United Security Bancshares (UBFO, Financial) announced its unaudited financial results for the quarter and nine months ended September 30, 2023, on October 30, 2023. The company reported a net income of $3.9 million for the quarter, a decrease from $4.5 million for the same period in 2022. However, on a year-to-date basis, the company reported a net income of $14.4 million, an increase from $10.3 million for the same period in 2022.
Financial Performance
The company's net interest margin increased to 4.05% for the quarter ended September 30, 2023, compared to 3.95% for the same period in 2022. The annualized average cost of deposits was 0.71% for the quarter, compared to 0.22% for the same period in 2022. Loan interest income increased by $2.2 million and investment securities income increased by $169,000 as a result of growth in loan balances and increases in interest rates, compared to the third quarter of 2022.
Balance Sheet and Credit Quality
Total assets decreased 2.0% to $1.27 billion, compared to $1.30 billion at the end of 2022. Total loans, net of unearned fees, decreased to $972.9 million, compared to $980.2 million at the end of 2022. The allowance for credit losses as a percentage of gross loans increased to 1.61%, compared to 1.04% at the end of 2022. The increase is primarily the result of an accounting adjustment of $6.6 million related to the adoption of a new accounting standard referred to as the Current Expected Credit Loss methodology or “CECL” which was adopted on January 1, 2023.
Company's Statement
“Our 2023 year-to-date earnings are the highest in our 35-year history. Third quarter net income was negatively impacted by the fair-value adjustment on our TRUPs and increased short-term borrowing costs, but we are pleased with our ability to maintain our net interest margin above four percent. We held our cost of deposits flat compared to the trailing quarter, and because of modest deposit runoff, our total cost of interest-bearing liabilities including borrowings increased to 1.91% compared to 1.38% last quarter. Our team of dedicated bankers continues to focus on gathering deposits and serving the banking needs of our local communities.” - Dennis Woods, President and Chief Executive Officer
Despite the decrease in net income for the quarter, the company's year-to-date earnings are the highest in its 35-year history. The company remains well-capitalized and expects to maintain adequate capital levels.
Explore the complete 8-K earnings release (here) from United Security Bancshares for further details.
