ubfo-20201015
false000113754700011375472020-10-152020-10-15

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

October 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:

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

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

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

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  

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.  






ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 15, 2020, the Company issued a press release announcing results for the quarter ended September 30, 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 October 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:October 15, 2020By: /s/ Bhavneet Gill
Bhavneet Gill
Senior Vice President & Chief Financial Officer




Document

United Security Bancshares reports 3rd quarter net income of $2.3 million

FRESNO, CA - October 15, 2020. United Security Bancshares (Nasdaq: UBFO) today announced its unaudited financial results for the nine months ended September 30, 2020. The Company recognized net income of $7,038,000, or $0.41 per diluted share for the nine months ended September 30, 2020, compared to net income of $12,276,000,or $0.72 per diluted share for the nine months ended September 30, 2019.

Third Quarter 2020 Highlights (at or for the quarter ended September 30, 2020, except where noted)

Net income for the quarter was $2.27 million, representing a $1.90 million or 45.58% decrease from $4.17 million for the quarter ended September 30, 2019. The decrease is primarily the result of a reduction in interest income related to a lower interest rate environment.
Total assets increased 18.50% to $1.13 billion, compared to $956.92 million at December 31, 2019.
Total loans, net of unearned fees, increased 10.71% to $660.44 million, compared to $596.55 million at December 31, 2019. Included in the increase are $25.89 million in Paycheck Protection Program (PPP) loans.
Total deposits increased 21.56% to $994.78 million, compared to $818.36 million at December 31, 2019.
The allowance for credit losses as a percentage of gross loans decreased to 1.32%, compared to 1.33% at December 31, 2019. The provision for credit losses totaled $4,000 for the quarter, compared to $5,000 for the quarter ended September 30, 2019.
Net interest income after the provision for credit losses was $7,464,000 for the quarter ended September 30, 2020, compared to $9,351,000 for the quarter ended September 30, 2019.
A loss on the fair value of junior subordinated debt of $18,000 was recorded for the quarter, as compared to a $660,000 gain for the quarter ended September 30, 2019.
Book value per share increased to $6.95, compared to $6.83 at December 31, 2019.
Net interest margin decreased to 2.97% from 4.17% for the quarter ended September 30, 2019.
Annualized average cost of deposits decreased to 0.19% from 0.45% for the quarter ended September 30, 2019.
Net charge-offs totaled $157,000, compared to net charge-offs of $226,000 for the quarter ended September 30, 2019.
Capital positions remain well-capitalized with a 11.38% Tier 1 Leverage Ratio compared to 12.82% as of December 31, 2019.
Annualized return on average assets ("ROAA") was 0.83%, compared to 1.69% for the quarter ended September 30, 2019.
Annualized return on average equity ("ROAE") was 7.61%, compared to 14.36% for the quarter ended September 30, 2019.

Dennis Woods, President and Chief Executive Officer, stated: "Our institution continues to seek out growth and income opportunities as the industry adjusts to the negative impacts of the COVID-19 pandemic. During these uncertain times our institution has maintained strong loan and deposit balances seeing increases in both during the period. During the third quarter we successfully expanded our footprint by opening a branch in the city of Mendota. We look forward to continuing to serve our communities during these challenging times."

Results of Operations

Net income for the nine months ended September 30, 2020 decreased $5,238,000 when compared to the nine months ended September 30, 2019. This decrease was due to a reduction in interest income, a result of a decrease in yields, and the provision for credit losses recorded during the current year. ROAE for the nine months ended September 30, 2020 was 7.93%, compared to 14.50% for the nine months ended September 30, 2019. ROAA was 0.93% for the nine months ended September 30, 2020, compared to 1.70% for the nine months ended September 30, 2019.

The annualized average cost of deposits was 0.24% for the nine months ended September 30, 2020, a decrease from 0.43% for the nine months ended September 30, 2019. The decrease in the cost of deposits is primarily attributed to reductions on deposit rates made in the fourth quarter of 2019 and first quarter of 2020. Average interest-bearing deposits increased 0.01% between the periods ended September 30, 2019 and 2020 from $523,104,000 to $523,136,000.




Net interest income after the provision for credit losses for the nine months ended September 30, 2020 totaled $21,487,000, a decrease of $6,616,000, or 23.54%, from $28,103,000 for the same period ended September 30, 2019. Net interest income after the provision for credit losses includes a provision for credit losses of $2,138,000 for the nine months ended September 30, 2020, compared to a provision of $15,000 for the nine months ended September 30, 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 4.30% for the nine months ended September 30, 2019 to 3.40% for the nine months ended September 30, 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 5.98% for the nine months ended September 30, 2019 to 4.99% for the nine months ended September 30, 2020. The yield on interest bearing liabilities decreased from 0.76% for the nine months ended September 30, 2019 to 0.45% for the nine months ended September 30, 2020.

Net interest income after the provision for credit losses was $7,464,000 for the quarter ended September 30, 2020, representing a $1,887,000 or 20.18% decrease compared to the same period ended September 30, 2019. The Company's net interest margin decreased from 4.17% to 2.97% between the quarters ended September 30, 2019 and September 30, 2020. The reduction in net interest margin is driven by the reduction in yields on all interest earning assets, partially offset by a decrease in interest expense on deposits.

Noninterest income for the nine months ended September 30, 2020 totaled $4,706,000, reflecting a decrease of $399,000 from the $5,105,000 in non-interest income reported for the nine months ended September 30, 2019. Customer service fees totaled $2,014,000 and $2,479,000 for the nine months ended September 30, 2020 and 2019, respectively. The decrease in customer service fees is attributed to lower fees and surcharges related to insufficient funds and electronic transfers recognized during the year. On a year-over-year comparative basis, non-interest income recorded a decrease of $120,000 in the gain on the fair value of junior subordinated debentures (TRUPs) for the nine months ended September 30, 2020 of $1,451,000, compared to a $1,571,000 gain for the same period ended September 30, 2019. The change in the fair value of TRUPs reflected in noninterest income was caused by fluctuations in the LIBOR yield curve. Noninterest income for the nine months ended September 30, 2020 includes a $310,000 gain in proceeds from bank-owned life insurance.

Noninterest income for the quarter ended September 30, 2020 totaled $911,000, reflecting a decrease of $942,000 from the $1,853,000 in non-interest income reported for the quarter ended September 30, 2019. The decrease is attributed to a $171,000 decrease in customer service fees and a $678,000 decrease in the gain on fair value of TRUPs. The change in the fair value of TRUPs reflected in noninterest income was caused by fluctuations in the LIBOR yield curve. The decrease in customer service fees is primarily the result of lower fees and surcharges related to insufficient funds and electronic transfers.

For the nine months ended September 30, 2020, noninterest expense totaled $16,355,000, an increase of $412,000 compared to $15,943,000 for the nine months ended September 30, 2019. On a year-over-year comparative basis, non-interest expense increased primarily due to a $745,000 increase in expenses related to other real estate owned, which included a write-down of $727,000 on one property. This was partially offset by decreases of $442,000 in professional fees and decreases of $176,000 in salaries and employee benefits. Salary and employee benefits expense for the nine months ended September 30, 2019 includes a $231,000 reduction in bonus expense. Also included in net cost on operation and sale of OREO for the nine months ended September 30, 2020 is a $113,000 loss on sale. The decrease in professional fees is attributed to a reduction in legal expense.

Noninterest expense for the quarter ended September 30, 2020 totaled $5,210,000, a decrease of $125,000 as compared to $5,335,000 reported for the quarter ended September 30, 2019. On a quarter-over-quarter comparative basis, non-interest expense decreased due to a $140,000 decrease in professional fees and a $53,000 decrease in salaries and employee benefits expense, partially offset by increases of $158,000 in regulatory assessments and $58,000 in occupancy expense.

The efficiency ratio for the nine months ended September 30, 2020 increased to 57.73%, compared to 47.99% for the nine months ended September 30, 2019. The increase is attributed to a reduction in net interest income as a result of the balance sheet repricing in a lower rate environment, a decrease in customer service fees, and an increase in OREO expense.

The Company recorded an income tax provision of $2,800,000 for the nine months ended September 30, 2020, compared to $4,989,000 for the same period in 2019. The effective tax rate for the nine months ended September 30, 2020 was 28.46%, compared to 28.90% for the nine months ended September 30, 2019. The Company recorded an income tax provision of $894,000 for the quarter ended September 30, 2020, compared to $1,696,000 for the same period in 2019. The effective tax rate for the quarter ended September 30, 2020 was 28.25%, compared to 28.90% for the same period ended September 30, 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 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 $177,028,000, or 18.50%, between September 30, 2020 and December 31, 2019, due primarily to increases of $64,108,000 in gross loan balances and $11,694,000 in investment securities. Total cash and cash equivalents increased $104,337,000 between December 31, 2019 and September 30, 2020. Unfunded loan commitments increased from $197,559,000 at December 31, 2019 to $204,522,000 at September 30, 2020. OREO balances decreased from $6,753,000 at December 31, 2019 to $5,018,000 at September 30, 2020. The reduction is attributed to the sale of one OREO property during the first quarter and a $727,000 write down on OREO in the second quarter.

Total deposits increased $176,421,000, or 21.56%, to $994,783,000 during the nine months ended September 30, 2020. This increase was due to an increase of $118,078,000 in noninterest bearing deposits, $45,771,000 in NOW and money market accounts, and $14,390,000 in savings accounts, partially offset by a decrease of $1,818,000 in time deposits. In total, NOW, money market and savings accounts increased 13.64% to $501,173,000 at September 30, 2020, compared to $441,012,000 at December 31, 2019. Noninterest bearing deposits increased 37.85% to $430,028,000 at September 30, 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 $174,692,000.

Shareholders’ equity at September 30, 2020 was $118,053,000, an increase of $2,065,000 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 September 30, 2020 there was an accumulated other comprehensive loss of $320,000, as compared to an accumulated other comprehensive loss of $632,000 at December 31, 2019. The change from December 31, 2019 to September 30, 2020 was the result of unrealized gains on available for sale securities, partially offset by losses on junior subordinated debentures (TRUPs) caused by a change in non-LIBOR 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 September 22, 2020. The dividend will be payable on October 16, 2020, to shareholders of record as of October 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 $2,138,000 for the nine months ended September 30, 2020, compared to a provision of $15,000 for the nine months ended September 30, 2019. Net loan charge-offs totaled $1,338,000 for the nine months ended September 30, 2020, as compared to net loan charge-offs of $180,000 for the nine months ended September 30, 2019. The provision recorded during the year is attributed to growth of the loan portfolio, increases in net charge-offs, and adjustment in qualitative factors related to the economic uncertainties caused by COVID-19. As of September 30, 2020, the Company had executed 23 payment deferrals or modifications on outstanding loan balances of $69,814,000 in connection with the COVID-19 relief provided by the CARES Act and interagency guidance issued in March 2020. These deferrals were generally no more than six months in duration and were not considered troubled debt restructurings. The Company recorded a provision for credit loss of $4,000 for the quarter ended September 30, 2020, compared to a provision of $5,000 for the quarter ended September 30, 2019.

The Company's allowance for loan loss totaled 1.32% of the loan portfolio at September 30, 2020, compared to 1.33% at December 31, 2019. Excluding the SBA PPP loans, which are fully government guaranteed, the allowance for loan loss totaled 1.37% of the loan portfolio at September 30, 2020.

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 $3,010,000 between December 31, 2019 and September 30, 2020 to $18,215,000. Nonperforming assets as a percentage of total assets decreased from 2.22% at December 31, 2019 to 1.61% at September 30, 2020. The decrease in nonperforming assets is primarily attributed to the reduction in OREO that occurred during the period. Additionally, restructured loans decreased $616,000 between December 31, 2019 and September 30, 2020, and nonaccrual loans decreased $162,000 between December 31, 2019 and September 30, 2020 to $11,535,000. OREO balances decreased from $6,753,000 at December 31, 2019 to $5,018,000 at September 30, 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 12 full-service branch offices in Fresno, Bakersfield, Campbell, Caruthers, Coalinga, Firebaugh, Mendota, 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)
September 30, 2020December 31, 2019
Assets
Cash and non-interest-bearing deposits in other banks$29,197 $27,291 
Due from Federal Reserve Bank ("FRB")294,135 191,704 
Cash and cash equivalents323,332 218,995 
Investment securities (at fair value)
Available-for-sale ("AFS") securities87,917 76,312 
Marketable equity securities3,865 3,776 
Total investment securities91,782 80,088 
Loans 661,482 597,374 
Unearned fees and unamortized loan origination costs - net(1,038)(820)
Allowance for credit losses(8,708)(7,908)
Net loans651,736 588,646 
Premises and equipment - net9,379 9,380 
Accrued interest receivable10,099 8,208 
   Other real estate owned ("OREO")5,018 6,753 
Goodwill4,488 4,488 
Deferred tax assets - net2,631 3,191 
Cash surrender value of life insurance20,403 20,955 
Operating lease right-of-use assets2,914 3,360 
Other assets12,165 12,855 
Total assets$1,133,947 $956,919 
Liabilities and Shareholders' Equity
Deposits  
Non-interest-bearing$430,028 $311,950 
Interest-bearing564,755 506,412 
Total deposits994,783 818,362 
Accrued interest payable36 59 
Operating lease liabilities3,017 3,463 
Other liabilities7,977 8,239 
Junior subordinated debentures (at fair value)10,081 10,808 
Total liabilities1,015,894 840,931 
Shareholders' Equity
Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 16,977,239 at September 30, 2020 and 16,973,885 at December 31, 2019
59,289 58,973 
Retained earnings59,084 57,647 
Accumulated other comprehensive loss(320)(632)
Total shareholders' equity118,053115,988
Total liabilities and shareholders' equity$1,133,947 $956,919 







United Security Bancshares
Consolidated Statements of Income (unaudited)
(in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Interest Income:
Interest and fees on loans$7,563 $8,648 $23,622 $25,733 
Interest on investment securities3434391,1271,360
Interest on deposits in FRB621,3306674,052
Total interest income7,96810,417 25,416 31,145 
Interest Expense:
Interest on deposits4519501,5622,675
Interest on other borrowed funds49111229352
Total interest expense5001,0611,7913,027
Net Interest Income 7,4689,35623,62528,118
Provision for Credit Losses452,13815
Net Interest Income after Provision for Credit Losses7,4649,35121,48728,103
Noninterest Income:
Customer service fees6688392,0142,479
Increase in cash surrender value of bank-owned life insurance124147382 438
Gain on fair value of marketable equity securities41889128
Gain on proceeds from bank-owned life insurance— — 310 — 
(Loss) gain on fair value of junior subordinated debentures(18)6601,4511,571
Loss on dissolution of real estate investment trust— (1)— (115)
(Loss) gain on sale of assets— (5)— 
Other133195460603
Total noninterest income9111,8534,7065,105
Noninterest Expense:
Salaries and employee benefits2,7222,7758,1318,307
Occupancy expense8878292,6092,450
Data processing139151386402
Professional fees7248641,9812,423
Regulatory assessments121(37)283138
Director fees9495282281
Correspondent bank service charges19145242
Net cost on operation and sale of OREO3571968223
Other4695731,6631,677
Total noninterest expense5,2105,33516,35515,943
Income Before Provision for Taxes3,1655,8699,83817,265
Provision for Taxes on Income8941,6962,8004,989
Net Income$2,271 $4,173 $7,038 $12,276 
Basic earnings per common share$0.13 $0.25 $0.41 $0.72 
Diluted earnings per common share$0.13 $0.25 $0.41 $0.72 
Weighted average basic shares for EPS16,977,23916,953,74416,975,64816,950,474
Weighted average diluted shares for EPS17,000,50116,990,16216,993,18016,981,619



United Security Bancshares
Average Balances and Rates (unaudited)
(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Average Balances:
Loans (1)$656,501 $579,035 $632,221 $575,323 
Investment securities 94,076 71,168 91,140 68,254 
Interest-bearing deposits in FRB248,722 240,605 203,574 231,807 
Total interest-earning assets999,299 890,808 926,935 875,384 
Allowance for credit losses(8,917)(8,448)(8,650)(8,449)
Cash and due from banks32,106 29,105 29,948 28,898 
Other real estate owned5,204 5,745 6,033 5,745 
Other non-earning assets60,479 62,752 61,872 61,112 
Total average assets$1,088,171 $979,962 $1,016,138 $962,690 
Interest-bearing deposits$551,797 $524,437 $523,136 $523,104 
Junior subordinated debentures9,710 10,416 9,640 10,296 
Total interest-bearing liabilities561,507 534,853 532,776 533,400 
Non-interest-bearing deposits398,282 319,547 355,114 306,590 
Other liabilities9,689 10,319 9,675 9,506 
Total liabilities969,478 864,719 897,565 849,496 
Total equity118,693 115,243 118,573 113,194 
Total liabilities and equity$1,088,171 $979,962 $1,016,138 $962,690 
Average Rates:
Loans (1)4.58 %5.93 %4.99 %5.98 %
Investment securities1.45 %2.45 %1.65 %2.66 %
Interest-bearing deposits in FRB0.10 %2.19 %0.44 %2.34 %
Earning assets3.17 %4.64 %3.66 %4.76 %
Interest bearing deposits0.33 %0.72 %0.40 %0.68 %
Total deposits0.19 %0.45 %0.24 %0.43 %
Junior subordinated debentures2.01 %4.23 %3.17 %4.57 %
Total interest-bearing liabilities0.35 %0.79 %0.45 %0.76 %
Net interest margin (2)2.97 %4.17 %3.40 %4.30 %
(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)
September 30, 2020June 30, 2020March 31, 2020December 31, 2019September 30, 2019
Cash and cash equivalents$323,332 $229,541 $199,853 $218,995 $245,943 
Investment securities91,782 96,739 97,486 80,088 81,651 
Loans660,444 648,650 623,686 596,554 569,500 
Allowance for credit losses(8,708)(8,862)(9,120)(7,908)(8,230)
Net loans651,736 639,788 614,566 588,646 561,270 
Other assets67,097 65,305 65,341 69,190 68,534 
Total assets$1,133,947 $1,031,373 $977,246 $956,919 $957,398 
Non-interest-bearing$430,028 $362,010 $324,167 $311,950 $333,156 
Interest-bearing564,755 531,102 516,270 506,412 487,067 
Total deposits994,783 893,112 840,437 818,362 820,223 
Other liabilities21,111 20,801 19,399 22,569 21,965 
Total liabilities1,015,894 913,913 859,836 840,931 842,188 
Total shareholders' equity118,053 117,460 117,410 115,988 115,210 
Total liabilities and shareholder's equity$1,133,947 $1,031,373 $977,246 $956,919 $957,398 

United Security Bancshares
Condensed - Consolidated Statements of Income (unaudited)
(in thousands)For the Quarters Ended:
September 30, 2020June 30, 2020March 31, 2020December 31, 2019September 30, 2019
Total interest income$7,968 $8,107 $9,341 $9,558 $10,417 
Total interest expense500 530 761 862 1,061 
Net interest income7,468 7,577 8,580 8,696 9,356 
Provision for credit losses428 1,707 
Net interest income after provision for credit losses7,464 7,149 6,873 8,691 9,351 
Total non-interest income911 1,214 2,580 647 1,853 
Total non-interest expense5,210 5,553 5,591 5,335 5,335 
Income before provision for taxes3,165 2,810 3,862 4,003 5,869 
Provision for taxes on income894 798 1,108 1,108 1,696 
Net income$2,271 $2,012 $2,754 $2,895 $4,173 








United Security Bancshares
Nonperforming Assets (unaudited)
(dollars in thousands)
September 30, 2020December 31, 2019
Commercial and industrial$— $75 
RE construction & development11,058 11,478 
Agricultural477 144 
Total nonaccrual loans$11,535 $11,697 
Loans past due 90 days and still accruing53 386 
Restructured loans1,609 2,389 
Total nonperforming loans$13,197 $14,472 
Other real estate owned5,018 6,753 
Total nonperforming assets$18,215 $21,225 
Nonperforming loans to total gross loans2.00 %2.42 %
Nonperforming assets to total assets1.61 %2.22 %
Allowance for credit losses to nonperforming loans65.98 %54.64 %


United Security Bancshares
Selected Financial Data (unaudited)
(dollars in thousands, except per share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Return on average assets0.83 %1.69 %0.93%1.70%
Return on average equity7.61 %14.36 %7.93%14.50%
Net charge-off to average loans0.10 %0.15 %0.28%0.04%
September 30, 2020December 31, 2019
Shares outstanding - period end16,977,239 16,973,885 
Book value per share$6.95 $6.83 
Efficiency ratio (1)57.73 %49.99 %
Total impaired loans$15,059 $17,072 
Net loan to deposit ratio65.52 %71.93 %
Allowance for credit losses to total loans1.32 %1.33 %
Tier 1 capital to adjusted average assets (leverage)
Company11.38 %12.82 %
 Bank11.24 %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)
Nine Months Ended September 30,
20202019Change $Change %
Net income$7,038 $12,276 $(5,238)(42.67)%
TRUPs (1) fair value adjustment gain1,451 1,571 
Write down on OREO (2)(727)— 
Loss on sale of OREO (2)(113)— 
611 1,571 
Income tax effect177 456 
Non-core items net of taxes434 1,115 
Non-GAAP core net income$6,604 $11,161 $(4,557)(40.83)%

(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.

(2)Write down and loss on sale of OREO are considered one-time events and therefore are not part of Core Income.



v3.20.2
Cover Document
Oct. 15, 2020
Cover [Abstract]  
Document Type 8-K
Document Period End Date Oct. 15, 2020
Entity Registrant Name UNITED SECURITY BANCSHARES
Entity Incorporation, State or Country Code CA
Entity File Number 000-32987
Entity Tax Identification Number 91-2112732
Entity Address, Address Line One 2126 Inyo Street
Entity Address, City or Town Fresno
Entity Address, State or Province CA
Entity Address, Postal Zip Code 93721
City Area Code 559
Local Phone Number 248-4943
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0001137547
Amendment Flag false