United Security Bancshares - Fourth Quarter Profits: $1.5 Million

FRESNO, Calif., Feb. 7, 2013 /PRNewswire/ -- United Security Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported today unaudited consolidated net income of $1.5 million or $0.10 per basic and diluted common share for the quarter ended December 31, 2012 and $6.1 million or $.43 per basic and diluted common share for the year ended December 31, 2012, as compared to a net loss of $3.4 million or ($0.24) per basic and diluted common shares for the quarter ended December 31, 2011 and a net loss of $10.8 million or ($.76) per basic and diluted shares for the year ended December 31, 2011.

Annualized return on average equity (ROAE) for the quarter ended December 31, 2012 was 8.56, compared to (24.52%) for the same period in 2011, and was 9.20% for the year ended December 31, 2012 compared to (15.86)% for the year ended December 31, 2011. Annualized return on average assets (ROAA) was 0.93% for the quarter ended December 31, 2012 compared to (2.09%) for the same three-month period in 2011, and was 0.97% for the year ended December 31, 2012 compared to (1.64%) for the year ended December 31, 2011.

The Board of Directors of United Security Bancshares declared a fourth quarter 2012 stock dividend of one percent (1%) on December 18, 2012. The stock dividend was payable to shareholders of record on January 11, 2013, and the shares will be issued on January 23, 2013.

Dennis R. Woods, President and Chief Executive Officer of the Company, states, "The year was very positive for the Company with reductions in problem assets and OREO, a stronger allowance for loan losses at year-end as a percentage of impaired loans, and consolidated net income of nearly $6.1 million for the year. We continue to see positive trends in the local economy and look forward to continued improvement in the coming year."  Shareholders' equity at December 31, 2012 was $69.4 million, up $7.3 million from shareholders' equity of $62.2 million at December 31, 2011.  

Net interest income before provision for credit losses for the quarter ended December 31, 2012 totaled $5.4 million and $23.1 million for the year ended December 31, 2012, down $808,000 from $6.2 million reported for the quarter ended December 31, 2011 and down $1.9 million from the $25.0 million reported for the year ended December 31, 2011, respectively. The net interest margin was 4.03% for the quarter ended December 31, 2012, and 4.40% for the year ended December 31, 2012, as compared to 4.41% for the quarter ended December 31, 2011 and 4.49% for the year ended December 31, 2011.

Noninterest income for the quarter ended December 31, 2012 totaled $411,000, reflecting a decrease of $874,000 from the $1.3 million in noninterest income reported for the quarter ended December 31, 2011. Noninterest income for the year ended December 31, 2012 totaled $6.1 million, reflecting a decrease of $771,000 from $6.9 million in noninterest income reported for the year ended December 31, 2011. Customer service fees continue to provide the majority of the Company's noninterest income from operations, totaling $883,000 for the quarter ended December 31, 2012, as compared to $923,000 for the quarter ended December 31, 2011, and $3.6 million for the years ended December 31, 2012 and 2011. Changes in noninterest income on a quarter-to-quarter comparative basis between the fourth quarters of 2012 and 2011 are largely the result of a decrease of $575,000 in gains recognized on the fair value of financial liabilities. On a twelve month comparative basis, the change in noninterest income of $(771,000) includes an increase of $1.8 million on gains realized on the sale of investments and an increase of $509,000 on gains realized on the sale of other real estate owned, offset by a decrease of $2.6 million in gains recognized on the fair value of financial liabilities. The gain on sale of investments of $1.8 million for the year ended December 31, 2012 is included in other non interest income.

Noninterest expense totaled $5.5 million for the quarter ended December 31, 2012, down $2.8 million from the $8.3 million reported for the quarter ended December 31, 2011. For the year ended December 31, 2012, noninterest expense totaled $20.6 million, down $10.2 million from the $30.8 million for the year ended December 31, 2011. Between the fourth quarters of 2012 and 2011, the company experienced significant decreases in impairment losses and other related expenses on other real estate owned, impairment losses on investment securities, and regulatory insurance assessments. On a year-to-year comparative basis, additional decreases in the above listed areas as well as decreases in impairment losses on goodwill, and professional fees contributed to the overall decrease.

Net income of $1.5 million realized during the fourth quarter of 2012 included a tax expense reduction of $1.0 million related to the Company's valuation allowance on deferred tax assets. The adjustment reduced the allowance for deferred tax assets from $3.7 million at December 31, 2011 to $2.7 million at December, and was the result of an increase in the anticipated utilization of deferred taxes in future periods.

The Company had a provision for loan loss reserve of $9,000 for the quarter ended December 31, 2012 and $1.0 million for the year ended December 31, 2012, compared to $1.1 million for the quarter ended December 31, 2011 and $13.6 million for the year ended December 31, 2011. Net loan recoveries totaled $615,000 for the quarter ended December 31, 2012, while net loan charge-offs totaled $2.9 million for the year ended December 31, 2012 as compared to net loan charge-offs of $1.4 million for the quarter ended December 31, 2011, and $16.5 million for the year ended December 31, 2011. With continued weakness in the economy and real estate markets within our service area, we have maintained an adequate allowance for loan losses, which totaled 2.95% of total loans at December 31, 2012 compared to 3.34% at December 31, 2011. 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 December 31, 2012 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 days and still accruing interest, decreased approximately $10.8 million between December 31, 2011 and December 31, 2012. Additionally, nonperforming assets as a percentage of total assets decreased from 9.88% at December 31, 2011 to 8.25% at December 31, 2012. Nonaccrual loans decreased $4.7 million between December 31, 2011 and December 31, 2012, while OREO, decreased $3.2 million during the same period. Impaired loans totaled $21.9 million at December 31, 2012, down $10.0 million from the balance of $31.9 million at December 31, 2011.

United Security Bancshares is a $640+ 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; (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, 2011, 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,


2012


2011

Assets




   Cash and noninterest-bearing deposits in other banks

$27,481


$28,052

   Cash and due from Federal Reserve Bank

114,146


96,132

   Federal funds sold

0


0

      Cash and cash equivalents

141,627


124,184

   Interest-bearing deposits in other banks

1,507


2,187

  Investment securities (AFS at market value)

31,844


38,458

   Loans and leases, net of unearned fees

400,033


408,146

     Less: Allowance for credit losses

(11,784)


(13,648)

   Net loans

388,249


394,498

   Premises and equipment - net

12,262


12,675

   Bank owned life insurance

16,681


16,150

   Intangible assets

4,737


5,041

   Other real estate owned

23,932


27,091

    Deferred Income Taxes

9,724


11,485

   Other assets

18,314


19,563

Total assets

$648,877


$651,332

   Deposits:




     Noninterest bearing demand and NOW

$270,094


$224,907

     Money market and savings

193,808


206,036

     Time

99,385


143,484

      Total deposits

563,287


574,427

   Borrowed funds

0


0

   Other liabilities

6,081


5,705

   Junior subordinated debentures (at fair value)

10,068


9,027

Total liabilities

579,436


589,159

Shareholders' equity:




   Common shares outstanding:




      14,217,303 at December 31, 2012

43,173


41,435

   Retained earnings

26,179


21,447

   Accumulated other comprehensive loss

89


(709)

Total shareholders' equity

69,441


62,173

Total liabilities and shareholders' equity

$648,877


$651,332

 

 

 

United Security Bancshares





 (dollars in 000s, except per share amounts)






Three Months

Ended

Three Months

Ended

Twelve months

ended

Twelve months

ended


December 31,

December 31,

December 31,

December 31,


2012

2011

2012

2011

Interest income:





   Interest and fees on loans

$5,507

$6,338

$23,184

$25,573

   Interest on investment securities

347

497

1,720

2,141

  Interest on deposits in FRB

67

50

224

187

   Interest on deposits in other banks

1

10

23

39

      Total interest income

5,922

6,895

25,151

27,940

Interest expense:





   Interest on deposits

435

569

1,791

2,620

   Interest on other borrowed funds

63

94

270

344

      Total interest expense

498

663

2,061

2,964

Net interest income before provision for credit losses

5,424

6,232

23,090

24,976

   Provision for credit losses

9

1,105

1,019

13,602

Net interest income

5,415

5,127

22,071

11,374

Noninterest income:





   Customer service fees

883

923

3,583

3,640

   Increase in cash surrender value of





      bank owned life insurance

137

141

564

565

(Loss) gain on sale of other real estate owned

(108)

(102)

278

(231)

(Loss) gain on Fair Value Option of Financial Assets

(490)

85

(774)

1,863

  Other noninterest income

(11)

238

2,455

1,040

Total noninterest income

411

1,285

6,106

6,877

Noninterest expense:





  Salaries and employee benefits

2,406

2,305

9,082

9,109

  Occupancy expense

940

821

3,548

3,487

  Professional fees

615

294

1,707

2,355

  Regulatory insurance assessments

351

728

1,409

2,082

  Impairment losses and other expenses on OREO

588

2,618

1,212

7,359

  Impairment losses on goodwill and intangible assets

0

0

0

1,525

  Impairment losses on investment securities

0

604

284

912

  Other noninterest expense

604

968

3,333

3,949

Total noninterest expense

5,504

8,338

20,575

30,778

Income before income tax provision

322

(1,926)

7,602

(12,527)

Provision (benefit) for income taxes

(1,157)

1,433

1,533

(1,715)

Net Income

$1,479

($3,359)

$6,069

($10,812)

 


 

United Security Bancshares





Selected Financial Data (Quarters Unaudited)





 (dollars in 000s, except per share amounts)






Three Months

Ended

Three Months

Ended

Twelve months

Ended

Twelve months

Ended


December 31,

December 31,

December 31,

December 31,


2012

2011

2012

2011

Basic earnings per share

$0.10

($0.24)

$0.43

($0.76)

Diluted earnings per share

$0.10

($0.24)

$0.43

($0.76)

Weighted average basic shares for EPS

14,217,303

14,217,303

14,217,303

14,217,303

Weighted average diluted shares for EPS

14,217,303

14,217,303

14,217,303

14,217,303






Annualized return on:





   Average assets

0.93%

-2.09%

0.97%

-1.64%

   Average equity

8.56%

-24.52%

9.20%

-15.86%

Yield on interest-earning assets

4.40%

4.90%

4.79%

5.02%

Cost of interest-bearing liabilities

0.56%

0.69%

0.60%

0.73%

Net interest margin

4.03%

4.41%

4.40%

4.49%

Annualized net charge-offs to average loans

-0.64%

1.37%

0.74%

3.88%







December 31,

December 31,




2012

2011



Shares outstanding - period end

14,217,303

13,531,832



Book value per share

$4.88

$4.59



Tangible book value per share

$4.55

$4.22



Efficiency ratio

70.47%

96.63%



Total nonperforming assets

$53,520

$64,333



Nonperforming assets to total assets

8.25%

9.88%



Total Impaired loans

$21,931

$31,882



Total nonaccrual loans

$13,425

$18,098



Allowance for loan losses to total loans

2.95%

3.34%






































SOURCE United Security Bancshares



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