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
October 16, 2012
Date of Report (Date of earliest event reported)
UNITED SECURITY BANCSHARES
(Exact Name of Registrant as Specified in its Charter)
California
(State or Other Jurisdiction of Incorporation)
000-32987 | 91-2112732 |
(Commission | (IRS Employer |
File Number) | Identification No.) |
2126 Inyo Street, Fresno, CA | 93721 |
(Address of Principal Executive Office) | (Zip Code) |
559-248-4943
(Registrant's Telephone Number, Including Area Code)
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:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a12 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 16, 2012, United Security Bancshares issued a press release reporting its financial results for the quarter ended September 30, 2012. A copy of such press release is attached, and incorporated herein by reference as Exhibit 99.1
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
EXHIBIT #
99.1 Press release of United Security Bancshares dated October 16, 2012
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.
United Security Bancshares | ||
Date: October 16, 2012 | By: | /s/ Richard Shupe |
Senior Vice President & | ||
Chief Financial Officer |
EXHIBIT INDEX
EXHIBIT # | DESCRIPTION | |
99.1 | Press release of United Security Bancshares dated September 30, 2012 |
United Security Bancshares - Third Quarter Profits: $1.4 Million
FRESNO, Calif., Oct. 16, 2012 /PRNewswire/ -- United Security Bancshares (http://www.unitedsecuritybank.com) (Nasdaq Global Select: UBFO) reported today unaudited consolidated net income of $1.4 million or $0.10 per basic and diluted common share for the quarter ended September 30, 2012 and $4.6 million or $.33 per basic and diluted common share for the nine months ended September 30, 2012, as compared to a net loss of $1.5 million or ($0.10) per basic and diluted common shares for the quarter ended September 30, 2011 and a net loss of $7.5 million or ($.53) per basic and diluted shares for the nine months ended September 30, 2011.
Annualized return on average equity (ROAE) for the quarter ended September 30, 2012 was 8.72%, compared to (29.58%) for the same period in 2011, and was 9.82% for the nine months ended September 30, 2012 compared to (13.68)% for the nine months ended September 30, 2011. Annualized return on average assets (ROAA) was .87% for the three months ended September 30, 2012 compared to (2.98%) for the same three-month period in 2011, and was 0.99% for the nine months ended September 30, 2012 compared to (1.50%) for the nine months ended September 30, 2011.
The Board of Directors of United Security Bancshares declared a thirdquarter 2012 stock dividend of one percent (1%) on September 26, 2012. The stock dividend was payable to shareholders of record on October 12, 2012, and the shares will be issued on October 24, 2012.
Dennis R. Woods, President and Chief Executive Officer of the Company, states, "We continue to see positive trends that are in alignment with the continued improvement in the weak economy and depressed real estate values." Shareholders' equity at September 30, 2012 was $67.7 million, up $5.0 million from shareholders' equity of $62.2 million at December 31, 2011.
Net interest income before provision for credit losses for the quarter ended September 30, 2012 totaled $5.6 million and $17.7 million for the nine months ended September 30, 2012, down just $618,000 from $6.2 million reported for the quarter ended September 30, 2011 and down $1.1 million from the $18.7 million reported for the nine months ended September 30, 2011, respectively. The net interest margin was 4.23% for the quarter ended September 30, 2012, and 4.53% for the nine months ended September 30, 2012, as compared to 4.42% for the quarter ended September 30, 2011 and 4.45% for the nine months ended September 30, 2011. The Company continues to benefit from decreasing costs on interest-bearing liabilities.
Noninterest income for the quarter ended September 30, 2012 totaled $1.1 million, reflecting a decrease of $2.2 million from the $3.3 million in noninterest income reported for the quarter ended September 30, 2011. Noninterest income for the nine months ended September 30, 2012 totaled $5.6 million, reflecting an increase of $33,000 from $5.6 million in noninterest income reported for the nine months ended September 30, 2011.Customer service fees continue to provide the majority of the Company's noninterest income from operations, totaling $902,000 for the quarter ended September 30, 2012, as compared to $956,000 for the quarter ended September 30, 2011, and $2.7 million for the nine months ended September 30, 2012 and 2011. Changes in noninterest income on a quarter-to-quarter comparative basis between the third quarters of 2012 and 2011 are largely the result of a decrease of $2.1 million in gains recognized on the fair value of financial liabilities.. On a nine month comparative basis, the change in noninterest income of $33,000 includes an increase of $1.8 million on gains realized on the sale of investments and an increase of $515,000 on gains realized on the sale of other real estate owned, offset by a decrease of $2.1 million in gains recognized on the fair value of financial liabilities. The gain on sale of investments of $1.8 million for the nine months ended September 30, 2012 is included in other non interest income.
Noninterest expense totaled $4.6 million for the quarter ended September 30, 2012, down $3.5 million from the $8.1 million reported for the quarter ended September 30, 2011. For the nine months ended September 30, 2012, noninterest expense totaled $15.0 million as down $7.4 million from the $22.4 million for the nine months ended September 30, 2011. Between the third quarters of 2012 and 2011 , the company experienced significant decreases in impairment losses on investment securities, impairment losses on other real estate owned, other real estate owned expenses, and professional fees. On a nine month comparative basis, additional decreases in the above listed areas as well as decreases in impairment losses on goodwill, and regulatory assessments contributed to the overall decrease.
The Company had a provision for loan loss reserve of $4,000 for the quarter ended September 30, 2012 and $1.0 million for the nine months ended September 30, 2012, compared to $2.4 million for the quarter ended September 30, 2011 and $12.5 million for the nine months ended September 30, 2011. Net loan charge-offs totaled $456,000 for the quarter ended September 30, 2012 and $3.5 million for the nine months ended September 30, 2012 as compared to $2.3 million for the quarter ended September 30, 2011, and $15.1 million for the nine months ended September 30, 2011. With continued weakness in the economy and real estate markets within our service area, we have maintained an adequate allowance for loan losses which totaled 2.97% of total loans at September 30, 2012 compared to 2.94% of total loans at June 30, 2012 and 3.34% at December 31, 2011. In determining the adequacy of the allowance for loan losses, Management's judgment is the primary determining factor for establishing the amount of the provision for loan losses and management considers the allowance for loan and lease losses September 30, 2012 to be adequate.
Non-performing assets, comprised of nonaccrual loans, troubled debt restructures (TDR), other real estate owned through foreclosure (OREO), and loans more than 90 days past days and still accruing interest, decreased approximately $17.8 million between December 31, 2011 and September 30, 2012. Additionally, nonperforming assets as a percentage of total assets decreased from 8.77% at December 31, 2011 to 6.20% at September 30, 2012. Nonaccrual loans decreased $7.6 million between December 31, 2011 and September 30, 2012, while OREO, decreased $3.6 million during the same period. Impaired loans totaled $21.1 million at September 30, 2012, down $10.7 million from the balance of $31.9 million at December 31, 2011.
United Security Bancshares is a $600+ million bank holding company. United Security Bank, its principal subsidiary is a state chartered bank and member of the Federal Reserve Bank of San Francisco.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and the Company intends such statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the Company's possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the Company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include (1) changes in interest rates, (2) significant changes in banking laws or regulations, (3) increased competition in the company's market, (4) other-than-expected credit losses, (5) earthquake or other natural disasters impacting the condition of real estate collateral, (6) the effect of acquisitions and integration of acquired businesses, (7) the impact of proposed and/or recently adopted changes in laws, and regulations on the Company and its business; (8) changing bank regulatory conditions, policies, whether arising as new legislation or regulatory initiatives or changes in our regulatory classifications, that could lead to restrictions on activities of banks generally or as to the Bank, including specifically the formal order between the Federal Reserve Bank of San Francisco and the Company and the Bank, (9) failure to comply with the regulatory agreement under which the Company is subject and (10) unknown economic impacts caused by the State of California's budget issues. Management cannot predict at this time the severity or duration of the effects of the recent business slowdown on our specific business activities and profitability. Weaker or a further decline in capital and consumer spending, and related recessionary trends could adversely affect our performance in a number of ways including decreased demand for our products and services and increased credit losses. Likewise, changes in interest rates, among other things, could slow the rate of growth or put pressure on current deposit levels and affect the ability of borrowers to repay loans. Forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made, or to update earnings guidance including the factors that influence earnings. For a more complete discussion of these risks and uncertainties, see the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and particularly the section of Management's Discussion and Analysis. Readers should carefully review all disclosures we file from time to time with the Securities and Exchange Commission ("SEC").
United Security Bancshares | |||
Consolidated Balance Sheets | |||
(dollars in thousands) | |||
September 30, | December 31, | ||
2012 | 2011 | ||
Assets | |||
Cash and noninterest-bearing deposits in other banks | $21,859 | $28,052 | |
Cash and due from Federal Reserve Bank | 119,661 | 96,132 | |
Federal funds sold | 0 | 0 | |
Cash and cash equivalents | 141,520 | 124,184 | |
Interest-bearing deposits in other banks | 1,506 | 2,187 | |
Investment securities (AFS at market value) | 42,157 | 38,458 | |
Loans and leases, net of unearned fees | 375,690 | 408,146 | |
Less: Allowance for credit losses | (11,160) | (13,648) | |
Net loans | 364,530 | 394,498 | |
Premises and equipment - net | 12,495 | 12,675 | |
Bank owned life insurance | 16,552 | 16,150 | |
Intangible assets | 4,792 | 5,041 | |
Other real estate owned | 23,487 | 27,091 | |
Deferred Income Taxes | 10,862 | 11,485 | |
Other assets | 15,730 | 19,563 | |
Total assets | $633,631 | $651,332 | |
Deposits: | |||
Noninterest bearing demand and NOW | $212,699 | $224,907 | |
Money market and savings | 228,995 | 206,036 | |
Time | 109,362 | 143,484 | |
Total deposits | 551,056 | 574,427 | |
Borrowed funds | 0 | 0 | |
Other liabilities | 5,386 | 5,705 | |
Junior subordinated debentures (at fair value) | 9,515 | 9,027 | |
Total liabilities | 565,957 | 589,159 | |
Shareholders' equity: | |||
Common shares outstanding: | |||
13,941,844 at September 30, 2012 | 42,432 | 41,435 | |
Retained earnings | 25,054 | 21,447 | |
Accumulated other comprehensive loss | 188 | (709) | |
Total shareholders' equity | 67,674 | 62,173 | |
Total liabilities and shareholders' equity | $633,631 | $651,332 |
United Security Bancshares | ||||
(dollars in 000s, except per share amounts) | ||||
Three Months Ended September 30, | Three Months Ended September 30, | Nine months ended September 30, | Nine months ended September 30, | |
2012 | 2011 | 2012 | 2011 | |
Interest income: | ||||
Interest and fees on loans | $5,670 | $6,378 | $17,678 | $19,235 |
Interest on investment securities | 397 | 507 | 1,375 | 1,644 |
Interest on deposits in FRB | 62 | 43 | 157 | 137 |
Interest on deposits in other banks | 2 | 9 | 22 | 29 |
Total interest income | 6,131 | 6,937 | 19,232 | 21,045 |
Interest expense: | ||||
Interest on deposits | 441 | 615 | 1,356 | 2,051 |
Interest on other borrowed funds | 68 | 82 | 207 | 250 |
Total interest expense | 509 | 697 | 1,563 | 2,301 |
Net interest income before provision for credit losses | 5,622 | 6,240 | 17,669 | 18,744 |
Provision for credit losses | 4 | 2,446 | 1,010 | 12,497 |
Net interest income | 5,618 | 3,794 | 16,659 | 6,247 |
Noninterest income: | ||||
Customer service fees | 902 | 956 | 2,700 | 2,717 |
Increase in cash surrender value of | ||||
bank owned life insurance | 147 | 143 | 427 | 424 |
Gain (Loss) on sale of other real estate owned | 49 | (85) | 386 | (129) |
Gain (loss) on Fair Value Option of Financial Assets | (171) | 1,923 | (284) | 1,778 |
Other noninterest income | 208 | 353 | 2,396 | 802 |
Total noninterest income | 1,135 | 3,290 | 5,625 | 5,592 |
Noninterest expense: | ||||
Salaries and employee benefits | 2,078 | 2,263 | 6,676 | 6,804 |
Occupancy expense | 1,004 | 864 | 2,608 | 2,666 |
Professional fees | 408 | 642 | 1,092 | 2,061 |
Regulatory insurance assessments | 275 | 366 | 1,058 | 1,354 |
Impairment losses and other expenses on OREO | 0 | 885 | 0 | 2,007 |
Impairment losses on goodwill and intangible assets | 0 | 0 | 0 | 1,525 |
Impairment losses on investment securities | 113 | 308 | 284 | 308 |
Other noninterest expense | 731 | 2,815 | 3,285 | 5,715 |
Total noninterest expense | 4,609 | 8,143 | 15,003 | 22,440 |
Income before income tax provision | 2,144 | (1,059) | 7,281 | (10,601) |
Provision (benefit) for income taxes | 778 | 401 | 2,690 | (3,148) |
Net Income | $1,366 | ($1,460) | 4,591 | ($7,453) |
United Security Bancshares | ||||
Selected Financial Data (Quarters Unaudited) | ||||
(dollars in 000s, except per share amounts) | ||||
Three months Ended September 30, | Three months Ended September 30, | Nine months ended September 30, | Nine months ended September 30, | |
2012 | 2011 | 2012 | 2011 | |
Basic earnings per share | $0.10 | ($0.10) | $0.33 | ($0.53) |
Diluted earnings per share | $0.10 | ($0.10) | $0.33 | ($0.53) |
Weighted average basic shares for EPS | 13,941,844 | 13,941,844 | 13,941,844 | 13,941,844 |
Weighted average diluted shares for EPS | 13,941,844 | 13,941,844 | 13,941,844 | 13,941,844 |
Annualized return on: | ||||
Average assets | .87% | (2.98%) | .99% | (1.50%) |
Average equity | 8.72% | (29.58%) | 9.82% | (13.68%) |
Yield on interest-earning assets | 5.09% | 4.90% | 4.93% | 5.00% |
Cost of interest-bearing liabilities | 0.65% | 0.69% | .62% | 0.74% |
Net interest margin | 4.23% | 4.42% | 4.53% | 4.45% |
Annualized net charge-offs to average loans | .46% | 7.84% | 1.19% | 4.67% |
September 30, | December 31, | |||
2012 | 2011 | |||
Shares outstanding - period end | 13,941,844 | 13,941,844 | ||
Book value per share | $4.85 | $4.46 | ||
Tangible book value per share | $4.51 | $4.10 | ||
Efficiency ratio | 68.22% | 96.63% | ||
Total nonperforming assets | $39,305 | $57,148 | ||
Nonperforming assets to total assets | 6.20% | 8.77% | ||
Total Impaired loans | $21,143 | $31,882 | ||
Total nonaccrual loans | $10,462 | $18,098 | ||
Allowance for loan losses to total loans | 2.97% | 3.34% | ||
CONTACT: Dennis R. Woods, President and Chief Executive Officer of United Security Bank, +1-559-248-4928