FRESNO, Calif., Aug. 3, 2011 /PRNewswire/ -- United Security
Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global
Select: UBFO) reported today an unaudited consolidated net loss of
$3.0 million or ($0.23) per basic and diluted common share for
the three months ended June 30, 2011,
as compared to net income of $515,000
or $0.04 per basic and diluted common
shares for the three months ended June 30,
2010. On a year-to-date basis, the Company reported an
unaudited consolidated net loss of $2.7
million or ($0.20) per basic
and diluted common share, as compared to net income of $957,000 or $0.07
per basic and diluted common shares for the six months ended
June 30, 2010.
Annualized return on average equity (ROE) for the three months
ended June 30, 2011 was (15.12%),
compared to 2.65% for the same period in 2010, and was (6.98%) for
the six months ended June 30, 2011
compared to 2.49% for the same six-month period in 2010. Annualized
return on average assets (ROA) was (1.83%) for the three months
ended June 30, 2011 compared to 0.29%
for the same three-month period in 2010, and was (0.81%) for the
six months ended June 30, 2011
compared to 0.27% to the same six-month period in 2010.
Earnings for the second quarter of 2011 were adversely impacted
by provisions for loan losses totaling $3.5
million and a goodwill impairment loss of $1.5 million recorded during the quarter.
Dennis R. Woods, President and Chief
Executive Officer of the Company, notes with respect to the
Goodwill impairment expense of $1.5
million reflected in this quarter's earnings, "This is a
noncash accounting adjustment related to a prior branch purchase
that does not impact the Bank's regulatory capital ratios."
Shareholders' equity at June 30,
2011 was $70.1 million, down
$3.1 million from the $73.3 million in shareholder's equity reported at
December 31, 2010.
Net interest income before provision for credit loss totaled
$6.3 million for the three months
ended June 30, 2011 and $12.5 million for the six months ended
June 30, 2011, down $1.1 million from $7.4
million reported during the three months ended June 30, 2010 and down $2.0 million from the $14.5 million reported during the six months
ended June 30, 2010, respectively.
The net interest margin was 4.52% for the three months ended
June 30, 2011, and 4.47% for the six
months ended June 30, 2011 as
compared to 4.87% for the three months ended June 30, 2010 and 4.81% for the six months ended
June 30, 2010. On a six-month
comparative basis, the Company continues to benefit from reduced
costs on interest-bearing liabilities, which partially offset
declines in yields on interest-earning assets between the two
six-month periods.
Noninterest income for the three months ended June 30, 2011 totaled $1.2
million, reflecting a decrease of $1.5 million from $2.7
million in noninterest income reported for the three months
ended June 30, 2010. Noninterest
income of $2.3 million reported for
the six months ended June 30, 2011
decreased of $1.7 million from
$4.0 million in noninterest income
reported for the six months ended June 30,
2010. Customer service fees continue to provide the majority
of the Company's noninterest income, totaling $894,000 for the three months ended June 30, 2011, as compared to $1.0 million for the three months ended
June 30, 2010, and $1.8 million for the six months ended
June 30, 2011, as compared to
$2.0 million for the six months ended
June 30, 2010. Changes in noninterest
income on a quarter-to-quarter comparative basis are largely the
result of decreases of $511,000 in
gains realized on the sale of loans, $488,000 in gains realized on the sale of other
real estate owned, and $245,000 in
fair value gains recorded on the Company's junior subordinated
debt, between the two three-month periods. On a six-month
comparative basis, changes in noninterest income are largely the
result of decreases of $511,000 in
gains realized on the sale of loans, as well as decreases of
$769,000 in fair value gains recorded
on the Company's junior subordinated debt.
Noninterest expense totaled $8.2
million for the three months ended June 30, 2011, up $192,000 from $8.0
million reported for the three months ended June 30, 2010, while noninterest expense totaled
$14.3 million for the six months
ended June 30, 2011, down
$76,000 from $14.4 million reported for the six months ended
June 30, 2010. Between the
three-month quarterly comparative periods, increases in
professional fees and OREO expenses totaling $582,000 were offset in part by a decrease in
impairment losses on investment securities. On a six-month
comparative basis, increases in salaries, professional fees,
regulatory assessments, and impairment losses on OREO and
intangible assets, were offset by a decrease in impairment losses
on investment securities.
For the three months ended June 30,
2011 the provision for loan loss was $3.5 million, compared to $519,000 for the three months ended June 30, 2010 representing an increase of
$3.0 million between the three-month
comparative periods. The provision for loan losses totaled
$4.4 million for the six months ended
June 30, 2011 compared to
$2.2 million for the six months ended
June 2010, reflecting an increase of
$2.3 million between the two
six-month periods. Net loan charge-offs totaled $6.6 million for the six months ended
June 30, 2011 as compared to
$5.1 million for the six months ended
June 30, 2010. At June 30, 2011, the allowance for loan losses
represented 3.33% of total loans, compared to 3.75% of total loans
at December 31, 2010. 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, 2011 to be adequate.
Dennis R. Woods, President and
Chief Executive Officer of the Company, explains, "The addition to
the Allowance for Loan Loss during the quarter will help us to
accelerate the work-out or disposition of troubled bank assets.
With upgrades in certain credits within the loan portfolio made
during the current year, as well as additional loan charge-offs
taken during 2011 and continued sales of other real estate owned
through foreclosure (OREO), a number of which are currently in
escrow, we are successfully realizing reductions in our overall
level of problem assets including impaired and nonaccrual loans, as
well as OREO."
Non-performing assets comprised of nonaccrual loans, OREO, and
loans more than 90 days past days and still accruing interest,
decreased approximately $10.8 million
between December 31, 2010 and
June 30, 2011, and decreased
$6.1 million during the quarter ended
June 30, 2011. Nonperforming assets
decreased as a percentage of total assets from 10.40% of total
assets at December 31, 2010 to 9.07%
of total assets at June 30, 2011 as
the Company continues to successfully work out, or dispose of,
problem assets. Nonaccrual loans decreased $7.6 million between December 31, 2010 and June
30, 2011, and decreased $2.6
million during the quarter ended June
30, 2011, while OREO decreased $3.5
million and $3.1 million during the same periods,
respectively. Impaired loans totaled $43.0
million at June 30, 2011,
decreasing $8.0 million from the
balance of $50.9 million at
December 31, 2010 and decreasing
$5.8 million from the balance of
$48.9 million at March 31, 2011.
The Board of Directors of United Security Bancshares declared a
second quarter 2011 stock dividend of one percent (1%) on
June 28, 2011. The stock dividend was
payable to shareholders of record on July
15, 2011, and the shares were issued on July 27, 2011.
United Security Bancshares is a $650+ 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").
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|
United Security
Bancshares
|
|
|
|
|
Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2011
|
|
2010
|
|
Assets
|
|
|
|
|
Cash and
noninterest-bearing deposits in other banks
|
$24,507
|
|
$13,259
|
|
Cash and due from Federal
Reserve Bank
|
71,867
|
|
85,171
|
|
Federal funds
sold
|
0
|
|
0
|
|
Cash and
cash equivalents
|
96,374
|
|
98,430
|
|
Interest-bearing deposits
in other banks
|
2,269
|
|
4,396
|
|
Investment securities (AFS
at market value)
|
49,342
|
|
51,503
|
|
Loans and leases, net of
unearned fees
|
429,491
|
|
441,046
|
|
Less: Allowance
for credit losses
|
(14,303)
|
|
(16,520)
|
|
Net loans
|
415,188
|
|
424,526
|
|
Premises and equipment -
net
|
12,875
|
|
12,909
|
|
Bank owned life
insurance
|
15,757
|
|
15,493
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|
Intangible
assets
|
5,341
|
|
7,186
|
|
Other real estate
owned
|
32,042
|
|
35,580
|
|
Other assets
|
29,775
|
|
28,187
|
|
Total assets
|
$658,963
|
|
$678,210
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|
Deposits:
|
|
|
|
|
Noninterest
bearing demand and NOW
|
$227,233
|
|
$199,675
|
|
Money market and
savings
|
160,958
|
|
158,253
|
|
Time
|
159,368
|
|
199,538
|
|
Total
deposits
|
547,559
|
|
557,466
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|
Borrowed funds
|
25,000
|
|
32,000
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|
Other
liabilities
|
5,349
|
|
4,828
|
|
Junior subordinated
debentures (at fair value)
|
10,912
|
|
10,646
|
|
Total liabilities
|
588,820
|
|
604,940
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|
Shareholders'
equity:
|
|
|
|
|
Common shares
outstanding:
|
|
|
|
|
13,265,205
at June 30, 2011
|
|
|
|
|
13,003,840
at December 31, 2010
|
40,707
|
|
39,869
|
|
Retained
earnings
|
30,300
|
|
33,807
|
|
Accumulated other
comprehensive income
|
(864)
|
|
(406)
|
|
Total shareholders'
equity
|
70,143
|
|
73,270
|
|
Total liabilities and
shareholders' equity
|
$658,963
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|
$678,210
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United Security
Bancshares
|
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Consolidated Statements of
Income (unaudited)
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(dollars in 000s, except per
share amounts)
|
|
|
|
|
|
|
Three
Months
Ended
|
Three
Months
Ended
|
Six
Months
Ended
|
Six
Months
Ended
|
|
|
June
30,
|
June
30,
|
June
30,
|
June,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Interest
income:
|
|
|
|
|
|
Interest and fees on
loans
|
$6,437
|
$7,769
|
$12,857
|
$15,309
|
|
Interest on investment
securities
|
540
|
731
|
1,137
|
1,599
|
|
Interest on Federal funds
sold and
|
|
|
|
|
|
deposits in
other banks
|
53
|
18
|
114
|
38
|
|
Total
interest income
|
7,030
|
8,518
|
14,108
|
16,946
|
|
Interest
expense:
|
|
|
|
|
|
Interest on
deposits
|
668
|
1,063
|
1,436
|
2,221
|
|
Interest on other
borrowed funds
|
83
|
78
|
168
|
185
|
|
Total
interest expense
|
751
|
1,141
|
1,604
|
2,406
|
|
Net interest income before
provision for credit losses
|
6,279
|
7,377
|
12,504
|
14,540
|
|
Provision for credit
losses
|
3,530
|
519
|
4,420
|
2,150
|
|
Net interest income
|
2,749
|
6,858
|
8,084
|
12,390
|
|
Noninterest
income:
|
|
|
|
|
|
Customer service
fees
|
894
|
1,016
|
1,761
|
1,964
|
|
Increase in cash
surrender value of
|
|
|
|
|
|
bank owned
life insurance
|
140
|
138
|
281
|
272
|
|
Gain on sale of
loans
|
0
|
511
|
0
|
511
|
|
(Loss) gain on sale of
other real estate owned
|
(324)
|
164
|
(44)
|
108
|
|
Gain (loss) on Fair Value
Option of Financial Assets
|
222
|
467
|
(145)
|
624
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|
Other noninterest
income
|
242
|
383
|
449
|
511
|
|
Total noninterest
income
|
1,174
|
2,679
|
2,302
|
3,990
|
|
Noninterest
expense:
|
|
|
|
|
|
Salaries and employee
benefits
|
2,220
|
2,107
|
4,541
|
4,388
|
|
Occupancy
expense
|
909
|
961
|
1,802
|
1,874
|
|
Professional
fees
|
980
|
632
|
1,419
|
1,019
|
|
Regulatory insurance
assessments
|
475
|
515
|
988
|
906
|
|
Impairment losses and
other expenses on OREO
|
1,157
|
890
|
2,073
|
1,993
|
|
Impairment losses on
goodwill and intangible assets
|
1,489
|
1,414
|
1,525
|
1,471
|
|
Impairment losses on
investment securities
|
0
|
458
|
0
|
702
|
|
Other noninterest
expense
|
1,010
|
1,071
|
1,949
|
2,020
|
|
Total noninterest
expense
|
8,240
|
8,048
|
14,297
|
14,373
|
|
Income before income tax
provision
|
(4,317)
|
1,489
|
(3,911)
|
2,007
|
|
Provision for income
taxes
|
(1,282)
|
974
|
(1,232)
|
1,050
|
|
Net Income
|
($3,035)
|
$515
|
($2,679)
|
$957
|
|
|
|
|
|
|
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|
|
United Security
Bancshares
|
|
|
|
|
|
Selected Financial Data
(Unaudited)
|
|
|
|
|
|
(dollars in 000s, except per
share amounts)
|
|
|
|
|
|
|
Three
Months
Ended
|
Three
Months
Ended
|
Six
Months
Ended
|
Six
Months
Ended
|
|
|
June
30,
|
June
30,
|
June
30,
|
June,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Basic earnings per
share
|
($0.23)
|
$0.04
|
($0.20)
|
$0.07
|
|
Diluted earnings per
share
|
($0.23)
|
$0.04
|
($0.20)
|
$0.07
|
|
Weighted average basic shares
for EPS
|
13,265,205
|
13,265,205
|
13,265,205
|
13,265,205
|
|
Weighted average diluted shares
for EPS
|
13,265,205
|
13,265,205
|
13,265,205
|
13,265,205
|
|
|
|
|
|
|
|
Annualized return on:
|
|
|
|
|
|
Average assets
|
(1.83%)
|
0.29%
|
(.81%)
|
0.27%
|
|
Average equity
|
(15.12%)
|
2.65%
|
(6.98%)
|
2.49%
|
|
Yield on interest-earning
assets
|
5.06%
|
5.62%
|
5.04%
|
5.60%
|
|
Cost of interest-bearing
liabilities
|
0.74%
|
0.92%
|
0.77%
|
0.98%
|
|
Net interest margin
|
4.52%
|
4.87%
|
4.47%
|
4.81%
|
|
Annualized net charge-offs to
average loans
|
5.49%
|
3.59%
|
3.08%
|
2.01%
|
|
|
|
|
|
|
|
|
June
30,
|
December
31,
|
|
|
|
|
2011
|
2010
|
|
|
|
Shares outstanding - period
end
|
13,265,205
|
13,003,840
|
|
Book value per share
|
$5.29
|
$5.63
|
|
Tangible book value per
share
|
$4.89
|
$5.08
|
|
Efficiency ratio
|
95.96%
|
85.76%
|
|
Total nonperforming
assets
|
$59,739
|
$70,521
|
|
Nonperforming assets to total
assets
|
9.07%
|
10.40%
|
|
Total Impaired loans
|
$43,009
|
$50,881
|
|
Total nonaccrual
loans
|
$26,756
|
$34,394
|
|
Allowance for loan losses to
total loans
|
3.33%
|
3.75%
|
|
|
|
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SOURCE United Security Bancshares