-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T4FRG5fY8qdvbSqm6gI0leE5mZkKY0T7OYsKj3cQvbp7hsaPcIA2enjbKXzQp+51 tFF+DWfAzKM7gPQQ/KGR3w== 0000726990-96-000004.txt : 19960502 0000726990-96-000004.hdr.sgml : 19960502 ACCESSION NUMBER: 0000726990-96-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960501 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED SECURITY BANCORPORATION CENTRAL INDEX KEY: 0000726990 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 911259511 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-18561 FILM NUMBER: 96554747 BUSINESS ADDRESS: STREET 1: 9506 N NEWPORT HWY CITY: SPOKANE STATE: WA ZIP: 99218 BUSINESS PHONE: 5094676949 MAIL ADDRESS: STREET 1: 9506 N NEWPORT HWY CITY: SPOKANE STATE: WA ZIP: 99218 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) ( X ) Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 ( ) Transition report under Section 13 or 15 (d) of the Exchange Act For the transition period from to Commission file number 000 - 18561 UNITED SECURITY BANCORPORATION (Exact Name of Small Business Issuer as Specified in Its Charter) Washington 91-1259511 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 9506 North Newport Highway, Spokane, WA 99218-1200 (Address of Principal Executive Offices) (509) 467-6949 (Issuer's Telephone Number, Including Area Code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The issuer has one class of capital stock, that being common stock. On May 1, 1996, there were 3,332,310 shares of such stock outstanding. 1 2 UNITED SECURITY BANCORPORATION QUARTERLY REPORT ON FORM 10-QSB March 31, 1996 Table of Contents
Page Part I Financial Information Item 1. Financial Statements Consolidated Statements of Condition - March 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . 3 Consolidated Statements of Income - Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . 4 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 1996 and 1995 . . . . 5 Notes to Consolidated Financial Statements . . . . 6-7 Item 2. Management's Discussion and Analysis or Plan of Operation . . . . . . . . . . . . . . . . . . . . . 8-9 Part II Other Information Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 10 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2 3 UNITED SECURITY BANCORPORATION CONSOLIDATED STATEMENTS OF CONDITION ($ in thousands)
March 31, December 31, 1996 1995 ASSETS (Audited) Cash and due from banks $ 7,254 $ 7,889 Overnight interest bearing deposits with other banks 10,043 4,337 Federal funds sold 5,810 3,355 --------- - - -------- Cash and cash equivalents 23,107 15,581 Securities available-for-sale (Note 2) 22,499 22,036 Securities held-to-maturity (Note 2) 631 365 Loans, net of allowance for loan losses of $1,465 in 1996 and $1,391 in 1995 (Notes 3 and 4) 152,047 141,861 Accrued interest receivable 1,862 1,635 Premises and equipment, net 6,356 6,383 Foreclosed real estate 351 370 Life insurance and salary continuation assets 2,343 2,315 Other assets 1,196 1,267 --------- - - -------- Total Assets $ 210,392 $ 191,813 ========= ========= LIABILITIES DEPOSITS Noninterest bearing - demand deposits $ 27,283 $ 25,643 Interest bearing: NOW and savings accounts 66,141 59,044 Time, $100,000 and over 21,283 21,693 Other time 64,268 57,411 --------- - - -------- TOTAL DEPOSITS 178,975 l63,791 Accrued interest payable 627 580 Note payable (Note 5) 2,523 Capital lease obligations 763 767 Other liabilities 2,037 1,812 --------- - - -------- TOTAL LIABILITIES 184,925 166,950 STOCKHOLDERS' EQUITY Common stock, no par, 5,000,000 shares authorized; issued and outstanding 3,332,310 20,830 20,837 Retained earnings 4,953 4,114 Net unrealized loss on securities available- for-sale, net of tax of $162 in 1996 and $45 for 1995 (316) (88) --------- - - -------- TOTAL STOCKHOLDERS' EQUITY 25,467 24,863 --------- - - -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 210,392 $ 191,813 ========= =========
The accompanying notes are an integral part of these statements. 3 4 UNITED SECURITY BANCORPORATION CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1996 AND 1995 ($ in thousands, except per share)
1996 1995 INTEREST INCOME Interest and fees on loans and leases $ 4,278 $ 3,338 Interest on securities 386 338 Other interest income 140 95 ------- - - ------ TOTAL INTEREST INCOME 4,804 3,771 ------- - - ------ INTEREST EXPENSE Interest on deposits 1,860 1,650 Interest on notes and capital leases 62 37 ------- - - ------ TOTAL INTEREST EXPENSE 1,922 1,687 ------- - - ------ NET INTEREST INCOME 2,882 2,084 Provision for loan losses (Note 4) 146 142 ------- - - ------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,736 1,942 ------- - - ------ NONINTEREST INCOME Fees and service charges 199 186 Insurance commissions 303 320 Securities gains/losses 51 12 Other 166 152 ------- - - ------ TOTAL NONINTEREST INCOME 719 670 ------- - - ------ NONINTEREST EXPENSE Salaries and employee benefits 1,418 927 Occupancy expense, net 154 77 Equipment expense 191 111 Amortization on noncompete agreements 6 43 FDIC assessments 1 89 State business and occupation tax 67 57 Other operating expense 316 405 ------- - - ------ TOTAL NONINTEREST EXPENSE 2,153 1,709 ------- - - ------ INCOME BEFORE TAXES 1,302 903 FEDERAL INCOME TAX EXPENSE 463 361 ------- - - ------ NET INCOME $ 839 $ 542 ======= ======= Earnings per common share $ .25 $ .28 Weighted average shares outstanding 3,332,310 1,940,810
The accompanying notes are an integral part of these statements. 4 5 UNITED SECURITY BANCORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS YEAR-TO-DATE MARCH 31, 1996 AND 1995 ($ in thousands)
1996 1995 Increase in Cash and Cash Equivalents Net income $ 839 $ 542 Cash flows from operating activities: Provision for loan losses 146 142 Depreciation and amortization 127 72 Amortization of investment securities (30) (Increase)/decrease in assets and liabilities Accrued interest receivable (227) (1) Other assets (29) 190 Deferred loan fees (49) (14) Accrued interest payable 47 134 Other liabilities 225 307 ------- -- - ----- Net cash provided by operating activities 1,079 1,342 ------- -- - ----- Cash flows from investing activities: Investment securities: Maturities 2,332 1,010 Sales 3,306 1,039 Purchases (6,595) (1,388) Net increase in loans and leases (10,211) (3,285) Purchases of premises and equipment (100) (246) Foreclosed real estate activity 19 69 ------- -- - ----- Net cash provided by investing activities (11,249) (2,801) ------- -- - ----- Cash flows from financing activities: Net increase in deposits 15,184 3,893 Federal funds purchased (1,065) Proceeds from notes payable 2,531 Principal payments on notes payable (8) (14) Principal payments on capital lease obligations (4) (24) Cash paid for redemption of fractional shares (7) ------- -- - ----- Net cash provided by financing activities 17,696 2,790 ------- -- - ----- Net increase/(decrease) in cash and cash equivalents 7,526 1,331 Cash and cash equivalents, beginning of year 15,581 9,461 ------- -- - ----- Cash and cash equivalents, end of quarter $23,107 $10,792 ======= =======
The accompanying notes are an integral part of these statements. 5 6 UNITED SECURITY BANCORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. Management Statement In the opinion of the Company, the accompanying audited and unaudited Consolidated Financial Statements present fairly the financial position of the Company as of March 31, 1996, December 31, 1995, and March 31, 1995, and the results of operations and the changes in financial position for the three month period ended March 31, 1996 and 1995. NOTE 2. Investment Securities Most of the investment securities are classified as available-for-sale and are stated at fair value, and unrealized holding gains and losses, net of related deferred taxes, are reported as a separate component of stockholders' equity. Gains or losses on available-for-sale securities sales are reported as part of noninterest income based on the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method. Carrying amount and fair values at March 31, 1996 and December 31, 1995 were as follows:
1996 1995 Amortized Fair Amortized Fair ($ in thousands) Cost Value Cost Value Securities available-for-sale: U.S. Treasury securities $ 1,251 $ 1,251 Obligations of federal government agencies $ 4,125 $ 4,103 2,814 2,800 Mortgage backed securities 11,419 11,403 13,550 13,545 Obligations of states, municipalities and political subdivisions 3,246 3,004 Other securities 4,187 3,989 4,554 4,440 ------- ------- ---- - --- ------- Total $22,977 $22,499 $22,169 $22,036 ======= ======= ======= ======= Securities held-to-maturity: Obligations of states, municipalities and political subdivisions $ 631 626 $ 365 $ 374 ======= ======= ======= =======
6 7 UNITED SECURITY BANCORPORATION NOTE 3. LOANS Loan detail by category as of March 31, 1996 and December 31, 1995 were as follows:
($ in thousands) 1996 1995 (Audited) Commercial and industrial $ 80,103 $ 75,011 Agricultural 22,629 19,787 Real estate mortgage 28,210 25,048 Real estate construction 8,783 10,169 Installment 9,393 9,234 Lease financing 1,853 1,336 Bank cards and other 2,997 3,172 -------- - -------- Total loans 153,968 143,757 Allowance for loan losses (1,465) (1,391) Deferred loan fees, net of deferred costs (456) (505) -------- - -------- Net loans $152,047 $141,861 ======== ========
NOTE 4. ALLOWANCE FOR LOAN LOSSES The allowance for loan loss is maintained at levels considered adequate by management to provide for possible loan losses. The allowance is based on management's assessment of various factors affecting the loan portfolio, including problem loans, business conditions and loss experience, and an overall evaluation of the quality of the underlying collateral. Changes in the allowance for loan loss during the three months ended March 31, 1996 and 1995 were as follows:
($ in thousands) 1996 1995 Balance, beginning of period $1,391 $1,246 Provision for loan losses 146 142 Loan charge-offs (73) (27) Loan recoveries 1 2 ------ - ------ Balance, end of period $1,465 $1,363 ====== ======
NOTE 5. NOTE PAYABLE Note payable as of March 31, 1996 was a borrowing by United Security Bancorporation from a bank for five years to complete the sale of Bank real estate to the Parent Company. The debt provides for monthly payments of $23,000 including interest at 8.75%. The debt reprices annually at prime plus .25%. 7 8 UNITED SECURITY BANCORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION A performance summary and detailed discussion regarding the results for first quarter results in 1996 and 1995 are contained on the following page. UNITED SECURITY BANCORPORATION AND SUBSIDIARIES PERFORMANCE SUMMARY
Three Months Ended March 31, % ($ in thousands) 1996 1995 Change Interest income $4,804 $3,771 27.4% Interest expense 1,922 1,687 13.9% ------ ------ - ----- Net interest income 2,882 2,084 38.3% Provision for loan losses 146 142 2.8% ------ ------ - ----- Net interest income after provision for loan losses 2,736 1,942 40.9% Noninterest income 719 670 7.3% Noninterest expense 2,153 1,709 26.0% ------ ------ - ----- Income before income taxes 1,302 903 44.2% Income taxes 463 361 28.3% ------ ------ - ----- Net income $ 839 $ 542 54.8% ====== ====== ===== Earnings per share $ .25 $ .28 (9.8%) Average shares outstanding 3,332,310 1,940,810 71.7%
8 9 UNITED SECURITY BANCORPORATION Results of Operations The results of operations include the consolidated results of operations for United Security Bancorporation and its wholly-owned subsidiaries (Corporation), United Security Bank, Home Security Bank, USB Insurance Agencies, Inc., USB Mortgage Company and USB Leasing, Inc. This information should be read in conjunction with the financial statements and related notes appearing in this report. United Security Bancorporation and its subsidiaries reported net income of $839,000 for the first three months of 1996 compared to $542,000 for the same period in 1995. Earnings per share were $.25 and $.28, respectively. Per share results for 1996 and 1995 are not directly comparable. In May and June, 1995, United Security Bancorporation sold 1,150,000 shares of stock in its initial public offering. Net income grew 54.8% in 1996 compared to 1995, while average outstanding shares grew by 71.7%. Net Interest Income Net interest income grew 38.3% to $2,882,000 in 1996 compared to $2,084,000 in 1995. The increase is primarily the result of loan growth and interest earning assets growth. Total loans grew 7.1% to $153,968,000 during the first quarter. Total earning assets grew 11% to $192,415,000 during first quarter 1996. Provision for Loan Losses The allowance for loan losses represents management's recognition of risks in the loan and lease portfolio. The allowance for loan losses grew to $1,465,000 as of March 31, 1996, which is .95% of loans and leases outstanding. Noninterest Income Noninterest income increased by 7.3% to $719,000 for first quarter 1996. This compares to $670,000 for first quarter 1995. Each category of income was higher than 1995 with the exception of insurance commissions, which was 5.3% lower than 1995. Noninterest Expense Noninterest expense increased by 26.0% in 1996 reflecting the opening of two new Bank branches in Downtown Spokane and Yakima, Washington for United Security Bank and Home Security Bank, respectively. USB Mortgage and USB Leasing have also significantly increased their activity and expenses, while improving the net profitability of the Corporation. Federal Income Tax Expense Reflecting the increase in Corporation profitability, federal income tax expense increased by 28.3% comparing 1996 tax expense to 1995. 9 10 UNITED SECURITY BANCORPORATION Part II Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits and Reports on Form 8-K. None in first quarter 1996. 10 11 UNITED SECURITY BANCORPORATION 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 thereunto duly authorized. UNITED SECURITY BANCORPORATION /s/ William C. Dashiell William C. Dashiell, President and Chief Executive Officer Date: May 1, 1996 /s/ Chad Galloway Chad Galloway, Vice President and Chief Financial Officer 11 EX-27 2
9 3-MOS DEC-31-1996 MAR-31-1996 7254 10043 5810 0 22499 631 626 153512 1465 210392 178975 0 2664 3286 20830 0 0 4637 210392 4278 386 140 4804 1860 1922 2882 146 51 2153 1302 1302 0 0 839 .25 .25 10.51 645 211 0 0 1391 73 1 1465 1465 0 0
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