Reports Continued Reductions in
Non-Performing Assets
United Security Bancshares, Inc. (Nasdaq: USBI) today reported
net income of $544,000, or $0.09 per diluted share, for the third
quarter ended September 30, 2015, compared with net income of
$837,000, or $0.13 per diluted share, for the third quarter of
2014. Net income for the first nine months of 2015 was $2.2
million, or $0.34 per diluted share, compared with $2.8 million, or
$0.46 per diluted share, for the first nine months of 2014.
“We have made progress in improving asset quality since last
year, as highlighted by a 34.8% decrease in non-performing assets,
including a $3.7 million decrease in other real estate owned,
compared with last year’s third quarter,” said James F. House,
President and CEO of United Security Bancshares, Inc. “Improved
asset quality was also reflected in a reduction in reserves for
loan losses compared with last year. We expect that continued
progress in reducing non-performing assets, combined with
generating quality loans, will contribute to future growth in
earnings.”
“Third quarter earnings were below last year’s results due
primarily to decreased loan volume at First US Bank. Part of the
decrease was due to the soft economy in many of our rural service
areas; however, a significant portion of the decrease resulted from
the resolution of problem assets and the migration of loans off the
balance sheet that did not meet the Bank’s current credit
standards. The net amount of loans meeting these criteria that were
moved off the balance sheet through payoff, charge-off or transfer
to other real estate totaled approximately 53% of net loan
reductions at the Bank during the 12-month period ended September
30, 2015.”
“As we improve the credit quality of the Bank’s loan portfolio,
we are able to focus more effort on quality asset generation. We
are taking steps to expand our loan production capabilities with
the recent opening of our new branch on University Boulevard in
downtown Tuscaloosa. Our consumer loan subsidiary, Acceptance Loan
Company (ALC), is attracting new business through partnerships with
prominent retailers, which has contributed to growth in consumer
loans. We are also focused on growing loans at the Bank in
contiguous metropolitan markets that have greater potential for
commercial loan growth. United Security has a very strong capital
base, and we are in excellent position to support future loan
growth.”
“We also continue to improve operating efficiencies to better
serve customers in the future. In October, we completed the
consolidation of all operational departments in our newly-renovated
existing main office building in Thomasville, including moving loan
operations, internal audit, compliance, collections, human
resources, and marketing departments to this location. With these
moves, we have created a primary bank operations center that we
believe will enable us to gain significant operating efficiencies
over time. In addition, we are increasing investment in our
information technology infrastructure to improve customer service
and provide a platform for future growth. We believe that these
changes will enhance the Company’s ability to compete and grow
business in new and existing markets,” continued Mr. House.
Third Quarter Results
Net income totaled $544,000, or $0.09 per diluted share, for the
third quarter ended September 30, 2015, compared with net income of
$837,000, or $0.13 per diluted share, for the third quarter of
2014.
Interest income totaled $7.3 million in the third quarter of
2015, compared with $7.9 million in the third quarter of 2014. The
decrease in interest income was due primarily to a decrease in
total loans, offset partially by higher interest income from
investment securities.
Interest expense decreased 12.6% to $561,000 in the third
quarter of 2015, compared with $642,000 in the third quarter of
2014. The decrease resulted primarily from a decline in
interest-bearing deposits and lower interest rates paid.
Net interest income was $6.8 million in the third quarter of
2015, compared with $7.3 million in the third quarter of
2014. The decrease in net interest income was due to a decrease in
loans combined with a 29 basis point decrease in net interest
margin. Net interest margin was 5.27% in the third quarter of 2015,
compared with 5.56% in the third quarter of 2014. The decrease 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 decreased to $237.7 million as of September 30, 2015,
compared with $265.2 million at September 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,
which accounted for 34% of net loans in the third quarter. 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 a credit of $78,000 in the third
quarter of 2015, compared to a credit of $55,000 in the third
quarter of 2014. The reduction in the provision resulted primarily
from recoveries of loans previously charged off and improvement in
the credit quality of several loan relationships. Net charge-offs
totaled approximately $586,000 in the third quarter of 2015,
compared with net charge-offs of approximately $201,000 in the
third quarter of 2014.
Total non-interest income decreased to $996,000 in the third
quarter of 2015, compared with $1.2 million in the third quarter of
2014. The decrease in non-interest income was due to lower service
charges, credit life insurance income, and other income.
Total non-interest expense decreased 2.1% to $7.1 million in the
third quarter of 2015, compared with $7.2 million in the third
quarter of 2014. The decrease in non-interest expense resulted from
lower salaries and employee benefits expense and net occupancy and
equipment expense. The reduction in salaries and employee benefits
expense resulted primarily from reduced levels of management
incentive expenses, including non-cash expenses associated with
stock options. The overall decrease in non-interest expense was
offset partially by a $23,000 increase in other real
estate/foreclosure expense and a $160,000 increase in other
expense.
As of September 30, 2015, both the common equity Tier 1 capital
and Tier 1 risk-based capital ratios were 23.76% for the Bank. The
Bank’s total capital ratio was 25.02%, and the Tier 1 leverage
ratio was 13.02%. Each of these ratios is higher than the ratios
required in order to be considered a “well-capitalized” institution
under the applicable regulatory capital framework.
Nine Months Results
For the first nine months of 2015, net income was $2.2 million,
or $0.34 per diluted share, compared with $2.8 million, or $0.46
per diluted share, for the first nine months of 2014. The decrease
in earnings for the first nine 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.
For the nine months ended September 30, 2015, net interest
income was $20.6 million, compared with $21.8 million for the
same period of 2014. Net interest margin decreased to 5.34% for the
first nine months of 2015 from 5.58% in the first nine months of
2014.
Provision for loan losses was a credit of $199,000 in the first
nine months of 2015, compared with a charge of $95,000 in the first
nine months of 2014.
Non-interest income decreased to $3.4 million for the first nine
months of 2015, compared with $3.8 million for the same period of
2014. The decrease was due to lower service charges, credit life
insurance and other income compared with the first nine months of
2014. Other income in the first nine months of 2014 included
$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 same period of 2015. The resulting
decrease in other income was partially offset by gains realized on
the sale of investment securities, which were $267,000 higher in
the first nine months of 2015, as compared to the same period of
2014.
Non-interest expense decreased 0.8% to $21.2 million in the
first nine months of 2015, compared with $21.3 million in the first
nine months of 2014. The decrease in non-interest expense was due
primarily to a $69,000 decrease in salaries and benefits expense, a
$69,000 decrease in occupancy and equipment expense, and a $202,000
decrease in other expense. These decreases were partially offset by
other real estate/foreclosure expense, which increased $165,000
compared with the first nine months of 2014.
Shareholders’ equity increased to $76.3 million, or $12.63 per
share, at September 30, 2015, compared with $75.2
million, or $12.45 per share, at December 31, 2014, and $73.9
million, or $12.25 per share, at September 30, 2014. The increase
in shareholders’ equity in the first nine months of 2015 resulted
from continued growth in retained earnings, offset partially by a
$930,000 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 in the third
quarter of 2014 and declared a cash dividend of $0.02 per share on
its common stock in each of the first, second and third quarters of
2015, an increase from the $0.01 per share dividend declared in the
third quarter of 2014.
About United Security Bancshares, Inc.
United Security Bancshares, Inc. is a bank holding company that
operates twenty 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)
September 30,
December 31,
2015 2014 (Unaudited) ASSETS Cash and
due from banks $ 8,496 $ 9,697 Interest-bearing deposits in banks
19,120 24,469 Total cash and cash
equivalents 27,616 34,166 Investment securities available-for-sale,
at fair value 204,719 204,966 Investment securities
held-to-maturity, at amortized cost 34,290 29,120 Federal Home Loan
Bank stock, at cost 515 738 Loans, net of allowance for loan losses
of $4,345 and $6,168, respectively 237,715 259,516 Premises and
equipment, net 11,708 9,764 Cash surrender value of bank-owned life
insurance 14,213 13,975 Accrued interest receivable 1,790 2,235
Other real estate owned 6,656 7,735 Other assets 9,315
10,394 Total assets $ 548,537 $ 572,609
LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits
$ 463,266 $ 483,659 Accrued interest expense 189 221 Other
liabilities 7,624 8,131 Short-term borrowings 1,175 436 Long-term
debt - 5,000 Total liabilities
472,254 497,447 Shareholders’ equity:
Common stock, par value $0.01 per share,
10,000,000 shares authorized; 7,329,060 shares issued; 6,038,554
and 6,034,059 shares outstanding, respectively
73 73 Surplus 9,768 9,577 Accumulated other comprehensive income,
net of tax 899 1,829 Retained earnings 86,373 84,582 Less treasury
stock: 1,290,506 and 1,295,001 shares at cost, respectively (20,817
) (20,886 ) Noncontrolling interest (13 ) (13 )
Total shareholders’ equity 76,283
75,162 Total liabilities and shareholders’ equity $
548,537 $ 572,609
UNITED SECURITY BANCSHARES, INC. AND
SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30, 2015
2014 2015 2014
(Unaudited) (Unaudited) Interest income: Interest and
fees on loans $ 6,160 $ 6,786 $ 18,815 $ 20,428 Interest on
investment securities 1,168 1,113
3,569 3,247 Total interest income 7,328 7,899
22,384 23,675 Interest expense: Interest on deposits 557 640
1,721 1,894 Interest on borrowings 4 2
19 23 Total interest expense 561
642 1,740 1,917 Net
interest income 6,767 7,257 20,644 21,758 Provision
(reduction in reserve) for loan losses (78 ) (55 )
(199 ) 95
Net interest income after provision
(reduction in reserve) for loan losses
6,845
7,312
20,843
21,663
Non-interest income:
Service and other charges on deposit
accounts
465
581
1,391
1,572
Credit insurance income 150 190 339 423 Other income 381
409 1,625 1,817 Total
non-interest income 996 1,180 3,355 3,812 Non-interest
expense: Salaries and employee benefits 4,106 4,359 12,513 12,582
Net occupancy and equipment 744 826 2,347 2,416 Other real
estate/foreclosure expense, net 247 224 814 649 Other expense
1,993 1,833 5,500
5,702 Total non-interest expense 7,090 7,242
21,174 21,349 Income before
income taxes 751 1,250 3,024 4,126 Provision for income taxes
207 413 870 1,297
Net income $ 544 $ 837 $ 2,154 $ 2,829 Basic
net income per share $ 0.09 $ 0.14 $ 0.35 $
0.46 Diluted net income per share $ 0.09 $ 0.13 $
0.34 $ 0.46 Dividends per share $ 0.02 $ 0.01
$ 0.06 $ 0.01
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version on businesswire.com: http://www.businesswire.com/news/home/20151028006545/en/
United Security Bancshares, Inc.Thomas S. Elley,
334-636-5424
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