Reports 45.9% Year-to-Date Earnings Growth Driven by Continued Expense Reduction

BIRMINGHAM, Ala., July 27, 2022 /PRNewswire/ -- First US Bancshares, Inc. (NASDAQ:FUSB) (the "Company"), the parent company of First US Bank (the "Bank"), today reported net income of $1.4 million, or $0.22 per diluted share, for the quarter ended June 30, 2022 ("2Q2022"), compared to $1.0 million, or $0.14 per diluted share, for the quarter ended June 30, 2021 ("2Q2021") and $1.4 million, or $0.20 per diluted share, for the quarter ended March 31, 2022 ("1Q2022"). Net income totaled $2.8 million for the six months ended June 30, 2022, compared to $1.9 million for the six months ended June 30, 2021, an increase of 45.9%. Diluted earnings per share totaled $0.42 for the six months ended June 30, 2022, compared to $0.28 per diluted share during the corresponding period of 2021.

Earnings improvement, comparing both 2Q2022 and the first six months of 2022 to corresponding periods in 2021, was driven primarily by reductions in non-interest expense following strategic initiatives that were initiated by the Company beginning in the third quarter of 2021. The strategic initiatives included the cessation of new business development at the Bank's wholly owned subsidiary, Acceptance Loan Company, Inc. ("ALC"), as well as efforts to reorganize the Bank's retail banking, technology and deposit operations functions. Due to these efforts, non-interest expense was reduced by $1.5 million, or 18.1%, comparing 2Q2022 to 2Q2021 and by $2.9 million, or 17.0%, comparing the six months ended June 30, 2022, to the six months ended June 30, 2021. Comparing 2Q2022 to 1Q2022, non-interest expense decreased by $0.2 million, or 2.5%.

"We are pleased to post a solid quarter of growth in loans and earnings per share," stated James F. House, the Company's President and CEO. "Our strategic focus on business simplification has been transformative for our Company. This emphasis, combined with a focus on loan and deposit pricing discipline and cost control, have led to solid improvement in operating efficiencies over the last three quarters. In addition, our continued focus on credit quality in our lending practices has further strengthened our balance sheet. Though a heightened level of economic and geopolitical concern certainly exists, we believe our Company is well-prepared to weather future challenges as they are presented," continued Mr. House.

Other Second Quarter Financial Highlights

Loan Growth – The table below summarizes loan balances by portfolio category at the end of each of the most recent five quarters as of June 30, 2022.

	Quarter Ended
	2022				2021
	June 30,		March 31,		December 31,		September 30,		June 30,
	(Dollars in Thousands)
	(Unaudited)		(Unaudited)				(Unaudited)		(Unaudited)
Real estate loans:
Construction, land development and other land loans	$	40,625	$	52,817	$	67,048	$	58,175	$	53,425
Secured by 1-4 family residential properties		69,098		69,760		72,727		73,112		78,815
Secured by multi-family residential properties		66,848		50,796		46,000		51,420		53,811
Secured by non-farm, non-residential properties		187,041		177,752		197,901		198,745		191,398
Commercial and industrial loans		65,792		67,455		72,286		73,777		65,772
Paycheck Protection Program ("PPP") loans		116		643		1,661		3,902		11,587
Consumer loans:
Direct consumer		15,419		18,023		21,689		25,845		26,937
Branch retail		18,634		21,891		25,692		29,764		31,688
Indirect sales		252,206		220,931		205,940		194,154		176,116
Total loans	$	715,779	$	680,068	$	710,944	$	708,894	$	689,549
Less unearned interest, fees and deferred costs		1,142		1,738		2,594		3,729		4,067
Allowance for loan and lease losses		8,751		8,484		8,320		8,193		7,726
Net loans	$	705,886	$	669,846	$	700,030	$	696,972	$	677,756

The Company's total loan portfolio increased by $35.7 million, or 5.3%, during 2Q2022. Loan volume increases were due to growth in the Bank's indirect, multi-family residential and commercial real estate (secured by non-farm, non-residential properties) categories. Growth in these categories was consistent with continued growth in consumer spending and robust economic activity, particularly in the larger metropolitan markets the Bank serves. Loan growth was partially offset by decreases in the construction, commercial and industrial, direct consumer, and branch retail categories. The decreases in direct consumer and branch retail loans were consistent with management's expectations related to the Company's business cessation strategy at ALC. As of June 30, 2022, loans totaled $715.8 million, an increase of $4.8 million, or 0.7%, since December 31, 2021.

Net Interest Income and Margin – Net interest income totaled $8.8 million in 2Q2022, compared to $9.3 million in 2Q2021 and $8.7 million in 1Q2022. For the six months ended June 30, 2022, net interest income totaled $17.5 million, compared to $18.4 million for the six months ended June 30, 2021. Compared to both prior periods, the decrease in net interest income was primarily attributable to reductions in interest and fees on ALC loans in connection with the ALC cessation of business strategy. Interest and fees on ALC loans decreased in 2Q2022 by $1.0 million, compared to 2Q2021, and by $1.9 million comparing the six months ended June 30, 2022 to the corresponding period of 2021. The decreases were partially offset by interest income in the Bank's other earning asset categories, which increased by $0.5 million on a net basis, comparing 2Q2022 to 2Q2021, and by $0.9 million, comparing the six months ended June 30, 2022 to the six months ended June 30, 2021. As ALC's loan portfolio continues to pay down, there will be continued reduction in interest and fees attributable to ALC's loans. These reductions are expected to continue to put downward pressure on total loan yield and net interest margin. As a result of the changing mix of earning assets, the Company's net interest margin was reduced to 3.91% in 2Q2022, compared to 4.31% in 2Q2021. For the six months ended June 30, 2022, net interest margin was 3.94%, compared to 4.35% for the six months ended June 30, 2021. Though net interest income and margin are expected to decrease as a result of the cessation of business strategy at ALC, significant expense savings have developed, or are expected to develop, as a result of the strategy. Historically, ALC's loan portfolio has represented both the Company's highest yielding loans, as well as the portfolio with the highest level of credit losses. Accordingly, while interest earned on these loans is expected to decrease over time, loan loss provision expense is also expected to decrease after the portfolio pays down. As the pay down continues, management is continuing efforts to grow earning assets in the Bank's other loan and investment categories, while at the same time maintaining pricing discipline on deposit and borrowing costs. As part of its overall interest rate risk management program, the Company has entered into forward interest rate swap contracts on certain variable rate deposit products and borrowings. During 2Q2022, the Company terminated one interest rate swap associated with a Federal Home Loan Bank borrowing and recorded a deferred gain associated with the termination of $0.3 million. The gain will be recognized over the remaining 27-month term of the original swap agreement.

Deposit Growth and Deployment of Funds – Deposits totaled $844.3 million as of June 30, 2022, compared to $838.1 million as of December 31, 2021, an increase of $6.2 million, or 0.7%. In the current environment, management has continued to focus on minimizing deposit expense and deploying excess cash balances into earning assets that meet the Company's established credit standards, while maintaining appropriate levels of liquidity to meet projected funding needs. Total average funding costs, including both interest- and noninterest-bearing liabilities and borrowings, was 0.32% in both 2Q2022 and 1Q2022, compared to 0.36% in 2Q2021. For the six months ended June 30, 2022, average funding costs totaled 0.32%, compared to 0.37% during the corresponding period of 2021. Given the increasing interest rate environment, management continued to deploy a portion of excess funds into the investment securities portfolio during 2Q2022. Investment securities, including both the available-for-sale and held-to-maturity portfolios totaled $152.5 million as of June 30, 2022, compared to $137.7 million as of March 31, 2022 and $134.3 million as of December 31, 2021. The expected average life of securities in the investment portfolio as of June 30, 2022 was 3.40 years. Management maintains the portfolio with average durations that are expected to provide monthly cash flows that can be utilized to reinvest in earning assets at current market rates.

Loan Loss Provision – Loan loss provisions totaled $0.9 million in 2Q2022, compared to $0.5 million in 2Q2021. For the six months ended June 30, 2022, loan loss provisions totaled $1.6 million, compared to $0.9 million for the six months ended June 30, 2021. The increase in provision expense comparing both the quarter and six months ended June 30, 2022 to the corresponding periods of 2021 reflected both an increase in charge-offs associated with ALC's loan portfolio, as well as qualitative adjustments applied to the portfolio in response to heightened inflationary trends and other economic uncertainties that have emerged in 2022. In management's view, the combination of the business cessation strategy, coupled with deteriorating economic conditions, including elevated inflation levels, has increased overall credit risk during 2022, particularly in ALC's loan portfolio. Loan loss provisions recorded by the Company during the first six months of 2022 included expense of $1.3 million associated with ALC's loans and $0.3 million associated with the Bank's portfolio. While loan loss provisions at ALC resulted primarily from increased charge-offs and heightened economic risk factors, provisions at the Bank resulted primarily from loan growth. Management will continue to closely monitor the impact of changing economic circumstances on the Company's loan portfolio and will adjust the allowance accordingly. Due to its classification as a smaller reporting company by the Securities and Exchange Commission, the Company is not required to adopt the Current Expected Credit Loss (CECL) model to account for credit losses until January 1, 2023. Management is continuing to evaluate the impact that the adoption of CECL will have on the Company's financial statements.

Non-interest Income – Non-interest income totaled $0.9 million in 2Q2022, compared to $0.8 million in both 2Q2021 and 1Q2022. For the six months ended June 30, 2022, non-interest income totaled $1.7 million, compared to $1.8 million for the corresponding period of 2021.

Non-interest Expense – Non-interest expense totaled $6.9 million in 2Q2022, compared to $8.4 million in 2Q2021 and $7.1 million in 1Q2022. For the six months ended June 30, 2022, non-interest expense totaled $13.9 million, compared to $16.8 million for the six months ended June 30, 2021. The ongoing expense decreases in 2022 have resulted primarily from implementation of the ALC strategy, as well as other efficiency efforts conducted by the Bank. As a result of these efforts, significant expense reductions were realized associated with salaries and employee benefits, occupancy and equipment, and other expenses associated with technology and professional services. As of June 30, 2022, the Company had 156 full-time equivalent employees, compared to 175 as of December 31, 2021, and 259 as of June 30, 2021. Non-interest expense during the six months ended June 30, 2022 was further reduced by $0.3 million in nonrecurring net gains on the sale of other real estate owned (OREO).

Asset Quality – The Company's nonperforming assets, including loans in non-accrual status and OREO, totaled $1.7 million as of June 30, 2022, compared to $4.2 million as of December 31, 2021. The reduction in nonperforming assets during the first six months of 2022 resulted from the sale of OREO properties during the period. Reductions in OREO totaled $1.9 million and included the sale of banking centers that were closed in 2021. As a percentage of total assets, non-performing assets totaled 0.18% as of June 30, 2022, compared to 0.43% as of December 31, 2021.

Shareholders' Equity – As of June 30, 2022, shareholders' equity totaled $82.6 million, compared to $90.1 million as of December 31, 2021. The decrease in shareholders' equity resulted from reductions in accumulated other comprehensive income due to declines in the market value of the Company's available-for-sale investment portfolio, as well as repurchases of shares of the Company's common stock during the first six months of 2022. The market value declines in investment securities available-for-sale were the direct result of the increasing interest rate environment in 2022. No other-than-temporary impairment was recognized in the portfolio, and the Company has both the intent and ability to retain the investments for a period of time sufficient to allow for the full recovery of all market value decreases. The market value decrease in available-for-sale securities was partially offset by an increase in the market value of cash flow derivative instruments that hedge certain deposits and borrowings on the Company's balance sheet.

Share Repurchases - During 2Q2022, the Company completed share repurchases totaling 260,800 shares of its common stock at a weighted average price of $11.01 per share. For the six months ended June 30, 2022, the Company repurchased a total of 348,400 shares of its common stock at a weighted average price per share of $10.99. The repurchases were completed under the Company's existing share repurchase program, which was amended in April 2021 to allow for the repurchase of additional shares through December 31, 2022. As of June 30, 2022, 660,813 shares remained available for repurchase under the program.

Cash Dividend – The Company declared a cash dividend of $0.03 per share on its common stock in 2Q2022. The dividend was consistent with dividends paid during 1Q2022 and all four quarters of 2021.

Regulatory Capital –During 2Q2022, the Bank continued to maintain capital ratios at higher levels than required to be considered a "well-capitalized" institution under applicable banking regulations. As of June 30, 2022, the Bank's common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.45%. Its total capital ratio was 12.56%, and its Tier 1 leverage ratio was 9.33%.

Liquidity – As of June 30, 2022, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations. The Company benefits from a strong core deposit base, a liquid investment securities portfolio and access to funding from a variety of sources, including federal funds lines, Federal Home Loan Bank advances and brokered deposits.

About First US Bancshares, Inc.

First US Bancshares, Inc. (the "Company") is a bank holding company that operates banking offices in Alabama, Tennessee, and Virginia through First US Bank (the "Bank"). In addition, the Company's operations include Acceptance Loan Company, Inc. ("ALC"), a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank's and ALC's consumer loan customers. The Company files periodic reports with the U.S. Securities and Exchange Commission (the "SEC"). Copies of its filings may be obtained through the SEC's website at www.sec.gov or at www.firstusbank.com. More information about the Company and the Bank may be obtained at www.firstusbank.com. The Company's stock is traded on the Nasdaq Capital Market under the symbol "FUSB."

Forward-Looking Statements

This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. The Company undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, the Company, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of the Company's senior management based upon current information and involve a number of risks and uncertainties.

Certain factors that could affect the accuracy of such forward-looking statements and cause actual results to differ materially from those projected in such forward-looking statements are identified in the public filings made by the Company with the SEC, and forward-looking statements contained in this press release or in other public statements of the Company or its senior management should be considered in light of those factors. Such factors may include the rate of growth (or lack thereof) in the economy generally and in the Company's service areas; 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 and protect against it, through vaccinations and otherwise, 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 impact of changing accounting standards and tax laws on the Company's allowance for loan losses and financial results; the impact of national and local market conditions on the Company's business and operations; strong competition in the banking industry; the impact of changes in interest rates and monetary policy on the Company's performance and financial condition; the pending discontinuation of LIBOR as an interest rate benchmark; the impact of technological changes in the banking and financial service industries and potential information system failures; cybersecurity and data privacy threats; the costs of complying with extensive governmental regulation; the possibility that acquisitions may not produce anticipated results and result in unforeseen integration difficulties; and other risk factors described from time to time in the Company's public filings, including, but not limited to, the Company's most recent Annual Report on Form 10-K. Relative to the Company's dividend policy, the payment of cash dividends is subject to the discretion of the Board of Directors and will be determined in light of then-current conditions, including the Company's earnings, leverage, operations, financial conditions, capital requirements and other factors deemed relevant by the Board of Directors. In the future, the Board of Directors may change the Company's dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA – LINKED QUARTERS (Dollars in Thousands, Except Per Share Data) (Unaudited)

	Quarter Ended															Six Months Ended
	2022						2021									2022				2021
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,				June 30,
Results of Operations:
Interest income	$	9,525		$	9,381		$	9,987		$	10,030		$	10,059		$	18,906			$	19,904
Interest expense		699			672			727			695			747			1,371		—		1,528
Net interest income		8,826			8,709			9,260			9,335			9,312			17,535		—		18,376
Provision for loan and lease losses		895			721			493			618			498			1,616				899
Net interest income after provision for loan and lease losses		7,931			7,988			8,767			8,717			8,814			15,919				17,477
Non-interest income		856			829			865			896			809			1,685				1,760
Non-interest expense		6,878			7,056			7,414			8,547			8,399			13,934				16,795
Income before income taxes		1,909			1,761			2,218			1,066			1,224			3,670				2,442
Provision for income taxes		494			400			507			229			271			894				539
Net income	$	1,415		$	1,361		$	1,711		$	837		$	953		$	2,776			$	1,903
Per Share Data:
Basic net income per share	$	0.23		$	0.22		$	0.27		$	0.13		$	0.15		$	0.45			$	0.30
Diluted net income per share	$	0.22		$	0.20		$	0.25		$	0.13		$	0.14		$	0.42			$	0.28
Dividends declared	$	0.03		$	0.03		$	0.03		$	0.03		$	0.03		$	0.06			$	0.06
Key Measures (Period End):
Total assets	$	955,385		$	968,646		$	958,302		$	956,734		$	946,946
Tangible assets ⁽¹⁾		947,462			960,650			950,233			948,592			938,719
Loans, net of allowance for loan losses		705,886			669,846			700,030			696,972			677,756
Allowance for loan and lease losses		8,751			8,484			8,320			8,193			7,726
Investment securities, net		152,536			137,736			134,319			121,467			123,583
Total deposits		844,296			853,117			838,126			846,842			837,885
Short-term borrowings		10,088			10,062			10,046			10,037			10,017
Long-term borrowings		10,690			10,671			10,653			-			-
Total shareholders' equity		82,576			87,807			90,064			89,597			88,778
Tangible common equity ⁽¹⁾		74,653			79,811			81,995			81,455			80,551
Book value per common share		14.05			14.33			14.59			14.41			14.28
Tangible book value per common share ⁽¹⁾		12.70			13.02			13.28			13.10			12.96
Key Ratios:
Return on average assets (annualized)		0.58	%		0.58	%		0.71	%		0.35	%		0.41	%		0.58	%			0.42	%
Return on average common equity (annualized)		6.55	%		6.17	%		7.54	%		3.71	%		4.32	%		6.36	%			4.36	%
Return on average tangible common equity (annualized) ⁽¹⁾		7.21	%		6.77	%		8.29	%		4.08	%		4.76	%		6.99	%			4.82	%
Net interest margin		3.91	%		3.97	%		4.10	%		4.17	%		4.31	%		3.94	%			4.35	%
Efficiency ratio ⁽²⁾		71.0	%		74.0	%		73.2	%		83.5	%		83.0	%		72.5	%			83.4	%
Net loans to deposits		83.6	%		78.5	%		83.5	%		82.3	%		80.9	%
Net loans to assets		73.9	%		69.2	%		73.0	%		72.8	%		71.6	%
Tangible common equity to tangible assets ⁽¹⁾		7.88	%		8.31	%		8.63	%		8.59	%		8.58	%
Tier 1 leverage ratio ⁽³⁾		9.33	%		9.38	%		9.17	%		8.51	%		8.60	%
Allowance for loan losses as % of loans		1.22	%		1.25	%		1.17	%		1.16	%		1.13	%
Nonperforming assets as % of total assets		0.18	%		0.32	%		0.43	%		0.35	%		0.22	%
Net charge-offs as a percentage of average loans		0.36	%		0.32	%		0.18	%		0.09	%		0.15	%		0.34	%			0.20	%

⁽¹⁾ Refer to Non-GAAP reconciliation of tangible balances and measures beginning on page 10.

⁽²⁾ Efficiency ratio = non-interest expense / (net interest income + non-interest income)

⁽³⁾ First US Bank Tier 1 leverage ratio

FIRST US BANCSHARES, INC. AND SUBSIDIARIES NET INTEREST MARGIN THREE MONTHS ENDED JUNE 30, 2022 AND 2021 (Dollars in Thousands) (Unaudited)

	Three Months Ended							Three Months Ended
	June 30, 2022							June 30, 2021
	Average Balance		Interest		Annualized Yield/ Rate %			Average Balance		Interest		Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans	$	698,696	$	8,742		5.02	%	$	673,676	$	9,668		5.76	%
Taxable investment securities		147,799		663		1.80	%		97,237		344		1.42	%
Tax-exempt investment securities		2,540		11		1.74	%		3,506		16		1.83	%
Federal Home Loan Bank stock		798		8		4.02	%		870		8		3.69	%
Federal funds sold		81		1		4.95	%		83		—		—
Interest-bearing deposits in banks		54,753		100		0.73	%		91,340		23		0.10	%
Total interest-earning assets		904,667		9,525		4.22	%		866,712		10,059		4.66	%

Noninterest-earning assets		66,990							68,237
Total	$	971,657						$	934,949

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
Demand deposits	$	253,887	$	130		0.21	%	$	235,493	$	145		0.25	%
Savings deposits		209,982		210		0.40	%		187,655		148		0.32	%
Time deposits		205,790		244		0.48	%		230,473		412		0.72	%
Total interest-bearing deposits		669,659		584		0.35	%		653,621		705		0.43	%
Noninterest-bearing demand deposits		189,600		—		—			173,842		—		—
Total deposits		859,259		584		0.27	%		827,463		705		0.34	%
Borrowings		17,569		115		2.63	%		10,017		42		1.68	%
Total funding costs		876,828		699		0.32	%		837,480		747		0.36	%

Other noninterest-bearing liabilities		8,179							8,991
Shareholders' equity		86,650							88,478
Total	$	971,657						$	934,949

Net interest income			$	8,826						$	9,312
Net interest margin						3.91	%						4.31	%

FIRST US BANCSHARES, INC. AND SUBSIDIARIES NET INTEREST MARGIN SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (Dollars in Thousands) (Unaudited)

	Six Months Ended							Six Months Ended
	June 30, 2022							June 30, 2021
	Average Balance		Interest		Annualized Yield/ Rate %			Average Balance		Interest		Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans	$	697,701	$	17,589		5.08	%	$	663,338	$	19,158		5.82	%
Taxable investment securities		139,101		1,148		1.66	%		90,233		650		1.45	%
Tax-exempt investment securities		2,655		23		1.75	%		3,514		32		1.84	%
Federal Home Loan Bank stock		839		16		3.85	%		987		17		3.47	%
Federal funds sold		81		1		2.49	%		84		—		—
Interest-bearing deposits in banks		56,297		129		0.46	%		93,311		47		0.10	%
Total interest-earning assets		896,674		18,906		4.25	%		851,467		19,904		4.71	%

Noninterest-earning assets		65,978							68,536
Total	$	962,652						$	920,003

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
Demand deposits	$	252,259	$	256		0.20	%	$	230,351	$	284		0.25	%
Savings deposits		203,535		351		0.35	%		181,202		293		0.33	%
Time deposits		208,245		493		0.48	%		234,544		871		0.75	%
Total interest-bearing deposits		664,039		1,100		0.33	%		646,097		1,448		0.45	%
Noninterest-bearing demand deposits		182,482		—		—			166,566		—		—
Total deposits		846,521		1,100		0.26	%		812,663		1,448		0.36	%
Borrowings		19,133		271		2.86	%		10,017		80		1.61	%
Total funding costs		865,654		1,371		0.32	%		822,680		1,528		0.37	%

Other noninterest-bearing liabilities		8,930							9,353
Shareholders' equity		88,068							87,970
Total	$	962,652						$	920,003

Net interest income			$	17,535						$	18,376
Net interest margin						3.94	%						4.35	%

FIRST US BANCSHARES, INC. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands, Except Per Share Data)

	June 30,		December 31,
	2022		2021
	(Unaudited)
ASSETS
Cash and due from banks	$	10,487	$	10,843
Interest-bearing deposits in banks		23,274		50,401
Total cash and cash equivalents		33,761		61,244
Federal funds sold		80		82
Investment securities available-for-sale, at fair value		150,192		130,883
Investment securities held-to-maturity, at amortized cost		2,344		3,436
Federal Home Loan Bank stock, at cost		884		870
Loans and leases, net of allowance for loan and lease losses of $8,751 and $8,320, respectively		705,886		700,030
Premises and equipment, net of accumulated depreciation of $22,486 and $21,916, respectively		24,786		25,123
Cash surrender value of bank-owned life insurance		16,286		16,141
Accrued interest receivable		2,650		2,556
Goodwill and core deposit intangible, net		7,923		8,069
Other real estate owned		276		2,149
Other assets		10,317		7,719
Total assets	$	955,385	$	958,302

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing	$	179,899	$	174,501
Interest-bearing		664,397		663,625
Total deposits		844,296		838,126
Accrued interest expense		492		224
Other liabilities		7,243		9,189
Short-term borrowings		10,088		10,046
Long-term borrowings		10,690		10,653
Total liabilities		872,809		868,238

Shareholders' equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,679,659 and 7,634,918 shares issued, respectively; 5,876,258 and 6,172,378 shares outstanding, respectively		75		75
Additional paid-in capital		14,263		14,163
Accumulated other comprehensive loss, net of tax		(6,584)		(276)
Retained earnings		100,838		98,428
Less treasury stock: 1,803,401 and 1,462,540 shares at cost, respectively		(26,016)		(22,326)
Total shareholders' equity		82,576		90,064

Total liabilities and shareholders' equity	$	955,385	$	958,302

FIRST US BANCSHARES, INC. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Data) (Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Interest income:
Interest and fees on loans	$	8,742	$	9,668	$	17,589	$	19,158
Interest on investment securities		783		391		1,317		746
Total interest income		9,525		10,059		18,906		19,904

Interest expense:
Interest on deposits		584		705		1,100		1,448
Interest on borrowings		115		42		271		80
Total interest expense		699		747		1,371		1,528

Net interest income		8,826		9,312		17,535		18,376

Provision for loan and lease losses		895		498		1,616		899

Net interest income after provision for loan and lease losses		7,931		8,814		15,919		17,477

Non-interest income:
Service and other charges on deposit accounts		294		240		593		506
Net gain on sales and prepayments of investment securities		—		22		—		22
Lease income		211		202		425		411
Other income, net		351		345		667		821
Total non-interest income		856		809		1,685		1,760

Non-interest expense:
Salaries and employee benefits		4,052		4,992		8,382		9,906
Net occupancy and equipment		841		1,020		1,607		2,059
Computer services		430		485		807		950
Fees for professional services		280		354		548		711
Other expense		1,275		1,548		2,590		3,169
Total non-interest expense		6,878		8,399		13,934		16,795

Income before income taxes		1,909		1,224		3,670		2,442
Provision for income taxes		494		271		894		539
Net income	$	1,415	$	953	$	2,776	$	1,903
Basic net income per share	$	0.23	$	0.15	$	0.45	$	0.30
Diluted net income per share	$	0.22	$	0.14	$	0.42	$	0.28
Dividends per share	$	0.03	$	0.03	$	0.06	$	0.06

Non-GAAP Financial Measures

In addition to the financial results presented in this press release that have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company's management believes that certain non-GAAP financial measures and ratios are beneficial to the reader. These non-GAAP measures have been provided to enhance overall understanding of the Company's current financial performance and position. Management believes that these presentations provide meaningful comparisons of financial performance and position in various periods and can be used as a supplement to the GAAP-based measures presented in this press release. The non-GAAP financial results presented should not be considered a substitute for the GAAP-based results. Management believes that both GAAP measures of the Company's financial performance and the respective non-GAAP measures should be considered together.

The non-GAAP measures and ratios that have been provided in this press release include measures of tangible assets and equity and certain ratios that include tangible assets and equity. Discussion of these measures and ratios is included below, along with reconciliations of such non-GAAP measures to GAAP amounts included in the financial statements previously presented in this press release.

Tangible Balances and Measures

In addition to capital ratios defined by GAAP and banking regulators, the Company utilizes various tangible common equity measures when evaluating capital utilization and adequacy. These measures, which are presented in the financial tables in this press release, may also include calculations of tangible assets. As defined by the Company, tangible common equity represents shareholders' equity less goodwill and identifiable intangible assets, while tangible assets represent total assets less goodwill and identifiable intangible assets.

Management believes that the measures of tangible equity are important because they reflect the level of capital available to withstand unexpected market conditions. In addition, presentation of these measures allows readers to compare certain aspects of the Company's capitalization to other organizations. In management's experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets that typically result from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these measures, management believes that there are no comparable GAAP financial measures to the tangible common equity ratios that the Company utilizes. Despite the importance of these measures to the Company, there are no standardized definitions for the measures, and, therefore, the Company's calculations may not be comparable with those of other organizations. In addition, there may be limits to the usefulness of these measures to investors. Accordingly, management encourages readers to consider the Company's consolidated financial statements in their entirety and not to rely on any single financial measure. The table below reconciles the Company's calculations of these measures to amounts reported in accordance with GAAP.

		Quarter Ended															Six Months Ended
		2022						2021									2022			2021
		June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
		(Dollars in Thousands, Except Per Share Data)
		(Unaudited Reconciliation)
TANGIBLE BALANCES
Total assets		$	955,385		$	968,646		$	958,302		$	956,734		$	946,946
Less: Goodwill			7,435			7,435			7,435			7,435			7,435
Less: Core deposit intangible			488			561			634			707			792
Tangible assets	(a)	$	947,462		$	960,650		$	950,233		$	948,592		$	938,719

Total shareholders' equity		$	82,576		$	87,807		$	90,064		$	89,597		$	88,778
Less: Goodwill			7,435			7,435			7,435			7,435			7,435
Less: Core deposit intangible			488			561			634			707			792
Tangible common equity	(b)	$	74,653		$	79,811		$	81,995		$	81,455		$	80,551

Average shareholders' equity		$	86,650		$	89,502		$	90,010		$	89,603		$	88,477		$	88,068		$	87,970
Less: Average goodwill			7,435			7,435			7,435			7,435			7,435			7,435			7,435
Less: Average core deposit intangible			523			596			669			746			836			559			882
Average tangible shareholders' equity	(c)	$	78,692		$	81,471		$	81,906		$	81,422		$	80,206		$	80,074		$	79,653

Net income	(d)	$	1,415		$	1,361		$	1,711		$	837		$	953		$	2,776		$	1,903
Common shares outstanding (in thousands)	(e)		5,876			6,130			6,172			6,218			6,215

TANGIBLE MEASURES
Tangible book value per common share	(b)/(e)	$	12.70		$	13.02		$	13.28		$	13.10		$	12.96

Tangible common equity to tangible assets	(b)/(a)		7.88	%		8.31	%		8.63	%		8.59	%		8.58	%

Return on average tangible common equity (annualized)	(1)		7.21	%		6.77	%		8.29	%		4.08	%		4.76	%		6.99	%		4.82	%

(1) Calculation of Return on average tangible common equity (annualized) = ((net income (d) / number of days in period) * number of days in year) / average tangible shareholders' equity (c)

Contact:	Thomas S. Elley
	205-582-1200

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SOURCE First US Bancshares, Inc.

FIRST US BANCSHARES, INC. REPORTS SECOND QUARTER 2022 RESULTS