UBFO United Security Bancshares

FRESNO, Calif., Aug. 13 /PRNewswire-FirstCall/ -- Dennis R. Woods, President and Chief Executive Officer of United Security Bancshares http://www.unitedsecuritybank.com/ (NASDAQ:UBFO) reported today the results of operations for the 2nd quarter and six months ended June 30, 2009. The net loss was $5,726,000 for the 2nd quarter of 2009, as compared with net income of $2,070,000 for the 2nd quarter in 2008. Basic and diluted loss per share for the 2nd quarter 2009 was ($0.47) compared with basic and diluted earnings per share of $0.17 for the 2nd quarter 2008. For the six months ended June 30, 2009, net loss was $4,805,000 compared with net income of $4,570,000 in 2008. For the six months ended June 30, 2009, return on average equity was (12.04%) and the return on average assets was (1.30%). For the same period in 2008, return on average equity was 10.98% and return on average assets was 1.19%. The largest components adversely impacting the 2nd quarter and six months ended June 30, 2009 loss were a non-cash goodwill impairment loss of $3,026,000 related to the Legacy Bank acquisition completed during the first quarter of 2007, and provisions for loan loss of $3,981,000 (after-tax) or $0.32 per share for the quarter and $4,771,000 (after-tax) or $0.39 per share for the six months ended June 30, 2009. The Board of Directors of United Security Bancshares declared a 3rd quarter 2009 stock dividend of one percent (1%). The stock dividend replaces the quarterly cash dividend. The stock dividend was payable to shareholders of record on July 10, 2009 and the shares were issued on July 22, 2009. Woods added, "Even though the 2nd quarter produced bleak results, in part from a $3 million non-cash, non-tax-deductible goodwill impairment, the Company's capital level, regulatory capital ratios and core earnings remain strong, and signs the economy and real estate markets are improving are now evident as we enter the 3rd quarter of 2009." The $3 million goodwill impairment loss and enhancements to the allowance for loan losses during the 2nd quarter reflects the continued challenging economic and the weaker real estate environments in some markets we serve. A pretax provision for loan losses of $6,806,000 was added to the reserve during the 2nd quarter 2009. The reserve now stands at 2.89% of gross loans. We continued to sell foreclosed properties during the quarter and worked with borrowers to restructure loans where possible. Now well into the 3rd quarter, the accelerated pace of property sales and borrowers debt restructures will help reduce the Company's level of problem assets as signs of an improving real estate market and general economy emerge. Since June 30, 2009, we have completed sales of $3.1 million in foreclosed properties, and have a number of pending sales of nonperforming assets in escrow. Shareholders' equity at quarter end was $74 million. Net interest income for the 2nd quarter 2009 was $6.8 million, down $933,000 from the 2nd quarter of 2008 for a decrease of 12.1%. The net interest margin decreased from 4.42% in the 2nd quarter 2008 to 4.30% in 2009. The net interest margin for the 2nd quarter of 2009 was negatively impacted by nonaccrual loans reducing the net margin by approximately 0.15% for the quarter. For the six months ended June 30, 2009 net interest income was $13,943,000, down $1,771,000 from $15,713,000 for the same period in 2008. Noninterest income for the 2nd quarter of 2009 was $1,277,000, down $444,000 from $1,721,000 in 2008 for a decrease of 25.8%. For the six months ended June 30, 2009, noninterest income was $2,419,000, down $1,635,000 from $4,054,000 for the same period in 2008. The largest single component of noninterest income difference was in the gain from the fair value adjustment to the carrying amount of Trust Preferred Securities, that accounted for $605,000 of the change. Other operating expenses for the three months ended June 30, 2009 were $9,095,000 and $5,741,000 for 2008, an increase of $3,354,000 or 58.4%. For the six months ended June 30, 2009, other operating expenses totaled $14,764,000, up $2,907,000 from $11,857,000 for the same period in 2008. Four expense components accounted for the much of differences for the quarter, as well as year-to-date. For the six month period, FDIC assessments increased by $376,000, write-downs on foreclosed properties were up $472,000, foreclosed property expenses were up $762,000 and the goodwill impairment expense was up $3,026,000 in 2009 over 2008. Salaries and benefits decreased by $1,459,000, occupancy expense declined $79,000. The provision for loan loss was $6,806,000 for the 2nd quarter of 2009 and $451,000 for 2nd quarter of 2008. For the six months ended June 30, 2009, the provision was $8,158,000 compared with $716,000 for the same period in 2008. 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 June 30, 2009 to be adequate. Non-performing assets increased to 14.03% of total assets on June 30, 2009 from 11.14% on March 31, 2009, as a result of increases in nonperforming loans as well as other real estate owned through foreclosure. At year-end 2008 non-performing assets were 10.68% of total assets and on June 30, 2008 6.67%. United Security Bancshares is a $730+ 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. 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 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 RICs; 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 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, 2008, and particularly the section of Management's Discussion and Analysis. United Security Bancshares Condensed Consolidated Balance Sheets (unaudited) (Dollars in thousands) June 30, June 30, 2009 2008 ---- ---- Cash & nonint.-bearing deposits in banks $16,458 $23,429 Interest-bearing deposits in banks 3,605 6,770 Federal funds sold 0 0 Investment securities AFS 81,767 98,260 Loans, net of unearned fees 547,754 582,231 Less: allowance for loan losses (15,842) (7,656) ------- ------ Loans, net 531,912 574,575 Premises and equipment, net 13,662 14,942 Intangible assets 9,884 13,879 Other assets 81,244 41,006 ------ ------ TOTAL ASSETS $738,532 $772,861 Deposits: Noninterest-bearing demand & NOW 170,993 178,663 Savings & Money Market 148,808 178,548 Time 191,072 201,461 ------- ------- Total deposits 510,873 558,672 Borrowed funds 135,305 110,640 Other liabilities 6,432 9,123 Junior subordinated debentures 11,927 12,741 ------ ------ TOTAL LIABILITIES $664,537 $691,176 Shareholders' equity: Common shares outstanding: 12,250,294 at Jun. 30, 2009 11,798,992 at Jun. 30, 2008 $36,362 $31,741 Retained earnings 41,418 51,495 Accumulated other comprehensive income (3,784) (1,551) ------ ------ Total shareholders' equity $73,995 $81,684 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 738,532 772,861 United Security Bancshares Condensed Consolidated Statements of Income Three Three Six Six (dollars in 000's, except Months Months Months Months per share amounts) Ended Ended Ended Ended (unaudited) June 30, June 30, June 30, June 30, -------- -------- -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Interest income $8,642 $11,431 $17,954 $24,175 Interest expense 1,847 3,702 4,011 8,461 ----- ----- ----- ----- Net interest income 6,795 7,728 13,943 15,713 Provision for loan losses 6,806 451 8,158 716 Other income 1,277 1,721 2,418 4,054 Other expenses 9,095 5,741 14,764 11,857 ----- ----- ------ ------ Income before income tax provision (7,829) 3,258 (6,561) 7,195 Provision for income taxes (2,103) 1,188 (1,756) 2,625 ------ ----- ------ ----- NET INCOME ($5,726) $2,070 ($4,805) $4,570 United Security Bancshares Three Three Six Six Selected Financial Data Months Months Months Months (dollars in 000's except Ended Ended Ended Ended per share amounts) 30-Jun-09 30-Jun-08 30-Jun-09 30-Jun-08 --------- --------- --------- --------- Basic Earnings Per Share ($0.47) $0.17 ($0.39) $0.37 Diluted Earning Per Share ($0.47) $0.17 ($0.39) $0.37 Annualized Return on: Average Assets -3.11% 1.09% -1.30% 1.19% Average Equity -28.45% 10.11% -12.04% 10.98% Net Interest Margin 4.30% 4.42% 4.39% 4.61% Net Charge-offs to Average Loans 1.05% 0.17% 1.44% 0.17% 30-Jun-09 30-Jun-08 --------- --------- Book Value Per Share $6.04 $6.92 Tangible Book Value Per Share $5.23 $5.75 Efficiency Ratio 90.24% 59.49% Non Performing Assets to Total Assets 14.03% 6.67% Allowance for Loan Losses to Total Loans 2.89% 1.31% Shares Outstanding - period end 12,250,294 11,798,992 Basic Shares - YTD average weighted 12,250,402 12,312,735 Diluted Shares - YTD average weighted 12,250,402 12,316,972 Basic Shares - QTD average weighted 12,250,294 12,298,550 Diluted Shares - QTD average weighted 12,250,294 12,301,665 DATASOURCE: United Security Bancshares CONTACT: Dennis R. Woods, President and Chief Executive Officer of United Security Bancshares, +1-559-248-4928 Web Site: http://www.unitedsecuritybank.com/

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