United Security Bancshares (NASDAQ:UBFO)
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United Security Bancshares - 18.3% ROE for 3rd Quarter of 2004
FRESNO, Calif., Oct. 12 /PRNewswire-FirstCall/ -- Dennis R. Woods, President
and Chief Executive Officer of United Security Bancshares (NASDAQ:UBFO),
http://www.unitedsecuritybank.com/ , reported today the results of operations
for the 3rd quarter of 2004. Return on average equity for the 3rd quarter was
18.3% and the return on average assets was 1.66%. Net income was $2,382,000, as
compared with $2,559,000 in 2003, a decrease of 6.9%. Net income was $6,152,000
for the nine months ended September 30, 2004 as compared with $6,505,000 in
2003, a decline of 5.4%.
The net income decrease of $353,000 in nine months ended September 30 resulted
from several factors which, except for income taxes, were more than offset by
increased core earnings and expense reduction. In the nine months of 2003 the
company earned shared appreciation income of $1,438,000 while none was earned
in the same period for 2004. This nonrecurring income was more than offset as
evidenced by the Company's nine month pretax income for 2004 which exceeded the
nine month pretax income of 2003 by $465,000, an increase of 4.9%. Income tax
expense however, increased by $818,000 for 2004 over 2003. This resulted from
the elimination of real estate investment trust (REIT) tax benefits by the
California Franchise Tax Board (FTB). The adjustments for this elimination
appeared in the fourth quarter for 2003 and are not apparent in the nine month
comparison. This discrepancy will no longer be a factor with the release of our
year end report.
Basic earnings per share for the 3rd quarter were $0.42 compared with $0.47 for
2003, a 10.6% decrease. Diluted earnings per share for the quarter were also
$0.42 compared with $0.47 a year ago. Year to date basic earnings per share for
2004 were $1.10 compared with 1.19 in 2003, a 7.6% decrease. Year to date
diluted earning per share for 2004 were $1.09 compared with $1.18 in 2003, a
7.6% decrease.
Woods added, "I am very pleased with the pretax earnings numbers, up $465,000
year to date. I consider pretax earnings growth a key indicator that
shareholder value is growing despite all that has gone on this year. We opened
a de novo branch in downtown Fresno, completed a merger with Taft National
Bank, improved corporate governance, strengthened the audit committee and
currently a significant portion of our staff is dedicated to ensuring our
compliance with Sarbanes-Oxley by year end, a highly complex and time consuming
project. Each of these items takes away from our core business focus and some
add considerable cost. I am especially pleased that we continue to project
another record year for earnings."
Return on average equity for the 3rd quarter was 18.3% and the return on
average assets was 1.66%. For the same period in 2003, ROAE was 23.8% and ROAA
was 2.01%. For the nine months just ended, return on average equity was 16.8%
and the return on average assets was 1.52%. For the same period in 2003, ROAE
was 20.2% and ROAA was 1.70%. The stability of these key ratios is indicative
of the banks' consistent performance and ability to build shareholder value,
even during expansion.
The 64th consecutive quarterly cash dividend of $0.16 per share, up from $0.145
for an 10.3% increase from a year ago, was declared on September 28, 2004 to be
paid on October 20, 2004, to shareholders of record on October 8, 2004.
Shareholders' equity ended the quarter at $52,123,000, an increase of 16.2%
over September 30, 2003. Dividends of $3.4 million were paid out of
shareholders' equity to shareholders during the past 12 months. During the last
12 months $2,022,136 from shareholders' equity was used to purchase and retire
Company stock. The average price paid per share was $23.07 and the number of
shares purchased and retired was 87,638 shares. In addition, $6,250,000 was
added to shareholders' equity as a result of the Taft National Bank
acquisition.
Net interest income for the 3rd quarter 2004 was $6.4 million, up $1.1 million
from 2003 for an increase of 21.4%. The net interest margin increased from
4.55% in 2003 to 5.03% in the 3rd quarter of 2004. The increase is primarily
attributable to growth in earning assets and a decrease in funding costs.
Earning assets increased by $43 million over the past 12 months.
Noninterest income for the 3rd quarter of 2004 was $1,359,000, down from
$2,223,000 in 2003 for a decrease of $864,000 or 38.9%. The decrease primarily
resulted from $1,032,000 in shared appreciation income in the 3rd quarter 2003
that did not reoccur in 2004 and was partially offset from increases in service
charges on deposit accounts and other noninterest income.
3rd quarter operating expenses were $3,738,000 for 2004 and $3,478,000 for
2003, an increase of $261,000 or 7.5%. The primary factors contributing to the
rise were salaries and other employee benefits related to the Taft acquisition,
Convention Center branch, and other key staff position additions to better
position the Company for continued strong growth. The efficiency ratio changed
to 49.3% for 2004 from 46.2% in 2003, reflecting the costs of expanding and the
nonreocurring shared appreciation income.
The provision for loan loss was $889,000 for the nine months of 2004 and
$872,000 for same period in 2003. The Bank's model to determine the adequacy of
the allowance for loan losses is the primary factor for establishing the amount
of the provision for loan losses and the current allowance for loan losses is
considered adequate.
Nonperforming assets improved to 3.04% of total assets on September 30, 2004
from 3.25% at June 30, 2004.
United Security Banc shares is a $583 million bank holding company. United
Security Bank, it's principal subsidiary is a state chartered bank and member
of the Federal Reserve Bank of San Francisco. The Bank operates ten branches in
the Central and Southern San Joaquin Valley.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements about the company for
which the company claims the protection of the safe harbor provisions contained
in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on management's knowledge and belief as of
today and include information concerning the company's possible or assumed
future financial condition, and its results of operations, business and
earnings outlook. These forward-looking statements are subject to risks and
uncertainties. A number of factors, some of which are beyond the company's
ability to control or predict, could cause future results to differ materially
from those contemplated by such forward-looking statements. These factors
include (1) changes in interest rates, (2) significant changes in banking laws
or regulations, (3) increased competition in the company's market, (4)
other-than-expected credit losses, (5) earthquake or other natural disasters
impacting the condition of real estate collateral, (6) the effect of
acquisitions and integration of acquired businesses, (7) the impact of proposed
and/or recently adopted changes in regulatory, judicial, or legislative tax
treatment of business transactions, particularly recently enacted California
tax legislation and the subsequent Dec. 31, 2003, announcement by the Franchise
Tax Board regarding the taxation of REITs and Riches; and (8) unknown economic
impacts caused by the State of California's budget issues. Management cannot
predict at this time the severity or duration of the effects of the recent
business slowdown on our specific business activities and profitability. Weaker
or a further decline in capital and consumer spending, and related recessionary
trends could adversely affect our performance in a number of ways including
decreased demand for our products and services and increased credit losses.
Likewise, changes in deposit interest rates, among other things, could slow the
rate of growth or put pressure on current deposit levels. Forward-looking
statements speak only as of the date they are made, and the company does not
undertake to update forward-looking statements to reflect circumstances or
events that occur after the date the statements are made, or to update earnings
guidance including the factors that influence earnings.
For a more complete discussion of these risks and uncertainties, see the
company's Quarterly Report on Form 10-K for the year ended December 31, 2003,
and particularly the section of Management's Discussion and Analysis.
United Security Bancshares
Consolidated Balance Sheets
(unaudited)
(Dollars in thousands)
September 30 September 30
2004 2003
Cash & noninterest-bearing deposits in
other banks $26,405 $18,465
Interest-bearing deposits in other banks 8,069 7,654
Federal funds sold 32,005 15,085
Investment securities 93,680 89,128
Loans, net of unearned fees 386,141 354,668
Less: allowance for loan losses (7,186) (5,298)
Loans, net 378,956 349,370
Premises and equipment, net 7,149 5,255
Intangible assets 4,222 2,035
Other assets 32,742 21,233
TOTAL ASSETS $583,227 $508,224
Deposits:
Noninterest-bearing demand & NOW $176,133 $117,814
Savings 31,982 25,247
Time 302,450 290,618
Total deposits 510,565 433,679
Borrowed funds 135 10,415
Other liabilities 4,940 4,361
Trust Preferred Securities 0 15,000
Junior subordinated debentures 15,464 0
TOTAL LIABILITIES $531,104 $463,455
Shareholders' equity:
Common shares outstanding:
5,681,472 at Sep. 30, 2004
5,508,760 at Sep. 30, 2003 $22,323 $18,218
Retained earnings 30,537 26,693
Unallocated ESOP shares (103) (374)
Other comprehensive income (loss) ($633) $232
Total shareholders' equity $52,123 $44,769
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $583,227 $508,224
United Security Bancshares
Consolidated Statements of Income
(unaudited)
Three Three Nine Nine
Months Months Months Months
Ending Ending Ending Ending
Sep 30 Sep 30 Sep 30 Sep 30
2004 2003 2004 2003
Interest income $8,060 $6,935 $22,200 $20,110
Interest expense 1,616 1,630 4,626 5,681
Net interest income 6,444 5,304 17,574 14,429
Provision for loan
losses 249 371 889 872
Other income 1,359 2,223 3,673 4,883
Other expenses 3,738 3,478 10,476 9,023
Income before income
taxes 3,815 3,679 9,883 9,417
Provision for income
taxes 1,433 1,121 3,731 2,913
NET INCOME $2,382 $2,559 $6,152 $6,505
United Security Bancshares
Selected Financial Data
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
09/30/2004 09/30/2003 09/30/2004 09/30/2003
Basic Earnings Per Share $0.42 $0.47 $1.10 $1.19
Diluted earning per share $0.42 $0.47 $1.09 $1.18
Annualized Return on:
Average Assets 1.66% 2.01% 1.52% 1.70%
Average Equity 18.34% 23.78% 16.79% 20.44%
Net Interest Margin 5.03% 4.55% 4.82% 4.11%
Net Charge-offs to
Average Loans 0.00% 0.04% 0.10% 0.28%
09/30/2004 09/30/2003
Book Value Per Share $9.17 $8.14
Tangible Book Value
Per Share $8.43 $7.77
Efficiency Ratio 49.30% 46.72%
Non Performing Assets
to Total Assets 3.04% 4.37%
Allowance for Loan
Losses to Total Loans 1.86% 1.49%
Shares Outstanding --
period end 5,681,472 5,508,760
DATASOURCE: United Security Bancshares
CONTACT: Dennis R. Woods, President and Chief Executive Officer of
United Security Bank, +1-559-248-4928
Web site: http://www.unitedsecuritybank.com/