First US Bancshares(FUSB) - 2025 Q1 - Quarterly Results

First Quarter 2025 Overview 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 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 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] - The Company maintains a disciplined approach to lending, investing, and funds management to navigate the volatile economic environment[6] Financial Performance Analysis This section analyzes the company's net income, interest income, credit provisions, and operating expenses for the quarter Net Income and Earnings Per Share 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 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] - 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] Provision for Credit Losses 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] Non-Interest Income 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 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] - 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] Financial Position Analysis This section details the company's balance sheet components, including loans, deposits, borrowings, investments, asset quality, and shareholders' equity Loans and Leases 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] - The weighted average credit score of new indirect loans financed during 1Q2025 reached 800, with the entire portfolio averaging 779[8] Deposits 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] Borrowings 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] - As of March 31, 2025, short-term borrowings included $25.0 million from FHLB and $20.0 million from FRB's discount window[13] Investment Securities and Deployment of Funds 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] - 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] Asset Quality 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 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] - 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] Capital and Liquidity Management This section reviews the company's regulatory capital ratios and overall liquidity position, including funding sources and uninsured deposits Regulatory Capital 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] Liquidity 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] - Estimated uninsured deposits totaled $202.6 million, or 21.1% of total deposits, as of March 31, 2025[41] Corporate Actions and Business Development This section outlines recent corporate actions, including dividends, share repurchases, and strategic banking center expansion initiatives Cash Dividend 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 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] - As of March 31, 2025, 872,813 shares remained available for repurchase under the Company's share repurchase program[21] Banking Center Growth 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] - This new location is expected to serve as the Bank's initial deposit gathering facility in the Daphne/Mobile area[24] Company Information and Disclosures This section provides an overview of First US Bancshares, Inc., its operations, and important forward-looking statement disclosures About First US Bancshares, Inc. 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] - 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] Forward-Looking Statements 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] - 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] - 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] Consolidated Financial Statements and Non-GAAP Reconciliations This section presents the company's interim consolidated financial statements and reconciliations of non-GAAP financial measures Net Interest Margin Analysis 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 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 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 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] - 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] Liquidity Measures 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] - Estimated uninsured deposits totaled $202.6 million, or 21.1% of total deposits, as of March 31, 2025[41] Tangible Balances and Measures 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] - 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]