UBFO to Merge with Community West Bancshares in All-Stock Deal

TL;DR

**UBFO is getting acquired by CWBC, so expect a bumpy but potentially rewarding integration for shareholders.**

AI Summary

UNITED SECURITY BANCSHARES (UBFO) reported a significant strategic shift with the announcement of an all-stock merger agreement with Community West Bancshares (CWBC) on December 16, 2025, expected to close in Q2 2026. The company, a California state-chartered bank holding company, operates 11 branches and 9 off-site Interactive Teller Machines primarily across Fresno, Madera, Kern, and Santa Clara Counties. In 2025, UBFO redeemed an additional $6.0 million in junior subordinated debentures, bringing the total redeemed to $9.0 million from an original $15.0 million, leaving a remaining contractual principal balance of $6.0 million. The Bank also acquired an additional six lots through a non-judicial foreclosure, transferring $3.6 million in loan balances to its wholly-owned subsidiary, York Monterey Properties, Inc. As of December 31, 2025, the aggregate market value of common stock held by non-affiliates was $104,165,322, with 17,255,505 shares outstanding as of March 24, 2026. The merger introduces integration risks and potential delays, alongside general economic and competitive pressures in the highly regulated banking sector.

Why It Matters

This merger is a pivotal moment for UNITED SECURITY BANCSHARES, signaling a strategic move to enhance scale and competitive positioning in the highly fragmented California banking market. For investors, the all-stock nature of the deal means a direct exchange into CWBC shares, with success hinging on the combined entity's ability to realize anticipated synergies and navigate integration challenges. Employees face potential restructuring, while customers could benefit from an expanded branch network and service offerings. In a market with 53 FDIC-insured institutions competing for business in UBFO's primary counties, this consolidation reflects ongoing pressures for regional banks to grow or be acquired to remain competitive against larger institutions.

Risk Assessment

Risk Level: high — The primary risk stems from the announced all-stock merger with Community West Bancshares, expected in Q2 2026. The filing explicitly lists 'the possibility that any of the anticipated benefits... will not be realized' and 'the risk that integration... will be materially delayed or will be more costly or difficult than expected' as significant factors. Additionally, the highly competitive banking environment with 53 FDIC-insured institutions in its market areas, coupled with general economic uncertainties and regulatory changes, contributes to a high-risk profile.

Analyst Insight

Investors should closely monitor the progress of the merger with Community West Bancshares, particularly shareholder approvals and regulatory clearances. Given the all-stock nature, current UBFO shareholders should evaluate CWBC's fundamentals and the projected synergies to determine the long-term value of the combined entity. Consider holding through the merger if confident in the integration, or selling if seeking to avoid potential post-merger volatility.

Key Numbers

• $104.2M — Market Value of Non-Affiliate Common Stock (As of June 30, 2025, indicating public float.)
• 17.3M — Shares Outstanding (As of March 24, 2026, relevant for per-share calculations.)
• $6.0M — Junior Subordinated Debentures Redeemed in 2025 (Reduces debt, leaving $6.0 million remaining from original $15.0 million.)
• $3.6M — Loan Balances Transferred to YMP in 2025 (Relates to additional real estate acquired through foreclosure.)
• Q2 2026 — Expected Merger Completion (Critical timeline for the all-stock merger with Community West Bancshares.)
• 4.75% — Fresno County Deposit Market Share (UBFO's largest market share, ranking 9th as of June 30, 2025.)
• 0.56% — Total Deposit Market Share (4 Counties) (Combined market share across Fresno, Madera, Kern, and Santa Clara Counties, ranking 17th as of June 30, 2025.)

Key Players & Entities

• UNITED SECURITY BANCSHARES (company) — Registrant and target in merger
• Community West Bancshares (company) — Acquirer in all-stock merger
• United Security Bank (company) — Wholly-owned subsidiary of UNITED SECURITY BANCSHARES
• York Monterey Properties, Inc. (company) — Wholly-owned subsidiary holding real estate
• USB Capital Trust II (company) — Special purpose entity for Trust Preferred Securities
• $104,165,322 (dollar_amount) — Aggregate market value of common stock held by non-affiliates as of June 30, 2025
• 17,255,505 (dollar_amount) — Shares outstanding as of March 24, 2026
• $6.0 million (dollar_amount) — Amount of junior subordinated debentures redeemed in 2025
• $3.6 million (dollar_amount) — Loan balances transferred to York Monterey Properties in 2025
• Nasdaq (regulator) — Exchange where UBFO common stock is listed

Forward-Looking Statements

• The amended employment agreement for Saunders (EX-10.10) will likely contain details regarding compensation or terms that could influence executive stability. (Saunders) — medium confidence, target: 2026-12-31
• The amended bylaws (EX-3.2) from 2011, while not new, are being re-filed, suggesting they remain the governing corporate structure for UNITED SECURITY BANCSHARES. (UNITED SECURITY BANCSHARES) — high confidence, target: 2026-12-31

FAQ

Risk Factors

• Merger Integration Challenges [high — operational]: The proposed all-stock merger with Community West Bancshares (CWBC) carries significant integration risks. There is a possibility that the anticipated benefits of the merger may not be realized, or that the integration of operations will be materially delayed, more costly, or more difficult than expected. Challenges in integrating and retaining key employees are also a concern.
• Economic and Market Volatility [medium — financial]: Adverse developments in U.S. or global economic conditions, including supply chain disruptions, inflationary pressures, and labor shortages, could negatively impact the Company's performance. Geopolitical and domestic political developments can increase unpredictability, contribute to rising energy and commodity prices, and increase financial market volatility.
• Merger Approval and Closing Conditions [high — regulatory]: The completion of the merger is contingent on shareholder approval from both United Security Bancshares and Community West Bancshares, as well as the satisfaction of other closing conditions. Failure to obtain these approvals or meet conditions could prevent the merger from closing.
• Impact of Natural Disasters and Global Conflict [medium — financial]: The Company's operations and the condition of its real estate collateral could be impacted by natural disasters, health epidemics, and global conflicts. Current military actions involving the Russian Federation and Ukraine, and the conflict in the Middle East, are cited as examples that may affect the local economy.
• Real Estate Acquired Through Foreclosure [low — financial]: The Bank acquired an additional six lots through non-judicial foreclosure in 2025, transferring $3.6 million in loan balances to its subsidiary, York Monterey Properties, Inc. The management of these foreclosed properties presents ongoing operational and financial considerations.
• Junior Subordinated Debentures [low — financial]: In 2025, the Company redeemed an additional $6.0 million in junior subordinated debentures, bringing the total redeemed to $9.0 million from an original $15.0 million. A remaining contractual principal balance of $6.0 million exists, which represents ongoing debt obligations.

Industry Context

United Security Bancshares operates within the highly regulated U.S. banking sector, characterized by intense competition and evolving customer service demands. The industry is influenced by macroeconomic factors such as interest rates, inflation, and economic growth. Consolidation through mergers and acquisitions, like the one proposed with Community West Bancshares, is a common strategy to achieve scale, expand market reach, and enhance operational efficiencies.

Regulatory Implications

As a bank holding company and a state-chartered bank, UBFO is subject to oversight from the Federal Reserve Board and California state banking regulators. The proposed merger with Community West Bancshares will require regulatory approvals, and failure to obtain them could jeopardize the transaction. Integration post-merger will also need to comply with all applicable banking regulations.

What Investors Should Do

1. Monitor the progress and conditions for the merger with Community West Bancshares, as its successful completion is critical for future strategy and value realization.
2. Analyze the impact of ongoing economic pressures (inflation, labor shortages) on UBFO's loan portfolio and profitability, especially given its market concentration.
3. Evaluate the company's strategy for managing foreclosed real estate assets held by York Monterey Properties, Inc., and the associated financial implications.
4. Assess the impact of the redemption of junior subordinated debentures on the company's capital structure and leverage ratios.

Key Dates

• 2025-12-16: Announcement of Merger Agreement with Community West Bancshares — Marks a significant strategic shift for UBFO, initiating the process for a combination with CWBC.
• 2025-12-31: Year-end financial reporting — Provides the latest financial snapshot before the expected merger completion, including details on debt redemption and foreclosed properties.
• 2026-03-24: Shares Outstanding as of — Key data point for per-share calculations and understanding the company's equity structure.
• 2026-06-30: Market Value of Common Stock (Non-Affiliates) as of — Indicates the public float and market capitalization of the company prior to merger.
• 2026-06-30: Deposit Market Share Data — Provides context on UBFO's competitive positioning in its key operating regions.
• 2026-06-30: Expected Merger Completion — Critical timeline for the combination with Community West Bancshares, impacting future operations and strategy.

Glossary

Bank Holding Company Act (BHCA)

Federal legislation that regulates bank holding companies in the United States. (UBFO is registered as a bank holding company under this act, subjecting it to specific regulatory oversight.)

Interactive Teller Machines (ITMs)

Advanced ATMs that allow customers to interact with a remote teller via video for more complex transactions. (UBFO utilizes ITMs at its branches and off-site locations, indicating a strategy for customer service and operational efficiency.)

Junior Subordinated Debentures

A type of debt instrument that ranks below senior debt but above equity in the event of liquidation. (UBFO has been actively redeeming these debentures, impacting its debt structure and financial leverage.)

Non-judicial Foreclosure

A process of foreclosing on a property without court intervention, typically allowed when a deed of trust is used as security. (The Bank uses this method to acquire real estate, which is then transferred to its subsidiary, York Monterey Properties, Inc.)

York Monterey Properties, Inc. (YMP)

A wholly-owned subsidiary of United Security Bank created to hold specific parcels of real estate acquired through foreclosure. (This subsidiary manages foreclosed properties, representing a specific asset class for the company.)

All-stock merger

A merger transaction where the acquiring company pays for the target company using its own stock, rather than cash. (The proposed merger with Community West Bancshares is structured as an all-stock transaction, impacting share structures and ownership.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year, such as revenue growth, margin changes, and the emergence of new risks, is not available in the provided text. The filing focuses on the current period's activities and forward-looking statements related to the proposed merger.

Key Financial Figures

• $5.3 million — unimproved lots at a historical cost of $5.3 million. YMP was originally funded with a $250,
• $250,000 — llion. YMP was originally funded with a $250,000 cash investment and the transfer of tho
• $3.6 million — re and transferred the loan balances of $3.6 million to YMP. As of December 31, 2025, these
• $15 million — y 23, 2007, USB Capital Trust II issued $15 million in 4 Table of Contents Trust Prefe
• $3.0 million — rust Preferred Securities. During 2015, $3.0 million of the original $15.0 million principal
• $15.0 million — ring 2015, $3.0 million of the original $15.0 million principal balance of the subordinated d
• $6.0 million — om the Bank. During 2025, an additional $6.0 million was purchased by the Bank and subsequen
• $9.0 million — The Company has now redeemed a total of $9.0 million in par value of the subordinated debent
• $15 billion — y a bank holding company with less than $15 billion in assets), mortgage servicing rights a
• $1.0 billion — ding companies with assets in excess of $1.0 billion. Interstate Branching . The Dodd-Frank
• $10 billion — respect to depository institutions with $10 billion or more in assets. Smaller institutions

Filing Documents

• ubfo-20251231.htm (10-K) — 4181KB
• bylaws_amended03222011a0.htm (EX-3.2) — 80KB
• saundersamendmenttoemplo.htm (EX-10.10) — 43KB
• ubfo-20251231exhibit211.htm (EX-21.1) — 1KB
• ubfo-20251231exhibit231.htm (EX-23.1) — 2KB
• ubfo-20251231exhibit311.htm (EX-31.1) — 8KB
• ubfo-20251231exhibit312.htm (EX-31.2) — 8KB
• ubfo-20251231exhibit321.htm (EX-32.1) — 3KB
• ubfo-20251231exhibit322.htm (EX-32.2) — 3KB
• bylaws_amended03222011a0001.jpg (GRAPHIC) — 207KB
• bylaws_amended03222011a0002.jpg (GRAPHIC) — 312KB
• bylaws_amended03222011a0003.jpg (GRAPHIC) — 296KB
• bylaws_amended03222011a0004.jpg (GRAPHIC) — 308KB
• bylaws_amended03222011a0005.jpg (GRAPHIC) — 330KB
• bylaws_amended03222011a0006.jpg (GRAPHIC) — 285KB
• bylaws_amended03222011a0007.jpg (GRAPHIC) — 247KB
• bylaws_amended03222011a0008.jpg (GRAPHIC) — 268KB
• bylaws_amended03222011a0009.jpg (GRAPHIC) — 251KB
• bylaws_amended03222011a0010.jpg (GRAPHIC) — 275KB
• bylaws_amended03222011a0011.jpg (GRAPHIC) — 285KB
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• bylaws_amended03222011a0013.jpg (GRAPHIC) — 298KB
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• bylaws_amended03222011a0018.jpg (GRAPHIC) — 311KB
• bylaws_amended03222011a0019.jpg (GRAPHIC) — 230KB
• bylaws_amended03222011a0020.jpg (GRAPHIC) — 281KB
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• bylaws_amended03222011a0022.jpg (GRAPHIC) — 182KB
• bylaws_amended03222011a0023.jpg (GRAPHIC) — 61KB
• saundersamendmenttoemplo001.jpg (GRAPHIC) — 188KB
• saundersamendmenttoemplo002.jpg (GRAPHIC) — 64KB
• saundersamendmenttoemplo003.jpg (GRAPHIC) — 26KB
• saundersamendmenttoemplo004.jpg (GRAPHIC) — 183KB
• saundersamendmenttoemplo005.jpg (GRAPHIC) — 250KB
• saundersamendmenttoemplo006.jpg (GRAPHIC) — 238KB
• saundersamendmenttoemplo007.jpg (GRAPHIC) — 208KB
• saundersamendmenttoemplo008.jpg (GRAPHIC) — 175KB
• saundersamendmenttoemplo009.jpg (GRAPHIC) — 245KB
• saundersamendmenttoemplo010.jpg (GRAPHIC) — 268KB
• saundersamendmenttoemplo011.jpg (GRAPHIC) — 226KB
• saundersamendmenttoemplo012.jpg (GRAPHIC) — 260KB
• saundersamendmenttoemplo013.jpg (GRAPHIC) — 245KB
• saundersamendmenttoemplo014.jpg (GRAPHIC) — 222KB
• saundersamendmenttoemplo015.jpg (GRAPHIC) — 58KB
• 0001137547-26-000011.txt ( ) — 32205KB
• ubfo-20251231.xsd (EX-101.SCH) — 77KB
• ubfo-20251231_cal.xml (EX-101.CAL) — 162KB
• ubfo-20251231_def.xml (EX-101.DEF) — 495KB
• ubfo-20251231_lab.xml (EX-101.LAB) — 1029KB
• ubfo-20251231_pre.xml (EX-101.PRE) — 827KB
• ubfo-20251231_htm.xml (XML) — 4184KB

- Business

Item 1 - Business 4

- Risk Factors 18

Item 1A - Risk Factors 18

– Unresolved Staff Comments

Item 1B – Unresolved Staff Comments 18

- Cybersecurity 18

Item 1C - Cybersecurity 18

- Properties

Item 2 - Properties 19

- Legal Proceedings

Item 3 - Legal Proceedings 19

– Mine Safety Disclosures

Item 4 – Mine Safety Disclosures 19 PART II: Item 5 - Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 20

- [Reserved] 21

Item 6 - [Reserved] 21

- Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations 21 I tem 7A - Quantitative and Qualitative Disclosures about Market Risk 43

- Financial Statements and Supplementary Data

Item 8 - Financial Statements and Supplementary Data 44

- Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 89

– Controls and Procedures

Item 9A – Controls and Procedures 89

– Other Information

Item 9B – Other Information 90

– Disclosures Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C – Disclosures Regarding Foreign Jurisdictions that Prevent Inspections 90 PART III:

– Directors, Executive Officers, and Corporate Governance

Item 10 – Directors, Executive Officers, and Corporate Governance 90

- Executive Compensation

Item 11 - Executive Compensation 98

- Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 109

- Certain Relationships and Related Transactions, and Director Independence

Item 13 - Certain Relationships and Related Transactions, and Director Independence 111

– Principal Accounting Fees and Services

Item 14 – Principal Accounting Fees and Services 112 PART IV:

– Exhibits and Financial Statement Schedules

Item 15 – Exhibits and Financial Statement Schedules 113 2 Table of Contents PART 1 Certain matters discussed or incorporated by reference in this Annual Report on Form 10-K (this "Report") including, but not limited to, those described in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All statements contained in this Report that are not clearly historical in nature are forward-looking, and the words "anticipate," "assume," "intend," "believe," "forecast," "expect," "estimate," "plan," "continue," "will," "should," "look forward" and similar expressions are generally intended to identify forward-looking statements. You should not place undue reliance on these statements as they involve risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those expressed in them. Factors that might cause such differences include, but are not limited to: the possibility that any of the anticipated benefits of the proposed merger with Community West Bancshares (the "Merger") will not be realized or will not be realized within the expected time period; the risk that integration of the Company's operations with those of Community West Bancshares ("CWBC") will be materially delayed or will be more costly or difficult than expected; the inability to complete the proposed Merger due to the failure of the Company's shareholders to adopt the Merger Agreement, or the failure of CWBC's shareholders to adopt the Merger Agreement or to approve the issuance of CWBC's common stock in connection with the Merger; the failure to satisfy other conditions to completion of the proposed Merger; the failure of the proposed Merger to close for any other reason; the challenges of integrating and retaining key employees; the effect

- Business

Item 1 - Business General United Security Bancshares is a California corporation incorporated in March 2001 and is registered with the Board of Governors of the Federal Reserve System (FRB) as a bank holding company under the Bank Holding Company Act of 1956, as amended (BHCA). The common stock of United Security Bancshares is listed on Nasdaq under the symbol "UBFO." United Security Bank was chartered under the laws of the State of California in 1987 as a commercial bank. On June 12, 2001, United Security Bank reorganized into the bank holding company form of ownership and thereby became the wholly-owned subsidiary of United Security Bancshares and each share of United Security Bank stock was exchanged for a share of United Security Bancshares stock on a one-for-one basis. The principal business of United Security Bancshares is to serve as the holding company for United Security Bank. References to the "Bank" refer to United Security Bank together with its wholly-owned subsidiary, York Monterey Properties. References to "we," "us," or the "Company" refer to United Security Bancshares together with its subsidiaries on a consolidated basis. References to the "Holding Company," refer to United Security Bancshares, the parent company, on a stand-alone basis. On December 16, 2025, the Company announced the signing of an Agreement and Plan of Merger with Community West Bancshares (NASDAQ: CWBC), headquartered in Fresno, California, together with its banking subsidiary, Community West Bank, pursuant to which the companies will combine in an all-stock merger transaction. Under the terms of the agreement, United Security Bancshares will merge with and into Community West Bancshares and United Security Bank will merge with and into Community West Bank. The United Security Bancshares and Community West Bancshares Boards of Directors have unanimously approved the transaction. The merger is expected to be completed during the second quarter of 2026. United Security

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