UBFO United Security Bancshares

FRESNO, Calif., July 12 /PRNewswire-FirstCall/ -- Dennis R. Woods, President and Chief Executive Officer of United Security Bancshares http://www.unitedsecuritybank.com/ (NASDAQ:UBFO) reported today the results of operation for the 2nd quarter and 1st half of 2007. Woods said, "Core earnings continues to grow as is apparent in the second quarter comparison. Core growth was less apparent on the year to date comparison due to significant nonrecurring income in the first quarter of 2006, but nevertheless it did occur. For the second half of 2007, our efforts will continue to focus on growing core earnings over prior periods and we look forward to reporting another record year." Net income for the 2nd quarter 2007 was $3,308,000, as compared with $3,062,000 in 2006 for an increase of $246,000 or 8.03%. Net income for the six months ended June 30, was $6,911,000 in 2007 and $6,926,000 in 2006. The 1st quarters of both 2007 and 2006 included unusual or nonrecurring income and expense items that impact the comparability of the two year-to-date periods. Without the impact of those unusual or nonrecurring income and expense items, net after-tax income for six months ended June 30, 2007 would have exceeded net after-tax income for the same period of 2006 by $456,000 or 6.6%. Basic and diluted earnings per share for the 2nd quarters of 2007 and 2006 were $0.27. Year to date basic and diluted earning per share for 2007 were $0.58 and $0.57 as compared with $0.61 and $0.60 in 2006. For the three months ended 6/30/07, return on average equity was 15.56% and the return on average assets was 1.74%. For the same period in 2006, ROAE was 19.14% and ROAA was 1.93%. Year to date ROAE and ROAA were 17.42% and 1.89% for 2007 and 22.34% and 2.20% for 2006. The 75th consecutive quarterly cash dividend of $0.125 per share, up from $0.11 for a 13.6% increase from a year ago, was declared on June 26, 2007, to be paid on July 18, 2007, to shareholders of record on July 6, 2007. Shareholders' equity at quarter end June 30, 2007 was $81,369,000, an increase of $17,934,000 over June 30, 2006. The merger with Legacy Bank, N.A. added $21,537,000 to shareholders' equity over June 30, 2006. Dividends of $5.4 million were paid out of shareholders' equity to shareholders during the past 12 months and $10,753,000 was utilized to purchase and retire shares of Company stock at an average price of $20.72. Net interest income for the 2nd quarter 2007 was $8.836 million, up $738,000 from 2006 for an increase of 9.1%. The net interest margin decreased from 5.73% in 2006 to 5.19% in 2007. The decrease in the net interest margin in 2007 was attributable in part to reversal of $125,000 accrued interest for loans placed on non accrual status during the quarter as well as increases in the cost of funds. Interest costs, as a percentage of earning assets, averaged 3.01% in 2007 and 2.34% in 2006. Year to date, the net interest margin changed little at 5.68% for 2007 and 5.69% for 2006. Noninterest income for the 2nd quarter of 2007 was $1,954,000, up from $1,594,000 in 2006 for an increase of $360,000 or 22.6%. Year to date noninterest income for the six months just ended June 30, 2007 was $3,535,000, down $1,266,000. A gain on sale of investments of $1,877,000 ($1,164,000 after tax)in 2006 was the primary cause for the decline. Operating expenses for the three months ended June 30 were $5,517,000 for 2007 and $5,036,000 for 2006, an increase of $481,000 or 9.6%. Year to date operating expenses for the 1st half of 2007 were $10,717,000, up $1,133,000 or 11.8%. The increases primarily result from the addition of the Campbell branch acquired in February 2007. Operating expenses of Campbell totaled $1,008,000 for the first half of 2007. The provision for loan loss was $208 thousand for the 2nd quarter of 2007 and $123 thousand for 2006. For the first half of 2007 the provision for loan loss was $410,000 compared with $363,000 in 2006. In determining the adequacy of the allowance for loan loss, Management's judgment is the primary determining factor for establishing the amount of the provision for loan losses and is considered adequate for the current period. Non-performing assets increased to 2.55% of total assets on June 30, 2007 from 1.95% at June 30, 2006. United Security Bancshares is a $772+ million bank holding company. United Security Bank, it's principal subsidiary is a state chartered bank and 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 regulatory, judicial, or legislative tax treatment of business transactions, particularly recently enacted California tax legislation and the subsequent Dec. 31, 2003, announcement by the Franchise Tax Board regarding the taxation of REITs and RICs; and (8) unknown economic impacts caused by the State of California's budget issues. 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, 2006, and particularly the section of Management's Discussion and Analysis. United Security Bancshares Consolidated Balance Sheets (unaudited) (Dollars in thousands) June 30 June 30 Cash & noninterest-bearing 2007 2006 deposits in other banks $24,190 $30,833 Interest-bearing deposits in other banks 7,910 7,772 Federal funds sold 2,376 5,600 Investment securities AFS 91,636 91,237 Loans, net of unearned fees 589,030 481,895 Less: allowance for loan losses (9,905) (8,039) Loans, net 579,126 473,856 Premises and equipment, net 15,970 12,463 Intangible assets 13,638 3,283 Other assets 37,468 39,227 TOTAL ASSETS $772,312 $664,271 Deposits: Noninterest-bearing demand & NOW $183,474 $196,343 Savings & Money Market 191,086 170,749 Time 266,627 194,015 Total deposits 641,187 561,107 Borrowed funds 23,060 17,100 Other liabilities 9,698 6,621 Junior subordinated debentures 16,998 16,009 TOTAL LIABILITIES $690,943 $600,836 Shareholders' equity: Common shares outstanding: 11,943,363 at June 30, 2007 11,361,913 at June 30, 2006 $33,966 $22,019 Retained earnings 48,618 43,107 Fair Value Adjustment - Hedge (56) 16 Accumulated other comprehensive income (1,159) (1,707) Total shareholders' equity $81,369 $63,435 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $772,312 $664,271 United Security Bancshares Consolidated Statements of Three Three Six Six Income Months Months Months Months (dollars in 000's, except Ended Ended Ended Ended per share amounts) (unaudited) June June June June 2007 2006 2007 2006 Interest income $13,962 $11,410 $28,198 $21,961 Interest expense 5,126 3,311 9,629 6,050 Net interest income 8,836 8,098 18,569 15,911 Provision for loan losses 208 123 410 363 Other income 1,954 1,594 3,535 4,801 Other expenses 5,517 5,035 10,717 9,584 Income before income tax provision 5,065 4,534 10,977 10,766 Provision for income taxes 1,757 1,472 4,066 3,839 NET INCOME $3,308 $3,062 $6,911 $6,926 United Security Bancshares Three Three Six Six Selected Financial Data Months Months Months Months (dollars in 000's except Ended Ended Ended Ended per share amounts) 06/30/2007 06/30/2006 06/30/2007 06/30/2006 Basic Earnings Per Share $0.27 $0.27 $0.58 $0.61 Diluted Earning Per Share $0.27 $0.27 $0.57 $0.60 Annualized Return on: Average Assets 1.73% 1.93% 1.89% 2.05% Average Equity 15.56% 19.14% 17.42% 20.82% Net Interest Margin 5.19% 5.73% 5.68% 5.69% Net Charge-offs to Average Loans 0.00% 0.01% 0.20% 0.29% 06/30/2007 06/30/2006 Book Value Per Share $6.81 $5.58 Tangible Book Value Per Share $5.67 $5.29 Efficiency Ratio 48.48% 46.27% Non Performing Assets to Total Assets 2.55% 1.95% Allowance for Loan Losses to Total Loans 1.68% 1.67% Shares Outstanding - period end 11,943,363 11,361,913 Basic Shares - average weighted 12,078,030 11,367,629 Diluted Shares - average weighted 12,135,006 11,502,106 DATASOURCE: United Security Bancshares CONTACT: Ken Donahue of United Security Bancshares, +1-559-248-4943, Web site: http://www.unitedsecuritybank.com/

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