First US Bancshares, Inc. Announces Third Quarter 2020 Results
10/30/2020 - 04:30 PM
BIRMINGHAM, Ala., Oct. 30, 2020 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq: FUSB) (the “Company”), the parent company of First US Bank (the “Bank”), today reported net income of $0.4 million , or $0.06 per diluted share, for the quarter ended September 30, 2020 (“3Q2020”), compared to $0.4 million , or $0.06 per diluted share, for the quarter ended June 30, 2020 (“2Q2020”) and $1.1 million , or $0.16 per diluted share, for the quarter ended September 30, 2019 (“3Q2019”). For the nine months ended September 30, 2020, the Company’s net income totaled $1.7 million , or $0.25 per diluted share, compared to $3.4 million , or $0.49 per diluted share, for the nine months ended September 30, 2019.
Net interest income improved to $9.0 million in 3Q2020, compared to $8.6 million in the previous quarter. The increase in net interest income was driven by significant loan growth during the quarter. Total loans averaged $609.6 million during 3Q2020, compared to $557.5 million during 2Q2020, an increase of $52.1 million , or 9.3% . The linked quarter growth in net interest income was partially offset by an increase in the provision for loan and lease losses in response to loan growth, as well as a modest reserve build in light of the current economic environment.
James F. House, President and CEO of the Company, stated, “We are pleased with the third quarter results, particularly in light of the challenging operating environment that we have experienced in 2020. The strong credit quality of our loan portfolio that has been built over the past several years has provided a solid footing that enables us to move forward in pursuing our loan growth initiatives. Our COVID-19-related payment deferments decreased to $18.4 million , or 2.9% of the loan portfolio, as of September 30, 2020, compared to $95.2 million , or 16.5% of the loan portfolio, as of June 30, 2020. In addition, we continue to gain insight as to the impact of the pandemic on our portfolio. As a result of the improving clarity and outlook, we were able to focus considerable effort during the quarter on loan growth, as well as our initiatives to reduce deposit costs, both of which should enhance earnings over time.”
Third Quarter 2020 Highlights
Loan Growth – Total loans increased by $61.1 million as of September 30, 2020 compared to June 30, 2020. The increase was most pronounced in indirect sales lending and commercial real estate lending, which grew by $35.4 million and $27.6 million , respectively, in 3Q2020, and the residential 1-4 family real estate portfolio also grew by $2.1 million in 3Q2020. The Company’s indirect sales portfolio is comprised of loans secured by collateral that generally includes recreational vehicles, campers, boats and horse trailers. Effective January 1, 2020, the portfolio was transferred to the Bank from Acceptance Loan Company, the Bank’s wholly owned subsidiary (“ALC”). During the COVID-19 pandemic, demand for this financing has grown substantially as consumers seek alternatives to more traditional travel and leisure activities. The growth in commercial real estate lending was focused on borrowers that management determined to be of appropriate credit quality and structure in the current environment under the Bank’s established underwriting criteria. Growth in indirect lending and commercial real estate lending was partially offset by decreases in the Bank’s commercial and industrial portfolio totaling $0.9 million , as well as a reduction in direct consumer lending, primarily through ALC’s branch system, that totaled $3.1 million during the quarter.
Net Interest Income – 3Q2020 net interest income increased by $0.3 million as a result of loan growth and the resulting shift of a portion of excess cash balances to higher-yielding assets. Net interest margin decreased nine basis points to 4.56% for 3Q2020, compared to 4.65% for 2Q2020. However, as a result of earning asset mix changes, combined with continued efforts to reduce deposit costs, reductions in net interest margin slowed in 3Q2020 compared to the previous quarter.
The interest rate environment precipitated by the pandemic has put significant pressure on our net interest margin, particularly in 2Q2020, as yields on interest-earning assets generally shifted downward more rapidly than rates on interest-bearing liabilities. During 3Q2020, management continued efforts to reprice deposit products in a manner consistent with the current environment. As a result of these efforts, the weighted average annualized rate paid for interest-bearing liabilities decreased to 0.68% for 3Q2020, compared to 0.80% for 2Q2020 and 1.16% for 3Q2019. Annualized total funding costs (including both interest-bearing and non-interest-bearing deposits and borrowings) decreased 10 basis points to 0.54% for 3Q2020, compared to 0.64% for 2Q2020 and 0.97% for 3Q2019. If the current interest rate environment continues, management expects to further reduce interest costs as interest-bearing liabilities continue to reprice.
Balance Sheet Growth – Total assets as of September 30, 2020 increased by $7.2 million , or 0.9% , compared to June 30, 2020. Liabilities experienced continued growth in 3Q2020 primarily due to deposit growth. Deposit growth during 2020 has reflected the impact of the pandemic on both business and consumer deposit holders, including preferences for liquidity, loan payment deferments, tax payment deferments, stimulus checks and lower consumer spending. Total deposits as of September 30, 2020 were $7.0 million , or 1.0% , higher than deposit balances as of June 30, 2020 and were $61.7 million , or 9.0% , higher than deposit balances as of December 31, 2019. Of the total year-to-date increase in deposits as of September 30, 2020, $40.2 million represented non-interest-bearing deposits, while $21.5 million were interest-bearing.
Loan Loss Provision – The ratio of net charge-offs to average loans was 0.19% annualized for 3Q2020, compared to 0.27% annualized for 2Q2020 and 0.28% annualized for 3Q2019. Although net charge-off experience improved, the Company’s provision for loan losses increased to $1.0 million in 3Q2020, compared to $0.9 million in both 2Q2020 and 3Q2019. The provision increase in 3Q2020 occurred primarily to reserve for the significant loan growth during the quarter, as well as a modest reserve build in light of the economic uncertainty that continues to exist related to the pandemic. Excluding loans originated under the Paycheck Protection Program (“PPP Loans”), which are guaranteed by the Small Business Administration (the “SBA”), the allowance as a percentage of total loans was 1.16% as of September 30, 2020, compared to 1.15% as of June 30, 2020 and 1.02% as of September 30, 2019.
In accordance with relevant accounting guidance for smaller reporting companies, the Company has not yet adopted the Current Expected Credit Loss (CECL) accounting model for the calculation of credit losses. Management believes that the allowance for loan and lease losses as of September 30, 2020, 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 the balance sheet date. However, due to the uncertainty of the economic environment resulting from the pandemic, management will continue to closely monitor the impact of changing economic circumstances on the Company’s loan portfolio.
Asset Quality – Non-performing assets, including loans in non-accrual status and other real estate owned (OREO), were $4.0 million as of September 30, 2020, compared to $4.8 million as of December 31, 2019. As a percentage of total assets, non-performing assets totaled 0.47% as of September 30, 2020, compared to 0.61% as of December 31, 2019.
Non-interest Income – Non-interest income totaled $1.4 million in 3Q2020, compared to $1.3 million in 2Q2020 and $1.4 million in 3Q2019. For both of the nine-month periods ended September 30, 2020 and 2019, non-interest income totaled $4.0 million .
Non-interest Expense – Non-interest expense totaled $8.7 million during 3Q2020, compared to $8.6 million during 2Q2020 and $8.5 million during 3Q2019. Non-interest expense totaled $25.8 million for the nine-month period ended September 30, 2020, compared to $25.5 million for the nine-month period ended September 30, 2019.
Cash Dividend – The Company declared a cash dividend of $0.03 per share on its common stock in each quarter of 2020, resulting in a dividend of $0.09 per share for the nine months ended September 30, 2020, compared to $0.06 per share for the nine months ended September 30, 2019.
Regulatory Capital – During 3Q2020, the Bank continued to maintain capital ratios at higher levels than the ratios required to be considered a “well-capitalized” institution under applicable banking regulations. As of September 30, 2020, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.71% . Its total capital ratio was 12.81% , and its Tier 1 leverage ratio was 9.08% .
Liquidity – As of September 30, 2020, 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.
COVID-19 Borrower Support Actions – Following the declaration of COVID-19 as a global pandemic in March 2020, the Company participated in a number of actions to support borrowers, including the origination of PPP Loans to deliver funding to small business owners, as well as processing loan payment deferments for consumer and business borrowers.
About First US Bancshares, Inc.
First US Bancshares, Inc. is a bank holding company that operates banking offices in Alabama, Tennessee and Virginia through First US Bank. In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. The Company 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 Bank’s and ALC’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 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 Bank’s and ALC’s service areas ; the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets ; collateral values ; and cybersecurity threats. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements .
Contact: Thomas S. Elley 205-582-1200
FIRST US BANCSHARES, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA – LINKED QUARTERS (Dollars in Thousands, Except Per Share Data) (Unaudited) Quarter Ended Nine Months Ended 2020 2019 2020 2019 September 30, June 30, March 31, December 31, September 30, September 30, September 30, Results of Operations: Interest income $ 9,996 $ 9,780 $ 10,397 $ 10,825 $ 11,027 $ 30,173 $ 32,763 Interest expense 1,031 1,157 1,511 1,636 1,680 3,699 5,010 Net interest income 8,965 8,623 8,886 9,189 9,347 26,474 27,753 Provision for loan and lease losses 1,046 850 580 716 883 2,476 1,998 Net interest income after provision for loan 7,919 7,773 8,306 8,473 8,464 23,998 25,755 Non-interest income 1,375 1,330 1,297 1,396 1,414 4,002 3,970 Non-interest expense 8,747 8,581 8,494 8,279 8,546 25,822 25,503 Income before income taxes 547 522 1,109 1,590 1,332 2,178 4,222 Provision for income taxes 136 118 262 381 214 516 865 Net income $ 411 $ 404 $ 847 $ 1,209 $ 1,118 $ 1,662 $ 3,357 Per Share Data: Basic net income per share $ 0.07 $ 0.07 $ 0.13 $ 0.19 $ 0.17 $ 0.27 $ 0.52 Diluted net income per share $ 0.06 $ 0.06 $ 0.13 $ 0.18 $ 0.16 $ 0.25 $ 0.49 Dividends declared $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.02 $ 0.09 $ 0.06 Key Measures (Period End): Total assets $ 852,941 $ 845,747 $ 788,565 $ 788,738 $ 771,930 Tangible assets (1) 844,439 837,142 779,850 779,913 762,996 Loans, net of allowance for loan losses 627,605 566,062 539,685 545,243 544,519 Allowance for loan and lease losses 7,185 6,423 5,954 5,762 5,585 Investment securities, net 93,405 103,964 110,079 108,356 114,309 Total deposits 745,336 738,290 682,595 683,662 677,640 Short-term borrowings 10,045 10,334 10,152 10,025 221 Total shareholders’ equity 85,658 85,281 84,332 84,748 83,790 Tangible common equity (1) 77,156 76,676 75,617 75,923 74,856 Book value per common share 13.87 13.81 13.73 13.76 13.47 Tangible book value per common share (1) 12.49 12.41 12.31 12.33 12.03 Key Ratios: Return on average assets (annualized) 0.19 % 0.20 % 0.43 % 0.61 % 0.57 % 0.27 % 0.57 % Return on average common equity 1.91 % 1.91 % 4.02 % 5.68 % 5.28 % 2.61 % 5.45 % Return on average tangible common equity(1) 2.12 % 2.13 % 4.49 % 6.35 % 5.92 % 2.90 % 6.13 % Net interest margin 4.56 % 4.65 % 4.97 % 5.12 % 5.23 % 4.72 % 5.20 % Efficiency ratio (2) 84.6 % 86.2 % 83.4 % 78.2 % 79.4 % 84.7 % 80.4 % Net loans to deposits 84.2 % 76.7 % 79.1 % 79.8 % 80.4 % Net loans to assets 73.6 % 66.9 % 68.4 % 69.1 % 70.5 % Tangible common equity to tangible(1) 9.14 % 9.16 % 9.70 % 9.73 % 9.81 % Tier 1 leverage ratio (3) 9.08 % 9.36 % 9.46 % 9.61 % 9.55 % Allowance for loan losses as % of loans (4) 1.13 % 1.12 % 1.09 % 1.05 % 1.02 % Nonperforming assets as % of total assets 0.47 % 0.52 % 0.60 % 0.61 % 0.35 %
(1) Refer to Non-GAAP reconciliation of tangible balances and measures beginning on page 11(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 1.16% as of September 30, 2020
FIRST US BANCSHARES, INC. AND SUBSIDIARIES NET INTEREST MARGIN THREE MONTHS ENDED SEPTEMBER 30, 20 20 AND 201 9 (Dollars in Thousands) (Unaudited) Three Months Ended Three Months Ended September 30, 2020 September 30, 2019 Average Balance Interest Annualized Yield/ Rate % Average Balance Interest Annualized Yield/ Rate % ASSETS Interest-earning assets: Total Loans $ 609,609 $ 9,557 6.24 % $ 538,294 $ 10,114 7.45 % Taxable investment securities 95,402 393 1.64 % 124,592 626 1.99 % Tax-exempt investment securities 3,530 16 1.80 % 1,981 14 2.80 % Federal Home Loan Bank stock 1,135 11 3.86 % 1,138 22 7.67 % Federal funds sold 80 — — 14,442 85 2.34 % Interest-bearing deposits in banks 72,288 19 0.10 % 28,858 166 2.28 % Total interest-earning assets 782,044 9,996 5.08 % 709,305 11,027 6.17 % Non-interest-earning assets: Other assets 68,424 72,414 Total $ 850,468 $ 781,719 LIABILITIES AND SHAREHOLDERS ’ EQUITY Interest-bearing liabilities: Demand deposits $ 203,842 $ 130 0.25 % $ 165,877 $ 217 0.52 % Savings deposits 161,699 147 0.36 % 157,822 389 0.98 % Time deposits 226,269 717 1.26 % 241,433 1,016 1.67 % Total interest-bearing deposits 591,810 994 0.67 % 565,132 1,622 1.14 % Borrowings 10,252 37 1.44 % 10,166 58 2.26 % Total interest-bearing liabilities (1) 602,062 1,031 0.68 % 575,298 1,680 1.16 % Non-interest-bearing liabilities: Demand deposits 153,112 111,845 Other liabilities 9,638 10,585 Shareholders’ equity 85,656 83,991 Total $ 850,468 $ 781,719 Net interest income $ 8,965 $ 9,347 Net interest margin 4.56 % 5.23 %
(1) The annualized rate on total average funding costs, including total average interest-bearing liabilities and average non-interest-bearing demand deposits, was 0.54% and 0.97% for the three-month periods ended September 30, 2020 and 2019, respectively
FIRST US BANCSHARES, INC. AND SUBSIDIARIES NET INTEREST MARGIN NINE MONTHS ENDED SEPTEMBER 30, 20 20 AND 201 9 (Dollars in Thousands) (Unaudited) Nine Months Ended Nine Months Ended September 30, 2020 September 30, 2019 Average Balance Interest Annualized Rate % Average Balance Interest Annualized Rate % ASSETS Interest-earning assets: Total Loans $ 571,881 $ 28,433 6.64 % $ 521,304 $ 29,620 7.60 % Taxable investment securities 101,303 1,417 1.87 % 137,793 2,156 2.09 % Tax-exempt investment securities 2,158 39 2.41 % 2,125 43 2.71 % Federal Home Loan Bank stock 1,136 41 4.82 % 853 45 7.05 % Federal funds sold 6,302 45 0.95 % 12,246 227 2.48 % Interest-bearing deposits in banks 66,325 198 0.40 % 38,890 672 2.31 % Total interest-earning assets 749,105 30,173 5.38 % 713,211 32,763 6.14 % Non-interest-earning assets: Other assets 71,594 71,834 Total $ 820,699 $ 785,045 LIABILITIES AND SHAREHOLDERS ’ EQUITY Interest-bearing liabilities: Demand deposits $ 185,667 $ 442 0.32 % $ 168,284 $ 639 0.51 % Savings deposits 161,026 605 0.50 % 163,981 1,309 1.07 % Time deposits 232,824 2,553 1.46 % 246,961 3,004 1.63 % Total interest-bearing deposits 579,517 3,600 0.83 % 579,226 4,952 1.14 % Borrowings 10,201 99 1.30 % 3,574 58 2.17 % Total interest-bearing liabilities (1) 589,718 3,699 0.84 % 582,800 5,010 1.15 % Non-interest-bearing liabilities: Demand deposits 136,052 110,291 Other liabilities 9,816
FUSB Rankings
#1541 Ranked by Stock Gains
FUSB Stock Data
Industry
Commercial Banking
Sector
Finance and Insurance
Tags
Finance, Regional Banks, Finance and Insurance, Commercial Banking
Country
United States
City
Birmingham
About FUSB
first us bank has served numerous communities since 1952 and has grown and prospered by developing long-term relationships with people in the community. over the years, first us bank has had one simple mission: to exceed the expectations of our customers, employees and shareholders. because of this mission, you won’t find a better team of bankers to meet your financial needs and help your company succeed. view all first us bank locations: https://www.firstusbank.com/about/locations
