-----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, LQZklwwND2VNOStF/vyoc+Jxi5iYiSRTI2fsPBRdYEpSyCj378MpXECGs+D/hIOB WHj+orou09JOZnZfO9biWA== 0001032210-00-000806.txt : 20000427 0001032210-00-000806.hdr.sgml : 20000427 ACCESSION NUMBER: 0001032210-00-000806 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000426 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-18561 FILM NUMBER: 609189 BUSINESS ADDRESS: STREET 1: 9506 N NEWPORT HWY CITY: SPOKANE STATE: WA ZIP: 99218-1200 BUSINESS PHONE: 5094676949 MAIL ADDRESS: STREET 1: 9506 N NEWPORT HWY CITY: SPOKANE STATE: WA ZIP: 99218-1200 10-Q 1 FORM 10-Q FOR PERIOD ENDED 03/31/2000 United States SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (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, 2000 or -------------- (_) Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the transition period from ____________ to _____________ Commission file number 000 - 18561 ----------- UNITED SECURITY BANCORPORATION ------------------------------ (Exact Name of Registrant 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 ------------- (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 April 20, 2000, there were 7,315,959 shares of such stock outstanding. 1 UNITED SECURITY BANCORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q March 31, 2000 Table of Contents
Page Independent Accountant's Report 3 Part I Financial Information Item 1. Financial Statements Consolidated Statements of Condition - March 31, 2000 and December 31, 1999.................................... 4 Consolidated Statements of Income - Three Months Ended March 31, 2000 and 1999.................................. 5 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 2000 and 1999............... 6 Notes to Consolidated Financial Statements............... 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 9-10 Item 3. Quantitative and Qualitative Disclosures About Market Risk.............................................. 11 Part II Other Information Item 6. Exhibits and Reports on Form 8-K......................... 11 Signatures............................................................... 11
2 UNITED SECURITY BANCORPORATION Independent Accountant's Report Board of Directors and Shareholders United Security Bancorporation We have reviewed the accompanying consolidated statement of condition of United Security Bancorporation and subsidiaries as of March 31, 2000, and the related consolidated statement of income, and consolidated condensed statement of cash flows for the three months ended March 31, 2000. These financial statements are the responsibility of the Corporation's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Everett, Washington /s/ Moss Adams LLP April 14, 2000 3 UNITED SECURITY BANCORPORATION UNITED SECURITY BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION
($ In thousands) March 31, December 31, 2000 1999 ASSETS Reviewed Audited Cash and due from banks $ 19,822 $ 21,387 Overnight interest bearing deposits with other banks 10,458 4,632 -------- -------- Cash and cash equivalents 30,280 26,019 Securities 52,022 53,141 Loans, net of allowance for loan losses of $4,307 in 2000 and $4,349 in 1999 419,439 418,210 Accrued interest receivable 5,098 4,494 Premises and equipment, net 13,511 13,133 Foreclosed real estate and other foreclosed assets 1,164 1,179 Life insurance and salary continuation assets 4,089 4,049 Intangible assets 6,091 6,189 Other assets 1,346 1,312 -------- -------- TOTAL ASSETS $533,040 $527,726 ======== ======== LIABILITIES Noninterest bearing - demand deposits $ 80,733 $ 82,299 Interest bearing: NOW and savings accounts 196,783 196,513 Time, $100,000 and over 64,743 56,430 Other time 123,214 117,657 -------- -------- TOTAL DEPOSITS 465,473 452,899 Short-term borrowings 1,700 7,508 Capital lease obligations 684 690 Accrued interest payable 1,482 1,367 Other liabilities 2,787 2,340 -------- -------- TOTAL LIABILITIES 472,126 464,804 STOCKHOLDERS' EQUITY Common stock, no par, shares authorized 15,000,000; issued and outstanding 7,315,959 in 2000 and 6,942,439 in 1999 49,646 44,471 Retained earnings 12,314 19,460 Accumulated other comprehensive income/(loss), net of tax (1,046) (1,009) -------- -------- TOTAL STOCKHOLDERS' EQUITY 60,914 62,922 -------- -------- TOTAL LIABILITIES and STOCKHOLDERS' EQUITY $533,040 $527,726 ======== ========
The accompanying notes are an integral part of these statements. 4 UNITED SECURITY BANCORPORATION UNITED SECURITY BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended ($ In thousands, except per share) March 31, 2000 1999 INTEREST INCOME Reviewed Unaudited Interest and fees on loans and leases $ 10,333 $ 9,299 Interest on securities 803 1,213 Other interest income 102 100 ---------- ---------- TOTAL INTEREST INCOME 11,238 10,612 ---------- ---------- INTEREST EXPENSE Interest on deposits 4,263 3,675 Interest on borrowings 48 39 ---------- ---------- TOTAL INTEREST EXPENSE 4,311 3,714 ---------- ---------- NET INTEREST INCOME 6,927 6,898 Provision for loan losses 337 267 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,590 6,631 ---------- ---------- NONINTEREST INCOME Fees and service charges 596 626 Insurance commissions 234 263 Securities gains/(losses) (6) 42 Other 219 334 ---------- ---------- TOTAL NONINTEREST INCOME 1,043 1,265 ---------- ---------- NONINTEREST EXPENSE Salaries and employee benefits 3,129 2,853 Occupancy expense, net 445 385 Equipment expense 351 333 Intangible amortization 98 94 Other operating expense 1,197 1,153 ---------- ---------- TOTAL NONINTEREST EXPENSE 5,220 4,818 ---------- ---------- INCOME BEFORE TAXES 2,413 3,078 INCOME TAX EXPENSE 623 999 ---------- ---------- NET INCOME $ 1,790 $ 2,079 ========== ========== Basic earnings per common share $ 0.24 $ 0.27 Diluted earnings per common share $ 0.24 $ 0.27 Basic weighted average shares outstanding 7,546,429 7,622,110 Diluted weighted average shares outstanding 7,606,969 7,731,503
The accompanying notes are an integral part of these statements. 5 UNITED SECURITY BANCORPORATION United Security Bancorporation and Subsidiaries Consolidated Condensed Statements of Cash Flows Year-To-Date March 31, 2000 and 1999 ($ in thousands)
2000 1999 Cash flows from operating activities: Reviewed Unaudited Net income $ 1,790 $ 2,079 Provision for loan losses 337 267 Depreciation and amortization 250 229 (Increase)/decrease in assets and liabilities: Accrued interest receivable (604) (194) Life insurance and salary continuation assets (40) (32) Other assets 61 (289) Accrued interest payable 115 (77) Other liabilities 447 (629) -------- --------- Net cash provided by operating activities 2,356 1,354 -------- --------- Cash flows from investing activities: Securities: Maturities 50 19,728 Sales 2,950 4,058 Purchases (1,918) (5,116) Net increase in loans (1,566) (10,974) Sales of premises and equipment 24 Purchases of premises and equipment (652) (293) Foreclosed real estate activity 15 (21) -------- --------- Net cash change in investing activities (1,097) 7,382 -------- --------- Cash flows from financing activities: Net change in deposits 12,574 (19,737) Proceeds from borrowings 408 Principal payments on borrowings (5,808) Principal payments on capital lease obligations (6) (5) Cash payments for stock repurchases (4,175) Cash received from stock sales 417 196 Cash redemption of fractional shares (17) -------- --------- Net cash provided by financing activities 3,002 (19,155) -------- --------- Net change in cash and cash equivalents 4,261 (10,419) Cash and cash equivalents, beginning of year 26,019 37,088 -------- --------- Cash and cash equivalents, end of quarter $ 30,280 $ 26,669 ======== =========
The accompanying notes are an integral part of these statements. 6 UNITED SECURITY BANCORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. Management Statement The consolidated financial statements include United Security Bancorporation and its wholly owned subsidiaries (USBN), United Security Bank, Home Security Bank, Bank of Pullman, Grant National Bank, AmericanWest Bank, and USB Insurance Agencies, Inc. after eliminating all significant intercompany balances and transactions. In the opinion of USBN, the accompanying Consolidated Financial Statements present fairly the financial position of USBN as of March 31, 2000 and December 31, 1999, and the related statements of income and cash flows for the three-month period ended March 31, 2000 and 1999. 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 March 31, 2000 and December 31, 1999 were as follows:
March 31, 2000 December 31, 1999 Fair Fair ($ in thousands) Amortized Value Financial Amortized Value Financial Cost Reviewed Statements Cost Audited Statements Securities available-for-sale: U.S. Treasury securities $ 2,502 $ 2,495 $ 2,495 $ 2,503 $ 2,503 $ 2,503 Obligations of federal government agencies 16,838 16,239 16,239 16,888 16,317 16,317 Mortgage backed securities 8,767 8,544 8,544 10,014 9,812 9,812 Obligations of states, municipalities and political subdivisions 8,046 8,028 8,028 8,201 8,163 8,163 Other securities 16,743 16,010 16,010 16,356 15,639 15,639 -------------------------------- ------------------------------ 52,896 51,316 51,316 53,962 52,434 52,434 Securities held-to-maturity: Obligations of states, municipalities and political subdivisions 706 701 706 707 699 707 -------------------------------- ------------------------------ Total $53,602 $52,017 $52,022 $54,669 $53,133 $53,141 ================================ ==============================
7 UNITED SECURITY BANCORPORATION NOTE 3. LOANS Loan detail by category as of March 31, 2000 and December 31, 1999 were as follows: ($ in thousands) March 31, 2000 December 31, 1999 Reviewed Audited Commercial and industrial $252,629 $246,796 Agricultural 64,293 67,025 Real estate mortgage 66,531 66,690 Real estate construction 13,259 14,781 Installment 21,290 21,190 Bank cards and other 6,526 6,939 ----------- ----------- Total loans 424,528 423,421 Allowance for loan losses (4,307) (4,349) Deferred loan fees, net of deferred costs (782) (862) ----------- ----------- Net loans $419,439 $418,210 =========== =========== NOTE 4. ALLOWANCE FOR LOAN LOSSES The allowance for loan loss is maintained at levels considered adequate by management to provide for possible loan losses. The allowance is based on management's assessment of various factors affecting the loan portfolio, including problem loans, business conditions and loss experience, and an overall evaluation of the quality of the underlying collateral. Changes in the allowance for loan losses during the three months ended March 31, 2000 and 1999 were as follows: Three Months Ended March 31, ($ in thousands) 2000 1999 Reviewed Unaudited Balance, beginning of period $4,349 $3,819 Provision for loan losses 337 267 Loan charge-offs (402) (332) Loan recoveries 23 27 --------- --------- Balance, end of period $4,307 $3,781 ========= ========= 8 UNITED SECURITY BANCORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion contains a review of the results of operations and financial condition for first quarter in 2000 and 1999. This information should be read in conjunction with the financial statements and related notes appearing in this report. The reader is assumed to have access to USBN's Form 10-K for the year ended December 31, 1999, which contains additional information. This discussion may contain certain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Readers are cautioned not to place undue reliance on these forward- looking statements. Overview A performance summary and detailed discussion regarding the first quarter for 2000 and 1999 follow this table. UNITED SECURITY BANCORPORATION AND SUBSIDIARIES PERFORMANCE SUMMARY
Three Months Ended March 31, % ($ in thousands, except per share) 2000 1999 Change Interest income $11,238 $10,612 5.9% Interest expense 4,311 3,714 16.1% ------- ------- ------- Net interest income 6,927 6,898 0.4% Provision for loan losses 337 267 26.2% ------- ------- ------- Net interest income after provision for loan losses 6,590 6,631 -0.6% Noninterest income 1,043 1,265 -17.5% Noninterest expense 5,220 4,818 8.3% ------- ------- ------- Income before income taxes 2,413 3,078 -21.6% Income taxes 623 999 -37.6% ------- ------- ------- Net income $ 1,790 $ 2,079 -13.9% ======= ======= ======= Basic earnings per common share $ 0.24 $ 0.27 -11.1% Diluted earnings per common share $ 0.24 $ 0.27 -11.1%
9 UNITED SECURITY BANCORPORATION Net Income USBN reported net income of $1,790,000 for the first quarter of 2000 compared to $2,079,000 for the same period in 1999. Basic and diluted earnings per share were $.24 in 2000 and $.27 in 1999. First quarter 2000 earnings were improved by a $174,000 tax credit from the renovation of a historical property, which reduced income tax expense and improved earnings per share by $.02. Net Interest Income For the first quarter of 2000 net interest income grew slightly to $6,927,000 compared to $6,898,000 in 1999. The growth in net interest income was due to loan volume growth, which on an average basis grew to $481 million in 2000 from $453 million in 1999. The net interest margin to average earning assets declined from 6.17% in 1999 to 5.79% in 2000. Provision for Loan Losses The allowance for possible loan losses is based on management's evaluation of the loan portfolio. The allowance for loan losses to total loans increased to 1.02% in 2000 compared to 1.01% in 1999. Noninterest Income Noninterest income was $1,043,000 in 2000 compared to $1,265,000 in 1999. Fees and service charges declined from $626,000 in 1999 to $596,000 in 2000. Insurance commissions were $234,000 in 2000 compared to $263,000 in 1999. There were nonrecurring securities gains of $42,000 in 1999. Other noninterest income was lower in 2000 primarily due to nonrecurring gains on the sale of escrow servicing and real estate owned. Noninterest Expense Noninterest expense increased from $4,818,000 in 1999 to $5,220,000 in 2000. The increase was primarily due to additional expenses for the five new branches opened by USB and BOP in the latter part of 1999 and to accrue expense for a new employee incentive program designed to create and reward productivity. Also expense was incurred for a new Computer Center opened in first quarter 2000. Income Tax Expense Income tax expense was lower in first quarter 2000 due to a $174,000 tax credit for the renovation of a historical property. Stock Repurchase Program USBN completed an approximately 5% stock repurchase program in March 2000, which was approved by the Board of Directors in December 1999. Approximately 385,000 shares were repurchased for $4.2 million in February and March 2000. 10 UNITED SECURITY BANCORPORATION Item 3. Quantitative and Qualitative Disclosures About Market Risk. Management considers interest rate risk to be a market risk that could have a significant effect on the financial condition of USBN. There have been no material changes in reported market risks faced by USBN since the end of the most recent fiscal year end. Part II Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 Financial Data Schedule. (b) Reports on Form 8-K None in first quarter 2000. 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 on April 20, 2000. UNITED SECURITY BANCORPORATION /s/ Richard C. Emery ------------------------------------ Richard C. Emery, President and Chief Executive Officer /s/ Chad Galloway ------------------------------------ Chad Galloway, Vice President and Chief Financial Officer 11 EX-27.1 2 FINANCIAL DATA SCHEDULE
9 12-MOS DEC-31-2000 MAR-31-2000 19,822 10,458 0 0 51,316 706 701 423,746 4,307 533,040 465,473 1,700 4,269 684 0 0 49,646 11,268 533,040 10,333 803 102 11,238 4,263 4,311 6,927 337 (6) 5,220 2,413 2,413 0 0 1,790 0.24 0.24 5.79 6,410 390 0 0 4,349 402 23 4,307 4,307 0 0
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