ORANGEBURG, N.Y., July 26 /PRNewswire-FirstCall/ -- Thomas E.
Hales, Chairman of the Board of U.S.B. Holding Co., Inc. (the
"Company") (NYSE:UBH), the parent company of Union State Bank (the
"Bank"), with consolidated assets of $2.82 billion, announced today
that the Company's net income for the three months ended June 30,
2006 was $7.2 million compared to $8.8 million for the three months
ended June 30, 2005, a decrease of $1.6 million, or 18.0 percent.
Diluted earnings per common share for the quarter ended June 30,
2006 was $0.32 compared to $0.39 in the prior year period, a
decrease of 17.9 percent. The Company's second quarter 2006 net
income resulted in a 13.88 percent return on average common
stockholders' equity and a 1.03 percent return on average total
assets, as compared to 18.57 percent and 1.26 percent,
respectively, for the prior year period. For the six months ended
June 30, 2006, net income was $15.3 million compared to $16.2
million for the six months ended June 30, 2005, a decrease of $0.9
million, or 5.3 percent. Diluted earnings per common share was
$0.67 for the six months ended June 30, 2006 compared to $0.72 in
the prior year period, a decrease of 6.9 percent. The Company's net
income for the six months ended June 30, 2006 resulted in a 14.80
percent return on average common stockholders' equity and a 1.10
percent return on average total assets, as compared to 17.28
percent and 1.17 percent, respectively, for the 2005 period. The
decreases in the 2006 second quarter and six months ended June 30,
2006 net income and diluted earnings per common share compared to
the 2005 periods were primarily due to a decrease in net interest
income and an increase in the provision for credit losses. Net
interest income decreased 4.4 percent to $22.9 million for the
quarter ended June 30, 2006 and 1.4 percent to $46.2 million for
the six months ended June 30, 2006 compared to the prior year
second quarter and six month periods, respectively. The primary
reason for the decrease in net interest income in both 2006 periods
was a decrease in the tax equivalent net interest margin to 3.47
percent and 3.53 percent for the three and six months ended June
30, 2006, as compared to 3.68 percent and 3.61 percent for the 2005
periods, respectively. These decreases were partially offset by
increases in average interest earning assets of $46.2 million, or
1.7 percent, and $29.4 million, or 1.1 percent, for the June 30,
2006 three and six month periods, respectively, as compared to the
prior year periods. The net interest margin may continue to be
negatively affected if the U.S. treasury yield curve maintains a
relatively flat position, continues to flatten further, or becomes
significantly inverted resulting in short-term interest rates at
higher levels than medium- to long-term interest rates. The
provision for credit losses increased to $1.0 million and $1.3
million for the three and six months ended June 30, 2006 compared
to $0.1 million and $0.5 million for the 2005 periods,
respectively. The increases were primarily due to an increase in a
specific reserve required for one relationship related to
non-performing real estate construction loans totaling $2.8
million. Non-performing assets at June 30, 2006 were $9.0 million
compared to $9.0 million and $5.2 million at December 31, 2005 and
June 30, 2005, respectively. Mr. Hales commented that, "The
increase in the specific reserve needed for the 2006 second quarter
significantly decreased our net income for the period.
Non-performing assets to total assets of 0.32 percent are
relatively low when considering our $1.5 billion loan portfolio."
He further stated that, "The first six months of 2006 have been
very challenging. The interest rate environment and increased
competition for loans and deposits will continue to pressure our
net interest margin. However, we will continue to promote and
maintain our exceptional products and services and remain prudent
in pricing loans and deposits, while evaluating opportunities to
deploy our capital position." The decrease in net income for the
three and six months ended June 30, 2006 was partially offset by a
$0.2 million and $0.6 million reductions in non-interest expenses
despite recognizing $0.3 million and $0.5 million of stock option
expense, respectively. Stock option expense recorded in 2006 was
due to the implementation of a new accounting pronouncement,
"Accounting for Stock-Based Compensation," beginning on January 1,
2006. Non-interest expenses decreased $0.2 million, or 1.5 percent,
to $12.8 million and $0.6 million, or 2.2 percent, to $25.8 million
for the three and six months ended June 30, 2006, respectively, as
compared to the prior year periods. The decrease in non-interest
expenses for the three and six months ended June 30, 2006 compared
to the 2005 periods was primarily due to decreases in legal
expenses for an appeal related to litigation involving a
non-performing real estate construction loan, data line costs, and
employee incentive compensation and medical benefits. Mr. Raymond
J. Crotty, President and Chief Operating Officer of the Company and
the Bank, added, "We continue to effectively control operating
expenses even after considering the stock option expense recorded
in 2006. Our efficiency ratio of less than 51 percent for both
periods in 2006 is evidence of management's efficient use of the
Company's resources." Non-interest income decreased $0.3 million
and $0.1 million for the three and six months ended June 30, 2006
compared to the prior 2005 periods, respectively. The decreases
were primarily due to lower levels of service charges on deposit
accounts and loan prepayment fees, partially offset by higher
income on loan commitment fees. The effective rate for the
provision for income taxes for the three and six months ended June
30, 2006 increased to 32.4 percent and 32.5 percent, respectively,
compared to 30.8 percent and 31.9 percent for the 2005 periods. The
increase in both 2006 periods was due to a decrease in the income
tax reserves recorded during the 2005 second quarter as a result of
the satisfactory completion of Federal and State tax examinations
for prior income tax years. The Company operates through its
banking subsidiary, Union State Bank, a commercial bank currently
with 29 branches, of which 26 are located in Rockland and
Westchester Counties, New York, and one branch each located in
Stamford, Connecticut, Manhattan, New York City, and Orange County,
New York. The Bank also operates four loan production offices in
Rockland, Westchester, and Orange Counties, New York, and Stamford,
Connecticut. Further information on the Company can be found on the
Bank's website at http://www.unionstate.com/. Forward-Looking
Statements: This Press Release contains a number of
"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. These forward-looking
statements may be identified by the use of such words as "believe,"
"expect," "anticipate," "intend," "should," "will," "would,"
"could," "may," "planned," "estimated," "potential," "outlook,"
"predict," "project" and similar terms and phrases, including
references to assumptions. Forward-looking statements are based on
various assumptions and analyses made by us in light of our
management's experience and its perception of historical trends,
current conditions and expected future developments, as well as
other factors we believe are appropriate under the circumstances.
These statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors (many of which
are beyond our control) that could cause actual results to differ
materially from future results expressed or implied by such
forward-looking statements. These factors include, without
limitation, the following: the timing and occurrence or
non-occurrence of events may be subject to circumstances beyond our
control; there may be increases in competitive pressure among
financial institutions or from non-financial institutions; changes
in the interest rate environment may reduce interest margins or
affect the value of investments; changes in deposit flows, loan
demand or real estate values may adversely affect our business;
changes in accounting principles, policies or guidelines may cause
our financial condition to be perceived differently; general
economic conditions, either nationally or locally in some or all of
the areas in which we do business, or conditions in the securities
markets or the banking industry may be less favorable than we
currently anticipate; legislative or regulatory changes may
adversely affect our business; applicable technological changes may
be more difficult or expensive than we anticipate; success or
consummation of new business initiatives may be more difficult or
expensive than we anticipate; or litigation or matters before
regulatory agencies, whether currently existing or commencing in
the future, may delay the occurrence or non-occurrence of events
longer than we anticipate. The Company's forward-looking statements
are only as of the date on which such statements are made. By
making any forward-looking statements, the Company assumes no duty
to update them to reflect new, changing or unanticipated events or
circumstances. You should consider these risks and uncertainties in
evaluating forward-looking statements and you should not place
undue reliance on these statements. U.S.B. HOLDING CO., INC.
SELECTED FINANCIAL INFORMATION - UNAUDITED (in thousands, except
ratios and share amounts) Six Months Ended Three Months Ended June
30, June 30, 2006 2005 2006 2005 Consolidated summary of operations
data: Interest income $85,302 $76,713 $43,446 $39,492 Interest
expense 39,075 29,810 20,581 15,577 Net interest income 46,227
46,903 22,865 23,915 Provision for credit losses 1,307 476 998 85
Non-interest income 3,564 3,706 1,607 1,879 Non-interest expenses
25,758 26,332 12,790 12,988 Income before income taxes 22,726
23,801 10,684 12,721 Provision for income taxes 7,386 7,601 3,459
3,912 Net income $15,340 $16,200 $ 7,225 $8,809 Consolidated common
share data(1): Basic earnings per share $0.71 $0.75 $0.33 $0.41
Diluted earnings per share $0.67 $0.72 0.32 $0.39 Weighted average
shares 21,744,542 21,507,990 21,765,023 21,577,459 Adjusted
weighted average shares 22,755,686 22,421,999 22,771,764 22,418,588
Cash dividends per share $0.28 $0.26 $0.14 $0.13 Selected balance
sheet data June 30, December 31, June 30, at period end: 2006 2005
2005 Securities available for sale, at estimated fair value
$394,022 $375,990 $440,426 Securities held to maturity 738,713
746,851 744,974 Loans, net of unearned income 1,498,270 1,474,984
1,517,067 Allowance for loan losses 16,260 15,164 15,624 Total
assets 2,820,286 2,758,226 2,878,782 Deposits 1,866,739 1,847,202
1,897,517 Borrowings 658,056 622,159 697,813 Subordinated debt
issued in connection with corporation- obligated mandatory
redeemable capital securities of subsidiary trusts 61,858 61,858
61,858 Stockholders' equity 208,865 204,153 196,090 Tier 1 capital
$276,916 $266,823 $254,847 Common shares outstanding(1) 21,768,568
21,713,805 21,630,152 Book value per common share(1) $9.59 $9.40
$9.07 Selected balance sheet financial ratios: Leverage ratio 9.90%
9.47% 9.14% Allowance for loan losses to total loans 1.09% 1.03%
1.03% Non-performing assets to total assets 0.32% 0.33% 0.18%
Selected income Six Months Ended Three Months Ended statement data
for June 30, June 30, June 30, June 30, the period ended: 2006 2005
2006 2005 Return on average total assets 1.10% 1.17% 1.03% 1.26%
Return on average common stockholders' equity 14.80% 17.28% 13.88%
18.57% Efficiency ratio 50.44% 50.89% 50.93% 49.23% Net interest
spread - tax equivalent 3.39% 3.49% 3.34% 3.59% Net interest margin
- tax equivalent 3.53% 3.61% 3.47% 3.68% (1) Share amounts are
adjusted for the five percent common stock dividend distributed in
September 2005. U.S.B. HOLDING CO., INC. AVERAGE BALANCE
INFORMATION - UNAUDITED Six Months Ended Three Months Ended June
30, June 30, 2006 2005 2006 2005 (000's) (000's) ASSETS Federal
funds sold $26,172 $41,183 $31,333 $23,509 Securities(2) 1,184,775
1,112,764 1,192,625 1,126,489 Loans(3) 1,482,236 1,509,877
1,486,197 1,513,975 Earning assets 2,693,183 2,663,824 2,710,155
2,663,973 Total Assets $ 2,794,831 $2,777,318 $2,803,124 $2,792,949
LIABILITIES AND STOCKHOLDERS' EQUITY Non-interest bearing deposits
$310,310 $334,612 $306,889 $337,076 Interest bearing deposits
1,531,838 1,538,202 1,513,727 1,529,216 Total deposits 1,842,148
1,872,814 1,820,616 1,866,292 Borrowings 669,292 616,624 699,842
632,113 Subordinated debt issued in connection with
corporation-obligated mandatory redeemable capital securities of
subsidiary trusts 61,858 61,858 61,858 61,858 Interest bearing
liabilities 2,262,988 2,216,684 2,275,427 2,223,187 Stockholders'
Equity $207,291 $187,490 $208,161 $189,710 (2) Securities exclude
mark-to-market adjustment required by FASB No. 115. (3) Loans are
net of both the unearned discount and the allowance for loan
losses. Nonaccruing loans are included in average balances for
purposes of computing average loans, average earning assets, and
total assets. U.S.B. HOLDING CO., INC. SUPPLEMENTAL FINANCIAL
INFORMATION - UNAUDITED Consolidated Balance Sheet Data at June 30,
2006 2005 (000's) Commercial (time and demand) loans $163,377
$171,296 Construction and land development loans 389,765 416,067
Commercial mortgages 574,089 585,456 Residential mortgages 282,639
257,150 Home equity loans 78,925 79,279 Personal installment loans
1,598 1,676 Credit card loans 6,849 6,511 Other loans 3,340 2,819
Deferred commitment fees 2,312 3,187 Intangibles 3,216 4,462
Goodwill 1,380 1,380 Nonaccrual loans 8,983 5,229 Restructured
loans 129 134 Reserve for unfunded loan commitments and standby
letters of credit(4) 1,001 627 Non-interest bearing deposits
308,966 348,078 Interest bearing deposits 1,557,773 1,549,439
Consolidated Income Statement Data for the Six Months Ended Three
Months Ended June 30, June 30, 2006 2005 2006 2005 (000's) Interest
income - tax equivalent $86,586 $77,848 $44,085 $40,078 Net
interest income - tax equivalent 47,511 48,038 23,504 24,501
Deposit service charges 1,663 1,831 834 927 Other income 1,901
1,875 773 952 Salaries and employee benefits expense 16,264 16,589
8,000 8,268 Occupancy and equipment expense 3,890 3,862 1,942 1,812
Advertising and business development expense 1,275 1,170 673 595
Professional fees expense 774 1,138 401 470 Communications expense
643 668 297 327 Stationery and printing expense 296 313 143 152
Amortization of intangibles 561 576 276 285 Other expense 2,055
2,016 1,058 1,079 Net charge-offs (recoveries) 316 (7) 189 27 (4)
The reserve for standby letters of credit of $0.4 million in 2005
was included in the allowance for loan losses. DATASOURCE: U.S.B.
Holding Co., Inc. CONTACT: Thomas M. Buonaiuto, Executive Vice
President & Chief Financial Officer of U.S.B. Holding Co.,
Inc., +1-845-365-4615 Web site: http://www.unionstate.com/
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