. Net charge-offs were $433 thousand for the fourth quarter of 2006 as compared to $1.2 million for the fourth quarter of 2005. Net charge-offs were $1.9 million for the year of 2006 as compared to net charge-offs of $4.1 million for the year of 2005. For the quarters ended December 31, 2006 and 2005, the provision for credit losses was $268 thousand and $2.1 million, respectively, while the provision for the year was $1.4 million for 2006 as compared to $5.6 million for 2005. As of December 31, 2006, the allowances for loan losses and lending-related commitments totaled $52.4 million or 1.09% of loans, net of unearned income, as compared to $52.9 million or 1.14% of loans, net of unearned income at December 31, 2005. During the fourth quarter, United's Board of Directors declared a cash dividend of 28o per share, which represented a 4% increase over the 27o per share dividend paid for the fourth quarter of 2005. Dividends per share Dividends per share Dividend paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term. of $1.09 for the year of 2006 also represented a 4% increase over the $1.05 per share paid for the year of 2005. The year of 2006 represented the thirty-third consecutive year of dividend increases for United shareholders. United Bankshares, with $6.7 billion in assets, presently has 90 full-service offices in West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. , Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). , Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). , Ohio, and Washington, D.C. United D.C. United is a professional soccer club located in Washington, D.C. that participates in Major League Soccer. The club's official nickname is the "Black-and-Red" and home uniforms are black and white with accents of red. The team's name refers to Washington, D.C. Bankshares stock is traded on the NASDAQ Global Select Market under the quotation QUOTATION, practice. The allegation of some authority or case, or passage of some law, in support of a position which it is desired to establish. 2. Quotations when properly made, assist the reader, but when misplaced, they are inconvenient. symbol "UBSI"." This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including certain plans, expectations, goals and projections, which are subject to numerous assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of factors including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving banking industry standards. 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