As filed with the Securities and Exchange Commission on May 29, 2013January 26, 2016.
Registration No. -
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNITED BANKSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
West Virginia | 6711 | 55-0641179 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I. R. S. Employer Identification Number) |
500 Virginia Street, East
Charleston, West Virginia 25301
(304) 348 8400
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Richard M. Adams
United Bankshares, Inc.
P. O. Box 393
500 Virginia Street, East
Charleston, West Virginia 25301
(304) 348 8400
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
with copies to:
Sandra M. Murphy, Esq. | ||
Bowles Rice LLP | ||
600 Quarrier Street | ||
P.O. Box 1386 | ||
Charleston, West Virginia 25325 (304) 347-1131 |
Michael P. Reed, Esq. Covington & Burling LLP One CityCenter 850 Tenth Street, N.W. Washington, D.C. 20001 (202) 662-5986 |
Approximate date of commencement of proposed sale to the public: as soon as practicable after this registration statement becomes effective.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company.) | Smaller reporting company | ¨ |
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ¨
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ¨
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to Be Registered | Amount to Be Registered(1) | Proposed Maximum Offering Price Per Unit | Proposed Maximum Aggregate Offering Price(2) | Amount of Registration Fee | ||||
Common Stock, par value $2.50 per share | 19,219,560 shares | Not applicable | $262,346,999 | $35,784.13 | ||||
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(1) The maximum number of shares of United Bankshares, Inc., or United Bankshares, common stock estimated to be issuable upon the completion of the United Bankshares/Virginia Commerce Bancorp, Inc., or Virginia Commerce, merger described herein, which number may be higher or lower in accordance with the formula described below. This number is based on (a) the number of shares of Virginia Commerce common stock outstanding and reserved for issuance as of May 22, 2013, and (b) a share exchange ratio of 0.5442 of a share of United Bankshares common stock, solely for purposes of calculating the registration fee, issuable in exchange for each of those shares of Virginia Commerce common stock in accordance with the Agreement and Plan of Reorganization, dated January 29, 2013, by and between United Bankshares and Virginia Commerce attached to this prospectus and joint proxy statement as Appendix A.
Title of Each Class of Securities to Be Registered Amount Registered(1) Common Stock, par value $2.50 per share (2)
to Be Proposed
Maximum
Offering Price
Per Unit Proposed
Maximum
Aggregate
Offering Price(2) Amount of
Registration Fee 7,094,210 shares Not applicable $130,178,759.84 $13,109.00
(1) | The maximum number of shares of United Bankshares, Inc., or United Bankshares, common stock estimated to be issuable upon the completion of the United Bankshares/Bank of Georgetown, or Georgetown, merger described herein, which number may be higher or lower in accordance with the formula described below. This number is based on (a) the number of shares of Georgetown common stock outstanding and reserved for issuance as of January 13, 2016, and (b) a share exchange ratio of 0.9313 per share of United Bankshares common stock, solely for purposes of calculating the registration fee, issuable in exchange for each of those shares of Georgetown common stock in accordance with the Agreement and Plan of Reorganization, dated November 9, 2015, by and between United Bankshares and Georgetown attached to this prospectus and proxy statement as Appendix A. |
(2) | Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f) of the Securities Act, based on a rate of $100.70 per $1,000,000 of the proposed maximum aggregate offering price. The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the book value of shares of Georgetown common stock (the securities to be cancelled in the merger), the latest practicable date prior to the date of filing of this registration statement as follows: the product of (1) $18.35, the book value per share of Georgetown common stock on December 31, 2015 and (2) 7,617,535, the estimated maximum number of shares of Georgetown common stock outstanding and reserved for issuance as of January 13, 2016. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act and computedor until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Rules 457(f)(1) and 457(c) of the Securities Act, based on a rate of $136.40 per $1,000,000 of the proposed maximum aggregate offering price. The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of Virginia Commerce common stock (the securities to be cancelled in the merger) in accordance with Rule 457(c) under the Securities Act as follows: the product of (1) $13.65, the market price per share of the common stock of Virginia Commerce on May 22, 2013 and (2) 19,219,560, the estimated maximum number of shares of Virginia Commerce common stock outstanding and reserved for issuance as of May 22, 2013.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)said Section 8(a), MAY DETERMINE.may determine.
Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This documentprospectus and proxy statement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
PRELIMINARY – SUBJECT TO COMPLETION – DATED MAY 29, 2013JANUARY 26, 2016
MERGER PROPOSED – YOUR VOTE IS VERY IMPORTANT
Dear Shareholder:
On January 29, 2013,November 9, 2015, United Bankshares, Inc., or United Bankshares, and Virginia Commerce Bancorp, Inc.Bank of Georgetown, or Georgetown, announced a strategic business combination in which Virginia CommerceGeorgetown will merge with and into aUnited Bank, an indirect wholly-owned subsidiary of United Bankshares. The combined company, which will retain the United name, will have approximately $11$14.0 billion in assets and operate [—] branches across the contiguous states of Virginia, West Virginia, Virginia, Ohio, Pennsylvania and Maryland and the District of Columbia. United Bankshares and Virginia Commerce areGeorgetown is sending you this prospectus and joint proxy statement to invite you to attend a special meeting of Georgetown shareholders being held by each company to allow you to vote on the merger. The special meeting will be held on [●], 2016, at [a.m.][p.m.], local time, at [ ], located at [ ].
If the merger is completed, holders of Virginia CommerceGeorgetown common stock will receive 0.54420.9313 shares of United Bankshares common stock in exchange for each share of Virginia CommerceGeorgetown common stock held immediately prior to the merger, subject to the payment of cash in lieu of fractional shares.The number of shares of United Bankshares common stock that Virginia CommerceGeorgetown shareholders will receive in the merger for each share of Virginia CommerceGeorgetown common stock is fixed. The implied value of the consideration Virginia CommerceGeorgetown shareholders will receive in the merger will change depending on changes in the market price of United Bankshares common stock and will not be known at the time you vote on the merger.
Based on the closing price of United Bankshares common stock on the NASDAQ Global Select Market, or NasdaqNASDAQ (trading symbol “UBSI”), on January 29, 2013,November 9, 2015, the last trading day before the public announcement of the merger, the 0.54420.9313 exchange ratio represented approximately $14.00$39.85 in value for each share of Virginia CommerceGeorgetown common stock. Based on United Bankshares’ closing price on [—[●], 2013 of $[—●], the 0.54420.9313 exchange ratio represented approximately $[—●] in value for each share of Virginia CommerceGeorgetown common stock. Based on the 0.54420.9313 exchange ratio and the number of shares of Virginia CommerceGeorgetown common stock outstanding and reserved for issuance under various plans and agreements and in connection with various convertible securities as of [—[●], 2013, the maximum number of shares of United Bankshares common stock issuable in the merger is expected to be [—[●].
The common stock of United Bankshares and Virginia Commerce areis listed on the NASDAQ Global Select Market.NASDAQ. United Bankshares and Virginia CommerceGeorgetown urge you to obtain current market quotations for United Bankshares (trading symbol “UBSI”) and Virginia Commerce (trading symbol “VCBI”).
The merger is intended to be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and holders of Virginia CommerceGeorgetown common stock are not expected to recognize any gain or loss for United States federal income tax purposes on the exchange of shares of Virginia CommerceGeorgetown common stock for shares of United Bankshares common stock in the merger, except with respect to any cash received in lieu of fractional shares of United Bankshares common stock.
At the special meeting of United BanksharesGeorgetown shareholders to be held on [—[●], 2013, United Bankshares shareholders will be asked to vote to (1) approve and adopt the merger agreement, (2) approve the issuance of the shares of United Bankshares common stock in connection with the merger, and (3) adjourn, postpone or continue the special meeting, if necessary, in order to further solicit proxies if there are not sufficient votes at the time of the special meeting to adopt the merger agreement. Adoption of the merger agreement and the issuance of the shares of United Bankshares common stock requires the affirmative vote of a majority of the votes cast on the matter assuming that a quorum is present.
At the special meeting of Virginia Commerce shareholders to be held on [—], 2013,2016, holders of Virginia CommerceGeorgetown common stock will be asked to vote to (1) approve the merger agreement and (2) approve in a non-binding advisory vote, certain compensation that may become payable to Virginia Commerce’s named executive officers in connection with the merger, and (3) grant the boardadjournment of directors authority to adjourn, continue, or postpone the special meeting, if necessary, in order to further solicit proxies if there are not sufficient votes at the timein favor of the special meeting to approveapproval of the merger agreement. Approval of the merger agreement requires the affirmative vote of the holders of at least a majority (50.1%) of the voting interest in the outstanding shares of Virginia Commerce commonvoting stock entitled to votebe cast at the Georgetown special meeting.
The United BanksharesGeorgetown board of directors unanimously recommends that United Banksharesholders of Georgetown common shareholdersstock vote “FOR” the approval and adoption of the merger agreement “FOR” the issuance of the shares of United Bankshares common stock and “FOR” the approval of the adjournment postponement or continuance of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve and adopt the merger agreement and approve the issuance of the United Bankshares common stock.
The Virginia Commerce board of directors unanimously recommends that Virginia Commerce common shareholders vote “FOR” the approval of the merger agreement, “FOR” the approval, in a non-binding advisory vote, of certain compensation that may become payable to Virginia Commerce’s named executive officers in connection with the merger, and “FOR” granting the board the authority to adjourn, postpone, or continue the special meeting, if necessary, in order to further solicit proxies if there are not sufficient votes to approvein favor of the merger agreement.
This documentprospectus and proxy statement describes the special meetings,meeting, the merger, the documents related to the merger and other related matters. Please carefully read this entire document, including “Risk Factors” beginning on page 1915 for a discussion of the risks relating to the proposed merger and owning United Bankshares common stock after the merger. You also can obtain information about United Bankshares and Virginia Commerce from documents that eachit has filed with the Securities and Exchange Commission.
Richard M. AdamsMichael P. Fitzgerald
Founder, Chairman, of the Board and Chief Executive Officer
United Bankshares, Inc.
Peter A. Converse
President and Chief Executive Officer
Virginia Commerce Bancorp, Inc.Bank of Georgetown
Neither the Securities and Exchange Commission nor any state securities commission or bank regulatory agency has approved or disapproved the United Bankshares common stock to be issued under this documentin the merger or passed upon the adequacy or accuracy of this document.prospectus and proxy statement. Any representation to the contrary is a criminal offense.
The securities to be issued in the merger are not savings and deposit accounts of any bank or non-bank subsidiary of United Bankshares or of Georgetown and they are not insured by the Federal Deposit Insurance Corporation, or any other governmental agency.
The date of this documentprospectus and proxy statement is [—[●], 2013,2016 and it is first being mailed or otherwise delivered to United Bankshares shareholders and Virginia CommerceGeorgetown shareholders on or about [—[●], 2013.2016.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [—], 2013
On [—], 2013, United Bankshares, Inc. (“United Bankshares”) will hold a Special Meeting of Shareholders at [4:00 p.m.], local time, at:
[The Blennerhassett Hotel]
320 Market Street
Parkersburg, West Virginia 26101
to consider and vote upon the following matters:
The United Bankshares board of directors has fixed the close of business on [—], 2013, as the record date for the special meeting. Only United Bankshares shareholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement of the special meeting. Adoption of the merger agreement and issuance of United Bankshares common stock in accordance with the merger agreement requires the affirmative vote of a majority of the votes cast on the matter, assuming that a quorum is present.
Whether or not you plan to attend the special meeting, please vote your shares as soon as possible. If you are a shareholder of record, you may vote your shares by submitting your proxy card by mail, by accessing the Internet site listed on the United Bankshares proxy card, by voting telephonically using the phone number listed on the United Bankshares proxy card or by submitting your proxy card by mail. To submit your proxy by mail, please complete, sign, date and return the accompanying proxy card in the enclosed self-addressed, stamped envelope. This will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any holder of record of United Bankshares common stock who is present at the special meeting may vote in person instead of by proxy, thereby canceling any previous proxy. In any event, a proxy may be revoked in writing at any time before the special meeting in the manner described in the accompanying document.
If you beneficially hold your shares through a bank, broker, nominee or other holder of record, please vote your shares as soon as possible by following the voting instructions you receive from such holder of record.
The United Bankshares board of directors has unanimously adopted and approved the merger and the merger agreement and recommends that United Bankshares shareholders vote “FOR” the proposals set forth herein.
By Order of the Board of Directors
Richard M. Adams
Chairman of the Board of Directors and Chief Executive Officer
YOUR VOTE IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [—], 2013
On [—], 2013, Virginia Commerce Bancorp, Inc. (“Virginia Commerce”) will hold a Special Meeting of Shareholders at [4:00 p.m.], local time, at:
The Washington Golf and Country Club
3017 North Glebe Road
Arlington, Virginia 22207
to consider and vote upon the following matters:
The Virginia Commerce board of directors has fixed the close of business on [—], 2013, as the record date for the special meeting. Only Virginia Commerce shareholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournment, postponement or continuance of the special meeting. Adoption of the merger agreement requires the affirmative vote of a majority (50.1%) of the outstanding shares of Virginia Commerce common stock entitled to vote at the special meeting.
Whether or not you plan to attend the special meeting, please vote your shares as soon as possible. If you are a shareholder of record, you may vote your shares by submitting your proxy card by mail, by accessing the Internet site listed on the Virginia Commerce proxy card, or by voting telephonically using the phone number listed on the Virginia Commerce proxy card. To submit your proxy by mail, please complete, sign, date and return the accompanying proxy card in the enclosed self-addressed, stamped envelope. This will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any holder of record of Virginia Commerce common stock who is present at the special meeting may vote in person instead of by proxy, thereby canceling any previous proxy. In any event, a proxy may be revoked at any time before the special meeting in the manner described in the accompanying document.
If you beneficially hold your shares through a bank, broker, nominee or other holder of record, please vote your shares as soon as possible by following the voting instructions you receive from such holder of record.
The Virginia Commerce board of directors has unanimously adopted and approved the merger and the merger agreement and recommends that Virginia Commerce shareholders vote “FOR” the proposals set forth herein.
By Order of the Board of Directors,
Peter A. Converse
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING.
REFERENCES TO ADDITIONAL INFORMATION
This documentprospectus and proxy statement incorporates by reference important business and financial information about United Bankshares and Virginia Commerce from documents filed with or furnished to the Securities and Exchange Commission, which is referred to as the SEC, that are not included in or delivered with this document.prospectus and proxy statement.
You can obtain documents incorporated by reference in this documentprospectus and proxy statement with respect to United Bankshares free of charge through the Securities and Exchange CommissionSEC’s website (http://www.sec.gov) or by requesting them in writing or by telephone fromby contacting United Bankshares or Virginia CommerceGeorgetown, as the case may be, at the following addresses:
United Bankshares, Inc. | ||
514 Market Street | ||
Parkersburg, West Virginia 26102 Attention: Jennie Singer Telephone: (304) 424-8800 | ||
Bank of Georgetown 1115 30th Street, N.W. Washington, D.C. 20007 Attention: | ||
Kent D. Carstater Telephone: | ||
You will not be charged for any of these documents that you request. United BanksharesGeorgetown shareholders requesting documents should do so by [—[●], 2013,[●], 2016, in order to receive them before their special meeting. Virginia Commerce
In addition, if you have questions about the merger or the Georgetown special meeting, need additional copies of this prospectus and proxy statement or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Kent D. Carstater, Senior Vice President and Treasurer, Bank of Georgetown, at the following address and telephone numbers:
Bank of Georgetown
1115 30th Street, N.W.
Washington, D.C. 20007
Attention: Kent D. Carstater
Telephone: (202) 355-1211
ABOUT THIS PROSPECTUS AND PROXY STATEMENT
This prospectus and proxy statement, which forms part of a registration statement on Form S-4 filed with the SEC by United Bankshares, constitutes a prospectus of United Bankshares under Section 5 of the Securities Act of 1933, as amended, which is referred to as the Securities Act, with respect to the shares of United Bankshares common stock to be issued to the Georgetown shareholders requesting documents should do so by [—], 2013, in orderpursuant to receive them before theirthe merger. This prospectus and proxy statement also constitutes a proxy statement for Georgetown. It also constitutes a notice of meeting with respect to the special meeting.meeting of Georgetown shareholders.
You should rely only on the information contained or incorporated by reference into this document.prospectus and proxy statement. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document.prospectus and proxy statement. This documentprospectus and proxy statement is dated [—[●], 2013, and you should assume that the information in this documentprospectus and proxy statement is accurate only as of such date. You should assume that the information incorporated by reference into this documentprospectus and proxy statement is accurate as of the date of such document. Neither the mailing of this documentprospectus and proxy statement to Virginia Commerce shareholders or United BanksharesGeorgetown shareholders nor the issuance by United Bankshares of shares of United Bankshares common stock in connection with the merger will create any implication to the contrary.
Information on the websites of United Bankshares or Virginia Commerce,Georgetown, or any subsidiary of United Bankshares or Virginia Commerce,Georgetown, is not part of this document.prospectus and proxy statement. You should not rely on that information in deciding how to vote.
This documentprospectus and proxy statement does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this documentprospectus and proxy statement regarding Virginia CommerceGeorgetown has been provided by Virginia CommerceGeorgetown and information contained in this documentprospectus and proxy statement regarding United Bankshares has been provided by United Bankshares.
See “Where You Can Find More Information” on page [—].86.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | ||||
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PROPOSALS TO BE CONSIDERED AT THE | ||||
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Recommendation of the | ||||
Recommendation of the | ||||
Opinion of | ||||
United Bankshares Board of Directors Following Completion of the Merger | ||||
Interests of Certain | ||||
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Consequences to | ||||
INFORMATION ABOUT UNITED BANKSHARES AND | ||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF | ||||
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APPENDICES |
APPENDIX A | Agreement and Plan of Reorganization, dated as of United Bankshares, Inc. and | |||||
APPENDIX B | ||||||
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APPENDIX C | Sections 29-311.01 through 29-311.50 of the DC Business Code |
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The following are answers to certain questions that you may have regarding the Virginia Commerce special meeting, the United BanksharesGeorgetown special meeting and the merger. United Bankshares and Virginia CommerceGeorgetown urge you to read carefully the remainder of this documentprospectus and proxy statement because the information in this section may not provide all the information that might be important to you with respect to the merger or the Georgetown special meeting or in determining how to vote, including the risk factors beginning on page [—].15. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this document.prospectus and proxy statement. Unless the context requires otherwise, references in this prospectus and proxy statement to United Bankshares refer to United Bankshares, Inc., a West Virginia corporation, and/or its consolidated subsidiaries, references in this prospectus and proxy statement to Georgetown refer to Bank of Georgetown, a District of Columbia corporation, and/or its consolidated subsidiaries, and references in this prospectus and proxy statement to “we,” “our” and “us” refer to United Bankshares and Georgetown collectively.
Q: | What are holders of |
A: | Holders of |
Q: | How does the Georgetown board of directors recommend I vote at the |
A: | The Georgetown board of directors unanimously recommends that you vote “FOR” the |
Q: | When and where is the |
A: | The special meeting of |
Q: | What do holders of |
A: | After you have carefully read this |
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Submitting your proxy by Internet, telephone or mail or directing your bank or broker to vote your shares will ensure that your shares are represented and voted at the Virginia CommerceGeorgetown special meeting. If you would like to attend the Virginia CommerceGeorgetown special meeting, see “The Virginia CommerceGeorgetown Special Meeting – Attending the Special Meeting” beginning on page [—].26.
Q: | What |
A: | The presence at the Georgetown special meeting, in person or by proxy, of the holders of a majority of the Georgetown common stock issued and |
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attend. If you submit a properly executed proxy card, even if you abstain from voting, your shares |
Submitting your proxy by Internet, telephone or mail or directing your bank or broker to vote your shares will ensure that your shares are represented and voted at the United Bankshares special meeting. If you would like to attend the United Bankshares special meeting, see “The United Bankshares Special Meeting – Attending the Special Meeting” beginning on page [—].
Q: | Who may solicit proxies on |
A: | In addition to solicitation of proxies by |
Q: | Why is my vote as a holder of |
A: | If you do not vote by proxy card, telephone or Internet or vote in person at the |
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Q: | If my shares are held in street name by my broker, will my broker automatically vote my shares for me? |
A: | No. Your broker cannot vote your shares without instructions from you. You should instruct your broker as to how to vote your shares, following the directions your broker provides to you. Please check the voting form used by your broker. Without instructions, your shares will not be voted, which will have the effect described below. |
Q: | What if I abstain from voting or fail to instruct my broker or other holder of record how to vote? |
A: | If you are a holder of |
If you are a holder of United Bankshares common stock and you submit a proxy card in which you abstain from voting, the abstention will be counted toward a quorum at the United Bankshares special meeting, but it will have no effect on any of the three proposals.
If your bank, broker, nominee or other holder of record holds your shares of United Bankshares or Virginia CommerceGeorgetown common stock in “street name,” for each proposal your bank, broker, nominee or other holder of record generally will vote such shares only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank, nominee or other holder of record with this prospectus and joint proxy statement. Your shares held in “street name” generally will not be voted on any proposal with respect to which you do not provide voting instructions (referred to as broker non-votes). Broker non-votes will have the same effect as a vote against the Virginia Commerce Merger Proposal,Georgetown merger proposal, but will have no effect on any other proposal at the Virginia Commerce special meeting or any proposal at the United BanksharesGeorgetown special meeting.
Q: | Can I attend the |
A: | Yes. All holders of |
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attend the |
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Even if you plan to attend the special meeting, you are encouraged to vote your shares as soon as possible.
Even if you plan to attend the special meeting, you are encouraged to vote your shares as soon as possible.
Q: | Will |
A: | Yes. Unless the merger agreement is terminated before the |
Q: | Is the merger expected to be taxable to |
A: | Generally, no. The merger is intended to be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code, and holders of |
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consequences of the merger. Tax matters can be complicated and the tax consequences of the merger to you will depend on your particular tax situation. You should consult your tax advisor to determine the specific tax consequences of the merger to you. |
Q: | If I am a holder of |
A: | Yes. If you are a shareholder of record of common stock, you may change your vote and revoke your proxy by: |
before the meeting, voting by telephone or the Internet at a later time;
before the meeting, submitting a properly signed proxy card with a later date;
voting in person at the Virginia CommerceGeorgetown special meeting subject to proof of identity;meeting; or
delivering written notice that you wish to revoke your proxy to Jennifer Manning, with an office located[●], at 14201 Sullyfield Circle, Suite 500, Chantilly, Virginia 20151,[●], at or before the Virginia CommerceGeorgetown special meeting. You must include your control number.
If you hold shares in street name, you must follow your broker’s instructions to change your vote. Any record holder of Virginia CommerceGeorgetown common stock, or street name holder with a written proxy from the record holder, entitled to vote in person at the Virginia CommerceGeorgetown special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence of a Georgetown shareholder at the special meeting will not constitute revocation of a previously given proxy.
Q: | If I am a |
before the meeting, voting by telephone or the Internet at a later time;
before the meeting, submitting a properly signed proxy card with a later date;
voting in person at the United Bankshares special meeting subject to proof of identity; or
delivering written notice that you wish to revoke your proxy to James J. Consagra, Jr. and Steven E. Wilson or either one of them, with an office located at United Square, Fifth and Avery Streets, Parkersburg, West Virginia 26101, at or before the United Bankshares special meeting. You must include your control number.
If you hold shares in street name, you must follow your broker’s instructions to change your vote. Any record holder of United Bankshares common stock, or street name holder with a written proxy from the record holder, entitled to vote in person at the United Bankshares special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence of a shareholder at the special meeting will not constitute revocation of a previously given proxy.
A: | Yes. Under |
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dissenters’ rights, Georgetown shareholders must strictly follow the procedures prescribed by the laws of the District of Columbia. These procedures are summarized under the section entitled “The Merger – Dissenters Rights” beginning on page 50, and Sections 29-311.01 through 29-311.50 of the DC Business Code are attached to this prospectus and proxy statement as Appendix C. |
Q: | If I am a |
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A: | No. You should not send in your |
Q: |
Who can I contact if I cannot locate my |
A: | If you are unable to locate your original |
Q: | What will I receive for my Georgetown common stock? |
A: | In exchange for each of your shares of Georgetown common stock, you will receive 0.9313 shares of United Bankshares common stock. |
Q: | When do you expect to complete the merger? |
A: | United Bankshares and |
Q: | What happens if the merger is not completed? |
A: | If the merger is not completed, holders of |
Q: | Who will be soliciting proxies? |
A: | In addition to soliciting proxies by mail, the directors and certain employees of |
In addition to soliciting proxies by mail, certain employees of United Bankshares may be soliciting proxies for the United Bankshares special meeting. United Bankshares has retained Georgeson, Inc. to assist with soliciting proxies on behalf of United Bankshares. See “The United Bankshares Special Meeting –Solicitation of Proxies” beginning on page [—] for more information.
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Q: | Whom should I call with questions? |
A: |
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This summary highlights selected information from this prospectus and joint proxy statement. It does not contain all of the information that may be important to you. We urge you to carefully read this entire prospectus and joint proxy statement and the other documents to which this prospectus and joint proxy statement refers to fully understand the merger and the other matters to be considered at the special meeting. See “Where You Can Find More Information” on page [—]86 to obtain the information incorporated by reference into this prospectus and joint proxy statement without charge. Each item in this summary includes a page reference directing you to a more complete description of that item.
The Merger (page [—])29)
We have attached the merger agreement to this prospectus and joint proxy statement as Appendix A. We encourage you to read the merger agreement. It is the legal document that governs the merger. All descriptions in this summary and elsewhere in this prospectus and proxy statement of the terms and conditions of the merger are qualified by reference to the merger agreement.
In the merger, United Bankshares will acquire Virginia CommerceGeorgetown by means of the merger of Virginia CommerceGeorgetown into George Mason Bankshares, Inc., or George Mason,United Bank, which is aan indirect subsidiary of United Bankshares. George MasonBankshares and a direct subsidiary of UBV Holding Company, LLC and will be the surviving entity in the merger.
Each share of Virginia CommerceGeorgetown common stock outstanding will be converted in the merger into 0.54420.9313 shares of United Bankshares common stock as further described below. We expect to complete the merger in the fourthsecond quarter of 2013,2016, although there can be no assurance in this regard.
Exchange Ratio in the Merger (page [—])56)
Upon completion of the merger, each Virginia CommerceGeorgetown shareholder will receive 0.54420.9313 shares of United Bankshares common stock for each share of Virginia CommerceGeorgetown common stock held immediately prior to the merger. We refer to this ratio as the exchange ratio. The aggregate number of shares of United Bankshares common stock to which a Virginia CommerceGeorgetown shareholder will be entitled upon completion of the merger will equal 0.5442the exchange ratio multiplied by the number of shares of Virginia CommerceGeorgetown common stock held by that Virginia CommerceGeorgetown shareholder. However, United Bankshares will not issue any fractional shares. A Virginia CommerceGeorgetown shareholder entitled to a fractional share of United Bankshares common stock will instead receive an amount in cash equal to the fraction of a whole share of United Bankshares common stock to which such shareholder would otherwise be entitled multiplied by the average of the daily closing prices for the shares of United Bankshares common stock for the 20 consecutive full trading days on which such shares are actually traded on Nasdaq,NASDAQ, ending at the close of trading on the tenth trading day immediately prior to the date on which the merger is completed. As an example, a holder of 100 shares of Virginia CommerceGeorgetown common stock would receive 5493 shares of United Bankshares common stock and an amount of cash equal to the product of 0.420.13 and the average of the daily closing prices for the shares of United Bankshares common stock for the 20 consecutive full trading days on which United Bankshares common stock is traded ending at the close of trading on the tenth trading day immediately prior to the date on which the merger is completed. A Virginia CommerceGeorgetown shareholder whose direct shareholdingsshares of Georgetown common stock are represented by multiple Virginia CommerceGeorgetown stock certificates will have all shares associated with those stock certificates aggregated for purposes of calculating whole shares and cash in lieu of fractional shares to be received upon completion of the merger.
The exchange ratio is a fixed ratio. Therefore, the number of shares of United Bankshares common stock to be received by holders of Virginia CommerceGeorgetown common stock in the merger will not change if the trading price of United Bankshares common stock or the market or book value of Virginia CommerceGeorgetown common stock changes between now and
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the time the merger is completed, except in limited circumstances where the trading price of United Bankshares common stock falls below certain thresholds when measured during a period shortly before the date that the merger is scheduled to be completed, in which case, Virginia CommerceGeorgetown will have an opportunity to terminate the merger agreement, ifsubject to United Bankshares elects notBankshares’ right to adjust the exchange rate accordingly.
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Upon completion of the merger, we expect that United Bankshares shareholders will own approximately 73%[●]% of the combined company and former Virginia CommerceGeorgetown shareholders will own approximately 27%[●]% of the combined company.
The market pricesprice of both United Bankshares common stock and Virginia Commerce common stock will fluctuate prior to the merger. You shouldUnited Bankshares and Georgetown urge you to obtain current stock pricemarket quotations for United Bankshares common stock.(trading symbol “USBI”).
Virginia Commerce’sGeorgetown’s Reasons for the Merger (page [—])33)
In reaching its decision to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger agreement, the Virginia CommerceGeorgetown board of directors consultedevaluated the merger and the merger agreement in consultation with Virginia Commerceexecutive management, as well asKeefe, Bruyette & Woods, Inc., or KBW, its financial advisor, and Covington & Burling LLP, or Covington, its legal advisors, andcounsel. The Georgetown board of directors carefully considered a number of factors, including, but not limited to eachthe terms of the following:merger agreement and the value of the United Bankshares common stockmerger consideration being offered to Virginia Commerce shareholders, the anticipated future trading value of the United Bankshares common stock consideration, and the expected future receipt by Virginia Commerce shareholders of dividends as United Bankshares shareholders; each of Virginia Commerce’s, United Bankshares’, and the combined entity’s business, operations, financial condition, asset quality, earnings and prospects; the feasibility of, and the results that could be expected to be obtained, if Virginia Commerce continuedreceived by Georgetown shareholders and ultimately determined that it was in the best interests of Georgetown and its shareholders for Georgetown to operate independently; the process conducted by its financial advisors to assist the Virginia Commerce board of directors in structuringenter into the merger with United Bankshares; and the scale, scope, strength and diversity of operations that could be achieved by combining Virginia Commerceagreement with United Bankshares. For more detail concerning the factors considered by the Virginia CommerceGeorgetown board of directors in reaching its decision to approve the merger and the merger agreement, see the section entitled “The Merger – Virginia Commerce’sGeorgetown’s Reasons for the Merger; Recommendation of the Virginia CommerceGeorgetown Board of Directors.”
Virginia Commerce’sGeorgetown’s Recommendation (page [—])33)
The Virginia CommerceGeorgetown board of directors believes that the merger is fair to and in the best interests of the Virginia CommerceGeorgetown shareholders. Virginia Commerce’sGeorgetown’s board of directors unanimously recommends that Virginia CommerceGeorgetown shareholders vote “FOR” the proposal to approve and adopt the merger agreement, the merger and the other transactions contemplated thereby.agreement. For the factors considered by the Virginia CommerceGeorgetown board of directors in reaching its decision to approve the merger agreement, see the section entitled “The Merger – Virginia Commerce’s Reasons for the Merger; Recommendation of the Virginia Commerce Board of Directors.”
Opinion of Virginia Commerce’s Financial Advisor (page [—] and Appendix B)
In considering whether to approve the merger, the Virginia Commerce board of directors considered the opinion of its financial advisor, Sandler O’Neill & Partners, L.P., or Sandler O’Neill, who delivered a written opinion to the Virginia Commerce board of directors that, as of January 29, 2013, the exchange ratio is fair to the holders of Virginia Commerce common stock from a financial point of view. We have attached the full text of this opinion, dated as of January 29, 2013, to this prospectus and joint proxy statement as Appendix B. You should read this opinion completely to understand the assumptions made, matters considered and limitations of the review undertaken by Sandler O’Neill in providing its opinion.
Sandler O’Neill’s opinion is directed to Virginia Commerce’s board of directors, addresses only the fairness of the exchange ratio pursuant to the merger agreement from a financial point of view to the holders of shares of Virginia Commerce common stock and does not address any other aspect of the merger or constitute a recommendation as to how any Virginia Commerce shareholder should vote at the special meeting held in connection with the merger.
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United Bankshares’ Reasons for the Merger (page[—])
In reaching its decision to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger agreement, the United Bankshares board of directors consulted with United Bankshares management, as well as its financial and legal advisors, and considered a number of factors, including, but not limited to, the following: each of United Bankshares’, Virginia Commerce’s and the combined entity’s business, operations, financial condition, asset quality, earnings and prospects; the potential of creating a contiguous Mid-Atlantic banking franchise with additional scale and access to a broader base of middle market and small business prospects; Virginia Commerce’s familiarity with the Northern Virginia and Washington, D.C. markets; and management’s expectation regarding cost synergies, accretion and internal rate of return. For more detail concerning the factors considered by the United Bankshares board of directors in reaching its decision to approve the merger agreement, see the section entitled “The Merger – United Bankshares’Georgetown’s Reasons for the Merger; Recommendation of the United BanksharesGeorgetown Board of Directors.”
United Bankshares’ Recommendation (page [—])
The United BanksharesOpinion of Georgetown’s Financial Advisor (page 38 and Appendix B)
In connection with the merger, Georgetown’s financial advisor, KBW, delivered a written opinion, dated November 9, 2015, to the Georgetown board of directors believes thatas to the merger is fairfairness, from a financial point of view and as of the date of the opinion, to andthe holders of Georgetown common stock of the exchange ratio in the best interestsmerger. The full text of the United Bankshares shareholders. opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion, is attached as Appendix B to this prospectus and proxy statement.The United Banksharesopinion was for the information of, and was directed to, the Georgetown board of directors unanimously recommends that United Bankshares shareholders vote “FOR”(in its capacity as such) in connection with its consideration of the proposalfinancial terms of the merger. The opinion did not address the underlying business decision of Georgetown to approve and adoptengage in the merger or enter into the merger agreement or constitute a recommendation to the Georgetown board in connection with the merger, and the other transactions contemplated thereby and the issuanceit does not constitute a recommendation to any holder of United BanksharesGeorgetown common stock or any shareholder of any other entity as to Virginia Commercehow to vote in connection with the merger or any other matter.
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Dissenters’ or Appraisal Rights (page 66)
Under Section 29-311 of the District of Columbia Business Organizations Code, or the DC Business Code, Georgetown shareholders will have dissenters’ rights in connection with the merger. ForTo exercise dissenters’ rights, Georgetown shareholders must strictly follow the factors consideredprocedures prescribed by the United Bankshares boardlaws of directors in reaching its decision to approve the merger agreement, seeDistrict of Columbia. These procedures are summarized under the section entitled “The Merger – United Bankshares’ Reasons for the Merger; RecommendationDissenters Rights” beginning on page50, and Sections 29-311.01 through 29-311.50 of the United Bankshares Board of Directors.”
Opinion of United Bankshares’ Financial Advisor (page [—] and Appendix C)
In considering whether to approve the merger, the United Bankshares board of directors considered the opinion of its financial advisor, Keefe, Bruyette & Woods, Inc., or KBW, who delivered a written opinion to the United Bankshares board of directors that, as of January 28, 2013, the merger consideration in the merger is fair to United Bankshares from a financial point of view. We haveDC Business Code are attached the full text of this opinion, dated as of January 28, 2013, to this prospectus and joint proxy statementstatement/prospectus as Appendix C. You should read this opinion completely to understand the assumptions made, matters considered and limitations of the review undertaken by KBW in providing its opinion.
KBW’s opinion is directed to the United Bankshares board of directors, addresses only the fairness of the merger consideration in the merger from a financial point of view to the United Bankshares and does not address any other aspect of the merger or constitute a recommendation as to how any United Bankshares shareholder should vote at the special meeting held in connection with the merger.
No Dissenters’ or Appraisal Rights (page [—])
Shareholders will not have any dissenters’ or appraisal rights in connection with the merger and the other matters described in this prospectus and joint proxy statement.
Accounting Treatment (page [—])66)
United Bankshares will account for the merger as a business combination as that term is used under U.S. generally accepted accounting principles.
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Material U.S. Federal Income Tax Consequences (page [—])68)
The merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes, and assuming the merger will so qualify, you will not recognize any gain or loss for U.S. federal income tax purposes as a result of your exchange of shares of Virginia CommerceGeorgetown common stock solely for shares of United Bankshares common stock. Virginia CommerceGeorgetown shareholders may, however, have to recognize gain in connection with the receipt of any cash received in the merger. Because this tax treatment may not apply to all Virginia CommerceGeorgetown shareholders, you should consult your own tax advisor for a full understanding of the merger’s tax consequences that are particular to you. It is a condition to our obligation to complete the merger that we receive a legal opinion that the merger will be treated for U.S. federal income tax purposes as a reorganization under Section 368 of the Code. This opinion, however, will not bind the Internal Revenue Service, which could take a different view.
Shareholders will also be required to file certain information with their federal income tax returns and to retain certain records with regard to the merger.
The discussion of U.S. federal income tax consequences set forth above is for general information only and does not purport to be a complete analysis or listing of all potential tax effects that may apply to a holder of Virginia CommerceGeorgetown common stock. Shareholders of Virginia CommerceGeorgetown are strongly urged to consult their tax advisors to determine the particular tax consequences to them of the merger, including the application and effect of federal, state, local, foreign and other tax laws.
The Companies (page [—])71)
United Bankshares, Inc.
500 Virginia Street, East
Charleston, West Virginia 25301
(304) 348 8400
United Bankshares is a West Virginia corporation registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended, or the BHCA. United Bankshares was incorporated and organized in 1982 and began conducting business in 1984 with the acquisition of three wholly owned subsidiaries. Since its formation in 1982, United Bankshares has acquired 2829 banking institutions. United Bankshares has two banking subsidiaries “doing business” under the name United Bank, one operating under the laws of West Virginia and the other operating under the laws of Virginia. United Bankshares’ banking subsidiaries offer a full range of commercial and retail banking services and products. United Bankshares also owns nonbank subsidiaries that engage in other community banking services such as asset management, real property title insurance, investment banking, financial planning and brokerage services.
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The headquarters of United Bankshares is located in United Center at 500 Virginia Street, East, Charleston, West Virginia. United Bankshares’ executive offices are located in Parkersburg, West Virginia at Fifth and Avery Streets. United Bankshares operates 115129 full service offices – 5669 located throughout West Virginia, 54 throughout the Shenandoah Valley Region of Virginia and the Northern Virginia, Maryland and Washington, D.C. areas, 55 throughout West Virginia, 4 in southwestern Pennsylvania and 1 in southeastern Ohio.
As of December 31, 2012,September 30, 2015, United Bankshares had total assets of $8.4$12.6 billion, total deposits of $6.7$9.5 billion, and shareholders’ equity of $992 million.$1.71 billion.
Virginia Commerce Bancorp, Inc.United Bank
5350 Lee Highway11185 Fairfax Boulevard
Arlington,Fairfax, Virginia 2220722030
(703) 534-0700219-4850
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Virginia CommerceUnited Bank is a bank holding company organized underVirginia banking corporation. United Bank was incorporated on June 5, 1984, and offers a full range of commercial and retail banking services and products. The headquarters and executive officers of United Bank are located at 11185 Fairfax Boulevard, Fairfax, VA 22030. United Bank operates 69 full service offices throughout the laws of the CommonwealthShenandoah Valley Region of Virginia in the Northern Virginia, Maryland and Washington, D.C. areas.
As of September 30, 2015, United Bank’s consolidated assets approximated $7.31 billion, total deposits were $5.00 billion and total shareholders’ equity approximated $1.33 billion.
Bank of Georgetown
1115 30th Street, NW
Washington, DC 20007
(202) 355-1200
Georgetown is registered undera District of Columbia chartered bank engaged in commercial banking activities in the BHCA. Virginia Commerce was organized under Virginia law on November 5, 1999 to become the holding company for Virginia Commerce Bank. Virginia Commerce acquired allWashington, DC metropolitan area since 2005. Georgetown offers a full line of the outstanding shares of Virginia Commerce Bank on December 22, 1999, upon the effectiveness of the Agreementbusiness-related loan, deposit and Plan of Share Exchange dated September 22, 1999 between Virginia Commerce and Virginia Commerce Bank.cash management products.
Virginia Commerce’s and Virginia Commerce Bank’sGeorgetown’s executive offices and main branch are located at 5350 Lee Highway, Arlington, Virginia.1115 30th Street, NW, Washington, DC 20007. The telephone number for Virginia Commerce’sGeorgetown’s principal executive offices is (703) 534-0700. Virginia Commerce Bank(202) 355-1200. Georgetown currently has twenty-seven additional11 full service branch offices and three business production offices throughout the District of Columbia, Northern Virginia an investment services office in Vienna, Virginia, and a residential mortgage lending office in Chantilly, Virginia.Maryland.
As of December 31, 2012, Virginia CommerceSeptember 30, 2015, Georgetown had total assets of $2.8$1.217 billion, total deposits of $2.2 billion,$959 million, and total stockholders’ equity of $245$123 million.
The Virginia Commerce ShareholderGeorgetown Special Meeting (page [—])24)
The Virginia CommerceGeorgetown special meeting will be held on [—[●], 2013 at [4:00 p.m.[●] at [The Washington Golf and Country Club, 3017 North Glebe Road, Arlington, Virginia 22207][ ] [a.m.] [p.m.] at [●]. At the special meeting, Virginia CommerceGeorgetown shareholders will be asked:
To approve the merger agreement as such agreement may be amended from time to time;
To approve, in a non-binding advisory vote, certain compensation that may become payable to Virginia Commerce named executive officers in connection with the merger; and
Approve the adjournment postponement or continuance of the special meeting, on one or more occasions, if necessary, or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the timefavor of approval of the special meeting to approve the merger agreement; andagreement.
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To transact such other business as may properly come before the special meeting or any adjournment, postponement or continuance of the special meeting.
Virginia Commerce Record Date; Vote Required (page [—])25)
Virginia CommerceGeorgetown shareholders can vote at the special meeting if they owned shares of Virginia CommerceGeorgetown common stock at the close of business on [—[●], 2013, which is the record date for the special meeting. On the record date, Virginia CommerceGeorgetown had approximately [—[●] shares of common stock outstanding and [—] shareholders entitled to vote.vote at the Georgetown special meeting. Each Virginia CommerceGeorgetown shareholder can cast one vote for each share of Virginia CommerceGeorgetown common stock owned on that date.
The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Virginia CommerceGeorgetown common stock entitled to vote at the Georgetown special meeting is necessary to constitute a quorum. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Although brokers have discretionary power to vote your shares of Virginia CommerceGeorgetown common stock with respect to routine matters, they do not have discretionary power to vote your shares of Virginia CommerceGeorgetown common stock on non-routine matters. All proposals for consideration at the Virginia CommerceGeorgetown special meeting are non-routine and therefore your broker will not be able to vote your shares of Virginia CommerceGeorgetown common stock with respect to these proposals unless the broker received appropriate instructions from you.
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If a quorum exists, the approval of the merger agreement requires the affirmative vote of the holders of a majority (50.1%) of the voting interest in the outstanding shares of Virginia Commerce commonvoting stock entitled to votebe cast at the Georgetown special meeting. Abstentions and broker non-votes will have the same effect on the outcome of the vote on this proposal as votes against this proposal.
If a quorum exists, approval, on an advisory basis only,Approval of the payment of certain compensation to Virginia Commerce’s named executive officers in connection with the merger,Georgetown adjournment proposal requires the affirmative vote of the holders of a majority of the votesvoting interest in the outstanding voting stock entitled to be cast at the Georgetown special meeting. Abstentions and broker non-votes will be disregarded and have nothe same effect on the outcome of the vote on this proposal.
Approval of the adjournment, postponement or continuance of the special meeting requires the affirmative vote of a majority of theproposal as votes cast at the special meeting. Abstentions and broker non-votes will be disregarded and have no effect on the outcome of the vote onagainst this proposal.
As of the record date, Virginia CommerceGeorgetown directors and executive officers, and their affiliates, held approximately [—[●]% of the outstanding shares of Virginia CommerceGeorgetown common stock entitled to vote at the special meeting. Virginia CommerceGeorgetown directors have entered into support agreements that obligate each director to vote shares of Virginia CommerceGeorgetown common stock over which each such director has sole voting and dispositive power for approval of the merger agreement, the merger and the other transactions contemplated thereby.
The United Bankshares Shareholder Meeting (page [—])
The United Bankshares special meeting will be held on [—], 2013 at [4:00 p.m.] at [The Blennerhassett Hotel], 320 Market Street, Parkersburg, West Virginia 26101. At the special meeting, United Bankshares shareholders will be asked:
To approve and adopt the merger agreement as such agreement may be amended from time to time;
Approve the issuance of the shares of United Bankshares common stock to Virginia Commerce shareholders pursuant to the merger agreement; and
Approve the adjournment, postponement or continuance of the special meeting, on one or more occasions, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposals.
United Bankshares Record Date; Vote Required (page [—])
United Bankshares shareholders can vote at the special meeting if they owned shares of United Bankshares common stock at the close of business on [—], 2013, which is the record date for the special meeting. On the record date, United Bankshares had approximately [—] shares of common stock outstanding and [—] shareholders entitled to vote. Each United Bankshares shareholder can cast one vote for each share of United Bankshares common stock owned on that date.
The presence, in person or by proxy, of the holders of a majority of the shares of United Bankshares common stock entitled to vote at the special meeting is necessary to constitute a quorum. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Although brokers have discretionary power to vote your shares of United Bankshares common stock with respect to routine matters, they do not have discretionary power to vote your
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shares of United Bankshares common stock on non-routine matters. All proposals for consideration at the United Bankshares special meeting are non-routine and therefore your broker will not be able to vote your shares of United Bankshares common stock with respect to these proposals unless the broker received appropriate instructions from you.
If a quorum exists, the approval of the merger agreement, the approval of the issuance of United Bankshares common stock in connection with the merger, and approval of the adjournment, postponement or continuance of the special meeting require the affirmative vote of a majority of the votes cast at the special meeting.
In determining whether all proposals have received the requisite number of affirmative votes, abstentions and broker non-votes will be disregarded and have no effect on the outcome of the vote on each proposal.
As of the record date, United Bankshares directors and executive officers, and their affiliates, held approximately [—]% of the outstanding shares of United Bankshares common stock entitled to vote at the special meeting. United Bankshares directors have indicated that they plan to vote the shares of United Bankshares common stock that they own for approval of the merger agreement, the merger and the other transactions contemplated thereby, although none of them have entered into any agreements obligating them to do so.agreement.
Conditions to Completion of the Merger (page [—])57)
The obligations of United Bankshares and Virginia CommerceGeorgetown to complete the merger depend on a number of conditions being satisfied or waived. These conditions include:
Virginia Commerce shareholders’ approval of the merger agreement;
United BanksharesGeorgetown shareholders’ approval of the merger agreement;
Approval of the merger by the necessary federal and state regulatory authorities;
The effectiveness of the registration statement filed on Form S-4 of which this prospectus and joint proxy statement is a part and no stop order suspending the effectiveness thereof shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the Securities and Exchange Commission, or SEC;
Authorization for the listing on NasdaqNASDAQ of the shares of United Bankshares common stock to be issued in the merger;
Absence of any law or court order prohibiting the merger;
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Receipt of opinions from counsel to Virginia CommerceGeorgetown and United Bankshares that the merger will be treated as a “reorganization” under Section 368(a) of the Code;
The execution and delivery of all documents required for United Bankshares to assume Virginia Commerce’s obligations with respect to its trust preferred securities;
The accuracy of the other party’s representations and warranties subject to the material adverse effect standard in the merger agreement; and
The performance in all material respects of all obligations of the other party contained in the merger agreement.
We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
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Regulatory Approvals (page [—])61)
We cannot complete the merger unless it is approved by the Board of Governors of the Federal Reserve System, or the Federal Reserve, and the Virginia Bureau of Financial Institutions.Institutions and the District of Columbia Department of Insurance, Securities and Banking. Once the Federal Reserve approves the merger, we have to wait from 15 to 30 days before we can complete it. During that time, the Department of Justice may challenge the merger. As of the date of this prospectus and joint proxy statement, we have not yet received the required regulatory approvals. While we do not know of any reason why we would not be able to obtain the necessary regulatory approvals in a timely manner, we cannot be certain when or if we will receive them or, if obtained, whether they will contain terms, conditions or restrictions not currently contemplated that will be detrimental to the combined company after completion of the merger.
Termination of the Merger Agreement (page [—])64)
Virginia CommerceGeorgetown and United Bankshares may mutually agree to terminate the merger agreement at any time.
Either Virginia CommerceGeorgetown or United Bankshares may terminate the merger agreement if the merger is not complete by November 30, 2013,6, 2016, unless the failure of the merger to be consummated arises out of or results from the knowing action or inaction of the party seeking to terminate.
United Bankshares may terminate the merger agreement if any of the following occurs:
Virginia CommerceThe approval of any governmental entity required for consummation of the merger is denied by a final non-appealable action of such governmental entity or the Georgetown shareholders do not approve the merger agreement;
Georgetown materially breaches any of its representations or obligations under the merger agreement, and does not cure the breach within 30 days of written notice of the breach;
The approval of any governmental entity required for consummation of the merger is denied by a final non-appealable action of such governmental entity or the shareholders of Virginia Commerce or United Bankshares do not approve the merger agreement;
Virginia CommerceGeorgetown is not able to confirm, as of the effective date of the merger, (i) the continued accuracy of its representations and warranties in the merger agreement as of the effective date of the merger or (ii) the performance in all material respects of all of its obligations in the merger agreement; or
The Virginia CommerceGeorgetown’s board of directors fails to recommend approval of the merger agreement, withdraws its recommendation or modifies its recommendation in a manner adverse to United Bankshares.
Virginia CommerceGeorgetown may terminate the merger agreement if any of the following occurs:
United Bankshares materially breaches any of its representations or obligations under the merger agreement and does not cure the breach within 30 days of written notice of the breach;
The approval of any governmental entity required for consummation of the merger is denied by a final non-appealable action of such governmental entity or the Georgetown shareholders of United Bankshares do not approve the merger agreement;
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United Bankshares materially breaches any of its representations or obligations under the merger agreement, and does not cure the breach within 30 days;
United Bankshares is not able to confirm, as of the effective date of the merger, (i) the continued accuracy of its representations and warranties in the merger agreement as of the effective date of the merger or (ii) the performance in all material respects of all of its obligations in the merger agreement; or
The United Bankshares board of directors fails to recommend approval of the merger agreement and the issuance of United Bankshares common stock in connection with the merger to the United Bankshares shareholders, withdraws its recommendation or modifies its recommendation in a manner adverse to Virginia Commerce; or
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Theaverage closing price of United Bankshares common stock declines by more than 20% from $25.83$42.79 and underperforms an index of banking companies by more than 15%20% over a designated measurement period, unless United Bankshares agrees to increase the number of shares of United Bankshares common stock to be issued to holders of Virginia CommerceGeorgetown common stock who are to receive shares of United Bankshares common stock in the merger to an amount that equals the economic value of the merger consideration to be received by Virginia Commerce shareholders as of the date the merger agreement was executed.stock.
Additionally, Virginia CommerceGeorgetown may terminate the merger agreement in order to enter into an agreement with respect to an unsolicited acquisition proposal that if consummated would result in a transaction more favorable to Virginia CommerceGeorgetown shareholders from a financial point of view, than the merger, provided that United Bankshares does not make a counteroffer that the Virginia Commerce board of directors determines is at least as favorable to the other proposal (as determined by the Georgetown board of directors) and Virginia CommerceGeorgetown pays the termination fee described below.
Termination Fee (page [—])65)
In the event that the merger agreement is terminated (i) by Virginia CommerceGeorgetown because it has received an unsolicited acquisition proposal that is more favorable to itsGeorgetown shareholders from a financial point of view than the merger with United Bankshares and United Bankshares does not make a counteroffer that the Virginia CommerceGeorgetown board of directors determines is at least as favorable to the unsolicited acquisition proposal or (ii) by United Bankshares because the Virginia CommerceGeorgetown board of directors fails to recommend, withdraws, modifies or changes its recommendation of the merger in a manner adverse in any respect to the interests of United Bankshares and within 12 months after the date of termination of the merger agreement, Virginia CommerceGeorgetown enters into an agreement with respect to another acquisition proposal or consummates another acquisition proposal, then Virginia CommerceGeorgetown must pay United Bankshares a termination fee of $20,000,000.$11,288,000.
Waiver and Amendment (page [—])60)
United Bankshares and Virginia CommerceGeorgetown may jointly amend the merger agreement and each may waive its right to require the other party to adhere to the terms and conditions of the merger agreement. However, United Bankshares and Virginia CommerceGeorgetown may not do so after Virginia CommerceGeorgetown shareholders approve the merger agreement if the amendment or waiver would violate the District of Columbia Business Organization Code or the Virginia Stock Corporation Act.Act, require further approval from Georgetown’s shareholders or such amendment changes the form or amount of merger consideration in a manner that is adverse in any respect to Georgetown’s shareholders.
Interests of Directors and Executive Officers in the Merger that Differ from Your Interests (page [—])51)
Some of the directors and executive officers of Virginia CommerceGeorgetown have interests in the merger that differ from, or are in addition to, their interests as shareholders of Virginia Commerce.Georgetown. These interests exist because of, among other things, employment or severance agreements that the executive officers entered into with Virginia Commerce,Georgetown, rights that these executive officers and directors have under Virginia Commerce’sGeorgetown’s benefit plans including equity plans and deferred compensation plans, and arrangements to continue as employees, contractors and/or directors of United Bankshares or its subsidiaries, including United Bank, (Virginia),following the merger, and rights to indemnification and directors and officers insurance following the merger. These employment and severance agreements provide certain executive
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officers with severance benefits if their employment is terminated in connection with the merger. The aggregate compensation that certain Georgetown directors and named executive officers may receive as a result of the merger is described in greater detail under “Interests of Certain Georgetown Directors and Executive Officers in the Merger” beginning on page 51.
In addition, twoone individual from Georgetown, Michael P. Fitzgerald, Founder, Chairman of the members of the Virginia CommerceGeorgetown board of directors, will join the board of United Bankshares,President, and three of its membersChief Executive Officer, will join the board of directors of United Bank (Virginia).Bankshares. Two individuals from Georgetown, Mr. Fitzgerald and Michael M. McCarthy, each of whom currently serves as a director of Georgetown, will join the board of directors of United Bank.
Further, as of the record date of the Georgetown special meeting, Georgetown directors and executive officers owned, in the aggregate, options to purchase [●] shares of Georgetown common stock granted under Georgetown’s stock option plan. The treatment of the options will be as set forth in the merger agreement and as described in greater detail under “Interests of Certain Georgetown Directors and Executive Officers in the Merger” beginning on page 51.
The members of the Virginia CommerceGeorgetown board of directors knew about these additional interests and considered them when they approved the merger agreement and the merger.
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Stock Options (page [—])56)
Under the merger agreement, each stock option to buy Virginia CommerceGeorgetown common stock granted under Virginia Commerce’sGeorgetown’s stock option plan that is outstanding and not yet exercised immediately prior to the merger, whether vested or unvested, will vest pursuant to the terms thereof and will be converted into an option to acquire, on the same terms and conditions as were applicable under such stock option, the number of shares of United Bankshares common stock equal to (a) the number of shares of Virginia CommerceGeorgetown common stock subject to such stock option multiplied by (b) 0.5442.the exchange ratio. Such product shall be rounded down to the nearest whole number. The exercise price per share (rounded up to the next whole cent) of each United Bankshares stock option issued for the Virginia CommerceGeorgetown stock option shall equal (y) the exercise price per share of shares of Virginia CommerceGeorgetown common stock that were purchasable pursuant to such Virginia CommerceGeorgetown stock option divided by (z) 0.5442.
Warrants (page [—])
Under the merger agreement, each warrant to acquire Virginia Commerce common stock that is outstanding and not yet exercised immediately prior to the merger, will be converted automatically into a warrant to purchase shares of United Bankshares common stock such that: (i) the number of shares of United Bankshares common stock to be subject to such warrant will be equal to the product of the number of shares of Virginia Commerce common stock subject to the original warrant and 0.5442; and (ii) the exercise price per share of United Bankshares common stock under such warrant will be equal to the exercise price per share of Virginia Commerce common stock under the original warrant divided by 0.5442.
The warrants issued by Virginia Commerce in connection with its trust preferred securities expire on September 24, 2013. Virginia Commerce and United Bankshares expect the holders of the trust preferred securities to exercise their warrants on or before September 23, 2013 to acquire shares of Virginia Commerce common stock, which shares of common stock would be eligible for the merger consideration on the same basis as all other shares of Virginia Commerce common stock.
In addition, notwithstanding the terms of the merger agreement discussed above, it is the present intention of United Bankshares, either alone or together with Virginia Commerce, to repurchase the warrant, or the TARP warrant, held by the United States Department of Treasury, or Treasury, and issued by Virginia Commerce in connection with the Troubled Asset Relief Program, or TARP, Capital Purchase Program, on or about the effective date of the merger for a purchase price equal to its fair value, which is assumed to be $26.845 million, subject to final negotiation with the Treasury. If the TARP warrant has not been repurchased as of the effective date, it will be converted into a warrant to purchase common stock of United Bankshares. If the TARP warrant has not been repurchased as of the effective date, the number of United Bankshares common shares for which the TARP warrant will become exercisable and the exercise price will be adjusted to reflect the 0.5442 share exchange ratio.
Restricted Stock (page [—])
Under the merger agreement, each restricted share of Virginia Commerce common stock that is outstanding immediately prior to the merger will be converted into shares of United Bankshares common stock in accordance with the exchange ratio, whether or not such restricted shares are vested. Restricted shares of Virginia Commerce common stock that were granted to an executive as TARP-compliant restricted stock less than two years prior to the merger will not experience accelerated vesting unless the executive’s employment is also terminated in connection with the merger. Any such TARP-compliant restricted shares that do not experience accelerated vesting in connection with the merger will be converted into restricted shares of United Bankshares common stock in accordance with the exchange ratio and will continue to be subject to time-based vesting in accordance with their original vesting schedule. All other restricted shares of Virginia Commerce common stock will fully vest and be freely transferable United Bankshares common stock following the merger.
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Material Differences in the Rights of United Bankshares Shareholders and Virginia CommerceGeorgetown Shareholders (page [—])77)
The rights of United Bankshares shareholders are governed by West Virginia law and by United Bankshares’ articles of incorporation and bylaws. The rights of Virginia CommerceGeorgetown shareholders are governed by VirginiaDistrict of Columbia law and by Virginia Commerce’sGeorgetown’s articles of incorporation and bylaws. Upon completion of the merger, the rights of the United Bankshares shareholders, including former shareholders of Virginia Commerce,Georgetown, will be governed by West Virginia law and the articles of incorporation and bylaws of United Bankshares.
This prospectus and joint proxy statement contains descriptions of the material differences in shareholder rights under each of the United Bankshares and Virginia CommerceGeorgetown governing documents.
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RISK FACTORSRisk Factors (page 15)
In addition to general investment risks andBefore voting at the otherspecial meeting, you should carefully consider all of the information contained in or incorporated by reference into this prospectus and joint proxy statement,document, including the matters addressed underrisk factors set forth in the heading “Cautionary Statement Regarding Forward-Looking Statements” on page [—] and the matters described under the captionsection entitled “Risk Factors” or described in theUnited Bankshares’ Annual ReportsReport on FormsForm 10-K filed by United Bankshares and Virginia Commerce for the year ended on December 31, 2012, Virginia Commerce shareholders should consider the matters described below in determining whether to approve the merger agreement2014 and United Bankshares shareholders should consider the matters described below in determining whether to approve and adopt the merger agreement and to approve the issuance of the shares of United Bankshares common stock in connection therewith.
Risks Associatedother reports filed with the Merger
Fluctuations in the trading price of United Bankshares common stock will change the value of the shares of United Bankshares common stock you receive in the merger.
The exchange ratio is set at 0.5442 shares of United Bankshares common stock for each share of Virginia Commerce common stock. As a result, the market value of the United Bankshares common stock that Virginia Commerce shareholders receive in the merger will depend on the market price of United Bankshares common stock at the time the sharesSEC, which are issued. Because the exchange ratio is fixed, the value of the shares of United Bankshares common stock that will be issued to Virginia Commerce shareholders in the merger will depend on the market price of United Bankshares common stock at the time the shares are issued. After the merger, the market value of United Bankshares common stock may decrease and be lower than the market value of United Bankshares common stock that was used in calculating the exchange ratio in the merger. Except as described in this prospectus and joint proxy statement, there will be no adjustment to the fixed number of shares of United Bankshares common stock that will be issued to Virginia Commerce shareholders based upon changes in the market price of United Bankshares common stock or Virginia Commerce common stock prior to the closing.
There may be an adjustment to the fixed number of shares of United Bankshares common stock that will be issued to Virginia Commerce shareholders based upon changes in the market price of United Bankshares common stock and the NASDAQ Bank Index prior to the closing. However, any changes to the fixed number of shares of United Bankshares common stock will not increase the per share value that Virginia Commerce shareholders will receive in the merger from the value calculated using the pre-announcement market price of United Bankshares common stock. Furthermore, the Virginia Commerce board of directors may terminate the merger agreement if the market price of United Bankshares common stock falls more than 20% on an actual basis and 15% on a relative basis to the NASDAQ Bank Index prior to the closing, in which case the merger will not occur.
The market price of United Bankshares common stock at the time the merger is completed may vary from the price of United Bankshares common stock on the date the merger agreement was executed, on the date of this prospectus and joint proxy statement and on the date of the Virginia Commerce special meeting as a result of various factors that are beyond the control of United Bankshares and Virginia Commerce, including, but not limited to, general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. In addition to the approval of the merger agreement by Virginia Commerce shareholders and United Bankshares shareholders, completion of the merger is subject to receipt of required regulatory approvals and satisfaction of other conditions that may not occur until after the Virginia Commerce special meeting or the United Bankshares special meeting. Therefore, at the time of the Virginia Commerce special meeting Virginia Commerce shareholders will not know the precise value of the consideration they will receive at the effective time of the merger. Virginia Commerce shareholders should obtain current market quotations for shares of United Bankshares common stock.
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The market price of United Bankshares common stock after the merger may be affected by factors different from those affecting the shares of Virginia Commerce or United Bankshares currently.
Upon completion of the merger, holders of Virginia Commerce common stock will become holders of United Bankshares common stock. United Bankshares’ business differs from that of Virginia Commerce, and, accordingly, the results of operations of the combined company and the market price of the combined company’s shares of common stock may be affected by factors different from those currently affecting the independent results of operations of each of United Bankshares and Virginia Commerce. For a discussion of the businesses of United Bankshares and Virginia Commerce and of certain factors to consider in connection with those businesses, see the documents incorporated by reference or described elsewhere ininto this prospectus and joint proxy statement.
The integration of the operations of United Bankshares and Virginia Commerce may be more difficult than anticipated.
The success of the merger will depend on a number of factors, including, but not limited to, United Bankshares’ ability to:
Timely and successfully integrate the operations of United Bankshares and Virginia Commerce;
Retain key employees, and retain and attract qualified personnel to, United Bankshares and Virginia Commerce;
Maintain existing relationships with depositors in Virginia Commerce to minimize withdrawals of deposits prior to and subsequent to the merger;
Maintain and enhance existing relationships with borrowers to limit unanticipated losses from loans of Virginia Commerce;
Control the incremental non-interest expense from United Bankshares to maintain overall operating efficiencies; and
Compete effectively in the communities served by United Bankshares and Virginia Commerce and in nearby communities.
United Bankshares may not be able to manage effectively its growth resulting from the merger.
Regulatory approvals may not be received, may take longer than expected or impose conditions that are not presently anticipated.
Before the merger may be completed, we must obtain various approvals or consents from the Federal Reserve and various bank regulatory and other authorities. These regulators may impose conditions on the completion of the merger or require changes to the terms of the merger. Although United Bankshares and Virginia Commerce do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of United Bankshares following the merger. There can be no assurance as to whether the regulatory approvals will be received, the timing of those approvals, or whether any conditions will be imposed. The merger agreement contains a condition to the obligation of each of United Bankshares and Virginia Commerce to close the merger that the required regulatory approvals not contain any conditions, restrictions or requirements applicable either before or after the effective time of the merger that the United Bankshares board of directors reasonably determines in good faith would have a material adverse effect on United Bankshares and its subsidiaries taken as a whole taking into account the consummation of the merger in making such determination. See “The Merger Agreement – Regulatory Approvals” on page [—].
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Combining the two companies may be more difficult, costly or time-consuming than expected.
The success of the merger will depend, in part, on United Bankshares’ ability to realize the anticipated benefits and cost savings from combining the businesses of United Bankshares and Virginia Commerce and to combine the businesses of United Bankshares and Virginia Commerce in a manner that permits growth opportunities and cost savings to be realized without materially disrupting the existing customer relationships of Virginia Commerce or decreasing revenues due to loss of customers. However, to realize these anticipated benefits and cost savings, United Bankshares must successfully combine the businesses of United Bankshares and Virginia Commerce. If United Bankshares is not able to achieve these objectives, the anticipated benefits and cost savings of the merger may not be realized fully or at all or may take longer to realize than expected.
United Bankshares and Virginia Commerce have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger will depend, in part, on our ability to successfully combine the businesses of United Bankshares and Virginia Commerce. To realize these anticipated benefits, after the completion of the merger, United Bankshares expects to integrate Virginia Commerce’s business into its own. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger. The loss of key employees could adversely affect United Bankshares’ ability to successfully conduct its business in the markets in which Virginia Commerce now operates, which could have an adverse effect on United Bankshares’ financial results and the value of its common stock. If United Bankshares experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause Virginia Commerce to lose customers or cause customers to remove their accounts from Virginia Commerce and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Virginia Commerce and United Bankshares during this transition period and for an undetermined period after consummation of the merger.
United Bankshares may fail to realize the cost savings estimated for the merger.
Although United Bankshares estimates that it will realize cost savings of approximately $16 million annually (excluding one-time costs and expenses associated with the merger with Virginia Commerce) from the merger when fully phased in, it is possible that the estimates of the potential cost savings could turn out to be incorrect. For example, the combined purchasing power may not be as strong as expected, and therefore the cost savings could be reduced. In addition, future business developments may require United Bankshares to continue to operate or maintain some facilities or support functions that are currently expected to be combined or reduced. The cost savings estimates also depend on United Bankshares’ ability to combine the businesses of United Bankshares and Virginia Commerce in a manner that permits those costs savings to be realized. If the estimates turn out to be incorrect or United Bankshares is not able to combine the two companies successfully, the anticipated cost savings may not be fully realized or realized at all, or may take longer to realize than expected.
Results after the merger may materially differ from the pro forma per share information presented in this prospectus and joint proxy statement.
Results after the merger of Virginia Commerce with and into United Bankshares may be materially different from those shown in the pro forma per share information that only show a combination of historical results from United Bankshares and Virginia Commerce. Merger, integration, restructuring and transaction costs related to the acquisition and combination of the companies are estimated to be in the range of approximately $16 million and could be higher or lower depending on how difficult it will be to integrate United Bankshares and Virginia Commerce. Furthermore, these charges may decrease capital of the combined company that could be used for profitable, income earning investments in the future.
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The merger with Virginia Commerce may distract management of United Bankshares from its other responsibilities.
The acquisition of Virginia Commerce could cause the management of United Bankshares to focus its time and energies on matters related to the acquisition that otherwise would be directed to the business and operations of United Bankshares. Any such distraction on the part of management, if significant, could affect its ability to service existing business and develop new business and adversely affect the business and earnings of United Bankshares.
If the merger is not completed, United Bankshares and Virginia Commerce will have incurred substantial expenses without realizing the expected benefits of the merger.
Each of United Bankshares and Virginia Commerce has incurred substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this prospectus and joint proxy statement and all filing and other fees paid to the SEC in connection with the merger. If the merger is not completed, United Bankshares and Virginia Commerce would have to recognize these expenses without realizing the expected benefits of the merger.
Virginia Commerce shareholders will have less influence as shareholders of United Bankshares than as shareholders of Virginia Commerce.
Virginia Commerce shareholders currently have the right to vote in the election of the board of directors of Virginia Commerce and on other matters affecting Virginia Commerce. Following the merger, the shareholders of Virginia Commerce as a group will own approximately 27% of the combined organization. When the merger occurs, each Virginia Commerce shareholder that receives shares of United Bankshares common stock will become a shareholder of United Bankshares with a percentage ownership of the combined organization much smaller than such shareholder’s percentage ownership of Virginia Commerce. Because of this, Virginia Commerce shareholders will have less influence on the management and policies of United Bankshares than they now have on the management and policies of Virginia Commerce.
Directors and officers of Virginia Commerce have interests in the merger that differ from the interests of non-director or non-management shareholders.
Some of the directors and officers of Virginia Commerce have interests in the merger that are in addition to their interests as shareholders of Virginia Commerce generally. These interests exist because of, among other things, employment or severance agreements that the officers entered into with Virginia Commerce, rights that Virginia Commerce officers and directors have under Virginia Commerce’s benefit plans (including the treatment of their stock options in connection with the merger) and rights to indemnification and directors and officers insurance following the merger. In addition, two individuals from Virginia Commerce will join the board of United Bankshares, and three individuals from Virginia Commerce will join the board of directors of United Bank (Virginia). Although the members of each of United Bankshares’ and Virginia Commerce’s board of directors knew about these additional interests and considered them when they approved the merger agreement and the merger, Virginia Commerce shareholders should understand that some of the directors and officers of Virginia Commerce will receive benefits or other payments in connection with the merger that Virginia Commerce shareholders will not receive. Further, in connection with Virginia Commerce’s entry into the merger agreement, each of Virginia Commerce’s directors signed a support agreement, which requires the directors, in their capacities as shareholders of Virginia Commerce, to (i) except in certain circumstances, vote their respective shares in favor of the merger agreement and the merger, to the extent such director has sole voting and dispositive power over such shares, and (ii) comply with the provisions of the merger agreement regarding solicitation of alternative third-party acquisition proposals. See “The Merger – Interests of Certain Virginia Commerce Directors and Executive Officers in the Merger” on page [—].
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The fairness opinion obtained by Virginia Commerce from its financial advisor will not reflect changes in circumstances between signing the merger agreement and the completion of the merger.
Virginia Commerce has not obtained an updated fairness opinion as of the date of this prospectus and joint proxy statement from Sandler O’Neill & Partners, L.P., Virginia Commerce’s financial advisor. Changes in the operations and prospects of Virginia Commerce or United Bankshares, general market and economic conditions and other factors that may be beyond the control of Virginia Commerce and United Bankshares, and on which the fairness opinion was based, may alter the value of Virginia Commerce or United Bankshares or the prices of shares of Virginia Commerce common stock or United Bankshares common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. Because Virginia Commerce does not anticipate asking its financial advisor to update its opinion, the January 29, 2013 opinion does not address the fairness of the merger consideration, from a financial point of view, at the time the merger is completed. The opinion is included as Appendix B to this prospectus and joint proxy statement. For a description of the opinion that Virginia Commerce received from its financial advisor, please refer to “The Merger – Opinion of Virginia Commerce’s Financial Advisor” on page [—]. For a description of the other factors considered by Virginia Commerce’s board of directors in determining to approve the merger, please refer to “The Merger – Recommendation of the Virginia Commerce Board of Directors” on page [—].
The fairness opinion obtained by United Bankshares from its financial advisor will not reflect changes in circumstances between signing the merger agreement and the completion of the merger.
United Bankshares has not obtained an updated fairness opinion as of the date of this prospectus and joint proxy statement from Keefe, Bruyette & Woods, Inc., United Bankshares’ financial advisor. Changes in the operations and prospects of Virginia Commerce or United Bankshares, general market and economic conditions and other factors that may be beyond the control of Virginia Commerce and United Bankshares, and on which the fairness opinion was based, may alter the value of Virginia Commerce or United Bankshares or the prices of shares of Virginia Commerce common stock or United Bankshares common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. Because United Bankshares does not anticipate asking its financial advisor to update its opinion, the January 28, 2013 opinion does not address the fairness of the merger consideration, from a financial point of view, at the time the merger is completed. The opinion is included as Appendix C to this prospectus and joint proxy statement. For a description of the opinion that United Bankshares received from its financial advisor, please refer to “The Merger – Opinion of United Bankshares’ Financial Advisor” on page [—]. For a description of the other factors considered by United Bankshares’ board of directors in determining to approve the merger, please refer to “The Merger – Recommendation of the United Bankshares Board of Directors” on page [—].
The merger agreement limits Virginia Commerce’s ability to pursue an alternative acquisition proposal and requires Virginia Commerce to pay a termination fee of $20 million under limited circumstances relating to alternative acquisition proposals.
The merger agreement prohibits Virginia Commerce from soliciting, initiating, or encouraging certain alternative acquisition proposals with any third party, subject to exceptions set forth in the merger agreement. See “The Merger Agreement – Acquisition Proposals” on page [—]. The merger agreement also provides for the payment by Virginia Commerce of a termination fee in the amount of $20,000,000 in the event that the other party terminates the merger agreement for certain reasons. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Virginia Commerce from considering or proposing such an acquisition. See “Merger Agreement – Termination Fee” on page [—].
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The merger will not be completed unless important conditions are satisfied.
Specified conditions set forth in the merger agreement must be satisfied or waived to complete the merger. If the conditions are not satisfied or waived, to the extent permitted by law or stock exchange rules, the merger will not occur or will be delayed and each of United Bankshares and Virginia Commerce may lose some or all of the intended benefits of the merger. The following conditions, in addition to other closing conditions, must be satisfied or waived, if permissible, before United Bankshares and Virginia Commerce are obligated to complete the merger:
The merger agreement and merger must be duly approved by the requisite vote of the shareholders of Virginia Commerce and the shareholders of United Bankshares;
All required regulatory approvals must be obtained;
The absence of any law or order by a court or regulatory authority that prohibits, restricts or makes illegal the merger;
The registration statement shall become effective under the Securities Act and no stop order shall have been issued or threatened by the SEC; and
To the extent required, the shares of United Bankshares common stock to be issued in the merger must be approved for listing on Nasdaq.
Termination of the merger agreement could negatively impact Virginia Commerce.
If the merger agreement is terminated, there may be various consequences. For example, Virginia Commerce’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. If the merger agreement is terminated and Virginia Commerce’s board of directors seeks another merger or business combination, Virginia Commerce shareholders cannot be certain that Virginia Commerce will be able to find a party willing to pay the equivalent or greater consideration than that which United Bankshares has agreed to pay in the merger. In addition, if the merger agreement is terminated under certain circumstances, including circumstances involving a change in recommendation by Virginia Commerce’s board of directors, Virginia Commerce may be required to pay United Bankshares a termination fee of $20,000,000.
Neither Virginia Commerce shareholders nor United Bankshares shareholders have dissenters’ appraisal rights in the merger.
Dissenters’ appraisal rights are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction.
Under the Virginia Stock Corporation Act, shareholders are not entitled to relief as dissenting shareholders if the shares of the corporation for which the dissenting shareholder would otherwise be entitled to relief are covered securities under Section 18(b)(1)(A) or (B) of the Securities Act of 1933, as amended, on the record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to act upon the corporate action requiring appraisal rights. Under the West Virginia Business Corporation Act, a shareholder may not exercise dissenters’ appraisal rights in connection with a merger with respect to shares that are listed on the New York Stock Exchange or the American Stock Exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., like Nasdaq, as of the record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to act upon the merger.
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Because Virginia Commerce common stock and United Bankshares common stock are listed on Nasdaq, neither holders of Virginia Commerce common stock nor holders of United Bankshares common stock will be entitled to dissenters’ appraisal rights in the merger with respect to their shares of Virginia Commerce common stock and United Bankshares common stock, respectively.
Failure to complete the merger could negatively affect the market price of Virginia Commerce common stock.
If the merger is not completed for any reason, Virginia Commerce will be subject to a number of material risks, including the following:
The market price of its common stock may decline to the extent that the current market prices of its shares reflect a market assumption that the merger will be completed;
Costs relating to the merger, such as legal, accounting and financial advisory fees, and, in specified circumstances, termination fees, must be paid even if the merger is not completed;
The diversion of management’s attention from the day-to-day business operations and the potential disruption to Virginia Commerce’s employees and business relationships during the period before the completion of the merger may make it difficult to regain financial and market positions if the merger does not occur; and
If Virginia Commerce’s board of directors seeks another merger or business combination, Virginia Commerce shareholders cannot be certain that Virginia Commerce will be able to find a party willing to pay an equivalent or greater consideration than that which United Bankshares has agreed to pay in the merger.
The shares of United Bankshares common stock to be received by Virginia Commerce shareholders as a result of the merger will have different rights from the shares of Virginia Commerce common stock.
Upon completion of the merger, Virginia Commerce shareholders will become United Bankshares shareholders and their rights as shareholders will be governed by the United Bankshares’ articles of incorporation and the United Bankshares’ bylaws. The rights associated with Virginia Commerce common stock are different from the rights associated with United Bankshares common stock.document. Please see “Comparative Rights of Shareholders”“Where You Can Find More Information”, beginning on page [—] for a discussion of the different rights associated with United Bankshares common stock.86.
Virginia Commerce will be subject to business uncertainties and contractual restrictions while the merger is pending.
Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Virginia Commerce. These uncertainties may impair Virginia Commerce’s ability to attract, retain and motivate strategic personnel until the merger is consummated, and could cause customers and others that deal with Virginia Commerce to seek to change existing business relationships with Virginia Commerce. Experienced employees in the financial services industry are in high demand, and competition for their talents can be intense. Employees of Virginia Commerce may experience uncertainty about their future role with the surviving corporation until, or even after, strategies with regard to the combined company are announced or executed. If strategic Virginia Commerce employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the surviving corporation, Virginia Commerce’s business following the merger could be harmed. In addition, the merger agreement restricts Virginia Commerce from making certain acquisitions and taking other specified actions until the merger occurs without the consent of United Bankshares. These restrictions may prevent Virginia Commerce from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement – Conduct of Business Pending the Merger” on page [—].
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Risks Associated with United Bankshares
United Bankshares’ business may be adversely affected by conditions in financial markets and economic conditions generally.
United Bankshares’ business is concentrated in the West Virginia, Northern Virginia and Shenandoah Valley Virginia market areas. As a result, its financial condition, results of operations and cash flows are subject to changes if there are changes in the economic conditions in these areas. A prolonged period of economic recession or other adverse economic conditions in these areas could have a negative impact on United Bankshares. A significant decline in general economic conditions nationally, caused by inflation, recession, acts of terrorism, outbreak of hostilities or other international or domestic occurrences, unemployment, changes in securities markets, declines in the housing market, a tightening credit environment or other factors could impact these local economic conditions and, in turn, have a material adverse effect on United Bankshares’ financial condition and results of operations which occurred during this past year.
The U.S. economy was in recession from December 2007 through June 2009. Business activity across a wide range of industries and regions in the U.S. was greatly reduced. Although economic conditions have improved, certain sectors, such as real estate and manufacturing, remain weak and unemployment remains high. Continued declines in real estate values, home sales volumes, and financial stress on borrowers as a result of the uncertain economic environment could have an adverse effect on United Bankshares’ borrowers or its customers, which could adversely affect United Bankshares’ financial condition and results of operations. In addition, local governments and many businesses are still experiencing difficulty due to lower consumer spending and decreased liquidity in the credit markets. Deterioration in local economic conditions, particularly within United Bankshares’ geographic regions and markets, could drive losses beyond that which is provided for in its allowance for loan losses. United Bankshares may also face the following risks in connection with these events:
Economic conditions that negatively affect housing prices and the job market have resulted, and may continue to result, in deterioration in credit quality of United Bankshares’ loan portfolios, and such deterioration in credit quality has had, and could continue to have, a negative impact on United Bankshares’ business.
Market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default rates on loans and other credit facilities.
The processes United Bankshares uses to estimate allowance for loan losses and reserves may no longer be reliable because they rely on complex judgments that may no longer be capable of accurate estimation.
United Bankshares’ ability to assess the creditworthiness of its customers may be impaired if the models and approaches it uses to select, manage and underwrite its customers become less predictive of future charge-offs.
United Bankshares expects to face increased regulation of its industry, and compliance with such regulation may increase its costs, limit its ability to pursue business opportunities, and increase compliance challenges.
As the above conditions or similar ones continue to exist or worsen, United Bankshares could experience continuing or increased adverse effects on its financial condition and results of operations.
The value of certain investment securities is volatile and future declines or other-than-temporary impairments could have a materially adverse effect on future earnings and regulatory capital.
Continued volatility in the fair value for certain investment securities, whether caused by changes in market conditions, interest rates, credit risk of the issuer, the expected yield of the security, or actual defaults in the portfolio could result in significant fluctuations in the value of the securities. This could have a material adverse
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impact on United Bankshares’ accumulated other comprehensive income and shareholders’ equity depending on the direction of the fluctuations. Furthermore, future downgrades or defaults in these securities could result in future classifications as other-than-temporarily impaired. This could have a material impact on United Bankshares’ future earnings, although the impact on shareholders’ equity will be offset by any amount already included in other comprehensive income for securities that were temporarily impairment.
There are no assurances as to adequacy of the allowance for loan losses
United Bankshares believes that its allowance for loan losses is maintained at a level adequate to absorb any probable losses in its loan portfolio given the current information known to management.
Management establishes the allowance based upon many factors, including, but not limited to:
Historical loan loss experience;
Industry diversification of the commercial loan portfolio;
The effect of changes in the local real estate market on collateral values;
The amount of nonperforming loans and related collateral security;
Current economic conditions that may affect the borrower’s ability to pay and value of the collateral;
Sources and cost of funds;
Volume, growth and composition of the loan portfolio; and
Other factors management believes are relevant.
These determinations are based upon estimates that are inherently subjective, and their accuracy depends on the outcome of future events, so ultimate losses may differ from current estimates. Changes in economic, operating and other conditions, including changes in interest rates, that are generally beyond United Bankshares’ control, can affect its loan losses. With unfavorable economic conditions since the end of 2007, United Bankshares’ credit losses have been on the rise. If the economic conditions do not improve or continue to decline, United Bankshares’ credit losses could continue to increase, perhaps significantly. As a result, such losses could exceed United Bankshares’ current allowance estimates. United Bankshares can provide no assurance that its allowance is sufficient to cover actual credit losses should such losses differ substantially from our current estimates.
In addition, federal and state regulators, as an integral part of their respective supervisory functions, periodically review United Bankshares’ allowance for credit losses.
Changes in interest rates may adversely affect United Bankshares’ business.
United Bankshares’ earnings, like most financial institutions, are significantly dependent on its net interest income. Net interest income is the difference between the interest income United Bankshares earns on loans and other assets that earn interest and the interest expense incurred to fund those assets, such as on savings deposits and borrowed money. Therefore, changes in general market interest rates, such as a change in the monetary policy of the Federal Reserve or otherwise, beyond those that are contemplated by United Bankshares’ interest rate risk model and policy, could have an effect on net interest income.
United Bankshares is subject to credit risk.
There are risks inherent in making any loan, including risks with respect to the period of time over which the loan may be repaid, risks resulting from changes in economic and industry conditions, risks inherent in dealing with individual borrowers and risks resulting from uncertainties as to the future value of collateral.
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United Bankshares seeks to mitigate the risk inherent in its loan portfolio by adhering to prudent loan approval practices. Although United Bankshares believes that its loan approval criteria are appropriate for the various kinds of loans it makes, United Bankshares may incur losses on loans that meet our loan approval criteria. Due to recent economic conditions affecting the real estate market, many lending institutions, including United Bankshares, have experienced substantial declines in the performance of their loans, including construction, land development and land loans. The value of real estate collateral supporting many construction and land development loans, land loans, commercial and multi-family loans have declined and may continue to decline. United Bankshares cannot assure that the economic conditions affecting customers and the quality of the loan portfolio will improve and thus, United Bankshares’ financial condition and results of operations could continue to be adversely affected.
Loss of United Bankshares’ Chief Executive Officer or other executive officers could adversely affect its business.
United Bankshares’ success is dependent upon the continued service and skills of its executive officers and senior management. If United Bankshares loses the services of these key personnel, it could have a negative impact on United Bankshares’ business because of their skills, years of industry experience and the difficulty of promptly finding qualified replacement personnel. The services of Richard M. Adams, United Bankshares’ Chief Executive Officer, would be particularly difficult to replace. United Bankshares and Mr. Adams are parties to an employment agreement providing for his continued employment by United Bankshares through March 31, 2016.
United Bankshares operates in a highly competitive market.
United Bankshares faces a high degree of competition in all of the markets it serves. United Bankshares considers all of West Virginia to be included in its market area. This area includes the five largest West Virginia Metropolitan Statistical Areas (MSA): the Parkersburg MSA, the Charleston MSA, the Huntington MSA, the Wheeling MSA and the Weirton MSA. United Bankshares serves the Ohio counties of Lawrence, Belmont, Jefferson and Washington and Fayette county in Pennsylvania primarily because of their close proximity to the Ohio and Pennsylvania borders and United Bankshares banking offices located in those counties or in nearby West Virginia. United Bankshares’ Virginia markets include the Maryland, northern Virginia and Washington, D.C. MSA, the Winchester MSA, the Harrisonburg MSA, and the Charlottesville MSA. United Bankshares considers all of the above locations to be the primary market area for the business of its banking subsidiaries.
There is a risk that aggressive competition could result in United Bankshares controlling a smaller share of these markets. A decline in market share could lead to a decline in net income which would have a negative impact on stockholder value.
Dividend payments by United Bankshares’ subsidiaries to United Bankshares and by United Bankshares to its shareholders can be restricted.
The declaration and payment of future cash dividends will depend on, among other things, United Bankshares’ earnings, the general economic and regulatory climate, United Bankshares’ liquidity and capital requirements, and other factors deemed relevant by United Bankshares’ board of directors. Federal Reserve policy limits the payment of cash dividends by bank holding companies, without regulatory approval, and requires that a holding company serve as a source of strength to its banking subsidiaries.
United Bankshares’ principal source of funds to pay dividends on its common stock is cash dividends from its subsidiaries. The payment of these dividends by its subsidiaries is also restricted by federal and state banking laws and regulations. As of January 1, 2013, an aggregate of approximately $27.6 million and $16.2 million was available for dividend payments from United Bank (West Virginia) and United Bank (Virginia), respectively, to United Bankshares without regulatory approval.
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United Bankshares may be adversely affected by the soundness of other financial institutions.
Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. United Bankshares has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds or other institutional clients. Recent defaults by financial services institutions, and even rumors or questions about a financial institution or the financial services industry in general, have led to market wide liquidity problems and could lead to losses or defaults by United Bankshares or other institutions. Any such losses could adversely affect United Bankshares’ financial condition or results of operations.
United Bankshares is subject to extensive government regulation and supervision.
United Bankshares is subject to extensive federal and state regulation, supervision and examination. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not shareholders. These regulations affect United Bankshares’ lending practices, capital structure, investment practices, dividend policy, operations and growth, among other things. These regulations also impose obligations to maintain appropriate policies, procedures and controls, among other things, to detect, prevent and report money laundering and terrorist financing and to verify the identities of United Bankshares’ customers. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect United Bankshares in substantial and unpredictable ways. Such changes could subject United Bankshares to additional costs, limit the types of financial services and products United Bankshares may offer and/or increase the ability of nonbanks to offer competing financial services and products, among other things. United Bankshares expends substantial effort and incurs costs to improve its systems, audit capabilities, staffing and training in order to satisfy regulatory requirements, but the regulatory authorities may determine that such efforts are insufficient. Failure to comply with relevant laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on United Bankshares’ business, financial condition and results of operations. While United Bankshares has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. As an example, the FDIC imposed higher assessments on deposits in 2009 based on the adequacy of the deposit insurance fund, conditions of the banking industry and as a result of changes in specific programs. The Dodd-Frank Act changed the FDIC’s assessment base for federal deposit insurance from the amount of insured deposits to consolidated average assets less tangible capital. It is possible that United Bankshares’ deposit insurance premiums could increase even more in the future under this new requirement.
In the normal course of business, United Bankshares and its subsidiaries are routinely subject to examinations and challenges from federal and state tax authorities regarding the amount of taxes due in connection with investments that United Bankshares has made and the businesses in which United Bankshares has engaged. Recently, federal and state taxing authorities have become increasingly aggressive in challenging tax positions taken by financial institutions. These tax positions may relate to tax compliance, sales and use, franchise, gross receipts, payroll, property and income tax issues, including tax base, apportionment and tax credit planning. The challenges made by tax authorities may result in adjustments to the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions. If any such challenges are made and are not resolved in United Bankshares’ favor, they could have a material adverse effect on United Bankshares’ financial condition and results of operations.
United Bankshares may elect or be compelled to seek additional capital in the future, but capital may not be available when it is needed.
United Bankshares is required by federal and state regulatory authorities to maintain adequate levels of capital to support United Bankshares’ operations. In addition, United Bankshares may elect to raise additional
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capital to support its business or to finance acquisitions, if any, or United Bankshares may otherwise elect to raise additional capital. In that regard, a number of financial institutions have recently raised considerable amounts of capital as a result of deterioration in their results of operations and financial condition arising from the turmoil in the mortgage loan market, deteriorating economic conditions, declines in real estate values and other factors, which may diminish United Bankshares’ ability to raise additional capital.
United Bankshares’ ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic conditions and a number of other factors, many of which are outside United Bankshares’ control, and on United Bankshares’ financial performance. Accordingly, United Bankshares cannot be assured of its ability to raise additional capital if needed or on terms acceptable to United Bankshares. If United Bankshares cannot raise additional capital when needed, it may have a material adverse effect on the company’s financial condition, results of operations and prospects.
United Bankshares’ information systems may experience an interruption or breach in security.
United Bankshares relies heavily on communications and information systems to conduct its business. In addition, as part of its business, United Bankshares collects, processes and retains sensitive and confidential client and customer information. United Bankshares’ facilities and systems, and those of its third party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events. Any failure, interruption or breach in security of these systems could result in failures or disruptions in its customer relationship management, general ledger, deposit, loan and other systems. While United Bankshares has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of its information systems could damage United Bankshares’ reputation, result in a loss of customer business, subject United Bankshares to additional regulatory scrutiny or expose it to civil litigation and possible financial liability, any of which could have a material adverse effect on United Bankshares’ financial condition and results of operations.
The Dodd-Frank Act may adversely affect United Bankshares’ business, financial condition and results of operations.
The Dodd-Frank Act significantly changes regulation of financial institutions and the financial services industry. The Dodd-Frank Act includes, among other things, provisions creating a Financial Services Oversight Council to identify emerging systemic risks and improve interagency cooperation; centralizing the responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which is responsible for implementing, examining and enforcing compliance with federal consumer financial laws; permanently raising the current standard maximum deposit insurance amount to $250,000; establishing strengthened capital standards for banks and disallowing trust preferred securities as qualifying for Tier 1 capital (subject to certain grandfather provisions for existing trust preferred securities); establishing new minimum mortgage underwriting standards; granting the Federal Reserve Board the power to regulate debit card interchange fees; and implementing corporate governance changes. Many aspects of the Dodd-Frank Act are subject to rulemaking that will take effect over several years, thus making it difficult to assess all the effects the Dodd-Frank Act will have on the financial industry, including United Bankshares, at this time. However, it is possible that United Bankshares’ interest expense could increase and deposit insurance premiums could change, and steps may need to be taken to increase qualifying capital. United Bankshares expects that operating and compliance costs will increase and could adversely affect its financial condition and results of operations.
The rules effecting debit card interchange fees under the Durbin Amendment will negatively impact our electronic banking income.
The Durbin Amendment required the Federal Reserve to establish a cap on the rate merchants pay banks for electronic clearing of debit transactions (i.e. the interchange rate). The Federal Reserve issued final rules,
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effective October 1, 2011, for establishing standards, including a cap, for debit card interchange fees and prohibiting network exclusivity arrangements and routing restrictions. The final rule established standards for assessing whether debit card interchange fees received by debit card issuers were reasonable and proportional to the costs incurred by issuers for electronic debit transactions. Under the final rule, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction is the sum of 21 cents per transaction, a 1 cent fraud prevention adjustment, and 5 basis points multiplied by the value of the transaction. Following completion of the acquisition of Virginia Commerce, United Bankshares will be subject to the cap on the interchange fees under the Durbin Amendment which will result in lower debit card interchange fees.
The short-term and long-term impact of the changing regulatory capital requirements and anticipated new capital rules is uncertain.
On June 7, 2012, the Federal Reserve, FDIC and OCC approved proposed rules that would substantially amend the regulatory risk-based capital rules applicable to United Bankshares, United Bank (West Virginia) and United Bank (Virginia). The proposed rules implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The proposed rules were subject to a public comment period that has expired and there is no date set for the adoption of final rules.
Various provisions of the Dodd-Frank Act increase the capital requirements of bank holding companies, such as United Bankshares. The leverage and risk-based capital ratios of these entities may not be lower than the leverage and risk-based capital ratios for insured depository institutions. The proposed rules include new minimum risk-based capital and leverage ratios, which would be phased in beginning in 2013, and would refine the definition of what constitutes “capital” for purposes of calculating those ratios. The proposed new minimum capital level requirements applicable to United Bankshares and its subsidiary banks under the proposals would be: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 4% for all institutions. The proposed rules would also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital ratios, and would result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement would be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase each year until fully implemented in January 2019. Moreover, the proposed reforms seek to eliminate trust preferred securities from Tier 1 capital over a ten-year period. An institution would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations would establish a maximum percentage of eligible retained income that could be utilized for such actions. Additionally, the U.S. implementation of Basel III contemplates that, for banking organizations with less than $15 billion in assets, the ability to treat trust preferred securities as tier 1 capital would be phased out over a ten-year period.
The new Consumer Financial Protection Bureau, created pursuant to the Dodd-Frank Act, has broad rule-making authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive” acts and practices. Additionally, the Consumer Financial Protection Bureau has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets.
While the proposed Basel III changes and other regulatory capital requirements will likely result in generally higher regulatory capital standards, it is difficult at this time to predict when or how any new standards will ultimately be applied to United Bankshares.
In addition, in the current economic and regulatory environment, regulators of banks and bank holding companies have become more likely to impose capital requirements on bank holding companies and banks that are more stringent than those required by applicable existing regulations.
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The application of more stringent capital requirements for United Bankshares could, among other things, result in lower returns on invested capital, require the raising of additional capital and result in additional regulatory actions if United Bankshares were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets. Implementation of changes to asset risk weightings for risk based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy and could limit United Bankshares’ ability to make distributions, including paying dividends.
United Bankshares’ business is dependent on technology, and an inability to invest in technological improvements may adversely affect United Bankshares’ results of operations and financial condition.
The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. United Bankshares has made significant investments in data processing, management information systems and Internet banking accessibility. United Bankshares’ future success will depend in part upon United Bankshares’ ability to create additional efficiencies in its operations through the use of technology. There can be no assurance that United Bankshares’ technological improvements will increase United Bankshares’ operational efficiency or that United Bankshares will be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers.
In addition, these changes may also require United Bankshares to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements which may negatively impact United Bankshares’ financial condition and results of operation. United Bankshares is currently reviewing the provisions of the Dodd-Frank Act and assessing their probable impact on United Bankshares and its operations.
If the FDIC raises the assessment rate charged to its insured financial institutions, United Bankshares’ FDIC insurance premium may increase and this could have a negative effect on expenses and results of operations.
Recent high levels of bank failures and temporary programs increasing deposit insurance limits dramatically increased resolution costs for the FDIC and depleted its deposit insurance fund. In order to maintain a strong funding position and restore reserve ratios for the deposit insurance fund, the FDIC increased assessment rates for all insured institutions throughout 2010. If there are additional financial institution failures, United Bankshares may be required to pay even higher FDIC insurance premiums than the recently increased levels, which may materially adversely affect results of operations and financial condition.
Failure to maintain effective internal controls over financial reporting in the future could impair United Bankshares’ ability to accurately and timely report its financial results or prevent fraud, resulting in loss of investor confidence and adversely affecting United Bankshares’ business and stock price.
Effective internal controls over financial reporting are necessary to provide reliable financial reports and prevent fraud. Management believes that United Bankshares’ internal controls over financial reporting are currently effective. Management will continually review and analyze United Bankshares’ internal controls over financial reporting for Sarbanes-Oxley Section 404 compliance. Any failure to maintain, in the future, an effective internal control environment could impact United Bankshares’ ability to report its financial results on an accurate and timely basis, which could result in regulatory actions, loss of investor confidence, and adversely impact United Bankshares’ business and stock price.
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United Bankshares could face unanticipated environmental liabilities or costs related to real property owned or acquired through foreclosure. Compliance with federal, state and local environmental laws and regulations, including those related to investigation and clean-up of contaminated sites, could have a negative effect on expenses and results of operations.
A significant portion of United Bankshares’ loan portfolio is secured by real property. During the ordinary course of business, United Bankshares may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, United Bankshares may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require United Bankshares to incur substantial expenses and may materially reduce the affected property’s value or limit United Bankshares’ ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase exposure to environmental liability. Although United Bankshares has policies and procedures to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on results of operations.
The Standard & Poor’s downgrade in the U.S. government’s sovereign credit rating, and in the credit ratings of instruments issued, insured or guaranteed by certain related institutions, agencies and instrumentalities, creates risks to United Bankshares’ net income, capital levels, financial condition and liquidity and causes uncertainties in general economic conditions that may adversely impact it.
In August 2011, Standard & Poor’s downgraded the United States long-term debt ratings and downgraded the credit ratings of certain long-term debt instruments issued by Fannie Mae and Freddie Mac and other U.S. government agencies linked to long-term U.S. debt. Instruments of this nature are key assets on the balance sheets of financial institutions, including United Bankshares. These downgrades could adversely affect the market value of such instruments, and could adversely impact United Bankshares’ ability to obtain funding that is collateralized by affected instruments, as well as affecting the pricing of that funding when it is available. In addition, these downgrades could materially affect financial markets and economic conditions, which may affect United Bankshares’ net income, financial condition and liquidity and result in future changes in capital requirements or United Bankshares’ investment portfolio in response to management’s assessment of the related risk weightings. United Bankshares cannot predict if, when or how these changes to the credit ratings will affect economic conditions. As a result, it is possible that these changes could result in a significant adverse impact to United Bankshares, and could affect other risks to which it is subject.
New accounting or tax pronouncements or interpretations may be issued by the accounting profession, regulators or other government bodies which could change existing accounting methods. Changes in accounting methods could negatively impact United Bankshares’ results of operations and financial condition.
Current accounting and tax rules, standards, policies and interpretations influence the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. These laws, regulations, rules, standards, policies, and interpretations are constantly evolving and may change significantly over time. Events that may not have a direct impact on United Bankshares, such as the bankruptcy of major U.S. companies, have resulted in legislators, regulators and authoritative bodies, such as the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board, and various taxing authorities, responding by adopting and/or proposing substantive revision to laws, regulations, rules, standards, policies, and interpretations. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. A change in accounting standards may adversely affect reported financial condition and results of operations.
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United Bankshares’ business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, its business and a negative impact on results of operations.
United Bankshares relies heavily on communications and information systems to conduct its business. Any failure, interruption or breach in security of these systems, whether due to severe weather, natural disasters, cyber attack, acts of war or terrorism, criminal activity or other factors, could result in failures or disruptions in general ledger, deposit, loan, customer relationship management and other systems. While United Bankshares has disaster recovery and other policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of United Bankshares’ information systems could damage its reputation, result in a loss of customer business, subject it to additional regulatory scrutiny or expose it to civil litigation and possible financial liability, any of which could have a material adverse effect on results of operations.
The negative economic effects caused by terrorist attacks, including cyber attacks, potential attacks and other destabilizing events would likely contribute to the deterioration of the quality of United Bankshares’ loan portfolio and could reduce its customer base, level of deposits, and demand for its financial products such as loans.
High inflation, natural disasters, acts of terrorism, including cyber attacks, an escalation of hostilities or other international or domestic occurrences, and other factors could have a negative impact on the economy of the Mid-Atlantic regions in which United Bankshares operates. An additional economic downturn in its markets would likely contribute to the deterioration of the quality of United Bankshares’ loan portfolio by impacting the ability of its customers to repay loans, the value of the collateral securing loans, and may reduce the level of deposits in its bank and the stability of its deposit funding sources. An additional economic downturn could also have a significant impact on the demand for United Bankshares’ products and services. The cumulative effect of these matters on United Bankshares’ results of operations and financial condition would likely be adverse and material.
United Bankshares’ vendors could fail to fulfill their contractual obligations, resulting in a material interruption in, or disruption to, its business and a negative impact on results of operations.
United Bankshares has entered into subcontracts for the supply of current and future services, such as data processing, mortgage loan processing and servicing, and certain property management functions. These services must be available on a continuous and timely basis and be in compliance with any regulatory requirements. Failure to do so could substantially harm United Bankshares’ business.
United Bankshares often purchases services from vendors under agreements that typically can be terminated on a periodic basis. There can be no assurance, however, that vendors will be able to meet their obligations under these agreements or that United Bankshares will be able to compel them to do so. Risks of relying on vendors include the following:
If an existing agreement expires or a certain service is discontinued by a vendor, then United Bankshares may not be able to continue to offer its customers the same breadth of products and its operating results would likely suffer unless it is able to find an alternate supply of a similar service.
Agreements United Bankshares may negotiate in the future may commit it to certain minimum spending obligations. It is possible United Bankshares will not be able to create the market demand to meet such obligations.
If market demand for United Bankshares’ products increases suddenly, its current vendors might not be able to fulfill United Bankshares’ commercial needs, which would require it to seek new arrangements or new sources of supply, and may result in substantial delays in meeting market demand.
United Bankshares may not be able to control or adequately monitor the quality of services it receives from its vendors. Poor quality services could damage United Bankshares’ reputation with its customers.
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Potential problems with vendors such as those discussed above could have a significant adverse effect on United Bankshares’ business, lead to higher costs and damage its reputation with its customers and, in turn, have a material adverse effect on its financial condition and results of operations.
United Bankshares’ potential inability to integrate companies it may acquire in the future could have a negative effect on its expenses and results of operations.
On occasion, United Bankshares may engage in a strategic acquisition when it believes there is an opportunity to strengthen and expand its business. To fully benefit from such acquisition, however, United Bankshares must integrate the administrative, financial, sales, lending, collections and marketing functions of the acquired company. If United Bankshares is unable to successfully integrate an acquired company, it may not realize the benefits of the acquisition, and its financial results may be negatively affected. A completed acquisition may adversely affect United Bankshares’ financial condition and results of operations, including its capital requirements and the accounting treatment of the acquisition. Completed acquisitions may also lead to significant unexpected liabilities after the consummation of these acquisitions.
United Bankshares’ stock price can be volatile.
Stock price volatility may make it more difficult for United Bankshares shareholders to resell their common stock when they want and at prices they find attractive. United Bankshares’ stock price can fluctuate significantly in response to a variety of factors, including, among other things:
Actual or anticipated negative variations in quarterly results of operations;
Negative recommendations by securities analysts;
Poor operating and stock price performance of other companies that investors deem comparable to United Bankshares;
News reports relating to negative trends, concerns and other issues in the financial services industry or the economy in general;
Negative perceptions in the marketplace regarding United Bankshares and/or its competitors;
New technology used, or services offered, by competitors;
Adverse changes in interest rates or a lending environment with prolonged low interest rates;
Adverse changes in the real estate market;
Negative economic news;
Failure to integrate acquisitions or realize anticipated benefits from acquisitions;
Adverse changes in government regulations; and
Geopolitical conditions such as acts or threats of terrorism or military conflicts.
General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause United Bankshares’ stock price to decrease regardless of operating results.
An investment in United Bankshares common stock is not an insured deposit.
United Bankshares common stock is not a bank deposit and, therefore, is not insured against loss by the Federal Deposit Insurance Corporation, any other deposit insurance fund or by any other public or private entity. Investment in United Bankshares common stock is inherently risky for the reasons described in this section and elsewhere in this prospectus and joint proxy statement and is subject to the same market forces that affect the price of common stock in any company. As a result, someone who acquires United Bankshares common stock, could lose some or all of their investment.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This documentprospectus and proxy statement contains or incorporates by reference a number of “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the financial conditions, results of operations, earnings outlook and prospects of United Bankshares, Virginia CommerceGeorgetown and the potential combined company and may include statements for the period following the completion of the merger. You can find many of these statements by looking for words such as “plan,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “potential,” “possible” or other similar expressions which identify these forward-looking statements and appear in a number of places in this prospectus and joint proxy statement (and the documents to which you are referred in this prospectus and joint proxy statement) and include, but are not limited to, all statements relating directly or indirectly to the timing or likelihood of completing the merger to which this prospectus and joint proxy statement relates, the timing and amount of growth and cost savings realized, following the merger, plans for future growth and other business development activities as well as capital expenditures, financing sources and the effects of regulation and competition, potential effects of not approving proposals discussed in this prospectus and joint proxy statement or not completing the merger, and all other statements regarding the intent, plans, beliefs or expectations of United Bankshares, Virginia Commerce,Georgetown, or those of their respective directors or officers.
The forward-looking statements involve certain risks and uncertainties. The ability of either United Bankshares or Virginia CommerceGeorgetown to predict results or the actual effects of its plans and strategies, or those of the combined company, is subject to inherent uncertainty. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include those set forth on page [—]15 under “Risk Factors,” as well as, among others, the following:
Those discussed and identified in public filings with the SEC made by United Bankshares or Virginia Commerce;Bankshares;
Fluctuations in the market price of United Bankshares common stock and the related effect on the market value of the merger consideration that Virginia CommerceGeorgetown common shareholders will receive upon completion of the merger;
Business uncertainties and contractual restrictions while the merger is pending;
The possibility that the proposed merger does not close when expected or at all because required regulatory, shareholder or other approvals and conditions to closing are not received or satisfied on a timely basis or at all;
The terms of the proposed merger may need to be modified to satisfy such approvals or conditions;
The anticipated benefits from the proposed merger such as it being accretive to earnings and expanding United Bankshares’ geographic presence and synergies are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations (including changes to capital requirements) and their enforcement, and the degree of competition in the geographic and business areas in which the companies operate;
The ability to promptly and effectively integrate the businesses of United Bankshares and Virginia Commerce;Georgetown;
Reputational risks and the reaction of the companies’ customers to the merger;
Diversion of management time on merger related issues;
Changes in asset quality and credit risk;
The inability to sustain revenue and earnings;
Changes in interest rates and capital markets;
Inflation;
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Customer acceptance of United Bankshares products and services;
Customer borrowing, repayment, investment and deposit practices;
Customer disintermediation;
The introduction, withdrawal, success and timing of business initiatives;
Competitive conditions;
The impact, extent and timing of technological changes,
Changes in fiscal and monetary policies, including changes in tax laws, and their effects on markets and customers; and
Changes in regulations and other actions of the Federal Reserve Board and federal and state banking regulators, and legislative and regulatory actions and reforms, including those associated with the Dodd-Frank Act and the Volcker Rule, and the new regulatory capital rules proposed under Basel III.
Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this documentprospectus and proxy statement or the date of any document incorporated by reference in this document.prospectus and proxy statement.
All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this documentprospectus and proxy statement and attributable to United Bankshares or Virginia CommerceGeorgetown or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this document.prospectus and proxy statement. Except to the extent required by applicable law or regulation, United Bankshares and Virginia CommerceGeorgetown undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this documentprospectus and proxy statement or to reflect the occurrence of unanticipated events.
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In addition to general investment risks and the other information contained in or incorporated by reference into this prospectus and proxy statement, including the matters addressed under the heading “Cautionary Statement Regarding Forward-Looking Statements” on page 13 and the matters described under the caption “Risk Factors” in the Annual Report on Forms 10-K filed by United Bankshares for the year ended December 31, 2014, Georgetown shareholders should consider the matters described below in determining whether to approve the merger agreement.
Because the exchange ratio is fixed, fluctuations in the trading price of United Bankshares common stock will change the value of the shares of United Bankshares common stock you receive in the merger.
The exchange ratio is set at 0.9313 shares of United Bankshares common stock for each share of Georgetown common stock. As a result, the market value of the United Bankshares common stock that Georgetown shareholders receive in the merger will depend on the market price of United Bankshares common stock at the time the shares are issued. Because the exchange ratio is fixed, the value of the shares of United Bankshares common stock that will be issued to Georgetown shareholders in the merger will depend on the market price of United Bankshares common stock at the time the shares are issued. After the merger, the market value of United Bankshares common stock may decrease and be lower than the market value of United Bankshares common stock that was used in calculating the exchange ratio in the merger. Except as described in this prospectus and proxy statement, there will be no adjustment to the fixed number of shares of United Bankshares common stock that will be issued to Georgetown shareholders based upon changes in the market price of United Bankshares common stock or Georgetown common stock prior to the closing.
There may be an adjustment to the fixed number of shares of United Bankshares common stock that will be issued to Georgetown shareholders based upon changes in the market price of United Bankshares common stock and the KBW Regional Banking Index (KRX) prior to the closing. However, any changes to the fixed number of shares of United Bankshares common stock will not increase the per share value that Georgetown shareholders will receive in the merger from the value calculated using the pre-announcement market price of United Bankshares common stock. Furthermore, the Georgetown board of directors may terminate the merger agreement if the average closing price of United Bankshares common stock falls more than 20% on an actual basis and 20% on a relative basis to the KBW Regional Banking Index (KRX) prior to the closing, in which case the merger will not occur unless United Bankshares agrees to increase the number of shares of United Bankshares common stock to be issued to holders of Georgetown common stock.
The market price of United Bankshares common stock at the time the merger is completed may vary from the price of United Bankshares common stock on the date the merger agreement was executed, on the date of this prospectus and proxy statement and on the date of the Georgetown special meeting as a result of various factors that are beyond the control of United Bankshares and Georgetown, including, but not limited to, general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. In addition to the approval of the merger agreement by Georgetown shareholders, completion of the merger is subject to receipt of required regulatory approvals and satisfaction of other conditions that may not occur until after the Georgetown special meeting. Therefore, at the time of the Georgetown special meeting Georgetown shareholders will not know the precise value of the consideration they will receive at the effective time of the merger. Georgetown shareholders should obtain current market quotations for shares of United Bankshares common stock.
The market price of United Bankshares common stock after the merger may be affected by factors different from those affecting the shares of Georgetown or United Bankshares currently.
Upon completion of the merger, holders of Georgetown common stock will become holders of United Bankshares common stock. United Bankshares’ business differs from that of Georgetown, and, accordingly, the results of operations of the combined company and the market price of the combined company’s shares of
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common stock may be affected by factors different from those currently affecting the independent results of operations of each of United Bankshares and Georgetown. For a discussion of the businesses of United Bankshares and Georgetown and of certain factors to consider in connection with those businesses, see the documents incorporated by reference or described elsewhere in this prospectus and proxy statement.
The integration of the operations of United Bankshares and Georgetown may be more difficult, costly or time-consuming than anticipated.
The success of the merger will depend, in part, on United Bankshares’ ability to realize the anticipated benefits and cost savings from successfully combining the businesses of United Bankshares and Georgetown and to combine the businesses of United Bankshares and Georgetown in a manner that permits growth opportunities and cost savings to be realized without materially disrupting the existing customer relationships of Georgetown or decreasing revenues due to loss of customers. If United Bankshares is not able to achieve these objectives, the anticipated benefits and cost savings of the merger may not be realized fully or at all or may take longer to realize than expected.
It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger. The loss of key employees could adversely affect United Bankshares’ ability to successfully conduct its business in the markets in which Georgetown now operates, which could have an adverse effect on United Bankshares’ financial results and the value of its common stock. If United Bankshares experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause Georgetown to lose customers or cause customers to remove their accounts from Georgetown and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Georgetown and United Bankshares during this transition period and for an undetermined period after consummation of the merger.
The success of the merger will also depend on United Bankshares’ ability to:
Retain and attract qualified personnel to, United Bankshares and Georgetown;
Maintain existing relationships with depositors of Georgetown to minimize withdrawals of deposits prior to and subsequent to the merger;
Maintain and enhance existing relationships with borrowers to limit unanticipated losses from loans of Georgetown;
Control the incremental non-interest expense from United Bankshares to maintain overall operating efficiencies; and
Compete effectively in the communities served by United Bankshares and Georgetown and in nearby communities.
United Bankshares may not be able to manage effectively its growth resulting from the merger.
Regulatory approvals may not be received, may take longer than expected or impose conditions that are not presently anticipated.
Before the merger may be completed, we must obtain various approvals or consents from the Federal Reserve and various bank regulatory and other authorities. These regulators may impose conditions on the completion of the merger or require changes to the terms of the merger. Although United Bankshares and
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Georgetown do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of United Bankshares following the merger. There can be no assurance as to whether the regulatory approvals will be received, the timing of those approvals, or whether any conditions will be imposed. The merger agreement contains a condition to the obligation of each of United Bankshares and Georgetown to close the merger that the required regulatory approvals not contain any conditions, restrictions or requirements applicable either before or after the effective time of the merger that the United Bankshares board of directors reasonably determines in good faith would have a material adverse effect on United Bankshares and its subsidiaries taken as a whole taking into account the consummation of the merger in making such determination. See “The Merger Agreement – Regulatory Approvals” on page 61.
United Bankshares may fail to realize the cost savings estimated for the merger.
Although United Bankshares estimates that it will realize cost savings of approximately $8.0 million annually (excluding one-time costs and expenses associated with the merger with Georgetown) from the merger when fully phased in, it is possible that the estimates of the potential cost savings could turn out to be incorrect. For example, the combined purchasing power may not be as strong as expected, and therefore the cost savings could be reduced. In addition, future business developments may require United Bankshares to continue to operate or maintain some facilities or support functions that are currently expected to be combined or reduced. The cost savings estimates also depend on United Bankshares’ ability to combine the businesses of United Bankshares and Georgetown in a manner that permits those costs savings to be realized. If the estimates turn out to be incorrect or United Bankshares is not able to combine the two companies successfully, the anticipated cost savings may not be fully realized or realized at all, or may take longer to realize than expected.
Results after the merger may materially differ from the pro forma per share information presented in this prospectus and proxy statement.
Results after the merger of Georgetown with and into United Bankshares may be materially different from those shown in the pro forma per share information that only show a combination of historical results from United Bankshares and Georgetown. Merger, integration, restructuring and transaction costs related to the acquisition and combination of the companies are estimated to be in the range of approximately $22.0 million and could be higher or lower depending on how difficult it will be to integrate United Bankshares and Georgetown. Furthermore, these charges may decrease capital of the combined company that could be used for profitable, income earning investments in the future.
The merger with Georgetown may distract management of United Bankshares from its other responsibilities.
The acquisition of Georgetown could cause the management of United Bankshares to focus its time and energies on matters related to the acquisition that otherwise would be directed to the business and operations of United Bankshares. Any such distraction on the part of management, if significant, could affect its ability to service existing business and develop new business and adversely affect the business and earnings of United Bankshares.
If the merger is not completed, United Bankshares and Georgetown will have incurred substantial expenses without realizing the expected benefits of the merger.
Each of United Bankshares and Georgetown has incurred and will continue to incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this prospectus and proxy statement and all filing and other fees paid to the SEC in connection with the merger. If the merger is not completed, United Bankshares and Georgetown would have to recognize these expenses without realizing the expected benefits of the merger.
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Georgetown shareholders will have less influence as shareholders of United Bankshares than as shareholders of Georgetown.
Georgetown shareholders currently have the right to vote in the election of the board of directors of Georgetown and on other matters affecting Georgetown. Following the merger, the shareholders of Georgetown as a group will own approximately [●]% of the combined organization. When the merger occurs, each Georgetown shareholder that receives shares of United Bankshares common stock will become a shareholder of United Bankshares with a percentage ownership of the combined organization much smaller than such shareholder’s percentage ownership of Georgetown. Because of this, Georgetown shareholders will have less influence on the management and policies of United Bankshares than they now have on the management and policies of Georgetown.
Some of the directors and executive officers of Georgetown may have interests in the merger that differ from the interests of non-director or non-management shareholders.
The interests of some of the directors and executive officers of Georgetown may be different from those of holders of Georgetown common stock, and directors and executive officers of Georgetown may be participants in arrangements that are different from, or in addition to, those of holders of Georgetown common stock. These interests are described in more detail in the section entitled “The Merger – Interests of Certain Georgetown Directors and Executive Officers in the Merger” beginning on page 51.
The fairness opinion delivered to the Georgetown board of directors by Georgetown’s financial advisor will not reflect changes in circumstances between signing the merger agreement and the completion of the merger.
The opinion of KBW, Georgetown’s financial advisor, to the Georgetown board of directors, was delivered on, and was dated, November 9, 2015. Changes in the operations and prospects of Georgetown or United Bankshares, general market and economic conditions and other factors that may be beyond the control of Georgetown and United Bankshares may alter the value of Georgetown or United Bankshares or the prices of shares of Georgetown common stock or United Bankshares common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. The opinion is included as Appendix B to this prospectus and proxy statement. For a description of the opinion, please refer to “The Merger – Opinion of Georgetown’s Financial Advisor” on page 38. For a description of the other factors considered by Georgetown’s board of directors in determining to approve the merger, please refer to “The Merger – Recommendation of the Georgetown Board of Directors” on page 33.
The merger agreement limits Georgetown’s ability to pursue an alternative acquisition proposal and requires Georgetown to pay a termination fee of $11,288,000 under limited circumstances relating to alternative acquisition proposals.
The merger agreement prohibits Georgetown from soliciting, initiating, or encouraging certain alternative acquisition proposals with any third party, subject to exceptions set forth in the merger agreement. See “The Merger Agreement – Acquisition Proposals” on page 60. The merger agreement also provides for the payment by Georgetown of a termination fee in the amount of $11,288,000 in the event that the other party terminates the merger agreement for certain reasons. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Georgetown from considering or proposing such an acquisition. See “Merger Agreement – Termination Fee” on page 65.
The merger will not be completed unless important conditions are satisfied.
Specified conditions set forth in the merger agreement must be satisfied or waived to complete the merger. If the conditions are not satisfied or waived, to the extent permitted by law or stock exchange rules, the merger
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will not occur or will be delayed and each of United Bankshares and Georgetown may lose some or all of the intended benefits of the merger. The following conditions, in addition to other closing conditions, must be satisfied or waived, if permissible, before United Bankshares and Georgetown are obligated to complete the merger:
The merger agreement and merger must be duly approved by the requisite vote of the shareholders of Georgetown;
All required regulatory approvals must be obtained;
The absence of any law or order by a court or regulatory authority that prohibits, restricts or makes illegal the merger;
The registration statement shall become effective under the Securities Act and no stop order shall have been issued or threatened by the SEC; and
To the extent required, the shares of United Bankshares common stock to be issued in the merger must be approved for listing on NASDAQ.
Some of the conditions to the merger may be waived by United Bankshares or Georgetown without resoliciting shareholder approval of the merger agreement.
Some of the conditions set forth in the merger agreement may be waived by United Bankshares or Georgetown, subject to the agreement of the other party in specific cases. See “The Merger Agreement – Conditions to of the Merger.” If any conditions are waived, Georgetown will evaluate whether an amendment of this prospectus and proxy statement and resolicitation of proxies is warranted. In the event that the board of directors of Georgetown determines that resolicitation of shareholders is not warranted, United Bankshares and Georgetown will have the discretion to complete the transaction without seeking further Georgetown shareholder approval.
Termination of the merger agreement could negatively impact Georgetown.
If the merger agreement is terminated, there may be various consequences. For example, Georgetown’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. If the merger agreement is terminated and the Georgetown board of directors seeks another merger or business combination, Georgetown shareholders cannot be certain that Georgetown will be able to find a party willing to pay the equivalent or greater consideration than that which United Bankshares has agreed to pay in the merger. In addition, if the merger agreement is terminated under certain circumstances, including circumstances involving a change in recommendation by Georgetown’s board of directors, Georgetown may be required to pay United Bankshares a termination fee of $11,288,000.
Failure to complete the merger could negatively affect the market price of Georgetown common stock.
If the merger is not completed for any reason, Georgetown will be subject to a number of material risks, including the following:
The market price of its common stock may decline to the extent that the current market prices of its shares reflect a market assumption that the merger will be completed;
Costs relating to the merger, such as legal, accounting and financial advisory fees, and, in specified circumstances, termination fees, must be paid even if the merger is not completed;
The diversion of management’s attention from the day-to-day business operations and the potential disruption to Georgetown’s employees and business relationships during the period before the
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completion of the merger may make it difficult to regain financial and market positions if the merger does not occur; and |
If Georgetown’s board of directors seeks another merger or business combination, Georgetown shareholders cannot be certain that Georgetown will be able to find a party willing to pay an equivalent or greater consideration than that which United Bankshares has agreed to pay in the merger.
The shares of United Bankshares common stock to be received by Georgetown shareholders as a result of the merger will have different rights from the shares of Georgetown common stock.
Upon completion of the merger, Georgetown shareholders will become United Bankshares shareholders and their rights as shareholders will be governed by the United Bankshares’ articles of incorporation and the United Bankshares’ bylaws. The rights associated with Georgetown common stock are different from the rights associated with United Bankshares common stock. Please see “Comparative Rights of Shareholders” beginning on page 77 for a discussion of the different rights associated with United Bankshares common stock.
Georgetown will be subject to business uncertainties and contractual restrictions while the merger is pending.
Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Georgetown. These uncertainties may impair Georgetown’s ability to attract, retain and motivate strategic personnel until the merger is consummated, and could cause customers and others that deal with Georgetown to seek to change existing business relationships with Georgetown. Experienced employees in the financial services industry are in high demand, and competition for their talents can be intense. Employees of Georgetown may experience uncertainty about their future role with the surviving corporation until, or even after, strategies with regard to the combined company are announced or executed. If strategic Georgetown employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the surviving corporation, Georgetown’s business following the merger could be harmed. In addition, the merger agreement restricts Georgetown from making certain acquisitions and taking other specified actions until the merger occurs without the consent of United Bankshares. These restrictions may prevent Georgetown from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement – Conduct of Business Pending the Merger” on page 62.
If the merger does not constitute a reorganization under Section 368(a) of the Code, then each Georgetown shareholder may be responsible for payment of U.S. income taxes related to the merger.
The United States Internal Revenue Service, or the IRS, may determine that the merger does not qualify as a nontaxable reorganization under Section 368(a) of the Code. In that case, each Georgetown shareholder would recognize a gain or loss equal to the difference between the (i) the sum of the fair market value of United Bankshares common stock received by the Georgetown shareholder in the merger and (ii) the Georgetown shareholder’s adjusted tax basis in the shares of Georgetown common stock exchanged therefor.
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UNITED BANKSHARES SUMMARY SELECTEDCONSOLIDATED FINANCIAL DATA
The following tables set forth certain summary historical consolidated financial information for United Bankshares and Virginia Commerce.Bankshares. The balance sheet data and income statement data of each of United Bankshares and Virginia Commerce as of and for the five years in the period ended December 31, 20122014 are taken from the audited consolidated financial statements of United Bankshares and Virginia Commerce, respectively.Bankshares.
The following information should be read in conjunction with the audited consolidated financial statements of each of United Bankshares and Virginia Commerce which can be found in their respectiveits Annual ReportsReport on Form 10-K for the year ended December 31, 20122014 and with the unaudited consolidated financial statements of each of United Bankshares and Virginia commerce in their Quarterly Reports on Form 10-Q for the periods ended March 31, 2013September 30, 2015 and March 31, 2012.September 30, 2014. See “Where You Can Find More Information” on page [—]86 for instructions on how to obtain this information.
UNITED BANKSHARES, INC.
Summary Consolidated Financial Data
At or For the Three Months Ended March 31 |
| Five Year Summary | At or For the Nine Months Ended September 30, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | 2013 | 2012 |
| 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 2014 | 2014 | 2013 | 2012 | 2011 | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest income | $ | 76,325 | $ | 81,788 | $ | 323,897 | $ | 316,522 | $ | 323,382 | $ | 365,845 | $ | 429,911 | $ | 316,390 | $ | 306,820 | $ | 418,542 | $ | 306,154 | $ | 323,897 | $ | 316,522 | $ | 323,382 | ||||||||||||||||||||||||||||||
Total interest expense | 9,503 | 12,822 | 46,190 | 55,794 | 85,196 | 120,374 | 177,119 | 29,421 | 31,668 | 42,834 | 36,313 | 46,190 | 55,794 | 85,196 | ||||||||||||||||||||||||||||||||||||||||||||
Net interest income | 66,822 | 68,966 | 277,707 | 260,728 | 238,186 | 245,471 | 252,792 | 286,969 | 275,152 | 375,708 | 269,841 | 277,707 | 260,728 | 238,186 | ||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | 5,187 | 4,133 | 17,862 | 17,141 | 13,773 | 46,065 | 25,155 | 16,252 | 15,628 | 21,937 | 19,267 | 17,862 | 17,141 | 13,773 | ||||||||||||||||||||||||||||||||||||||||||||
Other income | 18,348 | 16,326 | 66,292 | 50,837 | 62,203 | 53,970 | 67,303 | 55,501 | 61,547 | 80,962 | 66,506 | 66,292 | 50,837 | 62,203 | ||||||||||||||||||||||||||||||||||||||||||||
Other expense | 48,249 | 50,262 | 204,656 | 184,048 | 182,212 | 175,127 | 171,073 | 173,069 | 175,823 | 239,847 | 192,036 | 204,656 | 184,048 | 182,212 | ||||||||||||||||||||||||||||||||||||||||||||
Income taxes | 10,155 | 9,887 | 38,874 | 34,766 | 32,457 | 10,951 | 36,913 | 48,666 | 48,617 | 64,998 | 39,416 | 38,874 | 34,766 | 32,457 | ||||||||||||||||||||||||||||||||||||||||||||
Net income | 21,579 | 21,010 | 82,607 | 75,610 | 71,947 | 67,298 | 86,954 | 104,483 | 96,617 | 129,888 | 85,628 | 82,607 | 75,610 | 71,947 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends | 15,605 | 15,570 | 62,351 | 56,827 | 52,300 | 50,837 | 50,231 | 66,700 | 66,357 | 88,522 | 62,981 | 62,351 | 56,827 | 52,300 | ||||||||||||||||||||||||||||||||||||||||||||
Per common share: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 0.43 | 0.42 | 1.64 | 1.62 | 1.65 | 1.55 | 2.01 | 1.51 | 1.45 | 1.93 | 1.70 | 1.64 | 1.62 | 1.65 | ||||||||||||||||||||||||||||||||||||||||||||
Diluted | 0.43 | 0.42 | 1.64 | 1.61 | 1.65 | 1.55 | 2.00 | 1.50 | 1.44 | 1.92 | 1.70 | 1.64 | 1.61 | 1.65 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends | 0.31 | 0.31 | 1.24 | 1.21 | 1.20 | 1.17 | 1.16 | 0.96 | 0.96 | 1.28 | 1.25 | 1.24 | 1.21 | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||
Book value per share | 19.87 | 19.42 | 19.74 | 19.29 | 18.18 | 17.53 | 16.97 | 24.58 | 23.90 | 23.90 | 20.66 | 19.74 | 19.29 | 18.18 | ||||||||||||||||||||||||||||||||||||||||||||
Selected Ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Return on average shareholders’ equity | 8.72 | % | 8.63 | % | 8.35 | % | 8.50 | % | 9.19 | % | 8.81 | % | 11.12 | % | 8.25 | % | 8.22 | % | 8.13 | % | 8.43 | % | 8.35 | % | 8.50 | % | 9.19 | % | ||||||||||||||||||||||||||||||
Return on average assets | 1.05 | % | 1.00 | % | 0.98 | % | 0.97 | % | 0.95 | % | 0.85 | % | 1.09 | % | 1.14 | % | 1.12 | % | 1.11 | % | 1.02 | % | 0.98 | % | 0.97 | % | 0.95 | % | ||||||||||||||||||||||||||||||
Dividend payout ratio | 72.32 | % | 74.11 | % | 75.48 | % | 75.16 | % | 72.69 | % | 75.54 | % | 57.77 | % | 63.84 | % | 68.67 | % | 68.15 | % | 73.55 | % | 75.48 | % | 75.16 | % | 72.69 | % | ||||||||||||||||||||||||||||||
Selected Balance Sheet Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average assets | $ | 8,295,632 | $ | 8,442,810 | $ | 8,399,513 | $ | 7,780,836 | $ | 7,533,974 | $ | 7,925,506 | $ | 8,007,068 | $ | 12,227,753 | $ | 11,489,665 | $ | 11,652,776 | $ | 8,419,456 | $ | 8,399,513 | $ | 7,780,836 | $ | 7,533,974 | ||||||||||||||||||||||||||||||
Investment securities | 750,215 | 790,936 | 729,402 | 824,219 | 794,715 | 966,920 | 1,291,822 | 1,236,592 | 1,307,242 | 1,316,040 | 889,342 | 729,402 | 824,219 | 794,715 | ||||||||||||||||||||||||||||||||||||||||||||
Loans held for sale | 7,041 | 7,401 | 17,762 | 3,902 | 6,869 | 5,284 | 868 | 11,602 | 5,773 | 8,680 | 4,236 | 17,762 | 3,902 | 6,869 | ||||||||||||||||||||||||||||||||||||||||||||
Total loans | 6,466,762 | 6,194,187 | 6,511,416 | 6,230,777 | 5,260,326 | 5,736,809 | 6,014,155 | 9,173,657 | 9,018,158 | 9,104,652 | 6,704,583 | 6,511,416 | 6,230,777 | 5,260,326 | ||||||||||||||||||||||||||||||||||||||||||||
Total assets | 8,313,828 | 8,529,469 | 8,420,013 | 8,451,470 | 7,155,719 | 7,805,101 | 8,102,091 | 12,556,929 | 12,085,063 | 12,328,811 | 8,735,324 | 8,420,013 | 8,451,470 | 7,155,719 | ||||||||||||||||||||||||||||||||||||||||||||
Total deposits | 6,682,712 | 6,881,610 | 6,752,986 | 6,819,010 | 5,713,534 | 5,971,100 | 5,647,954 | 9,504,896 | 8,753,257 | 9,045,485 | 6,621,571 | 6,752,986 | 6,819,010 | 5,713,534 | ||||||||||||||||||||||||||||||||||||||||||||
Long-term borrowings | 284,850 | 345,298 | 284,926 | 345,366 | 386,458 | 771,935 | 852,685 | 939,401 | 1,133,255 | 1,105,314 | 575,697 | 284,926 | 345,366 | 386,458 | ||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 7,313,579 | 7,553,166 | 7,427,762 | 7,482,626 | 6,362,707 | 7,043,551 | 7,365,379 | 10,847,088 | 10,431,390 | 10,672,651 | 7,693,592 | 7,427,762 | 7,482,626 | 6,362,707 | ||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ equity | 1,000,249 | 976,303 | 992,251 | 968,844 | 793,012 | 761,550 | 736,712 | 1,709,841 | 1,653,673 | 1,656,160 | 1,041,732 | 992,251 | 968,844 | 793,012 |
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VIRGINIA COMMERCE BANCORP, INC.
Summary Consolidated Financial Data
Three Months Ended March 31, |
| Year Ended December 31, | ||||||||||||||||||||||||||||
(Dollars in thousands, except per share | 2013 | 2012 |
| 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
Summary of Operations: | ||||||||||||||||||||||||||||||
Interest income | $ | 31,202 | $ | 34,005 | $ | 132,938 | $ | 141,844 | $ | 148,826 | $ | 150,633 | $ | 160,468 | ||||||||||||||||
Interest expense | 5,408 | 7,226 | 26,271 | 35,042 | 43,497 | 59,229 | 77,430 | |||||||||||||||||||||||
Net interest income | 25,794 | 26,779 | 106,667 | 106,802 | 105,329 | 91,404 | 83,038 | |||||||||||||||||||||||
Provision for loan losses | 1,847 | 5,994 | 14,826 | 14,849 | 20,594 | 81,913 | 25,378 | |||||||||||||||||||||||
Net interest income after provision for loan losses | 23,947 | 20,785 | 91,841 | 91,953 | 84,735 | 9,491 | 57,660 | |||||||||||||||||||||||
Non-interest income | 2,558 | 4,949 | 17,470 | 8,145 | 7,621 | 5,600 | 6,431 | |||||||||||||||||||||||
Non-interest expense | 17,647 | 16,627 | 64,239 | 59,715 | 61,110 | 66,820 | 44,776 | |||||||||||||||||||||||
Income (loss) before taxes | 8,858 | 9,107 | 45,072 | 40,383 | 31,246 | (51,729 | ) | 19,315 | ||||||||||||||||||||||
Provision (benefit) for income tax | 2,822 | 2,965 | 14,972 | 13,293 | 9,706 | (18,404 | ) | 6,231 | ||||||||||||||||||||||
Net income (loss) | 6,036 | 6,142 | 30,100 | 27,090 | 21,540 | (33,325 | ) | 13,084 | ||||||||||||||||||||||
Effective dividend on preferred stock | – | 1,363 | 7,612 | 5,300 | 5,002 | 4,539 | 258 | |||||||||||||||||||||||
Net income (loss) available to common stockholders | 6,036 | 4,779 | 22,488 | 21,790 | 16,538 | (37,864 | ) | 12,826 | ||||||||||||||||||||||
Per Common Share: | ||||||||||||||||||||||||||||||
Net income (loss) per common share, basic | $ | 0.19 | $ | 0.15 | $ | 0.71 | $ | 0.73 | $ | 0.60 | $ | (1.42 | ) | $ | 0.48 | |||||||||||||||
Net income (loss) per common share, diluted | $ | 0.17 | $ | 0.14 | $ | 0.67 | $ | 0.71 | $ | 0.57 | $ | (1.42 | ) | $ | 0.47 | |||||||||||||||
Book value per common share | $ | 7.81 | $ | 7.20 | $ | 7.68 | $ | 7.17 | $ | 6.22 | $ | 5.79 | $ | 7.18 | ||||||||||||||||
Average number of common shares outstanding: | ||||||||||||||||||||||||||||||
Basic | 32,437,500 | 31,503,351 | 31,750,958 | 29,720,985 | 27,603,741 | 26,692,570 | 26,555,484 | |||||||||||||||||||||||
Diluted | 35,147,566 | 33,547,703 | 33,702,769 | 30,897,811 | 28,875,993 | 26,692,570 | 27,249,839 | |||||||||||||||||||||||
Selected Ratios: | ||||||||||||||||||||||||||||||
Return on average assets | 0.86 | % | 0.84 | % | 1.01 | % | 0.95 | % | 0.77 | % | -1.22 | % | 0.51 | % | ||||||||||||||||
Return on average equity | 9.80 | % | 8.46 | % | 10.11 | % | 10.23 | % | 9.22 | % | -13.89 | % | 7.18 | % | ||||||||||||||||
Selected Balance Sheet Data: | ||||||||||||||||||||||||||||||
Total assets | $ | 2,883,388 | $ | 2,954,226 | $ | 2,823,692 | $ | 2,938,518 | $ | 2,741,648 | $ | 2,725,297 | $ | 2,715,922 | ||||||||||||||||
Total loans (net) | 2,152,816 | 2,099,484 | 2,142,872 | 2,120,291 | 2,149,591 | 2,210,064 | 2,273,086 | |||||||||||||||||||||||
Total deposits | 2,186,932 | 2,237,848 | 2,245,392 | 2,292,158 | 2,247,201 | 2,229,327 | 2,172,142 | |||||||||||||||||||||||
Total stockholders’ equity | 253,803 | 296,637 | 245,309 | 283,771 | 245,594 | 218,868 | 253,287 |
39
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information combines the historical consolidated financial position and results of operations of United Bankshares and its subsidiaries and of Virginia Commerce and its subsidiaries, as an acquisition by United Bankshares of Virginia Commerce using the acquisition method of accounting and giving effect to the related pro forma adjustments described in the accompanying notes. Under the acquisition method of accounting, the assets and liabilities of Virginia Commerce will be recorded by United Bankshares at their respective fair values as of the date the merger is completed. The pro forma financial information should be read in conjunction with the Quarterly Report on Form 10-Q for the period ended March 31, 2013 and Annual Report on Form 10-K for the calendar year ended December 31, 2012 of both United Bankshares and Virginia Commerce, which are incorporated by reference herein. See “Where You Can Find More Information” on page [—], “Information about Virginia Commerce” on page [—] and “Summary Selected Financial Data – Virginia Commerce Bancorp, Inc. Summary Consolidated Financial Data” on page [—].
The merger was announced on January 29, 2013, and provides that each outstanding share of Virginia Commerce common stock will be canceled and converted into the right to receive 0.5442 shares of United Bankshares common stock. Any shares of Virginia Commerce common stock that are owned by Virginia Commerce, United Bankshares or any of their respective subsidiaries, other than in a fiduciary capacity, will be canceled without any consideration. At the effective time of the merger, Virginia Commerce’s outstanding stock options will be converted into options to purchase United’s common stock to purchase United Bankshares common stock. The number of United Bankshares common shares for which the stock options will become exercisable and the exercise price will be adjusted to reflect the 0.5442 share exchange ratio.
In addition, it is the present intention of United Bankshares, either alone or together with Virginia Commerce, to repurchase the TARP warrant held by the Treasury and issued by Virginia Commerce in connection with the TARP Capital Purchase Program, on or about the effective date of the merger for a purchase price equal to its fair value, which is assumed to be $26.845 million, subject to final negotiation with the Treasury. If the TARP warrant has not been repurchased as of the effective date, it will be converted into a warrant to purchase common stock of United Bankshares. If the TARP warrant has not been repurchased as of the effective date, the number of United Bankshares common shares for which the TARP warrant will become exercisable and the exercise price will be adjusted to reflect the 0.5442 share exchange ratio.
Virginia Commerce and United Bankshares expect the holders of the trust preferred securities to exercise their warrants on or before September 23, 2013 to acquire shares of Virginia Commerce common stock and that the shares issued in connection therewith would be eligible for the merger consideration on the same basis as all other shares of Virginia Commerce common stock.
The merger is intended to be treated as a “reorganization” for federal income tax purposes and United Bankshares and Virginia Commerce shareholders are not expected to recognize, for federal income tax purposes, any gain or loss on the merger, or the receipt of shares of United Bankshares common stock. For more information, see “Material U.S. Federal Income Tax Consequences of the Merger” on page [—].
The unaudited pro forma condensed combined balance sheet gives effect to the merger as if the transaction had occurred on March 31, 2013. The unaudited pro forma condensed combined income statements for the three months ended March 31, 2013 and the year ended December 31, 2012, give effect to the merger as if the transaction had occurred on January 1, 2012.
The unaudited pro forma condensed combined financial information included herein is presented for informational purposes only and does not necessarily reflect the financial results of the combined companies had the companies actually been combined at the beginning of the periods presented. The adjustments included in this unaudited pro forma condensed combined financial information are preliminary and may be revised and may not agree to actual amounts recorded by United Bankshares upon consummation of the merger. This information
40
also does not reflect the benefits of the expected cost savings and expense efficiencies, opportunities to earn additional revenue, potential impacts of current market conditions on revenues or asset dispositions, among other factors, and includes various preliminary estimates and may not necessarily be indicative of the financial position or results of operations that would have occurred if the merger had been consummated on the date or at the beginning of the period indicated or which may be attained in the future. The unaudited pro forma condensed combined financial information should be read in conjunction with and is qualified in its entirety by reference to the historical consolidated financial statements and related notes thereto of United Bankshares and its subsidiaries, which are incorporated in this document by reference, and the historical consolidated financial statements and related notes thereto of Virginia Commerce and its subsidiaries, which are also incorporated by reference. See “Where You Can Find More Information” on page [—], “Summary Selected Financial Data – United Bankshares, Inc. Summary Consolidated Financial Data” on page [—], and “Summary Selected Financial Data – Virginia Commerce Bancorp, Inc. Summary Consolidated Financial Data” on page [—].
UNITED BANKSHARES, INC.
SELECTED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION (UNAUDITED)
(Dollars in thousands) | Three Months Ended March 31, 2013 | Year Ended December 31, 2012 | ||||||
INCOME STATEMENT: | ||||||||
Net interest income | $ | 94,083 | $ | 392,991 | ||||
Provision for loan losses | 7,034 | 32,688 | ||||||
|
|
|
| |||||
Net interest income after provision for loan losses | 87,049 | 360,303 | ||||||
Noninterest income | 20,906 | 83,762 | ||||||
Noninterest expense | 66,888 | 273,304 | ||||||
|
|
|
| |||||
Income before income taxes | 41,067 | 170,761 | ||||||
Income taxes | 13,152 | 55,403 | ||||||
|
|
|
| |||||
Net income | $ | 27,915 | $ | 115,358 | ||||
|
|
|
| |||||
As of March 31, 2013 | ||||||||
BALANCE SHEET: | ||||||||
Cash and cash equivalents | $ | 447,746 | ||||||
Net loans | 8,508,509 | |||||||
Total assets | 11,421,099 | |||||||
Deposits | 8,880,476 | |||||||
Borrowings | 991,994 | |||||||
Shareholders’ equity | 1,463,143 |
41
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
UNITED BANKSHARES, INC.
As of March 31, 2013 | ||||||||||||||||||||
As Reported | United Bankshares & Virginia Commerce Pro Forma Combined | |||||||||||||||||||
(In thousands) | United Bankshares | Virginia Commerce | Proforma Adjustments | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from bank | $ | 138,885 | $ | 32,662 | ($ | 26,845 | ) | (a | ) | $ | 144,702 | |||||||||
Interest-bearing deposits with other banks | 223,044 | 80,000 | 303,044 | |||||||||||||||||
Federal funds sold and securities purchased under agreements to resell | 718 | 0 | 718 | |||||||||||||||||
Securities available for sale | 650,640 | 495,086 | 1,145,726 | |||||||||||||||||
Securities held to maturity | 43,266 | 0 | 43,266 | |||||||||||||||||
Securities – Other | 56,309 | 10,253 | 66,562 | |||||||||||||||||
Loans held for sale | 7,041 | 4,941 | 11,982 | |||||||||||||||||
Loans (net of unearned income) | 6,466,762 | 2,194,786 | (78,881 | ) | (b | ) | 8,582,667 | |||||||||||||
Less: allowance for loan losses | (74,158 | ) | (41,970 | ) | 41,970 | (c | ) | (74,158 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net loans | 6,392,604 | 2,152,816 | (36,911 | ) | 8,508,509 | |||||||||||||||
Bank premises and equipment | 70,856 | 9,668 | 80,524 | |||||||||||||||||
Goodwill | 375,583 | 0 | 251,212 | (d | ) | 626,795 | ||||||||||||||
Other intangibles | 9,573 | 0 | 24,247 | (e | ) | 33,820 | ||||||||||||||
Other assets | 345,309 | 97,962 | 12,180 | (f | ) | 455,451 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Assets | $ | 8,313,828 | $ | 2,883,388 | $ | 223,883 | $ | 11,421,099 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Noninterest-bearing deposits | $ | 1,810,345 | $ | 420,579 | $ | 2,230,924 | ||||||||||||||
Interest-bearing deposits | 4,872,367 | 1,766,353 | 10,832 | (g | ) | 6,649,552 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total deposits | 6,682,712 | 2,186,932 | 10,832 | 8,880,476 | ||||||||||||||||
Federal funds purchased | 13,490 | 0 | 13,490 | |||||||||||||||||
Securities sold under agreements to repurchase | 215,394 | 342,409 | 10,226 | (g | ) | 568,029 | ||||||||||||||
FHLB borrowings | 126,307 | 25,000 | 151,307 | |||||||||||||||||
Other long-term borrowings | 198,543 | 66,891 | (6,266 | ) | (g | ) | 259,168 | |||||||||||||
Other liabilities | 77,133 | 8,353 | 85,486 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Liabilities | 7,313,579 | 2,629,585 | 14,792 | 9,957,956 | ||||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Common stock | 127,169 | 32,310 | 13,956 | (h | )(i) | 173,435 | ||||||||||||||
Surplus | 237,198 | 121,370 | 295,258 | (h | )(i) | 653,826 | ||||||||||||||
Warrants | 0 | 8,520 | (8,520 | ) | (h | ) | 0 | |||||||||||||
Retained earnings | 718,273 | 89,523 | (89,523 | ) | (h | ) | 718,273 | |||||||||||||
Accumulated other comprehensive income | (64,253 | ) | 2,080 | (2,080 | ) | (h | ) | (64,253 | ) | |||||||||||
Treasury stock | (18,138 | ) | 0 | (18,138 | ) | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Stockholders’ equity | 1,000,249 | 253,803 | 209,091 | 1,463,143 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 8,313,828 | $ | 2,883,388 | $ | 223,883 | $ | 11,421,099 | ||||||||||||
|
|
|
|
|
|
|
|
See notes to the unaudited pro forma condensed combined financial information.
42
PRO FORMA CONDENSED INCOME STATEMENT (UNAUDITED)
UNITED BANKSHARES, INC.
For the Three Months Ended March 31, 2013 | ||||||||||||||||||||
As Reported | United Bankshares & Virginia Commerce Pro Forma Combined | |||||||||||||||||||
(In thousands, except share data) | United Bankshares | Virginia Commerce | Pro Forma Adjustments | |||||||||||||||||
Interest income | $ | 76,325 | $ | 31,202 | $ | 190 | (j | ) | $ | 107,717 | ||||||||||
Interest expense | 9,503 | 5,408 | (1,277 | ) | (k | ) | 13,634 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net Interest Income | 66,822 | 25,794 | 1,467 | 94,083 | ||||||||||||||||
Provision for loan losses | 5,187 | 1,847 | 7,034 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net interest income after provision for loan losses | 61,635 | 23,947 | 1,467 | 87,049 | ||||||||||||||||
Other income | 18,348 | 2,558 | 20,906 | |||||||||||||||||
Other expense | 48,249 | 17,647 | 992 | (l | ) | 66,888 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Income Before Income Taxes | 31,734 | 8,858 | 475 | 41,067 | ||||||||||||||||
Income taxes | 10,155 | 2,822 | 175 | (m | ) | 13,152 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net Income | $ | 21,579 | $ | 6,036 | $ | 300 | $ | 27,915 | ||||||||||||
Effective dividend on preferred stock | 0 | 0 | 0 | 0 | ||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||
Net income available to common shareholders | $ | 21,579 | $ | 6,036 | $ | 300 | $ | 27,915 | ||||||||||||
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|
|
|
|
|
| |||||||||||||
Net income per common share: | ||||||||||||||||||||
Basic | $ | 0.43 | $ | 0.19 | $ | 0.41 | ||||||||||||||
Diluted | $ | 0.43 | $ | 0.17 | $ | 0.40 | ||||||||||||||
Average common shares outstanding | ||||||||||||||||||||
Basic | 50,301,875 | 32,437,500 | (14,785,013 | ) | (o | ) | 67,954,362 | |||||||||||||
Diluted | 50,331,503 | 35,147,566 | (16,020,261 | ) | (o | ) | 69,458,808 |
See notes to the unaudited pro forma condensed combined financial information.
43
PRO FORMA CONDENSED INCOME STATEMENT (UNAUDITED)
UNITED BANKSHARES, INC.
For the Year Ended December 31, 2012 | ||||||||||||||||||||
As Reported | United Bankshares & Virginia Commerce Pro Forma Combined | |||||||||||||||||||
(In thousands, except share data) | United Bankshares | Virginia Commerce | Pro Forma Adjustments | |||||||||||||||||
Interest income | $ | 323,897 | $ | 132,938 | $ | 759 | (j | ) | $ | 457,594 | ||||||||||
Interest expense | 46,190 | 26,271 | (7,858 | ) | (k | ) | 64,603 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net Interest Income | 277,707 | 106,667 | 8,617 | 392,991 | ||||||||||||||||
Provision for loan losses | 17,862 | 14,826 | 32,688 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net interest income after provision for loan losses | 259,845 | 91,841 | 8,617 | 360,303 | ||||||||||||||||
Other income | 66,292 | 17,470 | 83,762 | |||||||||||||||||
Other expense | 204,656 | 64,239 | 4,409 | (l | ) | 273,304 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Income Before Income Taxes | 121,481 | 45,072 | 4,208 | 170,761 | ||||||||||||||||
Income taxes | 38,874 | 14,972 | 1,557 | (m | ) | 55,403 | ||||||||||||||
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|
|
|
|
|
|
| |||||||||||||
Net Income | $ | 82,607 | $ | 30,100 | $ | 2,651 | $ | 115,358 | ||||||||||||
Effective dividend on preferred stock | 0 | 7,612 | (7,612 | ) | (n | ) | 0 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net income available to common shareholders | $ | 82,607 | $ | 22,488 | $ | 10,263 | $ | 115,358 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net income per common share: | ||||||||||||||||||||
Basic | $ | 1.64 | $ | 0.71 | $ | 1.71 | ||||||||||||||
Diluted | $ | 1.64 | $ | 0.67 | $ | 1.68 | ||||||||||||||
Average common shares outstanding | ||||||||||||||||||||
Basic | 50,265,620 | 31,750,958 | (14,472,087 | ) | (o | ) | 67,544,491 | |||||||||||||
Diluted | 50,298,019 | 33,702,769 | (15,361,722 | ) | (o | ) | 68,639,066 |
See notes to the unaudited pro forma condensed combined financial information.
44
NOTE A – BASIS OF PRESENTATION
After the close of business on January 29, 2013, United Bankshares entered into the merger agreement with Virginia Commerce. In accordance with the merger agreement, Virginia Commerce will merge with and into George Mason, a wholly-owned subsidiary of United Bankshares. At the effective time of the merger, Virginia Commerce will cease to exist and George Mason shall survive and continue to exist as a Virginia corporation.
The merger agreement provides that at the effective time of the merger, each outstanding share of common stock of Virginia Commerce will be converted into the right to receive 0.5442 shares of United Bankshares common stock, par value $2.50 per share.
Pursuant to the merger agreement, at the effective time of the merger, Virginia Commerce’s outstanding stock options and trust preferred warrants will be converted into options to purchase United Bankshares’ common stock and warrants to purchase United Bankshares common stock. However, for the purposes hereof, Virginia Commerce and United Bankshares have assumed that the trust preferred warrants will be exercised by the holders thereof prior to their expiration date of September 23, 2013 and that the shares issued in connection therewith would be eligible for the merger consideration on the same basis as all other shares of Virginia Commerce common stock. It is the present intention of United Bankshares, either alone or together with Virginia Commerce, to repurchase the TARP warrant held by the Treasury on or about the effective date of the merger for a purchase price equal to its fair value, which is assumed to be $26.845 million, subject to final negotiation with the Treasury. If the TARP warrant has not been repurchased as of the effective date, it will be converted into a warrant to purchase common stock of United Bankshares.
After the effective time of the merger, Virginia Commerce Bank, a wholly-owned subsidiary of Virginia Commerce, will merge with and into United Bank (Virginia), a wholly-owned subsidiary of George Mason, United Bank (Virginia) will survive the bank merger and continue to exist as a Virginia banking corporation.
The unaudited pro forma condensed combined financial information of United Bankshares’ financial condition and results of operations, including per share data, are presented after giving effect to the merger. The pro forma financial information assumes that the merger with Virginia Commerce was consummated on January 1, 2012 for purposes of the unaudited pro forma condensed combined statement of income and on March 31, 2013 for purposes of the pro forma balance sheet and gives effect to the merger, for purposes of the unaudited pro forma condensed combined statement of income, as if it had been effective during the entire period presented.
The merger will be accounted for using the acquisition method of accounting; accordingly, the difference between the purchase price over the estimated fair value of the assets acquired (including identifiable intangible assets) and liabilities assumed will be recorded as goodwill.
The pro forma financial information includes estimated adjustments to record the assets and liabilities of Virginia Commerce at their respective fair values and represents management’s estimates based on available information. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analysis is performed. The final allocation of the purchase price will be determined after the merger is completed and after completion of a final analysis to determine the fair values of Virginia Commerce’s tangible, and identifiable intangible, assets and liabilities as of the closing date.
45
NOTE B – PRO FORMA ADJUSTMENTS
(In thousands, except share data)
The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current valuations, estimates and assumptions that are subject to change.
NOTE C – TARP CAPITAL PURCHASE PROGRAM WARRANT
On December 12, 2008, Virginia Commerce entered into a letter agreement with the Treasury under the TARP Capital Purchase Program, whereby Virginia Commerce issued and sold to the Treasury 71,000 shares of fixed rate cumulative perpetual preferred stock with a par value of $1.00 and a liquidation amount of $1,000 per
46
share, for a total price of $71.0 million. In addition, the Treasury received a warrant to purchase 2,696,203 shares of the Virginia Commerce common stock at an exercise price of $3.95 per share. Virginia Commerce accrued and paid dividends quarterly, beginning February 2009, at a rate of 5% per year for the first five years, then would have increased to 9% thereafter.
On December 11, 2012, Virginia Commerce repurchased all of its preferred stock that was issued to the Treasury under the TARP Capital Purchase Program. Pursuant to the redemption, the Treasury received from Virginia Commerce $71.3 million, consisting of $71.0 million in liquidation value of the preferred stock and approximately $256 thousand in accrued and unpaid dividends for the fourth quarter of 2012.
The TARP warrant has a ten year term, is immediately exercisable and remained outstanding at December 31, 2012. Pursuant to the terms of the letter agreement, the Treasury will not exercise voting rights with respect to any shares of common stock it acquires upon exercise of the warrant; voting rights may be exercised by any other holder.
It is the present intention of United Bankshares, either alone or together with Virginia Commerce, to repurchase the TARP warrant held by the Treasury on or about the effective date of the merger for a purchase price equal to its fair value, which is assumed to be $26.845 million, subject to final negotiation with the Treasury.
NOTE D – PRO FORMA ALLOCATION OF PURCHASE PRICE
The following table shows the pro forma allocation of the consideration paid for Virginia Commerce common equity to the acquired identifiable assets and liabilities assumed and the pro forma goodwill generated from the transaction:
(Unaudited, in thousands except share data) | ||||
Purchase price: | ||||
Fair value of common shares issued (18,506,473 shares), based on United Bankshares’ stock price of $24.76 as of April 15, 2013 | $ | 458,220 | ||
Fair value of stock options assumed | 4,674 | |||
Cash outlay to repurchase the warrant held by the Treasury | 26,845 | |||
|
| |||
Total purchase price | 489,739 | |||
Identifiable assets: | ||||
Cash and cash equivalents | 112,662 | |||
Investment securities | 505,339 | |||
Loans held for sale | 4,941 | |||
Loans, net of unearned income | 2,115,905 | |||
Premises and equipment | 9,668 | |||
Core deposit intangibles | 24,247 | |||
Other assets | 110,142 | |||
|
| |||
Total identifiable assets | $ | 2,882,904 | ||
Identifiable liabilities: | ||||
Deposits | $ | 2,197,764 | ||
Short-term borrowings | 352,635 | |||
Long-term borrowings | 85,625 | |||
Other liabilities | 8,353 | |||
|
| |||
Total identifiable liabilities | 2,644,377 | |||
|
| |||
Net assets acquired including identifiable intangible assets | 238,527 | |||
|
| |||
Resulting goodwill | $ | 251,212 | ||
|
|
47
NOTE E – ESTIMATED AMORTIZATION/ACCRETION OF ACQUISITION ACCOUNTING ADJUSTMENTS
The following table sets forth an estimate of the expected effects of the estimated aggregate acquisition accounting adjustments reflected in the pro forma combined financial statements on the future pre-tax net income of United Bankshares after the merger with Virginia Commerce:
Discount Accretion (Premium Amortization) | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
(Unaudited, in thousands) | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||||
Loans, net of unearned income | $ | 759 | $ | 759 | $ | 759 | $ | 759 | $ | 759 | ||||||||||
Deposits | 6,372 | 4,460 | 0 | 0 | 0 | |||||||||||||||
Core deposit intangible | (4,409 | ) | (3,968 | ) | (3,527 | ) | (3,086 | ) | (2,645 | ) | ||||||||||
Securities sold under agreements to repurchase | 2,739 | 1,901 | 1,693 | 1,693 | 1,693 | |||||||||||||||
Other long-term borrowings | (1,253 | ) | (1,253 | ) | (1,253 | ) | (1,253 | ) | (1,253 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Increase (decrease) in pre-tax income | $ | 1,740 | $ | (569 | ) | $ | (4,796 | ) | $ | (4,355 | ) | $ | (3,914 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
The actual effect of purchase accounting adjustments on the future pre-tax income of United Bankshares will differ from these estimates based on the closing date estimates of fair values and the use of different amortization methods than assumed above.
NOTE F– ESTIMATED COST SAVINGS AND MERGER-RELATED COSTS
Estimated cost savings, expected to approximate 25% of Virginia Commerce’s annualized pre-tax operating expenses, are excluded from the pro forma analysis. Cost savings are estimated to be realized at 50% in the first year after acquisition and 100% in subsequent years. In addition, estimated merger-related costs are not included in the pro forma combined statements of income since they will be recorded in the combined results of income as they are incurred prior to or after completion of the merger and not indicative of what historical results of the combined company would have been had the companies been actually combined during the periods presented. Merger-related costs are estimated to be approximately $16 million, before-tax.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
United Bankshares common stock is traded on NasdaqNASDAQ under the symbol “UBSI”. Virginia CommerceThere is no established public trading market for Georgetown common stock is traded on Nasdaq under the symbol “VCBI”.stock. The closing sale price reported for United Bankshares common stock on January 29, 2013,November 9, 2015, the last trading date preceding the public announcement of the merger agreement, was $25.83$42.79. On [●], 2016, the last practicable trading date before the distribution of this prospectus and proxy statement, the closing sales price reported for Virginia Commerce on such dateper share of United Bankshares common stock was $12.21.$[●].
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The following table sets forth for the periods indicated the high and low prices per share of United Bankshares common stock and Virginia Commerce common stock as reported on the Nasdaq,NASDAQ, along with the quarterly cash dividends per share declared. The per share prices do not include adjustments for markups, markdowns or commissions.
United Bankshares | Virginia Commerce | United Bankshares | ||||||||||||||||||||||||||||||||||
Sales Price | Sales Price | Sales Price | ||||||||||||||||||||||||||||||||||
Time Period | Dividends | High | Low | �� | Dividends | High | Low | Dividends | High | Low | ||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||||||||||
Second Quarter (through , 2013) | [—] | [—] | [—] | [—] | [—] | [—] | ||||||||||||||||||||||||||||||
First Quarter | $ | 0.31 | $ | 27.24 | �� | $ | 24.80 | — | 14.29 | 9.02 | ||||||||||||||||||||||||||
2016 | ||||||||||||||||||||||||||||||||||||
First Quarter (through [●], 2016) | [●] | [●] | [●] | |||||||||||||||||||||||||||||||||
2012 | ||||||||||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||||||||||
Fourth Quarter | $ | 0.31 | $ | 25.80 | $ | 23.02 | — | $ | 9.49 | $ | 8.38 | $ | 0.33 | $ | 43.13 | $ | 35.78 | |||||||||||||||||||
Third Quarter | $ | 0.31 | $ | 26.40 | $ | 22.54 | — | $ | 9.00 | $ | 7.82 | $ | 0.32 | $ | 43.43 | $ | 35.60 | |||||||||||||||||||
Second Quarter | $ | 0.31 | $ | 29.45 | $ | 23.87 | — | $ | 9.13 | $ | 7.46 | $ | 0.32 | $ | 40.70 | $ | 36.58 | |||||||||||||||||||
First Quarter | $ | 0.31 | $ | 30.91 | $ | 27.36 | — | $ | 9.70 | $ | 7.39 | $ | 0.32 | $ | 38.88 | $ | 33.25 | |||||||||||||||||||
2011 | ||||||||||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||||||||||
Fourth Quarter | $ | 0.31 | $ | 29.29 | $ | 19.06 | — | $ | 7.88 | $ | 5.56 | $ | 0.32 | $ | 38.00 | $ | 30.39 | |||||||||||||||||||
Third Quarter | $ | 0.30 | $ | 25.21 | $ | 18.78 | — | $ | 6.55 | $ | 5.45 | $ | 0.32 | $ | 33.60 | $ | 30.89 | |||||||||||||||||||
Second Quarter | $ | 0.30 | $ | 27.46 | $ | 22.36 | — | $ | 6.09 | $ | 5.35 | $ | 0.32 | $ | 32.50 | $ | 28.19 | |||||||||||||||||||
First Quarter | $ | 0.30 | $ | 30.84 | $ | 25.66 | — | $ | 6.37 | $ | 5.49 | $ | 0.32 | $ | 32.08 | $ | 28.23 |
As of [—[●], 20132016, the last date prior to printingdistribution of this prospectus and joint proxy statement for which it was practicable to obtain this information, there were approximately [—[●] registered holders of United Bankshares common stock and approximately [—[●] registered holders of Virginia CommerceGeorgetown common stock.
The following table sets forth historical per share market values for United Bankshares common stock (i) on January 29, 2013,November 9, 2015, the last trading day prior to public announcement of the merger agreement, and (ii) on [—[●], 20132016, the most recent practicable date before the printing and mailing of this prospectus and proxy statement/prospectus.statement. The table also shows the equivalent pro forma market value of Virginia CommerceGeorgetown common stock on those dates. Georgetown common stock is not listed on any stock exchange or quoted on any interdealer quotation system.
The equivalent pro forma market value of Virginia CommerceGeorgetown common stock is obtained by multiplying the historical market price of United Bankshares common stock by the applicable exchange ratio. For purposes of determining the equivalent pro forma market value and the applicable exchange ratio, we have assumed that the average closing price of a share of United Bankshares common stock is equal to the historical market price on January 29, 2013November 9, 2015 and [—[●], 2013.. Accordingly, the pro forma market value (i) on January 29, 2013November 9, 2015 is determined by multiplying $25.83$42.79 by the exchange ratio of 0.5442 and (ii) on [—[●], 2013 is determined by multiplying $[—●] by the exchange ratio of 0.5442.ratio.
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The historical market prices represent the last sale prices on or before the dates indicated. The average closing price of United Bankshares common stock used to determine the exchange ratio and the market price may be higher or lower than the closing prices of United Bankshares common stock on the dates shown in the table and, therefore, the market value of the United Bankshares common stock that you receive may be higher or lower than the equivalent pro forma market value shown in the table.
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Historical Market Price
United Bankshares | Virginia Commerce | Virginia Commerce Equivalent Pro Forma Market Value | ||||||||||
January 29, 2013 | $ | 25.83 | $ | 12.21 | $ | 14.06 | ||||||
[—], 2013 | $ | [—] | $ | [—] | $ | [—] |
United Bankshares | Georgetown Equivalent Pro Forma Market Value | |||||||
November 9, 2015 | $ | 42.79 | $ | 39.85 | ||||
[●] | $ | [●] | $ | [●] |
The market price of United Bankshares common stock will fluctuate between the date of this prospectus and proxy statement and the effective time of the merger. Georgetown shareholders should obtain current stock price quotations for United Bankshares common stock. No assurance can be given concerning the market price of United Bankshares common stock before or after the effective date of the merger. Any change in the market price of United Bankshares common stock prior to the effective time of the merger will affect the market value of the merger consideration that Georgetown’s shareholders will receive upon the effective time of the merger. Once the merger is completed, there will be no further private or public market for Virginia Commerce common stock.
The market prices of both United Bankshares common stock and Virginia Commerce common stock will fluctuate prior to the merger. Virginia Commerce shareholders should obtain current stock price quotations for United BanksharesGeorgetown common stock.
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COMPARATIVE HISTORICAL AND PRO FORMA UNAUDITED SHARE DATA
We have summarized below historical, unaudited per share information for United Bankshares and Virginia Commerce and additional information as if the companies had been combined for the periods shown, which we refer to as “pro forma” information.
The Virginia Commerce pro forma equivalent per share amounts are calculated by multiplying the United Bankshares pro forma combined book value per share and net income per share by the exchange ratio of 0.5442 so that the per share amounts equate to the respective values for one share of Virginia Commerce common stock.
We expect that both United Bankshares and Virginia Commerce will incur merger and integration charges as a result of the merger. We also anticipate that the merger will provide the combined company with financial benefits that may include reduced operating expenses. The information set forth below, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, may not reflect all of these anticipated financial expenses and does not reflect all of these anticipated financial benefits or consider any potential impacts of current market conditions or the merger or revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors, and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during the periods presented.
In addition, the information set forth below has been prepared based on preliminary estimates of merger consideration and fair values attributable to the merger, the actual amounts recorded for the merger may differ from the information presented. The estimation and allocations of merger consideration are subject to change pending further review of the fair value of the assets acquired and liabilities assumed and actual transaction costs. A final determination of fair value will be based on the actual net tangible and intangible assets and liabilities of Virginia Commerce that will exist on the date of completion of the merger.
The information in the following table is based on, and you should read it together with, the historical financial information and the notes thereto for United Bankshares and Virginia Commerce incorporated by reference into, or contained in, this proxy statement/prospectus.
Historical | Pro Forma Combined | Pro Forma Equivalent Virginia Commerce Share | ||||||||||||||
United Bankshares | Virginia Commerce | |||||||||||||||
Basic Earnings Per Common Share | ||||||||||||||||
For the year ended December 31, 2012 | $ | 1.64 | $ | 0.71 | $ | 1.71 | (1) | $ | 0.93 | (2) | ||||||
For the quarter ended March 31, 2013 | $ | 0.43 | $ | 0.19 | $ | 0.41 | (1) | $ | 0.22 | (2) | ||||||
Diluted Earnings Per Common Share | ||||||||||||||||
For the year ended December 31, 2012 | $ | 1.64 | $ | 0.67 | $ | 1.68 | (1) | $ | 0.91 | (2) | ||||||
For the quarter ended March 31, 2013 | $ | 0.43 | $ | 0.17 | $ | 0.40 | (1) | $ | 0.22 | (2) | ||||||
Cash Dividends Per Common Share | ||||||||||||||||
For the year ended December 31, 2012 | $ | 1.24 | — | $ | 1.24 | (3) | $ | 0.67 | (2) | |||||||
For the quarter ended March 31, 2013 | $ | 0.31 | — | $ | 0.31 | (3) | $ | 0.17 | (2) | |||||||
Book Value Per Common Share | ||||||||||||||||
For the year ended December 31, 2012 | $ | 19.74 | $ | 7.68 | $ | 21.60 | (4) | $ | 11.76 | (2) | ||||||
For the quarter ended March 31, 2013 | $ | 19.87 | $ | 7.81 | $ | 21.51 | (4) | $ | 11.70 | (2) |
5123
THE UNITED BANKSHARESGEORGETOWN SPECIAL MEETING
This section contains information about the special meeting of United BanksharesGeorgetown shareholders that has been called to consider and adoptapprove the merger agreement.
Together with this document, United Banksharesprospectus and proxy statement, Georgetown is also sending you a notice of the special meeting and a form of proxy that is solicited by the United BanksharesGeorgetown board of directors. The special meeting will be held on [—[●], [●], 2016, at [4:00 p.m.[ ] [a.m.] [p.m.], local time, at [The Blennerhassett Hotel], 320 Market Street, Parkersburg, West Virginia 26101.[●].
The purpose ofAt the special meeting is to vote on:
Each copy of this document mailed to record holders of United Bankshares common stock is accompanied by a proxy card with instructions for voting by mail, telephone or through the Internet. The United Bankshares board of directors requests that you submit your proxy promptly, whether or not your plan to attend the meeting. If you hold stock in your name as a shareholder of record and are voting by mail, you should complete and return the proxy card accompanying this document to ensure that your vote is counted at the special meeting, or at any adjournment of the special meeting, regardless of whether you plan to attend the special meeting. You may also vote your shares by telephone or through the Internet. Information and applicable deadlines for voting by telephone and through the Internet are set forth in the enclosed proxy card instructions.
If you hold your stock in “street name” through a broker, bank, nominee or other holder of record, you must direct your broker, bank, nominee or other holder of record to vote in accordance with the instructions you have received from such party.
If you hold stock in your name as a shareholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter to United Bankshares’ Corporate Secretary, or by attending the special meeting in person, notifying the Corporate Secretary, and voting by ballot at the special meeting. If you have voted your shares by telephone or through the
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Internet, you may revoke your prior telephone or Internet vote by recording a different vote, or by signing and returning a proxy card dated as of a date that is later than your last telephone or Internet vote.
Any shareholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying the Corporate Secretary) of a shareholder at the special meeting will not constitute revocation of a previously given proxy.
Written notices of revocation and other communications about revoking your proxy should be addressed to:
United Bankshares
514 Market Street
Parkersburg, West Virginia 26102
Attn: Jennie Singer
If you hold your shares in “street name” through a broker, bank, nominee or other holder of record, you will receive a voting instruction form directly from them. Follow the instructions on the form they provide to have your shares voted by proxy. If you wish to attend the meeting and vote in person, you must obtain a written proxy, executed in your favor, from the broker, bank, nominee or other holder of record to do so.
All shares represented by valid proxies that United Bankshares receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via the Internet or telephone, or with respect to shares beneficially held in “street name”, in accordance with the voting instructions received from the appropriate bank, broker, nominee or other holder of record.
If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the United Bankshares Merger Proposal, “FOR” the United Bankshares Stock Issuance Proposal and “FOR” the United Bankshares Adjournment Proposal. According to the United Bankshares bylaws, business to be conducted at the special meeting must be confined to the subjects stated in the United Bankshares notice of the special meeting.
United Bankshares will bear the entire cost of soliciting proxies from its shareholders. Proxies may be solicited on its behalf by directors, officers or employees in person or by telephone, electronic transmission, facsimile transmission or be telegram. United Bankshares has made arrangements with Georgeson, Inc. of Jersey City, New Jersey to assist in the soliciting proxies from institutional investors, nominee accounts and beneficial holders and has agreed to pay it approximately $7,500 plus reasonable expenses for these services. United Bankshares is not retaining Georgeson to solicit proxies from registered holders. Broadridge Financial Solutions, Inc. of Edgewood, New York will assist in the distribution of proxy materials to institutional investors and beneficial owners. Broadridge will contact all broker and nominee accounts to facilitate determination of the number of sets of proxy materials required, assist in the delivery of proxy materials to these accounts and secure their voting instructions. United Bankshares will reimburse Broadridge for the reasonable expenses in taking these actions.
If necessary, United Bankshares may use several of its regular employees, who will not be specially compensated, to solicit proxies from United Bankshares shareholders, either personally or by telephone, facsimile, letter or other electronic means.
The close of business on [—], 2013 has been fixed as the record date for determining the United Bankshares shareholders entitled to receive notice of and to vote at the special meeting. At that time, [—] shares of United Bankshares common stock were outstanding, held by approximately [—] holders of record and [—] holders in street name.
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In order to conduct voting at the special meeting, there must be a quorum. A quorum is the number of shares that must be present at the meeting – either in person or by proxy. To have a quorum at the special meeting requires the presence of shareholders or their proxies who are entitled to cast at least a majority of the votes that all shareholders are entitled to cast. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
As of the record date, directors and executive officers of United Bankshares had the right to vote approximately [—]shares of United Bankshares common stock, or approximately [•]% of the outstanding United Bankshares shares entitled to vote at the special meeting. United Bankshares currently expects that each of these individuals will vote their shares of United Bankshares common stock in favor of the proposals to be presented at the special meeting.
If you are a holder of United Bankshares common stock and you submit a proxy card in which you abstain from voting, the abstention will be counted toward a quorum at the United Bankshares special meeting, but it will have no effect on the United Bankshares Merger Proposal, the United Bankshares Stock Issuance Proposal and the United Bankshares Adjournment Proposal.
Brokers, banks and other holders of record holding shares of United Bankshares common stock in “street name” may vote your shares of United Bankshares common stock on the United Bankshares Merger Proposal, the United Bankshares Stock Issuance Proposal and the United Bankshares Adjournment Proposal only if you provide instructions on how to vote. If you do not provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank or other holder of record, your shares will not be voted on any proposal with respect to which you did not provide voting instructions. Broker non-votes will have no effect on the United Bankshares Merger Proposal, the United Bankshares Stock Issuance Proposal and the United Bankshares Adjournment Proposal.
The United Bankshares board of directors urges United Bankshares shareholders to promptly vote by: accessing the Internet site listed in the proxy card instructions if voting through the Internet, calling the telephone number listed in the proxy card instructions or completing, dating, and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope. If you hold your stock in “street name” through a bank or broker, please vote by following the voting instructions of your bank or broker.
Shareholders will vote at the meeting by ballot. Votes properly cast at the special meeting, in person or by proxy, will be tallied by United Bankshares’ Inspector of Election.
All holders of United Bankshares common stock, including holders of record and shareholders who beneficially hold their stock through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Shareholders of record on the record date can vote in person at the special meeting. If you beneficially hold your shares in “street name,” of record, you must obtain a written proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend theGeorgetown special meeting, you must either hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership, and you must bring a form of personal photo identification with you in orderwill be asked to be admitted. United Bankshares reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.
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PROPOSALS TO BE CONSIDERED AT THE UNITED BANKSHARES SPECIAL MEETINGPROPOSAL NO. 1
APPROVAL OF THE MERGER
As discussed elsewhere in this prospectus and joint proxy statement, United Bankshares shareholders will consider and vote on a proposal to approve and adoptupon the merger agreement. You should carefully read this prospectus and joint proxy statement in its entirety for more detailed information concerning the merger agreement and the merger. In particular, you should read in its entirety the merger agreement, which is attached as Appendix A to this prospectus and joint proxy statement.
Approval of the United Bankshares Merger Proposal requires the affirmative vote of a majority of the votes cast at a meeting at which a quorum exists consisting of a least a majority of the shares of United Bankshares common stock. Therefore, assuming that a quorum is present, your failure to vote or an abstention will be disregarded and have no effect on the outcome of the vote for the United Bankshares Merger Proposal. Your failure to vote could impact the existence of a quorum.
The United Bankshares board of directors urges United Bankshares shareholders to promptly vote by completing, dating and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope, or, if you hold your stock in “street name” through a bank, broker, nominee or other holder of record, by following the voting instructions of your bank, broker, nominee or other holder of record.If you hold stock in your name as a shareholder of record, you may complete, sign, date and mail your proxy card in the enclosed postage paid return envelope, vote by calling the toll-free number listed on the Virginia Commerce proxy card, vote by accessing the Internet site listed on the United Bankshares proxy card or vote in person at the United Bankshares special meeting. If you hold your stock in “street name” through a bank, broker, nominee or other holder of record, you must direct your bank or broker to vote in accordance with the instruction form forwarded to you by your bank or broker. This voting instruction form provides instructions on voting by mail, telephone or on the Internet.
If you return a properly executed proxy card but do not indicate instructions on your proxy card, your shares of United Bankshares common stock represented by such proxy card will be voted “FOR” approval of the United Bankshares Merger Proposal.
Recommendation of the United Bankshares Board of Directors
The United Bankshares board of directors unanimously recommends that United Bankshares shareholders vote “FOR” approval of the United Bankshares Merger Proposal.
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ISSUANCE OF UNITED BANKSHARES COMMON STOCK
As discussed elsewhere in this prospectus and joint proxy statement, United Bankshares shareholders will consider and vote on a proposal to approve the issuance of the shares of United Bankshares common stock to Virginia Commerce shareholders pursuant to the merger agreement. You should carefully read this prospectus and joint proxy statement in its entirety for more detailed information concerning the issuance of the United Bankshares common stock.
Approval of the United Bankshares Stock Issuance Proposal requires the affirmative vote of a majority of the votes cast on the matter at a meeting at which a quorum exists consisting of at least a majority of the shares of United Bankshares common stock. Therefore, assuming that a quorum is present, your failure to vote or an abstention will be disregarded and have no effect on the outcome of the vote for the United Bankshares Stock Issuance Proposal.
The United Bankshares board of directors urges United Bankshares shareholders to promptly vote by completing, dating and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope, or, if you hold your stock in “street name” through a bank, broker, nominee or other holder of record, by following the voting instructions of your bank, broker, nominee or other holder of record.If you hold stock in your name as a shareholder of record, you may complete, sign, date and mail your proxy card in the enclosed postage paid return envelope, vote by calling the toll-free number listed on the Virginia Commerce proxy card, vote by accessing the Internet site listed on the United Bankshares proxy card or vote in person at the United Bankshares special meeting. If you hold your stock in “street name” through a bank, broker, nominee or other holder of record, you must direct your bank or broker to vote in accordance with the instruction form forwarded to you by your bank or broker. This voting instruction form provides instructions on voting by mail, telephone or on the Internet.
If you return a properly executed proxy card but do not indicate instructions on your proxy card, your shares of United Bankshares common stock represented by such proxy card will be voted “FOR” approval of the United Bankshares Stock Issuance Proposal.
Recommendation of the United Bankshares Board of Directors
The United Bankshares board of directors unanimously recommends that United Bankshares shareholders vote “FOR” approval of the United Bankshares Stock Issuance Proposal.
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APPROVE AN ADJOURNMENT, POSTPONEMENT OR CONTINUANCE OF THE SPECIAL MEETING, IF NECESSARY TO PERMIT FURTHER SOLICITATION OF PROXIES
United Bankshares shareholders may be asked to vote on a proposal to adjourn, postpone or continue the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement and approve the issuance of United Bankshares common stock.
Approval of the United Bankshares Adjournment Proposal requires the affirmative vote of a majority of the votes cast on the matter at a meeting at which a quorum exists consisting of at least a majority of the shares of United Bankshares common stock. Therefore, assuming that a quorum is present, your failure to vote or an abstention will be disregarded and have no effect on the outcome of the vote for the United Bankshares Adjournment Proposal.
If you return a properly executed proxy card but do not indicate instructions on your proxy card, your shares of United Bankshares common stock represented by such proxy card will be voted “FOR” approval of the United Bankshares Adjournment Proposal.
Recommendation of the United Bankshares Board of Directors
The United Bankshares board of directors unanimously recommends that shareholders vote “FOR” approval of the United Bankshares Adjournment Proposal.
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THE VIRGINIA COMMERCE SPECIAL MEETING
This section contains information about the special meeting of Virginia Commerce shareholders that has been called to consider and approve the merger agreement.
Together with this document, Virginia Commerce is also sending you a notice of the special meeting and a form of proxy that is solicited by the Virginia Commerce board of directors. The special meeting will be held on [—], 2013, at [4:00 p.m.], local time, at [The Washington Golf and Country Club, 3017 North Glebe Road, Arlington, Virginia 22207].
The purpose of the special meeting is to vote on:matters:
(1) | a proposal to approve the merger agreement, and the plan of merger attached thereto, as |
(2) | a proposal to approve |
We do not expect that any matter other than the Virginia Commerce Merger Proposal, the Virginia Commerce Merger-Related Compensation ProposalGeorgetown merger proposal and the Virginia Commerce Adjournment ProposalGeorgetown adjournment proposal will be brought before the Georgetown special meeting. If, however, any other matter shall be brought before the Georgetown special meeting, the shares represented by a valid proxy will be voted by the named proxies, to the extent entitled, in accordance with their best judgment.
Each copy of this documentprospectus and proxy statement mailed to record holders of Virginia CommerceGeorgetown common stock is accompanied by a proxy card with instructions for voting. The Virginia CommerceGeorgetown board of directors requests that you submit your proxy promptly, whether or not you plan to attend the meeting. If you are a common shareholder and hold your shares of Virginia CommerceGeorgetown common stock under your own name (also known as “record ownership”), you can vote your shares in one of the following manners:
By proxy via mail by signing and returning the enclosed proxy card in the postage-paid envelope;
By proxy via the Internet at [—[●] and following the instructions;
By proxy via telephone at [—[●] on a touch-tone phone and following the recorded instructions; or
By attending the meeting and voting your shares in person.
Any vote by proxy card, Internet or telephone may be revoked by you at any time before the meeting by giving written notice of such revocation to the corporate secretary, executing another proxy or using the Internet or telephone voting procedures as of a date subsequent to the prior proxy card or Internet or telephone vote. If
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you are a shareholder of record or have a legal proxy from a shareholder of record, you may also revoke your proxy by voting in person at the special meeting. Shareholders who vote via the Internet or by telephone need not mail their proxy cards and doing so will revoke any prior vote or proxy. Instructions on how to vote by telephone or by the Internet are included with your proxy card.
If you hold your shares in “street name” through a bank, broker, nominee or other holder of record, you will receive a voting instruction form directly from them. Follow the instructions on the form they provide to have your shares voted by proxy. If you wish to attend the meeting and vote in person, you must obtain a written proxy, executed in your favor, from the bank, broker, nominee or other holder of record to do so.
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All shares represented by valid proxies that Virginia CommerceGeorgetown receives through this solicitation and that are not revoked will be voted in accordance with your instructions on the proxy card or as instructed via the Internet or telephone, or with respect to shares beneficially held in “street name,” in accordance with the voting instructions received from the appropriate bank, broker, nominee or other holder of record. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” each of the proposals described above.
Virginia CommerceGeorgetown shareholders with shares represented by stock certificates should not send Virginia CommerceGeorgetown stock certificates with their proxy cards. After the merger is completed, holders of Virginia CommerceGeorgetown common stock with shares represented by stock certificates or held in book-entry form will be mailed a transmittal form with instructions on how to exchange their Virginia CommerceGeorgetown stock certificates or book-entry shares for the merger consideration.
Virginia CommerceGeorgetown will bear the entire cost of soliciting proxies from its shareholders. In addition to solicitation of proxies by mail, proxies may also be solicited by Virginia Commerce’sGeorgetown’s directors and employees personally, and by telephone, facsimile, or other means. No additional compensation will be paid to these individuals for proxy solicitation nor is it expected to result in more than a minimal cost. Virginia CommerceGeorgetown may make arrangements directly with banks, brokerage houses, custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of Virginia CommerceGeorgetown common stock held of record by them and to obtain authorization for the execution of proxies. Virginia CommerceGeorgetown expects to reimburse these institutional holders for their reasonable expenses in connection with these activities. Virginia CommerceGeorgetown has also made arrangements with Eagle Rock Proxy Advisors, LLC[●] to assist it in soliciting proxies and has agreed to pay it approximately $5,000$[●] for these services and reimburse certain out of pocket expenses.
The close of business on [—[●], 2013 has been fixed as the record date for determining the Virginia CommerceGeorgetown shareholders entitled to receive notice of and to vote at the special meeting. At that time, [—[●] shares of Virginia CommerceGeorgetown common stock were outstanding and entitled to vote at the special meeting, held by approximately [—[●] beneficial holders of record including [—[●] holders of record.
The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Virginia CommerceGeorgetown common stock entitled to vote is necessary to constitute a quorum at the special meeting. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
As of the record date, directors and executive officers of Virginia CommerceGeorgetown had the right to vote [—[●] shares of Virginia CommerceGeorgetown common stock, or approximately [—[●] of the outstanding Virginia CommerceGeorgetown common stock entitled to be voted at the special meeting. Virginia CommerceGeorgetown currently expects that each of these individuals will vote their shares of Virginia CommerceGeorgetown common stock in favor of the proposals to be presented at the special meeting.
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If you are a holder of Virginia CommerceGeorgetown common stock and you submit a proxy in which you abstain from voting, the abstention will be counted toward a quorum at the Virginia CommerceGeorgetown special meeting, but it will have the same effect as a vote against approval of the Virginia Commerce Merger Proposal.Georgetown merger proposal. An abstention will have nothe same effect on eitheras a vote against the Virginia Commerce Merger-Related Compensation Proposal or the Virginia Commerce Adjournment Proposal.Georgetown adjournment proposal.
Brokers, banks, nominees and other holders of record holding shares of Virginia CommerceGeorgetown common stock in “street name” may only vote your shares of Virginia CommerceGeorgetown common stock on the Virginia Commerce Merger Proposal, the Virginia Commerce Merger-Related Compensation Proposal,Georgetown merger proposal and the Virginia Commerce Adjournment ProposalGeorgetown adjournment proposal if you provide instructions on how to vote. If you do not provide
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instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank, nominee or other holder of record, your shares will not be voted on any proposal with respect to which you did not provide instructions. Broker non-votes will have the same effect as a vote against approval of the Virginia Commerce Merger Proposal,Georgetown merger proposal, and will have no effect on either the Virginia Commerce Merger-Related Compensation Proposal or the Virginia Commerce Adjournment Proposal.Georgetown adjournment proposal.
All holders of Virginia CommerceGeorgetown common stock, including holders of record and shareholders who beneficially hold their stock through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Shareholders of record on the record date can vote in person at the special meeting. If you beneficially hold your shares in “street name,” of record, you must obtain a written proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must either hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership, and you must bring a form of personal photo identification with you in order to be admitted. Virginia CommerceGeorgetown reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.
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PROPOSALS TO BE CONSIDERED AT THE VIRGINIA COMMERCEGEORGETOWN SPECIAL MEETING
APPROVAL OF THE MERGER AGREEMENT
Virginia CommerceGeorgetown is asking its shareholders to approve the merger agreement. For a detailed discussion of the merger, including the terms and conditions of the merger agreement, see “The Merger Agreement,” beginning on page [—].56. As discussed in detail in the sections entitled “The Merger – Virginia Commerce’sGeorgetown’s Reasons for the Merger; Recommendation of the Board of Directors,” beginning on page [—],33, after careful consideration, the Virginia CommerceGeorgetown board of directors determined that the terms of the merger agreement and the transactions contemplated thereby are in the best interests of Virginia CommerceGeorgetown and the board unanimously approved the merger agreement. Accordingly, Virginia Commerce’sGeorgetown’s board of directors unanimously recommends that Virginia CommerceGeorgetown shareholders vote “FOR” the Virginia Commerce Merger Proposal.Georgetown merger proposal.
Approval of the Virginia Commerce Merger ProposalGeorgetown merger proposal requires the affirmative vote of the holders of a majority (50.1%) of the voting interest in the outstanding shares of Virginia Commerce commonvoting stock entitled to votebe cast at the Georgetown special meeting. You are entitled to one vote for each share of Virginia CommerceGeorgetown common stock you held as of the record date.
Because the affirmative vote of the holders of a majority (50.1%) of the voting interest in the outstanding sharesvoting stock entitled to votebe cast at on the matter, assuming a quorum is present at the special meeting, is needed in order to proceed with the merger, an abstention will have the effect of a vote against approval of the merger agreement.The Virginia CommerceGeorgetown board of directors urges Virginia CommerceGeorgetown shareholders to promptly vote by completing, dating and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope, or, if you hold your stock in “street name” through a bank, broker, nominee or other holder of record, by following the voting instructions of your bank, broker, nominee or other holder of record.If you hold stock in your name as a shareholder of record, you may complete, sign, date and mail your proxy card in the enclosed postage paid return envelope, vote by calling the toll-free number listed on the Virginia CommerceGeorgetown proxy card, vote by accessing the Internet site listed on the Virginia CommerceGeorgetown proxy card or vote in person at the Virginia CommerceGeorgetown special meeting. If you hold your stock in “street name” through a bank, broker, nominee or other holder of record, you must direct your bank or broker to vote in accordance with the instruction form forwarded to you by your bank or broker. This voting instruction form provides instructions on voting by mail, telephone or on the Internet.
Recommendation of the Virginia CommerceGeorgetown Board of Directors
The Virginia CommerceGeorgetown board of directors recommends that you vote “FOR” approval of the Virginia Commerce Merger Proposal.Georgetown merger proposal. See “The Merger – Virginia Commerce’sGeorgetown’s Reasons for the Merger; Recommendation of the Virginia CommerceGeorgetown Board of Directors” on page [—]33 for a more detailed discussion of the Virginia CommerceGeorgetown board of directors’ recommendation.
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ADVISORY (NON-BINDING) VOTE ON CERTAIN MERGER-RELATED
COMPENSATION FOR VIRGINIA COMMERCE NAMED EXECUTIVE OFFICERS
As required by Section 14A of the Exchange Act, Virginia Commerce is providing its shareholders with the opportunity to approve, in a non-binding advisory vote, certain compensation that may become payable to its named executive officers in connection with the merger, which is based on or related to the merger and the agreements and understandings concerning such compensation (the “Virginia Commerce Merger-Related Compensation Proposal”), by voting on the following resolution:
“RESOLVED, that the compensation that may be paid to the named executive officers of Virginia Commerce in connection with or as a result of the merger, as disclosed in the section entitled “The Merger – Interests of Certain Virginia Commerce Directors and Executive Officers in the Merger – Certain Compensation for Virginia Commerce Named Executive Officers,” and the related table and narrative, is hereby APPROVED.”
Approval of this proposal is not a condition to completion of the merger. The vote on this proposal is a vote separate and apart from the vote on the Virginia Commerce Merger Proposal. Because this proposal is advisory in nature only, a vote for or against approval will not be binding on either Virginia Commerce or United Bankshares.
The compensation that is subject to this proposal is a contractual obligation of Virginia Commerce and/or Virginia Commerce Bank and of United Bankshares and United Bank (Virginia) as the successors thereto. If the merger is approved and completed, such compensation may be paid, subject only to the conditions applicable thereto, even if shareholders fail to approve this proposal. If the merger is not completed, the Virginia Commerce board of directors will consider the results of the vote in making future executive compensation decisions.
Approval of the Virginia Commerce Merger-Related Compensation Proposal requires the affirmative vote of a majority of the votes cast by shareholders on the proposal, assuming a quorum is present. Abstentions will be counted toward a quorum at the Virginia Commerce special meeting, but will have no effect on the vote on this proposal.
If you return a properly executed proxy card but do not indicate instructions on your proxy card, your shares of Virginia Commerce common stock represented by such proxy card will be voted “FOR” approval of the Virginia Commerce Merger-Related Compensation Proposal.
Recommendation of the Virginia Commerce Board of Directors
The Virginia Commerce board of directors unanimously recommends that Virginia Commerce shareholders vote “FOR” approval of the Virginia Commerce Merger-Related Compensation Proposal.
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APPROVE GRANTING THE BOARD OF DIRECTORS AUTHORITY TO ADJOURN, POSTPONE OR CONTINUE THE VIRGINIA COMMERCEGEORGETOWN SPECIAL MEETING, IF NECESSARY TO PERMIT FURTHER SOLICITATION OF PROXIES
If at the Virginia CommerceGeorgetown special meeting the number of shares of common stock present in person or represented by proxy and voting in favor of the Virginia Commerce Merger ProposalGeorgetown merger proposal is insufficient to approve such proposal, management may move to adjourn, postpone or continue the special meeting on one or more occasions in order to enable the board of directors to continue to solicit additional proxies in favor of such proposal; however, the special meeting may not be adjourned, postponed or continued to a date later than [—[●], 2013.2016. In that event, you will be asked to vote only upon the Virginia Commerce Adjournment Proposal, may be asked to vote on the Virginia Commerce Merger-Related Compensation ProposalGeorgetown adjournment proposal and will not be asked to vote on the Virginia Commerce Merger ProposalGeorgetown merger proposal at the special meeting.
In this proposal, Virginia CommerceGeorgetown is asking the Virginia CommerceGeorgetown shareholders to authorize the holder of any proxy solicited by its board of directors to grant to the Virginia CommerceGeorgetown board of directors the authority to adjourn, postpone or continue the special meeting and any later adjournments. If the Virginia CommerceGeorgetown shareholders approve this proposal, Virginia CommerceGeorgetown could adjourn, postpone or continue the special meeting, and any adjourned session of the special meeting on one or more occasions, to use the additional time to solicit proxies in favor of the merger agreement proposal, including the solicitation of proxies from the shareholders that have previously voted against such proposal. Among other effects, approval of this proposal could mean that, even if proxies representing a sufficient number of votes against the approval of the Virginia Commerce Merger ProposalGeorgetown merger proposal have been received, Virginia CommerceGeorgetown could adjourn, postpone or continue the special meeting without a further shareholder vote on such proposal and seek to convince the holders of those shares to change their votes to vote in favor of such proposal.
Generally, if the special meeting is adjourned, no notice of the adjourned meeting is required to be given to shareholders, other than an announcement at the Georgetown special meeting of the place, date and time to which the meeting is adjourned.
Approval of the Virginia Commerce Adjournment ProposalGeorgetown adjournment proposal requires the affirmative vote of the holders of a majority of the votesvoting interest in the outstanding voting stock entitled to be cast by shareholders on the proposal, assuming a quorum is present. Abstentions will be counted toward a quorum at the Virginia CommerceGeorgetown special meeting, butmeeting. An abstention will have nothe same effect onas a vote against the vote on thisGeorgetown adjournment proposal.
Recommendation of the Virginia CommerceGeorgetown Board of Directors
The Virginia CommerceGeorgetown board of directors believes that if the number of shares of its common shares present in person or represented by proxy at the Virginia CommerceGeorgetown special meeting and voting in favor of the approval of the merger agreement is insufficient to approve such proposals, it is in the best interests of the Virginia CommerceGeorgetown shareholders to enable the board of directors, for a limited period of time, to continue to seek to obtain a sufficient number of additional votes to approve such proposals. The Virginia CommerceGeorgetown board of directors unanimously recommends that shareholders vote “FOR” the approval of the Virginia Commerce Adjournment Proposal.Georgetown adjournment proposal.
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The following summary describes certain aspects of the merger, including all the terms of the merger agreement that the respective managements of Virginia CommerceGeorgetown and United Bankshares believe are material. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. The merger agreement is attached to this prospectus and joint proxy statement as Appendix A and is incorporated by reference in this prospectus and joint proxy statement. You are urged to read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.
The United Bankshares board of directors considers the strategic direction of United Bankshares, including an evaluation of strategic growth opportunities, on a regular basis. This consideration includes periodic discussions with United Bankshares management with respect to business combination opportunities. In its evaluation of potential acquisition targets, the United Bankshares board of directors considers numerous factors, including among other things the strength of the fit between the target and United Bankshares’ existing business, the accretive or dilutive impact of the acquisition on United Bankshares’ earnings per share and other measures of profitability, the projected strength of the combined enterprise, the expected pro forma effects of the transaction on the balance sheet of the combined enterprise, and the impacts of the transaction on United Bankshares shareholders, employees, customers and other stakeholders.
Background and Negotiations of the Merger
Over the past several years, the Virginia Commerce boardAs part of directors, consistent with its duties toongoing consideration and evaluation of its shareholders, has periodically discussed and reviewed Virginia Commerce’s business, performance andlong-term prospects and considered Virginia Commerce’s strategic options, including potential strategic transactions.
During May 2012, Virginia Commerce began to meet informally with certain larger financial institutions, primarily as a result of solicitations from such other larger financial institutions, to discuss potential strategic transactions. From May 2012 to December 2012, Virginia Commerce met informally with five financial institutions including United Bankshares. Although Sandler O’Neill had not been formally engaged to advise Virginia Commerce in connection with a potential strategic transaction, Sandler O’Neill had previously advised thestrategies, Georgetown’s board of directors and executive management have regularly reviewed and assessed their respective business strategies and objectives, including strategic opportunities and challenges, and have considered various strategic options potentially available to Georgetown. The goals of Virginia Commercethese discussions were exploring avenues to maintain above average growth, increase profitability and enhance long-term value for Georgetown shareholders. These strategic discussions have focused on, among other things, the economic and regulatory environment facing financial institutions generally, the competitive landscape in the Washington, D.C. banking market, Georgetown’s strengths and weaknesses, as well as market and other conditions in the financial services industry. The Georgetown board of directors and executive management have considered, from time to time, expanding organically, raising additional capital through private placements or public offerings of equity or debt securities and strategic business combinations as means of creating shareholder value.
On September 17, 2014, KBW, a nationally recognized investment bank, met with the Georgetown board of directors at an offsite planning retreat to review the state of the banking industry and to facilitate a discussion on Georgetown’s potential strategic alternatives. KBW discussed with executive management and Georgetown’s board of directors current industry trends in bank performance and valuation, the initial public offering market for banks and a comparison of Georgetown to banks that had recently completed an initial public offering, and the mergers and acquisitions environment, including potential acquisition candidates and potential strategic acquirors. The Georgetown board of directors had an extensive discussion regarding the matters reviewed in its meeting with KBW as well as, among other things, Georgetown’s results of operations, business, performance and prospects. In the third quarter of 2014, Georgetown had not yet fully deployed the capital raised in its December 2013 equity offering, and the Georgetown board of directors concluded that Georgetown shareholders would not be adequately compensated in a varietysale transaction until Georgetown could supplement its historical growth with additional quarters of contexts and, continuing this advisory relationship, advised Virginia Commerce regarding these informal discussions.improved financial performance.
On May 16, 2012, Mr. Doug Fisher, ChairmanSince Georgetown’s inception, its board of directors has had a Strategic Planning Committee that was created to enable the board of Virginia Commerce,directors to give preliminary consideration to strategic corporate matters in an efficient and timely manner. The authority of the Strategic Planning Committee included, among other responsibilities, analyzing and initiating a sale of the institution. The directors serving on the Strategic Planning
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Committee are Mr. Ken Lehman, Director of Virginia CommerceHoward C. Bluver, Mr. Fitzgerald, Mr. Michael M. McCarthy, Mrs. Melinda H. McClure and Mr. Peter Converse, PresidentJames R. Nugent, Jr. Shortly after the Georgetown board of directors offsite planning retreat in September 2014, the Strategic Planning Committee encouraged Mr. Fitzgerald to familiarize himself with potential acquirors and their chief executives to better understand the institutions’ financial condition and performance, acquisition experience and objectives and potential cultural fit with Georgetown.
In February 2015, Mr. Fitzgerald met with the chief executive officer of Company D. During the meeting, Company D’s Chief Executive Officer provided an overview of Virginia Commerce, alongthe company, its mergers and acquisitions experience, its growth plans, generically, and what role Georgetown could play in those plans and benefits that could be realized. No specific merger terms were discussed. Mr. Fitzgerald then had similar meetings with a representative from Sandler O’Neill,United Bankshares’ Chief Executive Officer, Richard Adams, on July 15, 2015, and Company B’s Chief Executive Officer on July 27, 2015. Again, no specific merger terms were discussed in these meetings.
On July 15, 2015, the Strategic Planning Committee and certain members of the executive management team met with two officersrepresentatives from KBW. There was a discussion to update the Strategic Planning Committee regarding the matters reviewed at the meeting between the Georgetown board of directors and KBW on September 17, 2014 and to also review various sale process options that Georgetown might consider if the Strategic Planning Committee decided to explore a sale. On July 23, 2015, the Strategic Planning Committee authorized Georgetown management to engage KBW for the purpose of conducting a limited marketing process. From late July through mid-August 2015, confidential marketing materials were prepared and efforts were undertaken to populate an electronic data room with preliminary due diligence materials that could be accessed by interested parties that executed confidentiality agreements. From July 15, 2015 to August 5, 2015, KBW, in consultation with and with input from Georgetown, assisted with identifying 14 financial institution (referredinstitutions that might have a potential interest in a business combination transaction with Georgetown.
At Georgetown’s direction, from August 3 to hereinAugust 13, 2015, KBW had introductory, no-names conversations with each of the 14 institutions identified as “Bank 1”) with responsibility for mergers and acquisition activity for Bank 1. These officers of Bank 1 presented on Bank 1’s historical and planned expansion,potential parties, including through acquisitions, and expressedUnited Bankshares, regarding their possible interest in pursuing a potential acquisitionbusiness combination transaction with a party with characteristics similar to those of Virginia Commerce if Virginia CommerceGeorgetown. Eight parties, including United Bankshares, executed non-disclosure agreements, or NDAs, and were offered for sale. Messrs. Fisher, Lehman and Converse did not discuss specific transaction terms, including form of acquisition and specific acquisition price, with these officers from Bank 1 during this meeting. Messrs. Fisher, Lehman and Converse updatedsubsequently informed by KBW that Georgetown was the Virginia Commerce board of directors on the meeting with Bank 1 at a regularly scheduled meeting of the board held on June 27, 2012.
On June 13, 2012, Messrs. Fisher, Lehman and Converse met with two members of senior management of a financial institution (referred to herein as “Bank 2”) at Bank 2’s request. These members of Bank 2’s senior management expressed interestparty that might be interested in pursuing a potential acquisitionbusiness combination transaction. Pursuant to the NDAs, such parties agreed to, among other things, maintain strict confidentiality regarding Georgetown’s possible interest in undertaking a business combination transaction. Access to the electronic data room, confidential information memorandum and preliminary due diligence materials was made available to seven of Virginia Commerce if Virginia Commerce were offeredthe eight parties on the latter of August 17, 2015 or the date on which the potential partner executed a NDA. The eighth party was not provided access to the data room as it executed its NDA following the initial indication of interest deadline and the expansion of the electronic data room to include information that was not provided to the other parties prior to the submission of their initial indications of interest. This party elected not to submit an indication of interest.
On September 10, 2015, four of the parties that had received the confidential information memorandum, including United Bankshares, submitted non-binding indications of interest to acquire Georgetown. The initial indication of interest submitted by United Bankshares, proposed a transaction with an implied value of $30.00 per share of Georgetown common stock, or approximately $214.4 million in the aggregate, with the consideration consisting of 100% of United Bankshares common stock, with a fixed exchange ratio that would be determined prior to the announcement of a transaction. The second institution, referred to as Company B, submitted an initial indication of interest for sale. Messrs. Fisher, Lehmana proposed transaction with an implied value of $31.44 per share of Georgetown common stock, or approximately $225.4 million in the aggregate, with 100% of the consideration to be in Company B common stock. The third institution, referred to as Company C, submitted an initial indication of interest for a proposed transaction with an implied value within the range of $33.50 to $34.50 per share of Georgetown common stock, or $241.2 million to $248.8 million in the aggregate, with 80% of the consideration to be in Company C common stock and Converse did not discuss specificthe remaining 20% in cash. The fourth institution, referred to as Company D, submitted an initial indication of interest for a proposed transaction terms, including formwith an implied value of acquisition and specific acquisition price, with these members of Bank 2’s senior management during this meeting.$32.00
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On June 22, 2012, Messrs. Fisher, Lehman and Converse, and a representativeper share of Sandler O’Neill, metGeorgetown common stock, or approximately $229.7 million in the aggregate, with one member100% of senior management and one directorthe consideration to be in Company D common stock.
At Georgetown’s direction, on September 11, 2015, KBW contacted the financial advisor for each of a financial institution (referredthe prospective merger partners to herein as “Bank 3”) at Bank 3’s request regarding Bank 3’s interestclarify various terms in a potential acquisitionits client’s proposal. In the course of Virginia Commerce if Virginia Commerce were offered for sale. Messrs. Fisher, Lehman and Conversethose discussions, United Bankshares increased its initial offer to an implied value of $33.00 per share of Georgetown common stock, or approximately $237.3 million in the aggregate. United Bankshares did not discuss specific transactionmodify other terms including form of acquisition and specific acquisition price, with these representativestheir proposal. On September 13, 2015, Company D increased its initial offer to an implied value of Bank 3 during this meeting.
On June 27, 2012, during a regularly scheduled meeting,$33.00 per share of Georgetown common stock, or approximately $237.3 million in the Virginia Commerce board of directors discussed reviewing strategic alternatives for Virginia Commerce, including a potential business combination or sale of Virginia Commerce.
During the weekend of July 3 through July 5, 2012, at United Bankshares’ request, Mr. Converse informally met with Mr. Richard Adams, Chairman and Chief Executive Officer of United Bankshares, Mr. James Consagra, Jr., Executive Vice President of United Bankshares, and Mr. Richard M. Adams, Jr., Executive Vice President of United Bankshares. United Bankshares expressed interest in pursuing a potential acquisition of Virginia Commerce if Virginia Commerce were offered for sale. Mr. Converseaggregate. Company D did not discuss specific transactionmodify other terms including form of acquisition and specific acquisition price, with these members of United Bankshares’ senior management during this meeting.
At the July 25, 2012 meeting of Virginia Commerce’s board of directors, at which all directors were in attendance, Messrs. Fisher, Lehman, and Converse, along with a representative of Sandler O’Neill, reported the details of the meetings with Bank 2, Bank 3 and United Bankshares. During the meeting, Sandler O’Neill presented to the board of directors an overview of financial and competitive trends in the banking industry, an overview of Virginia Commerce, and trends in mergers and acquisitions in the banking industry. At this meeting, the board of directors determined to undertake certain steps which could culminate in the marketing of Virginia Commerce for sale, if the board of directors decided to pursue a potential acquisition of Virginia Commerce. Also at this meeting, the Virginia Commerce board of directors discussed potential courses of action if the independent loan review revealed additional weaknesses in Virginia Commerce’s loan portfolio, including potentially postponing any additional efforts that could culminate in the marketing of Virginia Commerce for sale. Accordingly, Virginia Commerce hired an independent, third-party loan review firm in August 2012 (a) to evaluate the loan portfolio of Virginia Commerce and estimate the fair value mark that a potential buyer would be likely to place on Virginia Commerce’s loan portfolio in conjunction with an acquisition of Virginia Commerce, and (b) to prepare Virginia Commerce for a targeted examination of Virginia Commerce’s loan portfolio by the Federal Reserve Bank of Richmond (the FRB of Richmond) during September 2012.
Based in part on advice received from Troutman Sanders LLP as Virginia Commerce’s outside legal counsel and Sandler O’Neill, the board of directors and management of Virginia Commerce concluded that, if Virginia Commerce received favorable exam results from the FRB of Richmond’s targeted exam and met relevant regulatory objectives, Virginia Commerce would likely be favorably positioned to receive regulatory approval to redeem the $71 million of preferred stock that Virginia Commerce issued to the Treasury pursuant to TARP in 2008. The board of directors and management of Virginia Commerce concluded that redeeming Virginia Commerce’s TARP preferred stock would improve Virginia Commerce’s position to attract potential acquisition offers from other financial institutions, in addition to potentially improving the valuation of Virginia Commerce common stock and providing operational, regulatory and compliance benefits to Virginia Commerce.
On August 1, 2012, Mr. Converse met with Mr. Adams of United Bankshares to generally discuss United Bankshares’ interest in pursuing an acquisition of Virginia Commerce. Mr. Converse and Mr. Adams did not discuss specific transaction terms, including form of acquisition and specific acquisition price, during this meeting.
The third party loan review was completed in late August 2012. At the August 29, 2012 meeting of the board of directors of Virginia Commerce, the directors of Virginia Commerce reviewed the results of the third-
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party loan review with a representative of Sandler O’Neill and concluded that the loan report showed progress in Virginia Commerce’s efforts to reduce the levels of Virginia Commerce’s problem loans, and validated the sufficiency of Virginia Commerce’s allowance for loan losses and problem loan identification processes.their proposal.
On September 19, 2012, at14, 2015, the request of United Bankshares, Messrs. Fisher, Lehman and Converse, and a representative of Sandler O’NeillStrategic Planning Committee met with Mr. Adams of United Bankshares to discuss further United Bankshares’ interest in pursuing an acquisition of Virginia Commerce and potential merits of combining Virginia Commerce and United Bankshares. During that meeting, United Bankshares generally described prices that United Bankshares could potentially offer for Virginia Commerce.
At the September 26, 2012 meeting of the Virginia Commerce board of directors, Messrs. Fisher, Lehman and Converse briefed the board on the meeting with United Bankshares, including the range of values discussed. Mark Merrill, Chief Financial Officer of Virginia Commerce, also attended portions of this meeting. During late September 2012, Mr. Converse contacted Virginia Commerce’s outside legal counsel, Troutman Sanders LLP, regarding the Board’s review of strategic alternatives, including potential business combinations or a potential sale of Virginia Commerce. Following this conversation Troutman Sanders initiated formal representation of Virginia Commerce in connection with its review of strategic alternatives.
On October 12, 2012, the Virginia Commerce board of directors approved the engagement of Sandler O’Neill for the express purpose of providing financial advisory and investment banking services to Virginia Commerce in connection with Virginia Commerce’s consideration of a possible business combination transaction, including a possible sale of Virginia Commerce. Based on a relationship of mutual trust that had developed between the Virginia Commerce board of directors and Sandler O’Neill over many years of consultations and presentations to the Virginia Commerce board and the Virginia Commerce board’s knowledge of the experience and qualifications of Sandler O’Neill in connection with financial institution mergers and acquisitions, the Virginia Commerce board of directors determined not to interview or seek alternate proposals from other investment banking firms. The Virginia Commerce board also took into account Virginia Commerce’s prior experience working with Sandler O’Neill, which in 2011 and 2012 assisted Virginia Commerce with the purchase of investment securities. See the additional information provided under “Sandler O’Neill’s Compensation and Other Relationships with Virginia Commerce” on page [—]. Troutman Sanders reviewed the proposed terms of Sandler O’Neill’s engagement and advised Virginia Commerce’s executive management in connection with entering into a formal engagement letter. Virginia Commerce executed a formal engagement letter with Sandler O’Neill on October 12, 2012.
On November 7, 2012, three representatives of Sandler O’Neill met with members of Virginia Commerce’s executive management team in order to conduct due diligence on Virginia Commerce for the purpose of representing Virginia Commerce as independent financial advisor.
On November 15, 2012, Messrs. Converse and Merrill, Richard B. Anderson, Jr., Chief Lending Officer of Virginia Commerce, and a representative of Sandler O’Neill met with two members of senior management of a financial institution (referred to herein as “Bank 4”). Bank 4 expressed interest in pursuing an acquisition of Virginia Commerce if Virginia Commerce were offered for sale. Messrs. Converse, Anderson and Merrill did not discuss specific transaction terms, including form of acquisition and specific acquisition price, with these members of Bank 4’s senior management during this meeting. On December 7, 2012, Mr. Converse met with the Chief Executive Officer of Bank 4 to discuss a potential strategic transaction including an acquisition by Bank 4 of Virginia Commerce. Mr. Converse did not discuss specific transaction terms, including form of acquisition and specific acquisition price, with the Chief Executive Officer of Bank 4 during this meeting.
On December 11, 2012, Virginia Commerce received approval to redeem all of its TARP preferred stock. The redemption was completed in full on December 12, 2012.
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During the first and second weeks of December 2012, representatives of Sandler O’Neill contacted 13 potential acquirors to invite them to participate in a sale process for Virginia Commerce. Eight banks executed confidentiality agreements (such banks, the “potential buyers”). Upon receipt of signed confidentiality agreements Sandler O’Neill emailed copies of a confidential information memorandum to each potential buyer. At this point, each potential buyer that returned a signed confidentiality agreement was also granted access to an online data room to conduct due diligence on Virginia Commerce. Letters of interest were required to be submitted by the potential buyers no later than January 15, 2013.
On December 19, 2012, during a regularly scheduled meeting, the Virginia Commerce board of directors discussed the status of confidential negotiations and diligence with the potential buyers.
On the morning of January 11, 2013, a public relations representative at Sandler O’Neill was contacted by a reporter from Bloomberg News. This reporter from Bloomberg asked the Sandler O’Neill representative to confirm that Sandler O’Neill had been hired to advise in connection with a possible sale of Virginia Commerce and that letters of interest were due on January 15, 2013. The Sandler O’Neill representative declined to comment. A representative from Sandler O’Neill promptly called Mr. Converse to discuss the inquiry. Mr. Converse immediately scheduled a meeting with the complete Virginia Commerce executive management team and then a subsequent telephonic meeting of the Virginia Commerce board of directors, in which Mr. Merrill and Troutman Sanders also participated. The Virginia Commerce board of directors determined to change the due date for letters of interest to Sunday, January 13, 2013. Sandler O’Neill contacted each of the potential buyers to make them aware of this change.
On Sunday January 13, 2013, Virginia Commerce received letters of interest from United Bankshares, Bank 3, Bank 4 and two additional financial institutions. The letters of interest contained various offers to acquire Virginia Commerce, with United Bankshares’ offer of a range of $13.50 to $14.00 per share of Virginia Commerce common stock being the highest.
The Virginia Commerce board of directors met by conference call on the evening of January 13, 2013 to discuss the letters of interest that had been received. Mr. Merrill also participated in this meeting. As part of its review of the letters of interest that had been received, the Virginia Commerce board of directors also reviewed the form of consideration proposed by each potential buyer.
On Monday evening, January 14, 2013, the Virginia Commerce board of directors held a telephonic meeting to further discuss and consider the lettersfour non-binding indications of interest that had been received. The Virginia Commerce board invited Sandler O’NeillStrategic Planning Committee reviewed and Troutman Sandersdiscussed each non-binding indication of interest with KBW. Following such review and discussion, in the interest of running an efficient and competitive process and to attendmitigate the meeting,risks of inadvertent disclosure associated with protracted due diligence, Georgetown’s Strategic Planning Committee decided to limit the number of parties to three and Mr. Merrill also attended this meeting. A representative of Troutman Sanders presented to the board a summary of fiduciary duties of directors of Virginia corporations, including a focused summary of fiduciary duties that apply in a merger or sale of a company. Troutman Sanders also delivered to the board of directors a memorandum explaining and analyzing fiduciary duties and related standards of conduct that apply to directors of Virginia corporations.
Sandler O’Neill formally presented the offers that were received during the January 14, 2013 meeting of the Virginia Commerce board of directors. The Virginia Commerce board of directors determined thatcontinue discussions with United Bankshares, Company C and Bank 4 would be offered an opportunityCompany D and to permit each of them to conduct further due diligence on Virginia Commerce and that updated bids to acquire Virginia Commerce would be due on Wednesday, January 30, 2013. United Bankshares requested that they be the first potential acquiror to conduct due diligence, and the board of directors and management of Virginia Commerce determined to grant United Bankshares onsite access to the books and records of Virginia Commerce on January 18 through January 20, 2013. Bank 4 was invited to conduct onsite due diligence of Virginia Commerce on January 25 through January 27, 2013, subject to Bank 4 increasing its offer significantly. Bank 4 stated to Sandler O’Neill that Bank 4 was unsure if it would be able to increase its offer until after due diligence on Virginia Commerce was complete; however it acknowledged that it would be required to do so if it were to be successful in an acquisition of Virginia Commerce.
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One of the two additional financial institutions that submitted a letter of interest on January 13, 2013 (referred to herein as “Bank 5”) and Bank 3 also requested that they be allowed to proceed with additional due diligence. Sandler O’Neill informed Bank 5 and Bank 3 that only one additional bidder, in addition to two already-selected bidders, would be invited to conduct onsite due diligence, and that the last selected bidder would have to increase its offer significantly to be so selected. Both Bank 5 and Bank 3 declined to submit increased bids and proceed further with negotiations and diligence.
From Friday, January 18 through Sunday, January 20, 2013, United Bankshares’ due diligence team was onsite at Virginia Commerce’s operations center in Chantilly, Virginia conducting due diligence. Sandler O’Neill and KBW, as financial advisor to United Bankshares, also attended and participated in due diligence efforts.
On Wednesday, January 23, 2013, Virginia Commerce received a verbal offer from United Bankshares that United Bankshares would pay $14.00 per share of Virginia Commerce common stock. Virginia Commerce convened a special meeting of the board of directors to discuss the verbal offer from United Bankshares. The Virginia Commerce board of directors held a second, telephonic meeting on Thursday morning, January 24, 2013, to receive and discuss analysis of the United Bankshares offer from a representative of Sandler O’Neill. United Bankshares submitted a written offer to pay $14.00 per share of Virginia Commerce common stock on Thursday, January 24, 2013. After much discussion by the board of directors, including a discussion of advice received from Sandler O’Neill, the board of directors determined to pursue the $14.00 per share offer from United Bankshares and cancel Bank 4’s scheduled onsite due diligence.
A representative of Sandler O’Neill communicated to Bank 4 the Virginia Commerce board’s decision to cancel Bank 4’s due diligence. The representative of Sandler O’Neill informed Bank 4 that Virginia Commerce was planning to pursue one-on-one discussions with another potential acquiror, United Bankshares, but did not disclose United Bankshares’ identity to Bank 4. Bank 4 requested that it be given an opportunity to pursue additional due diligence, including additional materials that had been uploaded to the electronic data room, including information on Georgetown’s loan portfolio, securities portfolio and make a new offerother information. From September 14 to acquire Virginia Commerce. The representativeSeptember 18, 2015, KBW separately informed United Bankshares, Company C and Company D that each of Sandler O’Neill asked Bank 4 for its best offer, and Bank 4 indicated that its best offerthem would be $13.50 per share. After Bank 4 learned that its best offer was lower than the other potential acquiror’s offer by a considerable margin, the representative of Sandler O’Neill confirmed with Bank 4 that it would not be invited to conduct further due diligence of Georgetown and to submit revised indications of interest.
In a September 16, 2015 conference call arranged by Company B’s financial advisor, the CEO of Company B and Company B’s financial advisor promoted the merits of Company B’s proposal to Mr. Fitzgerald and a representative from KBW. During the call, Company B verbally increased its initial offer to an implied value of $32.50 per share of Georgetown common stock, or further participateapproximately $233.5 million in the aggregate. Georgetown’s Strategic Planning Committee evaluated Company B’s revised proposal and deemed the increase in per share consideration inadequate to include Company B in the due diligence process.
On September 17, 2015, in an executive session of a regularly scheduled Georgetown board of directors meeting, Mr. Fitzgerald apprised the board of directors of the sale process without a further improved offer.that had begun in earnest on the date of the last regularly scheduled board of directors meeting in July 2015. The Georgetown board of directors does not hold an August meeting. The Strategic Planning Committee deemed it appropriate for confidentiality purposes not to advise the entire Georgetown board of directors until such time as actionable proposals were received. During the executive session Covington provided the directors with an overview of their legal duties in the context of the ongoing sale process.
On Friday, January 25, 2013, six membersSeptember 28 and 29, 2015, representatives of Virginia Commerce’sUnited Bankshares met with executive management team, including Messrs. Converse, Anderson and Merrill, and a representative of Sandler O’Neill traveledGeorgetown at the Washington, D.C. offices of Covington & Burling LLP, referred to Parkersburg, West Virginiaas Covington, legal counsel to Georgetown, to conduct reversetheir due diligence review. From October 7 to October 9 and on October 16, 2015, representatives of Company D met with executive management of Georgetown telephonically and at Covington’s offices and conducted their due diligence review. From October 13 to October 15, 2015, representatives of Company C met with executive management of Georgetown at an offsite location and at Covington’s offices and conducted their due diligence review.
On October 15, 2015, representatives from Company C met with Georgetown’s Strategic Planning Committee to provide an overview of Company C and Company C’s vision for a merger between Company C and Georgetown.
On October 22, 2015, each of United Bankshares and Company D submitted revised indications of interest. Company C submitted its revised indication of interest on October 23, 2015.
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The Strategic Planning Committee met on October 27, 2015, to consider the revised indications of interest submitted by each of United Bankshares and Companies C and D. Representatives of KBW and Covington participated in the meeting. KBW reviewed with the Strategic Planning Committee the process that had been undertaken to date and then reviewed the revised indications of interest that had been received from each of United Bankshares, Company C and Company D, along with a financial overview of each of United Bankshares, Company C and Company D on a stand-alone basis as well as on a pro-forma basis when combined with Georgetown. The revised indication of interest submitted by United Bankshares was for a transaction with an implied value of $37.00 per share of Georgetown common stock or $267.9 million in the aggregate, with 100% of the consideration to be in the form of United Bankshares common stock. The revised indication of interest submitted by Company C was for a transaction with an implied value of $36.25 per share of Georgetown common stock, or $262.2 million in the aggregate, with 85% of the consideration to be in the form of Company C common stock and the remainder in cash. The revised indication of interest submitted by Company D was for a transaction with an implied value of $35.27 per share of Georgetown common stock or $254.7 million in the aggregate, with 100% of the consideration to be in the form of Company D common stock. The revised indication of interest submitted by United Bankshares had an implied value per share to Georgetown shareholders that was higher by $0.75 per Georgetown common share than the next highest revised indication of interest submitted by Company C. Members of the Strategic Planning Committee asked various questions of KBW and Covington regarding the revised indications of interest.
Based on its review of the three revised indications of interest, the results of the process undertaken by Georgetown with KBW’s assistance, and the potential benefits and risks of a merger of Georgetown with United Bankshares, the Strategic Planning Committee voted unanimously to recommend to the Georgetown board of directors that Georgetown continue its discussions solely with United Bankshares. On Saturday, January 26, 2013, the membersmorning of Virginia Commerce’s executive management,October 28, 2015, in a special meeting of the Georgetown board of directors attended by KBW and Covington, KBW again reviewed the process that had been undertaken to date and the revised indications of interest that had been received from each of United Bankshares, Company C and Company D, along with a financial overview of each of United Bankshares, Company C and Company D on a stand-alone basis as well as on a pro-forma basis when combined with Georgetown, as had occurred with the assistanceStrategic Planning Committee the day prior. Georgetown directors asked questions of KBW and Covington regarding each of the representative from Sandler O’Neill, conducted due diligencerevised indications of interest, the process undertaken by Georgetown with KBW’s assistance and negotiated certain basic termsthe directors’ fiduciary duties. The Georgetown board of directors unanimously approved the Strategic Planning Committee’s recommendation to pursue a merger transaction with United Bankshares.
Later that morning on October 28, 2015, Mr. Fitzgerald informed Mr. Richard Adams that United Bankshares had been selected by the Georgetown board of directors as its business combination partner.
On the afternoon of October 28, 2015, Company D submitted another revised indication of interest for a transaction with an implied value of $36.21 per share of Georgetown common stock or $261.9 million in aggregate, again with 100% of the definitive agreement. Membersconsideration to be in the form of Company D common stock. On October 29, 2015, the Strategic Planning Committee convened telephonically and decided to proceed with United Bankshares, particularly since Company D’s revised indication of interest was $0.79 per share of Georgetown common stock less than the proposal of United Bankshares.
On October 30, 2015, following discussions between KBW, acting at the direction of Georgetown, and United Bankshares, Georgetown and United Bankshares agreed to determine the exchange ratio by taking the average of the closing prices for United Bankshares common stock for the 15 trading day period ending on the last trading day prior to the United Bankshares board of directors approving the merger agreement. On October 31, 2015, representatives of Georgetown, KBW and Covington were initially provided access to, and began to review, certain non-public information regarding United Bankshares. Representatives of Georgetown, KBW and Covington also met with representatives of United Bankshares management to discuss United Bankshares’ senior management team assistedcorporate strategy, regulatory relations, business and results of operations and prospects at Covington’s offices on November 3, 2015. Additional non-public information regarding United Bankshares was posted to the online data room for review by representatives of Georgetown, KBW and Covington during the week of November 2, 2015.
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On October 30, 2015, Bowles Rice LLP, or Bowles Rice, counsel to United Bankshares, provided an initial draft of the merger agreement to Covington and on October 31, 2015, Bowles Rice provided an initial draft of a support agreement and other related documents to Covington. The support agreement provided, among other things, for each director of Georgetown to vote his or her shares of Georgetown common stock in favor of the merger at any meeting of the Georgetown shareholders held to consider and vote on the merger. Covington reviewed the draft merger agreement and related documents, including the support agreement, with the due diligence. Beginning January 25, 2013 through January 29, 2013, Virginia Commerce’s executiveboth Georgetown management and Troutman Sanders negotiatedrepresentatives of KBW and on November 1, 2015 and provided comments on the draft merger agreement and related documents to Bowles Rice. From November 1 through November 9, 2015, United Bankshares, Georgetown, their respective representatives and their respective counsel, continued to negotiate the terms of the definitive merger agreement withand related documents. In addition, United Bankshares’ outsideBankshares and Georgetown and their respective financial and legal counsel, Bowles Rice LLP,advisors continued to discuss various matters related to the proposed combination of United Bankshares and senior management.Georgetown.
On Monday, January 28, 2013,November 9, 2015, the United BanksharesGeorgetown board of directors held a special meeting that was attended by representatives of Keefe, Bruyette & Woods, Inc., United Bankshares’ investment banker forin order to review the proposed transaction,merger agreement, the transactions contemplated thereby, including the merger, and Bowles Rice LLP, counsel to United Bankshares. During this meeting, the United Banksharesother terms of the merger agreement, including the merger consideration and the various related agreements contemplated by the merger agreement. The Georgetown board of directors evaluatedreceived presentations regarding the fairnessproposed merger from Georgetown’s financial advisor, KBW, and Georgetown’s legal counsel, Covington. The Georgetown board of directors was also briefed by executive management and Covington on the results of the due diligence review conducted on United Bankshares. Representatives of Covington updated the Georgetown board of directors on the negotiations with United Bankshares regarding the merger agreement and further advised the Georgetown board of directors on its legal duties. Representatives of KBW and Covington responded to questions from the directors. At this meeting, KBW reviewed the financial aspects of the proposed transaction with Virginia Commercemerger and rendered its opinion to the United Bankshares shareholders from a financial point of view. A representative of KBW advised that the merger consideration to be paid by United Bankshares in the transaction was fair to United Bankshares, from a financial point of view. A representative from Bowles Rice advised the United BanksharesGeorgetown board of directors regarding the directors’ fiduciary duties and the terms of the proposed transaction and merger agreement. After detailed discussion and careful deliberation, the United Bankshares board of directors unanimously approved the proposed acquisition of Virginia Commerce and approved signing the merger agreement.
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On Tuesday, January 29, 2013, the Virginia Commerce board of directors held a meeting by conference call that was also attended by Mr. Merrill and representatives of Sandler O’Neill and Troutman Sanders. During this meeting the Virginia Commerce board of directors evaluated the fairness of the proposed transaction with United Bankshares to the Virginia Commerce shareholders from a financial pointeffect that, as of view. A representative ofthat date and subject to the Sandler O’Neill Fairness Committee advised thatprocedures followed, assumptions made, matters considered and qualifications and limitations on the transactionreview undertaken by KBW as set forth in such opinion, the exchange ratio in the merger was fair, from a financial point of view. A representative from Troutman Sanders advisedview, to the Virginia Commerce boardholders of directors regardingGeorgetown common stock. See “Opinion of Georgetown’s Financial Advisor” on page 38, for more information. The closing price of United Bankshares common stock on November 9, 2015 was $42.79, indicating an implied value of $39.85 per Georgetown common share based on the legal structure0.9313 exchange ratio.
After careful and termsdeliberate consideration of the proposed transaction, the proposed merger agreementpresentations by Georgetown’s financial advisor and the directors’ fiduciary duties. After detailed discussion and careful deliberation, the Virginia Commerce board of directors unanimously approved the proposed acquisition of Virginia Commerce by United Bankshares and approved signing the merger agreement.
Negotiationlegal counsel as well as consideration of the final terms continued throughout the evening of January 29, 2013 until a final agreement was reached and the parties executed the merger agreement. The merger agreement was publicly announced on the morning of January 30, 2013 through a joint press release and a publicly accessible webcast prior to the market opening.
Virginia Commerce’sfactors described under “– Georgetown’s Reasons for the Merger; Recommendation of the Virginia CommerceGeorgetown Board of Directors” on page 33 and the interests of Georgetown shareholders, customers, employees and the communities served by Georgetown, the Georgetown board of directors unanimously approved the merger agreement and the related documents.
Following the special meeting of the Georgetown board of directors on November 9, 2015, the merger agreement and related documents were executed and the parties issued a press release announcing the proposed merger in the evening of November 9, 2015.
Georgetown’s Reasons for the Merger; Recommendation of the Georgetown Board of Directors
The Virginia CommerceGeorgetown board of directors believes that the merger is in the best interest of Virginia CommerceGeorgetown and its shareholders. Accordingly, the Virginia CommerceGeorgetown board of directors has unanimously approved the merger and the merger agreement and unanimously recommends that Virginia CommerceGeorgetown shareholders vote “FOR” approval of the merger agreement.
In reaching its decision to approve the merger and the merger agreement and to recommend itsthe approval of the merger agreement to Virginia CommerceGeorgetown shareholders, the Virginia CommerceGeorgetown board of directors consultedevaluated the merger and the merger agreement in consultation with executive management, Sandler O’Neill,KBW, its financial advisor, and Troutman Sanders LLP,Covington, its legal counsel. The Virginia CommerceGeorgetown board of directors carefully considered the terms of the merger agreement and the value of the merger consideration to be received by Virginia CommerceGeorgetown shareholders and ultimately determined that it was in the best interest of Virginia CommerceGeorgetown and its shareholders for Virginia CommerceGeorgetown to enter into the merger agreement
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with United Bankshares. The Virginia CommerceGeorgetown board of directors believes that partnering with United Bankshares and becoming the largest community bank headquartered in the Washington, DC area will maximize the long-term value of its shareholders’ investment in Virginia Commerce,Georgetown, and that the merger will provide the combined company with additional resources necessary to compete more effectively in Northern Virginia and the Washington, D.C. metropolitan area. In addition, the Virginia CommerceGeorgetown board of directors believes that the customers and communities served by Virginia CommerceGeorgetown will benefit from the combined company’s enhanced abilities to meet their banking needs.
In reaching its unanimous decision to approve the merger and the merger agreement and to recommend that Virginia CommerceGeorgetown shareholders vote “FOR” approval of the merger agreement, the Virginia CommerceGeorgetown board of directors considered many factors, including, without limitation, the following:
The extensive review undertaken by the Strategic Planning Committee and the Georgetown board of directors, with the assistance of Georgetown’s financial and legal advisors, with respect to the strategic alternatives available to Georgetown;
The substantial management, financial and employee resources that would be required to execute Georgetown’s strategic plan, the length of time it would take to achieve the objectives of its strategic plan and the risks and challenges inherent in the successful execution of its strategic plan;
The limited prospects for Georgetown to grow its franchise through acquisitions given Georgetown’s relatively small size, corporate structure and lack of liquidity in Georgetown common stock;
Its understanding of the current and prospective environment in which Georgetown and United Bankshares operate, including national, regional and local economic conditions, the interest rate environment, the competitive and regulatory environments for financial institutions generally, the increased regulatory burdens on financial institutions, the uncertainties of the regulatory environment in the future and the likely effect of these factors on Georgetown both with and without the merger;
The value of the United Bankshares common stock consideration being offered to Virginia CommerceGeorgetown shareholders in relation to the market value, book value per share, tangible book value per share, earnings per share and projected earnings per share of Virginia CommerceGeorgetown and United Bankshares;
Comparative pro forma analyses of Virginia Commerce, United Bankshares and the combined entity, and the earnings per share, dividends and capital levels of each entity;
The fact that the merger consideration represented more than 1.48approximately 2.15 times the closing price of Virginia Commerce common stock on January 10, 2013 (the day prior to the news report of a potential transaction) and 1.82 times the December 31, 2012 tangible book value per share of Virginia CommerceGeorgetown common stock;
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The expected future receipt by Virginia CommerceGeorgetown shareholders of significant dividends after completion of the merger as United Bankshares shareholders, based on United Bankshares’ current and forecasted dividend yield and its 38-year42-year history of dividend increases;
United Bankshares’ asset size, capital position and financial performance in recent periods, which make United Bankshares an attractive merger partner and would giveincrease the combined company over $11 billion in assets;company’s asset base to approximately $14.0 billion;
The feasibility and prospects of and the results that could be expected to be obtained if, Virginia Commerce continuedGeorgetown continuing to operate independently, including Virginia Commerce’sGeorgetown’s ability to compete with much larger regionally-based banks, and the potential need to eventually raise additional capital that could be dilutive to existing Virginia Commerce shareholders;Georgetown shareholders and the potential future trading value of Georgetown common stock compared to the implied value of the merger consideration offered by United Bankshares;
The anticipated future earnings growth of Virginia CommerceGeorgetown compared to the potential future earnings growth of United Bankshares and the combined entity;
The anticipated future trading value of Virginia Commerce common stock compared to the value of the common stock consideration offered by United Bankshares and the potential future trading value of United Bankshares common stock;
The common stock consideration offered by United Bankshares, including the opportunity for Virginia CommerceGeorgetown shareholders to receive shares of United Bankshares common stock on a tax-free basis for their shares of Virginia CommerceGeorgetown common stock;
The greater market capitalization and trading liquidity of United Bankshares common stock in the event Virginia CommerceGeorgetown shareholders desired to sell the shares of United Bankshares common stock to be received by them upon completion of the merger;
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Virginia Commerce’s recent repayment of TARP and operational, regulatory and compliance benefits that could be realizedThe solicitation process undertaken by Virginia Commerce if Virginia Commerce continued to operate independently;Georgetown with KBW’s assistance;
The process conducted by Sandler O’Neill, Virginia Commerce’s financial advisor,presentation, dated November 9, 2015, of KBW to assist the Virginia CommerceGeorgetown board of directors in structuringand the proposed merger with United Bankshares;
The presentationopinion, dated November 9, 2015, of analyses by Sandler O’Neill, Virginia Commerce’s financial advisor,KBW to the Georgetown board of directors as to the fairness, from a financial point of view and as of the merger considerationdate of the opinion, to be paid to Virginia Commercethe holders of Georgetown common shareholders. In this regard,stock of the Virginia Commerce board of directors received from Sandler O’Neill a written opinion dated January 29, 2013 that, as of such date,exchange ratio in the merger, consideration to be received pursuant to the merger agreement was fair to Virginia Commerce shareholders from a financial pointas more fully described below under “Opinion of view. The opinion is attached as Appendix B to this document. For a summary of Sandler O’Neill’s presentation, see “– Opinion of Virginia Commerce’sGeorgetown’s Financial Advisor” below;
The current and prospective environment in which Virginia Commerce operates, including national, regional and local economic conditions, the competitive environment for financial institutions, the increased regulatory burdens on financial institutions, and the uncertainties in the regulatory climate going forward;;
The analyses presented by Troutman Sanders, Virginia Commerce’s outsideCovington, Georgetown’s legal counsel, as to the structure of the merger, including the condition that the merger must qualify as a transaction that will permit Georgetown shareholders to receive United Bankshares shares in exchange for their Georgetown shares on a tax-free basis for federal income tax purposes, the merger agreement, duties of the Virginia CommerceGeorgetown board of directors under applicable law, and the process that Virginia CommerceGeorgetown (including its board of directors) employed in considering all potential strategic transactions including the merger with United Bankshares;
The ability to terminate the merger agreement if (i) the average closing price of United Bankshares common stock declines by more than 20% from the closing price immediately prior to the public announcement of entry into the merger agreement,$42.79 and (ii) United Bankshares common stock underperforms the NASDAQKBW Regional Bank Index (KRX) by more than 15%20%, all as calculated pursuant to the merger agreement;agreement, unless United Bankshares agrees to increase the number of shares of United Bankshares common stock to be issued to holders of Georgetown common stock;
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The scale, scope, strength and diversity of operations, product lines and delivery systems that could be achieved by combining Virginia CommerceGeorgetown with United Bankshares;
The additional products offered by United Bankshares to its customers, the ability of the combined company to provide comprehensive financial services to its customers, and the potential for operating synergies and cross-marketing of products and services across the combined company;
The potential value of an expansion of the United Bankshares branch network adding Virginia CommerceGeorgetown branch locations in Virginia to United Bankshares’ existing branch network in Virginia, West Virginia, Maryland, Pennsylvania, Ohio and Washington, D.C.;
The earnings prospects of the combined company after completion of the merger;
The shared community banking philosophies of Virginia CommerceGeorgetown and United Bankshares, and each entity’s commitment to community service and support of community-based non-profit organizations and causes;
The fact that Virginia Commerce directors and executive officers have interests in the merger that are different from, or in addition to, those of other Virginia Commerce shareholders, as more fully discussed under “– Interests of Certain Virginia Commerce Directors and Executive Officers in the Merger” on page [—];
The reports of Virginia Commerce’sGeorgetown’s management and the financial presentation by Sandler O’Neill to the Virginia CommerceGeorgetown board of directors concerning the operations, financial condition and prospects of United Bankshares and the expected financial impact of the merger on the combined company, including pro forma assets, earnings, deposits and capital ratios;
The likelihood of successful integration and operation of the combined company;
The likelihood of obtaining the regulatory approvals needed to complete the transaction;
The potential cost-saving opportunities resulting from the merger; and
The effects of the merger on Virginia CommerceGeorgetown employees, including the prospects for continued employment and the severance and other benefits agreed to be provided to Virginia Commerce employees; and
The review by the Virginia Commerce board of directors with its legal and financial advisors of the structure of the merger and the financial and other terms of the merger, including the exchange ratio and the condition that the merger must qualify as a transaction that will permit Virginia Commerce shareholders to receive United Bankshares shares in exchange for their Virginia Commerce shares on a tax-free basis for federal income tax purposes.Georgetown employees.
The Virginia CommerceGeorgetown board of directors also considered a number of potential risks and uncertainties associated with the merger in connection with its deliberation of the proposed transaction, including, without limitation, the following:
The challenges of integrating Virginia Commerce’sGeorgetown’s businesses, operations and employees with those of United Bankshares;
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The need to obtain approval by shareholders of Virginia Commerce and United Bankshares,Georgetown, as well as regulatory approvals in order to complete the transaction;
The risks associated with the operations of the combined company, including the ability to achieve the anticipated cost savings;
The fact that Georgetown directors and executive officers have interests in the merger that are different from, or in addition to, those of other Georgetown shareholders, as more fully discussed under “– Interests of Certain Bank of Georgetown Directors and Executive Officers in the Merger” on page 51;
The risks associated with entry into the merger agreement and conduct of Virginia Commerce’sGeorgetown’s business before the merger is completed, and the impact that provisions of the merger agreement relating to reimbursement of expenses and payment of a termination fee by Virginia CommerceGeorgetown may have on Virginia CommerceGeorgetown receiving superior acquisition offers; and
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That the fixed exchange ratio, by its nature, would not adjust upwards to compensate for declines in United Bankshares’ stock price prior to the completion of the merger, meaning that Virginia CommerceGeorgetown shareholders would not be protected against decreases in United Bankshares’ stock price prior to the completion of the merger; based upon its review of United Bankshares and its historical stock prices and prospects, the Virginia CommerceGeorgetown board of directors believes that a fixed exchange ratio is appropriate and in the best interests of Virginia CommerceGeorgetown shareholders.
The Virginia CommerceGeorgetown board of directors also considered the structural protections included in the merger agreement, such as the ability of Virginia CommerceGeorgetown to terminate the merger agreement if, without limitation:
United Bankshares breaches the representation that, since December 31, 2011,2014, no event has occurred or circumstance arisen that is reasonably likely to have a material adverse effect with respect to United Bankshares, which breach cannot be or has not been cured within 30 days after written notice of the breach to United Bankshares;
The average closing price of United Bankshares common stock declines by more than 20% from the closing price immediately prior to the public announcement of entry into the merger agreement,$42.79, and United Bankshares common stock underperforms the NASDAQKBW Regional Bank Index (KRX) by more than 15%20%, all as calculated pursuant to the merger agreement;agreement, unless United Bankshares agrees to increase the number of shares of United Bankshares common stock to be issued to holders of Georgetown common stock;
United Bankshares materially breaches any of its covenants or agreements under the merger agreement, which material breach cannot be or has not been cured within 30 days after written notice of the breach to United Bankshares; or
Any required approval of any government authority is denied by final nonappealable action of such government authority, or the shareholders of United Bankshares or Virginia CommerceGeorgetown do not approve the merger at the United BanksharesGeorgetown special meeting or the Virginia Commerce special meeting, respectively.meeting.
The Virginia CommerceGeorgetown board of directors also noted that it could terminate the merger agreement in order to concurrently enter into an agreement with respect to an unsolicited acquisition proposal that was received and considered by Virginia CommerceGeorgetown in compliance with the nonsolicitation provisions of the merger agreement and that would, if consummated, result in a transaction that is more favorable to Virginia CommerceGeorgetown shareholders than the merger. This termination right is conditioned on Virginia CommerceGeorgetown providing notice of the unsolicited acquisition proposal to United Bankshares, United Bankshares not making a revised offer to Virginia CommerceGeorgetown that is at least as favorable as the unsolicited acquisition proposal and Virginia CommerceGeorgetown paying a $20.0 millionan $11,288,000 break-up fee to United Bankshares. The amount of this potential fee was negotiated at arm’s-length and was deemed by the Virginia CommerceGeorgetown board of directors to be reasonable based upon the break-up fees paid in comparable transaction and the fact that multiple institutions had already been given an opportunity to bid prior to the merger agreement being approved. As of the date of this prospectus and joint proxy statement, no unsolicited acquisition proposals have been received. See “The Merger Agreement – Acquisition Proposals” on page [—]60 for more information.
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The foregoing discussion of the information and factors considered by the Virginia CommerceGeorgetown board of directors is not intended to be exhaustive, but includes the material factors considered by the board of directors. In view of the wide variety and complexity of factors considered in connection with its evaluation of the merger, the Virginia CommerceGeorgetown board of directors did not find it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Virginia CommerceGeorgetown board of directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Virginia CommerceGeorgetown board of directors based its recommendation on the totality of the information presented. The Virginia Commerce board of directors evaluated the factors described above, including asking questions of Virginia Commerce’s legal and financial advisors. The Virginia Commerce board of directors relied on the
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experience and expertise of its legal advisors regarding the structure of the merger and the terms of the merger agreement and on the experience and expertise of its financial advisor for quantitative analysis of the financial terms of the merger. See “– Opinion of Virginia Commerce’s Financial Advisor” below.
The Virginia CommerceGeorgetown board of directors unanimously recommends that you vote “FOR” the proposal to approve the merger agreement and plan of merger. In considering the recommendation of the Virginia CommerceGeorgetown board of directors with respect to the proposal to approve the merger agreement and plan of merger, Virginia CommerceGeorgetown shareholders should be aware that Virginia Commerce’Georgetown’ directors and executive officers have interests in the merger that are different from, or in addition to, those of other Virginia CommerceGeorgetown shareholders. The board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement and plan of merger be adopted by the shareholders of Virginia Commerce.Georgetown. See “The Merger – Interests of Certain Virginia CommerceBank of Georgetown Directors and Executive Officers in the Merger” on page [—].51.
This summary of the reasoning of Virginia Commerce’Georgetown’ board of directors and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements” on page [—].13.
United Bankshares’Bankshares Reasons for the Merger; Recommendation of the United Bankshares Board of DirectorsMerger
In reaching its decision to adopt and approve the merger agreement, the merger, the issuance of United Bankshares common stock in connection with the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger agreement, the United Bankshares board of directors consulted with United Bankshares management, as well as its financial and legal advisors, and considered a number of factors, including the following material factors:
United Bankshares’, Virginia Commerce’sBankshares’s, Georgetown’s and the combined entity’s business, operations, financial condition, risk profile, asset quality, earnings and prospects. In reviewing these factors, the United Bankshares board of directors considered its view that Virginia Commerce’sGeorgetown’s business and operations complement those of United Bankshares and that the merger would result in a combined company with a more diversified revenue stream, a well-balanced loan portfolio and an attractive funding base;
The fact that the core deposits made up the vast majority of Virginia Commerce’sGeorgetown’s deposit mix;
The fact that the merger will result in a combined entity with assets of approximately $11$14.0 billion and the regulatory and compliance consequences related to being an entity of that size in the financial services industry;
The potential of creatingenhancing a contiguous Mid-Atlantic banking franchise with additional scale and access to a broader base of middle market and small business prospects;
The combined entity will be the leading independentlargest community bank operating throughoutheadquartered in the most attractive markets in Northern Virginia and Washington, D.C. MSA;
Virginia Commerce’sGeorgetown’s familiarity with the Northern Virginia andmetro Washington, D.C. markets;
The board’sTheir understanding of the current and prospective environment in which United Bankshares and Virginia CommerceGeorgetown operate, including national and local economic conditions, the competitive environment for financial institutions generally and the likely effect of these factors on United Bankshares both with and without the proposed transaction;
Management’s expectation regarding cost synergies, earnings accretion, tangible book value dilution and internal rate of return;
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Its review and discussions with United Bankshares management concerning the due diligence examination of Virginia Commerce;Georgetown;
Sensitivity of the proposed transaction’s economic returns to a variety of factors, including changes to the amount of cost synergies, Virginia Commerce’sGeorgetown’s pro forma earnings, Virginia Commerce’sGeorgetown’s rates of growth and estimated mark-to-market of the associated loan portfolio;
The market for alternative merger or acquisition transactions in the banking industry and the likelihood and timing of other material strategic transactions;
The complementary nature of the cultures and product mix of the two companies, including the fact that each company utilizes the same service provider for its data processing platform, which management believes should facilitate integration and implementation of the transaction;
Management’s expectation that the strong capital position maintained by each separate company prior to the completion of the merger will contribute to a strong capital position for the combined entity upon completion of the merger;
The written opinion of KBW,Sandler O’Neill and Partners, L.P., United Bankshares’ financial advisor, dated as of January 28, 2013,November 9, 2015, delivered to the United Bankshares board of directors to the effect that, as of that date, and subject to and based on the various assumptions, considerations, qualifications and limitations set forth in the opinion, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to United Bankshares;
The financial and other terms of the merger agreement, including the fixed exchange ratio, tax treatment and mutual deal protection and termination fee provisions, which it reviewed with its outside financial and legal advisors;
The potential risks associated with and management’s recent experience in achieving anticipated cost synergies and savings and successfully integrating Virginia Commerce’sGeorgetown’s business, operations and workforce with those of Virginia Commerce;Georgetown;
The nature and amount of payments to be received by Virginia CommerceGeorgetown management in connection with the merger and the merger-related costs and restructuring charges that will be incurred in connection with the merger;
The potential risk of diverting management attention and resources from the operation of United Bankshares’ business and towards the completion of the merger; and
The regulatory and other approvals required in connection with the merger.
The foregoing discussion of the information and factors considered by the United Bankshares board of directors is not intended to be exhaustive, but includes the material factors considered by the United Bankshares board of directors. In reaching its decision to approve the merger agreement, the merger, the issuance of United Bankshares common stock to Virginia CommerceGeorgetown shareholders in connection with the merger, and the other transactions contemplated by the merger agreement, the United Bankshares board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The United Bankshares board of directors considered all these factors as a whole, including discussions with, and questioning of, United Bankshares management and United Bankshares’ financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.
ForOpinion of Georgetown’s Financial Advisor
Georgetown engaged KBW to render financial advisory and investment banking services to Georgetown, including an opinion to the reasons set forth above, the United BanksharesGeorgetown board of directors unanimously determined thatas to the merger agreement andfairness, from a financial point of view of the transactions contemplated by the merger agreement, are advisable andexchange ratio in the best interestsproposed merger of Georgetown with and into United Bank, an indirect wholly-owned subsidiary of United Bankshares and its shareholders, and unanimously adopted and approved the merger agreement and the transactions contemplated by it. The United Bankshares board of directors unanimously recommends that the United Bankshares shareholders vote “FOR” the approval of the United Bankshares Merger Proposal and vote “FOR” the approval of the United Bankshares Stock Issuance Proposal.
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Opinion of Virginia Commerce’s Financial Advisor
By letter dated October 12, 2012, Virginia Commerce retained Sandler O’Neill to act as its financial advisor in connection with a possible business combination transaction, including a potential sale of Virginia Commerce (or VCBI). Sandler O’NeillBankshares. Georgetown selected KBW because KBW is a nationally recognized investment banking firm whose principal business specialty is financial institutions. Inwith substantial experience in transactions similar to the ordinary coursemerger. As part of its
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investment banking business, Sandler O’NeillKBW is regularlycontinually engaged in the valuation of financial institutionsservices businesses and their securities in connection with mergers and acquisitions and other corporate transactions. Sandler O’Neill was also familiar with Virginia Commerce, having advised Virginia Commerce in connection withacquisitions.
As part of its engagement, representatives of KBW attended the acquisitionmeeting of investment securities and having made presentations to the Virginia CommerceGeorgetown board of directors and management from time to time.
Sandler O’Neill acted as financial advisor to Virginia Commerce in connection withheld on November 9, 2015, at which the proposed transaction and participated in certain of the negotiations and assisted Virginia Commerce with certain stages of the due diligence process leading to the execution of the merger agreement between Virginia Commerce and United Bankshares (or UBSI). At a meeting of the Virginia CommerceGeorgetown board of directors on January 29, 2013, Sandler O’Neill deliveredevaluated the proposed merger. At this meeting, KBW reviewed the financial aspects of the proposed merger and rendered an opinion to the Virginia CommerceGeorgetown board of directors its oral opinion, followed by delivery of its written opinion,to the effect that, as of such date the merger consideration was fairand subject to the holders of Virginia Commerce common stock from a financial point of view. The full text of Sandler O’Neill’s written opinion dated January 29, 2013 is attached as Appendix B to this proxy statement. The opinion outlines the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sandler O’NeillKBW as set forth in rendering its opinion. such opinion, the exchange ratio in the proposed merger was fair, from a financial point of view, to the holders of Georgetown common stock. The Georgetown board of directors approved the merger agreement at this meeting.
The description of the opinion set forth belowherein is qualified in its entirety by reference to the opinion. Virginia Commerce shareholders are urged to read the entire opinion carefully in connection with their considerationfull text of the proposed merger.opinion, which is attached as Appendix B to this prospectus and proxy statement and is incorporated herein by reference, and describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion.
Sandler O’Neill’sKBW’s opinion speaks only as of the date of the opinion. The opinion was for the information of, and was directed to, the Virginia CommerceGeorgetown board of directors and is directed only to the fairness(in its capacity as such) in connection with its consideration of the merger consideration to be paid tofinancial terms of the holders of Virginia Commerce common stockmerger. The opinion addressed only the fairness, from a financial point of view.view, as of the date of the opinion, of the exchange ratio in the merger to the holders of Georgetown common stock. It doesdid not address the underlying business decision of Virginia CommerceGeorgetown to engage in the merger or any other aspectenter into the merger agreement or constitute a recommendation to the Georgetown board of directors in connection with the merger, and isit does not constitute a recommendation to any Virginia Commerceholder of Georgetown common stock or any shareholder of any other entity as to how to vote in connection with the merger or any other matter, nor does it constitute a recommendation regarding whether or not any such shareholder should vote at the special meetingenter into a voting, shareholders’ or affiliates’ agreement with respect to the merger or exercise any other matter.dissenters’ or appraisal rights that may be available to such shareholder.
KBW’s opinion was reviewed and approved by KBW’s Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.
In connection with rendering itsthe opinion, on January 29, 2013, Sandler O’NeillKBW reviewed, analyzed and considered,relied upon material bearing upon the merger and bearing upon the financial and operating condition of Georgetown and United Bankshares, including among other things:
a draft of the merger agreement, dated November 7, 2015 (the most recent draft then made available to KBW);
the audited financial statements for the three fiscal years ended December 31, 2014 for Georgetown;
the unaudited quarterly financial statements for the fiscal quarters ended March 31, 2015, June 30, 2015 and September 30, 2015 of Georgetown;
the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2014 of United Bankshares;
the unaudited quarterly financial statements and quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2015 and June 30, 2015 of United Bankshares;
certain unaudited quarterly financial results for the period ended September 30, 2015 of United Bankshares, provided to KBW by representatives of United Bankshares;
certain regulatory filings of Georgetown and United Bankshares, including the quarterly Call Reports on form FRY-9Cs filed with respect to each quarter during the three-year period ended December 31, 2014 and the two quarters ended March 31, 2015 and June 30, 2015 for United Bankshares, and the
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quarterly Call Reports on form FFIEC 041 filed with respect to each quarter during the |
certain other interim reports and other communications of Georgetown and United Bankshares to their respective shareholders and investors; and
other financial information concerning the businesses and operations of Georgetown and United Bankshares that was furnished to KBW by Georgetown and United Bankshares or which KBW was otherwise directed to use for purposes of KBW’s analyses. KBW’s consideration of financial information and other factors that it deemed appropriate under the circumstances or relevant to its analyses included, among others, the following: the historical and current financial position and |
Sandler O’Neill also discussed with certain members of executive management of Virginia Commerce the business, financial condition, results of operations of Georgetown and prospectsUnited Bankshares;
the assets and liabilities of Virginia CommerceGeorgetown and United Bankshares;
the nature and terms of certain other merger transactions and business combinations in the banking industry;
a comparison of certain financial information for Georgetown and certain financial and stock market information for United Bankshares with similar information for certain other companies the securities of which were publicly traded;
financial and operating forecasts and projections of Georgetown that were prepared by, and provided to KBW and discussed with KBW by, Georgetown management and that were used and relied upon by KBW at the direction of such management with the consent of the Georgetown board of directors; and
financial and operating forecasts and projections of United Bankshares and estimates regarding certain pro forma financial effects of the merger on United Bankshares (including, without limitation, the cost savings and related expenses expected to result or be derived from the merger) that were prepared by, and provided to and discussed with KBW by, United Bankshares management and used and relied upon by KBW at the direction of Georgetown management with the consent of the Georgetown board of directors.
KBW also performed such other studies and analyses as it considered appropriate and took into account its assessment of general economic, market and financial conditions and its experience in other transactions, as well as its experience in securities valuation and knowledge of the banking industry generally. KBW also held similar discussions with the senior management of Georgetown and United Bankshares regarding the past and current business operations, regulatory relations, financial condition and future prospects of their respective companies and such other matters as KBW deemed relevant to its inquiry. In addition, KBW considered the results of operations and prospectsthe efforts undertaken by or on behalf of United Bankshares.Georgetown, with KBW’s assistance, to solicit indications of interest from third parties regarding a potential transaction with Georgetown.
In performingconducting its review Sandler O’Neill hasand arriving at its opinion, KBW relied upon and assumed the accuracy and completeness of all of the financial and other information that was available to it from public sources, that was provided to it by Virginia Commerceor that was publicly available and KBW did not independently verify the accuracy or completeness of any such information or assume any responsibility or liability for such verification, accuracy or completeness. KBW relied upon the respective managements of Georgetown and United Bankshares or that was otherwise reviewed by itas to the reasonableness and assumed the accuracy and completeness of such for purposes of preparing its fairness opinion. Sandler O’Neill further relied on the assurancesachievability of the managementfinancial and operating forecasts and projections of Virginia CommerceGeorgetown and United Bankshares, respectively, referred to above (and the assumptions and bases therefor) and KBW assumed, with the consent of Georgetown, that such managements are not aware of any facts or circumstances that would make anyforecasts and projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of such information inaccurate or misleadingmanagements and that such forecasts and projections would be realized in any material respect. Sandler O’Neill did not make an independent evaluation or appraisalthe amounts and in the time periods estimated by such managements. KBW further relied upon United Bankshares as to the reasonableness and achievability of the specific assets,estimates regarding certain pro forma financial effects of the collateral securing assetsmerger on United
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Bankshares (and the assumptions and bases therefor, including, without limitation, the cost savings and related expenses expected to result or be derived from the liabilities (contingent or otherwise)merger) referred to above and KBW assumed, with the consent of Virginia Commerce orGeorgetown, that all such estimates were reasonably prepared on a basis reflecting the best currently available estimates and judgments of United Bankshares or any of their respective subsidiaries. Sandler O’Neill did not make an independent evaluation ofmanagement and that such estimates would be realized in the adequacy ofamounts and in the allowance for loan losses of Virginia Commerce, United Bankshares or the combined entity after the merger and it has not reviewed any individual credit files relating to Virginia Commerce or United Bankshares. Sandler O’Neill has assumedtime periods estimated by such management.
It is understood that the respective allowances for loan losses for both Virginia Commerceforecasts, projections and estimates of Georgetown and United Bankshares provided to KBW were not prepared with the expectation of public disclosure, that all such forecasts, projections and estimates were based on numerous variables and assumptions that are adequateinherently uncertain, including, without limitation, factors related to covergeneral economic and competitive conditions and that, accordingly, actual results could vary significantly from those set forth in such losses and will be adequateinformation. KBW assumed, based on a pro forma basis for the combined entity.
In preparing its analyses, Sandler O’Neill used internal financial projections as provided bydiscussions with the respective executive managementmanagements of Virginia CommerceGeorgetown and United Bankshares and certain publicly available analyst estimates for United Bankshares. Sandler O’Neill also received and used in its analyses certain projections of transaction costs, purchase accounting adjustments, expected cost savings and other synergies that were prepared by and/or reviewed with the senior managementconsent of United Bankshares. With respect to those projections, estimates and judgments, the respective executive management of Virginia Commerce and United Bankshares confirmed to Sandler O’Neill that those projections, estimates and judgments reflected the best estimates and judgments of those respective managements of the future financial performance of Virginia Commerce and United Bankshares, respectively, and Sandler O’Neill assumedGeorgetown, that such performance would be achieved. Sandler O’Neill expressesinformation provided a reasonable basis upon which KBW could form its opinion and KBW expressed no opinionview as to any such estimates orinformation (or the assumptions or bases therefor). KBW relied on which they are based. Sandler O’Neill hasall such information without independent verification or analysis and did not in any respect assume any responsibility or liability for the accuracy or completeness thereof.
KBW also assumed that there has beenwere no material changechanges in the respective assets, liabilities, financial condition, results of operations, business or prospects of Virginia Commerce andeither Georgetown or United Bankshares since the date of the most recentlast financial datastatements of each such entity that were made available to it. Sandler O’Neill has alsoKBW. KBW is not an expert in the independent verification of the adequacy of allowances for loan and lease losses and KBW assumed, without independent verification and with Georgetown’s consent, that the aggregate allowances for loan and lease losses for Georgetown and United Bankshares were adequate to cover such losses. In rendering its opinion, KBW did not make or obtain any evaluations or appraisals or physical inspection of the property, assets or liabilities (contingent or otherwise) of Georgetown or United Bankshares, the collateral securing any of such assets or liabilities, or the collectability of any such assets, nor did KBW examine any individual loan or credit files, nor did it evaluate the solvency, financial capability or fair value of Georgetown or United Bankshares under any state or federal laws, including those relating to bankruptcy, insolvency or other matters. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold. Because such estimates are inherently subject to uncertainty, KBW assumed no responsibility or liability for their accuracy.
KBW assumed that, in all respects material to its analyses:
the merger and any related transaction would be completed substantially in accordance with the terms set forth in the merger agreement (the final terms of which KBW assumed would not differ in any respect material to KBW’s analyses from the latest draft of the merger agreement that had been reviewed by KBW) with no adjustments to the exchange ratio and with no other consideration or payments in respect of Georgetown common stock;
the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement were true and correct;
each party to the merger agreement and all related documents would perform all of the covenants and agreements required to be performed by such party under such documents;
there are no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval for the merger or any related transaction and that all conditions to the completion of the merger and any related transaction would be satisfied without any waivers or modifications to the merger agreement; and
in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the merger and any related transaction, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, would be imposed that would have a material
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adverse effect on the future results of operations or financial condition of Georgetown, United Bankshares, the combined entity, or the contemplated benefits of the merger, including the cost savings and related expenses expected to result or be derived from the merger. |
KBW assumed, in all respects material to KBW’s analyses, that the merger would be consummated in a manner that complies with the applicable provisions of the Securities Act, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations. KBW was further advised by representatives of Georgetown that Georgetown relied upon advice from its analysis that Virginia Commerceadvisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax, accounting and regulatory matters with respect to Georgetown, United Bankshares, would each remain as a going concern for all periods relevant to its analyses. Sandler O’Neill expresses no opinion as to any of the legal, accounting and tax matters relating to the merger and any other transactions contemplated in connection therewith.
Sandler O’Neill’s opinion is necessarily based on financial, economic, market and other conditions as in effect on,related transaction, and the information made available to it as of, the date of the opinion. Events occurring after the date of the opinion could materially affect Sandler O’Neill’s opinion. Sandler O’Neill hasmerger agreement. KBW did not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of its opinion.
Sandler O’Neill performed its analyses for the purpose of rendering its opinion to the Virginia Commerce board of directors, and Sandler O’Neill’s opinion is directed to the Virginia Commerce board of directors in connectionprovide advice with its consideration of the merger and does not constitute a recommendationrespect to any shareholder of Virginia Commerce as to how any such shareholder should vote at the special meeting called to consider and
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vote upon the merger. Sandler O’Neill’sKBW’s opinion is directedaddressed only to the fairness, from a financial point of view, as of the date of such opinion, of the exchange ratio in the merger consideration to the holders of Virginia CommerceGeorgetown common stockstock. KBW expressed no view or opinion as to any other terms or aspects of the merger or any term or aspect of any related transaction, including without limitation, the form or structure of the merger, any transactions that may be related to the merger, any consequences of the merger to Georgetown, its shareholders, creditors or otherwise, or any terms, aspects, merits or implications of any employment, consulting, voting, support, shareholder or other agreements, arrangements or understandings contemplated or entered into in connection with the merger or otherwise. KBW’s opinion was necessarily based upon conditions as they existed and could be evaluated on the date of such opinion and the information made available to KBW through such date. Developments subsequent to the date of KBW’s opinion may have affected, and may affect, the conclusion reached in KBW’s opinion and KBW did not and does not have an obligation to update, revise or reaffirm its opinion. KBW’s opinion did not address, and KBW expressed no view or opinion with respect to:
the underlying business decision of Virginia CommerceGeorgetown to engage in the merger or enter into the merger agreement;
the relative merits of the merger as compared to any other alternative business strategiesstrategic alternatives that might exist for Virginia Commerceare, have been or may be available to or contemplated by Georgetown or the effectGeorgetown board of any other transaction in which Virginia Commerce might engage. Sandler O’Neill’s opinion shall not be reproduced or used for any other purposes without Sandler O’Neill’s prior written consent. Sandler O’Neill has consented to inclusion of its opinion and a summary thereof in this prospectus and joint proxy statement and in the registration statement on Form S-4 which includes this prospectus and joint proxy statement. Sandler O’Neill’s opinion has been approved by Sandler O’Neill’s fairness opinion committee. Sandler O’Neill does not express any opinion as to directors;
the fairness of the amount or nature of theany compensation to be received in the merger by any officer, directorof Georgetown’s officers, directors or employees, or any class of such persons, relative to the compensation to the holders of Georgetown common stock;
the effect of the merger or any related transaction on, or the fairness of the consideration to be received by, holders of any class of securities of Georgetown (other than the holders of Georgetown common stock (solely with respect to the exchange ratio, as described in KBW’s opinion and not relative to any consideration to be received by holders of any other class of securities)) or holders of any class of securities of United Bankshares or any other party to any transaction contemplated by the merger agreement;
any adjustment (as provided in the Agreement) to the exchange ratio in the merger assumed for purposes of KBW’s opinion;
the actual value of United Bankshares common stock to be issued in the merger;
the prices, trading range or volume at which United Bankshares common stock would trade following the public announcement of the merger or the prices, trading range or volume at which United Bankshares common stock would trade following the consummation of the merger;
any advice or opinions provided by any other shareholder.advisor to any of the parties to the merger or any other transaction contemplated by the merger agreement; or
any legal, regulatory, accounting, tax or similar matters relating to Georgetown, United Bankshares, their respective shareholders, or relating to or arising out of or as a consequence of the merger or any
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related transaction, including whether or not the merger would qualify as a tax-free reorganization for United States federal income tax purposes. |
In renderingperforming its January 29, 2013analyses, KBW made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of KBW, Georgetown and United Bankshares. Any estimates contained in the analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, the KBW opinion Sandler O’Neill performed a varietywas among several factors taken into consideration by the Georgetown board of financial analyses. directors in making its determination to approve the merger agreement and the merger. Consequently, the analyses described below should not be viewed as determinative of the decision of the Georgetown board of directors with respect to the fairness of the exchange ratio. The type and amount of consideration payable in the merger were determined through negotiation between Georgetown and United Bankshares and the decision to enter into the merger agreement was solely that of the Georgetown board of directors.
The following is a summary of the material financial analyses performed by Sandler O’Neill, butKBW in connection with its opinion. The summary is not a complete description of all the financial analyses underlying Sandler O’Neill’sthe opinion, but summarizes the material analyses performed in connection with such opinion. The summary includesfinancial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex analytic process involving subjective judgmentsvarious determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Sandler O’NeillKBW did not attribute any particular weight to any analysis or factor that it considered. Rather Sandler O’Neillconsidered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler O’Neill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion; rather Sandler O’Neill made its determination as to the fairness of the merger consideration on the basis of its experience and professional judgment after considering the results of allAccordingly, KBW believes that its analyses taken as a whole. The process, therefore, is not necessarily susceptible to a partial analysis orand the summary description. Sandler O’Neill believes thatof its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the factors and analyses to be consideredinformation presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and analyses, or attempting to ascribe relative weights to some or all such factors andassumptions underlying the analyses, could create ana misleading or incomplete view of the evaluation process underlying its analyses and opinion. Also, no company included in Sandler O’Neill’s comparative
For purposes of the financial analyses described below, KBW utilized an implied transaction value for the proposed merger of $39.88 per share of Georgetown common stock based on the 0.9313x exchange ratio in the merger and the closing price of United Bankshares common stock on November 6, 2015.
Georgetown Selected Companies Analysis. KBW compared the financial performance and financial condition of Georgetown to 9 selected banks and thrifts that were listed on NASDAQ, the New York Stock Exchange or NYSE MKT and headquartered in the Washington D.C. MSA, and that had total assets between $750 million and $6.0 billion and a latest 12 months, or LTM, core return on average assets, or ROAA, greater than 0.50%. KBW also reviewed the market performance of the selected companies. Merger targets were excluded from the selected companies.
The selected companies were:
Eagle Bancorp, Inc.
Sandy Spring Bancorp, Inc.
Cardinal Financial Corporation
WashingtonFirst Bankshares, Inc.
Old Line Bancshares, Inc.
Middleburg Financial Corporation
Access National Corporation
The Community Financial Corporation
Southern National Bancorp of Virginia, Inc.
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To perform this analysis, KBW used profitability and other financial information as of, or for the latest 12 months ended, September 30, 2015 and market price information as of November 6, 2015. KBW also used 2015 and 2016 earnings per share, or EPS, estimates taken from Georgetown management’s forecasts and projections for Georgetown and 2015 and 2016 EPS estimates taken from publicly available consensus “street estimates” for the selected companies. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in Georgetown’s historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.
KBW’s analysis showed the following concerning the financial performance and financial condition of Georgetown and the selected companies:
Selected Companies | ||||||||||||||||||||
Georgetown | 25th Percentile | Average | Median | 75th Percentile | ||||||||||||||||
LTM Core Return on Average Assets(1) | 0.85 | % | 0.76 | % | 1.00 | % | 0.83 | % | 1.34 | % | ||||||||||
LTM Core Return on Average Equity(1) | 8.06 | % | 6.99 | % | 9.21 | % | 8.15 | % | 11.21 | % | ||||||||||
LTM Return on Average Tangible Common Equity | 8.27 | % | 8.64 | % | 10.69 | % | 9.64 | % | 13.84 | % | ||||||||||
LTM Net Interest Margin | 3.50 | % | 3.43 | % | 3.76 | % | 3.73 | % | 4.10 | % | ||||||||||
LTM Fee Income / Revenue(2) | 3.3 | % | 9.4 | % | 17.9 | % | 12.5 | % | 26.5 | % | ||||||||||
LTM Efficiency Ratio | 57.7 | % | 63.7 | % | 61.0 | % | 62.3 | % | 57.8 | % | ||||||||||
Tangible Common Equity / Tangible Assets | 10.15 | % | 9.50 | % | 9.64 | % | 9.58 | % | 9.76 | % | ||||||||||
Total Risk-Based Capital / Risk-Weighted Assets | 13.04 | % | 11.90 | % | 13.72 | % | 13.77 | % | 14.82 | % | ||||||||||
Loans / Deposits | 91.3 | % | 95.0 | % | 95.1 | % | 95.9 | % | 99.3 | % | ||||||||||
Loan Loss Reserve / Gross Loans | 1.08 | % | 0.93 | % | 1.05 | % | 1.03 | % | 1.16 | % | ||||||||||
Nonperforming Assets / Loans + OREO | 0.34 | % | 1.95 | % | 1.52 | % | 1.15 | % | 0.84 | % | ||||||||||
LTM Net Charge-Offs / Average Loans | (0.03 | %) | 0.19 | % | 0.12 | % | 0.07 | % | 0.01 | % |
(1) | Core income excludes extraordinary items, nonrecurring items, gain/loss on sale of securities and amortization of intangibles. |
(2) | Excludes gain/loss on sale of securities. |
KBW’s analysis showed the following concerning the market performance, to the extent publicly available, of the selected companies:
Selected Companies | ||||||||||||||||
25th Percentile | Average | Median | 75th Percentile | |||||||||||||
One – Year Stock Price Change | 2.4 | % | 18.4 | % | 13.7 | % | 30.2 | % | ||||||||
One – Year Total Return | 6.4 | % | 21.7 | % | 18.5 | % | 33.1 | % | ||||||||
YTD Stock Price Change | 5.8 | % | 18.2 | % | 12.2 | % | 28.3 | % | ||||||||
Stock Price / Book Value per Share | 1.16 | x | 1.54 | x | 1.36 | x | 1.96 | x | ||||||||
Stock Price / Tangible Book Value per Share | 1.28 | x | 1.69 | x | 1.62 | x | 2.15 | x | ||||||||
Stock Price / LTM EPS | 15.9 | x | 17.1 | x | 16.6 | x | 17.5 | x | ||||||||
Stock Price / 2015 Estimated EPS(1) | 15.0 | x | 16.5 | x | 16.3 | x | 16.9 | x | ||||||||
Stock Price / 2016 Estimated EPS(1) | 14.8 | x | 15.9 | x | 15.5 | x | 16.0 | x | ||||||||
Dividend Yield(2) | 1.1 | % | 1.9 | % | 1.9 | % | 2.8 | % | ||||||||
LTM Dividend Payout(2) | 21.3 | % | 31.6 | % | 29.9 | % | 43.0 | % |
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(1) | 2015 and 2016 EPS per consensus “street” estimates were not available for WashingtonFirst Bankshares, Inc. |
(2) | Dividend yield reflects most recent quarterly dividend, annualized, as a percentage of stock price. LTM dividend payout reflects most recent quarterly dividend, annualized, as a percentage of LTM EPS and excludes special dividends. |
KBW also reviewed with the Georgetown board of directors the implied transaction statistics for the proposed merger of 2.15x Georgetown’s book value per share as of September 30, 2015, 2.15x Georgetown’s tangible book value per share as of September 30, 2015, 28.5x Georgetown’s LTM EPS and 28.3x and 23.3x Georgetown’s estimated 2015 and 2016 EPS, respectively, in each case based on the implied transaction value for the proposed merger of $39.88 per share of Georgetown common stock and using historical financial information for Georgetown as of or for the twelve-month period ended September 30, 2015 and 2015 and 2016 EPS estimates taken from Georgetown management’s forecasts and projections for Georgetown.
No company used as a comparison in the above selected companies analysis is identical to Virginia Commerce or United Bankshares and no transaction is identical to the merger.Georgetown. Accordingly, an analysis of comparable companies or transactionsthese results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of Virginia Commerce or involved.
United Bankshares and the companies to which they are being compared.
In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of Virginia Commerce, United Bankshares and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solely for purposes of rendering its opinion and provided such analyses to the Virginia Commerce board of directors at the January 29, 2013 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of Virginia Commerce’s or United Bankshares’ common stock or the prices at which Virginia Commerce’s or United Bankshares’ common stock may be sold at any time. The analyses and opinion of Sandler O’Neill were among a number of factors taken into consideration by the Virginia Commerce board of directors in making its determination to adopt the plan of merger contained in the merger agreement and the analyses described below should not be viewed as determinative of the decision of the Virginia Commerce board of directors with respect to the fairness of the merger.
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At the January 29, 2013 meeting of the Virginia Commerce board of directors, Sandler O’Neill presented certain financial analyses of the merger. The summary below is not a complete description of the analyses underlying the opinion of Sandler O’Neill, the presentation made by Sandler O’Neill to the Virginia Commerce board of directors or the discussion between Sandler O’Neill and the Virginia Commerce board of directors at the meeting, but is instead a summary of the material analyses performed and presented in connection with the opinion.
Summary of ProposalSelected Companies Analysis
Sandler O’Neill reviewed. KBW compared the financial terms of the proposed transaction. Shares of Virginia Commerce common stock issuedperformance, financial condition and outstanding immediately prior to the merger will be converted into the right to receive 0.5442 sharesmarket performance of United Bankshares common stock. to 19 selected U.S. banks that were listed on NASDAQ, the New York Stock Exchange or NYSE MKT and that had total assets between $10.0 billion and $20.0 billion. Merger targets were excluded from the selected companies.
The aggregate transaction value of approximately $490.6 million is based upon United Bankshares’ 10-day average closing stock price as of January 29, 2013 of $25.73 and includes $27.1 million of transaction value attributable to 2,696,203 shares of Virginia Commerce common stock issuable upon the exercise of TARP warrant held by the Treasury, which are exercisable at $3.95 per share, 1,500,000 shares of Virginia Commerce common stock issuable upon the exercise of other warrants exercisable at $6.83 per share, and 1,462,653 shares subject to vested and exercisable stock options at a weighted average stock price of $9.99 per share. Based upon financial information as or for the quarter ended December 31, 2012, Sandler O’Neill calculated the following transaction ratios:selected companies were:
| Washington Federal, Inc. | |||
| Western Alliance Bancorporation | |||
| BancorpSouth, Inc. | |||
| Cathay General Bancorp |
Virginia Commerce – Comparable Company Analysis
Sandler O’Neill also used publicly available information to compare selected financial and market trading information for Virginia Commerce and a group of financial institutions selected by Sandler O’Neill.
The Virginia Commerce peer group was selected by Sandler O’Neill and consisted of the following publicly-traded commercial banks with total assets between $2.0 and $6.0 billion located in Maryland, Pennsylvania, Washington, D.C., West Virginia and Virginia:
Bryn Mawr Bank Corp.
Cardinal Financial Corp.
Carter Bank & Trust
City Holding Co.
Customers Bancorp Inc.
Eagle Bancorp Inc.
First Commonwealth Financial
First Community Bancshares Inc.
Hampton Roads Bankshares Inc.
Metro Bancorp Inc.
S&T Bancorp
Sandy Spring Bancorp Inc.
StellarOne Corp.
78
TowneBank
Union First Market Bankshares Corp.
Univest Corp. of Pennsylvania
The analysis compared publicly available financial information for Virginia Commerce and the median financial and market trading data for the Virginia Commerce peer group as of and for the last twelve months ended December 31, 2012. The table below sets forth the data for Virginia Commerce and the median data for the Virginia Commerce peer group as of and for the last twelve months ended December 31, 2012, with pricing data as of January 29, 2013.
(Dollars in millions) | VCBI | Comparable Group Median | Comparable Group High | Comparable Group Low | ||||||||||||
Total Assets | 2,824 | 3,118 | 5,995 | 2,036 | ||||||||||||
Tangible Common Equity / Tangible Assets | 8.69 | % | 8.93 | % | 10.80 | % | 6.46 | % | ||||||||
Total Risk-Based Capital Ratio | 14.51 | % | 14.35 | % | 16.85 | % | 11.65 | % | ||||||||
Return on Average Assets | 1.04 | % | 0.93 | % | 1.81 | % | (0.85 | %) | ||||||||
Return on Average Equity | 10.29 | % | 7.68 | % | 17.23 | % | (9.36 | %) | ||||||||
Net Interest Margin | 3.75 | % | 3.77 | % | 4.51 | % | 2.55 | % | ||||||||
Efficiency Ratio | 50.7 | % | 61.6 | % | 88.2 | % | 44.2 | % | ||||||||
Loan Loss Reserve / Gross Loans | 1.94 | % | 1.38 | % | 3.38 | % | 0.88 | % | ||||||||
Non-performing Assets / Assets | 3.32 | % | 2.02 | % | 8.50 | % | 0.25 | % | ||||||||
Price / Tangible Book Value | 159 | % | 126 | % | 211 | % | 88 | % | ||||||||
Price / LTM EPS | 18.2 | x | 14.0 | x | 20.4 | x | 8.0 | x | ||||||||
Market Capitalization | 390 | 390 | 744 | 198 |
79
Financial Data as of or for the Period Ending December 31, 2012
Pricing Data as of January 29, 2013
Market Data | Capital | Asset Quality | MRQ Performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Ticker | City, State | Price/ TBV | Price/ LTM EPS | Price/ ‘13E EPS | Price/ ‘14E EPS | Div. Yield | Market Cap. ($mm) | Total Assets ($mm) | TCE/ TA | Tier 1 Ratio | Total Capital | NPAs/ Assets | Res./ Loans | ROAA | ROAE | NIM | Eff. Ratio | ||||||||||||||||||||||||||||||||||||||||||||||||||
First Common-wealth Financial | FCF | Indiana, PA | 127 | % | 18.7 | x | 15.7 | x | 14.2 | x | 2.7 | % | $ | 744 | $ | 5,995 | 10.01 | % | 13.28 | % | 14.53 | % | 1.99 | % | 1.60 | % | 0.59 | % | 4.57 | % | 3.59 | % | 69.8 | % | ||||||||||||||||||||||||||||||||||
S&T Bancorp Inc. | STBA | Indiana, PA | 154 | 15.4 | 12.6 | 12.1 | 3.3 | 541 | 4,527 | 8.20 | 11.98 | 15.39 | 2.15 | 1.38 | 0.86 | 7.11 | 3.54 | 61.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Carter Bank & Trust | CARE | Martinsville, VA | 88 | 8.0 | NA | NA | 4.3 | 243 | 4,442 | 6.46 | 11.15 | 11.89 | 2.38 | 1.01 | 0.57 | 7.01 | 2.55 | 59.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
TowneBank | TOWN | Portsmouth, VA | 160 | 15.3 | NA | NA | 2.4 | 479 | 4,318 | 7.11 | 12.88 | 14.03 | 2.77 | 1.25 | 0.93 | 7.16 | 3.97 | 65.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Union First Market Bkshs Corp. | UBSH | Richmond, VA | 122 | 12.7 | 12.4 | 12.2 | 2.8 | 438 | 4,096 | 8.97 | 13.14 | 14.57 | 2.70 | 1.11 | 0.93 | 8.46 | 4.31 | 61.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sandy Spring Bancorp Inc. | SASR | Olney, MD | 125 | 13.4 | 13.1 | 12.9 | 2.8 | 493 | 3,955 | 10.23 | 14.15 | 15.40 | 1.61 | 1.67 | 1.01 | 8.19 | 3.54 | 59.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Eagle Bancorp Inc. | EGBN | Bethesda, MD | 189 | 14.0 | 12.8 | 12.0 | 0.0 | 519 | 3,409 | 8.50 | 10.80 | 12.19 | 1.06 | 1.38 | 1.26 | 11.88 | 4.34 | 49.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Customers Bancorp Inc. | CUUU | Wyomissing PA | 104 | 8.4 | 11.2 | NA | 0.0 | 268 | 3,197 | 9.73 | 12.21 | 11.65 | 1.43 | 0.93 | 1.03 | 11.40 | 3.20 | 51.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cardinal Financial Corp. | CFNL | McLean, VA | 167 | 10.9 | 11.5 | 12.3 | 1.2 | 498 | 3,039 | 9.83 | 11.94 | 13.04 | 0.25 | 1.06 | 1.81 | 17.23 | 3.54 | 44.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
StellarOne Corp. | STEL | Charlottes- ville, VA | 109 | 15.6 | 15.0 | 14.0 | 2.1 | 342 | 3,023 | 10.80 | 15.60 | 16.85 | 2.11 | 1.41 | 0.84 | 5.77 | 3.77 | 68.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
City Holding Co. | CHCO | Cross Lanes, WV | 206 | 14.3 | 12.4 | 12.1 | 3.8 | 581 | 2,917 | 9.40 | 12.97 | 13.85 | 1.04 | 0.88 | 1.49 | 13.01 | 4.01 | 51.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
First Community Bancshares Inc. | FCBC | Bluefield, VA | 143 | 14.0 | 10.8 | 11.3 | 3.0 | 323 | 2,770 | 8.50 | 14.93 | 16.18 | 1.42 | 1.46 | 1.45 | 11.57 | 4.51 | 51.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Metro Bancorp Inc. | METR | Harrisburg, PA | 95 | 20.4 | 19.6 | 16.5 | 0.0 | 222 | 2,635 | 8.90 | 13.97 | 15.22 | 2.07 | 1.64 | 0.54 | 5.92 | 3.77 | 75.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Univest Corp. of Pennsylvania | UVSP | Souderton, PA | 126 | 13.5 | 12.8 | 11.9 | 4.8 | 280 | 2,305 | 9.88 | 14.35 | 15.62 | 2.05 | 1.66 | 0.90 | 7.08 | 3.82 | 66.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Hampton Roads Bankshares Inc. | HMPR | Virginia Beach, VA | 107 | NM | NA | NA | 0.0 | 198 | 2,054 | 8.90 | 12.88 | 14.16 | 8.50 | 3.38 | (0.85 | ) | (9.36 | ) | 3.65 | 88.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
Bryn Mawr Bank Corp. | BMTC | Bryn Mawr, PA | 211 | 14.6 | 12.7 | 12.1 | 2.9 | 313 | 2,036 | 7.50 | 11.03 | 12.02 | 1.13 | 1.03 | 1.12 | 10.53 | 3.88 | 64.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
High | 211 | % | 20.4 | x | 19.6 | x | 16.5 | x | 4.8 | % | $ | 744 | $ | 5,995 | 10.80 | % | 15.60 | % | 16.85 | % | 8.50 | % | 3.38 | % | 1.81 | % | 17.23 | % | 4.51 | % | 88.2 | % | ||||||||||||||||||||||||||||||||||||
Low | 88 | 8.0 | 10.8 | 11.3 | 0.0 | 198 | 2,036 | 6.46 | 10.80 | 11.65 | 0.25 | 0.88 | (0.85 | ) | (9.36 | ) | 2.55 | 44.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | 139 | 13.9 | 13.3 | 12.8 | 2.6 | 405 | 3,420 | 8.93 | 12.95 | 14.16 | 2.17 | 1.43 | 0.91 | 7.97 | 3.75 | 61.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Median | 126 | 14.0 | 12.7 | 12.2 | 2.8 | 390 | 3,118 | 8.93 | 12.93 | 14.35 | 2.02 | 1.38 | 0.93 | 7.68 | 3.77 | 61.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Virginia Commerce | 159 | % | 18.2x | 12.7x | 10.1x | 0.0 | % | $ | 390 | $ | 2,824 | 8.69 | % | 13.25 | % | 14.51 | % | 3.32 | % | 1.94 | % | 1.04 | % | 10.29 | % | 3.75 | % | 50.7 | % |
80
Sandler O’Neill noted that Virginia Commerce had similar financial and performance metrics to the Virginia Commerce peer group selected by Sandler O’Neill.
United Bankshares – Comparable Company Analysis
Sandler O’Neill also used publicly available information to compare selected financial and market trading information for United Bankshares and a group of financial institutions selected by Sandler O’Neill.
The United Bankshares peer group as selected by Sandler O’Neill consisted of the following publicly-traded commercial banks with total assets between $4.0 and $15.0 billion located in Indiana, Michigan, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia:
Fulton Financial Corporation |
|
Carter Bank & Trust
Chemical Financial Corp.
First Commonwealth Financial
First Financial Bancorp
First Merchants Corp.
FirstMerit Corp.
F.N.B. Corp
National Penn Bancshares Inc.
PrivateBancorp, Inc.
Trustmark Corporation
F.N.B. Corporation
International Bancshares Corporation
PacWest Bancorp, Inc.
Old National Bancorp
Bank of Hawaii Corporation
Park National Corp.Sterling Bancorp
PinnacleMB Financial, Partners
S&T Bancorp Inc.
To perform this analysis, KBW used profitability and other financial information as of, or for the latest 12 months ended, September 30, 2015 (or June 30, 2015 in the case of International Bancshares Corporation for which the most recently reported fiscal quarter ended June 30, 2015) and market price information as of November 6, 2015. KBW also used 2015 and 2016 EPS estimates taken from United Bankshares management’s forecasts and projections for United Bankshares and used 2015 and 2016 EPS estimates taken from publicly available consensus “street estimates” for the selected companies. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in United Bankshares’s historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.
TowneBank
Union First Market Bankshares Corp.
WesBanco Inc.
The analysis compared publicly available financial information for United Bankshares and the median financial and market trading data for the United Bankshares peer group as of and for the last twelve months ended December 31, 2012. The table below sets forth the data for United Bankshares and the median data for the United Bankshares peer group as of and for the last twelve months ended December 31, 2012, with pricing data as of January 29, 2013.
(Dollars in millions) | UBSI | Comparable Group Median | Comparable Group High | Comparable Group Low | ||||||||||||
Total Assets | $ | 8,420 | $ | 5,956 | $ | 14,913 | $ | 4,096 | ||||||||
Tangible Common Equity / Tangible Assets | 7.55 | % | 8.50 | % | 10.80 | % | 6.09 | % | ||||||||
Total Risk-Based Capital Ratio | 13.66 | % | 14.55 | % | 17.80 | % | 11.89 | % | ||||||||
Return on Average Assets | 1.02 | % | 0.95 | % | 1.19 | % | 0.57 | % | ||||||||
Return on Average Equity | 8.48 | % | 7.75 | % | 9.86 | % | 4.57 | % | ||||||||
Net Interest Margin | 3.81 | % | 3.70 | % | 4.34 | % | 2.55 | % | ||||||||
Efficiency Ratio | 52.0 | % | 62.0 | % | 69.8 | % | 55.2 | % | ||||||||
Loan Loss Reserve / Gross Loans | 1.13 | % | 1.45 | % | 2.50 | % | 1.01 | % | ||||||||
Non-performing Assets / Assets | 1.48 | % | 1.82 | % | 3.33 | % | 0.34 | % | ||||||||
Price / Tangible Book Value | 214 | % | 150 | % | 239 | % | 88 | % | ||||||||
Price / LTM EPS | 15.8 | x | 13.4 | x | 19.6 | x | 8.0 | x | ||||||||
Market Capitalization | $ | 1,299 | $ | 711 | $ | 1,638 | $ | 243 |
81
Financial Data as of or for the Period Ending December 31, 2012
Pricing Data as of January 29, 2013
Market Data | Capital | Asset Quality | MRQ Performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Ticker | City, State | Price/ TBV | Price/ LTM EPS | Price/ ‘13E EPS | Price/ ‘14E EPS | Div. Yield | Market Cap. ($mm) | Total Assets ($mm) | TCE/ TA | Tier 1 Ratio | Total Capital | NPAs/ Assets | Res./ Loans | ROAA | ROAE | NIM | Eff. Ratio | ||||||||||||||||||||||||||||||||||||||||||||||||||
FirstMerit Corp. | FMER | Akron, OH | 139 | % | 12.2 | x | 11.5 | x | 10.9 | x | 4.3 | % | $ | 1,638 | $ | 14,913 | 8.16 | % | 11.25 | % | 12.50 | % | 0.34 | % | 1.47 | % | 1.04 | % | 9.35 | % | 3.60 | % | 62.1 | % | ||||||||||||||||||||||||||||||||||
F.N.B. Corp. | FNB | Hermitage, PA | 239 | 14.7 | 13.5 | 12.9 | 4.1 | 1,622 | 12,024 | 6.09 | 10.70 | 12.20 | 0.99 | 1.28 | 0.97 | 8.27 | 3.67 | 57.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Old National Bancorp | ONB | Evansville, IN | 163 | 14.1 | 12.6 | 11.8 | 3.0 | 1,351 | 9,544 | 9.01 | 13.70 | 14.80 | 1.79 | 1.05 | 0.98 | 7.73 | 4.34 | 66.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
National Penn Bancshares Inc. | NPBC | Boyertown, PA | 159 | 14.8 | 14.6 | 13.6 | 4.1 | 1,421 | 8,530 | 10.80 | 16.54 | 17.80 | 0.67 | 2.12 | 1.19 | 8.38 | 3.48 | 55.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Park National Corp. | PRK | Newark, OH | 175 | 13.4 | 13.1 | 12.7 | 5.7 | 1,011 | 6,643 | 8.79 | 13.13 | 16.32 | 3.33 | 1.25 | 0.97 | 9.86 | 3.73 | 63.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
First Financial Bancorp. | FFBC | Cincinnati, OH | 146 | 13.4 | 14.1 | 13.3 | 7.3 | 885 | 6,497 | 9.50 | 16.32 | 17.60 | 1.36 | 2.36 | 1.03 | 9.11 | 4.31 | 59.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
WesBanco Inc. | WSBC | Wheeling, WV | 174 | 12.6 | 11.7 | 11.3 | 3.1 | 677 | 6,079 | 6.77 | 12.82 | 14.45 | 1.11 | 1.42 | 0.88 | 7.40 | 3.51 | 62.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
First Common-wealth Financial | FCF | Indiana, PA | 127 | 18.7 | 15.7 | 14.2 | 2.7 | 744 | 5,995 | 10.01 | 13.28 | 14.53 | 1.99 | 1.60 | 0.59 | 4.57 | 3.59 | 69.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Chemical Financial Corp. | CHFC | Midland, MI | 146 | 13.3 | 12.6 | 12.3 | 3.4 | 676 | 5,917 | 8.02 | 12.38 | 13.20 | 2.34 | 2.02 | 0.84 | 7.76 | 3.75 | 61.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pinnacle Financial Partners | PNFP | Nashville, TN | 174 | 19.6 | 15.4 | 14.0 | 0.0 | 747 | 5,041 | 8.97 | 11.80 | 13.00 | 1.37 | 1.85 | 0.95 | 6.90 | 3.76 | 55.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
1st Source Corp. | SRCE | South Bend, IN | 115 | 11.1 | NA | NA | 3.0 | 542 | 4,551 | 10.56 | 14.26 | 15.57 | 0.93 | 2.50 | 1.09 | 8.83 | 3.66 | 66.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
S&T Bancorp Inc. | STBA | Indiana, PA | 154 | 15.4 | 12.6 | 12.1 | 3.3 | 541 | 4,527 | 8.20 | 11.98 | 15.39 | 2.15 | 1.38 | 0.86 | 7.11 | 3.54 | 61.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Carter Bank & Trust | CARE | Martinsville, VA | 88 | 8.0 | NA | NA | 4.3 | 243 | 4,442 | 6.46 | 11.15 | 11.89 | 2.38 | 1.01 | 0.57 | 7.01 | 2.55 | 59.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Towne-Bank | TOWN | Portsmouth, VA | 160 | 15.3 | NA | NA | 2.4 | 479 | 4,318 | 7.11 | 12.88 | 14.03 | 2.77 | 1.25 | 0.93 | 7.16 | 3.97 | 65.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
First Merchants Corp. | FRME | Muncie, IN | 138 | 10.6 | 11.7 | 11.7 | 0.8 | 430 | 4,305 | 7.50 | 14.15 | 16.34 | 1.84 | 2.37 | 0.96 | 7.48 | 4.10 | 63.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Union First Market Bkshs Corp. | UBSH | Richmond, VA | 122 | 12.7 | 12.4 | 12.2 | 2.8 | 438 | 4,096 | 8.97 | 13.14 | 14.57 | 2.70 | 1.11 | 0.93 | 8.46 | 4.31 | 61.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
High | 239 | % | 19.6 | x | 15.7 | x | 14.2 | x | 7.3 | % | $ | 1,638 | $ | 14,913 | 10.80 | % | 16.54 | % | 17.80 | % | 3.33 | % | 2.50 | % | 1.19 | % | 9.86 | % | 4.34 | % | 69.8 | % | ||||||||||||||||||||||||||||||||||||
Low | 88 | 8.0 | 11.5 | 10.9 | 0.8 | 243 | 4,096 | 9 | 70 | 89 | 4 | 01 | 57 | 57 | 55 | .2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | 151 | 13.7 | 13.2 | 12.5 | 3.6 | 840 | 6,714 | 8.43 | 13.09 | 14.64 | 1.75 | 1.63 | 0.92 | 7.84 | 3.74 | 619 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Median | 150 | 13.4 | 12.6 | 12.3 | 3.3 | 711 | 5,956 | 8.50 | 13.01 | 14.55 | 1.82 | 1.45 | 0.95 | 7.75 | 3.70 | 620 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
United Bankshares | 214 | % | 15.8x | 14.3x | 14.0x | 4.8 | % | $ | 1,299 | $ | 8,420 | 7.55 | % | 12.40 | % | 13.66 | % | 1.48 | % | 1.13 | % | 1.02 | % | 8.48 | % | 3.81 | % | 520 | % |
82
Sandler O’Neill noted that United Bankshares had similar financial and performance metrics to the United Bankshares peer group selected by Sandler O’Neill.
Virginia Commerce – Stock Price Performance
Sandler O’Neill reviewed the history of the publicly reported trading prices of Virginia Commerce’s common stock for the one-year period ended January 10, 2013 (the day prior to news reports of a potential transaction). Sandler O’Neill also reviewed the history of the publicly reported trading prices of Virginia Commerce common stock for the three-year period ended January 10, 2013. Sandler O’Neill then compared the relationship between the movements in the price of Virginia Commerce common stock against the movements in the prices of its peer group, the S&P 500 Index, NASDAQ Bank Index and the S&P Bank Index.
VCBI One Year Stock Performance
Beginning Index Value January 10, 2012 | Ending Index Value January 10, 2013 | |||||||
VCBI | 100 | % | 112 | % | ||||
S&P Bank Index | 100 | % | 119 | % | ||||
NASDAQ Bank Index | 100 | % | 114 | % | ||||
VCBI Peer Group | 100 | % | 114 | % | ||||
S&P 500 Index | 100 | % | 112 | % |
VCBI Three Year Stock Performance
Beginning Index Value January 10, 2010 | Ending Index Value January 10, 2013 | |||||||
VCBI | 100 | % | 161 | % | ||||
S&P Bank Index | 100 | % | 121 | % | ||||
NASDAQ Bank Index | 100 | % | 112 | % | ||||
VCBI Peer Group | 100 | % | 115 | % | ||||
S&P 500 Index | 100 | % | 136 | % |
Sandler O’Neill noted the above analysis shows that Virginia Commerce common stock out-performed each of the indices to which it was compared in the three-year period.
United Bankshares – Stock Price Performance
Sandler O’Neill reviewed the history of the publicly reported trading prices of United Bankshares’ common stock for the one-year period ended January 29, 2013. Sandler O’Neill also reviewed the history of the publicly reported trading prices of United Bankshares’ common stock for the three-year period ended January 29, 2013. Sandler O’Neill then compared the relationship between the movements in the price of United Bankshares’ common stock against the movements in the prices of its peer group, the S&P 500 Index, NASDAQ Bank Index and the S&P Bank Index.
UBSI One Year Stock Performance
Beginning Index Value January 29, 2012 | Ending Index Value January 29, 2013 | |||||||
UBSI | 100 | % | 93 | % | ||||
S&P Bank Index | 100 | % | 120 | % | ||||
NASDAQ Bank Index | 100 | % | 116 | % | ||||
UBSI Peer Group | 100 | % | 105 | % | ||||
S&P 500 Index | 100 | % | 115 | % |
83
UBSI Three Year Stock Performance
Beginning Index Value January 29, 2010 | Ending Index Value January 29, 2013 | |||||||
UBSI | 100 | % | 104 | % | ||||
S&P Bank Index | 100 | % | 121 | % | ||||
NASDAQ Bank Index | 100 | % | 114 | % | ||||
UBSI Peer Group | 100 | % | 121 | % | ||||
S&P 500 Index | 100 | % | 140 | % |
Sandler O’Neill noted the above analysis shows that United Bankshares’ stock under-performed each of the indices to which it was compared in the one-year and three-year periods.
Virginia Commerce – Net Present Value Analysis
Sandler O’Neill performed an analysis that estimated the present value of Virginia Commerce through December 31, 2017.
Sandler O’Neill based the analysis on Virginia Commerce’s projected earnings stream as derived from the internal financial projections provided by Virginia Commerce management for the years ending December 31, 2012 through 2014.
To approximate the terminal value of Virginia Commerce common stock at December 31, 2017, Sandler O’Neill applied price to forward earnings multiples of 12.0x to 17.0x and multiples of tangible book value ranging from 100% to 200%. Sandler O’Neill selected the price to forward earnings multiples of 12.0x to 17.0x based on the range of trading multiples of the comparable groups of Virginia Commerce. The income streams and terminal values were then discounted to present values using different discount rates ranging from 11.0% to 17.0%, which were assumed deviations, both up and down, as selected by Sandler O’Neill based on the Virginia Commerce discount rate of 13.5% as determined by Sandler O’Neill. The discount rate is determined by adding the 10-year Treasury Bond rate (1.95%), the published Ibbotson 60-year equity risk premium (5.70%), the published Ibbotson size premium (3.89%) and the published Ibbotson Industry Premium (1.99%).
Discount | Earnings Per Share Multiples | |||||||||||||||||||||||
Rate | 12.0x | 13.0x | 14.0x | 15.0x | 16.0x | 17.0x | ||||||||||||||||||
11.0% | $ | 11.13 | $ | 12.06 | $ | 12.98 | $ | 13.91 | $ | 14.84 | $ | 15.77 | ||||||||||||
12.0% | $ | 10.64 | $ | 11.53 | $ | 12.41 | $ | 13.30 | $ | 14.19 | $ | 15.07 | ||||||||||||
13.0% | $ | 10.18 | $ | 11.03 | $ | 11.87 | $ | 12.72 | $ | 13.57 | $ | 14.42 | ||||||||||||
14.0% | $ | 9.74 | $ | 10.55 | $ | 11.36 | $ | 12.17 | $ | 12.99 | $ | 13.80 | ||||||||||||
15.0% | $ | 9.32 | $ | 10.10 | $ | 10.88 | $ | 11.65 | $ | 12.43 | $ | 13.21 | ||||||||||||
16.0% | $ | 8.93 | $ | 9.67 | $ | 10.42 | $ | 11.16 | $ | 11.90 | $ | 12.65 | ||||||||||||
17.0% | $ | 8.55 | $ | 9.27 | $ | 9.98 | $ | 10.69 | $ | 11.40 | $ | 12.12 |
Discount | Tangible Book Value Per Share Multiples | |||||||||||||||||||||||
Rate | 100% | 120% | 140% | 160% | 180% | 200% | ||||||||||||||||||
11.0% | $ | 8.56 | $ | 10.27 | $ | 11.98 | $ | 13.69 | $ | 15.40 | $ | 17.11 | ||||||||||||
12.0% | $ | 8.18 | $ | 9.82 | $ | 11.45 | $ | 13.09 | $ | 14.73 | $ | 16.36 | ||||||||||||
13.0% | $ | 7.83 | $ | 9.39 | $ | 10.96 | $ | 12.52 | $ | 14.09 | $ | 15.65 | ||||||||||||
14.0% | $ | 7.49 | $ | 8.99 | $ | 10.48 | $ | 11.98 | $ | 13.48 | $ | 14.98 | ||||||||||||
15.0% | $ | 7.17 | $ | 8.60 | $ | 10.04 | $ | 11.47 | $ | 12.90 | $ | 14.34 | ||||||||||||
16.0% | $ | 6.86 | $ | 8.24 | $ | 9.61 | $ | 10.98 | $ | 12.36 | $ | 13.73 | ||||||||||||
17.0% | $ | 6.58 | $ | 7.89 | $ | 9.21 | $ | 10.52 | $ | 11.84 | $ | 13.15 |
Sandler O’Neill also considered and discussed with the Virginia Commerce board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net
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income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming Virginia Commerce’s net income varied from 25% above projections to 25% below projections. This analysis resulted in the following reference ranges of indicated aggregate values for Virginia Commerce common stock, using a discount rate of 13.5%:
Annual Budget | Earnings Per Share Multiples | |||||||||||||||||||||||
Variance | 12.0x | 13.0x | 14.0x | 15.0x | 16.0x | 17.0x | ||||||||||||||||||
(25.0%) | $ | 7.46 | $ | 8.08 | $ | 8.70 | $ | 9.32 | $ | 9.94 | $ | 10.56 | ||||||||||||
(20.0%) | $ | 7.95 | $ | 8.62 | $ | 9.28 | $ | 9.94 | $ | 10.61 | $ | 11.27 | ||||||||||||
(15.0%) | $ | 8.45 | $ | 9.16 | $ | 9.86 | $ | 10.56 | $ | 11.27 | $ | 11.97 | ||||||||||||
(10.0%) | $ | 8.95 | $ | 9.69 | $ | 10.44 | $ | 11.19 | $ | 11.93 | $ | 12.68 | ||||||||||||
(5.0%) | $ | 9.45 | $ | 10.23 | $ | 11.02 | $ | 11.81 | $ | 12.59 | $ | 13.38 | ||||||||||||
0.0% | $ | 9.94 | $ | 10.77 | $ | 11.60 | $ | 12.43 | $ | 13.26 | $ | 14.08 | ||||||||||||
5.0% | $ | 10.44 | $ | 11.31 | $ | 12.18 | $ | 13.05 | $ | 13.92 | $ | 14.79 | ||||||||||||
10.0% | $ | 10.94 | $ | 11.85 | $ | 12.76 | $ | 13.67 | $ | 14.58 | $ | 15.49 | ||||||||||||
15.0% | $ | 11.43 | $ | 12.39 | $ | 13.34 | $ | 14.29 | $ | 15.24 | $ | 16.20 | ||||||||||||
20.0% | $ | 11.93 | $ | 12.93 | $ | 13.92 | $ | 14.91 | $ | 15.91 | $ | 16.90 | ||||||||||||
25.0% | $ | 12.43 | $ | 13.46 | $ | 14.50 | $ | 15.53 | $ | 16.57 | $ | 17.61 |
United Bankshares – Net Present Value Analysis
Sandler O’Neill performed an analysis that estimated the present value of United Bankshares through December 31, 2017.
Sandler O’Neill based the analysis on United Bankshares’ projected earnings stream as derived from median publicly available analyst estimates for United Bankshares’ long term earnings growth rate for the year ended December 31, 2014 and the years thereafter as discussed with senior management of United Bankshares.
To approximate the terminal value of United Bankshares’ common stock at December 31, 2017, Sandler O’Neill applied price to forward earnings multiples of 12.0x to 17.0x and multiples of tangible book value ranging from 125% to 225%. Sandler O’Neill selected the price to forward earnings multiples of 12.0x to 17.0x based on the range of trades multiples of the comparable groups of United Bankshares. The income streams and terminal values were then discounted to present values using different discount rates ranging from 10.0% to 13.0%, which were assumed deviations, both up and down, as selected by Sandler O’Neill based on the United Bankshares discount rate of 11.5% as determined by Sandler O’Neill. The discount rate is determined by adding the 10-year Treasury Bond rate (1.95%), the published Ibbotson 60-year equity risk premium (5.70%), the published Ibbotson size premium (1.88%) and the published Ibbotson Industry Premium (1.99%).
Discount | Earnings Per Share Multiples | |||||||||||||||||||||||
Rate | 12.0x | 13.0x | 14.0x | 15.0x | 16.0x | 17.0x | ||||||||||||||||||
10.0% | $ | 20.38 | $ | 21.68 | $ | 22.98 | $ | 24.28 | $ | 25.58 | $ | 26.88 | ||||||||||||
10.5% | $ | 19.97 | $ | 21.24 | $ | 22.51 | $ | 23.78 | $ | 25.05 | $ | 26.32 | ||||||||||||
11.0% | $ | 19.57 | $ | 20.81 | $ | 22.06 | $ | 23.30 | $ | 24.54 | $ | 25.78 | ||||||||||||
11.5% | $ | 19.18 | $ | 20.40 | $ | 21.61 | $ | 22.83 | $ | 24.04 | $ | 25.25 | ||||||||||||
12.0% | $ | 18.80 | $ | 19.99 | $ | 21.18 | $ | 22.37 | $ | 23.55 | $ | 24.74 | ||||||||||||
12.5% | $ | 18.43 | $ | 19.59 | $ | 20.76 | $ | 21.92 | $ | 23.08 | $ | 24.24 | ||||||||||||
13.0% | $ | 18.07 | $ | 19.21 | $ | 20.34 | $ | 21.48 | $ | 22.62 | $ | 23.75 |
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Discount | Tangible Book Value Per Share Multiples | |||||||||||||||||||||||
Rate | 125% | 145% | 165% | 185% | 205% | 225% | ||||||||||||||||||
10.0% | $ | 16.90 | $ | 18.84 | $ | 20.78 | $ | 22.72 | $ | 24.65 | $ | 26.59 | ||||||||||||
10.5% | $ | 16.57 | $ | 18.47 | $ | 20.36 | $ | 22.25 | $ | 24.15 | $ | 26.04 | ||||||||||||
11.0% | $ | 16.25 | $ | 18.10 | $ | 19.95 | $ | 21.80 | $ | 23.65 | $ | 25.51 | ||||||||||||
11.5% | $ | 15.93 | $ | 17.74 | $ | 19.55 | $ | 21.36 | $ | 23.17 | $ | 24.98 | ||||||||||||
12.0% | $ | 15.62 | $ | 17.39 | $ | 19.16 | $ | 20.94 | $ | 22.71 | $ | 24.48 | ||||||||||||
12.5% | $ | 15.32 | $ | 17.06 | $ | 18.79 | $ | 20.52 | $ | 22.25 | $ | 23.98 | ||||||||||||
13.0% | $ | 15.03 | $ | 16.73 | $ | 18.42 | $ | 20.11 | $ | 21.81 | $ | 23.50 |
Sandler O’Neill also considered and discussed with the Virginia Commerce board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming United Bankshares’ net income varied from 25% above projections to 25% below projections. This analysis resulted in the following reference ranges of indicated aggregate values for United Bankshares’ common stock, using a discount rate of 11.5%:
Annual Budget | Earnings Per Share Multiples | |||||||||||||||||||||||
Variance | 12.0x | 13.0x | 14.0x | 15.0x | 16.0x | 17.0x | ||||||||||||||||||
(25.0%) | $ | 15.53 | $ | 16.44 | $ | 17.35 | $ | 18.26 | $ | 19.17 | $ | 20.08 | ||||||||||||
(20.0%) | $ | 16.26 | $ | 17.23 | $ | 18.20 | $ | 19.17 | $ | 20.14 | $ | 21.11 | ||||||||||||
(15.0%) | $ | 16.98 | $ | 18.02 | $ | 19.05 | $ | 20.08 | $ | 21.11 | $ | 22.14 | ||||||||||||
(10.0%) | $ | 17.71 | $ | 18.80 | $ | 19.90 | $ | 20.99 | $ | 22.08 | $ | 23.17 | ||||||||||||
(5.0%) | $ | 18.44 | $ | 19.59 | $ | 20.74 | $ | 21.90 | $ | 23.05 | $ | 24.20 | ||||||||||||
0.0% | $ | 19.17 | $ | 20.38 | $ | 21.59 | $ | 22.81 | $ | 24.02 | $ | 25.23 | ||||||||||||
5.0% | $ | 19.90 | $ | 21.17 | $ | 22.44 | $ | 23.72 | $ | 24.99 | $ | 26.27 | ||||||||||||
10.0% | $ | 20.62 | $ | 21.96 | $ | 23.29 | $ | 24.63 | $ | 25.96 | $ | 27.30 | ||||||||||||
15.0% | $ | 21.35 | $ | 22.75 | $ | 24.14 | $ | 25.54 | $ | 26.93 | $ | 28.33 | ||||||||||||
20.0% | $ | 22.08 | $ | 23.54 | $ | 24.99 | $ | 26.45 | $ | 27.90 | $ | 29.36 | ||||||||||||
25.0% | $ | 22.81 | $ | 24.32 | $ | 25.84 | $ | 27.36 | $ | 28.87 | $ | 30.39 |
Analysis of Selected Merger Transactions
Sandler O’Neill reviewed two sets of comparable mergers and acquisitions.
The first set of mergers and acquisitions included 19 transactions announced from January 1, 2011 through January 29, 2013 with announced transaction values between $100 and $500 million. Sandler O’Neill considered these transactions to be reflective of the proposed Virginia Commerce and United Bankshares combination. Sandler O’Neill reviewed the following multiples: transaction price to book value, transaction price to tangible book value, transaction price to last twelve months’ earnings per share, core deposit premium and market premium. As illustrated in the following table, Sandler O’Neill compared the proposed merger multiples to the median multiples of these comparable transactions.
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Deal Price / | ||||||||||||||||||||||||||||||||||||||
Acquiror | ST | Target | ST | Consideration | Announce Date | Deal Value ($mm) | BV | TBV | LTM EPS | Core Dep. Premium | Market Premium | |||||||||||||||||||||||||||
Investors Bancorp Inc. (MHC) | NJ | Roma Financial Corp. (MHC) | NJ | Stock | 12/19/2012 | $ | 459 | 215 | % | 217 | % | NM | NA | 70.5 | % | |||||||||||||||||||||||
Prosperity Bancshares Inc. | TX | Coppermark Bancshares Inc. | OK | Mixed | 12/10/2012 | 194 | 159 | 159 | 13.1x | 6.9 | % | NA | ||||||||||||||||||||||||||
PacWest Bancorp | CA | First California Financial Grp | CA | Stock | 11/6/2012 | 235 | 111 | 170 | 21.1 | 5.4 | 17.5 | |||||||||||||||||||||||||||
NBT Bancorp Inc. | NY | Alliance Financial Corp. | NY | Stock | 10/7/2012 | 231 | 157 | 212 | 19.1 | 12.4 | 22.4 | |||||||||||||||||||||||||||
Investors Bancorp Inc. (MHC) | NJ | Marathon Banking Corporation | NY | Cash | 6/14/2012 | 135 | 123 | 151 | 23.8 | 7.4 | NA | |||||||||||||||||||||||||||
Berkshire Hills Bancorp Inc. | MA | Beacon Federal Bancorp Inc. | NY | Mixed | 5/31/2012 | 130 | 111 | 111 | 22.6 | 3.4 | 48.9 | |||||||||||||||||||||||||||
Capital Bank Finl Corp | FL | Southern Community Financial | NC | Mixed | 3/26/2012 | 121 | 131 | 132 | 63.0 | 2.3 | NM | |||||||||||||||||||||||||||
Cadence Bancorp LLC | TX | Encore Bancshares Inc. | TX | Cash | 3/5/2012 | 251 | 171 | 240 | NM | 13.8 | 37.7 | |||||||||||||||||||||||||||
Carlile Bancshares Inc. | TX | Northstar Financial Corp. | TX | Cash | 2/21/2012 | 115 | 173 | 174 | 18.2 | 7.4 | NA | |||||||||||||||||||||||||||
Tompkins Financial Corporation | NY | VIST Financial Corp. | PA | Mixed | 1/25/2012 | 109 | 71 | 116 | 28.8 | 1.4 | 83.8 | |||||||||||||||||||||||||||
Old National Bancorp | IN | Indiana Community Bancorp | IN | Mixed | 1/24/2012 | 105 | 123 | 123 | NM | 2.2 | 65.4 | |||||||||||||||||||||||||||
Susquehanna Bancshares Inc. | PA | Tower Bancorp Inc. | PA | Mixed | 6/20/2011 | 342 | 135 | 149 | NM | 6.0 | 40.6 | |||||||||||||||||||||||||||
F.N.B. Corp. | PA | Parkvale Financial Corp. | PA | Mixed | 6/15/2011 | 163 | 138 | 198 | NM | 5.2 | NM | |||||||||||||||||||||||||||
Valley National Bancorp | NJ | State Bancorp Inc. | NY | Stock | 4/28/2011 | 267 | 188 | 188 | 23.7 | NA | 25.7 | |||||||||||||||||||||||||||
Brookline Bancorp Inc. | MA | Bancorp Rhode Island Inc. | RI | Mixed | 4/19/2011 | 234 | 175 | 193 | 22.9 | 11.8 | 57.1 | |||||||||||||||||||||||||||
IBERIABANK Corp. | LA | Cameron Bancshares Inc. | LA | Stock | 3/10/2011 | 135 | 174 | 174 | 14.6 | 11.9 | NA | |||||||||||||||||||||||||||
Susquehanna Bancshares Inc. | PA | Abington Bancorp Inc | PA | Stock | 1/26/2011 | 274 | 124 | 124 | 33.4 | 9.1 | 13.8 | |||||||||||||||||||||||||||
Industrial and Commercial Bank | Bank of East Asia (USA) NA | NY | Cash | 1/21/2011 | 140 | 134 | 162 | 47.6 | 21.1 | NA | ||||||||||||||||||||||||||||
People’s United Financial Inc. | CT | Danvers Bancorp Inc. | MA | Mixed | 1/20/2011 | 489 | 163 | 184 | 28.5 | 13.4 | 32.9 | |||||||||||||||||||||||||||
High | $ | 489 | 215 | % | 240 | % | 63.0x | 21.1 | % | 83.8 | % | |||||||||||||||||||||||||||
Low | 105 | 71 | 111 | 13.1 | 1.4 | 13.8 | ||||||||||||||||||||||||||||||||
Mean | 217 | 146 | 167 | 27.2 | 8.3 | 43.0 | ||||||||||||||||||||||||||||||||
Median | 194 | 138 | 170 | 23.3 | 7.4 | 39.1 |
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The second set of mergers and acquisitions included 19 transactions announced from January 1, 2008 through January 29, 2013 where the target was headquartered in Maryland, Washington, D.C. or Virginia. Sandler O’Neill considered these transactions to be reflective of the proposed Virginia Commerce and United Bankshares combination. Sandler O’Neill reviewed the following multiples: transaction price to book value,transaction price to tangible book value, transaction price to last twelve months’ earnings per share, core depositpremium and market premium. As illustrated in the following table, Sandler O’Neill compared the proposed merger multiples to the median multiples of these comparable transactions.
UBSI /VCBI | Comparable Transactions Median | Comparable Transactions High | Comparable Transactions Low | |||||||||||||
Transaction Value / Book Value: | 182 | % | 123 | % | 215 | % | 4 | % | ||||||||
Transaction Value / Tangible Book Value: | 182 | % | 131 | % | 240 | % | 4 | % | ||||||||
Transaction Value / Last Twelve Months Earnings Per Share: | 21.0 | x | 22.8 | x | 63.0 | x | 8.5 | x | ||||||||
Core Deposit Premium: | 12.7 | % | 2.7 | % | 21.1 | % | (9.5 | %) | ||||||||
Market Premium | 47.5 | % | 40.6 | % | 83.8 | % | 2.0 | % |
Deal Price / | ||||||||||||||||||||||||||||||||||||||
Acquiror | ST | Target | ST | Consideration | Announce Date | Deal Value ($mm) | BV | TBV | LTM EPS | Core Dep. Premium | Market Premium | |||||||||||||||||||||||||||
F.N.B. Corp. | PA | Annapolis Bancorp Inc. | MD | Mixed | 10/22/2012 | $ | 50 | 160 | % | 160 | % | 18.6x | NA | 53.7 | % | |||||||||||||||||||||||
City Holding Co. | WV | Community Financial Corp. | VA | Stock | 8/2/2012 | 38 | 66 | 66 | 23.9 | (3.8 | %) | 46.8 | ||||||||||||||||||||||||||
Old Line Bancshares Inc. | MD | WSB Holdings Inc. | MD | Stock | 7/11/2012 | 49 | 89 | 89 | 43.7 | (2.8 | ) | NM | ||||||||||||||||||||||||||
Customers Bancorp Inc. | PA | Acacia FSB | VA | Stock | 6/20/2012 | 65 | 52 | 52 | NM | (9.5 | ) | NA | ||||||||||||||||||||||||||
First Virginia Community Bank | VA | 1st Commonwealth Bank Virginia | VA | Stock | 6/12/2012 | 4 | 98 | 98 | NM | (0.2 | ) | NA | ||||||||||||||||||||||||||
Washington-First Bankshares Inc. | VA | Alliance Bankshares Corp. | VA | Stock | 5/3/2012 | 24 | 86 | 86 | NM | (1.2 | ) | 15.4 | ||||||||||||||||||||||||||
Kopernik Federal Bank | MD | Hull FSB | MD | Unclassified | 5/1/2012 | 2 | NM | NM | NM | NM | NA | |||||||||||||||||||||||||||
First Community Bancshares Inc. | VA | Peoples Bank of Virginia | VA | Stock | 3/1/2012 | 41 | 100 | 100 | 18.8 | 0.9 | NM | |||||||||||||||||||||||||||
Sandy Spring Bancorp Inc. | MD | CommerceFirst Bancorp Inc. | MD | Stock | 10/6/2011 | 25 | 107 | 107 | 16.4 | 1.1 | NM | |||||||||||||||||||||||||||
City Holding Co. | WV | Virginia Savings Bancorp Inc. | VA | Stock | 9/21/2011 | 13 | 110 | 110 | 25.2 | 1.0 | NA | |||||||||||||||||||||||||||
Old Line Bancshares Inc. | MD | Maryland Bankcorp Inc. | MD | Stock | 9/1/2010 | 20 | 78 | 78 | NM | (2.2 | ) | NM | ||||||||||||||||||||||||||
Capital Funding Bancorp Inc. | MD | AmericasBank Corp. | MD | Cash | 4/3/2009 | 0 | 4 | 4 | NM | (9.1 | ) | 2.0 | ||||||||||||||||||||||||||
Union Bankshares Corp. | VA | First Market Bank FSB | VA | Stock | 3/30/2009 | 105 | 118 | 118 | NM | 1.7 | NA | |||||||||||||||||||||||||||
Premier Financial Bancorp Inc. | WV | Abigail Adams National Bancorp | DC | Stock | 12/30/2008 | 12 | 44 | NA | NM | NA | 9.7 | |||||||||||||||||||||||||||
M&T Bank Corp. | NY | Provident Bankshares Corp. | MD | Stock | 12/18/2008 | 402 | 72 | 150 | NM | 2.7 | 69.9 | |||||||||||||||||||||||||||
Capital One Financial Corp. | VA | Chevy Chase Bank F.S.B. | MD | Stock | 12/3/2008 | 520 | 59 | 66 | NM | (2.7 | ) | NA |
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Deal Price / | ||||||||||||||||||||||||||||||||||||||
Acquiror | ST | Target | ST | Consideration | Announce Date | Deal Value ($mm) | BV | TBV | LTM EPS | Core Dep. Premium | Market Premium | |||||||||||||||||||||||||||
Hampton Roads Bankshares Inc. | VA | Gateway Financial Holdings | VA | Stock | 9/23/2008 | 86 | 61 | 96 | 8.5 | (2.0 | ) | 22.1 | ||||||||||||||||||||||||||
Village Bank & Trust Finl Corp | VA | River City Bk | VA | Stock | 3/9/2008 | 20 | 131 | 131 | NM | 5.6 | 44.9 | |||||||||||||||||||||||||||
Hampton Roads Bankshares Inc. | VA | Shore Financial Corp. | VA | Stock | 1/8/2008 | 56 | 198 | 201 | 19.8 | 16.8 | 80.0 | |||||||||||||||||||||||||||
High | $ | 520 | 198 | % | 201 | % | 43.7x | 16.8 | % | 80.0 | % | |||||||||||||||||||||||||||
Low | 0 | 4 | 4 | 8.5 | (9.5 | ) | 2.0 | |||||||||||||||||||||||||||||||
Mean | 81 | 91 | 101 | 21.9 | (0.2 | ) | 38.3 | |||||||||||||||||||||||||||||||
Median | 38 | 87 | 98 | 19.3 | (0.7 | ) | 44.9 |
Pro Forma Merger Analysis
Sandler O’Neill analyzed certain potential pro forma effects of the merger, assuming the following: (1) the merger is completed in the third quarter of 2013; (2) the transaction value per share is equal to $14.00 per share of Virginia Commerce common stock, based on an exchange ratio of 0.5442 shares of United Bankshares common stock for each share of Virginia Commerce common stock and a United Bankshares 10-day average stock price of $25.73 per share; (3) a 25% reduction in Virginia Commerce’s projected operating expenses, fully realized in 2014; (4) approximately $16.0 million in pre-tax transaction costs and expenses; (5) Virginia Commerce’s performance was calculated in accordance with Virginia Commerce management’s prepared earnings projections; (6) United Bankshares’ performance was calculated in accordance with median publicly available analyst estimates for United Bankshares’ long term earnings growth rate for the year ended December 31, 2013 and the years thereafter; and (7) certain other assumptions pertaining to costs and expenses associated with the transaction, intangible amortization, opportunity cost of cash and other items. The analyses indicated that, for the full years 2013 and 2014, the merger (excluding transaction expenses) would be accretive to United Bankshares’ projected earnings per share and slightly dilutive to United Bankshares’ tangible book value per share. The actual results achieved by the combined company may vary from projected results and the variations may be material.
Sandler O’Neill’s Compensation and Other Relationships with Virginia Commerce and United Bankshares
Sandler O’Neill has acted as financial advisor to the Virginia Commerce board of directors and executive management of Virginia Commerce and its subsidiaries in connection with the merger. The Virginia Commerce board of directors and executive management of Virginia Commerce and its subsidiaries agreed to pay Sandler O’Neill a transaction fee equal to 1.05% of the aggregate purchase price of Virginia Commerce in the merger, calculated as defined in Virginia Commerce’s engagement letter with Sandler O’Neill, $250,000 of which was paid upon delivery of Sandler O’Neill’s opinion, and the remainder of which is contingent upon completion of the merger. Virginia Commerce has also agreed to indemnify Sandler O’Neill against certain liabilities arising out of its engagement and to reimburse Sandler O’Neill for certain of its out-of-pocket expenses. During the two years preceding the date of its opinion to Virginia Commerce, Sandler O’Neill provided investment banking and financial advisory services to Virginia Commerce unrelated to the merger but did not receive any compensation for such services. During the same period, Sandler O’Neill also served as financial adviser to United Bankshares in connection with an unrelated transaction and received compensation for such services from United Bankshares.
In the ordinary course of its respective broker and dealer businesses, Sandler O’Neill may purchase securities from and sell securities to Virginia Commerce and United Bankshares and their affiliates. Sandler O’Neill may also actively trade the debt and/or equity securities of Virginia Commerce and United Bankshares or their affiliates for their own accounts and for the accounts of their customers and, accordingly, may at any time hold a long or short position in such securities.
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Opinion of United Bankshares’ Financial Advisor
On September 28, 2012, United Bankshares executed an engagement agreement with KBW. KBW’s engagement encompassed assisting United Bankshares in analyzing, structuring, negotiating and effecting a potential transaction between United Bankshares and Virginia Commerce. United Bankshares selected KBW because KBW is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger and is familiar with United Bankshares and its business. As part of its investment banking business, KBW is continually engaged in the valuation of financial businesses and their securities in connection with mergers and acquisitions.
On January 28, 2013, the United Bankshares board of directors held a meeting to evaluate the proposed merger of Virginia Commerce with and into United Bankshares. At this meeting, KBW reviewed the financial aspects of the proposed merger and rendered an oral opinion (subsequently confirmed in writing), to United Bankshares that, as of such date, and based upon and subject to factors and assumptions set forth therein, the merger consideration in the merger is fair, from a financial point of view, to United Bankshares. The United Bankshares board of directors approved the merger agreement at this meeting.
The full text of KBW’s written opinion, dated January 28, 2013, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Appendix C to this document and is incorporated herein by reference. The description of the opinion set forth herein is qualified in its entirety by reference to the full text of such opinion. United Bankshares shareholders are urged to read the opinion in its entirety.
KBW’s opinion speaks only as of the date of the opinion. The opinion is directed to the United Bankshares board and addresses only the fairness, from a financial point of view to United Bankshares, of the merger consideration in the merger. It does not address the underlying business decision to proceed with the merger and does not constitute a recommendation to any United Bankshares shareholder as to how the shareholder should vote at the United Bankshares special meeting on the merger or any related matter.
In connection with its opinion, KBW reviewed, analyzed and relied upon material bearing upon the merger and the financial and operating condition of United Bankshares and Virginia Commerce and the merger, including among other things, the following:
A draft of the merger agreement dated January 25, 2013 (the most recent draft made available to us);
The Annual Reports to Stockholders and Annual Reports on Form 10-K for the three years ended December 31, 2011 of United Bankshares and Virginia Commerce, respectively;
Certain interim reports to shareholders and Quarterly Reports on Form 10-Q of United Bankshares and Virginia Commerce and certain other communications from United Bankshares and Virginia Commerce to their respective shareholders; and
Other financial information concerning the businesses and operations of United Bankshares and Virginia Commerce furnished to KBW by United Bankshares and Virginia Commerce for purposes of KBW’s analysis.
KBW also held discussions with members of senior management of United Bankshares and Virginia Commerce regarding, the past and current business operations, regulatory relations, financial condition and future prospects of the respective companies and such other matters that KBW deemed relevant to its inquiry. In addition, KBW compared certain financial and stock market information for United Bankshares and Virginia Commerce with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the banking industry and performed such other studies and analyses as KBW considered appropriate.
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In conducting its review and arriving at its opinion, KBW relied upon and assumed the accuracy and completeness of all of the financial and other information provided to it or publicly available, and did not independently verify the accuracy or completeness of any such information or assume any responsibility for such verification or accuracy. KBW relied upon the managements of United Bankshares and Virginia Commerce as to the reasonableness and achievability of the financial and operating forecasts and projections (and assumptions and bases therefor) provided to KBW and KBW assumed that such forecasts and projections reflect the best currently available estimates and judgments of such managements and that such forecasts and projections will be realized in the amounts and in the time periods currently estimated by such managements. KBW is not an expert in the independent valuation of the adequacy of allowances for loan losses, and without independent verification, assumed that the aggregate allowances for loan and lease losses for United Bankshares and Virginia Commerce are adequate to cover those losses. KBW did not make or obtain any evaluations or appraisals of any assets or liabilities of United Bankshares and Virginia Commerce, nor did they examine or review any individual credit files.
The projections and associated assumptions used by KBW in certain of its analyses were sourced from United Bankshares’ and Virginia Commerce’s senior management teams. United Bankshares and Virginia Commerce do not publicly disclose internal management projections of the type provided to KBW in connection with its review of the merger. As a result, such projections were not prepared with a view towards public disclosure. The projections were based on numerous variables and assumptions, which are inherently uncertain, including factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in the projections. Any estimates or projections contained in the analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates or projections of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty.
KBW was not asked to, and it did not, offer any opinion as to the terms of the merger agreement or the form of the merger, other than the merger consideration, to the extent expressly specified in KBW’s opinion. Additionally, KBW’s opinion did not address the relative merits of the merger as compared to any alternative business strategies that might exist for United Bankshares, nor does it address the effect of any other business combination in which United Bankshares might engage.
For purposes of rendering its opinion, KBW assumed that, in all respects material to its analyses:
The merger will be completed substantially in accordance with the terms set forth in the merger agreement;
The representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement are true and correct;
Each party to the merger agreement and all related documents will perform all of the covenants and agreements required to be performed by such party under such documents;
All conditions to the completion of the merger will be satisfied without any waivers or modifications to the merger agreement; and
In the course of obtaining the necessary regulatory, contractual or other consents or approvals for the merger, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, will be imposed that will have a material adverse effect on the future results of operations or financial condition of the combined entity or the contemplated benefits of the merger, including the cost savings, revenue enhancements and related expenses expected to result from the merger.
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KBW further assumed that the merger will be accounted for as a purchase transaction under U.S. generally accepted accounting principles, and that the merger will qualify as a tax-free reorganization for United States federal income tax purposes. KBW’s opinion is not an expression of an opinion as to the prices at which shares of United Bankshares common stock will trade since the announcement of the proposed merger or the actual value of the United Bankshares common shares when issued pursuant to the merger, or the prices at which the United Bankshares common shares will trade following the completion of the merger.
In performing its analyses, KBW considered such financial and other factors that it deemed appropriate under the circumstances, including, among others, the following: (i) the historical and current financial position and results of operations of United Bankshares and Virginia Commerce; (ii) the assets and liabilities of United Bankshares and Virginia Commerce; and (iii) the nature and terms of certain other merger transactions involving banks and bank holding companies. KBW also took into account its assessment of general economic, market and financial conditions and its experience in other transactions, as well as its experience in securities valuation and knowledge of the banking industry generally.
The merger consideration was determined through negotiation between United Bankshares and Virginia Commerce and the decision to enter into the merger was solely that of United Bankshares’ board of directors. In addition, the KBW opinion was among several factors taken into consideration by the United Bankshares board in making its determination to approve the merger agreement and the merger. Consequently, the analyses described below should not be viewed as determinative of the decision of the United Bankshares board with respect to the fairness of the merger consideration in the merger.
Summary of Analysis by KBW
The following is a summary of the material financial analyses presented by KBW to the United Bankshares board, in connection with rendering the fairness opinion described above. The following summary is not a complete description of the financial analyses performed by KBW in rendering its opinion or the presentation made by KBW to the United Bankshares board, nor does the order of analysis described represent relative importance or weight given to any particular analysis by KBW and is qualified in its entirety by reference to the written opinion of KBW attached as Appendix C. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. Selecting portions of the analysis or of the summary set forth herein, without considering the analysis as a whole, could create an incomplete view of the processes underlying KBW’s opinion. In arriving at its opinion, KBW considered the results of its entire analysis and KBW did not attribute any particular weight to any analysis or factor that it considered. Rather, KBW made its determination as to fairness on the basis of its experience and professional judgment after considering the results of its entire analysis. The financial analyses summarized below include information presented in tabular format. Accordingly, KBW believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion. The tables alone do not constitute a complete description of the financial analyses.
Summary of Proposal.Pursuant to the terms of the merger agreement, each outstanding share of common stock, $1.00 par value per share, of Virginia Commerce not owned by United Bankshares or any of its wholly-owned subsidiaries, other than shares held by them in a fiduciary capacity or as a result of debts previously contracted, shall receive in respect thereof, shares of United Bankshares stock equal to $14.00 per share divided by the 10-day average stock price of United Bankshares prior to the announcement of the merger, as more fully described in the merger agreement.
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Selected Companies Analysis.Using publicly available information, KBW compared the financial performance and financial condition of Virginia Commerce to the following public banks and thrifts traded on a major exchange headquartered in Virginia and Maryland with assets between $1 billion and $5 billion. Companies included in this group were: