UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Exact Name of Registrant as Specified in Its Charter) For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number: 000-14549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 First US Bancshares, Inc. (State or Other Jurisdic ...

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) First US Bancshares, Inc. reported a significant decrease in net income for Q2 2025 and the six months ended June 30, 2025, primarily due to an increased provision for credit losses on loans and leases Net Income and EPS Overview | Period | Net Income | Diluted EPS | | :------------------- | :--------- | :---------- | | Q2 2025 | $0.2 million | $0.03 | | Q1 2025 | $1.8 million | $0.29 | | Q2 2024 | $2.1 million | $0.34 | | Six Months Ended June 30, 2025 | $1.9 million | $0.32 | | Six Months Ended June 30, 2024 | $4.2 million | $0.68 | - The decrease in net income for both Q2 2025 and the six months ended June 30, 2025, was primarily driven by an increase in the provision for credit losses on loans and leases[2](index=2&type=chunk) [Selected Financial Data Summary](index=1&type=section&id=Selected%20Financial%20Data%20Summary) A summary of key financial data shows a decline in net income and EPS across comparative periods, alongside an increase in the provision for credit losses. Total assets and loans have generally increased, while key profitability ratios like Return on Average Assets and Return on Average Common Equity have decreased significantly in Q2 2025 Key Financial Data (Q2 2025 vs. Q2 2024 & YTD) (Millions of Dollars) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Net Interest Income | $9.476 | $9.176 | $18.373 | $18.216 | | Provision for Credit Losses | $2.717 | $— | $3.245 | $— | | Net Income | $0.155 | $2.127 | $1.927 | $4.234 | | Diluted EPS | $0.03 | $0.34 | $0.32 | $0.68 | | Total Assets (Period End) | $1,143.379 | $1,083.313 | N/A | N/A | | Total Loans (Period End) | $871.431 | $819.126 | N/A | N/A | | Return on Average Assets (annualized) | 0.06% | 0.80% | 0.35% | 0.80% | | Return on Average Common Equity (annualized) | 0.61% | 9.23% | 3.86% | 9.24% | | Net Interest Margin | 3.59% | 3.69% | 3.56% | 3.67% | - The Allowance for Credit Losses (ACL) on loans and leases as a percentage of total loans increased to **1.31%** as of June 30, 2025, from 1.24% as of December 31, 2024[4](index=4&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) The CEO acknowledged the significant impact of increased credit loss provisions on Q2 and year-to-date earnings, driven by growth in indirect consumer lending, higher net charge-offs in that category, and additional reserves on commercial loans. Despite this, the CEO highlighted positive trends in net interest margin, total loan growth, and pre-tax pre-provision net revenue as foundational for future performance - The significant provision for credit losses in Q2 2025 was attributed to growth in indirect consumer lending, an uptick in net charge-offs in that category, and additional reserves on two individually evaluated commercial loans[5](index=5&type=chunk) - Positive trends include a **6 basis point expansion** in net interest margin compared to Q1 2025, **2.7% total loan growth** during Q2 2025 (**5.9% year-to-date**), and increases in pre-tax pre-provision net revenue (**0.9% QoQ** and **5.2% YoY**)[5](index=5&type=chunk) [Financial Results Analysis](index=2&type=section&id=Financial%20Results%20Analysis) [Loans and Leases](index=2&type=section&id=Loans%20and%20Leases) Total loans increased by $23.1 million in Q2 2025, primarily driven by a $25.1 million growth in consumer indirect loans. This growth was partially offset by reductions in construction and C&I loan categories. The indirect lending platform focuses on higher credit spectrum recreational and equipment consumer lending Loan Balances by Portfolio Category (Millions of Dollars) | Category | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Construction, land development and other land loans | $48.101 | $58.572 | $65.537 | $53.098 | $72.183 | | Secured by 1-4 family residential properties | 67.587 | 68.523 | 69.999 | 70.067 | 70.272 | | Secured by multi-family residential properties | 118.807 | 106.374 | 101.057 | 100.627 | 97.527 | | Secured by non-residential commercial real estate | 215.035 | 214.065 | 227.751 | 224.611 | 218.386 | | Commercial and industrial loans ("C&I") | 40.986 | 45.166 | 44.238 | 44.872 | 46.249 | | Consumer loans: Direct | 4.836 | 4.610 | 4.774 | 5.018 | 5.272 | | Consumer loans: Indirect | 376.079 | 351.025 | 309.683 | 305.015 | 309.237 | | **Total loans and leases held for investment** | **$871.431** | **$848.335** | **$823.039** | **$803.308** | **$819.126** | - Total loans increased by **$23.1 million** in Q2 2025, primarily due to a **$25.1 million growth** in consumer indirect loans. Multi-family residential real estate loans also grew by **$12.4 million**[7](index=7&type=chunk) - The indirect lending platform focuses on recreational and equipment consumer lending with a weighted average credit score of **798** for new loans in H1 2025 and **781** for the entire portfolio[7](index=7&type=chunk) [Net Interest Income and Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased quarter-over-quarter and year-over-year, while net interest margin saw a slight increase from the prior quarter but a decrease compared to Q2 2024. The QoQ improvement was driven by higher average loan volume and increased yields on loans and investments, whereas the YoY decline was due to yield reductions on loans following Federal Funds rate cuts in late 2024 Net Interest Income and Margin Trends (Millions of Dollars) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------ | :------ | :------ | :------ | :------ | :------ | | Net Interest Income | $9.476 | $8.897 | $9.176 | $18.373 | $18.216 | | Net Interest Margin | 3.59% | 3.53% | 3.69% | 3.56% | 3.67% | - The increase in net interest margin compared to the prior quarter (Q1 2025) resulted from increased average loan volume and higher yields on loans and investments[8](index=8&type=chunk) - The decrease in net interest margin compared to Q2 2024 was primarily due to loan yield reductions following Federal Funds rate cuts in late 2024[8](index=8&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) The Company recorded a significant provision for credit losses of $2.7 million in Q2 2025, totaling $3.2 million for the first six months of 2025, compared to no provision in the prior year periods. This increase was primarily driven by growth in the consumer indirect portfolio, higher net charge-offs in this category, and additional specific reserves for two commercial loans Provision for Credit Losses (Millions of Dollars) | Period | Provision for Credit Losses | | :------------------- | :-------------------------- | | Q2 2025 | $2.7 | | Six Months Ended June 30, 2025 | $3.2 | | Q2 2024 | $0 | | Six Months Ended June 30, 2024 | $0 | - Key drivers for the provision included **$1.4 million** for the indirect consumer portfolio and **$0.9 million** for specific reserves on two individually evaluated commercial loans in Q2 2025. For the six months, these figures were **$2.3 million** and **$0.9 million**, respectively[9](index=9&type=chunk)[11](index=11&type=chunk) - The Allowance for Credit Losses (ACL) on loans and leases as a percentage of total loans increased to **1.31%** as of June 30, 2025, from 1.24% as of December 31, 2024[11](index=11&type=chunk) [Pre-tax Pre-provision Net Revenue (PPNR)](index=4&type=section&id=Pre-tax%20Pre-provision%20Net%20Revenue%20(PPNR)) Pre-tax Pre-provision Net Revenue (PPNR) remained consistent at $2.9 million in Q2 2025 and Q1 2025, showing an increase compared to Q2 2024. For the six-month period, PPNR also increased year-over-year. PPNR as a percentage of average assets remained relatively stable Pre-tax Pre-provision Net Revenue (PPNR) (Millions of Dollars) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------- | :------- | | PPNR | $2.9 | $2.9 | $2.7 | $5.7 | $5.5 | | PPNR as % of Average Assets (annualized) | 1.03% | 1.06% | 1.03% | 1.05% | 1.04% | - PPNR increased by **0.9%** compared to Q1 2025 and by **5.2%** compared to Q2 2024[5](index=5&type=chunk) [Deposits](index=4&type=section&id=Deposits) Total deposits increased by $24.9 million (2.6%) in Q2 2025, driven by increases in interest-bearing demand deposit accounts and the strategic addition of brokered certificates of deposit to manage deposit costs. Core deposits, however, decreased as a percentage of total deposits - Total deposits increased by **$24.9 million**, or **2.6%**, during Q2 2025[13](index=13&type=chunk) - The increase was primarily due to growth in interest-bearing demand deposit accounts and the addition of brokered certificates of deposit[13](index=13&type=chunk) Core Deposits (Millions of Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Core Deposits | $816.1 | $837.7 | | Core Deposits as % of Total Deposits | 82.7% | 86.1% | [Borrowings](index=4&type=section&id=Borrowings) [Short-term Borrowings](index=4&type=section&id=Short-term%20Borrowings) Short-term borrowings significantly increased to $35.0 million as of June 30, 2025, from $10.0 million at December 31, 2024. These borrowings, primarily from FHLB and FRB, were used to maintain on-balance sheet liquidity while repricing deposits at lower rates Short-term Borrowings Outstanding (Millions of Dollars) | Period | Amount Outstanding | | :------------------- | :------------------------------- | | June 30, 2025 | $35.0 | | December 31, 2024 | $10.0 | - As of June 30, 2025, short-term borrowings included **$20.0 million** from FHLB and **$15.0 million** from the FRB's discount window, all with maturities less than 30 days[14](index=14&type=chunk) [Deployment of Funds (Cash & Securities)](index=4&type=section&id=Deployment%20of%20Funds%20(Cash%20%26%20Securities)) Cash, federal funds sold, and reverse repurchase agreements increased to $58.8 million (5.1% of total assets) as of June 30, 2025, from $52.9 million (4.8% of total assets) at December 31, 2024. Investment securities, however, decreased to $157.1 million from $168.6 million over the same period Cash and Investment Securities (Millions of Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------------------- | :------------ | :---------------- | | Cash, federal funds sold and securities purchased under reverse repurchase agreements | $58.8 | $52.9 | | % of Total Assets | 5.1% | 4.8% | | Investment Securities | $157.1 | $168.6 | - The expected average life of securities in the investment portfolio slightly increased to **3.7 years** as of June 30, 2025, from 3.6 years at December 31, 2024[15](index=15&type=chunk) [Asset Quality](index=4&type=section&id=Asset%20Quality) Nonperforming assets decreased to $3.7 million (0.33% of total assets) as of June 30, 2025, from $5.5 million (0.50% of total assets) at December 31, 2024. However, net charge-offs as a percentage of average loans significantly increased in Q2 2025 and for the six-month period, primarily due to a partial charge-off of a commercial loan and increased charge-offs in the indirect portfolio Nonperforming Assets and Net Charge-offs (Millions of Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Nonperforming Assets | $3.7 | $5.5 | | Nonperforming Assets as % of Total Assets | 0.33% | 0.50% | | Net Charge-offs as % of Average Loans (Q2) | 0.79% | 0.10% (Q2 2024) | | Net Charge-offs as % of Average Loans (H1) | 0.47% | 0.10% (H1 2024) | - The increase in net charge-offs was due to a **$1.2 million partial charge-off** of one individually evaluated commercial loan and increased charge-offs associated with the indirect portfolio (**$0.6 million** in Q2 2025 vs. $0.3 million in Q2 2024)[16](index=16&type=chunk) [Non-interest Income](index=4&type=section&id=Non-interest%20Income) Non-interest income remained relatively consistent across Q2 2025, Q1 2025, and Q2 2024, totaling approximately $0.8 million to $0.9 million. The six-month totals for 2025 and 2024 were also consistent at $1.7 million Non-interest Income Trends (Millions of Dollars) | Period | Non-interest Income | | :------------------- | :------------------------------ | | Q2 2025 | $0.8 | | Q1 2025 | $0.9 | | Q2 2024 | $0.8 | | Six Months Ended June 30, 2025 | $1.7 | | Six Months Ended June 30, 2024 | $1.7 | [Non-interest Expense](index=4&type=section&id=Non-interest%20Expense) Non-interest expense increased to $7.4 million in Q2 2025 from $6.9 million in Q1 2025, primarily due to higher salaries and benefits and professional services fees. The Q2 2025 expense was comparable to Q2 2024, and the six-month totals for 2025 and 2024 were consistent at $14.4 million Non-interest Expense Trends (Millions of Dollars) | Period | Non-interest Expense | | :------------------- | :------------------------------- | | Q2 2025 | $7.4 | | Q1 2025 | $6.9 | | Q2 2024 | $7.3 | | Six Months Ended June 30, 2025 | $14.4 | | Six Months Ended June 30, 2024 | $14.4 | - The quarter-over-quarter increase in non-interest expense was mainly driven by increases in salaries and benefits and fees for professional services[18](index=18&type=chunk) [Shareholders' Equity](index=4&type=section&id=Shareholders%27%20Equity) Shareholders' equity increased to $101.9 million (8.91% of total assets) as of June 30, 2025, from $98.6 million (8.96% of total assets) at December 31, 2024. This growth was primarily due to earnings (net of dividends and share repurchases) and a positive impact from reductions in accumulated other comprehensive loss Shareholders' Equity (Millions of Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Shareholders' Equity | $101.9 | $98.6 | | Shareholders' Equity as % of Total Assets | 8.91% | 8.96% | | Tangible Common Equity to Tangible Assets | 8.31% | 8.33% | - The increase in shareholders' equity was primarily driven by earnings (net of dividends and share repurchases) and a reduction in accumulated other comprehensive loss due to market interest rate changes and maturity of lower-yielding investment securities[19](index=19&type=chunk) [Capital Management](index=4&type=section&id=Capital%20Management) [Cash Dividend](index=4&type=section&id=Cash%20Dividend) The Company declared a cash dividend of $0.07 per share in Q2 2025, consistent with Q1 2025. This represents an increase from the $0.05 per share dividend paid in the first three quarters of 2024 Cash Dividends Declared | Period | Dividend Per Share | | :------------------- | :----------------- | | Q2 2025 | $0.07 | | Q1 2025 | $0.07 | | Q4 2024 | Increased from $0.05 | | Q1-Q3 2024 | $0.05 | [Share Repurchases](index=6&type=section&id=Share%20Repurchases) No shares were repurchased in Q2 2025. In Q1 2025, the Company repurchased 40,000 shares at a weighted average price of $13.38 per share. As of June 30, 2025, 872,813 shares remained available under the repurchase program - No share repurchases occurred in Q2 2025[22](index=22&type=chunk) - In Q1 2025, **40,000 shares** were repurchased at a weighted average price of **$13.38 per share**[22](index=22&type=chunk) - As of June 30, 2025, **872,813 shares** remained available for repurchase under the program[22](index=22&type=chunk) [Regulatory Capital](index=6&type=section&id=Regulatory%20Capital) As of June 30, 2025, First US Bank maintained capital ratios above the 'well-capitalized' thresholds. Its common equity Tier 1 capital and Tier 1 risk-based capital ratios were both 10.70%, total capital ratio was 11.93%, and Tier 1 leverage ratio was 9.23% - The Bank maintained capital ratios higher than required for a 'well-capitalized' institution[23](index=23&type=chunk) Regulatory Capital Ratios (June 30, 2025) | Ratio | Value | | :-------------------------- | :---- | | Common Equity Tier 1 Capital Ratio | 10.70% | | Tier 1 Risk-Based Capital Ratio | 10.70% | | Total Capital Ratio | 11.93% | | Tier 1 Leverage Ratio | 9.23% | [Liquidity](index=6&type=section&id=Liquidity) The Company maintained sufficient funding capacity as of June 30, 2025, supported by a strong core deposit base, a liquid investment securities portfolio, and access to various funding sources including federal funds lines, FHLB advances, FRB discount window, and brokered deposits - The Company maintained sufficient funding capacity for loan growth, capital expenditures, and ongoing operations[24](index=24&type=chunk) - Liquidity sources include a strong core deposit base, a liquid investment securities portfolio, and access to federal funds lines, FHLB advances, FRB discount window, and brokered deposits[24](index=24&type=chunk) [Banking Center Growth](index=6&type=section&id=Banking%20Center%20Growth) The Company continued renovation of a banking center in Daphne, Alabama, expected to open in H1 2026. Additionally, land was purchased in Mobile, Alabama, for a future office complex to house indirect lending operations and an additional banking center - Renovation of a banking center in Daphne, Alabama, is ongoing, with an anticipated opening in the first half of 2026[25](index=25&type=chunk) - Land was purchased in Mobile, Alabama, for a new office complex to house indirect lending operations and an additional banking center[25](index=25&type=chunk) [Company Information](index=6&type=section&id=Company%20Information) [About First US Bancshares, Inc.](index=6&type=section&id=About%20First%20US%20Bancshares%2C%20Inc.) First US Bancshares, Inc. is a bank holding company operating banking offices in Alabama, Tennessee, and Virginia through First US Bank. The Company's stock is traded on the Nasdaq Capital Market under the symbol 'FUSB' - First US Bancshares, Inc. is a bank holding company operating banking offices in Alabama, Tennessee, and Virginia through First US Bank[26](index=26&type=chunk) - The Company's stock is traded on the Nasdaq Capital Market under the symbol '**FUSB**'[26](index=26&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements subject to significant risks, uncertainties, estimates, and assumptions. The Company does not undertake to update these statements, which are based on management's best judgment and involve factors such as credit risk, real estate market weakness, liquidity risks, economic conditions, competition, interest rate changes, technological impacts, cybersecurity, AI risks, regulatory compliance, and acquisition integration difficulties. Dividend payments are discretionary and subject to various factors - Forward-looking statements are subject to significant risks, uncertainties, estimates, and assumptions, and the Company does not commit to updating them[27](index=27&type=chunk) - Key risk factors include credit risk (loan losses, commercial real estate lending), residential real estate market weakness, liquidity risks, national and local market conditions, competition, interest rate and monetary policy changes, technological changes, cybersecurity, AI risks, governmental regulation, accounting standards, tax laws, and acquisition integration[28](index=28&type=chunk) - The payment of cash dividends is at the discretion of the Board of Directors, based on current conditions including earnings, leverage, financial condition, and capital requirements[28](index=28&type=chunk)[29](index=29&type=chunk) [Financial Statements & Non-GAAP Reconciliations](index=9&type=section&id=Financial%20Statements%20%26%20Non-GAAP%20Reconciliations) [Net Interest Margin Analysis](index=9&type=section&id=Net%20Interest%20Margin%20Analysis) [Three Months Ended June 30, 2025 and 2024](index=9&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) For Q2 2025, total interest-earning assets increased, but the annualized yield decreased compared to Q2 2024. Loans saw a higher average balance but a lower yield. Total interest-bearing deposits increased, with a lower overall cost of funds. Net interest income increased, but net interest margin slightly decreased year-over-year Net Interest Margin Analysis (Q2 2025 vs. Q2 2024) (Millions of Dollars) | Metric | Q2 2025 Average Balance | Q2 2025 Interest | Q2 2025 Annualized Yield/Rate % | Q2 2024 Average Balance | Q2 2024 Interest | Q2 2024 Annualized Yield/Rate % | | :------------------------------------------ | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------------- | :------------------------------ | :------------------------------ | | Loans | $857.707 | $12.989 | 6.07% | $819.590 | $12.930 | 6.35% | | Investment securities | 154.576 | 1.335 | 3.46% | 143.112 | 1.108 | 3.11% | | Total interest-earning assets | 1,059.163 | 14.854 | 5.63% | 999.486 | 14.546 | 5.85% | | Total interest-bearing deposits | 833.521 | 5.125 | 2.47% | 798.005 | 5.210 | 2.63% | | Borrowings | 22.966 | 0.253 | 4.42% | 14.838 | 0.160 | 4.34% | | Net interest income | N/A | $9.476 | N/A | N/A | $9.176 | N/A | | Net interest margin | N/A | N/A | 3.59% | N/A | N/A | 3.69% | [Six Months Ended June 30, 2025 and 2024](index=11&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the six months ended June 30, 2025, average interest-earning assets increased, but the overall yield decreased compared to the same period in 2024. Loan yields declined, while investment securities yields improved. The cost of interest-bearing deposits decreased, but the cost of borrowings increased. Net interest income slightly increased, but net interest margin decreased year-over-year Net Interest Margin Analysis (H1 2025 vs. H1 2024) (Millions of Dollars) | Metric | H1 2025 Average Balance | H1 2025 Interest | H1 2025 Annualized Yield/Rate % | H1 2024 Average Balance | H1 2024 Interest | H1 2024 Annualized Yield/Rate % | | :------------------------------------------ | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------------- | :------------------------------ | :------------------------------ | | Loans | $841.210 | $25.230 | 6.05% | $820.787 | $25.783 | 6.32% | | Investment securities | 160.377 | 2.747 | 3.45% | 138.915 | 1.973 | 2.86% | | Total interest-earning assets | 1,041.273 | 28.872 | 5.59% | 998.357 | 28.823 | 5.81% | | Total interest-bearing deposits | 816.563 | 9.994 | 2.47% | 798.254 | 10.309 | 2.60% | | Borrowings | 23.184 | 0.505 | 4.39% | 14.692 | 0.298 | 4.08% | | Net interest income | N/A | $18.373 | N/A | N/A | $18.216 | N/A | | Net interest margin | N/A | N/A | 3.56% | N/A | N/A | 3.67% | [Interim Condensed Consolidated Balance Sheets](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $1.14 billion from $1.10 billion at December 31, 2024, primarily driven by growth in net loans and leases. Total deposits also increased, while short-term borrowings saw a significant rise. Shareholders' equity grew to $101.9 million Key Balance Sheet Items (Millions of Dollars) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total assets | $1,143.379 | $1,101.086 | | Net loans and leases held for investment | 860.043 | 812.855 | | Total deposits | 986.846 | 972.557 | | Short-term borrowings | 35.000 | 10.000 | | Total shareholders' equity | 101.892 | 98.624 | - Allowance for credit losses on loans and leases increased to **$11.388 million** from $10.184 million[35](index=35&type=chunk) [Interim Condensed Consolidated Statements of Operations](index=13&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, net income significantly decreased to $0.155 million from $2.127 million in Q2 2024, primarily due to a $2.717 million provision for credit losses. Total interest income slightly increased, while total interest expense remained stable. Non-interest income was consistent, but non-interest expense increased Key Income Statement Items (Millions of Dollars) | Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Total interest income | $14.854 | $14.546 | $28.872 | $28.823 | | Total interest expense | 5.378 | 5.370 | 10.499 | 10.607 | | Net interest income | 9.476 | 9.176 | 18.373 | 18.216 | | Provision for credit losses | 2.717 | — | 3.245 | — | | Net interest income after provision for credit losses | 6.759 | 9.176 | 15.128 | 18.216 | | Total non-interest income | 0.849 | 0.835 | 1.724 | 1.700 | | Total non-interest expense | 7.444 | 7.272 | 14.362 | 14.419 | | Income before income taxes | 0.164 | 2.739 | 2.490 | 5.497 | | Net income | $0.155 | $2.127 | $1.927 | $4.234 | | Diluted net income per share | $0.03 | $0.34 | $0.32 | $0.68 | [Non-GAAP Financial Measures](index=14&type=section&id=Non-GAAP%20Financial%20Measures) The Company provides non-GAAP financial measures, including liquidity, pre-tax pre-provision net revenue (PPNR), tangible assets, and equity, to offer enhanced understanding of financial performance and position. These measures are supplemental to GAAP and are used by management, analysts, and investors for evaluation and comparison - Non-GAAP measures are provided to enhance overall understanding of the Company's current financial performance and position, offering meaningful comparisons across periods[37](index=37&type=chunk) - Management believes both GAAP and non-GAAP measures should be considered together, and non-GAAP results should not be considered in isolation[37](index=37&type=chunk) [Liquidity Measures](index=14&type=section&id=Liquidity%20Measures) Total readily available liquidity decreased to $384.0 million as of June 30, 2025, from $397.7 million at December 31, 2024. This includes on-balance sheet cash and equivalents, unencumbered investment securities, and unused lendable collateral at FHLB and FRB, as well as unsecured lines of credit. Estimated uninsured deposits decreased to 20.5% of total deposits Readily Available Liquidity (Millions of Dollars) | Source | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------------------- | :------------ | :---------------- | | Total liquidity from cash, federal funds sold and reverse repurchase agreements | $58.805 | $52.943 | | Total liquidity from pledgable investment securities | 84.200 | 86.296 | | Liquidity from unused lendable collateral (loans) at FHLB | 11.175 | 45.388 | | Liquidity from unused lendable collateral (loans and securities) at FRB | 181.861 | 165.061 | | Unsecured lines of credit with banks | 48.000 | 48.000 | | **Total readily available liquidity** | **$384.041** | **$397.688** | - Estimated uninsured deposits totaled **$202.5 million**, or **20.5%** of total deposits, as of June 30, 2025, down from $216.8 million, or 22.2%, at December 31, 2024[44](index=44&type=chunk) - The Company's total remaining credit availability with the FHLB was **$298.0 million** as of June 30, 2025, subject to pledging additional collateral[43](index=43&type=chunk) [Pre-tax Pre-provision Net Revenue (PPNR) Reconciliation](index=16&type=section&id=Pre-tax%20Pre-provision%20Net%20Revenue%20(PPNR)%20Reconciliation) PPNR is used as a supplemental measure of profitability, excluding provisions for credit losses and income taxes, to assess core operating profitability. The reconciliation shows PPNR of $2.881 million in Q2 2025, with an annualized PPNR as a percentage of average assets at 1.03% - PPNR measures the Company's profitability before accounting for the provisions for credit losses and income taxes, providing a means to effectively measure core operating profitability on a trended basis[45](index=45&type=chunk) PPNR Reconciliation (Millions of Dollars) | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Net income | $0.155 | $1.772 | $1.714 | $2.222 | $2.127 | $1.927 | $4.234 | | Add: Provision for income taxes | 0.009 | 0.554 | 0.599 | 0.722 | 0.612 | 0.563 | 1.263 | | Add: Provision for credit losses | 2.717 | 0.528 | 0.470 | 0.152 | — | 3.245 | — | | **Pre-tax pre-provision net revenue** | **$2.881** | **$2.854** | **$2.783** | **$3.096** | **$2.739** | **$5.735** | **$5.497** | | PPNR as a percentage of average assets (annualized) | 1.03% | 1.06% | 1.02% | 1.14% | 1.03% | 1.05% | 1.04% | [Tangible Balances and Measures Reconciliation](index=16&type=section&id=Tangible%20Balances%20and%20Measures%20Reconciliation) Tangible common equity measures are used to evaluate capital utilization and adequacy, reflecting capital available to withstand unexpected market conditions. As of June 30, 2025, tangible assets were $1.136 billion, and tangible common equity was $94.4 million, resulting in a tangible common equity to tangible assets ratio of 8.31% - Tangible common equity represents shareholders' equity less goodwill and identifiable intangible assets, while tangible assets represent total assets less goodwill and identifiable intangible assets[47](index=47&type=chunk) - These measures are important for reflecting capital available to withstand unexpected market conditions and for comparing capitalization among banking organizations[48](index=48&type=chunk) Tangible Balances and Measures (Millions of Dollars) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total assets | $1,143.379 | $1,126.967 | $1,101.086 | $1,100.235 | $1,083.313 | | Less: Goodwill | 7.435 | 7.435 | 7.435 | 7.435 | 7.435 | | Less: Core deposit intangible | 0.012 | 0.030 | 0.049 | 0.067 | 0.097 | | **Tangible assets** | **$1,135.932** | **$1,119.502** | **$1,093.602** | **$1,092.733** | **$1,075.781** | | Total shareholders' equity | $101.892 | $101.231 | $98.624 | $98.491 | $93.836 | | Less: Goodwill | 7.435 | 7.435 | 7.435 | 7.435 | 7.435 | | Less: Core deposit intangible | 0.012 | 0.030 | 0.049 | 0.067 | 0.097 | | **Tangible common equity** | **$94.445** | **$93.766** | **$91.140** | **$90.989** | **$86.304** | | Tangible book value per common share | $16.41 | $16.34 | $16.00 | $15.92 | $15.03 | | Tangible common equity to tangible assets | 8.31% | 8.38% | 8.33% | 8.33% | 8.02% | | Return on average tangible common equity (annualized) | 0.66% | 7.79% | 7.49% | 9.99% | 10.05% |

Core Viewpoint - First US Bancshares, Inc. reported a significant decline in net income for the second quarter of 2025, primarily due to increased provisions for credit losses on loans and leases compared to previous periods [1][4]. Financial Performance - Net income for 2Q2025 was $0.2 million, or $0.03 per diluted share, down from $1.8 million, or $0.29 per diluted share in 1Q2025, and $2.1 million, or $0.34 per diluted share in 2Q2024 [1]. - For the six months ended June 30, 2025, net income totaled $1.9 million, or $0.32 per diluted share, compared to $4.2 million, or $0.68 per diluted share for the same period in 2024 [1]. Key Financial Metrics - Interest income for 2Q2025 was $14.854 million, an increase from $14.018 million in 1Q2025 and $14.420 million in 2Q2024 [3]. - Net interest income increased to $9.476 million in 2Q2025, up 6.5% from $8.897 million in 1Q2025 [7]. - Total loans increased by $23.1 million in 2Q2025, driven primarily by a $25.1 million growth in consumer indirect loans [6]. Provision for Credit Losses - The provision for credit losses was $2.7 million in 2Q2025, significantly higher than the $0.528 million in 1Q2025 and $0 in 2Q2024 [8]. - The allowance for credit losses on loans and leases as a percentage of total loans was 1.31% as of June 30, 2025, compared to 1.24% as of December 31, 2024 [8]. Asset Quality - Nonperforming assets totaled $3.7 million as of June 30, 2025, representing 0.33% of total assets, down from 0.50% as of December 31, 2024 [13]. - Net charge-offs as a percentage of average loans were 0.79% during 2Q2025, compared to 0.13% in 1Q2025 [13]. Deposits and Borrowings - Total deposits increased by $24.9 million, or 2.6%, during 2Q2025, primarily due to increases in interest-bearing demand deposit accounts [10]. - As of June 30, 2025, short-term borrowings were $35.0 million, up from $10.0 million as of December 31, 2024 [11]. Shareholders' Equity - Shareholders' equity totaled $101.9 million as of June 30, 2025, or 8.91% of total assets, compared to $98.6 million, or 8.96% of total assets, as of December 31, 2024 [16][17]. - The Company declared a cash dividend of $0.07 per share in 2Q2025, consistent with the previous quarter [18]. Regulatory Capital - The Bank maintained capital ratios above the required levels to be considered "well-capitalized," with a common equity Tier 1 capital ratio of 10.70% as of June 30, 2025 [20]. Banking Center Growth - The Company is renovating a banking center office in Daphne, Alabama, expected to open in the first half of 2026, and has purchased land in Mobile, Alabama for future development [22].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) This section presents the unaudited interim condensed consolidated financial statements and management's discussion and analysis [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited interim condensed consolidated financial statements for First US Bancshares, Inc. and its subsidiary, including the Balance Sheets, Statements of Operations, Comprehensive Income, Changes in Shareholders' Equity, and Cash Flows, along with detailed notes explaining significant accounting policies, investment securities, loans and leases, borrowings, and other financial instruments [Interim Condensed Consolidated Balance Sheets](index=5&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's consolidated balance sheet, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (Dollars in Thousands) | Metric | March 31, 2025 | December 31, 2024 | Change (QoQ) | % Change (QoQ) | | :----------------------------------- | :------------- | :---------------- | :------------- | :--------------- | | Total Assets | $1,126,967 | $1,101,086 | $25,881 | 2.35% | | Total Liabilities | $1,025,736 | $1,002,462 | $23,274 | 2.32% | | Total Shareholders' Equity | $101,231 | $98,624 | $2,607 | 2.64% | | Total Deposits | $961,952 | $972,557 | $(10,605) | -1.09% | | Loans and leases held for investment | $848,335 | $823,039 | $25,296 | 3.07% | [Interim Condensed Consolidated Statements of Operations](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Operations) This section provides the company's consolidated statements of operations, outlining revenues, expenses, and net income for the reporting period Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31, Dollars in Thousands, Except Per Share Data) | Metric | 2025 | 2024 | Change (YoY) | % Change (YoY) | | :----------------------------------- | :----- | :----- | :----------- | :------------- | | Total interest income | $14,018 | $14,277 | $(259) | -1.81% | | Total interest expense | $5,121 | $5,237 | $(116) | -2.21% | | Net interest income | $8,897 | $9,040 | $(143) | -1.58% | | Provision for credit losses | $528 | $— | $528 | N/A | | Net income | $1,772 | $2,107 | $(335) | -15.90% | | Basic net income per share | $0.30 | $0.36 | $(0.06) | -16.67% | | Diluted net income per share | $0.29 | $0.34 | $(0.05) | -14.71% | | Dividends per share | $0.07 | $0.05 | $0.02 | 40.00% | [Interim Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's consolidated statements of comprehensive income, including net income and other comprehensive income components Condensed Consolidated Statements of Comprehensive Income Highlights (Three Months Ended March 31, Dollars in Thousands) | Metric | 2025 | 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------------------------------------------------------------------ | :----- | :----- | :----------- | :------------- | | Net income | $1,772 | $2,107 | $(335) | -15.90% | | Unrealized holding gains (losses) on securities available-for-sale, net of tax | $2,011 | $(73) | $2,084 | -2854.79% | | Unrealized holding losses on effective cash flow hedge derivatives, net of tax benefit | $(305) | $— | $(305) | N/A | | Reclassification adjustments on cash flow hedge derivatives realized in net income, net of tax benefit | $(36) | $(117) | $81 | -69.23% | | Other comprehensive income (loss) | $1,670 | $(190) | $1,860 | -978.95% | | Total comprehensive income | $3,442 | $1,917 | $1,525 | 79.55% | [Interim Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) This section details changes in the company's shareholders' equity, reflecting net income, dividends, and other equity adjustments - Shareholders' equity increased from **$98,624 thousand** at December 31, 2024, to **$101,231 thousand** at March 31, 2025, primarily due to net income (**$1,772 thousand**) and a positive change in the fair value of available-for-sale securities (**$2,011 thousand**), partially offset by dividends declared (**$401 thousand**) and common stock repurchases (**$535 thousand**)[18](index=18&type=chunk) [Interim Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, Dollars in Thousands) | Cash Flow Activity | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :----- | :----- | :----------- | | Net cash provided by operating activities | $1,755 | $825 | $930 | | Net cash (used in) provided by investing activities | $(16,318) | $11,402 | $(27,720) | | Net cash provided by (used in) financing activities | $23,388 | $(2,264) | $25,652 | | Net increase in cash and cash equivalents | $8,825 | $9,963 | $(1,138) | | Cash and cash equivalents, end of period | $56,041 | $60,242 | $(4,201) | [Notes to Interim Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations and disclosures for the interim condensed consolidated financial statements [1. GENERAL](index=10&type=section&id=1.%20GENERAL) This note provides an overview of First US Bancshares, Inc.'s operations and banking services - First US Bancshares, Inc. is a bank holding company operating one wholly-owned banking subsidiary, First US Bank, headquartered in Birmingham, Alabama[21](index=21&type=chunk) - The Bank offers general commercial banking services through **15 full-service offices** across Alabama, Tennessee, and Virginia, and conducts indirect lending in **17 states**[22](index=22&type=chunk) [2. BASIS OF PRESENTATION](index=10&type=section&id=2.%20BASIS%20OF%20PRESENTATION) This note describes the accounting principles and presentation methods used for the interim financial statements - The interim condensed consolidated financial statements are unaudited and reflect all necessary adjustments for fair presentation, with results not necessarily indicative of the full fiscal year[23](index=23&type=chunk) - Certain prior period amounts were reclassified to conform to the 2025 presentation without affecting financial results[24](index=24&type=chunk) - The Company also detailed its calculation for basic and diluted net income per share and comprehensive income, and noted two new accounting standards (ASU 2023-09 and ASU 2024-03) not yet adopted, which are not expected to have a material impact[26](index=26&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk) [3. INVESTMENT SECURITIES](index=12&type=section&id=3.%20INVESTMENT%20SECURITIES) This note details the composition, fair value, and credit quality of the company's investment securities portfolio Investment Securities Portfolio (Dollars in Thousands) | Category | March 31, 2025 (Fair Value) | December 31, 2024 (Fair Value) | Gross Unrealized Losses (March 31, 2025) | | :-------------------------------------- | :---------------------------- | :----------------------------- | :--------------------------------------- | | Available-for-Sale (AFS) | $161,314 | $167,888 | $(5,107) | | Held-to-Maturity (HTM) | $602 | $642 | $(30) | | Total | $161,916 | $168,530 | $(5,137) | - As of March 31, 2025, **95 AFS debt securities** were in an unrealized loss position for more than 12 months, and **4** for less than 12 months[39](index=39&type=chunk) - Management does not intend to sell these securities and believes the losses are due to interest rate environment, not creditworthiness, thus no allowance for credit losses was deemed necessary for AFS or HTM securities[40](index=40&type=chunk) - Investment securities with a carrying value of **$62.6 million** (March 31, 2025) and **$72.1 million** (December 31, 2024) were pledged to secure public deposits and for other purposes[41](index=41&type=chunk) [4. LOANS AND LEASES](index=17&type=section&id=4.%20LOANS%20AND%20LEASES) This note provides a detailed breakdown of the loan and lease portfolio, including credit quality and allowance for credit losses Loan Portfolio Composition (Dollars in Thousands) | Loan Segment | March 31, 2025 | December 31, 2024 | Change (QoQ) | % Change (QoQ) | | :-------------------------------------- | :------------- | :---------------- | :----------- | :--------------- | | Construction, land development and other land loans | $58,572 | $65,537 | $(6,965) | -10.63% | | Secured by 1-4 family residential properties | $68,523 | $69,999 | $(1,476) | -2.11% | | Secured by multi-family residential properties | $106,374 | $101,057 | $5,317 | 5.26% | | Secured by non-residential commercial real estate | $214,065 | $227,751 | $(13,686) | -6.01% | | Commercial and industrial loans and leases | $45,166 | $44,238 | $928 | 2.10% | | Direct consumer | $4,610 | $4,774 | $(164) | -3.44% | | Indirect consumer | $351,025 | $309,683 | $41,342 | 13.35% | | Total loans | $848,335 | $823,039 | $25,296 | 3.07% | | Allowance for credit losses on loans and leases | $10,405 | $10,184 | $221 | 2.17% | - As of March 31, 2025, **52.8%** of the loan portfolio was concentrated in real estate loans[51](index=51&type=chunk) - Loans with a carrying value of **$90.7 million** and **$309.7 million** were pledged as collateral to secure FHLB and FRB borrowings, respectively[52](index=52&type=chunk) Allowance for Credit Losses on Loans and Leases (Dollars in Thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $10,184 | $10,507 | | Charge-offs | $(422) | $(390) | | Recoveries | $153 | $207 | | Provision for credit losses on loans and leases | $490 | $112 | | Ending balance | $10,405 | $10,436 | - The Company uses a credit grading system for commercial loans (Pass, Special Mention, Substandard, Doubtful, Loss) and categorizes residential real estate and consumer loans as performing or nonperforming[61](index=61&type=chunk)[62](index=62&type=chunk) - As of March 31, 2025, there were no loans classified as 'Loss'[63](index=63&type=chunk) Loans by Credit Quality Indicator (March 31, 2025, Dollars in Thousands) | Category | Pass | Special Mention | Substandard | Doubtful | Total | | :-------------------------------------- | :----- | :-------------- | :---------- | :------- | :------ | | Construction, land development and other land loans | $56,052 | $56 | $2,464 | $— | $58,572 | | Secured by multi-family residential properties | $97,877 | $8,497 | $— | $— | $106,374 | | Secured by non-residential commercial real estate | $208,987 | $4,063 | $1,015 | $— | $214,065 | | Commercial and industrial loans and leases | $42,178 | $77 | $259 | $2,652 | $45,166 | | Secured by 1-4 family residential properties (Performing/Non-performing) | $66,956 | N/A | N/A | N/A | $68,523 | | Direct consumer (Performing/Non-performing) | $4,610 | N/A | N/A | N/A | $4,610 | | Indirect consumer (Performing/Non-performing) | $350,663 | N/A | N/A | N/A | $351,025 | Aging Analysis of Past Due Loans (March 31, 2025, Dollars in Thousands) | Category | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days Or Greater Past Due | Total Past Due | Current | Total Loans | | :-------------------------------------- | :------------------ | :------------------ | :-------------------------- | :------------- | :-------- | :---------- | | Construction, land development and other land loans | $— | $— | $— | $— | $58,572 | $58,572 | | Secured by 1-4 family residential properties | $227 | $— | $— | $227 | $68,296 | $68,523 | | Secured by multi-family residential properties | $— | $— | $— | $— | $106,374 | $106,374 | | Secured by non-residential commercial real estate | $— | $— | $22 | $22 | $214,043 | $214,065 | | Commercial and industrial loans | $63 | $— | $2,652 | $2,715 | $42,451 | $45,166 | | Direct consumer | $3 | $1 | $— | $4 | $4,606 | $4,610 | | Indirect consumer | $594 | $295 | $362 | $1,251 | $349,774 | $351,025 | | Total | $887 | $296 | $3,036 | $4,219 | $844,116 | $848,335 | | As a percentage of total loans | 0.10% | 0.03% | 0.36% | 0.50% | 99.50% | 100.00% | Loans on Non-Accrual Status (March 31, 2025, Dollars in Thousands) | Category | Total Nonaccrual Loans | Nonaccrual Loans with No ACL | | :-------------------------------------- | :--------------------- | :--------------------------- | | Secured by 1-4 family residential properties | $632 | $389 | | Secured by non-residential commercial real estate | $22 | $— | | Commercial and industrial loans | $2,652 | $— | | Indirect consumer | $362 | $— | | Total loans | $3,668 | $389 | - The Company did not modify any loans to borrowers experiencing financial difficulty during the three months ended March 31, 2025, and there were no payment defaults on loans modified in the previous twelve months[74](index=74&type=chunk) [5. OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS](index=30&type=section&id=5.%20OTHER%20REAL%20ESTATE%20OWNED%20AND%20REPOSSESSED%20ASSETS) This note outlines the company's foreclosed property activity and repossessed assets Foreclosed Property Activity (Three Months Ended March 31, Dollars in Thousands) | Metric | 2025 | 2024 | | :-------------------- | :----- | :----- | | Beginning balance | $1,509 | $602 | | Sales proceeds | $(186) | $— | | Net gains | $35 | $— | | Impairment | $(30) | $(30) | | Ending balance | $1,328 | $572 | - Total repossessed assets remained consistent at **$0.2 million** as of both March 31, 2025, and March 31, 2024, and are included in other assets[76](index=76&type=chunk) [6. GOODWILL AND OTHER INTANGIBLE ASSETS](index=30&type=section&id=6.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) This note provides details on the company's goodwill and other intangible assets, including amortization Goodwill and Other Intangible Assets (Dollars in Thousands) | Asset | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Goodwill | $7,435 | $7,435 | | Core deposit intangible, net | $30 | $49 | | Total | $7,465 | $7,484 | - Goodwill impairment was neither indicated nor recorded during the three months ended March 31, 2025[77](index=77&type=chunk) - The estimated remaining amortization expense on intangible assets is **$30 thousand**, all of which will occur during 2025[79](index=79&type=chunk) [7. BORROWINGS](index=32&type=section&id=7.%20BORROWINGS) This note describes the company's short-term and long-term borrowings, including available lines of credit - Short-term borrowings increased significantly to **$45.0 million** as of March 31, 2025, from **$10.0 million** at December 31, 2024, comprising **$25.0 million** in FHLB advances and **$20.0 million** in federal funds purchased from the FRB[82](index=82&type=chunk) - The Company had no long-term FHLB advances outstanding[85](index=85&type=chunk) Subordinated Debt Information (Dollars in Thousands) | Metric | March 31, 2025 | March 31, 2024 | | :------------------------------------------------ | :------------- | :------------- | | Balance at period-end | $10,890 | $10,817 | | Average rate paid during the period | 4.20% | 4.20% | | Weighted average remaining maturity (in years) | 6.50 | 7.50 | Available Unused Lines of Credit (Dollars in Millions) | Source | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Correspondent banks | $48.0 | $48.0 | | FHLB advances | $285.3 | $319.9 | | FRB | $160.0 | $165.1 | [8. INCOME TAXES](index=34&type=section&id=8.%20INCOME%20TAXES) This note details the company's income tax provision, effective tax rate, and deferred tax assets Income Tax Provision and Effective Rate (Three Months Ended March 31, Dollars in Thousands) | Metric | 2025 | 2024 | | :-------------------- | :----- | :----- | | Provision for income taxes | $554 | $651 | | Effective tax rate | 23.8% | 23.6% | - The net deferred tax asset decreased to **$3.0 million** as of March 31, 2025, from **$4.1 million** at December 31, 2024, influenced by changes in fair value of available-for-sale securities and cash flow hedges, among other temporary differences[88](index=88&type=chunk) [9. DEFERRED COMPENSATION PLANS](index=34&type=section&id=9.%20DEFERRED%20COMPENSATION%20PLANS) This note outlines the company's deferred compensation obligations and stock equivalent holdings - The Company's deferred compensation obligation for supplemental retirement benefits decreased to **$2.6 million** as of March 31, 2025, from **$2.7 million** at December 31, 2024[89](index=89&type=chunk) - Under the Non-Employee Directors' Deferred Compensation Plan, **78,102 shares** of common stock were held as stock equivalents as of March 31, 2025[90](index=90&type=chunk) [10. STOCK AWARDS](index=34&type=section&id=10.%20STOCK%20AWARDS) This note provides information on stock-based compensation expense, stock option, and restricted stock activity - Stock-based compensation expense totaled **$0.2 million** for the three months ended March 31, 2025, up from **$0.1 million** in the prior year[94](index=94&type=chunk) - The Company did not grant any stock option awards during the period, but **49,400 shares** of restricted stock were granted[95](index=95&type=chunk)[98](index=98&type=chunk) Stock Option Activity (Three Months Ended March 31) | Metric | 2025 (Number of Shares) | 2024 (Number of Shares) | | :-------------------------- | :---------------------- | :---------------------- | | Outstanding, beginning of period | 268,250 | 411,900 | | Exercised | 20,750 | 8,750 | | Expired | 5,500 | 500 | | Options outstanding, end of period | 242,000 | 402,650 | | Options exercisable, end of period | 242,000 | 402,650 | Restricted Stock Award Activity (Three Months Ended March 31) | Metric | 2025 (Number of Shares) | 2024 (Number of Shares) | | :-------------------------- | :---------------------- | :---------------------- | | Unvested shares, beginning of period | 92,599 | 86,443 | | Granted | 49,400 | 55,300 | | Released from restriction | 50,075 | 45,977 | | Unvested shares, end of period | 91,924 | 95,766 | [11. LEASES](index=37&type=section&id=11.%20LEASES) This note details the company's operating lease income, expense, right-of-use assets, and liabilities Operating Lease Income and Expense (Three Months Ended March 31, Dollars in Thousands) | Metric | 2025 | 2024 | | :-------------------- | :----- | :----- | | Operating lease income | $284 | $257 | | Operating lease expense | $109 | $156 | Supplemental Lease Information (Dollars in Thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets | $1,838 | $1,921 | | Operating lease liabilities | $1,892 | $1,972 | | Weighted-average remaining lease term (in years) | 6.00 | 5.14 | | Weighted-average discount rate | 4.31% | 4.08% | [12. DERIVATIVE FINANCIAL INSTRUMENTS](index=40&type=section&id=12.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note describes the company's use of interest rate derivatives to manage economic risks and their impact on financial statements - The Company uses interest rate derivative instruments to manage economic risks, primarily modifying repricing characteristics of assets and liabilities[103](index=103&type=chunk) - In March 2025, the Company purchased an interest rate floor contract (**$20.0 million** notional) and entered into two forward starting interest rate swap contracts (**$40.0 million** aggregate notional) designated as cash flow hedges[104](index=104&type=chunk)[105](index=105&type=chunk) - Three interest rate swap contracts (**$30.0 million** aggregate notional) previously designated as fair value hedges were voluntarily terminated in March 2025[108](index=108&type=chunk) Active Derivative Instruments (Dollars in Thousands) | Category | Notional Amount (March 31, 2025) | Estimated Fair Value Gain (Loss) (March 31, 2025) | | :------------------------------------------------ | :------------------------------- | :------------------------------------------ | | Fair value hedges (Interest rate swaps) | $— | $— | | Cash flow hedges (Interest rate swaps) | $40,000 | $217 | | Cash flow hedges (Interest rate floors) | $20,000 | $278 | | Non-designated (Interest rate floors) | $25,000 | $15 | | Non-designated (Credit risk participation agreements) | $15,198 | $(71) | | Total derivatives designated as hedging instruments, net | N/A | $495 | | Total derivatives not designated as hedging instruments, net | N/A | $(56) | Net Effects of Derivative Instruments on Statements of Operations (Three Months Ended March 31, Dollars in Thousands) | Location in Statements of Operations | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Interest income | $(29) | $260 | | Interest expense | $97 | $156 | | Non-interest income | $(17) | $— | | Non-interest expense | $(4) | $(24) | | Net increase to income before income taxes | $47 | $392 | [13. OTHER OPERATING INCOME AND EXPENSE](index=43&type=section&id=13.%20OTHER%20OPERATING%20INCOME%20AND%20EXPENSE) This note provides a breakdown of various other operating income and expense categories Other Operating Income (Three Months Ended March 31, Dollars in Thousands) | Category | 2025 | 2024 | | :-------------------- | :----- | :----- | | Bank-owned life insurance | $137 | $131 | | ATM fee income | $84 | $85 | | Other income | $82 | $93 | | Total | $303 | $309 | Other Operating Expense (Three Months Ended March 31, Dollars in Thousands) | Category | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Postage, stationery and supplies | $149 | $178 | | Telephone/data communication | $199 | $192 | | Collection and recoveries | $70 | $26 | | Directors fees | $93 | $96 | | Software amortization | $108 | $90 | | Other real estate/foreclosure expense, net | $20 | $31 | | Other expense | $657 | $377 | | Total | $1,296 | $990 | [14. GUARANTEES, COMMITMENTS AND CONTINGENCIES](index=43&type=section&id=14.%20GUARANTEES%2C%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's off-balance sheet commitments, contingent liabilities, and litigation status Commitments and Contingent Liabilities (Dollars in Thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Standby letters of credit | $— | $— | | Standby performance letters of credit | $896 | $896 | | Commitments to extend credit | $133,257 | $120,703 | - The allowance for unfunded lending commitments remained at **$0.4 million** as of both March 31, 2025, and December 31, 2024[119](index=119&type=chunk) - The Company is self-insured for a significant portion of employee health benefits, with an estimated liability of **$0.2 million** for self-insurance as of both periods[119](index=119&type=chunk) - The Company is involved in ordinary course litigation, which management believes will not have a material adverse effect on its financial statements or results of operations[120](index=120&type=chunk) [15. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=45&type=section&id=15.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note details the fair value measurements of financial instruments, categorized by valuation hierarchy levels - The Company classifies financial instruments into a fair value hierarchy (Level 1, 2, 3) based on the observability of inputs[122](index=122&type=chunk) - Level 1 includes U.S. Treasury securities, Level 2 includes most other investment securities and derivatives, and Level 3 includes collateral dependent loans and OREO, which are valued using significant unobservable inputs like appraisal comparability adjustments[124](index=124&type=chunk)[125](index=125&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) Assets and Liabilities Measured at Fair Value on a Recurring Basis (March 31, 2025, Dollars in Thousands) | Asset/Liability | Total Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------------------------- | :--------------- | :------ | :------ | :------ | | Investment securities, available-for-sale | $161,314 | $38,797 | $122,517 | $— | | Other assets - interest rate floors | $293 | $— | $293 | $— | | Other assets - interest rate swaps | $217 | $— | $217 | $— | | Other liabilities - credit risk participation agreements | $71 | $— | $71 | $— | Assets Measured at Fair Value on a Non-recurring Basis (March 31, 2025, Dollars in Thousands) | Asset | Total Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------------- | :--------------- | :------ | :------ | :------ | | Collateral dependent loans | $1,393 | $— | $— | $1,393 | | OREO and other assets held-for-sale | $1,328 | $— | $— | $1,328 | - For Level 3 measurements, collateral dependent loans and OREO are valued with an appraisal comparability adjustment (discount) ranging from **9%-10%** (weighted average **9.5%**) based on recent market activity[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) Fair Value of Financial Instruments (March 31, 2025, Dollars in Thousands) | Instrument | Carrying Amount | Estimated Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------------------------- | :-------------- | :------------------- | :------ | :------ | :------ | | Cash and cash equivalents | $56,041 | $56,041 | $56,041 | $— | $— | | Investment securities available-for-sale | $161,314 | $161,314 | $38,797 | $122,517 | $— | | Investment securities held-to-maturity | $632 | $602 | $— | $602 | $— | | Federal funds sold and securities purchased under reverse repurchase agreements | $5,451 | $5,451 | $— | $5,451 | $— | | Federal Home Loan Bank stock | $1,978 | $1,978 | $— | $— | $1,978 | | Loans, net of allowance for credit losses | $837,930 | $799,659 | $— | $— | $799,659 | | Other assets - interest rate floors | $293 | $293 | $— | $293 | $— | | Other assets - interest rate swaps | $217 | $217 | $— | $217 | $— | | Deposits | $961,952 | $896,643 | $— | $896,643 | $— | | Short-term borrowings | $45,000 | $45,000 | $— | $45,000 | $— | | Long-term borrowings | $10,890 | $9,746 | $— | $9,746 | $— | | Other liabilities - credit risk participation agreements | $71 | $71 | $— | $71 | $— | [16. SEGMENT REPORTING](index=53&type=section&id=16.%20SEGMENT%20REPORTING) This note provides financial information for the company's single reportable operating segment, First US Bank - First US Bank is the Company's only reportable operating segment, conducting general commercial banking and indirect lending[148](index=148&type=chunk)[149](index=149&type=chunk) - The Chief Operating Decision Makers (CODM) evaluate performance and allocate resources based on net income and total consolidated assets[151](index=151&type=chunk) Bank Segment Financial Information (Three Months Ended March 31, Dollars in Thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Interest income | $14,018 | $14,277 | | Non-interest income | $875 | $865 | | Total income | $14,893 | $15,142 | | Interest expense | $5,121 | $5,237 | | Provision for credit losses | $528 | $— | | Salaries and employee benefits | $3,736 | $4,088 | | Fees for professional services | $215 | $341 | | Other expense | $657 | $377 | | Provision for income taxes | $554 | $651 | | Total expense | $13,121 | $13,035 | | Consolidated net income | $1,772 | $2,107 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=56&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial performance and condition, comparing the three months ended March 31, 2025, to the same period in 2024, and balance sheet items to December 31, 2024. It covers recent market conditions, an executive overview, detailed analysis of net interest income, provision for credit losses, non-interest income and expense, income taxes, and a comprehensive balance sheet analysis including loans, deposits, and liquidity [DESCRIPTION OF THE BUSINESS](index=56&type=section&id=DESCRIPTION%20OF%20THE%20BUSINESS) This section provides an overview of First US Bancshares, Inc.'s business model and operational scope - First US Bancshares, Inc. operates First US Bank, a commercial bank offering a range of services across **15 full-service offices** and indirect lending in **17 states**[153](index=153&type=chunk)[154](index=154&type=chunk) - The Company focuses on customer satisfaction through technology upgrades and employee training, with **147 full-time equivalent employees** as of March 31, 2025[155](index=155&type=chunk) [RECENT MARKET CONDITIONS](index=56&type=section&id=RECENT%20MARKET%20CONDITIONS) This section discusses the economic and market environment impacting the company's performance during the quarter - During Q1 2025, the banking industry faced economic volatility: U.S. inflation slowed to **2.4%** but remained above the FRB's **2% target**, unemployment modestly rose to **4.2%**, and the federal funds rate was held at **4.25%-4.50%**[159](index=159&type=chunk) - U.S. GDP contracted by **0.3%** for the first time since 2022, creating an uncertain environment for future rate movements[160](index=160&type=chunk) - Evolving trade policies and potential tariffs also contribute to broader economic uncertainty[160](index=160&type=chunk) [EXECUTIVE OVERVIEW](index=58&type=section&id=EXECUTIVE%20OVERVIEW) This section provides a high-level summary of the company's financial performance and key operational highlights Executive Overview of Financial Performance (Three Months Ended March 31, Dollars in Thousands, Except Per Share Data) | Metric | 2025 | 2024 | Change (YoY) | % Change (YoY) | | :----------------------------------- | :----- | :----- | :----------- | :------------- | | Net interest income | $8,897 | $9,040 | $(143) | -1.58% | | Provision for credit losses | $528 | $— | $528 | N/A | | Non-interest income | $875 | $865 | $10 | 1.16% | | Non-interest expense | $6,918 | $7,147 | $(229) | -3.20% | | Net income | $1,772 | $2,107 | $(335) | -15.90% | | Diluted net income per share | $0.29 | $0.34 | $(0.05) | -14.71% | - Net interest income decreased by **1.6%** due to yield reductions on loans following federal funds rate cuts in late 2024, partially offset by increased earning asset volumes and reduced interest expense on liabilities[163](index=163&type=chunk) - The provision for credit losses increased to **$0.5 million**, primarily due to loan growth[164](index=164&type=chunk) - Non-interest income remained consistent, while non-interest expense decreased by **3.2%** due to lower salaries and professional service fees, partially offset by higher 'other expense' (absence of check fraud recovery)[165](index=165&type=chunk)[166](index=166&type=chunk) [Net Interest Income and Margin](index=62&type=section&id=Net%20Interest%20Income%20and%20Margin) This section analyzes the company's net interest income and net interest margin, including factors influencing changes Net Interest Income and Margin Analysis (Three Months Ended March 31, Dollars in Thousands) | Metric | 2025 | 2024 | Change (YoY) | % Change (YoY) | | :-------------------- | :----- | :----- | :----------- | :------------- | | Net interest income | $8,897 | $9,040 | $(143) | -1.58% | | Net interest margin | 3.53% | 3.65% | -0.12% | -3.29% | | Total interest income | $14,018 | $14,277 | $(259) | -1.81% | | Total interest expense | $5,121 | $5,237 | $(116) | -2.21% | - The decrease in net interest income and margin was primarily driven by lower average yields on interest-earning assets (**$0.4 million** decrease), partially offset by growth in interest-earning assets (**$0.1 million** increase) and a decrease in interest expense (**$0.1 million** decrease) due to reductions in market interest rates[187](index=187&type=chunk) - Net interest margin improved by **12 basis points** from Q4 2024 to Q1 2025, reaching **3.53%**, but remained below earlier 2024 levels[188](index=188&type=chunk)[189](index=189&type=chunk) [Provision for Credit Losses](index=65&type=section&id=Provision%20for%20Credit%20Losses) This section discusses the provision for credit losses and its impact on the allowance for credit losses - The Company recorded a provision for credit losses of **$0.5 million** for the three months ended March 31, 2025, compared to no provision in the prior year, primarily due to increased loan volume[190](index=190&type=chunk) - The Allowance for Credit Losses (ACL) on loans and leases as a percentage of total loans was **1.23%** as of March 31, 2025, a slight decrease from **1.24%** at December 31, 2024[191](index=191&type=chunk) - Net charge-offs increased to **$0.3 million** from **$0.2 million** year-over-year[191](index=191&type=chunk) [Non-Interest Income](index=65&type=section&id=Non-Interest%20Income) This section details the various components of the company's non-interest income Non-Interest Income Components (Three Months Ended March 31, Dollars in Thousands) | Category | 2025 | 2024 | $ Change | % Change | | :----------------------------------- | :----- | :----- | :------- | :------- | | Service charges and other fees on deposit accounts | $288 | $299 | $(11) | -3.7% | | Bank-owned life insurance | $137 | $131 | $6 | 4.6% | | Lease income | $284 | $257 | $27 | 10.5% | | ATM fee income | $84 | $85 | $(1) | -1.2% | | Other income | $82 | $93 | $(11) | -11.8% | | Total non-interest income | $875 | $865 | $10 | 1.2% | [Non-Interest Expense](index=65&type=section&id=Non-Interest%20Expense) This section provides a breakdown of the company's non-interest expenses and factors influencing changes Non-Interest Expense Components (Three Months Ended March 31, Dollars in Thousands) | Category | 2025 | 2024 | $ Change | % Change | | :-------------------------------- | :----- | :----- | :------- | :------- | | Salaries and employee benefits | $3,736 | $4,088 | $(352) | -8.6% | | Net occupancy and equipment | $875 | $894 | $(19) | -2.1% | | Computer services | $412 | $443 | $(31) | -7.0% | | Insurance expense and assessments | $384 | $391 | $(7) | -1.8% | | Fees for professional services | $215 | $341 | $(126) | -37.0% | | Postage, stationery and supplies | $149 | $178 | $(29) | -16.3% | | Telephone/data communications | $199 | $192 | $7 | 3.6% | | Collection and recoveries | $70 | $26 | $44 | 169.2% | | Directors fees | $93 | $96 | $(3) | -3.1% | | Software amortization | $108 | $90 | $18 | 20.0% | | Other real estate/foreclosure expense, net | $20 | $31 | $(11) | -35.5% | | Other expense | $657 | $377 | $280 | 74.3% | | Total non-interest expense | $6,918 | $7,147 | $(229) | -3.2% | - The decrease in non-interest expense was primarily driven by reductions in salaries and employee benefits and fees for professional services[193](index=193&type=chunk) - This was partially offset by an increase in 'other expense' due to the absence of a check fraud expense recovery that occurred in Q1 2024[193](index=193&type=chunk) [Provision for Income Taxes](index=66&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes the company's income tax provision and effective tax rate Income Tax Provision and Effective Rate (Three Months Ended March 31, Dollars in Thousands) | Metric | 2025 | 2024 | | :-------------------- | :----- | :----- | | Provision for income taxes | $554 | $651 | | Effective tax rate | 23.8% | 23.6% | - The effective tax rate is influenced by recurring permanent differences such as tax-exempt interest income from municipal bonds and loans, and the cash surrender value of bank-owned life insurance[195](index=195&type=chunk) [BALANCE SHEET ANALYSIS](index=66&type=section&id=BALANCE%20SHEET%20ANALYSIS) This section provides a detailed analysis of the company's balance sheet components, including assets, liabilities, and equity [Investment Securities](index=66&type=section&id=Investment%20Securities) This section analyzes the company's investment portfolio, including changes in fair value and expected life - The total investment portfolio decreased to **$161.9 million** as of March 31, 2025, from **$168.6 million** at December 31, 2024[196](index=196&type=chunk) - Available-for-sale securities constituted **99.6%** of the portfolio, with net unrealized losses totaling **$4.0 million**, an improvement from **$6.7 million** at December 31, 2024[197](index=197&type=chunk) - The expected average life of securities increased to **4.0 years** from **3.6 years**[199](index=199&type=chunk) [Loans and Leases](index=67&type=section&id=Loans%20and%20Leases) This section details the composition and growth of the company's loan and lease portfolio - Total loans increased by **$25.3 million (3.1%)** to **$848.3 million** as of March 31, 2025, primarily driven by a **$41.3 million** growth in consumer indirect loans[168](index=168&type=chunk)[202](index=202&type=chunk) - This growth was partially offset by reductions in construction and non-residential commercial real estate loans[202](index=202&type=chunk) Loan Portfolio by Category (Dollars in Thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :-------------------------------------- | :------------- | :---------------- | | Construction, land development and other land loans | $58,572 | $65,537 | | Secured by 1-4 family residential properties | $68,523 | $69,999 | | Secured by multi-family residential properties | $106,374 | $101,057 | | Secured by non-residential commercial real estate | $214,065 | $227,751 | | Commercial and industrial loans | $45,166 | $44,238 | | Direct consumer | $4,610 | $4,774 | | Indirect consumer | $351,025 | $309,683 | | Total loans | $848,335 | $823,039 | Fixed vs. Variable Rate Loans by Maturity (March 31, 2025, Dollars in Thousands) | Maturity | Fixed Interest Rates | Variable Interest Rates | Total Loans | | :-------------------------- | :------------------- | :-------------------- | :---------- | | One Year or Less | $27,880 | $84,858 | $112,738 | | After One Year Through Five Years | $137,230 | $128,029 | $265,259 | | After Five Years Through Fifteen Years | $404,701 | $33,485 | $438,186 | | After Fifteen Years | $14,386 | $17,766 | $32,152 | | Total | $584,197 | $264,138 | $848,335 | [Allowance for Credit Losses on Loans and Leases](index=69&type=section&id=Allowance%20for%20Credit%20Losses%20on%20Loans%20and%20Leases) This section examines the allowance for credit losses on loans and leases, including net charge-offs Changes in ACL on Loans and Leases (Dollars in Thousands) | Metric | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Beginning balance | $10,184 | $10,116 | $10,227 | $10,436 | $10,507 | | Net charge-offs | $(269) | $(495) | $(251) | $(209) | $(183) | | Provision for credit losses | $490 | $563 | $140 | $— | $112 | | Ending balance | $10,405 | $10,184 | $10,116 | $10,227 | $10,436 | | Ending balance as a percentage of loans | 1.23% | 1.24% | 1.26% | 1.25% | 1.27% | | Net charge-offs as a percentage of average loans | 0.13% | 0.14% | 0.12% | 0.10% | 0.09% | [Allowance for Credit Losses on Unfunded Lending Commitments](index=69&type=section&id=Allowance%20for%20Credit%20Losses%20on%20Unfunded%20Lending%20Commitments) This section discusses the company's reserve for unfunded lending commitments - The Company's reserve for unfunded lending commitments remained at **$0.4 million** as of both March 31, 2025, and December 31, 2024[206](index=206&type=chunk) [Nonperforming Assets](index=70&type=section&id=Nonperforming%20Assets) This section provides an overview of the company's nonperforming assets, including non-accrual loans and OREO Nonperforming Assets (Dollars in Thousands) | Metric | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | :------ | | Non-accrual loans | $3,668 | $3,949 | $6,051 | $2,337 | $2,393 | | Other real estate owned | $1,328 | $1,509 | $538 | $542 | $572 | | Total Nonperforming Assets | $4,996 | $5,458 | $6,589 | $2,879 | $2,965 | | Nonperforming assets as a percentage of total assets | 0.44% | 0.50% | 0.60% | 0.27% | 0.28% | | ACL as a percentage of non-accrual loans | 283.67% | 257.89% | 167.18% | 437.61% | 436.11% | [Allocation of Allowance for Credit Losses on Loans and Leases](index=70&type=section&id=Allocation%20of%20Allowance%20for%20Credit%20Losses%20on%20Loans%20and%20Leases) This section details the allocation of the allowance for credit losses across different loan types ACL Allocation and Net Charge-offs by Loan Type (Q1 2025, Dollars in Thousands) | Loan Type | Allowance Allocation | ACL as Percentage of Total Loans | Net Charge-offs as Percentage of Average Loans | | :-------------------------------------- | :------------------- | :------------------------------- | :------------------------------------------- | | Construction, land development and other land loans | $279 | 0.48% | — | | Secured by 1-4 family residential properties | $355 | 0.52% | -0.03% | | Secured by multi-family residential properties | $529 | 0.50% | — | | Secured by non-residential commercial real estate | $1,271 | 0.59% | — | | Commercial and industrial loans | $1,527 | 3.38% | -0.13% | | Direct consumer | $47 | 1.02% | -4.49% | | Indirect consumer | $6,397 | 1.82% | 0.44% | | Total | $10,405 | 1.23% | 0.13% | [Deposits](index=70&type=section&id=Deposits) This section analyzes changes in the company's deposit base, including interest-bearing and non-interest-bearing accounts - Total deposits decreased by **1.1%** to **$962.0 million** as of March 31, 2025, primarily due to reductions in interest-bearing and non-interest-bearing demand deposit accounts, partly driven by lower deposit pricing[209](index=209&type=chunk) - Core deposits, excluding large time and brokered deposits, totaled **$813.9 million (84.6% of total deposits)**, down from **$837.7 million (86.1%)** at December 31, 2024[209](index=209&type=chunk) [Other Interest-Bearing Liabilities](index=72&type=section&id=Other%20Interest-Bearing%20Liabilities) This section discusses the company's other interest-bearing liabilities, such as federal funds purchased and FHLB advances - Other interest-bearing liabilities, including federal funds purchased, repurchase agreements, FHLB advances, and subordinated debt, increased significantly to **6.5%** of total interest-bearing liabilities as of March 31, 2025, from **2.5%** at December 31, 2024[211](index=211&type=chunk) [Shareholders' Equity](index=72&type=section&id=Shareholders%27%20Equity) This section details changes in shareholders' equity, including the impact of earnings, dividends, and share repurchases - Shareholders' equity increased by **2.6%** to **$101.2 million (9.0% of total assets)** as of March 31, 2025, driven by earnings, net of dividends and share repurchases, and a reduction in accumulated other comprehensive loss due to changes in market interest rates and maturing lower-yielding investment securities[212](index=212&type=chunk) - The Company declared a cash dividend of **$0.07 per share** for Q1 2025, consistent with the previous quarter's increase[213](index=213&type=chunk) - During Q1 2025, **40,000 shares** of common stock were repurchased at a weighted average price of **$13.38 per share**, with **872,813 shares** remaining available under the repurchase program[214](index=214&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=72&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section assesses the company's liquidity position and capital adequacy, including available funding sources - The Company maintains strong liquidity from cash, loan/investment maturities, and access to federal funds, FHLB advances, and the FRB's discount window[215](index=215&type=chunk) - Loans maturing or repricing in one year or less totaled **$264.4 million**, and investment securities maturing or repricing in one year or less were **$27.6 million** as of March 31, 2025[217](index=217&type=chunk) Readily Available Liquidity (Dollars in Thousands) | Source | March 31, 2025 | December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------- | :---------------- | | Total liquidity from cash, federal funds sold and securities purchased under reverse repurchase agreements | $61,492 | $52,943 | | Liquidity from pledgable investment securities | $89,064 | $86,296 | | Liquidity from unused lendable collateral (loans) at FHLB | $9,180 | $45,388 | | Liquidity from unused lendable collateral (loans and securities) at FRB | $160,043 | $165,061 | | Unsecured lines of credit with banks | $48,000 | $48,000 | | Total readily available liquidity | $367,779 | $397,688 | - Estimated uninsured deposits totaled **$202.6 million (21.1% of total deposits)** as of March 31, 2025, down from **$216.8 million (22.2%)** at December 31, 2024[226](index=226&type=chunk) - Management believes the Company has adequate liquidity to cover contractual obligations for the next twelve months[227](index=227&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=76&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section outlines the Company's approach to managing interest rate risk through financial simulation models to assess the potential impact of interest rate changes on net interest income and net interest margin over one- and two-year timeframes [Assessing Short-Term Interest Rate Risk – Net Interest Margin Simulation](index=76&type=section&id=Assessing%20Short-Term%20Interest%20Rate%20Risk%20%E2%80%93%20Net%20Interest%20Margin%20Simulation) This section presents the results of interest rate risk simulations on net interest margin and net interest income Average Change in Net Interest Margin from Level Interest Rate Forecast (basis points, pre-tax) | Interest Rate Shift | 1 Year | 2 Years | | :------------------ | :----- | :------ | | +1% | 1 | 2 | | +2% | 1 | 3 | | +3% | (1) | 2 | | -1% | (6) | (8) | | -2% | (12) | (19) | | -3% | (21) | (33) | Cumulative Change in Net Interest Income from Level Interest Rate Forecast (dollars in thousands, pre-tax) | Interest Rate Shift | 1 Year | 2 Years | | :------------------ | :----- | :------ | | +1% | $112 | $524 | | +2% | $116 | $712 | | +3% | $(136) | $379 | | -1% | $(702) | $(1,840) | | -2% | $(1,343) | $(4,252) | | -3% | $(2,345) | $(7,505) | [ITEM 4. CONTROLS AND PROCEDURES](index=77&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter [Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures](index=77&type=section&id=Conclusion%20Regarding%20the%20Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures - As of March 31, 2025, Bancshares' management, including its CEO and CFO, concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level[232](index=232&type=chunk)[233](index=233&type=chunk) [Changes in Internal Control Over Financial Reporting](index=77&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting - There were no changes in Bancshares' internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[234](index=234&type=chunk) [PART II. OTHER INFORMATION](index=78&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=78&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that the Company is involved in ordinary course litigation but expects no material adverse effect on its financial statements or operations - The Company is a party to certain ordinary course litigation and intends to vigorously defend itself, with management believing the outcome will not have a material adverse effect on its consolidated financial statements or results of operations[236](index=236&type=chunk) [ITEM 1A. RISK FACTORS](index=78&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the Company's most recent Annual Report on Form 10-K for a comprehensive list of risk factors, noting no material changes during the current reporting period - There have been no material changes to the risk factors previously disclosed in the Company's 2024 Form 10-K[237](index=237&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=78&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the Company's common stock repurchases during the first quarter of 2025 under its publicly announced share repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Number of Shares that May Yet Be Purchased Under the Programs | | :----------------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------------------------- | :-------------------------------------------------------------------- | | January 1 – January 31 | 687 | $12.68 | — | 912,813 | | February 1 – February 28 | 16,547 | $13.10 | 16,500 | 896,313 | | March 1 – March 31 | 23,545 | $13.58 | 23,500 | 872,813 | | Total | 40,779 | $13.37 | 40,000 | 872,813 | [ITEM 5. OTHER INFORMATION](index=78&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section confirms no other material information or changes in Rule 10b5-1 trading arrangements by directors or executive officers during the reporting period - No other material information was reported, and no directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the period[241](index=241&type=chunk) [ITEM 6. EXHIBITS](index=79&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, incentive programs, certifications, and XBRL-formatted financial statements - The report includes various exhibits such as the Certificate of Incorporation, Amended and Restated Bylaws, Cash Incentive Program, Director Fee Schedule, CEO/CFO certifications, and financial statements formatted in Inline XBRL[242](index=242&type=chunk) [SIGNATURES](index=80&type=section&id=SIGNATURES) This section contains the duly authorized signature for the Quarterly Report on Form 10-Q - The report is signed by Thomas S. Elley, Senior Executive Vice President, Treasurer, Assistant Secretary, Chief Financial Officer, and Principal Accounting Officer, on behalf of First US Bancshares, Inc. on May 8, 2025[244](index=244&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk)

[First Quarter 2025 Overview](index=1&type=section&id=First%20Quarter%202025%20Overview) First US Bancshares, Inc. reported increased net income and stable diluted EPS for 1Q2025, driven by solid loan growth and improved net interest margin [Highlights](index=1&type=section&id=1.1%20Highlights) First US Bancshares, Inc. reported increased net income and stable diluted EPS for 1Q2025, driven by solid loan growth and improved net interest margin First Quarter 2025 Financial Highlights | Period | Net Income (in millions) | Diluted Earnings per share | Return on average assets (annualized) | Return on average common equity (annualized) | Return on average tangible common equity (annualized) (1) | | :--- | :--- | :--- | :--- | :--- | :--- | | 1Q2025 | $1.8 | $0.29 | 0.66% | 7.21% | 7.79% | | 4Q2024 | $1.7 | $0.29 | 0.63% | 6.92% | 7.49% | | 1Q2024 | $2.1 | $0.34 | 0.80% | 9.25% | 10.08% | [CEO Commentary](index=2&type=section&id=1.2%20CEO%20Commentary) CEO James F. House highlighted a strong start to 2025 with solid loan growth and significant net interest margin improvement through disciplined management - Loans grew by **3.1%** during the quarter, and net interest margin increased by **12 basis points** over the prior quarter[6](index=6&type=chunk) - The Company maintains a disciplined approach to lending, investing, and funds management to navigate the volatile economic environment[6](index=6&type=chunk) [Financial Performance Analysis](index=1&type=section&id=Financial%20Performance%20Analysis) This section analyzes the company's net income, interest income, credit provisions, and operating expenses for the quarter [Net Income and Earnings Per Share](index=1&type=section&id=2.1%20Net%20Income%20and%20Earnings%20Per%20Share) Net income for 1Q2025 increased quarter-over-quarter but decreased year-over-year, while diluted EPS remained stable sequentially Net Income and Diluted Net Income per Share | Metric | 1Q2025 | 4Q2024 | 1Q2024 | | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $1,772 | $1,714 | $2,107 | | Diluted Net Income per Share | $0.29 | $0.29 | $0.34 | [Net Interest Income and Margin](index=1&type=section&id=2.2%20Net%20Interest%20Income%20and%20Margin) Net interest income slightly increased quarter-over-quarter, with net interest margin improving to **3.53%** due to loan volume and reduced funding costs Net Interest Income and Margin | Metric | 1Q2025 | 4Q2024 | 1Q2024 | | :--- | :--- | :--- | :--- | | Net Interest Income (in thousands) | $8,897 | $8,748 | $9,040 | | Net Interest Margin | 3.53% | 3.41% | 3.65% | - The increase in net interest margin compared to the prior quarter resulted from increased average loan volume and reductions in total funding costs from deposits and borrowings[9](index=9&type=chunk) - The decrease in net interest margin compared to 1Q2024 resulted primarily from yield reductions on loans following the Federal Funds rate reduction in late 2024[9](index=9&type=chunk) [Provision for Credit Losses](index=1&type=section&id=2.3%20Provision%20for%20Credit%20Losses) The company recorded a **$0.5 million** provision for credit losses in 1Q2025, consistent with the prior quarter, driven by loan growth and individually evaluated loans Provision for Credit Losses | Metric | 1Q2025 | 4Q2024 | 1Q2024 | | :--- | :--- | :--- | :--- | | Provision for Credit Losses (in thousands) | $528 | $470 | $- | - The provision for credit losses in 1Q2025 was primarily due to loan growth and increases associated with individually evaluated loans[15](index=15&type=chunk) [Non-Interest Income](index=1&type=section&id=2.4%20Non-Interest%20Income) Non-interest income remained relatively consistent at **$0.9 million** in 1Q2025, comparable to prior periods Non-Interest Income | Metric | 1Q2025 | 4Q2024 | 1Q2024 | | :--- | :--- | :--- | :--- | | Non-Interest Income (in thousands) | $875 | $982 | $865 | [Non-Interest Expense](index=1&type=section&id=2.5%20Non-Interest%20Expense) Non-interest expense remained stable quarter-over-quarter and decreased year-over-year, primarily due to lower salaries and professional service fees Non-Interest Expense | Metric | 1Q2025 | 4Q2024 | 1Q2024 | | :--- | :--- | :--- | :--- | | Non-Interest Expense (in thousands) | $6,918 | $6,947 | $7,147 | | Salaries and employee benefits (in thousands) | $3,736 | N/A | $4,088 | | Fees for professional services (in thousands) | $215 | N/A | $341 | - The year-over-year expense reduction was primarily due to decreases in salaries and benefits and fees for professional services[18](index=18&type=chunk) - These reductions were partially offset by an increase in other expense resulting from a recovery of check fraud expense in 1Q2024 that was not repeated in 1Q2025[18](index=18&type=chunk) [Financial Position Analysis](index=1&type=section&id=Financial%20Position%20Analysis) This section details the company's balance sheet components, including loans, deposits, borrowings, investments, asset quality, and shareholders' equity [Loans and Leases](index=1&type=section&id=3.1%20Loans%20and%20Leases) Total loans increased by **$25.3 million (3.1%)** in 1Q2025, primarily driven by growth in high-credit-score consumer indirect loans Loans and Leases Held for Investment | Loan Category | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | March 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Total loans and leases held for investment | $848,335 | $823,039 | $822,941 | | Consumer indirect loans | $351,025 | $309,683 | $308,986 | | Secured by multi-family residential properties | $106,374 | $101,057 | $62,145 | | Commercial and industrial loans | $45,166 | $44,238 | $57,112 | - Total loans increased by **$25.3 million (3.1%)** in 1Q2025, primarily driven by growth of **$41.3 million** in consumer indirect loans[8](index=8&type=chunk) - The weighted average credit score of new indirect loans financed during 1Q2025 reached **800**, with the entire portfolio averaging **779**[8](index=8&type=chunk) [Deposits](index=1&type=section&id=3.2%20Deposits) Total deposits decreased by **$10.6 million (1.1%)** in 1Q2025, primarily due to management's efforts to lower deposit pricing and improve net interest margin Total Deposits | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Deposits | $961,952 | $972,557 | | Non-interest-bearing deposits | $153,747 | $155,945 | | Interest-bearing deposits | $808,205 | $816,612 | | Core deposits (% of total deposits) | $813,900 (84.6%) | $837,700 (86.1%) | - Deposit reductions resulted in part from lower deposit pricing implemented by management during the quarter to improve net interest margin[10](index=10&type=chunk) [Borrowings](index=1&type=section&id=3.3%20Borrowings) Short-term borrowings significantly increased to **$45.0 million** to maintain liquidity while repricing deposits, including funds from FHLB and FRB Borrowings | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Short-term borrowings | $45,000 | $10,000 | | Long-term borrowings | $10,890 | $10,872 | - Short-term borrowings were held to maintain on-balance sheet liquidity levels while repricing deposits at lower rates[11](index=11&type=chunk) - As of March 31, 2025, short-term borrowings included **$25.0 million** from FHLB and **$20.0 million** from FRB's discount window[13](index=13&type=chunk) [Investment Securities and Deployment of Funds](index=1&type=section&id=3.4%20Investment%20Securities%20and%20Deployment%20of%20Funds) Cash and equivalents increased to **$61.5 million**, while investment securities decreased to **$161.9 million**, with the portfolio's average life extending to **4.0 years** Cash, Federal Funds Sold, and Investment Securities | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total cash and cash equivalents | $56,041 | $47,216 | | Federal funds sold and securities purchased under reverse repurchase agreements | $5,451 | $5,727 | | Investment securities, net | $161,946 | $168,570 | - Cash, federal funds sold, and securities purchased under reverse repurchase agreements totaled **$61.5 million**, or **5.5%** of total assets, up from **$52.9 million (4.8%)** in 4Q2024[14](index=14&type=chunk) - The expected average life of securities in the investment portfolio increased to **4.0 years** as of March 31, 2025, from **3.6 years** as of December 31, 2024[14](index=14&type=chunk) [Asset Quality](index=1&type=section&id=3.5%20Asset%20Quality) Asset quality improved in 1Q2025, with nonperforming assets decreasing to **$5.0 million** and net charge-offs declining to **0.13%** of average loans Asset Quality Metrics | Metric | 1Q2025 | 4Q2024 | 1Q2024 | | :--- | :--- | :--- | :--- | | Nonperforming assets (in thousands) | $5,000 | $5,500 | $3,000 | | Nonperforming assets as % of total assets | 0.44% | 0.50% | 0.28% | | Net charge-offs as a percentage of average loans | 0.13% | 0.24% | 0.09% | | ACL on loans and leases as % of total loans | 1.23% | 1.24% | 1.27% | [Shareholders' Equity](index=1&type=section&id=3.6%20Shareholders'%20Equity) Shareholders' equity increased to **$101.2 million**, driven by earnings, net of dividends and repurchases, and a positive impact from reduced accumulated other comprehensive loss Shareholders' Equity | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Shareholders' Equity | $101,231 | $98,624 | | Common equity to total assets | 8.98% | 8.96% | | Tangible common equity to tangible assets | 8.38% | 8.33% | - The increase in shareholders' equity resulted primarily from earnings, net of dividends paid and repurchases of common stock[19](index=19&type=chunk) - Shareholders' equity was positively impacted by reductions in the Company's accumulated other comprehensive loss due to changes in market interest rates and the maturity of lower yielding investment securities[19](index=19&type=chunk) [Capital and Liquidity Management](index=4&type=section&id=Capital%20and%20Liquidity%20Management) This section reviews the company's regulatory capital ratios and overall liquidity position, including funding sources and uninsured deposits [Regulatory Capital](index=4&type=section&id=4.1%20Regulatory%20Capital) The Bank maintained capital ratios above 'well-capitalized' thresholds, with a Tier 1 leverage ratio of **9.55%**, demonstrating strong regulatory compliance Regulatory Capital Ratios | Metric | March 31, 2025 | | :--- | :--- | | Common equity Tier 1 capital ratio | 11.08% | | Tier 1 risk-based capital ratio | 11.08% | | Total capital ratio | 12.23% | | Tier 1 leverage ratio | 9.55% | - The Bank continued to maintain capital ratios at higher levels than required to be considered a 'well-capitalized' institution under applicable banking regulations[22](index=22&type=chunk) [Liquidity](index=4&type=section&id=4.2%20Liquidity) The company maintained strong funding capacity with **$367.8 million** in readily available liquidity, supported by core deposits and diverse funding sources Readily Available Liquidity | Liquidity Source | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total liquidity from cash, federal funds sold and securities purchased under reverse repurchase agreements | $61,492 | $52,943 | | Total liquidity from pledgable investment securities | $89,064 | $86,296 | | Liquidity from unused lendable collateral (loans) at FHLB | $9,180 | $45,388 | | Liquidity from unused lendable collateral (loans and securities) at FRB | $160,043 | $165,061 | | Unsecured lines of credit with banks | $48,000 | $48,000 | | Total readily available liquidity | $367,779 | $397,688 | - The Company benefits from a strong core deposit base, a liquid investment securities portfolio, and access to funding from federal funds lines, FHLB advances, FRB's discount window, and brokered deposits[23](index=23&type=chunk) - Estimated uninsured deposits totaled **$202.6 million**, or **21.1%** of total deposits, as of March 31, 2025[41](index=41&type=chunk) [Corporate Actions and Business Development](index=4&type=section&id=Corporate%20Actions%20and%20Business%20Development) This section outlines recent corporate actions, including dividends, share repurchases, and strategic banking center expansion initiatives [Cash Dividend](index=4&type=section&id=5.1%20Cash%20Dividend) The company declared a **$0.07** per share cash dividend for 1Q2025, consistent with the prior quarter's increased payout Dividends Declared per Share | Metric | 1Q2025 | 4Q2024 | 3Q2024 | 2Q2024 | 1Q2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Dividends declared per share | $0.07 | $0.07 | $0.05 | $0.05 | $0.05 | [Share Repurchases](index=4&type=section&id=5.2%20Share%20Repurchases) The company repurchased **40,000** shares of common stock at **$13.38** per share in 1Q2025, with **872,813** shares remaining for repurchase - The Company repurchased **40,000** shares of common stock at a weighted average price of **$13.38** per share during 1Q2025[21](index=21&type=chunk) - As of March 31, 2025, **872,813** shares remained available for repurchase under the Company's share repurchase program[21](index=21&type=chunk) [Banking Center Growth](index=4&type=section&id=5.3%20Banking%20Center%20Growth) Renovation of a new banking center in Daphne, Alabama, is ongoing, expected to open by 4Q2025 as the initial deposit gathering facility in the area - Renovation of a banking center office in Daphne, Alabama, is ongoing, with an anticipated opening by the fourth quarter of 2025[24](index=24&type=chunk) - This new location is expected to serve as the Bank's initial deposit gathering facility in the Daphne/Mobile area[24](index=24&type=chunk) [Company Information and Disclosures](index=6&type=section&id=Company%20Information%20and%20Disclosures) This section provides an overview of First US Bancshares, Inc., its operations, and important forward-looking statement disclosures [About First US Bancshares, Inc.](index=6&type=section&id=6.1%20About%20First%20US%20Bancshares%2C%20Inc.) First US Bancshares, Inc. is a bank holding company operating First US Bank across Alabama, Tennessee, and Virginia, with stock traded on Nasdaq under 'FUSB' - First US Bancshares, Inc. operates banking offices in Alabama, Tennessee, and Virginia through First US Bank[25](index=25&type=chunk) - The Company files periodic reports with the U.S. Securities and Exchange Commission (SEC) and its stock is traded on the Nasdaq Capital Market under 'FUSB'[25](index=25&type=chunk) [Forward-Looking Statements](index=6&type=section&id=6.2%20Forward-Looking%20Statements) This section outlines forward-looking statements, which are subject to significant risks and uncertainties, and the company does not undertake to update them - Forward-looking statements involve significant risks, uncertainties, estimates, and assumptions, and the Company undertakes no obligation to update them[26](index=26&type=chunk) - Factors affecting forward-looking statements include credit risk, increased lending risks in commercial real estate, liquidity risks, national and local market conditions, interest rate changes, cybersecurity threats, AI development risks, and regulatory compliance costs[27](index=27&type=chunk) - The payment of cash dividends is at the discretion of the Board of Directors, subject to current conditions and may change in the future[27](index=27&type=chunk) [Consolidated Financial Statements and Non-GAAP Reconciliations](index=7&type=section&id=Consolidated%20Financial%20Statements%20and%20Non-GAAP%20Reconciliations) This section presents the company's interim consolidated financial statements and reconciliations of non-GAAP financial measures [Net Interest Margin Analysis](index=7&type=section&id=7.1%20Net%20Interest%20Margin%20Analysis) This section details average balances, interest income/expense, and annualized yields/rates for interest-earning assets and liabilities for 1Q2025 and 1Q2024 Net Interest Margin Analysis | ASSETS | Average Balance (in thousands) (3/31/2025) | Interest (in thousands) (3/31/2025) | Yield/Rate % (3/31/2025) | Average Balance (in thousands) (3/31/2024) | Interest (in thousands) (3/31/2024) | Yield/Rate % (3/31/2024) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Loans | $824,531 | $12,241 | 6.02% | $821,984 | $12,853 | 6.29% | | Investment securities | $166,241 | $1,412 | 3.44% | $134,719 | $865 | 2.58% | | Total interest-earning assets | $1,023,183 | $14,018 | 5.56% | $997,228 | $14,277 | 5.76% | | LIABILITIES | | | | | | | | Total interest-bearing deposits | $799,417 | $4,869 | 2.47% | $798,503 | $5,099 | 2.57% | | Borrowings | $23,404 | $252 | 4.37% | $14,545 | $138 | 3.82% | | Total funding liabilities | $978,115 | $5,121 | 2.12% | $962,661 | $5,237 | 2.19% | | Net interest income | | $8,897 | | | $9,040 | | | Net interest margin | | | 3.53% | | | 3.65% | [Interim Condensed Consolidated Balance Sheets](index=9&type=section&id=7.2%20Interim%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the condensed consolidated balance sheets for First US Bancshares, Inc. as of March 31, 2025, and December 31, 2024 Interim Condensed Consolidated Balance Sheets | ASSETS (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total cash and cash equivalents | $56,041 | $47,216 | | Investment securities available-for-sale, at fair value | $161,314 | $167,888 | | Net loans and leases held for investment | $837,930 | $812,855 | | Total assets | $1,126,967 | $1,101,086 | | LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands) | | | | Total deposits | $961,952 | $972,557 | | Short-term borrowings | $45,000 | $10,000 | | Long-term borrowings | $10,890 | $10,872 | | Total liabilities | $1,025,736 | $1,002,462 | | Total shareholders' equity | $101,231 | $98,624 | | Total liabilities and shareholders' equity | $1,126,967 | $1,101,086 | [Interim Condensed Consolidated Statements of Operations](index=10&type=section&id=7.3%20Interim%20Condensed%20Consolidated%20Statements%20of%20Operations) This section provides interim condensed consolidated statements of operations for the three months ended March 31, 2025, and March 31, 2024 Interim Condensed Consolidated Statements of Operations | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total interest income | $14,018 | $14,277 | | Total interest expense | $5,121 | $5,237 | | Net interest income | $8,897 | $9,040 | | Provision for credit losses | $528 | $- | | Net interest income after provision for credit losses | $8,369 | $9,040 | | Total non-interest income | $875 | $865 | | Total non-interest expense | $6,918 | $7,147 | | Income before income taxes | $2,326 | $2,758 | | Provision for income taxes | $554 | $651 | | Net income | $1,772 | $2,107 | | Diluted net income per share | $0.29 | $0.34 | | Dividends per share | $0.07 | $0.05 | [Non-GAAP Financial Measures](index=11&type=section&id=7.4%20Non-GAAP%20Financial%20Measures) This section provides non-GAAP financial measures and ratios, including liquidity and tangible balances, to complement GAAP measures for performance understanding - Non-GAAP measures are provided to enhance overall understanding of the Company's current financial performance and position, offering meaningful comparisons across periods[33](index=33&type=chunk) - Management believes both GAAP and non-GAAP measures should be considered together, as non-GAAP results should not be considered in isolation or as a substitute for GAAP measures[33](index=33&type=chunk) [Liquidity Measures](index=11&type=section&id=7.4.1%20Liquidity%20Measures) The company's readily available liquidity totaled **$367.8 million**, combining on-balance sheet cash and off-balance sheet funding capacity, demonstrating strong funding Readily Available Liquidity | Liquidity Source (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total liquidity from cash, federal funds sold and securities purchased under reverse repurchase agreements | $61,492 | $52,943 | | Total liquidity from pledgable investment securities | $89,064 | $86,296 | | Liquidity from unused lendable collateral (loans) at FHLB | $9,180 | $45,388 | | Liquidity from unused lendable collateral (loans and securities) at FRB | $160,043 | $165,061 | | Unsecured lines of credit with banks | $48,000 | $48,000 | | Total readily available liquidity | $367,779 | $397,688 | - Pledgable investment securities are considered a readily available source of liquidity, as they can be pledged with the FHLB or FRB for immediate funding[37](index=37&type=chunk) - Estimated uninsured deposits totaled **$202.6 million**, or **21.1%** of total deposits, as of March 31, 2025[41](index=41&type=chunk) [Tangible Balances and Measures](index=13&type=section&id=7.4.2%20Tangible%20Balances%20and%20Measures) Tangible common equity and tangible assets are presented to reflect capital available to withstand market conditions and facilitate comparisons, excluding goodwill and intangibles Tangible Balances and Measures | Metric (in thousands, except per share) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | $1,126,967 | $1,101,086 | $1,100,235 | $1,083,313 | $1,070,541 | | Less: Goodwill | $7,435 | $7,435 | $7,435 | $7,435 | $7,435 | | Less: Core deposit intangible | $30 | $49 | $67 | $97 | $134 | | Tangible assets | $1,119,502 | $1,093,602 | $1,092,733 | $1,075,781 | $1,062,972 | | Total shareholders' equity | $101,231 | $98,624 | $98,491 | $93,836 | $92,326 | | Tangible common equity | $93,766 | $91,140 | $90,989 | $86,304 | $84,757 | | Tangible book value per common share | $16.34 | $16.00 | $15.92 | $15.03 | $14.65 | | Tangible common equity to tangible assets | 8.38% | 8.33% | 8.33% | 8.02% | 7.97% | | Return on average tangible common equity (annualized) | 7.79% | 7.49% | 9.99% | 10.05% | 10.08% | - Tangible common equity represents shareholders' equity less goodwill and identifiable intangible assets, while tangible assets represent total assets less goodwill and identifiable intangible assets[42](index=42&type=chunk) - Management uses tangible equity measures to reflect the level of capital available to withstand unexpected market conditions and to compare capitalization to other organizations[43](index=43&type=chunk)

Financial Performance - First US Bancshares, Inc. reported a net income of $1.8 million, or $0.29 per diluted share, for 1Q2025, which is an increase from $1.7 million in 4Q2024 but a decrease from $2.1 million in 1Q2024 [1][3] - Total interest income for 1Q2025 was $14.018 million, down from $14.277 million in 1Q2024, while interest expense was $5.121 million, leading to a net interest income of $8.897 million [3][29] - Non-interest income remained stable at $0.875 million in 1Q2025 compared to $0.865 million in 1Q2024 [13][29] Loan and Deposit Trends - Total loans increased by $25.3 million in 1Q2025, primarily driven by a $41.3 million growth in consumer indirect loans [6][4] - Total deposits decreased by $10.6 million, or 1.1%, during 1Q2025, attributed to reductions in interest-bearing demand deposit accounts [8][27] - Core deposits, excluding large time deposits and wholesale brokered deposits, totaled $813.9 million, or 84.6% of total deposits, as of March 31, 2025 [8][27] Asset Quality and Credit Losses - The provision for credit losses in 1Q2025 was $0.528 million, consistent with the previous quarter, reflecting continued loan growth [11][12] - Nonperforming assets totaled $5.0 million, or 0.44% of total assets, as of March 31, 2025, down from 0.50% in the previous quarter [12][11] Shareholder Returns and Equity - The Company declared a cash dividend of $0.07 per share in 1Q2025, consistent with the previous quarter [16][29] - Shareholders' equity increased to $101.2 million, or 8.98% of total assets, as of March 31, 2025, compared to $98.6 million in the previous quarter [15][27] Capital and Liquidity - The Bank maintained capital ratios above the "well-capitalized" threshold, with a common equity Tier 1 capital ratio of 11.08% as of March 31, 2025 [18][19] - The Company held $61.5 million in cash and securities purchased under reverse repurchase agreements, representing 5.5% of total assets [10][34]

Operations and Strategy - Bancshares operates 15 full-service banking offices across Alabama, Tennessee, and Virginia, and conducts indirect lending in 17 states[17]. - The strategy focuses on loan and deposit growth, leveraging branch networks and digital capabilities, with plans for limited branching and potential acquisitions[18]. - The Bank's operations are limited by federal and state statutes, including requirements to maintain reserves against deposits and restrictions on loan types[32]. - The Bank's commercial real estate lending is subject to regulatory guidance to manage concentration risks, especially in challenging economic environments[40]. - The Company’s growth has been driven by strong demand in indirect lending and commercial real estate markets, but economic downturns and competition could limit future profitability[147]. Regulatory Environment - Bancshares is subject to extensive regulation by the Federal Reserve, ASBD, and FDIC, impacting its operations and profitability[26]. - The Dodd-Frank Act imposes restrictions on incentive compensation arrangements to mitigate inappropriate risk-taking by financial institutions[36]. - The CFPB has taken an aggressive regulatory approach, impacting consumer financial products and services, with potential changes under different administrations[35]. - The federal banking regulators proposed revisions to the Basel III Capital Rules in July 2023, which would not apply to the Company or the Bank due to their asset size being below $100 billion[55]. - The Growth Act allows community banks with total assets of less than $10 billion to access a simpler capital regime focused on Tier 1 leverage capital levels[52]. - The final rule to strengthen and modernize CRA regulations will be applicable starting January 1, 2026, with additional requirements on January 1, 2027[60]. - The Corporate Transparency Act requires entities to report beneficial ownership information, effective January 1, 2024, which may increase the Bank's anti-money laundering diligence activities and costs[67]. - Federal bank regulators have updated guidance on overdrafts, requiring banks to limit overdraft fees and monitor accounts to reduce reliance on high-cost credit[70]. - The Sarbanes-Oxley Act established new responsibilities for audit committees and expanded disclosure requirements for corporate insiders to enhance corporate governance[78]. - The GLBA requires financial institutions to maintain a comprehensive written information security program to protect customer information[80]. - The Company is required to notify the Federal Reserve or FDIC within 36 hours of significant computer security incidents that materially disrupt services[89]. - The Cyber Incident Reporting for Critical Infrastructure Act mandates reporting of covered cyber incidents to CISA within 72 hours[90]. - The SEC's amendments require public companies to disclose material cybersecurity incidents and management's role in cybersecurity risk management[91]. - The CFPB proposed a rule to promote "open banking," requiring financial institutions to provide consumers with access to certain transaction and account information[92]. - The Company is facing increased compliance costs and risks due to new climate-related regulations and supervisory expectations from federal banking agencies, particularly affecting institutions with over $100 billion in assets[141]. Financial Performance - Interest income for 2024 was $58,260,000, an increase of 10.3% from $52,806,000 in 2023[183]. - Net interest income decreased slightly to $36,149,000 in 2024 from $37,350,000 in 2023, reflecting a decline of 3.2%[183]. - Net income for 2024 was $8,170,000, down 3.7% from $8,485,000 in 2023[183]. - Total loans increased to $823,039,000 in 2024, compared to $821,791,000 in 2023, a growth of 0.2%[183]. - Total deposits rose to $972,557,000 in 2024, up from $950,191,000 in 2023, representing a 2.3% increase[183]. - The net interest margin for 2024 was 3.59%, down from 3.87% in 2023[183]. - The return on average assets for 2024 was 0.76%, a decrease from 0.82% in 2023[183]. - The common equity tier 1 risk-based capital ratio improved to 11.31% in 2024 from 10.88% in 2023[183]. - The allowance for credit losses on loans was $10,184,000 in 2024, slightly down from $10,507,000 in 2023[183]. - Non-interest income totaled $3.6 million in 2024, an increase from $3.4 million in 2023, driven by increases in lease income and other revenue sources[215]. Dividend and Shareholder Information - Bancshares declared total dividends of $0.22 per common share for the year ended December 31, 2024, compared to $0.20 per common share for 2023[175]. - The ability to pay dividends is subject to the Bank's operational results and regulatory restrictions, with no assurance of future dividend payments[148]. - The company expects to continue paying comparable cash dividends in the future, subject to operational results and regulatory requirements[175]. - A total of 40,691 shares were repurchased during the fourth quarter of 2024 at an average price of $12.66 per share[177]. - As of December 31, 2024, Bancshares was authorized to repurchase up to 912,813 shares of common stock under its share repurchase program[178]. - The Board of Directors authorized an additional 600,000 shares for repurchase in November 2024, extending the program expiration to December 31, 2025[178]. Risk Factors - The company faces liquidity risk, which could disrupt its ability to meet financial obligations, including demand for loans and deposit withdrawals[107]. - Economic conditions in the U.S. and local markets are sensitive to inflation and interest rates, which could constrain growth and profitability[110]. - The banking industry is highly competitive, with many competitors having greater resources and fewer regulatory constraints, which could affect market share[113][114]. - Rapid changes in market interest rates may adversely affect profitability, particularly net interest income[115]. - The Federal Reserve's interest rate increases have reached a 22-year high, creating challenges in balancing loan and deposit portfolios[116]. - A potential government shutdown could adversely affect the economy and the company's liquidity and earnings[119]. - The reliance on third-party vendors for data processing exposes the company to risks of operational interruptions and cybersecurity breaches, which could adversely affect financial results[125]. - The development and use of Artificial Intelligence (AI) present legal and regulatory challenges that could increase compliance costs and expose the company to liability[127]. - Changes in the regulatory landscape due to new administration could impact the company's performance and operational results[130]. - The company must comply with privacy and data protection laws, and any violations could lead to significant liabilities and reputational damage[131]. - Noncompliance with anti-money laundering regulations could result in significant penalties and restrictions on business operations[134]. - The company faces risks related to consumer protection laws, and failure to comply could lead to sanctions and adversely affect financial condition[135]. Cybersecurity - Cybersecurity is a critical focus area, with established processes for risk management and incident response, although no material incidents have occurred to date[164]. - The cybersecurity risk management process is overseen by senior management with over 90 years of collective experience in information security[167]. - The Company has a total of $293.3 million in commercial real estate (CRE) loans, representing 35.6% of its total loan portfolio as of December 31, 2024[105]. - The federal banking agencies have increased scrutiny on institutions with fast-growing CRE loan portfolios due to concerns about market weaknesses[105]. - The Company is implementing enhanced risk management policies for its growing CRE loan portfolio[105].

Financial Performance - Fourth quarter net income was $1.7 million, or $0.29 per diluted share, down from $2.2 million, or $0.36 per diluted share in the previous quarter[2] - Full-year net income totaled $8.2 million, or $1.33 per diluted share, consistent with the previous year's earnings[2] - Net income for the year ended December 31, 2024, was $8,170 million, down 3.7% from $8,485 million in 2023[34] - Basic net income per share for Q4 2024 was $0.30, compared to $0.38 in Q4 2023, a decrease of 21.1%[34] - Net income for Q4 2024 was $1,714,000, down from $2,222,000 in Q3 2024, representing a decrease of approximately 22.8%[47] Interest Income and Expenses - Interest income for the fourth quarter was $14.42 million, while interest expense was $5.67 million, resulting in net interest income of $8.75 million[4] - Net interest income decreased by $0.4 million in Q4 2024 compared to both Q3 2024 and Q4 2023, with a net interest margin of 3.41%[9] - Total interest income for Q4 2024 was $14,420 million, an increase of 3.4% from $13,945 million in Q4 2023[34] - Net interest income after provision for credit losses decreased to $8,278 million in Q4 2024 from $9,544 million in Q4 2023, a decline of 13.3%[34] Asset and Loan Growth - Total assets increased to $1.101 billion as of December 31, 2024, compared to $1.072 billion a year earlier[4] - Total loans reached $823.04 million, up from $803.31 million in the previous quarter[4] - Total loan volume increased by $19.7 million, or 2.5%, in Q4 2024, driven by growth in construction, consumer indirect, and commercial real estate lending[8] - Total loans increased to $818,524 thousand with a net interest income of $36,149 thousand for the year ended December 31, 2024, compared to $795,446 thousand and $37,350 thousand for 2023, respectively[30] Deposits and Funding - Total deposits decreased by $8.6 million, or 0.9%, in Q4 2024, with core deposits totaling $837.7 million, or 86.1% of total deposits[10] - Total deposits increased to $972,557 thousand in 2024, up from $950,191 thousand in 2023, reflecting a growth of approximately 2.4%[32] - Interest-bearing deposits rose to $816,612 thousand in 2024, compared to $796,600 thousand in 2023, indicating a year-over-year increase of about 2.5%[32] - The company reported a total funding cost of $969,550 thousand with an average yield of 2.28% for the year ended December 31, 2024, compared to $933,946 thousand and 1.65% in 2023[30] Credit Losses and Nonperforming Assets - The provision for credit losses was $470,000 in the fourth quarter, compared to a recovery of $152,000 in the previous quarter[4] - The provision for credit losses was $0.5 million in Q4 2024, compared to a recovery of credit losses of $0.4 million in Q4 2023[12] - Nonperforming assets totaled $5.4 million as of December 31, 2024, representing 0.50% of total assets[13] - The allowance for credit losses on loans and leases was $10,184 thousand as of December 31, 2024, slightly down from $10,507 thousand in 2023[32] Operational Efficiency - The efficiency ratio for the fourth quarter was 71.4%, indicating a slight increase in operational efficiency compared to previous quarters[4] - Non-interest expense decreased to $6.9 million in Q4 2024 from $7.4 million in Q4 2023[15] - Total non-interest expense decreased to $28,356 million in 2024 from $29,141 million in 2023, a reduction of 2.7%[34] Shareholder Equity and Dividends - Shareholders' equity increased to $98.6 million, or 8.96% of total assets, as of December 31, 2024[16] - Cash dividends increased to $0.07 per share in Q4 2024, compared to $0.05 per share in previous quarters[17] - Shareholders' equity increased to $98,624 thousand in 2024 from $90,593 thousand in 2023, representing an increase of approximately 8.5%[32] - Total shareholders' equity rose to $98,624,000 in Q4 2024, compared to $98,491,000 in Q3 2024[47] Strategic Initiatives - CEO noted an uptick in loan growth in the fourth quarter and a focus on enhancing yield through opportunistic purchases[6] - The company aims to grow earning assets and reduce funding costs in response to the changing interest rate environment[6] - The Company opened a new banking center in Knoxville, Tennessee, and commenced renovation of a center in Daphne, Alabama, expected to open in 2025[22] - The company continues to focus on maintaining a strong capital position while exploring new market opportunities and product innovations[47]

Core Insights - First US Bancshares, Inc. reported a net income of $1.7 million for the fourth quarter of 2024, a decrease from $2.2 million in the previous quarter and $2.3 million in the same quarter of 2023. For the full year 2024, net income totaled $8.2 million, slightly down from $8.5 million in 2023 [1][3][4] Financial Performance - **Net Income and Earnings Per Share**: The diluted earnings per share for 4Q2024 was $0.29, down from $0.36 in both 3Q2024 and 4Q2023. For the full year, diluted earnings per share remained stable at $1.33 [1][3] - **Interest Income and Expense**: Interest income for 4Q2024 was $14.42 million, while interest expense was $5.67 million, leading to a net interest income of $8.75 million. This represents a decrease from $9.11 million in 4Q2023 [3][8] - **Net Interest Margin**: The net interest margin for 4Q2024 was 3.41%, down from 3.67% in 4Q2023, primarily due to reductions in the federal funds rate and market interest rates [8][24] Loan and Deposit Trends - **Loan Growth**: Total loans increased by $19.7 million, or 2.5%, in 4Q2024, driven by growth in construction, consumer indirect, and commercial real estate lending. For the full year, total loans increased by $1.2 million, or 0.2% [7][11] - **Deposits**: Total deposits decreased by $8.6 million, or 0.9%, in 4Q2024, mainly due to the payoff of $10 million in callable wholesale brokered time deposits. Core deposits increased to $837.7 million, representing 86.1% of total deposits [9][27] Asset Quality and Provisions - **Provision for Credit Losses**: The company recorded a provision for credit losses of $0.5 million in 4Q2024, compared to a recovery of $0.4 million in 4Q2023. The allowance for credit losses as a percentage of total loans was 1.24% as of December 31, 2024 [11][12] - **Nonperforming Assets**: Nonperforming assets increased to $5.4 million, or 0.50% of total assets, as of December 31, 2024, compared to $3.0 million, or 0.28%, in the previous year [12] Shareholder Returns and Equity - **Dividends**: The company increased its cash dividend to $0.07 per share in 4Q2024, up from $0.05 in previous quarters. For the full year, cash dividends totaled $0.22 per share [16] - **Share Repurchases**: In 4Q2024, the company repurchased 40,000 shares at an average price of $12.68 per share, with a total of 146,500 shares repurchased for the year [17] - **Shareholders' Equity**: As of December 31, 2024, shareholders' equity was $98.6 million, or 8.96% of total assets, an increase from $90.6 million, or 8.44%, in 2023 [15][28] Strategic Initiatives - **Banking Center Growth**: The company opened a new banking center in Knoxville, Tennessee, and began renovations on another center in Daphne, Alabama, expected to open in 2025 [20]

Core Viewpoint - First US Bancshares, Inc. has expanded its share repurchase program, authorizing an additional 600,000 shares for repurchase and extending the program's expiration to December 31, 2025 [1] Share Repurchase Program - The company has repurchased a total of 1,289,972 shares to date, with 352,813 shares remaining available for repurchase [1] - The repurchase program was originally approved on January 19, 2006 [1] - Repurchases may occur through various methods, including open market transactions and privately negotiated transactions, subject to regulatory requirements [2] Company Overview - First US Bancshares, Inc. operates banking offices in Alabama, Tennessee, and Virginia through First US Bank [3] - The company's stock is traded on the Nasdaq Capital Market under the symbol "FUSB" [3]