Exhibit 99.1
Union Financial Bancshares, Inc. Announces Second Quarter Earnings
UNION, S.C.--(BUSINESS WIRE)--July 20, 2005--Union Financial
Bancshares, Inc. (NASDAQ: UFBS) today reported earnings of $549,000
for the three months ended June 30, 2005 compared to earnings of
$548,000 for the second quarter of 2004. Earnings per share were $0.28
per share (diluted) for the second quarter of 2005, versus $0.27 per
share (diluted) for the second quarter of 2004.
The company also declared a quarterly cash dividend of $0.10 per
share payable on August 15, 2005 to shareholders of record on July 29,
2005.
Net interest income before the loan loss provision for the second
quarter increased $84,000, or 3.48%, to $2.5 million compared to $2.4
million for the same period in the previous year. The increase was due
primarily to higher average loan balances over the previous year along
with an increase in yield on loans that resulted from a higher
concentration of commercial loans. The increase in total interest
income was partially offset by higher deposit costs as a result of
rising rates. Provision for loan losses for the second quarter totaled
$341,000 compared to $250,000 for the same period in the previous
year. The increase in provision for loan losses as compared to the
previous year was due to the 13.6% increase in net loans over the
previous year, a higher concentration of commercial loans in the
portfolio, which carry a higher risk of default, and a $1.0 million
increase in classified loans to $6.1 million compared to $5.1 million
for the same period in the previous year.
Non-interest income for the second quarter increased $16,000, or
2.44%, to $673,000 compared to $657,000 for the same period in the
previous year. The increase was due to higher fees for financial
services that resulted from an increase in transaction accounts that
was offset by lower fees generated from third party investment
brokerage and financing receivables program due to a reduction in
product volumes. Non-interest expense for the second quarter increased
$3,000 or 0.14% to $2.09 million compared to $2.08 million for the
same period in the previous year.
At June 30, 2005, assets totaled $375.2 million, a 6.73% increase
from $351.6 million at December 31, 2004. Net loans receivable
increased $12.4 million, or 7.25%, during the period to $183.5 million
at June 30, 2005, compared to $171.1 million at December 31, 2004. The
net growth in loans was driven by a 26% increase in the
consumer/commercial loan sector. Investment and mortgage-backed
securities at June 30, 2005, increased 12.00% to $160.7 million from
$143.5 million at December 31, 2004. Growth in lower cost transaction
accounts resulted in deposits increasing 3.68% to $236.0 million at
June 30, 2005 compared to $227.6 million at December 31, 2004. The
increase in loans and securities was funded with cash on hand, an
increase in deposits and an increase in borrowings of $14 million.
Commenting on the second quarter results, Dwight V. Neese,
President and Chief Executive Officer, stated: "We are pleased with
the progress we have made with repositioning the balance sheet while
facing a challenging local economic environment. We continue to have
positive growth on our balance sheet, marked by an increase in the
consumer and commercial loan portfolios of 26% over the same period
last year. We will continue to focus on our core operations over the
coming quarters and building long-term value for our shareholders."
Union Financial Bancshares is the holding company for Provident
Community Bank, N.A., which operates seven banking locations in the
upstate of South Carolina. At June 30, 2005, Union Financial had
$375.2 million in total assets and total stockholders' equity of $26.0
million.
- ---------------------------------------------------------------------
Union Financial Bancshares, Inc.
Second Quarter - Year Ending December 31, 2005
- ---------------------------------------------------------------------
Financial Highlights
(Unaudited) ($ in thousands, except share data)
At At
Balance Sheet 6/30/05 12/31/04 $Change %Change
- ------------- ----------------------------------------
Total assets $375,246 $351,598 $23,648 6.73%
Cash and interest-earning
deposits 7,195 13,197 -6,002 -45.48%
Investments & mortgage-
backed securities 160,707 143,494 17,213 12.00%
Loans receivable (net) 183,493 171,094 12,399 7.25%
Goodwill and intangible
assets 3,894 4,212 -318 -7.55%
Deposits 235,969 227,589 8,380 3.68%
Advances and other
borrowings 101,500 87,500 14,000 16.00%
Stockholders' equity 26,000 26,019 -19 -0.07%
Outstanding shares 1,904,368 1,957,989 -53,621 -2.74%
Book value per share $13.65 $13.29 $0.36 2.74%
Tangible book value per
share $11.61 $11.14 $0.47 4.23%
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------
Income Statement 2005 2004 2005 2004
- ---------------------------------------------------------------------
Net interest income $2,500 $2,416 $4,949 $4,676
Provision for loan losses 341 250 548 385
----------------------------------------
Net interest income after
loan loss provision 2,159 2,166 4,401 4,291
Non-interest income 673 657 1,250 1,285
Non-interest expense 2,090 2,087 4,192 4,168
Income tax 193 188 371 351
----------------------------------------
Net income $549 $548 $1,088 $1,057
========================================
Earnings per share:
basic $0.29 $0.28 $0.57 $0.54
========================================
Earnings per share:
diluted $0.28 $0.27 $0.55 $0.51
========================================
Six Months Ended
June 30,
-------------------
Key Financial Ratios 2005 2004
------------------ -------------------
Return on average assets 0.60% 0.60%
Return on average stockholders'
equity 8.63% 8.08%
Operating expense to average
assets 2.13% 2.37%
Capital to average assets 9.34% 9.25%
CONTACT: Union Financial Bancshares, Inc.
Dwight V. Neese, 864-429-1863