United Security Bancshares(UBFO) - 2020 Q3 - Quarterly Report

Financial Performance - For the nine months ended September 30, 2020, the Company reported net income of $7,038,000, or $0.41 per share, compared to $12,276,000, or $0.72 per share, for the same period in 2019[176]. - The Company's return on average assets decreased to 0.93% for the nine months ended September 30, 2020, down from 1.70% for the same period in 2019[176]. - Total interest income decreased by $5,729,000, or 18.39%, compared to the same period in 2019[188]. - Noninterest income for the quarter ended September 30, 2020 decreased by $942,000 to $911,000, a decline of 50.84% compared to the same quarter in 2019[194]. - Noninterest income for the nine months ended September 30, 2020 decreased by $399,000 to $4,706,000, a decline of 7.82% compared to the same period in 2019[196]. - The effective tax rate for the nine months ended September 30, 2020, was 28.46%, a decrease from 28.90% for the same period in 2019[201]. Credit Losses and Provisions - The provision for credit losses recognized during the period ended September 30, 2020, was $2,138,000, contributing to the decrease in net income[176]. - The provision for credit losses was $2,138,000 for the nine months ended September 30, 2020, compared to only $15,000 for the same period in 2019, indicating a significant increase in risk assessment[262]. - Net charge-offs for the nine months ended September 30, 2020 totaled $1,338,000, a substantial increase from $180,000 for the same period in 2019[263]. - The allowance for credit losses at September 30, 2020 was 1.32% of outstanding loan balances, down from 1.45% at September 30, 2019[264]. Loan and Deposit Growth - Total loans outstanding increased from $569,500,000 at September 30, 2019 to $660,444,000 at September 30, 2020, representing a growth of 15.95%[263]. - Total deposits reached $994,783,000, an increase of $176,421,000, or 21.56%, from $818,362,000 at December 31, 2019[211]. - Noninterest-bearing checking accounts increased to $355,114,000, compared to $306,590,000 in the previous year[181]. - Interest-bearing deposits increased by $58,343,000, or 11.52%, from $506,412,000 at December 31, 2019, to $564,755,000 at September 30, 2020[213]. Asset Management - Total assets increased by $177,028,000, or 18.50%, to $1,133,947,000 as of September 30, 2020, compared to $956,919,000 at December 31, 2019[202]. - Average earning assets were approximately $926,935,000 for the nine months ended September 30, 2020, compared to $875,384,000 for the same period in 2019[203]. - The loan to deposit ratio was 65.5% at September 30, 2020, compared to 71.9% at December 31, 2019, indicating improved liquidity management[269]. Economic Impact and Market Conditions - The unemployment rate in Fresno County was reported at 10.4% as of September 2020, indicating economic challenges in the local market[164]. - The Company anticipates a short-term slowdown in new loan originations due to COVID-19, focusing on balance sheet management and maintaining market share[175]. - The Company is actively working with COVID-19 affected borrowers to defer payments, interest, and fees, which may impact future interest income[166]. Regulatory Compliance and Capital Ratios - The Company's capital ratios were in excess of all regulatory requirements as of September 30, 2020, indicating sufficient capital to withstand an extended economic recession[167]. - The Bank's ratio of tangible shareholders' equity to total tangible assets was 12.4% at September 30, 2020, well above the required minimum of 9%[277]. - The Company and the Bank meet all capital adequacy requirements and are expected to continue meeting minimum capital requirements in the foreseeable future[284]. Dividends and Stock Repurchase - The Bank paid $6,027,000 in cash dividends to the Holding Company during the nine months ended September 30, 2020[288]. - The Board of Directors declared a cash dividend of $0.11 per share on the Company's common stock on September 22, 2020, with approximately $1,867,000 transferred from retained earnings for distribution[289]. - The Company has authorized the repurchase of up to $3,000,000 of outstanding stock, representing 2.6% of total shareholders' equity of $118,053,000 as of September 30, 2020[287].