<SUBMISSION>
<ACCESSION-NUMBER>0001137547-03-000054
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20030630
<FILING-DATE>20030814
<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>03843078
</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>a10q06302003e.htm
<DESCRIPTION>10Q - JUNE 30, 2003
<TEXT>
<HTML>
<head>
<title>United Security Bancshares 10Q JUNE 30, 2003
</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>



<table width=100% border=0 cellspacing=0 cellpadding=0>
<tr>
<td width=6% align=center valign=top><b>[X] </b></td>
<td width=93%> QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003</td>
</tr>
<tr>
<td><b>&nbsp; </b></td>
<td>&nbsp;</td>
</tr>

<tr>
<td width=6% align=center valign=top><b>[&nbsp;&nbsp;] </b></td>
<td width=93%> TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
  FROM _________ TO ________.</td>
</tr>
</table>


<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=3>Aggregate market value of
the Common Stock held by non-affiliates as of the last business day of the
registrant's most recently completed second fiscal quarter - June 30, 2003:
$74,240,456 </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes [    ]  No  [ X ]</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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 July 31, 2003:&nbsp;<u> 5,444,145&nbsp;</u></td>
</tr>
</table>
<BR><BR><BR><BR><BR>

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

<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>JUNE 30, 2003<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="#a0014">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="#a0015">Results of Operations</a></td>
<td align=center>15</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0018">Financial Condition</a></td>
<td align=center>18</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0024">Liquidity and Asset/Liability Management</a></td>
<td align=center>24</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><a href="#a0025">Regulatory Matters</a></td>
<td align=center>25</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="#a0027">Interest Rate Sensitivity and Market Risk</a></td>
<td align=center>27</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="#a0030">Controls and Procedures</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>PART II.&nbsp;&nbsp;<a href="#a0031">Other Information</a></td>
<td align=center>31</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="#a0032">Signatures</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>
June 30, 2003 (unaudited) and December 31, 2002</B></font></p>

<PRE>
                                                                      June 30,           December 31,
   (In thousands except shares)                                         2003                 2002
-------------------------------------------------------------------------------------------------------
Assets
 Cash and due from banks                                               $17,802             $16,750
 Federal funds sold and securities purchased
   under agreements to resell                                           12,090              14,735
                                                                ---------------------------------------
      Cash and cash equivalents                                         29,892              31,485

 Interest-bearing deposits in other banks                                9,642              10,224

 Securities available for sale (Note 2)                                 99,913             104,567

 Loans and leases (Note 3)                                             349,706             349,054
   Unearned fees                                                          (438)               (456)
   Allowance for credit losses                                          (5,060)             (5,556)
                                                                ---------------------------------------
       Net loans                                                       344,208             343,042

 Accrued interest receivable                                             2,036               2,437
 Premises and equipment - net (Note 4)                                   5,251               2,647
 Other real estate owned                                                 2,994               9,685
 Intangible assets                                                       2,122               2,300
 Cash surrender value of life insurance                                  2,571               2,518
 Investment in limited partnership                                       4,818               2,584
 Deferred income taxes                                                   1,782               1,638
 Other assets                                                            7,138               6,964
                                                               ----------------------------------------
Total Assets                                                          $512,367            $520,091
                                                               ========================================

Liabilities &amp;Shareholders' Equity
Liabilities:
 Deposits (Note 5)
   Noninterest-bearing                                                 $92,296             $89,000
   Interest-bearing                                                    348,258             334,987
                                                               ----------------------------------------
      Total deposits                                                   440,554             423,987

 Federal funds purchased and securities sold
    under agreements to repurchase (Note 6)                              9,000              35,400
 Other borrowings (Note 6)                                                 482                 650
 Accrued interest payable                                                  925               1,203
 Accounts payable and other liabilities                                  2,913               2,752
 Company obligated mandatorily redeemable cumulative trust
   preferred securities of subsidiary trust holding solely junior
   subordinated debentures (Trust Preferred securities) (Note 7)        15,000              15,000
                                                               ----------------------------------------
      Total liabilities                                                468,874             478,992

Commitments and Contingent Liabilities (Note 3)

Shareholders' Equity (Note 12):
  Common  stock, no par value
    10,000,000 shares authorized, 5,455,145 and 5,406,666
    issued and outstanding, in 2003 and 2002, respectively              17,723              17,553
  Retained earnings                                                     25,385              23,114
  Unearned ESOP shares                                                    (441)               (609)
  Accumulated other comprehensive income (Note 11)                         826               1,041
                                                               ----------------------------------------
          Total shareholders' equity                                    43,493              41,099
                                                               ----------------------------------------
Total liabilities and shareholders' equity                            $512,367            $520,091
                                                               ========================================
      See notes to financial statements
</PRE>

<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>
Periods Ended June 30, 2003 and 2002 (unaudited)</B></font></p>

<PRE>
                                                       Quarter Ended June 30,       Six Months Ended June 30,
   (In thousands except shares and EPS)                 2003            2002          2003            2002
------------------------------------------------------------------------------------------------------------------
Interest Income:
  Loans, including fees                                $5,492          $6,167       $11,287          $12,181
   Investment securities - AFS - taxable                  740             907         1,551            1,648
   Investment securities - AFS - nontaxable                33              35            67               71
   Federal funds sold and securities purchased
     under agreements to resell                            32              79            77              133
   Interest on deposits in other banks                     68               3           139                3
                                                     -------------------------------------------------------------
     Total interest income                              6,365           7,191        13,121           14,036
Interest Expense:
  Interest on deposits                                  1,566           2,094         3,195            4,289
  Interest on other borrowings                            307             602           856            1,121
                                                     -------------------------------------------------------------
         Total interest expense                         1,873           2,696         4,051            5,410
                                                     -------------------------------------------------------------
Net Interest Income Before
  provision for Credit Losses                           4,492           4,495         9,070            8,626
Provision for Credit Losses (Note 3)                      256             244           501              865
                                                     -------------------------------------------------------------
Net Interest Income                                     4,236           4,251         8,569            7,761
Noninterest Income:
  Customer service fees                                   949             990         1,865            1,943
  Loss on sale of securities                              (24)            (22)          (24)             (22)
  Gain on sale of loans                                     3               0            24                0
  Gain on sale of other real estate owne                   17               0            54                4
  Gain on sale of fixed assets                              1               0             1                0
  Shared appreciation income                              396              (4)          406              245
  Other                                                   149             117           273              230
                                                      -------------------------------------------------------------
    Total noninterest income                            1,491           1,081         2,599            2,400
Noninterest Expense:
  Salaries and employee benefits                        1,207           1,158         2,568            2,407
  Occupancy expense                                       374             462           772              927
  Data processing                                         128             141           263              277
  Professional fees                                       266             180           475              377
  Director fees                                            46              49            92              100
  Amortization of intangibles                              88              90           178              180
  Correspondent bank service charges                       73              75           144              144
  Other                                                   536             428          1,073             864
                                                      -------------------------------------------------------------
    Total noninterest expense                           2,718           2,583          5,565           5,278
                                                      -------------------------------------------------------------
Income Before Taxes on Income                           3,009           2,749          5,603           4,883
Taxes on Income                                           886             828          1,746           1,447
                                                      -------------------------------------------------------------
Net Income                                             $2,123          $1,921         $3,857          $3,436
                                                      =============================================================
Other comprehensive income, net of tax (Note 14):
 Unrealized (loss) gain on available for
  sale securities - net income tax (benefit)
   of $4, $527, $(144) and $438                             5             791           (216)            656
                                                      -------------------------------------------------------------
Comprehensive Income                                   $2,123          $1,921          $3,641         $4,092
                                                      =============================================================
Net Income per common share (Note 10)
  Basic                                                 $0.39           $0.36           $0.71          $0.64
                                                      =============================================================
  Diluted                                               $0.39           $0.35           $0.70           $0.63
                                                      =============================================================
Shares on which net income per common share
  were based (Note 10)
    Basic                                             5,432,001       5,381,918       5,432,001       5,381,918
                                                      =============================================================
    Diluted                                           5,494,441       5,483,163       5,494,441       5,483,163
                                                      =============================================================
     See notes to financial statements

</PRE>

<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 June 30, 2003</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, 2002                        5,397,298       $18,239         $18,582        $(873)          $111        $36,059

Director/Employee stock options exercised         6,000            36                                                         36
 Tax benefit of stock options exercised                              4                                                          4
 Net changes in unrealized gain
  (loss) on available for sale securities
  (net of income tax of $438 )                                                                                 656            656
 Dividends on common stock ($0.26 per share)                                    (1,411)                                    (1,411)
 Repurchase and cancellation of common shares    (35,076)         (590)                                                      (590)
 Release of unearned ESOP shares                   8,098            (2)                         144                           142
 Net Income                                                                      3,436                                      3,436
                                             ---------------------------------------------------------------------------------------
Balance June 30, 2002 (unaudited)              5,376,320        17,687          20,607         (729)           767         36,435

 Director/Employee stock options exercised        52,800           380                                                        380
 Tax benefit of stock options exercised                              3                                                          3
 Net changes in unrealized gain
  (loss) on available for sale securities
  (net of income tax of $183 )                                                                                 274            274
 Dividends on common stock ($0.26 per share)                                    (1,427)                                    (1,427)
 Repurchase and cancellation of common shares    (29,600)         (517)                                                      (517)
 Release of unearned ESOP shares                   7,146                                        120                           120
 Net Income                                                                      3,934                                      3,934
                                             ----------------------------------------------------------------------------------------
Balance December 31, 2002                      5,406,666        17,553          23,114         (609)         1,041         41,099

 Director/Employee stock options exercised        63,800           613                                                        613
  Net changes in unrealized gain
   (loss) on available for sale securities
   (net of income tax benefit of $119)                                                                        (178)          (178)
  Net changes in unrealized gain
   (loss) on interest rate swaps
   (net of income tax benefit of $25)                                                                          (37)           (37)
  Dividends on common stock ($0.29 per share)                                   (1,586)                                    (1,586)
  Repurchase and cancellation of common shares   (23,961)         (443)                                                      (443)
  Release of unearned ESOP shares                  8,640                                        168                           168
  Net Income                                                                     3,857                                      3,857
                                             ----------------------------------------------------------------------------------------
Balance June 30, 2003 (unaudited)              5,455,145       $17,723         $25,385        $(441)          $826        $43,493
                                             ========================================================================================
  See notes to financial statements
</PRE>

<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>
Six Months Ended June 30, 2003 and 2002 (unaudited)</B></font></p>


<PRE>
   (In thousands)                                                 2003                  2002
-------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities:
  Net income                                                     $3,857                $3,436
  Adjustments to reconcile net earnings to
   cash provided by operating activities:
    Provision for credit losses                                     501                   865
    Depreciation and amortization                                   498                   612
    Amortization of investment securities                           173                   219
    Loss on sale of securities                                       24                    22
    Decrease in accrued interest receivable                         401                 1,330
    Decrease in accrued interest payable                           (278)                  (81)
    Decrease in unearned fees                                       (18)                  (83)
    Increase in income taxes payable                                202                   249
    Decrease in accounts payable
     and accrued liabilities                                       (519)                 (123)
    Write-down of other investments                                  21                    40
    Write-down of other real estate owned                            46                     0
    Gain on sale of other real estate owned                         (54)                   (4)
    Gain on sale of loans                                           (24)                    0
    Increase in surrender value of life insurance                   (53)                  (54)
    Loss in limited partnership interest                            109                   115
    Net decrease (increase) in other assets                           9                  (648)
                                                            -------------------------------------
  Net cash provided by operating activities                       4,895                 5,895
Cash Flows From Investing Activities:
  Net decrease in interest-bearing deposits with banks              582                     0
  Purchases of  available-for-sale securities                   (44,936)              (44,428)
  Net redemption (purchase) of FHLB/FRB
    and other bank stock                                          1,026                  (307)
  Maturities and calls of available-for-sale securities          28,096                26,712
  Proceeds from sales of available-for-sale securities           21,000                     0
  Investment in limited partnership                              (2,343)                    0
  Net increase in loans                                          (4,663)              (22,761)
  Cash proceeds from sales of loans                               5,529                     0
  Cash proceeds from sales of foreclosed leased assets              447                     0
  Proceeds from sales of other real estate owned                    302                   459
  Capital expenditures for premises and equipment                  (199)                 (174)
                                                            -------------------------------------
  Net cash provided by (used in) investing activities             4,841               (40,499)
Cash Flows From Financing Activities:
  Net increase in demand deposit and savings accounts             5,231                 2,237
  Net increase in certificates of deposit                        11,336                38,468
  Net (decrease) increase in repurchase agreements              (26,400)                7,900
  Director/Employee stock options exercised                         614                    36
  Repurchase and retirement of common stock                        (442)                 (590)
  Repayment of ESOP borrowings                                     (167)                 (142)
  Payment of dividends on common stock                           (1,501)               (1,332)
                                                            -------------------------------------
  Net cash (used in) provided by financing activities           (11,329)               46,577
                                                            -------------------------------------
Net (decrease) increase in cash and cash equivalents             (1,593)               11,973
Cash and cash equivalents at beginning of period                 31,485                29,255
                                                            -------------------------------------
Cash and cash equivalents at end of period                      $29,892               $41,228
                                                            =====================================
See notes to financial statements

</PRE>

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

<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 FACE="Times New Roman, Times, Serif" 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
&#147;Bank&#148;), and United Security Bancshares Capital Trust I (the
&#147;Trust&#148;), (collectively the &#147;Company&#148;). 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 &#147;Reorganization&#148;) 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 7.
&#147;Trust Preferred Securities&#148;). </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 (&#147;REIT&#148;) 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, 2002.
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 FACE="Times New Roman, Times, Serif" 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 June 30, 2003 and December 31, 2002: </FONT></P>

<PRE>
                                         --------------------------------------------------------------------
     (In thousands)                                            Gross            Gross          Fair Value
                                            Amortized        Unrealized       Unrealized       (Carrying
June 30, 2003:                                 Cost            Gains            Losses          Amount)
                                         --------------------------------------------------------------------
U.S. Government agencies                      $66,550           $1,249            $(71)          $67,728
U.S. Government agency
 collateralized mortgage obligations               65                4               0                69
Obligations of state and
 political subdivisions                         2,704              200               0             2,904
Other debt securities                          29,156               64              (8)           29,212
                                         --------------------------------------------------------------------
                                              $98,475           $1,517            $(79)          $99,913
                                         ====================================================================
December 31, 2002:

U.S. Government agencies                      $63,794           $1,570              $0           $65,364
U.S. Government agency
  collateralized mortgage obligations             84                4               0                88
Obligations of state and
  political subdivisions                       2,795              178               0             2,973
Other debt securities                         36,158                5             (21)           36,142
                                         --------------------------------------------------------------------
                                            $102,831           $1,757            $(21)         $104,567
                                         ====================================================================
</PRE>

<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 June 30, 2003, are short-term government securities mutual funds
totaling $12.0 million, Trust Preferred securities pools totaling $9.2 million,
and a money market mutual fund totaling $8.0 million. Included in other debt
securities at December 31, 2002, is a short-term government securities mutual
fund totaling $10.0 million, a Trust Preferred securities pool totaling $3.1
million, and a money market mutual fund totaling $23.0 million. 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. </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 and $22,000 during
the six months ended June 30, 2003 and June 30, 2002, respectively. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The amortized cost and fair
value of securities available for sale at June 30, 2003, 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>
                                                           June 30, 2003
                                             ------------------------------------------
                                                  Amortized            Fair Value
  (In thousands)                                     Cost          (Carrying Amount)
---------------------------------------------------------------------------------------
Due in one year or less                            $20,091              $20,083
Due after one year through five years               52,254               52,845
Due after five years through ten years                 703                  748
Due after ten years                                 25,362               26,169
Collateralized mortgage obligations                     65                   68
                                             ------------------------------------------
                                                   $98,475              $99,913
                                             ==========================================
</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 June 30, 2003 and
December 31, 2002, available-for-sale securities with an amortized cost of
approximately $67.7 million and $65.0 million (fair value of $68.9 million and
$66.7 million) were pledged as collateral for public funds, treasury tax and
loan balances, and repurchase agreements. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>3. Loans and Leases</i></b></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<i>Loans include the following:</i></FONT></P>

<PRE>
                                               June 30,          December 31,
   (In thousands)                                2003                2002
----------------------------------------------------------------------------------
Commercial and industrial                      $123,535            $117,293
Real estate - mortgage                           96,435             100,417
Real estate - construction                       92,697              95,024
Agricultural                                     16,891              16,877
Installment/other                                 7,750               7,811
Lease financing                                  12,398              11,632
                                          ----------------------------------------
Total Loans                                    $349,706            $349,054
                                          ========================================
</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 35.4% of total loans at June 30, 2003 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. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Real estate mortgage loans,
representing 27.6% of total loans at June 30, 2003, 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>

<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 26.5% of total loans at June 30, 2003, 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 4.8% of total loans at June 30, 2003 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 3.5% of total loans at June 30, 2003, 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 at June 30, 2003 or December 31, 2002.
Nonaccrual loans totaled $20.0 million and $15.4 million at June 30, 2003 and
December 31, 2002, respectively. </FONT></P>

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

<PRE>
                                                   June 30,       December 31,      June 30,
   (In thousands)                                    2003             2002            2002
-------------------------------------------------------------------------------------------------
Balance, beginning of year                          $5,556           $4,457          $4,457
Provision charged to operations                        501            1,963             865
Losses charged to allowance                         (1,041)            (933)           (104)
Recoveries on loans previously charged off              44               69              17
                                                -------------------------------------------------
Balance at end-of-period                            $5,060           $5,556          $5,235
                                                =================================================
</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 June 30, 2003 and 2002,
the Company's recorded investment in loans for which impairment has been
recognized totaled $19.6 million and $8.2 million, respectively. Included in
this amount is $7.7 million and $2.6 million of impaired loans for which the
related specific allowance is $630,000 and $855,000, as well as $11.9 million
and $5.6 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 $17.3 million and $9.5 million for the
six-month periods ended June 30, 2003 and 2002, respectively. At December 31,
2002, the Company's recorded investment in loans for which impairment has been
recognized totaled $15.3 million. Included in this amount is $8.4 million of
impaired loans for which the related specific allowance is $1.3 million, as well
as $6.9 million of impaired loans that as a result of write-downs or the fair
value of the collateral did not have a specific allowance. The average recorded
investment in impaired loans was $11.3 million for the year ended December 31,
2002. 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 six months ended
June 30, 2003 and year ended December 31, 2002, the Company recognized $4,000
and $3,000 on such loans, respectively. For the six months ended June 30, 2002,
the Company recognized no income on such loans. </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 June 30, 2003 and December
31, 2002 these financial instruments include commitments to extend credit of
$110.2 million and $114.2 million, respectively, and standby letters of credit
of $1,251,000 and $814,000, 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>

<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 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>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 FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>4. Premises and Equipment</i></b></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>During the second quarter
of 2003, two OREO properties totaling $2.7 million were transferred to bank
premises and will be utilized to enhance bank operations. One property will be
used to relocate one of the Fresno branch operations to one of Fresno&#146;s
prime business locations. The Company&#146;s administrative headquarters will be
relocated to the second location to provide additional space for current
operations and allow for future expansion. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>5. Deposits</i></b></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<i>Deposits include the following:</i></FONT></P>

<PRE>
                                                  June 30,          December 31,
   (In thousands)                                   2003                2002
-------------------------------------------------------------------------------------
Noninterest bearing deposits                       $92,296             $89,000
Interest bearing deposits:
  NOW and money market accounts                     98,300             100,199
  Savings accounts                                  24,973              21,138
  Time deposits:
    Under $100,000                                  80,220              85,564
    $100,000 and over                              144,765             128,086
                                             ----------------------------------------
Total interest bearing deposits                    348,258             334,987
                                             ----------------------------------------
Total deposits                                    $440,554            $423,987
                                             ========================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><i>At June 30, 2003, the
scheduled maturities of all certificates of deposit and other time deposits are
as follows:</i> </FONT></P>

<PRE>
   (In thousands)
--------------------------------------------------------------------------------
One year or less                                                 $187,711
More than one year, but less than or equal to two years            25,875
More than two years, but less than or equal to three years         10,451
More than three years, but less than or equal to four years           419
More than four years, but less than or equal to five years            517
More than five years                                                   12
                                                             -------------------
                                                                 $224,985
                                                             ===================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>6. Short-term Borrowings/Other Borrowings</i></b></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>At June 30, 2003, the
Company had collateralized and uncollateralized lines of credit aggregating
$140.8 million, as well as FHLB lines of credit totaling $ 33.5 million.
Advances on the FHLB lines of credit totaled $9.0 million at June 30, 2003.
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, securities,
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 $157.5
million, as well as FHLB lines of credit totaling $ 36.7 million at December 31,
2002. Advances on the FHLB lines of credit totaled $35.4 million at December 31,
2002. </FONT></P>

<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><i>The table below provides
further detail of the Company's repurchase agreements and FHLB advances for the
periods ended June 30, 2003 and December 31, 2002:</i> </FONT></P>

<PRE>
                                                          June 30,         December 31,
  (In thousands)                                            2003               2002
------------------------------------------------------------------------------------------
Outstanding:
  Average for the period - Repos                             $0                $218
  Average for the period - FHLB advances                $21,106             $32,398
  Maximum during the period - total borrowings          $35,400             $35,400
Interest rates:
  Average for the period - Repos                          ----                1.96%
  Average for the period - FHLB advances                  4.35%               4.24%
  Average at period end - Repos                           ----                0.00%
  Average at period end - FHLB advances                   4.81%               4.17%
</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 $482,000 at June 30,
2003. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>7. 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 were deferred at the time of issuance
and will be amortized over the 30-year life of the securities. Interest expense
on the Trust Preferred Securities totaled $390,000 and amortization expense
totaled $8,000 for the six months ended June 30, 2003. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>8. 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>

<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>
<i>The following table sets forth the Company's and the Bank's actual capital positions at the periods presented:
</i></FONT></P>

<pre>
                                                  June 30,      December 31,      June 30,
                                                    2003            2002            2002
--------------------------------------------------------------------------------------------------
Company:
  Total Capital (to Risk Weighted Assets)           14.02%         13.20%          12.94%
  Tier I Capital (to Risk Weighted Assets)          12.50%         11.40%          10.94%
  Tier I Capital (to Average Assets)                10.71%          9.54%           9.73%
Bank:
  Total Capital (to Risk Weighted Assets)           13.47%         12.74%          12.46%
  Tier I Capital (to Risk Weighted Assets)          12.29%         11.49%          11.23%
  Tier I Capital (to Average Assets)                10.53%          9.61%           9.97%

</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As of June 30, 2003 and
December 31, 2002, 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 June 30, 2003, the Company has
received $1.9 million in cash dividends from the Bank, from which the Company
has paid $1.5 million 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. Year-to-date, the Bank has
paid dividends of $1.9 million to the Company, which was well within dividend
distributions allowed without prior approval. </FONT></P>

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

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>9. Supplemental Cash Flow Disclosures</i></b></FONT></P>


<pre>
                                                      Six Months Ended June 30,
   (In thousands)                                      2003                2002
-------------------------------------------------------------------------------------
Cash paid during the period for:
  Interest                                           $4,329              $5,490
  Income Taxes                                        1,547               1,658
Noncash investing activities:
  Loans transferred to foreclosed property            1,338               5,030
  Dividends declared not paid                           795                 704
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>10. Net Income Per Share</i></b></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><i>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:</i> </FONT></P>

<PRE>
                                                          Six Months Ended June 30,
   (In thousands except earnings per share data)           2003               2002
--------------------------------------------------------------------------------------
Net income available to common shareholders               $3,857             $3,436
Weighted average shares issued                             5,463              5,429
  Less: unearned ESOP shares                                 (31)               (47)
                                                      --------------------------------
Weighted average shares outstanding                        5,432              5,382
  Add: dilutive effect of stock options                       62                101
                                                      --------------------------------
Weighted average shares outstanding
  adjusted for potential dilution                          5,494              5,483
                                                      ================================
Basic earnings per share                                   $0.71              $0.64
                                                      ================================
Diluted earnings per share                                 $0.70              $0.63
                                                      ================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>11. Derivative Financial Instruments and Hedging Activities</i></b></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As part of its overall risk
management, the Company pursues various asset and liability management
strategies, which may include obtaining derivative financial instruments to
mitigate the impact of interest fluctuations on the Company&#146;s net interest
margin. During the second quarter of 2003, the Company entered into an interest
rate swap agreement with the purpose of minimizing interest rate fluctuations on
its interest rate margin and equity. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Under the interest rate
swap agreement, the Company receives a fixed rate and pays a variable rate based
on the Prime Rate (&#147;Prime&#148;). The swap qualifies as a cash flow hedge
under SFAS No. 133, &#147;Accounting for Derivative Instruments and Hedging
Activities&#148;, as amended, and is designated as a hedge of the variability of
cash flows the Company receives from certain variable-rate loans indexed to
Prime. In accordance with SFAS No. 133, the swap agreement is measured at fair
value and reported as an asset or liability on the consolidated balance sheet.
The portion of the change in the fair value of the swap that is deemed effective
in hedging the cash flows of the designated assets are recorded in accumulated
other comprehensive income and reclassified into interest income when such cash
flow occurs in the future. Any ineffectiveness resulting from the hedge is
recorded as a gain or loss in the consolidated statement of income as part of
noninterest income. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The amortizing hedge has a
notional value of $24.9 million and a duration of approximately 3.5 years. As of
June 30, 2003, the maximum length of time over which the Company is hedging its
exposure to the variability of future cash flows is approximately five years. As
of June 30, 2003, the loss amounts in accumulated other comprehensive income
associated with these cash flows totaled $37,000 (net of tax benefit of
$25,000). During the six months ended June 30, 2003, $9,000 (net of tax of
$6,000) was reclassified from other accumulated comprehensive income into
earnings. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>12. 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 six months ended June 30, 2003, the Company repurchased 23,961 shares
for a total of $443,000. During the years ended December 31, 2002 and 2001, the
Company repurchased 64,676 and 115,786 shares for a total of $1.9 million and
$1.1 million, respectively. The repurchased shares were subsequently retired. </FONT></P>

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

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>13. Stock Based Compensation</i></b></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>At June 30, 2003, the
company has a stock-based employee compensation plan, which is described more
fully in Note 10 of the Company&#146;s Annual Report on Form 10K for the year
ended December 31, 2002. The Company accounts for stock-based awards to
employees using the intrinsic value method in accordance with APB No. 25,
&quot;Accounting for Stock Issued to Employees&quot;, and related
interpretations. No stock-based employee compensation cost is reflected in net
income, as all options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the date of grant. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><i>The following table
illustrates the effect on net income and earnings per share if the company had
applied the fair value recognition provisions of SFAS No. 148, &#147;Accounting
for Stock-Based Compensation &#150; Transition and Disclosure an amendment of
FASB Statement No. 123&#148;.</i> </FONT></P>

<PRE>
                                                        Period Ended June 30,
------------------------------------------------------------------------------------
  (In thousands except earnings per share)               2003            2002
------------------------------------------------------------------------------------
Net income, as reported                                  $3,857          $3,436
Deduct: Total stock-based employee
 Compensation expense determined under fair
  value based method for all awards, net of
  related tax effects                                       (6)             (18)
                                                   ---------------------------------
Pro forma net income                                    $3,851           $3,418
                                                   =================================
Earnings per share:
  Basic - as reported                                    $0.71            $0.64
                                                   =================================
  Basic - pro forma                                      $0.70            $0.63
                                                   =================================
  Diluted - as reported                                  $0.71            $0.64
                                                   =================================
  Diluted - pro forma                                    $0.70            $0.62
                                                   =================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>14. Other Comprehensive Income</i></b></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><i>The following table
provides a reconciliation of the amounts included in comprehensive income:</I> </FONT></P>

<PRE>
                                                                    Six Months Ended June 30,
----------------------------------------------------------------------------------------------
  (In thousands)                                                       2003           2002
----------------------------------------------------------------------------------------------
Unrealized (loss) gain on available-for-sale securities:
  Unrealized (loss) gain on sale  securities - net income
    tax (benefit) of $(129), and $174                                 $(193)          $261
  Less: Reclassification adjustment for loss on sale of
    available-for-sale securities included in net income -
    net income tax benefit of $10, and $9                                15             13
                                                                  ----------------------------

   Net unrealized (loss) gain on available-for-sale
    securities - net income tax (benefit) of $(119), and $183         $(178)          $274
                                                                  ============================

Unrealized loss on interest rate swaps:
   Unrealized losses arising during period - net income tax
      benefit of $19                                                   $(28)           --
   Less: reclassification adjustments to interest income -
      net income tax of $6                                               (9)           --
                                                                  ----------------------------
   Net change in unrealized loss on interest rate swaps -
     net of income tax benefit $13                                     $(37)           --
                                                                  ============================
</PRE>

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


<a name="a0014"></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=2><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="a0015"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><u>Results of Operations</u></b></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>For the six months ended
June 30, 2003, the Company reported net income of $3.9 million or $0.71 per
share ($0.70 diluted) as compared to $3.4 million or $0.64 per share ($0.63
diluted) for the six months ended June 30, 2002. The Company&#146;s return on
average assets was 1.52% for the six-month-period ended June 30, 2003 as
compared to 1.48% for the six-month-period ended June 30, 2002. The Bank&#146;s
return on average equity was 18.32% for the six months ended June 30, 2003 as
compared to 18.65% for the same six-month period of 2002. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Net Interest Income</i></b></FONT></P>

<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 $9.1 million for the six months ended June
30, 2003, representing an increase of $445,000 or 5.2% when compared to the $8.6
million reported for the same six months of the previous year. The increase in
net interest income between 2002 and 2003 is primarily the result of significant
growth in earning assets, which was enhanced by a significant decline in the
Company&#146;s cost of interest-bearing liabilities. </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 3.87% at June 30, 2003 from 4.09% at
June 30, 2002, a decrease of 22 basis points (100 basis points = 1%) between the
two periods. Market rates of interest decreased between the six-month periods
ended June 30, 2002 and 2003. The prime rate averaged 4.24% for the six months
ended June 30, 2003 as compared to 4.75% for the comparative six months of 2002.
The effect of market rate declines between those two periods was mitigated to a
large degree as the result of significantly lower repricing of interest-bearing
liabilities. </FONT></P>

<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>
<u>Table 1. - Distribution of Average Assets, Liabilities and Shareholders' Equity:</u><BR>
Interest rates and Interest Differentials<BR>
Periods Ended June 30, 2003 and 2002</FONT></P>


<PRE>
                                           -------------------------------------------------------------------------
                                                             2003                                   2002
                                           -------------------------------------------------------------------------
     (dollars in thousands)                   Average                  Yield/     Average                   Yield/
                                              Balance     Interest     Rate       Balance      Interest      Rate
--------------------------------------------------------------------------------------------------------------------
Assets:
Interest-earning assets:
 Loans (1)                                    $351,763    $11,288      6.47%      $339,678     $12,181       7.23%
 Investment Securities - taxable                95,337      1,551      3.28%        67,297       1,648       4.94%
 Investment Securities - nontaxable (2)          2,764         67      4.89%         2,970          71       4.82%
 Interest on deposits in other banks            10,005        139      2.80%           172           3       3.67%
 Federal funds sold  and reverse repos          12,791         77      1.21%        15,495         133       1.73%
                                             -----------------------------------------------------------------------
    Total interest-earning assets              472,660    $13,122      5.60%       425,612     $14,036       6.65%
                                                         ====================                 ======================
Allowance for possible loan losses              (5,393)                             (4,999)
Noninterest-bearing assets:
 Cash and due from banks                        17,212                              16,716
 Premises and equipment, net                     2,580                               2,946
 Accrued interest receivable                     2,303                               3,284
 Other real estate owned                         5,895                               8,637
 Other assets                                   17,270                              15,565
                                             -------------                       ------------
    Total average assets                      $512,527                            $467,761
                                             =============                       ============
Liabilities and Shareholders' Equity:
nterest-bearing liabilities:
  NOW accounts                                 $29,874        $81      0.55%       $26,052        $105       0.81%
  Money market accounts                         69,733        549      1.59%        57,067         560       1.98%
  Savings accounts                              22,510         65      0.58%        19,456          85       0.88%
  Time deposits                                220,494      2,500      2.29%       204,327       3,539       3.49%
  Other borrowings                              21,932        458      4.21%        30,790         662       4.34%
  Trust Preferred securities                    15,000        398      5.35%        15,000         459       6.17%
                                             ------------------------------------------------------------------------
    Total interest-bearing liabilities         379,543     $4,051      2.15%       352,692      $5,410       3.09%
                                                         ====================                 =======================
Noninterest-bearing liabilities:
  Noninterest-bearing checking                  87,421                              75,526
  Accrued interest payable                         836                               1,103
  Other liabilities                              2,262                               1,291
                                             ------------                         ------------
    Total Liabilities                          470,062                             430,612

Total shareholders' equity                      42,465                              37,149
                                             ------------                         ------------
    Total average liabilites and
      Shareholders' equity                    $512,527                            $467,761
                                             ============                         ============
Interest income as a percentage
  of average earning assets                                            5.60%                                 6.65%
Interest expense as a percentage
  of average earning assets                                            1.73%                                 2.56%
                                                                  -------------                          ------------
Net interest margin                                                    3.87%                                 4.09%
                                                                  =============                          ============
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)</FONT></TD>
<TD WIDTH=95%><FONT 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
$733,000 and $709,000 for the six months ended June 30, 2003 and 2002,
respectively.</i></FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)</FONT></TD>
<TD WIDTH=95%><FONT 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>
</TR>

</TABLE>
<BR>

<p align=center><font size=3>16</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>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<u>Table 2.  Rate and Volume Analysis</u></FONT></P>


<pre>

                                              Increase (decrease) in the six months ended
                                                June 30, 2003 compared to June 30, 2002
                                             -----------------------------------------------
   (In thousands)                                 Total           Rate          Volume
--------------------------------------------------------------------------------------------
Increase (decrease) in interest income:
  Loans                                          $(894)         $(1,316)         $422
  Investment securities                           (101)            (660)          559
  Interest-bearing deposits in other banks         136               41            95
  Federal funds sold and securities
    purchased under agreements to resell           (56)             (35)          (21)
                                             -----------------------------------------------
      Total interest income                       (915)          (1,970)         1,055

Increase (decrease) in interest expense:
  Interest-bearing demand accounts                 (35)            (153)           118
  Savings accounts                                 (20)             (32)            12
  Time deposits                                 (1,039)          (1,301)           262
  Other borrowings                                (204)             (19)          (185)
  Trust Preferred securities                       (61)             (61)             0
                                             -----------------------------------------------
      Total interest expense                    (1,359)          (1,566)           207
                                             -----------------------------------------------
Increase in net interest income                   $444            $(404)          $848
                                             ===============================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>For the six months ended
June 30, 2003, total interest income decreased approximately $915,000 or 6.5% as
compared to the six months ended June 30, 2002. The change is attributable
primarily to a substantial increase in earning assets, which was more than
offset by the decrease in market rates of interest. Earning asset growth was
mostly in investment securities and in loans. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>For the six months ended
June 30, 2003, total interest expense decreased approximately $1.4 million or
25.1% as compared to the six-month period ended June 30, 2002. While average
interest-bearing liabilities increased by $26.9 million between the six-month
periods ended June 30, 2003 and 2002, the average rate paid on those liabilities
declined by 94 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 ix months ending June 30, 2003 the provision to the allowance
for credit losses amounted to $501,000 as compared to $865,000 for the six
months ended June 30, 2002. The amount provided to the allowance for credit
losses during the first six months brought the allowance to 1.45% of net
outstanding loan balances at June 30, 2003, as compared to 1.59% of net
outstanding loan balances at December 31, 2002, and 1.48% at June 30, 2002. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<i>Noninterest Income</i></FONT></P>


<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 six months ended
June 30, 2003 decreased $199,000 when compared to the same period last year.
Customer service fees declined by $78,000 between the two six-month periods
presented, which is attributable to modest declines in checking service charges
and overdraft fee income. Other noninterest income increased $204,000 between
the two periods, and is primarily attributable to an increase of $161,000 in
shared appreciation income on commercial real estate. </FONT></P>


<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>
<i>Noninterest Expense</i></FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><i>The following table sets
forth the amount and percentage changes in the categories presented for the six
months ended June 30, 2003 as compared to the six months ended June 30, 2002:</i></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<u>Table 3. Changes in Noninterest Expense</u></FONT></P>


<PRE>
   (In thousands)                                Amount            Percent
-------------------------------------------------------------------------------
Salaries and employee benefits                   $161                6.68%
Occupancy expense                                (155)             -16.67%
Data processing                                   (16)              -5.42%
Professional fees                                  98               25.85%
Directors fees                                     (8)              -8.51%
Amortization of intangibles                        (2)              -1.11%
Correspondent bank service charges                  0                0.08%
Other                                             209               24.25%
                                              ---------------------------------
  Total change in noninterest expense            $287                5.45%
                                              =================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Noninterest expense,
excluding provision for credit losses and income tax expense, totaled $5.6
million for the six months ended June 30, 2003 as compared to $5.3 million for
the same six-month period of 2002, representing an increase of $287,000 or 5.5%
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. Increases in
professional fees included increased audit fees, and legal fees on workouts of
impaired loans. Increases of $209,000 in other noninterest expense between the
two periods, include increased costs related to real estate owned through
foreclosure, insurance, postage, and various other office supplies. </FONT></P>

<a name="a0018"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><u>Financial Condition</u></b></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Total assets decreased to
$512.4 million at June 30, 2003, from the balance of $520.1 million at December
31, 2002, but increased from the balance of $510.8 million at June 30, 2002.
Total deposits of $440.6 million at June 30, 2003 increased $16.6 million or
3.9% from the balance reported at December 31, 2002, and increased $31.2 million
or 7.6% from the balance of $409.4 million reported at June 30, 2002. Between
December 31, 2002 and June 30, 2003, loan growth totaled $652,000, while
securities and other short-term investments decreased $7.3 million. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Earning assets averaged
approximately $472.7 million during the six months ended June 30, 2003, as
compared to $425.6 million for the same six-month period of 2002. Average
interest-bearing liabilities increased to $379.5 million for the six months
ended June 30, 2003, as compared to $352.7 million for the comparative six-month
period of 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Loans</i></b></FONT></P>

<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 $349.7 million at June 30, 2003, an increase of $652,000 or 0.2%
when compared to the balance of $349.1 million at December 31, 2002, and a
decrease of $4.2 million or 1.2% when compared to the balance of $354.0 million
reported at June 30, 2002. Loans on average rose 3.6% between the six-month
periods ended June 30, 2002 and June 30, 2003, with loans averaging $351.8
million for the six months ended June 30, 2003, as compared to $339.7 million
for the same six-month period of 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>During the first six months
of 2003, increases were experienced in commercial and industrial loans, as well
as, lease financing. The following table sets forth the amounts of loans
outstanding by category at June 30, 2003 and December 31, 2002, the category
percentages as of those dates, and the net change between the two periods
presented. </FONT></P>

<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>
<u>Table 4. Loans</u></FONT></P>

<PRE>
                                  June 30, 2003           December 31, 2002
                            -------------------------------------------------------------------------------
                                Dollar       % of        Dollar       % of        Net          %
   (In thousands)               Amount       Loans       Amount       Loans      Change      Change
-----------------------------------------------------------------------------------------------------------
Commercial and industrial      $123,535      35.4%      $117,293      33.6%      $6,242       5.32%
Real estate - mortgage           96,435      27.6%       100,417      28.9%      (3,982)    - 3.96%
Real estate - construction       92,697      26.5%        95,024      27.2%      (2,327)     -2.45%
Agricultural                     16,891       4.8%        16,877       4.8%          14       0.08%
Installment/other                 7,750       2.2%         7,811       2.2%         (61)     -0.78%
Lease financing                  12,398       3.5%        11,632       3.3%         766       6.58%
                             ------------------------------------------------------------------------------
Total Loans                    $349,706     100.0%      $349,054     100.0%        $652       0.19%
                             ==============================================================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The overall average yield
on the loan portfolio was 6.47% for the six months ended June 30, 2003 as
compared to 7.23% for the six months ended June 30, 2002, and decreased between
the two periods as the result of a decline in market rates of interest between
the two periods, which more than outweighed the increase in average volume. At
June 30, 2003, 68.5% of the Company's loan portfolio consisted of floating rate
instruments, as compared to 68.7% of the portfolio at December 31, 2002, with
the majority of those tied to the prime rate. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Deposits</i></b></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Total deposits increased
during the period to a balance of $440.6 million at June 30, 2003 representing
an increase of $16.6 million or 3.9% from the balance of $424.0 million reported
at December 31, 2002, and an increase of $31.2 million or 7.6% from the balance
reported at June 30, 2002. During the first six months of 2003, increases were
experienced in all deposit categories except NOW and money market accounts, with
a large portion of the increase being in time deposits. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><i>The following table sets
forth the amounts of deposits outstanding by category at June 30, 2003 and
December 31, 2002, and the net change between the two periods presented.</i> </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<u>Table 5. Deposits</u></FONT></P>

<PRE>
                                          June 30,     December 31,     Net        Percentage
   (In thousands)                           2003           2002        Change        Change
-----------------------------------------------------------------------------------------------
Noninterest bearing deposits              $92,296        $89,000       $3,296         3.70%
Interest bearing deposits:
  NOW and money market accounts            98,300        100,199       (1,899)        -1.90%
  Savings accounts                         24,973         21,138        3,835         18.14%
  Time deposits:
    Under $100,000                         80,220         85,564       (5,344)        -6.25%
    $100,000 and over                     144,765        128,086       16,679         13.02%
                                     ----------------------------------------------------------
Total interest bearing deposits           348,258        334,987       13,271          3.96%
                                     ----------------------------------------------------------
Total deposits                           $440,554       $423,987      $16,567          3.91%
                                     ==========================================================
</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 $13.3 million or 4.0% between December 31,
2002 and June 30, 2003, and noninterest-bearing deposits increased $3.3 million
or 3.7% 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 67.0% and 69.4% of the
total deposit portfolio at June 30, 2003 and December 31, 2002, respectively. </FONT></P>

<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 $47.6 million or
12.4% in total deposits between the six month periods ended June 30, 2002 and
June 30, 2003. Between these two periods, average interest-bearing deposits
increased $35.7 million or 11.6%, while total noninterest-bearing checking
increased $11.9 million or 15.8% on a year-to-date average basis. </FONT></P>

<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>In conjunction with a
recent regulatory examination, a question was raised concerning the Bank's
accounting treatment for certain Certificates of Deposit included in total
deposits and, Investment Certificates of Deposit classified as interest-bearing
assets in other banks, included in total assets. At June 30, 2003, the,
Investment Certificates of Deposit classified as interest-bearing assets in
other banks totaled $9.6 million, and the Certificates of Deposit included in
total deposits totaled $12.2 million. Management believes the accounting
treatment is in accordance with GAAP. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Short-Term Borrowings</i></b></FONT></P>

<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, securities, 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 $140.8 million,
as well as FHLB lines of credit totaling $33.5 million at June 30, 2003. 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 All lines of credit are
on an &#147;as available&#148; basis and can be revoked by the grantor at any
time. At June 30, 2003, the Company had advances on the FHLB line of credit
totaling $9.0 million. The Company had collateralized and uncollateralized lines
of credit aggregating $157.5 million, as well as FHLB lines of credit totaling
$36.7 million at December 31, 2002. The Company had FHLB advances of $35.4
million outstanding at December 31, 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Asset Quality and Allowance for Credit Losses</i></b></FONT></P>

<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>

<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<BR>
</ul>

<BR><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>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, "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."<BR>
</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=3>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=3>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, 9) high balance loan concentrations, and 10) other business
conditions. During the first six months of 2003, 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>

<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 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 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 June 30, 2003 and 2002,
the Company's recorded investment in loans for which impairment has been
recognized totaled $19.6 million and $8.2 million, respectively. Included in
total impaired loans at June 30, 2003, is $7.7 million of impaired loans for
which the related specific allowance is $630,000, as well as $11.9 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 June 30,
2002 included $2.6 million of impaired loans for which the related specific
allowance is $855,000, as well as $5.6 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 $17.3
million during the first six months of 2003 and $9.5 million during the first
six months of 2002. 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 six months ended
June 30, 2003 and year ended December 31, 2002, the Company recognized $4,000
and $3,000 on such loans, respectively. For the six months ended June 30, 2002,
the Company recognized no 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. In an effort to avoid recession, the Federal Reserve reduced interest
rates an unprecedented 475 basis points during 2001, 50 basis points during
November of 2002, and an additional 25 basis points during June 2003. With
interest rates at historical lows, the economic recovery has been slow in
coming, with increasing energy costs, declining consumer confidence, State
budget deficits, and job layoffs at major corporations across the country. With
events since the World Trade Center disaster, and expanding conflict in the
Middle East, 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 Management&#146;s
belief 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 a potential recession 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><BR><BR><BR><BR><BR><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><i>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.</i> </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<u>Table 6. Allowance for Credit Losses - Summary of Activity (unaudited)</u></FONT></P>

<pre>
                                                                  June 30,          June 30,
  (In thousands)                                                    2003              2002
--------------------------------------------------------------------------------------------------
Total loans outstanding at end of period before
  Deducting allowances for credit losses                          $349,268           $353,371
                                                              ====================================
Average net loans outstanding during period                        351,763           339,678
                                                              ====================================

Balance of allowance at beginning of period                          5,556             4,457
Loans charged off:
  Real estate                                                            0                 0
  Commercial and industrial                                         (1,007)              (18)
  Lease financing                                                      (22)              (67)
  Installment and other                                                (12)              (19)
                                                              ------------------------------------
     Total loans charged off                                        (1,041)             (104)

Recoveries of loans previously charged off:
     Real estate                                                         0                 0
     Commercial and industrial                                          22                15
     Lease financing                                                    22                 1
     Installment and other                                               0                 1
                                                              ------------------------------------
          Total loan recoveries                                         44                17
                                                              ------------------------------------
Net loans charged off                                                 (997)              (87)
Provision charged to operating expense                                 501               865
Balance of allowance for credit losses
   at end of period                                                 $5,060            $5,235
                                                              ====================================

Net loan charge-offs to total average loans (annualized)             0.57%             0.05%
Net loan charge-offs to loans at end of period (annualized)          0.58%             0.05%
Allowance for credit losses to total loans at end of period          1.45%             1.48%
Net loan charge-offs to allowance
   for credit losses (annualized)                                   39.73%             3.35%
Net loan charge-offs to provision
   for credit losses (annualized)                                  199.00%            10.06%
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Management believes that
the 1.45% credit loss allowance at June 30, 2003 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>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<u>Table 7. Nonperforming Assets</u></FONT></P>


<PRE>
                                                   June 30,          December 31,
   (In thousands except footnote)                   2003                2002
------------------------------------------------------------------------------------
Nonaccrual Loans (1)                               $20,022            $15,432
Restructured Loans                                      14                  0
                                               -------------------------------------
   Total nonperforming loans                        20,036             15,432
Other real estate owned                              2,994              9,685
                                               -------------------------------------
     Total nonperforming assets                    $23,030            $25,117
                                               =====================================

Loans past due 90 days or more, still accruing          $0                 $0
                                               =====================================
Nonperforming loans to total gross loans             5.73%               4.42%
                                               =====================================
Nonperforming assets to total gross loans            6.59%               7.20%
                                               =====================================
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)
Included in nonaccrual loans at December 31, 2002, are restructured loans
totaling $21,400.</i></FONT></P>

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

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Five lending relationships
make up nearly $17.2 million of the $20.0 million in nonperforming loans
reported at June, 30, 2003. All five relationships are considered impaired under
FAS 114. In addition, $11.4 million or 56.8% of total nonperforming loans are
secured by real estate. </FONT></P>

<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>Other real estate owned
through foreclosure has been reduced significantly during 2003 as the result of
both sales, and transfers of properties for other uses. One property totaling
more than $5.0 million was sold during the first quarter of 2003, while two
additional properties totaling more than $2.7 million were transferred to bank
premises during the second quarter of 2003. Those two properties transferred
will be used in the Company&#146;s ongoing operations (see Note 4 to the
Company&#146;s financial statements). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Except for the loans
included in the above table, or those otherwise included in the impaired loan
totals, there were no loans at June 30, 2003 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="a0024"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><u>Liquidity and Asset/Liability Management</u></b></FONT></P>

<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>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Liquidity</i></b></FONT></P>

<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
68.5% of the Company&#146;s loan portfolio at June 30, 2003. 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 June 30, 2003, the Bank had 67.2% of total assets in
the loan portfolio and a loan to deposit ratio of 79.2%. Liquid assets at June
30, 2003 include cash and cash equivalents totaling $29.9 million as compared to
$31.5 million at December 31, 2002. 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 $174.3
million at June 30, 2003. </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 the six months
ended June 30, 2003, dividends paid by the Bank to the parent company totaled
$1.9 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>


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

<a name="a0025"></a>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><u>Regulatory Matters</u></b></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Capital Adequacy</i></b></FONT></P>

<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><i>The following table sets
forth the Company&#146;s and the Bank's actual capital positions at June 30,
2003 and the minimum capital requirements for both under the regulatory
guidelines discussed above:</i> </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<u>Table 9. Capital Ratios</u></FONT></P>

<pre>
                                                  Company            Bank
                                                   Actual            Actual            Minimum
                                               Capital Ratios    Capital Ratios     Capital Ratios
                                            -------------------------------------------------------
Total risk-based capital ratio                     14.02%            13.47%             10.00%
Tier 1 capital to risk-weighted assets             12.50%            12.29%              6.00%
Leverage ratio                                     10.71%            10.53%              5.00%
</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 June 30, 2003. Management believes that, under the current
regulations, both will continue to meet their minimum capital requirements in
the foreseeable future. </FONT></P>

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

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Dividends</i></b></FONT></P>

<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 the first six months of 2003, the Company has
received $1.9 million in cash dividends from the Bank, from which the Company
paid $1.5 million in dividends to shareholders. </FONT></P>

<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 $1.9 million paid to the Company through June 30, 2003 were well within the
maximum allowed under those regulatory guidelines, without approval of the
Commissioner. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b><i>Reserve Balances</i></b></FONT></P>

<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 June 30,
2003 the Bank's qualifying balance with the Federal Reserve was approximately
$6.8 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><BR><BR><BR><BR><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>
<b>Item 3. Quantitative and Qualitative Disclosures about Market Risk</b></FONT></P>

<a name="a0027"></a>
<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>As part of its overall risk
management, the Company pursues various asset and liability management
strategies, which may include obtaining derivative financial instruments to
mitigate the impact of interest fluctuations on the Company&#146;s net interest
margin. During the second quarter of 2003, the Company entered into an interest
rate swap agreement with the purpose of minimizing interest rate fluctuations on
its interest rate margin and equity. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Under the interest rate
swap agreement, the Company receives a fixed rate and pays a variable rate based
on the Prime Rate (&#147;Prime&#148;). The swap qualifies as a cash flow hedge
under SFAS No. 133, &#147;Accounting for Derivative Instruments and Hedging
Activities&#148;, as amended, and is designated as a hedge of the variability of
cash flows the Company receives from certain variable-rate loans indexed to
Prime. In accordance with SFAS No. 133, the swap agreement is measured at fair
value and reported as an asset or liability on the consolidated balance sheet.
The portion of the change in the fair value of the swap that is deemed effective
in hedging the cash flows of the designated assets are recorded in accumulated
other comprehensive income and reclassified into interest income when such cash
flow occurs in the future. Any ineffectiveness resulting from the hedge is
recorded as a gain or loss in the consolidated statement of income as part of
noninterest income. The amortizing hedge has a notional value of $24.9 million
and a duration of approximately 3.5 years. As of June 30, 2003, the maximum
length of time over which the Company is hedging its exposure to the variability
of future cash flows is approximately five years. As of June 30, 2003, the loss
amounts in accumulated other comprehensive income associated with these cash
flows totaled $37,000 (net of tax benefit of $25,000). During the six months
ended June 30, 2003, $9,000 (net of tax of $6,000) was reclassified from other
accumulated comprehensive income into earnings. </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>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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 June 30, 2003, the Company had a cumulative
12-month Gap of -$8.9 million or -2.0% 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 $206.7 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 (although there are only
about $4.1 million of these floating-rate time deposits at June 30, 2003). 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 June 30, 2003, $269.9 million or 81.9% of the loan portfolio
matures or reprices within one year, and only 0.8% 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
3.5 years. Nearly $337.6 million or 90.6% of interest-bearing 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 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><i>The following table sets
forth the Company's Gap, or estimated interest rate sensitivity profile based on
ending balances as of June 30, 2003, 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.</i> </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<u>Table 8. Maturities and Interest Rate Sensitivity</u>
 (Unaudited)</FONT></P>

<PRE>
                                                                                                                  June 30, 2003

                                       ----------------------------------------------------------------------------
                                                                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)                              $206,690      $35,448      $27,720     $57,209       $2,617     $329,684
 Investment securities                                 30,136        7,143      49,379       13,255       99,913
 Interest-bearing deposits in
   other banks                                          6,279        3,165         198                     9,642
 Federal funds sold and reverse repos     12,090                                                          12,090
                                       ----------------------------------------------------------------------------
   Total earning assets                 $218,780      $71,863      $38,028    $106,786      $15,872     $451,329
                                       ============================================================================
 Interest-bearing
  transaction accounts                   $98,300                                                         $98,300
 Savings accounts                         24,973                                                          24,973
 Time deposits  (2)                        4,139      103,170       82,538      35,126           12      224,985
 Federal funds purchased/other
   borrowings                                482                     9,000                                 9,482
 Trust Preferred securities                                         15,000                                15,000
                                       ----------------------------------------------------------------------------
  Total interest-bearing liabilties     $127,894     $103,170     $106,538     $35,126          $12     $372,740
                                       ============================================================================

Interest rate sensitivity gap            $90,886     $(31,307)   $(68,510)     $71,660      $15,860      $78,589
Cumulative gap                           $90,886      $59,579     $(8,931)     $62,729      $78,589
Cumulative gap percentage to
     total earning assets                  20.1%        13.2%        -2.0%       13.9%        17.4%

</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<I>(1) Loan balance does not include nonaccrual loans of $20.022 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 June 30, 2003, 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>

<p align=center><font size=3>28</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><i>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 June 30, 2003 and December 31, 2002 ($ 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.</i> </FONT></P>

<PRE>
                               June 30, 2003                           December 31,2002
                  -----------------------------------------------------------------------------------
                   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           $43,026     $(1,709)       -3.82          $43,084       $1,628         3.93%
 + 100 BP            44,276        (459)       -1.03%          42,692        1,236         2.98%
     0 BP            44,735           0         0.00%          41,456            0         0.00%
 - 100 BP            43,503      (1,232)       -2.75%          39,709       (1,747)       -4.22%
 - 200 BP            45,678         943         2.11%          42,903        1,447         3.49%
</PRE>


<BR><BR><BR><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">


<a name="a0030"></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 "Act")) 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 Company 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 June 30, 2003, the Company 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><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">

<a name="a0031"></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></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company&#146;s Annual
Shareholder&#146;s Meeting was held on Wednesday May 21, 2003 in Fresno,
California. The shareholders were asked to vote on the election of eight
nominees to serve on the Company&#146;s Board of Directors. Such Directors
nominate for election will serve on the Board until the 2004 annual meeting of
shareholders and until their successors are elected and have been qualified.
Votes regarding the election of Directors were as follows: </FONT></P>

<pre>
           Director Nominee                    Votes For              Votes Withheld
 ------------------------------------ --------------------------- ----------------------
     Robert G. Bitter, Pharm. D.              3,927,879                    607
     Stanley J. Cavalla                       3,928,090                    396
     Tom Ellithorpe                           3,928,090                    396
     Ronnie D. Miller                         3,927,879                    607
     Walter Reinhard                          3,928,090                    396
     John Terzian                             3,926,890                  1,596
     Bobbi Thomason                           3,928,090                    396
     Dennis R. Woods                          3,922,090                  6,396
</pre>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Item 5.</b> Not applicable</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>31.1</td>
<td>Certification of the Chief Executive Officer of United Security Bancshares
pursuant to Section 302 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>31.2</td>
<td>Certification of the Chief Financial Officer of United Security Bancshares
pursuant to Section 302 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>32.1</td>
<td>Certification of the Chief Executive Officer of United Security Bancshares
pursuant to Section 906 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>32.2</td>
<td>Certification of the Chief Financial Officer of United Security Bancshares
pursuant to Section 906 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:</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
During the quarter ended June 30, 2003, the Company filed the following current reports on Form 8-K:</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
1) June 25, 2003 (containing a press release declaring a regular quarterly cash dividend), and 2) April 25, 2003
(containing a press release reporting the financial results for the period ended June 30, 2003).</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>31</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">





<a name="a0032"></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: Augyst 13, 2003</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>32</font></p>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">

















</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1
<SEQUENCE>3
<FILENAME>certcfo302b.htm
<DESCRIPTION>302 CERT - 6/30/03 - CEO
<TEXT>
<HTML>
<head>
<title>United Security Bancshares CFO Certification 302 10Q June 30, 2003
</title>
</head>
<BODY>

<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Exhibit 31.1</b></FONT></P>

<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>SECTION 302 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 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 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 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 officer 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, or caused such disclosure controls
and procedures to be designed under our supervision, 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 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 and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>c)</td>
<td>Disclosed in this report any change in the registrant's internal control
over financial reporting that occured during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
</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 officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of
internal control over financial reporting which which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; 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 control over financial reporting.</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;August 13, 2003</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><BR><BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A signed original of this written statement required by Section 302 of the Sarbannes-Oxley Act
has been provided to United Security Bancshares and will be retained by United Security Bancshares
and furnished to the SEC or its staff upon request.</FONT></P>







</body>
</html>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1
<SEQUENCE>4
<FILENAME>certceo302b2.htm
<DESCRIPTION>302 CERT - 6/30/03  - CFO
<TEXT>
<HTML>
<head>
<title>United Security Bancshares CFO Certification 302 10Q June 30, 2003
</title>
</head>
<BODY>

<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Exhibit 31.2</b></FONT></P>

<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>SECTION 302 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 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 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 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 officer 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, or caused such disclosure controls
and procedures to be designed under our supervision, 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 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 and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and</td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td valign=top>c)</td>
<td>Disclosed in this report any change in the registrant's internal control
over financial reporting that occured during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
</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 officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of
internal control over financial reporting which which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; 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 control over financial reporting.</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;August 13, 2003</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><BR><BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A signed original of this written statement required by Section 302 of the Sarbannes-Oxley Act
has been provided to United Security Bancshares and will be retained by United Security Bancshares
and furnished to the SEC or its staff upon request.</FONT></P>







</body>
</html>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1
<SEQUENCE>5
<FILENAME>a10q630cert9061.htm
<DESCRIPTION>906 CERT - 6/30/03 - CEO
<TEXT>
<HTML>
<head>
<title>906 certification for United Security Bancshares 10Q June 30, 2003
</title>
</head>
<BODY>

<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Exhibit 32.1</b></FONT></P>


<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>
August 13, 2003</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>


</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1
<SEQUENCE>6
<FILENAME>a10q630cert9062.htm
<DESCRIPTION>906 CERT - 6/30/03 - CFO
<TEXT>
<HTML>
<head>
<title>906 certification for United Security Bancshares 10Q June 30, 2003
</title>
</head>
<BODY>

<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>Exhibit 32.2</b></FONT></P>


<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>
August 13, 2003</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>


</body>
</html>

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