First US Bancshares, Inc. Reports Fourth Quarter and 2025 Results: Quarter-over-Quarter Net Income Improvement of 10%

"We are pleased to conclude 2025 with a quarter of continued strong earnings growth," stated James F. House, President and CEO of the Company. "Fourth quarter net income improved by 10% compared to the prior quarter and 24% compared to the fourth quarter of 2024. In addition, we saw continued improvement in loan portfolio credit metrics, with substantial decreases in both net charge-offs and nonperforming assets," continued Mr. House. "While 2025 was a challenging year, particularly related to credit issues that were largely resolved by the third quarter, we have continued to build momentum and are excited about the Company's prospects for 2026."                                                          

Financial Results

Loans and Leases – The table below summarizes loan balances by portfolio category as of the end of each of the most recent five quarters.

Total loans decreased by $14.5 million in 4Q2025 as growth in the multi-family residential real estate and C&I categories was offset by decreases primarily in the commercial real estate, construction, and indirect consumer categories. The decrease in non-residential commercial real estate was related to completed construction projects that moved into a permanent category, but were subsequently  refinanced into the permanent market. The decrease in construction is consistent with the ebb and flow of projects in the Company's service territories. Construction loans are generally short-to-medium term loans that are expected to pay off or transfer to another loan category upon project completion. The decrease in indirect consumer was related to the seasonality of the types of collateral financed in this category. Despite the decrease in loan volume during the final quarter, for the year ended December 31, 2025, total loans increased by $30.0 million, or 3.6%. The annual growth was due to substantial growth in the consumer indirect category, and to a lesser extent, the multi-family residential and C&I categories. The indirect lending platform focuses on consumer lending at the higher end of the credit spectrum. Collateral financed in the indirect portfolio primarily includes boats, recreational vehicles, campers, horse trailers and cargo trailers. The weighted average credit score of new indirect loans financed during the year ended December 31, 2025 was 797, while the weighted average credit score for the entire portfolio was 783.  For the year ended December 31, 2025, the Company's average total loan balance increased by $37.5 million, or 4.6%, compared to the year ended December 31, 2024. Consistent with the prevailing interest rate environment, aggregate loan yields generally decreased in 2025. The average yield on loans totaled 6.03% in 4Q2025, compared to 6.10% in 3Q2025 and 6.12% in 4Q2024. For the year ended December 31, 2025, the average loan yield was 6.06%, compared to 6.29% for the year ended December 31, 2024.

Deposits – Total deposits increased by $25.5 million, or 2.5%, during 4Q2025, due primarily to increases in interest-bearing demand deposits of $9.2 million and increases in certificates of deposit of $18.4 million, partially offset by a $2.1 million decrease in noninterest-bearing deposits. The growth in certificates of deposit balances during the quarter resulted from net growth of $26.2 million in wholesale brokered deposits, partially offset by a reduction of $7.8 million in retail balances. The brokered deposits acquired by the Company in 4Q2025 were obtained in conjunction with interest rate derivative instruments that are intended to support the Company's overall interest rate hedging strategy. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $838.3 million, or 81.6% of total deposits, as of December 31, 2025, compared to $837.7 million, or 86.1% of total deposits, as of December 31, 2024. The average rate on deposits totaled 2.19% during 4Q2025, compared to 2.14% during 3Q2025, and 2.28% during 4Q2024. Fluctuations in deposit costs have been relatively consistent with changes in market interest rates; however, significant competitive pressure remains to acquire and maintain deposit balances in the current environment. For the year ended December 31, 2025, the Company's average rate on deposits totaled 2.12%, compared to 2.25% for the year ended December 31, 2024.  

Net Interest Income and Margin – Net interest income in 4Q2025 decreased by $0.2 million, or 2.5%, compared to 3Q2025 and increased by $0.7 million, or 7.7%, compared to 4Q2024. Net interest margin was 3.46% for 4Q2025, compared to 3.60% for 3Q2025 and 3.41% for 4Q2024. For the year ended December 31, 2025, net interest income increased by $1.3 million, or 3.6%, compared to the year ended December 31, 2024, while net interest margin decreased to 3.54% from 3.59% comparing 2025 to 2024.

Provision for Credit Losses – During 4Q2025, the Company recorded a provision for credit losses of $0.2 million, compared to $0.6 million in 3Q2025 and $0.5 million in 4Q2024. For the year ended December 31, 2025, the provision for credit losses totaled $4.0 million, compared to $0.6 million for the year ended December 31, 2024. Of the total provision recorded in 2025, $2.7 million occurred in the second quarter and resulted from substantial growth in the consumer indirect category, combined with an increase in net charge-offs in the category, as well as from additional credit allowances on two individually evaluated commercial loans. During both 3Q2025 and 4Q2025, charge-offs associated with the indirect portfolio decreased relative to the second quarter and credit issues associated with the two individually evaluated commercial loans were substantially resolved. During 4Q2025, credit metrics related to the loan portfolio generally improved; however, uncertainty continues to exist pertaining to the ultimate impact on the Company's loan portfolio of economic matters, including prospective inflation, unemployment levels, tariffs, and consumer affordability. As of December 31, 2025, the Company's allowance for credit losses ("ACL") on loans and leases as a percentage of total loans was 1.25%, compared to 1.24% as of December 31, 2024.  

Pre-tax Pre-provision Net Revenue ("PPNR") – PPNR totaled $3.1 million in both 4Q2025 and 3Q2025, compared to $2.8 million in 4Q2024. For the year ended December 31, 2025, PPNR totaled $12.0 million compared to $11.4 million for the year ended December 31, 2024. As a percentage of average assets, PPNR totaled 1.09% in 4Q2025 compared to 1.08% in 3Q2025 and 1.02% in 4Q2024. For the year ended December 31, 2025, PPNR as a percentage of average assets was 1.07% compared to 1.06% for the year ended December 31, 2024. Refer to the non-GAAP reconciliation of PPNR to net income beginning on page 11.

Short-term Borrowings – As of December 31, 2025, the Company did not have any short-term borrowings outstanding, compared to $10.0 million in outstanding short-term borrowings as of December 31, 2024. As of December 31, 2024, all outstanding short-term borrowings had remaining maturities of less than 30 days and were borrowed exclusively from the Federal Home Loan Bank of Atlanta (FHLB). 

Cash and Investment Securities – As of December 31, 2025, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $78.4 million, or 6.8% of total assets, compared to $52.9 million, or 4.8% of total assets, as of December 31, 2024. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $168.5 million as of December 31, 2025 compared to $168.6 million as of December 31, 2024. As of December 31, 2025, the expected average life of securities in the investment portfolio was 3.7 years compared to 3.6 years as of December 31, 2024. During the year ended December 31, 2025 and 2024, the Company purchased $43.7 million and $58.0 million, respectively, of investment securities at market rates in existence at the time of purchase. These purchases, combined with the maturity and paydown of investment securities at lower rates have led to continued improvement in yield on the portfolio. The yield on investment securities, including both available-for-sale and held to maturity securities, totaled 3.81% during 4Q2025, compared to 3.65% during 3Q2025 and 3.26% during 4Q2024.  For the year ended December 31, 2025, the yield on investment securities totaled 3.59%, compared to 3.02% for the year ended December 31, 2024.  

Asset Quality – Nonperforming assets, including loans in non-accrual status and other real estate owned, totaled $1.6 million as of December 31, 2025, a decrease from $5.5 million as of December 31, 2024. As a percentage of total assets, nonperforming assets decreased to 0.14% as of December 31, 2025 compared to 0.50% as of December 31, 2024. Net charge-offs as a percentage of average loans totaled 0.08% during 4Q2025 compared to 0.61% during 3Q2025 and 0.24% during 4Q2024.  For the year ended December 31, 2025, annualized net charge-offs as a percentage of average loans totaled 0.41% compared to 0.14% for the year ended December 31 2024.  

Non-interest Income – Non-interest income remained relatively consistent, totaling $1.0 million in 4Q2025 compared to $0.9 million in 3Q2025 and $1.0 million in 4Q2024. For both years ended December 31, 2025 and 2024, non-interest income totaled $3.6 million.

Non-interest Expense – Non-interest expense totaled $7.3 million in 4Q2025, compared to $7.4 million in 3Q2025 and $6.9 million in 4Q2024 The expense increase comparing 4Q2025 to 4Q2024 resulted primarily from increases in salaries and benefits and fees for professional services. For the year ended December 31, 2025, non-interest expense totaled $29.1 million, compared to $28.4 million for the year ended December 31, 2024, an increase of 2.5%. 

Shareholders' Equity – As of December 31, 2025, shareholders' equity totaled $105.6 million, or 9.15% of total assets, compared to $98.6 million, or 8.96% of total assets, as of December 31, 2024. The increase in shareholders' equity during the year ended December 31, 2025 resulted primarily from earnings, net of dividends paid and repurchases of shares of the Company's common stock. In addition, shareholders' equity was positively impacted during the period by reductions in the Company's accumulated other comprehensive loss resulting from the maturity of lower yielding investment securities combined with purchases of securities at higher yields. The Company's ratio of tangible common equity to tangible assets was 8.56% as of December 31, 2025 compared to 8.33% as of December 31, 2024.  

Cash Dividend – In 4Q2025, the Company declared a cash dividend of $0.07 per share on its common stock, consistent with the dividend paid in all previous quarters of 2025 and 4Q2024. For the year ended December 31, 2025, the Company declared cash dividends totaling $0.28 per share, compared to $0.22 per share for the year ended December 31, 2024. 

Share Repurchases – During 4Q2025, the Company completed the repurchase of 88,000 shares of its common stock at a weighted average price of $13.93 per share. For the year ended December 31, 2025, repurchases totaled 128,000 shares at a weighted average price of $13.76 per share. All repurchases were completed under the Company's previously announced share repurchase program, which was expanded during 4Q2025 by an additional 1,000,000 shares. As of December 31, 2025, 1,784,813 shares remained available for repurchase under the program.

Regulatory Capital – During 4Q2025, 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 December 31, 2025, the Bank's common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.88%, its total capital ratio was 12.05%, and its Tier 1 leverage ratio was 9.03%.

Liquidity – As of December 31, 2025, the Company continued to maintain 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 with other banking institutions, FHLB advances, the FRB's discount window, and brokered deposits. Refer to the Non-GAAP Financial Measures section for additional discussion of measures of the Company's liquidity.

Banking Center Growth – During 4Q2025, the Company continued renovation of a banking center office in Daphne, Alabama that was purchased from another financial institution. This location is expected to serve as the Bank's initial deposit gathering facility in the Daphne/Mobile area. It is currently anticipated that the location will open to the public during the first half of 2026. In addition, during 4Q2025, the Company opened a new automated banking facility in Mountain Brook, Alabama.  

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"). 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 risk related to the Company's credit, including the effects of any government shutdown; loan losses may be greater than anticipated; our ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations; the increased lending risks associated with commercial real estate lending; potential weakness in the residential real estate market; liquidity risks; the impact of national and local market conditions on the Company's business and operations; the effects of significant changes to the structure and operations of the federal government; the rate of growth (or lack thereof) in the economy generally and in the Company's service areas; the effects of significant changes to the structure and operations of the federal government; digital banking trends may create deposit volatility; 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 effects of fiscal challenges facing the U.S. government or any potential government shutdown; the impact of technological changes in the banking and financial service industries and potential information system failures; cybersecurity and data privacy threats; the risks and challenges presented by the development and use of artificial intelligence ("AI"); the costs of complying with extensive governmental regulation; the risk that internal controls and procedures might fail or be circumvented; the impact of changing accounting standards and tax laws on the Company's allowance for credit losses and financial results; the potential impact of climate change related legislative and regulatory initiatives; the possibility that acquisitions may not produce anticipated results and result in unforeseen integration difficulties; the volatility of our stock price; our dependence on the soundness of other financial institutions; 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.