US
UNITED SECURITY BANCSHARES (UBFO)·Q2 2025 Earnings Summary
Executive Summary
- Q2 2025 EPS was $0.13 and net income was $2.17M, down sharply year over year on higher credit loss provision, higher deposit interest expense, and noninterest expense; NIM held at 4.35% while ROAA and ROAE fell to 0.73% and 6.46% respectively .
- Provision for credit losses rose to $1.86M in Q2 (vs $19k in Q2 2024), driven by student loan charge-offs; OREO increased to $7.85M following foreclosure transfers, but nonperforming assets declined vs year-end on lower nonaccrual loans .
- Deposit costs continued to rise as average interest-bearing deposits grew and brokered deposits averaged $100M at 4.55% (vs $50M at 5.55% in Q2 2024), partially offset by lower short-term borrowing costs; net interest income was $11.86M .
- No formal financial guidance was provided; the board declared a $0.12 cash dividend payable July 22, 2025, consistent with the prior quarter’s dividend .
- Management highlighted continued student loan portfolio credit normalization post-forbearance and branch investments (new Fresno location opening August 2025; renovations underway), framing capital and equity position as strong at $134.3M .
What Went Well and What Went Wrong
What Went Well
- Net interest margin increased to 4.35% vs 4.28% in Q2 2024, supported by lower rates on short-term borrowings and TruPS despite higher deposit rates .
- Nonperforming assets fell to 1.14% of total assets from 1.42% at year-end, driven by reductions in nonaccrual loans (partly offset by OREO transfers) .
- CEO emphasized continued progress on network investments: “The new location on the Northeast corner of Palm and Herndon… is nearing completion… projected to begin operations in August 2025,” demonstrating reinvestment in core markets .
What Went Wrong
- Net income declined 49.5% YoY to $2.17M as provision for credit losses surged and deposit interest expense and noninterest expense increased; ROAA and ROAE contracted materially .
- Noninterest income fell 50% YoY to $0.76M, impacted by a $317k loss on TruPS fair value (vs $225k loss in Q2 2024) and lack of the prior-year life insurance gain .
- Efficiency ratio deteriorated to 61.34% (from 53.50% in Q2 2024) amid higher salaries/benefits, OREO expense, and other noninterest costs .
Financial Results
KPIs
Estimate Comparison (S&P Global)
Values marked with * retrieved from S&P Global. No EPS or revenue consensus estimates were available for Q2 2025 via S&P Global.
Guidance Changes
Additional capital and funding note: The Company redeemed $3.0M of TruPS on July 1, 2025 (accrued for at 6/30/2025), which should reduce future TruPS-related expense variability .
Earnings Call Themes & Trends
No Q2 2025 earnings call transcript was available. Themes below are derived from Q2 2025 and Q1 2025 8‑K disclosures, compared with Q4 2024.
Management Commentary
- “Elevated student loan charge-offs continue to be incurred, primarily due to the recent expiration of payment forbearance programs related to the pandemic… While we may experience future charge-offs in this portfolio, we believe the overall allowance for credit losses is adequate.” — Dennis Woods, President & CEO .
- “The net interest margin for the quarter was 4.35%, and the equity position remains strong, totaling $134.3 million.” — Dennis Woods .
- “The new location on the Northeast corner of Palm and Herndon… is nearing completion… projected to begin operations in August 2025… renovations of Firebaugh and Caruthers are underway… These investments demonstrate our ongoing commitment to serving customers and reinvesting in communities across our market.” — Dennis Woods .
Q&A Highlights
No Q2 2025 earnings call transcript was available to extract Q&A. Key operational clarifications came via the 8-K:
- Drivers of YoY net income decline: higher provision for credit losses, deposit interest expense, and noninterest expense; partially offset by lower short-term borrowing expense and tax provision .
- TruPS valuation impact continues to flow through noninterest income; management views TruPS fair value adjustments as non-core with reconciliation provided .
Estimates Context
- S&P Global consensus estimates for Q2 2025 EPS and revenue were unavailable; therefore, beat/miss vs Street cannot be determined*.
- S&P Global shows an “actual revenue” data point of $11.08M for Q2 2025, but without an associated consensus or estimate count; we treat estimates as unavailable for this period*.
Values retrieved from S&P Global.
Key Takeaways for Investors
- Credit normalization dynamics remain the primary earnings swing factor; continued student loan charge-offs pushed the provision to $1.86M and weighed on EPS to $0.13 despite resilient NIM at 4.35% .
- Funding mix shows persistent reliance on brokered deposits ($100M avg at 4.55%), reflecting deposit competition; short-term borrowing costs fell, partially offsetting deposit cost pressure .
- Operating efficiency slipped (61.34%), driven by higher salaries/benefits and OREO-related costs; watch for cost discipline and OREO resolution to improve the ratio .
- TruPS fair value volatility remains a non-core earnings noise; the July 1, 2025 $3M partial redemption is a constructive step to reduce future variability .
- Asset quality optics improved at the headline level (NPA to assets down to 1.14%), but OREO rose with foreclosure transfers—resolution pace and recoveries will be critical near-term .
- Franchise investment (new Fresno branch, renovations) signals confidence and supports deposit growth and customer service, but near-term cost impact should be monitored .
- With no Street consensus available, positioning should focus on internal trajectory: stabilizing NIM, managing deposit costs, resolving student loan exposures, and normalizing provision; any upside catalyst likely stems from faster credit cleanup and cost containment .