ORANGEBURG, N.Y., July 25 /PRNewswire-FirstCall/ -- U.S.B. Holding Co., Inc. (the "Company") , the parent company of Union State Bank (the "Bank"), announced today that the Company's net income for the 2007 second quarter was $6.5 million, or $0.29 per share (diluted), compared to $7.2 million, or $0.32 per share (diluted), for the 2006 second quarter, a decrease of $0.7 million, or 9.8 percent. Return on average common stockholders' equity was 11.38 percent for the 2007 second quarter compared to 13.88 percent for the 2006 second quarter.
For the six months ended June 30, 2007, net income was $13.3 million, or $0.59 per share (diluted), compared to $15.3 million, or $0.67 per share (diluted), for the six months ended June 30, 2006, a decrease of $2.1 million, or 13.6 percent. Return on average common stockholders' equity was 11.67 percent for the six months ended June 30, 2007 compared to 14.80 percent for the 2006 six month period.
Financial highlights as of and for the three months ended June 30, 2007 compared to the June 30, 2006 period are as follows:
-- Consolidated total assets increased $209.5 million, or 7.4 percent, to
$3.0 billion.
-- Net loans increased $105.4 million, or 7.0 percent, to $1.6 billion.
-- Deposits increased $103.8 million, or 5.6 percent, to $2.0 billion.
-- Investments increased $128.5 million, or 11.3 percent, to $1.3 billion.
-- Net interest margin on a fully tax equivalent basis declined 38 basis
points from 2006 to 3.09 percent, primarily due to an increase in
funding costs.
-- The provision for credit losses decreased $0.6 million to $0.4 million,
primarily due to the elimination of specific reserves that were
required for two non-performing real estate construction loans
outstanding during 2006.
-- Non-interest expense increased $1.2 million, or 9.6 percent, to $14.0
million, primarily due to increases in stock option expense and medical
costs.
Financial highlights for the six months ended June 30, 2007 compared to the June 30, 2006 period are as follows:
-- Net interest margin on a fully tax equivalent basis declined 41 basis
points to 3.12 percent, primarily due to an increase in funding costs.
-- The provision for credit losses decreased $0.6 million to $0.7 million,
primarily due to the elimination of specific reserves that were
required for two non-performing real estate construction loans
outstanding during 2006.
-- Non-interest expenses increased $1.8 million, or 7.0 percent, to $27.6
million, primarily due to increases in stock option expense and medical
costs.
Operating results for the 2007 second quarter and six months ended June 30, 2007 are as follows:
Net interest income decreased $0.8 million, or 3.4 percent, to $22.1 million for the 2007 second quarter and $2.0 million, or 4.3 percent, to $44.2 million for the six months ended June 30, 2007 compared to the 2006 second quarter and six months ended June 30, 2006, respectively. The primary reason for the decrease in net interest income was a reduction in the tax equivalent net interest margin as a result of increases in interest bearing liability costs. The Company continues to operate in an interest rate environment with a flat-to-inverted U.S. Treasury yield curve. The narrower interest rate spreads between interest earning assets and interest bearing liabilities has significantly contributed to the decrease in net income.
In addition, on June 26, 2007, the Company redeemed all of its $10,310,000 Floating Rate Junior Subordinated Deferrable Interest Debentures, which were held by USB Statutory Trust III. As a result, $273,000 of unamortized debt issuance costs were written-off as additional interest expense. The decreases in net interest income were partially offset by increases in average interest earning assets of $234.2 million, or 8.6 percent, and $217.5 million, or 8.1 percent, for the June 30, 2007 three and six month periods, respectively, compared to the 2006 periods.
Thomas E. Hales, Chairman of the Board and Chief Executive Officer of the Company and the Bank, stated that, "Although the Company's net interest margin was significantly reduced for the three and six month 2007 periods compared to the 2006 periods, the decrease in the net interest margin has begun to stabilize as evidenced by the seven basis points decrease in the net interest margin from 3.16 percent for the 2007 first quarter to 3.09 percent for the 2007 second quarter. Also, three basis points of the seven basis points decrease were due to the write-off of the unamortized debt issuance costs in the 2007 second quarter."
Raymond J. Crotty, President and Chief Operating Officer of the Company and the Bank, added that, "The Bank's significant average balance increases in loans and deposits have helped reduce the impact of narrower interest rate spreads between interest earning assets and interest bearing liabilities. The Bank's business strategy of obtaining deposit relationships and lending in communities we serve has been reinforced by further expansion into Orange County with the recent openings of the Washingtonville and Monroe branches."
The provision for credit losses decreased $0.6 million for both the June 30, 2007 three and six month periods, respectively, compared to the 2006 periods. The decreases in 2007 are primarily as a result of the elimination of specific reserves that were required for two non-performing real estate construction loans outstanding during 2006. The decrease resulted in an allowance for loan losses to total loans ratio of 0.98 percent at June 30, 2007 compared to 1.01 percent and 1.09 percent at December 31, 2006 and June 30, 2006, respectively. As of June 30, 2007, nonaccrual loans decreased to $8.3 million compared to $9.0 million as of June 30, 2006. Nonaccrual loans as of June 30, 2007 primarily consisted of one customer relationship aggregating $7.4 million, which is supported by real estate collateral and personal guarantees.
Mr. Hales further commented that, "The Bank's residential mortgage portfolio does not contain sub-prime loans and, therefore, has not been affected by the sub-prime loan market. We always have and will continue to adhere to prudent credit underwriting standards to protect both our customers and institution."
Non-interest expenses increased $1.2 million to $14.0 million and $1.8 million to $27.6 million for the three and six months ended June 30, 2007, respectively, as compared to the 2006 periods. The increases in non-interest expenses for the three and six months ended June 30, 2007 were primarily due to increases in salaries and employee benefits expense related to stock option expense and medical costs; occupancy and equipment expense related to higher energy costs and rental expense for new Bank locations and maintenance contracts for new computer equipment; professional fees related to a previous non-performing real estate construction loan held by the Bank's wholly-owned subsidiary, Dutch Hill Realty Corp; and other expense related to credit cards. The effective rate for the provision for income taxes for the three and six months ended June 30, 2007 decreased to 30.8 percent and 31.6 percent compared to 32.4 percent and 32.5 percent for the 2006 periods, respectively.
The Company operates through its banking subsidiary, Union State Bank, a commercial bank currently with 31 branches, of which 29 are located in Rockland, Westchester, and Orange Counties, New York, and one branch each in Stamford, Connecticut, and New York City, New York. The Bank also operates four loan production offices in Rockland, Westchester, and Orange Counties, New York, and Stamford, Connecticut. Further information on the Company can be found on the Bank's website at http://www.unionstate.com/.
Forward-Looking Statements: This Press Release contains a number of "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. These forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "intend," "should," "will," "would," "could," "may," "planned," "estimated," "potential," "outlook," "predict," "project" and similar terms and phrases, including references to assumptions.
Forward-looking statements are based on various assumptions and analyses made by us in light of our management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond our control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the timing and occurrence or non- occurrence of events may be subject to circumstances beyond our control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins or affect the value of investments; changes in deposit flows, loan demand or real estate values may adversely affect our business; changes in accounting principles, policies or guidelines may cause our financial condition to be perceived differently; general economic conditions, either nationally or locally in some or all of the areas in which we do business, or conditions in the securities markets or the banking industry may be less favorable than we currently anticipate; legislative or regulatory changes may adversely affect our business; applicable technological changes may be more difficult or expensive than we anticipate; success or consummation of new business initiatives may be more difficult or expensive than we anticipate; or litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than we anticipate.
The Company's forward-looking statements are only as of the date on which such statements are made. By making any forward-looking statements, the Company assumes no duty to update them to reflect new, changing or unanticipated events or circumstances. You should consider these risks and uncertainties in evaluating forward-looking statements and you should not place undue reliance on these statements.
U.S.B. HOLDING CO., INC.
SELECTED FINANCIAL INFORMATION - UNAUDITED
(in thousands, except ratios and share amounts)
Six Months Ended Three Months Ended
June 30, June 30,
2007 2006 2007 2006
Consolidated summary of
operations data:
Interest income $94,725 $85,302 $48,058 $43,446
Interest expense 50,498 39,075 25,965 20,581
Net interest income 44,227 46,227 22,093 22,865
Provision for credit
losses 704 1,307 357 998
Non-interest income 3,425 3,564 1,688 1,607
Non-interest expenses 27,571 25,758 14,014 12,790
Income before income
taxes 19,377 22,726 9,410 10,684
Provision for income
taxes 6,122 7,386 2,896 3,459
Net income $13,255 $15,340 $6,514 $7,225
Consolidated common
share data:
Basic earnings per
share $0.60 $0.71 $0.30 $0.33
Diluted earnings
per share $0.59 $0.67 0.29 $0.32
Weighted average
shares 21,912,589 21,744,542 21,923,663 21,765,023
Adjusted weighted
average shares 22,403,713 22,755,686 22,310,710 22,771,764
Cash dividends
per share $0.30 $0.28 $0.15 $0.14
Selected balance sheet data June 30, December 31, June 30,
at period end: 2007 2006 2006
Securities available for sale,
at estimated fair value $504,600 $431,294 $394,022
Securities held to maturity 756,645 751,948 738,713
Loans, net of unearned income 1,603,717 1,593,420 1,498,270
Allowance for loan losses 15,696 16,034 16,260
Total assets 3,029,756 2,923,247 2,820,286
Deposits 1,970,588 1,896,369 1,866,739
Borrowings 753,827 708,015 658,056
Subordinated debt issued in
connection with corporation-
obligated mandatory redeemable
capital securities of
subsidiary trusts 51,548 61,858 61,858
Stockholders' equity 228,359 223,436 208,865
Tier 1 capital $286,153 $287,232 $276,916
Book value per common share $10.41 $10.20 $9.59
Common shares outstanding 21,939,569 21,902,023 21,768,568
Selected balance sheet financial
ratios:
Leverage ratio 9.52% 9.75% 9.90%
Allowance for loan losses to
total loans 0.98% 1.01% 1.09%
Non-performing assets to
total assets 0.28% 0.34% 0.32%
Selected income statement Six Months Ended Three Months Ended
data for the period: June 30, June 30, June 30, June 30,
2007 2006 2007 2006
Return on average total
assets 0.89% 1.10% 0.87% 1.03%
Return on average common
stockholders' equity 11.67% 14.80% 11.38% 13.88%
Efficiency ratio 56.38% 50.44% 57.42% 50.93%
Net interest spread - tax
equivalent 2.92% 3.39% 2.91% 3.34%
Net interest margin - tax
equivalent 3.12% 3.53% 3.09% 3.47%
U.S.B. HOLDING CO., INC.
AVERAGE BALANCE INFORMATION - UNAUDITED
Six Months Ended Three Months Ended
June 30, June 30,
2007 2006 2007 2006
(000's) (000's)
ASSETS
Federal funds sold $63,822 $26,172 $,184 $31,333
Securities(1) 1,240,156 1,184,775 1,259,490 1,192,625
Loans(2) 1,606,728 1,482,236 1,621,700 1,486,197
Interest earning assets 2,910,706 2,693,183 2,944,374 2,710,155
Assets $2,989,581 $2,794,831 $3,009,290 $2,803,124
LIABILITIES AND
STOCKHOLDERS' EQUITY
Non-interest bearing
deposits $,368 $310,310 $,903 $306,889
Interest bearing deposits 1,682,146 1,531,838 1,704,096 1,513,727
Total deposits 1,986,514 1,842,148 2,006,999 1,820,616
Borrowings 710,976 669,292 720,566 699,842
Subordinated debt issued
in connection
with corporation-obligated
mandatory redeemable capital
securities of subsidiary
trusts 61,573 61,858 61,285 61,858
Interest bearing
liabilities 2,454,695 2,262,988 2,485,947 2,275,427
Stockholders' Equity $227,169 $207,291 $228,898 $208,161
1 Securities exclude the mark-to-market adjustment required by SFAS No.
115.
2 Loans are net of both the unearned income and the allowance for loan
losses. Nonaccruing loans are included in average balances for
purposes of computing average loans, average earning assets, and total
assets.
U.S.B. HOLDING CO., INC.
SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED
Consolidated Balance Sheet Data
at June 30,
2007 2006
(000's)
Commercial (time and demand) loans $156,412 $163,377
Construction and real estate secured loans 491,797 389,765
Commercial mortgages 575,539 574,089
Residential mortgages 285,024 282,639
Home equity loans 83,020 78,925
Personal installment loans 1,836 1,598
Credit card loans 7,329 6,849
Other loans 4,395 3,340
Deferred commitment fees 1,635 2,312
Intangibles 2,024 3,216
Goodwill 1,380 1,380
Nonaccrual loans 8,348 8,983
Restructured loans 123 129
Reserve for unfunded loan commitments and
standby letters of credit 994 1,001
Non-interest bearing deposits 315,976 308,966
Interest bearing deposits 1,654,612 1,557,773
Consolidated Income Statement Data for the
Six Months Ended Three Months Ended
June 30, June 30,
2007 2006 2007 2006
(000's)
Interest income - tax equivalent $95,977 $86,586 $48,682 $44,085
Net interest income - tax equivalent 45,479 47,511 22,717 23,504
Deposit service charges 1,643 1,663 823 834
Other income 1,782 1,901 865 773
Salaries and employee benefits expense 17,536 16,264 8,842 8,000
Occupancy and equipment expense 4,102 3,890 2,060 1,942
Advertising and business development
expense 1,241 1,275 779 673
Professional fees expense 921 774 441 401
Communications expense 692 643 305 297
Stationery and printing expense 324 296 171 143
Amortization of intangibles 548 561 272 276
Other expense 2,207 2,055 1,144 1,058
Net charge-offs 1,099 316 602 189
