United Security Bancshares(US:UBFO)2025-03-20 20:45Market 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].