FIRST US BANCSHARES INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
FUSB$16.450.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0000950170-24-123874
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000950170-25-066717
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 111 current paragraphs.
51 unchanged; 42 reworded; 17 added; 14 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
The banking industry continued to be impacted by economic volatility during the three months ended March 31, 2025. The U.S. inflation rate, as measured by the consumer price index, slowed to 2.4% in March 2025, however, it remained elevated above the Federal Reserve Bank’s (“FRB”) longer run target of 2%. The U.S. unemployment rate moved up modestly to 4.2% in March 2025. The Open Market Committee of the FRB did not change the federal funds rate during the period, keeping the rate at a level of 4.25% to 4.50%. Treasury rates generally trended lower during the period, indicating sentiment of further rate reductions to come later in 2025. U.S. gross domestic product (“GDP”) contracted during the first quarter of 2025 for the first time since 2022, decreasing 0.3% on an annualized basis, due primarily to a surge in imports during the quarter. The combination of the continued heightened inflation level with negative GDP provides a difficult environment in which to predict future movement in the federal funds rate. Remarks from the Open Market Committee following its March 2025 meetings remained cautious, noting that uncertainty around its economic outlook had increased and that it would “carefully assess incoming data, the evolving outlook, and the balance of risks” in its consideration of the extent and timing of additional adjustments to the federal funds rate.
Current report
In addition, the Company continues to monitor the potential impact of evolving trade policies, including the impact of additional tariffs imposed by the U.S. While no specific tariffs were implemented during the reporting period that materially affected the Company’s operations, the potential for future changes in cross-border trade arrangements and import/export duties contributes to broader economic uncertainty. Should the impact of tariffs lead to higher inflation levels or higher interest rates for a sustained period, the Company’s financial position and result of operations could be negatively impacted.
Current report
Net interest income decreased by $0.1 million, or 1.6%, comparing the three months ended March 31, 2025 to the three months ended March 31, 2024. Net interest margin was 3.53% for the three months ended March 31, 2025, compared to 3.65% for the three months ended March 31, 2024. The decrease in net interest income and margin comparing the three months ended March 31, 2025 to the three months ended March 31, 2024 resulted primarily from yield reductions on loans that occurred following the reduction of the federal funds rate during the latter part of 2024. The reduction in interest income was partially offset by an increase in average earning asset volumes, particularly investment securities, as well as reductions in expense on interest-bearing liabilities.
Current report
For the three months ended March 31, 2025, non-interest expense totaled $6.9 million, compared to $7.1 million for the three months ended March 31, 2024. The expense reduction comparing the three months ended March 31, 2025 to the three months ended March 31, 2024 resulted primarily from decreases in salaries and benefits and fees for professional services. These reductions were partially offset by an increase in other expense that resulted primarily from a recovery of check fraud expense that occurred during the three months ended March 31, 2024, but was not repeated during the three months ended March 31, 2025.
Current report
Total loans increased by $25.3 million, or 3.1%, as of March 31, 2025, compared to December 31, 2024. The increase was driven primarily by growth of $41.3 million in consumer indirect loans during the quarter. The indirect lending platform focuses on recreational and equipment consumer lending on 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 quarter reached 800, while the weighted average credit score for the entire portfolio was 779. In addition to the indirect portfolio, the Company also grew its multi-family residential real estate and commercial and industrial lending categories during the quarter by $5.3 million and $0.9 million, respectively. Loan growth during the quarter was partially offset by reductions of $22.2 million in other lending categories, primarily construction and non-residential commercial real estate. Total loan volume averaged $824.5 million during the three months ended March 31, 2025, compared to $822.0 million during the three months ended March 31, 2024.
Current report
Total deposits decreased by $10.6 million, or 1.1%, during the three months ended March 31, 2025, due primarily to reductions in interest-bearing demand deposit accounts, and to a lesser extent, reductions in non-interest-bearing demand deposit accounts. These reductions resulted in part from lower deposit pricing implemented by management during the quarter in an effort to improve net interest margin. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $813.9 million, or 84.6% of total deposits, as of March 31, 2025, compared to $837.7 million, or 86.1% of total deposits, as of December 31, 2024.
Current report
Short-term Borrowings
Current report
As of March 31, 2025, the Company had $45.0 million in short-term borrowings outstanding, compared to $10.0 million outstanding as of December 31, 2024. The short-term borrowings were held as part of the Company’s efforts to maintain on-balance sheet liquidity levels while repricing deposits at lower rates. As of both March 31, 2025 and December 31, 2024, all outstanding short-term borrowings had remaining maturities of less than 30 days. The amount outstanding as of March 31, 2025 included $25.0 million borrowed from the Federal Home Loan Bank of Atlanta (“FHLB”) and $20.0 million borrowed from the Federal Reserve Bank’s (“FRB”) discount window. As of December 31, 2024, all short-term borrowings outstanding were borrowed exclusively from the FHLB.
Current report
During the three months ended March 31, 2025, the Company declared a cash dividend of $0.07 per share on its common stock, consistent with the dividend paid in the previous quarter. The Company’s cash dividend was increased during the fourth quarter of 2024, compared to a dividend declared of $0.05 per share in each of the first three quarters of 2024.
Current report
Interest income decreased by $0.3 million, comparing the three months ended March 31, 2025 to the three months ended March 31, 2024. Of the decrease, $0.4 million was attributable to lower average yields on interest-earning assets, which was partially offset by $0.1 million growth in interest-earning assets comparing the two periods.
Current report
The Company’s net interest income and net interest margin during the first three months of 2025 continued to be impacted by changes in the interest rate environment that occurred during the latter months of 2024. Notably, between September and December 2024, the federal funds rate was reduced by 100 basis points, and generally, the Company’s earning assets repriced more quickly than interest-bearing liabilities during the latter part of 2024, reducing the Company’s net interest margin to 3.41% during the three months ended December 31 2024. During the first quarter of 2025, management continued efforts to both maximize earning asset growth and reduce interest expense, resulting in an improvement in net interest margin by 12 basis points, comparing the first quarter of 2025 to the fourth quarter of 2024. While net interest margin improved compared to the prior quarter, it remained below the levels recorded during the earlier periods of 2024. For the three months ended March 31, 2025, net interest margin was 3.53%, compared to 3.65% for the three months ended March 31, 2024. While management is continuing efforts to improve net interest margin, the results of these efforts cannot be fully predicted. Should market interest rates increase or decrease at significant levels, particularly over a short period of time, the Company’s net interest margin and net interest income could be negatively impacted.
Current report
The Company’s non-interest income remained relatively consistent, totaling $0.9 million for both the three months ended March 31, 2025 and 2024.
Current report
Non-interest expense totaled $6.9 million and $7.1 million during the three months ended March 31, 2025 and 2024, respectively. The expense reduction comparing the three months ended March 31, 2025 to the three months ended March 31, 2024 resulted primarily from decreases in salaries and benefits and fees for professional services. These reductions were partially offset by an increase in other expense that resulted primarily from a recovery of check fraud expense that occurred during the three months ended March 31, 2024, but was not repeated during the three months ended March 31, 2025.
Current report
The following table classifies the Company's fixed and variable rate loans as of March 31, 2025 according to contractual maturities of: (1) one year or less, (2) after one year through five years, (3) after five years through fifteen years, and (4) after fifteen years:
Current report
Deposits
Current report
During the three months ended March 31, 2025, the Company declared a cash dividend of $0.07 per share on its common stock, consistent with the dividend paid in the previous quarter. The Company’s cash dividend was increased during the fourth quarter of 2024, compared to a dividend declared of $0.05 per share in each of the first three quarters of 2024.
Current report
In addition to collateralized funding sources through the FHLB and FRB, the Company had $48.0 million in unused established unsecured lines of credit with banks as of both March 31, 2025 and December 31, 2024.
Removed paragraphs (14)
Previous report
During the nine months ended September 30, 2024, the banking industry continued to be impacted by economic volatility and the higher interest rate environment that has persisted since 2022. The U.S. inflation rate, as measured by the consumer price index, slowed for a sixth consecutive month in September 2024 to 2.4%. While the inflation rate remained elevated above the Federal Reserve Bank’s (“FRB”) longer run target of 2%, the trend downward led the Open Market Committee of the FRB to reduce the federal funds rate by 50 basis points, bringing the target federal funds rate to a range of 4.75% to 5.00% as of September 30, 2024. This signaled at least a partial shift in focus by the FRB to managing employment levels more closely, while continuing to monitor inflation levels. The U.S. unemployment rate trended lower during the third quarter of 2024, easing to 4.1% in September 2024, while the U.S. economy, as measured by gross domestic product, expanded at an annualized pace of 2.8% in the third quarter of 2024. U.S. Treasury rates decreased substantially during the third quarter of 2024, with short term rates generally decreasing in greater magnitude than long term rates causing a flattening of the treasury curve. While benchmark interest rates eased during the third quarter of 2024, competitive pressures in the banking industry remained elevated, particularly with respect to deposit pricing. In addition, geopolitical uncertainty on the world stage, as well as political uncertainty with respect to the U.S. election cycle, persisted through the quarter. Management continues to carefully navigate the Company’s course through these challenges, and believes the Company is well positioned to respond effectively in multiple operating environments. However, additional inflationary pressure, higher interest rates, and a fiercely competitive environment could put downward pressure on the Company’s financial position and results of operations.
Previous report
Net interest income decreased by $0.8 million, or 3.0%, comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023. In general, net interest margin has declined amid the higher interest rate environment that has persisted since 2022, as interest-bearing liabilities repriced at faster rates than interest-bearing assets. For the nine months ended September 30, 2024, net interest income totaled $27.4 million, compared to $28.2 million during the nine months ended September 30, 2023. Net interest margin totaled 3.65% for the nine months ended September 30, 2024, compared to 3.93% for the nine months ended September 30, 2023.
Previous report
For the nine months ended September 30, 2024, non-interest expense totaled $21.4 million, compared to $21.7 million for the nine months ended September 30, 2023. Salaries and benefits expense decreased during the first nine months of 2024 compared to the corresponding period of 2023, primarily due to lower staff levels resulting from strategic initiatives implemented by the Company in prior years. In addition, other expenses were lower during the nine months ended September 30, 2024 compared to the corresponding period of 2023, due primarily to the recovery of check fraud losses and reduced collection expenses. These reductions in non-interest expense during the first nine months of 2024 were partially offset by increases associated with occupancy and professional services expenses.
Previous report
Total loans decreased by $18.5 million, or 2.2%, as of September 30, 2024, compared to December 31, 2023. The decrease was primarily driven by payoffs of construction loans and, to a lesser extent, reductions in the consumer indirect and commercial and industrial ("C&I") loan categories. These reductions were partially offset by growth in commercial real estate (non-farm, non-residential) and multi-family residential loans. While the Company experienced a reduction in loan volume during the first nine months of 2024, average loan balances remained higher than average loan balances during the corresponding period of 2023. For the nine months ended September 30, 2024, average total loans were $821.0 million, compared to $795.0 million during the nine months ended September 30, 2023.
Previous report
Deposit Growth
Previous report
Deposits totaled $981.1 million as of September 30, 2024, compared to $950.2 million as of December 31, 2023. The increase since December 31, 2023 was due primarily to increased interest-bearing time deposits and interest-bearing demand deposits, partially offset by decreased money market and savings accounts. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $833.5 million, or 85.0% of total deposits, as of September 30, 2024, compared to $819.5 million, or 86.2% of total deposits, as of December 31, 2023.
Previous report
The Company declared cash dividends totaling $0.15 per share on its common stock during both the nine months ended September 30, 2024 and 2023.
Previous report
Interest income increased by $5.0 million, comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023. Of the increase, $3.5 million was attributable to higher average yields on interest-earning assets, while $1.5 million was attributable to growth in interest-earning assets comparing the two periods. The increase in average yield was attributable to the rise in market interest rates that began in 2022, continued in 2023 and generally persisted through the nine months ended September 30, 2024.
Previous report
The rising interest rate environment has caused compression of the Company’s net interest margin in recent periods, as the cost of interest-bearing liabilities has generally increased at a faster pace than interest-earning assets. The Company’s net interest margin during the nine months ended September 30, 2024 totaled 3.65%, compared to 3.93% during the nine months ended September 30, 2023. During the third quarter of 2024, the higher interest rate environment began to ease with notable reductions in yields on U.S. treasury instruments, as well as a 50-basis point reduction in the federal funds rate. Should interest rate reductions continue to occur, both the Company’s interest-earning assets and interest-bearing liabilities will be impacted. However, the speed with which interest revenues and expenses reprice can vary significantly based on a number of factors, including, but not limited to, existing contractual terms and the competitive environment, as well as loan and deposit customer behavior and preferences. Management continues to focus efforts to both maximize earning asset growth and reduce interest expense; however, the results of these efforts cannot be fully predicted. In addition, should market interest rates increase or decrease at significant levels, especially in a short period of time, the Company’s net interest income could be negatively impacted.
Previous report
The Company’s non-interest income increased by $0.1 million comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023.
Previous report
Non-interest expense totaled $21.4 million and $21.7 million during the nine months ended September 30, 2024 and 2023, respectively. Salaries and benefits expense decreased during the first nine months of 2024 compared to the corresponding period of 2023, primarily due to lower staff levels resulting from strategic initiatives implemented by the Company in prior years. In addition, other expenses were lower during the nine months ended September 30, 2024 compared to the corresponding period of 2023, due primarily to the recovery of check fraud losses and reduced collection expenses. These reductions in non-interest expense during the first nine months of 2024 were partially offset by increases associated with occupancy and professional services expenses.
Previous report
During the nine months ended September 30, 2024, the Company purchased $27.5 million in taxable U.S. agency-sponsored securities that are included in the available-for-sale portfolio. The purchased securities offset $23.6 million in proceeds received by the Company associated with maturities and prepayments in the portfolio. In the higher interest rate environment, the securities purchased have served to increase the Company’s yield on taxable investment securities. For the nine months ended September 30, 2024, the yield on taxable investment securities totaled 2.95%, compared to 2.15% for the nine months ended September 30, 2023.
Previous report
The increase in nonperforming assets comparing September 30, 2024 to previous quarter-end dates in the table above resulted from two loans (from the C&I and 1-4 family residential categories) that moved into non-accrual status during the third quarter of 2024.
Previous report
During both the nine months ended September 30, 2024 and 2023, the Company declared dividends totaling $0.15 per common share, or approximately $0.9 million in aggregate amount. Bancshares’ Board of Directors evaluates dividend payments based on the Company’s level of earnings and the desire to maintain a strong capital base, as well as regulatory requirements relating to the payment of dividends.
Reworded paragraphs (42)
Previous wording
First US Bancshares, Inc., a Delaware corporation (“Bancshares” and, together with its subsidiary, the “Company”), is a bank holding company formed in 1983 registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Bancshares operates one wholly owned banking subsidiary, First US Bank, an Alabama banking corporation (the “Bank”). Bancshares and the Bank are headquartered in Birmingham, Alabama. Previously, the Bank operated two additional wholly owned subsidiaries, Acceptance Loan Company and FUSB Reinsurance, Inc., both of which were legally dissolved in 2023, and all remaining assets and liabilities of these entities were transferred to the Bank prior to December 31, 2023.
Current wording
First US Bancshares, Inc., a Delaware corporation (“Bancshares” and, together with its subsidiary, the “Company”), is a bank holding company formed in 1983 registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Bancshares operates one wholly owned banking subsidiary, First US Bank, an Alabama banking corporation (the “Bank”). Bancshares and the Bank are headquartered in Birmingham, Alabama.
Previous wording
Delivery of the best possible financial services to customers remains an overall operational focus of the Company. The Company recognizes that attention to detail and responsiveness to customers’ desires are critical to customer satisfaction. The Company continues to upgrade technology, both in its financial services and in the training of its 154 full-time equivalent employees (as of September 30, 2024), to ensure customer satisfaction and convenience.
Current wording
Delivery of the best possible financial services to customers remains an overall operational focus of the Company. The Company recognizes that attention to detail and responsiveness to customers’ desires are critical to customer satisfaction. The Company continues to upgrade technology, both in its financial services and in the training of its 147 full-time equivalent employees (as of March 31, 2025), to ensure customer satisfaction and convenience.
Previous wording
The emphasis of this discussion is a comparison of assets, liabilities and shareholders’ equity as of September 30, 2024 to December 31, 2023, while comparing income and expense for the nine months ended September 30, 2024 and 2023. All yields and ratios presented and discussed herein are recorded and presented on the accrual basis and not on the tax-equivalent basis, unless otherwise indicated.
Current wording
The emphasis of this discussion is a comparison of assets, liabilities and shareholders’ equity as of March 31, 2025 to December 31, 2024, while comparing income and expense for the three months ended March 31, 2025 and 2024. All yields and ratios presented and discussed herein are recorded and presented on the accrual basis and not on the tax-equivalent basis, unless otherwise indicated.
Previous wording
The Company earned net income of $2.2 million, or $0.36 per diluted common share, during the three months ended September 30, 2024, compared to $2.1 million, or $0.33 per diluted common share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, net income totaled $6.5 million, or $1.04 per diluted common share, compared to $6.2 million, or $0.97 per diluted common share, for the nine months ended September 30, 2023.
Current wording
The Company earned net income of $1.8 million, or $0.29 per diluted common share, during the three months ended March 31, 2025, compared to $2.1 million, or $0.34 per diluted common share, for the three months ended March 31, 2024.
Previous wording
Summarized condensed consolidated statements of operations are included below for the three and nine months ended September 30, 2024 and 2023.
Current wording
Summarized condensed consolidated statements of operations are included below for the three months ended March 31, 2025 and 2024.
Previous wording
The discussion that follows summarizes the most significant activity that drove changes in the Company’s operating results during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.
Current wording
The discussion that follows summarizes the most significant activity that drove changes in the Company’s operating results during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.
Previous wording
For the nine months ended September 30, 2024, the provision for credit losses totaled $0.2 million, compared to $0.8 million for the nine months ended September 30, 2023. The decrease in the provision for credit losses comparing the first nine months of 2024 to the corresponding period of 2023 was due primarily to decreases in loan volume, as well as adjustments in economic forecasts that impact the calculation of the allowance for credit losses ("ACL") on loans and leases. As of September 30, 2024, the Company’s ACL on loans and leases as a percentage of total loans was 1.26%, compared to 1.28% as of December 31, 2023.
Current wording
For the three months ended March 31, 2025, the Company recorded a provision for credit losses of $0.5 million, compared to the three months ended March 31, 2024, in which no provision for credit losses was recorded. The increase in the provision for credit losses comparing the three months ended March 31, 2025 to the three months ended March 31, 2024 was primarily attributable to loan growth during the quarter. As of March 31, 2025, the Company’s allowance for credit losses ("ACL") on loans and leases as a percentage of total loans was 1.23%, compared to 1.24% as of December 31, 2024.
Previous wording
Non-interest income remained relatively consistent, totaling $2.6 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Current wording
Non-interest income remained relatively consistent, totaling $0.9 million for both the three months ended March 31, 2025 and 2024.
Previous wording
As of September 30, 2024, the Company’s assets totaled $1,100.2 million, compared to $1,072.9 million as of December 31, 2023, an increase of 2.5%.
Current wording
As of March 31, 2025, the Company’s assets totaled $1,127.0 million, compared to $1,101.1 million as of December 31, 2024, an increase of 2.4%.
Previous wording
Nonperforming assets, including loans in non-accrual status and OREO, totaled $6.6 million as of September 30, 2024, compared to $3.0 million as of December 31, 2023. The increase in nonperforming assets resulted from two loans (from the C&I and 1-4 family residential categories) that moved into non-accrual status during the third quarter of 2024. As a percentage of total assets, nonperforming assets totaled 0.60% as of September 30, 2024, compared to 0.28% as of December 31, 2023. Annualized net charge-offs as a percentage of average loans during the nine months ended September 30, 2024 totaled 0.10%, compared to 0.12% during the corresponding period of 2023.
Current wording
Nonperforming assets, including loans in non-accrual status and other real estate owned, totaled $5.0 million as of March 31, 2025, compared to $5.5 million as of December 31, 2024. As a percentage of total assets, nonperforming assets totaled 0.44% as of March 31, 2025, compared to 0.50% as of December 31, 2024. Net charge-offs as a percentage of average loans totaled 0.13% during the three months ended March 31, 2025, compared to 0.09% during the three months ended March 31, 2024.
Previous wording
As of September 30, 2024, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $97.8 million, or 8.9% of total assets, compared to $59.8 million, or 5.6% of total assets, as of December 31, 2023. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $145.0 million as of September 30, 2024, compared to $136.7 million as of December 31, 2023. During the nine months ended September 30, 2024, $27.5 million was invested in taxable U.S. agency-sponsored bonds, resulting in improved yields in the investment portfolio. As of September 30, 2024, the expected average life of securities in the investment portfolio was 4.1 years, compared to 3.9 years as of December 31, 2023.
Current wording
As of March 31, 2025, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $61.5 million, or 5.5% 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 $161.9 million as of March 31, 2025, compared to $168.6 million as of December 31, 2024. As of March 31, 2025, the expected average life of securities in the investment portfolio was 4.0 years, compared to 3.6 years as of December 31, 2024.
Previous wording
Shareholders’ equity increased by $7.9 million, or 8.7%, as of September 30, 2024, compared to December 31, 2023. The increase in shareholders’ equity during the nine months ended September 30, 2024 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 nine months ended September 30, 2024 by reductions in the Company's accumulated other comprehensive loss resulting from changes in market interest rates, as well as the maturity of lower yielding investment securities.
Current wording
Shareholders’ equity increased by $2.6 million, or 2.6%, as of March 31, 2025, compared to December 31, 2024. The increase in shareholders’ equity during the three months ended March 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 quarter by reductions in the Company's accumulated other comprehensive loss resulting from changes in market interest rates, as well as the maturity of lower yielding investment securities.
Previous wording
During the nine months ended September 30, 2024, the Company repurchased 106,500 shares of its common stock at a weighted average price of $10.67 per share. The repurchases were completed under the Company’s previously announced share repurchase program. As of September 30, 2024, 352,813 shares remained available for repurchase under the program.
Current wording
During the three months ended March 31, 2025, the Company completed the repurchase of 40,000 shares of its common stock at a weighted average price of $13.38 per share. The repurchases were completed under the Company’s previously announced share repurchase program. As of March 31, 2025, 872,813 shares remained available for repurchase under the program.
Previous wording
During the nine months ended September 30, 2024, 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 September 30, 2024, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.45%. Its total capital ratio was 12.63%, and its Tier 1 leverage ratio was 9.49%.
Current wording
During the three months ended March 31, 2025, 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 March 31, 2025, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.08%. Its total capital ratio was 12.23%, and its Tier 1 leverage ratio was 9.55%.
Previous wording
As of September 30, 2024, 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 with other banking institutions, Federal Home Loan Bank (FHLB) advances, the discount window of the Federal Reserve Bank (FRB), and brokered deposits.
Current wording
As of March 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.
Previous wording
As part of the Company’s overall growth strategy, during the nine months ended September 30, 2024, the Company opened a new banking center in the Bearden area of Knoxville, Tennessee that replaced the Bank’s previously existing Knoxville-Bearden location. In addition, the Company commenced 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, and it is anticipated that the location will open to the public in 2025.
Current wording
During the three months ended March 31, 2025, the Company continued its 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 by the fourth quarter of 2025.
Previous wording
Net interest income is calculated as the difference between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The Company’s earning assets consist of loans, taxable and tax-exempt investments, Federal Home Loan Bank stock, federal funds sold by the Bank, securities purchased under reverse repurchase agreements and interest-bearing deposits in banks. Interest-bearing liabilities consist of interest-bearing demand deposits and savings and time deposits, as well as short- and long-term borrowings.
Current wording
Net interest income is calculated as the difference between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The Company’s earning assets consist of loans, investment securities, Federal Home Loan Bank stock, federal funds sold by the Bank, securities purchased under reverse repurchase agreements and interest-bearing deposits in banks. Interest-bearing liabilities consist of interest-bearing demand deposits and savings and time deposits, as well as short- and long-term borrowings.
Previous wording
The following tables show the average balances of each principal category of assets, liabilities and shareholders’ equity for the three and nine months ended September 30, 2024 and 2023. Additionally, the tables provide an analysis of interest revenue or expense associated with each category, along with the accompanying yield or rate percentage. Net interest margin is calculated for each period presented as net interest income divided by average total interest-earning assets.
Current wording
The following tables show the average balances of each principal category of assets, liabilities and shareholders’ equity for the three months ended March 31, 2025 and 2024. Additionally, the tables provide an analysis of interest revenue or expense associated with each category, along with the accompanying yield or rate percentage. Net interest margin is calculated for each period presented as net interest income divided by average total interest-earning assets.
Previous wording
The increase in interest income was offset by an increase in interest expense of $5.8 million, comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023. Of the increase, $4.9 million was attributable to the rise in market interest rates, while $0.9 million was attributable to growth in interest-bearing liabilities, primarily savings and time deposits.
Current wording
The decrease in interest income was offset by a decrease in interest expense of $0.1 million, comparing the three months ended March 31, 2025 to the three months ended March 31, 2024. The decrease was primarily attributable to the reductions in market interest rates.
Previous wording
The Company recorded a provision for credit losses of $0.2 million during the nine months ended September 30, 2024, compared to a provision of $0.8 million during the nine months ended September 30, 2023. The decrease in the provision for credit losses comparing the first nine months of 2024 to the corresponding period of 2023 was due primarily to decreases in loan volume, as well as adjustments in economic forecasts that impact the calculation of the ACL on loans and leases. As of September 30, 2024, the Company’s ACL on loans and leases as a percentage of total loans was 1.26%, compared to 1.28% as of December 31, 2023.
Current wording
The Company recorded a provision for credit losses of $0.5 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, in which no provision for credit losses was recorded. The increase in the provision for credit losses comparing the three months ended March 31, 2025 to the corresponding period of 2024 was due primarily to an increase in loan volume. As of March 31, 2025, the Company’s ACL on loans and leases as a percentage of total loans was 1.23%, compared to 1.24% as of December 31, 2024.
Previous wording
Net charge-offs totaled $0.6 million for both the nine months ended September 30, 2024 and 2023. However, the ongoing timing of charge-offs, economic developments, and other factors that could impact the provision for credit losses cannot be fully predicted with certainty. Sustained levels of high inflation, combined with sustained elevated market interest rates, could negatively impact the Company’s borrowers, which could lead to increased provisions for credit losses in the future.
Current wording
Net charge-offs totaled $0.3 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively. The ongoing timing of charge-offs, economic developments, and other factors that could impact the provision for credit losses cannot be fully predicted with certainty. Among other things, sustained levels of high inflation or an economic downturn in the Company's operating territories could negatively impact the Company’s borrowers, and could lead to increased provisions for credit losses in the future.
Previous wording
The provision for income taxes was $2.0 million for both the nine months ended September 30, 2024 and 2023, and the Company’s effective tax rate was 23.5% and 24.4%, respectively, for the same periods.
Current wording
The provision for income taxes was $0.6 million and $0.7 million for the three months ended March 31, 2025 and 2024, respectively. The Company’s effective tax rate was 23.8% and 23.6%, respectively, for the same periods.
Previous wording
The investment securities portfolio is used by management to provide liquidity, to generate interest income and for use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering the duration, composition and/or balance of the portfolio. The expected average life of securities in the investment portfolio was 4.1 years and 3.9 years as of September 30, 2024 and December 31, 2023, respectively.
Current wording
The investment securities portfolio is used by management to provide liquidity, to generate interest income and for use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering the duration, composition and/or balance of the portfolio. The expected average life of securities in the investment portfolio was 4.0 years and 3.6 years as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
Available-for-sale securities are recorded at estimated fair value, with unrealized gains or losses recognized, net of taxes, in accumulated other comprehensive loss, a separate component of shareholders’ equity. As of September 30, 2024, available-for-sale securities totaled $144.3 million, or 99.5% of the total investment portfolio, compared to $135.6 million, or 99.2% of the total investment portfolio, as of December 31, 2023. Available-for-sale securities consisted of residential and commercial mortgage-backed securities, U.S. Treasury securities, corporate bonds, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
Current wording
Available-for-sale securities are recorded at estimated fair value, with unrealized gains or losses recognized, net of taxes, in accumulated other comprehensive loss, a separate component of shareholders’ equity. As of March 31, 2025, available-for-sale securities totaled $161.3 million, or 99.6% of the total investment portfolio, compared to $167.9 million, or 99.6% of the total investment portfolio, as of December 31, 2024. Available-for-sale securities consisted of residential and commercial mortgage-backed securities, U.S. Treasury securities, corporate bonds, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
Previous wording
Held-to-maturity securities are recorded at amortized cost and represent securities that the Company both intends and has the ability to hold to maturity. As of September 30, 2024, held-to-maturity securities totaled $0.8 million, or 0.5% of the total investment portfolio, compared to $1.1 million, or 0.8% of the total investment portfolio, as of December 31, 2023. Held-to-maturity securities consisted of commercial mortgage-backed securities, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
Current wording
Held-to-maturity securities are recorded at amortized cost and represent securities that the Company both intends and has the ability to hold to maturity. As of March 31, 2025, held-to-maturity securities totaled $0.6 million, or 0.4% of the total investment portfolio, compared to $0.7 million, or 0.4% of the total investment portfolio, as of December 31, 2024. Held-to-maturity securities consisted of commercial mortgage-backed securities, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
Previous wording
Net unrealized losses in the available-for-sale portfolio totaled $4.7 million as of September 30, 2024, compared to $9.3 million as of December 31, 2023. Net unrealized losses within the available-for-sale portfolio were recognized, net of tax, in accumulated other comprehensive loss.
Current wording
Net unrealized losses in the available-for-sale portfolio totaled $4.0 million as of March 31, 2025, compared to $6.7 million as of December 31, 2024. Net unrealized losses within the available-for-sale portfolio were recognized, net of tax, in accumulated other comprehensive loss.
Previous wording
The Company’s total loan portfolio decreased by $18.5 million, or 2.2%, as of September 30, 2024, compared to December 31, 2023. The tables below summarize loan balances by portfolio category, as well as the allowance for credit losses, as of the end of each of the most recent five quarters as of September 30, 2024:
Current wording
The Company’s total loan portfolio increased by $25.3 million, or 3.1%, as of March 31, 2025, compared to December 31, 2024. The tables below summarize loan balances by portfolio category, as well as the ACL, as of the end of each of the most recent five quarters as of March 31, 2025:
Previous wording
As of September 30, 2024 and December 31, 2023, the composition of the non-farm, non-residential loan portfolio was as follows:
Current wording
As of March 31, 2025 and December 31, 2024, the composition of the non-residential commercial real estate loan portfolio was as follows:
Previous wording
The tables below summarize changes in the allowance for credit losses on loans and leases for each of the most recent five quarters as of September 30, 2024:
Current wording
The tables below summarize changes in the ACL on loans and leases for each of the most recent five quarters as of March 31, 2025:
Previous wording
Unfunded lending commitments are off-balance sheet arrangements that represent unconditional commitments of the Company to lend to a borrower that are unfunded as of the balance sheet date. These may include unfunded loan commitments, standby letters of credit, and financial guarantees. The CECL accounting guidance requires that an estimate of expected credit loss be measured on commitments in which an entity is exposed to credit risk via a present contractual obligation to extend credit unless the obligation is unconditionally cancellable by the issuer. For the Company, unconditional lending commitments generally include unfunded term loan agreements, home equity lines of credit, lines of credit, and demand deposit account overdraft protection. As of September 30, 2024 and December 31, 2023, the Company’s reserve for unfunded commitments, which is recorded in other liabilities in the Company’s consolidated balance sheets, totaled $0.5 million and $0.6 million, respectively.
Current wording
The Company records an ACL on unfunded lending commitments in which the Company is exposed to credit risk via a present contractual obligation to extend credit unless the obligation is unconditionally cancellable. Unconditional lending commitments generally include unfunded term loan agreements, home equity lines of credit, lines of credit, and demand deposit account overdraft protection.
Previous wording
While no portion of the allowance for credit losses is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, the following table shows an allocation of the allowance for credit losses as of September 30, 2024 and December 31, 2023:
Current wording
While no portion of the ACL is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, the following table shows an allocation of the ACL as of March 31, 2025 and December 31, 2024:
Previous wording
Total deposits increased to $981.1 million as of September 30, 2024, from $950.2 million as of December 31, 2023, an increase of 3.3%. Core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, provide a relatively stable funding source that supports earning assets. Core deposits totaled $833.5 million, or 85.0% of total deposits, as of September 30, 2024, compared to $819.5 million, or 86.2% of total deposits, as of December 31, 2023.
Current wording
Total deposits decreased to $962.0 million as of March 31, 2025, from $972.6 million as of December 31, 2024, a decrease of 1.1%. The decrease was due primarily to reductions in interest-bearing demand deposit accounts, and to a lesser extent, reductions in non-interest-bearing demand deposit accounts. These reductions resulted in part from lower deposit pricing implemented by management during the quarter in an effort to improve net interest margin. Core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, provide a relatively stable funding source that supports earning assets. Core deposits totaled $813.9 million, or 84.6% of total deposits, as of March 31, 2025, compared to $837.7 million, or 86.1% of total deposits, as of December 31, 2024.
Previous wording
Other interest-bearing liabilities that are used by the Company as an alternative source of funds consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances, and subordinated debt. As of September 30, 2024, other interest-bearing liabilities totaled 1.3% of total interest-bearing liabilities, compared to 2.5% as of December 31, 2023.
Current wording
Other interest-bearing liabilities that are used by the Company as an alternative source of funds consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances, and subordinated debt. As of March 31, 2025, other interest-bearing liabilities totaled 6.5% of total interest-bearing liabilities, compared to 2.5% as of December 31, 2024.
Previous wording
As of September 30, 2024, shareholders’ equity totaled $98.5 million, or 9.0% of total assets, compared to $90.6 million, or 8.4% of total assets, as of December 31, 2023. The increase in shareholders’ equity during the nine months ended September 30, 2024 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 nine months ended September 30, 2024 by reductions in the Company's accumulated other comprehensive loss resulting from changes in market interest rates, as well as the maturity of lower yielding investment securities.
Current wording
As of March 31, 2025, shareholders’ equity totaled $101.2 million, or 9.0% of total assets, compared to $98.6 million, or 9.0% of total assets, as of December 31, 2024. The increase in shareholders’ equity during the three months ended March 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 three months ended March 31, 2025 by reductions in the Company's accumulated other comprehensive loss resulting from changes in market interest rates, as well as the maturity of lower yielding investment securities.
Previous wording
In addition, during the nine months ended September 30, 2024, the Company completed the repurchase of 106,500 shares of its common stock at a weighted average price of $10.67 per share. The repurchases were completed under the Company’s previously announced share repurchase program. As of September 30, 2024, 352,813 shares remained available for repurchase under the program. No shares were repurchased by the Company during the nine months ended September 30, 2023.
Current wording
In addition, during the three months ended March 31, 2025, the Company completed the repurchase of 40,000 shares of its common stock at a weighted average price of $13.38 per share. The repurchases were completed under the Company’s previously announced share repurchase program. As of March 31, 2025, 872,813 shares remained available for repurchase under the program. No shares were repurchased by the Company during the three months ended March 31, 2024.
Previous wording
The asset portion of the balance sheet provides liquidity primarily from the following sources: (1) excess cash and interest-bearing deposits in banks, (2) federal funds sold and securities purchased under reverse repurchase agreements, (3) principal payments and maturities of loans and (4) principal payments and maturities from the investment portfolio. Loans maturing or repricing in one year or less amounted to $246.9 million as of September 30, 2024 and $241.2 million as of December 31, 2023. Investment securities forecasted to mature or reprice in one year or less were estimated to be $29.5 million and $12.9 million of the investment portfolio as of September 30, 2024 and December 31, 2023, respectively.
Current wording
The asset portion of the balance sheet provides liquidity primarily from the following sources: (1) excess cash and interest-bearing deposits in banks, (2) federal funds sold and securities purchased under reverse repurchase agreements, (3) principal payments and maturities of loans and (4) principal payments and maturities from the investment portfolio. Loans maturing or repricing in one year or less amounted to $264.4 million as of March 31, 2025 and $279.0 million as of December 31, 2024. Investment securities forecasted to mature or reprice in one year or less were estimated to be $27.6 million and $29.6 million of the investment portfolio as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
Although some securities in the investment portfolio have legal final maturities exceeding 10 years, a substantial percentage of the portfolio provides monthly principal and interest payments and consists of securities that are readily marketable and easily convertible into cash on short notice. The investment securities portfolio had an estimated average life of 4.1 years and 3.9 years as of September 30, 2024 and December 31, 2023, respectively. However, management does not rely solely upon the investment portfolio to generate cash flows to fund loans, capital expenditures, dividends, debt repayment and other cash requirements. These activities are also funded by cash flows from loan payments, as well as increases in deposits and short-term borrowings.
Current wording
Although some securities in the investment portfolio have legal final maturities exceeding 10 years, a substantial percentage of the portfolio provides monthly principal and interest payments and consists of securities that are readily marketable and easily convertible into cash on short notice. The investment securities portfolio had an estimated average life of 4.0 years and 3.6 years as of March 31, 2025 and December 31, 2024, respectively. However, management does not rely solely upon the investment portfolio to generate cash flows to fund loans, capital expenditures, dividends, debt repayment and other cash requirements. These activities are also funded by cash flows from loan payments, as well as increases in deposits and short-term borrowings.
Previous wording
The Company had up to $294.8 million and $279.4 million in remaining unused credit from the FHLB (subject to available collateral, which may include eligible investment securities and loans) as of September 30, 2024 and December 31, 2023, respectively. In addition, the Company had $48.0 million in unused established federal funds lines as of both September 30, 2024 and December 31, 2023.
Current wording
The Company had $25.0 million and $10.0 million of outstanding borrowings under FHLB advances as of March 31, 2025 and December 31, 2024, respectively. The Company's use of FHLB advances varies depending on fluctuations in deposits and other funding sources, as well as their use in interest rate hedging strategies. The Company had up to $285.3 million and $319.9 million in remaining unused credit from the FHLB (subject to available collateral, which may include eligible investment securities and loans) as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
The Company also has access to the FRB’s discount window. The discount window allows borrowing on pledged collateral that includes eligible investment securities and loans. In response to heightened liquidity concerns in the banking industry, during 2023 management undertook measures designed to enhance the Company’s liquidity position. These procedures included holding higher levels of on-balance sheet cash, as well as enhancing the availability of off-balance sheet borrowing capacity. As part of these efforts, during the third quarter of 2023, the Company completed the establishment of additional borrowing capacity through the FRB's discount window, primarily via the pledging of the majority of the Company’s indirect loan portfolio as collateral. Including the pledging of these loans, along with selected securities, the Company had $165.2 and $161.7 million in borrowing capacity with the FRB’s discount window as of September 30, 2024 and December 31, 2023, respectively.
Current wording
The Company also has access to the FRB’s discount window. The discount window allows borrowing on pledged collateral that includes eligible investment securities and loans. The Company maintains pledges of its consumer indirect loan portfolio and selected investment securities with the FRB as collateral to provide immediate access to funding through the discount window. As of March 31, 2025 and December 31, 2024 the Company had $160.0 and $165.1 million, respectively, in borrowing capacity with the FRB’s discount window. As of March 31, 2025 and December 31, 2024, the Bank had $20.0 million and zero, respectively, in outstanding federal funds purchased from the FRB's discount window.
Previous wording
The Company had zero and $10.0 million of outstanding borrowings under FHLB advances as of September 30, 2024 and December 31, 2023, respectively. The Company's use of FHLB advances varies depending on fluctuations in deposits and other funding sources, as well as their use in interest rate hedging strategies. In addition, on October 1, 2021, the Company completed a private placement of $11.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes that will mature on October 1, 2031. Net of unamortized debt issuance costs, the subordinated notes were recorded as long-term borrowings totaling $10.9 million and $10.8 million as of September 30, 2024 and December 31, 2023, respectively.
Current wording
On October 1, 2021, the Company completed a private placement of $11.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes that will mature on October 1, 2031. Net of unamortized debt issuance costs, the subordinated notes were recorded as long-term borrowings totaling $10.9 million as of both March 31, 2025 and December 31, 2024.
Showing the first 40 of 42 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
As of both March 31, 2025 and December 31, 2024, the Company’s reserve for unfunded commitments, which is recorded in other liabilities in the Company’s consolidated balance sheets, totaled $0.4 million.