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United Security Bancshares Inc. Reports Operating Results (10-Q)

November 08, 2010 | About:
10qk

10qk

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United Security Bancshares Inc. (USBI) filed Quarterly Report for the period ended 2010-09-30.

United Security Bancshares Inc. has a market cap of $55.55 million; its shares were traded at around $9.24 with a P/E ratio of 51.33 and P/S ratio of 1.01. The dividend yield of United Security Bancshares Inc. stocks is 4.76%.USBI is in the portfolios of Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Net income attributable to USBI during the third quarter of 2010 was $351,000, compared to net income attributable to USBI of $1.0 million for the same period of 2009, resulting in a decrease of basic net income attributable to USBI per share from $0.17 to $0.06. Net income attributable to USBI decreased from $5.2 million for the nine months ended September 30, 2009 to $3.3 million for the nine months ended September 30, 2010, resulting in a decrease in basic net income attributable to USBI per share to $0.55 from $0.86. Annualized return on assets was 0.65% for the first nine months of 2010, compared to 1.01% for the same period during 2009. Average return on shareholders equity decreased to 5.28% for the first nine months of 2010 from 8.64% during the first nine months of 2009.

CREDIT QUALITY. The provision for loan losses at the Bank increased to $5.4 million for the nine months ended September 30, 2010, compared to $1.7 million for the same period in 2009. For the quarter ended September 30, 2010, the provision for loan losses at the Bank was $908,000, an increase from $639,000 for the same quarter of 2009. Continued weakness in residential and commercial real estate and high unemployment levels in our market areas had a significant impact on our net charge-off levels and resulted in a higher provision for loan losses at the Bank. The provision for loan losses at ALC decreased to $1.4 million for the nine months ended September 30, 2010, compared to $3.2 million for the same period in 2009. For the quarter ended September 30, 2010, the provision for loan losses at ALC was $478,000, compared to $850,000 for the same quarter of 2009. Non-performing loans at ALC have declined from previous levels, and charge-offs have declined, thus requiring a lower provision for loan losses.

Total non-interest income for the Company increased $194,000, or 16.1%, for the third quarter of 2010 and increased $1.5 million, or 23.7%, for the first nine months of 2010 compared to the same periods in 2009, respectively. Service charges and fees on deposit accounts increased $56,000 for the 2010 third quarter and $113,000 for the nine months ended September 30, 2010, compared to the same periods in 2009, respectively. Credit life insurance income increased $19,000 for the 2010 third quarter and declined $54,000 for the nine months ended September 30, 2010, compared to the same periods in 2009, respectively. All other income was negatively affected by an increase in loss on the sale of other real estate owned of $129,000 for the 2010 third quarter and $268,000 for the nine months ended September 30, 2010, compared to the same periods in 2009, respectively. All other fees increased $1.5 million for the nine months ended September 30, 2010 as a result of the $4.2 million insurance settlement received in the first quarter of 2010.

Total non-interest expense increased $1.8 million, or 25.6%, for the 2010 third quarter and increased $3.1 million, or 15.6%, for the nine months ended September 30, 2010 compared to the same periods in 2009. Impairment write-down on other real estate owned amounted to $1.6 million for the 2010 third quarter. This impairment resulted from the continued decline in real estate values as the downturn continues in our markets. Salary and employee benefits decreased $62,000, when comparing the third quarter of 2010 to the same period in 2009, and increased $387,000 for the nine months ended September 30, 2010 compared to the same period in 2009. For the 2010 third quarter, legal and professional fees increased $59,000 and telephone and data circuit expense decreased $17,000, each compared to the same quarter in 2009. For the nine months ended September 30, 2010, legal and professional fees decreased $81,000 and telephone and data circuit expense decreased $7,000, each compared to the same period in 2009. Insurance assessments imposed by the Federal Deposit Insurance Corporation (the FDIC) decreased $98,000 for the 2010 third quarter and increased $104,000 for the nine months ended September 30, 2010 compared to the same periods in 2009.

In comparing financial condition at September 30, 2010 to December 31, 2009, total assets decreased $38.0 million to $653.8 million, while liabilities decreased $40.0 million to $570.8 million. Shareholders equity increased $1.6 million as a result of an increase in other comprehensive income of $469,000 and earnings in excess of dividends of $1.2 million.

Investment securities decreased $41.5 million, or 21.2%, during the first nine months of 2010. Investments provide the Company with a stable form of liquidity while maximizing earnings yield. Loans, net of unearned income, decreased $6.0 million, from $412.5 million at December 31, 2009, to $406.5 million at September 30, 2010. While net loans at September 30, 2010 decreased from December 31, 2009, average loans increased $5.7 million from December 31, 2009 and $6.8 million from September 30, 2009. Loan growth at the Bank has been flat due to the slowdown in construction and real estate development in the trade areas served by the Company. Deposits increased $573,000, or 0.1%, during the first nine months of 2010. Loans, net of unearned income at ALC decreased $5.8 million, from $90.8 million at December 31, 2009 to $85.0 million at September 30, 2010. Loans at the Bank, after consolidation eliminations, decreased $194,000 from $321.7 million at December 31, 2009 to $321.5 million at September 30, 2010.

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