United Security Bancshares(US:UBFO)2024-03-26 20:55Market 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].