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<SEC-DOCUMENT>0000726990-96-000008.txt : 19961018
<SEC-HEADER>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
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<TEXT>
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
<PAGE> 2
UNITED SECURITY BANCORPORATION
INDEX QUARTERLY REPORT ON FORM 10-QSB
September 30, 1996
Table of Contents
<TABLE>
<CAPTION>
Page
<S>
<C>
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
</TABLE>
2
<PAGE> 3
UNITED SECURITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
September 30,
December 31,
($ in thousands) 1996 1995
<S> <C> <C>
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
=========
=========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
UNITED SECURITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended
September 30, Year-
To-Date
1996 1995 1996
1995
<S> <C> <C> <C>
<C>
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
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
UNITED SECURITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR-TO-DATE SEPTEMBER 30, 1996 AND 1995
($ in thousands)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
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 $13,742
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
UNITED SECURITY BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Management Statement
In the opinion of the Company, the accompanying audited and
unaudited Consolidated Financial Statements present fairly the
financial position of the Company as of September 30, 1996,
December 31, 1995, and September 30, 1995, and the results of
operations and the changes in financial position for the nine month
period ended September 30, 1996 and 1995.
Certain reclassifications of 1995 balances have been made to
conform with the September 30, 1996 presentation; there was no
impact on net income, earnings per share or stockholders' equity.
Also per share amounts and weighted average shares outstanding have
been retroactively adjusted to reflect a previously disclosed stock
dividend and stock split-up.
NOTE 2. Securities
Most of the securities are classified as available-for-sale and are
stated at fair value, and unrealized holding gains and losses, net
of related deferred taxes, are reported as a separate component of
stockholders' equity. Gains or losses on available-for-sale
securities sales are reported as part of noninterest income based
on the net proceeds and the adjusted carrying amount of the
securities sold, using the specific identification method.
Carrying amount and fair values at September 30, 1996 and December
31, 1995 were as follows:
<TABLE>
<CAPTION>
September 30, 1996 December 31,
1995
Amortized Fair Amortized
Fair
($ in thousands) Cost Value Cost
Value
<S> <C> <C> <C>
<C>
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
======= ======= =======
=======
</TABLE>
6
<PAGE> 7
UNITED SECURITY BANCORPORATION
NOTE 3. LOANS
Loan detail by category as of September 30, 1996 and December 31,
1995 were as follows:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995
(Audited)
<S> <C> <C>
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
$141,861
========
========
</TABLE>
NOTE 4. ALLOWANCE FOR LOAN LOSSES
The allowance for loan loss is maintained at levels considered
adequate by management to provide for possible loan losses. The
allowance is based on management's assessment of various factors
affecting the loan portfolio, including problem loans, business
conditions and loss experience, and an overall evaluation of the
quality of the underlying collateral. Changes in the allowance for
loan loss during the three and nine months ended September 30, 1996
and 1995 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30, Year-To-
Date
($ in thousands) 1996 1995 1996
1995
<S> <C> <C> <C>
<C>
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
====== ====== ======
======
</TABLE>
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 $23,000 including interest at 8.75%. The
debt reprices annually at prime plus .25%.
7
<PAGE> 8
UNITED SECURITY BANCORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
A performance summary and detailed discussion regarding the second
quarter and year-to-date results in 1996 and 1995 follow this
table.
UNITED SECURITY BANCORPORATION AND SUBSIDIARIES
PERFORMANCE SUMMARY
<TABLE>
<CAPTION>
Three Months Ended
September 30, Year-To-
Date
%
%
($ in thousands) 1996 1995 Change 1996
1995 Change
<S> <C> <C> <C> <C>
<C> <C>
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%
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>2
<TEXT>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 9695
<INT-BEARING-DEPOSITS> 8427
<FED-FUNDS-SOLD> 16020
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16953
<INVESTMENTS-CARRYING> 605
<INVESTMENTS-MARKET> 607
<LOANS> 172358
<ALLOWANCE> 1636
<TOTAL-ASSETS> 234705
<DEPOSITS> 201170
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2572
<LONG-TERM> 3257
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<COMMON> 21102
<OTHER-SE> 6604
<TOTAL-LIABILITIES-AND-EQUITY> 234705
<INTEREST-LOAN> 13709
<INTEREST-INVEST> 980
<INTEREST-OTHER> 450
<INTEREST-TOTAL> 15139
<INTEREST-DEPOSIT> 5789
<INTEREST-EXPENSE> 6010
<INTEREST-INCOME-NET> 9129
<LOAN-LOSSES> 403
<SECURITIES-GAINS> 53
<EXPENSE-OTHER> 6762
<INCOME-PRETAX> 4249
<INCOME-PRE-EXTRAORDINARY> 4249
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2907
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
<YIELD-ACTUAL> 6.31
<LOANS-NON> 380
<LOANS-PAST> 617
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1391
<CHARGE-OFFS> 165
<RECOVERIES> 7
<ALLOWANCE-CLOSE> 1636
<ALLOWANCE-DOMESTIC> 1636
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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