United Security Bancshares, Inc. Reports Second Quarter Results
THOMASVILLE, Ala., Aug. 6 /PRNewswire-FirstCall/ -- United Security Bancshares, Inc. (Nasdaq: USBI) today reported a net loss attributable to USBI of $348,000, or $0.06 per diluted share, for the second quarter ended June 30, 2010, compared with net income of $2.9 million, or $0.48 per diluted share, for the same period of 2009.
"We reported continued growth in our net interest income in the second quarter of 2010 due to higher average loan balances and an improved net interest margin compared with the second quarter of last year; however, this growth was more than offset by an increase in our provision for loan losses related to the soft economy," stated R. Terry Phillips, President and Chief Executive Officer of United Security Bancshares, Inc. "The increase in our provision f or loan losses was the primary reason for our second quarter loss and was due to higher charge-offs as we wrote down the value of certain real estate loans that were foreclosed on during the quarter to reflect lower prices for commercial properties in our markets. We are very fortunate and believe that our strong capital base provides United Security with an important buffer against potential losses related to loan charge-offs in the future."
"The soft economy continues to have a negative effect on real estate in our market. It has resulted in lower demand and weak prices for properties, as well as reduced loan demand to fund residential and commercial real estate purchases. Our primary focus for the immediate future, particularly in light of the current economic climate, continues to be on improving asset quality rather than building our loan portfolio. In the 2010 second quarter, we reduced our non-performing assets by $5.0 million, a 10.4% decrease to $42.9 milli on compared with the 2010 first quarter. The reduction was due to a combination of write-offs and foreclosed property sales during the quarter. We believe that these are important steps to strengthen our balance sheet and grow future earnings," continued Mr. Phillips.
Second Quarter Results
Interest income totaled $11.2 million in the second quarter of 2010, compared with $11.9 million in the second quarter of 2009. The decrease in interest income was due primarily to lower interest rates charged on loans and lower interest earned on investment securities compared with the same period last year.
Interest expense declined 27.0% to $2.5 million in the second quarter of 2010, compared with $3.4 million in the second quarter of 2009. The decrease resulted from lower interest rates paid on certificates of deposit and borrowed funds compared with the second quarter of 2009.
Net interest income increased 1.8% to $8.7 million in the second quar ter of 2010, compared with $8.5 million in the second quarter of 2009. Net interest margin rose to 5.73% in the second quarter of 2010, a 12 basis point improvement from 5.61% in the second quarter of 2009 and a 24 basis point increase from the first quarter of 2010.
Provision for loan losses was $3.7 million in the second quarter of 2010, or 3.5% of annualized average loans, compared with $1.5 million, or 1.4% of annualized average loans, in the second quarter of 2009. The increase in the provision for loan losses was due primarily to a higher level of charge-offs in 2010. Net charge-offs rose to $4.3 million in the second quarter of 2010, compared with $1.8 million in the second quarter of 2009.
"We are taking a very aggressive approach in identifying impairment in our loan portfolio to account for changes in values arising from the current economic climate and our customers' business prospects," stated Mr. Phillips. "The charge-offs this quarte r were due to loans being written down to account for changes in market conditions and to properly reflect those changes in values on our balance sheet."
Total non-interest income was $1.2 million for the second quarter of 2010, compared with $4.0 million in the second quarter of 2009. The decline in non-interest income was due primarily to $2.7 million in proceeds from the settlement of a lawsuit included in non-interest income for the second quarter of 2009. There was no comparable amount received in the second quarter of 2010. Other income for the second quarter of 2010 included a $291,000 loss on sale of other real estate owned, compared with a loss of $121,000 in the second quarter of 2009.
Non-interest expense increased 3.9% to $7.0 million in the second quarter of 2010, compared with $6.7 million in the second quarter of 2009. Salary and benefit costs rose by $139,000, and FDIC insurance and assessments increased $95,000, both compared with the second quar ter of 2009. These increases were offset partially by lower legal and professional fees compared with the second quarter of 2009.
Six Months Results
For the first six months of 2010, net income attributable to USBI was $2.9 million, or $0.49 per diluted share, compared with $4.1 million, or $0.69 per diluted share, for the first six months of 2009. The 2010 results include $4.2 million, or $0.43 per share, of non-interest income from an insurance settlement, and the 2009 results include $2.7 million, or $0.31 per share, of non-interest income related to the settlement of a lawsuit.
For the six months ended June 30, 2010, net interest income increased 0.5% to $17.0 million, compared with $16.9 million for the same period of 2009. Net interest margin improved to 5.61% for the first six months of 2010 from 5.57% in the first six months of 2009.
Provision for loan losses was $5.4 million in the first six months of 2010, compared with $3.4 million in the first six months of 2009.
Non-interest income rose 25.4% to $6.5 million for the first six months of 2010, compared with $5.2 million in 2009. The $1.3 million increase in non-interest income resulted from a $4.2 million insurance settlement received in 2010, offset partially by $2.7 million in proceeds from the settlement of a lawsuit in 2009 that was not recurring in 2010.
Non-interest expense was up 10% to $14.0 million, compared with $12.7 million in the first six months of 2009. The increase was due to higher salary and employee benefit expense and expenses related to FDIC insurance premiums and assessments compared with the same period in 2009.
Shareholders' equity increased to $83.2 million, or $13.84 per share, for the six months ended June 30, 2010, compared with $80.8 million, or $13.43 per share, for the six months ended June 30, 2009. Regular quarterly dividends were $0.11 per share for the second quarter of 2010.
About United Secu rity 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 followin g 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 commercia l 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 | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2010 | 2009 | 2010 | 2009 | |||||
(Unaudited) | (Unaudited) | |||||||
INTEREST INCOME: | ||||||||
Interest and Fees on Loans | $ 9,540 | $ 9,754 | $18,846 | $19,489 | ||||
Interest on Investment Securities | 1,645 | 2,191 | 3,593 | 4,425 | ||||
Total Interest Income | 11,185 | 11,945 | 22,439 | 23,914 | ||||
INTEREST EXPENSE: | ||||||||
Interest on Deposits | 1,975 | 2,523 | 3,958 | 5,177 | ||||
Interest on Borrowings | 556 | 925 | 1,496 | 1,841 | ||||
Total Interest Expense | 2,531 | 3,448 | 5,454 | 7,018 | ||||
NET INTEREST INCOME | 8,654 | 8,497 | 16,985 | 16,896 | ||||
PROVISION FOR LOAN LOSSES | 3,682 | 1,459 | 5,425 | 3,368 | ||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 4,972 | 7,038 | 11,560 | 13,528 | ||||
NON-INTEREST INCOME: | ||||||||
Service and Other Charges on Deposit Accounts | 796 | 731 | 1,449 | 1,392 | ||||
Credit Life Insurance Income | 211 | 257 | 342 | 415 | ||||
Other Income | 146 | 2,979 | 4,736 | 3,397 | ||||
Total Non-Interest Income | 1,153 | 3,967 | 6,527 | 5,204 | ||||
NON-INTEREST EXPENSE: | ||||||||
Salaries and Employee Benefits | 3,625 | 3,486 | 7,086 | 6,637 | ||||
Occupancy Expense | 479 | 460 | 928 | 914 | ||||
Furniture and Equipment Expense | 326 | 305 | 626 | 610 | ||||
Other Expense | 2,521 | 2,442 | 5,314 | 4,519 | ||||
Total Non-Interest Expense | 6,951 | 6,693 | 13,954 | 12,680 | ||||
INCOME (LOSS) BEFORE INCOME TAXES | (826) | 4,312 | 4,133 | 6,052 | ||||
PROVISION FOR (BENEFIT FROM) INCOME TAXES | (478) | 1,440 | 1,321 | 1,911 | ||||
NET INCOME (LOSS) | $ (348) | $ 2,872 | $ 2,812 | $ 4,141 | ||||
Less: Net Loss Attributable to Noncontrolling Interest | 0 | 0 | (125) | 0 | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO USBI | $ (348) | $ 2,872 | $ 2,937 | $ 4,141 | ||||
BASIC AND DILUTED NET INCOME | ||||||||
(LOSS) ATTRIBUTABLE TO USBI PER SHARE | $ (0.06) | $ 0.48 | $ 0.49 | $ 0.69 | ||||
DIVIDENDS PER SHARE | $ 0.11 | $ 0.11 | $ 0.22 | $ 0.38 | ||||
UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES | ||||
June 30, | December 31, | |||
2010 | 2009 | |||
(Unaudited) | ||||
ASSETS | ||||
Cash and Due from Banks | $12,714 | $ 12,323 | ||
Interest Bearing Deposits in Banks | 126 | 126 | ||
Total Cash and Cash Equivalents | 12,840 | 12,449 | ||
Federal Funds Sold | 15,320 | 4,545 | ||
Investment Securities Available-for-Sale, at fair market value | 162,310 | 194,754 | ||
Investment Securities Held-to-Maturity, at cost | 1,250 | 1,250 | ||
Federal Home Loan Bank Stock, at cost | 5,700 | 5,700 | ||
Loans, net of allowance for loan losses of $9,650 and $10,004, respectively | 401,687 | 402,504 | ||
Premises and Equipment, net | 16,840 | 17,253 | ||
Cash Surrender Value of Bank-Owned Life Insurance | 12,273 | 12,037 | ||
Accrued Interest Receivable | 4,976 | 5,095 | ||
Goodwill | 4,098 | 4,098 | ||
Investment in Limited Partnerships | 1,834 | 1,925 | ||
Other Real Estate Owned | 27,056 | 21,439 | ||
Other Assets | 7,464 | 8,705 | ||
Total Assets | $673,648 | $691,754 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Deposits | $523,772 | $513,053 | ||
Accrued Interest Expense | 2,382 | 2,477 | ||
Short-Term Borrowings | 403 | 620 | ||
Long-Term Debt | 54,000 | 85,000 | ||
Other Liabilities | 9,890 | 9,140 | ||
Total Liabilities | 590,447 | 610,290 | ||
Commitments and Contingencies | ||||
Shareholders' Equity: | ||||
Common Stock, par value $0.01 per share, 10,000,000 shares authorized; | 73 | 73 | ||
Surplus | 9,233 | 9,233 | ||
Accumulated Other Comprehensive Income, net of tax | 4,641 | 4,316 | ||
Retained Earnings | 91,852 | 90,242 | ||
Less Treasury Stock: 1,306,056 and 1,299,978 shares at cost, respectively | (21,200) | (21,127) | ||
Noncontrolling Interest | (1,398) | (1,273) | ||
Total Shareholders' Equity | 83,201 | 81,464 | ||
Total Liabilities and Shareholders' Equity | $673,648 | $691,754 | ||
CONTACT: Robert Steen, +1-334-636-5424