PART I. Financial Information This section provides the unaudited financial statements and management's discussion and analysis for the first quarter of 2023 [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for United Security Bancshares, including detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $1.26 billion, driven by lower net loans and deposits, while shareholders' equity remained stable Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,261,194** | **$1,299,193** | | Net Loans | $927,105 | $969,996 | | Total Investment Securities | $208,914 | $210,860 | | **Total Liabilities** | **$1,148,286** | **$1,186,730** | | Total Deposits | $1,111,132 | $1,165,484 | | **Total Shareholders' Equity** | **$112,908** | **$112,463** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income significantly increased to $6.1 million, driven by a 37.2% rise in net interest income and higher diluted EPS Q1 2023 vs Q1 2022 Income Statement (in thousands, except EPS) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total Interest Income | $14,559 | $9,991 | | Net Interest Income | $12,945 | $9,438 | | (Reversal) Provision for Credit Losses | $(493) | $5 | | Total Noninterest Income (Loss) | $1,448 | $(206) | | Total Noninterest Expense | $6,240 | $5,816 | | **Net Income** | **$6,125** | **$2,443** | | **Diluted EPS** | **$0.36** | **$0.14** | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income reached $6.8 million, a turnaround from prior-year loss, driven by unrealized gains on debt securities Comprehensive Income (Loss) (in thousands) | Component | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Income | $6,125 | $2,443 | | Other Comprehensive Income (Loss) | $639 | $(7,301) | | **Comprehensive Income (Loss)** | **$6,764** | **$(4,858)** | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity slightly increased to $112.9 million, influenced by net income, comprehensive income, and CECL adoption - The adoption of the Current Expected Credit Loss (CECL) standard on January 1, 2023, resulted in a cumulative downward adjustment to retained earnings of **$4.7 million**[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities provided $9.3 million cash, investing activities $40.3 million, while financing activities used $43.0 million Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $9,328 | $2,225 | | Net Cash from Investing Activities | $40,255 | $(20,894) | | Net Cash from Financing Activities | $(43,025) | $24,354 | | **Net Change in Cash** | **$6,558** | **$5,715** | | **Cash at End of Period** | **$45,153** | **$224,934** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, including CECL adoption's impact on credit losses, and portfolio compositions - The Company adopted ASC 326 ("CECL") on January 1, 2023, resulting in a **$6.4 million** increase in the allowance for credit losses and a **$4.7 million** reduction to retained earnings, net of tax[19](index=19&type=chunk) Impact of CECL Adoption on Allowance for Credit Losses (in thousands) | Loan Category | Allowance Before CECL | Impact of CECL | Allowance After CECL | | :--- | :--- | :--- | :--- | | Commercial and industrial | $956 | $1,336 | $2,292 | | Real estate mortgage | $1,364 | $2,359 | $3,723 | | Real estate construction | $3,408 | $721 | $4,129 | | Agricultural | $525 | $1,025 | $1,550 | | Installment and student loans | $2,898 | $1,957 | $4,855 | | **Total** | **$10,182** | **$6,367** | **$16,549** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial performance and condition, covering income, assets, deposits, and CECL adoption [Overview](index=34&type=section&id=Overview) Q1 2023 highlights include increased net income, higher net interest margin, and CECL-driven allowance for credit losses - Key highlights for Q1 2023 include: - Net income increased to **$6.1 million** compared to **$2.4 million** in Q1 2022 - Total assets decreased by **2.9%** to **$1.26 billion** since year-end 2022 - Total deposits decreased by **4.7%** to **$1.11 billion** since year-end 2022 - The allowance for credit losses as a percentage of gross loans increased to **1.65%** from **1.04%** at year-end 2022, mainly due to CECL adoption[138](index=138&type=chunk)[144](index=144&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Net income rose to $6.1 million, driven by a 37.2% increase in net interest income and an expanded net interest margin Rate and Volume Analysis of Net Interest Income Change (Q1 2023 vs Q1 2022, in thousands) | Component | Total Change | Change Due to Rate | Change Due to Volume | | :--- | :--- | :--- | :--- | | **Increase in Interest Income** | **$4,568** | **$5,332** | **$(764)** | | Loans | $3,881 | $2,869 | $1,012 | | Investment securities | $711 | $600 | $111 | | **Increase in Interest Expense** | **$1,151** | **$1,189** | **$(38)** | | **Increase in Net Interest Income** | **$3,417** | **$4,143** | **$(726)** | - Net interest margin increased to **4.45%** for Q1 2023, up from **3.10%** in Q1 2022, primarily due to a shift to higher-yielding assets and increased loan yields[154](index=154&type=chunk) - Noninterest income increased by **$1.7 million** year-over-year, largely due to a **$1.3 million** positive swing in the fair value adjustment of junior subordinated debentures[157](index=157&type=chunk) [Financial Condition](index=41&type=section&id=Financial%20Condition) Total assets decreased to $1.26 billion due to lower loans and deposits; asset quality stable, credit loss allowance increased Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2023 | % of Loans | December 31, 2022 | % of Loans | | :--- | :--- | :--- | :--- | :--- | | Commercial and industrial | $50,511 | 5.4% | $57,902 | 5.9% | | Real estate – mortgage | $665,706 | 70.6% | $671,521 | 68.5% | | RE construction & development | $137,257 | 14.6% | $153,374 | 15.6% | | Agricultural | $45,513 | 4.8% | $52,722 | 5.4% | | Installment and student loans | $43,740 | 4.6% | $44,659 | 4.6% | | **Total gross loans** | **$942,727** | **100.0%** | **$980,178** | **100.0%** | Nonperforming Assets (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Nonaccrual loans | $13,195 | $14,544 | | Loans past due 90+ days | $382 | $252 | | **Total nonperforming loans** | **$13,577** | **$14,796** | | Other real estate owned | $4,582 | $4,582 | | **Total nonperforming assets** | **$18,159** | **$19,378** | | NPA to Total Assets | 1.44% | 1.49% | - Total deposits decreased by **$54.4 million (4.7%)** since year-end 2022, primarily due to an **$86.9 million** drop in noninterest-bearing deposits[178](index=178&type=chunk)[180](index=180&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital) The company maintains strong liquidity with substantial cash and credit lines, and capital ratios remain well above minimums - At March 31, 2023, the company had **$13.2 million** in outstanding borrowings and access to an additional **$481.5 million** in unused, collateralized lines of credit[214](index=214&type=chunk) Capital Ratios as of March 31, 2023 | Ratio | Company | Bank | Minimum to be Well Capitalized | | :--- | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 10.89% | 10.88% | 5.00% (9.00% for CBLR) | - A cash dividend of **$0.11** per share was declared on March 28, 2023[223](index=223&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - This section is not applicable because United Security Bancshares is a smaller reporting company[225](index=225&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal controls this quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[227](index=227&type=chunk) - No material changes were made to the internal control over financial reporting during the first quarter of 2023[228](index=228&type=chunk) PART II. Other Information This section covers legal proceedings, equity sales, and exhibits filed with the Form 10-Q [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Management expects no material adverse effect on financial condition from ongoing legal proceedings in the normal course - Management does not expect any material adverse effect on the Company's financial condition from ongoing legal proceedings[231](index=231&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the quarter ended March 31, 2023 - The company reported no unregistered sales of equity securities for the first quarter of 2023[232](index=232&type=chunk) [Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley - Exhibits filed with this report include CEO and CFO certifications as required by the Sarbanes-Oxley Act[233](index=233&type=chunk) Signatures The report was signed by the President and CEO, and Senior Vice President and CFO on May 15, 2023 - The report was signed on May 15, 2023, by Dennis R. Woods, President and Chief Executive Officer, and David A. Kinross, Senior Vice President and Chief Financial Officer[237](index=237&type=chunk)

[Part I](index=4&type=section&id=PART%20I) [Item 1. Business](index=4&type=section&id=Item%201%20-%20Business) United Security Bancshares is a California-based bank holding company operating through its subsidiary, United Security Bank - United Security Bancshares is a bank holding company whose principal business is serving as the holding company for United Security Bank, a California state-chartered bank headquartered in Fresno, California[13](index=13&type=chunk)[15](index=15&type=chunk) - The Bank operates twelve branches and several lending offices primarily in Fresno, Madera, Kern, and Santa Clara Counties, offering commercial banking services, various deposit instruments, and a range of lending activities[15](index=15&type=chunk)[19](index=19&type=chunk) Loan Portfolio Composition (as of Dec 31, 2022) | Loan Type | Percentage of Total Loans | | :--- | :--- | | Real estate mortgage | 68.5% | | Real estate construction | 15.5% | | Commercial and industrial | 6.1% | | Agricultural | 5.4% | | Installment loans | 4.5% | - The company faces **high competition** in its primary markets of Fresno, Madera, Kern, and Santa Clara counties, ranking 20th in total deposit market share across these areas as of June 30, 2022[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - The company is **extensively regulated** by federal and state authorities, including the FRB, FDIC, and DFPI, with key regulations including the Dodd-Frank Act and the USA PATRIOT Act[30](index=30&type=chunk)[32](index=32&type=chunk)[54](index=54&type=chunk) - As of December 31, 2022, the company employed **117 full-time equivalent staff** and offers a 401(k) plan with a 100% match up to 4% of salary contributions[97](index=97&type=chunk)[99](index=99&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A%20-%20Risk%20Factors) This section is not required for smaller reporting companies, and therefore, no risk factors are listed - Disclosure of risk factors is **not required for smaller reporting companies**[102](index=102&type=chunk) [Item 1B. Unresolved Staff Comments](index=18&type=section&id=Item%201B%20%E2%80%93%20Unresolved%20Staff%20Comments) The Company reported no unresolved staff comments from the SEC as of December 31, 2022 - The Company had **no unresolved staff comments** at December 31, 2022[103](index=103&type=chunk) [Item 2. Properties](index=18&type=section&id=Item%202%20-%20Properties) The Company operates from twelve branches and two loan offices, owning its headquarters and six branches - The Company operates twelve branches, two loan production offices, and nine remote ITM/ATM locations across Fresno, Madera, Kern, and Santa Clara Counties[104](index=104&type=chunk) - As of year-end 2022, the Company **owned six branches and its Fresno headquarters**, and leased the remaining six branches and all remote machine locations[105](index=105&type=chunk) [Item 3. Legal Proceedings](index=18&type=section&id=Item%203%20-%20Legal%20Proceedings) The Company is not aware of any pending legal proceedings that would materially affect its financial condition - The Company is not currently a party to any legal proceedings that are expected to have a **material adverse effect** on its financial condition or operations[106](index=106&type=chunk) [Item 4. Mine Safety Disclosures](index=18&type=section&id=Item%204%20%E2%80%93%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine safety disclosures are **not applicable** to the Company's business[107](index=107&type=chunk) [Part II](index=18&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%205%20-%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company's stock (UBFO) trades on Nasdaq, with quarterly dividends of $0.11 per share paid in 2022 - The Company's common stock (UBFO) is traded on The Nasdaq Global Select Market and had approximately **549 record holders** as of December 31, 2022[108](index=108&type=chunk) 2022 Quarterly Common Stock Prices | Quarter | High | Low | | :--- | :--- | :--- | | Q1 2022 | $8.74 | $8.03 | | Q2 2022 | $8.67 | $7.24 | | Q3 2022 | $7.73 | $6.50 | | Q4 2022 | $7.44 | $6.51 | - The Company declared and paid quarterly cash dividends of **$0.11 per share** in 2022, consistent with the dividends paid in 2021[112](index=112&type=chunk) - The Company **did not repurchase any common shares** under its $3 million stock repurchase plan during 2022 and 2021[117](index=117&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%207%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income rose to $15.7 million in 2022, driven by a 29.2% increase in net interest income from rising rates [Overview and Financial Summary](index=20&type=section&id=7.1%20Overview%20and%20Financial%20Summary) Net income rose to $15.7 million in 2022, driven by higher net interest income, with improved ROAA and ROAE 2022 vs 2021 Financial Highlights | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | $15.7 million | $10.1 million | | Total Assets | $1.30 billion | $1.33 billion | | Total Loans, net | $980.2 million | $871.5 million | | Total Deposits | $1.17 billion | $1.19 billion | | Net Interest Income | $46.1 million | $35.7 million | | Provision for Credit Losses | $1.8 million | $2.1 million | | Net Interest Margin | 3.69% | 3.16% | | ROAA | 1.16% | 0.82% | | ROAE | 13.75% | 8.47% | [Results of Operations](index=22&type=section&id=7.2%20Results%20of%20Operations) Net income increased by $5.6 million in 2022, as a $10.4 million rise in net interest income offset lower noninterest income Summary of Earnings (Years Ended Dec 31) | (In thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net interest income | $46,062 | $35,651 | $32,277 | | Provision for credit losses | $1,802 | $2,107 | $2,769 | | Noninterest income | $1,838 | $3,385 | $5,174 | | Noninterest expense | $24,039 | $23,615 | $22,270 | | **Net income** | **$15,686** | **$10,098** | **$8,961** | | **Net income - Diluted (per share)** | **$0.92** | **$0.59** | **$0.53** | - Net interest income increased by **$10.4 million (29.2%)** in 2022, driven by a 61 basis point increase in the yield on interest-earning assets[135](index=135&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Noninterest income decreased by **$1.5 million (45.7%)** in 2022, primarily due to a larger loss on the fair value of junior subordinated debentures[150](index=150&type=chunk) - Noninterest expense increased by **$424,000 (1.8%)** in 2022, mainly due to higher professional fees and data processing costs[151](index=151&type=chunk) - The Company adopted the CECL accounting standard effective January 1, 2023, and estimates a one-time increase to its allowance for credit losses of **$6.0 million to $8.0 million**[147](index=147&type=chunk) [Financial Condition](index=28&type=section&id=7.3%20Financial%20Condition) Total assets decreased slightly to $1.30 billion as cash was deployed into a 12.9% growth in net loans Year-End Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Due from FRB | $6,945 | $188,162 | ($181,217) | (96.3)% | | Net loans | $969,996 | $862,200 | $107,796 | 12.9% | | Investment securities | $210,860 | $182,646 | $28,214 | 15.4% | | Total assets | $1,299,193 | $1,330,944 | ($31,751) | (2.4)% | | Total deposits | $1,165,484 | $1,188,106 | ($22,622) | (1.9)% | - The loan portfolio grew by **12.9% to $981.8 million** in 2022, led by a 20.4% increase in real estate mortgage loans and a 31.9% increase in commercial and industrial loans[156](index=156&type=chunk)[157](index=157&type=chunk) - The student loan portfolio decreased to **$42.1 million** from $48.5 million in 2021, with no new originations[162](index=162&type=chunk) - Nonperforming assets increased to **$19.5 million (1.99% of gross loans)** at year-end 2022 from $16.6 million (1.92% of gross loans) at year-end 2021[218](index=218&type=chunk)[222](index=222&type=chunk) - The Company and Bank remain **well-capitalized**, with the Company's Tier 1 Leverage Ratio at **10.10%** as of Dec 31, 2022, exceeding the 9.00% minimum requirement[57](index=57&type=chunk)[237](index=237&type=chunk)[449](index=449&type=chunk) [Critical Accounting Estimates and Policies](index=44&type=section&id=7.4%20Critical%20Accounting%20Estimates%20and%20Policies) The Company identifies the Allowance for Credit Losses and Fair Value of Junior Subordinated Debt as critical accounting estimates - The determination of the **Allowance for Credit Losses** is a critical accounting estimate requiring significant judgment regarding future cash flows and economic conditions[243](index=243&type=chunk) - The **Fair Value of Junior Subordinated Debt** is another critical estimate, valued using a discounted cash flow model with Level 3 inputs (unobservable inputs)[244](index=244&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%207A%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not required for smaller reporting companies, and therefore, no market risk disclosures are provided - Disclosure of quantitative and qualitative information about market risk is **not required for smaller reporting companies**[245](index=245&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=44&type=section&id=Item%208%20-%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements, supplementary data, and the independent auditor's report [Report of Independent Registered Public Accounting Firm](index=46&type=section&id=8.1%20Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion, identifying the Allowance for Credit Losses as a critical audit matter - The auditor, Moss Adams LLP, issued an **unqualified opinion**, concluding that the financial statements are fairly presented in accordance with U.S. GAAP[249](index=249&type=chunk) - The **Allowance for Credit Losses was identified as a critical audit matter**, highlighting the significant auditor judgment required to evaluate management's assumptions[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) [Consolidated Financial Statements](index=47&type=section&id=8.2%20Consolidated%20Financial%20Statements) The financial statements show total assets of $1.30 billion and a 2022 net income of $15.7 million Consolidated Balance Sheet (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,299,193** | **$1,330,944** | | Net Loans | $969,996 | $862,200 | | Total Investment Securities | $210,860 | $182,646 | | **Total Liabilities** | **$1,186,730** | **$1,210,737** | | Total Deposits | $1,165,484 | $1,188,106 | | **Total Shareholders' Equity** | **$112,463** | **$120,207** | Consolidated Statement of Income (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net Interest Income | $46,062 | $35,651 | | Provision for Credit Losses | $1,802 | $2,107 | | Noninterest Income | $1,838 | $3,385 | | Noninterest Expense | $24,039 | $23,615 | | **Net Income** | **$15,686** | **$10,098** | | **Diluted EPS** | **$0.92** | **$0.59** | - The company experienced a net cash outflow from investing activities of **$174.2 million** in 2022, driven by a net increase in loans and purchases of securities[263](index=263&type=chunk) - Shareholders' equity decreased from $120.2 million to **$112.5 million**, largely due to a $16.3 million other comprehensive loss from unrealized losses on securities[262](index=262&type=chunk) [Notes to Consolidated Financial Statements](index=53&type=section&id=8.3%20Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, including the upcoming CECL adoption, and provide breakdowns of financial statement components - The company will adopt the **CECL accounting standard on January 1, 2023**, replacing the current "incurred loss" model with an "expected loss" model[303](index=303&type=chunk) - At Dec 31, 2022, the investment portfolio had **unrealized losses of $27.1 million**, primarily due to changes in interest rates, not credit quality[306](index=306&type=chunk)[311](index=311&type=chunk) - The allowance for credit losses totaled **$10.2 million** at year-end 2022, based on historical loss migration and specific allowances for impaired loans[193](index=193&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - The company has two stock-based compensation plans, with total stock-based compensation expense of **$185,000** in 2022[400](index=400&type=chunk)[401](index=401&type=chunk)[402](index=402&type=chunk) - The company measures its junior subordinated debt at fair value, classifying it as a **Level 3 liability** with a fair value of **$10.9 million** at year-end 2022[425](index=425&type=chunk)[430](index=430&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=94&type=section&id=Item%209%20-%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The Company reported no changes in or disagreements with its accountants on accounting or financial disclosure - There were **no disagreements with accountants** on accounting and financial disclosure[452](index=452&type=chunk) [Item 9A. Controls and Procedures](index=94&type=section&id=Item%209A%20%E2%80%93%20Controls%20and%20Procedures) Management concluded that disclosure controls, procedures, and internal control over financial reporting were effective - Management concluded that the Company's **disclosure controls and procedures are effective** as of December 31, 2022[453](index=453&type=chunk) - Management concluded that the Company's **internal control over financial reporting is effective** as of December 31, 2022[454](index=454&type=chunk) [Item 9B. Other Information](index=95&type=section&id=Item%209B%20%E2%80%93%20Other%20Information) There was no other information to be reported in this item - **No information was reported** under this item[456](index=456&type=chunk) [Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections](index=95&type=section&id=Item%209C%20%E2%80%93%20Disclosures%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the Company - This disclosure is **not applicable** to the Company[457](index=457&type=chunk) [Part III](index=95&type=section&id=PART%20III) [Item 10. Directors, Executive Officers, and Corporate Governance](index=95&type=section&id=Item%2010%20%E2%80%93%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the Company's 2023 Proxy Statement - Information regarding directors, executive officers, and corporate governance is **incorporated by reference** from the Company's 2023 Proxy Statement[459](index=459&type=chunk) [Item 11. Executive Compensation](index=95&type=section&id=Item%2011%20-%20Executive%20Compensation) Information for this item is incorporated by reference from the Company's 2023 Proxy Statement - Information regarding executive compensation is **incorporated by reference** from the Company's 2023 Proxy Statement[460](index=460&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=95&type=section&id=Item%2012%20-%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the Company's 2023 Proxy Statement - Information regarding security ownership is **incorporated by reference** from the Company's 2023 Proxy Statement[461](index=461&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=95&type=section&id=Item%2013%20-%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the Company's 2023 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is **incorporated by reference** from the Company's 2023 Proxy Statement[462](index=462&type=chunk) [Item 14. Principal Accounting Fees and Services](index=95&type=section&id=Item%2014%20%E2%80%93%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the Company's 2023 Proxy Statement - Information regarding principal accounting fees and services is **incorporated by reference** from the Company's 2023 Proxy Statement[463](index=463&type=chunk) [Part IV](index=96&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=96&type=section&id=Item%2015%20%E2%80%93%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the report - The Consolidated Financial Statements are located in **Item 8** of the report[465](index=465&type=chunk) - All financial statement schedules have been **omitted** because they are not applicable, not required, or the information is included elsewhere in the report[467](index=467&type=chunk) - Filed exhibits include Articles of Incorporation, Bylaws, various executive employment and compensation agreements, and **CEO/CFO certifications**[469](index=469&type=chunk)[470](index=470&type=chunk)

Financial Performance - Total assets increased 2.9% to $1.37 billion compared to $1.33 billion at December 31, 2021[166] - Total loans, net of unearned fees, increased 10.4% to $962.2 million compared to $871.5 million at December 31, 2021[166] - Net interest income before the provision for credit losses increased 24.0% to $32.6 million for the nine months ended September 30, 2022, compared to $26.3 million for the same period in 2021[166] - Return on average assets ("ROAA") was 1.03% for the nine months ended September 30, 2022, compared to 0.75% for the same period in 2021[166] - Return on average equity ("ROAE") was 11.99% for the nine months ended September 30, 2022, compared to 7.55% for the same period in 2021[166] - Total interest income increased by $6.7 million, or 24.1%, for the nine months ended September 30, 2022, compared to the same period in 2021[192] - The company reported an increase in net interest income of $3,393 thousand for the three months ended September 30, 2022, compared to the same period in 2021[190] Asset and Liability Management - Total average assets reached $1,383,157 thousand in 2022, up from $1,270,323 thousand in 2021, reflecting a growth of approximately 8.9%[183] - Total liabilities increased to $1,269,329 thousand in 2022 from $1,149,771 thousand in 2021, marking a growth of about 10.4%[183] - Total shareholders' equity decreased to $113,828 thousand in 2022 from $120,552 thousand in 2021, indicating a decline of approximately 5.6%[183] - Cash and cash equivalents decreased by $93.2 million, or 42.5%, between December 31, 2021, and September 30, 2022[207] - Total deposits reached $1.24 billion, reflecting an increase of $52.7 million, or 4.4%, from $1.19 billion at December 31, 2021[221] - Average interest-bearing liabilities increased to $739.2 million for the nine months ended September 30, 2022, from $641.9 million for the same period in 2021[208] Loan Portfolio and Credit Quality - The loan portfolio totaled $960.5 million at September 30, 2022, an increase of $91.2 million, or 10.5%, from $869.3 million at December 31, 2021[209] - Real estate mortgage loans increased by $74.7 million, or 13.4%, during the first nine months of 2022[210] - Commercial and industrial loans increased by $16.9 million between December 31, 2021, and September 30, 2022[215] - Total loans outstanding increased from $809.1 million at September 30, 2021 to $962.2 million at September 30, 2022, representing a growth of 18.9%[270] - Impaired and classified loans totaled $11.8 million, or 1.2% of gross loans, as of September 30, 2022, down from $13.7 million, or 1.6%, at December 31, 2021[232] - The allowance for loan losses increased to $10.063 million as of September 30, 2022, from $9.333 million at December 31, 2021[241] Interest Income and Expense - Total interest income increased by $3.6 million, or 36.9%, for the three months ended September 30, 2022, compared to the same period in 2021[190] - The average yield on total interest-earning assets increased by 84 basis points, driven by higher yields on investment securities and loans due to market rate increases[190] - Net interest margin improved to 3.95% for the three months ended September 30, 2022, compared to 3.17% in the same period of 2021[190] - Total interest expense increased by approximately $399,000, or 26.1%, for the nine months ended September 30, 2022, compared to the same period in 2021[195] - Interest expense as a percentage of average earning assets rose to 0.24% in 2022 from 0.18% in 2021[190] Economic and Market Conditions - The Federal Open Market Committee increased the overnight benchmark rate by 300bps during 2022 to combat rising inflation[169] - The prime rate increased from 3.25% at September 30, 2021, to 6.25% at September 30, 2022, impacting both interest income and expense[188] - The effective tax rate for the nine months ended September 30, 2022, was 28.87%, compared to 28.28% for the same period in 2021[206] - The company continues to monitor economic conditions in the real estate market to adjust the allowance for loan losses as necessary[264] Dividends and Capital Management - The Company declared a cash dividend of $0.11 per share on common stock on September 27, 2022, totaling approximately $1.9 million[286] - The Bank's Tier 1 Capital Ratio was 9.60% at September 30, 2022, compared to 9.80% at September 30, 2021[280] - The Company's capital position remains well-capitalized with a 9.56% Tier 1 Leverage Ratio compared to 9.79% as of December 31, 2021[166] Noninterest Income and Expenses - Noninterest income decreased by $1.3 million to $789,000 for the nine months ended September 30, 2022, compared to $2.1 million in the same period in 2021[199] - Professional fees increased by $433,000, or 17.2%, for the nine months ended September 30, 2022, compared to the same period in 2021[202] - Salaries and employee benefits remained relatively stable, decreasing slightly by $13,000 to $8.8 million for the nine months ended September 30, 2022[202]

Table of Contents SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Commission file number: 000-32897 UNITED SECURITY BANCSHARES (Exact name of registrant as specified in its charter) | CALIFORNIA | 91-2112732 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | 2126 Inyo Street, Fresno, California | 93721 | | (Address of principal executive offices) | (Zip Code) | Registrants telephone number, including area code (559) ...

Table of Contents SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Commission file number: 000-32897 UNITED SECURITY BANCSHARES (Exact name of registrant as specified in its charter) | CALIFORNIA | 91-2112732 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | 2126 Inyo Street, Fresno, California | 93721 | | (Address of principal executive offices) | (Zip Code) | Registrants telephone number, including area code (559) ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021. ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file number: 000-32987 UNITED SECURITY BANCSHARES (Exact name of registrant as specified in its charter) CALIFORNIA 91-2112732 (State or other jurisdiction of i ...

Table of Content Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ 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 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 for the past 90 days. Yes ☒ No ☐ Indicate by chec ...

UNITED SECURITY BANCSHARES (Exact name of registrant as specified in its charter) | CALIFORNIA | 91-2112732 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | 2126 Inyo Street, Fresno, California | 93721 | | (Address of principal executive offices) | (Zip Code) | Registrants telephone number, including area code (559) 248-4943 Table of Content SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Commission file number: 0 ...

Table of Content SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Commission file number: 000-32897 UNITED SECURITY BANCSHARES (Exact name of registrant as specified in its charter) | CALIFORNIA | 91-2112732 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | 2126 Inyo Street, Fresno, California | 93721 | | (Address of principal executive offices) | (Zip Code) | Registrants telephone number, including area code (559) ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020. ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission file number: 000-32987 UNITED SECURITY BANCSHARES (Exact name of registrant as specified in its charter) CALIFORNIA 91-2112732 (State or other jurisdiction of i ...