Market Presence - United Security Bancshares operates primarily in Fresno, Madera, Kern, and Santa Clara Counties, with a total of 53 FDIC-insured financial institutions competing in these areas[28]. - As of June 30, 2024, the bank holds a 4.18% market share in Fresno County, ranking 9th, and an 8.48% market share in Madera County, ranking 5th[29]. - The bank's total market share across Fresno, Madera, Kern, and Santa Clara Counties is 0.53%, ranking 18th overall[29]. Banking Services - The bank offers a variety of commercial banking services, including real estate loans, commercial loans, and agricultural loans, with a focus on personalized service[19][20]. - United Security Bancshares has a high concentration of commercial real estate loans but does not engage in residential mortgage lending[22]. - The bank's competitive strategy includes offering competitive interest rates and a higher level of personalized service compared to larger competitors[26]. Technology and Customer Service - The bank has established Interactive Teller Machines (ITMs) at all branch locations and nine off-site ITMs to enhance customer service[14]. Financial Instruments - The bank's subsidiary, York Monterey Properties, Inc., was funded with a $250,000 cash investment and an additional $805,000 to manage real estate acquired through foreclosures[15]. - The bank's Trust Preferred Securities issued in 2007 amounted to $15 million, with a floating interest rate of 1.29% over the forward 3-month SOFR rate[16]. Regulatory Environment - The bank's operations are subject to complex regulations that can materially affect its business and financial results[30]. - The Dodd-Frank Act increased the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets[32]. - The Dodd-Frank Act established a minimum non-risk-based leverage ratio set at 4.00%[34]. - The FDIC is required to increase the reserve ratio of the Deposit Insurance Fund to 1.35% of insured deposits[36]. - The Dodd-Frank Act broadened the base for FDIC insurance assessments, now based on average consolidated total assets less tangible equity capital[36]. - The Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB) with authority over depository institutions with $10 billion or more in assets[36]. - The Dodd-Frank Act prohibits excessive compensation for executives of depository institutions with assets over $1.0 billion[36]. - The Dodd-Frank Act allows national and state banks to establish branches in other states[36]. - The FRB's risk-based capital adequacy guidelines require bank holding companies to maintain minimum levels of capital based on risk-weighted assets[48]. - The FRB's policy regarding dividends states that a bank holding company should not pay cash dividends exceeding its net income for the past year[51]. Capital and Stock - The Company's common stock is listed on Nasdaq and is subject to Nasdaq standards for listed companies[53]. - As of December 31, 2024, the Company and the Bank were classified as "well capitalized" under applicable standards[57]. - The Bank owned 67,374 shares of the Federal Home Loan Bank of San Francisco capital stock valued at $6,737,400 as of December 31, 2024[71]. - The Bank owned 38,908 shares of Federal Reserve Bank of San Francisco stock with paid-in capital totaling $1,945,400 as of December 31, 2024[74]. - The FDIC insures deposits up to $250,000 per qualified account, with a risk-based assessment system categorizing banks into four risk categories[67]. - The FDIC's deposit insurance fund reserve ratio fell to 1.30% in 2020, prompting a restoration plan to achieve a minimum of 1.35% by September 30, 2028[68]. - The Company and the Bank adopted the community bank leverage ratio framework during 2020, maintaining a leverage ratio greater than 9%[57]. - The Bank is prohibited from paying dividends if it would become "undercapitalized" after such payments[61]. - The FDIC has the authority to terminate a depository institution's deposit insurance if its financial condition is deemed unsafe or unsound[69]. Compliance and Consumer Protection - The Company is subject to various federal and state consumer protection laws, which can result in significant liabilities if violated[75]. - The Federal Deposit Insurance Corporation Improvement Act requires prompt corrective action for banks falling below prescribed minimum capital ratios[59]. - The Bank received a CRA rating of "Satisfactory" as of its most recent examination, which is crucial for undertaking certain activities, including acquisitions[93]. - On October 24, 2023, the FRB and FDIC released a joint final rule to amend the CRA, promoting greater access to credit and adjusting to industry changes, with certain provisions delayed until January 1, 2026[94]. - The Anti-Money Laundering Act of 2020 represents significant changes to anti-money laundering laws, with its full impact yet to be determined as regulations are still being proposed[79]. - The AML Act expands federal AML laws to a broader range of industries, including cryptocurrency, and requires FinCEN to facilitate information sharing among law enforcement agencies[81]. - The Corporate Transparency Act mandates reporting of beneficial ownership information to a confidential FinCEN database, with compliance required by January 1, 2025[86]. - The AML Act enhances enforcement, increasing civil penalties for violations and allowing for whistleblower awards leading to fines or forfeitures of at least $50,000[84]. - The Bank is subject to federal statutory and regulatory provisions covering security procedures, management interlocks, and funds availability[101]. Mergers and Acquisitions - The FDIC is conducting a broader reevaluation of its bank merger review process, with proposed changes currently open for public comment until April 10, 2025[100]. - The Bank Merger Act allows the FDIC to review and approve proposed bank mergers, ensuring they do not harm competition or financial stability[99]. - In September 2024, the FDIC issued a final statement of policy for reviewing Bank Merger Act applications, establishing higher expectations for statutory factors[100]. Employee and Organizational Structure - The Company employed 114 full-time equivalent staff as of December 31, 2024[104]. - The Company offers a comprehensive benefits package including 100% matching contributions up to 4% of salary for retirement plans[106]. - The Company emphasizes competitive pay and performance-based incentive programs for employee retention and development[105]. - The Company has a focus on maintaining employee health and wellness through a comprehensive benefits package[106]. - The Company has faced increased competition from other financial institutions and non-bank financial services[26]. - The Company is subject to various risks including economic conditions, regulatory changes, and competition impacting its business operations[11]. - The Company cannot predict the future impact of potential changes to the Dodd-Frank Act and its regulations due to political dynamics[36].

Financial Performance - Net income for the year ended December 31, 2024, decreased 25.3% to $14.8 million, compared to $19.8 million for the year ended December 31, 2023[12]. - For the quarter ended December 31, 2024, net income was $2.5 million, a decrease of 53.8% compared to $5.4 million for the same quarter in 2023[4]. - Noninterest income for the quarter ended December 31, 2024, totaled $120,000, a decrease of $2.9 million from $3.0 million in the same quarter of 2023[8]. - The annualized return on average assets (ROAA) decreased to 0.81% for the quarter ended December 31, 2024, compared to 1.72% for the same quarter in 2023[5]. - Net income for the three months ended December 31, 2024, was $2,495,000, a decrease of 34.9% from $3,829,000 in the previous quarter[36]. - Basic net income per common share for the three months ended December 31, 2024, was $0.15, down from $0.22 in the previous quarter, reflecting a decrease of 31.8%[36]. - Non-GAAP core net income for the year ended December 31, 2024, was $15,216,000, a decrease of 22.4% from $19,601,000 in 2023[47]. Deposits and Loans - Total deposits increased 5.3% to $1.06 billion as of December 31, 2024, compared to $1.00 billion at the end of 2023[4]. - Total deposits increased by $53.1 million, or 5.3%, to $1.1 billion as of December 31, 2024, driven by a $96.2 million increase in interest-bearing deposits[21]. - Interest-bearing deposits increased by $96.2 million, while noninterest-bearing deposits decreased by 10.7% to $360.2 million[21]. - Core deposits decreased by $56.6 million, reflecting a decline in noninterest-bearing deposits and savings accounts[21]. - Total loans, net of unearned fees, increased 0.92% to $928.5 million as of December 31, 2024, compared to $920.0 million at the end of 2023[4]. - Average loans for the three months ended December 31, 2024, were $939,110,000, a slight increase from $935,637,000 in the same period last year[38]. Expenses and Efficiency - Noninterest expense for the year ended December 31, 2024, totaled $28.3 million, an increase of $2.3 million compared to $26.0 million for the year ended December 31, 2023[17]. - The efficiency ratio for the quarter ended December 31, 2024, increased to 60.79%, compared to 46.40% for the same quarter in 2023[10]. - Total noninterest expense increased to $7,430,000 for the three months ended December 31, 2024, compared to $7,142,000 in the previous quarter, marking an increase of 4.0%[36]. - Efficiency ratio for Q4 2024 was 60.79%, up from 46.40% in Q4 2023, indicating increased operational costs[45]. Assets and Equity - Shareholders' equity rose to $130.4 million, an increase of $7.8 million from $122.5 million at December 31, 2023, due to $14.8 million in net income[22]. - The total assets of the company were $1.211 billion as of December 31, 2024, compared to $1.211 billion at December 31, 2023[34]. - Total assets decreased to $1,211,718,000 in Q4 2024 from $1,211,045,000 in Q4 2023, a decline of 0.04%[41]. - Total equity increased to $132,920,000 as of December 31, 2024, compared to $117,520,000 a year earlier, reflecting a growth of 13.1%[38]. Credit Quality - The provision for credit losses was $3.0 million for the year ended December 31, 2024, compared to $1.5 million in 2023, primarily due to charge-offs in the student loan portfolio[25]. - Non-performing assets increased by $745,000 to $17.2 million, representing 1.42% of total assets as of December 31, 2024, up from 1.36% in 2023[27]. - The allowance for credit losses was 1.72% of the loan portfolio at December 31, 2024, compared to 1.70% at December 31, 2023[26]. - Nonperforming loans to total gross loans increased to 1.36% in Q4 2024 from 1.29% in Q4 2023[44]. - Provision for credit losses was $1,213,000 in Q4 2024, compared to $873,000 in Q4 2023, reflecting a significant increase[42].

Financial Performance - Net income for the quarter decreased 0.62% to $3.8 million for the quarter ended September 30, 2024, compared to $3.9 million for the same quarter in 2023[147]. - The Company's annualized return on average assets was 1.36% for the nine months ended September 30, 2024, compared to 1.52% for the same period in 2023[151]. - The Company's annualized return on average equity was 12.95% for the nine months ended September 30, 2024, compared to 16.64% for the same period in 2023[151]. - Noninterest income for the quarter ended September 30, 2024, increased by $1.9 million to $2.0 million compared to the same quarter in 2023[165]. - Total noninterest income for the nine months ended September 30, 2024, increased by $2.0 million to $4.6 million compared to the same period in 2023[167]. Interest Income and Expenses - Net interest margin increased to 4.20% for the quarter ended September 30, 2024, compared to 4.09% for the same quarter in 2023[147]. - Interest expense increased 15.7% to $3.9 million, compared to $3.4 million for the third quarter of 2023[147]. - For the three months ended September 30, 2024, total interest income increased by $427,000, or 2.8%, compared to the same period in 2023[157]. - For the nine months ended September 30, 2024, total interest income increased by $634,000, or 1.41%, compared to the same period in 2023[159]. - Total interest expense increased by approximately $3.0 million, or 38.9%, for the nine months ended September 30, 2024, compared to the same period in 2023[162]. Loans and Deposits - Total loans, net of unearned fees, increased 5.99% to $975.2 million, compared to $920.0 million at December 31, 2023[147]. - Total deposits increased 6.0% to $1.07 billion, compared to $1.00 billion at December 31, 2023[147]. - Net loans increased to $958.6 million as of September 30, 2024, from $904.4 million at December 31, 2023, reflecting organic loan growth[176]. - Total gross loans amounted to $975.2 million as of September 30, 2024, an increase of $55.1 million or 6.0% from $920.0 million at December 31, 2023[178]. - Total deposits reached $1.07 billion at September 30, 2024, an increase of $60.5 million (6.0%) from December 31, 2023, but a decrease of $77.4 million (7.8%) year-over-year[191]. Credit Losses and Allowances - The allowance for credit losses as a percentage of gross loans decreased to 1.69%, compared to 1.70% at December 31, 2023[147]. - The Company recorded a provision for credit losses of $1.6 million for the quarter ended September 30, 2024, with no provision recorded for the same quarter in 2023[147]. - The allowance for credit losses was $15,296, slightly improved from $15,817 in the previous year[153]. - The provision for credit losses was $2.14 million for the nine months ended September 30, 2024, significantly higher than the $452,000 provision for the same period in 2023[214]. - Nonperforming assets rose to $17.43 million as of September 30, 2024, up from $16.46 million at December 31, 2023, representing an increase of $974,000[205]. Capital and Equity - Total shareholders' equity increased from $117,401 to $130,929, representing an increase of approximately 11%[153]. - The Company's effective tax rate for the three months ended September 30, 2024, was 25.43%, down from 28.78% for the same period in 2023[174]. - The Bank's Tier 1 Capital Ratio was 12.35% at September 30, 2024, up from 11.42% at the same date in 2023[229]. - The Company declared a cash dividend of $0.12 per share on September 24, 2024, with approximately $2.1 million transferred from retained earnings for this distribution[233]. Asset Management - Total assets as of September 30, 2024, were $1.26 billion, an increase of $44.3 million year-to-date, while total liabilities were $1.12 billion, an increase of $34.0 million[176]. - Average interest-earning assets for the three months ended September 30, 2024, were $1,120,080, generating interest income of $15,755, with a yield of 5.60%[153]. - Total average assets decreased from $1,266,644 to $1,231,282, reflecting a decline of approximately 2.77% year-over-year[153]. - Cash and cash equivalents increased to $47.9 million at September 30, 2024, from $40.8 million at December 31, 2023[223]. Loan Portfolio Composition - Real estate mortgage loans represented 70.5% of total loans at September 30, 2024, totaling $687.9 million, an increase from $646.7 million at December 31, 2023[179]. - Agricultural loans rose by $16.8 million (25.5%) from December 31, 2023, to September 30, 2024, and by $5.0 million (7.5%) year-over-year[184]. - Installment loans decreased by $1.9 million (5.0%) from December 31, 2023, to September 30, 2024, and by $3.2 million (8.0%) year-over-year, primarily due to declines in student loan balances[184]. - The outstanding balance of student loans decreased by $3.5 million (8.8%) year-over-year, with $1.0 million in loans for students not yet in repayment status as of September 30, 2024[185]. Economic Conditions and Monitoring - The company continues to monitor economic conditions in the real estate market to assess the adequacy of the allowance for credit losses[211]. - The prime rate decreased from 8.50% at September 30, 2023, to 8.00% at September 30, 2024, impacting future interest income and expense[155].

Net Income and Profitability - Net income for the quarter ended September 30, 2024, decreased 0.6% to $3.8 million compared to $3.9 million for the same period in 2023[1][4] - Net income for the nine months ended September 30, 2024, decreased 14.6% to $12.3 million compared to $14.4 million for the same period in 2023[10] - Net income for September 2024 was $3,829 thousand, down from $4,297 thousand in June 2024[33] - Net income for the nine months ended September 30, 2024, is $12.287 million, a decrease of 14.6% compared to $14.395 million in 2023[38] - Non-GAAP core net income for the nine months ended September 30, 2024, is $12.188 million, down 17.6% from $14.788 million in 2023[38] Net Interest Margin and Interest Income - Net interest margin increased to 4.20% for the quarter ended September 30, 2024, compared to 4.09% for the same period in 2023[2][6] - Net interest margin decreased slightly to 4.20% in September 2024 from 4.28% in June 2024[30] - Net interest income before provision for credit losses decreased by $2.3 million (0.91%) to $35.0 million for the nine months ended September 30, 2024, compared to $37.4 million in the same period in 2023[12] - Net interest income for the nine months ended September 30, 2024, was $35,046 thousand, down from $37,368 thousand in the same period of 2023, a decrease of 6.21%[28] - Total interest income rose to $15,755 thousand in September 2024, up from $14,972 thousand in June 2024[33] - Interest income from loans and fees for the nine months ended September 30, 2024, was $41,457 thousand, up from $40,292 thousand in the same period of 2023, an increase of 2.89%[28] Loans and Deposits - Total loans increased 5.99% to $975.2 million as of September 30, 2024, compared to $920.0 million at December 31, 2023[2] - Total deposits increased 6.0% to $1.07 billion as of September 30, 2024, compared to $1.00 billion at December 31, 2023[2] - Total loans increased to $975,151 thousand in September 2024, up from $949,413 thousand in June 2024[32] - Total deposits increased to $1,065,021 thousand in September 2024, up from $1,006,614 thousand in June 2024[32] - Net loans grew to $958,628 thousand in September 2024, up from $904,384 thousand in December 2023, an increase of 6%[27] - Total deposits rose to $1,065,021 thousand in September 2024, compared to $1,004,477 thousand in December 2023, marking a 6.03% increase[27] - Loan-to-deposit ratio as of September 30, 2024, is 91.56%, slightly down from 91.59% as of December 31, 2023[36] Noninterest Income and Expense - Noninterest income increased to $2.0 million for the quarter ended September 30, 2024, primarily due to a $661,000 gain on the fair value of junior subordinated debentures[7] - Noninterest income increased by $2.0 million to $4.6 million for the nine months ended September 30, 2024, driven by gains from life insurance proceeds and changes in the fair value of TRUPs[13] - Noninterest income for the nine months ended September 30, 2024, was $4,591 thousand, compared to $2,574 thousand in the same period of 2023, a significant increase of 78.36%[28] - Noninterest expense increased by $1.8 million to $20.8 million for the nine months ended September 30, 2024, primarily due to higher professional fees and salaries[14] - Total noninterest expense for the nine months ended September 30, 2024, was $20,849 thousand, up from $19,082 thousand in the same period of 2023, an increase of 9.26%[28] Asset and Liability Growth - Total assets increased by $44.3 million (3.7%) to $1.2 billion as of September 30, 2024, driven by growth in gross loan balances and cash equivalents[16] - Total deposits increased by $60.5 million (6.0%) to $1.1 billion as of September 30, 2024, with interest-bearing deposits rising by $103.7 million[17] - Total assets increased to $1,255,376 thousand as of September 30, 2024, compared to $1,211,045 thousand at the end of 2023, reflecting a growth of 3.66%[27] - Total interest-earning assets increased to $1,120,080 thousand in September 2024, up from $1,082,749 thousand in June 2024[30] Credit Quality and Provisions - The provision for credit losses increased to $1.8 million for the nine months ended September 30, 2024, compared to $587,000 in the same period in 2023, primarily due to student loan charge-offs[20] - Non-performing assets increased by $974,000 to $17.4 million as of September 30, 2024, representing 1.39% of total assets[21] - The company's provision for credit losses for the nine months ended September 30, 2024, was $1,750 thousand, compared to $587 thousand in the same period of 2023, a substantial increase of 198.13%[28] - Nonperforming loans to total gross loans ratio increased to 1.32% in September 2024 from 1.29% in December 2023[35] - Total nonperforming assets increased to $17,430 thousand in September 2024 from $16,456 thousand in December 2023[35] - Provision for credit losses increased significantly to $1,558 thousand in September 2024 from $19 thousand in June 2024[33] - Allowance for credit losses to nonperforming loans decreased to 128.60% in September 2024 from 131.87% in December 2023[35] Capital and Shareholder Equity - The company's Tier 1 Leverage Ratio improved to 12.44% as of September 30, 2024, compared to 11.82% as of December 31, 2023[2] - Shareholders' equity increased by $10.3 million to $132.9 million as of September 30, 2024, driven by net income and a decrease in accumulated other comprehensive loss[18] - Tier 1 capital to adjusted average assets (leverage ratio) for the company as of September 30, 2024, is 12.44%, up from 11.82% as of December 31, 2023[36] - Book value per share as of September 30, 2024, is $7.67, compared to $7.14 as of December 31, 2023[36] - Tangible book value per share as of September 30, 2024, is $7.41, up from $6.88 as of December 31, 2023[36] Efficiency and Return Metrics - The efficiency ratio improved to 52.47% for the quarter ended September 30, 2024, compared to 54.63% for the same period in 2023[8] - Efficiency ratio for the three months ended 2024 is 52.47%, improving from 54.63% in 2023[36] - Annualized return on average assets (ROAA) increased to 1.24% for the quarter ended September 30, 2024, compared to 1.21% for the same period in 2023[4] - Return on average assets for the three months ended 2024 is 1.24%, compared to 1.21% for the same period in 2023[36] - Return on average equity for the three months ended 2024 is 11.63%, down from 13.06% in 2023[36] - Annualized net charge-offs to average loans for the three months ended 2024 is 0.27%, up from 0.20% in 2023[36] Dividends and Capital Adequacy - The company declared a cash dividend of $0.12 per share, payable on October 23, 2024[19] - The company remains well-capitalized and expects to maintain adequate capital levels[19] Cost of Deposits - Annualized average cost of deposits increased to 1.18% for the quarter ended September 30, 2024, compared to 0.71% for the same period in 2023[2][5]

Financial Performance - Net income for the quarter ended June 30, 2024, decreased 2.72% to $4.3 million, compared to $4.4 million for the same quarter in 2023[1] - Net income for Q2 2024 was $4,297,000, compared to $4,161,000 in Q1 2024 and $4,417,000 in Q2 2023, reflecting a year-over-year decrease of 2.7%[34] - Core net income for the six months ended June 30, 2024, was $8,824 thousand, a decrease of 14.8% from $10,359 thousand in the same period of 2023[43] Interest Income and Margin - Net interest margin decreased to 4.28% for the quarter ended June 30, 2024, down from 4.35% for the same quarter in 2023[3] - Total interest income for Q2 2024 was $14,972,000, a slight increase from $14,879,000 in Q1 2024 but a decrease from $15,086,000 in Q2 2023[34] - Net interest income after provision for credit losses for Q2 2024 was $11,503,000, compared to $11,541,000 in Q1 2024 and $11,413,000 in Q2 2023[34] - Net interest income for the quarter ended June 30, 2024, was $11,522 thousand, compared to $11,714 thousand for the previous quarter, reflecting a decrease of 1.63%[39] Loans and Deposits - Total loans, net of unearned fees, increased 3.19% to $949.4 million, compared to $920.0 million at December 31, 2023[3] - Total deposits increased 0.2% to $1.01 billion, compared to $1.00 billion at December 31, 2023[3] - Total deposits increased by $2.1 million, or 0.2%, to $1.0 billion as of June 30, 2024, driven by a $32.5 million increase in interest-bearing deposits[20] - The net loan-to-deposit ratio as of June 30, 2024, was 92.80%, an increase from 90.04% at the end of 2023[41] Credit Losses and Nonperforming Assets - The allowance for credit losses as a percentage of gross loans decreased to 1.61%, compared to 1.70% at December 31, 2023[3] - The provision for credit losses was $192,000 for the six months ended June 30, 2024, down from $598,000 for the same period in 2023[24] - Non-performing assets increased by $844,000 to $17.3 million, representing 1.42% of total assets as of June 30, 2024[26] - Nonperforming loans to total gross loans ratio was 1.34% as of June 30, 2024, compared to 1.29% at the end of 2023[40] Efficiency and Expenses - The efficiency ratio for the quarter ended June 30, 2024, increased to 53.49%, compared to 45.76% for the same quarter in 2023[10] - Total noninterest expense for Q2 2024 was $6,973,000, up from $6,738,000 in Q1 2024 and $6,207,000 in Q2 2023[34] Shareholder Equity and Dividends - Shareholders' equity rose to $127.4 million, an increase of $4.8 million from $122.5 million at December 31, 2023, due to $8.5 million in net income[21] - A cash dividend of $0.12 per share was declared on June 25, 2024, payable on July 23, 2024[23] Asset Growth - Total assets increased to $1.22 billion as of June 30, 2024, from $1.21 billion at December 31, 2023[33] - Total assets as of June 30, 2024, were $1,219,822 thousand, a slight increase from $1,206,404 thousand on March 31, 2024[38]

Financial Performance - Net income for the quarter ended March 31, 2024, decreased 32.07% to $4.2 million compared to $6.1 million for the same period in 2023[131]. - The annualized return on average assets (ROAA) decreased to 1.40% for the quarter ended March 31, 2024, from 1.95% for the same quarter in 2023[137]. - The annualized return on average equity (ROAE) decreased to 13.51% for the quarter ended March 31, 2024, compared to 22.05% for the same quarter in 2023[137]. - Noninterest income decreased by $395,000 to $1,053,000 for the quarter ended March 31, 2024, compared to the same period in 2023[150]. - Noninterest expense for Q1 2024 increased by $498,000 to $6.7 million compared to Q1 2023, primarily due to higher professional fees and salaries[153]. - The effective tax rate for Q1 2024 was 28.94%, a slight decrease from 29.16% in Q1 2023[156]. Loan and Deposit Trends - Total loans increased 1.02% to $929.4 million compared to $920.0 million at December 31, 2023[133]. - Total deposits decreased 4.83% to $955.9 million compared to $1.0 billion at December 31, 2023[133]. - Net loans increased by 1.1% from December 31, 2023, to $913.9 million but decreased by 1.4% year-over-year[157]. - Total deposits decreased to $955.9 million at March 31, 2024, down $48.5 million, or 4.8%, from $1.00 billion at December 31, 2023, and down $155.2 million, or 14.0%, from $1.11 billion at March 31, 2023[171]. - Noninterest-bearing deposits fell to $353.2 million, a decrease of $50.1 million, or 12.4%, from $403.2 million at December 31, 2023[171]. - Interest-bearing deposits increased slightly to $602.8 million, up $1.5 million, or 0.3%, from $601.3 million at December 31, 2023[171]. - Core deposits constituted 97.1% of total deposits at March 31, 2024, compared to 97.6% at December 31, 2023[172]. Asset Quality and Credit Losses - The allowance for credit losses as a percentage of gross loans decreased to 1.66%, compared to 1.70% at December 31, 2023[133]. - The Company recorded a provision for credit losses of $173,000 for the quarter ended March 31, 2024, compared to a reversal of provision of $493,000 for the same quarter in 2023[133]. - Nonperforming assets decreased to $16.3 million at March 31, 2024, down from $16.5 million at December 31, 2023[185]. - Nonaccrual loans increased to $11.6 million at March 31, 2024, compared to $11.4 million at December 31, 2023[186]. - The allowance for credit losses to nonperforming loans was 131.34% at March 31, 2024[185]. - Net charge-offs for the quarter ended March 31, 2024, totaled $289,000, down from $434,000 for the same period in 2023, with an annualized net charge-off rate of 0.13%[195]. Capital and Dividends - The Tier 1 Capital Ratio for the Bank was 12.50% at March 31, 2024, up from 10.88% at March 31, 2023[207]. - The Board of Directors authorized a stock repurchase program of up to $3.0 million, representing 2.4% of total shareholders' equity of $124.2 million as of March 31, 2024[211]. - The Bank paid $2.1 million in cash dividends to the Holding Company during the quarter ended March 31, 2024, which funded operating costs and interest payments[212]. - A cash dividend of $0.12 per share was declared on March 26, 2024, with approximately $2.1 million transferred from retained earnings to dividends payable[213]. - The Bank is subject to dividend restrictions under the California Financial Code, limiting cash dividends to the lesser of retained earnings or net income for the last three fiscal years[214]. Interest Income and Expenses - Total interest income increased by $320,000, or 2.2%, for the three months ended March 31, 2024, compared to the same period in 2023[144]. - Total interest expense increased approximately $1.6 million, or 96.1%, for the quarter ended March 31, 2024, compared to the same period in 2023[147]. - The overall average yield on the loan portfolio rose to 6.00% for the quarter ended March 31, 2024, up from 5.56% for the same quarter in 2023[145]. - The average yield on total interest-earning assets increased by 45 basis points, from 5.07% to 5.52%[146]. - The annualized average cost of funds was 1.73% for the quarter ended March 31, 2024, compared to 0.83% for the same quarter in 2023[133].

Financial Performance - For the quarter ended March 31, 2024, United Security Bancshares reported net income of $4.2 million, a decrease of 31.15% from $6.1 million for the same period in 2023[1]. - Net income decreased to $4,161,000 for the three months ended March 31, 2024, down 32% from $6,125,000 in the prior year[20]. - Net income for the quarter ended March 31, 2024, decreased 32.1% to $4.2 million, compared to $6.1 million for the same period in 2023[28]. - The return on average assets was 1.40% for the three months ended March 31, 2024, down from 1.95% in the prior year[24]. Interest Income and Margin - Total interest income for the three months ended March 31, 2024, was $14,879,000, an increase of 2.2% from $14,559,000 in the same period of 2023[20]. - Net interest income before the provision for credit losses totaled $11.7 million, down 9.51% from $12.9 million in Q1 2023[7]. - The net interest margin decreased from 4.51% in Q1 2023 to 4.35% in Q1 2024 due to rising deposit and borrowing costs[7]. - The net interest margin for the period was 4.35%, slightly down from 4.51% in the previous year[21]. - Net interest margin decreased to 4.35% for the quarter ended March 31, 2024, compared to 4.51% for the quarter ended March 31, 2023[26]. Expenses - Noninterest expense rose to $6.7 million, an increase of 8.06% from $6.2 million in the same quarter last year, driven by higher professional fees and salaries[8]. - Total noninterest expense increased to $6,738,000, up 8% from $6,240,000 in the same period of 2023[20]. - The efficiency ratio rose to 52.96% for the three months ended March 31, 2024, compared to 43.48% in the prior year, indicating decreased operational efficiency[24]. - The efficiency ratio for the quarter ended March 31, 2024, increased to 52.96%, compared to 43.48% for the same period in 2023[30]. Assets and Equity - Total assets decreased by $4.6 million, or 0.4%, from December 31, 2023, to March 31, 2024, with gross loan balances increasing by $9.6 million[10]. - Total assets as of March 31, 2024, were $1,206,404,000, a decrease from $1,261,194,000 in the same period last year[23]. - Shareholders' equity increased to $124.2 million as of March 31, 2024, up from $122.5 million at the end of 2023, primarily due to net income[12]. Loans and Commitments - Average loans decreased to $904,392,000 from $947,453,000 year-over-year, reflecting a decline of 4.5%[21]. - Total loans, net of unearned fees, increased 1.02% to $929.4 million, compared to $920.0 million at December 31, 2023[26]. - Unfunded loan commitments rose from $183.5 million at December 31, 2023, to $190.3 million at March 31, 2024[10]. Credit Losses - The provision for credit losses was $173,000, compared to a reversal of $493,000 in the same period last year, indicating a shift towards increased credit loss provisions[20]. - The provision for credit losses was $173,000 for the quarter ended March 31, 2024, compared to a reversal of provision of $493,000 for the same period in 2023[35]. - The allowance for credit losses was 1.66% of the loan portfolio at March 31, 2024, slightly down from 1.70% at December 31, 2023[13]. Noninterest Income - Noninterest income totaled $1,053,000, a decrease of 27.3% from $1,448,000 in the prior year[20]. - Noninterest income for the quarter ended March 31, 2024, totaled $1.1 million, a decrease of $395,000 compared to $1.4 million for the same period in 2023[29]. Deposits - The annualized average cost of deposits increased to 0.72% in Q1 2024 from 0.48% in Q1 2023, while average interest-bearing deposits decreased by 12.9% from $689.7 million to $601.0 million[3]. - Total deposits decreased 4.8% to $955.9 million during the quarter ended March 31, 2024, compared to $1.0 billion at December 31, 2023[32]. Other - The effective tax rate for Q1 2024 was 28.9%, compared to 29.2% for the same period in 2023[9]. - Book value per share increased to $7.17, compared to $7.14 at December 31, 2023[26]. - Non-performing assets decreased to $16.3 million, representing 1.35% of total assets as of March 31, 2024, down from 1.36% at December 31, 2023[36]. - The Company declared a cash dividend of $0.12 per share, payable on April 22, 2024[34].

Market Presence - United Security Bancshares operates primarily in Fresno, Madera, Kern, and Santa Clara Counties, with a total deposit market share of 0.33% across these regions as of June 30, 2023[28]. - The Bank ranks 9th in Fresno County with a market share of 4.24%, 4th in Madera County with 8.40%, 14th in Kern County with 0.68%, and 40th in Santa Clara County with 0.01%[28]. - The company’s primary market areas include Fresno, Madera, Santa Clara, and Kern Counties, with varying market shares across these regions[27]. Banking Services - The Bank offers a full range of commercial banking services, including various deposit instruments and lending products, with a focus on personalized service to compete against larger institutions[19][20]. - The company offers a variety of commercial banking services, including real estate loans, commercial loans, and agricultural loans, with a focus on personalized service[19][20]. - The company does not originate subprime or adjustable-rate loans, maintaining a conservative lending approach[22]. - The company competes with larger banks by offering competitive interest rates and personalized service, despite not providing trust and wealth management services[26]. Regulatory Environment - The Company is subject to various federal and state regulations that govern capital adequacy, reserves, and loan limitations, impacting its operational strategies[29][30]. - The Company is subject to various federal and state regulations that govern capital adequacy, loan limitations, and branch operations, which can impact its growth and earnings[29]. - The Company is subject to regulation by the Securities and Exchange Commission (SEC) and must comply with its disclosure requirements[35]. - The Company is subject to various federal and state consumer protection laws, which can result in significant potential liability from litigation and regulatory sanctions[77][78]. - The CFPB has broad supervisory and enforcement authority over consumer financial products, which may impact the Company's business and financial condition[78]. Capital and Financial Stability - As of December 31, 2023, the Company and the Bank were classified as "well capitalized" under applicable standards, meeting the total risk-based capital ratio of 10% or more, Tier 1 risk-based capital ratio of 8% or more, and leverage capital ratio of 5% or more[58][63]. - The Dodd-Frank Act increased the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets[33]. - The Dodd-Frank Act established a minimum non-risk-based leverage ratio set at 4.00%[33]. - The Dodd-Frank Act requires the FDIC to increase the reserve ratio of the Deposit Insurance Fund to 1.35% of insured deposits[33]. - The Dodd-Frank Act added an additional capital conservation buffer of 2.5% of risk-weighted assets over each required capital ratio[33]. - The Company and the Bank adopted the community bank leverage ratio framework during 2020, allowing them to be considered "well capitalized" for prompt corrective action purposes[57][63]. - The Bank is eligible to accept brokered deposits as it is deemed "well-capitalized" as of December 31, 2023[66]. Employee and Corporate Governance - The Company employed 114 full-time equivalent staff as of December 31, 2023[103]. - The Company provides competitive pay consistent with employee position and experience, with annual increases based on merit[104]. - Employees receive a comprehensive benefits package, including 100% matching contributions up to 4% of salary for retirement plans[105]. - The Company has a code of ethics that prohibits discrimination or harassment, requiring annual training for all employees[106]. - The Company is subject to the Community Reinvestment Act (CRA) and received a "Satisfactory" rating in its most recent examination[96]. Compliance and Risk Management - The Company emphasizes the importance of risk management and compliance with regulatory requirements to maintain financial stability and growth[11]. - The Anti-Money Laundering Act of 2020 (AML Act) represents significant changes to anti-money laundering laws, with new regulations expected to impact operations[82]. - The AML Act expands federal AML laws to a broader range of industries, including cryptocurrency and antiquities[84]. - The Corporate Transparency Act (CTA) requires reporting of beneficial ownership information to a confidential FinCEN database starting January 1, 2025[89]. - The Company must comply with cybersecurity regulations, including new SEC rules for disclosures regarding cybersecurity risk management[99]. Investment and Assets - The Bank owned 67,374 shares of the Federal Home Loan Bank of San Francisco capital stock valued at $6,737,400 as of December 31, 2023[73]. - The Bank owned 38,567 shares of Federal Reserve Bank of San Francisco stock with paid-in capital totaling $1,929,850 as of December 31, 2023[76]. - The Company has a subsidiary, York Monterey Properties, Inc., which was funded with an initial investment of $250,000 and an additional $805,000 to manage real estate acquired through foreclosures[15]. Deposit Insurance and Assessment - The FDIC insures deposits up to $250,000 per qualified account, and the assessment rates for deposit insurance are based on the average consolidated total assets less average tangible equity capital[68][69]. - The FDIC adopted a restoration plan in September 2020 to achieve a reserve ratio of 1.35% by September 30, 2028, following a decline to 1.30% due to extraordinary growth in insured deposits[69]. - The FDIC's deposit insurance fund reserve ratio fell below the statutory minimum of 1.35% in 2020, leading to a restoration plan to achieve the minimum by September 30, 2028[69].

Financial Performance - Net income decreased to $3.9 million for Q3 2023, down from $4.5 million in Q3 2022[139] - The Company reported net income of $14.4 million for the nine months ended September 30, 2023, compared to $10.3 million for the same period in 2022[143] - Return on average assets (ROAA) was 1.21% for Q3 2023, compared to 1.28% for Q3 2022[139] - Return on average equity (ROAE) was 13.06% for Q3 2023, down from 15.61% for Q3 2022[139] - The Company's effective tax rate for Q3 2023 was 28.78%, a decrease from 29.14% in Q3 2022[168] Asset and Deposit Trends - Total assets decreased by 2.0% to $1.27 billion as of September 30, 2023, compared to $1.30 billion at December 31, 2022[139] - Total deposits decreased by 15.3% to $987.6 million compared to $1.17 billion at December 31, 2022[139] - Total average assets decreased from $1,383,157 thousand in September 2022 to $1,266,644 thousand in September 2023[148] - Total deposits decreased to $987.6 million at September 30, 2023, down $177.9 million, or 15.3%, from $1.17 billion at December 31, 2022[184] - Average total deposits decreased by $131.4 million, or 10.8%, year-to-date compared to the same period in 2022[186] Loan and Credit Quality - The allowance for credit losses as a percentage of gross loans increased to 1.61%, up from 1.04% at December 31, 2022[139] - Net loans decreased by $12.8 million, or 1.3%, from December 31, 2022, totaling $972.9 million as of September 30, 2023, but increased by $12.3 million, or 1.3%, year-over-year[172] - Nonperforming assets decreased to $18.7 million at September 30, 2023, from $19.4 million at December 31, 2022, with nonaccrual loans at $14.2 million[193] - The allowance for loan losses to nonperforming loans increased to 110.5% at September 30, 2023, from 68.8% at December 31, 2022[193] - Net charge-offs for the nine months ended September 30, 2023, totaled $1,352,000, compared to $488,000 for the same period in 2022, indicating a significant increase of 177.6%[203] Interest Income and Expense - Total interest income increased by $1.8 million, or 13.4%, for the three months ended September 30, 2023, compared to the same period in 2022[152] - The average yield on total interest-earning assets increased by 102 basis points, driven by higher yields on treasury, corporate, and mortgage-backed securities[152] - The annualized average cost of deposits was 0.71% for Q3 2023, compared to 0.22% for Q3 2022[139] - Total interest expense increased approximately $5.7 million, or 294.8%, for the nine months ended September 30, 2023, compared to the same period in 2022[157] - The average yield on total interest-earning assets increased by 145 basis points due to increases in loan yields and investment yields[154] Capital and Dividends - The Tier 1 Capital Ratio for the Bank was 11.42% at September 30, 2023, up from 9.55% at September 30, 2022, exceeding the minimum requirement of 5.00%[213] - The Company declared a cash dividend of $0.12 per share on September 26, 2023, with approximately $2.1 million transferred from retained earnings to dividends payable[219] - The Bank is subject to dividend restrictions under the California Financial Code, limiting cash dividends to the lesser of retained earnings or net income for the last three fiscal years[220] - Cash dividends may require prior approval from the Commissioner if the above test is not met, with a cap on the amount not exceeding the net income for the last fiscal year or the current fiscal year[220] Other Financial Metrics - The prime rate increased from 4.75% at September 30, 2022, to 8.50% at September 30, 2023, impacting both interest income and expense[150] - The total shareholders' equity increased from $113,828 thousand in September 2022 to $117,401 thousand in September 2023[148] - The weighted average interest rate for student loans was 12.14%, with an average balance per borrower of approximately $106,000[180] - The student loan portfolio balance decreased to $39.6 million as of September 30, 2023, from $42.1 million at December 31, 2022[183]

Financial Performance - Net income increased to $4.4 million for Q2 2023, up from $3.4 million in Q2 2022, reflecting a growth of 29.4%[137] - Net interest income before provision for credit losses increased by 20.1% to $12.5 million for Q2 2023, compared to $10.4 million in Q2 2022[137] - Total interest income increased by $4.1 million, or 37.2%, for the three months ended June 30, 2023, compared to the same period in 2022[149] - Noninterest income for the quarter ended June 30, 2023, increased by $409,000 to $1,011,000, a 67.9% increase compared to the same quarter in 2022[157] - Noninterest income for the six months ended June 30, 2023, increased by $2.1 million to $2.5 million, a 522.8% increase compared to the same period in 2022[159] - Total interest income increased by $5.4 million, or 27.9%, to $8.7 million for the six months ended June 30, 2023, compared to the same period in 2022[151] Asset and Liability Management - Total assets decreased by 0.8% to $1.29 billion as of June 30, 2023, compared to $1.30 billion at December 31, 2022[137] - Total loans decreased by 2.0% to $960.1 million, down from $980.2 million at December 31, 2022[137] - Total deposits decreased by 10.2% to $1.05 billion, compared to $1.17 billion at December 31, 2022[137] - Average interest-earning assets decreased by $69.8 million, with a $133.2 million decrease in balances held at the Federal Reserve Bank, partially offset by a $48.2 million increase in loan balances and a $15.1 million increase in investment securities[149] - Total average assets for the three months ended June 30, 2023, were $1,270,149 thousand, a decrease from $1,337,498 thousand in the same period of 2022[143] - Total interest-bearing liabilities amounted to $749,261 thousand for the three months ended June 30, 2023, compared to $748,012 thousand for the same period in 2022[143] Credit Quality and Losses - The allowance for credit losses as a percentage of gross loans increased to 1.68%, up from 1.04% at December 31, 2022, due to a $6.6 million adjustment related to the CECL accounting standard[137] - The allowance for credit losses increased to $15,644 thousand for the three months ended June 30, 2023, from $9,302 thousand in the same period of 2022[143] - The allowance for credit losses increased to $16,110,000 at June 30, 2023, up from $9,713,000 at June 30, 2022, marking a 65.5% increase[200] - Net charge-offs for the six months ended June 30, 2023, totaled $902,000, compared to $37,000 for the same period in 2022, indicating a significant increase in charge-offs[202] - The net loan charged-off to total average loans (annualized) was 0.19% for the six months ended June 30, 2023, compared to 0.01% for the same period in 2022[200] Capital and Equity - Capital position remains strong with an 11.16% Tier 1 Leverage Ratio, up from 10.10% as of December 31, 2022[137] - Return on average assets (ROAA) was 1.68% for the six months ended June 30, 2023, compared to 0.89% for the same period in 2022[140] - Return on average equity (ROAE) was 19.32% for the six months ended June 30, 2023, compared to 10.19% for the same period in 2022[140] - The Tier 1 Capital Ratio for the Bank was 11.18% at June 30, 2023, compared to 9.55% at June 30, 2022, reflecting improved capital adequacy[212] Dividend Policy - The Company declared a cash dividend of $0.12 per share on June 27, 2023, with approximately $2.1 million transferred from retained earnings for distribution[218] - The Bank is subject to dividend restrictions under the California Financial Code, limiting cash dividends to the lesser of retained earnings or net income for the last three fiscal years minus distributions to the Holding Company[219] - Cash dividends may only be paid with prior approval from the Commissioner if the above test is not met, and cannot exceed the net income for the last fiscal year or the current fiscal year[219] - Stock dividends do not require the satisfaction of any tests or approval from the Commissioner[219] - The Commissioner can prohibit dividend payments if the Bank's shareholders' equity is deemed inadequate or if paying a dividend is considered unsafe or unsound[219] - The Reserve Bank may also impose limits on dividends paid by the Bank[219] Market and Economic Conditions - The prime rate increased from 4.75% at June 30, 2022, to 8.25% at June 30, 2023, impacting both interest income and expense[147] - The overall average yield on the loan portfolio rose to 5.59% for the six months ended June 30, 2023, up from 4.28% in the prior year[152] - The net interest margin increased to 4.38% for the six months ended June 30, 2023, compared to 3.23% for the same period in 2022[153] Other Financial Metrics - Noninterest-bearing checking accounts decreased to $390,953 thousand for the three months ended June 30, 2023, from $465,926 thousand in the same period of 2022[143] - Total shareholders' equity decreased to $107,730 thousand for the three months ended June 30, 2023, from $113,977 thousand in the same period of 2022[143] - Total noninterest expense for the quarter ended June 30, 2023, increased by $537,000 to $6.2 million, a 9.5% increase compared to the same quarter in 2022[160] - Total noninterest expense for the six months ended June 30, 2023, increased by $863,000 to $12.4 million, a 7.4% increase compared to the same period in 2022[162] - The Company's effective tax rate for the six months ended June 30, 2023, was 29.07%, compared to 28.67% for the same period in 2022[165]