Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK
PURCHASE, SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2008
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-14549
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
United Security Bancshares, Inc. Employee Stock Ownership Plan (With 401(k) Provisions)
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
United Security Bancshares, Inc.
131 West Front Street
P.O. Box 249
Thomasville, Alabama 36784
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
Page | ||
1 | ||
FINANCIAL STATEMENTS | ||
3 | ||
4 | ||
5 | ||
SUPPLEMENTAL SCHEDULE | ||
Schedule H, Line 4i – Schedule of Assets (Held at End of Year) | 10 | |
11 | ||
12 |
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator
United Security Bancshares, Inc. Employee Stock Ownership Plan (With 401(k) Provisions)
We have audited the accompanying statement of net assets available for benefits of the United Security Bancshares, Inc. Employee Stock Ownership Plan (With 401(k) Provisions) (the “Plan”) as of December 31, 2008, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2008, and the changes in net assets available for benefits for the year then ended, in conformity with U.S. generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2008, is presented for the purpose of additional analysis and is not a required part of the financial statements, but is supplementary information required by the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Carr, Riggs & Ingram, LLC |
Dothan, Alabama |
June 26, 2009 |
1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee
United Security Bancshares, Inc.
Thomasville, Alabama
We have audited the accompanying statement of net assets available for benefits of the United Security Bancshares, Inc. Employee Stock Ownership Plan (With 401(k) Provisions) as of December 31, 2007. This financial statement is the responsibility of the Plan’s management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the net assets available for benefits as of December 31, 2007, in conformity with U.S. generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC |
Birmingham, Alabama |
June 26, 2008 |
2
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN (With 401(k) Provisions)
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2008 AND 2007
2008 | 2007 | |||||
Assets | ||||||
Investments, at fair value: | ||||||
Participant directed: | ||||||
Common Stock, United Security Bancshares, Inc. | $ | 5,693,643 | $ | 4,579,795 | ||
Mutual Funds | 5,439,056 | 6,958,738 | ||||
11,132,699 | 11,538,533 | |||||
Nonparticipant directed: | ||||||
Life insurance contracts | 32,364 | 36,705 | ||||
Total Investments | 11,165,063 | 11,575,238 | ||||
Receivables: | ||||||
Employer contributions | 889 | — | ||||
Participant contributions | 888 | — | ||||
Accrued interest and dividends | 77,390 | 411,883 | ||||
Total Receivables | 79,167 | 411,883 | ||||
Cash | 45,262 | — | ||||
Net assets available for benefits | $ | 11,289,492 | $ | 11,987,121 | ||
See Notes to Financial Statements.
3
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN (With 401(k) Provisions)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2008
2008 | ||||
Additions to net assets attributed to: | ||||
Investments: | ||||
Interest and dividend income | $ | 333,942 | ||
Net unrealized/realized depreciation in fair value of investments | (1,042,450 | ) | ||
Net investment loss | (708,508 | ) | ||
Contributions: | ||||
Employer | 459,641 | |||
Participant | 587,050 | |||
Participant rollovers | 5,834 | |||
Total contributions | 1,052,525 | |||
Total additions | 344,017 | |||
Deductions from net assets attributed to: | ||||
Benefit payments to participants | 1,041,646 | |||
Total deductions | 1,041,646 | |||
Net decrease in net assets available for benefits | (697,629 | ) | ||
Net assets available for benefits at beginning of year | 11,987,121 | |||
Net assets available for benefits at end of year | $ | 11,289,492 | ||
See Notes to Financial Statements.
4
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. | DESCRIPTION OF THE PLAN |
The following brief description of the United Security Bancshares, Inc. Employee Stock Ownership Plan (With 401(k) Provisions) (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
General
The Plan is a controlled group defined contribution plan, which provides savings benefits for substantially all employees of the following controlled group of United Security Bancshares, Inc. (collectively, the “Company”):
United Security Bancshares, Inc. (parent company)
First United Security Bank
Acceptance Loan Company
The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
Contributions
Each year, participants may contribute up to a total of $15,500 of pretax annual compensation, as defined in the Plan and subject to applicable limitations of the Internal Revenue Code. Participants may also roll over amounts representing distributions from other qualified defined benefit or defined contribution plans and conduit IRAs. The Company may, at its discretion, match 100% of the participants’ pretax deferrals up to a total of 6% of base compensation.
Participant Accounts
Each participant’s account is credited with the participant’s contributions, the Company’s match and Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account.
Vesting
Employees are eligible to participate in the Plan on the first day of the month following their initial date of service. Effective January 1, 2003, participants are immediately vested in their contributions, the Company matching contributions and the earnings thereon. Prior to January 1, 2003, participants were immediately vested in their contributions, but subject to a six year vesting schedule in employer contributions.
Forfeitures
Prior to January 1, 2003, participants who were not credited with at least 1,000 hours of service during the Plan year forfeited any employer contributions received for that Plan year. The forfeitures were used to reduce future employer contributions to the Plan. Effective January 1, 2003, participants are immediately vested in contributions; therefore, the Plan no longer has forfeitures to reduce future employer contributions to the Plan.
5
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. | DESCRIPTION OF THE PLAN (Continued) |
Payment of Benefits
Participants may elect to receive a distribution upon hardship, termination, retirement or disability. Hardship distributions are allowed for purchasing of a primary residence, financing the higher education of the participant, the participant’s spouse, or dependent, paying unreimbursed medical bills or alleviating other certain financial hardships. Upon termination or retirement, participants may elect to receive a lump sum or rollover their account balances into other qualified plans. If a participant dies, the total account balance will be paid to the designated beneficiary or to his or her estate.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. Participants are always 100% vested in their contributions and the Company’s match thereon.
NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The financial statements of the Plan have been prepared in accordance with U.S. generally accepted accounting principles. Income on securities is recorded on the accrual basis and investments are recorded at fair value as stated below.
Investment Valuation
The Plan’s investments in cash are stated at fair value, which approximates cost. The shares of mutual funds, pooled bond funds and common stock are valued at quoted market prices on the last business day of the Plan year.
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates and assumptions.
Payment of Benefits
Benefits are recorded when paid.
6
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
NOTES TO FINANCIAL STATEMENTS
NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure. The measurement and disclosure requirements of SFAS No. 157 related to financial assets and financial liabilities are effective for the Plan beginning in 2008. The resulting fair values calculated under SFAS No. 157 after adoption are not materially different than the fair values that would have been calculated under previous guidance.
NOTE 3. | INVESTMENTS |
The fair values of individual investments that represent 5% or more of the Plan’s net assets at December 31, 2008 and/or 2007 are as follows:
2008 | 2007 | |||||
Common Stock, United Security Bancshares, Inc. | $ | 5,693,643 | $ | 4,579,795 | ||
Federated Prime Obligation Fund | 1,239,305 | 1,037,629 | ||||
Federated Stock Trust | 589,393 | 871,257 | ||||
American Funds Growth Fund of America R3 | 579,664 | — | ||||
Dreyfus S&P 500 Index Fund | 398,577 | 630,737 | ||||
Federated Equity Kaufman Fund | 335,472 | 689,131 | ||||
American Century 20th Century International Fund | 243,800 | 683,894 | ||||
American Century 20th Century Ultra Advanced Fund | 340 | 797,973 |
For the year ended December 31, 2008, the Plan’s investments (including investments bought, sold and transferred, as well as held during the year) depreciated $1,042,450 in fair value as determined by quoted market prices as follows:
Common Stock, United Security Bancshares, Inc. | $ | 796,310 | ||
Mutual Funds | (1,838,760 | ) | ||
Total | ($ | 1,042,450 | ) | |
NOTE 4. | FAIR VALUE MEASUREMENTS |
SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 has been applied prospectively as of the beginning of the period.
SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
7
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
NOTES TO FINANCIAL STATEMENTS
NOTE 4. | FAIR VALUE MEASUREMENTS (Continued) |
Level | 1 | Unadjusted quoted prices in active markets for identical assets or liabilities | ||
Level | 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or that can be corroborated by observable market data for substantially the full term of the assets or liabilities | ||
Level | 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
All investments in the Plan are classified as Level 1 except for life insurance contracts, which are considered Level 2. As required by SFAS No. 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
NOTE 5. | NONPARTICIPANT DIRECTED INVESTMENTS |
Nonparticipant directed investments consist of life insurance contracts that certain participants have purchased under the terms of the Plan. The life insurance contracts are stated at the current cash surrender value. The participants pay the annual premiums of the insurance policies from their respective participant accounts.
NOTE 6. | TRANSACTIONS WITH PARTIES-IN-INTEREST |
Plan investments are managed by The Trust Company of Sterne, Agee & Leach, Inc. The Trust Company of Sterne, Agee & Leach, Inc. is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. Fees paid by the Plan sponsor for administrative and record keeping services totaled $13,387 for the year ended December 31, 2008.
During the years ended December 31, 2008 and 2007, the Plan purchased 17,988 and 13,102 shares of United Security Bancshares, Inc. common stock at a cost of $320,449 and $389,021, respectively. During the year ended December 31, 2008, there were no shares sold by the Plan, however, the Plan sold 29,400 shares of United Security Bancshares, Inc. for $719,607 in 2007.
The Company pays for all legal, accounting and other services on behalf of the Plan.
NOTE 7. | RECONCILIATION OF FINANCIAL STATEMENTS TO THE FORM 5500 |
The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2008 and 2007 to the Form 5500:
2008 | 2007 | ||||||
Net assets available for benefits per the financial statements | $ | 11,289,492 | $ | 11,987,121 | |||
Cash to accrual adjustment for accrued interest and dividends | (77,390 | ) | 8,699 | ||||
Net assets available for benefits per the Form 5500 | $ | 11,212,102 | $ | 11,995,820 | |||
The following is a reconciliation of changes in net assets available for benefits per the financial statements for the year ended December 31, 2008 to the Form 5500:
8
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
NOTES TO FINANCIAL STATEMENTS
NOTE 7. | RECONCILIATION OF FINANCIAL STATEMENTS TO THE FORM 5500 (Continued) |
Net decrease in net assets available for benefits per the financial statements | $ | (697,629 | ) | |
Cash to accrual adjustment for accrued interest and dividends | (1,977 | ) | ||
Net decrease in net assets available for benefits per the Form 5500 | $ | (699,606 | ) | |
NOTE 8. | INCOME TAX STATUS |
The Internal Revenue Service has determined and informed the Company by a letter dated June 21, 2002, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (the “IRC”). Although the Plan has been amended since receiving the determination letter, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with applicable requirements of the IRC.
NOTE 9. | RISKS AND UNCERTAINTIES |
The Plan provides for investment options in various funds which invest in equity and debt securities and other investments. Such investments are exposed to risks and uncertainties, such as interest rate risk, credit risk, economic changes, political unrest, regulatory changes and foreign currency risk. The Plan’s exposure to a concentration of credit risk is dependent upon funds selected by participants. These risks and uncertainties could impact participants’ account balances and the amounts reported in the financial statements. During 2008, broad domestic and international indices declined. During this period, the decline in the Plan’s fair value of investments was consistent with these indices. Approximately 50% and 38% of the Plan’s net assets were invested in the common stock of the Company at December 31, 2008 and 2007, respectively. The underlying value of the Company’s stock is impacted by the performance of the Company, the market’s evaluation of such performance and other factors.
9
Table of Contents
UNITED SECURITY BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN (With 401(k) Provisions)
SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2008
(Plan Number 001)
(Employer Identification Number 63-0843362)
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
(a) | (b) Identity of Issuer, Borrower, Lessor or Similar Party | (c) Description of Investment including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | (d) Cost | (e) Current Value | |||||
* | United Security Bancshares, Inc. Common Stock | 285,969 shares | ** | $ | 5,693,643 | ||||
Federated Prime Obligation Fund | 1,239,305 shares | ** | 1,239,305 | ||||||
Federated Stock Trust | 33,526 shares | ** | 589,393 | ||||||
American Funds Growth Fund of America R3 | 28,696 shares | ** | 579,664 | ||||||
Federated Total Return Bond Fund | 53,481 shares | ** | 544,439 | ||||||
Goldman Sachs Short Duration Fund | 44,515 shares | ** | 458,060 | ||||||
Dreyfus S&P 500 Index Fund | 15,798 shares | ** | 398,577 | ||||||
Federated Equity Kaufman Fund | 93,187 shares | ** | 335,472 | ||||||
American Century 20th Century International Fund | 32,946 shares | ** | 243,800 | ||||||
Accessor Balanced Allocation Fund | 19,066 shares | ** | 237,752 | ||||||
Accessor Aggressive Growth Fund | 16,906 shares | ** | 184,609 | ||||||
Federated Capital Appreciation Fund | 11,254 shares | ** | 168,813 | ||||||
Accessor U. S. Government Money Market Fund | $145,568 face amount | ** | 145,568 | ||||||
Accessor Growth Allocation Fund | 11,982 shares | ** | 139,109 | ||||||
Accessor Income and Growth Fund | 9,737 shares | ** | 122,789 | ||||||
Accessor Income Allocation Fund | 3,934 shares | ** | 50,233 | ||||||
Goldman Sachs Large Value | 132 shares | ** | 1,133 | ||||||
American Century 20th Century Ultra Advanced Fund | 24 shares | ** | 340 | ||||||
Life insurance contracts | Life insurance policies | *** | 32,364 | ||||||
$ | 11,165,063 | ||||||||
* | Party-in-interest. |
** | Cost not included, funds are participant directed. |
*** | Investments in life insurance contracts are nonparticipant directed. The face amount of the policies at December 31, 2008 was $205,610. |
See accompanying report of independent registered public accounting firm, Carr, Riggs & Ingram, LLC.
10
Table of Contents
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Plan administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITED SECURITY BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN (WITH 401(K) PROVISIONS) | ||||
Date: June 26, 2009 | By: | /s/ Larry M. Sellers | ||
Larry M. Sellers | ||||
Vice President & Secretary of United Security Bancshares, Inc., the Plan Administrator of the United Security Bancshares, Inc. Employee Stock Ownership Plan (With 401(k) Provisions) |
11
Table of Contents
Exhibit 23.1 | Consent of Independent Registered Public Accounting Firm | |
Exhibit 23.2 | Consent of Independent Registered Public Accounting Firm |
12