United Security Bancshares(UBFO) - 2024 Q1 - Quarterly Report

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].