United Security Bancshares, Inc. Reports Second Quarter Results

United Security Bancshares, Inc. (Nasdaq: USBI) today reported net income of $1.2 million, or $0.20 per diluted share, for the second quarter ended June 30, 2013, compared with net income of $1.4 million, or $0.23 per diluted share, for the second quarter of 2012. Net income for the first six months of 2013 rose to $2.1 million, or $0.34 per diluted share, compared with $133,000, or $0.02 per diluted share, for the first six months of 2012.

“We are pleased to report our fifth consecutive quarter of positive earnings, continued reductions in non-performing assets and solid growth in our capital ratios,” stated James F. House, President and CEO of United Security Bancshares, Inc. “Our non-performing assets are down 39% from the highs reached last year, and this quarter marked our fourth consecutive quarter of reducing other real estate owned (OREO) and third consecutive quarter of reducing non-performing assets.”

“We are making solid progress at strengthening our balance sheet by systematically reducing our problem loans and OREO while building our capital base. We have added to our capital base with earnings over the past five quarters. Our second quarter’s total risk-based capital rose to 19.0% for the holding company and 19.2% for First United Security Bank. Both ratios were more than double the minimum regulatory requirement of 8.0% and significantly above the regulatory requirement of 10.0% for a well-capitalized institution. We are pleased that we maintained our ‘well capitalized’ rating, the highest regulatory rating, throughout the recession and without any assistance from the Federal government.”

“We expect our near-term growth prospects to be constrained by weak demand for commercial and real estate loans and increased pricing pressure from other banks in our market. We have taken steps to reduce our problem loans and believe that we are well-positioned to grow assets as loan demand increases in the markets we serve,” continued Mr. House.

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.

Total non-interest income was $1.2 million in the second quarter of 2013, compared with $1.3 million in the second quarter of 2012. The decline in non-interest income was due to lower service charges, credit life insurance income and other income, all compared with the second quarter of 2012.

Total non-interest expense declined 3.5% to $7.2 million in the second quarter of 2013, compared with $7.4 million in the second quarter of 2012. The decline in non-interest expense was due primarily to lower other expense, compared with the second quarter of 2012. Total OREO related expenses were $425,000 in the second quarter of 2013, which marked the second lowest quarter of OREO expenses in over two years. OREO totaled $12.4 million at June 30, 2013, an 18% decline from $15.0 million at June 30, 2012, representing the fourth consecutive quarterly decrease in OREO.

United Security Bancshares and First United Security Bank continued to be rated as ‘well-capitalized,’ the highest regulatory rating, at the end of the second quarter of 2013. Total risk-based capital was 19.0% for the Company and 19.2% for the Bank, significantly above the regulatory requirement of 10.0% for a well-capitalized institution and the minimum regulatory requirement of 8.0%. Tier 1 risk-based capital was 17.8% for the Company and 17.9% for the Bank, both measures significantly above the regulatory requirement of 6.0% for a well-capitalized institution and the minimum regulatory requirement of 4.0%. Tier 1 leverage ratio rose to 11.3% for the Company and 11.4% for the Bank.

Six Months Results

For the first six months of 2013, net income was $2.1 million, or $0.34 per diluted share, compared with $133,000, or $0.02 per diluted share, for the first six months of 2012. The increase in earnings for the first six months of 2013 was due to a decline in the provision for loan losses, growth in non-interest income and lower non-interest expenses, all compared with the first six months of 2012.

For the six months ended June 30, 2013, net interest income was $15.5 million, compared with $17.1 million for the same period of 2012. Net interest margin declined to 6.0% for the first six months of 2013 from 6.1% in the first six months of 2012.

Provision for loan losses was $559,000 in the first six months of 2013, compared with $2.7 million in the first six months of 2012.

Non-interest income increased to $2.9 million for the first six months of 2013, compared with $2.6 million for the same period of 2012. The increase was due primarily to higher other income in 2013 that included a $484,000 prepayment penalty from the early payoff of a mortgage backed pool, partially offset by lower service and other charges on deposit accounts and credit life insurance income, compared with the first six months of 2012.

Non-interest expense was down 13.9% to $14.9 million in the first six months of 2013, compared with $17.3 million in the first six months of 2012. The decline in non-interest expense was due primarily to a $2.5 million decrease in impairment of OREO, lower furniture and equipment expense and lower other expense, all compared with the first six months of 2012.

Shareholders’ equity was $69.0 million, or $11.46 per share, at June 30, 2013, compared with $68.6 million, or $11.40 per share, at December 31, 2012, and $66.7 million, or $11.09 per share, at June 30, 2012. The increase in shareholders’ equity from retained earnings of $2.1 million was offset somewhat by a $1.7 million decrease in accumulated other comprehensive income, due to a decline in the market value of investment securities available-for- sale. The Company did not declare a cash dividend on its common stock for the second quarter of 2013.

About United Security Bancshares, Inc.

United Security Bancshares, Inc. is a bank holding company that operates nineteen banking offices in Alabama through First United Security Bank. In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. The Company’s stock is traded on the Nasdaq Capital Market under the symbol “USBI.”

Forward-Looking Statements

This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. USBI undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, USBI, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of USBI’s senior management based upon current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements are identified in the public filings made by USBI with the Securities and Exchange Commission, and forward-looking statements contained in this press release or in other public statements of USBI or its senior management should be considered in light of those factors. Specifically, with respect to statements relating to loan demand, growth and earnings potential and the adequacy of the allowance for loan losses for USBI, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and collateral values. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.
 

UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except Per Share Data)
 
    June 30,     December 31,
2013 2012
(Unaudited)
ASSETS
Cash and Due from Banks $ 10,628 $ 12,181
Interest Bearing Deposits in Banks   38,351     41,945  
Total Cash and Cash Equivalents 48,979 54,126
Federal Funds Sold 5,000 5,000
Investment Securities Available-for-Sale, at fair value 102,621 92,614
Investment Securities Held-to-Maturity, at amortized cost 35,105 21,136
Federal Home Loan Bank Stock, at cost 681 936
Loans, net of allowance for loan losses of $11,635 and $19,278, respectively 312,008 337,400
Premises and Equipment, net 8,697 8,903
Cash Surrender Value of Bank-Owned Life Insurance 13,479 13,303
Accrued Interest Receivable 2,750 3,101
Investment in Limited Partnerships 836 836
Other Real Estate Owned 12,377 13,286
Other Assets   13,173     16,492  
Total Assets $ 555,706   $ 567,133  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits $ 478,086 $ 489,034
Accrued Interest Expense 286 413
Other Liabilities 7,867 8,401
Short-Term Borrowings   456     638  
Total Liabilities   486,695     498,486  
Shareholders’ Equity:

Common Stock, par value $0.01 per share, 10,000,000 shares authorized; 7,327,560 shares issued; 6,023,622 shares outstanding
73 73
Surplus 9,284 9,284
Accumulated Other Comprehensive Income, net of tax 1,435 3,139
Retained Earnings 79,355 77,287
Less Treasury Stock: 1,303,938 shares at cost (21,123 ) (21,123 )
Noncontrolling Interest   (13 )   (13 )
 
Total Shareholders’ Equity   69,011     68,647  
 
Total Liabilities and Shareholders’ Equity $ 555,706   $ 567,133  
 

 

UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
2013     2012 2013     2012
(Unaudited) (Unaudited)
 
INTEREST INCOME:
Interest and Fees on Loans $ 7,697 $ 8,883 $ 15,607 $ 17,966
Interest on Investment Securities   735   865   1,419   1,792  
Total Interest Income 8,432 9,748 17,026 19,758
 
INTEREST EXPENSE:
Interest on Deposits 735 1,147 1,522 2,522
Interest on Borrowings   2   30   4   115  
Total Interest Expense   737   1,177   1,526   2,637  
 
NET INTEREST INCOME 7,695 8,571 15,500 17,121
 

PROVISION FOR LOAN LOSSES
  53   468   559   2,683  
 

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

7,642

8,103

14,941

14,438
 
NON-INTEREST INCOME:

Service and Other Charges on Deposit Accounts

558

603

1,148

1,231
Credit Life Insurance Income 169 222 279 341
Other Income   501   506   1,424   1,033  
Total Non-Interest Income 1,228 1,331 2,851 2,605
 
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 3,965 3,714 7,977 7,479
Occupancy Expense 500 480 961 928
Furniture and Equipment Expense 281 343 564 653
Impairment on Other Real Estate 165 30 362 2,864
Loss on Sale of Other Real Estate 260 266 705 460
Other Expense   2,005   2,607   4,299   4,886  
Total Non-Interest Expense   7,176   7,440   14,868   17,270  
 

INCOME (LOSS) BEFORE INCOME TAXES

1,694

1,994

2,924

(227

)

PROVISION FOR (BENEFIT FROM) INCOME TAXES
 

512
 

623
 

856
 

(360

)
NET INCOME $ 1,182 $ 1,371 $ 2,068 $ 133  

BASIC AND DILUTED NET INCOME PER SHARE
$ 0.20 $ 0.23 $ 0.34 $ 0.02  
 
DIVIDENDS PER SHARE $ - $ - $ - $ -  
 

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX