EXHIBIT 99.1
Union Financial Bancshares, Inc. Reports Earnings and Announces
Quarterly Cash Dividend
UNION, S.C.--(BUSINESS WIRE)--Feb. 15, 2005--Union Financial
Bancshares, Inc. (NASDAQ:UFBS) today announced a 16% increase in
earnings over the previous fiscal year. Net income for the twelve
months ended December 31, 2004 was $2,156,000, or $1.05 per share
(diluted) compared to $1,859,000, or $.90 per share (diluted), for the
twelve month period ending September 30, 2003. The Company also
declared a quarterly dividend of $0.10 per share on its outstanding
common stock, payable on February 15, 2005 to shareholders of record
January 28, 2005.
Net income for the three months ended December 31, 2004 was
$592,000 compared to a net loss of ($1,210,000) for the three months
ended December 31, 2003. Earnings per share were $.29 per share
(diluted) for the fourth quarter of fiscal 2004 versus a loss per
share of ($.62) (diluted) for the fourth quarter of 2003.
On October 21, 2003, the Board of Directors of Union Financial
Bancshares, Inc. changed the fiscal year end of the Corporation from
September 30 to December 31, effective December 31, 2003. During the
quarter ending December 31, 2003, the Corporation initiated a balance
sheet restructuring that was designed to increase the net interest
margin and enhance future earnings. The restructuring included the
sale of $31.3 million in low yielding mortgage backed securities that
resulted in a pretax loss of $700,000 and the prepayment of a $5
million 6.25% Federal Home Loan Bank advance with two years remaining
that carried a $381,000 penalty. The purpose of the restructuring was
to lessen exposure to interest rate risk. As a result of the Bank's
balance sheet restructuring, the Corporation recorded a net loss for
the quarter ended December 31, 2003.
At December 31, 2004, assets totaled $351.6 million, a 2.94%
increase from $341.5 million at September 30, 2003. Net loans
receivable increased $18.2 million or 11.88% to $171.1 million at
December 31, 2004, compared to $152.9 million at September 30, 2003.
Investment and mortgage-backed securities at December 31, 2004,
decreased 8.86% to $143.5 million from $157.4 million at September 30,
2003. The increase in loans was funded with the reduction in
securities along with an increase in borrowings of $2.5 million and
deposits of $7.4 million.
Commenting on the earnings results, Dwight V. Neese, President and
Chief Executive Officer, stated: "We are pleased with the results we
have achieved in the face of challenging local economic conditions and
in the midst of repositioning the balance sheet after our charter
conversion in the previous year. Not only did our twelve month results
show an earnings increase of 16% over the previous fiscal year, our
earnings per share also rose 16%. We continue to have positive growth
on our balance sheet, marked by an increase in the consumer and
commercial loan portfolios of 29.4% over the previous fiscal year. We
look forward to focusing on our core operations over the coming
quarters and building long-term value for our shareholders."
Union Financial also announced that the Corporation's board of
directors has approved the repurchase of an additional 98,000 shares,
or approximately 5% of the Corporation's outstanding common stock.
Repurchases, which will be conducted through open market purchases or
privately negotiated transactions, will be made from time to time
depending on market conditions and other factors. Repurchased shares
will be held in treasury.
Union Financial Bancshares was founded in Union, South Carolina,
in 1934 and is celebrating its 70th anniversary. Union Financial is
the holding company for Provident Community Bank, which operates seven
banking locations in four counties of South Carolina-Union, Laurens,
Fairfield, and York. At December 31, 2004, Union Financial had $351.6
million in total assets and stockholders' equity of $26.0 million.
Union Financial Bancshares, Inc.
Fourth Quarter - Year Ending December 31, 2004
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Financial Highlights
($ in thousands, except share data)
As of As of
December September
31, 30,
Balance Sheet 2004 2003 $Change %Change
- ------------------------------- -------------------------------------
Total assets $351,598 $341,552 $10,046 2.94%
Cash and interest-bearing
deposits 13,197 5,017 8,180 163.05%
Investments & mortgage-backed
securities 143,494 157,438 -13,944 -8.86%
Loans receivable (net) 171,094 152,921 18,173 11.88%
Goodwill & intangible assets 4,212 5,007 -795 -15.88%
Deposits 227,589 220,232 7,357 3.34%
Advances & other borrowings 87,500 85,000 2,500 2.94%
Stockholders' equity 26,019 26,216 -197 -0.75%
Number of outstanding shares 1,957,989 1,965,103 -7,114 -0.36%
Book value per share $13.29 $13.34 -$0.05 -0.39%
Tangible book value per share $11.14 $10.79 $0.34 3.19%
For the For the For the
For the Three Twelve Twelve
Quarter Months Months Months
Ended Ended Ended Ended
Dec. Dec. Dec. Sept.
31, 31, 31, 30,
---------------------------------
Income Statement 2004 2003 2004 2003
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Net interest income $2,561 $1,482 $9,706 $8,222
Provision for loan losses 475 725 1,250 725
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Net interest income after loan
loss provision 2,086 757 8,456 7,497
Noninterest income 681 -283 2,583 2,534
Noninterest expense 1,964 2,326 8,162 7,601
Income tax 211 -642 721 571
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Net income $592 -$1,210 $2,156 $1,859
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Earnings per share: Basic $0.30 -$0.62 $1.10 $0.95
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Earnings per share: Dilutive $0.29 -$0.62 $1.05 $0.90
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For the Twelve For the Twelve
Months Ended Months Ended
December 31, September 30,
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Key Financial Ratios 2004 2003
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Return on average assets 0.61% 0.55%
Return on average stockholders'
equity 8.40% 6.64%
Operating expense to average assets 2.14% 2.17%
Capital to average assets 9.64% 10.20%
CONTACT: Union Financial Bancshares, Inc.
Dwight V. Neese, 864-429-1863