<SUBMISSION>
<ACCESSION-NUMBER>0001137547-02-000112
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20020930
<FILING-DATE>20021114
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>UNITED SECURITY BANCSHARES
<CIK>0001137547
<ASSIGNED-SIC>6021
<IRS-NUMBER>912112732
<STATE-OF-INCORPORATION>CA
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-32897
<FILM-NUMBER>02823646
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1525 E SHAW AVENUE
<CITY>FRESO
<STATE>CA
<ZIP>93710
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1525 E SHAW AVENUE
<CITY>FRESNO
<STATE>CA
<ZIP>93710
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a10q9302002.htm
<DESCRIPTION>10Q - SEPTEMBER 30, 2002
<TEXT>
<HTML>
<head>
<title>United Security Bancshares 10Q September 30, 2002
</title>
</head>
<BODY>

<FONT FACE="Times New Roman, Times, Serif" SIZE=3><a href="#toc2002">Click here for Table of Contents</a></font>

<hr size=4 noshade width=100%><BR>



 <p align=center><font size=4><b>SECURITIES AND EXCHANGE COMMISSION</b></font><br>
WASHINGTON, D.C. 20549</p>

<p align=center><font size=4><b>FORM 10-Q</b></font></p>
<HR noshade width=20%><BR>
<p><font size=3><b>


&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[X]</b>&nbsp;QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002.</font></p><BR>
<p><font size=3>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>[&nbsp;&nbsp;&nbsp;]</b>&nbsp;TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;FOR THE TRANSITION PERIOD FROM _______ TO _______ .</font></p><BR>


<p align=center><font size=5><b><u>UNITED SECURITY BANCSHARES</u></b></font><BR>
<font size=2>(Exact name of registrant as specified in its charter)</font></p>

<table width=100% border=0 cellspacing=0 cellpadding=0>
<tr align=center>
<td width=35%><u>CALIFORNIA</u></td>
<td width=30%>&nbsp;</td>
<td width=45%><u>91-2112732</u></td>
</tr>
<tr align=center>
<td>(State or other jurisdiction of</td>
<td>&nbsp;</td>
<td>(I.R.S. Employer</td>
</tr>
<tr align=center>
<td>incorporation or organization)</td>
<td>&nbsp;</td>
<td>Identification No.)</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr align=center>
<td width=35%><u>1525 East Shaw Ave., Fresno, California</u></td>
<td width=30%>&nbsp;</td>
<td width=45%><u>93710</u></td>
</tr>
<tr align=center>
<td>(Address of principal executive offices)</td>
<td>&nbsp;</td>
<td>(Zip Code)</td>
</tr>
</table>
<BR>

<table width=100% border=0 cellspacing=0 cellpadding=0>
<tr>
<td width=28%>&nbsp;</td>
<td width=72%>Registrants telephone number, including area code<u>&nbsp;(559) 248-4943&nbsp;</u></td>
</tr>
</table>
<br><BR><BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing for the past 90 days.
Yes&nbsp;<u>&nbsp;&nbsp;X&nbsp;&nbsp;</u> No&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate the number of
shares outstanding of each of the issuer's classes of common stock, as of the
latest practicable date. </FONT></P>

<table width=100% border=0 cellspacing=0 cellpadding=0>
<tr>
<td width=100% align=center><u>Common Stock, no par value</u></td>
</tr>
<tr>
<td align=center>(Title of Class)</td>
</tr>
<tr>
<td align=center>&nbsp;</td>
</tr>
<tr>
<td align=center>Shares outstanding as of September 30, 2002:&nbsp;<u> 5,466,674&nbsp;</u></td>
</tr>
</table>
<BR><BR><BR><BR><BR>

<BR><BR><BR>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">
<BR>


<a name="toc2002"></a>
<p align=center><font size=3><b>UNITED SECURITY BANCSHARES AND SUBSIDIARIES<BR>
QUARTERLY REPORT ON FORM 10Q FOR THE PERIOD ENDED<BR>SEPTEMBER 30, 2002<BR><BR>
TABLE OF CONTENTS</B></font></p>
<HR noshade width=100%>

<!-- Index table begins here 4 columns -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 border=0>
<tr>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=61%>&nbsp;</td>
<td width=35% align=center><u>&nbsp;Page&nbsp;</u></td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<TD>&nbsp;</TD>
<TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Facing Page</font></TD>
<td align=center>&nbsp;1</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Table of Contents</font></TD>
<td align=center>&nbsp;2</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2>PART I.&nbsp;&nbsp;Financial Information</td>
<td>&nbsp;</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2>Item 1.&nbsp;&nbsp;Financial Statements:</td>
<td>&nbsp;</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a003">Consolidated Balance Sheets</a></td>
<td align=center>3</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a004">Consolidated Statements of Income and Comprehensive Income</a></td>
<td align=center>4</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a005">Consolidated Statements of Changes in Shareholder's Equity</a></td>
<td align=center>5</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a006">Consolidated Statements of Cash Flows</a></td>
<td align=center>6</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a007">Notes to Consolidated Financial Statements</a></td>
<td align=center>7</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>


<tr>
<td>&nbsp;</td>
<td valign=top>Item 2.</td>
<td><a href="#a0013">Management's Discussion and Analysis of Financial Condition
and Results of Operations:</a></td>
<td>&nbsp;</td>
</tr>


<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0014">Results of Operations</a></td>
<td align=center>14</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0017">Financial Condition</a></td>
<td align=center>17</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0023">Liquidity and Asset/Liability Management</a></td>
<td align=center>23</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0024">Regulatory Matters</a></td>
<td align=center>24</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2>Item 3.&nbsp;&nbsp;Quantitative and Qualitative Disclosures about Market Risk:</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0026">Interest Rate Sensitivity and Market Risk</a></td>
<td align=center>26</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td valign=top>Item 4.</td>
<td><a href="#a0029">Controls and Procedures</a></td>
<td align=center>29</td>
</tr>

<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2>PART II.&nbsp;&nbsp;<a href="#a0030">Other Information</a></td>
<td align=center>30</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2><a href="#a0031">Signatures</a></td>
<td align=center>31</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2><a href="#a0032">Certifications</a></td>
<td align=center>32</td>
</tr>
<tr>
<TD>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</table>

<BR><BR><BR><BR>


<p align=center><font size=3>2</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<a name="a003"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>United Security Bancshares and Subsidiaries<BR>
Consolidated Statements of Condition - Balance Sheets<BR>
September 30, 2002 (unaudited) and December 31, 2001</b></font></p>

<PRE>
                                                                   September 30,         December 31,
   (In thousands except shares)                                         2002                 2001
----------------------------------------------------------------------------------------------------------
Assets
 Cash and due from banks                                              $19,169              $15,945
 Interest-bearing deposits in other banks                               7,012                    0
 Federal funds sold and securities purchased
   under agreements to resell                                           2,950               13,310
                                                                ------------------------------------------
      Cash and cash equivalents                                        29,131               29,255
 Securities available for sale (Note 2)                               116,242               63,365
 Securities held to maturity (Note 2)                                       0                    0
                                                                ------------------------------------------
   Total investment securities                                        116,242               63,365

 Loans and leases (Note 3)                                            363,713              336,287
    Unearned fees                                                        (343)                (667)
    Allowance for credit losses                                        (5,523)              (4,457)
                                                                ------------------------------------------
       Net loans                                                      357,847              331,163
 Accrued interest receivable                                            2,778                3,751
 Premises and equipment - net                                           2,714                3,057
 Other real estate owned                                                9,428                5,390
 Intangible assets                                                      2,390                2,660
 Cash surrender value of life insurance                                 2,492                2,411
 Investment in limited partnership                                      2,622                2,772
 Deferred income taxes                                                  1,021                1,730
 Other assets                                                           6,349                5,374
                                                                ------------------------------------------
Total assets                                                         $533,014             $450,928
                                                                ==========================================
Liabilities &amp; Shareholders' Equity:
Liabilities
 Deposits (Note 4)
   Noninterest bearing                                                $85,130              $72,413
   Interest bearing                                                   353,396              296,238
                                                                ------------------------------------------
      Total deposits                                                  438,526              368,651
 Federal funds purchased and securities sold
     under agreements to repurchase (Note 5)                           35,400               27,500
 Other borrowings (Note 5)                                                709                  916
 Accrued interest payable                                               1,185                1,270
 Accounts payable and other liabilities                                 1,901                1,532
                                                                ------------------------------------------
      Total liabilities                                               477,721              399,869
Company obligated manditorily redeemable cumulative trust
  preferred securities of subsidiary trust holding solely junior
  subordinated debentures (Trust Preferred securities) (Note 6)        15,000               15,000

Commitments and Contingent Liabilities (Note 3)

Shareholders' Equity (Notes 7 and 10)
  Common  stock, no par value
    10,000,000 shares authorized, 5,429,130 and 5,397,298
    issued and outstanding, in 2002 and 2001, respectively             18,017               18,239
  Retained earnings                                                    21,765               18,582
  Unearned ESOP shares (Note 5)                                          (664)                (873)
  Accumulated other comprehensive income                                1,175                  111
                                                                ------------------------------------------
      Total shareholders' equity                                       40,293               36,059
                                                                ------------------------------------------
Total liabilities and shareholders' equity                           $533,014             $450,928
                                                                ==========================================
      See notes to financial statements
</pre>

<BR><BR>

<p align=center><font size=3>3</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<a name="a004"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>United Security Bancshares and Subsidiaries<BR>
Consolidated Statements of Income and Comprehensive Income<BR>
Nine Months Ended September 30, 2002 and 2001 (unaudited)</b></font></p>

<PRE>
                                                            Quarter Ended Sept 30,     Nine Months Ended Sept 30,
   (In thousands except shares and EPS)                       2002          2001          2002           2001
---------------------------------------------------------------------------------------------------------------------
Interest Income:
 Loans, including fees                                       $6,186        $6,747       $18,367        $20,456
 Investment securities - AFS - taxable                        1,033           894         2,685          2,340
 Investment securities - HTM - taxable                            0             0             0            202
 Investment securities - AFS - nontaxable                        34            41           105            118
 Federal funds sold and securities purchased
   under agreements to resell                                   126           167           259            251
 Interest on deposits in other banks                             34             0            37              0
                                                          -----------------------------------------------------------
     Total interest income                                    7,413         7,849        21,453         23,367
Interest Expense:
 Interest on deposits                                         2,191         2,910         6,480          8,811
   Interest on other borrowings                                 605           693         1,726          1,586
                                                          -----------------------------------------------------------
     Total interest expense                                   2,796         3,603         8,206         10,397
                                                          -----------------------------------------------------------
Net Interest Income Before
  Provision for Credit Losses                                 4,617         4,246        13,247         12,970
Provision for Credit Losses (Note 3)                            325           492         1,189          1,268
                                                          -----------------------------------------------------------
Net Interest Income                                           4,292         3,754        12,058         11,702
Noninterest Income:
 Customer service fees                                        1,047           899         2,991          2,208
 (Loss) gain on sale of securities                               (2)          482           (24)           759
 Gain on sale of other real estate owned                          0             0             4             36
 Gain on sale of fixed assets                                    10             0            10              8
 Other                                                          258            68           728            199
                                                          -----------------------------------------------------------
    Total noninterest income                                  1,313         1,449         3,709          3,210
Noninterest Expense:
 Salaries and employee benefits                               1,312         1,120         3,719          3,342
 Occupancy expense                                              393           445         1,319          1,283
 Data processing                                                136           146           414            397
 Professional fees                                              290           231           668            433
 Director fees                                                   52            52           153            151
 Amortization of intangibles                                     90            90           270            270
 Correspondent bank service charges                              73            57           218            156
 Other                                                          582           440         1,445          1,197
                                                          -----------------------------------------------------------
    Total noninterest expense                                 2,928         2,581         8,206          7,229
                                                          -----------------------------------------------------------
Income Before Taxes on Income                                 2,677         2,622         7,561          7,683

Taxes on Income (Note 11)                                       801           944         2,249          2,818
                                                          -----------------------------------------------------------
Net Income                                                   $1,876        $1,678        $5,312         $4,865
                                                          ===========================================================
Other comprehensive income, net of tax: Unrealized
 (loss) gain on available for sale securities -
  net income tax of $272, $182, $709 and $140                   407          274          1,064            210
                                                          -----------------------------------------------------------
Comprehensive Income                                         $2,283       $1,952         $6,376         $5,075
                                                          ===========================================================
Net Income per common share (Note 9)
  Basic                                                       $0.35        $0.31          $0.98          $0.89
                                                          ===========================================================
  Diluted                                                     $0.34        $0.30          $0.97          $0.87
                                                          ===========================================================
Shares on which net income per common
 share were based (Note 9)
  Basic                                                    5,396,553     5,450,736      5,396,553      5,450,736
                                                          ===========================================================
  Diluted                                                  5,487,885     5,577,015      5,487,885      5,577,015
                                                          ===========================================================
     See notes to financial statements
</pre>

<BR><BR>

<p align=center><font size=3>4</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<a name="a005"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>United Security Bancshares and Subsidiaries<BR>
Consolidated Statements of Changes in Shareholders' Equity<BR>
Periods Ended September 30, 2002</b></font></p>

<PRE>

                                                Common stock Common stock                           Accumulated
                                               ---------------------------                              Other
                                                   Number                 Retained     Unearned     Comprehensive
   (In thousands except shares)                  of Shares     Amount     Earnings    ESOP Shares   Income (Loss)    Total
--------------------------------------------------------------------------------------------------------------------------------
Balance January 1, 2001                          5,419,487    $19,178     $14,916       $(682)          $337        $33,749

 Director/Employee stock options exercised          84,830        608                                                   608
 Tax benefit of stock options exercised                           118                                                   118
 Net changes in unrealized gain
   (loss) on available for sale securities
   (net of income tax of $139,849 )                                                                      209            209
 Dividends on common stock ($0.345 per share)                              (1,902)                                   (1,902)
 Unearned ESOP shares purchased                    (23,185)                              (398)                         (398)
 Release of unearned ESOP shares                     8,993                                156                           156
 Net Income                                                                 4,865                                     4,865
                                              ----------------------------------------------------------------------------------
Balance September 30, 2001 (unaudited)           5,490,125     19,904      17,879        (924)           546         37,405

 Director/Employee stock options exercised          20,000        197                                                   197
 Tax benefit of stock options exercised                            28                                                    28
 Net changes in unrealized gain
    (loss) on available for sale securities
    (net of income tax  benefit of $290,305 )                                                           (435)          (435)
 Dividends on common stock ($0.115 per share)                                (625)                                     (625)
 Repurchase and cancellation of common shares     (115,786)    (1,884)                                               (1,884)
 Release of unearned ESOP shares                     2,959         (6)                     51                            45
 Net Income                                                                 1,328                                     1,328
                                              -----------------------------------------------------------------------------------
Balance December 31, 2001                        5,397,298     18,239      18,582        (873)           111         36,059

 Director/Employee stock options exercised          57,100        401                                                   401
 Tax benefit of stock options exercised                             4                                                     4
 Net changes in unrealized gain
   (loss) on available for sale securities
   (net of income tax of $709,186)                                                                     1,064          1,064
 Dividends on common stock ($0.39 per share)                               (2,129)                                   (2,129)
 Repurchase and cancellation of common shares      (37,076)      (625)                                                 (625)
 Release of unearned ESOP shares                    11,808         (2)                    209                           207
 Net Income                                                                 5,312                                     5,312
                                              -----------------------------------------------------------------------------------
Balance September 30, 2002 (unaudited)           5,429,130    $18,017     $21,765       $(664)        $1,175        $40,293
                                              ===================================================================================
  See notes to financial statements
</pre>

<BR><BR><BR><BR><BR><BR>

<p align=center><font size=3>5</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">


<a name="a006"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>United Security Bancshares and Subsidiaries<BR>
Consolidated Statements of Cash Flows<BR>
Periods Ended September 30, 2002 and 2001 (unaudited)</b></font></p>

<PRE>
   (In thousands)                                                 2002                  2001
--------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities:
  Net income                                                     $5,312                $4,865
  Adjustments to reconcile net earnings to
   cash provided by operating activities:
    Provision for credit losses                                   1,189                 1,268
    Depreciation and amortization                                   910                   894
    Amortization of investment securities                           312                   184
    Loss (gain) on sale of securities                                24                  (759)
    Decrease (increase) in accrued interest receivable              973                  (563)
    (Decrease) increase in accrued interest payable                 (85)                  294
    Decrease in unearned fees                                      (324)                 (133)
    Decrease (increase) in income taxes payable                     137                   (75)
    Increase (decrease) in accounts payable
     and accrued liabilities                                        149                   (19)
    Write-down of other investments                                  40                     0
    Write-down of other real estate owned                           132                     0
    Gain on sale of other real estate owned                          (4)                  (36)
    Gain on sale of assets                                          (10)                   (8)
    Increase in surrender value of life insurance                   (81)                  (82)
    Loss in limited partnership interest                            172                   137
    Net (increase) decrease in other assets                         (92)                   35
                                                           --------------------------------------------
  Net cash provided by operating activities                       8,754                 6,002
Cash Flows From Investing Activities:
  Purchases of  available-for-sale securities                   (95,685)              (74,016)
  Net purchase of FHLB/FRB and other bank stock                    (307)                 (635)
  Maturities and calls of available-for-sale securities          44,245                34,158
  Maturities and calls of held-to-maturity securities                 0                10,250
  Proceeds from sales of available-for-sale securities                0                26,088
  Investment in limited partnership                                   0                  (888)
  Investment in title company                                         0                (1,500)
  Net increase in loans                                         (32,566)              (65,561)
  Proceeds from sales of other real estate owned                    420                     0
  Capital expenditures for premises and equipment                  (298)                 (439)
  Proceeds from sales of premises and equipment                      15                    23
                                                           --------------------------------------------
  Net cash used in investing activities                         (84,176)              (72,520)
Cash Flows From Financing Activities:
  Net increase in demand deposit
    and savings accounts                                         22,481                28,893
  Net increase in certificates of deposit                        47,393                33,728
  Net decrease in federal funds purchased                             0               (20,750)
  Net increase in repurchase agreements                           7,900                 7,888
  Proceeds from company obligated manditorily redeemable
    preferred securities of subsidiary trust holding
    soley junior subordinated debentures                              0                14,505
  Director/Employee stock options exercised                         401                   608
  Repurchase and retirement of common stock                        (625)                 (831)
  Proceeds from ESOP borrowings                                       0                   399
  Repayment of ESOP borrowings                                     (209)                 (130)
  Purchase of unearned ESOP shares                                    0                  (399)
  Payment of dividends on common stock                           (2,043)               (1,816)
                                                           --------------------------------------------
  Net cash provided by financing activities                      75,298                62,095
                                                           --------------------------------------------
Net decrease in cash and cash equivalents                          (124)               (4,423)
Cash and cash equivalents at beginning of period                 29,255                19,176
                                                           --------------------------------------------
Cash and cash equivalents at end of period                      $29,131               $14,753
                                                           ============================================
See notes to financial statements
</pre>

<BR><BR><BR>

<p align=center><font size=3>6</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<BR><BR>
<a name="a007"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><u>United Security Bancshares and Subsidiaries
 - Notes to Consolidated Financial Statements - (Unaudited)</u></b></font></p>

<P><font size=3><b><i>1. Summary of Significant Accounting and Reporting Policies</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The consolidated financial statements include the accounts of United Security Bancshares, Inc., and its wholly owned
subsidiaries, United Security Bank and subsidiary (the "Bank"), and United Security Bancshares Capital Trust I (the "Trust"),
(collectively the "Company"). Intercompany accounts and transactions have been eliminated in consolidation. In the following
notes, references to the Bank are references to United Security Bank. References to the Company are references to United
Security Bancshares, Inc. (including the Bank), except for periods prior to June 12, 2001, in which case, references to the
Company are references to the Bank.</font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
United Security Bancshares is a bank holding company, incorporated in the state of California for the purpose of acquiring all
the capital stock of the Bank through a holding company reorganization (the "Reorganization") of the Bank. The Reorganization,
which was accounted for in a manner similar to a pooling of interests, was completed on June 12, 2001. Management believes the
reorganization will provide the Company greater operating and financial flexibility and will permit expansion into a broader
range of financial services and other business activities.</font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
United Security Bancshares Capital Trust I, a subsidiary of United Security Bancshares, is a Delaware statutory business trust
formed for the exclusive purpose of issuing and selling Trust Preferred Securities. The Trust was formed on June 28, 2001 (See
Note 6. "Trust Preferred Securities").</font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
USB Investment Trust Inc. was incorporated effective December 31, 2001 as a special purpose real estate investment trust
("REIT") under Maryland law. The REIT is a subsidiary of the Bank and was funded with $133.0 million in real estate-secured
loans contributed by the Bank. USB Investment Trust will give the Bank flexibility in raising capital, and will reduce the
expenses associated with holding the assets contributed to USB Investment Trust.</font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
These unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim
financial information on a basis consistent with the accounting policies reflected in the audited financial statements of the
Company included in its Annual Report on Form 10-K for the year ended December 31, 2001. These interim financial statements do
not include all of the information and footnotes required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for a
fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the
results that may be expected for any other interim period or for the year as a whole.</font></p>

<P><font size=3><b><i>2. Securities Available for Sale</i></b></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
   Following is a comparison of the amortized cost and approximate fair value of securities available for sale for the periods
   ended September 30, 2002 and December 31, 2001:</font></p>

<PRE>
                                         ------------------------------------------------------------------
                                                             Gross            Gross         Fair Value
   (In thousands)                           Amortized      Unrealized       Unrealized      (Carrying
September 30, 2002:                            Cost          Gains            Losses         Amount)
-----------------------------------------------------------------------------------------------------------
U.S. Government agencies                     $65,239        $1,527            $(32)          $66,734
U.S. Government agency
 collateralized mortgage obligations              89             4               0                93
Obligations of state and
 political subdivisions                        2,796           215               0             3,011
Other debt securities                         46,160           259             (15)           46,404
                                         ------------------------------------------------------------------
                                            $114,284        $2,005            $(47)         $116,242
                                         ==================================================================
December 31, 2001:
U.S. Government agencies                     $42,341          $360            $(74)          $42,627
U.S. Government agency
 collateralized mortgage obligations             211             1              (2)              210
Obligations of state and
 political subdivisions                        3,464            72              (4)            3,532
Other debt securities                         17,164             0            (168)           16,996
                                         ------------------------------------------------------------------
                                             $63,180          $433           $(248)          $63,365
                                         ==================================================================
</PRE>

<BR>

<p align=center><font size=3>7</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Included in other debt
securities at September 30, 2002 is a short-term money-market mutual fund
totaling $28.0 million. Included in other debt securities at September 30, 2002
and December 31, 2001, are a short-term government securities mutual fund
totaling $10.0 million, and Trust Preferred securities pools totaling $3.2
million. Also included is a CRA qualified investment fund totaling $5.0 million
at September 30, 2002 and $4.0 million at December 31, 2001. The short-term
government securities mutual fund invests in debt securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, with a
maximum duration equal to that of a 3-year U.S. Treasury Note. The principal
strategy of the CRA qualified investment fund is to invest in debt securities
that will cause the shares of the fund to qualify under the Community
Reinvestment Act of 1977 (&#147;CRA&#148;) as CRA qualified investments. Such
investments may include U.S. Government agencies, taxable municipal bonds, and
certificates of deposit. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>There were realized losses
on calls of available-for-sale securities totaling $24,000 during the nine
months ended September 30, 2002. Realized gains on sale of available-for-sale
securities totaled $759,000 during the nine months ended September 30, 2001. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The amortized cost and fair
value of securities available for sale at September 30, 2002, by contractual
maturity, are shown below. Actual maturities may differ from contractual
maturities because issuers have the right to call or prepay obligations with or
without call or prepayment penalties. </FONT></P>

<PRE>
                                                        September 30, 2002
                                              ------------------------------------------
                                                   Amortized            Fair Value
  (In thousands)                                      Cost          (Carrying Amount)
----------------------------------------------------------------------------------------
Due in one year or less                             $38,181               $38,185
Due after one year through five years                45,013                45,958
Due after five years through ten years                3,695                 3,836
Due after ten years                                  27,306                28,170
Collateralized mortgage obligations                      89                    93
                                              ------------------------------------------
                                                   $114,284              $116,242
                                              ==========================================
</PRE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Contractual maturities on collateralized mortgage obligations cannot be anticipated due to allowed
paydowns.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>At September 30, 2002 and
December 31, 2001, available-for-sale securities with an amortized cost of
approximately $66,495,000 and $43,833,000 (fair value of $68,049,000 and
$44,198,000) were pledged as collateral for public funds, treasury tax and loan
balances, and repurchase agreements. </FONT></P>

<P><font size=3><b><i>3. Loans and Leases</i></b></font></p>
<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Loans and leases include the following:</font></p>

<PRE>
                                            September 30,       December 31,
   (In thousands)                               2002                2001
---------------------------------------------------------------------------------
Commercial and industrial                    $108,200            $102,280
Real estate - mortgage                        103,565             111,425
Real estate - construction                    112,323              92,764
Agricultural                                   20,605              12,987
Installment/other                               7,777               6,647
Lease financing                                11,243              10,184
                                         ----------------------------------------
Total Loans                                  $363,713            $336,287
                                         ========================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company's loans are
predominantly in the San Joaquin Valley, and the greater Oakhurst/East Madera
County area, although the Company does participate in loans with other financial
institutions, primarily in the state of California. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Commercial and industrial
loans represent 29.7% of total loans at September 30, 2002 and have a high
degree of industry diversification. A substantial portion of the commercial and
industrial loans are secured by accounts receivable, inventory, leases or other
collateral including real estate. The remainder are unsecured; however,
extensions of credit are predicated upon the financial capacity of the borrower.
Repayment of commercial loans is generally from the cash flow of the borrower.
Real estate mortgage loans, representing 28.5% of total loans at September 30,
2002, are secured by trust deeds on primarily commercial property. Repayment of
real estate mortgage loans is generally from the cash flow of the borrower. </FONT></P>

<BR>

<p align=center><font size=3>8</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Real estate construction
loans, representing 30.9% of total loans at September 30, 2002, consist of loans
to residential contractors, which are secured by single family residential
properties. All real estate loans have established equity requirements.
Repayment on construction loans is generally from long-term mortgages with other
lending institutions. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Agricultural loans
represent 5.7% of total loans at September 30, 2002 and are generally secured by
land, equipment, inventory and receivables. Repayment is from the cash flow of
the borrower. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Lease financing loans,
representing 3.1% of total loans at September 30, 2002, consist of loans to
small businesses, which are secured by commercial equipment. Repayment of the
lease obligation is from the cash flow of the borrower. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>There were no loans over 90
days past due and still accruing interest at September 30, 2002 or December 31,
2001. Nonaccrual loans totaled $14.2 million and $13.0 million at September 30,
2002 and December 31, 2001, respectively. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
An analysis of changes in the allowance for credit losses is as follows:</FONT></P>

<PRE>
                                               September 30,    December 31,    September 30,
   (In thousands)                                  2002             2001            2001
-----------------------------------------------------------------------------------------------
Balance, beginning of year                        $4,457           $3,773          $3,773
Provision charged to operations                    1,189            1,733           1,268
Losses charged to allowance                         (152)          (1,076)           (697)
Recoveries on loans previously charged off            29               27              18
                                              -------------------------------------------------
Balance at end-of-period                          $5,523           $4,457          $4,362
                                              =================================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The allowance for credit
losses represents management's estimate of the risk inherent in the loan
portfolio based on the current economic conditions, collateral values and
economic prospects of the borrowers. Significant changes in these estimates
might be required in the event of a downturn in the economy and/or the real
estate market in the San Joaquin Valley, and the greater Oakhurst and East
Madera County area. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>At September 30, 2002 and
2001, the Company's recorded investment in loans for which impairment has been
recognized totaled $14.4 million and $5.6 million. Included in this amount is
$8.6 million and $3.2 million of impaired loans for which the related specific
allowance is $1,352,000 and $545,000, as well as $5.9 million and $2.5 million
of impaired loans that as a result of write-downs or the fair value of the
collateral, did not have a specific allowance. The average recorded investment
in impaired loans was $10.2 million and $3.4 million for the nine-month periods
ended September 30, 2002 and 2001, respectively. At December 31, 2001, the
Company's recorded investment in loans for which impairment has been recognized
totaled $13.1 million. Included in this amount is $1.3 million of impaired loans
for which the related specific allowance is $115,000, as well as $11.8 million
of impaired loans that as a result of write-downs or the fair value of the
collateral did not have a specific allowance. The average recorded investment in
impaired loans was $5.7 million for the year ended December 31, 2001. In most
cases, the Company uses the cash basis method of income recognition for impaired
loans. In the case of certain troubled debt restructuring for which the loan is
performing under the current contractual terms, income is recognized under the
accrual method. For the nine months ended September 30, 2002, the Company
recognized no income on such loans. For the year ended December 31, 2001and the
nine months ended September 30, 2001, the Company recognized $23,000 and $12,000
on such loans, respectively. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In the normal course of
business, the Company is party to financial instruments with off-balance sheet
risk to meet the financing needs of its customers. At September 30, 2002 and
December 31, 2001 these financial instruments include commitments to extend
credit of $88.5 million and $108.1 million, respectively, and standby letters of
credit of $6.7 million and $6.3 million, respectively. These instruments involve
elements of credit risk in excess of the amount recognized on the balance sheet.
The contract amounts of these instruments reflect the extent of the involvement
the bank has in off-balance sheet financial instruments. </FONT></P>

<BR>

<p align=center><font size=3>9</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company&#146;s exposure
to credit loss in the event of nonperformance by the counterparty to the
financial instrument for commitments to extend credit and standby letters of
credit is represented by the contractual amounts of those instruments. The
Company uses the same credit policies as it does for on-balance-sheet
instruments. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Commitments to extend
credit are agreements to lend to a customer, as long as there is no violation of
any condition established in the contract. Substantially all of these
commitments are at floating interest rates based on prime. Commitments generally
have fixed expiration dates. The Company evaluates each customer's
creditworthiness on a case by case basis. The amount of collateral obtained, if
deemed necessary, is based on management's credit evaluation. Collateral held
varies but includes accounts receivable, inventory, leases, property, plant and
equipment, residential real estate and income-producing properties. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Standby letters of credit are generally unsecured and are issued by the Company to guarantee the performance of a customer to a
third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans
to customers.</FONT></P>

<P><font size=3><b><i>4. Deposits</i></b></font></p>
<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Deposits include the following:</font></p>

<pre>
                                                September 30,       December 31,
   (In thousands)                                   2002                2001
-------------------------------------------------------------------------------------
Noninterest bearing deposits                      $85,130             $72,413
Interest bearing deposits:
 NOW and money market accounts                     92,083              83,316
 Savings accounts                                  20,881              19,883
 Time deposits:
   Under $100,000                                  91,606              68,414
   $100,000 and over                              148,826             124,625
                                             ----------------------------------------
Total interest bearing deposits                   353,396             296,238
                                             ----------------------------------------
Total deposits                                   $438,526            $368,651
                                             ========================================
</PRE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>At September 30, 2002, the
scheduled maturities of all certificates of deposit and other time deposits are
as follows: </FONT></P>

<PRE>
   (In thousands)
--------------------------------------------------------------------------------
One year or less                                                 $210,397
More than one year, but less than or equal to two years            23,866
More than two years, but less than or equal to three years          4,241
More than three years, but less than or equal to four years         1,424
More than four years, but less than or equal to five years            493
More than five years                                                   11
                                                             -------------------
                                                                 $240,432
                                                             ===================
</PRE>

<P><font size=3><b><i>5. Short-term Borrowings/Other Borrowings</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>At September 30, 2002, the
Company had collateralized and uncollateralized lines of credit aggregating
$163.9 million, as well as FHLB lines of credit totaling $ 38.6 million.
Advances on the FHLB lines of credit totaled $35.4 million at September 30,
2002. These lines of credit generally have interest rates tied to the Federal
Funds rate or are indexed to short-term U.S. Treasury rates or LIBOR. FHLB
advances are collateralized by all of the Company&#146;s stock in the FHLB and
certain qualifying mortgage loans. All lines of credit are on an &#147;as
available&#148; basis and can be revoked by the grantor at any time. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company had
collateralized and uncollateralized lines of credit with aggregating $119.6
million, as well as repurchase agreement lines of credit totaling $5.3 million
and FHLB lines of credit totaling $ 35.6 million at December 31, 2001. As of
that date, investment securities of $5.6 million (including accrued interest)
were pledged as collateral for repurchase agreements and $64.9 million in real
estate-secured loans were pledged as collateral for FHLB advances. </FONT></P>

<BR>

<p align=center><font size=3>10</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The table below provides
further detail of the Company's repurchase agreements and FHLB advances for the
periods ended September 30, 2002 and December 31, 2001: </FONT></P>

<PRE>
                                                         September 30,       December 31,
  (In thousands)                                             2002                2001
----------------------------------------------------------------------------------------
Outstanding:
  Average for the period - Repos                              $291              $12,048
  Average for the period - FHLB advances                   $31,387              $19,255
  Maximum during the period - total borrowings             $35,400              $38,250
Interest rates:
  Average for the period - Repos                             1.96%                4.90%
  Average for the period - FHLB advances                     4.27%                4.79%
  Average at period end - Repos                              ----                 1.93%
  Average at period end - FHLB advances                      4.17%                4.66%
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On June 20, 2000, the
Company&#146;s ESOP entered into an agreement with a correspondent bank to
establish a $1.0 million unsecured revolving line of credit with a variable rate
of prime plus 100 basis points and maturity of June 20, 2005. The loan is
guaranteed by the Company. Advances on the line totaled $709,000 at September
30, 2002. </FONT></P>

<P><font size=3><b><i>6. Trust Preferred Securities</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On July 16, 2001, the
Company&#146;s wholly owned special-purpose trust subsidiary, United Security
Bancshares Capital Trust I (the &#147;Trust&#148;) issued $15 million in
cumulative Trust Preferred Securities. The securities bear a floating rate of
interest of 3.75% over the six month LIBOR rate, payable semi-annually.
Concurrent with the issuance of the Trust Preferred Securities, the Trust used
the proceeds from the Trust Preferred Securities offering to purchase a like
amount of Junior Subordinated Debentures of the Company. The Subordinated
Debentures are the sole assets of the Trust and are eliminated, along with the
related income statement effects, in the consolidated financial statements. The
Company will pay interest on the Junior Subordinated Debentures to the Trust,
which represents the sole revenues and sole source of dividend distributions to
the holders of the Trust Preferred Securities. The Company has the right,
assuming no default has occurred, to defer payments of interest on the Junior
Subordinated Debentures at any time for a period not to exceed 20 consecutive
quarters. The Trust Preferred Securities will mature on July 25, 2031, but can
be redeemed after July 25, 2006 at a premium, and can be redeemed after July 25,
2011 at par. The obligations of the Trust are fully and unconditionally
guaranteed, on a subordinated basis, by the Company. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company received $14.5
million from the Trust upon issuance of the Junior Subordinated Debentures, of
which $13.7 million was contributed by the Company to the Bank to increase its
capital. Under applicable regulatory guidelines, a portion of the Trust
Preferred Securities will qualify as Tier I Capital, and the remainder as Tier
II Capital. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Issuance costs of $495,000
related to the Trust Preferred Securities have been deferred and will be
amortized over the 30-year life of the securities. Interest expense on the Trust
Preferred Securities totaled $669,000 and amortization expense totaled $12,000
for the nine months ended September 30, 2002. </FONT></P>

<P><font size=3><b><i>7. Regulatory Matters</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><u>Capital Guidelines</u> - The
Company (on a consolidated basis) and the Bank are subject to various regulatory
capital requirements adopted by the Board of Governors of the Federal Reserve
System (&#147;Board of Governors&#148;). Failure to meet minimum capital
requirements can initiate certain mandates and possible additional discretionary
actions by regulators that, if undertaken, could have a direct material effect
on the Company&#146;s consolidated financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company and the Bank must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities, and certain off-balance
sheet items as calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors. Prompt
corrective action provisions are not applicable to bank holding companies. </FONT></P>

<BR>

<p align=center><font size=3>11</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Quantitative measures
established by regulation to ensure capital adequacy require insured
institutions to maintain a minimum leverage ratio of Tier 1 capital (the sum of
common stockholders' equity, noncumulative perpetual preferred stock and
minority interests in consolidated subsidiaries, minus intangible assets,
identified losses and investments in certain subsidiaries, plus unrealized
losses or minus unrealized gains on available for sale securities) to total
assets. Institutions which have received the highest composite regulatory rating
and which are not experiencing or anticipating significant growth are required
to maintain a minimum leverage capital ratio of 3% Tier 1 capital to total
assets. All other institutions are required to maintain a minimum leverage
capital ratio of at least 100 to 200 basis points above the 3% minimum
requirement. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Board of Governors has
also adopted a statement of policy, supplementing its leverage capital ratio
requirements, which provides definitions of qualifying total capital (consisting
of Tier 1 capital and supplementary capital, including the allowance for loan
losses up to a maximum of 1.25% of risk-weighted assets) and sets forth minimum
risk-based capital ratios of capital to risk-weighted assets. Insured
institutions are required to maintain a ratio of qualifying total capital to
risk weighted assets of 8%, at least one-half of which must be in the form of
Tier 1 capital. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following table sets
forth the Company&#146;s and the Bank's actual capital positions at the periods
presented: </FONT></P>

<PRE>
                                               September 30,     December 31,     September 30,
                                                   2002              2001              2001
------------------------------------------------------------------------------------------------
Company:
  Total Capital (to Risk Weighted Assets)         12.24%            12.89%            14.75%
  Tier I Capital (to Risk Weighted Assets)        10.67%            10.82%            12.44%
  Tier I Capital (to Average Assets)               9.28%            10.20%            10.54%

Bank:
  Total Capital (to Risk Weighted Assets)         12.07%            12.48%            14.13%
  Tier I Capital (to Risk Weighted Assets)        10.84%            11.38%            12.90%
  Tier I Capital (to Average Assets)               9.39%            10.67%            10.90%
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As of September 30, 2002
and December 31, 2001, the most recent notifications from the Bank&#146;s
regulators categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well-capitalized,
the Bank must maintain minimum total capital and Tier 1 capital (as defined) to
risk-based assets (as defined), and a minimum leverage ratio of Tier 1 capital
to average assets (as defined) as set forth in the proceeding discussion. There
are no conditions or events since the notification that management believes have
changed the institution&#146;s category. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Under regulatory
guidelines, the $15 million in Trust Preferred Securities issued in July of 2001
will qualify as Tier 1 capital up to 25% of Tier 1 capital. Any additional
portion of Trust Preferred Securities will qualify as Tier 2 capital. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><u>Dividends</U> - Subsequent to
the Reorganization on June 12, 2001, dividends paid to shareholders have been
paid by the bank holding company, subject to restrictions set forth in the
California General Corporation Law. The primary source of funds with which
dividends will be paid to shareholders will come from cash dividends received by
the Company from the Bank. Year-to-date as of September 30, 2002, the Company
has received $3,085,000 in cash dividends from the Bank, from which the Company
has paid or declared $2,754,000 in dividends to shareholders. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Under California state
banking law, the Bank may not pay cash dividends in an amount which exceeds the
lesser of the retained earnings of the Bank or the Bank&#146;s net income for
the last three fiscal years (less the amount of distributions to shareholders
during that period of time). If the above test is not met, cash dividends may
only be paid with the prior approval of the California State Department of
Financial Institutions, in an amount not exceeding the greater of: (i) the
Bank&#146;s retained earnings; (ii) its net income for the last fiscal year; or
(iii) its net income for the current fiscal year. As of September 30, 2002,
approximately $7.8 million was available to the Bank for cash dividend
distributions without prior approval. Year-to-date, the Bank has paid dividends
of $3,085,000 to the Company. </FONT></P>

<BR>

<p align=center><font size=3>12</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><font size=3><b><i>8. Supplemental Cash Flow Disclosures</i></b></font></p>

<PRE>

                                                 Nine Months Ended September 30,
   (In thousands)                                   2002                2001
--------------------------------------------------------------------------------------
Cash paid during the period for:
  Interest                                         $8,291              $10,104
  Income Taxes                                      2,109                2,775
Noncash investing activities:
  Loans transferred to foreclosed property          5,030                2,734
  Dividends declared not paid                         711                  632
</PRE>

<P><font size=3><b><i>9. Net Income Per Share</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following table
provides a reconciliation of the numerator and the denominator of the basic EPS
computation with the numerator and the denominator of the diluted EPS
computation: </FONT></P>

<PRE>
                                                          Nine Months Ended September 30,
   (In thousands except earnings per share data)              2002               2001
----------------------------------------------------------------------------------------------
Net income available to common shareholders                  $5,312             $4,865

Weighted average shares issued                                5,442              5,507
   Less: unearned ESOP shares                                   (45)               (56)
                                                       ---------------------------------------
Weighted average shares outstanding                           5,397              5,451
   Add: dilutive effect of stock options                         91                126
                                                       ---------------------------------------
Weighted average shares outstanding
     adjusted for potential dilution                          5,488              5,577
                                                       =======================================
Basic earnings per share                                      $0.98              $0.89
                                                       =======================================
Diluted earnings per share                                    $0.97              $0.87
                                                       =======================================
</PRE>

<P><font size=3><b><i>10. Common Stock Repurchase Plan</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>During August 2001, the
Company&#146;s Board of Directors approved a plan to repurchase, as conditions
warrant, up to 280,000 shares of the Company&#146;s common stock on the open
market or in privately negotiated transactions. The duration of the program is
open-ended and the timing of the purchases will depend on market conditions.
During the nine months ended September 30, 2002, the Company repurchased 37,076
shares for a total of $625,000. During the year ended December 31, 2001, the
Company repurchased 115,786 shares for a total of $1.9 million. The repurchased
shares were subsequently retired. </FONT></P>

<P><font size=3><b><i>11. Income Taxes</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The effective tax rate for
the nine months ended September 30, 2002 was 29.7% as compared to 36.7% for the
nine months ended September 30, 2001 and 33.9% for the year ended December 31.
2001. The decline in the Company&#146;s effective tax rate during 2002, was
primarily the result of the formation of USB Investment Trust, Inc., as a
subsidiary of the Bank during January of 2002. The subsidiary was formed as a
special purpose real estate investment trust (&#147;REIT&#148;) under Maryland
law. </FONT></P>

<BR>

<p align=center><font size=3>13</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<a name="a0013"></a>
<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations</b>
</font></p>
<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><u>Overview</u></b></font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><i>Certain matters discussed
or incorporated by reference in this Quarterly Report of Form 10-Q are
forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those projected in the
forward-looking statements. Such risks and uncertainties include, but are not
limited to, those described in Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations. Therefore, the information set
forth therein should be carefully considered when evaluating the business
prospects of the Company. </i></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On June 12, 2001, the
United Security Bank (the &#147;Bank&#148;) became the wholly owned subsidiary
of United Security Bancshares, Inc. (the &#147;Company&#148;) through a tax free
holding company reorganization, accounted for on a basis similar to the pooling
of interest method. In the transaction, each share of Bank stock was exchanged
for a share of Company stock on a one-to-one basis. No additional equity was
issued as part of this transaction. In the following discussion, references to
the Bank are references to United Security Bank. References to the Company are
references to United Security Bancshares, Inc. (including the Bank), except for
periods prior to June 12, 2001, in which case, references to the Company are
references to the Bank. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On June 28, 2001, United
Security Bancshares Capital Trust I (the &#147;Trust&#148;) was formed as a
Delaware business trust for the sole purpose of issuing Trust Preferred
securities. On July 16, 2001, the Trust completed the issuance of $15 million in
Trust Preferred securities, and concurrently, the Trust used the proceeds from
that offering to purchase Junior Subordinated Debentures of the Company. The
Company subsequently contributed $13.7 million of the $14.5 million in net
proceeds received from the Trust to the Bank to increase its regulatory capital. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company continues to
seek ways to better meet its customers' needs for financial services, expand
into new markets and compete in today's financial services environment. The
Company's strategy is to be a better low-cost provider of services to its
customer base while enlarging its market area and corresponding customer base to
further its ability to provide those services. The Company currently has seven
banking branches, which provide financial services in Fresno and Madera
counties. </FONT></P>

<a name="a0014"></a>
<b><u>Results of Operations</u></b><BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>For the nine months ended
September 30, 2002, the Company reported net income of $5.312 million or $0.98
per share ($0.97 diluted) as compared to $4.865 million or $0.89 per share
($0.87 diluted) for the nine months ended September 30, 2001. The Company&#146;s
return on average assets was 1.45% for the nine months ended September 30, 2002
as compared to 1.69% for the same nine-month period of 2001. The Bank&#146;s
return on average equity was 18.68% for the nine months ended September 30, 2002
as compared to 18.22% for the same nine-month period of 2001. </FONT></P>

<b><i>Net Interest Income</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net interest income, the
most significant component of earnings, is the difference between the interest
and fees received on earning assets and the interest paid on interest-bearing
liabilities. Earning assets consist primarily of loans, and to a lesser extent,
investments in securities issued by federal, state and local authorities, and
corporations. These earning assets are funded by a combination of
interest-bearing and noninterest-bearing liabilities, primarily customer
deposits and short-term and long-term borrowings. Net interest income before
provision for credit losses totaled $13.2 million for the nine months ended
September 30, 2002, representing an increase of $277,000 or 2.1% when compared
to the $13.0 million reported for the same nine months of the previous year. The
increase in net interest income between 2001 and 2002 is primarily the result of
significant growth in earning assets, which was partially offset by decline in
market rates of interest between these two nine-month periods. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Bank's net interest
margin, as shown in Table 1, decreased to 3.96% at September 30, 2002 from 4.91%
at September 30, 2001, a decrease of 95 basis points (100 basis points = 1%)
between the two periods. Market rates of interest decreased significantly
between the nine-month periods ended September 30, 2001 and 2002. The prime rate
averaged 4.75% for the nine months ended September 30, 2002 as compared to 7.50%
for the comparative nine months of 2001. </FONT></P>

<BR>

<p align=center><font size=3>14</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<u>Table 1. - Distribution of Average Assets, Liabilities and Shareholders' Equity:</u><BR>
Interest rates and Interest Differentials<BR>
Periods Ended September 30, 2002 and 2001

<PRE>
                                          -----------------------------------------------------------------------------
                                                            2002                                 2001
                                          -----------------------------------------------------------------------------
     (dollars in thousands)                  Average                   Yield/      Average                  Yield/
                                             Balance      Interest      Rate       Balance     Interest      Rate
-----------------------------------------------------------------------------------------------------------------------
Assets:
Interest-earning assets:
  Loans (1)                                  $342,755     $18,367       7.16%     $287,428     $20,456       9.52%
  Investment Securities - taxable              79,128       2,685       4.54%       53,715       2,542       6.33%
  Investment Securities - nontaxable (2)        2,921         105       4.81%        3,321         118       4.75%
  Interest on deposits in other banks           1,467          37       3.37%            0           0       0.00%
  Federal funds sold  and reverse repos        20,242         259       1.71%        8,878         251       3.78%
                                          -----------------------------------------------------------------------------
    Total interest-earning assets             446,513     $21,453       6.42%      353,342     $23,367       8.84%
                                                         =====================                =========================
Allowance for possible loan losses             (5,134)                              (3,948)
Noninterest-bearing assets:
  Cash and due from banks                      17,342                               13,415
  Premises and equipment, net                   2,888                                3,298
  Accrued interest receivable                   2,983                                3,298
  Other real estate owned                       9,100                                3,762
  Other assets                                 15,360                               12,620
                                           -------------                        -------------
    Total average assets                     $489,052                             $385,787
                                           =============                        =============
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  NOW accounts                                $26,777        $161       0.80%      $24,044        $302       1.68%
  Money market accounts                        57,926         837       1.93%       43,626       1,238       3.79%
  Savings accounts                             19,747         129       0.87%       17,787         272       2.04%
  Time deposits                               219,298       5,353       3.26%      167,946       6,999       5.57%
  Other borrowings                             32,595       1,045       4.29%       34,879       1,343       5.15%
  Trust Preferred securities                   15,000         681       6.07%        4,231         243       7.68%
                                           ----------------------------------------------------------------------------
    Total interest-bearing liabilities        371,343      $8,206       2.95%      292,513     $10,397       4.75%
                                                          ====================                =========================
Noninterest-bearing liabilities:
  Noninterest-bearing checking                 77,137                               54,680
  Accrued interest payable                      1,113                                1,412
  Other liabilities                             1,446                                1,489
                                           -------------                         -------------
    Total Liabilities                         451,039                              350,094

Total shareholders' equity                     38,013                               35,693
                                           -------------                         -------------
    Total average liabilites and
       Shareholders' equity                  $489,052                             $385,787
                                           =============                         =============
Interest income as a percentage
    of average earning assets                                           6.42%                                8.84%
Interest expense as a percentage
    of average earning assets                                           2.46%                                3.93%
                                                                   -------------                         -------------
Net interest margin                                                     3.96%                                4.91%
                                                                   =============                         =============
</PRE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<td width=5% valign=top align=center><i>&nbsp;(1)</i></td>
<td width=90%><FONT FACE="times new roman, serif" SIZE=2>
<i>Loan amounts include nonaccrual loans, but the related interest income has been
included only if collected for the period prior to the loan being placed on a
nonaccrual basis. Loan interest income includes loan fees of approximately
$1,039,000 and $1,122,000 for the nine months ended September 30, 2002 and 2001,
respectively.</i></font></td>
<td width=5%>&nbsp;</td>
</tr>
<tr>
<td valign=top align=center><i>&nbsp;(2)</i></td>
<td><FONT FACE="times new roman, serif" SIZE=2>
<i>Applicable nontaxable securities yields have not been calculated on a
tax-equivalent basis because they are not material to the Company&#146;s results
of operations.</i></font></td>
<td>&nbsp;</td>
</tr>
</TABLE>

<BR>

<p align=center><font size=3>15</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Both the Company's net
interest income and net interest margin are affected by changes in the amount
and mix of interest-earning assets and interest-bearing liabilities, referred to
as &quot;volume change.&quot; Both are also affected by changes in yields on
interest-earning assets and rates paid on interest-bearing liabilities, referred
to as &quot;rate change&quot;. The following table sets forth the changes in
interest income and interest expense for each major category of interest-earning
asset and interest-bearing liability, and the amount of change attributable to
volume and rate changes for the periods indicated. </FONT></P>


<u>Table 2.  Rate and Volume Analysis</u>

<PRE>
                                                Increase (decrease) in the nine months ended
                                                  Sept 30, 2002 compared to Sept 30, 2001
                                               -----------------------------------------------
   (In thousands)                                   Total           Rate          Volume
----------------------------------------------------------------------------------------------
Increase (decrease) in interest income:
  Loans                                           $(2,089)        $(5,621)        $3,532
  Investment securities                               130            (845)           975
  Interest-bearing deposits in other banks             37              37              0
  Federal funds sold and securities purchased
    under agreements to resell                          8            (190)           198
                                               -----------------------------------------------
     Total interest income                         (1,914)         (6,619)         4,705

Increase (decrease) in interest expense:
  Interest-bearing demand accounts                   (542)           (866)           324
  Savings accounts                                   (143)           (170)            27
  Time deposits                                    (1,646)         (3,415)         1,769
  Other borrowings                                   (541)           (443)           (98)
  Trust Preferred securities                          681             681              0
                                               -----------------------------------------------
     Total interest expense                        (2,191)         (4,213)         2,022
                                               -----------------------------------------------
Increase in net interest income                      $277         $(2,426)        $2,703
                                               ===============================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>For the nine months ended
September 30, 2002, total interest income decreased approximately $1.9 million
or 8.2% as compared to the nine months ended September 30, 2001. The change is
attributable primarily to a substantial decrease in market rates of interest,
which was only partially offset by an increase in the overall volume of earning
assets. Earning asset growth was mostly in loans and, to a smaller degree, in
investment securities and federal funds sold. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>For the nine months ended
September 30, 2002, total interest expense decreased approximately $2.2 million
or 21.1% as compared to the nine-month period ended September 30, 2001. While
average interest-bearing liabilities increased by $78.8 million between the
nine-month periods ended September 30, 2002 and 2001, the average rate paid on
those liabilities declined by 180 basis points, which more than outweighed in
the increase in volume. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Provisions for credit
losses and the amount added to the allowance for credit losses is determined on
the basis of management's continuous credit review of the loan portfolio,
consideration of past loan loss experience, current and future economic
conditions, and other pertinent factors. Such factors consider the allowance for
credit losses to be adequate when it covers estimated losses inherent in the
loan portfolio. Based on the condition of the loan portfolio, management
believes the allowance is sufficient to cover risk elements in the loan
portfolio. For the nine months ending September 30, 2002 the provision to the
allowance for credit losses amounted to $1.2 million as compared to $1.3 million
for the nine months ended September 30, 2001. The amount provided to the
allowance for credit losses during the first nine months brought the allowance
to 1.52% of net outstanding loan balances at September 30, 2002, as compared to
1.33% of net outstanding loan balances at December 31, 2001, and 1.35% at
September 30, 2001. </FONT></P>

<b><i>Noninterest Income</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Noninterest income consists
primarily of fees and commissions earned on services that are provided to the
Company&#146;s banking customers. Noninterest income for the nine months ended
September 30, 2002 increased $499,000 when compared to the same period last
year. An increase in customer service fees accounted for $783,000 of the change
in noninterest income between the two nine-month periods presented, and is are
attributable to growth in checking service charges, as well as overdraft and ATM
fee income. Other noninterest income increased $529,000 between the two periods,
and was more than offset by declines in gains from sales of securities, other
real estate owned, and fixed assets. Of the increase in other noninterest
income, $252,000 is attributable to shared appreciation income on commercial
real estate and, $132,000 is attributable to OREO rental income realized during
2002. An additional $113,000 in income was realized during 2002, as the result
of the Company&#146;s investment in a title company during the later half of
2001. </FONT></P>

<BR>

<p align=center><font size=3>16</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<b><i>Noninterest Expense</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following table sets
forth the amount and percentage changes in the categories presented for the nine
months ended September 30, 2002 as compared to the nine months ended September
30, 2001: </FONT></P>

<u>Table 3. Changes in Noninterest Expense</u>

<pre>
   (In thousands)                               Amount            Percent
-------------------------------------------------------------------------------
Salaries and employee benefits                   $377              11.27%
Occupancy expense                                  36               2.81%
Data processing                                    17               4.21%
Professional fees                                 235              54.04%
Directors fees                                      2               1.23%
Amortization of intangibles                         0               0.00%
Correspondent bank service charges                 62               39.44%
Other                                             248               20.89%
                                            ------------------------------------
  Total change in noninterest expense            $977               13.51%
                                            ====================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Noninterest expense,
excluding provision for credit losses and income tax expense, totaled $8.2
million for the nine months ended September 30, 2002 as compared to $7.2 million
for the same nine-month period of 2001, representing an increase of $977,000 or
13.5% between the two periods. Increases in salaries and employee benefits were
the result of additional staff to support the Company&#146;s strategic long-term
growth objectives, as well as normal wage and benefit increases combined with
increased medical insurance costs incurred during the year. Professional fees
increased between the nine-month periods presented partially as the result of
additional expenses incurred during 2002 for legal fees associated with impaired
loans and costs of forming the Bank&#146;s REIT subsidiary. Increases of
$248,000 in other noninterest expense between the two periods, include
write-downs of foreclosed properties totaling $132,000. </FONT></P>

<a name="a0017"></a>
<b><u>Financial Condition</u></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Total assets increased to
$533.0 million at September 30, 2002, up from $425.0 million at the end of the
same period last year, and up from the balance of $450.9 million at December 31,
2001. Total deposits of $438.5 million at September 30, 2002 increased $104.0
million or 31.1% from the balance reported at September 30, 2001, and increased
$69.8 million or 19.0% from the balance of $368.7 million reported at December
31, 2001. Between December 31, 2001 and September 30, 2002, loan growth totaled
$27.4 million, while securities and other short-term investments increased $42.5
million. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Earning assets averaged
approximately $446.5 million during the nine months ended September 30, 2002, as
compared to $353.3 million for the same nine-month period of 2001. Average
interest-bearing liabilities increased to $371.3 million for the nine months
ended September 30, 2002, as compared to $292.5 million for the comparative
nine-month period of 2001. </FONT></P>

<b><i>Loans</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company's primary
business is that of acquiring deposits and making loans, with the loan portfolio
representing the largest and most important component of its earning assets.
Loans totaled $363.7 million at September 30, 2002, an increase of $27.4 million
or 8.2% when compared to the balance of $336.3 million at December 31, 2001, and
an increase of $40.0 million or 12.4% when compared to the balance of $323.7
million reported at September 30, 2001. Loans on average rose 19.2% between the
nine-month periods ended September 30, 2001 and September 30, 2002, with loans
averaging $342.8 million for the nine months ended September 30, 2002, as
compared to $287.4 million for the same nine-month period of 2001. </FONT></P>

<BR>

<p align=center><font size=3>17</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>During the first nine
months of 2002, increases were experienced in all loan categories except real
estate mortgage loans. The following table sets forth the amounts of loans
outstanding by category at September 30, 2002 and December 31, 2001, the
category percentages as of those dates, and the net change between the two
periods presented. </FONT></P>

<u>Table 4. Loans</u>

<PRE>
                                   September 30, 2002         December 31, 2001
                               ------------------------------------------------------------------------
                                   Dollar       % of        Dollar      % of        Net         %
   (In thousands)                  Amount       Loans       Amount      Loans      Change     Change
-------------------------------------------------------------------------------------------------------
Commercial and industrial        $108,200       29.7%     $102,280      30.4%      $5,920      5.79%
Real estate - mortgage            103,565       28.5%      111,425      33.1%      (7,860)    -7.05%
Real estate - construction        112,323       30.9%       92,764      27.6%      19,559     21.08%
Agricultural                       20,605        5.7%       12,987       3.9%       7,618     58.67%
Installment/other                   7,777        2.1%        6,647       2.0%       1,130     17.01%
Lease financing                    11,243        3.1%       10,184       3.0%       1,059     10.40%
                                -----------------------------------------------------------------------
Total Loans                      $363,713      100.0%     $336,287     100.0%     $27,426      8.16%
                                 ======================================================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The overall average yield
on the loan portfolio was 7.16% for the nine months ended September 30, 2002 as
compared to 9.52% for the nine months ended September 30, 2001, and decreased
between the two periods as the result of a significant decline in market rates
of interest between the two periods. At September 30, 2002, 63.9% of the
Company's loan portfolio consisted of floating rate instruments, as compared to
65.2% of the portfolio at December 31, 2001, with the majority of those tied to
the prime rate. </FONT></P>

<b><i>Deposits</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Total deposits increased
during the period to a balance of $438.5 million at September 30, 2002
representing an increase of $69.9 million or 19.0% from the balance of $368.7
million reported at December 31, 2001, and an increase of $104.0 million or
31.1% from the balance reported at September 30, 2001. During the first nine
months of 2002, increases were experienced in all deposit categories, with a
large portion of the increase being in time deposits. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The following table sets forth the amounts of deposits outstanding by category at September 30, 2002 and December 31, 2001, and
the net change between the two periods presented. </FONT></P>

<u>Table 5. Deposits</u>

<PRE>
                                       September 30,     December 31,         Net         Percentage
   (In thousands)                          2002              2001            Change         Change
-------------------------------------------------------------------------------------------------------
Noninterest bearing deposits             $85,130           $72,413          $12,717         17.56%
Interest bearing deposits:
  NOW and money market accounts           92,083            83,316            8,767         10.52%
  Savings accounts                        20,881            19,883              998          5.02%
  Time deposits:
    Under $100,000                        91,606            68,414           23,192         33.90%
    $100,000 and over                    148,826           124,625           24,201         19.42%
                                      -----------------------------------------------------------------
Total interest bearing deposits          353,396           296,238           57,158         19.29%
                                      -----------------------------------------------------------------
Total deposits                          $438,526          $368,651          $69,875         18.95%
                                      =================================================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company's deposit base
consists of two major components represented by noninterest-bearing (demand)
deposits and interest-bearing deposits. Interest-bearing deposits consist of
time certificates, NOW and money market accounts and savings deposits. Total
interest-bearing deposits increased $57.2 million or 19.3% between December 31,
2001 and September 30, 2002, and noninterest-bearing deposits increased $12.7
million or 17.6% between the same two periods presented. Core deposits,
consisting of all deposits other than time deposits of $100,000 or more, and
brokered deposits, continue to provide the foundation for the Company's
principal sources of funding and liquidity. These core deposits amounted to
65.6% and 65.5% of the total deposit portfolio at September 30, 2002 and
December 31, 2001, respectively. </FONT></P>

<BR>

<p align=center><font size=3>18</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On a year-to-date average
(refer to Table 1), the Company experienced an increase of $92.8 million or
30.1% in total deposits between the nine month periods ended September 30, 2001
and September 30, 2002. Between these two periods, average interest-bearing
deposits increased $70.3 million or 27.8%, while total noninterest-bearing
checking increased $22.5 million or 41.1% on a year-to-date average basis. </FONT></P>

<b><i>Short-term Borrowings</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company has the ability
to obtain borrowed funds consisting of federal funds purchased, securities sold
under agreements to repurchase (&#147;repurchase agreements&#148;) and Federal
Home Loan Bank (&#147;FHLB&#148;) advances as alternatives to retail deposit
funds. The Company has established collateralized and uncollateralized lines of
credit with several correspondent banks, as well as a securities dealer, for the
purpose of obtaining borrowed funds as needed. The Company may continue to
borrow funds in the future as part of its asset/liability strategy, and may use
these funds to acquire certain other assets as deemed appropriate by management
for investment purposes and to better utilize the capital resources of the Bank.
Federal funds purchased represent temporary overnight borrowings from
correspondent banks and are generally unsecured. Repurchase agreements are
collateralized by mortgage backed securities and securities of U.S. Government
agencies, and generally have maturities of one to six months, but may have
longer maturities if deemed appropriate as part of the Company&#146;s
asset/liability management strategy. FHLB advances are collateralized by all of
the Company&#146;s stock in the FHLB and certain qualifying mortgage loans. In
addition, the Company has the ability to obtain borrowings from the Federal
Reserve Bank of San Francisco, which would be collateralized by certain pledged
loans in the Company&#146;s loan portfolio. The lines of credit are subject to
periodic review of the Company&#146;s financial statements by the grantors of
the credit lines. Lines of credit may be modified or revoked at any time if the
grantors feel there are adverse trends in the Company&#146;s financial position. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company had
collateralized and uncollateralized lines of credit aggregating $163.9 million,
as well as FHLB lines of credit totaling $35.5 million at September 30, 2002.
These lines of credit generally have interest rates tied to the Federal Funds
rate or are indexed to short-term U.S. Treasury rates or LIBOR. FHLB advances
are collateralized by all of the Company&#146;s stock in the FHLB and certain
qualifying mortgage loans. All lines of credit are on an &#147;as
available&#148; basis and can be revoked by the grantor at any time. At
September 30, 2002, the Company had advances on the FHLB line of credit totaling
$35.4 million. The Company had collateralized and uncollateralized lines of
credit aggregating $119.6 million, as well as a repurchase agreement line of
credit of $5.3 million and FHLB lines of credit totaling $35.6 million at
December 31, 2001. The Company had repurchase agreements of $5.3 million and
FHLB advances of $22.2 million outstanding at December 31, 2001. </FONT></P>

<b><i>Asset Quality and Allowance for Credit Losses</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Lending money is the
Company's principal business activity, and ensuring appropriate evaluation,
diversification, and control of credit risks is a primary management
responsibility. Implicit in lending activities is the fact that losses will be
experienced and that the amount of such losses will vary from time to time,
depending on the risk characteristics of the loan portfolio as affected by local
economic conditions and the financial experience of borrowers. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The allowance for credit
losses is maintained at a level deemed appropriate by management to provide for
known and inherent risks in existing loans and commitments to extend credit. The
adequacy of the allowance for credit losses is based upon management's
continuing assessment of various factors affecting the collectibility of loans
and commitments to extend credit; including current economic conditions, past
credit experience, collateral, and concentrations of credit. There is no precise
method of predicting specific losses or amounts which may ultimately be charged
off on particular segments of the loan portfolio. The conclusion that a loan may
become uncollectible, either in part or in whole, is judgmental and subject to
economic, environmental, and other conditions which cannot be predicted with
certainty. When determining the adequacy of the allowance for credit losses, the
Company follows the guidelines set forth in the Interagency Policy Statement on
the Allowance for Loan and Lease Losses (&#147;Statement&#148;) issued jointly
by banking regulators during July 2001. The Statement outlines characteristics
that should be used in segmentation of the loan portfolio for purposes of the
analysis including risk classification, past due status, type of loan, industry
or collateral. It also outlines factors to consider when adjusting the loss
factors for various segments of the loan portfolio. Securities and Exchange
Commission Staff Accounting Bulletin No. 102 was also released at this time
which represents the SEC staff&#146;s view relating to methodologies and
supporting documentation for the Allowance for Loan and Lease Losses that should
be observed by all public companies in complying with the federal securities
laws and the Commission&#146;s interpretations. It is also generally consistent
with the guidance published by the banking regulators. </FONT></P>

<BR>

<p align=center><font size=3>19</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The Company&#146;s methodology for assessing the adequacy of the allowance for credit losses consists of several key elements, which
include:</FONT></P>

<ul>
<li>the formula allowance,<BR>
<li>specific allowances for problem graded loans ("classified loans")<BR>
<li>and the unallocated allowance
</ul>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In addition, the allowance
analysis also incorporates the results of measuring impaired loans as provided
in: </FONT></P>

<ul>
<li>Statement of Financial Accounting Standards ("SFAS") No. 114,<BR>
 "Accounting by Creditors for Impairment of a Loan" and<BR>
<li>SFAS 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures."
</ul>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The formula allowance is
calculated by applying loss factors to outstanding loans and certain unfunded
loan commitments. Loss factors are based on the Company&#146;s historical loss
experience and on the internal risk grade of those loans and, may be adjusted
for significant factors that, in management's judgment, affect the
collectability of the portfolio as of the evaluation date. Management determines
the loss factors for problem graded loans (substandard, doubtful, and loss),
special mention loans, and pass graded loans, based on a loss migration model.
The migration analysis incorporates loan losses over the past twelve quarters
(three years) and loss factors are adjusted to recognize and quantify the loss
exposure from changes in market conditions and trends in the Company&#146;s loan
portfolio. For purposes of this analysis, loans are grouped by internal risk
classifications which are &#147;pass&#148;, &#147;special mention&#148;,
&#147;substandard&#148;, &#147;doubtful&#148;, and &#147;loss&#148;. Certain
loans are homogenous in nature and are therefore pooled by risk grade. These
homogenous loans include consumer installment and home equity loans. Special
mention loans are currently performing but are potentially weak, as the borrower
has begun to exhibit deteriorating trends, which if not corrected, could
jeopardize repayment of the loan and result in further downgrade. Substandard
loans have well-defined weaknesses which, if not corrected, could jeopardize the
full satisfaction of the debt. A loan classified as &#147;doubtful&#148; has
critical weaknesses that make full collection of the obligation improbable.
Classified loans, as defined by the Company, include loans categorized as
substandard, doubtful, and loss. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Specific allowances are
established based on management&#146;s periodic evaluation of loss exposure
inherent in classified loans, impaired loans, and other loans in which
management believes there is a probability that a loss has been incurred in
excess of the amount determined by the application of the formula allowance. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The unallocated portion of
the allowance is based upon management&#146;s evaluation of various conditions
that are not directly measured in the determination of the formula and specific
allowances. The conditions may include, but are not limited to, general economic
and business conditions affecting the key lending areas of the Company, credit
quality trends, collateral values, loan volumes and concentrations, and other
business conditions. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s
methodology includes features that are intended to reduce the difference between
estimated and actual losses. The specific allowance portion of the analysis is
designed to be self-correcting by taking into account the current loan loss
experience based on that portion of the portfolio. By analyzing the probable
estimated losses inherent in the loan portfolio on a quarterly basis, management
is able to adjust specific and inherent loss estimates using the most recent
information available. In performing the periodic migration analysis, management
believes that historical loss factors used in the computation of the formula
allowance need to be adjusted to reflect current changes in market conditions
and trends in the Company&#146;s loan portfolio. There are a number of other
factors which are reviewed when determining adjustments in the historical loss
factors. They include 1) trends in delinquent and nonaccrual loans, 2) trends in
loan volume and terms, 3) effects of changes in lending policies, 4)
concentrations of credit, 5) competition, 6) national and local economic trends
and conditions, 7) experience of lending staff, 8) loan review and Board of
Directors oversight, and 9) other business conditions. During the first nine
months of 2002, there were no changes in estimation methods or assumptions that
affected the methodology for assessing the adequacy of the allowance for credit
losses. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Management and the
Company&#146;s lending officers evaluate the loss exposure of classified and
impaired loans on a weekly/monthly basis and through discussions and officer
meetings as conditions change. The Company&#146;s Loan Committee meets weekly
and serves as a forum to discuss specific problem assets that pose significant
concerns to the Company, and to keep the Board of Directors informed through
committee minutes. All special mention and classified loans are reported
quarterly on Criticized Asset Reports which are reviewed by senior management.
With this information, the migration analysis and the impaired loan analysis are
performed on a quarterly basis and adjustments are made to the allowance as
deemed necessary. </FONT></P>

<BR>

<p align=center><font size=3>20</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Impaired loans are measured
based on the present value of the expected future cash flows discounted at the
loan's effective interest rate or the fair value of the collateral if the loan
is collateral dependent. The amount of impaired loans is not directly comparable
to the amount of nonperforming loans disclosed later in this section. The
primary differences between impaired loans and nonperforming loans are: i) all
loan categories are considered in determining nonperforming loans while impaired
loan recognition is limited to commercial and industrial loans, commercial and
residential real estate loans, construction loans, and agricultural loans, and
ii) impaired loan recognition considers not only loans 90 days or more past due,
restructured loans and nonaccrual loans but also may include problem loans other
than delinquent loans. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company considers a
loan to be impaired when, based upon current information and events, it believes
it is probable the Company will be unable to collect all amounts due according
to the contractual terms of the loan agreement. Impaired loans include
nonaccrual loans, restructured debt, and performing loans in which full payment
of principal or interest is not expected. Management bases the measurement of
these impaired loans on the fair value of the loan's collateral or the expected
cash flows on the loans discounted at the loan's stated interest rates. Cash
receipts on impaired loans not performing to contractual terms and that are on
nonaccrual status are used to reduce principal balances. Impairment losses are
included in the allowance for credit losses through a charge to the provision,
if applicable. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>At September 30, 2002 and
2001, the Company's recorded investment in loans for which impairment has been
recognized totaled $14.4 million and $5.6 million, respectively. Included in
total impaired loans at September 30, 2002, is $8.6 million of impaired loans
for which the related specific allowance is $1,352,000, as well as $5.9 million
of impaired loans that as a result of write-downs or the fair value of the
collateral, did not have a specific allowance. Total impaired loans at September
30, 2001 included $3.2 million of impaired loans for which the related specific
allowance is $545,000, as well as $2.5 million of impaired loans that as a
result of write-downs or the fair value of the collateral, did not have a
specific allowance. The average recorded investment in impaired loans was $10.2
million during the first nine months of 2002 and $3.4 million during the first
nine months of 2001. In most cases, the Bank uses the cash basis method of
income recognition for impaired loans. In the case of certain troubled debt
restructuring for which the loan is performing under the current contractual
terms, income is recognized under the accrual method. For the nine months ended
September 30, 2002, the Bank recognized no income on such loans. For the nine
months ended September 30, 2001, the Bank recognized $12,000 of income on such
loans. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Other factors that continue
to gain management&#146;s attention are competition in the Company&#146;s market
area and economic conditions, which may ultimately affect the risk assessment of
the portfolio. The Company has experienced increased competition from major
banks, local independents and non-bank institutions creating pressure on loan
pricing. After the Federal Reserve raised interest rates 75 basis points during
1999 and an additional 100 basis points by mid-2000, the domestic economy began
to slow in the third quarter, and stall during the fourth quarter of 2000. As a
result, the Federal Reserve began to cut interest rates in the first week of
January 2001, and by December 31, 2001, had reduced interest rates by an
unprecedented 475 basis points. We have gone from what was possibly considered
the longest economic expansion in recent U.S. history, to what many refer to as
a mild recession in a relatively short period of time, with increasing energy
costs, declining consumer confidence, and job layoffs at major corporations
across the country. Add to this, corporate accounting scandals, as well as
expanding conflict in the Middle East, and it is difficult to determine what
continued impact these changes will have on consumer confidence and the domestic
economy or whether the Federal Reserve will continue to adjust interest rates in
an effort to control the economy. It is likely that the business environment in
California will continue to be influenced by these domestic as well as global
events, although the overall economy of California has generally improved over
the past several years. San Francisco, the Silicon Valley, and adjacent areas
continue to feel the effect of the high-tech decline as occupancy rates drop,
along with rental rates of available commercial office space. Occupancy rates
for commercial real estate in other parts of the state may also suffer as a
result of the drag on the economy. The local economy has been impacted to some
degree over the past several years by such things as decreased exports and
adverse weather patterns, which has increased worries about the future economic
trends in the state. Local unemployment rates, as well as foreclosures in Fresno
and Madera counties have increased during the past several years and persist to
the current time. Despite the Central Valley's traditionally high unemployment,
it is anticipated that the Central San Joaquin Valley will continue to grow and
diversify as property and housing costs remain reasonable relative to other
areas of the state, although this growth may begin to slow as the Federal
Reserve seeks to control what it perceives as potential weakness in the economy.
Management recognizes increased risk of loss due to the Company's exposure from
local and worldwide economic conditions, as well as soft real estate markets,
and takes these factors into consideration when analyzing the adequacy of the
allowance for credit losses. </FONT></P>

<BR>

<p align=center><font size=3>21</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following table
provides a summary of the Company's allowance for possible credit losses,
provisions made to that allowance, and charge-off and recovery activity
affecting the allowance for the periods indicated. </FONT></P>

<u>Table 6. Allowance for Credit Losses - Summary of Activity (unaudited)</u>

<PRE>
                                                          September 30,     September 30,
  (In thousands)                                              2002              2001
--------------------------------------------------------------------------------------------
Total loans outstanding at end of period before
  deducting allowances for credit losses                    $363,370         $323,043
                                                        ====================================
Average net loans outstanding during period                  342,755          287,428
                                                        ====================================

Balance of allowance at beginning of period                    4,457            3,773
Loans charged off:
  Real estate                                                      0                0
  Commercial and industrial                                     (125)            (671)
  Installment and other                                          (27)             (26)
                                                        ------------------------------------
     Total loans charged off                                    (152)            (697)

Recoveries of loans previously charged off:
  Real estate                                                      0                0
  Commercial and industrial                                       28               18
  Installment and other                                            1                0
                                                        ------------------------------------
     Total loan recoveries                                        29               18
                                                        ------------------------------------
Net loans charged off                                           (123)            (679)

Provision charged to operating expense                         1,189            1,268
Balance of allowance for credit losses
  at end of period                                            $5,523           $4,362
                                                        ====================================

Net loan charge-offs to
   total average loans (annualized)                            0.05%            0.32%
Net loan charge-offs to
   loans at end of period (annualized)                         0.05%            0.28%
Allowance for credit losses to
   total loans at end of period                                1.52%            1.35%
Net loan charge-offs to
   allowance for credit losses (annualized)                    2.98%           20.81%
Net loan charge-offs to
   provision for credit losses (annualized)                   10.34%           53.55%
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Management believes that
the 1.52% credit loss allowance at September 30, 2002 is adequate to absorb
known and inherent risks in the loan portfolio. No assurance can be given,
however, that the economic conditions which may adversely affect the Company's
service areas or other circumstances will not be reflected in increased losses
in the loan portfolio. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>It is the Company's policy
to discontinue the accrual of interest income on loans for which reasonable
doubt exists with respect to the timely collectability of interest or principal
due to the ability of the borrower to comply with the terms of the loan
agreement. Such loans are placed on nonaccrual status whenever the payment of
principal or interest is 90 days past due or earlier when the conditions
warrant, and interest collected is thereafter credited to principal to the
extent necessary to eliminate doubt as to the collectability of the net carrying
amount of the loan. Management may grant exceptions to this policy if the loans
are well secured and in the process of collection. </FONT></P>

<u>Table 7. Nonperforming Assets</u>

<pre>
                                                     September 30,        December 31,
   (In thousands)                                        2002                2001
-----------------------------------------------------------------------------------------
Nonaccrual Loans (1)                                   $14,163             $13,019
Restructured Loans                                           0                   0
                                                     ------------------------------------
   Total nonperforming loans                            14,163              13,019
Other real estate owned                                  9,428               5,390
                                                     ------------------------------------
   Total nonperforming assets                          $23,591             $18,409
                                                     ====================================

Loans past due 90 days or more, still accruing              $0                  $0
                                                     ====================================
Nonperforming loans to total gross loans                 3.89%                3.87%
                                                     ====================================
Nonperforming assets to total gross loans                6.49%                5.47%
                                                     ====================================
</PRE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<td width=5% valign=top align=center><i>&nbsp;(1)</i></td>
<td width=90%><FONT FACE="times new roman, serif" SIZE=2>
<i>Included in nonaccrual loans at September 30, 2002 and December 31, 2001, are
restructured loans totaling $25,900 and $42,700, respectively.</i></font></td>
<td width=5%>&nbsp;</td>
</tr>
</table>

<BR>

<p align=center><font size=3>22</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Loans past due more than 30
days are receiving increased management attention and are monitored for
increased risk. The Company continues to move past due loans to nonaccrual
status in its ongoing effort to recognize loan problems at an earlier point in
time when they may be dealt with more effectively. As impaired loans, nonaccrual
and restructured loans are reviewed for specific reserve allocations and the
allowance for credit losses is adjusted accordingly. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Except for the loans
included in the above table, or those otherwise included in the impaired loan
totals, there were no loans at September 30, 2002 where the known credit
problems of a borrower caused the Company to have serious doubts as to the
ability of such borrower to comply with the present loan repayment terms and
which would result in such loan being included as a nonaccrual, past due or
restructured loan at some future date. </FONT></P>

<a name="a0023"></a>
<b><u>Liquidity and Asset/Liability Management</u></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The primary function of
asset/liability management is to provide adequate liquidity and maintain an
appropriate balance between interest-sensitive assets and interest-sensitive
liabilities. </FONT></P>

<b><i>Liquidity</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Liquidity management may be
described as the ability to maintain sufficient cash flows to fulfill financial
obligations, including loan funding commitments and customer deposit
withdrawals, without straining the Company&#146;s equity structure. To maintain
an adequate liquidity position, the Company relies on, in addition to cash and
cash equivalents, cash inflows from deposits and short-term borrowings,
repayments of principal on loans and investments, and interest income received.
The Company's principal cash outflows are for loan origination, purchases of
investment securities, depositor withdrawals and payment of operating expenses. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company continues to
emphasize liability management as part of its overall asset/liability strategy.
Through the discretionary acquisition of short term borrowings, the Company has
been able to provide liquidity to fund asset growth while, at the same time,
better utilizing its capital resources, and better controlling interest rate
risk. The borrowings are generally short-term and more closely match the
repricing characteristics of floating rate loans, which comprise approximately
63.9% of the Company&#146;s loan portfolio at September 30, 2002. This does not
preclude the Company from selling assets such as investment securities to fund
liquidity needs but, with favorable borrowing rates, the Company has maintained
a positive yield spread between borrowed liabilities and the assets which those
liabilities fund. If, at some time, rate spreads become unfavorable, the Company
has the ability to utilize an asset management approach and, either control
asset growth or, fund further growth with maturities or sales of investment
securities. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company's liquid asset
base which generally consists of cash and due from banks, federal funds sold,
securities purchased under agreements to resell (&#147;reverse repos&#148;) and
investment securities, is maintained at a level deemed sufficient to provide the
cash outlay necessary to fund loan growth as well as any customer deposit runoff
that may occur. Within this framework is the objective of maximizing the yield
on earning assets. This is generally achieved by maintaining a high percentage
of earning assets in loans, which historically have represented the Company's
highest yielding asset. At September 30, 2002, the Bank had 67.1% of total
assets in the loan portfolio and a loan to deposit ratio of 82.8%. Liquid assets
at September 30, 2002 include cash and cash equivalents totaling $29.1 million
as compared to $29.3 million at December 31, 2001. Other sources of liquidity
include collateralized and uncollateralized lines of credit from other banks,
the Federal Home Loan Bank, and from the Federal Reserve Bank totaling $199.4
million at September 30, 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The liquidity of the parent
company, United Security Bancshares, is primarily dependent on the payment of
cash dividends by its subsidiary, United Security Bank, subject to limitations
imposed by the Financial Code of the State of California. During 2002, total
dividends paid by the Bank to the parent company totaled $3.085 million dollars.
As a bank holding company formed under the Bank Holding Act of 1956, United
Security Bancshares is to provide a source of financial strength for its
subsidiary bank(s). To help provide financial strength, United Security
Bancshares&#146; trust subsidiary, United Security Bancshares Capital Trust I,
completed a $15 million offering in Trust Preferred Securities during July 2001,
the proceeds of which were used to purchase Junior Subordinated Debentures of
the Company. Of the $14.5 million in net proceeds received by the Company, $13.7
million was used to enhance the liquidity and capital positions of the Bank. </FONT></P>

<BR>

<p align=center><font size=3>23</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">


<a name="a0024"></a>
<B><U>Regulatory Matters</u></b>
<BR><BR>
<b><i>Capital Adequacy</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Capital adequacy for bank
holding companies and their subsidiary banks has become increasingly important
in recent years. Continued deregulation of the banking industry since the 1980's
has resulted in, among other things, a broadening of business activities beyond
that of traditional banking products and services. Because of this volatility
within the banking and financial services industry, regulatory agencies have
increased their focus upon ensuring that banking institutions meet certain
capital requirements as a means of protecting depositors and investors against
such volatility. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>During July 2001, the
Company completed an offering of Trust Preferred Securities in an aggregate
amount of $15.0 million to enhance its regulatory base, while providing
additional liquidity. Subsequent to the completion of the offering, the Company
contributed $13.7 million of that offering to the Bank to enhance its capital
position. Under applicable regulatory guidelines, the Trust Preferred Securities
qualify as Tier I capital up to a maximum of 25% of Tier I capital. Any
additional portion will qualify as Tier 2 capital. As shareholders&#146; equity
increases the amount of Tier I capital that can be comprised of Trust Preferred
Securities will increase. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Board of Governors of
the Federal Reserve System (&#147;Board of Governors&#148;) has adopted
regulations requiring insured institutions to maintain a minimum leverage ratio
of Tier 1 capital (the sum of common stockholders' equity, noncumulative
perpetual preferred stock and minority interests in consolidated subsidiaries,
minus intangible assets, identified losses and investments in certain
subsidiaries, plus unrealized losses or minus unrealized gains on available for
sale securities) to total assets. Institutions which have received the highest
composite regulatory rating and which are not experiencing or anticipating
significant growth are required to maintain a minimum leverage capital ratio of
3% Tier 1 capital to total assets. All other institutions are required to
maintain a minimum leverage capital ratio of at least 100 to 200 basis points
above the 3% minimum requirement. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Board of Governors has
also adopted a statement of policy, supplementing its leverage capital ratio
requirements, which provides definitions of qualifying total capital (consisting
of Tier 1 capital and Tier 2 supplementary capital, including the allowance for
loan losses up to a maximum of 1.25% of risk-weighted assets) and sets forth
minimum risk-based capital ratios of capital to risk-weighted assets. Insured
institutions are required to maintain a ratio of qualifying total capital to
risk weighted assets of 8%, at least one-half (4%) of which must be in the form
of Tier 1 capital. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following table sets
forth the Company&#146;s and the Bank's actual capital positions at September
30, 2002 and the minimum capital requirements for both under the regulatory
guidelines discussed above: </FONT></P>

<u>Table 9. Capital Ratios</u>

<pre>
                                                       Company            Bank
                                                        Actual           Actual             Minimum
                                                    Capital Ratios    Capital Ratios     Capital Ratios
                                                  -------------------------------------------------------
Total risk-based capital ratio                          12.24%            12.07%             8.00%
Tier 1 capital to risk-weighted assets                  10.67%            10.84%             4.00%
Leverage ratio                                           9.28%             9.39%             3.00%
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As is indicated by the
above table, the Company and the Bank exceeded all applicable regulatory capital
guidelines at September 30, 2002. Management believes that, under the current
regulations, both will continue to meet their minimum capital requirements in
the foreseeable future. </FONT></P>

<b><i>Dividends</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Dividends paid to
shareholders by the Company are subject to restrictions set forth in the
California General Corporation Law. The California General Corporation Law
provides that a corporation may make a distribution to its shareholders if
retained earnings immediately prior to the dividend payout are at least equal
the amount of the proposed distribution. The primary source of funds with which
dividends will be paid to shareholders is from cash dividends received by the
Company from the Bank. During 2002, the Company has received $3.085 million in
cash dividends from the Bank, from which the Company declared or paid $2.754
million in dividends to shareholders. </FONT></P>

<BR>

<p align=center><font size=3>24</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Bank as a
state-chartered bank is subject to dividend restrictions set forth in California
state banking law, and administered by the California Commissioner of Financial
Institutions (&#147;Commissioner&#148;). Under such restrictions, the Bank may
not pay cash dividends in an amount which exceeds the lesser of the retained
earnings of the Bank or the Bank&#146;s net income for the last three fiscal
years (less the amount of distributions to shareholders during that period of
time). If the above test is not met, cash dividends may only be paid with the
prior approval of the Commissioner, in an amount not exceeding the Bank&#146;s
net income for its last fiscal year or the amount of its net income for the
current fiscal year. This is not the case with the Bank. Year-to-date dividends
of $3.085 million paid to the Company through September 30, 2002 were well
within the maximum allowed under those regulatory guidelines, without approval
of the Commissioner. </FONT></P>

<b><i>Reserve Balances</i></b>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Bank is required to
maintain average reserve balances with the Federal Reserve Bank. At September
30, 2002 the Bank's qualifying balance with the Federal Reserve was
approximately $6.3 million, consisting of vault cash and balances. </FONT></P>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p align=center><font size=3>25</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<a name="a0026"></a>
<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 3. Quantitative and Qualitative Disclosures about Market Risk</b>
</font></p>
<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Interest Rate Sensitivity and Market Risk</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>An interest rate-sensitive
asset or liability is one that, within a defined time period, either matures or
is subject to interest rate adjustments as market rates of interest change.
Interest rate sensitivity is the measure of the volatility of earnings from
movements in market rates of interest, which is generally reflected in interest
rate spread. As interest rates change in the market place, yields earned on
assets do not necessarily move in tandem with interest rates paid on
liabilities. Interest rate sensitivity is related to liquidity in that each is
affected by maturing assets and sources of funds. Interest rate sensitivity is
also affected by assets and liabilities with interest rates that are subject to
change prior to maturity. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The object of interest rate
sensitivity management is to minimize the impact on earnings from interest rate
changes in the marketplace. In recent years, deregulation, causing liabilities
to become more interest rate sensitive, combined with interest rate volatility
in the capital markets, has placed additional emphasis on this principal. When
management decides to maintain repricing imbalances, it usually does so on the
basis of a well- conceived strategy designed to ensure that the risk is not
excessive and that liquidity is properly maintained. The Company's interest rate
risk management is the responsibility of the Asset/Liability Management
Committee (ALCO) which reports to the Board of Directors on a periodic basis,
pursuant to established operating policies and procedures. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company's
asset/liability profile is not complex. The Company does not currently engage in
trading activities or use derivatives to control interest rate risk, although it
has the ability to do so if deemed necessary by ALCO and approved by the Board
of Directors. From the &#147;Gap&#148; report below, the Company is apparently
subject to interest rate risk to the extent that its liabilities have the
potential to reprice more quickly than its assets within the next year. At
September 30, 2002, the Company had a cumulative 12 month Gap of $-4.2 million
or -0.9% of total earning assets. Management believes the Gap analysis shown
below is not entirely indicative of the Company&#146;s actual interest rate
sensitivity, because certain interest-sensitive liabilities would not reprice to
the same degree as interest-sensitive assets. For example, if the prime rate
were to change by 50 basis points, the floating rate loans included in the
$212.6 million immediately adjustable category would change by the full 50 basis
points. Interest bearing checking and savings accounts which are also included
in the immediately adjustable column probably would move only a portion of the
50 basis point rate change and, in fact, might not even move at all. In
addition, many of the floating rate time deposits are at their floors, or have
repricing rates below their current floors, which means that they might act as
fixed-rate instruments in either a rising or a declining rate environment (see
below for a discussion of the Bank&#146;s floating rate time deposits). The
effects of market value risk have been mitigated to some degree by the makeup of
the Bank's balance sheet. Loans are generally short-term or are floating-rate
instruments. At September 30, 2002, $287.4 million or 82.2% of the loan
portfolio matures or reprices within one year, and only 2.6% of the portfolio
matures or reprices in more than 5 years. Total investment securities including
call options and prepayment assumptions, have a combined duration of
approximately 1.9 years. Nearly $367.6 million or 90.9% of interest-bearing
deposit liabilities mature or can be repriced within the next 12 months, even
though the rate elasticity of deposits with no defined maturities may not
necessarily be the same as interest-earning assets. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Since May of 1994, the Bank
has offered a two-year floating rate certificate of deposit product to its
customers which adjusts with changes in the Prime Rate, but which has an
interest rate floor below which the rate paid cannot drop. The current rates
below which the rates on this product cannot drop range from 1.50% to 6.50%,
with approximately $3.0 million or 32.0% of those at, or above, a 6.00% floor.
With the significant decrease in market rates of interest during 2001, all $9.3
million of the floating-rate CD&#146;s are at their floors making them
fixed-rate instruments in a declining rate environment. In addition, $7.6
million of the CD&#146;s have repricing rates below their current floors, and
would behave as fixed rate instruments even in a rising rate environment. In
fact, $7.1 million or 76.8% of them would remain fixed rate instruments even if
the prime rate were to increase 200 BP or less, $5.6 million or 60.0% would
remain fixed rate instruments even if the prime rate were to increase 300 BP or
less, and $3.0 million or 32.0% of them would remain fixed rate instruments even
if the prime rate were to increase 400 BP or less. Of the $5.6 million in the
two-year floating rate certificates of deposit which would behave as fixed rate
instruments if rates were to increase or decrease 300 basis points,
approximately $2.4 million matures in three months or less, and approximately
$3.2 million matures in between four and nine months. This $5.6 million in
two-year floating rate certificates of deposit has been treated as fixed-rate
instruments for the purpose of the following Gap report. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Interest rate risk can be
measured through various methods including Gap, duration and market value
analysis as well as income simulation models. The Company employs each of these
methods and refines these processes to make the most accurate measurements
possible. The information provided by these calculations is the basis for
management decisions in managing interest rate risk.</FONT></P>

<BR>

<p align=center><font size=3>26</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The following table sets forth the Company's Gap, or estimated interest rate sensitivity profile based on
ending balances as of September 30, 2002, representing the interval of time
before earning assets and interest-bearing liabilities may respond to changes in
market rates of interest. Assets and liabilities are categorized by remaining
interest rate maturities rather than by principal maturities of obligations.
$5.6 million in two-year, floating rate time deposits which would behave as
fixed rate instruments if rates were to increase or decrease 300 basis points,
and have therefore been treated as fixed rate instruments for purposes of this
Gap report. </FONT></P>

<u>Table 8. Maturities and Interest Rate Sensitivity</u><BR>
 &nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)

<PRE>
                                                                     September 30,2002
                                       ----------------------------------------------------------------------------
                                                                After Three   After One
                                                   Next Day But    Months     Year But      After
                                                   Within Three  Within 12   Within Five     Five
   (In thousands)                      Immediately    Months       Months       Years       Years        Total
-------------------------------------------------------------------------------------------------------------------
Interest Rate Sensitivity Gap:
 Loans (1)                              $212,595      $36,199      $38,596     $53,036       $9,124     $349,550
 Investment securities                                 57,124        8,876      46,066        4,176      116,242
 Interest-bearing deposits in
  other banks                                                        7,012                                 7,012
 Federal funds sold and reverse repos      2,950                                                           2,950
                                       ----------------------------------------------------------------------------
     Total earning assets               $215,545      $93,323      $54,484     $99,102      $13,300     $475,754
                                       ============================================================================
Interest-bearing
  transaction accounts                   $92,083                                                         $92,083
  Savings accounts                        20,881                                                          20,881
  Time deposits  (2)                       4,598      107,935       99,947      27,941           11      240,432
  Federal funds purchased/other
    borrowings                               709       26,400                    9,000                    36,109
Trust Preferred securities                                          15,000                                15,000
                                       ----------------------------------------------------------------------------
 Total interest-bearing liabilities     $118,271     $134,335     $114,947     $36,941          $11     $404,505
                                       ============================================================================

Interest rate sensitivity gap            $97,274     $(41,012)   $(60,463)     $62,161      $13,289      $71,249
Cumulative gap                           $97,274      $56,262     $(4,201)     $57,960      $71,249
Cumulative gap percentage to
  total earning assets                    20.4%        11.8%        -0.9%       12.2%        15.0%
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>
(1) Loan balance does not include nonaccrual loans of $14.163 million.<BR>
(2) See above for discussion of the impact of floating rate CD's.</i></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company utilizes a
vendor-purchased simulation model to analyze net interest income sensitivity to
movements in interest rates. The simulation model projects net interest income
based on both a 100 and 200 basis point rise and a 100 and 200 basis point fall
in interest rates ramped over a twelve month period, with net interest impacts
projected out as far as twenty four months. The model is based on the actual
maturity and repricing characteristics of the Company's interest-sensitive
assets and liabilities. The model incorporates assumptions regarding the impact
of changing interest rates on the prepayment of certain assets and liabilities.
Projected net interest income is calculated assuming customers will reinvest
maturing deposit accounts and the Company will originate a certain amount of new
loans. The balance sheet growth assumptions utilized correspond closely to the
Company's strategic growth plans and annual budget. Excess cash is invested in
overnight funds or other short-term investments such as U.S. Treasuries. Cash
shortfalls are covered through additional borrowing of overnight or short-term
funds. The Board of Directors has adopted an interest rate risk policy which
establishes maximum decreases in net interest income of 12% and 15% in the event
of a 100 BP and 200 BP increase or decrease in market interest rates over a
twelve month period. Based on the information and assumptions utilized in the
simulation model at September 30, 2002, the resultant projected impact on net
interest income falls within policy limits set by the Board of Directors for all
rate scenarios run. </FONT></P>

<BR><BR><BR><BR><BR><BR>

<p align=center><font size=3>27</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company also utilizes
the same vendor-purchased simulation model to project the impact of changes in
interest rates on the underlying market value of all the Company's assets,
liabilities, and off-balance sheet accounts under alternative interest rate
scenarios. The resultant net value, as impacted under each projected interest
rate scenario, is referred to as the market value of equity (&quot;MV of
Equity&quot;). This technique captures the interest rate risk of the Company's
business mix across all maturities. The market analysis is performed using an
immediate rate shock of 200 basis points up and down calculating the present
value of expected cash flows under each rate environment at applicable discount
rates. The market value of loans is calculated by discounting the expected
future cash flows over either the term to maturity for fixed rate loans or
scheduled repricing for floating rate loans using the current rate at which
similar loans would be made to borrowers with similar credit ratings. The market
value of investment securities is based on quoted market prices obtained from
reliable independent brokers. The market value of time deposits is calculated by
discounting the expected cash flows using current rates for similar instruments
of comparable maturities. The market value of deposits with no defined
maturites, including interest-bearing checking, money market and savings
accounts is calculated by discounting the expected cash flows at a rate equal to
the difference between the cost of these deposits and the alternate use of the
funds, federal funds in this case. Assumed maturities for these deposits are
estimated using decay analysis and are generally assumed to have implied
maturities of less than five years. For noninterest sensitive assets and
liabilities, the market value is equal to their carrying value amounts at the
reporting date. The Company's interest rate risk policy establishes maximum
decreases in the Company's market value of equity of 12% and 15% in the event of
an immediate and sustained 100 BP and 200 BP increase or decrease in market
interest rates. As shown in the table below, the percentage changes in the net
market value of the Company's equity are within policy limits for both rising
and falling rate scenarios. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following sets forth
the analysis of the Company's market value risk inherent in its
interest-sensitive financial instruments as they relate to the entire balance
sheet at September 30, 2002 and December 31, 2001 ($ in thousands). Fair value
estimates are subjective in nature and involve uncertainties and significant
judgment and, therefore, cannot be determined with absolute precision.
Assumptions have been made as to the appropriate discount rates, prepayment
speeds, expected cash flows and other variables. Changes in these assumptions
significantly affect the estimates and as such, the obtained fair value may not
be indicative of the value negotiated in the actual sale or liquidation of such
financial instruments, nor comparable to that reported by other financial
institutions. In addition, fair value estimates are based on existing financial
instruments without attempting to estimate future business. </FONT></P>

<PRE>
                               September 30, 2002                           December 31, 2001
                    ------------------------------------------  -------------------------------------------
                     Estimated    Change in      Change in         Estimated    Change in      Change in
    Change in            MV           MV             MV                MV           MV            MV
      Rates          of Equity    of Equity $    of Equity $        of Equity   of Equity $    of Equity %
--------------------------------------------------------------  -------------------------------------------
    + 200 BP          $37,944      $(989)          -2.54%           $33,884      ($1,768)       -4.96%
    + 100 BP           39,070        137            0.35%            35,206         (446)       -1.25%
        0 BP           38,933          0            0.00%            35,62             0         0.00%
    - 100 BP           37,996       (937)          -2.41%           35,478          (174)       -0.49%
    - 200 BP           39,155        222            0.57%           34,717          (935)       -2.62%
</PRE>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p align=center><font size=3>28</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<a name="a0029"></a>
<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 4. Controls and Procedures</b>
</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(a) Evaluation of
Disclosure Controls and Procedures: An evaluation of the Company's disclosure
controls and procedures (as defined in Section 13(a)-14(c) of the Securities
Exchange Act of 1934 (the &quot;Act&quot;)) was carried out under the
supervision and with the participation of the Company's Chief Executive
Officer, Chief Financial Officer and several other members of the Company's
management within the 90-day period preceding the filing date of this
quarterly report. The Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures as
currently in effect are effective in ensuring that the information required to
be disclosed by the Registrant in the reports it files or submits under the Act
is (i) accumulated and communicated to the Company's management (including
the Chief Executive Officer and Chief Financial Officer) in a timely manner, and
(ii) recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(b) Changes in Internal
Controls: In the quarter ended September 30, 2002, the Company's did not make
any significant changes in, nor take any corrective actions regarding, its
internal controls or other factors that could significantly affect these
controls. </FONT></P>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p align=center><font size=3>29</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

<BR><BR><BR><BR><BR><BR>

<a name="a0030"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><u>PART II. OTHER INFORMATION</u></b></FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 1.</b> Not applicable</FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 2.</b> Not applicable</FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 3.</b> Not applicable</FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 4.</b> Not applicable</FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 5.</b>&nbsp;&nbsp;&nbsp;Effective September 16, 2002, Mike Munoz, Jr. resigned from<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the Company's
Board of Directors. Mr. Munoz resigned to devote more time to personal endeavors.</FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 6.</b> Exhibits and Reports on Form 8-K:</FONT></P><BR>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Exhibits:


<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<tr>
<td width=10%>&nbsp;</td>
<td width=5%>&nbsp;</td>
<td width=85%>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>99.1</td>
<td>Certification of the Chief Executive Officer of United Security Bancshares
pursuant to Section 902 of the Sarbannes-Oxley Act of 2002</td>
</tr>
<tr>
<td width=10%>&nbsp;</td>
<td width=5%>&nbsp;</td>
<td width=85%>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>99.2</td>
<td>Certification of the Chief Financial Officer of United Security Bancshares
pursuant to Section 902 of the Sarbannes-Oxley Act of 2002</td>
</tr>
</TABLE><BR><BR>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Reports on Form 8-K: None</FONT></P>


<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p align=center><font size=3>30</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">


<BR><BR><BR><BR>
<a name="a0031"></a>
<p align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>Signatures</b></font></p><BR>


<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized,
</font></p><BR><BR>

<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<td width=60%>&nbsp;</td>
<td align=center width=40%><b>United Security Bancshares</b></td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<TR>
<td>&nbsp;Date: November 13, 2002</td>
<td align=center><u>/S/  Dennis R.Woods</u></td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Dennis R.Woods</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Chairman of the Board and</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>President</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center><u>/S/  Kenneth L. Donahue</u></td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Kenneth L. Donahue</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Senior Vice President and</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Chief Financial Officer</td>
</tr>
</TABLE><BR><BR>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p align=center><font size=3>31</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">



<a name="a0032"></a>
<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<tr>
<td width=4%>&nbsp;</td>
<td width=4%>&nbsp;</td>
<td width=92%>&nbsp;</td>
</tr>
<tr>
<td colspan=3 align=center><b>CERTIFICATION</b></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr><tr>
<td colspan=3 align=left>I, Dennis R. Woods, certify that:</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>1.</td>
<td colspan=2>I have reviewed this quarterly report on Form 10-Q of United Security Bancshares;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>2.</td>
<td colspan=2>Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>3.</td>
<td colspan=2>Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>4.</td>
<td colspan=2>The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>a)</td>
<td>designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>b)</td>
<td>evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the &quot;Evaluation Date&quot;); and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>c)</td>
<td>presented in this quarterly  report our  conclusions  about the  effectiveness
of the  disclosure  controls and procedures based on our evaluation as of the Evaluation Date;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>5.</td>
<td colspan=2>The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>a)</td>
<td>all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>b)</td>
<td>any fraud,  whether or not material,  that  involves management or other employees
 who have a  significant  role in the registrant's internal controls; and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>6.</td>
<td colspan=2>The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>Date:&nbsp;&nbsp;&nbsp;&nbsp;November 13, 2002</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2><u>&nbsp;&nbsp;&nbsp;&nbsp;/S/ Dennis R. Woods&nbsp;&nbsp;&nbsp;&nbsp;</u></td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dennis R. Woods&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>Chairman of the Board and&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President</td>
</tr>
</table>

<BR><BR>

<p align=center><font size=3>32</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">


<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<tr>
<td width=4%>&nbsp;</td>
<td width=4%>&nbsp;</td>
<td width=92%>&nbsp;</td>
</tr>
<tr>
<td colspan=3 align=center><b>CERTIFICATION</b></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr><tr>
<td colspan=3 align=left>I, Kenneth L. Donahue, certify that:</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>1.</td>
<td colspan=2>I have reviewed this quarterly report on Form 10-Q of United Security Bancshares;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>2.</td>
<td colspan=2>Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>3.</td>
<td colspan=2>Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>4.</td>
<td colspan=2>The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>a)</td>
<td>designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>b)</td>
<td>evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the &quot;Evaluation Date&quot;); and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>c)</td>
<td>presented in this quarterly  report our  conclusions  about the  effectiveness
of the  disclosure  controls and procedures based on our evaluation as of the Evaluation Date;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>5.</td>
<td colspan=2>The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>a)</td>
<td>all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>b)</td>
<td>any fraud,  whether or not material,  that  involves management or other employees
 who have a  significant  role in the registrant's internal controls; and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top>6.</td>
<td colspan=2>The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>Date:&nbsp;&nbsp;&nbsp;&nbsp;November 13, 2002</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=2><u>&nbsp;&nbsp;&nbsp;&nbsp;/S/ Kenneth L. Donahue&nbsp;&nbsp;&nbsp;&nbsp;</u></td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Kenneth L. Donahue&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>Senior Vice President and&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=2>&nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer</td>
</tr>
</table>

<BR><BR>

<p align=center><font size=3>33</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1
<SEQUENCE>3
<FILENAME>a10q930cert991.htm
<DESCRIPTION>EXHIBIT 99.1- 902 CERT - CEO
<TEXT>
<HTML>
<head>
<title>906 certification for United Security Bancshares 10Q September 30, 2002
</title>
</head>
<BODY>



<p align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>Section 906 Certification</b></font></p><BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The certification set forth below is being submitted to the Securities and Exchange Commission
solely for the purpose of complying with Section 1350 of Chapter 63 of Title 18 of the United
States Code.</FONT></P>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
November 13, 2002</FONT></P>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Dennis R. Woods, the Chief Executive Officer of United Security Bancshares certifies:</FONT></P>
<BR>

<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<tr>
<td valign=top width=5%>1.</td>
<td width=95%>that this periodic report fully complies
with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td valign=top>2.</td>
<td>that information contained in this
periodic report fairly presents, in all material respects, the financial
condition and results of operations of United Security Bancshares.</td>
</tr>
</table>
<BR><BR><BR>

<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<tr>
<td width=60%>&nbsp;</td>
<td align=center width=40%><b>&nbsp;</b></td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center><u>/S/  Dennis R. Woods</u></td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Dennis R. Woods</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Chairman of the Board and</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>President</td>
</tr>
</TABLE><BR><BR>


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1
<SEQUENCE>4
<FILENAME>a10q930cert992.htm
<DESCRIPTION>EXHIBIT 99.2 - 902 CERT - CFO
<TEXT>
<HTML>
<head>
<title>906 certification for United Security Bancshares 10Q September 30, 2002
</title>
</head>
<BODY>



<p align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>Section 906 Certification</b></font></p><BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The certification set forth below is being submitted to the Securities and Exchange Commission
solely for the purpose of complying with Section 1350 of Chapter 63 of Title 18 of the United
States Code.</FONT></P>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
November 13, 2002</FONT></P>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Kenneth L. Donahue, the Chief Financial Officer of United Security Bancshares certifies:</FONT></P>
<BR>

<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<tr>
<td valign=top width=5%>1.</td>
<td width=95%>that this periodic report fully complies
with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td valign=top>2.</td>
<td>that information contained in this
periodic report fairly presents, in all material respects, the financial
condition and results of operations of United Security Bancshares.</td>
</tr>
</table>
<BR><BR><BR>

<TABLE width=620 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<tr>
<td width=60%>&nbsp;</td>
<td align=center width=40%><b>&nbsp;</b></td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center><u>/S/  Kenneth L. Donahue</u></td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Kenneth L. Donahue</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Senior Vice President and</td>
</tr>
<TR>
<td>&nbsp;</td>
<td align=center>Chief Financial Officer</td>
</tr>
</TABLE><BR><BR>


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</TEXT>
</DOCUMENT>
</SUBMISSION>
