First US Bancshares, Inc. Reports Third Quarter and Year-to-Date Earnings: Nine-month EPS Growth of 36.6% Over 2022

BIRMINGHAM, Ala., Oct. 25, 2023 /PRNewswire/ -- Third Quarter Highlights:

Net Income	Diluted Earnings per share	Return on average assets (annualized)	Return on average common equity (annualized)	Return on average tangible common equity (annualized) (1)	Loans to deposits
$2.1 million	$0.33	0.80 %	9.65 %	10.58 %	87.9 %

First US Bancshares, Inc. (Nasdaq: FUSB) (the "Company"), the parent company of First US Bank (the "Bank"), today reported net income of $2.1 million, or $0.33 per diluted share, for the quarter ended September 30, 2023 ("3Q2023"), compared to $2.0 million, or $0.31 per diluted share, for the quarter ended June 30, 2023 ("2Q2023") and $1.9 million, or $0.29 per diluted share, for the quarter ended September 30, 2022 ("3Q2022").  Net income totaled $6.2 million, or $0.97 per diluted share, for the nine months ended September 30, 2023, compared to $4.6 million, or $0.71 per diluted share, for the nine months ended September 30, 2022, an increase of 36.6% on diluted earnings per share.

The table below summarizes selected financial data for each of the periods presented.

		Quarter Ended																				Nine Months Ended
		2023												2022								2023				2022
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
Results of Operations:		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Interest income		$	13,902			$	12,999			$	11,960			$	11,621			$	10,670			$	38,861			$	29,576
Interest expense			4,419				3,676				2,526				1,730				1,155				10,621				2,526
Net interest income			9,483				9,323				9,434				9,891				9,515				28,240				27,050
Provision for credit losses			184				300				269				527				1,165				753				2,781
Net interest income after provision for credit losses			9,299				9,023				9,165				9,364				8,350				27,487				24,269
Non-interest income			837				799				829				678				1,088				2,465				2,773
Non-interest expense			7,319				7,151				7,270				7,106				7,032				21,740				20,966
Income before income taxes			2,817				2,671				2,724				2,936				2,406				8,212				6,076
Provision for income taxes			704				648				652				708				546				2,004				1,440
Net income		$	2,113			$	2,023			$	2,072			$	2,228			$	1,860			$	6,208			$	4,636
Per Share Data:
Basic net income per share		$	0.35			$	0.34			$	0.35			$	0.37			$	0.31			$	1.04			$	0.76
Diluted net income per share		$	0.33			$	0.31			$	0.33			$	0.35			$	0.29			$	0.97			$	0.71
Dividends declared		$	0.05			$	0.05			$	0.05			$	0.05			$	0.03			$	0.15			$	0.09
Key Measures (Period End):
Total assets		$	1,065,239			$	1,068,126			$	1,026,658			$	994,667			$	989,277
Tangible assets (1)			1,057,597				1,060,435				1,018,912				986,866				981,421
Total loans			815,300				814,494				775,889				773,873				750,271
Allowance for credit losses			11,380				11,536				11,599				9,422				9,373
Investment securities, net			127,823				124,404				128,689				132,657				145,903
Total deposits			927,038				932,628				897,885				870,025				846,537
Short-term borrowings			30,000				30,000				25,000				20,038				40,106
Long-term borrowings			10,781				10,763				10,744				10,726				10,708
Total shareholders' equity			87,408				85,725				84,757				85,135				83,103
Tangible common equity (1)			79,766				78,034				77,011				77,334				75,247
Book value per common share			14.88				14.59				14.45				14.65				14.30
Tangible book value per common share (1)			13.58				13.28				13.13				13.31				12.95
Key Ratios:
Return on average assets (annualized)			0.80	%			0.79	%			0.85	%			0.90	%			0.75	%			0.81	%			0.64	%
Return on average common equity (annualized)			9.65	%			9.48	%			10.02	%			10.60	%			8.78	%			9.71	%			7.15	%
Return on average tangible common equity (annualized) (1)			10.58	%			10.41	%			11.05	%			11.70	%			9.69	%			10.67	%			7.87	%
Net interest margin			3.79	%			3.88	%			4.13	%			4.27	%			4.10	%			3.93	%			4.00	%
Efficiency ratio (2)			70.9	%			70.6	%			70.8	%			67.2	%			66.3	%			70.8	%			70.3	%
Total loans to deposits			87.9	%			87.3	%			86.4	%			88.9	%			88.6	%
Total loans to assets			76.5	%			76.3	%			75.6	%			77.8	%			75.8	%
Common equity to total assets			8.21	%			8.03	%			8.26	%			8.56	%			8.40	%
Tangible common equity to tangible assets (1)			7.54	%			7.36	%			7.56	%			7.84	%			7.67	%
Tier 1 leverage ratio (3)			9.09	%			9.19	%			9.36	%			9.39	%			9.23	%
Allowance for credit losses as % of loans			1.40	%			1.42	%			1.49	%			1.22	%			1.25	%
Nonperforming assets as % of total assets			0.29	%			0.15	%			0.18	%			0.24	%			0.28	%
Net charge-offs as a percentage of average loans			0.10	%			0.14	%			0.11	%			0.25	%			0.29	%			0.12	%			0.24	%

(1)  Refer to Non-GAAP reconciliation of tangible balances and measures beginning on page 12.

(2)  Efficiency ratio = non-interest expense / (net interest income + non-interest income)

(3)  First US Bank Tier 1 leverage ratio

CEO Commentary

"We delivered improved operating results in the third quarter compared to the previous quarter and in the year-to-date results compared to the prior-year period," stated James F. House, President and CEO of the Company. "The Company's year-over-year earnings improvement reflects the impact of our strategic efforts over the past two years to both transform the Company's asset quality and improve operating efficiency. As we begin the fourth quarter, we are executing the final steps to wrap up these efforts, and we are moving forward with strategic planning efforts for the coming years," continued Mr. House.

Update on Strategic Initiatives

During the third quarter of 2021, the Company executed strategic initiatives that were designed to improve operating efficiency, focus the Company's loan growth activities, and fortify asset quality. The most significant component of these initiatives was the cessation of new business at the Bank's wholly owned consumer loan-focused subsidiary, Acceptance Loan Company ("ALC"). This initiative, which included the closure of ALC's branch lending locations in September 2021, served to significantly decrease the Company's non-interest expense, and has led to substantial improvement in the Company's consumer lending asset quality as ALC's remaining loans pay down over time. Historically, ALC's loans have produced significantly higher levels of charge-offs than the Bank's other loan portfolios.

As of September 30, 2023, remaining loans at ALC totaled $12.1 million, compared to $20.2 million as of December 31, 2022. In 2023, as ALC's loans have continued to decrease, the Company has realized substantially lower levels of net charge-offs on the portfolio compared to prior periods. Net charge-offs on ALC loans totaled $0.3 million, or 2.09% of average loans, during the nine months ended September 30, 2023, compared to $1.5 million, or 6.38% of average loans, during the nine months ended September 30, 2022. As of September 30, 2023, $0.2 million, or 1.3% of ALC's loans, were past due, compared to $0.8 million, or 3.8%, as of December 31, 2022.

Effective October 1, 2023, the Company sold all of ALC's remaining loans to the Bank in an intercompany transaction.  The Bank will continue to manage the remaining loans in the portfolio through final resolution. It is expected that all other assets and liabilities of ALC will be transferred to the Bank via an intercompany transaction by the end 2023.

Other Financial Results

Loan Growth – The table below summarizes loan balances by portfolio category as of the end of each of the most recent five quarters.

		Quarter Ended
		2023						2022
		September 30,		June 30,		March 31,		December 31,		September 30,
		(Dollars in Thousands)
		(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)
Real estate loans:
Construction, land development and other land loans		$90,051		$91,231		$69,398		$53,914		$36,230
Secured by 1-4 family residential properties		83,876		85,101		86,622		87,995		84,452
Secured by multi-family residential properties		56,506		54,719		63,368		67,852		72,377
Secured by non-farm, non-residential properties		199,116		204,270		198,266		200,156		200,707
Commercial and industrial loans		59,369		60,568		65,708		73,546		65,935
Consumer loans:
Direct		6,544		7,593		8,435		9,851		11,950
Branch retail		9,648		10,830		12,222		13,992		15,878
Indirect		310,190		300,182		271,870		266,567		262,742
Total loans held for investment		$815,300		$814,494		$775,889		$773,873		$750,271
Allowance for credit losses		11,380		11,536		11,599		9,422		9,373
Net loans held for investment		$803,920		$802,958		$764,290		$764,451		$740,898

Total loan volume increased by $0.8 million, or 0.1%, in 3Q2023. For the nine months ended September 30, 2023, total loans increased by $41.4 million, or 5.4%. Loan volume increases during the first nine months of 2023 were driven primarily by growth in indirect consumer and commercial construction loans. Growth in indirect consumer lending was consistent with continued demand for the products collateralized through the Company's indirect program, including recreational vehicles, campers, boats, horse trailers and cargo trailers.  Indirect loan growth tends to be seasonal due to its emphasis on outdoor recreational products, with growth typically more pronounced in the spring and early summer months. The increase in commercial construction (construction, land development and other land loans) was primarily attributable to continued growth in construction fundings on multi-family residential projects. Loan growth during the first nine months of 2023 was partially offset by decreases in the residential real estate and commercial and industrial categories, as well as the direct consumer and branch retail consumer categories. Loans in direct consumer and branch retail were expected to decrease as they comprise the majority of ALC's remaining loan balances.

Net Interest Income and Margin – Net interest income totaled $9.5 million in 3Q2023, compared to $9.3 million in 2Q2023. Net interest margin was 3.79% in 3Q2023, compared to 3.88% in 2Q2023. Although margin decreased in 3Q2023, net interest income increased due to growth in average loans, as well as one additional earning day during the quarter. For the nine months ended September 30, 2023, net interest income totaled $28.2 million (net interest margin of 3.93%), compared to $27.1 million (net interest margin of 4.00%) for the nine months ended September 30, 2022. The year-over-year increase in net interest income was primarily attributable to growth in average loans comparing the two periods. While yields on earning assets have continued to increase in 2023, rates on interest-bearing liabilities have increased at a faster pace, causing margin compression. In the current environment, management continues to focus efforts on both maintaining and growing core deposit levels through competitive pricing strategies.

Deposit Growth – Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, increased by $1.1 million during 3Q2023.  Core deposits totaled $786.8 million, or 84.9% of total deposits as of September 30, 2023, compared to $785.7 million, or 84.2% of total deposits, as of June 30, 2023, and $778.1 million, or 89.4% of total deposits as of December 31, 2022. In total, deposits decreased by $5.6 million during 3Q2023 due to the maturity of $10.0 million in brokered deposits, partially offset by growth in retail deposits. As of September 30, 2023, total deposits were $927.0 million, compared to $870.0 million as of December 31, 2022. The year-to-date growth included an increase of $69.2 million in interest bearing deposits, offset by a decrease of $12.2 million in noninterest-bearing deposits. The shift to interest-bearing deposits in 2023 is consistent with deposit holders seeking to maximize interest earnings on their accounts in the current interest rate environment. In addition, interest bearing deposit growth during the nine months ended September 30, 2023 included net growth of $30.2 million in brokered deposits that were acquired in order to further enhance the Company's liquidity position following the bank failures that occurred during the early months of 2023.

Deployment of Funds – Management seeks to deploy earning assets in an efficient manner to maximize net interest income while maintaining appropriate levels of liquidity to protect the safety and soundness of the organization. Following the bank failures that occurred during the early months of 2023, management has focused effort on maintaining and growing the Company's strong liquidity position. These efforts have included holding higher levels of cash and cash equivalents on the Company's balance sheet. Cash and cash equivalents totaled $66.1 million as of September 30, 2023, compared to $74.7 million as of June 30, 2023, and $30.2 million as of December 31, 2022. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $127.8 million as of September 30, 2023, compared to $124.4 million as of June 30, 2023, and $132.7 million as of December 31, 2022. The expected average life of securities in the investment portfolio was 3.9 years as of September 30, 2023, compared to 3.5 years as of December 31, 2022.

Provision for Credit Losses – The Company recorded provisions for credit losses totaling $0.2 million during 3Q2023, compared to $0.3 million during 2Q2023 and $1.2 million during 3Q2022. Credit loss provisioning has decreased significantly in 2023 compared to 2022 primarily due to the cessation of business strategy at ALC which has led to significantly reduced net charge-offs as ALC's loans have decreased. For the nine months ended September 30, 2023, the provision for credit losses totaled $0.8 million, compared to $2.8 million for the nine months ended September 30, 2022.

The tables below summarize changes in the Company's allowance for credit losses on loans during the first nine months of 2023, including the impact of the adoption of the current expected credit loss (CECL) accounting standard on January 1, 2023.

		As of and for the Nine Months Ended September 30, 2023
		Construction, Land Development, and Other		Real Estate 1-4 Family		Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer		Branch Retail		Indirect Consumer		Total
		(Dollars in Thousands)
		(Unaudited)
Allowance for credit losses:
Beginning balance		$517		$832		$646		$1,970		$919		$866		$518		$3,154		$9,422
Impact of adopting CECL		(94)		(39)		(85)		(147)		(20)		47		628		1,833		2,123
Charge-offs		—		(96)		—		—		—		(521)		(359)		(500)		(1,476)
Recoveries		—		39		—		—		—		499		195		40		773
Provision		157		18		(156)		(201)		(369)		(404)		(147)		1,640		538
Ending balance		$580		$754		$405		$1,622		$530		$487		$835		$6,167		$11,380
		Allowance for Credit Losses as a Percentage of Total Loans (Before and After CECL Adoption)
December 31, 2022		0.95 %		0.94 %		0.95 %		0.99 %		1.25 %		8.61 %		3.64 %		1.18 %		1.22 %
January 1, 2023 (adoption)		0.78 %		0.90 %		0.83 %		0.91 %		1.22 %		9.08 %		8.05 %		1.87 %		1.49 %
March 31, 2023		0.75 %		0.89 %		0.80 %		0.89 %		1.19 %		10.57 %		8.74 %		1.95 %		1.49 %
June 30, 2023		0.69 %		0.91 %		0.76 %		0.86 %		0.94 %		8.30 %		8.64 %		1.94 %		1.42 %
September 30, 2023		0.64 %		0.90 %		0.72 %		0.81 %		0.89 %		7.44 %		8.65 %		1.99 %		1.40 %

In addition to the provision for credit losses on loans noted in the table above, the Company recorded $0.2 million to the provision for credit losses associated with unfunded lending commitments during the nine months ended September 30, 2023.

Non-interest Income – Non-interest income totaled $0.8 million in both 3Q2023 and 2Q2023, compared to $1.1 million in 3Q2022. For the nine months ended September 30, 2023, non-interest income totaled $2.5 million, compared to $2.8 million for the nine months ended September 30, 2022. The reduction in both quarterly and year-to-date non-interest income in 2023 compared to 2022 resulted from gains on the sale of premises and equipment that occurred during 3Q2022, but were not repeated in 2023.

Non-interest Expense – Non-interest expense totaled $7.3 million in 3Q2023, compared to $7.2 million in 2Q2023, and $7.0 million in 3Q2022.  For the nine months ended September 30, 2023, non-interest expense totaled $21.7 million, compared to $21.0 million for the nine months ended September 30, 2022. The increase comparing both the three- and nine-month periods of 2023 and 2022 resulted from nonrecurring gains on the sale of OREO properties that offset non-interest expense in 2022, but were not repeated in 2023.

Asset Quality – Nonperforming assets, including loans in non-accrual status and OREO, totaled $3.0 million as of September 30, 2023, compared to $1.6 million as of June 30, 2023 and $2.3 million as of December 31, 2022. The increase in nonperforming assets resulted primarily from one commercial real estate loan that moved into nonaccrual status during 3Q2023. As a percentage of total assets, nonperforming assets totaled 0.29% as of September 30, 2023, compared to 0.15% as of June 30, 2023 and 0.24% as of December 31, 2022. Net charge-offs as a percentage of average loans decreased to 0.10% during 3Q2023, compared to 0.14% during 2Q2023 and 0.29% during 3Q2022. For the nine months ended September 30, 2023, net charge-offs totaled 0.12%, compared to 0.24% for the nine months ended September 30, 2022. The decrease in net charge-offs comparing the 2023 periods to 2022 resulted primarily from favorable trends on charge-off experience on legacy ALC loans.

Shareholders' Equity – As of September 30, 2023, shareholders' equity totaled $87.4 million, or 8.2% of total assets, compared to $85.1 million, or 8.6% of total assets, as of December 31, 2022. The increase in shareholders' equity resulted from earnings, net of dividends paid, partially offset by the CECL transition adjustment which reduced retained earnings by $1.8 million, net of tax, as well as a net increase in accumulated other comprehensive loss totaling $1.7 million associated with fair value declines in the available-for-sale investment portfolio and reclassification adjustments associated with terminated interest rate swaps. As of September 30, 2023, the Company's ratio of common equity to total assets was 8.21%, compared to 8.56% as of December 31, 2022, while the Company's ratio of tangible common equity to tangible assets was 7.54% as of September 30, 2023, compared to 7.84% as of December 31, 2022.

Cash Dividend – The Company declared a cash dividend of $0.05 per share on its common stock in 3Q2023, consistent with the previous two quarters of 2023, and the fourth quarter of 2022. Cash dividends totaled $0.15 per share for the nine months ended September 30, 2023, compared to $0.09 per common share for the nine months ended September 30, 2022.

Regulatory Capital – During 3Q2023, the Bank continued to maintain capital ratios at higher levels than required to be considered a "well-capitalized" institution under applicable banking regulations. As of September 30, 2023, the Bank's common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.81%, its total capital ratio was 12.06%, and its Tier 1 leverage ratio was 9.09%.

Liquidity – As of September 30, 2023, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations. The Company benefits from a strong core deposit base, a liquid investment securities portfolio and access to funding from a variety of sources, including federal funds lines, Federal Home Loan Bank (FHLB) advances and brokered deposits. In addition, the Company has access to the Federal Reserve Bank's (FRB) discount window and its Bank Term Funding Program (BTFP), the latter of which was established during 2023 in response to the liquidity events that occurred in the banking industry. Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and loans. The discount window allows borrowing under 90-day terms, while borrowing terms under the BTFP are up to one year. The BTFP also allows investment securities to be pledged as collateral at 100% of par value when par value is greater than fair value.

Excluding wholesale brokered deposits, as of September 30, 2023, the Company had approximately 29 thousand deposit accounts with an average balance of approximately $28.9 thousand per account. Estimated uninsured deposits (calculated as deposit amounts per deposit holder in excess of $250 thousand, the maximum amount of federal deposit insurance, and excluding deposits secured by pledged assets) totaled $173.0 million, or 18.7% of total deposits, as of September 30, 2023. As of December 31, 2022, estimated uninsured deposits totaled $148.3 million, or 17.1% of total deposits.

In response to heightened liquidity concerns in the banking industry, during 2023 management undertook measures designed to enhance the Company's liquidity position. These procedures included holding higher levels of on-balance sheet cash, as well as enhancing the availability of off-balance sheet borrowing capacity. As part of these efforts, during 3Q2023, the Company completed the establishment of additional borrowing capacity through the FRB's discount window, primarily via the pledging of the majority of the Company's indirect loan portfolio as collateral.  Due to these efforts, the Company's immediate borrowing capacity based on collateral pledged through the discount window increased to $146.6 million as of September 30, 2023, compared to $1.2 million as of December 31, 2022.

The table below provides information on the Company's on-balance sheet liquidity, as well as readily available sources of liquidity as of both September 30, 2023 and December 31, 2022.

	September 30,  2023				December 31,  2022
	(Dollars in Thousands)
	(Unaudited)				(Unaudited)
Liquidity from cash and federal funds sold:
Cash and cash equivalents	$	66,129			$	30,152
Federal funds sold		1,143				1,768
Liquidity from cash and federal funds sold		67,272				31,920
Liquidity from pledgable investment securities:
Investment securities available-for sale, at fair value		126,551				130,795
Investment securities held-to-maturity, at amortized cost		1,272				1,862
Less: securities pledged		(42,340)				(54,717)
Less: estimated collateral value discounts		(10,943)				(7,833)
Liquidity from pledgable investment securities		74,540				70,107
Liquidity from unused lendable collateral (loans) at FHLB		6,676				18,215
Liquidity from unused lendable collateral (loans and securities) at FRB		146,613				1,198
Unsecured lines of credit with banks		48,000				45,000
Total readily available liquidity	$	343,101			$	166,440

The table calculates readily available sources of liquidity, including cash and cash equivalents, federal funds sold, and other liquidity sources.  Certain of the measures have not been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"); however, management believes that the non-GAAP measures are beneficial to the reader as they enhance the overall understanding of the Company's liquidity position and can be used as a supplement to GAAP-based measures of liquidity. Specifically, liquidity from pledgable investment securities and total readily available liquidity are non-GAAP measures used by management and regulators to analyze a portion of the Company's liquidity. Management uses these measures to evaluate the Company's liquidity position. Pledgable investment securities are considered by management as a readily available source of liquidity since the Company has the ability to pledge the securities with the FHLB or FRB to obtain immediate funding. Both available-for-sale and held-for-maturity securities may be pledged at fair value with the FHLB and through the FRB discount window. The amounts shown as liquidity from pledgable investment securities represents total investment securities as recorded on the balance sheet, less reductions for securities already pledged and discounts expected to be taken by the lender to determine collateral value. The calculations are intended to reflect minimum levels of liquidity readily available to the Company through the pledging of investment securities, and do not contemplate the additional available liquidity that could be available from the FRB through the BTFP.

Other readily available sources of liquidity include unused collateral in the form of loans that the Company had pledged with the FHLB, as well as unsecured lines of credit with other banks. The unused lendable collateral value at the FHLB presented in the table represents only the amount immediately available to the Company from loans already pledged by the Company to the FHLB as of each balance sheet date presented. As of September 30, 2023 and December 31, 2022, the Company's total remaining credit availability with the FHLB was $260.3 million and $246.8 million, respectively, subject to the pledging of additional collateral which may include eligible investment securities and loans. In addition, the Company has access to additional sources of liquidity that generally could be obtained over a period of time. For example, the Company has access to unsecured brokered deposits through the wholesale funding markets. Management believes the Company's on-balance sheet and other readily available liquidity provide strong indicators of the Company's ability to fund obligations in a stressed liquidity environment.

About First US Bancshares, Inc.

First US Bancshares, Inc. (the "Company") is a bank holding company that operates banking offices in Alabama, Tennessee, and Virginia through First US Bank (the "Bank"). In addition, the Company's operations include Acceptance Loan Company, Inc. ("ALC"), a consumer loan company.  The Company files periodic reports with the U.S. Securities and Exchange Commission (the "SEC"). Copies of its filings may be obtained through the SEC's website at www.sec.gov or at www.firstusbank.com. More information about the Company and the Bank may be obtained at www.firstusbank.com. The Company's stock is traded on the Nasdaq Capital Market under the symbol "FUSB."

Forward-Looking Statements

This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. The Company undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, the Company, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of the Company's senior management based upon current information and involve a number of risks and uncertainties. 

Certain factors that could affect the accuracy of such forward-looking statements and cause actual results to differ materially from those projected in such forward-looking statements are identified in the public filings made by the Company with the SEC, and forward-looking statements contained in this press release or in other public statements of the Company or its senior management should be considered in light of those factors. Such factors may include risk related to the Company's credit, including that if loan losses are greater than anticipated; the impact of national and local market conditions on the Company's business and operations; the rate of growth (or lack thereof) in the economy generally and in the Company's service areas; strong competition in the banking industry; the impact of changes in interest rates and monetary policy on the Company's performance and financial condition; the discontinuation of LIBOR as an interest rate benchmark; the impact of technological changes in the banking and financial service industries and potential information system failures; cybersecurity and data privacy threats; the costs of complying with extensive governmental regulation; the impact of changing accounting standards and tax laws on the Company's allowance for credit losses and financial results; the possibility that acquisitions may not produce anticipated results and result in unforeseen integration difficulties; and other risk factors described from time to time in the Company's public filings, including, but not limited to, the Company's most recent Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023. Relative to the Company's dividend policy, the payment of cash dividends is subject to the discretion of the Board of Directors and will be determined in light of then-current conditions, including the Company's earnings,  leverage, operations, financial conditions, capital requirements and other factors deemed relevant by the Board of Directors. In the future, the Board of Directors may change the Company's dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

 

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
THREE MONTHS ENDED September 30, 2023 AND 2022
(Dollars in Thousands)
(Unaudited)
		Three Months Ended												Three Months Ended
		September 30, 2023												September 30, 2022
		Average Balance				Interest				Annualized Yield/ Rate %				Average Balance				Interest				Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans		$	821,294			$	12,584				6.08	%		$	743,145			$	9,750				5.21	%
Taxable investment securities			123,290				682				2.19	%			148,964				748				1.99	%
Tax-exempt investment securities			1,037				3				1.15	%			2,322				8				1.37	%
Federal Home Loan Bank stock			1,001				21				8.32	%			1,808				17				3.73	%
Federal funds sold			1,069				14				5.20	%			1,984				11				2.20	%
Interest-bearing deposits in banks			44,379				598				5.35	%			23,166				136				2.33	%
Total interest-earning assets			992,070				13,902				5.56	%			921,389				10,670				4.59	%
Noninterest-earning assets			61,235												64,593
Total		$	1,053,305											$	985,982
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
Demand deposits		$	206,540			$	176				0.34	%		$	243,131			$	182				0.30	%
Savings deposits			244,932				1,570				2.54	%			211,724				342				0.64	%
Time deposits			323,824				2,476				3.03	%			209,361				340				0.64	%
Total interest-bearing deposits			775,296				4,222				2.16	%			664,216				864				0.52	%
Noninterest-bearing demand deposits			161,381				—				—				183,612				—				—
Total deposits			936,677				4,222				1.79	%			847,828				864				0.40	%
Borrowings			19,468				197				4.01	%			45,427				291				2.54	%
Total funding costs			956,145				4,419				1.83	%			893,255				1,155				0.51	%
Other noninterest-bearing liabilities			10,263												8,642
Shareholders' equity			86,897												84,085
Total		$	1,053,305											$	985,982
Net interest income						$	9,483											$	9,515
Net interest margin											3.79	%											4.10	%

 

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
NINE MONTHS ENDED September 30, 2023 AND 2022
(Dollars in Thousands)
(Unaudited)
		Nine Months Ended												Nine Months Ended
		September 30, 2023												September 30, 2022
		Average Balance				Interest				Annualized Yield/ Rate %				Average Balance				Interest				Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans		$	795,033			$	35,330				5.94	%		$	713,015			$	27,339				5.13	%
Taxable investment securities			126,341				2,033				2.15	%			142,425				1,896				1.78	%
Tax-exempt investment securities			1,048				10				1.28	%			2,543				31				1.63	%
Federal Home Loan Bank stock			1,347				75				7.44	%			1,165				33				3.79	%
Federal funds sold			1,415				51				4.82	%			853				12				1.88	%
Interest-bearing deposits in banks			35,437				1,362				5.14	%			45,133				265				0.79	%
Total interest-earning assets			960,621				38,861				5.41	%			905,134				29,576				4.37	%
Noninterest-earning assets			61,484												65,379
Total		$	1,022,105											$	970,513
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
Demand deposits		$	216,445			$	557				0.34	%		$	249,183			$	438				0.24	%
Savings deposits			221,293				3,279				1.98	%			206,294				693				0.45	%
Time deposits			297,708				5,845				2.62	%			208,621				833				0.53	%
Total interest-bearing deposits			735,446				9,681				1.76	%			664,098				1,964				0.40	%
Noninterest-bearing demand deposits			162,084				—				—				182,862				—				—
Total deposits			897,530				9,681				1.44	%			846,960				1,964				0.31	%
Borrowings			29,375				940				4.28	%			27,994				562				2.68	%
Total funding costs			926,905				10,621				1.53	%			874,954				2,526				0.39	%
Other noninterest-bearing liabilities			9,722												8,833
Shareholders' equity			85,478												86,726
Total		$	1,022,105											$	970,513
Net interest income						$	28,240											$	27,050
Net interest margin											3.93	%											4.00	%

 

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
		September 30,				December 31,
		2023				2022
		(Unaudited)
ASSETS
Cash and due from banks		$	10,311			$	11,844
Interest-bearing deposits in banks			55,818				18,308
Total cash and cash equivalents			66,129				30,152
Federal funds sold			1,143				1,768
Investment securities available-for-sale, at fair value			126,551				130,795
Investment securities held-to-maturity, at amortized cost			1,272				1,862
Federal Home Loan Bank stock, at cost			2,151				1,359
Loans held for investment			815,300				773,873
Less allowance for credit losses			11,380				9,422
Net loans held for investment			803,920				764,451
Premises and equipment, net of accumulated depreciation			24,259				24,439
Cash surrender value of bank-owned life insurance			16,622				16,399
Accrued interest receivable			3,522				3,011
Goodwill and core deposit intangible, net			7,642				7,801
Other real estate owned			617				686
Other assets			11,411				11,944
Total assets		$	1,065,239			$	994,667
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing		$	157,652			$	169,822
Interest-bearing			769,386				700,203
Total deposits			927,038				870,025
Accrued interest expense			1,864				607
Other liabilities			8,148				8,136
Short-term borrowings			30,000				20,038
Long-term borrowings			10,781				10,726
Total liabilities			977,831				909,532
Shareholders' equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,738,156 and     7,680,856 shares issued, respectively; 5,874,781 and 5,812,258 shares outstanding,    respectively			75				75
Additional paid-in capital			14,824				14,510
Accumulated other comprehensive loss, net of tax			(8,907)				(7,241)
Retained earnings			107,976				104,460
Less treasury stock: 1,863,375 and 1,868,598 shares at cost, respectively			(26,560)				(26,669)
Total shareholders' equity			87,408				85,135
Total liabilities and shareholders' equity		$	1,065,239			$	994,667

 

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023				2022
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Interest income:
Interest and fees on loans		$	12,584			$	9,750			$	35,330			$	27,339
Interest on investment securities			685				756				2,043				1,927
Interest on deposits in banks			598				136				1,362				265
Other			35				28				126				45
Total interest income			13,902				10,670				38,861				29,576
Interest expense:
Interest on deposits			4,222				864				9,681				1,964
Interest on borrowings			197				291				940				562
Total interest expense			4,419				1,155				10,621				2,526
Net interest income			9,483				9,515				28,240				27,050
Provision for credit losses			184				1,165				753				2,781
Net interest income after provision for credit losses			9,299				8,350				27,487				24,269
Non-interest income:
Service and other charges on deposit accounts			302				311				869				904
Lease income			241				210				707				635
Other income, net			294				567				889				1,234
Total non-interest income			837				1,088				2,465				2,773
Non-interest expense:
Salaries and employee benefits			4,120				4,007				12,310				12,389
Net occupancy and equipment			897				861				2,625				2,468
Computer services			464				417				1,315				1,224
Insurance expense and assessments			423				310				1,156				970
Fees for professional services			331				263				735				811
Other expense			1,084				1,174				3,599				3,104
Total non-interest expense			7,319				7,032				21,740				20,966
Income before income taxes			2,817				2,406				8,212				6,076
Provision for income taxes			704				546				2,004				1,440
Net income		$	2,113			$	1,860			$	6,208			$	4,636
Basic net income per share		$	0.35			$	0.31			$	1.04			$	0.76
Diluted net income per share		$	0.33			$	0.29			$	0.97			$	0.71
Dividends per share		$	0.05			$	0.03			$	0.15			$	0.09

Non-GAAP Financial Measures

In addition to the financial results presented in this press release that have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company's management believes that certain non-GAAP financial measures and ratios are beneficial to the reader. These non-GAAP measures have been provided to enhance overall understanding of the Company's current financial performance and position. Management believes that these presentations provide meaningful comparisons of financial performance and position in various periods and can be used as a supplement to the GAAP-based measures presented in this press release. The non-GAAP financial results presented should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Management believes that both GAAP measures of the Company's financial performance and the respective non-GAAP measures should be considered together.

The non-GAAP measures and ratios that have been provided in this press release include measures of tangible assets and equity and certain ratios that include tangible assets and equity. Discussion of these measures and ratios is included below, along with reconciliations of such non-GAAP measures to GAAP amounts included in the consolidated financial statements previously presented in this press release.

Tangible Balances and Measures

In addition to capital ratios defined by GAAP and banking regulators, the Company utilizes various tangible common equity measures when evaluating capital utilization and adequacy. These measures, which are presented in the financial tables in this press release, may also include calculations of tangible assets. As defined by the Company, tangible common equity represents shareholders' equity less goodwill and identifiable intangible assets, while tangible assets represent total assets less goodwill and identifiable intangible assets.

Management believes that the measures of tangible equity are important because they reflect the level of capital available to withstand unexpected market conditions. In addition, presentation of these measures allows readers to compare certain aspects of the Company's capitalization to other organizations. In management's experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets that typically result from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these measures, management believes that there are no comparable GAAP financial measures to the tangible common equity ratios that the Company utilizes. Despite the importance of these measures to the Company, there are no standardized definitions for the measures, and, therefore, the Company's calculations may not be comparable with those of other organizations. In addition, there may be limits to the usefulness of these measures to investors. Accordingly, management encourages readers to consider the Company's consolidated financial statements in their entirety and not to rely on any single financial measure. The table below reconciles the Company's calculations of these measures to amounts reported in accordance with GAAP.

 

				Quarter Ended										Nine Months Ended
				2023						2022				2023		2022
				September 30,		June 30,		March 31,		December  31,		September 30,		September 30,		September 30,
				(Dollars in Thousands, Except Per Share Data)
				(Unaudited Reconciliation)
TANGIBLE BALANCES
Total assets				$1,065,239		$1,068,126		$1,026,658		$994,667		$989,277
Less: Goodwill				7,435		7,435		7,435		7,435		7,435
Less: Core deposit intangible				207		256		311		366		421
Tangible assets		(a)		$1,057,597		$1,060,435		$1,018,912		$986,866		$981,421
Total shareholders' equity				$87,408		$85,725		$84,757		$85,135		$83,103
Less: Goodwill				7,435		7,435		7,435		7,435		7,435
Less: Core deposit intangible				207		256		311		366		421
Tangible common equity		(b)		$79,766		$78,034		$77,011		$77,334		$75,247
Average shareholders' equity				$86,897		$85,660		$83,837		$83,390		$84,085		$85,478		$86,726
Less: Average goodwill				7,435		7,435		7,435		7,435		7,435		7,435		7,435
Less: Average core deposit intangible				229		282		337		392		451		282		523
Average tangible shareholders' equity		(c)		$79,233		$77,943		$76,065		$75,563		$76,199		$77,761		$78,768
Net income		(d)		$2,113		$2,023		$2,072		$2,228		$1,860		$6,208		$4,636
Common shares outstanding (in thousands)		(e)		5,875		5,875		5,867		5,812		5,812
TANGIBLE MEASURES
Tangible book value per common share		(b)/(e)		$13.58		$13.28		$13.13		$13.31		$12.95
Tangible common equity to tangible assets		(b)/(a)		7.54 %		7.36 %		7.56 %		7.84 %		7.67 %
Return on average tangible common equity (annualized)		(1)		10.58 %		10.41 %		11.05 %		11.70 %		9.69 %		10.67 %		7.87 %

(1)	Calculation of Return on average tangible common equity (annualized) = ((net income (d) / number of days in period) * number of days in year) / average tangible shareholders' equity (c)

 

Contact:	Thomas S. Elley
	205-582-1200

 

Cision

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SOURCE First US Bancshares, Inc.