First US Bancshares, Inc. Reports Fourth Quarter and Full Year 2021 Results

Thursday, 27. January 2022 22:15

BIRMINGHAM, Ala., Jan. 27, 2022 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq: FUSB) (the “Company”), the parent company of First US Bank (the “Bank”), today reported net income of $1.7 million, or $0.25 per diluted share, for the quarter ended December 31, 2021 (“4Q2021”), compared to $0.8 million, or $0.13 per diluted share, for the quarter ended September 30, 2021 (“3Q2021”) and $1.0 million, or $0.15 per diluted share, for the quarter ended December 31, 2020 (“4Q2020”). For the year ended December 31, 2021 (“Full-year 2021”), the Company’s net income totaled $4.5 million, or $0.66 per diluted share, compared to $2.7 million, or $0.40 per diluted share, for the year ended December 31, 2020 (“Full-year 2020”), an increase of 64.4%. The Company’s earnings growth in 2021 was driven by reductions in both interest and non-interest expense, as well as a decrease in the provision for loan and lease losses. Although loan loss provisions decreased in 2021, the Company maintained its loan loss reserves as a percentage of total loans at levels consistent with the previous year and did not record negative provisions. Accordingly, loan loss provision expense was commensurate with the Company’s continued loan growth. Growth in loan volume during 4Q2021 totaled $2.1 million, bringing total loan growth for the year ended December 31, 2021, to $60.8 million, or 9.4%. Excluding Paycheck Protection Program (“PPP”) loans which have been administered by the Small Business Administration (“SBA”) in response to the COVID-19 pandemic, total loan growth for 2021 was $71.1 million, or 11.1%.

Strategic Initiatives

Progress continued during 4Q2021 on the Company’s strategic initiatives aimed at improving operating efficiency, focusing the Company’s loan growth activities, and fortifying asset quality. As previously announced, 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 resulted in pre-tax expense reductions at ALC netting to $1.3 million, comparing 4Q2021 to 3Q2021. ALC’s 4Q2021 expense reductions were partially offset by one-time pre-tax charges totaling approximately $0.4 million associated with personnel, lease terminations, and other administrative costs associated with the branch closures. As of December 31, 2021, approximately $0.9 million in total one-time pre-tax charges associated with ALC’s business cessation had been incurred. This amount represents the majority of one-time charges currently expected in connection with this strategic initiative. Future non-interest expenses at ALC are expected to consist primarily of personnel and operating expenses associated with collection of ALC’s remaining loan portfolio, as well as provision expense for loan losses or changes in loss estimates.

The expense reductions associated with the ALC strategy had a significant impact on the improvement of the Company’s earnings in 4Q2021. These reductions are expected to contribute favorably to the Company’s earnings in future periods; however, revenues associated with loans at ALC will also decrease as ALC’s portfolio continues to pay down. Loans at ALC totaled $40.8 million as of December 31, 2021, compared to $48.0 million as of September 30, 2021, a reduction of $7.2 million, or 15.0%, during the quarter. Consistent with the reduction in loans, revenues earned on ALC’s loan portfolio decreased to $2.0 million in 4Q2021, compared to $2.3 million in 3Q2021, or a decrease of 13.0%. Management continues to expect that the majority of ALC’s loans will be paid off by the end of 2023. Accordingly, the Company’s focus remains on loan growth in other areas of the Bank’s portfolio, as well as efforts to reduce the Bank’s ongoing operating expenses and improve the Company’s efficiency over time.

“We are pleased to end 2021 on a high note from an earnings standpoint,” stated James F. House, President and CEO of the Company. “Our ALC initiative, combined with the closure of four of the Bank’s branches in September, have driven substantial expense savings and improved profitability as we closed out the year. We also achieved net loan growth during the quarter despite the substantial reductions in ALC’s loan portfolio. Though we remain focused on operational simplification and improvement, we have not lost sight of the importance of loan growth as a driver of long-term earnings,” continued Mr. House.

Other Fourth 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 December 31, 2021.

  Quarter Ended 
  2021  2020 
  December
31,
  September
30,
  June
30,
  March
31,
  December
31,
 
    
  (Dollars in Thousands) 
  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)     
Real estate loans:                    
Construction, land development and other land loans $67,048  $58,175  $53,425  $48,491  $37,282 
Secured by 1-4 family residential properties  72,727   73,112   78,815   82,349   88,856 
Secured by multi-family residential properties  46,000   51,420   53,811   54,180   54,326 
Secured by non-farm, non-residential properties  197,901   198,745   191,398   193,626   184,528 
Commercial and industrial loans  72,286   73,777   65,772   65,043   69,808 
Paycheck Protection Program ("PPP") loans  1,661   3,902   11,587   14,795   11,927 
Consumer loans:                    
Direct consumer  21,689   25,845   26,937   26,998   29,788 
Branch retail  25,692   29,764   31,688   31,075   32,094 
Indirect sales  205,940   194,154   176,116   153,940   141,514 
Total loans $710,944  $708,894  $689,549  $670,497  $650,123 
Less unearned interest, fees and deferred costs  2,594   3,729   4,067   3,792   4,279 
Allowance for loan and lease losses  8,320   8,193   7,726   7,475   7,470 
Net loans $700,030  $696,972  $677,756  $659,230  $638,374 
                     

The Company’s commercial lending efforts in 2021 led to growth in the Bank’s construction, commercial real estate (secured by non-farm, non-residential properties), and C&I categories of $29.8 million, $13.4 million, and $2.5 million, respectively, for the year. The growth in these portfolios was consistent with the commercial lending team’s focus areas and is indicative of continued improvement in economic activity in larger metropolitan markets, primarily in the southeast, that the Bank serves. Growth in these categories was partially offset by decreases during the year in other loan categories including 1-4 residential family, multifamily residential, and PPP loans which decreased $16.1 million, $8.3 million, and $10.3 million, respectively. The reduction in PPP loans was anticipated given the nature of these loans which are administered by the SBA in response to the COVID-19 pandemic. PPP loans are no longer being originated by the Bank, and the reduction in loan balances during 2021 represented loans that were forgiven by the SBA. In addition, the reduction in 1-4 family residential loans included $9.2 million in 1-4 family rental investment properties, a loan category that management has generally sought to reduce exposure to in the current environment.

The Company maintains three consumer lending categories. The direct consumer and branch retail categories are primarily comprised of loans in ALC’s consumer portfolio. Accordingly, these categories are expected to decrease as the ALC dissolution strategy continues. Reductions in the two categories of loans totaled $14.5 million combined in 2021, including a decrease of $8.2 million in 4Q2021, the first full quarter following the cessation of new business at ALC and closure of its branch lending locations. The indirect category, which grew by $64.4 million in 2021, is focused on consumer lending secured by collateral that includes recreational vehicles, campers, boats, horse trailers and cargo trailers. Since early 2020, the Bank has experienced substantial growth in indirect lending as consumers sought alternatives to more traditional travel and leisure activities in the wake of the COVID-19 pandemic, and as the Bank expanded its lending platform into additional states. The Bank now operates indirect lending in a 12-state footprint primarily in the southeastern United States.

Net Interest Income and Margin – Net interest income totaled $9.3 million in both 4Q2021 and 3Q2021. Full-year 2021 net interest income totaled $37.0 million, compared to $35.8 million in 2020. The increase in 2021 resulted primarily from a reduction in interest expense totaling $1.7 million comparing the two years. Although the average balance of both interest-earning assets and interest-bearing liabilities increased in 2021 compared to 2020, the interest rate environment continued to compress margins leading to reductions in both interest income and interest expense. Due to the interest rate environment, combined with growth in both noninterest and interest-bearing deposits, interest expense reductions outpaced interest income reductions, leading to overall net interest income improvement. Annualized average funding costs totaled 0.33% in 4Q2021, compared to 0.32% in 3Q2021, and 0.47% in 4Q2020. Net interest margin totaled 4.10% during 4Q2021, compared to 4.17% for 3Q2021, and 4.59% in 4Q2020. Full-year 2021 net interest margin was 4.23%, compared to 4.69% in 2020.

Deposit Growth and Deployment of Funds – Total deposits decreased by $8.7 million during 4Q2021, representing the first quarter of deposit reduction since March 31, 2020, at the onset of the COVID-19 pandemic. For the year ended December 31, 2021, deposits increased by $55.9 million, or 7.1%. The deposit growth during 2021 was 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 were deployed into lower earning assets. Management has continued to focus 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 was $0.5 million in 4Q2021, compared to $0.6 million in 3Q2021. Full-year 2021 loan loss provisioning totaled $2.0 million, compared to $2.9 million in 2020. The reduction in loan loss provisions in 2021 was due primarily to overall improvement in the economic outlook comparing the two years, as well as the reduced volume of loans in ALC’s portfolio which has historically carried the Company’s highest level of losses. At the onset of the COVID-19 pandemic, over 1,900 of the Company’s borrowers requested and were granted COVID-19 pandemic-related loan payment deferments. As of December 31, 2021, loans that continued to be in pandemic-related deferment totaled only $0.3 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 six quarters 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 and lease 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 December 31, 2021. The Company will continue to closely monitor the impact of changing economic circumstances on the Company’s loan portfolio and adjust the allowance accordingly. 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 in both 4Q2021 and 3Q2021. Full-year 2021 non-interest income totaled $3.5 million, compared to $5.0 million in the previous year. The reduction in non-interest income included $0.5 million in secondary market mortgage revenues that were earned in 2020 associated with the Bank’s mortgage division that was discontinued beginning in 4Q2020. Although the discontinuance resulted in a reduction in non-interest income, non-interest expense associated with the mortgage division, primarily salaries and benefits, was reduced commensurately. In addition, during 2020, approximately $0.6 million in gains on sale of investment securities and sales of premises and equipment were recorded that were not repeated in 2021. Furthermore, service and other charges on deposit accounts decreased $0.2 million due primarily to changes in deposit customer behaviors during the pandemic.

Non-interest Expense – Non-interest expense decreased by $1.1 million in 4Q2021, compared to 3Q2021, due primarily to cost savings resulting from ALC’s branch closures, as well as the closure of four of the Bank’s branches in September 2021. As mentioned previously, reductions in non-interest expense were partially offset by one-time pre-tax charges associated with the ALC dissolution initiative. For the year ended December 31, 2021, non-interest expense totaled $32.8 million, compared to $34.3 million for the year ended December 31, 2020, a reduction of $1.5 million, or 4.5%. Consistent with expense reductions in 4Q2021, the full-year reduction in expenses resulted from cost savings associated with the ALC dissolution strategy combined with Bank branch closures.   Management remains focused on initiatives to continue to simplify the Company’s operating environment and improve operating efficiency.

Balance Sheet Growth – As of December 31, 2021, assets totaled $958.3 million, compared to $890.5 million as of December 31, 2020, an increase of 7.6%. The Company’s asset growth in 2021 was consistent with overall growth in deposits and borrowings during the year. 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 2021, $22.6 million represented non-interest-bearing deposits, while $33.3 million were interest-bearing.

Subordinated Debt Issuance – On October 1, 2021, the Company completed 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 bear interest at a rate of 3.50% per annum for the first five years, at which time 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 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 $5.0 million into capital surplus of the Bank.

Asset Quality – The Company’s non-performing assets, including loans in non-accrual status and other real estate owned (OREO), totaled $4.2 million as of December 31, 2021, compared to $4.0 million as of December 31, 2020. During 2021, increases in the total amount of nonperforming assets resulted primarily from banking centers that were closed during the year and reclassified into OREO. As a percentage of total assets, non-performing assets were 0.43% as of December 31, 2021, compared to 0.45% as of December 31, 2020.    

Cash Dividend – The Company declared a cash dividend of $0.03 per share on its common stock in 4Q2021. Dividends declared by the Company totaled $0.12 in both 2021 and 2020.  

Share Repurchases - During 4Q2021, the Company completed share repurchases totaling 45,748 shares of its $0.01 par value common stock at a weighted average price of $11.47 per share. The Company did not repurchase shares during the first three quarters of 2021. The 4Q2021 repurchases were completed under the Company’s existing share repurchase program, which was extended in December 2020, and amended in April 2021 to allow the repurchase of additional shares through its date of expiration on December 31, 2022. As of December 31, 2021, a total of 1,009,213 shares remained available for repurchase under the program.

Regulatory Capital – During 4Q2021, 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 December 31, 2021, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.36%. Its total capital ratio was 12.44%, and its Tier 1 leverage ratio was 9.17%.

Liquidity – As of December 31, 2021, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations. The Company benefits from a strong core deposit base, a liquid investment securities portfolio and access to funding from a variety of sources, including federal funds lines, Federal Home Loan Bank advances and brokered deposits.

About First US Bancshares, Inc.

First US Bancshares, Inc. (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  Year Ended 
  2021  2020  2021  2020 
  December
31,
  September
30,
  June
30,
  March
31,
  December
31,
  December
31,
  December
31,
 
Results of Operations: (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)     
Interest income $9,987  $10,030  $10,059  $9,845  $10,204  $39,921  $40,377 
Interest expense  727   695   747   781   912   2,950   4,611 
Net interest income  9,260   9,335   9,312   9,064   9,292   36,971   35,766 
Provision for loan and lease losses  493   618   498   401   469   2,010   2,945 
Net interest income after provision for loan
and lease losses
  8,767   8,717   8,814   8,663   8,823   34,961   32,821 
Non-interest income  865   896   809   951   1,008   3,521   5,010 
Non-interest expense  7,414   8,547   8,399   8,396   8,477   32,756   34,299 
Income before income taxes  2,218   1,066   1,224   1,218   1,354   5,726   3,532 
Provision for income taxes  507   229   271   268   309   1,275   825 
Net income $1,711  $837  $953  $950  $1,045  $4,451  $2,707 
Per Share Data:                            
Basic net income per share $0.27  $0.13  $0.15  $0.15  $0.16  $0.70  $0.43 
Diluted net income per share $0.25  $0.13  $0.14  $0.14  $0.15  $0.66  $0.40 
Dividends declared $0.03  $0.03  $0.03  $0.03  $0.03  $0.12  $0.12 
Key Measures (Period End):                            
Total assets $958,302  $956,734  $946,946  $926,535  $890,511         
Tangible assets (1)  950,233   948,592   938,719   918,216   882,101         
Loans, net of allowance for loan losses  700,030   696,972   677,756   659,230   638,374         
Allowance for loan and lease losses  8,320   8,193   7,726   7,475   7,470         
Investment securities, net  134,319   121,467   123,583   75,783   91,422         
Total deposits  838,126   846,842   837,885   818,043   782,212         
Short-term borrowings  10,046   10,037   10,017   10,017   10,017         
Long-term borrowings  10,653   -   -   -   -         
Total shareholders’ equity  90,064   89,597   88,778   87,917   86,678         
Tangible common equity (1)  81,995   81,455   80,551   79,598   78,268         
Book value per common share  14.59   14.41   14.28   14.15   14.03         
Tangible book value per common share (1)  13.28   13.10   12.96   12.81   12.67         
Key Ratios:                            
Return on average assets (annualized)  0.71%  0.35%  0.41%  0.43%  0.48%  0.47%  0.32%
Return on average common equity (annualized)  7.54%  3.71%  4.32%  4.41%  4.82%  5.01%  3.17%
Return on average tangible common equity (annualized) (1)  8.29%  4.08%  4.76%  4.87%  5.34%  5.52%  3.52%
Net interest margin  4.10%  4.17%  4.31%  4.40%  4.59%  4.23%  4.69%
Efficiency ratio (2)  73.2%  83.5%  83.0%  83.8%  82.3%  80.9%  84.1%
Net loans to deposits  83.5%  82.3%  80.9%  80.6%  81.6%        
Net loans to assets  73.0%  72.8%  71.6%  71.2%  71.7%        
Tangible common equity to tangible assets (1)  8.63%  8.59%  8.58%  8.67%  8.87%        
Tier 1 leverage ratio (3)  9.17%  8.51%  8.60%  8.73%  8.98%        
Allowance for loan losses as % of loans  1.17%  1.16%  1.13%  1.12%  1.16%        
Nonperforming assets as % of total assets  0.43%  0.35%  0.22%  0.37%  0.45%        
Net charge-offs as a percentage of average loans  0.18%  0.09%  0.15%  0.25%  0.11%  0.16%  0.20%


(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
 


FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Dollars in Thousands)
(Unaudited)

  Three Months Ended  Three Months Ended 
  December 31, 2021  December 31, 2020 
  Average
Balance
  Interest  Annualized
Yield/
Rate %
  Average
Balance
  Interest  Annualized
Yield/
Rate %
 
ASSETS                        
Interest-earning assets:                        
Total loans $715,882  $9,503   5.27% $644,759  $9,818   6.06%
Taxable investment securities  127,605   444   1.38%  92,523   344   1.48%
Tax-exempt investment securities  3,091   13   1.67%  3,533   16   1.80%
Federal Home Loan Bank stock  870   8   3.65%  1,135   10   3.51%
Federal funds sold  80         85       
Interest-bearing deposits in banks  48,310   19   0.16%  63,477   16   0.10%
Total interest-earning assets  895,838   9,987   4.42%  805,512   10,204   5.04%
Non-interest-earning assets:                        
Other assets  66,147           68,096         
Total $961,985          $873,608         
                         
LIABILITIES AND SHAREHOLDERS’ EQUITY                        
Interest-bearing liabilities:                        
Demand deposits $244,258  $128   0.21% $211,000  $134   0.25%
Savings deposits  204,063   145   0.28%  167,429   151   0.36%
Time deposits  212,891   295   0.55%  236,769   591   0.99%
Total interest-bearing deposits  661,212   568   0.34%  615,198   876   0.57%
Borrowings  20,678   159   3.05%  10,021   36   1.43%
Total interest-bearing liabilities (1)  681,890   727   0.42%  625,219   912   0.58%
Non-interest-bearing liabilities:                        
Demand deposits  179,331           152,537         
Other liabilities  10,758           9,515         
Shareholders’ equity  90,006           86,337         
Total $961,985          $873,608         
                         
Net interest income     $9,260          $9,292     
Net interest margin          4.10%          4.59%


(1)   The annualized rate on total average funding costs, including total average interest-bearing liabilities and average non-interest-bearing demand deposits, was 0.33% and 0.47% for the three-month periods ended December 31, 2021 and 2020, respectively.
 


FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
YEAR ENDED DECEMBER 31, 2021 AND 2020
(Dollars in Thousands)
(Unaudited)

  Year Ended  Year Ended 
  December 31, 2021  December 31, 2020 
  Average
Balance
  Interest  Annualized
Yield/

Rate %
  Average
Balance
  Interest  Annualized
Yield/

Rate %
 
ASSETS                        
Interest-earning assets:                        
Total loans $685,010  $38,229   5.58% $590,200  $38,251   6.48%
Taxable investment securities  107,141   1,503   1.40%  99,096   1,761   1.78%
Tax-exempt investment securities  3,370   60   1.78%  2,503   55   2.20%
Federal Home Loan Bank stock  928   34   3.66%  1,135   51   4.49%
Federal funds sold  83         4,740   45   0.95%
Interest-bearing deposits in banks  76,972   95   0.12%  65,609   214   0.33%
Total interest-earning assets  873,504   39,921   4.57%  763,283   40,377   5.29%
Non-interest-earning assets:                        
Other assets  66,782           70,716         
Total $940,286          $833,999         
                         
LIABILITIES AND SHAREHOLDERS’ EQUITY                        
Interest-bearing liabilities:                        
Demand deposits $236,084  $553   0.23% $192,035  $577   0.30%
Savings deposits  193,766   599   0.31%  162,636   756   0.46%
Time deposits  226,425   1,517   0.67%  233,815   3,143   1.34%
Total interest-bearing deposits  656,275   2,669   0.41%  588,486   4,476   0.76%
Borrowings  13,512   281   2.08%  10,156   135   1.33%
Total interest-bearing liabilities (1)  669,787   2,950   0.44%  598,642   4,611   0.77%
Non-interest-bearing liabilities:                        
Demand deposits  172,187           140,196         
Other liabilities  9,416           9,741         
Shareholders’ equity  88,896           85,420         
Total $940,286          $833,999         
                         
Net interest income     $36,971          $35,766     
Net interest margin          4.23%          4.69%


(1)   The annualized rate on total average funding costs, including total average interest-bearing liabilities and average non-interest-bearing demand deposits, was 0.35% and 0.62% for the years ended December 31, 2021 and 2020, respectively.
 


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

  December 31,  December 31, 
  2021  2020 
  (Unaudited)     
ASSETS        
Cash and due from banks $10,843  $12,235 
Interest-bearing deposits in banks  50,401   82,180 
Total cash and cash equivalents  61,244   94,415 
Federal funds sold  82   85 
Investment securities available-for-sale, at fair value  130,883   84,993 
Investment securities held-to-maturity, at amortized cost  3,436   6,429 
Federal Home Loan Bank stock, at cost  870   1,135 
Loans and leases, net of allowance for loan and lease losses of $8,320 and $7,470, respectively  700,030   638,374 
Premises and equipment, net of accumulated depreciation of $21,916 and $23,774, respectively  25,123   28,206 
Cash surrender value of bank-owned life insurance  16,141   15,846 
Accrued interest receivable  2,556   2,807 
Goodwill and core deposit intangible, net  8,069   8,410 
Other real estate owned  2,149   949 
Other assets  7,719   8,862 
Total assets $958,302  $890,511 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Deposits:        
Non-interest-bearing $174,501  $151,935 
Interest-bearing  663,625   630,277 
Total deposits  838,126   782,212 
Accrued interest expense  224   292 
Other liabilities  9,189   11,312 
Short-term borrowings  10,046   10,017 
Long-term borrowings  10,653   - 
Total liabilities  868,238   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; 6,172,378 and 6,176,556 shares outstanding, respectively  75   75 
Additional paid-in capital  14,163   13,786 
Accumulated other comprehensive loss, net of tax  (276)  (52)
Retained earnings  98,428   94,722 
Less treasury stock: 1,462,540 and 1,419,795 shares at cost, respectively  (22,326)  (21,853)
Total shareholders’ equity  90,064   86,678 
         
Total liabilities and shareholders’ equity $958,302  $890,511 
         


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

  Three Months Ended  Year Ended 
  December 31,  December 31, 
  2021  2020  2021  2020 
  (Unaudited)  (Unaudited)  (Unaudited)     
Interest income:                
Interest and fees on loans $9,503  $9,818  $38,229  $38,251 
Interest on investment securities  484   386   1,692   2,126 
Total interest income  9,987   10,204   39,921   40,377 
                 
Interest expense:                
Interest on deposits  569   876   2,669   4,476 
Interest on borrowings  158   36   281   135 
Total interest expense  727   912   2,950   4,611 
                 
Net interest income  9,260   9,292   36,971   35,766 
                 
Provision for loan and lease losses  493   469   2,010   2,945 
                 
Net interest income after provision for loan and lease losses  8,767   8,823   34,961   32,821 
                 
Non-interest income:                
Service and other charges on deposit accounts  292   306   1,069   1,301 
Net gain on sales and prepayments of investment securities        22   326 
Mortgage fees from secondary market     68   23   567 
Lease income  211   212   830   842 
Other income, net  362   422   1,577   1,974 
Total non-interest income  865   1,008   3,521   5,010 
                 
Non-interest expense:                
Salaries and employee benefits  4,206   5,069   19,157   20,536 
Net occupancy and equipment  1,070   1,111   4,388   4,185 
Computer services  421   485   1,832   1,796 
Fees for professional services  272   293   1,275   1,297 
Other expense  1,445   1,519   6,104   6,485 
Total non-interest expense  7,414   8,477   32,756   34,299 
                 
Income before income taxes  2,218   1,354   5,726   3,532 
Provision for income taxes  507   309   1,275   825 
Net income $1,711  $1,045  $4,451  $2,707 
Basic net income per share $0.27  $0.16  $0.70  $0.43 
Diluted net income per share $0.25  $0.15  $0.66  $0.40 
Dividends per share $0.03  $0.03  $0.12  $0.12 
                 


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  Year Ended 
    2021  2020  2021  2020 
    December
31,
  September
30,
  June
30,
  March
31,
  December
31,
  December
31,
  December
31,
 
      
    (Dollars in Thousands, Except Per Share Data) 
    (Unaudited Reconciliation) 
TANGIBLE BALANCES                              
Total assets   $958,302  $956,734  $946,946  $926,535  $890,511         
Less: Goodwill    7,435   7,435   7,435   7,435   7,435         
Less: Core deposit intangible    634   707   792   884   975         
Tangible assets (a) $950,233  $948,592  $938,719  $918,216  $882,101         
                               
Total shareholders’ equity   $90,064  $89,597  $88,778  $87,917  $86,678         
Less: Goodwill    7,435   7,435   7,435   7,435   7,435         
Less: Core deposit intangible    634   707   792   884   975         
Tangible common equity (b) $81,995  $81,455  $80,551  $79,598  $78,268         
                               
Average shareholders’ equity   $90,010  $89,603  $88,477  $87,456  $86,337  $88,896  $85,420 
Less: Average goodwill    7,435   7,435   7,435   7,435   7,435   7,435   7,435 
Less: Average core deposit intangible    669   746   836   927   1,019   794   1,172 
Average tangible shareholders’ equity (c) $81,906  $81,422  $80,206  $79,094  $77,883  $80,667  $76,813 
                               
Net income (d) $1,711  $837  $953  $950  $1,045  $4,451  $2,707 
Common shares outstanding (in thousands) (e)  6,172   6,218   6,215   6,214   6,177         
                               
TANGIBLE MEASURES                              
Tangible book value per common share (b)/(e) $13.28  $13.10  $12.96  $12.81  $12.67         
                               
Tangible common equity to tangible assets (b)/(a)  8.63%  8.59%  8.58%  8.67%  8.87%        
                               
Return on average tangible common equity (annualized) (1)  8.29%  4.08%  4.76%  4.87%  5.34%  5.52%  3.52%


(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


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