United Security Bancshares - Third Quarter Profits: $1.9 million

       United Security Bancshares - Third Quarter Profits: $1.9 million

PR Newswire

FRESNO, Calif., Oct. 17, 2013

FRESNO, Calif., Oct. 17, 2013 /PRNewswire/ -- United Security Bancshares
(http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported
today unaudited consolidated net income of $1,852,000 or $0.13 per basic and
diluted common share for the quarter ended September30, 2013 and $4,323,000
or $0.30 per basic and diluted common share for the nine months ended
September30, 2013, as compared to $1,366,000 or $0.09 per basic and diluted
common shares for the quarter ended September30, 2012 and $4,591,000 or $0.32
per basic and diluted shares for the nine months ended September30, 2012.

Annualized return on average equity (ROAE) for the quarter ended September30,
2013 was 10.14%, compared to 8.25% for the same period in 2012, and was 8.10%
for the nine months ended September30, 2013, compared to 9.43% for the nine
months ended September30, 2012. Annualized return on average assets (ROAA)
was 1.14% for the three months ended September30, 2013, compared to 0.87% for
the same period in 2012, and was 0.90% for the nine months ended September30,
2013 compared to 0.99% for the nine months ended September30, 2012.

Change in net income on a quarter-to-quarter comparative basis between the
third quarters of 2013 and 2012 is largely the result of a negative provision
for credit losses of $1,150,000 during the quarter ended September30, 2013,
compared to a $4,000 provision during the same period ended September30,
2012. Partially offsetting the negative provision during the quarter ended
September30, 2013, compared to the same period ended September30, 2012, was
a decrease of $339,000 in interest income and an increase of $507,000 in
non-interest expense. On a nine month comparative basis, changes in income
were the result of a $2,130,000 decrease in provision for credit losses and a
$1,274,000 decrease in net cost of operation on OREO, offset by a decrease of
$1,807,000 on gains realized on the sale of other investments and a $1,943,000
decrease in total interest income.

The Board of Directors of United Security Bancshares declared a third quarter
2013 stock dividend of one percent (1%) on September 24, 2013. The stock
dividend was payable to shareholders of record on October 11, 2013, and the
shares will be issued on October 23, 2013.

Dennis R. Woods, President and Chief Executive Officer of the Company, states,
"We are continuing to see reductions in problem assets, increases in capital,
and positive net earnings. We continue to see improvements in both the local
and the national economy and look forward to continued success during the
fourth quarter of 2013." Shareholders' equity at September30, 2013 was
$73,499,000, up $4,058,000 from shareholders' equity of $69,441,000 at
December31, 2012.

Net interest income before provision for credit losses for the quarter ended
September30, 2013 totaled $5,427,000 and $16,029,000 for the nine months
ended September30, 2013, a decrease of $195,000 from $5,622,000 reported for
the quarter ended September30, 2012 and a decrease of $1,640,000 from the
$17,669,000 reported for the nine months ended September30, 2012,
respectively. The net interest margin was 3.83% for the quarter ended
September30, 2013, and 3.90% for the nine months ended September30, 2013, as
compared to 4.25% for the quarter ended September30, 2012 and 4.53% for the
nine months ended September30, 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 September30, 2013 totaled
$1,413,000, reflecting an increase of $440,000 from $973,000 in noninterest
income reported for the quarter ended September30, 2012. Noninterest income
for the nine months ended September30, 2013 totaled $3,038,000, reflecting a
decrease of $1,917,000 from $4,955,000 in noninterest income reported for the
nine months ended September30, 2012. Customer service fees continue to
provide the majority of the Company's noninterest income, totaling $873,000
for the quarter ended September30, 2013, as compared to $902,000 for the
quarter ended September30, 2012, and $2,554,000 and $2,700,000 for the nine
months ended September 30, 2013 and 2012, respectively. Changes in noninterest
income on a quarter-to-quarter comparative basis between the third quarters of
2013 and 2012 are largely the result of an increase of $312,000 on gains on
fair value option of financial assets during the quarter ended September30,
2013. The Company recorded a $113,000 impairment loss on investments during
the quarter ended September30, 2012, compared to no loss for the same period
ended September30, 2013. On a nine-month comparative basis, non-interest
income decreased primarily due to a $1,807,000 gain on sale of investment
during the nine months ended September30, 2012, compared to no gain for the
same period ended September30, 2013.

Noninterest expense totaled $4,954,000 for the quarter ended September30,
2013, an increase of $507,000 as compared to $4,447,000 reported for the
quarter ended September30, 2012. For the nine months ended September30,
2013, noninterest expense totaled $13,181,000, a decrease of $1,152,000 as
compared to $14,333,000 for the nine months ended September30, 2012. Between
the third quarters of 2013 and 2012, net operating cost on other real estate
owned and salaries expenses increased $273,000 and $132,000, respectively,
partially offset by decreases in occupancy expenses and professional fees. On
a nine month comparative basis, noninterest expense decreased primarily due to
a $1,036,000 net gain on OREO during the nine months ended September30, 2013,
compared to a net cost on OREO of $238,000 for the same period ended
September30, 2012.

The Company had a negative provision for loan loss of $1,150,000 for the
quarter ended September30, 2013 and $1,120,000 for the nine months ended
September30, 2013, compared to a provision of $4,000 for the quarter ended
September30, 2012 and $1,010,000 for the nine months ended September30,
2012. Net loan recoveries totaled $545,000 for the quarter ended September30,
2013 and net loan charge-offs totaled $112,000 for the nine months ended
September30, 2013 as compared to net charge-offs of $453,000 for the quarter
ended September30, 2012, and $3,498,000 for the nine months ended
September30, 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 September30, 2013 compared
to 2.95% of total loans at December31, 2012 and 2.97% at September30, 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 September30, 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 $8,344,000 between December31, 2012 and September30, 2013.
Additionally, nonperforming assets as a percentage of total assets decreased
from 7.25% at December31, 2012 to 5.85% at September30, 2013. Nonaccrual
loans decreased $1,500,000 between December31, 2012 and September30, 2013,
while OREO, decreased $6,807,000 during the same period. Impaired loans
totaled $21,698,000 at September30, 2013, a decrease of $233,000 from the
balance of $21,931,000 at December31, 2012.

United Security Bancshares is a $650+ 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)
                                         September 30, 2013  December 31, 2012
Assets
Cash and noninterest-bearing deposits in 28,552              27,481
other banks
Cash and due from Federal Reserve Bank   153,290             114,146
Cash and cash equivalents                181,842             141,627
Interest-bearing deposits in other banks 1,513               1,507
Investment securities (AFS at market     32,577              31,844
value)
Loans and leases, net of unearned fees   383,992             400,033
Less: Allowance for credit losses        (10,552)            (11,784)
Net loans                                373,440             388,249
Premises and equipment - net             12,088              12,262
Other real estate owned                  17,125              23,932
Goodwill and intangible assets           4,597               4,737
Cash surrender value of life insurance   17,072              16,681
Deferred income taxes                    10,130              9,724
Other assets                             11,431              18,314
Total assets                             661,815             648,877
Deposits:
Noninterest bearing demand deposits      236,112             217,014
Money market, NOW, and savings           244,162             246,888
Time                                     91,202              99,385
Total deposits                           571,476             563,287
Accrued interest payable                 57                  71
Other liabilities                        5,979               6,010
Junior subordinated debentures (at fair  10,804              10,068
value)
Total liabilities                        588,316             579,436
Shareholders' equity:
Common stock, no par value 20,000,000
shares authorized, 14,653,358 issued and 45,038              43,173
outstanding at September 30, 2013, and
14,217,303 at December 31, 2012
Retained earnings                        28,662              26,179
Accumulated other comprehensive income   (201)               89
Total shareholders' equity               73,499              69,441
Total liabilities and shareholders'      $      661,815      $     648,877
equity

United Security Bancshares
Consolidated Statements of Income (unaudited)
(in thousands, except per share amounts)
                                        Three Months Ended  Nine Months Ended

                                        September 30,      September 30,
                                        2013       2012     2013      2012
Interest income:
Interest and fees on loans              $  5,545   $ 5,670  $ 16,565  $ 17,678
Interest on investment securities       157        397      495       1,375
Interest on deposits in FRB             88         62       223       157
Interest on deposits in other banks     2          2        6         22
Total interest income                   5,792      6,131    17,289    19,232
Interest expense:
Interest on deposits                    301        441      1,043     1,356
Interest on other borrowed funds        64         68       217       207
Total interest expense                  365        509      1,260     1,563
Net interest income before provision    5,427      5,622    16,029    17,669
for credit losses
Provision for credit losses             (1,150)    4        (1,120)   1,010
Net interest income                     6,577      5,618    17,149    16,659
Non-interest income:
Customer service fees                   873        902      2,554     2,700
Increase in cash surrender value of     140        147      417       427
bank owned life insurance
Impairment loss on investment           0          (113)    0         (284)
securities, other than temporary loss
Gain (loss) on Fair Value Option of     141        (171)    (519)     (284)
Financial Assets
Loss on sale of securities              0          (10)     0         (10)
Gain on sale of other investment        0          0        0         1,807
Other non-interest income               259        218      586       599
Total non-interest income               1,413      973      3,038     4,955
Non-interest expense:
Salaries and employee benefits          2,210      2,078    6,684     6,676
Occupancy expense                       905        1,004    2,693     2,608
Data processing                         33         15       126       53
Professional fees                       316        408      1,136     1,092
Regulatory assessments                  334        275      1,032     1,058
Director fees                           58         61       175       196
Amortization of intangibles             47         79       140       248
Correspondent bank service charges      72         75       229       235
Loss on California tax credit           86         23       151       207
partnership
Net cost (gain) on operation of OREO    182        (91)     (1,036)   238
Other non-interest expense              711        520      1,851     1,722
Total non-interest expense              4,954      4,447    13,181    14,333
Income before income tax provision      3,036      2,144    7,006     7,281
Provision for income taxes              1,184      778      2,683     2,690
Net Income                              $  1,852   $ 1,366  $ 4,323   $ 4,591

United Security Bancshares
Selected Financial Data (unaudited)
(in thousands, except per share amounts)
                           Three Months Ended           Nine Months Ended

                           September 30,               September 30,
                           2013           2012          2013        2012
Basic earnings per share   $0.13          $0.09         $0.30       $0.32
Diluted earnings per share $0.13          $0.09         $0.30       $0.32
Weighted average basic     14,653,358     14,507,818    14,651,014  14,507,818
shares for EPS
Weighted average diluted   14,653,592     14,507,818    14,651,937  14,507,818
shares for EPS
Annualized return on:
Average assets             1.14%          0.87%         0.90%       0.99%
Average equity             10.14%         8.25%         8.10%       9.43%
Yield on interest-earning  4.10%          4.64%         4.21%       4.93%
assets
Cost of interest-bearing   0.42%          0.59%         0.49%       0.62%
liabilities
Net interest margin        3.83%          4.25%         3.90%       4.53%
Annualized net charge-offs
(recoveries) to average    (0.55)%        0.46%         0.04%       1.19%
loans
                           September30,  December31,
                           2013           2012
Shares outstanding -       14,653,358     14,217,303
period end
Book value per share       $5.02          $4.88
Tangible book value per    $4.70          $4.55
share
Efficiency ratio           73.83%         70.47%
Total nonperforming assets $38,730        $47,074
Nonperforming assets to    5.85%          7.25%
total assets
Total Impaired loans       $21,698        $21,931
Total nonaccrual loans     $11,925        $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, dwoods@unitedsecuritybank.com
 
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