- The Washington Times - Monday, March 28, 2005

United Bankshares Inc.’s move to set up a Washington headquarters is a strong signal that the banking company is expanding beyond its West Virginia market, analysts said yesterday.

United, previously based in Parkersburg, W.Va., last week established an office in Northwest and another in Charleston, W.Va., as its dual headquarters.

Chairman and Chief Executive Officer Richard M. Adams said the purpose was to focus more of the company’s resources on the Washington metropolitan market, which accounts for half of its deposits.

United Bankshares has 90 bank offices, 35 of which are in the Washington area under its Vienna, Va., subsidiary United Bank, and $6.4 billion in assets.

Troy Ward, a senior analyst with St. Louis brokerage firm AG Edwards & Sons Inc., said the Washington headquarters could improve United Bankshares’ stock price, which has been trading in the $30 range for the past six months.

The company’s stock closed yesterday on the Nasdaq Stock Market at $32.47, up 41 cents from Thursday’s price of $32.06. The markets were closed on Good Friday.

“I think one of the reasons United Bankshares has traded less than other smaller capital banks is that it was seen as just a West Virginia franchise. It was looked at as a sleepy franchise,” said Mr. Ward, who rated the stock as a “buy.”

Mr. Ward does not own any shares of United Bankshares, but AG Edwards is seeking a banking relationship with the company.

Steven Alexopoulos, with New York investment bank Sandler O’Neill & Partners LP, said he likes the company’s Washington strategy.

“It’s a good idea to build resources in higher-growth markets like Northern Virginia,” Mr. Alexopoulos said.

But Mr. Alexopoulos advised investors to hold their stock, saying he is cautious of the banking industry, which is facing higher interest rates that squeeze interest margins for banks.

His said his concern has been more focused on how the banking sector has been performing overall rather than United Bankshares, which had solid earnings for the fourth quarter and the year.

United Bankshares said quarterly profits ended Dec. 31 more than doubled to $25.5 million (59 cents per share) from $10.4 million (20 cents) a year earlier. Income for the year jumped 24 percent to $97.7 million ($1.92) from $78.7 million ($1.52) in 2003.

Mr. Alexopoulos does not own any company stock, but Sandler O’Neill is seeking business with the company.

Although he is encouraged by United Bankshares’ performance, senior analyst Brett Rabatin also had cautious outlook for the company and banking sector.

“I think the company’s fundamentals are pretty good. But I have to look at its rating from an industry standpoint,” said Mr. Rabatin, who is with Cleveland equity-research firm FTN Midwest Securities Corp.

Mr. Rabatin, who rated the stock as “neutral,” does not own any company shares. But FTN Midwest has business with the company.

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