United Security Bancshares - Net Income $356,000 during the First Quarter and Continued Reduction in Problem Assets

FRESNO, Calif., April 28, 2011 /PRNewswire/ -- United Security Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported today unaudited consolidated net income of $356,000 or $0.03 per basic and diluted common share for the three months ended March 31, 2011, as compared to $442,000 of $0.03 per basic and diluted common shares for the three months ended March 31, 2010.

Annualized return on average equity (ROE) for the three months ended March 31, 2011 was 2.06%, compared to 2.33% for the same period in 2010. Annualized return on average assets (ROA) was 0.22% for the three months ended March 31, 2011 compared to 0.25% for the same three-month period in 2010.

The Board of Directors of United Security Bancshares declared a second quarter 2011 stock dividend of one percent (1%) on March 22, 2011. The stock dividend was payable to shareholders of record on April 8, 2011, and the shares were issued on April 20, 2011.

Dennis R. Woods, President and Chief Executive Officer of the Company, added, "We continue to work through our problem assets and have seen reductions in the levels of both nonaccrual and impaired loans during the first quarter of 2011. Sales of OREO properties have gained momentum during 2011 with $1.2 million in gross sales completed during the first quarter. We have completed additional sales on four properties so far in April 2011, and have other sales pending in escrow. During the quarter, we have been able to reduce the level of problem assets, while strengthening the allowance for loan losses, and generating net income for the shareholders."

Shareholders' equity at March 31, 2011 was $73.6 million, up $326,000 from shareholders' equity of $73.3 million reported at December 31, 2010.  

Net interest income before provision for credit loss for the three months ended March 31, 2011 totaled $6.2 million, down $938,000 from $7.2 million reported during the three months ended March 31, 2010. The net interest margin was 4.42% for the three months ended March 31, 2011 as compared to 4.76% for the three months ended March 31, 2010. On a three-month comparative basis, the Company has continued to benefit from decreasing costs on interest-bearing liabilities, but these benefits have been outweighed by declines in yields on earning assets as loan volumes have dropped over the past year.

Noninterest income for the three months ended March 31, 2011 totaled $1.1 million, reflecting a decrease of $183,000 from $1.3 million in noninterest income reported for the three months ended March 31, 2010. Customer service fees continue to provide the majority of the Company's noninterest income, totaling $867,000 for the three months ended March 31, 2011, as compared to $948,000 for the three months ended March 31, 2010. Changes in noninterest income on a quarter-to-quarter comparative basis are largely the result of decreases of $524,000 in fair value gains recorded on the Company's junior subordinated debt, which more than offset increases of $336,000 in gains realized on the sale of other real estate owned between the two three-month periods.

Noninterest expense totaled $6.1 million for the three months ended March 31, 2011, down $268,000 from $6.3 million reported for the three months ended March 31, 2010. Between the three-month comparative periods, decreases in impairment losses on other real estate owned, investment securities, and intangible assets, were partially offset by modest increases in regulatory insurance assessments.

For the three months ended March 31, 2011 the provision for loan loss was $890,000, compared to $9.1 million for the three months ended December 31, 2010, and $1.6 million for the three months ended March 31, 2010. This represents a decrease of $8.2 million between the quarters ended March 31, 2011 and December 31, 2010, and a decrease of $741,000 between the quarters ended March 31, 2011 and March 31, 2010. Net loan charge-offs totaled $665,000 for the three months ended March 31, 2011 as compared to $5.6 million for the three months ended December 31, 2010, and $443,000 for the three months ended March 31, 2010. With continued weakness in the economy and real estate markets within our service area, we continue to build the allowance for loan losses which totaled 3.87% of total loans at March 31, 2011 compared to 3.75% of total loans at December 31, 2010, and 3.12% of total loans at March 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 March 31, 2011 to be adequate.

Non-performing assets, comprised of nonaccrual loans, other real estate owned through foreclosure (OREO), and loans more than 90 days past days and still accruing interest, decreased approximately $4.6 million between December 31, 2010 and March 31, 2011. Nonperforming assets decreased as a percentage of total assets from 10.40% of total assets at December 31, 2010 to 9.83% of total assets at March 31, 2011 as the Company continues to successfully work out, or dispose of, problem assets. Nonaccrual loans decreased $5.0 million between December 31, 2010 and March 31, 2011, while OREO, decreased $429,000 during the same period. Impaired loans totaled $48.8 million at March 31, 2011, decreasing $2.0 million from the balance of $50.9 million at December 31, 2010.

United Security Bancshares is a $670+ 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").

SOURCE United Security Bancshares