Safe and Sound

United Security Bank

Fresno, CA
5
Star Rating
Fresno, CA-based United Security Bank is an FDIC-insured bank started in 1987. Regulatory filings show the bank having equity of $108.7 million on assets of $780.8 million, as of June 30, 2017.

With 127 full-time employees in 13 offices in CA, the bank currently holds loans and leases worth $559.2 million, including real estate loans of $443.9 million. U.S. bank customers currently have $666.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, United Security Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is key. It works as a cushion against losses and as protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.
On our test to measure capital adequacy, United Security Bank achieved a score of 18 out of a possible 30 points, better than the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. United Security Bank's Tier 1 capital ratio was 16.17 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, United Security Bank held equity amounting to 13.92 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these kinds of assets could eventually be required to use capital to absorb losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, United Security Bank scored 36 out of a possible 40 points, coming in below the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.98 percent of United Security Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the the size of that reserve to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on United Security Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, have less ability to do those things.

United Security Bank scored 18 out of a possible 30 on Bankrate's earnings test, beating the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one key measure of a bank's earnings. United Security Bank's most recent annualized quarterly return on equity was 8.98 percent, below the national average of 9.28 percent.

The bank recorded net income of $4.8 million on total equity of $108.7 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.22 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 percent.








WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.