Union Financial Bancshares, Inc. Reports 25% Increase in Fourth Quarter Earnings and Record Results for 2005
January 17 2006 - 3:45PM
Business Wire
Union Financial Bancshares, Inc. (NASDAQ: UFBS) today reported
earnings of $740,000 for the three months ended December 31, 2005
compared to earnings of $592,000 for the fourth quarter of 2004, a
25.0% increase. Earnings per share were $0.38 per share (diluted)
for the fourth quarter of 2005, versus $0.29 per share (diluted)
for the fourth quarter of 2004. The Company reported record net
income of $2.5 million or $1.26 per share (diluted), for the year
ended December 31, 2005, a 14% increase over net income of $2.2
million, or $1.05 per share (diluted), for 2004. Net interest
income before the loan loss provision for the fourth quarter
increased $153,000, or 6.0%, to $2.7 million compared to $2.5
million for the same period in the previous year. The increase was
due primarily to higher average loan balances over the previous
year along with an increase in yield on loans that resulted from a
higher concentration of commercial loans. The increase in interest
income was partially offset by higher deposit costs as a result of
rising rates and increased borrowings. The provision for loan
losses for the fourth quarter totaled $100,000 compared to $475,000
for the same period in the previous year. The decrease in provision
for loan losses as compared to the previous year was due to a $1.1
million reduction in classified loans to $3.4 million compared to
$4.5 million for the same period in the previous year, offset by a
12.6% increase in net loans over the previous year, and a higher
concentration of commercial loans in the portfolio, which carry a
higher risk of default. Non-interest income for the fourth quarter
decreased $80,000, or 11.7%, to $601,000 compared to $681,000 for
the same period in the previous year. The decrease was due to lower
fees generated from third party investment brokerage and financing
receivables program due to a reduction in product volumes, offset
by higher fees for financial services that resulted from an
increase in transaction accounts. The Company also recorded a loss
on the sale of investments of $54,000 that resulted from a
restructuring of the investment portfolio to reduce exposure to
government equity securities. Non-interest expense for the fourth
quarter increased $210,000, or 10.7%, to $2.2 million compared to
$2.0 million for the same period in the previous year. The increase
was due primarily to higher employee benefits and advertising
costs. At December 31, 2005, assets totaled $370.8 million, a 5.5%
increase from $351.6 million at December 31, 2004. Net loans
receivable increased $21.5 million, or 12.6%, during the period to
$192.6 million at December 31, 2005, compared to $171.1 million at
December 31, 2004. The net growth in loans was driven by a 25%
increase in the consumer/commercial loan sector as the Company
continues to focus on this lending segment with specialized loan
officers and products. Growth in lower cost transaction accounts
resulted in deposits increasing 5.3% to $239.6 million at December
31, 2005 compared to $227.6 million at December 31, 2004. Cash on
hand and the increase in deposits along with an increase in
borrowings of $8.2 million funded the increase in loans. Commenting
on the earning results, Dwight V. Neese, President and Chief
Executive Officer, stated: "We are extremely pleased with our 2005
year-end results. Not only did our twelve month results show an
earnings increase of 14% over the previous fiscal year, our
earnings per share also rose 20%. We saw growth in loans and
deposits for the year, with solid increases across the board in
both our consumer and business lines. We look forward to focusing
on our operations over the coming quarters and building long-term
value for our shareholders." In other news, the Company has
announced plans to open two more banking centers in Rock Hill at
Manchester Village and Westminster Towers and to expand into
Greenville County with the acquisition of an existing banking
center in Simpsonville. All locations have received regulatory
approval and are anticipated to open during the first half of 2006.
The Company also declared a quarterly cash dividend of $0.10 per
share payable on February 15, 2006 to shareholders of record on
January 31, 2006. Union Financial Bancshares has a dividend
reinvestment plan and information about the plan can be obtained
from Registrar and Transfer Company at 800-368-5948. Union
Financial Bancshares is the holding company for Provident Community
Bank, N.A., which operates seven banking locations in the upstate
of South Carolina. At December 31, 2005, Union Financial had $371
million in total assets and total stockholders' equity of $25.3
million. Please visit our website at www.providentonline.com or
contact Wanda J. Wells, SVP/Shareholder Relations Officer at
wwells@providentonline.com or Richard H. Flake, EVP/CFO at
rflake@providentonline.com. Certain matters set forth in this news
release may contain forward-looking statements that are provided to
assist in the understanding of anticipated future financial
performance. However, such performance involves risks and
uncertainties that may cause actual results to differ materially
from those in such statements. For a discussion of certain factors
that may cause such forward-looking statements to differ materially
from the Corporation's actual results, see the Corporation's
Quarterly Reports on Form 10-Q for the quarters ended September 30,
2005, June 30, 2005 and March 31, 2005 and the Corporation's Annual
Report in Form 10-K for the year ended December 31, 2004. -0- *T
Union Financial Bancshares, Inc. Fourth Quarter - Year Ended
December 31, 2005
-------------------------------------------------------------------
Financial Highlights ($ in thousands, except share data) At At
December December 31, 31, Balance Sheet 2005 2004 $Change % Change
-------------- ---------------------------------------- Total
assets $370,795 $351,598 $19,197 5.46% Cash and interest- earning
deposits 8,380 13,197 (4,817) -36.50% Investments & mortgage-
backed securities 146,283 143,494 2,789 1.94% Loans receivable
(net) 192,577 171,094 21,483 12.56% Goodwill & intangible
assets 3,576 4,212 (636) -15.10% Deposits 239,603 227,589 12,014
5.28% Advances & other borrowings 95,715 87,500 8,215 9.39%
Stockholders' equity 25,333 26,019 (686) -2.64% Outstanding shares
1,905,897 1,957,989 (52,092) -2.66% Book value per share $13.29
$13.29 $0.00 0.02% Three Months Ended Twelve Months Ended December
31, December 31, ---------------------------------------- Income
Statement 2005 2004 2005 2004 ----------------
---------------------------------------- Net interest income $2,714
$2,561 $10,243 $9,706 Provision for loan losses 100 475 869 1,250
---------------------------------------- Net interest income after
loan loss provision 2,614 2,086 9,374 8,456 Noninterest income 601
681 2,543 2,561 Noninterest expense 2,174 1,964 8,537 8,140 Income
tax 301 211 914 721 ---------------------------------------- Net
income $740 $592 $2,466 $2,156
======================================== Earnings per share: basic
$0.39 $0.30 $1.29 $1.10 ========================================
Earnings per share: diluted $0.38 $0.29 $1.26 $1.05
======================================== Twelve Months Ended
December 31, ------------------- Key Financial Ratios 2005 2004
-------------------- ------------------ Return on average assets
0.68% 0.61% Return on average stockholders' equity 9.68% 8.40%
Operating expense to average assets 2.17% 2.14% Capital to average
assets 9.17% 9.64% *T
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