Press Releases

First US Bancshares, Inc. Reports First Quarter 2023 Diluted EPS Growth of 65% Over First Quarter 2022

BIRMINGHAM, Ala., April 26, 2023 /PRNewswire/ -- 

First 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

$2.1million

$0.33

0.85 %

10.02 %

11.05 %

86.4 %

 

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 March 31, 2023 ("1Q2023"), compared to $2.2 million, or $0.35 per diluted share, for the quarter ended December 31, 2022 ("4Q2022") and $1.4 million, or $0.20 per diluted share, for the quarter ended March 31, 2022 ("1Q2022"). Compared to 4Q2022, diluted earnings per share decreased by 5.7% due primarily to increased interest expense on deposits, combined with two less earning days in the quarter.  Compared to 1Q2022, diluted earnings per share increased by 65.0% due to increased net interest income, combined with reduced provisions for credit losses.

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



Quarter Ended




2023



2022




March
31,



December
31,



September
30,



June
30,



March
31,


Results of Operations:


(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)


Interest income


$

11,960



$

11,621



$

10,670



$

9,525



$

9,381


Interest expense



2,526




1,730




1,155




699




672


Net interest income



9,434




9,891




9,515




8,826




8,709


Provision for credit losses



269




527




1,165




895




721


Net interest income after provision for credit losses



9,165




9,364




8,350




7,931




7,988


Non-interest income



829




678




1,088




856




829


Non-interest expense



7,270




7,106




7,032




6,878




7,056


Income before income taxes



2,724




2,936




2,406




1,909




1,761


Provision for income taxes



652




708




546




494




400


Net income


$

2,072



$

2,228



$

1,860



$

1,415



$

1,361


Per Share Data:
















Basic net income per share


$

0.35



$

0.37



$

0.31



$

0.23



$

0.22


Diluted net income per share


$

0.33



$

0.35



$

0.29



$

0.22



$

0.20


Dividends declared


$

0.05



$

0.05



$

0.03



$

0.03



$

0.03


Key Measures (Period End):
















Total assets


$

1,026,054



$

994,667



$

989,277



$

955,385



$

968,646


Tangible assets (1)



1,018,308




986,866




981,421




947,462




960,650


Total loans



775,889




773,873




750,271




714,637




678,330


Allowance for loan and lease losses



11,599




9,422




9,373




8,751




8,484


Investment securities, net



128,689




132,657




145,903




152,536




137,736


Total deposits



897,885




870,025




846,537




844,296




853,117


Short-term borrowings



25,000




20,038




40,106




10,088




10,062


Long-term borrowings



10,744




10,726




10,708




10,690




10,671


Total shareholders' equity



84,153




85,135




83,103




82,576




87,807


Tangible common equity (1)



76,407




77,334




75,247




74,653




79,811


Book value per common share



14.34




14.65




14.30




14.05




14.33


Tangible book value per common share (1)



13.02




13.31




12.95




12.70




13.02


Key Ratios:
















Return on average assets (annualized)



0.85

%



0.90

%



0.75

%



0.58

%



0.58

%

Return on average common equity (annualized)



10.02

%



10.60

%



8.78

%



6.55

%



6.17

%

Return on average tangible common equity (annualized) (1)



11.05

%



11.70

%



9.69

%



7.21

%



6.77

%

Net interest margin



4.13

%



4.27

%



4.10

%



3.91

%



3.97

%

Efficiency ratio (2)



70.8

%



67.2

%



66.3

%



71.0

%



74.0

%

Total loans to deposits



86.4

%



88.9

%



88.6

%



84.6

%



79.5

%

Total loans to assets



75.6

%



77.8

%



75.8

%



74.8

%



70.0

%

Tangible common equity to tangible assets (1)



7.50

%



7.84

%



7.67

%



7.88

%



8.31

%

Tier 1 leverage ratio (3)



9.30

%



9.39

%



9.23

%



9.33

%



9.38

%

Allowance for loan losses as % of loans



1.49

%



1.22

%



1.25

%



1.22

%



1.25

%

Nonperforming assets as % of total assets



0.18

%



0.24

%



0.28

%



0.18

%



0.32

%

Net charge-offs as a percentage of average loans



0.11

%



0.25

%



0.29

%



0.36

%



0.32

%


(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

"The first quarter results reflect the strength of our well-positioned balance sheet," stated James F. House, President and CEO of the Company. "In a quarter marked by banking sector volatility and emerging economic challenges, the Company grew diluted earnings per share by 65% year-over-year, while enhancing its liquidity position. In addition, credit quality metrics continued to trend positively during the quarter, reflective of the strategy we implemented over 18 months ago aimed at, among other things, shifting our consumer lending platforms to assets of higher credit quality," continued Mr. House. 

Strategic Focus and Impact on Asset Quality

Beginning in the third quarter of 2021, the Company implemented strategic initiatives 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 subsidiary, Acceptance Loan Company ("ALC").  This initiative, which included the closure of ALC's branch lending locations, was expected to both reduce the Company's expense structure and ultimately improve asset quality following the paydown of ALC's loans.  Historically, ALC's loans have produced substantially higher levels of charge-offs than the Bank's other loan portfolios. 

Consistent with management's expectations, as a result of this initiative, the Company realized a reduction of 14.3% in non-interest expense in 2022, compared to 2021.  While non-interest expense reductions were realized in 2022, charge-offs of ALC's loans remained elevated in 2022 as the run-off of the loan portfolio commenced.  Although ALC's charge-offs began to decrease in the latter part of 2022, more significant reductions have occurred in 2023.  Net charge-offs associated with ALC's loans decreased to $0.1 million during 1Q2023, compared to $0.4 million in 4Q2022, and $0.5 million in 1Q2022.  Although the timing of future charge-offs and recoveries cannot be fully predicted, management expects continued reduction in net charge-offs over time as the portfolio continues to decrease.  As of March 31, 2023, remaining loans at ALC totaled $16.9 million, compared to $20.2 million as of December 31, 2022 and $33.8 million as of March 31, 2022.

The improved charge-off experience at ALC has favorably impacted the Company's overall asset quality trends.  Net charge-offs totaled 0.11% of the Company's average loan balance during 1Q2023, compared to 0.25% during 4Q2022 and 0.32% during 1Q2022.  In addition, the Company's nonperforming assets, including loans in non-accrual status and OREO, decreased to $1.8 million as of March 31, 2023, compared to $2.3 million as of December 31, 2022, and $3.1 million as of March 31, 2022.  As a percentage of total assets, non-performing assets totaled 0.18% as of March 31, 2023, compared to 0.24% as of December 31, 2022, and 0.32% as of March 31, 2022.

Other First Quarter 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 as of March 31, 2023.



Quarter Ended



2023


2022



March
31,


December
31,


September
30,


June
30,


March
31,



(Dollars in Thousands)



(Unaudited)




(Unaudited)


(Unaudited)


(Unaudited)

Real estate loans:











Construction, land development and other land loans


$69,398


$53,914


$36,230


$40,647


$52,946

Secured by 1-4 family residential properties


86,622


87,995


84,452


69,109


69,862

Secured by multi-family residential properties


63,368


67,852


72,377


66,851


50,815

Secured by non-farm, non-residential properties


198,266


200,156


200,707


187,032


177,698

Commercial and industrial loans


65,708


73,546


65,935


65,909


68,102

Consumer loans:











Direct


8,435


9,851


11,950


14,891


17,149

Branch retail


12,222


13,992


15,878


17,992


20,827

Indirect


271,870


266,567


262,742


252,206


220,931

Total loans held for investment


$775,889


$773,873


$750,271


$714,637


$678,330

Allowance for loan and lease losses


11,599


9,422


9,373


8,751


8,484

Net loans held for investment


$764,290


$764,451


$740,898


$705,886


$669,846

 

Total loans increased by $2.0 million, or 0.3%, during 1Q2023. Loan volume increases during the quarter were driven primarily by growth in the construction, land development and other land category and the consumer indirect category.  The increase in construction, land development and other land loans category was primarily attributable to growth in construction fundings on multi-family residential projects. Growth in consumer indirect 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.  As of March 31, 2023, the Company conducted indirect lending in 17 states.  Loan growth in 1Q2023 was partially offset by decreases in the multi-family residential, and other commercial and consumer categories.  Loans in the direct consumer and branch retail consumer categories were expected to decrease as they comprise the majority of ALC's remaining loan balances.  Moving forward, management will continue efforts to grow the loan portfolio in a diversified manner with appropriate attention to the economic environment and the impact of elevated interest rates on the credit quality of both current and prospective borrowers. 

Deposit Growth – Deposits totaled $897.9 million as of March 31, 2023, compared to $870.0 million as of December 31, 2022.  Growth in deposits during the quarter resulted from wholesale brokered deposit sources utilized by the Company to increase liquidity on the Company's balance sheet in the wake of bank failures that occurred during March 2023.  During the quarter, the Company acquired brokered deposits totaling $35.0 million.  Of the acquired deposits, $20.0 million have six-month maturities, while the remainder either mature or are callable by the Company within 12 months.  As of March 31, 2023, core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, totaled $761.7 million, or 84.8% of total deposits, compared to $778.1 million, or 89.4% of total deposits, as of December 31, 2022. 

Deployment of Funds – The acquisition of brokered deposits during the quarter drove an increase in the Company's on-balance sheet cash and cash equivalent position by $38.3 million comparing March 31, 2023 to December 31, 2022. Management consistently 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.  Management's decisions, particularly during the latter portion of 1Q2023 were focused on enhancing the Company's liquidity position. As part of this focus, management elected to hold higher levels of cash and cash equivalents and did not seek to re-deploy excess cash into the Company's investment securities portfolio during the quarter. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $128.7 million as of March 31, 2023, compared to $132.7 million as of December 31, 2022. The expected average life of securities in the investment portfolio was 3.7 years as of March 31, 2023, compared to 3.5 years as of December 31, 2022.

Net Interest Income and Margin – Net interest income totaled $9.4 million in 1Q2023, compared to $9.9 million in 4Q2022. The decrease resulted from two less earnings days in the quarter, as well as margin compression as interest-bearing liabilities repriced faster than interest-earning assets amid the ongoing rising interest rate environment.  This was partially driven by a shift in the mix of deposits from noninterest-bearing to interest-bearing during the quarter.  As of March 31, 2023, noninterest-bearing deposits totaled $154.7 million, compared to $169.8 million as of December 31, 2022, a decrease of 8.9%.  By contrast, interest-bearing deposits increased to $743.2 million as of March 31, 2023, compared to $700.2 million as of December 31, 2022, an increase of 6.1%. 

Comparing 1Q2023 to 1Q2022, net interest income increased by $0.7 million due to a combination of margin expansion and growth in earning assets that occurred primarily in 2022.  Consistent with much of the banking industry, the Company's margin expanded during the latter two quarters of 2022, but contracted in 1Q2023, as the velocity of changes in both funding mix and rate increases on funding sources accelerated.  The Company's total funding costs, including both interest and noninterest-bearing deposits and borrowings, increased by 37 basis points to 1.14% in 1Q2023, compared to 0.77% in 4Q2022.  Net interest margin was 4.13% in 1Q2023, compared to 4.27% in 4Q2022 and 3.97% in 1Q2022.

CECL Adoption and Credit Provisioning – Effective January 1, 2023, the Company adopted the current expected credit loss (CECL) model to account for credit losses on financial instruments, including loans.  The adoption of the CECL model resulted in a transition adjustment that increased the Company's allowance for loan and lease losses by $2.1 million, including $1.4 million associated with the Bank's loan portfolio and $0.7 million associated with ALC's run-off loan portfolio. In addition, the Company recorded a reserve against off-balance sheet exposures associated with unfunded loan commitments of $0.3 million, which is included in other liabilities.

The first table below summarizes changes in the Company's allowance for loan and lease losses associated with the initial adoption of CECL on January 1, 2023, as well as activity during the remainder of 1Q2023.  The second table summarizes the allowance for loan and lease losses as a percentage of total loans in each portfolio category as of both December 31, 2022 (immediately prior to CECL adoption) and January 1, 2023 (immediately following CECL adoption), compared to March 31, 2023. 



As of and for the Three Months Ended March 31, 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 loan and lease 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



(8)





(215)


(155)


(156)


(534)

Recoveries



16





198


77


28


319

Provision


97


(32)


(52)


(61)


(117)


(4)



438


269

Ending balance


$520


$769


$509


$1,762


$782


$892


$1,068


$5,297


$11,599






















Allowance for Loan and Lease 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 %

 

The adoption of CECL was most impactful on the Company's consumer indirect loan portfolio due primarily to the extension of the loss estimate period to the estimated life of loans in this category.  The Company originates indirect loans with maturities of up to 15 years; however, a significant number of these loans have historically paid off prior to maturity.  As of both January 1, 2023 and March 31, 2023, the estimated average remaining life of the indirect portfolio was between four and five years.  The branch retail portfolio, which represents indirect lending originated by ALC, was similarly impacted by the transition to CECL.  In addition, the Company's consumer portfolios were impacted by current economic forecasts using data provided by the Federal Reserve on inflation, unemployment, and the forecasted movement of interest rates.

Non-interest Income – Non-interest income levels remained consistent, totaling $0.8 million in 1Q2023, compared to $0.7 million in 4Q2022 and $0.8 million in 1Q2022.

Non-interest Expense – Non-interest expense totaled $7.3 million in 1Q2023, compared to $7.1 million in both 4Q2022 and 1Q2022.  The increase comparing 1Q2023 to 4Q2022 resulted primarily from increases in salaries and benefits expense.  Compared to 1Q2022, the increase resulted from increases in various miscellaneous expense categories, partially offset by year-over-year reductions in salaries and benefits.

Shareholders' Equity – As of March 31, 2023, shareholders' equity totaled $84.2 million, compared to $85.1 million as of December 31, 2022. The decrease in shareholders' equity resulted from the CECL transition adjustment which reduced retained earnings by $2.4 million, and to a lesser extent, from reductions in accumulated other comprehensive income associated with fair value declines in the available-for-sale investment portfolio and other reclassification adjustments.  These reductions were partially offset by earnings, net of dividends paid, for the quarter.  As of March 31, 2023, the Company's ratio of tangible common equity to tangible assets totaled 7.50%, compared to 7.84% as of December 31, 2022, and 8.31% as of March 31, 2022.  

Cash Dividend – Consistent with 4Q2022, the Company declared a cash dividend of $0.05 per share on its common stock in 1Q2023.  During each of the first three quarters of 2022, the Company paid cash dividends of $0.03 per common share.  The increased dividend in both 4Q2022 and 1Q2023 is commensurate with earnings improvement experienced by the Company in both 1Q2023 and full-year 2022.

Regulatory Capital – During 1Q2023, 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 March 31, 2023, the Bank's common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.09%.  As of March 31, 2023, its total capital ratio was 12.34%, and its Tier 1 leverage ratio was 9.30%.

Liquidity – As of March 31, 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's discount window and its Bank Term Funding Program (BTFP), the latter of which was established during 1Q2023 in response to the recent liquidity events that have occurred in the banking industry.  Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and, in certain circumstances, eligible 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.

Management monitors the Company's liquidity position on a daily basis, and maintains policies, guidelines and contingency funding plans designed to ensure that adequate levels of liquidity are maintained through a variety of circumstances.  Leading up to and in response to the liquidity events that occurred in the banking industry during 1Q2023, management undertook a number of procedures to both enhance the Company's liquidity position, as well as to effectively communicate the Company's sound liquidity position to deposit customers, borrowers, employees, and regulatory authorities.  Procedures undertaken included, but were not limited to, the following:

  • Communication with all Company employees on the safety and soundness of the Company's liquidity and capital positions
  • Daily monitoring by senior leadership of questions and concerns from deposit customers
  • Review and realignment of collateral pledging capacity with the Federal Reserve and FHLB
  • Accelerated procurement of wholesale brokered deposits to enhance the Company's on-balance sheet liquidity position
  • Roll out of promotional interest rates on selected deposit products to attract new deposit growth
  • Re-testing of federal funds line borrowing capabilities in the week following bank failures

These procedures represent precautionary measures undertaken by management as a matter of prudence and in accordance with the Company's contingency funding plans, which are a component of the Company's liquidity policies and procedures.  While the Company enhanced its liquidity position over the course of the quarter through wholesale deposit fundings, core deposits remained stable.  Exclusive of wholesale brokered deposit fundings, the Company's total deposits decreased by only $7.4 million, or 0.9%, comparing March 31, 2023 to December 31, 2022.  Although events during the quarter strained the banking industry as a whole, the Company's management remains confident in the stability of the Company's core deposit base which has served as the Company's primary funding source for many years.  Excluding wholesale brokered deposits, as of March 31, 2023, the Company had over 29 thousand deposit accounts with an average balance of approximately $27.3 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) totaled $165.9 million, or 18.5% of total deposits, as of March 31, 2023. As of December 31, 2022, estimated uninsured deposits totaled $148.3 million, or 17.1% of total deposits.

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


March 31,
 2023



December 31,
 2022



(Dollars in Thousands)



(Unaudited)



(Unaudited)


Liquidity from cash and federal funds sold:






Cash and cash equivalents

$

68,427



$

30,152


Federal funds sold


263




1,768


Liquidity from cash and federal funds sold


68,690




31,920


Liquidity from pledgable investment securities:






Investment securities available-for sale, at fair value


127,007




130,795


Investment securities held-to-maturity, at amortized cost


1,682




1,862


Less: securities pledged


(51,899)




(54,717)


Less: estimated collateral value discounts


(10,918)




(7,833)


Liquidity from pledgable investment securities


65,872




70,107


Liquidity from unused lendable collateral (loans) at FHLB


19,228




18,215


Unsecured lines of credit with banks


28,000




45,000


Total readily available liquidity

$

181,790



$

165,242


 

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 is a non-GAAP measure used by management and regulators to analyze a portion of the Company's liquidity. 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 Federal Reserve 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 Federal Reserve 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 Federal Reserve 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 March 31, 2023 and December 31, 2022, the Company's total remaining credit availability with the FHLB was $243.4 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 pending 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 loan and lease 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. 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 March 31, 2023 AND 2022
(Dollars in Thousands)
(Unaudited)




Three Months Ended



Three Months Ended




March 31, 2023



March 31, 2022




Average
Balance



Interest



Annualized
Yield/
Rate %



Average
Balance



Interest



Annualized
Yield/
Rate %


ASSETS



















Interest-earning assets:



















Total loans


$

770,871



$

10,982




5.78

%


$

696,695



$

8,847




5.15

%

Taxable investment securities



129,840




680




2.12

%



130,306




485




1.51

%

Tax-exempt investment securities



1,059




3




1.15

%



2,771




12




1.76

%

Federal Home Loan Bank stock



1,634




28




6.95

%



879




8




3.69

%

Federal funds sold



2,591




29




4.54

%



81








Interest-bearing deposits in banks



20,526




238




4.70

%



57,859




29




0.20

%

Total interest-earning assets



926,521




11,960




5.24

%



888,591




9,381




4.28

%




















Noninterest-earning assets



62,818










64,958








Total


$

989,339









$

953,549



























LIABILITIES AND SHAREHOLDERS' EQUITY



















Interest-bearing deposits:



















Demand deposits


$

227,382



$

195




0.35

%


$

250,612



$

126




0.20

%

Savings deposits



193,878




553




1.16

%



197,016




140




0.29

%

Time deposits



270,780




1,389




2.08

%



210,727




249




0.48

%

Total interest-bearing deposits



692,040




2,137




1.25

%



658,355




515




0.32

%

Noninterest-bearing demand deposits



166,548










175,285








Total deposits



858,588




2,137




1.01

%



833,640




515




0.25

%

Borrowings



37,221




389




4.24

%



20,715




157




3.07

%

Total funding costs



895,809




2,526




1.14

%



854,355




672




0.32

%




















Other noninterest-bearing liabilities



9,693










9,692








Shareholders' equity



83,837










89,502








Total


$

989,339









$

953,549



























Net interest income





$

9,434









$

8,709





Net interest margin









4.13

%









3.97

%

 

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




March 31,



December 31,




2023



2022




(Unaudited)





ASSETS


Cash and due from banks


$

11,970



$

11,844


Interest-bearing deposits in banks



56,457




18,308


Total cash and cash equivalents



68,427




30,152


Federal funds sold



263




1,768


Investment securities available-for-sale, at fair value



127,007




130,795


Investment securities held-to-maturity, at amortized cost



1,682




1,862


Federal Home Loan Bank stock, at cost



1,590




1,359


Loans held for investment



775,889




773,873


Less allowance for loan and lease losses



11,599




9,422


Net loans held for investment



764,290




764,451


Premises and equipment, net of accumulated depreciation



24,290




24,439


Cash surrender value of bank-owned life insurance



16,472




16,399


Accrued interest receivable



2,898




3,011


Goodwill and core deposit intangible, net



7,746




7,801


Other real estate owned



617




686


Other assets



10,772




11,944


Total assets


$

1,026,054



$

994,667


LIABILITIES AND SHAREHOLDERS' EQUITY


Deposits:







Non-interest-bearing


$

154,661



$

169,822


Interest-bearing



743,224




700,203


Total deposits



897,885




870,025


Accrued interest expense



841




607


Other liabilities



7,431




8,136


Short-term borrowings



25,000




20,038


Long-term borrowings



10,744




10,726


Total liabilities



941,901




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; 5,866,866 and 5,812,258 shares outstanding,
   respectively



75




75


Additional paid-in capital



14,663




14,510


Accumulated other comprehensive loss, net of tax



(7,714)




(7,241)


Retained earnings



103,823




104,460


Less treasury stock: 1,871,290 and 1,868,598 shares at cost, respectively



(26,694)




(26,669)


Total shareholders' equity



84,153




85,135


Total liabilities and shareholders' equity


$

1,026,054



$

994,667


 

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




Three Months Ended




March 31,




2023



2022




(Unaudited)



(Unaudited)


Interest income:







Interest and fees on loans


$

10,982



$

8,847


Interest on investment securities



978




534


Total interest income



11,960




9,381









Interest expense:







Interest on deposits



2,137




516


Interest on borrowings



389




156


Total interest expense



2,526




672









Net interest income



9,434




8,709









Provision for credit losses



269




721









Net interest income after provision for credit losses



9,165




7,988









Non-interest income:







Service and other charges on deposit accounts



285




299


Lease income



231




214


Other income, net



313




316


Total non-interest income



829




829









Non-interest expense:







Salaries and employee benefits



4,222




4,330


Net occupancy and equipment



835




766


Computer services



421




377


Fees for professional services



245




268


Other expense



1,547




1,315


Total non-interest expense



7,270




7,056









Income before income taxes



2,724




1,761


Provision for income taxes



652




400


Net income


$

2,072



$

1,361


Basic net income per share


$

0.35



$

0.22


Diluted net income per share


$

0.33



$

0.20


Dividends per share


$

0.05



$

0.03


 

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 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






2023



2022






March
31,



December 
31,



September
30,



June 
30,



March 
31,






(Dollars in Thousands, Except Per Share Data)






(Unaudited Reconciliation)


TANGIBLE BALANCES


















Total assets




$

1,026,054



$

994,667



$

989,277



$

955,385



$

968,646


Less: Goodwill





7,435




7,435




7,435




7,435




7,435


Less: Core deposit intangible





311




366




421




488




561


Tangible assets


(a)


$

1,018,308



$

986,866



$

981,421



$

947,462



$

960,650




















Total shareholders' equity




$

84,153



$

85,135



$

83,103



$

82,576



$

87,807


Less: Goodwill





7,435




7,435




7,435




7,435




7,435


Less: Core deposit intangible





311




366




421




488




561


Tangible common equity


(b)


$

76,407



$

77,334



$

75,247



$

74,653



$

79,811




















Average shareholders' equity




$

83,837



$

83,390



$

84,085



$

86,650



$

89,502


Less: Average goodwill





7,435




7,435




7,435




7,435




7,435


Less: Average core deposit intangible





337




392




451




523




596


Average tangible shareholders' equity


(c)


$

76,065



$

75,563



$

76,199



$

78,692



$

81,471




















Net income


(d)


$

2,072



$

2,228



$

1,860



$

1,415



$

1,361


Common shares outstanding (in thousands)


(e)



5,867




5,812




5,812




5,876




6,130




















TANGIBLE MEASURES


















Tangible book value per common share


(b)/(e)


$

13.02



$

13.31



$

12.95



$

12.70



$

13.02




















Tangible common equity to tangible assets


(b)/(a)



7.50

%



7.84

%



7.67

%



7.88

%



8.31

%



















Return on average tangible common equity
(annualized)


(1)



11.05

%



11.70

%



9.69

%



7.21

%



6.77

%



(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

SOURCE First US Bancshares, Inc.

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