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United Security Bancshares - First Quarter Profits: $1.2 million


News provided by

United Security Bancshares

Apr 20, 2015, 09:00 ET

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FRESNO, Calif., April 20, 2015 /PRNewswire/ -- United Security Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO), today announced its unaudited financial results for the quarter ended March 31, 2015. The Company recognized net income of $1,228,000 for the first quarter of 2015, an improvement of $320,000, or 35.24%, relative to the net income in the first quarter of 2014.  Basic and diluted earnings per share increased to $0.08 for the three months ended March 31, 2015, as compared to $0.06 for the three months ended March 31, 2014.

Annualized return on average equity (ROAE) for the three months ended March 31, 2015 was 5.94%, compared to 4.77% for the three months ended March 31, 2014.  Annualized return on average assets (ROAA) was 0.74% for the three months ended March 31, 2015, compared to 0.55% for the three months ended March 31, 2014.  The increases in ROAE and ROAA for the three months ended March 31, 2015 were partially due to growth in the loan portfolio during the second half of 2014 and the resulting favorable impact on interest income.  Net income increased for the three months ended March 31, 2015 compared to the same period ended March 31, 2014, and our net interest margin strengthened from 3.81% at March 31, 2014 to 4.26% at March 31, 2015.  The 45 basis point increase in net interest margin in the period-to-period comparison resulted primarily from growth of the loan portfolio, which is a higher yielding asset, compared to overnight investments with the Federal Reserve Bank.

The Board of Directors of United Security Bancshares declared a first quarter 2015 stock dividend of one percent (1%) on March 24, 2015. The stock dividend was payable to shareholders of record on April 6, 2015, and the shares will be issued on April 17, 2015. This marks the 26th consecutive quarterly stock dividend since initiated in 2008.  Capital preservation remains a significant focus of the Company's Directors in consideration of the Basel III capital standards adopted.

Dennis R. Woods, President and Chief Executive Officer of the Company, states, "2015 has begun on a high note with a year-over-year increase of over 35% in net income and $34 million growth in our loan portfolio during the first quarter. We are well positioned for continued success during the remainder of the year."  Total assets were up $15,255,000, or 2.30% in the first quarter of 2015, due to net growth of $34,326,000 in gross loan balances. Loan volume was favorably impacted by the purchase of $18,924,000 in residential mortgage loans.  Shareholders' equity at March 31, 2015 was $84,144,000, up $1,318,000 from shareholders' equity of $82,826,000 at December 31, 2014. 

Net interest income before provision for credit losses for the three months ended March 31, 2015 totaled $6,224,000, an increase of $759,000 from the $5,465,000 reported for the three months ended March 31, 2014.  The net interest margin was 4.26% for the three months ended March 31, 2015, as compared to 3.81% for the three months ended March 31, 2014.   The Company experienced an improvement in net interest margin due to a shift within average interest-earning assets from low-yielding overnight investments to higher-yielding loans.

Noninterest income for the three months ended March 31, 2015 totaled $921,000, reflecting an increase of $204,000 from $717,000 in noninterest income reported for the three months ended March 31, 2014.  Customer service fees continue to provide the majority of the Company's noninterest income, totaling $833,000 and $794,000 for the quarters ended March 31, 2015 and 2014, respectively.  On a year-over-year comparative basis, non-interest income increased primarily due to a decrease of $220,000 on loss on the fair value option of financial liabilities.

For the three months ended March 31, 2015, noninterest expense totaled $4,708,000, a decrease of $87,000 as compared to $4,795,000 for the three months ended March 31, 2014.  On a year-over-year comparative basis, noninterest expense decreased primarily due to decreases of $213,000 in net cost on OREO and $95,000 in salaries expense during the three months ended March 31, 2015, compared to the same period ended March 31, 2014.  Partially offsetting the decreases were increases in professional fees and occupancy expenses.

The Company recorded a provision for credit losses for $459,000 in connection with a single borrower consumer relationship who exhibited credit deterioration at the end of the first quarter 2015.  The Company had a negative provision of $47,000 for the three months ended March 31, 2014.  Net loan recoveries totaled $60,000 for the three months ended March 31, 2015, as compared to net recoveries of $142,000 for the three months ended March 31, 2014.  With a modest recovery in the economy and real estate markets within the Bank's service area, the Company has maintained an adequate allowance for loan losses which totaled 2.29% of total loans at March 31, 2015, a slight decline compared to 2.35% of total loans at December 31, 2014.  In determining the adequacy of the allowance for loan losses, Management's judgment is a significant factor and management considers the allowance for credit losses at March 31, 2015 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 due and still accruing interest, increased approximately $1,123,000 between December 31, 2014 and March 31, 2015.  Nonperforming assets as a percentage of total assets increased from 4.46% at December 31, 2014 to 4.53% at March 31, 2015.  Nonaccrual loans increased $972,000 between December 31, 2014 and March 31, 2015, while OREO balances remained the same.  Impaired loans totaled $17,152,000 at March 31, 2015, an increase of $1,115,000 from the balance of $16,037,000 at December 31, 2014.

United Security Bancshares is a $670+ million bank holding company headquartered in Fresno, California. United Security Bank, its principal subsidiary, is a California state chartered bank with 11 branches serving the Central Valley and Campbell, and is a 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 written regulatory agreement under which the Company is subject and (10) unknown economic impacts caused by the State of California's budget issues, including the effect on Federal spending do to sequestration required by the Budget Control Act of 2011. Management cannot predict at this time the severity or duration of the effects of the recent business slowdown on the Company's specific business activities and profitability. Weaker or a further decline in capital and consumer spending, and related recessionary trends could adversely affect the Company's 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, 2014, and particularly the section of Management's Discussion and Analysis.  Readers should carefully review all disclosures the Company files from time to time with the Securities and Exchange Commission ("SEC").

United Security Bancshares




Consolidated Balance Sheets (unaudited)




(in thousands)





March 31, 2015


December 31, 2014

Assets




Cash and noninterest-bearing deposits in other banks

$

18,812


$

21,348

Cash and due from Federal Reserve Bank

66,666


82,229

Cash and cash equivalents

85,478


103,577

Interest-bearing deposits in other banks

1,523


1,522

Investment securities available for sale (at fair value)

46,898


48,301

Loans and leases, net of unearned fees

492,560


457,595

Less: Allowance for credit losses

(11,290)


(10,771)

Net loans

481,270


446,824

Premises and equipment - net

11,331


11,550

Other real estate owned

14,010


14,010

Goodwill and intangible assets

4,488


4,488

Cash surrender value of life insurance

17,845


17,717

Deferred income taxes

6,849


6,853

Other assets

8,732


8,327

Total assets

$

678,424


$

663,169

Deposits




Noninterest bearing demand deposits

$

227,537


$

215,439

Money market, NOW, and savings

273,104


271,789

Time

77,626


78,145

Total deposits

578,267


565,373

Accrued interest payable

42


40

Other liabilities

5,733


4,815

Junior subordinated debentures (at fair value)

10,238


10,115

Total liabilities

594,280


580,343

Shareholders' equity








Common stock, no par value 20,000,000 shares authorized, 15,579,335 issued and outstanding at March 31, 2015, and 15,425,086 at December 31, 2014

50,106


49,271

Retained earnings

34,130


33,730

Accumulated other comprehensive loss

(92)


(175)

Total shareholders' equity

84,144


82,826

Total liabilities and shareholders' equity

$

678,424


$

663,169

United Security Bancshares




Consolidated Statements of Income (unaudited)




(in thousands)





Three Months Ended March 31,


2015


2014

Interest income:




Interest and fees on loans

$

6,279


$

5,475

Interest on investment securities

214


228

Interest on deposits in FRB

46


83

Interest on deposits in other banks

2


2

Total interest income

6,541


5,788

Interest expense:




Interest on deposits

259


262

Interest on other borrowed funds

58


61

Total interest expense

317


323

Net interest income before provision for credit losses

6,224


5,465

Provision (Recovery of provision) for credit losses

459


(47)

Net interest income

5,765


5,512

Non-interest income:




Customer service fees

833


794

Increase in cash surrender value of bank-owned life insurance

128


127

Loss on Fair Value of Financial Liability

(125)


(345)

Other non-interest income

85


141

Total non-interest income

921


717

Non-interest expense:




Salaries and employee benefits

2,431


2,526

Occupancy expense

940


873

Data processing

31


41

Professional fees

348


180

Regulatory assessments

246


233

Director fees

56


56

Amortization of intangibles

—


47

Correspondent bank service charges

19


29

Loss on California tax credit partnership

30


23

Net cost on operation and sale of OREO

68


281

Other non-interest expense

539


506

Total non-interest expense

4,708


4,795

Income before income tax provision

1,978


1,434

Provision for income taxes

750


526

Net Income

$

1,228


$

908

United Security Bancshares




Selected Financial Data (unaudited)




(dollars in thousands, except per share amounts)





Three Months Ended March 31,


2015


2014

Basic earnings per share

$

0.08


$

0.06

Diluted earnings per share

$

0.08


$

0.06

Weighted average basic shares for EPS

15,579,335


15,554,688

Weighted average diluted shares for EPS

15,581,162


15,559,409





Average Balances:




Average assets

$

672,886


$

666,471

Average interest-earning assets

593,316


582,451

Average loans

466,781


395,277

Average deposits

571,599


570,585

Average equity

83,877


77,289





Annualized return on:




Average assets

0.74%


0.55%

Average equity

5.94%


4.77%

Yield on interest-earning assets

4.48%


4.03%

Cost of interest-bearing liabilities

0.36%


0.38%

Net interest margin

4.26%


3.81%

Annualized net recoveries to average loans

(0.05)%


(0.15)%










March 31, 2015


December 31, 2014

Shares outstanding - period end

15,579,335


15,425,086

Book value per share

$5.40


$5.37

Tangible book value per share

$5.11


$5.08

Efficiency ratio

64.94%


64.57%

Total nonperforming assets

$30,709


$29,586

Nonperforming assets to total assets

4.53%


4.46%

Total impaired loans

$17,152


$16,037

Total nonaccrual loans

$10,907


$9,935

Loan to deposit ratio

85.18%


80.94%

Allowance for credit losses to total loans

2.29%


2.35%





SOURCE United Security Bancshares

Related Links

http://www.unitedsecuritybank.com

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