FRESNO, Calif., April 8, 2011 /PRNewswire/ -- United Security
Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global
Select: UBFO) reported audited results for the year-to-date and
quarterly periods ended December 31,
2010 in its filing of the annual Form 10-K with the
Securities and Exchange Commission on April
4, 2011. Consolidated net loss was $4,439,000, or $(0.34) per basic and diluted common share for
the year ended December 31, 2010,
compared to a consolidated net loss of $4,537,000, or $(0.35) per basic and diluted common share for
the year ended December 31, 2009. Net
loss was $5,807,000, or $(0.45) per basic and diluted common share, for
the quarter ended December 31, 2010,
compared to a loss of $425,000, or
$(0.03) per basic and diluted common
share for the quarter ended December 31,
2009.
Annualized return on average equity (ROE) for the year ended
December 31, 2010 was -5.67%,
compared to -5.77% for the same period in 2009. Annualized return
on average assets (ROA) was -0.63% for year ended December 31, 2010 compared to -0.62% for the same
period in 2009. Annualized return on average equity (ROE) for the
quarter ended December 31, 2010 was
-29.01%, compared to -2.18% for the same quarterly period in 2009.
Annualized return on average assets (ROA) was -3.28% for quarter
ended December 31, 2010 compared to
-0.23% for the same quarterly period in 2009.
The Board of Directors of United Security Bancshares declared a
first quarter 2011 stock dividend of one percent (1%). The stock
dividend was payable to shareholders of record on January 7, 2011, and the shares were issued on
January 19, 2011.
Dennis R. Woods, President and
Chief Executive Officer of the Company, added, "While we reported a
net loss for 2010, operating results were improved over the
previous year and we continue to see improvements in levels of
allowance for loan losses, liquidity, and capital ratios. At
December 31, 2010, the Company had
cash and cash equivalents of more than $98,400,000 as compared to $29,200,000 at December
31, 2009. Total risk-based capital was 16.17% at
December 31, 2010 and 14.30% at
December 31, 2009. Goodwill
impairment charges were half of those reported during 2009,
although still accounted for nearly one third of the $4,439,000 net loss reported during the year
ended December 31, 2010. The
net loss was also impacted by an additional $2.6 million recorded as a pre-tax provision for
loan losses ($1.5 million net of tax)
relating to three lending relationships that were revalued based
upon current appraisals received after the year end and after our
original 2010 earnings release dated March
3, 2011, bringing the allowance for loan losses to
$16.5 million or 3.75 % of total
loans at December 31, 2010. During
2010, we continued to deleverage the balance sheet, reducing our
reliance on wholesale funding while improving liquidity and
continuing our efforts to reduce problem assets.
"Our ongoing efforts to reduce problem assets are not
necessarily reflected in the balance sheet at December 31, 2010. During 2010, we sold or
wrote-down more than $15,650,000 in
OREO properties, but transferred $14,200,000 in foreclosed properties from loans
to OREO during the year. The first quarter of 2011 has been active
for OREO sales with one sale already completed and several other
sales expected to be completed by the end of the first quarter of
2011. While we have had success in reducing nonaccrual loans
through restructuring loans with borrowers or through foreclosure
when required, a single large lending relationship that went to
nonaccrual status late during the fourth quarter of 2010 increased
nonaccrual loans at December 31, 2010
to levels similar to those reported at December 31, 2009.
"While reporting net losses is not good from a business and
shareholder perspective, the net losses reported during 2009 and
2010 will allow us to recapture some of our income taxes paid in
previous years. The Worker, Homeownership and Business Assistance
Act of 2009 enacted in November 2009
allows taxpayers to elect up to a five-year carryback for net
operating losses (NOL) generated during 2008 or 2009 to offset
taxable income in those preceding taxable years. We have amended
our 2009 tax return and anticipate recovering nearly $4,900,000 in past taxes paid under the NOL
five-year carryback option. We will utilize the standard two-year
NOL carryback option allowed under the current tax provisions for
2010 and future reporting periods as appropriate."
Shareholders' equity at December 31,
2010 was $73,270,000 and
Shareholders' equity at December 31,
2009 was $75,821,000.
Net interest income before provision for credit loss for the
year ended December 31, 2010 was
$27,901,000, down from $28,349,000 reported during the year ended
December 31, 2009 and was
$6,538,000 for the quarter ended
December 31, 2010, down from
$7,247,000 reported during the
quarter ended December 31, 2009. The
net interest margin was 4.58% for the year ended December 31, 2010 and 4.49% for the year ended
December 31, 2009. The net interest
margin was 4.33% for the quarter ended December 31, 2010 compared to 4.65% for the
quarter ended December 31, 2009. On a
year-over-year basis, the Company has continued to benefit from
decreasing costs on interest-bearing liabilities, which has more
than outweighed the decline in yield on interest-earning
assets.
Noninterest income for the year ended December 31, 2010 was $5,939,000, down $366,000 from $6,305,000 reported for the year ended
December 31, 2009. As with the fourth
quarter discussed below, changes in noninterest income on a
year-to-year comparative basis are partly the result of decreases
of $829,000 in fair value gains
recorded on the Company's junior subordinated debt, and decreases
of $694,000 in other noninterest
income between the two year-to-date periods resulting from
$863,000 in gains taken during the
fourth quarter of 2009 on the sale of loan-related farm equipment
that were not again realized in 2010. On a year-to-date basis, the
Company benefited from a reduction of $708,000 in net losses on sales of OREO with net
losses of $85,000 reported for the
year ended December 31, 2010 compared
to net losses of $793,000 reported
for the year ended December 31, 2009.
In addition, the Company realized gains of $509,000 on the sale of a real estate loan
portfolio during the year ended December 31,
2010.
Noninterest income for the quarter ended December 31, 2010 was $481,000, reflecting a decrease of $2,387,000 from $2,868,000 in noninterest income reported during
the quarter ended December 31, 2009.
During the fourth quarter of 2010, the Company realized losses
related to fair value adjustments on its junior subordinated debt
of $529,000, reflecting a decrease of
$1,384,000 from the $855,000 gain recorded during the fourth quarter
of 2009. Other noninterest income decreased $843,000 between the quarters ended December 31, 2009 and December 31, 2010 as a result of $840,000 in gains taken during the fourth quarter
of 2009 on the sale of loan-related farm equipment. Net losses on
the sale of other real estate owned (OREO) through foreclosure
sales totaled $182,000 during the
quarter ended December 31, 2010,
representing an increase of $145,000
when compared to net losses totaling $37,000 realized during the quarter ended
December 31, 2009.
For the year ended December 31,
2010, noninterest expense totaled $29,020,000, up $1,054,000 from $27,966,000, reported for the year ended
December 31, 2009. Noninterest
expense for the quarter ended December 31,
2010 totaled $8,067,000
compared with $6,353,000 for the
quarter ended December 31, 2009, an
increase of $1,714,000 or 27.0%
between the two quarterly periods. On a year-to-date basis,
impairment losses and other expenses related to OREO increased
$1,427,000 from $2,936,000 during the year ended December 31, 2009 to $4,363,000 for the year ended December 31, 2010, while regulatory insurance
assessments increased $1,343,000
between 2009 and 2010, from $1,203,000 for the year ended December 31, 2009 to $2,546,000 for the year ended December 31, 2010. Impairment losses on goodwill
and intangible assets decreased $1,636,000 between the years ended December 31, 2010 and 2009, respectively, with
goodwill impairment losses of $1,414,000 reported during 2010 compared to
$3,026,000 reported during 2009. The
Company does not recognize any tax benefit related to these
goodwill impairment losses, and as a result, the losses impact the
Company's net income dollar-for-dollar. As a result, the goodwill
impairment losses represent approximately 49.0% and 67.0% of the
net loss reported by the Company for the years ended December 31, 2010 and December 31, 2009, respectively.
For the year ended December 31,
2010 the provision for loan loss was $12,475,000 compared to $13,375,000 for the year ended December 31, 2009, representing a decrease of
$900,000 between the two year-to-date
periods. The provision for loan loss was $9,099,000 for the quarter ended December 31, 2010 compared to $4,782,000 for quarter ended December 31, 2009, representing an increase of
$4,317,000 between the two quarterly
periods.
While the Company has experienced some improvement on average in
2010 as compared to 2009 in the overall level of problem assets,
the Company may experience additional losses related to problem
assets due to a continued weak economy and weak real estate markets
in our service area. There can be no assurance that we will
not experience future increases in nonperforming assets or that the
disposition of such nonperforming assets will not adversely affect
our profitability. As a result of continued weakness in the economy
and specifically weak real estate markets in our service area, we
continue to build the allowance for loan losses which totaled 3.75%
of total loans at December 31, 2010
compared to 2.96% of total loans at December
31, 2009. 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
December 31, 2010 to be adequate.
Non-performing assets decreased approximately $937,000 between December
31, 2009 and December 31,
2010, but increased as a percentage of total assets to
10.40% of total assets at December 31,
2010 up from 10.31% of total assets on December 31, 2009, as a result of declines in
total assets between the two periods. OREO, a component of
nonperforming assets, decreased $637,000 between December
31, 2009 and December 31,
2010, but increased $1,326,000
between September 30, 2010 and
December 31, 2010 as the result of
the transfer of approximately $4,420,000 in impaired loans to OREO during the
fourth quarter of 2010. Impaired loans totaled $50,881,000 at December
31, 2010, decreasing $2,913,000 from the balance of $53,794,000 at December
31, 2009, but increasing $5,079,000 from the balance of $45,802,000 at September
30, 2010. Similarly, nonaccrual loans of $34,394,000 at December
31, 2010, decreased $362,000
from the balance of $34,756,000 at
December 31, 2009 but increased
$3,891,000 from the balance of
$30,503,000 at September 30, 2010. The increase in both impaired
loans and nonaccrual loans during the fourth quarter of 2010 is
largely the result of a single large lending relationship totaling
approximately $10,550,000 which went
to nonaccrual status during December
2010. Annualized net loan charge-offs totaled 4.81% and
3.19% of average loans during the quarters ended December 31, 2010 and December 31, 2009, respectively, and totaled
2.24% and 1.85% of average loans during the years ended
December 31, 2010 and December 31, 2009, respectively.
United Security Bancshares is a $675+ 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 laws, and regulations on the Company and its
business, including California tax
legislation and the subsequent Dec. 31,
2003, announcement by the Franchise Tax Board regarding the
taxation of REITs and RICs; (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 regulatory agreement under which the
Company is subject and (10) 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, 2010, 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
|
|
(dollars in
thousands)
|
|
|
December
31,
|
|
December
31,
|
|
|
2010
|
|
2009
|
|
Assets
|
|
|
|
|
Cash and
noninterest-bearing deposits in other banks
|
$13,259
|
|
$15,006
|
|
Cash and due from Federal
Reserve Bank
|
85,171
|
|
2,638
|
|
Federal funds
sold
|
0
|
|
11,585
|
|
Cash and
cash equivalents
|
98,430
|
|
29,229
|
|
Interest-bearing deposits
in other banks
|
4,396
|
|
3,313
|
|
Investment securities (AFS
at market value)
|
51,503
|
|
71,411
|
|
Loans and leases, net of
unearned fees
|
441,046
|
|
507,708
|
|
Less: Allowance
for credit losses
|
(16,520)
|
|
(15,016)
|
|
Net loans
|
424,526
|
|
492,692
|
|
Premises and equipment -
net
|
12,909
|
|
13,296
|
|
Bank owned life
insurance
|
15,493
|
|
14,972
|
|
Intangible
assets
|
7,186
|
|
9,425
|
|
Other real estate
owned
|
35,580
|
|
36,217
|
|
Other assets
|
28,187
|
|
22,680
|
|
Total assets
|
$678,210
|
|
$693,235
|
|
Deposits:
|
|
|
|
|
Noninterest
bearing demand and NOW
|
$199,675
|
|
$187,754
|
|
Money market and
savings
|
158,253
|
|
144,911
|
|
Time
|
199,538
|
|
228,995
|
|
Total
deposits
|
557,466
|
|
561,660
|
|
Borrowed funds
|
32,000
|
|
40,000
|
|
Other
liabilities
|
4,828
|
|
5,038
|
|
Junior subordinated
debentures (at fair value)
|
10,646
|
|
10,716
|
|
Total liabilities
|
604,940
|
|
617,414
|
|
Shareholders'
equity:
|
|
|
|
|
Common shares
outstanding:
|
|
|
|
|
13,003,849
at December 31, 2010
|
|
|
|
|
12,496,499
at December 31, 2009
|
39,869
|
|
37,575
|
|
Retained
earnings
|
33,807
|
|
40,499
|
|
Accumulated other
comprehensive income
|
(406)
|
|
(2,253)
|
|
Total shareholders'
equity
|
73,270
|
|
75,821
|
|
Total liabilities and
shareholders' equity
|
$678,210
|
|
$693,235
|
|
|
|
|
|
|
|
|
|
United Security
Bancshares
|
|
Consolidated Statements of
Income (Quarters unaudited)
|
|
Periods Ended December 31, 2010
and 2009
|
|
(dollars in 000s, except per
share amounts)
|
|
|
Quarter
Ended
|
Quarter
Ended
|
Year
Ended
|
Year
Ended
|
|
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
Interest
income:
|
|
|
|
|
|
Interest and fees on
loans
|
$6,910
|
$7,857
|
$29,502
|
$31,197
|
|
Interest on investment
securities
|
611
|
972
|
2,852
|
4,356
|
|
Interest on Federal funds
sold and
|
|
|
|
|
|
deposits in
other banks
|
59
|
23
|
136
|
123
|
|
Total
interest income
|
7,580
|
8,852
|
32,490
|
35,676
|
|
Interest
expense:
|
|
|
|
|
|
Interest on
deposits
|
951
|
1,447
|
4,217
|
6,192
|
|
Interest on other
borrowed funds
|
91
|
158
|
372
|
1,135
|
|
Total
interest expense
|
1,042
|
1,605
|
4,589
|
7,327
|
|
Net interest income before
provision for credit losses
|
6,538
|
7,247
|
27,901
|
28,349
|
|
Provision for credit
losses
|
9,099
|
4,782
|
12,475
|
13,375
|
|
Net interest income
|
(2,561)
|
2,465
|
15,426
|
14,974
|
|
Noninterest
income:
|
|
|
|
|
|
Customer service
fees
|
908
|
923
|
3,812
|
3,882
|
|
Increase in cash
surrender value of
|
|
|
|
|
|
bank owned
life insurance
|
140
|
140
|
554
|
544
|
|
Gain on sale of
loans
|
0
|
0
|
509
|
0
|
|
Loss on sale of other real
estate owned
|
(182)
|
(37)
|
(85)
|
(793)
|
|
(Loss) gain on Fair Value
Option of Financial Assets
|
(529)
|
855
|
316
|
1,145
|
|
Other noninterest
income
|
144
|
987
|
833
|
1,527
|
|
Total noninterest
income
|
481
|
2,868
|
5,939
|
6,305
|
|
Noninterest
expense:
|
|
|
|
|
|
Salaries and employee
benefits
|
2,320
|
2,149
|
8,949
|
8,551
|
|
Occupancy
expense
|
966
|
877
|
3,789
|
3,692
|
|
Professional
fees
|
464
|
702
|
2,081
|
2,201
|
|
Regulatory insurance
assessments
|
1,081
|
331
|
2,546
|
1,203
|
|
Impairment losses and
other expenses on OREO
|
1,690
|
920
|
4,363
|
2,936
|
|
Impairment losses on
goodwill and intangible assets
|
0
|
24
|
1,471
|
3,107
|
|
Impairment losses on
investment securities
|
165
|
123
|
1,253
|
843
|
|
Other noninterest
expense
|
1,381
|
1,227
|
4,568
|
5,433
|
|
Total noninterest
expense
|
8,067
|
6,353
|
29,020
|
27,966
|
|
Income before income tax
provision
|
(10,147)
|
(1,020)
|
(7,655)
|
(6,687)
|
|
Provision for income
taxes
|
(4,340)
|
(595)
|
(3,216)
|
(2,150)
|
|
Net Income
|
($5,807)
|
($425)
|
($4,439)
|
($4,537)
|
|
|
|
|
|
|
|
|
|
|
United Security
Bancshares
|
|
Selected Financial Data
(Quarters Unaudited)
|
|
(dollars in 000s, except per
share amounts)
|
|
|
Quarter
Ended
|
Quarter
Ended
|
Year
Ended
|
Year
Ended
|
|
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
Basic earnings per
share
|
($0.45)
|
($0.03)
|
($0.34)
|
($0.35)
|
|
Diluted earnings per
share
|
($0.45)
|
($0.03)
|
($0.34)
|
($0.35)
|
|
Weighted average basic shares
for EPS
|
13,003,840
|
13,003,840
|
13,003,840
|
13,003,840
|
|
Weighted average diluted shares
for EPS
|
13,003,840
|
13,003,840
|
13,003,840
|
13,003,840
|
|
|
|
|
|
|
|
Annualized return on:
|
|
|
|
|
|
Average assets
|
-3.28%
|
-0.23%
|
-0.63%
|
-0.62%
|
|
Average equity
|
-29.01%
|
-2.18%
|
-5.67%
|
-5.77%
|
|
Yield on interest-earning
assets
|
5.02%
|
5.67%
|
5.33%
|
5.65%
|
|
Cost of interest-bearing
liabilities
|
0.87%
|
1.28%
|
0.93%
|
1.43%
|
|
Net interest margin
|
4.33%
|
4.65%
|
4.58%
|
4.49%
|
|
Annualized net charge-offs to
average loans
|
4.81%
|
3.19%
|
2.24%
|
1.85%
|
|
|
|
|
|
|
|
|
December
31,
|
December
31,
|
|
|
|
|
2010
|
2009
|
|
|
|
Shares outstanding - period
end
|
13,003,840
|
12,496,499
|
|
|
|
Book value per share
|
$5.63
|
$6.07
|
|
|
|
Tangible book value per
share
|
$5.08
|
$5.31
|
|
|
|
Efficiency ratio
|
85.76%
|
80.70%
|
|
|
|
Total nonperforming assets
(1)
|
$70,521
|
$71,458
|
|
|
|
Nonperforming assets to total
assets
|
10.40%
|
10.31%
|
|
|
|
Total Impaired loans
(2)
|
$50,881
|
$53,794
|
|
|
|
Total nonaccrual
loans
|
$34,394
|
$34,757
|
|
|
|
Allowance for loan losses to
total loans
|
3.75%
|
2.96%
|
|
|
|
Tier 1 leverage -
consolidated
|
11.50%
|
11.68%
|
|
|
|
Tier 1 leverage -
Bank
|
11.04%
|
11.19%
|
|
|
|
Tier 1 risk-based capital -
consolidated
|
14..90%
|
13.03%
|
|
|
|
Tier 1 risk-based capital -
Bank
|
14.35%
|
12.47%
|
|
|
|
Total risk-based capital -
consolidated
|
16.17%
|
14.30%
|
|
|
|
Total risk-based capital -
Bank
|
15.58%
|
13.70%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Other real estate owned
through foreclosure, nonaccrual loans, and loans past due 90 days
of more still accruing interest.
|
|
(2) Includes troubled debt
restructures.
|
|
|
|
|
|
|
SOURCE United Security Bancshares