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United Security Bancshares, Inc. Reports Third Quarter Results

Third Quarter Results

Interest income totaled $10.7 million in the third quarter of 2011, compared with $11.4 million in the third quarter of 2010. The decrease in interest income was due primarily to lower interest rates and a 2.7% decrease in average earning assets.

Interest expense declined 29.6% to $1.7 million in the third quarter of 2011, compared with $2.5 million in the third quarter of 2010. The decrease resulted primarily from a decline in interest rates paid compared with the third quarter of 2010, partially offset by an increase in interest bearing deposit accounts.

Net interest income remained flat at $8.97 million for the quarter ended September 30, 2011 compared with the quarter ended September 30, 2010. Net interest margin rose 18 basis points to 6.2% in the third quarter of 2011, compared with 6.0% in the third quarter of 2010.

Provision for loan losses rose to $2.3 million in the third quarter of 2011, or 2.2% of annualized average loans, compared with $1.4 million, or 1.4% of annualized average loans, in the third quarter of 2010. Net charge-offs rose to $6.0 million in the third quarter of 2011, compared with $1.3 million in the third quarter of 2010.

Core earnings for the third quarter remained positive with growth in net interest income and net interest margin compared with the third quarter of 2010. Net loans were down 1.3% from year-end 2010 due to reduced loan demand and loans transferred to OREO. Loan demand remains weak across First United Security Bank’s markets due to the soft economy and its effect on real estate transactions and related loan activity.

Total non-interest income was $1.6 million in the third quarter of 2011, up slightly compared with the third quarter of 2010.



Total non-interest expense increased 19.2% to $10.6 million in the third quarter of 2011, compared with $8.9 million in the third quarter of 2010. Salary and benefit costs rose 9.8% to $3.8 million, other real estate expenses increased 52% to $3.3 million and other expense was up 8% to $2.6 million, all compared with the third quarter of 2010.

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