false000113754700011375472025-01-272025-01-27

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

January 27, 2025
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)
559-490-6261
(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))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
UBFO
NASDAQ
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 January 27, 2025, the Company issued a press release announcing results for the quarter and year ended December 31, 2024 (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 #

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:January 27, 2025By: /s/ David A. Kinross
David A. Kinross
Senior Vice President and Chief Financial Officer





United Security Bancshares Reports 2024 Net Income of $14.8 Million

FRESNO, CA - January 27, 2025. United Security Bancshares (Nasdaq: UBFO) today announced its unaudited financial results for the year ended December 31, 2024. The Company reported net income of $14.8 million, or $0.86 per basic and diluted share, for the year ended December 31, 2024, compared to $19.8 million, or $1.16 per basic and diluted share, for the year ended December 31, 2023.

Fourth Quarter 2024 Highlights (as of, or for, the quarter ended December 31, 2024, except where noted):
▪Net interest margin increased to 4.22% for the quarter ended December 31, 2024, compared to 4.12% for the quarter ended December 31, 2023.
▪Annualized average cost of deposits was 1.11% for the quarter ended December 31, 2024, compared to 0.73% for the quarter ended December 31, 2023.
▪Net income for the quarter decreased 53.80% to $2.5 million, compared to $5.4 million for the quarter ended December 31, 2023.
▪Interest and fees on loans decreased 0.81% to $13.8 million, as a result of decreases in average loan balances, compared to $13.9 million for the fourth quarter of 2023.
▪Interest expense decreased 3.2% to $3.3 million, as a result of decreases in short-term borrowing costs offset by increases in deposit interest expense, compared to $3.5 million for the fourth quarter of 2023.
▪The total fair value of the junior subordinated debentures (TRUPs) increased by $189,000 during the quarter ended December 31, 2024. A loss of $755,000 was recorded through the income statement and a gain of $566,000 was recorded through accumulated other comprehensive income. For the quarter ended December 31, 2023, the total fair value increased by $240,000 and was separately presented as a $826,000 gain recorded through the income statement and a $1,066,000 loss recorded through accumulated other comprehensive income.
▪The Company recorded a provision for credit losses of $1.2 million for the quarter ended December 31, 2024, compared to $873,000 for the quarter ended December 31, 2023.
▪Noninterest expense increased 8.12% to $7.4 million, compared to $6.9 million for the quarter ended December 31, 2023.
▪Annualized return on average assets (ROAA) decreased to 0.81%, compared to 1.72% for the quarter ended December 31, 2023.
▪Annualized return on average equity (ROAE) decreased to 7.47%, compared to 18.28% for the quarter ended December 31, 2023.
▪Total loans, net of unearned fees, increased 0.92% to $928.5 million, compared to $920.0 million at December 31, 2023.
▪Total deposits increased 5.3% to $1.06 billion, compared to $1.00 billion at December 31, 2023.

Dennis Woods, President and Chief Executive Officer, stated, “Our fourth-quarter operating results included a $755,000 loss from mark-to-market accounting on our TRUPs, a significant contrast to the $826,000 gain recorded in the same period of 2023—a $1.6 million swing that impacted our net income. Despite challenges in the deposit-gathering environment, we achieved a deposit growth of over 5% and increased our net interest margin for the quarter to 4.22%. Expanding our loan portfolio remains a priority for our team, and while total loan growth was modest over the past year, our undisbursed loan commitments grew substantially, reaching $203.8 million at year-end, compared to $131.7 million as of September 30, 2024.”

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. Management believes that financial results are more comparative excluding the impact of such non-core items.

Results of Operations

Quarter Ended December 31, 2024:

For the quarter ended December 31, 2024, the Company reported net income of $2.5 million and earnings per basic and diluted share of $0.15, compared to net income of $5.4 million and $0.31 per basic and diluted share for the quarter ended December 31, 2023. Net income for the quarter ended September 30, 2024, was $3.8 million and $0.22 per basic and diluted share. Net income for the quarter ended December 31, 2024, decreased 53.8% when compared to the quarter ended December 31, 2023. The decrease is primarily the result of a change of $1.6 million on the fair value of TRUPs, an increase of $1.3 million in deposit interest expense, and an increase in the credit loss provision of $340,000, partially offset by a decrease of $1.4 million in short-term borrowing expense and a decrease of $1.0 million in the income tax provision. For the quarter
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ended December 31, 2023, a gain of $826,000 was recorded on the fair value of TRUPs compared to a loss of $755,000 recorded for the quarter ended December 31, 2024. ROAE for the quarter ended December 31, 2024, was 7.47%, compared to 18.28% for the quarter ended December 31, 2023. ROAA was 0.81% for the quarter ended December 31, 2024, compared to 1.72% for the quarter ended December 31, 2023. The decrease in both ratios was due primarily to the decrease in income between the two quarters.

The annualized average cost of deposits was 1.11% for the quarter ended December 31, 2024, compared to 0.73% for the quarter ended December 31, 2023. Average interest-bearing deposits increased 11.7% between the periods ended December 31, 2023, and 2024, from $612.6 million to $684.5 million, respectively. Included in the increase in interest-bearing deposits are purchased brokered deposits with an average balance of $100.0 million for the quarter ended December 31, 2024. These brokered deposits were purchased to reduce short-term borrowings, fund loan growth, and offset deposit runoff as part of the Bank’s cash management strategy. The average rate paid for brokered deposits for the quarter ended December 31, 2024 was 4.91%. The Bank held no brokered deposits during the quarter ended December 31, 2023. The annualized average cost of funds was 1.17% for the quarter ended December 31, 2024, compared to 1.24% for the quarter ended December 31, 2023. The rate decrease was due to balance decreases in time deposits, NOW accounts, and short-term borrowings, partially offset by increases in deposit rates.

Net interest income, before the provision for credit losses, was $11.8 million for the quarter ended December 31, 2024, representing a $147,000, or 1.2%, decrease from the $12.0 million reported at December 31, 2023. The decrease in net interest income was driven by increases in interest expense on deposits and decreases in loan-interest income and investment income, offset by decreases in interest expense on short-term borrowings. The Company’s net interest margin of 4.22% for the quarter ended December 31, 2024, increased from 4.12% for the quarter ended December 31, 2023. The increase in the net interest margin is due to increases in yields on investment securities and decreases in yields on short-term borrowings and TRUPs, offset by increases in yields on interest-bearing deposits and decreases in yields on overnight investments held at the Federal Reserve. Net interest income for the quarter ended December 31, 2024, before the provision for credit losses, decreased $8,000 from the $11.8 million reported during the quarter ended September 30, 2024. This was primarily due to decreases in loan and fee income, partially offset by decreases in deposit and short-term borrowing expenses.

Noninterest income for the quarter ended December 31, 2024, totaled $120,000, a decrease of $2.9 million from the $3.0 million in non-interest income reported for the quarter ended December 31, 2023. The decrease is primarily attributed to a loss of $755,000 recorded on the fair value of TRUPs for the quarter ended December 31, 2024, compared to a recorded gain of $826,000 for the quarter ended December 31, 2023. Noninterest income for the quarter ended December 31, 2023 also included a gain on proceeds from life insurance of $907,000. Noninterest income decreased $1.9 million from the 2.0 million reported for the quarter ended September 30, 2024. This was primarily due to a loss of $755,000 on the fair value of TRUPs for the quarter ended December 31, 2024, compared to a gain of $661,000 for the quarter ended September 30, 2024.

Noninterest expense for the quarter ended December 31, 2024, totaled $7.4 million, reflecting a $558,000 increase over the $6.9 million reported for the quarter ended December 31, 2023, and a $288,000 increase from the $7.1 million reported from the quarter ended September 30, 2024. The increase between the quarters ended December 31, 2024, and 2023, resulted partially from increases of $250,000 in salaries and employee benefit expenses, $137,000 in data processing expenses, and $173,000 in sundry losses.

The efficiency ratio for the quarter ended December 31, 2024, increased to 60.79%, compared to 46.40% for the quarter ended December 31, 2023. This deterioration was due to a combination of a decrease in noninterest income resulting from a loss on TRUPs and an increase in noninterest expenses, as previously described.

The Company recorded an income tax provision of $786,000 for the quarter ended December 31, 2024, compared to $1.8 million for the quarter ended December 31, 2023, and $1.3 million for the quarter ended September 30, 2024. The effective tax rate for the quarter ended December 31, 2024, was 23.96%, compared to 25.0% and 25.4% for the quarters ended December 31, 2023, and September 30, 2024, respectively.

Year Ended December 31, 2024:

Net income for the year ended December 31, 2024, decreased 25.3% to $14.8 million, compared to net income of $19.8 million for the year ended December 31, 2023. The decrease is primarily the result of a $2.8 million increase in interest expense on deposits, a $1.5 million increase in the provision for credit losses, and a $888,000 change in the fair value of TRUPs, partially offset by an increase of $1.1 million in loan interest income, and a $2.1 million decrease in the provision for income taxes. ROAE for the year ended December 31, 2024, was 11.52%, compared to 17.05% for the year ended December 31, 2023. ROAA was 1.22% for the year ended December 31, 2024, compared to 1.57% for the year ended December 31, 2023. Both ratios were impacted by the decrease in net income in 2024 compared to 2023.

The average cost of deposits was 0.96% for the year ended December 31, 2024, compared to 0.64% for the year ended December 31, 2023. Average interest-bearing deposits decreased 1.7% between the periods ended December 31, 2023, and
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2024, from $651.1 million to $639.7 million, respectively. The annualized average cost of funds was 1.23% for the year ended December 31, 2024, compared to 0.91% for the year ended December 31, 2023. The increase was primarily due to increases in rates paid on deposits and short-term borrowings.

Net interest income before the provision for credit losses for the year ended December 31, 2024, totaled $46.9 million, a decrease of $2.5 million, or 1.23%, from the $49.3 million reported for the same period ended December 31, 2023. The Company’s net interest margin of 4.26% for the year ended December 31, 2024, decreased from 4.29% for the year ended December 31, 2023. The decrease in the net interest margin is due to increases in average deposit costs and short-term borrowing costs and was partially offset by increases in yields on investment securities and loans. Loan yields increased from 5.75% to 5.97% between the two periods while the cost of interest-bearing liabilities increased from 1.52% to 1.95% between the two periods.

Noninterest income for the year ended December 31, 2024, totaled $4.7 million, a decrease of $856,000 when compared to the $5.6 million reported for the year ended December 31, 2023. This decrease resulted primarily from a $888,000 change in the fair value of TRUPs. For the year ended December 31, 2024, a loss on the fair value of TRUPs of $614,000 was recorded, compared to a gain of $274,000 for the same period in 2023. The change in the fair value of TRUPs reflected in noninterest income was caused by fluctuations in the Secured Overnight Financing Rate (SOFR) yield curve. Other noninterest income increased $428,000 between the two periods.

For the year ended December 31, 2024, noninterest expense totaled $28.3 million, an increase of $2.3 million compared to $26.0 million for the year ended December 31, 2023. On a year-over-year comparative basis, noninterest expense increased due to increases of $899,000 in professional fees and $727,000 in salaries and employee benefits. Professional fees increased primarily due to increases in service contract expense related to information technology services and increases in legal expenses. Salaries and employee benefits expense increased due to increases in salaries, group insurance expense, and stock-based compensation expense.

The efficiency ratio for the year ended December 31, 2024, increased to 54.82%, compared to 47.32% for the year ended December 31, 2023. This deterioration was due to a combination of a decrease in net interest income resulting from increased short-term borrowing and deposit expenses and an increase in noninterest expense, as previously described.

The Company recorded an income tax provision of $5.5 million for the year ended December 31, 2024, compared to $7.7 million for the same period in 2023. The effective tax rate for the year ended December 31, 2024, was 27.2%, compared to 28.0% for the year ended December 31, 2023.

Balance Sheet Review

Total assets increased $673,000, or 0.06%, between December 31, 2023, and December 31, 2024. Gross loan balances increased $8.9 million, investment securities decreased $23.9 million, and total cash and cash equivalents increased $15.4 million. Increases in gross loans included increases of $20.0 million in real estate mortgage loans and $10.4 million in commercial and industrial loans, and were offset by decreases of $16.8 million in real estate construction and development loans, $4.8 million in installment loans, and $333,000 in agricultural loans. Declines in the investment portfolio were primarily the result of the maturity of $12.5 million in treasury securities, $11.6 million in paydowns, and a $750,000 decrease in unrealized losses. Unfunded loan commitments increased from $183.5 million at December 31, 2023, to $204.0 million at December 31, 2024. OREO balances totaled $4.6 million at December 31, 2023, and December 31, 2024.

Total deposits increased $53.1 million, or 5.3%, to $1.1 billion during the year ended December 31, 2024. This was due to increases of $96.2 million in interest-bearing deposits, offset by decreases of $43.1 million in noninterest-bearing deposits. Included in the increase in interest-bearing deposits are brokered DDA accounts with an average balance of $47.3 million for the year ended December 31, 2024. NOW and money market accounts increased $97.6 million, time deposits increased $6.5 million, and savings accounts decreased $7.9 million. In total, NOW, money market and savings accounts increased 16.9% to $619.1 million at December 31, 2024, compared to $529.4 million at December 31, 2023. Noninterest-bearing deposits decreased 10.7% to $360.2 million at December 31, 2024, compared to $403.2 million at December 31, 2023. Core deposits, which are comprised of noninterest-bearing deposits, NOW, money market, savings accounts, and time deposits less than $250,000, decreased $56.6 million.

Shareholders’ equity at December 31, 2024, totaled $130.4 million, an increase of $7.8 million from the $122.5 million reported at December 31, 2023. The increase in equity was the result of $14.8 million in net income and a decrease of $686,000 in accumulated other comprehensive loss, partially offset by $8.3 million in dividend payments. At December 31, 2024, accumulated other comprehensive loss totaled $14.4 million, compared to $15.0 million at December 31, 2023. The decrease in
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accumulated other comprehensive loss was primarily the result of a decrease of $530,000 in net unrealized losses on investment securities. Changes in unrealized losses on the investment portfolio are attributed to changes in interest rates, not credit quality. The Company does not intend to sell, and it is more likely than not that it will not be required to sell, any securities held at an unrealized loss.

The Board of Directors of United Security Bancshares declared a cash dividend on common stock of $0.12 per share on December 17, 2024. The dividend was paid on January 17, 2025, to shareholders of record as of January 2, 2025, and is included in other liabilities as of December 31, 2024. No assurances can be provided as to the amount and/or declaration and payment of future dividends, if any. The Company continues to be well-capitalized and expects to maintain adequate capital levels.

Credit Quality

The Company recorded a provision for credit losses of $3.0 million for the year ended December 31, 2024, compared to a provision of $1.5 million for the year ended December 31, 2023. The provision recorded during 2024 was primarily driven by charge-offs within the student loan portfolio. Net loan charge-offs totaled $2.6 million for the year ended December 31, 2024, compared to $2.3 million for the year ended December 31, 2023, and related primarily to student loans for both periods.

The Company’s allowance for credit losses totaled 1.72% of the loan portfolio at December 31, 2024, compared to 1.70% at December 31, 2023. Management considers the allowance for credit losses at December 31, 2024, to be adequate.

Non-performing assets, comprised of nonaccrual loans, other real estate owned through foreclosure (OREO), and loans more than 90 days past due and still accruing interest, increased $745,000 between December 31, 2023, and December 31, 2024, to $17.2 million. As a percentage of total assets, non-performing assets increased from 1.36% at December 31, 2023, to 1.42% at December 31, 2024. The increase in non-performing assets is primarily attributed to an increase of $750,000 in nonaccrual loans. OREO balances remained at $4.6 million at December 31, 2024, and December 31, 2023. On January 14, 2025, the Bank foreclosed on nonaccrual loans totaling $3.2 million and transferred the amount to OREO, which is not reflected in the $4.6 million balance at December 31, 2024.

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 13 full-service branch offices in Fresno, Bakersfield, Campbell, Caruthers, Coalinga, Firebaugh, Fowler, Mendota, Oakhurst, San Joaquin, and Taft, California. 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 table, 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 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 press 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
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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) adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures, labor shortages, and global conflict and unrest; (2) the impact of natural disasters, droughts, earthquakes, floods, wildfires, terrorist attacks, health epidemics, and threats of war or actual war, including current military actions involving the Russian Federation and Ukraine and the conflict in the Middle East, which may impact the local economy and/or the condition of real estate collateral; (3) geopolitical and domestic political developments that can increase levels of political and economic unpredictability, contribute to rising energy and commodity prices, and increase the volatility of financial markets; (4) changes in general economic and financial market conditions, either nationally or locally; (5) fiscal policies of the U.S. government, including interest rate policies of the Board of Governors of the Federal Reserve System and the resulting impact on the Company’s interest-rate sensitive assets and liabilities; (6) changes in banking laws or regulations and government policies that could lead to a tightening of credit and/or a requirement that the Company raise additional capital;
(7) increased competition in the Company’s markets, impacting the ability to execute its business plans; (8) continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than the Company is, and the Company’s response to competitive pressure; (9) loss of, or inability to attract, key personnel; (10) unanticipated deterioration in the loan portfolio, credit losses, and the sufficiency of the allowance for credit losses; (11) the ability to grow the loan portfolio due to constraints on concentrations of credit; (12) challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; (13) the impact of technological changes and the ability to develop and maintain secure and reliable electronic systems, including failures in or breaches of the Company’s operational and/or security systems or infrastructure, and the Company's ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft, and other attacks on the Company’s information technology systems or on the third-party vendors who perform functions for the Company; (14) the failure to maintain effective controls over financial reporting; (15) risks related to the sufficiency of liquidity, including the quality and quantity of the Company’s deposits and the ability to attract and retain deposits and other sources of funding and liquidity; (16) adverse developments in the financial services industry generally, such as the bank failures in 2023 and 2024 and any related impact on depositor behavior or investor sentiment; (17) the possibility that the recorded goodwill could become impaired which may have an adverse impact on earnings and capital; (18) asset/liability matching risks; (19) and changes in accounting policies or procedures.

The Company does not undertake (and expressly disclaims) any obligation to publicly revise or update these forward-looking statements to reflect subsequent events or circumstances except as may be required by law. 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, 2023, 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.
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United Security Bancshares
Consolidated Balance Sheets (unaudited)
(In thousands, except share data)December 31, 2024December 31, 2023
Assets
Cash and cash equivalents$56,211 $40,784 
Investment securities (at fair value)
Available-for-sale (AFS) debt securities net of allowance for credit losses of $0 (amortized cost of $179,753 and $204,389, respectively)
157,382 181,266 
Marketable equity securities3,326 3,354 
Total investment securities160,708 184,620 
Loans 930,244 921,341 
Unearned fees and unamortized loan origination costs - net(1,782)(1,299)
Allowance for credit losses(16,046)(15,658)
Net loans912,416 904,384 
Premises and equipment - net8,668 9,098 
Accrued interest receivable8,104 7,928 
Other real estate owned (OREO)4,582 4,582 
Goodwill4,488 4,488 
Deferred tax assets - net14,419 14,055 
Cash surrender value of life insurance - net20,692 21,954 
Investment in limited partnerships4,275 3,200 
Operating lease right-of-use assets3,069 1,338 
Other assets14,086 14,614 
Total assets$1,211,718 $1,211,045 
Liabilities and Shareholders’ Equity
Deposits  
Noninterest-bearing$360,152 $403,225 
Interest-bearing697,470 601,252 
Total deposits1,057,622 1,004,477 
Short-term borrowings— 62,000 
Operating lease liabilities3,161 1,437 
Other liabilities9,001 9,376 
Junior subordinated debentures (TRUPs) (at fair value)
11,572 11,213 
Total liabilities1,081,356 1,088,503 
Shareholders’ Equity
Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 17,364,894 at December 31, 2024 and 17,167,895 at December 31, 2023
61,267 60,585 
Retained earnings83,447 76,995 
Accumulated other comprehensive loss, net of tax(14,352)(15,038)
Total shareholders’ equity130,362122,542
Total liabilities and shareholders’ equity$1,211,718 $1,211,045 

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United Security Bancshares
Consolidated Statements of Income (unaudited)Three Months EndedTwelve Months Ended
(In thousands, except share and per-share data)December 31, 2024September 30, 2024December 31, 2023December 31, 2024December 31, 2023
Interest Income:
Interest and fees on loans$13,778 $14,401 $13,891 $55,236 $54,183 
Interest on investment securities1,255 1,2981,378 5,2095,870
Interest on deposits at other banks113 56 136 306 324 
Total interest income15,146 15,755 15,405 60,751 60,377 
Interest Expense:
Interest on deposits2,933 3,064 1,630 9,578 6,758 
Interest on other borrowed funds409 879 1,824 4,323 4,298 
Total interest expense3,342 3,943 3,454 13,901 11,056 
Net Interest Income 11,804 11,812 11,951 46,850 49,321 
Provision for Credit Losses1,213 1,558 873 2,963 1,460 
Net Interest Income after Provision for Credit Losses10,591 10,254 11,078 43,887 47,861 
Noninterest Income:
Customer service fees775 719 731 2,918 2,918 
Increase in cash surrender value of bank-owned life insurance151 132 151 551 557 
Unrealized (loss) gain on fair value of marketable equity securities(298)224 138 (28)39 
Gain on proceeds from bank-owned life insurance— — 907 573 907 
(Loss) gain on fair value of junior subordinated debentures (TRUPs)
(755)661 826 (614)274 
Gain on sale of assets— — — 11 — 
Other247 287 244 1,302 874 
Total noninterest income120 2,023 2,997 4,713 5,569 
Noninterest Expense:
Salaries and employee benefits3,470 3,526 3,220 13,884 13,157 
Occupancy expense955 990 936 3,686 3,739 
Data processing338 467 201 1,114 784 
Professional fees1,401 1,128 1,397 5,265 4,366 
Regulatory assessments204 159 173 697 727 
Director fees100 105 117 436 438 
Net cost of operation of OREO51 37 74 140 201 
Other911 730 754 3,058 2,542 
Total noninterest expense7,430 7,142 6,872 28,280 25,954 
Income Before Provision for Taxes3,281 5,135 7,203 20,320 27,476 
Provision for Taxes on Income786 1,306 1,803 5,537 7,680 
Net Income$2,495 $3,829 $5,400 $14,783 $19,796 
Net income per common share
Basic$0.15 $0.22 $0.31 $0.86 $1.16 
Diluted$0.15 $0.22 $0.31 $0.86 $1.16 
Weighted average common shares outstanding
Basic17,202,324 17,194,02417,144,563 17,188,42417,114,214
Diluted17,237,136 17,206,39117,154,476 17,199,81217,125,186
7

United Security Bancshares
Average Balances and Rates (unaudited)Three Months EndedTwelve Months Ended
(In thousands)December 31, 2024September 30, 2024December 31, 2023December 31, 2024December 31, 2023
Average Balances:
Loans (1)$939,110 $949,207 $935,637 $925,993 $942,135 
Investment securities 165,214 166,977 185,639 168,740 201,958 
Interest-bearing deposits in other banks9,677 3,896 9,663 5,901 6,187 
Total interest-earning assets1,114,001 1,120,080 1,130,939 1,100,634 1,150,280 
Allowance for credit losses(16,457)(15,296)(15,253)(15,727)(15,759)
Nonaccrual loans12,052 12,053 12,088 11,906 13,300 
Cash and non-interest-bearing deposits in other banks34,403 34,113 33,929 33,457 34,811 
Other real estate owned4,582 4,582 4,582 4,582 4,582 
Other non-earning assets75,916 75,750 80,830 76,132 77,646 
Total average assets$1,224,497 $1,231,282 $1,247,115 $1,210,984 $1,264,860 
Interest-bearing deposits$684,485 $678,334 $612,629 $639,727 $651,099 
Junior subordinated debentures (TRUPs)
12,464 12,464 12,464 12,464 12,464 
Short-term borrowings16,928 44,704 110,942 62,212 63,183 
Total interest-bearing liabilities713,877 735,502 736,035 714,403 726,746 
Noninterest-bearing deposits366,609 353,944 383,563 358,212 410,673 
Other liabilities11,091 10,907 9,997 10,065 11,044 
Total liabilities1,091,577 1,100,353 1,129,595 1,082,680 1,148,463 
Total equity132,920 130,929 117,520 128,304 116,397 
Total liabilities and equity$1,224,497 $1,231,282 $1,247,115 $1,210,984 $1,264,860 
Average Rates:
Loans (1)5.84 %6.04 %5.89 %5.97 %5.75 %
Investment securities3.02 %3.09 %2.94 %3.09 %2.91 %
Interest-bearing deposits in other banks4.65 %5.72 %5.58 %5.19 %5.24 %
Total earning assets5.41 %5.60 %5.40 %5.52 %5.25 %
Interest bearing deposits1.71 %1.80 %1.19 %1.50 %1.04 %
Total deposits1.11 %1.18 %0.73 %0.96 %0.64 %
Short-term borrowings5.17 %5.94 %5.76 %5.64 %5.54 %
Junior subordinated debentures (TRUPs)
6.00 %6.73 %6.65 %6.55 %6.41 %
Total interest-bearing liabilities1.86 %2.13 %1.97 %1.95 %1.52 %
Net interest margin (2)4.22 %4.20 %4.12 %4.26 %4.29 %
(1) Average loans do not include nonaccrual loans but do include interest income recovered from previously charged-off loans, unearned fees, and unamortized loan origination costs.
(2) Net interest margin is computed by dividing annualized net interest income by average interest-earning assets.

8

United Security Bancshares
Condensed - Consolidated Balance Sheets (unaudited)
(In thousands)December 31, 2024September 30, 2024June 30, 2024March 31, 2024December 31, 2023
Cash and cash equivalents$56,211 $47,915 $38,757 $43,004 $40,784 
Investment securities160,708 168,835 166,316 168,563 184,620 
Loans, net of unearned fees and unamortized loan origination costs928,462 975,151 949,413 929,413 920,042 
Allowance for credit losses(16,046)(16,523)(15,323)(15,451)(15,658)
Net loans912,416 958,628 934,090 913,962 904,384 
Other assets82,383 79,998 80,659 80,875 81,257 
Total assets$1,211,718 $1,255,376 $1,219,822 $1,206,404 $1,211,045 
Non-interest-bearing deposits$360,152 $360,117 $372,886 $353,151 $403,225 
Interest-bearing deposits697,470 704,904 633,728 602,783 601,252 
Total deposits1,057,622 1,065,021 1,006,614 955,934 1,004,477 
Other liabilities23,734 57,499 85,858 126,286 84,026 
Total liabilities1,081,356 1,122,520 1,092,472 1,082,220 1,088,503 
Total shareholders’ equity130,362 132,856 127,350 124,184 122,542 
Total liabilities and shareholder’s equity$1,211,718 $1,255,376 $1,219,822 $1,206,404 $1,211,045 

United Security Bancshares
Condensed - Consolidated Statements of Income (unaudited)
For the Quarters Ended:
(In thousands)December 31, 2024September 30, 2024June 30, 2024March 31, 2024December 31, 2023
Total interest income$15,146 $15,755 $14,972 $14,879 $15,405 
Total interest expense3,342 3,943 3,450 3,165 3,454 
Net interest income11,804 11,812 11,522 11,714 11,951 
Provision for credit losses1,213 1,558 19 173 873 
Net interest income after provision for credit losses10,591 10,254 11,503 11,541 11,078 
Total non-interest income120 2,023 1,517 1,053 2,997 
Total non-interest expense7,430 7,142 6,973 6,738 6,872 
Income before provision for taxes3,281 5,135 6,047 5,856 7,203 
Provision for taxes on income786 1,306 1,750 1,695 1,803 
Net income$2,495 $3,829 $4,297 $4,161 $5,400 

9

United Security Bancshares
Nonperforming Assets (unaudited)
(Dollars in thousands)December 31, 2024December 31, 2023
Real estate - construction and development$12,198 $11,403 
Agricultural— 45 
Total nonaccrual loans12,198 11,448 
Loans past due 90 days and still accruing421 426 
Total nonperforming loans12,619 11,874 
Other real estate owned4,582 4,582 
Total nonperforming assets$17,201 $16,456 
Nonperforming loans to total gross loans1.36 %1.29 %
Nonperforming assets to total assets1.42 %1.36 %
Allowance for credit losses to nonperforming loans127.16 %131.87 %


United Security Bancshares
Selected Financial Data (unaudited)
Three months ended December 31,Year Ended December 31,
2024202320242023
Return on average assets0.81 %1.72 %1.22 %1.57 %
Return on average equity7.47 %18.28 %11.52 %17.05 %
Efficiency ratio (1)60.79 %46.40 %54.82 %47.32 %
Annualized net charge-offs to average loans0.57 %0.41 %0.28 %0.24 %
December 31, 2024December 31, 2023
Shares outstanding - period end17,364,894 17,167,895 
Book value per share$7.51 $7.14 
Tangible book value per share$7.25 $6.88 
Loan-to-deposit ratio87.79 %91.59 %
Allowance for credit losses to total loans1.72 %1.70 %
Tier 1 capital to adjusted average assets (leverage ratio):
Company12.57 %11.82 %
Bank12.59 %11.83 %
(1) Efficiency ratio is total noninterest expense divided by net interest income before provision for credit losses plus total noninterest income.
10

United Security Bancshares
Net Income before Non-Core Reconciliation
Non-GAAP Information (unaudited)
Year Ended December 31,
(Dollars in thousands)20242023Change $Change %
Net income$14,783 $19,796 $(5,013)(25.3)%
Junior subordinated debentures (TRUPs) fair value adjustment (1)
(614)274 
Income tax effect181 (79)
Non-core items net of taxes(433)195 
Non-GAAP core net income$15,216 $19,601 $(4,385)(22.4)%

(1)Junior subordinated debentures 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.

11
v3.24.4
Cover Document
Jan. 27, 2025
Cover [Abstract]  
Document Type 8-K
Document Period End Date Jan. 27, 2025
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 490-6261
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
Trading Symbol UBFO
Security Exchange Name NASDAQ
Title of 12(b) Security Common Stock, no par value
United Security Bancshares (NASDAQ:UBFO)
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