SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

April 15, 2020
Date of Report (Date of earliest event reported)

UNITED SECURITY BANCSHARES
(Exact Name of Registrant as Specified in its Charter)

California
(State or Other Jurisdiction of Incorporation)
000-32987
 
91-2112732
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
2126 Inyo Street, Fresno, California
 
93721
(Address of principal executive offices)
 
(Zip Code)

559-248-4943
(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 








ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On April 15, 2020, the Company issued a press release announcing results for the quarter ended March 31, 2020 (the "Press Release"). A copy of the Press Release is furnished as Exhibit 99.1 and incorporated herein by reference. The Press Release contains the non-GAAP measure Core Net Income. The Company believes that the presentation of that non-GAAP measure provides useful information for the understanding of its ongoing operations and, thereby, enhances an investor’s overall understanding of the Company's current financial performance relative to past performance and provides, along with the nearest GAAP measures, a baseline for modeling future expectations. The non-GAAP measure is reconciled to the comparable GAAP financial measure in the financial tables within the Press Release. The Company cautions that the non-GAAP measure should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. Additionally, the Company notes that there can be no assurance that the above referenced non-GAAP financial measure is comparable to similarly titled financial measures used by other companies.

The information in Item 2.02 of this Current Report on Form 8-K and the Press Release attached hereto as Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.


ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d)    Exhibits.

EXHIBIT #
99.1 Press release of United Security Bancshares dated April 15, 2020


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
United Security Bancshares
 
 
 
 
Date:
April 15, 2020
 
By: /s/ Bhavneet Gill
 
 
 
Bhavneet Gill
 
 
 
Senior Vice President & Chief Financial Officer






Exhibit


United Security Bancshares reports 1st quarter net income of $2.8 million

FRESNO, CA - April 15, 2020. United Security Bancshares (Nasdaq: UBFO) today announced its unaudited financial results for the quarter ended March 31, 2020. The Company recognized net income of $2,754,000 for the quarter ended March 31, 2020, a decrease of 31% compared to the net income of $4,007,000 recognized for the quarter ended March 31, 2019. Basic and diluted earnings per share decreased to $0.16 for the quarter ended March 31, 2020, as compared to basic and diluted earnings per share of $0.24 for the quarter ended March 31, 2019.

First Quarter 2020 Highlights (at or for the quarter ended March 31, 2020, except where noted)

Net income for the quarter decreased $1,253,000 or 31.27% to $2,754,000, compared to $4,007,000 for the quarter ended March 31, 2019. The decrease is a result of a reduction in interest income related to a lower rate environment and a provision for loan losses, partially offset by a gain on the fair value of junior subordinated debt.
The allowance for credit losses as a percentage of gross loans increased to 1.46%, compared to 1.33% at December 31, 2019. The provision for credit losses totaled $1,707,000, compared to $6,000 for the quarter ended March 31, 2019. The increase in provision reflects an expectation of significant deterioration in the macro-economic environment as a result of the impact of COVID-19, net charge-offs, and loan growth.
The gain on the fair value of junior subordinated debt was $1,498,000 for the quarter, compared to $414,000 for the quarter ended March 31, 2019.
Total loans, net of unearned fees, increased 4.55% to $623,686,000, compared to $596,554,000 at December 31, 2019.
Total deposits increased to $840,437,000, compared to $818,362,000 at December 31, 2019.
Book value per share increased to $6.92, compared to $6.83 at December 31, 2019.
Net interest margin decreased to 4.00% from 4.45% for the quarter ended March 31, 2019.
Annualized average cost of deposits decreased to 0.33% from 0.41% for the quarter ended March 31, 2019.
Net charge-offs totaled $495,000, compared to net recoveries of $16,000 for the quarter ended March 31, 2019.
Capital positions remain strong with a 12.77% Tier 1 Leverage Ratio, a 14.92% Common Equity Tier 1 Ratio; a 15.99% Tier 1 Risk-Based Capital Ratio; and a 17.24% Total Risk-Based Capital Ratio.
Annualized return on average assets ("ROAA") was 1.19%, compared to 1.71% for the quarter ended March 31, 2019.
Annualized return on average equity ("ROAE") was 9.65%, compared to 14.61% for the quarter ended March 31, 2019.

Dennis Woods, President and Chief Executive Officer, stated: "Although we saw growth in both our loan and deposit portfolios during this first quarter, we cannot predict the full impact COVID-19 will have on our markets and economy. Our strong credit quality, ample liquidity, and capital level provide a solid foundation as we navigate through these uncertain times."

Results of Operations

ROAE for the quarter ended March 31, 2020 was 9.65%, compared to 14.61% for the quarter ended March 31, 2019. ROAA was 1.19% for the quarter ended March 31, 2020, compared to 1.71% for the quarter ended March 31, 2019. The annualized average cost of deposits was 0.33% for the quarter ended March 31, 2020, a decrease from 0.41% for quarter ended March 31, 2019. Average interest-bearing deposits decreased 4.10% between the quarters ended March 31, 2019 and 2020 to an average balance of $501,026,000.

Net interest income after the provision for credit losses for the quarter ended March 31, 2020 totaled $6,873,000, a decrease of $2,581,000, or 27.30%, from $9,454,000 for the same period ended March 31, 2019. Net interest income after the provision for credit losses includes a provision for credit losses of $1,707,000 for the quarter ended March 31, 2020, compared to a provision of $6,000 for the quarter ended March 31, 2019. During the first quarter of 2020, the Federal Reserve cut its benchmark rate by 1.50%. As a result, the Prime rate decreased from 4.75% to 3.25%. A majority of the Company's floating rate loans and investments are indexed to the Prime rate. The Company's net interest margin decreased from 4.45% for the quarter ended March 31, 2019 to 4.00% for the quarter ended March 31, 2020. The decrease was the result of decreases in yields on overnight fed funds, loans, and investment securities, partially offset by a decrease in interest expense. The yield on loans decreased from 6.06% for the quarter ended March 31, 2019 to 5.57% for the quarter ended March 31, 2020. The yield on interest bearing liabilities decreased from 0.73% for the quarter ended March 31, 2019 to 0.60% for the quarter ended March 31, 2020.






Non-interest income for the quarter ended March 31, 2020 totaled $2,580,000, reflecting an increase of $1,057,000 from the $1,523,000 in non-interest income reported for the quarter ended March 31, 2019. Customer service fees totaled $728,000 and $809,000 for the quarter ended March 31, 2020 and 2019, respectively. On a year-over-year comparative basis, non-interest income increased primarily due to a $1,498,000 gain on the fair value of junior subordinated debentures (TRUPs) for the quarter ended March 31, 2020, compared to a $414,000 gain for the same period ended March 31, 2019. The change in the fair value of TRUPs reflected in non-interest income was caused by fluctuations in the LIBOR yield curve. Non-interest income for the quarter ended March 31, 2019 includes a $109,000 loss resulting from the dissolution of the USB Real Estate Investment Trust (REIT) which was completed in February 2019.
 
For the quarter ended March 31, 2020, non-interest expense totaled $5,591,000, an increase of $244,000 compared to $5,347,000 for the quarter ended March 31, 2019. On a year-over-year comparative basis, non-interest expense increased primarily due to increases of $223,000 in salaries and employee benefits, $88,000 in expenses related to other real estate owned, and $40,000 in occupancy expense, partially offset by decreases of $111,000 in professional fees. Salary and employee benefits expense for the quarter ended March 31, 2019 includes a $231,000 reversal of bonus expense. Included in net cost on operation and sale of OREO for the quarter ended March 31, 2020 is a $113,000 loss on sale. The decrease in professional fees is attributed to a reduction in legal expense.

The efficiency ratio for the quarter ended March 31, 2020 deteriorated to 50.10%, compared to 48.68% for the quarter ended March 31, 2019. The decline is attributed to a reduction in net interest income as a result of the balance sheet repricing in a lower rate environment, partially offset by an increase in gain on the fair value of TRUPs.

The Company recorded an income tax provision of $1,108,000 for the quarter ended March 31, 2020, compared to $1,623,000 for the same period in 2019. The effective tax rate for the quarter ended March 31, 2020 was 28.69%, compared to 28.83% for the quarter ended March 31, 2019.

Provided at the end of this Press Release is a reconciliation of Core Net Income, as a non-GAAP measure, to Net Income. This reconciliation excludes Non-Core items such as the Fair Value Adjustment for TRUPs, recovery of provision for credit losses, and gain or loss on sale of other real estate owned (OREO). Management believes that financial results are more comparative excluding the impact of such non-core items.

Balance Sheet Review

Total assets increased $20,327,000, or 2.12%, for the quarter ended March 31, 2020, due primarily to increases of $17,398,000 in investment securities and $26,391,000 in gross loan balances. Unfunded loan commitments increased from $197,559,000 at December 31, 2019 to $209,014,000 at March 31, 2020. OREO balances decreased from $6,753,000 at December 31, 2019 to $5,745,000 at March 31, 2020. The reduction was attributed to a $1,008,000 sale of OREO.

Total deposits increased $22,075,000, or 2.70%, to $840,437,000 during the quarter ended March 31, 2020. This increase was due to an increase of $12,217,000 in noninterest bearing deposits, $9,448,000 in NOW and money market accounts, and $4,062,000 in savings accounts, partially offset by a decrease of $3,652,000 in time deposits. In total, NOW, money market and savings accounts increased 3.06% to $454,522,000 at March 31, 2020, compared to $441,012,000 at December 31, 2019. Noninterest bearing deposits increased 3.92% to $324,167,000 at March 31, 2020, compared to $311,950,000 at December 31, 2019. As a result of the net increase, core deposits, which is made up of the balance of noninterest bearing deposits, NOW, money market, savings, and time deposits accounts less than $250,000, increased $22,897,000.

Shareholders’ equity at March 31, 2020 was $117,410,000, an increase of $1,422,000 from shareholders’ equity of $115,988,000 at December 31, 2019. The increase in equity was the result of net earnings for the period, partially offset by cash dividends. At March 31, 2020 there was accumulated other comprehensive loss of $174,000, as compared to accumulated other comprehensive loss of $632,000 at December 31, 2019. The change from December 31, 2019 to March 31, 2020 was the result of unrealized gains on junior subordinated debentures (TRUPs) caused by a change in yields during the period.

The Board of Directors of United Security Bancshares declared a cash dividend on common stock of $0.11 per share on March 24, 2020. The dividend was payable on April 15, 2020, to shareholders of record as of April 6, 2020. No assurances can be provided that future dividends will be declared and/or as to the timing of such future dividends, if any.






Credit Quality

The Company has recorded a provision for credit losses of $1,707,000 for the quarter ended March 31, 2020, compared to a provision of $6,000 for the quarter ended March 31, 2019. Net loan charge-offs totaled $495,000 for the quarter ended March 31, 2020, as compared to net recoveries of $16,000 for the quarter ended March 31, 2019. The provision recorded during the quarter is attributed to growth of the loan portfolio, net charge-offs, and uncertainty related to COVID-19. COVID-19 is precipitating an economic recession and it is unknown whether or not the economy will bounce back quickly.

The Company's allowance for loan loss totaled 1.46% of the loan portfolio at March 31, 2020, compared to 1.33% at December 31, 2019. In determining the adequacy of the allowance for loan losses, the judgment of the Company's management is a significant factor. Management considers the allowance for credit losses at March 31, 2020 to be adequate.

Non-performing assets, comprised of nonaccrual loans, troubled debt restructures (TDRs), other real estate owned through foreclosure (OREO), and loans more than 90 days past due and still accruing interest, decreased $266,000 between December 31, 2019 and March 31, 2020 to $20,959,000. Nonperforming assets as a percentage of total assets decreased from 2.22% at December 31, 2019 to 2.14% at March 31, 2020. The decrease in nonperforming assets is primarily attributed to the reduction in OREO that occurred during the period, offset by nonaccrual loans which increased $332,000 between December 31, 2019 and March 31, 2020 to $12,029,000. Total restructured loans decreased $1,872,000 between December 31, 2019 and March 31, 2020. OREO balances decreased from $6,753,000 at December 31, 2019 to $5,745,000 at March 31, 2020.

About United Security Bancshares

United Security Bancshares (NASDAQ: UBFO) is the holding company for United Security Bank, which was founded in 1987. United Security Bank is headquartered in Fresno and operates 11 full-service branch offices in Fresno, Bakersfield, Campbell, Caruthers, Coalinga, Firebaugh, Oakhurst, San Joaquin, and Taft. Additionally, United Security Bank operates Commercial Real Estate Construction, Commercial Lending, and Consumer Lending departments. For more information, please visit www.unitedsecuritybank.com.

Non-GAAP Financial Measures

This press release and the accompanying financial tables contain a non-GAAP financial measure (Net Income before Non-Core) within the meaning of the Securities and Exchange Commission’s Regulation G. In the accompanying financial tables, the Company has provided a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. The Company’s management believes that this non-GAAP financial measure provides useful information about the Company’s results of operations and/or financial position to both investors and management. The Company provides this non-GAAP financial measure to investors to assist them in performing their analysis of its historical operating results. The non-GAAP financial measure shows the Company's operating results before consideration of certain adjustments and, consequently, this non-GAAP financial measure should not be construed as an alternative to net income (loss) as an indicator of the Company's operating performance, as determined in accordance with GAAP. The Company may calculate this non-GAAP financial measure differently than other companies.

Forward-Looking Statements

This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Company intends such statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are based on management’s knowledge and belief as of today and are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. Forward-looking statements are subject to risks and uncertainties and actual results may differ materially from those presented.   Factors that might cause such differences, some of which are beyond the Company’s ability to control or predict, include, but are not limited to: (1) the effects of the COVID-19 pandemic, including the effects of the steps being taken to address the pandemic and their impact on the Company’s market and employees, (2) changes in general economic and financial market conditions, either nationally or locally, (3) changes in interest rates, (4) changes in banking laws or regulations, (5) increased competition in the Company's market, impacting the ability to execute its business plans, (6) loss of key personnel, (7) unanticipated credit losses, (8) earthquakes or other natural disasters impacting the local economy and/or the condition of real estate collateral, (9) the impact of technological changes and the ability to develop and maintain secure and reliable electronic systems, and (10) changes in accounting policies or procedures.






The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.  For a more complete discussion of these risks and uncertainties, see the Company’s Annual Report on Form 10-K, for the year ended December 31, 2019, and particularly the section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations."  Readers should carefully review all disclosures the Company files from time to time with the Securities and Exchange Commission.






United Security Bancshares
 
 
 
Consolidated Balance Sheets (unaudited)
 
 
 
(in thousands)
 
 
 
 
March 31, 2020
 
December 31, 2019
Assets
 
 
 
Cash and non-interest-bearing deposits in other banks
$
28,134

 
$
27,291

Due from Federal Reserve Bank ("FRB")
171,719

 
191,704

Cash and cash equivalents
199,853

 
218,995

 
 
 
 
Investment securities (at fair value)
 
 
 
Available for sale ("AFS") securities
93,695

 
76,312

Marketable equity securities
3,791

 
3,776

Total investment securities
97,486

 
80,088

Loans
623,765

 
597,374

Unearned fees and unamortized loan origination costs - net
(79
)
 
(820
)
Allowance for credit losses
(9,120
)
 
(7,908
)
Net loans
614,566

 
588,646

 
 
 
 
Premises and equipment - net
9,279

 
9,380

Accrued interest receivable
8,285

 
8,208

Other real estate owned ("OREO")
5,745

 
6,753

Goodwill
4,488

 
4,488

Deferred tax assets - net
2,555

 
3,191

Cash surrender value of life insurance
21,086

 
20,955

Operating lease right-of-use assets
3,214

 
3,360

Other assets
10,689

 
12,855

Total assets
$
977,246

 
$
956,919

 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
Deposits
 

 
 

Non-interest-bearing
$
324,167

 
$
311,950

Interest-bearing
516,270

 
506,412

Total deposits
840,437

 
818,362

 
 
 
 
Accrued interest payable
50

 
59

Operating lease liabilities
3,317

 
3,463

Other liabilities
7,486

 
8,239

Junior subordinated debentures (at fair value)
8,546

 
10,808

Total liabilities
859,836

 
840,931

 
 
 
 
Shareholders' Equity
 
 
 
Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 16,974,235 at March 31, 2020 and 16,973,885 at December 31, 2019
59,050

 
58,973

Retained earnings
58,534

 
57,647

Accumulated other comprehensive loss
(174)

 
(632)

Total shareholders' equity
117,410

 
115,988

Total liabilities and shareholders' equity
$
977,246

 
$
956,919












United Security Bancshares
 
 
 
Consolidated Statements of Income (unaudited)
 
 
 
(in thousands)
 
 
 
 
Three Months Ended March 31,
 
2020
 
2019
Interest Income:
 
 
 
Interest and fees on loans
$
8,346

 
$
8,642

Interest on investment securities
428

 
477

Interest on deposits in FRB
567

 
1,298

Total interest income
9,341

 
10,417

 
 
 
 
Interest Expense:
 
 
 
Interest on deposits
664

 
834

Interest on other borrowed funds
97

 
123

Total interest expense
761

 
957

Net Interest Income
8,580

 
9,460

Provision for Credit Losses
1,707

 
6

Net Interest Income after Provision for Credit Losses
6,873

 
9,454

 
 
 
 
Noninterest Income:
 
 
 
Customer service fees
728

 
809

Increase in cash surrender value of bank-owned life insurance
131

 
145

Gain on fair value of marketable equity securities
14

 
57

Gain on fair value of junior subordinated debentures
1,498

 
414

Loss on dissolution of real estate investment trust

 
(109)

Other
209

 
207

Total noninterest income
2,580

 
1,523

 
 
 
 
Noninterest Expense:
 
 
 
Salaries and employee benefits
2,995

 
2,772

Occupancy expense
853

 
813

Data processing
112

 
107

Professional fees
702

 
813

Regulatory assessments
85

 
93

Director fees
94

 
91

Correspondent bank service charges
15

 
14

Net cost on operation and sale of OREO
153

 
65

Other
582

 
579

Total noninterest expense
5,591

 
5,347

 
 
 
 
Income Before Provision for Taxes
3,862

 
5,630

Provision for Taxes on Income
1,108

 
1,623

Net Income
$
2,754

 
$
4,007

 
 
 
 
Basic earnings per common share
$
0.16

 
$
0.24

Diluted earnings per common share
$
0.16

 
$
0.24

Weighted average basic shares for EPS
16,974,100

 
16,947,040

Weighted average diluted shares for EPS
16,994,727

 
16,972,630






United Security Bancshares
 
 
 
Average Balances and Rates (unaudited)
 
 
 
(in thousands)
Three Months Ended March 31,
 
2020
 
2019
Average Balances:
 
 
 
Loans (1)
$
603,060

 
$
578,326

Investment securities – taxable
82,101

 
68,293

Interest-bearing deposits in FRB
178,748

 
215,644

Total interest-earning assets
863,909


862,263

Allowance for credit losses
(7,905
)
 
(8,458
)
Cash and due from banks
29,282

 
28,349

Other real estate owned
6,628

 
5,745

Other non-earning assets
61,810

 
59,685

Total average assets
$
953,724


$
947,584

 
 
 
 
Interest-bearing deposits
$
501,026

 
$
522,457

Junior subordinated debentures
10,714

 
10,090

Total interest-bearing liabilities
511,740

 
532,547

 
 
 
 
Non-interest-bearing deposits
314,389

 
294,801

Other liabilities
9,679

 
9,025

Total liabilities
835,808


836,373

Total equity
117,916

 
111,211

Total liabilities and equity
$
953,724

 
$
947,584

 
 
 
 
Average Rates:
 
 
 
Loans (1)
5.57
%
 
6.06
%
Investment securities- taxable
2.10
%
 
2.83
%
Interest-bearing deposits in FRB
1.28
%
 
2.44
%
Earning assets
4.35
%
 
4.90
%
Interest bearing deposits
0.53
%
 
0.65
%
Total deposits
0.33
%
 
0.41
%
Junior subordinated debentures
3.64
%
 
4.94
%
Total interest-bearing liabilities
0.60
%
 
0.73
%
Net interest margin (2)
4.00
%
 
4.45
%

(1) Loan amounts include nonaccrual loans, but the related interest income has been included only if collected for the period prior to the loan being placed on a nonaccrual basis.
(2) Net interest margin is computed by dividing annualized net interest income by average interest-earning assets.

















United Security Bancshares
 
 
 
 
 
 
 
 
Condensed - Consolidated Balance Sheets (unaudited)
 
 
 
 
(in thousands)
 
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
 
March 31, 2019
Cash and cash equivalents
$
199,853

 
$
218,995

 
$
245,943

 
$
309,460

 
$
260,701

Investment securities
97,486

 
80,088

 
81,651

 
63,632

 
66,604

Loans
623,686

 
596,554

 
569,500

 
572,810

 
579,617

Allowance for credit losses
(9,120
)
 
(7,908
)
 
(8,230
)
 
(8,452
)
 
(8,417
)
Net loans
614,566

 
588,646

 
561,270

 
564,358

 
571,200

Other assets
65,341

 
69,190

 
68,534

 
69,043

 
65,535

Total assets
$
977,246

 
$
956,919

 
$
957,398

 
$
1,006,493

 
$
964,040

 
 
 
 
 
 
 
 
 
 
Non-interest-bearing
$
324,167

 
$
311,950

 
$
333,156

 
$
304,172

 
$
300,476

Interest-bearing
516,270

 
506,412

 
487,067

 
566,743

 
531,101

Total deposits
840,437

 
818,362

 
820,223

 
870,915

 
831,577

Other liabilities
19,399

 
22,569

 
21,965

 
22,240

 
21,270

Total liabilities
859,836

 
840,931

 
842,188

 
893,155

 
852,847

Total shareholders' equity
117,410

 
115,988

 
115,210

 
113,338

 
111,193

Total liabilities and shareholder's equity
$
977,246

 
$
956,919

 
$
957,398

 
$
1,006,493

 
$
964,040


United Security Bancshares
 
 
 
 
 
 
 
 
Condensed - Consolidated Statements of Income (unaudited)
 
 
 
 
(in thousands)
For the Quarters Ended:
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
 
March 31, 2019
Total interest income
$
9,341

 
$
9,558

 
$
10,417

 
$
10,311

 
$
10,417

Total interest expense
761

 
862

 
1,061

 
1,008

 
957

Net interest income
8,580

 
8,696

 
9,356

 
9,303

 
9,460

Provision for credit losses
1,707

 
5

 
5

 
4

 
6

Net interest income after provision for credit losses
6,873

 
8,691

 
9,351

 
9,299

 
9,454

 
 
 
 
 
 
 
 
 
 
Total non-interest income
2,580

 
647

 
1,853

 
1,729

 
1,523

Total non-interest expense
5,591

 
5,335

 
5,335

 
5,262

 
5,347

Income before provision for taxes
3,862

 
4,003

 
5,869

 
5,766

 
5,630

Provision for taxes on income
1,108

 
1,108

 
1,696

 
1,669

 
1,623

Net income
$
2,754

 
$
2,895

 
$
4,173

 
$
4,097

 
$
4,007













United Security Bancshares
 
 
 
Nonperforming Assets (unaudited)
 
 
 
(dollars in thousands)
 
 
 
 
March 31, 2020
 
December 31, 2019
Commercial and industrial
$
75

 
$
75

RE construction & development
11,411

 
11,478

Agricultural
543

 
144

Total nonaccrual loans
$
12,029


$
11,697

 
 
 
 
Loans past due 90 days and still accruing
1,061

 
386

Restructured loans
2,124

 
2,389

Total nonperforming loans
$
15,214

 
$
14,472

Other real estate owned
5,745

 
6,753

Total nonperforming assets
$
20,959

 
$
21,225

 
 
 
 
Nonperforming loans to total gross loans
2.44
%
 
2.42
%
Nonperforming assets to total assets
2.14
%
 
2.22
%
Allowance for credit losses to nonperforming loans
59.94
%
 
54.64
%
United Security Bancshares
 
 
 
Selected Financial Data (unaudited)
 
 
 
(dollars in thousands, except per share amounts)
 
 
 
Three Months Ended March 31,
 
2020
 
2019
 
 
 
 
Return on average assets
1.19
%
 
1.71
 %
Return on average equity
9.65
%
 
14.61
 %
Net charge-off (recoveries) to average loans
0.33
%
 
(0.01
)%
 
 
 
 
 
 
 
 
 
March 31, 2020
 
December 31, 2019
Shares outstanding - period end
16,974,235

 
16,973,885

Book value per share

$6.92

 

$6.83

Efficiency ratio (1)
50.10
%
 
49.99
 %
Total impaired loans

$16,509

 

$17,072

Net loan to deposit ratio
73.12
%
 
71.93
 %
Allowance for credit losses to total loans
1.46
%
 
1.33
 %
Total capital to risk weighted assets
 
 
 
Company
17.24
%
 
17.98
 %
Bank
17.21
%
 
17.78
 %
Tier 1 capital to risk-weighted assets
 
 
 
Company
15.99
%
 
16.81
 %
Bank
15.96
%
 
16.61
 %
Common equity tier 1 capital to risk-weighted assets
 
 
 
Company
14.92
%
 
15.39
 %
Bank
15.96
%
 
16.61
 %
Tier 1 capital to adjusted average assets (leverage)
 
 
 
Company
12.77
%
 
12.82
 %
Bank
12.76
%
 
12.83
 %
(1) Efficiency ratio is defined as total noninterest expense divided by net interest income before provision for credit losses plus total noninterest income.





United Security Bancshares
 
 
 
 
 
 
 
 
Net Income before Non-Core Reconciliation
 
 
 
 
 
 
 
 
Non-GAAP Information (dollars in thousands)
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
 
 
 
2020
 
2019
 
Change $
 
Change %
Net income
 
$
2,754

 
$
4,007

 
$
(1,253
)
 
(31.27
)%
 
 
 
 
 
 
 
 
 
TRUPs (1) fair value adjustment gain
 
1,498

 
414

 
 
 
 
Loss on sale of OREO
 
(113
)
 

 
 
 
 
 
 
1,385

 
414

 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax effect
 
402

 
120

 
 
 
 
Non-core items net of taxes
 
983

 
294

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP core net income
 
$
1,771

 
$
3,713

 
$
(1,942
)
 
(52.30
)%

(1)
TRUPs Fair Value Adjustment is not part of Core Income and depending upon market rates, can “add to” or “subtract from” Core Income and mask Non-GAAP Core Income change.