United Security Bancshares Reports 49.5% Decrease in Net Income for Q2 2025

United Security Bancshares reported its financial results for the second quarter of 2025, revealing a net income of $2.2 million, a decrease of 49.5% from $4.3 million in the same quarter of 2024. This decline was primarily attributed to a significant increase in the provision for credit losses, which rose to $1.9 million from just $19,000 a year earlier. The company's total interest income for the quarter was $15.0 million, a slight increase from $14.97 million in the prior year, driven by a 1.4% rise in interest and fees on loans. However, noninterest income fell sharply by 50% to $758,000, largely due to the absence of a prior year gain from life insurance proceeds.

In terms of balance sheet performance, total assets increased marginally to $1.21 billion as of June 30, 2025, compared to $1.21 billion at the end of 2024. The loan portfolio saw a modest increase of 2.03%, reaching $947.3 million, while total deposits decreased slightly by 0.18% to $1.06 billion. The company’s net interest margin improved to 4.35%, up from 4.28% a year prior, reflecting effective management of interest-earning assets and liabilities.

Operationally, United Security Bancshares has focused on maintaining a stable customer base and enhancing its liquidity position. The company reported a loan-to-deposit ratio of 89.74% as of June 30, 2025, compared to 87.79% at the end of 2024. The bank's core deposits, which exclude time deposits over $250,000 and brokered deposits, constituted approximately 87.43% of total deposits, indicating a solid foundation for funding. The company also noted an increase in other real estate owned (OREO) from $4.6 million to $7.9 million, attributed to the transfer of nonaccrual loans.

Looking ahead, United Security Bancshares remains cautious about the economic environment, particularly the agricultural sector, which is vital to its customer base in California's Central Valley. The company is actively monitoring credit quality and has implemented strategies to manage potential risks associated with its loan portfolio. Management believes that the current allowance for credit losses is adequate to cover expected losses, although they acknowledge the ongoing challenges posed by economic fluctuations and competitive pressures in the banking sector.