FRESNO, Calif., Oct. 11 /PRNewswire-FirstCall/ -- Dennis R. Woods,
President and Chief Executive Officer of United Security Bancshares
(NASDAQ:UBFO) http://www.unitedsecuritybank.com/ reported today the
results of operations for the third quarter of 2006. Basic earnings
per share for the third quarter 2006 were $0.31 compared with $0.24
in 2005, a 29.2% increase. Diluted earnings per share for the third
quarter 2006 were $0.30 compared with $0.24 a year ago, a 25.0%
increase. Year-to-date basic earnings per share for 2006 were $0.91
compared with $0.70 in 2005, up 30.0%. Year-to-date diluted earning
per share for 2006 were also $0.91 compared with $0.70 in 2005. Net
income for the third quarter of 2006 was $3.5 million, as compared
with $2.7 million in 2005, up 26.9%. Net income was $10.4 million
for the nine months ended September 30, 2006, compared with $8.0
million in 2005, an increase of 30.0%. Woods stated, "I am very
pleased with the quarter and the year-to-date earnings this year as
both demonstrate our continued success to build shareholder value.
We're very excited about the proposed merger announced last week
with Legacy Bank, N.A., in Campbell, CA. The merger will provide us
with new opportunities in a growing and dynamic marketplace to
enhance earnings and increase shareholder value." Return on average
equity (ROAE) for the third quarter of 2006 was 21.7% and the
return on average assets (ROAA) was 2.03%. For the third quarter
2005, ROAE and ROAA were 18.9% and 1.68%, respectively. For the
nine months ended September 30, 2006, ROAE and ROAA were 22.1% and
2.14%, respectively. For the same nine-month period in 2005, ROAE
and ROAA were 19.1% and 1.72%, respectively. These key performance
ratios demonstrate the banks' consistent ability to build
shareholder value. The 72nd consecutive quarterly cash dividend of
$0.11 per share, up from $0.09 for a 22.2% increase from a year
ago, was declared on September 26, 2006 to be paid on October 25,
2006 to shareholders of record on October 12, 2006. At the end of
the quarter, Shareholders' equity was $64.6 million, an increase of
12.7% from September 30, 2005. Dividends of $4.7 million were paid
out of shareholders' equity to shareholders during the past 12
months. During the last 12 months, $2,402,956 of shareholders'
equity was used to purchase and retire 111,494 shares at an average
price of $23.01 per share. During the third quarter of 2006, 84,215
shares were repurchased at an average price of $22.21. Net interest
income for the third quarter of 2006 was $8.5 million, an increase
of $1.2 million or 16.4% from 2005. Third quarter net interest
margin increased from 5.29% in 2005 to 5.63% in 2006. For the nine
months ended September 30, the net interest margin was 5.66% and
5.23% in 2006 and 2005, respectively. The increase is primarily
attributable to growth in average earning assets and rising
interest rates. Average earning assets increased by $50 million
over the past 12 months, averaging $602 million and $551 million in
the third quarter of 2006 and 2005, respectively. Noninterest
income of $2.3 million for the third quarter of 2006 increased $878
thousand or 60.4% from 2005, and 2006 year-to-date noninterest
income of $7.1 million increased $2.6 million from the same
year-to-date period in 2005. Increases in noninterest income
experienced during 2006 were the result of several large
nonrecurring items, discussed below, which were partially offset by
modest declines in customer service fees. The decrease in customer
service fees of $493 thousand and $215 thousand for the nine months
and quarter ended September 30, 2006, respectively, includes
decreases in ATM fees of $269 thousand for the nine months ended
September 30, 2006 and $146 thousand for the third quarter of 2006.
Third quarter operating expenses increased from $4.1 million in
2005 to $5.1 million in 2006, and increased $2.1 million or 16.3%
from $12.6 million to $14.6 million for the nine months ended
September 30, 2006. During 2006, increases were experienced in
salaries and employee benefits associated with the normal and
anticipated growth of the Company, as well as additional
nonrecurring expenses associated with foreclosed property. The
efficiency ratio was 46.3% for the third quarter of 2006 compared
to 48.2% for the same period in 2005. Increases in noninterest
income experienced during 2006 were largely offset by increases in
noninterest expense during the same period, and increases in both
areas were primarily the result of nonrecurring items. Nonrecurring
items included in noninterest income during 2006 included a $1.8
million gain on the sale of an investment during the first quarter
of 2006, as well as a $1 million gain from the sale of the
Company's administration building during the third quarter.
Partially offsetting this, were $1.8 million in additional
nonrecurring operating costs associated with the liquidation of
foreclosed property during 2006, $870 thousand of which was
incurred during the third quarter. The provision for loan losses
was $639,000 for the nine months ended September 30, 2006 and
$890,000 for same period in 2005. Provisions for loan losses are
determined on the basis of management's periodic credit review of
the loan portfolio. Based on the condition of the loan portfolio,
management believes the provisions made to the allowance for loan
losses are sufficient to cover risk elements in the loan portfolio.
Net charge-offs were $278,000 for the third quarter of 2006 and
$246,000 for the same period in 2005. Other real estate owned
totaled $1.9 million at the end of the third quarter of 2006 and
$4.4 million for the same period in 2005. Nonperforming assets were
$10.2 million or .28% of total assets on September 30, 2006 and
$19.6 million or .69% of total assets on September 30, 2005. United
Security Bancshares is a $678+ million bank holding company. United
Security Bank, its principal subsidiary is a state chartered bank
and member of the Federal Reserve Bank of San Francisco. The
forgoing may be deemed to be offering materials of United Security
Bancshares and Legacy Bank, N. A. in connection with United
Security Bancshares' proposed acquisition of Legacy Bank, N. A. on
the terms and subject to the conditions in the definitive agreement
between United Security Bancshares and Legacy Bank, N. A.
Shareholders of Legacy Bank, N. A. and other investors are urged to
read the proxy statement/prospectus that will be included in the
registration statement on Form S-4, which United Security
Bancshares will file with the SEC in connection with the proposed
merger, because it will contain important information about United
Security Bancshares and Legacy Bank, N. A., the merger and related
matters. After it is filed with the SEC, the proxy
statement/prospectus will be available for free, both on the SEC
web site (http://www.sec.gov/ ) and from United Security Bancshares
and Legacy Bank, N. A. In addition to the proposed registration
statement and proxy statement/prospectus, United Security
Bancshares files annual, quarterly and special reports, proxy
statement and other information with the SEC. FORWARD-LOOKING
STATEMENTS This news release contains forward-looking statements
about the company for which the company claims the protection of
the safe harbor provisions 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
regulatory, judicial, or legislative tax treatment of business
transactions, particularly recently enacted California tax
legislation and the subsequent Dec. 31, 2003, announcement by the
Franchise Tax Board regarding the taxation of REITs and Riches; and
(8) unknown economic impacts caused by the State of California's
budget issues. 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 deposit interest
rates, among other things, could slow the rate of growth or put
pressure on current deposit levels. 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 Quarterly Report on Form 10-K
and Form 10-Q for the year ended December 31, 2005, or the quarter
ended June 30, 2006 and particularly the section of Management's
Discussion and Analysis. United Security Bancshares Consolidated
Balance Sheets (unaudited) (Dollars in thousands) September 30,
September 30, 2006 2005 Cash & noninterest-bearing deposits in
other banks $24,960 $31,851 Interest-bearing deposits in other
banks 7,832 7,598 Federal funds sold 14,460 48,360 Investment
securities AFS 90,034 108,195 Loans, net of unearned fees 498,333
387,351 Less: allowance for loan losses (8,005) (7,623) Loans, net
490,328 379,729 Premises and equipment, net 13,172 10,338
Intangible assets 3,148 3,686 Other assets 34,078 39,277 TOTAL
ASSETS $678,012 $629,032 Deposits: Noninterest-bearing demand &
NOW $198,288 $192,218 Savings 34,933 38,601 Time 356,906 318,564
Total deposits 590,127 549,383 Borrowed funds 0 0 Other liabilities
7,796 6,855 Junior subordinated debentures 15,464 15,464 TOTAL
LIABILITIES $613,386 $571,702 Shareholders' equity: Common shares
outstanding: 11,309,698 at Sep. 30, 2006 11,369,192 at Sep 30, 2005
$20,601 $22,235 Retained earnings 45,323 36,789 Other comprehensive
income (loss) (1,299) (1,692) Total shareholders' equity $64,626
$57,332 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $678,012
$629,034 United Security Bancshares Consolidated Statements of
Income (dollars in 000's, except per share Three Three Nine Nine
amounts) Months Months Months Months (unaudited) Ended Ended Ended
Ended September September September September 2006 2005 2006 2005
Interest income $12,548 $10,032 $34,509 $28,521 Interest expense
3,999 2,685 10,049 6,945 Net interest income 8,549 7,347 24,460
21,577 Provision for loan losses 276 392 639 890 Other income 2,331
1,453 7,132 4,539 Other expenses 5,060 4,064 14,644 12,594 Income
before income tax provision 5,544 4,344 16,309 12,633 Provision for
income taxes 2,083 1,618 5,922 4,653 NET INCOME $3,461 $2,727
$10,387 $7,979 United Security Bancshares Selected Financial Data
Three Three Nine Nine (dollars in 000's except Months Months Months
Months per share amounts) Ended Ended Ended Ended 09/30/2006
09/30/2005 09/30/2006 09/30/2005 Basic Earnings Per Share $0.31
$0.24 $0.91 $0.70 Diluted Earning Per Share $0.30 $0.24 $0.91 $0.70
Annualized Return on: Average Assets 2.03% 1.68% 2.14% 1.72%
Average Equity 21.69% 18.85% 22.12% 19.14% Net Interest Margin
5.63% 5.17% 5.66% 5.26% Net Charge-offs to Average Loans 0.06%
0.06% 0.08% 0.06% 09/30/2006 09/30/2005 Book Value Per Share $5.71
$5.05 Tangible Book Value Per Share $5.44 $4.72 Efficiency Ratio
46.35% 48.22% Non Performing Assets to Total Assets 1.50% 3.12%
Allowance for Loan Losses to Total Loans 1.61% 1.97% Shares
Outstanding - period end 11,309,698 11,369,192 Basic Shares -
average weighted 11,337,694 11,369,192 Diluted Shares - average
weighted 11,455,145 11,455,182 DATASOURCE: United Security
Bancshares CONTACT: Dennis R. Woods, President and Chief Executive
Officer of United Security Bank, +1-559-248-4928 Web site:
http://www.unitedsecuritybank.com/
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