THOMASVILLE, Ala., Feb. 24 /PRNewswire-FirstCall/ -- United Security Bancshares, Inc. (Nasdaq: USBI) today announced that, along with its banking subsidiary First United Security Bank and Acceptance Loan Company, Inc., a finance company operated by the bank (collectively referred to as the "USB Companies"), it has entered into a settlement agreement to resolve all claims alleged against the defendants named in the lawsuit styled Acceptance Loan Company Inc., First United Security Bank and United Security Bancshares, Inc. v. The Cincinnati Insurance Company, et al., filed in the Circuit Court of Clarke County, Alabama on December 18, 2009, Case No. 16-CV-2009-900168.00.
The USB Companies filed the lawsuit to seek recovery under a fidelity insurance policy and bond issued by The Cincinnati Insurance Company, which policy provides coverage for losses due to the dishonest or fraudulent conduct of employees of the USB Companies. Acceptance Loan Company, Inc. originally submitted a claim under the policy in connection with the loan irregularities discovered during the second quarter of 2007 resulting from the fraudulent conduct of certain ALC employees.
Pursuant to the settlement agreement, The Cincinnati Insurance Company agreed to pay to the USB Companies the sum of $4,150,000. In exchange, the USB Companies agreed to dismiss, with prejudice, each of the defendants from the lawsuit and to release the defendants from all claims asserted or that may have been asserted against the defendants in the lawsuit. The parties will be responsible for their own attorneys' fees and costs arising from the lawsuit, with the costs of mediation in the proceeding to be shared equally by the USB Companies and The Cincinnati Insurance Company.
"We are very pleased with the settlement agreement that was reached with the insurance company," said Terry Phillips, President and Chief Executive Officer of United Security Bancshares, Inc. "USBI has been very aggressive in pursuing all available recovery in connection with the ALC losses and thus far has been successful in doing so."The settlement agreement concludes the lawsuit. The USB Companies entered into the settlement agreement to avoid the expense and uncertainty of future litigation of the claims alleged in the lawsuit.