United Security Bancshares - Second Quarter Profits: $1.4 million

      United Security Bancshares - Second Quarter Profits: $1.4 million

PR Newswire

FRESNO, Calif., July 18, 2013

FRESNO, Calif., July18, 2013 /PRNewswire/ --United Security Bancshares
(http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported
today unaudited consolidated net income of $1,397,000 or $0.10 per basic and
diluted common share for the quarter ended June30, 2013 and $2,472,000 or
$0.17 per basic and diluted common share for the six months ended June30,
2013, as compared to $2,172,000 or $0.15 per basic and diluted common shares
for the quarter ended June30, 2012 and $3,224,000 or $0.22 per basic and
diluted shares for the six months ended June30, 2012.

Annualized return on average equity (ROAE) for the quarter ended June30, 2013
was 7.85%, compared to 13.40% for the same period in 2012, and was 7.04% for
the six months ended June30, 2013 compared to 10.23% for the six months ended
June30, 2012. Annualized return on average assets (ROAA) was 0.88% for the
three months ended June30, 2013 compared to 1.42% for the same period in
2012, and was 0.78% for the six months ended June30, 2013 compared to 1.05%
for the six months ended June30, 2012.

Changes in net income on a quarter-to-quarter comparative basis between the
second quarters of 2013 and 2012 are largely the result of an increase of
$649,000 on gains realized on the sale of other real estate owned during the
quarter ended June30, 2013. The Company recorded a $1,807,000 gain realized
on the sale of tax credit partnership investments during the quarter ended
June30, 2012, compared to no gain reported for the same period ended June30,
2013. On a six month comparative basis, changes in income again were the
result of an increase of $1,612,000 on gains realized on the sale of other
real estate owned and a decrease of $1,807,000 on gains realized on the sale
of other investments.

The Board of Directors of United Security Bancshares declared a second quarter
2013 stock dividend of one percent (1%) on June 25, 2013. The stock dividend
was payable to shareholders of record on July 12, 2013, and the shares will be
issued on July 24, 2013.

Dennis R. Woods, President and Chief Executive Officer of the Company, states,
"We continue the positive trends started last year with reductions in problem
assets, increases in capital, and positive net earnings. It has been a long
road since the economy declined in 2008, but we are benefiting from recent
improvements in both the local and the national economy." Shareholders'
equity at June30, 2013 was $71,708,000, up $2,267,000 from shareholders'
equity of $69,441,000 at December31, 2012.

Net interest income before provision for credit losses for the quarter ended
June30, 2013 totaled $5,342,000 and $10,602,000 for the six months ended
June30, 2013, a decrease of $625,000 from $5,967,000 reported for the quarter
ended June30, 2012 and a decrease of $1,448,000 from the $12,050,000 reported
for the six months ended June30, 2012, respectively. The net interest margin
was 3.94% for the quarter ended June30, 2013, and 3.94% for the six months
ended June30, 2013, as compared to 4.71% for the quarter ended June30, 2012
and 4.70% for the six months ended June30, 2012. The Company continues to
experience a decline in net interest margin due to decreases in loan and
investment income.

Noninterest income for the quarter ended June30, 2013 totaled $2,031,000,
reflecting a decrease of $1,633,000 from $3,664,000 in noninterest income
reported for the quarter ended June30, 2012. Noninterest income for the six
months ended June30, 2013 totaled $3,575,000, reflecting a decrease of
$983,000 from $4,558,000 in noninterest income reported for the six months
ended June30, 2012. Customer service fees continue to provide the majority of
the Company's noninterest income, totaling $902,000 for the quarter ended
June30, 2013, as compared to $897,000 for the quarter ended June30, 2012,
and $1,681,000 and $1,801,000 for the six months ended June 30, 2013 and 2012,
respectively. Changes in noninterest income on a quarter-to-quarter
comparative basis between the second quarters of 2013 and 2012 are largely the
result of an increase of $649,000 on gains realized on the sale of other real
estate owned during the quarter ended June30, 2013. The Company recorded a
$1,807,000 gain realized on the sale of investments during the quarter ended
June30, 2012, compared to no net gain for the same period ended June30,
2013.

Noninterest expense totaled $5,078,000 for the quarter ended June30, 2013, an
increase of $101,000 as compared to $4,977,000 reported for the quarter ended
June30, 2012. For the six months ended June30, 2013, noninterest expense
totaled $10,176,000, a decrease of $290,000 as compared to $10,466,000 for the
six months ended June30, 2012. Between the second quarters of 2013 and 2012,
expenses on other real estate owned increased $606,000, partially offset by
decreases in impairment losses on investment securities, professional fees,
regulatory assessments, and salary expenses. On a six month comparative
basis, noninterest expense decreased due to decreases in salary expense,
regulatory assessments, sale on tax credit partnership and impairment losses
on investment securities, partially offset by increases in professional fees
and occupancy expenses.

The Company had a provision for loan loss reserve of $39,000 for the quarter
ended June30, 2013 and $30,000 for the six months ended June30, 2013,
compared to $1,004,000 for the quarter ended June30, 2012 and $1,006,000 for
the six months ended June30, 2012. Net loan charge-offs totaled $285,000 for
the quarter ended June30, 2013 and $657,000 for the six months ended June30,
2013 as compared to $2,444,000 for the quarter ended June30, 2012, and
$3,044,000 for the six months ended June30, 2012. With a modest recovery in
the economy and real estate markets within our service area, we have
maintained an adequate allowance for loan losses which totaled 2.75% of total
loans at June30, 2013 compared to 2.95% of total loans at December31, 2012
and 2.94% at June30, 2012. 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 at June30, 2013 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 due and still accruing interest, decreased
approximately $9,305,000 between December31, 2012 and June30, 2013.
Additionally, nonperforming assets as a percentage of total assets decreased
from 7.25% at December31, 2012 to 5.94% at June30, 2013. Nonaccrual loans
decreased $2,760,000 between December31, 2012 and June30, 2013, while OREO,
decreased $6,711,000 during the same period. Impaired loans totaled
$20,469,000 at June30, 2013, a decrease of $1,462,000 from the balance of
$21,931,000 at December31, 2012.

United Security Bancshares is a $630+ million bank holding company
headquartered in Fresno, California. United Security Bank, its principal
subsidiary is a California state chartered bank with 11 branches serving the
Central Valley and Campbell, and is a 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 written regulatory agreement under which
the Company is subject and (10) unknown economic impacts caused by the State
of California's budget issues, including the effect on Federal spending do to
sequestration required by the Budget Control Act of 2011. 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, 2012, 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 (unaudited)
(in thousands)
                                             June 30, 2013  December 31, 2012
Assets
Cash and noninterest-bearing deposits in     23,754         27,481
other banks
Cash and due from Federal Reserve Bank       114,515        114,146
Cash and cash equivalents                    138,269        141,627
Interest-bearing deposits in other banks     1,511          1,507
Investment securities (AFS at market value)  25,527         31,844
Loans and leases, net of unearned fees       405,035        400,033
Less: Allowance for credit losses            (11,157)       (11,784)
Net loans                                    393,878        388,249
Premises and equipment - net                 11,922         12,262
Other real estate owned                      17,221         23,932
Goodwill and intangible assets               4,643          4,737
Cash surrender value of life insurance       16,941         16,681
Deferred income taxes                        10,146         9,724
Other assets                                 15,604         18,314
Total assets                                 635,662        648,877
Deposits:
Noninterest bearing demand deposits and NOW  219,693        217,014
Money market and savings                     233,423        246,888
Time                                         93,985         99,385
Total deposits                               547,101        563,287
Accrued interest payable                     60             71
Other liabilities                            5,911          6,010
Junior subordinated debentures (at fair      10,882         10,068
value)
Total liabilities                            563,954        579,436
Shareholders' equity:
Common stock, no par value 20,000,000 shares
authorized, 14,508,309 issued and            44,416         43,173
outstanding at June 30, 2013, and 14,217,303
at December 31, 2012
Retained earnings                            27,429         26,179
Accumulated other comprehensive income       (137)          89
Total shareholders' equity                   71,708         69,441
Total liabilities and shareholders' equity   $     635,662  $        648,877



United Security Bancshares
Consolidated Statements of Income (unaudited)
(in thousands, except per share amounts)
                                                             

                                       Three Months Ended    Six Months Ended
                                       June 30,              June 30,
                                       2013        2012       2013      2012
Interest income:
Interest and fees on loans           $ 5,554    $  5,966    $ 11,020  $ 12,009
Interest on investment securities      140         457        338       978
Interest on deposits in FRB            70          43         135       94
Interest on deposits in other banks    2           10         4         20
Total interest income                  5,766       6,476      11,497    13,101
Interest expense:
Interest on deposits                   331         437        742       915
Interest on other borrowed funds       93          72         153       136
Total interest expense                 424         509        895       1,051
Net interest income before provision   5,342       5,967      10,602    12,050
for credit losses
Provision for credit losses            39          1,004      30        1,006
Net interest income                    5,303       4,963      10,572    11,044
Non-interest income:
Customer service fees                  902         897        1,681     1,801
Increase in cash surrender value of    140         144        277       280
bank owned life insurance
Gain on sale of other real estate      924         275        1,949     337
owned
Loss on Fair Value Option of           (103)       364        (660)     (112)
Financial Assets
Gain on sale of other investment       0           1,807      0         1,807
Other non-interest income              168         177        328       445
Total non-interest income              2,031       3,664      3,575     4,558
Non-interest expense:
Salaries and employee benefits         2,113       2,176      4,474     4,598
Occupancy expense                      883         840        1,788     1,605
Data processing                        33          19         93        37
Professional fees                      375         439        820       683
Regulatory assessments                 339         417        698       783
Director fees                          59          69         117       136
Amortization of intangibles            46          79         93        170
Correspondent bank service charges     81          80         157       160
Impairment losses on investment        0           149        0         172
securities
Impairment losses on OREO              0           0          118       0
Loss on California tax credit          32          81         65        184
partnership
OREO expense                           588         (18)       613       666
Other non-interest expense             529         646        1,140     1,272
Total non-interest expense             5,078       4,977      10,176    10,466
Income before income tax provision     2,256       3,650      3,971     5,136
Provision for income taxes             859         1,478      1,499     1,912
Net Income                           $ 1,397    $  2,172    $ 2,472   $ 3,224



United Security Bancshares
Selected Financial Data (unaudited)
(in thousands, except per share amounts)
                           Three Months Ended           Six Months Ended
                           June 30,                     June 30,
                           2013           2012          2013        2012
Basic earnings per share   $0.10          $0.15         $0.17       $0.22
Diluted earnings per share $0.10          $0.15         $0.17       $0.22
Weighted average basic     14,506,423     14,364,210    14,504,774  14,364,210
shares for EPS
Weighted average diluted   14,507,817     14,364,210    14,508,363  14,364,210
shares for EPS
Annualized return on:
Average assets             0.88%          1.42%         0.78%       1.05%
Average equity             7.85%          13.40%        7.04%       10.23%
Yield on interest-earning  4.25%          5.13%         4.27%       5.08%
assets
Cost of interest-bearing   0.50%          0.61%         0.52%       0.63%
liabilities
Net interest margin        3.94%          4.75%         3.94%       4.70%
Annualized net charge-offs 0.29%          2.48%         0.34%       1.54%
to average loans
                           June30, 2013  December31,
                                          2012
Shares outstanding -       14,508,309     14,217.303
period end
Book value per share       $4.94          $4.88
Tangible book value per    $4.62          $4.55
share
Efficiency ratio           76.48%         70.47%
Total nonperforming assets $37,769        $47,074
Nonperforming assets to    5.94%          7.25%
total assets
Total Impaired loans       $20,469        $21,931
Total nonaccrual loans     $10,665        $13,425
Allowance for credit       2.75%          2.95%
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