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UNITED SECURITY BANCSHARES CA
Symbol U : UBFO
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United Security Bancshares - Third Quarter Profits: $1.4 Million

2012-10-16 18:00 ET - News Release

FRESNO, Calif., Oct. 16, 2012 /PRNewswire/ -- United Security Bancshares (http://www.unitedsecuritybank.com) (Nasdaq Global Select: UBFO) reported today unaudited consolidated net income of $1.4 million or $0.10 per basic and diluted common share for the quarter ended September 30, 2012 and $4.6 million or $.33 per basic and diluted common share for the nine months ended September 30, 2012, as compared to a net loss of $1.5 million or ($0.10) per basic and diluted common shares for the quarter ended September 30, 2011 and a net loss of $7.5 million or ($.53) per basic and diluted shares for the nine months ended September 30, 2011.

Annualized return on average equity (ROAE) for the quarter ended September 30, 2012 was 8.72%, compared to (29.58%) for the same period in 2011, and was 9.82% for the nine months ended September 30, 2012 compared to (13.68)% for the nine months ended September 30, 2011. Annualized return on average assets (ROAA) was .87% for the three months ended September 30, 2012 compared to (2.98%) for the same three-month period in 2011, and was 0.99% for the nine months ended September 30, 2012 compared to (1.50%) for the nine months ended September 30, 2011.

The Board of Directors of United Security Bancshares declared a thirdquarter 2012 stock dividend of one percent (1%) on September 26, 2012. The stock dividend was payable to shareholders of record on October 12, 2012, and the shares will be issued on October 24, 2012.

Dennis R. Woods, President and Chief Executive Officer of the Company, states, "We continue to see positive trends that are in alignment with the continued improvement in the weak economy and depressed real estate values."  Shareholders' equity at September 30, 2012 was $67.7 million, up $5.0 million from shareholders' equity of $62.2 million at December 31, 2011.  

Net interest income before provision for credit losses for the quarter ended September 30, 2012 totaled $5.6 million and $17.7 million for the nine months ended September 30, 2012, down just $618,000 from $6.2 million reported for the quarter ended September 30, 2011 and down $1.1 million from the $18.7 million reported for the nine months ended September 30, 2011, respectively. The net interest margin was 4.23% for the quarter ended September 30, 2012, and 4.53% for the nine months ended September 30, 2012, as compared to 4.42% for the quarter ended September 30, 2011 and 4.45% for the nine months ended September 30, 2011. The Company continues to benefit from decreasing costs on interest-bearing liabilities.

Noninterest income for the quarter ended September 30, 2012 totaled $1.1 million, reflecting a decrease of $2.2 million from the $3.3 million in noninterest income reported for the quarter ended September 30, 2011. Noninterest income for the nine months ended September 30, 2012 totaled $5.6 million, reflecting an increase of $33,000 from $5.6 million in noninterest income reported for the nine months ended September 30, 2011.Customer service fees continue to provide the majority of the Company's noninterest income from operations, totaling $902,000 for the quarter ended September 30, 2012, as compared to $956,000 for the quarter ended September 30, 2011, and $2.7 million for the nine months ended September 30, 2012 and 2011. Changes in noninterest income on a quarter-to-quarter comparative basis between the third quarters of 2012 and 2011 are largely the result of a decrease of $2.1 million in gains recognized on the fair value of financial liabilities..  On a nine month comparative basis, the change in noninterest income of $33,000 includes an increase of $1.8 million on gains realized on the sale of investments and an increase of $515,000 on gains realized on the sale of other real estate owned, offset by a decrease of $2.1 million in gains recognized on the fair value of financial liabilities. The gain on sale of investments of $1.8 million for the nine months ended September 30, 2012 is included in other non interest income.

Noninterest expense totaled $4.6 million for the quarter ended September 30, 2012, down $3.5 million from the $8.1 million reported for the quarter ended September 30, 2011. For the nine months ended September 30, 2012, noninterest expense totaled $15.0 million as down $7.4 million from the $22.4 million for the nine months ended September 30, 2011. Between the third quarters of 2012 and 2011 , the company experienced significant decreases in impairment losses on investment securities, impairment losses on other real estate owned, other real estate owned expenses, and professional fees. On a nine month comparative basis, additional decreases in the above listed areas as well as decreases in impairment losses on goodwill, and regulatory assessments contributed to the overall decrease.

The Company had a provision for loan loss reserve of $4,000 for the quarter ended September 30, 2012 and $1.0 million for the nine months ended September 30, 2012, compared to $2.4 million for the quarter ended September 30, 2011 and $12.5 million for the nine months ended September 30, 2011. Net loan charge-offs totaled $456,000 for the quarter ended September 30, 2012 and $3.5 million for the nine months ended September 30, 2012 as compared to $2.3 million for the quarter ended September 30, 2011, and $15.1 million for the nine months ended September 30, 2011. With continued weakness in the economy and real estate markets within our service area, we have maintained an adequate allowance for loan losses which totaled 2.97% of total loans at September 30, 2012 compared to 2.94% of total loans at June 30, 2012 and 3.34% at December 31, 2011. 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 September 30, 2012 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 days and still accruing interest, decreased approximately $17.8 million between December 31, 2011 and September 30, 2012. Additionally, nonperforming assets as a percentage of total assets decreased from 8.77% at December 31, 2011 to 6.20% at September 30, 2012. Nonaccrual loans decreased $7.6 million between December 31, 2011 and September 30, 2012, while OREO, decreased $3.6 million during the same period. Impaired loans totaled $21.1 million at September 30, 2012, down $10.7 million from the balance of $31.9 million at December 31, 2011.

United Security Bancshares is a $600+ 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; (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, 2011, 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").

United Security Bancshares




Consolidated Balance Sheets




(dollars in thousands)





September 30,


December 31,


2012


2011

Assets




   Cash and noninterest-bearing deposits in other banks

$21,859


$28,052

   Cash and due from Federal Reserve Bank

119,661


96,132

   Federal funds sold

0


0

      Cash and cash equivalents

141,520


124,184

   Interest-bearing deposits in other banks

1,506


2,187

  Investment securities (AFS at market value)

42,157


38,458

   Loans and leases, net of unearned fees

375,690


408,146

     Less: Allowance for credit losses

(11,160)


(13,648)

   Net loans

364,530


394,498

   Premises and equipment - net

12,495


12,675

   Bank owned life insurance

16,552


16,150

   Intangible assets

4,792


5,041

   Other real estate owned

23,487


27,091

    Deferred Income Taxes

10,862


11,485

   Other assets

15,730


19,563

Total assets

$633,631


$651,332

   Deposits:




     Noninterest bearing demand and NOW

$212,699


$224,907

     Money market and savings

228,995


206,036

     Time

109,362


143,484

      Total deposits

551,056


574,427

   Borrowed funds

0


0

   Other liabilities

5,386


5,705

   Junior subordinated debentures (at fair value)

9,515


9,027

Total liabilities

565,957


589,159

Shareholders' equity:




   Common shares outstanding:




      13,941,844 at September 30, 2012

42,432


41,435

   Retained earnings

25,054


21,447

   Accumulated other comprehensive loss

188


(709)

Total shareholders' equity

67,674


62,173

Total liabilities and shareholders' equity

$633,631


$651,332
















United Security Bancshares





 (dollars in 000s, except per share amounts)






Three Months

Ended

September 30,

Three Months

Ended

September 30,

Nine months ended

September 30,

Nine months ended

September 30,


2012

2011

2012

2011

Interest income:





   Interest and fees on loans

$5,670

$6,378

$17,678

$19,235

   Interest on investment securities

397

507

1,375

1,644

  Interest on deposits in FRB

62

43

157

137

   Interest on deposits in other banks

2

9

22

29

      Total interest income

6,131

6,937

19,232

21,045

Interest expense:





   Interest on deposits

441

615

1,356

2,051

   Interest on other borrowed funds

68

82

207

250

      Total interest expense

509

697

1,563

2,301

Net interest income before provision for credit losses

5,622

6,240

17,669

18,744

   Provision for credit losses

4

2,446

1,010

12,497

Net interest income

5,618

3,794

16,659

6,247

Noninterest income:





   Customer service fees

902

956

2,700

2,717

   Increase in cash surrender value of





      bank owned life insurance

147

143

427

424

 Gain (Loss) on sale of other real estate owned

49

(85)

386

(129)

Gain (loss) on Fair Value Option of Financial Assets

(171)

1,923

(284)

1,778

  Other noninterest income

208

353

2,396

802

Total noninterest income

1,135

3,290

5,625

5,592

Noninterest expense:





  Salaries and employee benefits

2,078

2,263

6,676

6,804

  Occupancy expense

1,004

864

2,608

2,666

  Professional fees

408

642

1,092

2,061

  Regulatory insurance assessments

275

366

1,058

1,354

  Impairment losses and other expenses on OREO

0

885

0

2,007

  Impairment losses on goodwill and intangible assets

0

0

0

1,525

  Impairment losses on investment securities

113

308

284

308

  Other noninterest expense

731

2,815

3,285

5,715

Total noninterest expense

4,609

8,143

15,003

22,440

Income before income tax provision

2,144

(1,059)

7,281

(10,601)

Provision (benefit) for income taxes

778

401

2,690

(3,148)

Net Income

$1,366

($1,460)

4,591

($7,453)
















United Security Bancshares





Selected Financial Data (Quarters Unaudited)





 (dollars in 000s, except per share amounts)






Three months

Ended

September 30,

Three months

Ended

September 30,

Nine months ended

September 30,

Nine months ended

September 30,


2012

2011

2012

2011

Basic earnings per share

$0.10

($0.10)

$0.33

($0.53)

Diluted earnings per share

$0.10

($0.10)

$0.33

($0.53)

Weighted average basic shares for EPS

13,941,844

13,941,844

13,941,844

13,941,844

Weighted average diluted shares for EPS

13,941,844

13,941,844

13,941,844

13,941,844






Annualized return on:





   Average assets

.87%

(2.98%)

.99%

(1.50%)

   Average equity

8.72%

(29.58%)

9.82%

(13.68%)

Yield on interest-earning assets

5.09%

4.90%

4.93%

5.00%

Cost of interest-bearing liabilities

0.65%

0.69%

.62%

0.74%

Net interest margin

4.23%

4.42%

4.53%

4.45%

Annualized net charge-offs to average loans

.46%

7.84%

1.19%

4.67%







September 30,

December 31,




2012

2011



Shares outstanding - period end

13,941,844

13,941,844



Book value per share

$4.85

$4.46



Tangible book value per share

$4.51

$4.10



Efficiency ratio

68.22%

96.63%



Total nonperforming assets

$39,305

$57,148



Nonperforming assets to total assets

6.20%

8.77%



Total Impaired loans

$21,143

$31,882



Total nonaccrual loans

$10,462

$18,098



Allowance for loan losses to total loans

2.97%

3.34%













SOURCE United Security Bancshares

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