First US Bancshares, Inc. Reports Second Quarter 2021 Results

Reports Continued Loan Growth Combined with Earnings and Asset Quality Improvement

BIRMINGHAM, Ala., July 28, 2021 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq: FUSB) (the “Company”), the parent company of First US Bank (the “Bank”), today reported net income of $953,000, or $0.14 per diluted share, for the quarter ended June 30, 2021 (“2Q2021”), compared to $950,000, or $0.14 per diluted share, for the quarter ended March 31, 2021 (“1Q2021”) and $404,000, or $0.06 per diluted share, for the quarter ended June 30, 2020 (“2Q2020”). For the six months ended June 30, 2021, the Company’s net income totaled $1,903,000, or $0.28 per diluted share, compared to $1,251,000, or $0.19 per diluted share, for the six months ended June 30, 2020.

Loan growth for the quarter totaled $19.1 million, or an increase of 2.8%, compared to March 31, 2021. For the six-months ended June 30, 2021, total loan growth was $39.4 million, or 6.1%. During both quarters of 2021, growth was driven by the Bank’s indirect lending and construction portfolios. Due to earning asset growth, combined with continued reductions in interest expense, net interest income continued to improve during 2Q2021. Pre-provision net interest income increased by $248,000, or 2.7%, comparing 2Q2021 to 1Q2021, and by $689,000, or 8.0%, comparing 2Q2021 to 2Q2020. Year-to-date pre-provision net interest income as of June 30, 2021 exceeded the same period of 2020 by $867,000, or 5.0%.

The Company’s non-performing assets, including loans in non-accrual status and other real estate owned (OREO), decreased to $2.1 million as of June 30, 2021, compared to $3.5 million as of March 31, 2021 and $4.4 million as of June 30, 2020. As a percentage of total assets, non-performing assets improved to 0.22% as of June 30, 2021, compared to 0.37% as of March 31, 2021 and 0.52% as of June 30, 2020.

“We are pleased to have posted continued strong organic loan growth during the second quarter,” stated James F. House, President and CEO of the Company. “The interest rate environment remains challenging, and the deployment of funds into solid earning assets is critical to our ability to sustain and then grow earnings over time. At the same time, we remain focused on the credit quality of the assets we deploy. We were gratified to see another quarter of reduction in nonperforming assets. We believe that this asset quality improvement reflects adherence to our credit standards and the resiliency of our customer base,” continued Mr. House.

Financial Highlights

Loan Growth – The table below summarizes loan balances by portfolio category at the end of each of the most recent five quarters as of June 30, 2021.

		Quarter Ended
		2021						2020
		June 30,			March 31,			December 31,			September 30,			June 30,
		(Dollars in Thousands)
		(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)
Real estate loans:
Construction, land development and other land loans		$	53,425		$	48,491		$	37,282		$	35,472		$	31,384
Secured by 1-4 family residential properties			78,815			82,349			88,856			95,147			93,010
Secured by multi-family residential properties			53,811			54,180			54,326			49,197			48,807
Secured by non-farm, non-residential properties			191,398			193,626			184,528			183,754			160,683
Commercial and industrial loans			65,772			65,043			69,808			72,948			73,978
Paycheck Protection Program ("PPP") loans			11,587			14,795			11,927			13,950			13,793
Consumer loans:
Direct consumer			26,937			26,998			29,788			30,048			33,299
Branch retail			31,688			31,075			32,094			33,145			33,000
Indirect sales			176,116			153,940			141,514			125,369			89,932
Total loans		$	689,549		$	670,497		$	650,123		$	639,030		$	577,886
Less unearned interest, fees and deferred costs			4,067			3,792			4,279			4,240			5,401
Allowance for loan and lease losses			7,726			7,475			7,470			7,185			6,423
Net loans		$	677,756		$	659,230		$	638,374		$	627,605		$	566,062

Loan growth during 2Q2021 was distributed primarily between indirect lending and real estate construction lending, which totaled growth of $22.2 million and $4.9 million, respectively. For the six months ended June 30, 2021, loan growth totaled $34.6 million and $16.1 million for indirect lending and construction lending, respectively. The indirect portfolio is focused on consumer loans secured by collateral that includes recreational vehicles, campers, boats, horse trailers and cargo trailers. Since the onset of the COVID-19 pandemic, the Bank has experienced substantial growth in indirect lending as consumers sought alternatives to more traditional travel and leisure activities. The Bank now operates indirect lending in a 12-state footprint primarily in the southeastern United States, including Oklahoma, which became operational in the latter part of 2Q2021. The growth in the Bank’s construction lending was indicative of continued growth in economic activity in larger metropolitan markets, primarily in the southeast, served by the Bank.

Aside from indirect lending, other consumer loans include the direct consumer and branch retail categories, which consist primarily of loans at the Bank’s wholly-owned subsidiary, Acceptance Loan Company (“ALC”). Direct consumer loans decreased by $0.1 million during 2Q2021, while branch retail loans increased by $0.6 million during the quarter. The Bank’s commercial and industrial (“C&I”) portfolio increased by $0.7 million during 2Q2021. Additionally, the Bank’s total loan balance in the Paycheck Protection Program (“PPP”) administered by the Small Business Administration (“SBA”) declined by $3.2 million during 2Q2021 as PPP loans continued to be forgiven by the SBA.

Net Interest Income and Margin – Margin compression remained a challenge for the Company during 2Q2021 due in part to the interest rate environment that has persisted since the onset of the COVID-19 pandemic. Net interest margin totaled 4.31% for 2Q2021, compared to 4.40% for 1Q2021 and 4.65% for 2Q2020. In addition to the prevailing interest rate environment, loan portfolio reductions in the higher-yielding direct consumer portfolio, coupled with significant influxes of investable cash through deposit growth, have also contributed to margin compression. In this environment, management has continued to reprice deposit liabilities at lower rates upon maturity. Due to these repricing efforts, annualized average total funding costs decreased to 0.36% in 2Q2021, compared to 0.39% in 1Q2021 and 0.64% in 2Q2020.

Deposit Growth and Deployment of Funds – The Bank continued to experience significant growth in deposit balances during 2Q2021, a trend that has persisted since the onset of the pandemic. Total deposits increased by $19.8 million, or 2.4%, during 2Q2021. For the six months ended June 30, 2021, total deposits increased by $55.7 million, or 7.1%. The deposit growth is consistent with general trends in commercial banking and reflects deposit-holder receipt of stimulus payments and preferences for liquidity. In the current interest rate environment, the increased deposit levels put additional pressure on net interest margin as excess funds are deployed into lower earning assets. Management remains focused on deploying investable cash balances into earning assets that meet the Company’s established credit standards, while maintaining appropriate levels of liquidity. In an effort to more effectively deploy excess cash, additional investment securities were purchased during 2Q2021. As a result, total investment securities increased to $123.6 million as of June 30, 2021, compared to $75.8 million as of March 31, 2021 and $104.0 million as of June 30, 2020.

Loan Loss Provision – 2Q2021 loan loss provisioning increased by $0.1 million compared to 1Q2021 and decreased by $0.4 million compared to 2Q2020. The increase in provisioning compared to 1Q2021 was due to the increase in loan volume during 2021, while the decrease in provisioning compared to 2Q2020 was due in part to improvement in the credit quality of the loan portfolio resulting from reductions in ALC’s consumer-related portfolio. As of June 30, 2021, total loans at ALC, which contain the highest charge-off rates in the Company’s loan portfolio, were reduced by $8.3 million compared to June 30, 2020. The loan volume reductions at ALC led to lower credit losses, but also contributed to margin compression as the mix of higher interest-earning loans decreased relative to 2Q2020.

In addition to changes in the credit quality mix of the Company’s loan portfolio, the overall economic outlook in the markets served by the Company continued to improve during 2Q2021 compared to the prior quarter and fiscal year. During 2020, over 1,900 of the Company’s borrowers requested and were granted COVID-19 pandemic-related payment deferments. As of June 30, 2021, loans that continued to be in pandemic-related deferment totaled $0.6 million, compared to $1.2 million as of March 31, 2021, and $95.2 million as of June 30, 2020. The decrease in deferred loans over the past four quarters, combined with reductions in nonaccrual assets, is indicative of the strength of the credit quality within the portfolio. Although pandemic-related economic uncertainty continues to exist, management believes that the allowance for loan losses, which was calculated under an incurred loss model, was sufficient to absorb losses in the Company’s loan portfolio based on circumstances existing as of June 30, 2021. The Company will continue to closely monitor the impact of changing economic circumstances on the Company’s loan portfolio. Due to its classification as a smaller reporting company by the Securities and Exchange Commission, the Company is not required to adopt the Current Expected Credit Loss (CECL) model to account for credit losses until January 1, 2023. Management continues to evaluate the impact that the adoption of CECL will have on the Company’s financial statements

Non-interest Income – Non-interest income was $0.8 million for 2Q2021, compared to $1.0 million for 1Q2021 and $1.3 million for 2Q2020. The decrease in 2Q2021 compared to 1Q2021 was primarily attributable to reductions in service charges and related fees on the Bank’s deposit accounts and credit insurance income. Comparing 2Q2021 to 2Q2020, approximately $0.2 million of the decrease resulted from reductions in service charges, credit insurance income and secondary market mortgage revenues, while the remaining $0.3 million of the decrease resulted from net gains on the sale of investment securities that occurred during 2Q2020 that were not repeated in 2Q2021. The decrease in service charges is consistent with changes in deposit customer behaviors since the onset of the pandemic. The reduction in secondary market mortgage fees resulted from the discontinuance of the Bank’s mortgage division that became effective in 4Q2020. Although the discontinuance resulted in a reduction in non-interest income, non-interest expense, primarily salaries and benefits, was reduced commensurately.

Non-interest Expense – Non-interest expense was $8.4 million for both 2Q2021 and 1Q2021, compared to $8.6 million for 2Q2020. The decreases in both latter quarters compared to 2Q2020 resulted primarily from reductions in salaries and employee benefits. A portion of the expense reduction was associated with the discontinuation of the secondary mortgage marketing division. Management remains focused on expense containment in the current environment. In accordance with these efforts, during 2Q2021, the Company announced the pending closure of four banking offices in order to improve the Bank’s operating efficiency.

Balance Sheet Growth – Total assets as of June 30, 2021 increased by $20.4 million, or 2.2%, compared to March 31, 2021, and increased by $101.2 million, or 12.0%, compared to June 30, 2020. Growth in deposits totaled $19.8 million, or 2.4%, in 2Q2021 from 1Q2021, and $99.6 million, or 13.5%, comparing 2Q2021 to 2Q2020. The deposit growth reflected the impact of the pandemic on both business and consumer deposit holders, including preferences for liquidity, loan payment deferments, tax payment deferments, government stimulus receipts and generally lower consumer spending. Of the total increase in deposits during 2Q2021, $10.0 million represented non-interest-bearing deposits, while $9.8 million were interest-bearing. The growth comparing June 30, 2021 to June 30, 2020 included $32.0 million in wholesale deposits that were acquired by the Bank at a weighted average total cost of 0.40% and have an initial weighted average term of 48 months. Along with interest rate swaps that the Company had previously put in place, the wholesale deposits serve to mitigate a portion of risk associated with rising interest rates. Wholesale funding also provides the Company with additional liquidity that enables management to continue its focus on reducing interest expense on core deposits.

Cash Dividend – The Company declared a cash dividend of $0.03 per share on its common stock in the second quarter of 2021, which is consistent with the Company’s dividend declaration for the first quarter of 2021 and each quarter of 2020.

Regulatory Capital – During 2Q2021, 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 June 30, 2021, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.14%. Its total capital ratio was 12.22%, and its Tier 1 leverage ratio was 8.60%.

Liquidity – As of June 30, 2021, 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 advances and brokered deposits.

About First US Bancshares, Inc.

First US Bancshares, Inc. is a bank holding company that operates banking offices in Alabama, Tennessee and Virginia through First US Bank. In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. 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 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. Specifically, with respect to statements relating to the sufficiency of the allowance for loan and lease losses, loan demand, cash flows, interest costs, growth and earnings potential, expansion and the Company’s positioning to handle the challenges presented by COVID-19, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy generally and in the Bank’s and ALC’s service areas; market conditions and investment returns; changes in interest rates; the impact of the current COVID-19 pandemic on the Company’s business, the Company’s customers, the communities that the Company serves and the United States economy, including the impact of actions taken by governmental authorities to try to contain the virus and protect against it, through vaccinations and otherwise, or address the impact of the virus on the United States economy (including, without limitation, the Coronavirus Aid, Relief and Economic Security (CARES) Act and subsequent federal legislation) and the resulting effect on the Company’s operations, liquidity and capital position and on the financial condition of the Company’s borrowers and other customers; the pending discontinuation of LIBOR as an interest rate benchmark; the availability of quality loans in the Bank’s and ALC’s service areas; the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets; collateral values; cybersecurity threats; and risks related to the Paycheck Protection Program. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA – LINKED QUARTERS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

		Quarter Ended																				Six Months Ended
		2021								2020												2021				2020
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
Results of Operations:
Interest income		$	10,059			$	9,845			$	10,204			$	9,996			$	9,780			$	19,904			$	20,177
Interest expense			747				781				912				1,031				1,157				1,528				2,668
Net interest income			9,312				9,064				9,292				8,965				8,623				18,376				17,509
Provision for loan and lease losses			498				401				469				1,046				850				899				1,430
Net interest income after provision for loan and lease losses			8,814				8,663				8,823				7,919				7,773				17,477				16,079
Non-interest income			809				951				1,008				1,375				1,330				1,760				2,627
Non-interest expense			8,399				8,396				8,477				8,747				8,581				16,795				17,075
Income before income taxes			1,224				1,218				1,354				547				522				2,442				1,631
Provision for income taxes			271				268				309				136				118				539				380
Net income		$	953			$	950			$	1,045			$	411			$	404			$	1,903			$	1,251
Per Share Data:
Basic net income per share		$	0.15			$	0.15			$	0.16			$	0.07			$	0.07			$	0.30			$	0.20
Diluted net income per share		$	0.14			$	0.14			$	0.15			$	0.06			$	0.06			$	0.28			$	0.19
Dividends declared		$	0.03			$	0.03			$	0.03			$	0.03			$	0.03			$	0.06			$	0.06
Key Measures (Period End):
Total assets		$	946,946			$	926,535			$	890,511			$	852,941			$	845,747
Tangible assets (1)			938,719				918,216				882,101				844,439				837,142
Loans, net of allowance for loan losses			677,756				659,230				638,374				627,605				566,062
Allowance for loan and lease losses			7,726				7,475				7,470				7,185				6,423
Investment securities, net			123,583				75,783				91,422				93,405				103,964
Total deposits			837,885				818,043				782,212				745,336				738,290
Short-term borrowings			10,017				10,017				10,017				10,045				10,334
Total shareholders’ equity			88,778				87,917				86,678				85,658				85,281
Tangible common equity (1)			80,551				79,598				78,268				77,156				76,676
Book value per common share			14.28				14.15				14.03				13.87				13.81
Tangible book value per common share (1)			12.96				12.81				12.67				12.49				12.41
Key Ratios:
Return on average assets (annualized)			0.41	%			0.43	%			0.48	%			0.19	%			0.20	%			0.42	%			0.31	%
Return on average common equity (annualized)			4.32	%			4.41	%			4.82	%			1.91	%			1.91	%			4.36	%			2.96	%
Return on average tangible common equity (annualized) (1)			4.76	%			4.87	%			5.34	%			2.12	%			2.13	%			4.82	%			3.30	%
Net interest margin			4.31	%			4.40	%			4.59	%			4.56	%			4.65	%			4.35	%			4.81	%
Efficiency ratio (2)			83.0	%			83.8	%			82.3	%			84.6	%			86.2	%			83.4	%			84.8	%
Net loans to deposits			80.9	%			80.6	%			81.6	%			84.2	%			76.7	%
Net loans to assets			71.6	%			71.2	%			71.7	%			73.6	%			66.9	%
Tangible common equity to tangible assets (1)			8.58	%			8.67	%			8.87	%			9.14	%			9.16	%
Tier 1 leverage ratio (3)			8.60	%			8.73	%			8.98	%			9.08	%			9.36	%
Allowance for loan losses as % of loans (4)			1.13	%			1.12	%			1.16	%			1.13	%			1.12	%
Nonperforming assets as % of total assets			0.22	%			0.37	%			0.45	%			0.47	%			0.52	%
Net charge-offs as a percentage of average loans			0.15	%			0.25	%			0.11	%			0.19	%			0.27	%			0.20	%			0.28	%

(1) Refer to Non-GAAP reconciliation of tangible balances and measures beginning on page 10.

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

(3) First US Bank Tier 1 leverage ratio

(4) The allowance for loan losses as a % of loans excluding PPP loans, which are guaranteed by the SBA, was 1.15% as of June 30, 2021.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Dollars in Thousands)
(Unaudited)

		Three Months Ended										Three Months Ended
		June 30, 2021										June 30, 2020
		Average Balance			Interest			Annualized Yield/ Rate %				Average Balance			Interest			Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total Loans		$	673,676		$	9,668			5.76	%		$	557,511		$	9,237			6.66	%
Taxable investment securities			97,237			344			1.42	%			104,449			493			1.90	%
Tax-exempt investment securities			3,506			16			1.83	%			1,737			12			2.78	%
Federal Home Loan Bank stock			870			8			3.69	%			1,135			15			5.32	%
Federal funds sold			83			—			—				6,233			4			0.26	%
Interest-bearing deposits in banks			91,340			23			0.10	%			74,596			19			0.10	%
Total interest-earning assets			866,712			10,059			4.66	%			745,661			9,780			5.28	%
Non-interest-earning assets:
Other assets			68,237										72,990
Total		$	934,949									$	818,651
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Demand deposits		$	235,493		$	145			0.25	%		$	183,536		$	138			0.30	%
Savings deposits			187,655			148			0.32	%			155,953			146			0.38	%
Time deposits			230,473			412			0.72	%			234,041			847			1.46	%
Total interest-bearing deposits			653,621			705			0.43	%			573,530			1,131			0.79	%
Borrowings			10,017			42			1.68	%			10,230			26			1.02	%
Total interest-bearing liabilities (1)			663,638			747			0.45	%			583,760			1,157			0.80	%
Non-interest-bearing liabilities:
Demand deposits			173,842										140,621
Other liabilities			8,991										9,317
Shareholders’ equity			88,478										84,953
Total		$	934,949									$	818,651
Net interest income					$	9,312									$	8,623
Net interest margin									4.31	%									4.65	%

(1) The annualized rate on total average funding costs, including total average interest-bearing liabilities and average non-interest-bearing demand deposits, was 0.36% and 0.64% for the three-month periods ended June 30, 2021 and 2020, respectively.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(Dollars in Thousands)
(Unaudited)

		Six Months Ended										Six Months Ended
		June 30, 2021										June 30, 2020
		Average Balance			Interest			Annualized Yield/ Rate %				Average Balance			Interest			Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total Loans		$	663,338		$	19,158			5.82	%		$	552,810		$	18,876			6.87	%
Taxable investment securities			90,233			650			1.45	%			104,286			1,024			1.97	%
Tax-exempt investment securities			3,514			32			1.84	%			1,464			23			3.16	%
Federal Home Loan Bank stock			987			17			3.47	%			1,136			30			5.31	%
Federal funds sold			84			—			—				9,448			45			0.96	%
Interest-bearing deposits in banks			93,311			47			0.10	%			63,311			179			0.57	%
Total interest-earning assets			851,467			19,904			4.71	%			732,455			20,177			5.54	%
Non-interest-earning assets:
Other assets			68,536										73,199
Total		$	920,003									$	805,654
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Demand deposits		$	230,351		$	284			0.25	%		$	176,480		$	313			0.36	%
Savings deposits			181,202			293			0.33	%			160,686			458			0.57	%
Time deposits			234,544			871			0.75	%			236,137			1,835			1.56	%
Total interest-bearing deposits			646,097			1,448			0.45	%			573,303			2,606			0.91	%
Borrowings			10,017			80			1.61	%			10,176			62			1.23	%
Total interest-bearing liabilities (1)			656,114			1,528			0.47	%			583,479			2,668			0.92	%
Non-interest-bearing liabilities:
Demand deposits			166,566										127,431
Other liabilities			9,353										9,906
Shareholders’ equity			87,970										84,838
Total		$	920,003									$	805,654
Net interest income					$	18,376									$	17,509
Net interest margin									4.35	%									4.81	%

⁽¹⁾ The annualized rate on total average funding costs, including total average interest-bearing liabilities and average non-interest-bearing demand deposits, was 0.37% and 0.75% for the six-month periods ended June 30, 2021 and 2020, respectively.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)

		June 30,				December 31,
		2021				2020
		(Unaudited)
ASSETS
Cash and due from banks		$	13,952			$	12,235
Interest-bearing deposits in banks			67,871				82,180
Total cash and cash equivalents			81,823				94,415
Federal funds sold			83				85
Investment securities available-for-sale, at fair value			118,735				84,993
Investment securities held-to-maturity, at amortized cost			4,848				6,429
Federal Home Loan Bank stock, at cost			870				1,135
Loans and leases, net of allowance for loan and lease losses of $7,726 and $7,470, respectively			677,756				638,374
Premises and equipment, net of accumulated depreciation of $24,370 and $23,774, respectively			27,959				28,206
Cash surrender value of bank-owned life insurance			15,992				15,846
Accrued interest receivable			2,579				2,807
Goodwill and core deposit intangible, net			8,227				8,410
Other real estate owned			846				949
Other assets			7,228				8,862
Total assets		$	946,946			$	890,511
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing		$	174,691			$	151,935
Interest-bearing			663,194				630,277
Total deposits			837,885				782,212
Accrued interest expense			223				292
Other liabilities			10,043				11,312
Short-term borrowings			10,017				10,017
Total liabilities			858,168				803,833
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,634,281 and 7,596,351 shares issued, respectively; 6,214,809 and 6,176,556 shares outstanding, respectively			75				75
Additional paid-in capital			13,981				13,786
Accumulated other comprehensive income (loss), net of tax			312				(52	)
Retained earnings			96,252				94,722
Less treasury stock: 1,419,472 and 1,419,795 shares at cost, respectively			(21,842	)			(21,853	)
Total shareholders’ equity			88,778				86,678
Total liabilities and shareholders’ equity		$	946,946			$	890,511

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2021			2020			2021			2020
Interest income:
Interest and fees on loans		$	9,668		$	9,237		$	19,158		$	18,876
Interest on investment securities			391			543			746			1,301
Total interest income			10,059			9,780			19,904			20,177
Interest expense:
Interest on deposits			705			1,131			1,448			2,606
Interest on borrowings			42			26			80			62
Total interest expense			747			1,157			1,528			2,668
Net interest income			9,312			8,623			18,376			17,509
Provision for loan and lease losses			498			850			899			1,430
Net interest income after provision for loan and lease losses			8,814			7,773			17,477			16,079
Non-interest income:
Service and other charges on deposit accounts			240			263			506			697
Net gain on sales and prepayments of investment securities			22			326			22			326
Mortgage fees from secondary market			—			176			23			303
Lease income			202			212			411			424
Other income, net			345			353			798			877
Total non-interest income			809			1,330			1,760			2,627
Non-interest expense:
Salaries and employee benefits			4,992			5,193			9,906			10,329
Net occupancy and equipment			1,020			995			2,059			1,996
Computer services			485			424			950			841
Fees for professional services			354			401			711			679
Other expense			1,548			1,568			3,169			3,230
Total non-interest expense			8,399			8,581			16,795			17,075
Income before income taxes			1,224			522			2,442			1,631
Provision for income taxes			271			118			539			380
Net income		$	953		$	404		$	1,903		$	1,251
Basic net income per share		$	0.15		$	0.07		$	0.30		$	0.20
Diluted net income per share		$	0.14		$	0.06		$	0.28		$	0.19
Dividends per share		$	0.03		$	0.03		$	0.06		$	0.06

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 a substitute for the GAAP-based results. 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 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																				Six Months Ended
				2021								2020												2021				2020
				June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
				(Dollars in Thousands, Except Per Share Data)
				(Unaudited Reconciliation)
TANGIBLE BALANCES
Total assets				$	946,946			$	926,535			$	890,511			$	852,941			$	845,747
Less: Goodwill					7,435				7,435				7,435				7,435				7,435
Less: Core deposit intangible					792				884				975				1,067				1,170
Tangible assets		(a)		$	938,719			$	918,216			$	882,101			$	844,439			$	837,142
Total shareholders’ equity				$	88,778			$	87,917			$	86,678			$	85,658			$	85,281
Less: Goodwill					7,435				7,435				7,435				7,435				7,435
Less: Core deposit intangible					792				884				975				1,067				1,170
Tangible common equity		(b)		$	80,551			$	79,598			$	78,268			$	77,156			$	76,676
Average shareholders’ equity				$	88,477			$	87,456			$	86,337			$	85,656			$	84,953			$	87,970			$	84,837
Less: Average goodwill					7,435				7,435				7,435				7,435				7,435				7,435				7,435
Less: Average core deposit intangible					836				927				1,019				1,115				1,224				882				1,278
Average tangible shareholders’ equity		(c)		$	80,206			$	79,094			$	77,883			$	77,106			$	76,294			$	79,653			$	76,124
Net income		(d)		$	953			$	950			$	1,045			$	411			$	404			$	1,903			$	1,251
Common shares outstanding (in thousands)		(e)			6,215				6,214				6,177				6,177				6,176
TANGIBLE MEASURES
Tangible book value per common share		(b)/(e)		$	12.96			$	12.81			$	12.67			$	12.49			$	12.41
Tangible common equity to tangible assets		(b)/(a)			8.58	%			8.67	%			8.87	%			9.14	%			9.16	%
Return on average tangible common equity (annualized)		(1)			4.76	%			4.87	%			5.34	%			2.12	%			2.13	%			4.82	%			3.30	%

(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