BIRMINGHAM, Ala., Jan. 30, 2018 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq:FUSB) (the “Company”) today reported a net loss of $1.9 million, or $(0.29) per diluted share, for the quarter ended December 31, 2017, primarily due to a one-time, non-cash charge of $2.5 million that resulted from the adjustment of deferred tax assets upon the enactment of the Tax Cuts and Jobs Act of 2017 (“Tax Reform”). For the year ended December 31, 2017, the Company reported a net loss of $0.4 million, or $(0.06) per diluted share, compared to net income of $1.2 million, or $0.19 per diluted share, for the year ended December 31, 2016. Absent the impact of the one-time, non-cash charge associated with Tax Reform, the Company’s net income was $0.6 million and $2.1 million for the quarter and year ended December 31, 2017, respectively. Additional information on the impact of Tax Reform on the Company’s 2017 earnings is included in the Appendix to this release.
2017 Financial Highlights
- Pre-tax Earnings Growth – Income before income taxes totaled $2.6 million for the year ended December 31, 2017, compared to $1.4 million for the year ended December 31, 2016, an increase of 88.4%.
- Interest Income Growth – Interest and fees on loans increased by $1.1 million during the year ended December 31, 2017 compared to the year ended December 31, 2016. The increase resulted from increased average loan volume and was partially offset by a decrease of $0.1 million in interest on investment securities as proceeds from the scheduled maturity of investments were redeployed into the loan portfolio.
- Loan Growth – Net loans increased $23.3 million, or 7.2%, during the year ended December 31, 2017. Loan growth in the Company’s banking subsidiary, First US Bank (the “Bank”), totaled $17.4 million during the year ended December 31, 2017, while the Company’s finance company subsidiary, Acceptance Loan Company, Inc. (“ALC”), grew its loan portfolio by $5.9 million. During the fourth quarter of 2017, total growth in net loans was $8.1 million, or 9.6% on an annualized basis. Growth in net loans at the Bank totaled $6.0 million, while ALC’s growth totaled $2.1 million during the quarter.
- Asset Quality Improvement – Non-performing assets, including loans in non-accrual status and other real estate owned (OREO), decreased to $6.0 million, or 0.96% of total assets, as of December 31, 2017, compared to $7.3 million, or 1.20% of total assets, as of December 31, 2016.
“We saw substantial improvement in core earnings during 2017, as total interest income increased by nearly $1.0 million compared to 2016,” stated James F. House, President and Chief Executive Officer of the Company. “The growth in interest income is driving improved earnings and is indicative of the solid loan growth that we have experienced over the past two years. In addition, we are excited that we accomplished the move of our headquarters to Birmingham in 2017. We believe that our new headquarters location provides a solid platform from which we can grow,” continued Mr. House.
Results of Operations
- Pre-provision net interest income totaled $7.3 million for the fourth quarter of 2017, compared to $7.1 million for the fourth quarter of 2016. For the year ended December 31, 2017, pre-provision net interest income totaled $28.4 million, compared to $27.9 million for the year ended December 31, 2016. The increase in net interest income resulted from loan growth. Average loans totaled $331.7 million and $293.0 million during the years ended December 31, 2017 and 2016, respectively. Net yield on interest-earning assets was 5.08% for the year ended December 31, 2017, compared to 5.16% for the year ended December 31, 2016.
- The provision for loan losses was $0.5 million for the fourth quarter of 2017, compared to $1.8 million for the fourth quarter of 2016. For the year ended December 31, 2017, the provision for loan losses totaled $2.0 million, compared to $3.2 million for the year ended December 31, 2016. The decrease during both periods resulted from provision expense recorded for the Bank during the fourth quarter of 2016. The Company’s allowance for loan losses as a percentage of loans was 1.36% as of December 31, 2017, compared to 1.48% as of December 31, 2016.
- Non-interest income totaled $1.3 million for the fourth quarter of 2017, compared to $1.2 million for the fourth quarter of 2016. For the year ended December 31, 2017, non-interest income totaled $4.7 million, compared to $5.2 million for the year ended December 31, 2016. The decrease in non-interest income for the year ended December 31, 2017 resulted primarily from reductions in gains on the sale and prepayment of investment securities at the Bank, as well as reductions in other ancillary revenues at ALC.
- Non-interest expense totaled $7.4 million for the fourth quarter of 2017, compared to $6.8 million for the fourth quarter of 2016. For the years ended December 31, 2017 and 2016, non-interest expense totaled $28.4 million and $28.5 million, respectively. The decrease in non-interest expense for the year ended December 31, 2017 resulted primarily from reductions in regulatory assessments, insurance expense and impairment charges associated with closed branches. These reductions were offset in part by increases in salaries and benefits expense and occupancy and equipment expense.
Balance Sheet Management
- Net loans totaled $346.1 million as of December 31, 2017, compared to $322.8 million as of December 31, 2016. The increase in net loans included increases of $17.4 million and $5.9 million at the Bank and ALC, respectively. The growth in loan volume was funded primarily through cash flows generated from the scheduled maturity of investment securities. Investment securities totaled $180.2 million as of December 31, 2017, compared to $207.8 million as of December 31, 2016. Investment securities serve to both enhance interest income and provide an additional source of liquidity available to fund loan growth and capital expenditures. Management has structured the investment portfolio to provide cash flows through interest earned and the maturity or payoff of securities in the portfolio on a monthly basis. In the current environment, the Company expects cash flows from the investment portfolio to continue to serve as a significant source of liquidity available for the funding of future loan growth.
- Premises and equipment increased by $8.1 million during the year ended December 31, 2017 due to capital expenditures associated with the construction of an office complex in Birmingham, Alabama. Initial construction of the office complex was completed during the third quarter of 2017, and the complex houses a new retail branch of the Bank that became operational during the same period. At the end of the third quarter of 2017, the Company and the Bank relocated their headquarters to the complex.
- Liabilities increased to $549.4 million as of December 31, 2017, compared to $530.7 million as of December 31, 2016. The increase resulted from an increase in deposits of $19.5 million. Deposits generated through the Bank’s branch system are considered the Company’s primary funding source to meet short- and long-term liquidity needs. Deposit levels fluctuate throughout the year based on seasonality, as well as specific circumstances impacting deposit customers. In addition to deposits, significant external sources of liquidity are available to the Bank, including access to funding through federal funds lines, Federal Home Loan Bank advances and brokered deposits.
- Shareholders’ equity was $76.2 million, or $12.53 per outstanding common share, as of December 31, 2017. Shareholders’ equity was $76.2 million, or $12.62 per outstanding common share, as of December 31, 2016.
- The Company declared a cash dividend of $0.02 per share on its common stock in the fourth quarter of 2017. This amount is consistent with the Company’s quarterly dividend declarations for the first three quarters of 2017 and each quarter of 2016.
- During the fourth quarter, the Bank continued to maintain capital ratios at higher levels than the ratios required to be considered a “well-capitalized” institution under applicable banking regulations. As of December 31, 2017, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 18.41%. Its total capital ratio was 19.60%, and its Tier 1 leverage ratio was 11.89%.
About First US Bancshares, Inc.
First US Bancshares, Inc. is a bank holding company that operates banking offices in Alabama 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’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 Securities and Exchange Commission, 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 loan demand, growth and earnings potential and expansion, 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, 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 and collateral values. 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)
| Quarter Ended (Unaudited) |
||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
||||||||||||||||
| Results of Operations: | ||||||||||||||||||||
| Interest income | $ | 8,087 | $ | 7,820 | $ | 7,683 | $ | 7,510 | $ | 7,721 | ||||||||||
| Interest expense | 804 | 685 | 626 | 591 | 588 | |||||||||||||||
| Net interest income | 7,283 | 7,135 | 7,057 | 6,919 | 7,133 | |||||||||||||||
| Provision for loan losses | 523 | 373 | 576 | 515 | 1,814 | |||||||||||||||
| Net interest income after provision for loan losses | 6,760 | 6,762 | 6,481 | 6,404 | 5,319 | |||||||||||||||
| Non-interest income | 1,333 | 1,236 | 930 | 1,167 | 1,165 | |||||||||||||||
| Non-interest expense | 7,359 | 7,190 | 6,863 | 7,037 | 6,826 | |||||||||||||||
| Income (loss) before income taxes | 734 | 808 | 548 | 534 | (342 | ) | ||||||||||||||
| Provision for (benefit from) income taxes | 2,600 | 173 | 132 | 130 | (237 | ) | ||||||||||||||
| Net income (loss) | $ | (1,866 | ) | $ | 635 | $ | 416 | $ | 404 | $ | (105 | ) | ||||||||
| Per Share Data: | ||||||||||||||||||||
| Basic net income (loss) per share | $ | (0.30 | ) | $ | 0.10 | $ | 0.07 | $ | 0.07 | $ | (0.02 | ) | ||||||||
| Diluted net income (loss) per share | $ | (0.29 | ) | $ | 0.10 | $ | 0.06 | $ | 0.06 | $ | (0.02 | ) | ||||||||
| Dividends declared | $ | 0.02 | $ | 0.02 | $ | 0.02 | $ | 0.02 | $ | 0.02 | ||||||||||
| Period-End Balance Sheet: | ||||||||||||||||||||
| Total assets | $ | 625,581 | $ | 614,599 | $ | 616,218 | $ | 619,827 | $ | 606,892 | ||||||||||
| Loans, net of allowance for loan losses | 346,121 | 338,026 | 330,526 | 317,677 | 322,772 | |||||||||||||||
| Allowance for loan losses | 4,774 | 4,808 | 4,905 | 4,879 | 4,856 | |||||||||||||||
| Investment securities, net | 180,150 | 185,802 | 200,831 | 213,497 | 207,814 | |||||||||||||||
| Total deposits | 517,079 | 508,385 | 509,245 | 509,078 | 497,556 | |||||||||||||||
| Short-term borrowings | 15,594 | 10,635 | 10,692 | 10,750 | 10,119 | |||||||||||||||
| Long-term debt | 10,000 | 10,000 | 10,000 | 15,000 | 15,000 | |||||||||||||||
| Total shareholders’ equity | 76,208 | 78,854 | 78,373 | 77,297 | 76,241 | |||||||||||||||
| Key Ratios: | ||||||||||||||||||||
| Return on average assets (annualized) | (1.18 | %) | 0.41 | % | 0.27 | % | 0.27 | % | (0.07 | %) | ||||||||||
| Return on average equity (annualized) | (9.38 | %) | 3.21 | % | 2.14 | % | 2.12 | % | (0.53 | %) | ||||||||||
| Loans to deposits | 66.9 | % | 66.5 | % | 64.9 | % | 62.4 | % | 64.9 | % | ||||||||||
| Allowance for loan losses as % of loans | 1.36 | % | 1.40 | % | 1.46 | % | 1.51 | % | 1.48 | % | ||||||||||
| Nonperforming assets as % of total assets | 0.96 | % | 0.94 | % | 1.01 | % | 1.10 | % | 1.20 | % | ||||||||||
FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
| December 31, |
December 31, |
||||||
| 2017 | 2016 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 7,577 | $ | 7,018 | |||
| Interest-bearing deposits in banks | 19,547 | 16,512 | |||||
| Total cash and cash equivalents | 27,124 | 23,530 | |||||
| Federal funds sold | 15,000 | ― | |||||
| Investment securities available-for-sale, at fair value | 153,871 | 181,910 | |||||
| Investment securities held-to-maturity, at amortized cost | 26,279 | 25,904 | |||||
| Federal Home Loan Bank stock, at cost | 1,609 | 1,581 | |||||
| Loans, net of allowance for loan losses of $4,774 and $4,856, respectively | 346,121 | 322,772 | |||||
| Premises and equipment, net | 26,433 | 18,340 | |||||
| Cash surrender value of bank-owned life insurance | 14,923 | 14,603 | |||||
| Accrued interest receivable | 2,057 | 1,987 | |||||
| Other real estate owned | 3,792 | 4,858 | |||||
| Other assets | 8,372 | 11,407 | |||||
| Total assets | $ | 625,581 | $ | 606,892 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Deposits | $ | 517,079 | $ | 497,556 | |||
| Accrued interest expense | 381 | 241 | |||||
| Other liabilities | 6,319 | 7,735 | |||||
| Short-term borrowings | 15,594 | 10,119 | |||||
| Long-term debt | 10,000 | 15,000 | |||||
| Total liabilities | 549,373 | 530,651 | |||||
| Shareholders’ equity: | |||||||
| Common stock, par value $0.01 per share, 10,000,000 shares authorized; | |||||||
| 7,345,946 and 7,329,060 shares issued, respectively; 6,081,744 and 6,043,102 shares outstanding, respectively | 73 | 73 | |||||
| Surplus | 10,755 | 10,786 | |||||
| Accumulated other comprehensive income (loss), net of tax | (868 | ) | (1,277 | ) | |||
| Retained earnings | 86,673 | 87,434 | |||||
| Less treasury stock: 1,264,202 and 1,285,958 shares at cost, respectively | (20,414 | ) | (20,764 | ) | |||
| Noncontrolling interest | (11 | ) | (11 | ) | |||
| Total shareholders’ equity | 76,208 | 76,241 | |||||
| Total liabilities and shareholders’ equity | $ | 625,581 | $ | 606,892 | |||
FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||
| Interest income: | ||||||||||||||||||
| Interest and fees on loans | $ | 7,068 | $ | 6,745 | $ | 26,996 | $ | 25,937 | ||||||||||
| Interest on investment securities | 1,019 | 976 | 4,104 | 4,218 | ||||||||||||||
| Total interest income | 8,087 | 7,721 | 31,100 | 30,155 | ||||||||||||||
| Interest expense: | ||||||||||||||||||
| Interest on deposits | 694 | 526 | 2,407 | 2,094 | ||||||||||||||
| Interest on borrowings | 110 | 62 | 299 | 177 | ||||||||||||||
| Total interest expense | 804 | 588 | 2,706 | 2,271 | ||||||||||||||
| Net interest income | 7,283 | 7,133 | 28,394 | 27,884 | ||||||||||||||
| Provision for loan losses | 523 | 1,814 | 1,987 | 3,197 | ||||||||||||||
| Net interest income after provision for loan losses | 6,760 | 5,319 | 26,407 | 24,687 | ||||||||||||||
| Non-interest income: | ||||||||||||||||||
| Service and other charges on deposit accounts | 474 | 467 | 1,880 | 1,773 | ||||||||||||||
| Credit insurance income | 256 | 111 | 715 | 681 | ||||||||||||||
| Net gain on sales and prepayments of investment securities | 1 | 2 | 229 | 659 | ||||||||||||||
| Other income, net | 602 | 585 | 1,842 | 2,088 | ||||||||||||||
| Total non-interest income | 1,333 | 1,165 | 4,666 | 5,201 | ||||||||||||||
| Non-interest expense: | ||||||||||||||||||
| Salaries and employee benefits | 4,326 | 3,929 | 17,374 | 16,663 | ||||||||||||||
| Net occupancy and equipment | 888 | 769 | 3,164 | 3,150 | ||||||||||||||
| Other real estate/foreclosure expense, net | 77 | 349 | 538 | 719 | ||||||||||||||
| Other expense | 2,068 | 1,779 | 7,373 | 7,963 | ||||||||||||||
| Total non-interest expense | 7,359 | 6,826 | 28,449 | 28,495 | ||||||||||||||
| Income (loss) before income taxes | 734 | (342 | ) | 2,624 | 1,393 | |||||||||||||
| Provision (benefit from) for income taxes | 2,600 | (237 | ) | 3,035 | 169 | |||||||||||||
| Net income (loss) | $ | (1,866 | ) | $ | (105 | ) | $ | (411 | ) | $ | 1,224 | |||||||
| Basic net income (loss) per share | $ | (0.30 | ) | $ | (0.02 | ) | $ | (0.07 | ) | $ | 0.20 | |||||||
| Diluted net income (loss) per share | $ | (0.29 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | 0.19 | |||||||
| Dividends per share | $ | 0.02 | $ | 0.02 | $ | 0.08 | $ | 0.08 | ||||||||||
| Key Ratios: | ||||||||||||||||||
| Return on average assets | (1.18 | %) | (0.07 | %) | (0.07 | %) | 0.21 | % | ||||||||||
| Return on average equity | (9.38 | %) | (0.53 | %) | (0.52 | %) | 1.56 | % | ||||||||||
APPENDIX
FIRST US BANCSHARES, INC. AND SUBSIDIARIES
ADJUSTED NET INCOME AND SELECTED FINANCIAL DATA (1)
(Dollars in Thousands, Except Per Share Data)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||
| As reported: | |||||||||||||||||||
| Income (loss) before income taxes | $ | 734 | $ | (342 | ) | $ | 2,624 | $ | 1,393 | ||||||||||
| Provision (benefit from) for income taxes | 2,600 | (237 | ) | 3,035 | 169 | ||||||||||||||
| Net income (loss) | $ | (1,866 | ) | $ | (105 | ) | $ | (411 | ) | $ | 1,224 | ||||||||
| Impact of Tax Reform: | |||||||||||||||||||
| Provision (benefit from) for income taxes | (2,471 | ) | ‒ | (2,471 | ) | ‒ | |||||||||||||
| Adjusted Net income (loss) | $ | 605 | $ | (105 | ) | $ | 2,060 | $ | 1,224 | ||||||||||
| Per Share Data: | |||||||||||||||||||
| Reported Basic net income (loss) per share | $ | (0.30 | ) | $ | (0.02 | ) | $ | (0.07 | ) | $ | 0.20 | ||||||||
| Impact of Tax Reform | (0.40 | ) | ‒ | (0.40 | ) | ‒ | |||||||||||||
| Adjusted Basic net income (loss) per share | $ | 0.10 | $ | (0.02 | ) | $ | 0.33 | $ | 0.20 | ||||||||||
| Reported Diluted net income (loss) per share | $ | (0.29 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | 0.19 | ||||||||
| Impact of Tax Reform | (0.38 | ) | ‒ | (0.38 | ) | ‒ | |||||||||||||
| Adjusted Diluted net income (loss) per share | $ | 0.09 | $ | (0.02 | ) | $ | 0.32 | $ | 0.19 | ||||||||||
| Key Ratios: | |||||||||||||||||||
| Reported Return on average assets (annualized) | (1.18 | %) | (0.07 | %) | (0.07 | %) | 0.21 | % | |||||||||||
| Impact of Tax Reform | (1.56 | %) | ‒ | (0.40 | %) | ‒ | |||||||||||||
| Adjusted Return on average assets (annualized) | 0.38 | % | (0.07 | %) | 0.33 | % | 0.21 | % | |||||||||||
| Reported Return on average equity (annualized) | (9.38 | %) | (0.53 | %) | (0.52 | %) | 1.56 | % | |||||||||||
| Impact of Tax Reform | (12.42 | %) | ‒ | (3.15 | %) | ‒ | |||||||||||||
| Adjusted Return on average equity (annualized) | 3.04 | % | (0.53 | %) | 2.63 | % | 1.56 | % | |||||||||||
(1) For the three and twelve months ended December 31, 2017, the Company recorded a one-time, non-cash charge of $2.5 million that resulted from the adjustment of the Company’s deferred tax assets upon the enactment of the Tax Cuts and Jobs Act of 2017 (“Tax Reform”). The adjusted net income and related per share data and key ratios presented herein exclude the impact of Tax Reform on the Company’s results for the three and twelve months ended December 31, 2017 and are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that this non-GAAP presentation is useful in demonstrating the one-time impact of the deferred tax asset adjustment on the Company’s results for the periods presented, but cautions readers that non-GAAP measures should not be viewed as a substitute for results determined in accordance with GAAP.