United Security Bancshares - Second Quarter Profits: $1.4 million PR Newswire FRESNO, Calif., July 18, 2013 FRESNO, Calif., July18, 2013 /PRNewswire/ --United Security Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported today unaudited consolidated net income of $1,397,000 or $0.10 per basic and diluted common share for the quarter ended June30, 2013 and $2,472,000 or $0.17 per basic and diluted common share for the six months ended June30, 2013, as compared to $2,172,000 or $0.15 per basic and diluted common shares for the quarter ended June30, 2012 and $3,224,000 or $0.22 per basic and diluted shares for the six months ended June30, 2012. Annualized return on average equity (ROAE) for the quarter ended June30, 2013 was 7.85%, compared to 13.40% for the same period in 2012, and was 7.04% for the six months ended June30, 2013 compared to 10.23% for the six months ended June30, 2012. Annualized return on average assets (ROAA) was 0.88% for the three months ended June30, 2013 compared to 1.42% for the same period in 2012, and was 0.78% for the six months ended June30, 2013 compared to 1.05% for the six months ended June30, 2012. Changes in net income on a quarter-to-quarter comparative basis between the second quarters of 2013 and 2012 are largely the result of an increase of $649,000 on gains realized on the sale of other real estate owned during the quarter ended June30, 2013. The Company recorded a $1,807,000 gain realized on the sale of tax credit partnership investments during the quarter ended June30, 2012, compared to no gain reported for the same period ended June30, 2013. On a six month comparative basis, changes in income again were the result of an increase of $1,612,000 on gains realized on the sale of other real estate owned and a decrease of $1,807,000 on gains realized on the sale of other investments. The Board of Directors of United Security Bancshares declared a second quarter 2013 stock dividend of one percent (1%) on June 25, 2013. The stock dividend was payable to shareholders of record on July 12, 2013, and the shares will be issued on July 24, 2013. Dennis R. Woods, President and Chief Executive Officer of the Company, states, "We continue the positive trends started last year with reductions in problem assets, increases in capital, and positive net earnings. It has been a long road since the economy declined in 2008, but we are benefiting from recent improvements in both the local and the national economy." Shareholders' equity at June30, 2013 was $71,708,000, up $2,267,000 from shareholders' equity of $69,441,000 at December31, 2012. Net interest income before provision for credit losses for the quarter ended June30, 2013 totaled $5,342,000 and $10,602,000 for the six months ended June30, 2013, a decrease of $625,000 from $5,967,000 reported for the quarter ended June30, 2012 and a decrease of $1,448,000 from the $12,050,000 reported for the six months ended June30, 2012, respectively. The net interest margin was 3.94% for the quarter ended June30, 2013, and 3.94% for the six months ended June30, 2013, as compared to 4.71% for the quarter ended June30, 2012 and 4.70% for the six months ended June30, 2012. The Company continues to experience a decline in net interest margin due to decreases in loan and investment income. Noninterest income for the quarter ended June30, 2013 totaled $2,031,000, reflecting a decrease of $1,633,000 from $3,664,000 in noninterest income reported for the quarter ended June30, 2012. Noninterest income for the six months ended June30, 2013 totaled $3,575,000, reflecting a decrease of $983,000 from $4,558,000 in noninterest income reported for the six months ended June30, 2012. Customer service fees continue to provide the majority of the Company's noninterest income, totaling $902,000 for the quarter ended June30, 2013, as compared to $897,000 for the quarter ended June30, 2012, and $1,681,000 and $1,801,000 for the six months ended June 30, 2013 and 2012, respectively. Changes in noninterest income on a quarter-to-quarter comparative basis between the second quarters of 2013 and 2012 are largely the result of an increase of $649,000 on gains realized on the sale of other real estate owned during the quarter ended June30, 2013. The Company recorded a $1,807,000 gain realized on the sale of investments during the quarter ended June30, 2012, compared to no net gain for the same period ended June30, 2013. Noninterest expense totaled $5,078,000 for the quarter ended June30, 2013, an increase of $101,000 as compared to $4,977,000 reported for the quarter ended June30, 2012. For the six months ended June30, 2013, noninterest expense totaled $10,176,000, a decrease of $290,000 as compared to $10,466,000 for the six months ended June30, 2012. Between the second quarters of 2013 and 2012, expenses on other real estate owned increased $606,000, partially offset by decreases in impairment losses on investment securities, professional fees, regulatory assessments, and salary expenses. On a six month comparative basis, noninterest expense decreased due to decreases in salary expense, regulatory assessments, sale on tax credit partnership and impairment losses on investment securities, partially offset by increases in professional fees and occupancy expenses. The Company had a provision for loan loss reserve of $39,000 for the quarter ended June30, 2013 and $30,000 for the six months ended June30, 2013, compared to $1,004,000 for the quarter ended June30, 2012 and $1,006,000 for the six months ended June30, 2012. Net loan charge-offs totaled $285,000 for the quarter ended June30, 2013 and $657,000 for the six months ended June30, 2013 as compared to $2,444,000 for the quarter ended June30, 2012, and $3,044,000 for the six months ended June30, 2012. With a modest recovery in the economy and real estate markets within our service area, we have maintained an adequate allowance for loan losses which totaled 2.75% of total loans at June30, 2013 compared to 2.95% of total loans at December31, 2012 and 2.94% at June30, 2012. In determining the adequacy of the allowance for loan losses, Management's judgment is the primary determining factor for establishing the amount of the provision for loan losses and management considers the allowance for loan and lease losses at June30, 2013 to be adequate. Non-performing assets, comprised of nonaccrual loans, troubled debt restructures (TDR), other real estate owned through foreclosure (OREO), and loans more than 90 days past due and still accruing interest, decreased approximately $9,305,000 between December31, 2012 and June30, 2013. Additionally, nonperforming assets as a percentage of total assets decreased from 7.25% at December31, 2012 to 5.94% at June30, 2013. Nonaccrual loans decreased $2,760,000 between December31, 2012 and June30, 2013, while OREO, decreased $6,711,000 during the same period. Impaired loans totaled $20,469,000 at June30, 2013, a decrease of $1,462,000 from the balance of $21,931,000 at December31, 2012. United Security Bancshares is a $630+ million bank holding company headquartered in Fresno, California. United Security Bank, its principal subsidiary is a California state chartered bank with 11 branches serving the Central Valley and Campbell, and is a member of the Federal Reserve Bank of San Francisco. FORWARD-LOOKING STATEMENTS This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and the Company intends such statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the Company's possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the Company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include (1) changes in interest rates, (2) significant changes in banking laws or regulations, (3) increased competition in the company's market, (4) other-than-expected credit losses, (5) earthquake or other natural disasters impacting the condition of real estate collateral, (6) the effect of acquisitions and integration of acquired businesses, (7) the impact of proposed and/or recently adopted changes in laws, and regulations on the Company and its business; (8) changing bank regulatory conditions, policies, whether arising as new legislation or regulatory initiatives or changes in our regulatory classifications, that could lead to restrictions on activities of banks generally or as to the Bank, including specifically the formal order between the Federal Reserve Bank of San Francisco and the Company and the Bank, (9) failure to comply with the written regulatory agreement under which the Company is subject and (10) unknown economic impacts caused by the State of California's budget issues, including the effect on Federal spending do to sequestration required by the Budget Control Act of 2011. Management cannot predict at this time the severity or duration of the effects of the recent business slowdown on our specific business activities and profitability. Weaker or a further decline in capital and consumer spending, and related recessionary trends could adversely affect our performance in a number of ways including decreased demand for our products and services and increased credit losses. Likewise, changes in interest rates, among other things, could slow the rate of growth or put pressure on current deposit levels and affect the ability of borrowers to repay loans. Forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made, or to update earnings guidance including the factors that influence earnings. For a more complete discussion of these risks and uncertainties, see the Company's Annual Report on Form 10-K for the year ended December 31, 2012, and particularly the section of Management's Discussion and Analysis. Readers should carefully review all disclosures we file from time to time with the Securities and Exchange Commission ("SEC"). United Security Bancshares Consolidated Balance Sheets (unaudited) (in thousands) June 30, 2013 December 31, 2012 Assets Cash and noninterest-bearing deposits in 23,754 27,481 other banks Cash and due from Federal Reserve Bank 114,515 114,146 Cash and cash equivalents 138,269 141,627 Interest-bearing deposits in other banks 1,511 1,507 Investment securities (AFS at market value) 25,527 31,844 Loans and leases, net of unearned fees 405,035 400,033 Less: Allowance for credit losses (11,157) (11,784) Net loans 393,878 388,249 Premises and equipment - net 11,922 12,262 Other real estate owned 17,221 23,932 Goodwill and intangible assets 4,643 4,737 Cash surrender value of life insurance 16,941 16,681 Deferred income taxes 10,146 9,724 Other assets 15,604 18,314 Total assets 635,662 648,877 Deposits: Noninterest bearing demand deposits and NOW 219,693 217,014 Money market and savings 233,423 246,888 Time 93,985 99,385 Total deposits 547,101 563,287 Accrued interest payable 60 71 Other liabilities 5,911 6,010 Junior subordinated debentures (at fair 10,882 10,068 value) Total liabilities 563,954 579,436 Shareholders' equity: Common stock, no par value 20,000,000 shares authorized, 14,508,309 issued and 44,416 43,173 outstanding at June 30, 2013, and 14,217,303 at December 31, 2012 Retained earnings 27,429 26,179 Accumulated other comprehensive income (137) 89 Total shareholders' equity 71,708 69,441 Total liabilities and shareholders' equity $ 635,662 $ 648,877 United Security Bancshares Consolidated Statements of Income (unaudited) (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012 Interest income: Interest and fees on loans $ 5,554 $ 5,966 $ 11,020 $ 12,009 Interest on investment securities 140 457 338 978 Interest on deposits in FRB 70 43 135 94 Interest on deposits in other banks 2 10 4 20 Total interest income 5,766 6,476 11,497 13,101 Interest expense: Interest on deposits 331 437 742 915 Interest on other borrowed funds 93 72 153 136 Total interest expense 424 509 895 1,051 Net interest income before provision 5,342 5,967 10,602 12,050 for credit losses Provision for credit losses 39 1,004 30 1,006 Net interest income 5,303 4,963 10,572 11,044 Non-interest income: Customer service fees 902 897 1,681 1,801 Increase in cash surrender value of 140 144 277 280 bank owned life insurance Gain on sale of other real estate 924 275 1,949 337 owned Loss on Fair Value Option of (103) 364 (660) (112) Financial Assets Gain on sale of other investment 0 1,807 0 1,807 Other non-interest income 168 177 328 445 Total non-interest income 2,031 3,664 3,575 4,558 Non-interest expense: Salaries and employee benefits 2,113 2,176 4,474 4,598 Occupancy expense 883 840 1,788 1,605 Data processing 33 19 93 37 Professional fees 375 439 820 683 Regulatory assessments 339 417 698 783 Director fees 59 69 117 136 Amortization of intangibles 46 79 93 170 Correspondent bank service charges 81 80 157 160 Impairment losses on investment 0 149 0 172 securities Impairment losses on OREO 0 0 118 0 Loss on California tax credit 32 81 65 184 partnership OREO expense 588 (18) 613 666 Other non-interest expense 529 646 1,140 1,272 Total non-interest expense 5,078 4,977 10,176 10,466 Income before income tax provision 2,256 3,650 3,971 5,136 Provision for income taxes 859 1,478 1,499 1,912 Net Income $ 1,397 $ 2,172 $ 2,472 $ 3,224 United Security Bancshares Selected Financial Data (unaudited) (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012 Basic earnings per share $0.10 $0.15 $0.17 $0.22 Diluted earnings per share $0.10 $0.15 $0.17 $0.22 Weighted average basic 14,506,423 14,364,210 14,504,774 14,364,210 shares for EPS Weighted average diluted 14,507,817 14,364,210 14,508,363 14,364,210 shares for EPS Annualized return on: Average assets 0.88% 1.42% 0.78% 1.05% Average equity 7.85% 13.40% 7.04% 10.23% Yield on interest-earning 4.25% 5.13% 4.27% 5.08% assets Cost of interest-bearing 0.50% 0.61% 0.52% 0.63% liabilities Net interest margin 3.94% 4.75% 3.94% 4.70% Annualized net charge-offs 0.29% 2.48% 0.34% 1.54% to average loans June30, 2013 December31, 2012 Shares outstanding - 14,508,309 14,217.303 period end Book value per share $4.94 $4.88 Tangible book value per $4.62 $4.55 share Efficiency ratio 76.48% 70.47% Total nonperforming assets $37,769 $47,074 Nonperforming assets to 5.94% 7.25% total assets Total Impaired loans $20,469 $21,931 Total nonaccrual loans $10,665 $13,425 Allowance for credit 2.75% 2.95% losses to total loans SOURCE United Security Bancshares Website: http://www.unitedsecuritybank.com Contact: Dennis R. Woods, President and Chief Executive Officer of United Security Bank, +1-559-248-4928
United Security Bancshares - Second Quarter Profits: $1.4 million
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