UBFO's Q3 Net Income Rises, But YTD Profit Dips Amid Higher Loan Loss Provisions

Ticker: UBFO · Form: 10-Q · Filed: Nov 7, 2025 · CIK: 1137547

United Security Bancshares 10-Q Filing Summary
FieldDetail
CompanyUnited Security Bancshares (UBFO)
Form Type10-Q
Filed DateNov 7, 2025
Risk Levelmedium
Pages16
Reading Time19 min
Sentimentmixed

Sentiment: mixed

Topics: Regional Banking, Loan Growth, Credit Risk, Net Interest Income, Financial Performance, Asset Quality, Deposits

TL;DR

**UBFO's Q3 looks okay, but the big jump in loan loss provisions year-to-date means they're worried about credit quality, so I'm staying on the sidelines.**

AI Summary

UNITED SECURITY BANCSHARES (UBFO) reported a net income of $4.023 million for the three months ended September 30, 2025, a 5.06% increase from $3.829 million in the same period of 2024. However, net income for the nine months ended September 30, 2025, decreased by 27.78% to $8.874 million from $12.287 million in the prior year. Total assets grew to $1.235 billion as of September 30, 2025, up from $1.211 billion at December 31, 2024. Net interest income for the quarter increased to $12.419 million from $11.812 million year-over-year, but the nine-month net interest income saw a more modest rise to $36.576 million from $35.046 million. A significant increase in the provision for credit losses was noted, rising to $5.106 million for the nine months ended September 30, 2025, from $1.750 million in the same period of 2024, indicating a more cautious lending environment. Loans increased to $960.329 million from $930.244 million, primarily driven by a $31.392 million increase in real estate construction and development loans and a $22.670 million increase in agricultural loans. Total deposits also increased to $1.075 billion from $1.057 billion, with non-interest-bearing deposits rising by $24.215 million.

Why It Matters

UBFO's mixed financial results, with a quarterly net income increase but a significant year-to-date decline, signal a challenging environment for regional banks. The substantial increase in provision for credit losses to $5.106 million for the nine months ended September 30, 2025, suggests management is bracing for potential loan defaults, which could impact future profitability and investor confidence. For investors, this indicates a need for careful evaluation of asset quality and risk management practices. Employees and customers might see a more conservative approach to lending, potentially affecting loan availability and growth opportunities in the San Joaquin Valley and Santa Clara County markets where UBFO operates, intensifying competitive pressures from larger financial institutions.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in the provision for credit losses, which jumped to $5.106 million for the nine months ended September 30, 2025, from $1.750 million in the prior year, a 191.77% increase. This indicates a heightened concern for potential loan defaults. Additionally, the decrease in net income for the nine-month period by 27.78% to $8.874 million, despite an increase in net interest income, suggests underlying pressures on profitability.

Analyst Insight

Investors should closely monitor UBFO's asset quality and future credit loss provisions. Given the significant increase in loan loss provisions, a cautious approach is warranted; consider holding existing positions but deferring new investments until there's clearer evidence of stabilized credit quality and improved year-over-year profitability trends.

Financial Highlights

debt To Equity
N/A
revenue
$36,576,000
operating Margin
N/A
total Assets
$1,235,620,000
total Debt
$9,145,000
net Income
$8,874,000
eps
$0.23
gross Margin
N/A
cash Position
$66,767,000
revenue Growth
+4.36%

Revenue Breakdown

SegmentRevenueGrowth
Interest and fees on loans$41,973,000+1.27%
Customer service fees$2,211,000+3.17%
Increase in cash surrender value of bank-owned life insurance$400,000+0.25%

Key Numbers

  • $4.023M — Net Income (Q3 2025) (Increased 5.06% from $3.829M in Q3 2024)
  • $8.874M — Net Income (YTD Q3 2025) (Decreased 27.78% from $12.287M in YTD Q3 2024)
  • $5.106M — Provision for Credit Losses (YTD Q3 2025) (Increased 191.77% from $1.750M in YTD Q3 2024)
  • $1.235B — Total Assets (Sep 30, 2025) (Increased from $1.211B at Dec 31, 2024)
  • $960.329M — Total Loans (Sep 30, 2025) (Increased from $930.244M at Dec 31, 2024)
  • $1.075B — Total Deposits (Sep 30, 2025) (Increased from $1.057B at Dec 31, 2024)
  • $12.419M — Net Interest Income (Q3 2025) (Increased from $11.812M in Q3 2024)
  • $36.576M — Net Interest Income (YTD Q3 2025) (Increased from $35.046M in YTD Q3 2024)
  • 17,575,853 — Shares Outstanding (As of October 31, 2025)
  • $0.23 — Basic EPS (Q3 2025) (Increased from $0.22 in Q3 2024)

Key Players & Entities

  • UNITED SECURITY BANCSHARES (company) — registrant
  • United Security Bank (company) — wholly-owned subsidiary
  • York Monterey Properties, Inc. (company) — wholly-owned subsidiary
  • Nasdaq (regulator) — exchange where common stock is registered
  • $4.023 million (dollar_amount) — net income for Q3 2025
  • $8.874 million (dollar_amount) — net income for nine months ended September 30, 2025
  • $5.106 million (dollar_amount) — provision for credit losses for nine months ended September 30, 2025
  • $1.235 billion (dollar_amount) — total assets as of September 30, 2025
  • $960.329 million (dollar_amount) — total loans as of September 30, 2025
  • $1.075 billion (dollar_amount) — total deposits as of September 30, 2025

FAQ

What were UNITED SECURITY BANCSHARES's net income figures for Q3 2025 and YTD?

UNITED SECURITY BANCSHARES reported a net income of $4.023 million for the three months ended September 30, 2025, an increase from $3.829 million in Q3 2024. For the nine months ended September 30, 2025, net income was $8.874 million, a decrease from $12.287 million in the same period of 2024.

How did the provision for credit losses change for UBFO in 2025?

The provision for credit losses for UNITED SECURITY BANCSHARES significantly increased to $5.106 million for the nine months ended September 30, 2025, compared to $1.750 million for the same period in 2024, representing a 191.77% increase.

What is the total asset value for UNITED SECURITY BANCSHARES as of September 30, 2025?

As of September 30, 2025, UNITED SECURITY BANCSHARES reported total assets of $1.235 billion, an increase from $1.211 billion at December 31, 2024.

What was the trend in net interest income for UBFO?

Net interest income for UNITED SECURITY BANCSHARES increased to $12.419 million for the three months ended September 30, 2025, from $11.812 million in Q3 2024. For the nine months ended September 30, 2025, it rose to $36.576 million from $35.046 million in the prior year.

How much did UBFO's loan portfolio grow by September 30, 2025?

UNITED SECURITY BANCSHARES's total loans, net of unearned fees and unamortized loan origination costs, increased to $958.348 million as of September 30, 2025, from $928.462 million at December 31, 2024.

What are the primary loan categories for UNITED SECURITY BANCSHARES?

The primary loan categories for UNITED SECURITY BANCSHARES include real estate mortgage loans at 69.58% of the total, real estate construction and development at 14.87%, and agricultural loans at 7.53% as of September 30, 2025.

What is the risk associated with UBFO's available-for-sale securities?

At September 30, 2025, UBFO had available-for-sale securities with $16.167 million in gross unrealized losses, primarily due to changes in interest rates rather than credit quality. Management does not intend to sell these securities and does not expect to be required to sell them before recovery.

What was the change in total deposits for UNITED SECURITY BANCSHARES?

Total deposits for UNITED SECURITY BANCSHARES increased to $1.075 billion as of September 30, 2025, from $1.057 billion at December 31, 2024. Non-interest-bearing deposits increased by $24.215 million during this period.

What is the basic earnings per share for UBFO in Q3 2025?

The basic earnings per common share for UNITED SECURITY BANCSHARES was $0.23 for the three months ended September 30, 2025, a slight increase from $0.22 in the same period of 2024.

Where are UNITED SECURITY BANCSHARES's loans predominantly located?

UNITED SECURITY BANCSHARES's loans are predominantly located in the San Joaquin Valley and the greater Oakhurst/Eastern Madera County area, as well as the Campbell area of Santa Clara County, California.

Risk Factors

  • Increased Provision for Credit Losses [high — financial]: The provision for credit losses significantly increased by 191.77% to $5.106 million for the nine months ended September 30, 2025, from $1.750 million in the prior year. This indicates a more cautious lending environment and potential concerns about loan portfolio quality.
  • Interest Rate Sensitivity [medium — market]: Fluctuations in interest rates can impact net interest income. While net interest income increased for both the quarter and nine-month period, the growth in interest expense on deposits outpaced interest income on investment securities.
  • Loan Portfolio Growth [medium — operational]: Total loans grew to $960.329 million, driven by increases in real estate construction and development loans and agricultural loans. Managing the credit risk associated with this growth is crucial.
  • Regulatory Compliance [medium — regulatory]: As a financial institution, UBFO is subject to extensive regulation. Changes in regulatory requirements or failure to comply could result in fines, penalties, or reputational damage.

Industry Context

United Security Bancshares operates in the community banking sector, characterized by a focus on local markets and relationship-based lending. The industry is currently navigating a complex environment with rising interest rates, increased regulatory scrutiny, and evolving customer expectations for digital services. Competition remains robust from both traditional banks and newer fintech entrants.

Regulatory Implications

The significant increase in the provision for credit losses suggests a heightened awareness of potential credit risks, possibly influenced by economic conditions or regulatory guidance. Banks must remain vigilant in their risk management practices and ensure compliance with capital adequacy and lending standards.

What Investors Should Do

  1. Monitor loan portfolio quality and credit loss trends.
  2. Analyze the drivers of net interest income growth.
  3. Evaluate the impact of increased non-interest-bearing deposits.

Key Dates

  • 2025-09-30: End of Third Quarter 2025 — Reporting period for the 10-Q, showing mixed financial performance with increased quarterly net income but a year-to-date decrease.
  • 2025-10-31: Shares Outstanding Date — Indicates 17,575,853 shares outstanding as of this date, relevant for per-share calculations.
  • 2024-09-30: End of Third Quarter 2024 — Comparative period for Q3 2025 results, highlighting a 5.06% increase in net income for the quarter.
  • 2024-12-31: End of Fiscal Year 2024 — Balance sheet comparison point, showing growth in total assets, loans, and deposits by Q3 2025.

Glossary

Provision for credit losses
An expense set aside by a financial institution to cover potential loan defaults and uncollectible debts. (A significant increase in this provision signals potential concerns about the quality of the loan portfolio and a more conservative lending stance.)
Net Interest Income
The difference between the interest income generated by a bank and the interest paid out to its depositors and lenders. (A key measure of a bank's profitability from its core lending and borrowing activities. It showed modest growth for UBFO.)
Available-for-sale (AFS) securities
Investments that are not classified as held-to-maturity or trading securities. Their unrealized gains and losses are reported in other comprehensive income. (These securities represent a portion of the bank's investment portfolio, and their fair value is subject to market fluctuations.)
Non-interest-bearing deposits
Deposits that do not earn interest, such as most checking accounts. These are typically a low-cost source of funding for banks. (An increase in these deposits suggests a growing low-cost funding base for the bank.)
Accumulated other comprehensive loss
A component of shareholders' equity that includes unrealized gains and losses on certain investments (like AFS securities) and other items not included in net income. (A decrease in this loss (moving towards positive) indicates an improvement in the unrealized value of certain assets.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, United Security Bancshares (UBFO) shows a mixed financial picture. While total assets, loans, and deposits have seen modest growth, net income has declined significantly by 27.78% year-to-date. This decline is largely attributable to a dramatic 191.77% increase in the provision for credit losses, indicating a more conservative stance and potential headwinds in the loan portfolio. However, quarterly net income and net interest income have shown positive year-over-year growth, suggesting some resilience in current operations despite the longer-term trend.

Filing Stats: 4,743 words · 19 min read · ~16 pages · Grade level 15.8 · Accepted 2025-11-07 17:07:35

Filing Documents

Financial Information

PART I. Financial Information

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Comprehensive Income 5 Condensed Consolidated Statements of Changes in Shareholders' Equity 6 Condensed Consolidated Statements of Cash Flows 7 Notes to Condensed Consolidated Financial Statements 8

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Overview 34 Results of Operations 36 Financial Condition 44 Liquidity and Capital Resources 52

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 55

Controls and Procedures

Item 4. Controls and Procedures 55

Other Information

PART II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 56 Item 1A.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 56

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 56

Other Information

Item 5. Other Information 56

Exhibits

Item 6. Exhibits 56

Signatures

Signatures 59 2 Table of Contents

Financial Information

PART I. Financial Information

- Financial Statements (Unaudited)

Item 1 - Financial Statements (Unaudited) United Security Bancshares and Subsidiaries Condensed Consolidated Balance Sheets – (unaudited) (In thousands except shares) September 30, 2025 December 31, 2024 Assets Cash and cash equivalents $ 66,767 $ 56,211 Investment securities (at fair value) Available-for-sale (AFS) securities net of allowance for credit losses of $ 0 (amortized cost of $ 157,049 and $ 179,753 ) 140,917 157,382 Marketable equity securities 3,425 3,326 Total investment securities 144,342 160,708 Loans 960,329 930,244 Unearned fees and unamortized loan origination costs - net ( 1,981 ) ( 1,782 ) Allowance for credit losses - loans ( 16,235 ) ( 16,046 ) Net loans 942,113 912,416 Premises and equipment - net 9,069 8,668 Accrued interest receivable 7,474 8,104 Other real estate owned 7,852 4,582 Goodwill 4,488 4,488 Investment in limited partnerships 4,275 4,275 Deferred tax assets - net 13,004 14,419 Cash surrender value of life insurance - net 21,092 20,692 Operating lease right-of-use assets 2,587 3,069 Other assets 12,557 14,086 Total assets $ 1,235,620 $ 1,211,718 Liabilities & Shareholders' Equity Liabilities Deposits Non-interest-bearing $ 384,367 $ 360,152 Interest-bearing 691,533 697,470 Total deposits 1,075,900 1,057,622 Operating lease liabilities 2,679 3,161 Other liabilities 10,514 9,001 Junior subordinated debentures (at fair value) 9,145 11,572 Total liabilities 1,098,238 1,081,356 Commitments and contingent liabilities ( Note 18 ) Shareholders' Equity Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 17,557,427 at September 30, 2025 and 17,364,894 at December 31, 2024 61,928 61,267 Retained earnings 86,020 83,447 Accumulated other comprehensive loss, net of tax ( 10,566 ) ( 14,352 ) Total shareholders' equity 137,382 130,362 Total liabilities and shareholders' equity $ 1,235,620 $ 1,211,718 See accompanying notes to condensed consolidated financial statemen

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