SECURITIES AND EXCHANGE COMMISSION
Washington, D C 20549
FORM 10-Q
(Mark One)
( x ) Quarterly Report Pursuant to Section 13 or 15(2) of the Securities
Exchange Act of 1934
( ) Transition Report Pursuant to Section 13 or 15(2) of the Securities
Exchange Act of 1934
FOR THE QUARTER ENDED MARCH 31, 1995
Commission File Number 0-14549
UNITED SECURITY BANCSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
Alabama 63-0843362
(State of Other Jurisdiction of (I R S Employer Identification
Incorporation or Organization) Number)
131 West Front Street (334) 636-5424
Post Office Box 249 (Registrant's Telephone
Thomasville, AL 36784 Number Including Area
(Address and Zip Code of Code)
Principal Executive Offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (x). No ( ).
Shares of common stock ($.25 par value) outstanding as of March 31, 1995:
534,490.
Total Number of Pages: 12
Exhibit Index at Page: None.
<PAGE>
PART I.
FINANCIAL INFORMATION
<PAGE>
UNITED SECURITY BANCSHARES, INC AND SUBSIDIARY INDEX TO FORM 10-Q
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 4
Consolidated Statements of Condition at March 31, 1995 (Unaudited), 4
and December 31, 1994
Consolidated Statements of Income (Unaudited) for the Three Months 5
Ended March 31, 1995 and 1994
Consolidated Statements of Cash Flows (Unaudited) for the Three 6
Months Ended March 31, 1995 and 1994
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 8
and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE PAGE
Signatures 12
<PAGE>
Item 1.
UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
March 31, December 31,
ASSETS 1995 1994
[S] [C] [C]
Cash and due from banks $ 7,327,689 $ 7,190,823
Federal funds sold 1,000,000 0
TOTAL CASH AND CASH EQUIVALENTS 8,327,689 7,190,823
Investment securities (market value of $22,814,181
and $21,594,206, respectively) 22,715,888 22,126,539
Investment securities available for sale 95,340,455 90,587,661
Loans 58,423,234 58,061,776
Less: Unearned interest on loans ( 519,219) ( 556,356)
Less: Allowance for possible loan losses ( 781,933) ( 772,000)
NET LOANS 57,122,082 56,733,420
Premises and equipment 3,802,107 3,876,828
Accrued interest receivable 1,828,062 1,853,986
Other assets 3,631,052 4,071,778
TOTAL ASSETS $192,767,335 $186,441,035
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand - non-interest bearing $ 25,544,137 $ 23,491,541
Demand - interest bearing 25,143,802 26,582,602
Savings 15,102,602 14,323,733
Time 81,183,463 77,886,065
TOTAL DEPOSITS 146,974,004 142,283,941
Federal funds purchased 0 7,400,000
Securities sold under repurchase agreements 70,837 220,614
U.S. Treasury tax and loan 280,730 531,474
Other borrowings 16,500,000 9,500,000
Dividend payable 235,176 224,486
Accrued interest payable 932,002 800,647
Other liabilities 792,115 911,224
Current portion long-term debt 5,083,333 5,083,333
Long-term debt 743,056 763,889
TOTAL LIABILITIES 171,611,253 167,719,608
SHAREHOLDERS' EQUITY
Common stock, par value $.25 per share;
600,000 shares authorized; 550,515
shares issued 137,628 137,628
Surplus 5,645,945 5,645,945
Net unrealized loss on
available for sale securities ( 1,343,977) ( 3,217,137)
Retained earnings 16,970,906 16,409,411
Less: Treasury stock - 16,025 shares, at cost ( 254,420) ( 254,420)
TOTAL SHAREHOLDERS' EQUITY 21,156,082 18,721,427
$192,767,335 $186,441,035
See Notes to Consolidated Financial Statements.
<PAGE>
UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended March 31,
1995 1994
INTEREST INCOME
[S] [C] [C]
Interest and fees on loans $1,315,071 $1,119,694
Interest on investment securities:
Taxable 181,738 323,022
Tax-exempt 234,783 195,809
416,521 518,831
Interest on investment securities
available for sale 2,176,502 1,360,943
Interest on trading securities 4,610 24,829
Interest on federal funds sold 3,214 6,377
Interest on rate swaps 4,112 59,266
TOTAL INTEREST INCOME 3,920,030 3,089,940
INTEREST EXPENSE
Interest on deposits 1,281,352 1,080,556
Interest on short-term borrowings 231,133 35,687
Interest on long-term debt 87,112 93,260
TOTAL INTEREST EXPENSE 1,599,597 1,209,503
Net interest income 2,320,433 1,880,437
Provision for possible loan losses 0 6,000
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 2,320,433 1,874,437
NON-INTEREST INCOME
Service and penalty charges on deposit accounts 199,187 199,234
Credit life insurance commissions 5,092 11,877
Other income 53,682 35,414
Securities gains (losses):
Investment securities ( 277,258) 208,602
Trading securities 15,746 (195,156)
Options 55,063 37,312
TOTAL NON-INTEREST INCOME 51,512 297,283
NON-INTEREST EXPENSES
Salaries 569,987 551,038
Employee benefits 77,486 88,138
Occupancy expense 78,066 84,953
Furniture and equipment expense 157,925 147,111
Stationery and operating supplies 31,832 35,313
Telephone expense 38,205 42,889
FDIC assessment 78,780 73,783
Other expenses 225,993 234,287
TOTAL NON-INTEREST EXPENSES 1,258,274 1,257,512
Income before income taxes 1,113,671 914,208
Applicable income taxes 317,000 232,000
NET INCOME $ 796,671 $ 682,208
Average number of shares outstanding $534,490 $534,490
Net income per share $ 1.49 $ 1.28
See Notes to Consolidated Financial Statements.
<PAGE>
UNITED SECURITY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended March 31,
1995 1994
Cash flows from operating activities:
[S] [C] [C]
Net income $ 796,671 $ 682,208
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 101,116 101,680
Provision for possible loan losses 0 6,000
Amortization of intangible assets 116,402 56,269
Investment securities (gains) losses 277,258 ( 208,602)
Loss on sale of other real estate 0 8,500
Net securities premium amortization 115,832 487,299
Net decrease in trading securities 0 1,980,000
(Increase) decrease in:
Interest receivable 25,924 ( 7,264)
Other assets ( 799,571) ( 746,120)
Increase (decrease) in:
Interest payable 131,355 ( 17,923)
Other liabilities ( 119,109) ( 257,104)
Net cash provided by operating activities 645,878 2,084,943
Cash flows from investing activities:
Proceeds from maturities and prepayments
of investment securities 176,233 1,862,395
Purchases of investment securities ( 737,250) ( 525,253)
Proceeds from sales of investment
securities available for sale 11,446,105 13,334,346
Proceeds from prepayments of
investment securities available for sale 321,551 8,592,664
Purchases of investment securities
available for sale ( 13,944,817) 24,419,376)
Net increase in loans ( 388,662) ( 1,208,471)
Purchase of premises and equipment ( 26,395) ( 53,604)
Proceeds from sale of other real estate 0 25,000
Net cash used in investing activities ( 3,153,235) ( 2,392,299)
Cash flows from financing activities:
Net increase in demand and
savings deposits 1,392,665 5,553,242
Net increase (decrease) in time deposits 3,297,398 958,300
Net increase (decrease) in short-term
borrowings ( 800,521) ( 5,056,992)
Repayments of long-term debt ( 20,833) ( 20,834)
Dividends paid ( 224,486) ( 194,360)
Acquisition of treasury stock 0 ( 4,862)
Sale of treasury stock 0 5,092
Net cash provided by financing activities 3,644,223 1,239,586
Net increase in cash and cash
equivalents $ 1,136,866 $ 932,230
Cash and cash equivalents, beginning of
period 7,190,823 5,043,695
Cash and cash equivalents, end of period $ 8,327,689 $ 5,975,925
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 1,468,242 $ 1,191,580
Income taxes $ 40,000 $ 0
Supplemental schedule of noncash investing
and financing activities:
Dividends declared but unpaid $ 235,176 $ 224,486
See Notes to Consolidated Financial Statements.
<PAGE>
UNITED SECURITY BANCSHARES, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note A - General
The consolidated financial statements include the accounts of United Security
Bancshares, Inc. (Bancshares) and its subsidiary. All significant intercompany
accounts have been eliminated.
The interim financial statements are unaudited but, in the opinion of
management, reflect all adjustments necessary for a fair presentation of results
for such periods. Such adjustments are of a normal, recurring nature. The
results of operation for any interim period are not necessarily indicative of
results for the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
Annual Report for the year ended December 31, 1994, of United Security
Bancshares, Inc. and subsidiary.
Note B - Contingencies
The Company is a defendant in two lawsuits claiming unspecified damages filed
by two customers alleging breach of contract, fraud, and misrepresentation over
a $1.6 million loan commitment. The cases are just in the discovery stages and
have not progressed sufficiently to determine the likelihood of unfavorable
outcomes or appraisal of damages, if any. Management believes the outcome of
the litigation will not have a material adverse effect on the financial position
of the Company.
Note C - Reclassifications
Certain balances in the prior year have been reclassified to conform with the
presentation adopted in the current year.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
For the Three Months Ended March 31, 1995
The following discussion and financial information are presented to aid in an
understanding of the current financial position and results of operations of
United Security Bancshares, Inc. ("United Security"). United Security is the
Parent Holding Company of United Security Bank (the "Bank"), and it has no
operations of any consequence other than the ownership of its subsidiary. The
emphasis of this discussion is a comparison of Assets, Liabilities, and Capital
for the three months ended March 31, 1995, to year-end 1994; while comparing
income for the quarter ended March 31, 1995, to income for the quarter ended
March 31, 1994. All yields and ratios presented and discussed herein are based
on the cash basis and not on the tax-equivalent basis.
COMPARING THE THREE MONTHS ENDED MARCH 31, 1995, TO THE THREE MONTHS ENDED MARCH
31, 1994:
Net income rose $114,463 or 16.78% increasing net income per share to $1.49 from
$1.28. The increase is due in part to improved net interest income.
Net interest income increased $439,996 or 23.4% over the first quarter of 1994.
Volume, rate and yield changes contributed to this increase. Total interest-
earning assets increased by $5,730,805 or 3.38% in the first quarter of 1995 and
interest-bearing liabilities increased $1,816,113 or 1.28% during the same
period. Volume changes favoring the interest earning assets coupled with
increased interest rates over the first quarter of 1994 has contributed to the
increased net interest income because of the spread between the yield on assets
and the rates paid on liabilities.
Operating income (income excluding taxes and securities transactions) increased
$456,670 or 52.9% in the first quarter of 1995 compared to 1994. Management's
investment strategy continued to be directed toward interest income generated
through the investment portfolio by restructuring the fixed rate portion of the
portfolio into floating rates or other fixed rates. Some losses were accepted
in the investment securities in order to secure a better yield position. This
investment strategy was implemented in 1994 and the increase of total interest
income of $830,090 or 26.9% in the first quarter of 1995 is the result.
Total interest expense increased $390,094 or 32.25% in the first quarter of 1995
compared to the same period in 1994. Interest expense on short-term borrowings
increased $195,446 during the first quarter of 1995 compared to the first
quarter of 1994. Short-term borrowing consists of U. S. Treasury demand notes
in the Treasury, Tax, and Loan Accounts, securities sold under repurchase
agreements, and borrowings from the Federal Home Loan Bank and are used to
satisfy short term funding needs, also for arbitrage when advantageous to the
Bank. The increased expense is a direct result of higher interest rates and an
increase in total interest bearing deposits of $2,637,467 or 2.2% during the
same period.
Total non-interest expense remained flat with only a $762 increase. This
reduction of growth in non-interest expense is result of managements's efforts
to control expenses.
COMPARING THE ENDING FIGURES MARCH 31, 1995, TO ENDING FIGURES DECEMBER 31,
1994:
Total assets increased $6,326,300 (3.39%)TO $192,767,335. Net loans increased
$388,662 (.69%) TO $57,122,082, while investment securities increased by
$5,342,143 (4.74%) to $118,056,343.
Deposits continue to show steady growth by increasing $4,690,063 or 3.30% to
$146,974,004 in the first quarter of 1995.
Federal funds purchased and securities sold under agreements to repurchase
generally mature within one to four days from the transaction date. These funds
are generally used to satisfy daily funding needs. At quarter-end, March 31,
1995, the Bank was in a zero balance federal funds position compared to a
federal funds purchased position of $7,400,000 at year-end 1994. Other
borrowings, on the other hand, increased by $7,000,000 during the first quarter
of 1995. The increase represents a move from federal funds purchased to Federal
Home Loan Bank loans maturing in the second and third quarter of 1995. Treasury
tax and loan deposits are on demand and were down by $250,744 at quarter-end,
while securities sold under repurchase agreements were down by $149,777 during
the same period.
The long-term debt consists of a floating rate note from the Federal Home Loan
bank secured by investment securities pledged to the federal Home Loan Bank.
This debt is used to fund long-term fixed-rate mortgages and the final
installment is due in 2005.
Undivided profits increased $561,495 or 3.42%, and net unrealized loss on
available for sale securities realized an improvement of $1,873,160 in the first
quarter, which resulted in a Stockholders' Equity increase of $2,434,655 or 13%
to $21,156,082.
Management is not aware of any current recommendations by the regulatory
authorities which would have any adverse effect on the liquidity, capital
resources or operation of the Bank.
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) No exhibits are filed with this report.
(b) No reports on Form 8-K were filed for the quarter ended 3-31-95.
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED SECURITY BANCSHARES, INC.
DATE: May 10, 1995
BY:
Larry M. Sellers
Its Vice-President, Secretary and Treasurer
(Duly Authorized Officer and Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
See Notes to Consolidated Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 7,327,689
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 95,340,455
<INVESTMENTS-CARRYING> 22,715,888
<INVESTMENTS-MARKET> 22,814,181
<LOANS> 58,423,234
<ALLOWANCE> 781,933
<TOTAL-ASSETS> 192,767,335
<DEPOSITS> 146,974,004
<SHORT-TERM> 21,934,900
<LIABILITIES-OTHER> 1,959,293
<LONG-TERM> 743,056
<COMMON> 137,628
0
0
<OTHER-SE> 21,018,454
<TOTAL-LIABILITIES-AND-EQUITY> 192,767,335
<INTEREST-LOAN> 1,315,071
<INTEREST-INVEST> 2,604,959
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,920,030
<INTEREST-DEPOSIT> 1,281,352
<INTEREST-EXPENSE> 1,599,597
<INTEREST-INCOME-NET> 2,320,433
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (206,449)
<EXPENSE-OTHER> 1,258,274
<INCOME-PRETAX> 1,113,671
<INCOME-PRE-EXTRAORDINARY> 796,671
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 796,671
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.49
<YIELD-ACTUAL> 5.66
<LOANS-NON> 266,782
<LOANS-PAST> 321,609
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,531,387
<ALLOWANCE-OPEN> 772,000
<CHARGE-OFFS> 8,324
<RECOVERIES> 18,257
<ALLOWANCE-CLOSE> 781,933
<ALLOWANCE-DOMESTIC> 781,933
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
