United Security Bancshares, Inc. Reports Third Quarter Results Net Income Rises to $3.0 Million for First Nine Months of 2013 Business Wire THOMASVILLE, Ala. -- November 1, 2013 United Security Bancshares, Inc. (Nasdaq: USBI) today reported net income of $904,000, or $0.15 per diluted share, for the third quarter ended September30,2013, compared with net income of $1.2million, or $0.20 per diluted share, for the third quarter of 2012. Net income for the first nine months of 2013 rose to $3.0 million, or $0.49 per diluted share, compared with $1.3 million, or $0.22 per diluted share, for the first nine months of 2012. “We are pleased to report our sixth consecutive quarter of positive net income, which highlights our progress in reducing non-performing loans, other real estate owned (OREO) and expenses related to OREO,” stated James F. House, President and CEO of United Security Bancshares, Inc. “Our non-performing assets are down 45% to $26.0 million compared with the third quarter of last year. This quarter marked our fifth consecutive quarter of reducing OREO and fourth consecutive quarter of reducing non-performing assets.” “Although we have made excellent progress in reducing costs related to problem assets, our earnings growth has been constrained by weak demand for commercial and real estate loans and increased pricing pressure from other banks in our market. We remain focused on reducing non-performing assets while positioning our bank to grow earnings as loan demand recovers in our markets. We have a strong capital base that is well above the minimum regulatory requirements, and we believe that we have the capital to support our future growth,” continued Mr. House. Third Quarter Results Interest income totaled $8.3 million in the third quarter of 2013, compared with $9.3 million in the third quarter of 2012. The decline in interest income was due primarily to lower earning assets, primarily loans, as well as reduction in yield, compared with the third quarter of 2012. Net loans totaled $304.8 million in the third quarter of 2013, compared with $344.7 million at September 30, 2012. The decrease in net loans was due to loan payoffs and write-downs outpacing new loan demand. An overall weak economy, primarily centered in the real estate sector, has been a significant factor in lower loan demand over the past year. Interest expense declined 31.9% to $702,000 in the third quarter of 2013, compared with $1.0 million in the third quarter of 2012. The decrease resulted primarily from lower interest rates paid on deposits compared with the third quarter of 2012. Net interest income was $7.6 million in the third quarter of 2013, compared with $8.3million in the third quarterof 2012. The decline in net interest income was due to lower earning assets, primarily loans, combined with a 15 basis point decline in net interest margin, compared with the third quarter of 2012. Net interest margin was 5.89% in the third quarter of 2013, compared with 6.04% in the third quarter of 2012. The decline in net interest margin was due primarily to the overall decline in interest earned on loans and investments. In addition, the yield on the investment portfolio has declined due to the early payoff of certain higher yielding bonds. Provision for loan losses declined to $240,000 in the third quarter of 2013, or 0.3% of annualized average loans, compared with $492,000, or 0.5% of annualized average loans, in the third quarter of 2012. Net charge-offs were $2.6million in the third quarter of 2013, compared with $0.8 million in the third quarter of 2012. The increase in net charge-offs was due primarily to the write-down of certain real estate loans to reflect market valuations. These loans were previously reserved for in the allowance for loan losses, and the write-downs had no effect on this quarter’s earnings. Total non-interest income was $1.3 million in the third quarter of 2013, compared with $1.5 million in the third quarter of 2012. The decrease in non-interest income was due to lower service charges, credit life insurance income and other income compared with the third quarter of 2012. Total non-interest expense declined 2.6% to $7.4 million in the third quarter of 2013, compared with $7.6million in the third quarter of 2012. The decline in non-interest expense was due primarily to lower OREO-related costs, which declined $686,000 compared with the third quarter of 2012. Total OREO-related expenses were $263,000 in the third quarter of 2013,whichmarked the lowest quarter of OREO-related expenses in over three years. OREO totaled $11.4 million at September30, 2013, a 16.4% decline from $13.6 million at September 30, 2012, representing the fifth consecutive quarterly decrease in OREO. United Security Bancshares, Inc. and First United Security Bank continued to be rated as “well-capitalized,” the highest regulatory rating, as of September 30, 2013. Total risk-based capital was20.0% for the Company and 20.1% for the Bank, compared with a regulatory requirement of 10.0% for a well-capitalized institution and a minimum regulatory requirement of 8.0%. The Tier 1 leverage ratio was 11.6%for the Company and 11.7% for the Bank, both measures significantly above the requirement of 5.0%for a well-capitalized institution and minimum regulatory requirement of 3.0%. Nine Months Results For the first nine months of 2013, net income rose to $3.0 million, or $0.49 per diluted share, compared with $1.3 million, or $0.22 per diluted share, for the first nine months of 2012. Net interest income for the nine months ended September 30, 2013, was $23.1 million, compared with $25.4million for the same period of 2012. Net interest margin declined to 5.97% for the first nine months of 2013 from 6.07% for the first nine months of 2012. Provision for loan losses dropped to $799,000 in the first nine months of 2013, compared with $3.2 million in the first nine months of 2012. Non-interest income was $4.1 million for the first nine months of both 2013 and 2012. Non-interest expense declined 10.5% to $22.2 million in the first nine months of 2013, compared with $24.8 million in the first nine months of 2012. The decrease was due primarily to reduced impairment costs for OREO and lower loss on sale of OREO. Total OREO-related expenses were $1.3 million for the first nine months of 2013,compared with $4.3 million in the first nine months of 2012. Shareholders’ equity rose to $69.4 million, or $11.51 per share, at September30,2013, compared with $68.6 million, or $11.40per share, at December 31, 2012, and $68.1 million, or $11.30 per share, at September 30, 2012. The increase in shareholders’ equity from retained earnings of $3.0 million was offset somewhat by a $2.3 million decrease in accumulated other comprehensive income, due to a decline in the market value of investment securities available-for-sale. The Company did not declare a cash dividend on its common stock for the third quarter of 2013. About United Security Bancshares, Inc. United Security Bancshares, Inc. is a bank holding company that operates nineteen banking offices in Alabama through First United Security Bank. In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. The Company’s stock is traded on the Nasdaq Capital Market under the symbol “USBI.” Forward-Looking Statements This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. USBI undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, USBI, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of USBI’s senior management based upon current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements are identified in the public filings made by USBI with the Securities and Exchange Commission, and forward-looking statements contained in this press release or in other public statements of USBI or its senior management should be considered in light of those factors. Specifically, with respect to statements relating to loan demand, growth and earnings potential and the adequacy of the allowance for loan losses for USBI, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and collateral values. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements. UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in Thousands, Except Share Data) September 30, December 31, 2013 2012 (Unaudited) ASSETS Cash and Due from Banks $ 12,048 $ 12,181 Interest Bearing Deposits in Banks 31,430 41,945 Total Cash and Cash Equivalents 43,478 54,126 Federal Funds Sold 5,000 5,000 Investment Securities Available-for-Sale, at 121,744 92,614 fair value Investment Securities Held-to-Maturity, at 35,108 21,136 amortized cost Federal Home Loan Bank Stock, at cost 906 936 Loans, net of allowance for loan losses of 304,778 337,400 $9,282 and $19,278, respectively Premises and Equipment, net 8,756 8,903 Cash Surrender Value of Bank-Owned Life 13,565 13,303 Insurance Accrued Interest Receivable 2,527 3,101 Investment in Limited Partnerships 819 836 Other Real Estate Owned 11,372 13,286 Other Assets 11,949 16,492 Total Assets $ 560,002 $ 567,133 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 476,020 $ 489,034 Accrued Interest Expense 263 413 Other Liabilities 7,535 8,401 Short-Term Borrowings 1,777 638 Long-Term Borrowings 5,000 - Total Liabilities $ 490,595 $ 498,486 Commitments and Contingencies Shareholders’ Equity: Common Stock, par value $0.01 per share, 10,000,000 shares authorized; 7,327,560 shares 73 73 issued; 6,028,091 and 6,023,622 shares outstanding, respectively Surplus 9,284 9,284 Accumulated Other Comprehensive Income, net of 796 3,139 tax Retained Earnings 80,259 77,287 Less Treasury Stock: 1,299,469 and 1,303,938 (20,992 ) (21,123 ) shares at cost, respectively Noncontrolling Interest (13 ) (13 ) Total Shareholders’ Equity 69,407 68,647 Total Liabilities and Shareholders’ Equity $ 560,002 $ 567,133 UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Data) Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (Unaudited) (Unaudited) INTEREST INCOME: Interest and Fees on Loans $ 7,413 $ 8,488 $ 23,020 $ 26,454 Interest on Investment Securities 857 840 2,276 2,632 Total Interest Income 8,270 9,328 25,296 29,086 INTEREST EXPENSE: Interest on Deposits 693 1,027 2,215 3,549 Interest on Borrowings 9 4 13 119 Total Interest Expense 702 1,031 2,228 3,668 NET INTEREST INCOME 7,568 8,297 23,068 25,418 PROVISION FOR LOAN LOSSES 240 492 799 3,175 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 7,328 7,805 22,269 22,243 NON-INTEREST INCOME: Service and Other Charges on 586 639 1,734 1,870 Deposit Accounts Credit Life Insurance Income 239 272 518 613 Other Income 466 542 1,890 1,575 Total Non-Interest Income 1,291 1,453 4,142 4,058 NON-INTEREST EXPENSE: Salaries and Employee Benefits 4,029 3,433 12,006 10,912 Occupancy Expense 495 488 1,456 1,416 Furniture and Equipment Expense 301 317 865 970 Impairment on Other Real Estate 215 377 577 3,241 Loss on Sale of Other Real Estate 48 572 753 1,032 Other Expense 2,277 2,375 6,576 7,261 Total Non-Interest Expense 7,365 7,562 22,233 24,832 INCOME BEFORE INCOME TAXES 1,254 1,696 4,178 1,469 PROVISION FOR INCOME TAXES 350 517 1,206 157 NET INCOME $ 904 $ 1,179 $ 2,972 $ 1,312 BASIC AND DILUTED NET INCOME PER $ 0.15 $ 0.20 $ 0.49 $ 0.22 SHARE DIVIDENDS PER SHARE $ 0.00 $ 0.00 $ 0.00 $ 0.00 Contact: United Security Bancshares, Inc. Thomas S. Elley, 334-636-5424
United Security Bancshares, Inc. Reports Third Quarter Results
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