First US Bancshares(FUSB) - 2020 Q1 - Quarterly Report

Part I. Financial Information Financial Statements This section presents the unaudited interim condensed consolidated financial statements for Q1 2020, including balance sheets, statements of operations, comprehensive income, changes in shareholders' equity, cash flows, and detailed notes Condensed Consolidated Balance Sheet Highlights (Unaudited) | (In Thousands) | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Assets | $788,565 | $788,738 | | Loans, net | $539,685 | $545,243 | | Total Deposits | $682,595 | $683,662 | | Total Liabilities | $704,233 | $703,990 | | Total Shareholders' Equity | $84,332 | $84,748 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | (In Thousands, Except Per Share Data) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net Interest Income | $8,886 | $9,173 | | Provision for Loan and Lease Losses | $580 | $400 | | Non-interest Income | $1,297 | $1,265 | | Non-interest Expense | $8,494 | $8,453 | | Net Income | $847 | $1,234 | | Diluted Net Income per Share | $0.13 | $0.18 | Interim Condensed Consolidated Balance Sheets Total assets remained stable at approximately $788.6 million in Q1 2020, with slight decreases in net loans, total deposits, and shareholders' equity Interim Condensed Consolidated Statements of Operations Net income for Q1 2020 decreased to $847 thousand from $1.23 million in Q1 2019, primarily due to lower net interest income and increased loan loss provisions Interim Condensed Consolidated Statements of Comprehensive Income Total comprehensive income significantly decreased to $130 thousand in Q1 2020 from $2.08 million in Q1 2019, driven by unrealized losses on cash flow hedge derivatives Interim Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity slightly decreased to $84.3 million in Q1 2020, primarily due to fair value changes in derivatives and treasury stock repurchases, partially offset by net income Interim Condensed Consolidated Statements of Cash Flows Net cash from operations decreased to $1.0 million in Q1 2020, while investing activities used $0.3 million and financing activities used $1.6 million, leading to a $0.9 million net decrease in cash Notes to Interim Condensed Consolidated Financial Statements These notes detail accounting policies, the significant impact of COVID-19 on operations, loan portfolio specifics, credit quality, and responses like loan deferments and PPP participation - The company's operations were significantly impacted by the COVID-19 pandemic, leading to destabilized financial markets and uncertain future performance[28][29] - Over 1,400 borrowers with approximately $114.9 million in principal balance were granted loan deferments by April 30, 2020, in response to COVID-19[75][76] - Certain loan categories totaling $79.7 million (14.5% of the portfolio) were identified as at-risk due to the pandemic, including hotels/motels and dine-in restaurants[77][84] - The company approved 132 loans totaling $13.6 million under the SBA's Paycheck Protection Program (PPP) by April 30, 2020[85] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2020 financial performance, emphasizing the COVID-19 impact, company responses like loan deferments and PPP, and changes in net interest income and loan loss provisions Q1 2020 vs. Q1 2019 Performance Highlights | Metric (in thousands) | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Net Interest Income | $8,886 | $9,173 | | Provision for Loan/Lease Losses | $580 | $400 | | Net Income | $847 | $1,234 | - Net interest income decreased by $0.3 million year-over-year, with net interest margin compressing by 20 basis points to 4.97%[192] - The provision for loan and lease losses increased to $0.6 million from $0.4 million year-over-year, driven by COVID-19 economic impacts[194] - The company implemented its Pandemic Contingency Plan, offering loan deferments to over 1,400 borrowers and funding $13.6 million in PPP loans[183][184][189] - During Q1 2020, the company repurchased 38,604 shares of common stock at a weighted average price of $11.70 per share[208] Quantitative and Qualitative Disclosures About Market Risk This section details the company's market risk management, primarily focusing on interest rate risk using financial simulation models to assess impacts on net interest income and asset/liability values - The company's primary market risk is interest rate risk, managed to maximize net interest income while preserving capital[245] - Financial simulation models are used to measure interest rate exposure, analyzing scenarios including +/- 1% to 4% interest rate shocks[246][249] - Management conducts monthly evaluations of interest rate impacts on short-term net interest margin and long-term profitability over a five-year period[249][250] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting during Q1 2020 - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2020[253] - No material changes occurred in internal control over financial reporting during the quarter ended March 31, 2020[254] Part II. Other Information Legal Proceedings The company is involved in ordinary course litigation, with management believing the outcome will not materially adversely affect financial statements or operations - The company is a party to certain ordinary course litigation and intends to defend itself vigorously[257] - Management believes the outcome of litigation is not expected to have a material adverse effect on financial condition or results of operations[257] Risk Factors This section updates risk factors, focusing on COVID-19 impacts including market volatility, low interest rates, credit deterioration, operational disruptions, and new risks from PPP participation - The COVID-19 global pandemic is a primary risk factor, with its ultimate effect on the business remaining highly uncertain[259] - Key pandemic risks include financial market volatility, low interest rates, increased credit risk from loan deferments, customer financial deterioration, and business disruptions[260][261][262] - Participation in the SBA Paycheck Protection Program (PPP) introduces risks such as potential litigation and the possibility of SBA denying loan guarantees[264][267] [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) This section details Q1 2020 share repurchase activity, with 44,139 shares purchased at an average price of $11.12, and 54,961 shares remaining available under the program Issuer Purchases of Equity Securities (Q1 2020) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | Jan 2020 | 0 | $— | 0 | | Feb 2020 | 20,905 | $11.78 | 20,905 | | Mar 2023 | 23,234 | $10.53 | 17,699 | | Total | 44,139 | $11.12 | 38,604 | - As of March 31, 2020, 54,961 additional shares remained authorized for repurchase under the program expiring December 31, 2020[269] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, and required CEO/CFO certifications - The filing includes key corporate documents, compensation agreements, and required CEO and CFO certifications[270]