Press Release

United Security Bancshares Reports 3rd Quarter Net Income of $4.2 Million

Company Release - 10/16/2019 5:38 PM ET

FRESNO, Calif.--(BUSINESS WIRE)-- United Security Bancshares (Nasdaq: UBFO) today announced its unaudited financial results for the three and nine months ended September 30, 2019. The Company reported consolidated net income of $4,173,000, or $0.25 per basic and diluted common share, for the quarter ended September 30, 2019, as compared to $3,518,000, or $0.21 per basic and diluted common share, for the quarter ended September 30, 2018. The Company recognized net income of $12,276,000 for the nine months ended September 30, 2019, an increase of 22% compared to the net income of $10,068,000 recognized for the nine months ended September 30, 2018. Basic and diluted earnings per share increased to $0.72 for the nine months ended September 30, 2019, as compared to basic earnings per share of $0.60 and diluted earnings per share of $0.59 for the nine months ended September 30, 2018.

Third Quarter 2019 Highlights (at or for the quarter ended September 30, 2019, except where noted)

  • Net interest income after provision for credit losses increased to $9,351,000, compared to $9,236,000 for the quarter ended September 30, 2018, and increased from $9,299,000 in the preceding quarter.
  • Net interest margin decreased to 4.17% from 4.43% for the quarter ended September 30, 2018, and decreased from 4.28% in the preceding quarter.
  • Net charge-offs totaled $226,000, compared to net recoveries of $746,000 for the quarter ended September 30, 2018, and net recoveries of $31,000 in the preceding quarter.
  • Capital positions remain strong with a 12.47% Tier 1 Leverage Ratio, a 15.67% Common Equity Tier 1 Ratio; a 17.13% Tier 1 Risk-Based Capital Ratio; and a 18.38% Total Risk-Based Capital Ratio.
  • Annualized return on average assets ("ROAA") was 1.69%, compared to 1.59% for the quarter ended September 30, 2018, and 1.71% in the preceding quarter.
  • Annualized return on average equity ("ROAE") was 14.36%, compared to 13.04% for the quarter ended September 30, 2018, and 14.53% in the preceding quarter.
  • Total loans, net of unearned fees, decreased to $569,500,000, compared to $587,814,000 at December 31, 2018.
  • Other real estate owned balances remained at $5,745,000 at September 30, 2019 when compared to $5,745,000 at December 31, 2018.
  • The allowance for credit losses as a percentage of gross loans increased to 1.45%, compared to 1.43% at December 31, 2018.
  • Total deposits increased to $820,223,000, compared to $805,643,000 at December 31, 2018.
  • Book value per share increased to $6.80, compared to $6.45 at December 31, 2018.

Dennis Woods, President and Chief Executive Officer, stated: "During the third quarter, we added Interactive Teller Machines (ITMs) in four of our branches, replacing existing drive-up windows, to provide extended banking hours for our customers. Our third quarter net interest margin reflects the impact of the Federal Reserve rate cut, however, core net income, capital, and liquidity remain strong. We expect to carry this momentum through the fourth quarter of 2019."

Results of Operations

Annualized ROE for the nine months ended September 30, 2019 was 14.50%, compared to 12.81% for the nine months ended September 30, 2018. Annualized ROA was 1.70% for the nine months ended September 30, 2019, compared to 1.58% for the nine months ended September 30, 2018. Annualized ROE for the quarter ended September 30, 2019 was 14.36% compared to 13.04% for the same period in 2018. Annualized ROA was 1.69% for the quarter ended September 30, 2019, compared to 1.59% for the same period in 2018.

The annualized average cost of deposits was 0.45% for the quarter ended September 30, 2019 and 0.31% for the quarter ended September 30, 2018. The increase in the cost of deposits is attributed to increases in average balances of interest-bearing deposits and rates paid on time deposits and money market accounts. Interest-bearing deposits increased 9.81% between the quarters ended September 30, 2018 and 2019 to an average balance of $524,437,000.

Net interest income after the provision for credit losses for the nine months ended September 30, 2019 totaled $28,103,000, an increase of $1,439,000, or 5.40%, from $26,664,000 for the same period ended September 30, 2018. Included within the balance of net interest income after the provision for credit losses for the nine months ended September 30, 2018 was a $1,710,000 recovery of provision. The recovery of provision was due to one-time recoveries on previously charged-off loans. There were no such recoveries recognized during the nine months ended September 30, 2019. The Company's net interest margin decreased from 4.31% for the nine months ended September 30, 2018 to 4.30% for the nine months ended September 30, 2019. The decrease was the result of increases in the cost of deposits, partially offset by increases in loan yields, and investment yields. The yield on loans increased from 5.52% for the nine months ended September 30, 2018 to 5.98% for the nine months ended September 30, 2019. The yield on loans for the nine months ended September 30, 2018 includes $550,000 in write-downs of unamortized insurance premiums on the student loan portfolio, which was a result of the dissolution of the insurance carrier. The increase in net interest income on a year-over-year comparison is the result of higher interest rates on loans and investment securities, partially offset by increasing costs of deposits and a decline in loan balances. Net interest income after the provision for credit losses for the quarter ended September 30, 2019 totaled $9,351,000, an increase of $115,000, or 1.25%, from the net interest income of $9,236,000 for the same period ended September 30, 2018.

Non-interest income for the nine months ended September 30, 2019 totaled $5,105,000, reflecting an increase of $2,165,000 from the $2,940,000 in non-interest income reported for the nine months ended September 30, 2018. Customer service fees, which represent the largest portion of the Company's non-interest income, totaled $2,479,000 and $2,787,000 for the nine months ended September 30, 2019 and 2018, respectively. On a year-over-year comparative basis, non-interest income increased primarily due to a $1,571,000 gain on the fair value of junior subordinated debentures (TRUPs) for the nine months ended September 30, 2019, compared to a $923,000 loss for the same period ended September 30, 2018. The change in the fair value of TRUPs reflected in non-interest income was caused by fluctuations in the LIBOR yield curve. Non-interest income for the nine months ended September 30, 2019 also includes a $115,000 loss resulting from the dissolution of the USB Real Estate Investment Trust (REIT) which was completed in February 2019. Non-interest income for the nine months ended September 30, 2018 includes a $171,000 gain recorded on the death benefit proceeds of bank-owned life insurance.

Non-interest income for the quarter ended September 30, 2019 totaled $1,853,000, reflecting an increase of $1,004,000 from the $849,000 in non-interest income reported for the quarter ended September 30, 2018. The increase during the period was primarily due to the recording of a $660,000 gain on the fair value of TRUPs for the quarter ended September 30, 2019, as compared to a $262,000 loss for the quarter ended September 30, 2018. The change in the fair value of TRUPs reflected in non-interest income was primarily caused by fluctuations in the LIBOR yield curve. Customer service fees totaled $839,000 for the quarter ended September 30, 2019, as compared to $815,000 for the quarter ended September 30, 2018.

For the nine months ended September 30, 2019, non-interest expense totaled $15,943,000, an increase of $484,000 compared to $15,459,000 for the nine months ended September 30, 2018. On a year-over-year comparative basis, non-interest expense increased primarily due to increases of $663,000 in professional fees, $188,000 in other expenses, and $116,000 in data processing, partially offset by a decreases of $491,000 in salaries and employee benefits and $110,000 in regulatory assessments. The increase in professional fees is mainly attributed to an increase in legal fees. The increase in data processing is primarily due to additional service fees, and the increase in other expenses is attributed to workman's compensation insurance expense. The decrease in salary and employee benefits is attributed to lower equity award expense. Non-interest expense for the nine months ended September 30, 2018 includes a $121,000 recovery of workman's compensation insurance expense.

Non-interest expense totaled $5,335,000 for the quarter ended September 30, 2019, an increase of $192,000 as compared to $5,143,000 reported for the quarter ended September 30, 2018. On a quarter-over-quarter comparative basis, non-interest expense increased primarily due to increases in data processing expenses and professional fees, partially offset by decreases in regulatory assessments as well as salary and employee benefits as a result of lower equity award expenses. The decrease in regulatory assessments is attributed to the utilization of FDIC assessment credits.

The Company recorded an income tax provision of $4,989,000 for the nine months ended September 30, 2019, compared to $4,077,000 for the same period in 2018. The effective tax rate for the nine months ended September 30, 2019 was 28.90%, compared to 28.82% for the nine months ended September 30, 2018. For the quarter ended September 30, 2019, the Company recorded a tax provision of $1,696,000, compared to a provision of $1,424,000 for the same period in 2018.

Provided at the end of this Press Release is a reconciliation of Core Net Income, as a non-GAAP measure, to Net Income. This reconciliation excludes Non-Core items such as the Fair Value Adjustment for TRUPs, recovery of provision for credit losses, and gain on sale of other real estate owned (OREO). Management believes that financial results are more comparative excluding the impact of such non-core items.

Balance Sheet Review

Total assets increased $24,340,000, or 2.61%, for the nine months ended September 30, 2019, due primarily to increases of $23,482,000 in overnight funds held at the Federal Reserve. Loan balances decreased by $17,805,000 for the nine months ended September 30, 2019 and investment securities increased by $11,566,000. Unfunded loan commitments increased $35,231,000 to $211,584,000 during the first nine months of 2019. With the adoption of ASU 2016-02, effective January 1, 2019, the Company began to recognize an operating lease right-of-use asset and operating lease liability. At September 30, 2019, the operating lease right-of-use asset was $3,610,000 and the operating lease liability was $3,714,000.

Total deposits increased $14,580,000, or 1.81%, to $820,223,000 during the nine months ended September 30, 2019. This increase was due to an increase of $40,436,000 in noninterest bearing deposits, partially offset by a decrease of $14,279,000 in time deposits and a decrease of $11,577,000 in NOW, money market, and savings accounts. Total money market and savings accounts decreased 2.69% to $418,914,000 at September 30, 2019, compared to $430,491,000 at December 31, 2018. Noninterest bearing deposits increased 13.81% to $333,156,000 at September 30, 2019, compared to $292,720,000 at December 31, 2018. As a result of the net increase, core deposits, which is made up of the balance of noninterest bearing deposits, NOW, money market, savings, and time deposits accounts less than $250,000, increased $28,859,000.

Shareholders’ equity at September 30, 2019 was $115,210,000, up $5,970,000 from shareholders’ equity of $109,240,000 at December 31, 2018. The increase in equity was a result of net earnings for the period, partially offset by cash dividends.

The Board of Directors of United Security Bancshares declared a cash dividend on common stock of $0.11 per share on September 24, 2019. The dividend will be payable on October 18, 2019, to shareholders of record as of October 8, 2019. The Board of Directors of United Security Bancshares declared a cash dividend on common stock of $0.11 per share on June 25, 2019. The dividend was payable on July 18, 2019, to shareholders of record as of July 8, 2019. The Board of Directors of United Security Bancshares declared a cash dividend on common stock of $0.11 per share on March 26, 2019. The dividend was payable on April 17, 2019, to shareholders of record as of April 8, 2019. No assurances can be provided that future dividends will be declared and/or as to the timing of such future dividends, if any.

Credit Quality

The Company has recorded a provision for credit losses of $15,000 for the nine months ended September 30, 2019, compared to a recovery of provision of $1,699,000 for the nine months ended September 30, 2018. Net loan charge-offs totaled $180,000 for the nine months ended September 30, 2019, as compared to net recoveries of $1,230,000 for the nine months ended September 30, 2018. The Company recorded a provision for credit loss of $5,000 for the quarter ended September 30, 2019, compared to a recovery of provision for credit losses of $373,000 for the quarter ended September 30, 2018. Net loan charge-offs totaled $226,000 for the quarter ended September 30, 2019, as compared to net loan recoveries of $746,000 for the quarter ended September 30, 2018.

The Company's allowance for loan loss totaled 1.45% of the loan portfolio at September 30, 2019, compared to 1.43% at December 31, 2018. In determining the adequacy of the allowance for loan losses, the judgment of the Company's management is a significant factor. Management considers the allowance for credit losses at September 30, 2019 to be adequate.

Non-performing assets, comprised of nonaccrual loans, troubled debt restructures (TDRs), other real estate owned through foreclosure (OREO), and loans more than 90 days past due and still accruing interest, decreased approximately $354,000 between December 31, 2018 and September 30, 2019 to $21,275,000. Nonperforming assets as a percentage of total assets decreased from 2.32% at December 31, 2018 to 2.22% at September 30, 2019. The decrease in nonperforming assets is mainly attributed to decreases in restructured loans. Nonaccrual loans increased $704,000 between December 31, 2018 and September 30, 2019 to $12,756,000. Restructured loans decreased $1,763,000 between December 31, 2018 and September 30, 2019. OREO totaled $5,745,000 at September 30, 2019 and December 31, 2018.

About United Security Bancshares

United Security Bancshares (NASDAQ: UBFO) is the holding company for United Security Bank, which was founded in 1987. United Security Bank is headquartered in Fresno and operates 11 full-service branch offices in Fresno, Bakersfield, Campbell, Caruthers, Coalinga, Firebaugh, Oakhurst, San Joaquin, and Taft. Additionally, United Security Bank operates Commercial Real Estate Construction, Commercial Lending, and Consumer Lending departments. For more information, please visit www.unitedsecuritybank.com.

Non-GAAP Financial Measures

This press release and the accompanying financial tables contain a non-GAAP financial measure (Net Income before Non-Core) within the meaning of the Securities and Exchange Commission’s Regulation G. In the accompanying financial tables, the Company has provided a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. The Company’s management believes that this non-GAAP financial measure provides useful information about the Company’s results of operations and/or financial position to both investors and management. The Company provides this non-GAAP financial measure to investors to assist them in performing their analysis of its historical operating results. The non-GAAP financial measure shows the Company's operating results before consideration of certain adjustments and, consequently, this non-GAAP financial measure should not be construed as an alternative to net income (loss) as an indicator of the Company's operating performance, as determined in accordance with GAAP. The Company may calculate this non-GAAP financial measure differently than other companies.

Forward-Looking Statements

This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Company intends such statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are based on management’s knowledge and belief as of today and are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. Forward-looking statements are subject to risks and uncertainties and actual results may differ materially from those presented. Factors that might cause such differences, some of which are beyond the Company’s ability to control or predict, include, but are not limited to: (1) changes in general economic and financial market conditions, either nationally or locally, (2) changes in interest rates, (3) changes in banking laws or regulations, (4) increased competition in the Company’s market, impacting the ability to execute its business plans, (5) loss of key personnel, (6) unanticipated credit losses, (7) earthquakes or other natural disasters impacting the local economy and/or the condition of real estate collateral, (8) the impact of technological changes and the ability to develop and maintain secure and reliable electronic systems, and (9) changes in accounting policies or procedures.

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. For a more complete discussion of these risks and uncertainties, see the Company’s Annual Report on Form 10-K, for the year ended December 31, 2018, and particularly the section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations." Readers should carefully review all disclosures the Company files from time to time with the Securities and Exchange Commission.

 

United Security Bancshares

Consolidated Balance Sheets (unaudited)

(in thousands)

 

September 30, 2019

 

December 31, 2018

Assets

 

 

 

Cash and non-interest-bearing deposits in other banks

$

31,073

 

 

$

28,949

 

Due from Federal Reserve Bank ("FRB")

214,870

 

 

191,388

 

Cash and cash equivalents

245,943

 

 

220,337

 

Investment securities (at fair value)

 

 

 

Available for sale ("AFS") securities

77,864

 

 

66,426

 

Marketable equity securities

3,787

 

 

3,659

 

Total investment securities

81,651

 

 

70,085

 

Loans

570,128

 

 

587,933

 

Unearned fees and unamortized loan origination costs - net

(628

)

 

(119

)

Allowance for credit losses

(8,230

)

 

(8,395

)

Net loans

561,270

 

 

579,419

 

Premises and equipment - net

9,455

 

 

9,837

 

Accrued interest receivable

10,522

 

 

8,341

 

Other real estate owned

5,745

 

 

5,745

 

Goodwill

4,488

 

 

4,488

 

Deferred tax assets - net

3,121

 

 

3,174

 

Cash surrender value of life insurance

20,682

 

 

20,244

 

Operating lease right-of-use assets

3,610

 

 

 

Other assets

10,911

 

 

11,388

 

Total assets

$

957,398

 

 

$

933,058

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

Deposits

 

 

 

Non-interest-bearing

$

333,156

 

 

$

292,720

 

Interest-bearing

487,067

 

 

512,923

 

Total deposits

820,223

 

 

805,643

 

 

 

 

 

Accrued interest payable

72

 

 

57

 

Operating lease liabilities

3,714

 

 

 

Other liabilities

7,849

 

 

7,963

 

Junior subordinated debentures (at fair value)

10,330

 

 

10,155

 

Total liabilities

842,188

 

 

823,818

 

 

 

 

 

Shareholders' Equity

 

 

 

Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 16,953,744 at September 30, 2019 and 16,946,622 at December 31, 2018

58,896

 

 

58,624

 

Retained earnings

56,619

 

 

49,942

 

Accumulated other comprehensive (loss) income

(305

)

 

674

 

Total shareholders' equity

115,210

 

109,240

Total liabilities and shareholders' equity

$

957,398

 

 

$

933,058

 

 
 

United Security Bancshares

Consolidated Statements of Income (unaudited)

(in thousands)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Interest Income:

 

 

 

 

 

 

 

Interest and fees on loans

$

8,648

 

$

8,397

 

$

25,733

 

$

24,114

Interest on investment securities

439

 

351

 

1,360

 

809

Interest on deposits in FRB

1,330

 

806

 

4,052

 

1,870

Total interest income

10,417

 

9,554

 

31,145

 

26,793

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

Interest on deposits

950

 

579

 

2,675

 

1,517

Interest on other borrowed funds

111

 

112

 

352

 

311

Total interest expense

1,061

 

691

 

3,027

 

1,828

Net Interest Income

9,356

 

8,863

 

28,118

 

24,965

Provision (Recovery of Provision) for Credit Losses

5

 

(373)

 

15

 

(1,699)

Net Interest Income after Provision (Recovery of Provision) for Credit Losses

9,351

 

9,236

 

28,103

 

26,664

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

Customer service fees

839

 

815

 

2,479

 

2,787

Increase in cash surrender value of bank-owned life insurance

147

 

132

 

438

 

 

389

Gain (loss) on fair value of marketable equity securities

18

 

(35)

 

128

 

(114)

Gain on proceeds from bank-owned life insurance

 

 

 

171

Gain (loss) on fair value of junior subordinated debentures

660

 

(262)

 

1,571

 

(923)

Loss on dissolution of real estate investment trust

(1)

 

 

(115)

 

(Loss) gain on sale of assets

(5)

 

 

1

 

29

Other

195

 

199

 

603

 

601

Total noninterest income

1,853

 

849

 

5,105

 

2,940

 

 

 

 

 

 

 

 

Noninterest Expense:

 

 

 

 

 

 

 

Salaries and employee benefits

2,775

 

2,826

 

8,307

 

8,798

Occupancy expense

829

 

848

 

2,450

 

2,448

Data processing

151

 

74

 

402

 

286

Professional fees

864

 

620

 

2,423

 

1,760

Regulatory assessments

(37)

 

87

 

138

 

248

Director fees

95

 

78

 

281

 

239

Correspondent bank service charges

14

 

15

 

42

 

48

Loss on California tax credit partnership

 

5

 

 

14

Net cost on operation and sale of OREO

71

 

30

 

223

 

129

Other

573

 

560

 

1,677

 

1,489

Total noninterest expense

5,335

 

5,143

 

15,943

 

15,459

 

 

 

 

 

 

 

 

Income Before Provision for Taxes

5,869

 

4,942

 

17,265

 

14,145

Provision for Taxes on Income

1,696

 

1,424

 

4,989

 

4,077

Net Income

$

4,173

 

$

3,518

 

$

12,276

 

$

10,068

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.25

 

$

0.21

 

$

0.72

 

$

0.60

Diluted earnings per common share

$

0.25

 

$

0.21

 

$

0.72

 

$

0.59

Weighted average basic shares for EPS

16,950,564

 

16,902,218

 

16,948,810

 

16,897,524

Weighted average diluted shares for EPS

16,981,705

 

16,954,053

 

16,977,224

 

16,933,477

 
 

United Security Bancshares

Average Balances and Rates (unaudited)

 

 

 

 

(in thousands)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Average Balances:

 

 

 

 

 

 

 

Loans (1)

$

579,035

 

 

$

571,673

 

 

$

575,323

 

 

$

584,424

 

Investment securities – taxable

71,168

 

 

59,571

 

 

68,254

 

 

51,489

 

Interest-bearing deposits in FRB

240,605

 

 

163,572

 

 

231,807

 

 

137,478

 

Total interest-earning assets

890,808

 

 

794,816

 

 

875,384

 

 

773,391

 

Allowance for credit losses

(8,448

)

 

(8,934

)

 

(8,449

)

 

(9,219

)

Cash and due from banks

29,105

 

 

27,514

 

 

28,898

 

 

27,111

 

Other real estate owned

5,745

 

 

5,745

 

 

5,745

 

 

5,745

 

Other non-earning assets

62,752

 

 

56,225

 

 

61,112

 

 

54,653

 

Total average assets

$

979,962

 

 

$

875,366

 

 

$

962,690

 

 

$

851,681

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

$

524,437

 

 

$

449,041

 

 

$

523,104

 

 

$

431,118

 

Junior subordinated debentures

10,416

 

 

10,062

 

 

10,296

 

 

9,783

 

Total interest-bearing liabilities

534,853

 

 

459,103

 

 

533,400

 

 

440,901

 

Non-interest-bearing deposits

319,547

 

 

303,614

 

 

306,590

 

 

299,701

 

Other liabilities

10,319

 

 

5,645

 

 

9,506

 

 

6,012

 

Total liabilities

864,719

 

 

768,362

 

 

849,496

 

 

746,614

 

Total equity

115,243

 

 

107,004

 

 

113,194

 

 

105,067

 

Total liabilities and equity

$

979,962

 

 

$

875,366

 

 

$

962,690

 

 

$

851,681

 

 

 

 

 

 

 

 

 

Average Rates:

 

 

 

 

 

 

 

Loans (1)

5.93

%

 

5.83

%

 

5.98

%

 

5.52

%

Investment securities- taxable

2.45

%

 

2.34

%

 

2.66

%

 

2.10

%

Interest-bearing deposits in FRB

2.19

%

 

1.95

%

 

2.34

%

 

1.82

%

Earning assets

4.64

%

 

4.77

%

 

4.76

%

 

4.63

%

Interest bearing deposits

0.72

%

 

0.51

%

 

0.68

%

 

0.47

%

Total deposits

0.45

%

 

0.31

%

 

0.43

%

 

0.28

%

Junior subordinated debentures

4.23

%

 

4.42

%

 

4.57

%

 

4.25

%

Total interest-bearing liabilities

0.79

%

 

0.60

%

 

0.76

%

 

0.55

%

Net interest margin (2)

4.17

%

 

4.43

%

 

4.30

%

 

4.31

%

(1) Loan amounts include nonaccrual loans, but the related interest income has been included only if collected for the period prior to the loan being placed on a nonaccrual basis.

(2) Net interest margin is computed by dividing annualized net interest income by average interest-earning assets.

 

United Security Bancshares

Condensed - Consolidated Balance Sheets (unaudited)

(in thousands)

 

September 30, 2019

 

June 30, 2019

 

March 31, 2019

 

December 31, 2018

 

September 30, 2018

Cash and cash equivalents

$

245,943

 

 

$

309,460

 

 

$

260,701

 

 

$

220,337

 

 

$

207,300

 

Investment securities

81,651

 

 

63,632

 

 

66,604

 

 

70,085

 

 

65,727

 

Loans

569,500

 

 

572,810

 

 

579,617

 

 

587,814

 

 

577,598

 

Allowance for credit losses

(8,230

)

 

(8,452

)

 

(8,417

)

 

(8,395

)

 

(8,798

)

Net loans

561,270

 

 

564,358

 

 

571,200

 

 

579,419

 

 

568,800

 

Other assets

68,534

 

 

69,043

 

 

65,535

 

 

63,217

 

 

62,201

 

Total assets

$

957,398

 

 

$

1,006,493

 

 

$

964,040

 

 

$

933,058

 

 

$

904,028

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing

$

333,156

 

 

$

304,172

 

 

$

300,476

 

 

$

292,720

 

 

$

315,213

 

Interest-bearing

487,067

 

 

566,743

 

 

531,101

 

 

512,923

 

 

463,670

 

Total deposits

820,223

 

 

870,915

 

 

831,577

 

 

805,643

 

 

778,883

 

Other liabilities

21,965

 

 

22,240

 

 

21,270

 

 

18,175

 

 

18,099

 

Total liabilities

842,188

 

 

893,155

 

 

852,847

 

 

823,818

 

 

796,982

 

Total shareholders' equity

115,210

 

 

113,338

 

 

111,193

 

 

109,240

 

 

107,046

 

Total liabilities and shareholder's equity

$

957,398

 

 

$

1,006,493

 

 

$

964,040

 

 

$

933,058

 

 

$

904,028

 

 
 

United Security Bancshares

Condensed - Consolidated Statements of Income (unaudited)

 

 

 

 

(in thousands)

For the Quarters Ended:

 

September 30, 2019

 

June 30, 2019

 

March 31, 2019

 

December 31, 2018

 

September 30, 2018

Total interest income

$

10,417

 

 

$

10,311

 

 

$

10,417

 

 

$

9,821

 

 

$

9,554

 

Total interest expense

1,061

 

 

1,008

 

 

957

 

 

876

 

 

691

 

Net interest income

9,356

 

 

9,303

 

 

9,460

 

 

8,945

 

 

8,863

 

Provision (recovery of provision) for credit losses

5

 

 

4

 

 

6

 

 

(65

)

 

(373

)

Net interest income after provision (recovery of provision) for credit losses

9,351

 

 

9,299

 

 

9,454

 

 

9,010

 

 

9,236

 

 

 

 

 

 

 

 

 

 

 

Total non-interest income

1,853

 

 

1,729

 

 

1,523

 

 

1,665

 

 

849

 

Total non-interest expense

5,335

 

 

5,262

 

 

5,347

 

 

5,473

 

 

5,143

 

Income before provision for taxes

5,869

 

 

5,766

 

 

5,630

 

 

5,202

 

 

4,942

 

Provision for taxes on income

1,696

 

 

1,669

 

 

1,623

 

 

1,254

 

 

1,424

 

Net income

$

4,173

 

 

$

4,097

 

 

$

4,007

 

 

$

3,948

 

 

$

3,518

 

 
 

United Security Bancshares

Nonperforming Assets (unaudited)

(dollars in thousands)

 

September 30, 2019

 

December 31, 2018

Commercial and industrial

$

75

 

 

$

 

Real estate - mortgage

1,008

 

 

389

 

RE construction & development

11,529

 

 

11,663

 

Agricultural

144

 

 

 

Total nonaccrual loans

$

12,756

 

 

$

12,052

 

 

 

 

 

Loans past due 90 days and still accruing

326

 

 

 

Restructured loans

2,448

 

 

3,832

 

Total nonperforming loans

$

15,530

 

 

$

15,884

 

Other real estate owned

5,745

 

 

5,745

 

Total nonperforming assets

$

21,275

 

 

$

21,629

 

 

 

 

 

Nonperforming assets to total gross loans

2.72

%

 

2.70

%

Nonperforming assets to total assets

2.22

%

 

2.32

%

Allowance for credit losses to nonperforming loans

52.99

%

 

52.85

%

 
 

United Security Bancshares

Selected Financial Data (unaudited)

(dollars in thousands, except per share amounts)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Return on average assets

1.69

%

 

1.59

%

 

1.70%

 

1.58%

Return on average equity

14.36

%

 

13.04

%

 

14.50%

 

12.81%

Net charge-off (recoveries) to average loans

0.15

%

 

(0.52

)%

 

0.04%

 

(0.28)%

 

 

 

 

 

 

 

 

 

September 30,
2019

 

December 31,
2018

 

 

 

 

Shares outstanding - period end

16,953,744

 

 

16,946,622

 

 

 

 

 

Book value per share

$6.80

 

 

$6.45

 

 

 

 

 

Efficiency ratio (1)

47.99

%

 

53.66

%

 

 

 

 

Total impaired loans

$18,362

 

 

$18,683

 

 

 

 

 

Net loan to deposit ratio

68.43

%

 

71.92

%

 

 

 

 

Allowance for credit losses to total loans

1.45

%

 

1.43

%

 

 

 

 

Total capital to risk weighted assets

 

 

 

 

 

 

 

Company

18.38

%

 

17.80

%

 

 

 

 

Bank

18.18

%

 

17.70

%

 

 

 

 

Tier 1 capital to risk-weighted assets

 

 

 

 

 

 

 

Company

17.13

%

 

16.55

%

 

 

 

 

Bank

16.93

%

 

16.45

%

 

 

 

 

Common equity tier 1 capital to risk-weighted assets

 

 

 

 

 

 

 

Company

15.67

%

 

15.15

%

 

 

 

 

Bank

16.93

%

 

16.45

%

 

 

 

 

Tier 1 capital to adjusted average assets (leverage)

 

 

 

 

 

 

 

Company

12.47

%

 

12.15

%

 

 

 

 

Bank

12.29

%

 

12.16

%

 

 

 

 

(1) Efficiency ratio is defined as total noninterest expense divided by net interest income before provision for credit losses plus total noninterest income.

 

United Security Bancshares

Net Income before Non-Core Reconciliation

Non-GAAP Information (dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

 

2019

 

2018

 

Change $

 

Change %

Net income

 

$

12,276

 

 

$

10,068

 

 

$

2,208

 

 

21.93

%

 

 

 

 

 

 

 

 

 

TRUPs (1) fair value adjustment gain (loss)

 

1,571

 

 

(923

)

 

 

 

 

Reversal of provision for credit losses (2)

 

 

 

1,710

 

 

 

 

 

 

 

1,571

 

 

787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax effect

 

456

 

 

228

 

 

 

 

 

Non-core items net of taxes

 

1,115

 

 

559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP core net income

 

$

11,161

 

 

$

9,509

 

 

$

1,652

 

 

17.37

%

(1)

TRUPs Fair Value Adjustment is not part of Core Income and depending upon market rates, can “add to” or “subtract from” Core Income and mask Non-GAAP Core Income change.

 

 

(2)

A reversal of provision for credit losses is not part of Non-GAAP Core Income. This reversal from the allowance for credit losses was in excess of the calculated reserve for the period. The recovery of provision for credit losses of $1,699,000 for the nine months ended September 30, 2018, within the Consolidated Statements of Income, includes this reversal of provision for credit losses of $1,710,000 and a provision for overdrafts of $11,000. For the nine months ended September 30, 2019, there was no reversal from the allowance for credit losses in excess of the calculated reserve for the period. The provision for credit losses of $15,000, as reported within the Consolidated Statements of Income, represents the provision for overdrafts.

 

 

Dennis Woods, President and CEO
(559) 248-4928

Source: United Security Bancshares