First US Bancshares, Inc. Reports Third Quarter 2021 Results

Rhea-AI Summary

First US Bancshares, Inc. (FUSB) reported a net income of $837 thousand ($0.13 per diluted share) for 3Q2021, a decrease from $953 thousand in 2Q2021 but an increase from $411 thousand in 3Q2020. Year-to-date net income reached $2.7 million ($0.41 per diluted share), up from $1.7 million in the same period last year. Loan growth was $19.3 million in 3Q2021, totaling $58.8 million (9.0%) year-to-date. Strategic initiatives included the closure of 20 branches, leading to anticipated expense reductions. The company declared a cash dividend of $0.03 per share, maintaining strong capital ratios.

Positive

• Year-to-date net income increased to $2.7 million, up from $1.7 million year-over-year.
• Loan growth of $58.8 million (9.0%) year-to-date, with $19.3 million growth in 3Q2021.
• Maintained strong capital ratios above 'well-capitalized' requirements.
• Declaring consistent cash dividends of $0.03 per share.

Negative

• Net income decreased in 3Q2021 compared to 2Q2021.
• Incurred pre-tax charges of approximately $550 thousand due to branch closures.
• Net interest margin decreased to 4.17%, down from 4.31% in 2Q2021.

Reports Year-Over-Year Earnings and Loan Growth and Advancement of Strategic Initiatives

BIRMINGHAM, Ala., Oct. 27, 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 $837 thousand, or $0.13 per diluted share, for the quarter ended September 30, 2021 (“3Q2021”), compared to $953 thousand, or $0.14 per diluted share, for the quarter ended June 30, 2021 (“2Q2021”) and $411 thousand, or $0.06 per diluted share, for the quarter ended September 30, 2020 (“3Q2020”). For the nine months ended September 30, 2021, the Company’s net income totaled $2.7 million, or $0.41 per diluted share, compared to $1.7 million, or $0.25 per diluted share, for the nine months ended September 30, 2020. Loan growth during 3Q2021 totaled $19.3 million, bringing year-to-date loan growth to $58.8 million, or 9.0%, for the nine months ended September 30, 2021.

Advancement of Strategic Initiatives

During 3Q2021, the Company made progress on strategic initiatives aimed at improving operating efficiency, focusing the Company’s loan growth activities, and fortifying asset quality. On September 3, 2021, the Bank’s wholly-owned subsidiary, Acceptance Loan Company, Inc. (“ALC”), ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. This initiative is expected to result in expense reduction beginning in the fourth quarter of 2021 (“4Q2021”), while at the same time focusing management’s efforts on growth in the Bank’s other loan portfolios.

In connection with the ALC branch closures, the Company recorded pre-tax charges of approximately $550 thousand during 3Q2021. These one-time expenses included severance and related personnel costs, lease termination costs, fixed asset valuation adjustments, termination of technology contracts, and other costs to administer the branch closures. The Company expects to incur approximately $500 thousand in additional expenses in the coming months primarily related to personnel expenses associated with one-time payments to ALC personnel that continue to manage the remaining loan portfolio, as well as expenses associated with the ultimate termination of ALC’s remaining branch leases. It is expected that the majority of the remaining one-time expenses will be incurred during 4Q2021 and the first quarter of 2022 and will be fully offset by ongoing cost savings that result from the closures.

In addition to the ALC branch closures, on September 3, 2021, four of the Bank’s previously existing banking offices were closed. The decision to close these banking offices was based on analysis of banking center activity, profitability and Community Reinvestment Act assessment. The closures included banking centers located in Bucksville, Columbiana and south Tuscaloosa, Alabama, as well as Ewing, Virginia.

“We are pleased that we have completed these major strategic initiatives, while at the same time posting loan growth and substantially improved year-over-year earnings,” stated James F. House, President and CEO of the Company. “We are continuing to transform our Company to an organization that can operate more efficiently with a focus on those lending areas that we believe will sustain our growth for many years to come,” continued Mr. House.

Other Third Quarter 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 September 30, 2021.

		Quarter Ended
		2021												2020
		September 30,				June 30,				March 31,				December 31,				September 30,
		(Dollars in Thousands)
		(Unaudited)				(Unaudited)				(Unaudited)								(Unaudited)
Real estate loans:
Construction, land development and other land loans		$	58,175			$	53,425			$	48,491			$	37,282			$	35,472
Secured by 1-4 family residential properties			73,112				78,815				82,349				88,856				95,147
Secured by multi-family residential properties			51,420				53,811				54,180				54,326				49,197
Secured by non-farm, non-residential properties			198,745				191,398				193,626				184,528				183,754
Commercial and industrial loans			73,777				65,772				65,043				69,808				72,948
Paycheck Protection Program ("PPP") loans			3,902				11,587				14,795				11,927				13,950
Consumer loans:
Direct consumer			25,845				26,937				26,998				29,788				30,048
Branch retail			29,764				31,688				31,075				32,094				33,145
Indirect sales			194,154				176,116				153,940				141,514				125,369
Total loans		$	708,894			$	689,549			$	670,497			$	650,123			$	639,030
Less unearned interest, fees and deferred costs			3,729				4,067				3,792				4,279				4,240
Allowance for loan and lease losses			8,193				7,726				7,475				7,470				7,185
Net loans		$	696,972			$	677,756			$	659,230			$	638,374			$	627,605

Loan growth during 3Q2021 totaled $19.3 million, or an increase of 2.8%, compared to June 30, 2021. For the nine months ended September 30, 2021, total loan growth was $58.8 million, or 9.0%. Loan growth during 3Q2021 was distributed between indirect lending, real estate lending and commercial and industrial (“C&I”) lending, which totaled net growth of $18.0 million, $4.0 million and $8.0 million, respectively. For the nine months ended September 30, 2021, net loan growth in these same portfolios totaled $52.6 million, $16.4 million and $4.0 million, 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. The growth in the Bank’s real estate and C&I lending was indicative of continued growth in economic activity in larger metropolitan markets, primarily in the southeast, served by the Bank.

Consumer loans (excluding the indirect portfolio) include the direct consumer and branch retail categories, which consist primarily of loans at ALC. These portfolios will continue to decrease over time as loans held by ALC mature and are paid off. Direct consumer and branch retail loans decreased by $1.1 million and $1.9 million, respectively, during 3Q2021. Additionally, the Bank’s total loan balance in the Paycheck Protection Program (“PPP”) administered by the Small Business Administration (“SBA”) declined by $7.7 million during 3Q2021 as PPP loans continued to be forgiven by the SBA.

Net Interest Income and Margin – Due to earning asset growth, combined with continued reductions in interest expense, net interest income continued to improve during 3Q2021. Pre-provision net interest income increased by $23 thousand, or 0.2%, comparing 3Q2021 to 2Q2021, and by $370 thousand, or 4.1%, comparing 3Q2021 to 3Q2020. Year-to-date pre-provision net interest income as of September 30, 2021 exceeded the same period of 2020 by $1.2 million, or 4.7%. Margin compression remained a challenge for the Company during 3Q2021 due in part to the interest rate environment that has persisted since the onset of the COVID-19 pandemic. Net interest margin totaled 4.17% for 3Q2021, compared to 4.31% for 2Q2021 and 4.56% for 3Q2020. 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. Given 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 0.32% in 3Q2021, compared to 0.36% in 2Q2021 and 0.54% in 3Q2020.

Deposit Growth and Deployment of Funds – The Bank continued to experience growth in deposit balances during 3Q2021, a trend that has persisted since the onset of the pandemic. Total deposits increased by $9.0 million, or 1.1%, during 3Q2021. For the nine months ended September 30, 2021, total deposits increased by $64.6 million, or 8.3%. 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.

Loan Loss Provision – Loan loss provisioning during 3Q2021 increased by $0.1 million compared to 2Q2021 and decreased by $0.4 million compared to 3Q2020. The increase in provisioning compared to 2Q2021 was due to the increase in loan volume during 3Q2021, along with additional provisioning for ALC’s loan portfolios to account for the inherent uncertainty that may result from ALC’s branch closures. The decrease in provisioning compared to 3Q2020 was due primarily to overall improvement in the general economic outlook and reduction of uncertainty related to loans that could be impacted by the COVID-19 pandemic as compared to the previous year. During 2020, over 1,900 of the Company’s borrowers requested and were granted COVID-19 pandemic-related payment deferments. As of September 30, 2021, loans that continued to be in pandemic-related deferment totaled only $0.7 million, compared to $95.2 million as of June 30, 2020 in the early stages of the pandemic. The decrease in deferred loans over the past five 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 September 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 $0.9 million for 3Q2021, compared to $0.8 million for 2Q2021 and $1.4 million for 3Q2020. Comparing 3Q2021 to 3Q2020, approximately $0.2 million of the decrease resulted from reductions in secondary market mortgage revenues, while the remaining $0.3 million of the decrease resulted from gains on the sale of premises and equipment that occurred during 3Q2020 and were not repeated in 3Q2021. 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 $8.5 million for 3Q2021, compared to $8.4 million for 2Q2021 and $8.7 million for 3Q2020. The decreases in both latter quarters compared to 3Q2020 resulted primarily from reductions in salaries and employee benefits. The increase comparing 3Q2021 to 2Q2021 resulted primarily from the expenses associated with the ALC branch closures. Management remains focused on expense containment in the current environment.

Balance Sheet Growth – Total assets as of September 30, 2021 increased by $9.8 million, or 1.0%, compared to June 30, 2021, and increased by $103.8 million, or 12.2%, compared to September 30, 2020. Growth in deposits totaled $9.0 million, or 1.1%, in 3Q2021 from 2Q2021, and $101.5 million, or 13.6%, comparing 3Q2021 to 3Q2020. 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 3Q2021, $0.7 million represented non-interest-bearing deposits, while $8.3 million were interest-bearing. The growth comparing September 30, 2021 to September 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 had 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.

Asset Quality – The Company’s non-performing assets, including loans in non-accrual status and other real estate owned (OREO), totaled $3.3 million as of September 30, 2021, compared to $2.1 million as of June 30, 2021 and $4.0 million as of September 30, 2020. The increase in 3Q2021 from 2Q2021 resulted primarily from banking centers that were closed during the quarter and reclassified into OREO. As a percentage of total assets, non-performing assets were 0.35% as of September 30, 2021, compared to 0.22% as of June 30, 2021 and 0.47% as of September 30, 2020.    

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

Regulatory Capital – During 3Q2021, the Bank continued to maintain capital ratios at higher levels than required to be considered a “well-capitalized” institution under applicable banking regulations. As of September 30, 2021, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.69%. Its total capital ratio was 11.78%, and its Tier 1 leverage ratio was 8.51%.

Liquidity – As of September 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.

Subordinated Debt Issuance – Subsequent to 3Q2021, on October 1, 2021, the Company announced the completion of a private placement of $11.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes that will mature on October 1, 2031 (the “Notes”). The Notes will bear interest at a rate of 3.50% per annum for the first five years, then the interest rate will be reset quarterly to a benchmark interest rate per annum which, subject to certain conditions provided in the Notes, will be equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points. The Company expects to use the remaining net proceeds for general corporate purposes, which may include the repurchase of the Company’s common stock, and to support organic growth plans, including the maintenance of capital ratios. Following receipt of the net proceeds of the Notes, the Company invested $5 million into capital surplus of the Bank.

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, 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 Company’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 Company’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																				Nine Months Ended
		2021												2020								2021				2020
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
Results of Operations:
Interest income		$	10,030			$	10,059			$	9,845			$	10,204			$	9,996			$	29,934			$	30,173
Interest expense			695				747				781				912				1,031				2,223				3,699
Net interest income			9,335				9,312				9,064				9,292				8,965				27,711				26,474
Provision for loan and lease losses			618				498				401				469				1,046				1,517				2,476
Net interest income after provision for loan and lease losses			8,717				8,814				8,663				8,823				7,919				26,194				23,998
Non-interest income			896				809				951				1,008				1,375				2,656				4,002
Non-interest expense			8,547				8,399				8,396				8,477				8,747				25,342				25,822
Income before income taxes			1,066				1,224				1,218				1,354				547				3,508				2,178
Provision for income taxes			229				271				268				309				136				768				516
Net income		$	837			$	953			$	950			$	1,045			$	411			$	2,740			$	1,662
Per Share Data:
Basic net income per share		$	0.13			$	0.15			$	0.15			$	0.16			$	0.07			$	0.43			$	0.27
Diluted net income per share		$	0.13			$	0.14			$	0.14			$	0.15			$	0.06			$	0.41			$	0.25
Dividends declared		$	0.03			$	0.03			$	0.03			$	0.03			$	0.03			$	0.09			$	0.09
Key Measures (Period End):
Total assets		$	956,734			$	946,946			$	926,535			$	890,511			$	852,941
Tangible assets (1)			948,592				938,719				918,216				882,101				844,439
Loans, net of allowance for loan losses			696,972				677,756				659,230				638,374				627,605
Allowance for loan and lease losses			8,193				7,726				7,475				7,470				7,185
Investment securities, net			121,467				123,583				75,783				91,422				93,405
Total deposits			846,842				837,885				818,043				782,212				745,336
Short-term borrowings			10,037				10,017				10,017				10,017				10,045
Total shareholders’ equity			89,597				88,778				87,917				86,678				85,658
Tangible common equity (1)			81,455				80,551				79,598				78,268				77,156
Book value per common share			14.41				14.28				14.15				14.03				13.87
Tangible book value per common share (1)			13.10				12.96				12.81				12.67				12.49
Key Ratios:
Return on average assets (annualized)			0.35	%			0.41	%			0.43	%			0.48	%			0.19	%			0.39	%			0.27	%
Return on average common equity (annualized)			3.71	%			4.32	%			4.41	%			4.82	%			1.91	%			4.14	%			2.61	%
Return on average tangible common equity (annualized) (1)			4.08	%			4.76	%			4.87	%			5.34	%			2.12	%			4.57	%			2.90	%
Net interest margin			4.17	%			4.31	%			4.40	%			4.59	%			4.56	%			4.29	%			4.72	%
Efficiency ratio (2)			83.5	%			83.0	%			83.8	%			82.3	%			84.6	%			83.5	%			84.7	%
Net loans to deposits			82.3	%			80.9	%			80.6	%			81.6	%			84.2	%
Net loans to assets			72.8	%			71.6	%			71.2	%			71.7	%			73.6	%
Tangible common equity to tangible assets (1)			8.59	%			8.58	%			8.67	%			8.87	%			9.14	%
Tier 1 leverage ratio (3)			8.51	%			8.60	%			8.73	%			8.98	%			9.08	%
Allowance for loan losses as % of loans (4)			1.16	%			1.13	%			1.12	%			1.16	%			1.13	%
Nonperforming assets as % of total assets			0.35	%			0.22	%			0.37	%			0.45	%			0.47	%
Net charge-offs as a percentage of average loans			0.09	%			0.15	%			0.25	%			0.11	%			0.19	%			0.16	%			0.25	%

(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 1.17% as of September 30, 2021.

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

		Three Months Ended												Three Months Ended
		September 30, 2021												September 30, 2020
		Average Balance				Interest				Annualized Yield/ Rate %				Average Balance				Interest				Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans		$	691,435			$	9,568				5.49	%		$	609,609			$	9,557				6.24	%
Taxable investment securities			119,943				409				1.35	%			95,402				393				1.64	%
Tax-exempt investment securities			3,367				15				1.77	%			3,530				16				1.80	%
Federal Home Loan Bank stock			870				8				3.65	%			1,135				11				3.86	%
Federal funds sold			86				—				—				80				—				—
Interest-bearing deposits in banks			73,490				30				0.16	%			72,288				19				0.10	%
Total interest-earning assets			889,191				10,030				4.48	%			782,044				9,996				5.08	%
Non-interest-earning assets:
Other assets			67,067												68,424
Total		$	956,258											$	850,468
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Demand deposits		$	239,188			$	141				0.23	%		$	203,842			$	130				0.25	%
Savings deposits			208,187				160				0.30	%			161,699				147				0.36	%
Time deposits			223,988				351				0.62	%			226,269				717				1.26	%
Total interest-bearing deposits			671,363				652				0.39	%			591,810				994				0.67	%
Borrowings			10,032				43				1.70	%			10,252				37				1.44	%
Total interest-bearing liabilities (1)			681,395				695				0.40	%			602,062				1,031				0.68	%
Non-interest-bearing liabilities:
Demand deposits			176,102												153,112
Other liabilities			9,158												9,638
Shareholders’ equity			89,603												85,656
Total		$	956,258											$	850,468
Net interest income						$	9,335											$	8,965
Net interest margin											4.17	%											4.56	%

(1)   The annualized rate on total average funding costs, including total average interest-bearing liabilities and average non-interest-bearing demand deposits, was 0.32% and 0.54% for the three-month periods ended September 30, 2021 and 2020, respectively.

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

		Nine Months Ended												Nine Months Ended
		September 30, 2021												September 30, 2020
		Average Balance				Interest				Annualized Yield/ Rate %				Average Balance				Interest				Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans		$	672,807			$	28,726				5.71	%		$	571,881			$	28,433				6.64	%
Taxable investment securities			100,245				1,059				1.41	%			101,303				1,417				1.87	%
Tax-exempt investment securities			3,464				47				1.81	%			2,158				39				2.41	%
Federal Home Loan Bank stock			948				25				3.53	%			1,136				41				4.82	%
Federal funds sold			84				—				—				6,302				45				0.95	%
Interest-bearing deposits in banks			86,632				77				0.12	%			66,325				198				0.40	%
Total interest-earning assets			864,180				29,934				4.63	%			749,105				30,173				5.38	%
Non-interest-earning assets:
Other assets			68,041												71,594
Total		$	932,221											$	820,699
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Demand deposits		$	233,329			$	425				0.24	%		$	185,667			$	442				0.32	%
Savings deposits			190,296				453				0.32	%			161,026				605				0.50	%
Time deposits			230,986				1,222				0.71	%			232,824				2,553				1.46	%
Total interest-bearing deposits			654,611				2,100				0.43	%			579,517				3,600				0.83	%
Borrowings			10,022				123				1.64	%			10,201				99				1.30	%
Total interest-bearing liabilities (1)			664,633				2,223				0.45	%			589,718				3,699				0.84	%
Non-interest-bearing liabilities:
Demand deposits			169,780												136,052
Other liabilities			9,288												9,816
Shareholders’ equity			88,520												85,113
Total		$	932,221											$	820,699
Net interest income						$	27,711											$	26,474
Net interest margin											4.29	%											4.72	%

⁽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 0.68% for the nine-month periods ended September 30, 2021 and 2020, respectively.

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

		September 30,				December 31,
		2021				2020
		(Unaudited)
ASSETS
Cash and due from banks		$	15,219			$	12,235
Interest-bearing deposits in banks			60,041				82,180
Total cash and cash equivalents			75,260				94,415
Federal funds sold			82				85
Investment securities available-for-sale, at fair value			117,560				84,993
Investment securities held-to-maturity, at amortized cost			3,907				6,429
Federal Home Loan Bank stock, at cost			870				1,135
Loans and leases, net of allowance for loan and lease losses of $8,193 and $7,470, respectively			696,972				638,374
Premises and equipment, net of accumulated depreciation of $22,276 and $23,774, respectively			25,445				28,206
Cash surrender value of bank-owned life insurance			16,066				15,846
Accrued interest receivable			2,592				2,807
Goodwill and core deposit intangible, net			8,142				8,410
Other real estate owned			2,373				949
Other assets			7,465				8,862
Total assets		$	956,734			$	890,511
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing		$	175,386			$	151,935
Interest-bearing			671,456				630,277
Total deposits			846,842				782,212
Accrued interest expense			183				292
Other liabilities			10,075				11,312
Short-term borrowings			10,037				10,017
Total liabilities			867,137				803,833
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,634,918 and 7,596,351 shares issued, respectively; 6,218,126 and 6,176,556 shares outstanding, respectively			75				75
Additional paid-in capital			14,051				13,786
Accumulated other comprehensive income (loss), net of tax			369				(52	)
Retained earnings			96,903				94,722
Less treasury stock: 1,416,792 and 1,419,795 shares at cost, respectively			(21,801	)			(21,853	)
Total shareholders’ equity			89,597				86,678
Total liabilities and shareholders’ equity		$	956,734			$	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								Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Interest income:
Interest and fees on loans		$	9,568			$	9,557			$	28,726			$	28,433
Interest on investment securities			462				439				1,208				1,740
Total interest income			10,030				9,996				29,934				30,173
Interest expense:
Interest on deposits			652				994				2,100				3,600
Interest on borrowings			43				37				123				99
Total interest expense			695				1,031				2,223				3,699
Net interest income			9,335				8,965				27,711				26,474
Provision for loan and lease losses			618				1,046				1,517				2,476
Net interest income after provision for loan and lease losses			8,717				7,919				26,194				23,998
Non-interest income:
Service and other charges on deposit accounts			271				298				777				995
Net gain on sales and prepayments of investment securities			—				—				22				326
Mortgage fees from secondary market			—				196				23				499
Lease income			208				206				619				630
Other income, net			417				675				1,215				1,552
Total non-interest income			896				1,375				2,656				4,002
Non-interest expense:
Salaries and employee benefits			5,045				5,138				14,951				15,467
Net occupancy and equipment			1,259				1,078				3,318				3,074
Computer services			461				470				1,411				1,311
Fees for professional services			292				325				1,003				1,004
Other expense			1,490				1,736				4,659				4,966
Total non-interest expense			8,547				8,747				25,342				25,822
Income before income taxes			1,066				547				3,508				2,178
Provision for income taxes			229				136				768				516
Net income		$	837			$	411			$	2,740			$	1,662
Basic net income per share		$	0.13			$	0.07			$	0.43			$	0.27
Diluted net income per share		$	0.13			$	0.06			$	0.41			$	0.25
Dividends per share		$	0.03			$	0.03			$	0.09			$	0.09

Non-GAAP Financial Measures

In addition to the financial results presented in this press release that have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company’s management believes that certain non-GAAP financial measures and ratios are beneficial to the reader. These non-GAAP measures have been provided to enhance overall understanding of the Company’s current financial performance and position. Management believes that these presentations provide meaningful comparisons of financial performance and position in various periods and can be used as a supplement to the GAAP-based measures presented in this press release. The non-GAAP financial results presented should not be considered 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																				Nine Months Ended
				2021												2020								2021				2020
				September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
				(Dollars in Thousands, Except Per Share Data)
				(Unaudited Reconciliation)
TANGIBLE BALANCES
Total assets				$	956,734			$	946,946			$	926,535			$	890,511			$	852,941
Less: Goodwill					7,435				7,435				7,435				7,435				7,435
Less: Core deposit intangible					707				792				884				975				1,067
Tangible assets		(a)		$	948,592			$	938,719			$	918,216			$	882,101			$	844,439
Total shareholders’ equity				$	89,597			$	88,778			$	87,917			$	86,678			$	85,658
Less: Goodwill					7,435				7,435				7,435				7,435				7,435
Less: Core deposit intangible					707				792				884				975				1,067
Tangible common equity		(b)		$	81,455			$	80,551			$	79,598			$	78,268			$	77,156
Average shareholders’ equity				$	89,603			$	88,477			$	87,456			$	86,337			$	85,656			$	88,520			$	85,112
Less: Average goodwill					7,435				7,435				7,435				7,435				7,435				7,435				7,435
Less: Average core deposit intangible					746				836				927				1,019				1,115				836				1,223
Average tangible shareholders’ equity		(c)		$	81,422			$	80,206			$	79,094			$	77,883			$	77,106			$	80,249			$	76,454
Net income		(d)		$	837			$	953			$	950			$	1,045			$	411			$	2,740			$	1,662
Common shares outstanding (in thousands)		(e)			6,218				6,215				6,214				6,177				6,177
TANGIBLE MEASURES
Tangible book value per common share		(b)/(e)		$	13.10			$	12.96			$	12.81			$	12.67			$	12.49
Tangible common equity to tangible assets		(b)/(a)			8.59	%			8.58	%			8.67	%			8.87	%			9.14	%
Return on average tangible common equity (annualized)		(1			4.08	%			4.76	%			4.87	%			5.34	%			2.12	%			4.57	%			2.90	%

(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

FAQ

What were First US Bancshares' earnings for 3Q2021?

First US Bancshares reported net income of $837 thousand for 3Q2021.

How much did FUSB grow its loans in 3Q2021?

FUSB achieved loan growth of $19.3 million in 3Q2021.

What was the net income for First US Bancshares in 2020?

The net income for the nine months ended September 30, 2020, was $1.7 million.

What is the current dividend per share for FUSB?

FUSB declared a dividend of $0.03 per share in 3Q2021.

How did the capital ratios of First US Bancshares perform?

As of September 30, 2021, FUSB maintained capital ratios higher than required for 'well-capitalized' institutions.