United Security Bancshares - Fourth Quarter Profits: $1.5 Million

      United Security Bancshares - Fourth Quarter Profits: $1.5 Million

PR Newswire

FRESNO, Calif., Feb. 7, 2013

FRESNO, Calif., Feb. 7, 2013 /PRNewswire/ -- United Security Bancshares
(http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported
today unaudited consolidated net income of $1.5 million or $0.10 per basic and
diluted common share for the quarter ended December 31, 2012 and $6.1 million
or $.43 per basic and diluted common share for the year ended December 31,
2012, as compared to a net loss of $3.4 million or ($0.24) per basic and
diluted common shares for the quarter ended December 31, 2011 and a net loss
of $10.8 million or ($.76) per basic and diluted shares for the year ended
December 31, 2011.

Annualized return on average equity (ROAE) for the quarter ended December 31,
2012 was 8.56, compared to (24.52%) for the same period in 2011, and was 9.20%
for the year ended December 31, 2012 compared to (15.86)% for the year ended
December 31, 2011. Annualized return on average assets (ROAA) was 0.93% for
the quarter ended December 31, 2012 compared to (2.09%) for the same
three-month period in 2011, and was 0.97% for the year ended December 31, 2012
compared to (1.64%) for the year ended December 31, 2011.

The Board of Directors of United Security Bancshares declared a fourth ^
quarter 2012 stock dividend of one percent (1%) on December 18, 2012. The
stock dividend was payable to shareholders of record on January 11, 2013, and
the shares will be issued on January 23, 2013.

Dennis R. Woods, President and Chief Executive Officer of the Company, states,
"The year was very positive for the Company with reductions in problem assets
and OREO, a stronger allowance for loan losses at year-end as a percentage of
impaired loans, and consolidated net income of nearly $6.1 million for the
year. We continue to see positive trends in the local economy and look forward
to continued improvement in the coming year." Shareholders' equity at
December 31, 2012 was $69.4 million, up $7.3 million from shareholders' equity
of $62.2 million at December 31, 2011. 

Net interest income before provision for credit losses for the quarter ended
December 31, 2012 totaled $5.4 million and $23.1 million for the year ended
December 31, 2012, down $808,000 from $6.2 million reported for the quarter
ended December 31, 2011 and down $1.9 million from the $25.0 million reported
for the year ended December 31, 2011, respectively. The net interest margin
was 4.03% for the quarter ended December 31, 2012, and 4.40% for the year
ended December 31, 2012, as compared to 4.41% for the quarter ended December
31, 2011 and 4.49% for the year ended December 31, 2011.

Noninterest income for the quarter ended December 31, 2012 totaled $411,000,
reflecting a decrease of $874,000 from the $1.3 million in noninterest income
reported for the quarter ended December 31, 2011. Noninterest income for the
year ended December 31, 2012 totaled $6.1 million, reflecting a decrease of
$771,000 from $6.9 million in noninterest income reported for the year ended
December 31, 2011. Customer service fees continue to provide the majority of
the Company's noninterest income from operations, totaling $883,000 for the
quarter ended December 31, 2012, as compared to $923,000 for the quarter ended
December 31, 2011, and $3.6 million for the years ended December 31, 2012 and
2011. Changes in noninterest income on a quarter-to-quarter comparative basis
between the fourth quarters of 2012 and 2011 are largely the result of a
decrease of $575,000 in gains recognized on the fair value of financial
liabilities. On a twelve month comparative basis, the change in noninterest
income of $(771,000) includes an increase of $1.8 million on gains realized on
the sale of investments and an increase of $509,000 on gains realized on the
sale of other real estate owned, offset by a decrease of $2.6 million in gains
recognized on the fair value of financial liabilities. The gain on sale of
investments of $1.8 million for the year ended December 31, 2012 is included
in other non interest income.

Noninterest expense totaled $5.5 million for the quarter ended December 31,
2012, down $2.8 million from the $8.3 million reported for the quarter ended
December 31, 2011. For the year ended December 31, 2012, noninterest expense
totaled $20.6 million, down $10.2 million from the $30.8 million for the year
ended December 31, 2011. Between the fourth quarters of 2012 and 2011, the
company experienced significant decreases in impairment losses and other
related expenses on other real estate owned, impairment losses on investment
securities, and regulatory insurance assessments. On a year-to-year
comparative basis, additional decreases in the above listed areas as well as
decreases in impairment losses on goodwill, and professional fees contributed
to the overall decrease.

Net income of $1.5 million realized during the fourth quarter of 2012 included
a tax expense reduction of $1.0 million related to the Company's valuation
allowance on deferred tax assets. The adjustment reduced the allowance for
deferred tax assets from $3.7 million at December 31, 2011 to $2.7 million at
December, and was the result of an increase in the anticipated utilization of
deferred taxes in future periods.

The Company had a provision for loan loss reserve of $9,000 for the quarter
ended December 31, 2012 and $1.0 million for the year ended December 31, 2012,
compared to $1.1 million for the quarter ended December 31, 2011 and $13.6
million for the year ended December 31, 2011. Net loan recoveries totaled
$615,000 for the quarter ended December 31, 2012, while net loan charge-offs
totaled $2.9 million for the year ended December 31, 2012 as compared to net
loan charge-offs of $1.4 million for the quarter ended December 31, 2011, and
$16.5 million for the year ended December 31, 2011. With continued weakness in
the economy and real estate markets within our service area, we have
maintained an adequate allowance for loan losses, which totaled 2.95% of total
loans at December 31, 2012 compared to 3.34% at December 31, 2011. In
determining the adequacy of the allowance for loan losses, Management's
judgment is the primary determining factor for establishing the amount of the
provision for loan losses and management considers the allowance for loan and
lease losses December 31, 2012 to be adequate.

Non-performing assets, comprised of nonaccrual loans, troubled debt
restructures (TDR), other real estate owned through foreclosure (OREO), and
loans more than 90 days past days and still accruing interest, decreased
approximately $10.8 million between December 31, 2011 and December 31, 2012.
Additionally, nonperforming assets as a percentage of total assets decreased
from 9.88% at December 31, 2011 to 8.25% at December 31, 2012. Nonaccrual
loans decreased $4.7 million between December 31, 2011 and December 31, 2012,
while OREO, decreased $3.2 million during the same period. Impaired loans
totaled $21.9 million at December 31, 2012, down $10.0 million from the
balance of $31.9 million at December 31, 2011.

United Security Bancshares is a $640+ million bank holding company. United
Security Bank, its principal subsidiary is a state chartered bank and member
of the Federal Reserve Bank of San Francisco.

FORWARD-LOOKING STATEMENTS
This news release contains 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 are based on management's knowledge and belief as
of today and include information concerning the Company's possible or assumed
future financial condition, and its results of operations, business and
earnings outlook. These forward-looking statements are subject to risks and
uncertainties. A number of factors, some of which are beyond the Company's
ability to control or predict, could cause future results to differ materially
from those contemplated by such forward-looking statements. These factors
include (1) changes in interest rates, (2) significant changes in banking laws
or regulations, (3) increased competition in the company's market, (4)
other-than-expected credit losses, (5) earthquake or other natural disasters
impacting the condition of real estate collateral, (6) the effect of
acquisitions and integration of acquired businesses, (7) the impact of
proposed and/or recently adopted changes in laws, and regulations on the
Company and its business; (8) changing bank regulatory conditions, policies,
whether arising as new legislation or regulatory initiatives or changes in our
regulatory classifications, that could lead to restrictions on activities of
banks generally or as to the Bank, including specifically the formal order
between the Federal Reserve Bank of San Francisco and the Company and the
Bank, (9) failure to comply with the regulatory agreement under which the
Company is subject and (10) unknown economic impacts caused by the State of
California's budget issues. Management cannot predict at this time the
severity or duration of the effects of the recent business slowdown on our
specific business activities and profitability. Weaker or a further decline in
capital and consumer spending, and related recessionary trends could adversely
affect our performance in a number of ways including decreased demand for our
products and services and increased credit losses. Likewise, changes in
interest rates, among other things, could slow the rate of growth or put
pressure on current deposit levels and affect the ability of borrowers to
repay loans. Forward-looking statements speak only as of the date they are
made, and the company does not undertake to update forward-looking statements
to reflect circumstances or events that occur after the date the statements
are made, or to update earnings guidance including the factors that influence
earnings. 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, 2011,
and particularly the section of Management's Discussion and Analysis. Readers
should carefully review all disclosures we file from time to time with the
Securities and Exchange Commission ("SEC").



United Security Bancshares
Consolidated Balance Sheets
(dollars in thousands)
                                                    December 31,  December 31,
                                                    2012          2011
Assets
 Cash and noninterest-bearing deposits in other   $27,481       $28,052
banks
 Cash and due from Federal Reserve Bank           114,146       96,132
 Federal funds sold                               0             0
 Cash and cash equivalents                     141,627       124,184
 Interest-bearing deposits in other banks         1,507         2,187
 Investment securities (AFS at market value)       31,844        38,458
 Loans and leases, net of unearned fees           400,033       408,146
 Less: Allowance for credit losses              (11,784)      (13,648)
 Net loans                                        388,249       394,498
 Premises and equipment - net                     12,262        12,675
 Bank owned life insurance                        16,681        16,150
 Intangible assets                                4,737         5,041
 Other real estate owned                          23,932        27,091
 Deferred Income Taxes                           9,724         11,485
 Other assets                                     18,314        19,563
Total assets                                        $648,877      $651,332
 Deposits:
 Noninterest bearing demand and NOW             $270,094      $224,907
 Money market and savings                       193,808       206,036
 Time                                           99,385        143,484
 Total deposits                                563,287       574,427
 Borrowed funds                                   0             0
 Other liabilities                                6,081         5,705
 Junior subordinated debentures (at fair value)   10,068        9,027
Total liabilities                                   579,436       589,159
Shareholders' equity:
 Common shares outstanding:
 14,217,303 at December 31, 2012               43,173        41,435
 Retained earnings                                26,179        21,447
 Accumulated other comprehensive loss             89            (709)
Total shareholders' equity                          69,441        62,173
Total liabilities and shareholders' equity          $648,877      $651,332







United Security
Bancshares
(dollars in 000s,
except per share
amounts)
                         Three Months Three Months Twelve months Twelve months

                         Ended        Ended        ended         ended
                         December 31, December 31, December 31,  December 31,
                         2012         2011         2012          2011
Interest income:
 Interest and fees on  $5,507       $6,338       $23,184       $25,573
loans
 Interest on           347          497          1,720         2,141
investment securities
 Interest on deposits   67           50           224           187
in FRB
 Interest on deposits  1            10           23            39
in other banks
 Total interest     5,922        6,895        25,151        27,940
income
Interest expense:
 Interest on deposits  435          569          1,791         2,620
 Interest on other     63           94           270           344
borrowed funds
 Total interest     498          663          2,061         2,964
expense
Net interest income
before provision for     5,424        6,232        23,090        24,976
credit losses
 Provision for credit  9            1,105        1,019         13,602
losses
Net interest income      5,415        5,127        22,071        11,374
Noninterest income:
 Customer service fees 883          923          3,583         3,640
 Increase in cash
surrender value of
 bank owned life    137          141          564           565
insurance
(Loss) gain on sale of   (108)        (102)        278           (231)
other real estate owned
(Loss) gain on Fair
Value Option of          (490)        85           (774)         1,863
Financial Assets
 Other noninterest      (11)         238          2,455         1,040
income
Total noninterest income 411          1,285        6,106         6,877
Noninterest expense:
 Salaries and employee  2,406        2,305        9,082         9,109
benefits
 Occupancy expense      940          821          3,548         3,487
 Professional fees      615          294          1,707         2,355
 Regulatory insurance   351          728          1,409         2,082
assessments
 Impairment losses and  588          2,618        1,212         7,359
other expenses on OREO
 Impairment losses on
goodwill and intangible  0            0            0             1,525
assets
 Impairment losses on   0            604          284           912
investment securities
 Other noninterest      604          968          3,333         3,949
expense
Total noninterest        5,504        8,338        20,575        30,778
expense
Income before income tax 322          (1,926)      7,602         (12,527)
provision
Provision (benefit) for  (1,157)      1,433        1,533         (1,715)
income taxes
Net Income               $1,479       ($3,359)     $6,069        ($10,812)





United Security
Bancshares
Selected Financial Data
(Quarters Unaudited)
(dollars in 000s,
except per share
amounts)
                         Three Months Three Months Twelve months Twelve months

                         Ended        Ended        Ended         Ended
                         December 31, December 31, December 31,  December 31,
                         2012         2011         2012          2011
Basic earnings per share $0.10        ($0.24)      $0.43         ($0.76)
Diluted earnings per     $0.10        ($0.24)      $0.43         ($0.76)
share
Weighted average basic   14,217,303   14,217,303   14,217,303    14,217,303
shares for EPS
Weighted average diluted 14,217,303   14,217,303   14,217,303    14,217,303
shares for EPS
Annualized return on:
 Average assets        0.93%        -2.09%       0.97%         -1.64%
 Average equity        8.56%        -24.52%      9.20%         -15.86%
Yield on                 4.40%        4.90%        4.79%         5.02%
interest-earning assets
Cost of interest-bearing 0.56%        0.69%        0.60%         0.73%
liabilities
Net interest margin      4.03%        4.41%        4.40%         4.49%
Annualized net
charge-offs to average   -0.64%       1.37%        0.74%         3.88%
loans
                         December 31, December 31,
                         2012         2011
Shares outstanding -     14,217,303   13,531,832
period end
Book value per share     $4.88        $4.59
Tangible book value per  $4.55        $4.22
share
Efficiency ratio         70.47%       96.63%
Total nonperforming      $53,520      $64,333
assets
Nonperforming assets to  8.25%        9.88%
total assets
Total Impaired loans     $21,931      $31,882
Total nonaccrual loans   $13,425      $18,098
Allowance for loan       2.95%        3.34%
losses to total loans

SOURCE United Security Bancshares

Website: http://www.unitedsecuritybank.com
Contact: Dennis R. Woods, President and Chief Executive Officer of United
Security Bank, +1-559-248-4928