United Security Bancshares - Fourth Quarter Profits: $2.9 million PR Newswire FRESNO, Calif., Jan. 28, 2014 FRESNO, Calif., Jan.28, 2014 /PRNewswire/ --United Security Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported today unaudited consolidated net income of $2,945,000 or $0.20 per basic and diluted common share for the quarter ended December31, 2013 and $7,269,000 or $0.49 per basic and diluted common share for the year ended December31, 2013, as compared to $1,479,000 or $0.09 per basic and diluted common shares for the quarter ended December31, 2012 and $6,069,000 or $0.41 per basic and diluted shares for the year ended December31, 2012. Annualized return on average equity (ROAE) for the quarter ended December31, 2013 was 15.8%, compared to 8.56% for the same period in 2012, and was 10.09% for the year ended December31, 2013, compared to 9.20% for the year ended December31, 2012. Annualized return on average assets (ROAA) was 1.79% for the three months ended December31, 2013, compared to 0.93% for the same period in 2012, and was 1.13% for the year ended December31, 2013 compared to 0.97% for the year ended December31, 2012. Change in net income on a quarter-to-quarter comparative basis between the fourth quarters of 2013 and 2012 is largely the result of a $2,686,000 reversal of valuation allowance on deferred tax during the quarter ended December31, 2013. Partially offsetting the reversal of valuation allowance during the quarter ended December31, 2013, compared to the same period ended December31, 2012, was a decrease of $209,000 in interest income. On a twelve month comparative basis, changes in income were the result of a $2,117,000 decrease in provision for credit losses, a $2,686,000 reversal on valuation allowance on deferred tax, and a $663,000 decrease in net cost of operation on OREO, offset by a decrease of $1,739,000 on gains realized on the sale of other investments and a $2,149,000 decrease in total interest income. The Board of Directors of United Security Bancshares declared a fourth quarter 2013 stock dividend of one percent (1%) on December 17, 2013. The stock dividend was payable to shareholders of record on January 10, 2014, and the shares will be issued on January 22, 2014. Dennis R. Woods, President and Chief Executive Officer of the Company, states, "2013 provided a great deal of positive momentum for the Bank with reductions in non-performing assets and stronger net income.The reversal of all $2.7 million of the allowance for deferred taxes is a further indication that the dynamics of the Company are improving. We continue to see improvements in both the local and the national economy and look forward to continued success in 2014." Shareholders' equity at December31, 2013 was $76,543,000, up $7,102,000 from shareholders' equity of $69,441,000 at December31, 2012. Net interest income before provision for credit losses for the quarter ended December31, 2013 totaled $5,362,000 and $21,391,000 for the year ended December31, 2013, a decrease of $62,000 from $5,424,000 reported for the quarter ended December31, 2012 and a decrease of $1,699,000 from the $23,090,000 reported for the year ended December31, 2012, respectively. The net interest margin was 3.72% for the quarter ended December31, 2013, and 3.87% for the year ended December31, 2013, as compared to 4.03% for the quarter ended December31, 2012 and 4.40% for the year ended December31, 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 December31, 2013 totaled $929,000, reflecting an increase of $478,000 from $451,000 in noninterest income reported for the quarter ended December31, 2012. Noninterest income for the year ended December31, 2013 totaled $3,968,000, reflecting a decrease of $1,508,000 from $5,476,000 in noninterest income reported for the year ended December31, 2012. Customer service fees continue to provide the majority of the Company's noninterest income, totaling $902,000 for the quarter ended December31, 2013, as compared to $883,000 for the quarter ended December31, 2012, and $3,456,000 and $3,583,000 for the year ended December 31, 2013 and 2012, respectively. Changes in noninterest income on a quarter-to-quarter comparative basis between the fourth quarters of 2013 and 2012 are largely the result of $233,000 in reduction in losses on fair value option of financial assets during the quarter ended December31, 2013. The Company recorded a $68,000 impairment loss on investments during the quarter ended December31, 2012, compared to no loss for the same period ended December31, 2013. On a year over year comparative basis, non-interest income decreased primarily due to a $1,739,000 gain on sale of investment during the year ended December31, 2012, compared to no gain for the same period ended December31, 2013. Noninterest expense totaled $5,902,000 for the quarter ended December31, 2013, a increase of $358,000 as compared to $5,544,000 reported for the quarter ended December31, 2012. For the year ended December31, 2013, noninterest expense totaled $19,083,000, a decrease of $862,000 as compared to $19,945,000 for the year ended December31, 2012. Between the fourth quarters of 2013 and 2012, professional fees and regulatory assessments decreased $476,000 and $233,000, respectively, partially offset by increases in salaries expense and loss on tax credit partnership. On a twelve month comparative basis, noninterest expense decreased primarily due to a $271,000 net cost on OREO during the year ended December31, 2013, compared to a net cost on OREO of $934,000 for the same period ended December31, 2012. The Company had a provision for loan loss of $22,000 for the quarter ended December31, 2013 and a negative provision for loan loss of $1,098,000 for the year ended December31, 2013, compared to a provision of $9,000 for the quarter ended December31, 2012 and $1,019,000 for the year ended December31, 2012. Net loan recoveries totaled $414,000 for the quarter ended December31, 2013 and $302,000 for the year ended December31, 2013, as compared to net recoveries of $615,000 for the quarter ended December31, 2012, and net charge-offs of $2,883,000 for the year ended December31, 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 2.78% of total loans at December31, 2013 compared to 2.95% of total loans at December31, 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 December31, 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 $15,026,000 between December31, 2012 and December31, 2013. Additionally, nonperforming assets as a percentage of total assets decreased from 7.25% at December31, 2012 to 5.04% at December31, 2013. Nonaccrual loans decreased $1,084,000 between December31, 2012 and December31, 2013, while OREO, decreased $9,986,000 during the same period. Impaired loans totaled $18,132,000 at December31, 2013, a decrease of $3,799,000 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) December 31, 2013 December 31, 2012 Assets Cash and noninterest-bearing deposits in 20,193 27,481 other banks Cash and due from Federal Reserve Bank 115,019 114,146 Cash and cash equivalents 135,212 141,627 Interest-bearing deposits in other banks 1,515 1,507 Investment securities (AFS at market 43,616 31,844 value) Loans and leases, net of unearned fees 395,013 400,033 Less: Allowance for credit losses (10,988) (11,784) Net loans 384,025 388,249 Premises and equipment - net 12,122 12,262 Other real estate owned 13,946 23,932 Goodwill and intangible assets 4,550 4,737 Cash surrender value of life insurance 17,203 16,681 Deferred income taxes 11,630 9,724 Other assets 12,110 18,314 Total assets 635,929 648,877 Deposits: Noninterest bearing demand deposits 214,317 217,014 Money market, NOW, and savings 244,686 246,888 Time 83,486 99,385 Total deposits 542,489 563,287 Accrued interest payable 44 71 Other liabilities 5,728 6,010 Junior subordinated debentures (at fair 11,125 10,068 value) Total liabilities 559,386 579,436 Shareholders' equity: Common stock, no par value 20,000,000 shares authorized, 14,799,888 issued and 45,778 43,173 outstanding at December 31, 2013, and 14,217,303 at December 31, 2012 Retained earnings 30,884 26,179 Accumulated other comprehensive income (119) 89 Total shareholders' equity 76,543 69,441 Total liabilities and shareholders' $ 635,929 $ 648,877 equity United Security Bancshares Consolidated Statements of Income (unaudited) (in thousands, except per share amounts) Three Months Ended December Twelve Months Ended 31, December 31, 2013 2012 2013 2012 Interest income: Interest and fees on $ 5,414 $ 5,507 $ 21,979 $ 23,184 loans Interest on investment 208 347 703 1,720 securities Interest on deposits in 89 67 312 224 FRB Interest on deposits in 2 1 8 23 other banks Total interest income 5,713 5,922 23,002 25,151 Interest expense: Interest on deposits 287 435 1,330 1,791 Interest on other 64 63 281 270 borrowed funds Total interest expense 351 498 1,611 2,061 Net interest income before provision for 5,362 5,424 21,391 23,090 credit losses Provision for credit 22 9 (1,098) 1,019 losses Net interest income 5,340 5,415 22,489 22,071 Non-interest income: Customer service fees 902 883 3,456 3,583 Increase in cash surrender value of bank 139 137 556 564 owned life insurance Impairment loss on investment securities, — (68) — (284) other than temporary loss Loss on Fair Value Option (257) (490) (776) (774) of Financial Assets Loss on sale of — (185) — (195) securities Gain on sale of other — — — 1,739 investment Other non-interest income 145 174 732 843 Total non-interest income 929 451 3,968 5,476 Non-interest expense: Salaries and employee 2,530 2,406 9,214 9,082 benefits Occupancy expense 985 940 3,678 3,548 Data processing 59 24 185 77 Professional fees 139 615 1,275 1,707 Regulatory assessments 118 351 1,150 1,409 Director fees 57 60 232 256 Amortization of 47 56 187 304 intangibles Correspondent bank 58 78 287 313 service charges Loss (gain) on California 102 (168) 253 39 tax credit partnership Net cost on operation of 1,307 696 271 934 OREO Other non-interest 500 486 2,351 2,276 expense Total non-interest 5,902 5,544 19,083 19,945 expense Income before income tax 367 322 7,374 7,602 provision Provision for (Benefit (2,578) (1,157) 105 1,533 from) income taxes Net Income $ 2,945 $ 1,479 $ 7,269 $ 6,069 United Security Bancshares Selected Financial Data (unaudited) (in thousands, except per share amounts) Three Months Ended December Twelve Months Ended 31, December 31, 2013 2012 2013 2012 Basic earnings per share $0.20 $0.09 $0.49 $0.41 Diluted earnings per $0.20 $0.09 $0.49 $0.41 share Weighted average basic 14,799,888 14,789,001 14,798,135 14,789,001 shares for EPS Weighted average diluted 14,804,338 14,789,001 14,799,037 14,789,001 shares for EPS Annualized return on: Average assets 1.79% 0.93% 1.13% 0.97% Average equity 15.80% 8.56% 10.09% 9.20% Yield on interest-earning 3.96% 4.40% 4.15% 4.79% assets Cost of interest-bearing 0.40% 0.56% 0.47% 0.60% liabilities Net interest margin 3.72% 4.03% 3.87% 4.40% Annualized net charge-offs (recoveries) (0.42)% (0.64)% (0.08)% 0.74% to average loans December31, December31, 2013 2012 Shares outstanding - 14,799,888 14,217,303 period end Book value per share $5.17 $4.88 Tangible book value per $4.86 $4.55 share Efficiency ratio 73.45% 70.47% Total nonperforming $32,048 $47,074 assets Nonperforming assets to 5.04% 7.25% total assets Total Impaired loans $18,132 $21,931 Total nonaccrual loans $12,341 $13,425 Allowance for credit 2.78% 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, firstname.lastname@example.org
United Security Bancshares - Fourth Quarter Profits: $2.9 million
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