First US Bancshares, Inc. Reports Second Quarter and Year-to-Date Earnings: Six-month Diluted EPS Growth of $0.04 Over 2023

BIRMINGHAM, Ala., July 24, 2024 /PRNewswire/ — Second 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

$2.1 million

$0.34

0.80 %

9.23 %

10.05 %

85.8 %

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 $0.34 per diluted share, for the quarter ended June 30, 2024 (“2Q2024”), compared to $2.1 million, or $0.34 per diluted share, for the quarter ended March 31, 2024 (“1Q2024”) and $2.0 million, or $0.31 per diluted share, for the quarter ended June 30, 2023 (“2Q2023”). For the six months ended June 30, 2024, net income totaled $4.2 million, or $0.68 per diluted share, compared to $4.1 million, or $0.64 per diluted share.

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

Quarter Ended

Six Months Ended

2024

2023

2024

2023

June
30,

March
31,

December
31,

September
30,

June
30,

June
30,

June
30,

Results of Operations:

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Interest income

$

14,546

$

14,277

$

13,945

$

13,902

$

12,999

$

28,823

$

24,959

Interest expense

5,370

5,237

4,835

4,419

3,676

10,607

6,202

Net interest income

9,176

9,040

9,110

9,483

9,323

18,216

18,757

Provision for (recovery of) credit losses

–

–

(434)

184

300

—

569

Net interest income after provision for (recovery of) credit
losses

9,176

9,040

9,544

9,299

9,023

18,216

18,188

Non-interest income

835

865

916

837

799

1,700

1,628

Non-interest expense

7,272

7,147

7,401

7,319

7,151

14,419

14,421

Income before income taxes

2,739

2,758

3,059

2,817

2,671

5,497

5,395

Provision for income taxes

612

651

782

704

648

1,263

1,300

Net income

$

2,127

$

2,107

$

2,277

$

2,113

$

2,023

$

4,234

$

4,095

Per Share Data:

Basic net income per share

$

0.36

$

0.36

$

0.38

$

0.35

$

0.34

$

0.72

$

0.69

Diluted net income per share

$

0.34

$

0.34

$

0.36

$

0.33

$

0.31

$

0.68

$

0.64

Dividends declared

$

0.05

$

0.05

$

0.05

$

0.05

$

0.05

$

0.10

$

0.10

Key Measures (Period End):

Total assets

$

1,083,313

$

1,070,541

$

1,072,940

$

1,065,239

$

1,068,126

Tangible assets (1)

1,075,781

1,062,972

1,065,334

1,057,597

1,060,435

Total loans

819,126

822,941

821,791

815,300

814,494

Allowance for credit losses (“ACL”) on loans and leases

10,227

10,436

10,507

11,380

11,536

Investment securities, net

144,876

126,363

136,669

127,823

124,404

Total deposits

954,455

943,268

950,191

927,038

932,628

Short-term borrowings

15,000

15,000

10,000

30,000

30,000

Long-term borrowings

10,836

10,817

10,799

10,781

10,763

Total shareholders’ equity

93,836

92,326

90,593

87,408

85,725

Tangible common equity (1)

86,304

84,757

82,987

79,766

78,034

Book value per common share

16.34

15.95

15.80

14.88

14.59

Tangible book value per common share (1)

15.03

14.65

14.47

13.58

13.28

Key Ratios:

Return on average assets (annualized)

0.80

%

0.80

%

0.86

%

0.80

%

0.79

%

0.80

%

0.82

%

Return on average common equity (annualized)

9.23

%

9.25

%

10.31

%

9.65

%

9.48

%

9.24

%

9.74

%

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

10.05

%

10.08

%

11.29

%

10.58

%

10.41

%

10.06

%

10.72

%

Net interest margin

3.69

%

3.65

%

3.67

%

3.79

%

3.88

%

3.67

%

4.00

%

Efficiency ratio (2)

72.6

%

72.2

%

73.8

%

70.9

%

70.6

%

72.4

%

70.7

%

Total loans to deposits

85.8

%

87.2

%

86.5

%

87.9

%

87.3

%

Total loans to assets

75.6

%

76.9

%

76.6

%

76.5

%

76.3

%

Common equity to total assets

8.66

%

8.62

%

8.44

%

8.21

%

8.03

%

Tangible common equity to tangible assets (1)

8.02

%

7.97

%

7.79

%

7.54

%

7.36

%

Tier 1 leverage ratio (3)

9.46

%

9.37

%

9.36

%

9.09

%

9.19

%

ACL on loans and leases as % of total loans

1.25

%

1.27

%

1.28

%

1.40

%

1.42

%

Nonperforming assets as % of total assets

0.27

%

0.28

%

0.28

%

0.29

%

0.15

%

Net charge-offs as a percentage of average loans

0.10

%

0.09

%

0.19

%

0.10

%

0.14

%

0.10

%

0.14

%

(1)  Refer to Non-GAAP reconciliation of tangible balances and measures beginning on page 9.

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

(3)  First US Bank Tier 1 leverage ratio

CEO Commentary

“We are pleased to report another quarter of consistent earnings, as well as improved year-to-date earnings amid a volatile economic environment,” stated James F. House, President and CEO of the Company. “Our team remains focused on managing the fundamentals of our business, and while we have not seen loan growth this year, we are well positioned to benefit from future asset growth opportunities as they arise. Early in 2Q2024, we increased our investment portfolio to further enhance the Company’s strong liquidity position and to take advantage of the higher interest rate environment. These purchases accelerated the repricing of earning assets during the quarter and, combined with continued pricing discipline on deposits and borrowings, led to quarter-over-quarter expansion of net interest margin for the first time since the fourth quarter of 2022. As we move into the second half of the year, we remain cautiously optimistic about economic circumstances. Inflation has slowed considerably from the peaks of 2022; however, certain fundamentals continue to point to the possibility that inflation and interest rates may remain at levels higher than market expectations would indicate. Accordingly, we will remain vigilant in the management of the Company’s balance sheet with an eye toward multiple possibilities,” continued Mr. House.           

Financial Results

Loans and Leases – The table below summarizes loan balances by portfolio category as of the end of each of the most recent five quarters.

Quarter Ended

2024

2023

June
30,

March
31,

December
31,

September
30,

June
30,

(Dollars in Thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Real estate loans:

Construction, land development and other land loans

$72,183

$102,282

$88,140

$90,051

$91,231

Secured by 1-4 family residential properties

70,272

74,361

76,200

83,876

85,101

Secured by multi-family residential properties

97,527

62,145

62,397

56,506

54,719

Secured by non-farm, non-residential properties

218,386

212,465

213,586

199,116

204,270

Commercial and industrial loans

46,249

57,112

60,515

59,369

60,568

Consumer loans:

Direct

5,272

5,590

5,938

6,544

7,593

Branch retail

6,879

7,794

8,670

9,648

10,830

Indirect

302,358

301,192

306,345

310,190

300,182

Total loans and leases held for investment

$819,126

$822,941

$821,791

$815,300

$814,494

Allowance for credit losses on loans and leases

10,227

10,436

10,507

11,380

11,536

Net loans and leases held for investment

$808,899

$812,505

$811,284

$803,920

$802,958

Total loan volume decreased by $3.8 million, or 0.5%, in 2Q2024, driven primarily by reductions in commercial and industrial loans and 1-4 family residential loans. These reductions were partially offset by growth in commercial real estate (non-farm, non-residential), multi-family residential, and indirect consumer loans. In addition, approximately $30.7 million in multi-family construction loans went into service and were transferred from the construction category to the multi-family category during 2Q2024. During the six months ended June 30, 2024, total loans decreased by $2.7 million, or 0.3%. Average total loan balances decreased by $2.4 million, or 0.3%, during 2Q2024, compared to 1Q2024.  While the Company experienced modest loan decreases during 2Q2024, average loans remained higher during both the three- and six-month periods ended June 30, 2024 than the corresponding periods of 2023. Comparing 2Q2024 to 2Q2023, average loan balances increased by $27.2 million, or 3.4%. For the six months ended June 30, 2024, average loan balances increased by $39.1 million, or 5.0%, compared to the six months ended June 30, 2023. 

Net Interest Income and Margin – Net interest income for 2Q2024 totaled $9.2 million, an increase from $9.0 million in 1Q2024, and a decrease from $9.3 million in 2Q2023. The increase compared to 1Q2024 resulted primarily from an increase in net interest margin of 4 basis points comparing the two quarters, due primarily to the aforementioned purchases of investment securities. Compared to 2Q2023, the reduction resulted from net interest margin compression that totaled 19 basis points as interest-bearing liabilities repriced at a faster pace than interest-bearing assets, particularly during 2023. Net interest margin was 3.69% in 2Q2024, compared to 3.65% in 1Q2024, and 3.88% in 2Q2023. For the six months ended June 30, 2024, net interest margin totaled 3.67%, compared to 4.00% for the six months ended June 30, 2023. In the wake of the rising interest rate environment that began in 2022, the Company’s net interest margin compressed for five consecutive quarters through 1Q2024, before expanding by 4 basis points in 2Q2024. The expansion of margin in 2Q2024 compared to 1Q2024 was attributable to increases in both average investment securities and yields on investment securities that enabled interest-earning assets to reprice at a faster pace than interest-bearing liabilities during the quarter.

Deposit Growth – Total deposits increased by $11.2 million, or 1.2%, during 2Q2024, due primarily to growth in non-interest bearing demand and interest-bearing time deposits, partially offset by decreases in interest-bearing demand deposits. The shift to interest-bearing time deposits is consistent with deposit holders seeking to maximize interest earnings over time. The majority of growth in time deposits during the first six months of 2024 was in instruments with maturities of less than 12 months, and was partially offset by a reduction in wholesale brokered time deposits of $4.8 million during 2Q2024. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $813.4 million, or 85.2% of total deposits as of June 30, 2024, compared to $819.5 million, or 86.2% of total deposits, as of December 31, 2023.                          

Deployment of Funds – As of June 30, 2024, the Company held cash and federal funds sold balances totaling $63.7 million, or 5.9% of total assets, compared to $59.8 million, or 5.6% of total assets, as of December 31, 2023. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $144.9 million as of June 30, 2024, compared to $136.7 million as of December 31, 2023. During the six months ended June 30, 2024, $27.5 million was invested in taxable U.S. agency-sponsored bonds, resulting in improved yields in the investment portfolio. Accordingly, the weighted average yield of the taxable investment portfolio increased to 3.13% during 2Q2024, compared to 2.59% during 1Q2024, and 2.14% during 2Q2023. As of June 30, 2024, the expected average life of securities in the investment portfolio was 4.3 years, compared to 3.9 years as of December 31, 2023. In the current higher interest rate environment, management continues to seek opportunities to reconfigure the investment portfolio with higher yielding assets as cash flows become available.   

Provision for Credit Losses – No provision for credit losses was recorded by the Company during the six months ended June 30, 2024, compared to a provision of $0.6 million for the six months ended June 30, 2023. The Company’s determination that no provisioning was required during the first six months of 2024 was due to loan portfolio balance reductions (in particular, consumer balances which generally contain higher loss ratios) combined with a decrease in unfunded lending commitments. As of June 30, 2024, the Company’s allowance for credit losses on loans and leases as a percentage of total loans was 1.25%, compared to 1.28% as of December 31, 2023.      

Asset Quality – Nonperforming assets, including loans in non-accrual status and OREO, totaled $2.9 million as of June 30, 2024, compared to $3.0 million as of December 31, 2023. As a percentage of total assets, nonperforming assets totaled 0.27% as of June 30, 2024, compared to 0.28% as of December 31, 2023. Annualized net charge-offs as a percentage of average loans during 2Q2024 totaled 0.10%, compared to 0.09% during 1Q2024 and 0.14% during 2Q2023.

Non-interest Income – Non-interest income totaled $0.8 million in 2Q2024, compared to $0.9 million in 1Q2024 and $0.8 million in 2Q2023. For the six months ended June 30, 2024, non-interest income totaled $1.7 million, compared to $1.6 million for the six months ended June 30, 2023.

Non-interest Expense – Non-interest expense totaled $7.3 million in 2Q2024, compared to $7.1 million in 1Q2024, and $7.2 million in 2Q2023. For both the six months ended June 30, 2024 and 2023, non-interest expense totaled $14.4 million. While non-interest expense remained consistent comparing the two six month periods, in 2024 the Company experienced increases in expenses associated with occupancy and equipment and professional services that were offset by decreases in salaries and employee benefits and other expense. The increases associated with occupancy and professional services in 2024 resulted from a variety of activities, including increases in costs associated with growth in banking centers, as well as increases in legal, accounting and auditing fees. The reduction in salaries and benefits during the first six months of 2024, compared to the first six months of 2023 resulted from the ongoing effects of reductions in staff levels attained through strategic initiatives implemented by the Company in prior years.

Shareholders’ Equity – As of June 30, 2024, shareholders’ equity totaled $93.8 million, or 8.66% of total assets, compared to $90.6 million, or 8.44% of total assets, as of December 31, 2023. The increase in shareholders’ equity during the six months ended June 30, 2024  resulted primarily from earnings, net of dividends paid and repurchases of shares of the Company’s common stock. The Company’s ratio of tangible common equity to tangible assets was 8.02% as of June 30, 2024, compared to 7.79% as of December 31, 2023.  

Cash Dividend – The Company declared a cash dividend of $0.05 per share on its common stock in 2Q2024, consistent with 1Q2024 and all four quarters of 2023.

Share Repurchases – During 2Q2024, the Company completed the repurchase of 77,000 shares of its common stock at a weighted average price of $10.60 per share. The repurchases were completed under the Company’s previously announced share repurchase program. As of June 30, 2024, 382,313 shares remained available for repurchase under the program.

Regulatory Capital – During 2Q2024, the Bank continued to maintain capital ratios at higher levels than required to be considered a “well-capitalized” institution under applicable banking regulations. As of June 30, 2024, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.28%, its total capital ratio was 12.47%, and its Tier 1 leverage ratio was 9.46%.

Liquidity – As of June 30, 2024, the Company continued to maintain 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 with other banking institutions, Federal Home Loan Bank (FHLB) advances, the discount window of the Federal Reserve Bank (FRB), and brokered deposits.

Banking Center Growth – As part of the Company’s overall growth strategy, during 2Q2024, the Company opened a new banking center in the Bearden area of Knoxville, Tennessee that replaced the Bank’s previously existing Knoxville-Bearden location. It is anticipated that the new location will provide more favorable exposure to potential customers, while at the same time improving access to most of the Bank’s existing customers in the area. In addition, during 2Q2024, the Company commenced renovation of a banking center office in Daphne, Alabama that was purchased from another financial institution during 1Q2024. This location is expected to serve as the Bank’s initial deposit gathering facility in the Daphne/Mobile area, and it is anticipated that the location will open to the public in early 2025.

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”). 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 increased lending risks associated with commercial real estate lending; liquidity risks; 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 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 credit 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 SUBSIDIARIESNET INTEREST MARGINTHREE MONTHS ENDED JUNE 30, 2024 AND 2023(Dollars in Thousands)(Unaudited)

Three Months Ended

Three Months Ended

June 30, 2024

June 30, 2023

Average
Balance

Interest

Annualized
Yield/
Rate %

Average
Balance

Interest

Annualized
Yield/
Rate %

ASSETS

Interest-earning assets:

Total loans

$

819,590

$

12,930

6.35

%

$

792,382

$

11,764

5.95

%

Taxable investment securities

142,094

1,105

3.13

%

125,965

671

2.14

%

Tax-exempt investment securities

1,018

3

1.19

%

1,048

4

1.53

%

Federal Home Loan Bank stock

969

19

7.89

%

1,415

27

7.65

%

Federal funds sold

4,850

66

5.47

%

602

7

4.66

%

Interest-bearing deposits in banks

30,965

423

5.49

%

41,144

526

5.13

%

Total interest-earning assets

999,486

14,546

5.85

%

962,556

12,999

5.42

%

Noninterest-earning assets

65,794

60,895

Total

$

1,065,280

$

1,023,451

LIABILITIES AND SHAREHOLDERS’ EQUITY

Interest-bearing deposits:

Demand deposits

$

203,784

424

0.84

%

$

215,645

185

0.34

%

Savings deposits

247,211

1,627

2.65

%

224,512

1,155

2.06

%

Time deposits

347,010

3,159

3.66

%

298,418

1,982

2.66

%

Total interest-bearing deposits

798,005

5,210

2.63

%

738,575

3,322

1.80

%

Noninterest-bearing demand deposits

151,117

—

—

158,379

—

—

Total deposits

949,122

5,210

2.21

%

896,954

3,322

1.49

%

Borrowings

14,838

160

4.34

%

31,633

354

4.49

%

Total funding costs

963,960

5,370

2.24

%

928,587

3,676

1.59

%

Other noninterest-bearing liabilities

8,638

9,204

Shareholders’ equity

92,682

85,660

Total

$

1,065,280

$

1,023,451

Net interest income

$

9,176

$

9,323

Net interest margin

3.69

%

3.88

%

FIRST US BANCSHARES, INC. AND SUBSIDIARIESNET INTEREST MARGINSIX MONTHS ENDED JUNE 30, 2024 AND 2023(Dollars in Thousands)(Unaudited)

Six Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

Average
Balance

Interest

Annualized
Yield/
Rate %

Average
Balance

Interest

Annualized
Yield/
Rate %

ASSETS

Interest-earning assets:

Total loans

$

820,787

$

25,783

6.32

%

$

781,686

$

22,746

5.87

%

Taxable investment securities

137,891

1,967

2.87

%

127,892

1,351

2.13

%

Tax-exempt investment securities

1,024

6

1.18

%

1,053

7

1.34

%

Federal Home Loan Bank stock

941

37

7.91

%

1,524

55

7.28

%

Federal funds sold

5,729

155

5.44

%

1,591

36

4.56

%

Interest-bearing deposits in banks

31,985

875

5.50

%

30,892

764

4.99

%

Total interest-earning assets

998,357

28,823

5.81

%

944,638

24,959

5.33

%

Noninterest-earning assets

66,808

61,612

Total

$

1,065,165

$

1,006,250

LIABILITIES AND SHAREHOLDERS’ EQUITY

Interest-bearing deposits:

Demand deposits

$

202,522

676

0.67

%

$

221,480

381

0.35

%

Savings deposits

253,816

3,511

2.78

%

209,279

1,708

1.65

%

Time deposits

341,916

6,122

3.60

%

284,433

3,370

2.39

%

Total interest-bearing deposits

798,254

10,309

2.60

%

715,192

5,459

1.54

%

Noninterest-bearing demand deposits

150,380

—

—

162,441

—

—

Total deposits

948,634

10,309

2.19

%

877,633

5,459

1.25

%

Borrowings

14,692

298

4.08

%

34,412

743

4.35

%

Total funding costs

963,326

10,607

2.21

%

912,045

6,202

1.37

%

Other noninterest-bearing liabilities

9,675

9,448

Shareholders’ equity

92,164

84,757

Total

$

1,065,165

$

1,006,250

Net interest income

$

18,216

$

18,757

Net interest margin

3.67

%

4.00

%

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

June 30,

December 31,

2024

2023

(Unaudited)

ASSETS

Cash and due from banks

$

11,601

$

12,987

Interest-bearing deposits in banks

46,619

37,292

Total cash and cash equivalents

58,220

50,279

Federal funds sold

5,520

9,475

Investment securities available-for-sale, at fair value

144,008

135,565

Investment securities held-to-maturity, at amortized cost

868

1,104

Federal Home Loan Bank stock, at cost

1,494

1,201

Loans and leases held for investment

819,126

821,791

Less allowance for credit losses on loans and leases

10,227

10,507

Net loans and leases held for investment

808,899

811,284

Premises and equipment, net of accumulated depreciation

24,896

24,398

Cash surrender value of bank-owned life insurance

16,875

16,702

Accrued interest receivable

3,787

3,976

Goodwill and core deposit intangible, net

7,532

7,606

Other real estate owned

542

602

Other assets

10,672

10,748

Total assets

$

1,083,313

$

1,072,940

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits:

Non-interest-bearing

$

150,763

$

153,591

Interest-bearing

803,692

796,600

Total deposits

954,455

950,191

Accrued interest expense

2,026

2,030

Other liabilities

7,160

9,327

Short-term borrowings

15,000

10,000

Long-term borrowings

10,836

10,799

Total liabilities

989,477

982,347

Shareholders’ equity:

Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,818,931 and
    7,738,201 shares issued, respectively; 5,744,254 and 5,735,075 shares outstanding,
   respectively

78

75

Additional paid-in capital

15,200

14,972

Accumulated other comprehensive loss, net of tax

(6,368)

(6,431)

Retained earnings

113,615

109,959

Less treasury stock: 2,074,677 and 2,003,126 shares at cost, respectively

(28,689)

(27,982)

Total shareholders’ equity

93,836

90,593

Total liabilities and shareholders’ equity

$

1,083,313

$

1,072,940

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

Three Months Ended

Six Months Ended

June 30,

June 30,

2024

2023

2024

2023

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Interest income:

Interest and fees on loans

$

12,930

$

11,764

$

25,783

$

22,746

Interest on investment securities

1,108

675

1,973

1,358

Interest on deposits in banks

423

526

875

764

Other

85

34

192

91

Total interest income

14,546

12,999

28,823

24,959

Interest expense:

Interest on deposits

5,210

3,322

10,309

5,459

Interest on borrowings

160

354

298

743

Total interest expense

5,370

3,676

10,607

6,202

Net interest income

9,176

9,323

18,216

18,757

Provision for credit losses

—

300

—

569

Net interest income after provision for credit losses

9,176

9,023

18,216

18,188

Non-interest income:

Service and other charges on deposit accounts

298

282

597

567

Lease income

253

235

510

466

Other income, net

284

282

593

595

Total non-interest income

835

799

1,700

1,628

Non-interest expense:

Salaries and employee benefits

3,890

3,968

7,978

8,190

Net occupancy and equipment

954

893

1,848

1,728

Computer services

444

430

887

851

Insurance expense and assessments

414

406

805

733

Fees for professional services

364

159

705

404

Other expense

1,206

1,295

2,196

2,515

Total non-interest expense

7,272

7,151

14,419

14,421

Income before income taxes

2,739

2,671

5,497

5,395

Provision for income taxes

612

648

1,263

1,300

Net income

$

2,127

$

2,023

$

4,234

$

4,095

Basic net income per share

$

0.36

$

0.34

$

0.72

$

0.69

Diluted net income per share

$

0.34

$

0.31

$

0.68

$

0.64

Dividends per share

$

0.05

$

0.05

$

0.10

$

0.10

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 in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. 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 liquidity, 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.

Liquidity Measures

The table below provides information combining the Company’s on-balance sheet liquidity with readily available off-balance sheet sources of liquidity as of both June 30, 2024 and December 31, 2023.

June 30,
 2024

December 31,
 2023

(Dollars in Thousands)

(Unaudited)

(Unaudited)

Liquidity from cash and federal funds sold:

Cash and cash equivalents

$

58,220

$

50,279

Federal funds sold

5,520

9,475

Liquidity from cash and federal funds sold

63,740

59,754

Liquidity from pledgable investment securities:

Investment securities available-for sale, at fair value

144,008

135,565

Investment securities held-to-maturity, at amortized cost

868

1,104

Less: securities pledged

(47,950)

(41,375)

Less: estimated collateral value discounts

(11,179)

(11,129)

Liquidity from pledgable investment securities

85,747

84,165

Liquidity from unused lendable collateral (loans) at FHLB

14,769

21,696

Liquidity from unused lendable collateral (loans and securities) at FRB

158,298

161,729

Unsecured lines of credit with banks

48,000

48,000

Total readily available liquidity

$

370,554

$

375,344

The table above calculates readily available liquidity by combining cash and cash equivalents, federal funds sold and unencumbered investment security values on the Company’s consolidated balance sheet with off-balance sheet liquidity that is readily available through unused collateral pledged to the FHLB and FRB, as well as unsecured lines of credit with other banks. Liquidity from pledgable investment securities and total readily available liquidity are non-GAAP measures used by management and regulators to analyze a portion of the Company’s liquidity. Management uses these measures to evaluate the Company’s liquidity position.

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 FRB 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 FRB discount window. The amounts shown as liquidity from pledgable investment securities represent total investment securities as recorded on the consolidated balance sheet, less reductions for securities already pledged and discounts expected to be taken by the lender to determine collateral value.

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 consolidated balance sheet date presented. As of June 30, 2024 and December 31, 2023, the Company’s total remaining credit availability with the FHLB was $276.1 million and $279.4 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, including 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.

Excluding wholesale brokered deposits, as of June 30, 2024, the Company had approximately 30 thousand deposit accounts with an average balance of approximately $30.0 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, and excluding deposits secured by pledged assets) totaled $206.7 million, or 21.6% of total deposits, as of June 30, 2024. As of December 31, 2023, estimated uninsured deposits totaled $200.3 million, or 21.1% of total deposits.

Tangible Balances and Measures

In addition to capital ratios defined by GAAP and banking regulators, the Company utilizes various tangible common equity measures when evaluating capital utilization and adequacy. These measures, which are presented in the financial tables in this press release, may also include calculations of tangible assets. As defined by the Company, tangible common equity represents shareholders’ equity less goodwill and identifiable intangible assets, while tangible assets represent total assets less goodwill and identifiable intangible assets.

Management believes that the measures of tangible equity are important because they reflect the level of capital available to withstand unexpected market conditions. In addition, presentation of these measures allows readers to compare certain aspects of the Company’s capitalization to other organizations. In management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets that typically result from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these measures, management believes that there are no comparable GAAP financial measures to the tangible common equity ratios that the Company utilizes. Despite the importance of these measures to the Company, there are no standardized definitions for the measures, and, therefore, the Company’s calculations may not be comparable with those of other organizations. In addition, there may be limits to the usefulness of these measures to investors. Accordingly, management encourages readers to consider the Company’s consolidated financial statements in their entirety and not to rely on any single financial measure. The table below reconciles the Company’s calculations of these measures to amounts reported in accordance with GAAP.

Quarter Ended

Six Months Ended

2024

2023

2024

2023

June
30,

March
31,

December
31,

September
30,

June
30,

June 30,

June 30,

(Dollars in Thousands, Except Per Share Data)

(Unaudited Reconciliation)

TANGIBLE BALANCES

Total assets

$1,083,313

$1,070,541

$1,072,940

$1,065,239

$1,068,126

Less: Goodwill

7,435

7,435

7,435

7,435

7,435

Less: Core deposit intangible

97

134

171

207

256

Tangible assets

(a)

$1,075,781

$1,062,972

$1,065,334

$1,057,597

$1,060,435

Total shareholders’ equity

$93,836

$92,326

$90,593

$87,408

$85,725

Less: Goodwill

7,435

7,435

7,435

7,435

7,435

Less: Core deposit intangible

97

134

171

207

256

Tangible common equity

(b)

$86,304

$84,757

$82,987

$79,766

$78,034

Average shareholders’ equity

$92,682

$91,645

$87,615

$86,897

$85,660

$92,164

$84,757

Less: Average goodwill

7,435

7,435

7,435

7,435

7,435

7,435

7,435

Less: Average core deposit
intangible

115

151

188

229

282

133

310

Average tangible shareholders’
equity

(c)

$85,132

$84,059

$79,992

$79,233

$77,943

$84,596

$77,012

Net income

(d)

$2,127

$2,107

$2,277

$2,113

$2,023

$4,234

$4,095

Common shares outstanding (in
thousands)

(e)

5,744

5,787

5,735

5,875

5,875

TANGIBLE MEASURES

Tangible book value per common
share

(b)/(e)

$15.03

$14.65

$14.47

$13.58

$13.28

Tangible common equity to
tangible assets

(b)/(a)

8.02 %

7.97 %

7.79 %

7.54 %

7.36 %

Return on average tangible
common equity (annualized)

(1)

10.05 %

10.08 %

11.29 %

10.58 %

10.41 %

10.06 %

10.72 %

(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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