First US Bancshares Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow

10-Q 1 fusb-10q_20200930.htm 10-Q fusb-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐	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: 0-14549

First US Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

63-0843362

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

3291 U.S. Highway 280

Birmingham, AL

35243

(Address of Principal Executive Offices)

(Zip Code)

(205) 582-1200

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FUSB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	Outstanding at November 9, 2020
Common Stock, $0.01 par value	6,176,556 shares

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

		PAGE

PART I. FINANCIAL INFORMATION		4

ITEM 1. FINANCIAL STATEMENTS		4

Interim Condensed Consolidated Balance Sheets at September 30, 2020 (Unaudited) and December 31, 2019		4

Interim Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)		5

Interim Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)		6

Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)		7

Interim Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)		9

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)		10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		41

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		54

ITEM 4. CONTROLS AND PROCEDURES		55

PART II. OTHER INFORMATION		56

ITEM 1. LEGAL PROCEEDINGS		56

ITEM 1A. RISK FACTORS		56

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		58

ITEM 6. EXHIBITS		59

Signature Page		60

FORWARD-LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). In addition, First US Bancshares, Inc. (“Bancshares” and, together with its subsidiaries, the “Company”), through its senior management, from time to time makes forward-looking statements concerning its expected future operations, performance and other developments. The words “estimate,” “project,” “intend,” “anticipate,” “expect,” “believe,” “continues” and similar expressions are indicative of forward-looking statements. Such forward-looking statements are necessarily estimates reflecting the Company’s best judgment based on current information and involve a number of risks and uncertainties, and various factors could cause results to differ materially from those contemplated by such forward-looking statements. Such factors could include those identified from time to time in the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements, including the risk factors described in Part I, Item 1A of the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2019 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. Specifically, with respect to statements relating to the sufficiency of the allowance for loan and lease losses, loan demand, cash flows, interest costs, growth and earnings potential, expansion and the Company’s positioning to handle the challenges presented by COVID-19, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy generally and in the Company’s service areas; market conditions and investment returns; changes in interest rates; the impact of the current COVID-19 pandemic on the Company’s business, the Company’s customers, the communities that the Company serves and the United States economy, including the impact of actions taken by governmental authorities to try to contain the virus or address the impact of the virus on the United States economy (including, without limitation, the Coronavirus Aid, Relief and Economic Security (CARES) Act and subsequent federal legislation) and the resulting effect on the Company’s operations, liquidity and capital position and on the financial condition of the Company’s borrowers and other customers; the pending discontinuation of LIBOR as an interest rate benchmark; the availability of quality loans in the Company’s service areas; the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets; collateral values; cybersecurity threats; and risks related to the Paycheck Protection Program. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

	September 30,			December 31,
	2020			2019
	(Unaudited)
ASSETS
Cash and due from banks	$	14,709		$	11,939
Interest-bearing deposits in banks		50,934			45,091
Total cash and cash equivalents		65,643			57,030
Federal funds sold		86			10,080
Investment securities available-for-sale, at fair value		85,682			94,016
Investment securities held-to-maturity, at amortized cost		7,723			14,340
Federal Home Loan Bank stock, at cost		1,135			1,137
Loans, net of allowance for loan and lease losses of $7,185 and $5,762, respectively		627,605			545,243
Premises and equipment, net of accumulated depreciation of $23,443 and $22,570, respectively		28,337			29,216
Cash surrender value of bank-owned life insurance		15,771			15,546
Accrued interest receivable		2,883			2,488
Goodwill and core deposit intangible, net		8,502			8,825
Other real estate owned		985			1,078
Other assets		8,589			9,739
Total assets	$	852,941		$	788,738
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	152,942		$	112,729
Interest-bearing		592,394			570,933
Total deposits		745,336			683,662
Accrued interest expense		365			537
Other liabilities		11,537			9,766
Short-term borrowings		10,045			10,025
Total liabilities		767,283			703,990
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,596,351 and 7,568,053 shares issued, respectively; 6,176,556 and 6,157,692 shares outstanding, respectively		75			75
Additional paid-in capital		13,680			13,814
Accumulated other comprehensive loss, net of tax		(106	)		(46	)
Retained earnings		93,862			92,755
Less treasury stock: 1,419,795 and 1,410,361 shares at cost, respectively		(21,853	)		(21,850	)
Total shareholders’ equity		85,658			84,748
Total liabilities and shareholders’ equity	$	852,941		$	788,738

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Unaudited)				(Unaudited)
Interest income:
Interest and fees on loans	$	9,557	$	10,114	$	28,433	$	29,620
Interest on investment securities		439		913		1,740		3,143
Total interest income		9,996		11,027		30,173		32,763
Interest expense:
Interest on deposits		994		1,622		3,600		4,952
Interest on borrowings		37		58		99		58
Total interest expense		1,031		1,680		3,699		5,010
Net interest income		8,965		9,347		26,474		27,753
Provision for loan and lease losses		1,046		883		2,476		1,998
Net interest income after provision for loan and lease losses		7,919		8,464		23,998		25,755
Non-interest income:
Service and other charges on deposit accounts		298		472		995		1,375
Credit insurance income		54		175		252		426
Net gain on sales and prepayments of investment securities		—		45		326		67
Mortgage fees from secondary market		196		91		499		380
Lease income		206		212		630		633
Other income, net		621		419		1,300		1,089
Total non-interest income		1,375		1,414		4,002		3,970
Non-interest expense:
Salaries and employee benefits		5,138		5,089		15,467		15,272
Net occupancy and equipment		1,078		1,055		3,074		3,190
Computer services		470		421		1,311		1,105
Fees for professional services		325		316		1,004		879
Other expense		1,736		1,665		4,966		5,057
Total non-interest expense		8,747		8,546		25,822		25,503

Income before income taxes		547		1,332		2,178		4,222
Provision for income taxes		136		214		516		865
Net income	$	411	$	1,118	$	1,662	$	3,357
Basic net income per share	$	0.07	$	0.17	$	0.27	$	0.52
Diluted net income per share	$	0.06	$	0.16	$	0.25	$	0.49
Dividends per share	$	0.03	$	0.02	$	0.09	$	0.06

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
	(Unaudited)						(Unaudited)
Net income	$	411		$	1,118		$	1,662		$	3,357
Other comprehensive income (loss):
Unrealized holding gains on securities available-for-sale arising during period, net of tax expense (benefit) of $(2), $40, $548 and $726, respectively		(6	)		122			1,647			2,178
Reclassification adjustment for net gains on securities available-for -sale realized in net income, net of tax of $0, $11, $81 and $16, respectively		—			(34	)		(245	)		(51	)
Unrealized holding losses arising during the period on effective cash flow hedge derivatives, net of tax expense (benefit) of $15, $(108), $(488) and $(108), respectively		45			(323	)		(1,462	)		(323	)
Other comprehensive income (loss)		39			(235	)		(60	)		1,804
Total comprehensive income	$	450		$	883		$	1,602		$	5,161

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in Thousands, Except Share and Per Share Data)

For the three months ended September 30, 2020 and 2019 (Unaudited)

	Common Stock Shares Outstanding			Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock, at Cost			Total Shareholders’ Equity
Balance, June 30, 2019		6,306,161		$	75	$	13,646		$	(338	)	$	90,737		$	(20,372	)	$	83,748
Net income		—			—		—			—			1,118			—			1,118
Net change in fair value of securities available-for-sale, net of tax		—			—		—			88			—			—			88
Net change in fair value of derivative instruments, net of tax		—			—		—			(323	)		—			—			(323	)
Dividends declared: $.02 per share		—			—		—			—			(124	)		—			(124	)
Impact of stock-based compensation plans, net		269			—		84			—			—			—			84
Treasury stock repurchases		(84,200	)		—		—			—			—			(801	)		(801	)
Balance, September 30, 2019		6,222,230		$	75	$	13,730		$	(573	)	$	91,731		$	(21,173	)	$	83,790

Balance, June 30, 2020		6,176,433		$	75	$	13,573		$	(145	)	$	93,636		$	(21,858	)	$	85,281
Net income		—			—		—			—			411			—			411
Net change in fair value of securities available-for-sale, net of tax		—			—		—			(6	)		—			—			(6	)
Net change in fair value of derivative instruments, net of tax		—			—		—			45			—			—			45
Dividends declared: $.03 per share		—			—		—			—			(185	)		—			(185	)
Impact of stock-based compensation plans, net		(200	)		—		112			—			—			—			112
Reissuance of treasury stock as compensation		323			—		(5	)		—			—			5			—
Balance, September 30, 2020		6,176,556		$	75	$	13,680		$	(106	)	$	93,862		$	(21,853	)	$	85,658

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in Thousands, Except Share and Per Share Data)

For the nine months ended September 30, 2020 and 2019 (Unaudited)

	Common Stock Shares Outstanding			Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock, at Cost			Non- controlling Interest			Total Shareholders’ Equity
Balance, January 1, 2019		6,298,062		$	75	$	13,496		$	(2,377	)	$	88,668		$	(20,414	)	$	(11	)	$	79,437
Net income		—			—		—			—			3,357			—			—			3,357
Net change in fair value of securities available-for-sale, net of tax		—			—		—			2,127			—			—			—			2,127
Net change in fair value of derivative instruments, net of tax		—			—		—			(323	)		—			—			—			(323	)
Dividends declared: $.06 per share		—			—		—			—			(377	)		—			—			(377	)
Impact of stock-based compensation plans, net		5,789			—		276			—			—			—			—			276
Reissuance of treasury stock as compensation		2,579			—		(42	)		—			—			42			—			—
Treasury stock repurchases		(84,200	)		—		—			—			—			(801	)		—			(801	)
Discontinuation of partnership consolidation		—			—		—			—			83			—			11			94
Balance, September 30, 2019		6,222,230		$	75	$	13,730		$	(573	)	$	91,731		$	(21,173	)	$	—		$	83,790

Balance, January 1, 2020		6,157,692		$	75	$	13,814		$	(46	)	$	92,755		$	(21,850	)	$	—		$	84,748
Net income		—			—		—			—			1,662			—			—			1,662
Net change in fair value of securities available-for-sale, net of tax		—			—		—			1,402			—			—			—			1,402
Net change in fair value of derivative instruments, net of tax		—			—		—			(1,462	)		—			—			—			(1,462	)
Dividends declared: $.09 per share		—			—		—			—			(555	)		—			—			(555	)
Impact of stock-based compensation plans, net		28,298

Price	10.00	EPS	1
Shares	7	P/E	14
MCap	68	P/FCF	8
Net Debt	-35	EBIT	13
TEV	33	TEV/EBIT	3
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-11-10
10-Q	2020-06-30	Filed 2020-08-12
10-Q	2020-03-31	Filed 2020-05-14
10-K	2019-12-31	Filed 2020-03-18
10-Q	2019-09-30	Filed 2019-11-06
10-Q	2019-06-30	Filed 2019-08-07
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-03-15
10-Q	2018-09-30	Filed 2018-11-13
10-Q	2018-05-07	Filed 2018-08-08
10-Q	2018-03-31	Filed 2018-05-04
10-K	2017-12-31	Filed 2018-03-15
10-Q	2017-09-30	Filed 2017-11-08
10-Q	2017-06-30	Filed 2017-08-09
10-Q	2017-03-31	Filed 2017-05-05
10-K	2016-12-31	Filed 2017-03-15
10-Q	2016-09-30	Filed 2016-11-09
10-Q	2016-06-30	Filed 2016-08-10
10-Q	2016-03-31	Filed 2016-05-12
10-K	2015-12-31	Filed 2016-03-11
10-Q	2015-09-30	Filed 2015-11-13
10-Q	2015-06-30	Filed 2015-08-13
10-Q	2015-03-31	Filed 2015-05-14
10-K	2014-12-31	Filed 2015-03-12
10-Q	2014-09-30	Filed 2014-11-13
10-Q	2014-06-30	Filed 2014-08-13
10-Q	2014-03-31	Filed 2014-05-14
10-K	2013-12-31	Filed 2014-03-21
10-Q	2013-09-30	Filed 2013-11-13
10-Q	2013-06-30	Filed 2013-08-14
10-Q	2013-03-31	Filed 2013-05-10
10-K	2012-12-31	Filed 2013-03-28
10-Q	2012-09-30	Filed 2012-11-13
10-Q	2012-06-30	Filed 2012-08-10
10-Q	2012-03-31	Filed 2012-05-11
10-K	2011-12-31	Filed 2012-03-30
10-Q	2011-09-30	Filed 2011-11-14
10-Q	2011-06-30	Filed 2011-08-12
10-Q	2011-03-31	Filed 2011-05-23
10-K	2010-12-31	Filed 2011-03-15
10-Q	2010-09-30	Filed 2010-11-08
10-Q	2010-06-30	Filed 2010-08-09
10-Q	2010-03-31	Filed 2010-05-10
10-K	2009-12-31	Filed 2010-03-15

8-K	2020-11-18	Regulation FD, Exhibits
8-K	2020-10-30	Earnings, Exhibits
8-K	2020-08-07	Regulation FD, Exhibits
8-K	2020-07-29	Earnings, Exhibits
8-K	2020-05-29
8-K	2020-05-04
8-K	2020-04-30
8-K	2020-02-26
8-K	2020-01-28
8-K	2020-01-27
8-K	2019-10-28
8-K	2019-09-03
8-K	2019-07-29
8-K	2019-07-09
8-K	2019-05-02
8-K	2019-05-02
8-K	2019-04-29
8-K	2019-01-29
8-K	2019-01-28
8-K	2018-11-06
8-K	2018-08-31
8-K	2018-08-16
8-K	2018-08-13
8-K	2018-07-30
8-K	2018-04-27
8-K	2018-04-25
8-K	2018-04-16
8-K	2018-01-30

EX-31.1	fusb-ex311_7.htm
EX-31.2	fusb-ex312_8.htm
EX-32	fusb-ex32_9.htm

FUSB 10Q Quarterly Report

First US Bancshares Earnings 2020-09-30