United Security Bancshares, Inc. (Nasdaq: USBI) today reported
net income of $774,000, or $0.12 per diluted share, for the second
quarter ended June 30, 2015, compared with net income of $1.2
million, or $0.20 per diluted share, for the second quarter of
2014. Net income for the first six months of 2015 was $1.6 million,
or $0.25 per diluted share, compared with $2.0 million, or $0.33
per diluted share, for the first six months of 2014.
“We are pleased to report the lowest level of non-performing
assets in more than five years, as we reduced total non-performing
assets by $5.6 million, or 34%, during the past year,” stated James
F. House, President and CEO of United Security Bancshares, Inc.
“Our ratio of non-performing assets to total assets improved to
1.96%, down 95 basis points since the end of the second quarter of
last year. We expect continued improvement in this metric as a
result of our focus on reducing non-performing assets and
generating quality loans.”
“We also experienced quarterly growth in net loans of $5.8
million. This quarter’s loan growth benefited from a 13.0% increase
in loans generated by our consumer loan subsidiary, Acceptance Loan
Company, Inc. (ALC). ALC’s loan generation also contributed to a 38
basis point increase in our net interest margin compared with the
first quarter of 2015. However, loan demand from our Bank customers
remains weak due to the soft economy in many of our rural service
areas, especially with respect to quality commercial and real
estate loans. Over the past 12 months, the Bank has experienced
loan payoffs and paydowns at a faster rate than new loans were
generated. Our strategy for growing our loan production is to
expand into contiguous metropolitan markets that have greater
commercial loan potential. We are currently constructing a new
branch in Tuscaloosa, Alabama that is scheduled to open in the
fourth quarter of 2015, and we are looking at potential expansion
into other markets as well.”
“We expect to complete a major renovation of our main office in
Thomasville in the third quarter of 2015 that will consolidate a
number of key departments, including loan operations, internal
audit, compliance, collections, human resources and marketing. We
expect the new facility to improve our operating efficiencies and
provide more opportunities for staff cross-training and
development. We are also making new investments in our IT
infrastructure to improve customer service and provide a platform
for our future growth. We are very positive about these changes and
their effect on our ability to grow and better serve our customers
in the future,” continued Mr. House.
Second Quarter Results
Net income totaled $774,000, or $0.12 per diluted share, for the
second quarter ended June 30, 2015, compared with net income of
$1.2 million, or $0.20 per diluted share, for the second quarter of
2014.
Interest income totaled $7.7 million in the second quarter of
2015, compared with $7.9 million in the second quarter of 2014. The
decline in interest income was due primarily to a decrease in total
loans, offset partially by higher interest income from investment
securities, compared with the second quarter of 2014.
Interest expense declined 10.3% to $565,000 in the second
quarter of 2015, compared with $630,000 in the second quarter of
2014. The decrease resulted primarily from a decline in
interest-bearing deposits and lower interest rates paid, compared
with the same period of 2014.
Net interest income was $7.2 million in the second quarter of
2015, compared with $7.3 million in the second quarter of
2014. The decline in net interest income was due to a decrease in
loans, combined with a 4 basis point decline in net interest
margin, compared with the second quarter of 2014. Net interest
margin was 5.57% in the second quarter of 2015, compared with 5.61%
in the second quarter of 2014. The decline in net interest margin
was due primarily to the payoff of higher-yielding loans, as well
as the continued impact of changes in ALC’s loan origination
criteria that have focused on improved credit quality, with an
offset in lower interest rates charged.
Net loans declined to $245.0 million as of June 30, 2015,
compared with $272.1 million at June 30, 2014. The decrease in net
loans was due to loan payoffs and paydowns outpacing new loan
production at the Bank, offset partially by loan growth at ALC. An
overall sluggish economy in the geographical areas that the Bank
serves, primarily in the real estate sector, has been a significant
factor in lower loan demand at the Bank during the past year.
Provision for loan losses was $45,000 in the second quarter of
2015, compared with a reduction in reserve for loan losses of
$264,000 in the second quarter of 2014. The reduction in the
reserve for loan losses in the second quarter of 2014 was due in
part to recoveries of loans previously charged off. Net charge-offs
totaled approximately $438,000 in the second quarter of 2015,
compared with net charge-offs of approximately $630,000 in the
second quarter of 2014.
Total non-interest income decreased to $1.1 million in the
second quarter of 2015, compared with $1.5 million in the second
quarter of 2014. The decrease in non-interest income was due
primarily to lower other income and lower service charges, offset
partially by growth in credit life insurance income, compared with
the second quarter of 2014. Other income for the second quarter of
2014 included approximately $459,000 in income resulting from a
gain on the termination of a partnership interest and a
reimbursement from a vendor, neither of which was repeated in the
second quarter of 2015.
Total non-interest expense decreased 1.6% to $7.1 million in the
second quarter of 2015, compared with $7.2 million in the
second quarter of 2014. The decline in non-interest expense
resulted from lower other expense, which included reductions in
legal and consulting fees, as well as FDIC and state assessments.
The decline was offset partially by a 1.8% increase in salaries and
benefits expense and a 0.6% increase in occupancy and equipment
expense. Total OREO-related expense increased to $347,000 in the
second quarter of 2015, compared with $325,000 in the second
quarter of 2014, primarily due to reductions in gains on the sale
of OREO, which are netted in this expense category.
Effective as of the first quarter of 2015, First US Bank is
subject to the revised regulatory capital standards promulgated
under the Basel III Final Rule. As of June 30, 2015, both the
common equity Tier 1 capital and Tier 1 risk-based capital ratios
were 23.53% for the Bank. The Bank’s total capital ratio was
24.79%, and the Tier 1 leverage ratio was 12.93%. Each of these
ratios is higher than the ratios required to be considered a
“well-capitalized” institution under the revised framework.
Six Months Results
For the first six months of 2015, net income was $1.6 million,
or $0.25 per diluted share, compared with $2.0 million, or $0.33
per diluted share, for the first six months of 2014. The decrease
in earnings for the first six months of 2015 was due to lower net
interest income resulting primarily from a decrease in earning
assets and lower non-interest income, offset partially by
reductions in the provision for loan losses, compared with the
first six months of 2014.
For the six months ended June 30, 2015, net interest income was
$13.9 million, compared with $14.5 million for the same period
of 2014. Net interest margin declined to 5.38% for the first six
months of 2015 from 5.59% in the first six months of 2014.
Provision for loan losses was a credit of $121,000 in the first
six months of 2015, compared with a charge of $150,000 in the first
six months of 2014.
Non-interest income decreased to $2.4 million for the first six
months of 2015, compared with $2.6 million for the same period of
2014. Other income in the 2014 period included approximately
$459,000 in income resulting from a gain on the termination of a
partnership interest and a reimbursement from a vendor, neither of
which was repeated in the 2015 period. The decrease in non-interest
income was partially offset by increases in realized gains on sale
of securities for the first six months of 2015.
Non-interest expense totaled $14.1 million in the first six
months of both 2015 and 2014.
Shareholders’ equity rose to $75.8 million, or $12.56 per share,
at June 30, 2015, compared with $75.2 million, or $12.45
per share, at December 31, 2014, and $73.2 million, or $12.15 per
share, at June 30, 2014. The increase in shareholders’ equity in
the first six months of 2015 resulted from continued growth in
retained earnings, offset partially by an $861,000 decrease in
other comprehensive income resulting from a decrease in the market
value of investment securities available-for-sale.
The Company resumed paying quarterly dividends during 2014 and
declared a dividend of $0.02 per share on its common stock in both
the first and second quarters of 2015.
About United Security Bancshares, Inc.
United Security Bancshares, Inc. is a bank holding company that
operates nineteen banking offices in Alabama through First US Bank.
In addition, the Company’s operations include Acceptance Loan
Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc.,
an underwriter of credit life and credit accident and health
insurance policies sold to the Bank’s and ALC’s consumer loan
customers. The Company’s stock is traded on the Nasdaq Capital
Market under the symbol “USBI.”
Forward-Looking Statements
This press release contains forward-looking statements, as
defined by federal securities laws. Statements contained in this
press release that are not historical facts are forward-looking
statements. These statements may address issues that involve
significant risks, uncertainties, estimates and assumptions made by
management. The Company undertakes no obligation to update these
statements following the date of this press release, except as
required by law. In addition, the Company, through its senior
management, may make from time to time forward-looking public
statements concerning the matters described herein. Such
forward-looking statements are necessarily estimates reflecting the
best judgment of the Company’s senior management based upon current
information and involve a number of risks and uncertainties.
Certain factors that could affect the accuracy of such
forward-looking statements are identified in the public filings
made by the Company with the Securities and Exchange Commission,
and forward-looking statements contained in this press release or
in other public statements of the Company or its senior management
should be considered in light of those factors. Specifically, with
respect to statements relating to loan demand, growth and earnings
potential, geographic expansion and the adequacy of the allowance
for loan losses for the Company, these factors include, but are not
limited to, the rate of growth (or lack thereof) in the economy
generally and in the Bank’s and ALC’s service areas, the
availability of quality loans in the Bank’s and ALC’s service
areas, the relative strength and weakness in the consumer and
commercial credit sectors and in the real estate markets and
collateral values. There can be no assurance that such factors or
other factors will not affect the accuracy of such forward-looking
statements.
UNITED SECURITY BANCSHARES, INC. AND
SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in Thousands, Except Share and
Per Share Data)
June 30, December 31, 2015 2014
(Unaudited) ASSETS Cash and due from banks $ 9,227 $
9,697 Interest-bearing deposits in banks 15,826
24,469 Total cash and cash equivalents 25,053 34,166
Investment securities available-for-sale, at fair value 202,247
204,966 Investment securities held-to-maturity, at amortized cost
43,929 29,120 Federal Home Loan Bank stock, at cost 740 738 Loans,
net of allowance for loan losses of $5,008 and $6,168, respectively
244,993 259,516 Premises and equipment, net 10,929 9,764 Cash
surrender value of bank-owned life insurance 14,133 13,975 Accrued
interest receivable 1,931 2,235 Other real estate owned 7,168 7,735
Other assets 9,527 10,394 Total assets
$ 560,650 $ 572,609
LIABILITIES AND
SHAREHOLDERS’ EQUITY Deposits $ 471,141 $ 483,659 Accrued
interest expense 198 221 Other liabilities 7,543 8,131 Short-term
borrowings 985 436 Long-term debt 5,000 5,000
Total liabilities 484,867 497,447
Shareholders’ equity: Common stock, par value $0.01
per share, 10,000,000 shares authorized;
7,329,060 shares issued; 6,034,059 shares
outstanding
73 73 Surplus 9,691 9,577 Accumulated other comprehensive income,
net of tax 968 1,829 Retained earnings 85,950 84,582 Less treasury
stock: 1,295,001 shares at cost (20,886 ) (20,886 ) Noncontrolling
interest (13 ) (13 ) Total shareholders’
equity 75,783 75,162 Total
liabilities and shareholders’ equity $ 560,650 $ 572,609
UNITED SECURITY BANCSHARES, INC. AND
SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share
Data)
Three Months Ended Six Months Ended June
30, June 30, 2015 2014 2015
2014 (Unaudited) (Unaudited) Interest income:
Interest and fees on loans $ 6,520 $ 6,845 $ 12,655 $ 13,642
Interest on investment securities 1,215 1,085
2,401 2,134 Total interest income 7,735 7,930
15,056 15,776 Interest expense: Interest on deposits 557 617
1,164 1,254 Interest on borrowings 8 13
15 21 Total interest expense 565 630
1,179 1,275 Net interest income
7,170 7,300 13,877 14,501
Provision (reduction in reserve) for loan
losses
45
(264
)
(121
)
150
Net interest income after provision
(reduction in reserve) for loan losses
7,125
7,564
13,998
14,351
Non-interest income:
Service and other charges on deposit
accounts
472
491
926
991
Credit insurance income 114 93 189 233 Other income 482
901 1,244 1,408 Total
non-interest income 1,068 1,485 2,359 2,632 Non-interest
expense: Salaries and employee benefits 4,215 4,141 8,407 8,223 Net
occupancy and equipment 780 775 1,603 1,590 Other real
estate/foreclosure expense, net 347 325 567 425 Other expense
1,765 1,982 3,507 3,869
Total non-interest expense 7,107 7,223
14,084 14,107 Income before income taxes 1,086
1,826 2,273 2,876 Provision for income taxes 312 608
663 884 Net income $ 774 $ 1,218
$ 1,610 $ 1,992 Basic net income per share $ 0.13 $ 0.20
$ 0.26 $ 0.33 Diluted net income per share $ 0.12 $
0.20 $ 0.25 $ 0.33 Dividends per share $ 0.02 $ -
$ 0.04 $ -
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version on businesswire.com: http://www.businesswire.com/news/home/20150729006152/en/
United Security Bancshares, Inc.Thomas S. Elley,
334-636-5424
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