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TheStreet Open House

United Security Bancshares, Inc. Reports Second Quarter Results

Second Quarter Results

Interest income totaled $8.4 million in the second quarter of 2013, compared with $9.7 million in the second quarter of 2012. The decline in interest income was due primarily to lower earning assets, primarily loans, compared with the second quarter of 2012.

Interest expense declined 37.4% to $737,000 in the second quarter of 2013, compared with $1.2 million in the second quarter of 2012. The decrease resulted primarily from lower interest rates paid compared with the prior year.

Net interest income was $7.7 million in the second quarter of 2013, compared with $8.6 million in the second quarter of 2012. The decline in net interest income was due to lower earning assets, primarily loans, combined with a 20 basis point decline in the net interest margin, compared with the second quarter of 2012. Net interest margin was 6.0% in the second quarter of 2013, compared with 6.2% in the second quarter of 2012. The decline in net interest margin was due primarily to the competitive loan market that has resulted in margin compression at the Bank and a change in Acceptance Loan Company’s loan origination criteria that is focused on improved credit quality with a slight offset in lower interest rates charged.

Net loans declined to $312.0 million in the second quarter of 2013, compared with $337.4 million at December 31, 2012. The decrease in net loans was due to loan payoffs and write-downs outpacing new loan production. An overall sluggish economy in the bank’s markets, primarily centered in the real estate sector, has been a significant factor in lower loan demand over the past year.

Provision for loan losses declined to $53,000 in the second quarter of 2013, or 0.06% of annualized average loans, compared with $468,000, or 0.5% of annualized average loans, in the second quarter of 2012. Net charge-offs totaled $5.2 million in the second quarter of 2013, compared with $1.1 million in the second quarter of 2012. The increase in net charge-offs, without an increase in provision for loan losses, was due primarily to several large real estate development loans that were written down to reflect market valuations, which loans were previously reserved for in the allowance for loan losses.

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