United Security Bancshares (UBFO, Financial) filed Quarterly Report for the period ended 2009-06-30.
United Security Bancshares is the holding company for United Security Bank. United Security Bancshares has a market cap of $59.8 million; its shares were traded at around $4.88 with a P/E ratio of 15.7 and P/S ratio of 1.1. United Security Bancshares had an annual average earning growth of 25.9% over the past 5 years.
Total noninterest income of $2.4 million reported for the six months ended June 30, 2009 decreased $1.6 million or 40.3% as compared to the six months ended June 30, 2008, resulting in part to changes in SFAS No. 159 fair market value adjustments between the two six-month periods on the Company s junior subordinated debt. Noninterest income continues to be driven by customer service fees, which totaled $2.0 million for the six months ended June 30, 2009, representing a decrease of $461,000 or 18.7% over the $2.5 million in customer service fees reported for the six months ended June 30, 2008. Although we believe the decline in current economic conditions has had an impact on the level of customer service fees, decreases in ATM fees between the two periods presented resulting from the loss of a contract during 2008 to provide multiple ATM s in a single location have also adversely impacted the level of customer service fees. Customer service fees represented 83.0% and 60.9% of total noninterest income for the six-month periods ended June 30, 2009 and 2008, respectively.
Noninterest expense increased approximately $2.9 million or 24.5% between the six-month periods ended June 30, 2008 and June 30, 2009. The primary reason for the increase in noninterest expense experienced during the first six months of 2009 was the result of a goodwill impairment loss totaling $3.0 million recognized during the quarter ended June 30, 2009. While impairment losses on the Company s core deposit intangible assets decreased $567,000 between the six-month periods ended June 30, 2008 and 2009, the Company took impairment charges of $503,000 during the first six months of 2009 on real estate owned through foreclosure, and $403,000 on investment securities. Salary expense decreased $1.5 million or 25.4% between the six months ended June 30, 2008 and June 30, 2009, primarily as the result of declines in accrued bonuses and employee incentives between the two periods.
Nonperforming assets, which are primarily related to the real estate portfolio, remained high during the six months ended June 30, 2009 as real estate markets continue to suffer from the mortgage crisis which began during mid-2007. Nonaccrual loans increased $10.5 million from the balance reported at December 31, 2008, and increased $17.5 million from the balance reported at June 30, 2008, to a balance of $56.2 million at June 30, 2009. In determining the adequacy of the underlying collateral related to these loans, management monitors trends within specific geographical areas, loan-to-value ratios, appraisals, and other credit issues related to the specific loans. Impaired loans increased $18.2 million during the six months ended June 30, 2009 to a balance of $67.2 million at June 30, 2009, and increased $9.1 million during the quarter ended June 30, 2009. Other real estate owned through foreclosure increased $6.9 million between December 31, 2008 and June 30, 2009, as sales of existing OREO properties were more than offset by the transfer of the $10.3 million in loans to other real estate owned during the six months ended June 30, 2009. As a result of these events, nonperforming assets as a percentage of total assets increased from 9.96% at December 31, 2008 to 14.03% at June 30, 2009.
The Company s return on average assets was -1.30% for the six months ended June 30, 2009 as compared to 1.19% for the six months ended June 30, 2008, and was -3.11% for the quarter months ended June 30, 2009 as compared to 1.09% for the quarter ended June 30, 2008. The Bank s return on average equity was -12.00% for the six months ended June 30, 2009 as compared to 10.98% for the same six-month period of 2008, and was -28.45% for the quarter ended June 30, 2009 as compared to 10.11% for the quarter ended June 30, 2008.
The Bank\'s net interest margin, as shown in Table 1, decreased to 4.39% at June 30, 2009 from 4.61% at June 30, 2008, a decrease of 22 basis point (100 basis points = 1%) between the two periods. Average market rates of interest have decreased significantly between the six-month periods ended June 30, 2008 and 2009. The prime rate averaged 3.25% for the six months ended June 30, 2009 as compared to 5.65% for the comparative six months of 2008.
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United Security Bancshares is the holding company for United Security Bank. United Security Bancshares has a market cap of $59.8 million; its shares were traded at around $4.88 with a P/E ratio of 15.7 and P/S ratio of 1.1. United Security Bancshares had an annual average earning growth of 25.9% over the past 5 years.
Highlight of Business Operations:
With market rates of interest declining 100 basis points during the fourth quarter of 2007, and another 400 basis points during the year ended December 31, 2008, the Company continues to experience compression of its net interest margin. The Company s net interest margin was 4.39% for the six months ended June 30, 2009, as compared to 4.36% for the year ended December 31, 2008, and 4.61% for the six months ended June 30, 2008. With approximately 66% of the loan portfolio in floating rate instruments at June 30, 2009, the effects of market rates continue to impact loan yields. Loans yielded 5.77% during the six months ended June 30, 2009, as compared to 6.81% for the year ended December 31, 2008, and 7.48% for the six months ended June 30, 2008. With the rapid decline in market rates of interest experienced during 2008, deposit repricing was slow to follow the decline in loan rates during the second half of 2008. However, with stock market declines, combined with more substantial FDIC insurance coverage, deposit rates declined during the fourth quarter of 2008 as investors sought safety in bank deposits. Borrowing rates declined significantly during the fourth quarter of 2008 and have remained low during 2009, resulting in overnight and short-term borrowing rates of less than 0.50% during the six months ended June 30, 2009. The Company has benefited from these rate declines, as it has continued to utilize overnight and short-term borrowing lines through the Federal Reserve and Federal Home Loan Bank to a greater degree. The Company s average cost of funds was 1.55% for the six months ended June 30, 2009 as compared to 2.75% for the year ended December 31, 2008, and 3.18% for the six months ended June 30, 2008.Total noninterest income of $2.4 million reported for the six months ended June 30, 2009 decreased $1.6 million or 40.3% as compared to the six months ended June 30, 2008, resulting in part to changes in SFAS No. 159 fair market value adjustments between the two six-month periods on the Company s junior subordinated debt. Noninterest income continues to be driven by customer service fees, which totaled $2.0 million for the six months ended June 30, 2009, representing a decrease of $461,000 or 18.7% over the $2.5 million in customer service fees reported for the six months ended June 30, 2008. Although we believe the decline in current economic conditions has had an impact on the level of customer service fees, decreases in ATM fees between the two periods presented resulting from the loss of a contract during 2008 to provide multiple ATM s in a single location have also adversely impacted the level of customer service fees. Customer service fees represented 83.0% and 60.9% of total noninterest income for the six-month periods ended June 30, 2009 and 2008, respectively.
Noninterest expense increased approximately $2.9 million or 24.5% between the six-month periods ended June 30, 2008 and June 30, 2009. The primary reason for the increase in noninterest expense experienced during the first six months of 2009 was the result of a goodwill impairment loss totaling $3.0 million recognized during the quarter ended June 30, 2009. While impairment losses on the Company s core deposit intangible assets decreased $567,000 between the six-month periods ended June 30, 2008 and 2009, the Company took impairment charges of $503,000 during the first six months of 2009 on real estate owned through foreclosure, and $403,000 on investment securities. Salary expense decreased $1.5 million or 25.4% between the six months ended June 30, 2008 and June 30, 2009, primarily as the result of declines in accrued bonuses and employee incentives between the two periods.
Nonperforming assets, which are primarily related to the real estate portfolio, remained high during the six months ended June 30, 2009 as real estate markets continue to suffer from the mortgage crisis which began during mid-2007. Nonaccrual loans increased $10.5 million from the balance reported at December 31, 2008, and increased $17.5 million from the balance reported at June 30, 2008, to a balance of $56.2 million at June 30, 2009. In determining the adequacy of the underlying collateral related to these loans, management monitors trends within specific geographical areas, loan-to-value ratios, appraisals, and other credit issues related to the specific loans. Impaired loans increased $18.2 million during the six months ended June 30, 2009 to a balance of $67.2 million at June 30, 2009, and increased $9.1 million during the quarter ended June 30, 2009. Other real estate owned through foreclosure increased $6.9 million between December 31, 2008 and June 30, 2009, as sales of existing OREO properties were more than offset by the transfer of the $10.3 million in loans to other real estate owned during the six months ended June 30, 2009. As a result of these events, nonperforming assets as a percentage of total assets increased from 9.96% at December 31, 2008 to 14.03% at June 30, 2009.
The Company s return on average assets was -1.30% for the six months ended June 30, 2009 as compared to 1.19% for the six months ended June 30, 2008, and was -3.11% for the quarter months ended June 30, 2009 as compared to 1.09% for the quarter ended June 30, 2008. The Bank s return on average equity was -12.00% for the six months ended June 30, 2009 as compared to 10.98% for the same six-month period of 2008, and was -28.45% for the quarter ended June 30, 2009 as compared to 10.11% for the quarter ended June 30, 2008.
The Bank\'s net interest margin, as shown in Table 1, decreased to 4.39% at June 30, 2009 from 4.61% at June 30, 2008, a decrease of 22 basis point (100 basis points = 1%) between the two periods. Average market rates of interest have decreased significantly between the six-month periods ended June 30, 2008 and 2009. The prime rate averaged 3.25% for the six months ended June 30, 2009 as compared to 5.65% for the comparative six months of 2008.
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