UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report (Date of
earliest event reported): October 28, 2015
UNITED
SECURITY BANCSHARES, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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0-14549
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63-0843362
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer
Identification Number)
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131 West Front Street, P.O. Box 249, Thomasville, Alabama 36784
(Address
of principal executive offices, including zip code)
(334)
636-5424
(Registrant’s telephone number, including area code)
N/A
(Former
name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 28, 2015, United Security Bancshares, Inc. issued a press
release announcing financial results for the third quarter ended
September 30, 2015. The press release is attached as Exhibit 99.1 to
this Form 8-K and is furnished to, but not filed with, the Commission.
Item 9.01 Financial Statements and Exhibits.
(d)
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Exhibits.
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Exhibit Number
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Exhibit
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99.1
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Press Release dated October 28, 2015
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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UNITED SECURITY BANCSHARES, INC.
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By:
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/s/ Thomas S. Elley
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Name:
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Thomas S. Elley
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Vice President, Treasurer and Assistant Secretary,
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Chief Financial Officer and Principal Accounting Officer
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Dated:
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October 28, 2015
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INDEX TO EXHIBITS
Exhibit Number
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Exhibit
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99.1
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Press Release dated October 28, 2015*
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*This exhibit is furnished to, but not filed with, the Commission by
inclusion herein.
Exhibit 99.1
United
Security Bancshares, Inc. Reports Third Quarter Results
Reports
Continued Reductions in Non-Performing Assets
THOMASVILLE, Ala.--(BUSINESS WIRE)--October 28, 2015--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.
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UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES
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INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
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(Dollars in Thousands, Except Share and Per Share Data)
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September 30,
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December 31,
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2015
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|
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2014
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(Unaudited)
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ASSETS
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Cash and due from banks
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$
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8,496
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$
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9,697
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Interest-bearing deposits in banks
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19,120
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24,469
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Total cash and cash equivalents
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27,616
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34,166
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Investment securities available-for-sale, at fair value
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204,719
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204,966
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Investment securities held-to-maturity, at amortized cost
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34,290
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29,120
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Federal Home Loan Bank stock, at cost
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|
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515
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738
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Loans, net of allowance for loan losses of $4,345 and $6,168,
respectively
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|
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237,715
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|
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259,516
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Premises and equipment, net
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11,708
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9,764
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Cash surrender value of bank-owned life insurance
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|
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14,213
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13,975
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Accrued interest receivable
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|
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1,790
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|
|
|
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2,235
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Other real estate owned
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|
|
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6,656
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|
|
|
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7,735
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Other assets
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9,315
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|
|
|
|
10,394
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Total assets
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$
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548,537
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$
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572,609
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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|
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Deposits
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|
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$
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463,266
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|
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$
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483,659
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Accrued interest expense
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|
|
|
189
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|
|
|
|
221
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|
Other liabilities
|
|
|
|
7,624
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|
|
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|
8,131
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Short-term borrowings
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|
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1,175
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|
|
|
|
436
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Long-term debt
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|
|
|
-
|
|
|
|
|
5,000
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|
Total liabilities
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|
|
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472,254
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|
|
|
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497,447
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Shareholders’ equity:
|
|
|
|
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|
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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
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|
|
|
73
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|
|
|
|
73
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|
Surplus
|
|
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|
9,768
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|
|
|
|
9,577
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Accumulated other comprehensive income, net of tax
|
|
|
|
899
|
|
|
|
|
1,829
|
|
Retained earnings
|
|
|
|
86,373
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|
|
|
|
84,582
|
|
Less treasury stock: 1,290,506 and 1,295,001 shares at cost,
respectively
|
|
|
|
(20,817
|
)
|
|
|
|
(20,886
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)
|
Noncontrolling interest
|
|
|
|
(13
|
)
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
Total shareholders’ equity
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|
|
|
76,283
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|
|
|
|
75,162
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|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
548,537
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|
|
|
$
|
572,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARIES
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Dollars in Thousands, Except Per Share Data)
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|
|
|
|
|
|
|
|
|
|
|
|
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Three Months Ended
|
|
|
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Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
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September 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
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|
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2014
|
|
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(Unaudited)
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|
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(Unaudited)
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Interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans
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|
|
|
$
|
6,160
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|
|
|
$
|
6,786
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|
|
|
|
$
|
18,815
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|
|
|
$
|
20,428
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Interest on investment securities
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|
|
|
|
1,168
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|
|
|
|
1,113
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|
|
|
|
|
3,569
|
|
|
|
|
3,247
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Total interest income
|
|
|
|
|
7,328
|
|
|
|
|
7,899
|
|
|
|
|
|
22,384
|
|
|
|
|
23,675
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
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|
|
|
|
1,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
6,767
|
|
|
|
|
7,257
|
|
|
|
|
|
20,644
|
|
|
|
|
21,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (reduction in reserve) for loan losses
|
|
|
|
|
(78
|
)
|
|
|
|
(55
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)
|
|
|
|
|
(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
|
CONTACT:
United Security Bancshares, Inc.
Thomas S. Elley,
334-636-5424
First US Bancshares (NASDAQ:FUSB)
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First US Bancshares (NASDAQ:FUSB)
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