United Security Bancshares Reports 35.54% Drop in Q1 Net Income Amid Rising Credit Loss Provisions

**Company Overview:** United Security Bancshares (NASDAQ: [UBFO](https://stockinvest.us/stock/UBFO)) is a financial services company headquartered in Fresno, California. It operates through its wholly-owned subsidiary, United Security Bank, and is focused on providing banking solutions in the Central Valley of California.

**Key Financial Highlights for Q1 2025:**

• Net income for the quarter decreased by **35.54%**, totaling **$2.7 million** compared to **$4.2 million** in Q1 2024.
• Net interest income after provision for credit losses fell to **$9.996 million**, down from **$11.541 million** the previous year, primarily due to a significant increase in credit loss provisions.
• Total loans decreased by **$7.6 million** (0.84%) to **$920.7 million**, with notable declines in commercial and industrial loans and real estate construction loans.
• Noninterest income increased to **$1.36 million**, driven mainly by a **$270,000 gain** from the fair value of junior subordinated debentures.
• Return on average assets (ROAA) and return on average equity (ROAE) decreased to **0.91%** and **8.19%**, respectively, from **1.40%** and **13.51%** in Q1 2024.
• Deposits decreased by **$31.4 million** (2.97%) to **$1.03 billion** compared to December 31, 2024, influenced by a decline in interest-bearing accounts. However, year-over-year, deposits increased by **$70.3 million** (7.4%) due to brokered deposits.
• The loan-to-deposit ratio was at **89.7%**, an increase from **87.8%** at the end of 2024.
• The provision for credit losses surged to **$2.3 million** from **$173,000** in the previous year, reflecting increased risks, particularly in the installment loan portfolio.

**Positive Aspects:**

• Growth in noninterest income suggests diversification in revenue streams.
• Rise in the fair value of junior subordinated debt indicates improved management strategies in debt valuation.
• Disciplined deposit pricing has kept funding costs lower than competitors amidst rising interest rates.

**Negative Aspects:**

• Sharp decline in net income reflects challenges in maintaining profitability amid rising provisions for credit losses.
• Decrease in total loans and deposits is a concern for future earnings and suggests potential customer attrition.
• High provision for credit losses indicates increased risk in the loan portfolio, particularly with student loans.

**Summary Statistics:**

• **Net Interest Margin:** **4.58%** (increase from 4.35% in Q1 2024)
• **Total Assets:** **$1.19 billion** as of March 31, 2025
• **Total Equity:** **$132.9 million** with a slight increase from **$130.4 million** at year-end 2024

**Conclusion:**** United Security Bancshares is facing a challenging environment marked by declining net income and rising provisions for credit losses. While the company has managed to grow noninterest income and maintain a solid net interest margin, strategic adjustments will be critical to navigate credit risks and enhance customer retention moving forward.