United Security Bancshares - $4.1 Million Net Income for 2008
FRESNO, Calif., Feb. 9 /PRNewswire-FirstCall/ -- Dennis R. Woods,
President and Chief Executive Officer of United Security Bancshares
http://www.unitedsecuritybank.com/ (Nasdaq: UBFO) reported today the results of
operation for the 4th quarter and twelve months ended December 31, 2008.
The Company earned $842,000 for the 4th quarter of 2008, as compared with
net income of $689,000 for the 4th quarter in 2007. Basic and diluted earnings
per share for the 4th quarter 2008 were $0.07 compared with $0.06 for the 4th
quarter 2007. For the twelve months ended December 31, 2008, net income was
$4,070,000 compared with $11,257,000 in 2007. For the twelve months ended
December 31, 2008, return on average equity was 4.93% and the return on average
assets was .52%. For the same period in 2007, return on average equity was
13.73% and return on average assets was 1.47%. The low interest rate
environment, weak real estate market and economy all combined to impact earnings
adversely.
The Board of Directors of United Security Bancshares declared a 1st
quarter 2009 stock dividend of one percent (1%). The 1st quarter 2009 stock
dividend replaces the quarterly cash dividend and reflects a similar value. The
stock dividend was paid to shareholders of record on January 9, 2009 and the
shares were issued on January 21, 2009.
Woods added, "We've watched, with great interest, the US Government's
several attempts to unlock the credit markets and stem the tide of real estate
foreclosures by pouring billions of dollars into the financial rescue of Wall
Street and the nation's largest financial institutions. Very few dollars have
been directed towards the millions of struggling homeowners and small business
owners. The bailout dollars for banks are a short-term fix to assist through
difficult times. Essentially the bailout dollars are ten-year loans, at 5% after
tax, (8.62% pre- tax equivalent) for the first five years moving up to 9%
(15.52% pre-tax equivalent) after five years. Along with the high rates of
interest, the TARP (Treasury Asset Recovery Plan) dollars come with
restrictions, a US Government right to buy shares (warrants) in the Company, and
the TARP agreement provides for the US Government to change any part of the deal
in the future. The Board will weight all factors prior to making a decision
regarding TARP.
We are confident the new administration in Washington is focused on
helping struggling homeowners and stimulating the economy and expect legislation
will be passed aimed more directly at resolving those problems. In the meantime,
we continue to strengthen our balance sheet and ask that our customers do the
same. We remain committed to providing the very best banking services to
business and individuals in the communities we serve. We'll let the US
Government focus on rescuing the economy."
Shareholders' equity at quarter end was $79.6 million. During the past 12
months, dividends of $4.6 million were paid out of shareholders' equity to
shareholders and $1.2 million was utilized to purchase and retire shares of
Company stock at an average price of $13.70 per share.
Net interest income for the 4th quarter 2008 was $7.07 million, down $1.7
million from the 4th quarter of 2007 for a decrease of 19.6%. The net interest
margin decreased from 4.92% in the 4th quarter of 2007 to 4.02% in the 4th
quarter of 2008. For the twelve months ended December 31, 2008 net interest
income was $30.2 million, down $6.4 million from $36.6 million for the same
period in 2007. The net interest margin decreased from 5.35% for the twelve
months in 2007 to 4.33% for the same period in 2008. The lower interest rate
environment and increase in nonaccrual loans are the primary factors for the
declines.
Noninterest income for the 4th quarter of 2008 was $2,697,000, up $587,000
from $2,110,000 in 2007 for an increase of 27.8%. The increase resulted from the
gain from the fair value adjustment to the carrying amount of Trust Preferred
Securities during the 4th quarter of 2008 that was up $629,000 compared with the
4th quarter of 2007. For the twelve months ended December 31, 2008, noninterest
income was $8,343,000, down $1,321,000 from $9,664,000 for the same period in
2007. The net result of a gain from the fair value adjustment to the carrying
amount of Trust Preferred Securities and a drop in ATM fees account for most of
the net decline in noninterest income in 2008, compared to 2007.
Other operating expenses for the three months ended December 31, 2008 were
$6,253,000 and $6,724,000 for 2007, a decrease of $474,000 or 7%. For the twelve
months ended December 31, 2008, other operating expenses totaled $23,279,000, up
$548,000 from $22,731,000 for the same period in 2007. Several expense items in
combination account for the differences. For the 4th quarter, OREO write-downs
and OREO expense were up $960,000 while salaries and benefits declined by
$449,000 during the 4th quarter 2008 compared with the same period in 2007. The
drop in salaries and benefits in 2008 were primarily the result of reversals of
accruals for bonuses and no accruals for 401k and ESOP were expensed for the
period. For the year 2008, the primarily difference with 2007 results from OREO
write-downs and OREO expenses that were up $1,096,000 along with a loss from the
fair value adjustment to the carrying value of core-deposit intangibles that was
up $648,000. Offsetting these increases in expense were lower salaries and
benefits by $220,000 and a decline in loss on write-downs on assets of $820,000
that occurred in 2007 but did not occur in 2008.
The provision for loan loss was $2,383,000 for the 4th quarter of 2008 and
$3,337,000 for 4th quarter of 2007. For the twelve months ended December 31,
2008, the provision was $9,598,000 compared with $5,697,000 for the same period
in 2007. 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 December 31, 2008 to be adequate. Non-performing
assets increased to 10.68% of total assets on December 31, 2008 from 7.96% on
September 30, 2008.
United Security Bancshares is a $760+ million bank holding company. United
Security Bank, its principal subsidiary is a state chartered bank and member of
the Federal Reserve Bank of San Francisco.
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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, 2007, and particularly the section of Management's Discussion and
Analysis.
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United Security Bancshares
Consolidated Balance Sheets (unaudited)
(Dollars in thousands)
December 31, December 31,
2008 2007
Cash & nonint.-bearing deposits in banks $19,426 $25,300
Interest-bearing deposits in banks 20,431 2,909
Federal funds sold 0 0
Investment securities AFS 92,749 89,415
Loans, net of unearned fees 548,742 596,481
Less: allowance for loan losses (15,071) (10,901)
Loans, net 533,671 585,580
Premises and equipment, net 14,285 15,574
Intangible assets 13,417 15,038
Other assets 67,097 37,899
TOTAL ASSETS $761,077 $771,715
Deposits:
Noninterest-bearing demand & NOW 190,363 184,506
Savings & Money Market 133,367 148,282
Time 184,756 301,829
Total deposits 508,486 634,617
Borrowed funds 155,045 32,280
Other liabilities 6,010 9,047
Junior subordinated debentures 11,926 13,341
TOTAL LIABILITIES $681,467 $689,285
Shareholders' equity:
Common shares outstanding:
12,010,372 at Dec. 31, 2008
11,855,192 at Dec. 31, 2007 $34,811 $32,587
Retained earnings 47,722 49,997
Fair Value Adjustment - Hedge 0 (2)
Accumulated other comprehensive income (2,923) (151)
Total shareholders' equity $79,610 $82,430
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY 761,077 771,715
United Security Bancshares
Consolidated Statements of Income
(dollars in 000's,
except per share Three Months Three Months Twelve Months Twelve Months
amounts) Ended Ended Ended Ended
(unaudited) December 31, December 31, December 31, December 31,
2008 2007 2008 2007
Interest income $10,036 $14,245 $45,146 $57,156
Interest expense 2,967 5,450 14,937 20,573
Net interest income 7,069 8,795 30,209 36,582
Provision for loan
losses 2,383 3,337 9,598 5,697
Other income 2,698 2,110 8,343 9,664
Other expenses 6,254 6,724 23,279 22,731
Income before income
tax provision 1,130 845 5,675 17,818
Provision for income
taxes 289 156 1,605 6,561
NET INCOME $842 $689 $4,070 $11,257
United Security Bancshares
Selected Financial Data Three Three Twelve Twelve
(dollars in 000's except Months Months Months Months
per share amounts) Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2008 2007 2008 2007
Basic Earnings Per
Share $0.07 $0.06 $0.34 $0.93
Diluted Earning Per
Share $0.07 $0.06 $0.34 $0.92
Annualized Return on:
Average Assets 0.43% 0.34% 0.52% 1.47%
Average Equity 4.18% 3.22% 4.93% 13.73%
Net Interest Margin 4.02% 4.92% 4.33% 5.35%
Net Charge-offs to
Average Loans 2.31% 2.18% 0.92% 0.90%
December 31, December 31,
2008 2007
Book Value Per Share $6.63 $6.95
Tangible Book Value Per
Share $5.51 $5.71
Efficiency Ratio 60.38% 47.38%
Non Performing Assets to
Total Assets 10.68% 3.66%
Allowance for Loan
Losses to Total Loans 2.75% 1.83%
Shares Outstanding -
period end 12,010,372 11,855,192
Basic Shares - YTD
average weighted 12,048,728 12,165,475
Diluted Shares - YTD
average weighted 12,052,150 12,200,920
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