FRESNO, Calif., Nov. 21, 2011 /PRNewswire/ -- United Security Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported today an unaudited consolidated net loss of $1.46 million or ($0.11) per basic and diluted common share for the three months ended September 30, 2011, as compared to net income of $411,000 or $0.03 per basic and diluted common share for the three months ended September 30, 2010. On a year-to-date basis, the Company reported an unaudited consolidated net loss of $7.5 million or ($0.56) per basic and diluted common share, as compared to net income of $1.4 million or $0.10 per basic and diluted common share for the nine months ended September 30, 2010.
Annualized return on average equity (ROE) for the three months ended September 30, 2011 was (9.05%), compared to 2.07% for the same period in 2010, and was (13.68%) for the nine months ended September 30, 2011 compared to 2.35% for the same nine-month period in 2010. Annualized return on average assets (ROA) was (0.88%) for the three months ended September 30, 2011 compared to 0.23% for the same three-month period in 2010, and was (1.50%) for the nine months ended September 30, 2011 compared to 0.26% to the same nine-month period in 2010
Shareholders' equity at September 30, 2011 was $65.4 million, down $7.9 million from the $73.3 million in shareholder's equity reported at December 31, 2010.
Net interest income before provision for credit loss totaled $6.2 million for the three months ended September 30, 2011 and $18.7 million for the nine months ended September 30, 2011, down $583,000 from $6.8 million reported during the three months ended September 30, 2010 and down $2.6 million from the $21.4 million reported during the nine months ended September 30, 2010, respectively. The net interest margin was 4.42% for the three months ended September 30, 2011, and 4.45% for the nine months ended September 30, 2011 as compared to 4.45% for the three months ended September 30, 2010 and 4.66% for the nine months ended September 30, 2010. On a nine-month comparative basis, the Company continues to benefit from reduced costs on interest-bearing liabilities, which partially offset declines in yields on interest-earning assets between the two nine-month periods.
Noninterest income for the three months ended September 30, 2011 totaled $3.3 million, an increase of $1.8 million from $1.5 million in noninterest income reported for the three months ended September 30, 2010. Noninterest income of $5.6 million reported for the nine months ended September 30, 2011 increased $134,000 from $5.5 million in noninterest income reported for the nine months ended September 30, 2010. Customer service fees continue to provide the majority of the Company's noninterest income, totaling $956,000 for the three months ended September 30, 2011, as compared to $940,000 for the three months ended September 30, 2010, and $2.7 million for the nine months ended September 30, 2011, as compared to $2.9 million for the nine months ended September 30, 2010. Changes in noninterest income on a quarter-to-quarter comparative basis is largely the result of an increase in $1.7 million in fair value gains recorded on the Company's junior subordinated debt. On a nine-month comparative basis, changes in noninterest income are primarily the result of decreases of $509,000 in gains realized on the sale of loans, off set by an increase of $933,000 in fair value gains recorded on the Company's junior subordinated debt.
Noninterest expense totaled $8.1 million for the three months ended September 30, 2011, up $1.6 million from the $6.6 million reported for the three months ended September 30, 2010, while noninterest expense totaled $22.4 million for the nine months ended September 30, 2011, up $1.5 million from $21.0 million reported for the nine months ended September 30, 2010. Between the three-month quarterly comparative periods, increases in OREO related expenses totaling $2.0 million were offset in part by decreases in other expenses. On a nine-month comparative basis, increases in OREO related expenses of $2.1 million and increases in professional fees totaling $444,000, were offset by a decrease in impairment losses on investment securities totaling $780,000.
For the three months ended September 30, 2011 the provision for loan loss was $2.4 million, compared to $1.2 million for the three months ended September 30, 2010 representing an increase of $1.2 million between the three-month comparative periods. The provision for loan losses totaled $12.5 million for the nine months ended September 30, 2011 compared to $3.4 million for the nine months ended September 2010, reflecting an increase of $9.1 million between the two nine-month periods. Net loan charge-offs totaled $15.1 million for the nine months ended September 30, 2011 as compared to $5.4 million for the nine months ended September 30, 2010. At September 30, 2011, the allowance for loan losses represented 3.34% of total loans, compared to 3.75% of total loans at December 31, 2010. 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 at September 30, 2011 to be adequate.
Non-performing assets comprised of nonaccrual loans, OREO, troubled debt restructurings and loans more than 90 days past days and still accruing interest, decreased approximately $23.9 million between December 31, 2010 and September 30, 2011, and decreased $11.1 million during the quarter ended September 30, 2011. Nonperforming assets decreased as a percentage of total assets from 14.07% of total assets at December 31, 2010 to 10.71% of total assets at September 30, 2011 as the Company continues to successfully work out or dispose of problem assets. Nonaccrual loans decreased $13.7 million between December 31, 2010 and September 30, 2011, and $0.01 million during the quarter ended September 30, 2011, while OREO decreased $5.2 million and $1.7 million during the same periods, respectively. Impaired loans totaled $35.0 million at September 30, 2011, decreasing $16.0 million from the balance of $51.0 million at December 31, 2010 and decreasing $2.0 million from the balance of $43.0 million at June 30, 2011. Troubled debt restructurings totaled $19.9 million at September 30, 2011, decreasing $5.0 million from the balance of $24.9 million at December 31, 2010 and decreasing $3.0 million from the balance of $29.1 million at June 30, 2011.
Total assets at September 30, 2011 were $668.5 million compared to $678.2 million at December 31, 2010, a year-to-date decrease of $9.7 million, and compared to $655.6 million at June 30, 2011, a decrease of $12.8 million during the quarter. Total deposits at September 30, 2011 were $562.4 million compared to $557.5 million at December 31, 2010, an increase of $4.9 million for the nine-month period, and compared to $547.6 million at June 30, 2011, an increase of $14.8 million for the three month period.
The Board of Directors of United Security Bancshares declared a third quarter 2011 stock dividend of one percent (1%) on September 27, 2011. The stock dividend was payable to shareholders of record as of October 14, 2011, and shares were issued on October 26, 2011.
Dennis R. Woods, President and Chief Executive Officer of the Company, shares his thoughts: "As the economic malaise reaches its fourth birthday, no clear sign of its ending in the near term is evident. However, during this time, the Company has successfully, and without governmental assistance, managed and reduced its problem assets; all the while deleveraging the balance sheet, improving liquidity and continuing to offer premium products and services to our customers. In fact, $154 million in adversely classified assets have been removed from the balance sheet since June 2009, brokered deposits have dropped $75 million, and overnight investments rose nearly $95 million since September 2007, and the Company currently has $0 in borrowed funds. The additions made to the loan loss reserve during the quarter and year-to-date supports a long-term commitment to assisting our borrowers and the communities we serve, by focusing on their needs, and allowing for mutually beneficial workout strategies. Although we have booked a substantial loss, the pace of our concentrated efforts is accelerating as evidenced by incoming recoveries on past losses. The Bank is committed to further reducing its level of problem assets and continues to maintain adequate levels of capital and liquidity, keeping us positioned for opportunities when local and global recoveries begin."
United Security Bancshares is a $650+ million bank holding company. United Security Bank, its principal subsidiary is a California 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, including California tax legislation and the subsequent Dec. 31, 2003, announcement by the Franchise Tax Board regarding the taxation of REITs and RICs; (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, 2010, 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 - (unaudited) | ||||
(dollars in thousands) | ||||
September 30, | December 31, | |||
2011 | 2010 | |||
Assets | ||||
Cash and noninterest-bearing deposits in other banks | $23,588 | $13,259 | ||
Cash and due from Federal Reserve Bank | 96,882 | 85,171 | ||
Federal funds sold | 0 | 0 | ||
Cash and cash equivalents | 120,470 | 98,430 | ||
Interest-bearing deposits in other banks | 2,178 | 4,396 | ||
Investment securities (AFS at market value) | 47,063 | 51,503 | ||
Loans and leases, net of unearned fees | 416,942 | 441,046 | ||
Less: Allowance for credit losses | (13,936) | (16,520) | ||
Net loans | 403,006 | 424,526 | ||
Premises and equipment - net | 12,663 | 12,909 | ||
Bank owned life insurance | 16,017 | 15,493 | ||
Intangible assets | 5,190 | 7,186 | ||
Other real estate owned | 30,388 | 35,580 | ||
Other assets | 31,515 | 28,187 | ||
Total assets | $668,490 | $678,210 | ||
Deposits: | ||||
Noninterest bearing demand and NOW | $247,714 | $199,675 | ||
Money market and savings | 162,705 | 158,253 | ||
Time | 151,937 | 199,538 | ||
Total deposits | 562,356 | 557,466 | ||
Borrowed funds | 25,000 | 32,000 | ||
Other liabilities | 6,692 | 4,828 | ||
Junior subordinated debentures (at fair value) | 9,048 | 10,646 | ||
Total liabilities | 603,096 | 604,940 | ||
Shareholders' equity: | ||||
Common shares outstanding: | ||||
13,397,847 at September 30, 2011 | ||||
13,003,840 at December 31, 2010 | 41,129 | 39,869 | ||
Retained earnings | 25,108 | 33,807 | ||
Accumulated other comprehensive income | (843) | (406) | ||
Total shareholders' equity | 65,394 | 73,270 | ||
Total liabilities and shareholders' equity | $668,490 | $678,210 | ||
United Security Bancshares | |||||
Consolidated Statements of Income (unaudited) | |||||
(dollars in 000s, except per share amounts) | |||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||
September 30, | September 30, | September 30, | September 30, | ||
2011 | 2010 | 2011 | 2010 | ||
Interest income: | |||||
Interest and fees on loans and leases | $6,378 | $7,283 | $19,235 | $22,592 | |
Interest on investment securities | 507 | 642 | 1,644 | 2,241 | |
Interest on Federal funds sold and | |||||
Deposits in other banks | 52 | 39 | 166 | 77 | |
Total interest income | 6,937 | 7,964 | 21,045 | 24,910 | |
Interest expense: | |||||
Interest on deposits | 615 | 1,045 | 2,051 | 3,266 | |
Interest on other borrowed funds | 82 | 96 | 250 | 281 | |
Total interest expense | 697 | 1,141 | 2,301 | 3,547 | |
Net interest income before provision for credit losses | 6,240 | 6,823 | 18,744 | 21,363 | |
Provision for credit losses | 2,446 | 1,226 | 12,497 | 3,376 | |
Net interest income | 3,794 | 5,597 | 6,247 | 17,987 | |
Noninterest income: | |||||
Customer service fees | 956 | 940 | 2,717 | 2,904 | |
Increase in cash surrender value of | |||||
bank owned life insurance | 143 | 142 | 424 | 414 | |
Gain (loss) on sale of loans | 0 | (2) | 0 | 509 | |
(Loss) gain on sale of other real estate owned | (85) | (11) | (129) | 97 | |
Gain (loss) on Fair Value Option of Financial Assets | 1,923 | 221 | 1,778 | 845 | |
Other noninterest income | 353 | 178 | 802 | 689 | |
Total noninterest income | 3,290 | 1,468 | 5,592 | 5,458 | |
Noninterest expense: | |||||
Salaries and employee benefits | 2,263 | 2,241 | 6,804 | 6,629 | |
Occupancy expense | 864 | 949 | 2,666 | 2,823 | |
Professional fees | 642 | 598 | 2,061 | 1,617 | |
Regulatory insurance assessments | 366 | 559 | 1,354 | 1,465 | |
Impairment losses and other expenses on OREO | 2,668 | 680 | 4,741 | 2,673 | |
Impairment losses on goodwill and intangible assets | 0 | 0 | 1,525 | 1,471 | |
Impairment losses on investment securities | 308 | 386 | 308 | 1,088 | |
Other noninterest expense | 1,032 | 1,167 | 2,981 | 3,187 | |
Total noninterest expense | 8,143 | 6,580 | 22,440 | 20,953 | |
Income before income tax provision | (1,059) | 485 | (10,601) | 2,492 | |
Provision for income taxes | 401 | 74 | 3,148 | 1,124 | |
Net (Loss) Income | ($1,460) | $411 | ($7,453) | $1,368 | |
United Security Bancshares | ||||||||
Selected Financial Data | ||||||||
(dollars in 000's, except per share amounts) | ||||||||
Quarter Ended Sept 30, | Nine Months Ended Sept 30, | |||||||
2011 | 2010 | 2011 | 2010 | |||||
Basic earnings per share | ($0.11) | $0.03 | ($0.56) | $0.10 | ||||
Diluted earnings per share | ($0.11) | $0.03 | ($0.56) | $0.10 | ||||
Weighted average basic shares for EPS | 13,397,847 | 13,397,847 | 13,397,847 | 13,397,847 | ||||
Weighted average diluted shares for EPS | 13,397,847 | 13,397,847 | 13,397,847 | 13,397,847 | ||||
Annualized return on: | ||||||||
Average assets | -0.88% | 0.23% | -1.50% | 0.26% | ||||
Average equity | -9.05% | 2.07% | -13.68% | 2.35% | ||||
Yield on interest-earning assets | 4.90% | 5.20% | 5.00% | 5.43% | ||||
Cost of interest-bearing liabilities | 0.69% | 0.91% | 0.74% | 0.95% | ||||
Net interest margin | 4.41% | 4.45% | 4.45% | 4.66% | ||||
Annualized net charge-offs to average loans | 4.67% | 1.69% | 4.67% | 1.45% | ||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Shares outstanding - period end | 13,397,847 | 13,003,849 | ||||||
Book value per share | $4.88 | $5.63 | ||||||
Tangible book value per share | $4.49 | $5.08 | ||||||
Efficiency ratio | 92.21% | 85.76% | ||||||
Nonperforming assets to total assets | 10.71% | 14.07% | ||||||
Allowance for loan losses to total loans | 3.34% | 3.75% | ||||||
Tier 1 leverage - consolidated | 9.32% | 11.68% | ||||||
Tier 1 leverage - Bank | 9.77% | 11.19% | ||||||
Tier 1 risk-based capital - consolidated | 11.89% | 13.03% | ||||||
Tier 1 risk-based capital - Bank | 12.41% | 12.47% | ||||||
Total risk-based capital - consolidated | 13.15% | 14.30% | ||||||
Total 1 risk-based capital - Bank | 13.64% | 13.70% | ||||||
SOURCE United Security Bancshares
