-----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, IcLZxPvbDfe7EUCfsFzgQkFM7OZZXrvePsH7MujGMuzFIUeQn2C6XXnn5dE8Li1r 59vRRSUmZlTGUiksQPX5Eg== 0000726990-96-000008.txt : 19961018 0000726990-96-000008.hdr.sgml : 19961018 ACCESSION NUMBER: 0000726990-96-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961017 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: 96644613 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 September 30, 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 October 16, 1996, there were 3,348,030 shares of such stock outstanding. 1 2 UNITED SECURITY BANCORPORATION INDEX QUARTERLY REPORT ON FORM 10-QSB September 30, 1996 Table of Contents
Page Part I Financial Information Item 1. Financial Statements Consolidated Statements of Condition - September 30, 1996 and December 31, 1995 . . . . . . . . . . . . 3 Consolidated Statements of Income - Three Months and Nine Months Ended June 30, 1996 and 1995 . . . . . 4 Consolidated Condensed Statements of Cash Flows - Nine Months Ended June 30, 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 AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION
September 30, December 31, ($ in thousands) 1996 1995 ASSETS (Audited) Cash and due from banks $ 9,695 $ 7,889 Overnight interest bearing deposits with other banks 8,427 4,337 Federal funds sold 16,020 3,355 --------- ------- - -- Cash and cash equivalents 34,142 15,581 Securities (Note 2) 17,558 22,401 Loans, net of allowance for loan losses of $1,636 in 1996 and $1,391 in 1995 (Notes 3 and 4) 170,722 141,861 Accrued interest receivable 2,058 1,635 Premises and equipment, net 6,208 6,383 Foreclosed real estate 620 370 Life insurance and salary continuation assets 2,578 2,315 Other assets 819 1,032 --------- ------- - -- TOTAL ASSETS $ 234,705 $ 191,578 ========= ========= LIABILITIES Noninterest bearing - demand deposits $ 33,033 $ 25,643 Interest bearing: NOW and savings accounts 80,656 59,044 Time, $100,000 and over 28,824 21,693 Other time 58,657 57,411 --------- ------- - -- TOTAL DEPOSITS 201,170 l63,791 Note payable (Note 5) 2,502 Capital lease obligations 755 767 Accrued interest payable 682 580 Other liabilities 1,890 1,577 --------- ------- - -- TOTAL LIABILITIES 206,999 166,715 STOCKHOLDERS' EQUITY Common stock, no par, shares authorized 15,000,000 in 1996 and 5,000,000 in 1995, issued and outstanding 3,348,030 in 1996 and 3,332,310 in 1995 21,102 20,837 Retained earnings 7,020 4,114 Net unrealized loss on securities available- for-sale, net of tax of $215 in 1996 and $45 for 1995 (416) (88) --------- ------- - -- TOTAL STOCKHOLDERS' EQUITY 27,706 24,863 --------- ------- - -- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 234,705 $ 191,578 ========= =========
The accompanying notes are an integral part of these statements. 3 4 UNITED SECURITY BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME ($ in thousands, except per share)
Three Months Ended September 30, Year- To-Date 1996 1995 1996 1995 INTEREST INCOME Interest and fees on loans and leases $ 4,852 $ 3,860 $13,709 $10,836 Interest on securities 289 468 980 1,227 Other interest income 196 131 450 296 ------- ------- ------- - ------- TOTAL INTEREST INCOME 5,337 4,459 15,139 12,359 ------- ------- ------- - ------- INTEREST EXPENSE Interest on deposits 2,031 1,743 5,789 5,137 Interest on notes and capital leases 80 16 221 89 ------- ------- ------- - ------- TOTAL INTEREST EXPENSE 2,111 1,759 6,010 5,226 ------- ------- ------- - ------- NET INTEREST INCOME 3,226 2,700 9,129 7,133 Provision for loan losses (Note 4) 136 32 403 203 ------- ------- ------- - ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,090 2,668 8,726 6,930 ------- ------- ------- - ------ NONINTEREST INCOME Fees and service charges 273 220 822 649 Insurance commissions 324 389 956 1,019 Securities gains/losses 16 53 49 Life insurance proceeds 1,030 Other 207 78 454 378 ------- ------- ------- - ------- TOTAL NONINTEREST INCOME 804 703 2,285 3,125 ------- ------- ------- - ------- NONINTEREST EXPENSE Salaries and employee benefits 1,505 1,182 4,405 3,569 Occupancy expense, net 161 141 458 343 Equipment expense 171 156 539 462 Death benefit expense 379 Other operating expense 446 495 1,360 1,400 ------- ------- ------- - ------- TOTAL NONINTEREST EXPENSE 2,283 1,974 6,762 6,153 ------- ------- ------- - ------- INCOME BEFORE TAXES 1,611 1,397 4,249 3,902 FEDERAL INCOME TAX EXPENSE 483 198 1,342 898 ------- ------- ------- - ------- NET INCOME $ 1,128 $ 1,199 $ 2,907 $ 3,004 ======= ======= ======= ======= Earnings per common share $ .34 $ .36 $ .87 $ 1.12 Weighted average shares outstanding 3,348,030 3,332,310 3,339,487 2,680,328
The accompanying notes are an integral part of these statements. 4 5 UNITED SECURITY BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEAR-TO-DATE SEPTEMBER 30, 1996 AND 1995 ($ in thousands)
1996 1995 Increase in Cash and Cash Equivalents Net income $ 2,907 $ 3,004 Cash flows from operating activities: Provision for loan losses 403 203 Depreciation and amortization 389 333 Unexercised stock options 72 Amortization of investment securities 15 46 (Increase)/decrease in assets and liabilities Accrued interest receivable (423) (295) Life insurance and salary continuation assets (263) (154) Other assets 55 113 Deferred loan fees (13) 13 Accrued interest payable 102 226 Other liabilities 313 862 ------- ------- Net cash provided by operating activities 3,557 4,351 ------- ------- Cash flows from investing activities: Securities: Maturities 7,621 4,922 Sales 4,526 7,374 Purchases (7,649) (12,152) Net increase in loans and leases (29,093) (13,381) Purchases of premises and equipment (213) (1,308) Foreclosed real estate activity (250) (224) ------- ------- Net cash provided by investing activities (25,058) (14,796) ------- ------- Cash flows from financing activities: Net increase in deposits 37,379 9,519 Federal funds purchased (2,725) Proceeds from notes payable 2,529 Principal payments on notes payable (27) (485) Principal payments on capital lease obligations (12) (36) Cash received from stock sales 200 8,462 Cash paid for redemption of fractional shares (7) (9) ------- ------- Net cash provided by financing activities 40,062 14,726 ------- ------- Net increase/(decrease) in cash and cash equivalents 18,561 4,281 Cash and cash equivalents, beginning of year 15,581 9,461 ------- ------- Cash and cash equivalents, end of quarter $34,142 $13,742 ======= =======
The accompanying notes are an integral part of these statements. 5 6 UNITED SECURITY BANCORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. Management Statement In the opinion of the Company, the accompanying audited and unaudited Consolidated Financial Statements present fairly the financial position of the Company as of September 30, 1996, December 31, 1995, and September 30, 1995, and the results of operations and the changes in financial position for the nine month period ended September 30, 1996 and 1995. Certain reclassifications of 1995 balances have been made to conform with the September 30, 1996 presentation; there was no impact on net income, earnings per share or stockholders' equity. Also per share amounts and weighted average shares outstanding have been retroactively adjusted to reflect a previously disclosed stock dividend and stock split-up. NOTE 2. Securities Most of the securities are classified as available-for-sale and are stated at fair value, and unrealized holding gains and losses, net of related deferred taxes, are reported as a separate component of stockholders' equity. Gains or losses on available-for-sale securities sales are reported as part of noninterest income based on the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method. Carrying amount and fair values at September 30, 1996 and December 31, 1995 were as follows:
September 30, 1996 December 31, 1995 Amortized Fair Amortized Fair ($ in thousands) Cost Value Cost Value Securities available-for-sale: U.S. Treasury securities $500 $500 $ 1,251 $ 1,251 Obligations of federal government agencies 858 848 2,814 2,800 Mortgage backed securities 9,466 9,440 13,550 13,545 Obligations of states, municipalities and political subdivisions 3,249 3,058 Other securities 3,402 3,107 4,554 4,440 ------- ------- ------- -- - ----- Total $17,475 $16,953 $22,169 $22,036 ======= ======= ======= ======= Securities held-to-maturity: Obligations of states, municipalities and political subdivisions $ 605 607 $ 365 $ 374 ======= ======= ======= =======
6 7 UNITED SECURITY BANCORPORATION NOTE 3. LOANS Loan detail by category as of September 30, 1996 and December 31, 1995 were as follows:
($ in thousands) 1996 1995 (Audited) Commercial and industrial $ 93,229 $ 75,011 Agricultural 24,683 19,787 Real estate mortgage 29,486 25,048 Real estate construction 9,562 10,169 Installment 10,258 9,234 Lease financing 3,352 1,336 Bank cards and other 2,280 3,172 -------- ------ - -- Total loans 172,850 143,757 Allowance for loan losses (1,636) (1,391) Deferred loan fees, net of deferred costs (492) (505) -------- ------ - -- Net loans $170,722 $141,861 ======== ========
NOTE 4. ALLOWANCE FOR LOAN LOSSES The allowance for loan loss is maintained at levels considered adequate by management to provide for possible loan losses. The allowance is based on management's assessment of various factors affecting the loan portfolio, including problem loans, business conditions and loss experience, and an overall evaluation of the quality of the underlying collateral. Changes in the allowance for loan loss during the three and nine months ended September 30, 1996 and 1995 were as follows:
Three Months Ended September 30, Year-To- Date ($ in thousands) 1996 1995 1996 1995 Balance, beginning of period $1,570 $1,357 $1,391 $1,246 Provision for loan losses 136 32 403 203 Loan charge-offs (73) (18) (165) (82) Loan recoveries 3 11 7 15 ------ ------ ------ - - ----- Balance, end of period $1,636 $1,382 $1,636 $1,382 ====== ====== ====== ======
NOTE 5. NOTE PAYABLE Note payable as of September 30, 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 $23,000 including interest at 8.75%. The debt reprices annually at prime plus .25%. 7 8 UNITED SECURITY BANCORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION A performance summary and detailed discussion regarding the second quarter and year-to-date results in 1996 and 1995 follow this table. UNITED SECURITY BANCORPORATION AND SUBSIDIARIES PERFORMANCE SUMMARY
Three Months Ended September 30, Year-To- Date % % ($ in thousands) 1996 1995 Change 1996 1995 Change Interest income $5,337 $4,459 19.7% $15,139 $12,359 22.5% Interest expense 2,111 1,759 20.0% 6,010 5,226 15.0% ------ ------ ------ ------- - ------- ----- Net interest income 3,226 2,700 19.5% 9,129 7,133 28.0% Provision for loan losses 136 32 325.0% 403 203 98.5% ------ ------ ------ ------- - ------- ----- Net interest income after provision for loan losses 3,090 2,668 15.8% 8,726 6,930 25.9% Noninterest income 804 703 14.4% 2,285 3,125 -26.9% Noninterest expense 2,283 1,974 15.7% 6,762 6,153 9.9% ------ ------ ------ ------ - ------ ----- Income before income taxes 1,611 1,397 15.3% 4,249 3,902 8.9% Income taxes 483 198 143.9% 1,342 898 49.4% ------ ------ ------ ------ - ------ ----- Net income $1,128 $1,199 -5.9% $2,907 $3,004 -3.2% ====== ====== ====== ====== ====== ===== Earnings per share $ .34 $.36 -6.4% $.87 $1.12 -22.3% Average shares outstanding 3,348,030 3,332,310 .5% 3,339,487 2,680,328 24.6%
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 $2,907,000 for the first nine months of 1996 compared to $3,004,000 for the same period in 1995. Earnings per share were $.87 and $1.12, respectively. Earnings were $1,128,000 for third quarter 1996 compared to $1,199,000 for third quarter 1995. Earnings per share were $.34 and $.36, respectively. 1995 year-to- date net income was significantly improved by insurance proceeds received due to the untimely death of a key employee. 1995 earnings per share year-to-date would have been $.83 without the net insurance proceeds. 1996 year-to-date net income nearly matched 1995 net income, which was significantly improved by the insurance 8 9 UNITED SECURITY BANCORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued) proceeds and related tax benefits received in 1995. 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. Year-to- date average outstanding shares grew by 24.6% in 1996 compared to 1995. Net Interest Income Net interest income grew 28.0% to $9,129,000 in 1996 compared to $7,133,000 in 1995. The increase is primarily the result of loan growth. Total loans grew 20.2% to $172,850,000 during the first nine months of 1996. Loans are nearly 27% higher as of September 30, 1996 compared to a year earlier. 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 $1,636,000 as of September 30, 1996, which is .95% of loans and leases outstanding. Noninterest Income Noninterest income decreased by 26.9% to $2,285,000 during the first nine months of 1996 due to the insurance proceeds income of $1,030,000 received in second quarter 1995 described above. Most of the noninterest income categories were higher than in 1995 consistent with the growth of the Corporation. Insurance commissions were $63,000 lower in 1996. Noninterest Expense Noninterest expense increased by 9.9% 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. Noninterest expense was increased in 1995 by $379,000 for the death benefit expense recognized. Federal Income Tax Expense Income tax expense is higher in 1996 by 49.4% reflecting higher earnings after considering the insurance proceeds received in 1995 were not taxable. 9 10 UNITED SECURITY BANCORPORATION Part II Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None in third quarter 1996. (b) Reports on Form 8-K. None in third 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: October 16, 1996 /s/ Chad Galloway ---------------- ------------------------------- - --- Chad Galloway, Vice President and Chief Financial Officer 11 EX-27 2
9 9-MOS DEC-31-1996 SEP-30-1996 9695 8427 16020 0 16953 605 607 172358 1636 234705 201170 0 2572 3257 0 0 21102 6604 234705 13709 980 450 15139 5789 6010 9129 403 53 6762 4249 4249 0 0 2907 .87 .87 6.31 380 617 0 0 1391 165 7 1636 1636 0 0
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