United Security Bancshares - 17.42% ROE for 1st Half of 2007
FRESNO, CA, July 12, 2007 Dennis R. Woods, President and Chief Executive Officer
of United Security Bancshares http://www.unitedsecuritybank.com/
(Nasdaq-GS:UBFO) reported today the results of operation for the 2nd quarter and
1st half of 2007.
Woods said, "Core earnings continues to grow as is apparent in the second
quarter comparison. Core growth was less apparent on the year to date comparison
due to significant nonrecurring income in the first quarter of 2006, but
nevertheless it did occur. For the second half of 2007, our efforts will
continue to focus on growing core earnings over prior periods and we look
forward to reporting another record year."
Net income for the 2nd quarter 2007 was $3,308,000, as compared with $3,062,000
in 2006 for an increase of $246,000 or 8.03%. Net income for the six months
ended June 30, was $6,911,000 in 2007 and $6,926,000 in 2006. The 1st quarters
of both 2007 and 2006 included unusual or nonrecurring income and expense items
that impact the comparability of the two year-to-date periods. Without the
impact of those unusual or nonrecurring income and expense items, net after-tax
income for six months ended June 30, 2007 would have exceeded net after-tax
income for the same period of 2006 by $456,000 or 6.6%.
Basic and diluted earnings per share for the 2nd quarters of 2007 and 2006 were
$0.27. Year to date basic and diluted earning per share for 2007 were $0.58 and
$0.57 as compared with $0.61 and $0.60 in 2006.
For the three months ended 6/30/07, return on average equity was 15.56% and the
return on average assets was 1.74%. For the same period in 2006, ROAE was 19.14%
and ROAA was 1.93%. Year to date ROAE and ROAA were 17.42% and 1.89% for 2007
and 22.34% and 2.20% for 2006.
The 75th consecutive quarterly cash dividend of $0.125 per share, up from $0.11
for a 13.6% increase from a year ago, was declared on June 26, 2007, to be paid
on July 18, 2007, to shareholders of record on July 6, 2007.
Shareholders' equity at quarter end June 30, 2007 was $81,369,000 an increase of
$17,934,000 over June 30, 2006. The merger with Legacy Bank, N.A. added
$21,537,000 to shareholders' equity over June 30, 2006. Dividends of $5.4
million were paid out of shareholders'equity to shareholders during the past 12
months and $10,753,000 was utilized to purchase and retire shares of Company
stock at an average price of $20.72.
Net interest income for the 2nd quarter 2007 was $8.836 million, up $738,000
from 2006 for an increase of 9.1%. The net interest margin decreased from 5.73%
in 2006 to 5.19% in 2007. The decrease in the net interest margin in 2007 was
attributable in part to reversal of $125,000 accrued interest for loans placed
on non accrual status during the quarter as well as increases in the cost of
funds. Interest costs, as a percentage of earning assets, averaged 3.01% in 2007
and 2.34% in 2006. Year to date, the net interest margin changed little at 5.68%
for 2007 and 5.69% for 2006.
Noninterest income for the 2nd quarter of 2007 was $1,954,000, up from
$1,594,000 in 2006 for an increase of $360,000 or 22.6%. Year to date
noninterest income for the six months just ended June 30, 2007 was $3,535,000,
down $1,266,000. A gain on sale of investments of $1,877,000 ($1,164,000 after
tax)in 2006 was the primary cause for the decline.
Operating expenses for the three months ended June 30 were $5,517,000 for 2007
and $5,036,000 for 2006, an increase of $481,000 or 9.6%. Year to date operating
expenses for the 1st half of 2007 were $10,717,000, up $1,133,000 or 11.8%. The
increases primarily result from the addition of the Campbell branch acquired in
February 2007. Operating expenses of Campbell totaled $1,008,000 for the first
half of 2007.
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The provision for loan loss was $208 thousand for the 2nd quarter of 2007 and
$123 thousand for 2006. For the first half of 2007 the provision for loan loss
was $410,000 compared with $363,000 in 2006. In determining the adequacy of the
allowance for loan loss, Management's judgment is the primary determining factor
for establishing the amount of the provision for loan losses and is considered
adequate for the current period.
Non-performing assets increased to 2.55% of total assets on June 30, 2007 from
1.95% at June 30, 2006
United Security Bancshares is a $772+ million bank holding company. United
Security Bank, it's principal subsidiary is a 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 regulatory, judicial, or legislative tax
treatment of business transactions, particularly recently enacted California tax
legislation and the subsequent Dec. 31, 2003, announcement by the Franchise Tax
Board regarding the taxation of REITs and RICs; and (8) 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, 2006, and
particularly the section of Management's Discussion and Analysis.
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United Security Bancshares
Consolidated Balance Sheets (unaudited)
(Dollars in thousands)
June 30 June 30
2007 2006
Cash & noninterest-bearing deposits in ========= =========
other banks $ 24,190 $ 30,833
Interest-bearing deposits in other banks 7,910 7,772
Federal funds sold 2,376 5,600
Investment securities AFS 91,636 91,237
Loans, net of unearned fees 589,030 481,895
Less: allowance for loan losses (9,905) (8,039)
========= =========
Loans, net 579,126 473,856
Premises and equipment, net 15,970 12,463
Intangible assets 13,638 3,283
Other assets 37,468 39,227
========= =========
TOTAL ASSETS $ 772,312 $ 664,271
--------- ---------
Deposits:
Noninterest-bearing demand & NOW $ 183,474 $ 196,343
Savings & Money Market 191,086 170,749
Time 266,627 194,015
========= =========
Total deposits 641,187 561,107
Borrowed funds 23,060 17,100
Other liabilities 9,698 6,621
Junior subordinated debentures 16,998 16,009
========= =========
TOTAL LIABILITIES $ 690,943 $ 600,836
Shareholders' equity:
Common shares outstanding:
11,943,363 at June 30, 2007
11,361,913 at June 30, 2006 $ 33,966 $ 22,019
Retained earnings 48,618 43,107
Fair Value Adjustment - Hedge (56) 16
Accumulated other comprehensive income (1,159) (1,707)
========= =========
Total shareholders' equity $ 81,369 $ 63,435
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 772,312 $ 664,271
--------- ---------
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United Security Bancshares Three Three Six Six
Consolidated Statements of Income Months Months Months Months
(dollars in 000's, except per share amounts) Ended Ended Ended Ended
(unaudited) June June June June
2007 2006 2007 2006
========== ========== ========== ==========
Interest income $ 13,962 $ 11,410 $ 28,198 $ 21,961
Interest expense 5,126 3,311 9,629 6,050
========== ========== ========== ==========
Net interest income 8,836 8,098 18,569 15,911
Provision for loan losses 208 123 410 363
Other income 1,954 1,594 3,535 4,801
Other expenses 5,517 5,035 10,717 9,584
========== ========== ========== ==========
Income before income tax provision 5,065 4,534 10,977 10,766
Provision for income taxes 1,757 1,472 4,066 3,839
========== ========== ========== ==========
NET INCOME $ 3,308 $ 3,062 $ 6,911 $ 6,926
United Security Bancshares Three Three Six Six
Selected Financial Data Months Months Months Months
(dollars in 000's except per share amounts) Ended Ended Ended Ended
06/30/2007 06/30/2006 06/30/2007 06/30/2006
========== ========== ========== ==========
Basic Earnings Per Share $ 0.27 $ 0.27 $ 0.58 $ 0.61
Diluted Earning Per Share $ 0.27 $ 0.27 $ 0.57 $ 0.60
Annualized Return on:
Average Assets 1.73% 1.93% 1.89% 2.05%
Average Equity 15.56% 19.14% 17.42% 20.82%
Net Interest Margin 5.19% 5.73% 5.68% 5.69%
Net Charge-offs to Average Loans 0.00% 0.01% 0.20% 0.29%
06/30/2007 06/30/2006
Book Value Per Share $ 6.81 $ 5.58
Tangible Book Value Per Share $ 5.67 $ 5.29
Efficiency Ratio 48.48% 46.27%
Non Performing Assets to Total Assets 2.55% 1.95%
Allowance for Loan Losses
to Total Loans 1.68% 1.67%
Shares Outstanding - period end 11,943,363 11,361,913
Basic Shares - average weighted 12,078,030 11,367,629
Diluted Shares - average weighted 12,135,006 11,502,106
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