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Financail Stocks In The news: United Security Bancshares (NASDAQ:UBFO)

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On Thursday, Shares of United Security Bancshares (NASDAQ:UBFO), added 1.97% and closed at 7.75 in the last trading session. The last trading range of the stock ranges between $7.65 and $7.85.

United Security Bancshares (Nasdaq: UBFO), recently declared its unaudited financial results for the quarter ended March 31, 2017.  The Company recognized net income of $1,771,000 for the three months ended March 31, 2017, a boost of 0.11% contrast to the net income of $1,769,000 recognized for the three months ended March 31, 2016.  Basic and diluted earnings per share remained at $0.10 for the three months ended March 31, 2017, as contrast to $0.10 for the three months ended March 31, 2016.

Dennis Woods, President and Chief Executive Officer, added: “There is an important matter not apparent to the casual reader of this earnings release that I want to point out. Apart From the Fair Value Adjustment for Trust Preferred Securities (“TRUPS”), net income was $1,972,600 for the three months ended March 31, 2017, a boost of about 27% contrast to net income of $1,554,200 for the three months ended March 31, 2016.”  Mr. Woods explained that “the 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 Core Income change.”

The TRUPS Fair Value Adjustment for the three month periods ended March 31, 2016 and 2017, respectively, are set forth in the table appearing at the end of this Press Release.

First Quarter 2017 Highlights (at or for the quarter ended March 31, 2017)

  • Net interest income raised to $7,228,000, contrast to $6,611,000 for the quarter ended March 31, 2016, and reduced from $7,384,000 in the preceding quarter.
  • Annualized net interest margin reduced to 4.10% from 4.12% for the quarter ended March 31, 2016.
  • Net recoveries totaled $25,000, contrast to net charge-offs of $2,000 in the preceding quarter and net recoveries of $27,000 for the quarter ended March 31, 2016.
  • Total loans reduced to $547,748,000, contrast to $570,834,000 at December 31, 2016.
  • Nonperforming assets as a percentage of total assets raised to 2.54%, contrast to 2.40% at December 31, 2016.
  • Nonperforming assets raised about $1,027,000 between December 31, 2016 and March 31, 2017.
  • Other real estate owned balances remained unchanged at $6,471,000, when contrast to December 31, 2016.
  • The allowance for credit losses as a percentage of gross loans raised to 1.64%, contrast to 1.56% at December 31, 2016.
  • Total deposits reduced to $670,541,000, contrast to $676,629,000 at December 31, 2016.
  • Tangible book value per share raised to $5.57, contrast to $5.52 at December 31, 2016.

Return on average equity (ROAE) for the three months ended March 31, 2017 was 7.34%, contrast to 7.82% for the three months ended March 31, 2016.  Return on average assets (ROAA) was 0.92% for the three months ended March 31, 2017, contrast to 0.98% for the three months ended March 31, 2016.  The annualized average cost of deposits was 0.20% for the quarter ended March 31, 2017, up from 0.18% for the quarter ended March 31, 2016. Shareholders’ equity at March 31, 2017 was $98,498,000, up $1,844,000 from shareholders’ equity of $96,654,000 at December 31, 2016.

Total assets reduced $3,874,000, or 0.49%, for the three months ended March 31, 2017, due partially to a decline of $2,140,000 in the investment portfolio and $23,086,000 in gross loan balances, offset by a boost of $20,100,000 in overnight funds.

Total deposits reduced $6,088,000, or 0.90%, to $670,541,000 during the three months ended March 31, 2017.  Interest bearing transaction and savings accounts reduced 0.81% to $308,420,000 at March 31, 2017, contrast to $310,941,000 at December 31, 2016.  Noninterest bearing deposits raised 6.46%  to $279,668,000 at March 31, 2017, contrast to $262,697,000 at December 31, 2016. This increase was partially offset by a decrease in time deposits which included the maturity of $6,000,000 in purchased brokered certificates of deposit.

The Board of Directors of United Security Bancshares declared a first quarter 2017 stock dividend of one percent (1%) on March 28, 2017. The stock dividend was payable to shareholders of record on April 7, 2017, and the shares were issued on April 17, 2017. This marks the 34th successive quarterly stock dividend since 2008.  The Company’s Board of Directors has elected to issue stock dividends in order to preserve capital for future growth opportunities.  No assurances can be offered that future dividends, whether payable in stock or cash, will be declared and/or as to the timing of such future dividends, if any.

Net interest income after the provision for credit losses for the three months ended March 31, 2017 totaled $7,207,000, a boost of $574,000, or 8.65%, from the net interest income of $6,633,000 for the same period ended March 31, 2016. Although net interest income raised, the Company’s net interest margin declined from 4.12% for the three months ended March 31, 2016 to 4.10% for the three months ended March 31, 2017.  The 2 basis point decrease in net interest margin in the period-to-period comparison resulted mainly from declining yields on the loan and investment portfolios.  The yield on loans declined from 5.31% for the three months ended March 31, 2016 to 5.18% for the three months ended March 31, 2017. The 13 basis point decrease in loan yields is the result of strong loan growth in lower-yielding mortgage loans and competitive pressures on loan yields.  The increase in net interest income on a year-over-year comparison is the result of a boost in loan balances between the two periods.

Non-interest income for the three months ended March 31, 2017 totaled $909,000, reflecting a decrease of $652,000 from $1,561,000 in non-interest income stated for the three months ended March 31, 2016.  Customer service fees, which represent the leading portion of the Company’s non-interest income, totaled $941,000 and $926,000 for the three months ended March 31, 2017 and 2016, respectively.  On a year-over-year comparative basis, non-interest income reduced mainly because of the change in fair value option of financial liability caused by fluctuations in the LIBOR yield curve.  The Company recorded a $336,000 loss on the fair value option of financial liability for the three months ended March 31, 2017, contrast to a $358,000 gain for the same period ended March 31, 2016.

For the three months ended March 31, 2017, non-interest expense totaled $5,190,000, a decrease of $110,000 contrast to $5,300,000 for the three months ended March 31, 2016.  On a year-over-year comparative basis, non-interest expense reduced mainly because of decreases of $234,000 in professional fees, $120,000 in regulatory assessments, and $82,000 in occupancy expenses, partially offset by a boost of $395,000 in salaries and employee benefit expenses.  Professional fees for the three months ended March 31, 2016, included a $125,000 legal settlement. Salaries and employee benefit expenses for the three months ended March 31, 2017, reflect increases in salaries, higher group insurance expenses, and increases in incentives and bonuses.

The Company recorded a provision for credit losses of $21,000 for the three months ended March 31, 2017, contrast to a recovery of provision of $22,000 for the three months ended March 31, 2016.  Net loan recoveries totaled $25,000 for the three months ended March 31, 2017, as contrast to net recoveries of $27,000 for the three months ended March 31, 2016.

Over the quarter the allowance for loan losses raised slightly as a percentage of total loans. The allowance for loan losses totaled 1.64% of total loans at March 31, 2017, contrast to 1.56% of total loans at December 31, 2016. In determining the adequacy of the allowance for loan losses, the judgment of the Company’s administration is a noteworthyfactor and administration considers the allowance for credit losses at March 31, 2017 to be adequate.

Non-performing assets, comprised of nonaccrual loans, troubled debt restructures (TDR), other real estate owned through foreclosure (OREO), and loans more than 90 days past due and still accruing interest, raised about $1,027,000 between December 31, 2016 and March 31, 2017 to $19,908,000.  Nonperforming assets as a percentage of total assets raised from 2.40% at December 31, 2016 to 2.54% at March 31, 2017.  The increase in nonperforming assets is mainly attributed to increases in restructured loans.  Nonaccrual loans reduced $80,000 between December 31, 2016 and March 31, 2017 to $7,184,000.  Impaired loans totaled $17,740,000 at March 31, 2017, a boost of $1,561,000 from the balance of $16,179,000 at December 31, 2016. OREO totaled $6,471,000 at March 31, 2017 and December 31, 2016.

Analyst recommendation for this stock stands at N/A.