BIRMINGHAM, Ala., April 27, 2018 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq:FUSB) (the “Company”) today reported net income of $414,000, or $0.06 per diluted share, for the quarter ended March 31, 2018, compared to $404,000, or $0.06 per diluted share, for the quarter ended March 31, 2017.

Financial Highlights

  • Interest Income Growth – Interest and fees on loans increased by $593,000 during the three months ended March 31, 2018 compared to the three months ended March 31, 2017, which was a result of increased average loan volume.
     
  • Loan Growth – Net loans increased $7.7 million, or 8.9% on an annualized basis, during the three months ended March 31, 2018.  Loan growth in the Company’s banking subsidiary, First US Bank (the “Bank”), totaled $4.6 million during the quarter ended March 31, 2018, while the Company’s finance company subsidiary, Acceptance Loan Company, Inc. (“ALC”), grew its loan portfolio by $3.1 million.
     
  • Asset Quality Improvement – Non-performing assets, including loans in non-accrual status and other real estate owned (OREO), decreased to $5.4 million, or 0.86% of total assets, as of March 31, 2018, compared to $6.8 million, or 1.10% of total assets, as of March 31, 2017.   

Acquisition

Subsequent to quarter-end, the Company reached a definitive agreement to acquire The Peoples Bank, headquartered in Rose Hill, Virginia. The Peoples Bank serves communities in the Knoxville, Tennessee and southwest Virginia areas. Under the terms of the agreement, the Company will acquire all of the outstanding capital stock of The Peoples Bank and then merge The Peoples Bank with and into the Bank. The transaction is expected to close in the third quarter of 2018, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals. The transaction is expected to result in a combined institution approaching $800 million in assets.

“We have had an exciting start to 2018, and we believe the transaction with The Peoples Bank, particularly in the Knoxville market, represents a significant step forward in our strategic plan to expand into other major markets in the Southeast in order to grow and diversify our business and customer base,” said James F. House, President and Chief Executive Officer of the Company.  “We have also had a solid start to the year from an earnings and loan growth standpoint.  Quality asset growth will be the driver of improved earnings over time,” continued Mr. House.   

Results of Operations

  • Pre-provision net interest income totaled $7.3 million for the first quarter of 2018, compared to $6.9 million for the first quarter of 2017.  The increase in net interest income resulted primarily from loan growth.  Average loans totaled $353.3 million and $325.1 million during the three months ended March 31, 2018 and 2017, respectively.  Net yield on interest-earning assets was 5.24% for the quarter ended March 31, 2018, compared to 5.05% for the quarter ended March 31, 2017.
     
  • The provision for loan losses was $658,000 for the first quarter of 2018, compared to $515,000 for the first quarter of 2017.  The increase in provision expense in 2018 compared to 2017 was due to more substantial loan growth in the first quarter of 2018 compared to the first quarter of 2017.  Growth in net loans totaled $7.7 million in the first quarter of 2018, compared to a decrease of $5.1 million in the first quarter of 2017. Loan growth at the Bank was primarily driven by continued growth in the Bank’s larger metropolitan markets of Birmingham and Tuscaloosa, while loan growth at ALC was due to continued growth in ALC’s indirect retail lending efforts. The Company’s allowance for loan losses as a percentage of loans was 1.35% as of March 31, 2018, compared to 1.51% as of March 31, 2017.
     
  • Non-interest income totaled $1.1 million for the first quarter of 2018, compared to $1.2 million for the first quarter of 2017.  The decrease in non-interest income for the three months ended March 31, 2018 compared to the same period in 2017 resulted primarily from reductions in gains on the sale and prepayment of investment securities at the Bank, as well as reductions in credit insurance income earned through consumer lending at ALC, and was partially offset by an increase in mortgage fees from secondary market transactions at the Bank.
     
  • Non-interest expense totaled $7.3 million for the first quarter of 2018, compared to $7.0 million for the first quarter of 2017.  The increase in non-interest expense for the three months ended March 31, 2018 compared to the same period in 2017 resulted primarily from increases in salaries and benefits expense and occupancy and equipment expense, partially offset by a decrease in computer services expense.
     
  • The Company’s effective tax rate was 16.4% for the first quarter of 2018, compared to 24.3% for the first quarter of 2017.  The reduced effective tax rate resulted from the reduction in the Company’s statutory federal tax rate under the Tax Cuts and Jobs Act of 2017.

Balance Sheet Management

  • Net loans totaled $353.8 million as of March 31, 2018, compared to $346.1 million as of December 31, 2017. The increase in net loans included increases of $4.6 million and $3.1 million at the Bank and ALC, respectively.  The growth in loan volume was funded primarily from available balances that were in federal funds sold as of December 31, 2017.
     
  • Investment securities totaled $181.9 million as of March 31, 2018, compared to $180.2 million as of December 31, 2017. Investment securities serve to both enhance interest income and provide an additional source of liquidity available to fund loan growth and capital expenditures. Management has structured the investment portfolio to provide cash flows through interest earned and the maturity or payoff of securities in the portfolio on a monthly basis. In the current environment, the Company expects cash flows from the investment portfolio to continue to serve as a significant source of liquidity available to fund future loan growth, as well as the Company’s acquisition activities.
     
  • Liabilities increased to $551.8 million as of March 31, 2018, compared to $549.4 million as of December 31, 2017. The increase resulted from an increase in deposits of $8.2 million that was partially offset by a decrease in short-term borrowings of $5.3 million.  Deposits generated through the Bank’s branch system are considered the Company’s primary funding source to meet short- and long-term liquidity needs. Deposit levels fluctuate throughout the year based on seasonality, as well as specific circumstances impacting deposit customers. In addition to deposits, significant external sources of liquidity are available to the Bank, including access to funding through federal funds lines, Federal Home Loan Bank advances and brokered deposits.
     
  • Shareholders’ equity was $75.5 million, or $12.41 per outstanding common share, as of March 31, 2018, compared to $76.2 million, or $12.53 per outstanding common share, as of December 31, 2017. The decrease in shareholders’ equity resulted primarily from an increase in accumulated other comprehensive loss associated with unrealized losses in the fair value of available-for-sale securities of $1.1 million during the first quarter of 2018, partially offset by growth in retained earnings of $0.3 million. The unrealized losses in the fair value of available-for-sale securities were considered by management to be the direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers.
     
  • The Company declared a cash dividend of $0.02 per share on its common stock in the first quarter of 2018. This amount is consistent with the Company’s quarterly dividend declarations for each quarter of 2017.
  • During the first quarter, 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 March 31, 2018, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 18.14%. Its total capital ratio was 19.32%, and its Tier 1 leverage ratio was 11.91%.

About First US Bancshares, Inc.

First US Bancshares, Inc. is a bank holding company that operates banking offices in Alabama 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’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 Securities and Exchange Commission, 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 loan demand, growth and earnings potential and expansion, 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, 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 and collateral values. With respect to the proposed acquisition of The Peoples Bank, these factors include, but are not limited to, the possibility that regulatory and other approvals and conditions to the proposed transaction are not received or satisfied on a timely basis or at all, or contain unanticipated terms and conditions; the possibility that modifications to the terms of the transaction may be required in order to obtain or satisfy such approvals or conditions; delays in closing the transaction; difficulties, delays and unanticipated costs in integrating the organizations’ businesses or realized expected cost savings and other benefits; business disruptions as a result of the integration of the organizations, including possible loss of customers; diversion of management time to address transaction-related issues; and changes in asset quality and credit risk as a result of the transaction. 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)
  
 Quarter Ended
(Unaudited)
 
 2018
 2017
 
                
 March
31,
 December
31,
 September
30,
 June
30,
 March
31,
 
                
                
Results of Operations:               
Interest income$8,119 $8,087 $7,820 $7,683 $7,510 
Interest expense 805  804  685  626  591 
                
Net interest income 7,314  7,283  7,135  7,057  6,919 
Provision for loan losses 658  523  373  576  515 
                
Net interest income after provision for loan losses 6,656  6,760  6,762  6,481  6,404 
Non-interest income 1,140  1,333  1,236  930  1,167 
Non-interest expense 7,301  7,359  7,190  6,863  7,037 
                
Income (loss) before income taxes 495  734  808  548  534 
Provision for (benefit from) income taxes 81  2,600  173  132  130 
                
Net income (loss)$414 $(1,866)$635 $416 $404 
                
Per Share Data:               
Basic net income (loss) per share$0.07 $(0.30)$0.10 $0.07 $0.07 
                
Diluted net income (loss) per share$0.06 $(0.29)$0.10 $0.06 $0.06 
                
Dividends declared$0.02 $0.02 $0.02 $0.02 $0.02 
                
Period-End Balance Sheet:     
Total assets$627,319 $625,581 $614,599 $616,218 $619,827 
Loans, net of allowance for loan losses 353,805  346,121  338,026  330,526  317,677 
Allowance for loan losses 4,829  4,774  4,808  4,905  4,879 
Investment securities, net 181,942  180,150  185,802  200,831  213,497 
Total deposits 525,273  517,079  508,385  509,245  509,078 
Short-term borrowings 10,298  15,594  10,635  10,692  10,750 
Long-term debt 10,000  10,000  10,000  10,000  15,000 
Total shareholders’ equity 75,525  76,208  78,854  78,373  77,297 
      
      
Key Ratios:     
Return on average assets (annualized) 0.27% (1.18%) 0.41% 0.27% 0.27%
Return on average equity (annualized) 2.21% (9.38%) 3.21% 2.14% 2.12%
Loans to deposits 67.4% 66.9% 66.5% 64.9% 62.4%
Allowance for loan losses as % of loans 1.35% 1.36% 1.40% 1.46% 1.51%
Nonperforming assets as % of total assets 0.86% 0.96% 0.94% 1.01% 1.10%
      


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

    
 March
31,
 December
31,
  2018   2017 
 (Unaudited)  
ASSETS
Cash and due from banks$7,806  $7,577 
Interest-bearing deposits in banks 26,667   19,547 
Total cash and cash equivalents 34,473   27,124 
Federal funds sold -   15,000 
Investment securities available-for-sale, at fair value 156,642   153,871 
Investment securities held-to-maturity, at amortized cost 25,300   26,279 
Federal Home Loan Bank stock, at cost 1,413   1,609 
Loans, net of allowance for loan losses of $4,829 and $4,774, respectively 353,805   346,121 
Premises and equipment, net 26,197   26,433 
Cash surrender value of bank-owned life insurance 15,000   14,923 
Accrued interest receivable 2,011   2,057 
Other real estate owned 3,343   3,792 
Other assets 9,135   8,372 
Total assets$627,319  $625,581 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits$525,273  $517,079 
Accrued interest expense 387   381 
Other liabilities 5,836   6,319 
Short-term borrowings 10,298   15,594 
Long-term debt 10,000   10,000 
Total liabilities 551,794   549,373 
    
Shareholders’ equity:   
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,351,466 and 7,345,946 shares issued, respectively; 6,087,264 and 6,081,744  shares outstanding, respectively 73   73 
Surplus 10,867   10,755 
Accumulated other comprehensive income (loss), net of tax (1,955)  (868)
Retained earnings 86,965   86,673 
Less treasury stock: 1,264,202 shares at cost (20,414)  (20,414)
Noncontrolling interest (11)  (11)
Total shareholders’ equity 75,525   76,208 
    
Total liabilities and shareholders’ equity$627,319  $625,581 
    


  
FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
  
 Three Months Ended
 March 31,
  2018  2017
      
 (Unaudited)
Interest income:   
Interest and fees on loans$7,089 $6,496
Interest on investment securities 1,030  1,014
Total interest income 8,119  7,510
    
Interest expense:   
Interest on deposits 701  528
Interest on borrowings 104  63
Total interest expense 805  591
    
Net interest income 7,314  6,919
    
Provision for loan losses 658  515
    
Net interest income after provision for loan losses 6,656  6,404
    
Non-interest income:   
Service and other charges on deposit accounts 467  464
Credit insurance income 218  256
Net gain on sales and prepayments of investment securities 3  49
Mortgage fees from secondary market 117  -
Other income, net 335  398
Total non-interest income 1,140  1,167
    
Non-interest expense:   
Salaries and employee benefits 4,567  4,398
Net occupancy and equipment 889  777
Computer services 292  387
Fees for professional services 273  233
Other expense 1,280  1,242
Total non-interest expense 7,301  7,037
    
Income before income taxes 495  534
Provision for income taxes 81  130
Net income$414 $404
Basic net income per share$0.07 $0.07
Diluted net income per share$0.06 $0.06
Dividends per share$0.02 $0.02
      

Contact:
Thomas S. Elley
205-582-1200