First US Bancshares(US:FUSB)2024-08-09 16:58Financial Performance - The Company reported net income of $2.1 million, or $0.34 per diluted common share, for the three months ended June 30, 2024, compared to $2.0 million, or $0.31 per diluted common share, for the same period in 2023, reflecting a 5% increase in net income year-over-year [143]. - Net interest income decreased by $0.5 million, or 2.9%, for the six months ended June 30, 2024, compared to the same period in 2023, due to net interest margin compression [145]. - The Company declared cash dividends of $0.10 per share during both the six months ended June 30, 2024 and 2023 [153]. - Non-interest income increased by $72 thousand for the six months ended June 30, 2024, totaling $1.7 million compared to $1.628 million in 2023 [166]. - Total non-interest expense remained stable at $14.4 million for both the six months ended June 30, 2024 and 2023, despite increases in occupancy and professional services expenses [167]. - The provision for income taxes was $1.3 million for both periods, with effective tax rates of 23.0% in 2024 and 24.1% in 2023 [168]. Asset and Loan Management - Total assets increased by 1.0% to $1,083.3 million as of June 30, 2024, compared to $1,072.9 million as of December 31, 2023 [147]. - Total loans decreased by $2.7 million, or 0.3%, as of June 30, 2024, compared to December 31, 2023, indicating a slowdown in loan demand [148]. - The total loan portfolio decreased by $2.7 million, or 0.3%, to $819.1 million as of June 30, 2024, compared to $822.9 million as of December 31, 2023 [174]. - Loans maturing or repricing in one year or less amounted to $248.8 million as of June 30, 2024, compared to $241.2 million as of December 31, 2023 [183]. Credit Quality - Nonperforming assets totaled $2.9 million, or 0.27% of total assets, as of June 30, 2024, a slight improvement from $3.0 million, or 0.28%, as of December 31, 2023 [149]. - The allowance for credit losses on loans and leases was 1.25% of total loans as of June 30, 2024, down from 1.28% as of December 31, 2023 [146]. - No provision for credit losses was recorded for the six months ended June 30, 2024, compared to a provision of $0.6 million for the same period in 2023 [164]. - Net charge-offs were consistent at $0.4 million for the six months ended June 30, 2024, compared to $0.5 million in the prior year [165]. - The net charge-offs for the quarter were $209,000, with a net charge-off percentage of 0.10% of average loans [176]. Deposits and Funding - Deposits increased to $954.5 million as of June 30, 2024, up from $950.2 million as of December 31, 2023, primarily due to increased interest-bearing time deposits [150]. - Total deposits as of June 30, 2024, were $948,634, with interest-bearing deposits totaling $798,254 and a total funding cost of $963,326 [160]. - Core deposits totaled $813.4 million, or 85.2% of total deposits, as of June 30, 2024, compared to $819.5 million, or 86.2% of total deposits, as of December 31, 2023 [180]. - Estimated uninsured deposits totaled $206.7 million, or 21.6% of total deposits, as of June 30, 2024, compared to $200.3 million, or 21.1% of total deposits, as of December 31, 2023 [192]. - Total readily available liquidity was $370.6 million as of June 30, 2024, compared to $375.3 million as of December 31, 2023 [189]. Capital and Equity - Shareholders' equity increased by $3.2 million, or 3.6%, as of June 30, 2024, compared to December 31, 2023, primarily driven by earnings net of dividends paid [152]. - Shareholders' equity totaled $93.8 million, or 8.7% of total assets, as of June 30, 2024, compared to $90.6 million, or 8.4% of total assets, as of December 31, 2023 [182]. - As of June 30, 2024, the Bank's common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.28%, with a total capital ratio of 12.47% and a Tier 1 leverage ratio of 9.46% [154]. Investment Portfolio - As of June 30, 2024, the total investment portfolio included available-for-sale securities totaling $144.0 million, representing 99.4% of the portfolio, an increase from $135.6 million (99.2%) as of December 31, 2023 [171]. - The gross unrealized losses in the available-for-sale portfolio decreased to $9.5 million as of June 30, 2024, from $10.1 million as of December 31, 2023 [173]. - Held-to-maturity securities amounted to $0.9 million, or 0.6% of the total investment portfolio, down from $1.1 million (0.8%) as of December 31, 2023 [172]. - The expected average life of securities in the investment portfolio was 4.3 years as of June 30, 2024, compared to 3.9 years as of December 31, 2023 [170]. - The investment securities portfolio had an estimated average life of 4.3 years as of June 30, 2024, compared to 3.9 years as of December 31, 2023 [184]. Strategic Initiatives - During Q2 2024, the Company opened a new banking center in Knoxville, Tennessee, and commenced renovation of a banking center in Daphne, Alabama, expected to open in early 2025 [155]. - The Company maintained excess funding capacity sufficient for loan growth, capital expenditures, and ongoing operations, benefiting from a strong core deposit base and a liquid investment securities portfolio [155]. - The Company purchased $50 million in interest rate floors during Q1 2024 to mitigate risk in down rate scenarios [155]. - The company did not purchase any additional derivative contracts during Q2 2024 [198]. Interest Rate Sensitivity - The average change in net interest margin for a +1% interest rate forecast is $849,000 for 1 year and $1,482,000 for 2 years [197]. - For a -1% interest rate forecast, the average change in net interest margin is -$1,075,000 for 1 year and -$1,956,000 for 2 years [197]. - The net interest margin is projected to change by $1,467,000 for a +2% interest rate forecast over 1 year [197]. - A -2% interest rate forecast results in an average change in net interest margin of -$2,235,000 for 1 year [197]. - The company experienced a net interest margin change of $1,824,000 for a +3% interest rate forecast over 1 year [197]. - For a -3% interest rate forecast, the average change in net interest margin is -$3,274,000 for 1 year [197]. - The company reported a cumulative change in net interest income of $1,482,000 for a +1% interest rate forecast over 2 years [197]. - The cumulative change in net interest income for a -2% interest rate forecast is -$4,406,000 for 2 years [197].