Contact: Robert Steen
334-636-5424
UNITED SECURITY BANCSHARES, INC. REPORTS
FIRST QUARTER RESULTS
First Quarter Net Income Increases to $3.3 Million
THOMASVILLE, Ala. (May 4, 2010) -- United Security Bancshares, Inc. (Nasdaq: USBI) today reported net income of $3.3 million, or $0.55 per diluted share, for the first quarter of 2010, compared with net income of $1.3 million, or $0.21 per diluted share, for the first quarter of 2009. The 2010 results include an insurance settlement of $4.15 million, which represents $0.41 per diluted share after tax and related expenses.
“Our strong first quarter earnings resulted in large part from the insurance proceeds that we received following a settlement with our insurance carrier for a bond claim filed in December 2009,” stated R. Terry Phillips, President and Chief Executive Officer of United Security Bancshares, Inc. “The claim was related to certain loan irregularities and fraudulent activities at Acceptance Loan Company that resulted in losses during 2007. We are pleased that this matter was settled without going to trial.”
“Our operating results reflected the continued impact of the soft economy. Loan demand is weak in many of our markets due to a slowdown in real estate sales and declining real estate values. In addition, the weakness in the real estate markets has pressured the underlying collateral values of loans and has contributed in large part to the increase in non-performing assets since last year. We have increased our allowance for loan losses since last year to $10.3 million, or 2.5% of net loans, and believe that this amount provides adequate coverage for potential loan losses based on our current projections. We remain focused on working off the higher level of non-performing assets and believe that our success in this area will be a major factor in growing our future earnings,” continued Mr. Phillips.
First Quarter Results
Interest income totaled $11.3 million in the first quarter of 2010, compared with $12.0 million in the first quarter of 2009. Interest and fees on loans were down 4.4% to $9.3 million due to lower interest rates and an 11 basis point decrease in the net interest margin to 5.49%, compared with 5.60% in the first quarter of 2009.
Interest expense declined 18.1% to $2.9 million in the first quarter of 2010, compared with $3.6 million in the first quarter of 2009. The decline in interest expense was due primarily to a decline in interest rates paid on interest bearing deposits, partially offset by higher average balances in interest bearing accounts.
Net interest income decreased 0.8% to $8.3 million in the first quarter of 2010, compared with $8.4 million in the first quarter of the prior year. The decline in net interest income was due primarily to lower net interest margin related to an increase in interest bearing deposits, offset somewhat by slightly higher loan balances.
Provision for loan losses decreased to $1.7 million in the first quarter of 2010, or 1.7% of annualized average loans, compared with $1.9 million, or 1.9% of annualized average loans, in the first quarter of 2009.
“Our loan loss provision declined from the first quarter of last year and is down considerably from the fourth quarter of 2009,” stated Mr. Phillips. “We benefited from a lower level of net charge-offs and remain focused on working through our problem loans to minimize potential losses. In addition, we are continuing to emphasize credit quality over loan growth until the economy begins to show signs of recovery.”
Total non-interest income increased $4.1 million to $5.4 million in the first quarter of 2010, compared with $1.2 million in the first quarter of the prior year. The increase in non-interest income was due primarily to the insurance settlement of $4.15 million arising from the proceeds of the Company’s bond claim. The insurance proceeds were offset somewhat by lower service charges on deposit accounts, as customers have reduced overdraft and related fees, and a decrease in credit life insurance income.
Non-interest expense increased to $7.0 million in the first quarter of 2010, compared with $6.0 million in the first quarter of 2009. Salary and employee benefits increased $310,000, and other expenses rose $716,000 due to an increase in FDIC insurance ($108,000), legal fees related to the insurance settlement ($333,000) and higher carrying costs associated with other real estate owned.
“United Security Bancshares and First United Security Bank continue to be well-capitalized, which is the highest regulatory rating, and we believe that our capital position highlights the safety and soundness of our operations. We are pleased to report this level of capital, without the assistance of any bail-out funds provided by the government, and we remain focused on preserving our capital during this weak economic period,” concluded Mr. Phillips.
Shareholders' equity increased to $84.0 million, or $13.95 per share, for the three months ended March 31, 2010, compared with $79.1 million, or $13.14 per share, for the three months ended March 31, 2009. Return on average assets at March 31, 2010 was 0.83%, and return on average equity was 6.92%, each adjusted for the one-time payment of the insurance settlement. Regular quarterly dividends were $0.11 per share for the first quarter of 2010, compared with $0.27 per share for the first quarter of 2009.
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. With respect to 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 INCOME
(Dollars in Thousands, Except Per Share Data)
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
(Unaudited) | ||||||||
INTEREST INCOME: | ||||||||
Interest and Fees on Loans | $ | 9,305 | $ | 9,735 | ||||
Interest on Investment Securities Available-for-Sale | 1,949 | 2,234 | ||||||
Total Interest Income | 11,254 | 11,969 | ||||||
INTEREST EXPENSE: | ||||||||
Interest on Deposits | 1,983 | 2,654 | ||||||
Interest on Borrowings | 940 | 916 | ||||||
Total Interest Expense | 2,923 | 3,570 | ||||||
NET INTEREST INCOME | 8,331 | 8,399 | ||||||
PROVISION FOR LOAN LOSSES | 1,743 | 1,909 | ||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 6,588 | 6,490 | ||||||
NON-INTEREST INCOME: | ||||||||
Service and Other Charges on Deposit Accounts | 653 | 661 | ||||||
Credit Life Insurance Income | 131 | 158 | ||||||
Other Income | 4,590 | 418 | ||||||
Total Non-Interest Income | 5,374 | 1,237 | ||||||
NON-INTEREST EXPENSE: | ||||||||
Salaries and Employee Benefits | 3,461 | 3,151 | ||||||
Occupancy Expense | 449 | 454 | ||||||
Furniture and Equipment Expense | 300 | 305 | ||||||
Other Expense | 2,793 | 2,077 | ||||||
Total Non-Interest Expense | 7,003 | 5,987 | ||||||
INCOME BEFORE INCOME TAXES | 4,959 | 1,740 | ||||||
PROVISION FOR INCOME TAXES | 1,799 | 471 | ||||||
NET INCOME | $ | 3,160 | $ | 1,269 | ||||
Less: Net Income Attributable to Noncontrolling Interest | 125 | 0 | ||||||
NET INCOME ATTRIBUTABLE TO UNITED SECURITY BANCSHARES, INC. | $ | 3,285 | $ | 1,269 | ||||
BASIC AND DILUTED NET INCOME PER SHARE | $ | 0.55 | $ | 0.21 | ||||
DIVIDENDS PER SHARE | $ | 0.11 | $ | 0.27 | ||||
UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Per Share Data)
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and Due from Banks | $ | 12,014 | $ | 12,323 | ||||
Interest-Bearing Deposits in Other Banks | 126 | 126 | ||||||
Total Cash and Cash Equivalents | 12,140 | 12,449 | ||||||
Federal Funds Sold | 14,850 | 4,545 | ||||||
Investment Securities Available-for-Sale, at fair market value | 164,963 | 194,754 | ||||||
Investment Securities Held-to Maturity, at fair market value | 1,250 | 1,250 | ||||||
Federal Home Loan Bank Stock, at cost | 5,700 | 5,700 | ||||||
Loans, net of allowance for loan losses of $10,268 and $10,004, respectively | 403,337 | 402,504 | ||||||
Premises and Equipment, net | 16,905 | 17,253 | ||||||
Cash Surrender Value of Bank-Owned Life Insurance | 12,161 | 12,037 | ||||||
Accrued Interest Receivable | 4,937 | 5,095 | ||||||
Goodwill | 4,098 | 4,098 | ||||||
Investment in Limited Partnerships | 1,854 | 1,925 | ||||||
Other Real Estate Owned | 21,782 | 21,439 | ||||||
Other Assets | 9,797 | 8,705 | ||||||
Total Assets | $ | 673,774 | $ | 691,754 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits | $ | 521,722 | $ | 513,053 | ||||
Accrued Interest Expense | 2,357 | 2,477 | ||||||
Short-Term Borrowings | 776 | 620 | ||||||
Long-Term Debt | 54,000 | 85,000 | ||||||
Other Liabilities | 10,932 | 9,140 | ||||||
Total Liabilities | 589,787 | 610,290 | ||||||
Shareholders’ Equity: | ||||||||
Common Stock, par value $0.01 per share, 10,000,000 shares authorized; | ||||||||
7,317,560 shares issued; 6,017,489 and 6,017,582 shares outstanding, | ||||||||
respectively | 73 | 73 | ||||||
Surplus | 9,233 | 9,233 | ||||||
Accumulated Other Comprehensive Income, net of tax | 4,344 | 4,316 | ||||||
Retained Earnings | 92,864 | 90,242 | ||||||
Less Treasury Stock: 1,300,071 and 1,299,978 shares at cost, respectively | (21,129 | ) | (21,127 | ) | ||||
Noncontrolling Interest | (1,398 | ) | (1,273 | ) | ||||
Total Shareholders’ Equity | 83,987 | 81,464 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 673,774 | $ | 691,754 |