United Security Bancshares, Inc. (Nasdaq: USBI) today reported net income attributable to USBI of $904,000, or $0.15 per diluted share, for the second quarter ended June 30, 2011, compared with a net loss of $348,000, or ($0.06) per diluted share, for the same period of 2010.

United Security returned to profitability in the second quarter of 2011 and benefited from a significant reduction in the provision for loan losses compared with the linked first quarter of 2011 and the second quarter of 2010. The growth in net income since the second quarter of last year also resulted from an increase in net interest income and non-interest income, as well as higher net interest margin.

The Company expects near-term earnings to be affected by the continued weakness in its real estate loan portfolio related to a slowdown in real estate sales and lower real estate values that affect loan demand and collateral values.

Second Quarter Results

Net interest income increased 2.0% to $8.8 million in the second quarter of 2011, compared with $8.7 million in the second quarter of 2010. Net interest margin rose to 6.17% in the second quarter of 2011, a 44 basis point improvement from 5.73% in the second quarter of 2010.

Core earnings for the second quarter remained solid, with growth in net interest income and net interest margin compared with the second quarter of 2010. Net loans increased modestly from year-end 2010 and benefited from a slight increase in consumer loans, but 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.

Interest income totaled $10.6 million in the second quarter of 2011, compared with $11.2 million in the second quarter of 2010. The decrease in interest income was due primarily to lower interest rates and a 5.2% decrease in average earning assets.

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