United Security Bancshares (UBFO) DEF 14A Definitive proxy

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

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United Security Bancshares

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United Security Bancshares
2151 West Shaw Avenue
Fresno, California 93711

April 15, 2003

Dear Shareholders:

You are cordially invited to attend United Security Bancshares’ annual meeting of shareholders which will be held at United Security Bank’s head office located at 2151 West Shaw Avenue, Fresno, California, on Wednesday, May 21, 2003 at 7:00 p.m.

At the meeting, shareholders will be asked to elect directors for the ensuing year. Information regarding the nominees for election of directors is set forth in the accompanying proxy statement.

It is important that your shares be represented at the meeting whether or not you plan to attend. Please indicate on the enclosed proxy card your vote on the matter presented, and sign, date and return the proxy card in the enclosed envelope. If you do attend the meeting and wish to vote in person, your proxy will be withdrawn at that time.

Dennis R. Woods

Chairman of the Board

TABLE OF CONTENTS

United Security Bancshares
1525 East Shaw Avenue
Fresno, California 93710

Notice of Annual Meeting of Shareholders

May 21, 2003

To the Shareholders of
United Security Bancshares:

Notice is hereby giventhat the annual meeting of shareholders of United Security Bancshares will be held at the head office of United Security Bank located at 2151 West Shaw Avenue, Fresno, California, on May 21, 2003 at 7:00 p.m. for the purpose of considering and voting upon the following matters:

1. Election of Directors.To elect eight (8) persons to serve as directors of United Security Bancshares until their successors are duly elected and qualified.

Robert G. Bitter, Pharm. D.	Walter Reinhard
Stanley J. Cavalla	John Terzian
Tom Ellithorpe	Bobbi Thomason
Ronnie D. Miller	Dennis R. Woods

2. Transaction of Other Business.To transact such other business as may properly come before the meeting and any adjournment or adjournments thereof.

The board of directors has fixed the close of business on March 27, 2003 as the record date for determination of shareholders entitled to notice of, and to vote at, the meeting.

Section 3.3 of Article III of the Bylaws sets forth the nomination procedure for nominations of directors. Section 3.3 provides:

Nominations for election of members of the board may be made by the board or by any holder of any outstanding class of capital stock of the corporation entitled to vote for the election of directors. Notice of intention to make any nominations (other than for persons named in the notice of the meeting called for the election of directors) shall be made in writing and shall be delivered or mailed to the president of the corporation by the later of: (i) the close of business twenty-one (21) days prior to any meeting of shareholders called for the election of directors; or (ii) ten (10) days after the date of mailing of notice of the meeting to shareholders. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the number of shares of capital stock of the corporation owned by each proposed nominee; (d) the name and residence address of the

notifying shareholder; (e) the number of shares of capital stock of the corporation owned by the notifying shareholder; (f) the number of shares of capital stock of any bank, bank holding company, savings and loan association or other depository institution owned beneficially by the nominee or by the notifying shareholder and the identities and locations of any such institutions; and (g) whether the proposed nominee has ever been convicted of or pleaded nolo contendere to any criminal offense involving dishonesty or breach of trust, filed a petition in bankruptcy or been adjudged bankrupt. The notification shall be signed by the nominating shareholder and by each nominee, and shall be accompanied by a written consent to be named as a nominee for election as a director from each proposed nominee. Nominations not made in accordance with these procedures shall be disregarded by the chairperson of the meeting, and upon his or her instructions, the inspectors of election shall disregard all votes cast for each such nominee. The foregoing requirements do not apply to the nomination of a person to replace a proposed nominee who has become unable to serve as a director between the last day for giving notice in accordance with this paragraph and the date of election of directors if the procedure called for in this paragraph was followed with respect to the nomination of the proposed nominee.

		By Order of the Board of Directors
Dated:	April 15, 2003	Robert G. Bitter, Secretary

We urge you to vote in favor of management’s proposal by signing and returning the enclosed proxy as promptly as possible, whether or not you plan to attend the meeting in person. The enclosed proxy is solicited by the board of directors. Any shareholder giving a proxy may revoke it prior to the time it is voted by filing with United Security Bancshares’ secretary an instrument revoking it or a duly executed proxy bearing a later date, or by attending the meeting and voting in person. Please indicate on the proxy whether or not you expect to attend the meeting so that we can arrange adequate accommodations.

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United Security Bancshares

Proxy Statement

Annual Meeting of Shareholders

May 21, 2003

Introduction

This proxy statement is furnished in connection with the solicitation of proxies for use at the 2003 annual meeting of shareholders of United Security Bancshares to be held on Wednesday, May 21, 2003 at 7:00 p.m. at the head office of United Security Bank located at 2151 West Shaw Avenue, Fresno, California, and at any and all adjournments thereof.

It is anticipated that this proxy statement and the accompanying notice and form of proxy will be mailed on or about April 15, 2003 to shareholders eligible to receive notice of, and to vote at, the meeting.

Revocability of Proxies

A form of proxy for voting your shares at the meeting is enclosed. Any shareholder who executes and delivers such proxy has the right to and may revoke it at any time before it is exercised by filing with the secretary of United Security Bancshares an instrument revoking it or a duly executed proxy bearing a later date. In addition, the powers of the proxyholders will be suspended if the person executing the proxy is present at the meeting and elects to vote in person by advising the chairman of the meeting of his or her election to vote in person, and voting in person at the meeting. Subject to such revocation or suspension, all shares represented by a properly executed proxy received in time for the meeting will be voted by the proxyholders in accordance with the instructions specified on the proxy.Unless otherwise directed in the accompanying proxy, the shares represented by your executed proxy will be voted “FOR” the nominees for election of directors named herein. If any other business is properly presented at the meeting, the proxy will be voted in accordance with the recommendations of United Security Bancshares’ management.

Persons Making the Solicitation

This solicitation of proxies is being made by the board of directors of United Security Bancshares. The expense of preparing, assembling, printing and mailing this proxy statement and the materials used in the solicitation of proxies for the meeting will be borne by United Security Bancshares. It is contemplated that proxies will be solicited principally through the use of the mail, but directors, officers and employees of United Security Bancshares may solicit proxies personally or by telephone, without receiving special compensation.

Voting Securities

There were issued and outstanding 5,453,261 shares of United Security Bancshares’ common stock on March 27, 2003, which has been fixed as the record date for the purpose of determining shareholders entitled to notice of, and to vote at, the meeting. On any matter submitted to the vote of the shareholders, each holder of United Security Bancshares’ common stock will be entitled to one vote, in person or by proxy, for each share of common stock he or she held of record on the books of United Security Bancshares as of the record date. In connection with the election of directors, shares may be voted cumulatively if a shareholder present at the meeting gives notice at the meeting, prior to the voting for election of directors, of his or her intention to vote cumulatively. If any shareholder of United Security Bancshares gives such notice, then all shareholders eligible to vote will be entitled to cumulate their shares in voting for election of directors. Cumulative voting allows a shareholder to cast a number of votes equal to the number of shares held in his or her name as of the record date, multiplied by the number of directors to be elected. These votes may be cast for any one nominee, or may be distributed among as many nominees as the shareholder sees fit. If cumulative voting is declared at the meeting, votes represented by proxies delivered pursuant to this proxy statement may be cumulated in the discretion of the proxyholders, in accordance with management’s recommendation. The effect of broker nonvotes is that such votes are not counted as being voted; however such votes are counted for purposes of determining a quorum. The effect of a vote of abstention on any matter is that such vote is not counted as a vote for or against the matter, but is counted as an abstention.

Shareholdings of Certain
Beneficial Owners and Management

Management of United Security Bancshares knows of no person who owns, beneficially or of record, either individually or together with associates, five percent (5%) or more of the outstanding shares of United Security Bancshares’ common stock, except as set forth in the table below. The following table sets forth, as of March 20, 2003, the number and percentage of shares of United Security Bancshares’ outstanding common stock beneficially owned, directly or indirectly, by each of United Security Bancshares’ directors, named executive officers and principal shareholders and by the directors and executive officers of United Security Bancshares as a group. The shares “beneficially owned” are determined under Securities and Exchange Commission Rules, and do not necessarily indicate ownership for any other purpose. In general, beneficial ownership includes shares over which the director, named executive officer or principal shareholder has sole or shared voting or investment power and shares which such person has the right to acquire within 60 days of March 20, 2003. Unless otherwise indicated, the persons listed below have sole voting and investment powers of the shares beneficially owned. Management is not aware of any arrangements which may, at a subsequent date, result in a change of control of United Security Bancshares.

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	Amount and Nature of			Percent
Beneficial Owner	Beneficial Ownership			of Class(1)
Directors and Named Executive Officers:
Robert G. Bitter, Pharm. D.		403,335	(2)		7.4
Rhodlee A. Braa		110,125	(3)		2.0
Stanley J. Cavalla		224,600	(4)		4.1
Kenneth L. Donahue		130,495	(5)		2.4
Tom Ellithorpe		95,686			1.8
David L. Eytcheson		368,076	(6)		6.7
Ronnie D. Miller		398,917	(7)		7.3
Walter Reinhard		174,388			3.2
John Terzian		89,830	(8)		1.6
Bobbi Thomason		348,912	(9)		6.4
Dennis R. Woods		428,659	(10)		7.8
All Directors and Executive Officers as a Group (11 in all)		2,065,001	(11)		37.0

*	Less than one percent (1%).
(1)	Includes shares subject to options held by the directors and executive officers that were exercisable within 60 days of March 20, 2003. These are treated as issued and outstanding for the purpose of computing the percentage of each director, named executive officer and the directors and executive officers as a group, but not for the purpose of computing the percentage of class owned by any other person.
(2)	Dr. Bitter has shared voting and investment powers as to 314,076 shares in his capacity as a trustee of United Security Bank’s Cash or Deferred 401(k) Stock Ownership Plan and United Security Bank’s Employee Stock Ownership Plan. Dr. Bitter’s address is c/o United Security Bancshares, 1525 East Shaw Avenue, Fresno, California 93710.
(3)	Mr. Braa has shared voting and investment powers as to 61,800 shares and has 30,600 shares acquirable by exercise of stock options. Mr. Braa also holds 13,285 shares in United Security Bank’s Cash or Deferred 401(k) Stock Ownership Plan and United Security Bank’s Employee Stock Ownership Plan.
(4)	Mr. Cavalla has 2,000 shares acquirable by exercise of stock options.
(5)	Mr. Donahue has shared voting and investment powers as to 60,096 shares and has 30,000 shares acquirable by exercise of stock options. Mr. Braa also holds 39,462 shares in United Security Bank’s Cash or Deferred 401(k) Stock Ownership Plan and United Security Bank’s Employee Stock Ownership Plan.
(6)	Mr. Eytcheson has shared voting and investment powers as to 314,076 shares in his capacity as a trustee of United Security Bank’s Cash or Deferred 401(k) Stock Ownership Plan and United Security Bank’s Employee Stock Ownership Plan. Mr. Eytcheson also has shared voting and investment powers as to the remaining 54,000 shares. Mr. Eytcheson’s address is c/o United Security Bancshares, 1525 East Shaw Avenue, Fresno, California 93710.

(Footnotes continued on the following page.)

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(7)	Mr. Miller has shared voting and investment powers as to 314,076 shares in his capacity as a trustee of United Security Bank’s Cash or Deferred 401(k) Stock Ownership Plan and United Security Bank’s Employee Stock Ownership Plan. Mr. Miller also has shared voting and investment powers as to an additional 76,009 shares. Mr. Miller’s address is c/o United Security Bancshares, 1525 East Shaw Avenue, Fresno, California 93710.
(8)	Mr. Terzian has shared voting and investment powers as to 47,020 shares.
(9)	Ms. Thomason has shared voting and investment powers as to 10,220 shares. Ms. Thomason’s address is c/o United Security Bancshares, 1525 East Shaw Avenue, Fresno, California 93710.
(10)	Mr. Woods has 60,000 shares acquirable by exercise of stock options. Mr. Woods’ address is c/o United Security Bancshares, 1525 East Shaw Avenue, Fresno, California 93710. Mr. Woods also holds 27,123 shares in United Security Bank’s Cash or Deferred 401(k) Stock Ownership Plan and United Security Bank’s Employee Stock Ownership Plan.
(11)	Total includes 122,600 shares acquirable by exercise of stock options.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires United Security Bancshares’ directors and certain executive officers and persons who own more than ten percent of a registered class of United Security Bancshares’ equity securities (collectively, the “Reporting Persons”), to file reports of ownership and changes in ownership with the Securities and Exchange Commission. The Reporting Persons are required by Securities and Exchange Commission regulation to furnish United Security Bancshares with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or written representations from the Reporting Persons that no Forms 5 were required for those persons, United Security Bancshares believes that, during 2003 the Reporting Persons complied with all filing requirements applicable to them.

Proposal 1:
Election of Directors

Nominees

United Security Bancshares’ Bylaws provide that the number of directors of United Security Bancshares shall not be less than eight (8) nor more than fifteen (15) until changed by an amendment of the articles of incorporation or the bylaws adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote, provided that a proposal to reduce the authorized number or the minimum number of directors below five cannot be adopted. The exact number of directors shall be fixed from time to time, within the range: (i) by a resolution duly adopted by the board of directors; (ii) by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of the holders of a majority of the outstanding shares entitled to vote; or (iii) by approval of the shareholders. The exact number of directors has been set at eight (8).

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The persons named below, all of whom are currently members of the board of directors, have been nominated for election as directors to serve until the 2004 annual meeting of shareholders and until their successors are elected and have qualified. Votes of the proxyholders will be cast in such a manner as to effect the election of all eight (8) nominees, as appropriate, (or as many thereof as possible under the rules of cumulative voting). The eight (8) nominees for directors receiving the most votes will be elected directors. In the event that any of the nominees should be unable to serve as a director, it is intended that the proxy will be voted for the election of such substitute nominee, if any, as shall be designated by the board of directors. The board of directors has no reason to believe that any of the nominees named below will be unable to serve if elected.

The following table sets forth, as of March 20, 2003, the names of, and certain information concerning, the persons nominated by the board of directors for election as directors of United Security Bancshares.

			Year First		Principal Occupation
Name and Title			Appointed		During the
Other than Director	Age		Director		Past Five Years
Robert G. Bitter, Pharm. D., Secretary		64		2001	Clinical Pharmacist at Madera Community Hospital, Owner of Berenda Creek Ranch and Partner in Selma Shopping Center.
Stanley J. Cavalla		52		2001	Vice President of Suburban Steel, Inc. and Vice President of Tri State Stairway Corp.
Tom Ellithorpe		60		2001	Owner of Insurance Buying Service.
Ronnie D. Miller Vice Chairman		61		2001	President of Ron Miller Enterprises, Inc., dba Fresno Motor Sales and Fresno Commercial Lenders.
Walter Reinhard		73		2001	Retired. Former President of Reinhard’s Cabinet.
John Terzian		70		2001	Retired. Former owner of Tollhouse Enterprises, Inc., dba Peacock Market.
Bobbi Thomason		73		2001	Owner of Thomason Tractor Company of California.
Dennis R. Woods Chairman, President and Chief Executive Officer		55		2001	Chairman of the Board, President and Chief Executive Officer of United Security Bancshares and United Security Bank.

All of the nominees named above have served as members of United Security Bancshares’ board of directors since its inception. All nominees will continue to serve if elected at the meeting until the 2004 annual meeting of shareholders and until their successors are elected and have been qualified.

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None of the directors were selected pursuant to any arrangement or understanding other than with the directors and executive officers⁽¹⁾ of United Security Bancshares acting within their capacities as such. There are no family relationships between any of the directors of United Security Bancshares. No director of United Security Bancshares serves as a director of any company which has a class of securities registered under, or which is subject to the periodic reporting requirements of, the Securities Exchange Act of 1934, or of any company registered as an investment company under the Investment Company Act of 1940.

The Board of Directors and Committees

United Security Bancshares’ board of directors met twelve (12) times in 2002. None of United Security Bancshares’ directors attended less than 75 percent of all board of directors’ meetings and committee meetings of which they were a member.

United Security Bancshares has an audit committee which meets as needed to review examinations of the Federal Reserve Board, the Department of Financial Institutions and Moss Adams LLP, United Security Bancshares’ auditor. The audit committee consists of Mr. Ellithorpe (chairman), Mr. Reinhard and Ms. Thomason. The audit committee met eight (8) times during 2002. The audit committee functions are to review all internal and external audits, report any significant findings to the board of directors, and ensure that the internal audit plans are met, programs are carried out, and weaknesses are promptly responded to. The audit committee meets annually to discuss and review the overall audit plan. The board of directors has adopted a written charter for the audit committee which is attached as Exhibit A to this proxy statement. Each of the audit committee members satisfies the definition of independent director as established in the NASDAQ listing standards.

Audit Committee Report

This report of the audit committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that United Security Bancshares specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts.

The audit committee has reviewed United Security Bancshares’ audited financial statements and discussed such statements with management. The audit committee has discussed with Moss Adams LLP, United Security Bancshares’ independent auditors during the year 2002, the matters required to be discussed by Statement of Auditing Standards No. 61 (Communication with Audit and Finance Committees, as amended).

The audit committee received written disclosures and a letter from Moss Adams LLP, required by Independence Standards Board Standard No. 1 and has discussed with them their independence from management. The audit committee has also considered whether the independent auditors’ provision of other nonaudit services is compatible with the auditors’ independence.

(1) As used in this proxy statement, the term “executive officer” of United Security Bancshares includes the President/Chief Executive Officer, Senior Vice President/Chief Financial Officer, Senior Vice President/Chief Credit Officer and Senior Vice President/Chief Operating Officer.

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Based on the review and discussions noted above, the audit committee recommended to the board of directors that United Security Bancshares’ audited financial statements be included in United Security Bancshares’ Annual Report on Form 10-K for the year ended December 31, 2002, for filing with the Securities and Exchange Commission.

The audit committee has also confirmed that there have been no new circumstances or developments since their respective appointments to the audit committee that would impair any member’s ability to act independently.

The Audit Committee

Tom Ellithorpe, Chairman
Walter Reinhard
Bobbi Thomason

United Security Bancshares has a personnel committee which met two (2) times in 2002. The personnel committee consists of Mr. Ellithorpe (chairman) and Messrs. Cavalla, Miller and Woods. The purpose of the personnel committee is to set policies, review salary recommendations, grant stock options and approve other personnel matters which are in excess of management’s authority.

United Security Bancshares also has a board evaluation/nominating committee which did not meet in 2002. The board evaluation/nominating committee consists of Mr. Ellithorpe (chairman) and Messrs. Cavalla, Miller and Woods. The purpose of the board evaluation/nominating committee is to evaluate the directors for various performance rating factors to determine each director’s monthly director’s fees and to make recommendations to the board of directors regarding nominees for election of directors.

Report of Personnel Committee on Executive Compensation

Compensation Policies

The personnel committee establishes the overall executive compensation guidelines of United Security Bancshares and establishes the compensation plans and specific compensation levels of the Chief Executive Officer (“CEO”) and other executive officers. The personnel committee reviews its approach to executive compensation annually.

The personnel committee believes that executive officer compensation should be closely aligned with the performance of United Security Bancshares on a short-term and long-term basis, and that such compensation should be structured to assist United Security Bancshares in attracting and retaining key executives critical to its long-term success. To that end, the personnel committee’s policy for compensation packages of executive officers consists of three components: (i) an annual base salary; (ii) the potential to earn incentive bonuses dependent on United Security Bancshares’ performance, and (iii) stock option awards and salary continuation plans designed to link shareholder interests with those of executive management by providing long-term incentives to executive officers of United Security Bancshares. The performance based aspects, items (ii) and (iii) above, are considered major elements of the overall compensation program.

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Executive Officer Compensation

Base Salary:Effective January 1, 1997, the personnel committee of United Security Bank established a fixed-based salary program whereby the executive officers base salaries were frozen. Future compensation increases are achieved through the performance-based aspects of compensation. In establishing fixed base salaries, the personnel committee considered salaries of comparably sized California banks, banks earning between $3 and $4 million per year, as well as local area banks. The information was compiled from a variety of sources including the California Banker’s Association, proxy materials, and other independent sources. However, executive officers may have their salaries adjusted from time to time as the size, complexity, and earnings of United Security Bancshares change, in order to ensure that total compensation remains competitive. The fixed based salary program was reviewed during 2000, and the base salaries were increased for the CEO and the other three executive officers as a result of the significant asset and earnings growth since the plan was first enacted in 1997. Base salaries have not been adjusted since 2000.

Annual Incentives:The personnel committee believes that incentives for officers are a key component for ensuring continued growth in shareholder value through increased earnings. Accordingly, executive officers earn bonuses based upon a percentage of United Security Bancshares’ net income each year.

All executive officers are entitled to participate in United Security Bank’s ESOP and 401(k) programs but are subject to more stringent matching bank contributions than other employees of United Security Bank, as required by regulation.

Long-term Incentives:Long-term incentives are provided through the grant of stock options to certain employees of United Security Bank including executive officers. Incentive stock options are granted at the market value prevailing on the date of grant and are intended to retain and motivate key management to improve United Security Bancshares’ long-term shareholder value, as the options only have value if the market price of the underlying stock appreciates after the date granted. At December 31, 2002, total stock options that have been granted to key management and remain outstanding totaled 201,800 shares, including 82,500 to the CEO, 60,600 to other executive officers (3 total), and 58,700 to other senior management (6 total).

A component of United Security Bank’s 401(k)/ESOP recognizes and rewards employee’s contributions to its successful operation by enabling those employees to acquire a proprietary interest in United Security Bancshares’ common stock. All employees of United Security Bank are eligible to participate in the 401(k) Plan upon the first day of the month after date of hire. Participants are automatically vested 100% in all employee contributions which they may invest in any of several authorized investment vehicles, including United Security Bancshares’ stock. United Security Bank contributes funds to match the employee’s 401(k) Plan contribution up to 5% of the employee’s eligible annual compensation. These contributions are invested in United Security Bancshares’ stock and are subject to certain vesting requirements over a period of six years. Under the ESOP portion of the plan, United Security Bancshares annually contributes shares of common stock for each eligible employee’s account in an amount proportionate to the employee’s compensation. United Security Bancshares’ contribution is at the discretion of the board of directors and has been 8% of employee compensation for all but one year since its inception in 1994 through 2002. Employees thereby have a vested interest in contributing on an ongoing basis to the profitability of United

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Security Bancshares, and with a vesting period of six years, they have the additional incentive to remain with United Security Bank on a long-term basis.

United Security Bank has established a nonqualified salary continuation plan for five of United Security Bank’s key employees, including the president and executive officers, which provides additional compensation benefits upon retirement for a period of 15 years. Future compensation under the plan is earned by the employees for services rendered through retirement and vests over a period of 12 years. In connection with the implementation of the salary continuation plans, United Security Bank purchased single premium universal life insurance policies on the life of each of the key employees covered under the plan. United Security Bank is the owner and beneficiary of these insurance policies.

Chief Executive Officer Compensation

Since Mr. Woods became the CEO in 1993, United Security Bank’s performance and competitive position have improved significantly. United Security Bank’s earnings have increased more than 500% since that time, and dividends have increased every year; a total of 290% over the period. Total assets have increased more than 480% during that same period. Some of this growth has come from mergers and acquisitions, which in turn have strengthened United Security Bancshares’ strategic position and competitive growth outlook for the future.

Base Salary:Mr. Woods is subject to the same fixed salary program as other executive officers. During 2000, the personnel committee targeted Mr. Woods’ base salary at the competitive median for comparable sized California banks demonstrating comparable net earnings as taken from a variety of reliable sources. Mr. Woods’ base salary of $239,000 is currently believed reasonable by the personnel committee based upon reference to competitive pay practices and the previously described compensation approach to executive officers. The personnel committee believes that the performance based compensation program, as it relates to the CEO, offers substantial additional compensation incentives to reward Mr. Woods for successful results.

Performance Based Compensation:Mr. Woods is eligible to participate in the same short-term and long-term incentive plans as the other executive officers of United Security Bancshares. In addition, the terms of the bonus plan for the CEO are different than the other executive officers.

Mr. Woods’ entire performance based compensation is tied directly to net income of United Security Bancshares. Pursuant to the provisions of the performance based compensation plan for the CEO, Mr. Woods was awarded a cash bonus totaling $303,032 as a result of United Security Bancshares’ performance during 2002.

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As noted, United Security Bancshares’ executive compensation policy is based primarily on performance. The personnel committee believes Mr. Woods has managed United Security Bancshares well, and has achieved above-normal results, not only in terms of earnings and asset growth, but also in overall stockholder value.

Members of the Personnel Committee:

Dennis R. Woods
Stanley J. Cavalla
Tom Ellithorpe
Ronnie D. Miller

Compensation Committee Interlocks and Insider Participation

Messrs. Woods, Cavalla, Ellithorpe and Miller served as members of United Security Bancshares’ personnel committee during 2002. Mr. Woods serves as the President and Chief Executive Officer of United Security Bancshares. There are no personnel committee interlocks between United Security Bancshares and other entities involving United Security Bancshares’ executive officers or board members.

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United Security Bancshares

	Period Ending
Index	12/31/97		12/31/98		12/31/99		12/31/00		12/31/01		12/31/02
United Security Bancshares		100.00		120.96		175.38		149.91		150.61		162.95
S&P 500		100.00		128.55		155.60		141.42		124.63		96.95
SNL <$500M Bank Index		100.00		91.31		84.52		81.54		112.79		144.45
SNL $500M-$1B Bank Index		100.00		98.32		91.02		87.12		113.02		144.30

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Compensation of Directors and Executive Officers

Director Compensation

During 2002, directors of United Security Bancshares and United Security Bank were compensated for monthly board meetings based on a performance rating structure ranging from a minimum of $800 per meeting up to $1,300 per meeting. In addition, the vice chairman received an additional $200 per meeting and the secretary received an additional $250 per meeting. Also, directors, other than Mr. Woods, were paid $300 for their attendance at committee meetings, other than loan committee meetings, and were paid $400 for their attendance at loan committee meetings, if such committee meeting was held on a day other than the regular board of directors’ meeting. During 2003, the directors of United Security Bank will continue to be compensated.

In September, 2000, Mr. Cavalla, a director of United Security Bancshares, received a stock option under the United Security Bank 1995 Stock Option Plan to acquire 5,000 shares of common stock. The exercise price for these shares is $17.00 per share. This option is for a term of ten years expiring in September, 2010.

Director Emeritus Plan

During 1995, United Security Bank also established a Directors Emeritus Plan, which was amended in May, 2000. Those directors who (i) retire as directors of United Security Bank or (ii) retired as directors of Golden Oak Bank and who signed a shareholder’s agreement, are eligible to participate in the Directors Emeritus Plan. Each Director Emeritus will be a lifetime position or until a Director Emeritus shall sell a majority of his or her ownership in United Security Bank. Directors Emeritus receive a monthly fee of $400, and receive preferential deposit and customer service with free checking as long as they serve as a Director Emeritus. Director Emeritus benefits terminate upon (i) the ultimate sale of United Security Bank, (ii) the sale of a majority of the Director Emeritus’ shares of United Security Bank’s common stock, or (iii) the finding by United Security Bank’s board of directors that the Director Emeritus is engaging in activities or making statements which are detrimental to United Security Bank or United Security Bank’s public image.

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Executive Officers

The following table sets forth information, as of March 20, 2003, concerning executive officers of United Security Bancshares:

			Position and Principal Occupation
Name	Age		For the Past Five Years
Dennis R. Woods		55	President and Chief Executive Officer of United Security Bank and United Security Bancshares.
Kenneth L. Donahue		54	Senior Vice President and Chief Financial Officer of United Security Bank and United Security Bancshares.
Rhodlee A. Braa		61	Senior Vice President and Chief Credit Officer of United Security Bank and United Security Bancshares.
David L. Eytcheson		62	Senior Vice President and Chief Operating Officer of United Security Bank and United Security Bancshares.

Executive Compensation

The persons serving as the executive officers of United Security Bancshares received during 2002, and are expected to continue to receive in 2003, cash compensation in their capacities as executive officers of United Security Bank.

The following Summary Compensation Table indicates the compensation of United Security Bancshares’ executive officers.

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Summary Compensation Table

										Long Term Compensation
Annual Compensation										Awards				Payouts
(a)	(b)		(c)			(d)		(e)		(f)		(g)		(h)		(i)
								Other
								Annual		Restricted						All Other
Name and								Compen-		Stock				LTIP		Compen-
Principal			Salary			Bonus		sation		Award(s)		Options/		Payouts		sation
Position	Year		($)			($)		($)		($)		SARs		($)		($)(3)
Dennis R. Woods		2002	$	254,300	(1)	$	257,609		0		0		0		0	$	40,400
President and Chief		2001	$	254,300	(1)	$	260,264		0		0		0		0	$	36,845
Executive Officer		2000	$	216,646	(2)	$	201,680		0		0		0		0	$	35,123
Kenneth L. Donahue		2002	$	112,000		$	62,544		0		0		0		0	$	24,534
Senior Vice President and Chief		2001	$	112,000		$	54,410		0		0		0		0	$	23,356
Financial Officer		2000	$	99,691		$	36,601		0		0		0		0	$	23,961
David L. Eytcheson		2002	$	112,000		$	62,544		0		0		0		0	$	23,139
Senior Vice President and Chief		2001	$	112,000		$	54,410		0		0		0		0	$	22,112
Operating Officer		2000	$	99,691		$	36,601		0		0		0		0	$	23,966
Rhodlee A. Braa		2002	$	112,000		$	62,544		0		0		0		0	$	24,280
Senior Vice President and Chief		2001	$	112,000		$	54,410		0		0		0		0	$	21,659
Credit Officer		2000	$	99,045		$	36,601		0		0		0		0	$	23,869

(1)	Includes $15,300 in directors fees.
(2)	Includes $11,800 in directors fees.
(3)	This amount represents United Security Bank’s contribution under United Security Bank’s Cash or Deferred 401(k) Plan, United Security Bank’s Employee Stock Ownership Plan and the cost of premiums for excess disability, medical and life insurance.

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Option/SAR Exercises and Year-End Value Table

Aggregated Option/SAR Exercises in Last Fiscal Year and Year-End Option/SAR Value

(a)	(b)		(c)		(d)	(e)
						Value of
					Number of	Unexercised In-
					Unexercised	the-Money
					Options/SARs at	Options/SARs at
					Year-End (#)	Year-End ($)
	Shares Acquired on		Value Realized		Exercisable/	Exercisable/
Name	Exercise (#)		($)		Unexercisable	Unexercisable
Dennis R. Woods		32,500	$	382,525	Options Only 82,500/0	Options Only $656,025/$0
Kenneth L. Donahue		0		N/A	Options Only 30,000/0	Options Only $195,600/$0
David L. Eytcheson		12,000	$	78,240	Options Only 0/0	Options Only $0/$0
Rhodlee A. Braa		11,400	$	143,640	Options Only 30,600/0	Options Only $203,160/$0

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Mr. Woods has a salary continuation agreement with United Security Bank which provides that United Security Bank will pay him $100,000 per year for 15 years following his retirement from United Security Bank at age 61 (“Retirement Age”). In the event of disability while Mr. Woods is actively employed prior to Retirement Age, he will have the option to take a benefit amount based on the vesting schedule below for 15 years beginning at the earlier of the time when he reaches age 61 or the date on which he is no longer entitled to disability benefits under his principal disability insurance policy. In the event Mr. Woods dies while actively employed by United Security Bank prior to Retirement Age, his beneficiary will receive from United Security Bank $100,000 per year for 15 years beginning one month after his death. In the event of termination without cause, early retirement, or voluntary termination, Mr. Woods shall receive a benefit amount based on the vesting schedule below for 15 years beginning with the month following the month in which Mr. Woods terminates employment and attains age 61. The vesting schedule is 25% for the first year of service beginning July 3, 1996, 15% for the second year of service, 10% for the third year of service, 6% per year of service for the following eight years of service and 2% for the twelfth year of service. In the event Mr. Woods is terminated for cause he will forfeit any benefits from the salary continuation agreement.

In addition, Mr. Woods also has an agreement with United Security Bank for severance compensation in the event there is a change in control of United Security Bank. The agreement is for a term of five years beginning February 26, 2002. Pursuant to the agreement, in the event there is an acquisition (as defined in the agreement) of United Security Bank, then the resulting corporation shall pay Mr. Woods a lump sum amount in cash equal to the sum of (i) the last three (3) years of his total compensation, inclusive of his base annual salary and bonus and (ii) the amount necessary to cover any “golden parachute taxes” that may be assessed pursuant to Section 280G of the Internal Revenue Code.

Mr. Donahue has a salary continuation agreement with United Security Bank which provides that United Security Bank will pay him $50,000 per year for 15 years following his retirement from United Security Bank at age 59 (“Retirement Age”). In the event of disability while Mr. Donahue is actively employed prior to Retirement Age, he will have the option to take a benefit amount based on the vesting schedule below for 15 years beginning at the earlier of the time when he reaches age 59 or the date on which he is no longer entitled to disability benefits under his principal disability insurance policy. In the event Mr. Donahue dies while actively employed by United Security Bank prior to Retirement Age, his beneficiary will receive from United Security Bank $50,000 per year for 15 years beginning one month after his death. In the event of termination without cause, early retirement, or voluntary termination, Mr. Donahue shall receive a benefit amount based on the vesting schedule below for 15 years beginning with the month following the month in which Mr. Donahue terminates employment and attains age 59. The vesting schedule is 8.33% for each year of service beginning January 1, 1997. In the event Mr. Donahue is terminated for cause he will forfeit any benefits from the salary continuation agreement.

In addition, Mr. Donahue also has an agreement with United Security Bank for severance compensation in the event there is a change in control of United Security Bank. The agreement is for a term of five years beginning February 26, 2002. Pursuant to the agreement, in the event there is an acquisition (as defined in the agreement) of United Security Bank, then the resulting corporation shall pay Mr. Donahue a lump sum amount in cash equal to his last year’s total compensation, inclusive of his base annual salary and bonus reduced by such amount, if any so that

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all benefits that are accelerated as a result of the acquisition will not be subject to any “golden parachute taxes” that may be assessed pursuant to Section 280G of the Internal Revenue Code.

Mr. Eytcheson has a salary continuation agreement with United Security Bank which provides that United Security Bank will pay him $50,000 per year for 15 years following his retirement from United Security Bank at age 68 (“Retirement Age”). In the event of disability while Mr. Eytcheson is actively employed prior to Retirement Age, he will have the option to take a benefit amount based on the vesting schedule below for 15 years beginning at the earlier of the time when he reaches age 68 or the date on which he is no longer entitled to disability benefits under his principal disability insurance policy. In the event Mr. Eytcheson dies while actively employed by United Security Bank prior to Retirement Age, his beneficiary will receive from United Security Bank $50,000 per year for 15 years beginning one month after his death. In the event of termination without cause, early retirement, or voluntary termination, Mr. Eytcheson shall receive a benefit amount based on the vesting schedule below for 15 years beginning with the month following the month in which Mr. Eytcheson terminates employment and attains age 68. The vesting schedule is 8.33% for each year of service beginning January 1, 1997. In the event Mr. Eytcheson is terminated for cause he will forfeit any benefits from the salary continuation agreement.

In addition, Mr. Eytcheson also has an agreement with United Security Bank for severance compensation in the event there is a change in control of United Security Bank. The agreement is for a term of five years beginning February 26, 2002. Pursuant to the agreement, in the event there is an acquisition (as defined in the agreement) of United Security Bank, then the resulting corporation shall pay Mr. Eytcheson a lump sum amount in cash equal to his last year’s total compensation, inclusive of his base annual salary and bonus reduced by such amount, if any so that all benefits that are accelerated as a result of the acquisition will not be subject to any “golden parachute taxes” that may be assessed pursuant to Section 280G of the Internal Revenue Code.

Mr. Braa has a salary continuation agreement with United Security Bank which provides that United Security Bank will pay him $50,000 per year for 15 years following his retirement from United Security Bank at age 66 (“Retirement Age”). In the event of disability while Mr. Braa is actively employed prior to Retirement Age, he will have the option to take a benefit amount based on the vesting schedule below for 15 years beginning at the earlier of the time when he reaches age 66 or the date on which he is no longer entitled to disability benefits under his principal disability insurance policy. In the event Mr. Braa dies while actively employed by United Security Bank prior to Retirement Age, his beneficiary will receive from United Security Bank $50,000 per year for 15 years beginning one month after his death. In the event of termination without cause, early retirement, or voluntary termination, Mr. Braa shall receive a benefit amount based on the vesting schedule below for 15 years beginning with the month following the month in which Mr. Braa terminates employment and attains age 66. The vesting schedule is 8.33% for each year of service beginning January 1, 1997. In the event Mr. Braa is terminated for cause he will forfeit any benefits from the salary continuation agreement.

In addition, Mr. Braa also has an agreement with United Security Bank for severance compensation in the event there is a change in control of United Security Bank. The agreement is for a term of five years beginning February 26, 2002. Pursuant to the agreement, in the event there is an acquisition (as defined in the agreement) of United Security Bank, then the resulting corporation shall pay Mr. Braa a lump sum amount in cash equal to his last year’s total compensation, inclusive of his base

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annual salary and bonus reduced by such amount, if any so that all benefits that are accelerated as a result of the acquisition will not be subject to any “golden parachute taxes” that may be assessed pursuant to Section 280G of the Internal Revenue Code.

Independent Accountants

The firm of Moss Adams LLP served as certified independent public accountants for United Security Bancshares with respect to the year 2002, and Moss Adams LLP has been appointed as United Security Bancshares’ certified independent public accountants for 2003. United Security Bancshares’ board has determined the firm of Moss Adams LLP to be fully independent of the operations of United Security Bancshares.

Aggregate fees billed by Moss Adams LLP to United Security Bancshares for the year ended 2002 are as follows:

Audit fees	$	60,660
Tax preparation	$	8,000
Other services	$	1,500

Moss Adams LLP audited United Security Bancshares’ financial statements for the year ended December 31, 2002. It is anticipated that a representative of Moss Adams LLP will be present at the meeting and will be available to respond to appropriate questions from shareholders at the meeting.

Shareholder Proposals

Shareholder proposals to be submitted for presentation at the 2004 annual meeting of shareholders of United Security Bancshares must be received by United Security Bancshares no later than December 31, 2003.

Certain Transactions

Some of the directors and executive officers of United Security Bancshares and their immediate families, as well as the companies with which they are associated, are customers of, or have had banking transactions with, United Security Bank in the ordinary course of United Security Bank’s business, and United Security Bank expects to have banking transactions with such persons in the future. In management’s opinion, all loans and commitments to lend in such transactions were made in compliance with applicable laws and on substantially the same terms, including interest rates and collateral, as those prevailing for comparable transactions with other persons of similar creditworthiness and in the opinion of management did not involve more than a normal risk of collectibility or present other unfavorable features.

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Other Matters

Management does not know of any matters to be presented at the meeting other than those set forth above. However, if other matters come before the meeting, it is the intention of the persons named in the accompanying proxy to vote the shares represented by the proxy in accordance with the recommendations of management on such matters, and discretionary authority to do so is included in the proxy.

United Security Bancshares

Dated: April 15, 2003 Robert G. Bitter, Secretary

It is very important that every shareholder vote. We urge you to sign and return the enclosed proxy as promptly as possible, whether or not you plan to attend the meeting in person. In order to facilitate the providing of adequate accommodations, please indicate on the proxy whether or not you expect to attend the meeting.

A copy of United Security Bancshares’ annual report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 2002 is available without charge upon written request to Mr. Ken Donahue at 1525 East Shaw Avenue, Fresno, California, 93710.

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Exhibit A

Audit Committee Charter
United Security Bancshares

The purpose of the Audit Committee is to assist the Board of Directors in its oversight of (1) the integrity of the financial reporting of the Bank, (2) the independence and performance of the Bank’s external and internal auditors, and (3) the Bank’s compliance with legal and regulatory requirements. In order to establish the governing principles of the Audit Committee, the Board of Directors hereby adopts this Charter, as amended, on September 24, 2002.

Structure and Membership

The Audit Committee will be composed of not less than three members of the Board. Committee membership will be comprised solely of independent directors, each of whom is able to read and understand Bank financial statements and reports.

Scope of Responsibilities

The Audit Committee shall have the authority to retain special legal, accounting, or other consultants to advise or inform the Committee. The Audit Committee may request any officer or employee of the Bank, or the Bank’s outside counsel, or independent auditors to attend a meeting of the Audit Committee or to meet with any members of, or consultants to, the Committee.

On behalf of the Board, the Audit Committee will carry out the following responsibilities.

Audit Committee Charter

1)     In keeping with Nasdaq Rule 4350(d)(1), the Audit Committee will review and reassess the adequacy of this Charter not less than annually. In conducting this annual review, the Committee will assess compliance with Nasdaq Rule 4350, and appropriate banking regulations regarding Committee composition, independence, and scope of responsibilities.

2)     Results of the Committee’s review of its Charter, and any appropriate updates, will be duly reported to the full Board.

Audit Process

The independent auditors are ultimately accountable to the Audit Committee and the Board. The Audit Committee is responsible for selecting, evaluating, or replacing the independent auditors.

3)     The Committee will monitor all components of the audit process, serving as the primary link between the auditors and the full Board. This includes the independent public accountants, as well as, third-party internal auditors engaged for operational, compliance, and information systems audits or reviews.

4)     In carrying out this responsibility, the Committee will schedule regular, independent meetings with all audit representatives, ensuring timely review, approval and monitoring of a comprehensive Annual Audit Plan.

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5)     In keeping with AICPA Independence Standards, the Committee will require the public accounting firm’s annual written disclosure of any and all Bank relationships that could affect their independence.

Quality of Financial Reporting

6)     The Committee will schedule review of periodic SEC filings, the FDIC “Called Report”, the Federal Reserve Board’s FRY Reports, and the Bank’s Annual Report. This will be accomplished by reviewing reports and information provided by Management, including financial statements, changes in financial policies, variations between budgeted and actual numbers, and responses to various outside audit recommendations.

7)     Independent discussions will then be scheduled with the public accounting firm, in order to verify management’s compliance. These discussions will focus on the public accountant’s judgments with regard to the quality of the Bank’s financial accounting and reporting, as well as, review of trends in accounting principles and standards.

Bank Compliance Program

8)     The Committee will appoint a Bank Compliance Officer, to develop and administer a comprehensive CRA and Regulatory Compliance Program. In addition, the Compliance Program will include provision for a compliance audit function that provides for independent testing and reporting on the effectiveness of Compliance policies and procedures.

9)     The Committee will receive periodic reports from the Compliance Officer on Bank adherence to laws and regulations.

Code of Business Conduct and Ethics

10)     The Audit Committee will, at least annually, review and advise the Board regarding administration of the Bank’sCode of Business Conduct and Ethics.

Review of Insurance Programs

11)     The Audit Committee will, at least annually, review insurance programs from the standpoint of gaps and exposure, as well as fraud.

The function of the Audit Committee is oversight. While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits, or to determine that the Bank’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditors. It is also not the duty of the Audit Committee to conduct investigations, to resolve disagreements, if any, between management and the independent auditors, or to ensure compliance with laws and regulations, or the Bank’s Code of Business Conduct and Ethics.

Committee Minutes

The Audit Committee will keep minutes, and other relevant records, of all its meetings. The minutes of all meetings will be submitted to the Board of Directors.

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Proxy

United Security Bancshares This proxy is solicited on behalf of the board of directors. The undersigned hereby appoints Tom Ellithorpe, Ronnie D. Miller and John Terzian as proxyholders with full power of substitution, to represent, vote and act with respect to all shares of common stock of United Security Bancshares which the undersigned would be entitled to vote at the meeting of shareholders to be held on May 21, 2003 at 7:00 p.m., at the head offices of United Security Bank, located at 2151 West Shaw Avenue, Fresno, California or any adjournments thereof, with all the powers the undersigned would possess if personally present as follows:

1. Election of eight (8) persons to be directors.

Robert G. Bitter, Pharm. D.	Walter Reinhard
Stanley J. Cavalla	John Terzian
Tom Ellithorpe	Bobbi Thomason
Ronnie D. Miller	Dennis R. Woods

[  ]	FOR ALL NOMINEES LISTED ABOVE	[  ]	WITHHOLD AUTHORITY
	(except as marked to the contrary below)

     (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee’s name on the space below:)

2. Transaction of such other business as may properly come before the meeting and any adjournment or adjournments thereof.

Please Sign and Date Below

The board of directors recommends a vote “FOR” each of the directors named above.The proxy confers authority to vote and shall be voted in accordance with such recommendation unless a contrary instruction is indicated, in which case, the shares represented by the proxy will be voted in accordance with such instruction.If no instruction is specified with respect to the matter to be acted upon, the shares represented by the proxy will be voted in accordance with the recommendations of management. If any other business is presented at the meeting, this proxy confers authority to and shall be voted in accordance with the recommendations of management.

(Please date this proxy and sign your name exactly as it appears on your stock certificate. Executors, administrators, trustees, etc., should give their full title. If a corporation, please sign in full corporate name by the president or other authorized officer. If a partnership, please sign in partnership name by an authorized person. All joint owners should sign.)

[  ] I Do [  ] I Do Not Expect to Attend the Meeting.

(Number of Shares)

(Please Print Your Name)

(Please Print Your Name)

(Date)

(Signature of Shareholder)

(Signature of Shareholder)

This proxy is solicited on behalf of the board of directors and may be revoked prior to its exercise by filing with the secretary of United Security Bancshares a duly executed proxy bearing a later date or an instrument revoking this proxy or by attending the meeting and voting in person.