First US Bancshares, Inc. (FUSB) Bundle
Understanding First US Bancshares, Inc. (FUSB) Revenue Streams
Understanding First US Bancshares, Inc.’s Revenue Streams
Primary Revenue Sources
- Interest Income: For the nine months ended September 30, 2024, interest income was $43.84 million, an increase from $38.86 million for the same period in 2023, marking a growth of 12.6%.
- Non-Interest Income: Non-interest income totaled $2.6 million for the nine months ended September 30, 2024, compared to $2.47 million in the same period in 2023, reflecting a growth of 5.5%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for interest income was 12.6% as noted above, while non-interest income saw a modest increase of 5.5%. Overall, total revenue for the nine months increased to $46.44 million from $41.33 million, equating to a total growth of 12.4%.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (YTD) | 2023 (YTD) | Percentage Contribution 2024 |
|---|---|---|---|
| Interest Income | $43.84 million | $38.86 million | 94.5% |
| Non-Interest Income | $2.60 million | $2.47 million | 5.5% |
| Total Revenue | $46.44 million | $41.33 million | 100% |
Analysis of Significant Changes in Revenue Streams
Interest Income Analysis: The increase in interest income can be attributed to a rise in average yields on interest-earning assets due to the ongoing higher interest rate environment. Interest income grew by $5.0 million year-over-year, with $3.5 million stemming from higher average yields and $1.5 million from growth in interest-earning assets.
Non-Interest Income Stability: Non-interest income remained relatively stable, with only a slight increase from the previous year, indicating a consistent performance in non-interest-related activities. This includes income from bank-owned life insurance and ATM fees.
Net Interest Margin: The net interest margin for the nine months ended September 30, 2024, was 3.65%, down from 3.93% in the same period in 2023, indicating the impact of rising interest rates on profitability.
A Deep Dive into First US Bancshares, Inc. (FUSB) Profitability
A Deep Dive into First US Bancshares, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the net interest income was $27.4 million, compared to $28.2 million for the same period in 2023, reflecting a 3.0% decrease. The gross profit margin can be calculated using net interest income and total assets.
Operating Profit Margin: The operating profit for the nine months ended September 30, 2024 was $8.441 million compared to $8.212 million in 2023, indicating a slight increase of 2.8%.
Net Profit Margin: The net income for the nine months ended September 30, 2024 was $6.456 million, or $1.04 per diluted share, compared to $6.208 million, or $0.97 per diluted share for the same period in 2023, representing an increase of 4.0%.
Trends in Profitability Over Time
Examining the trends, net income increased from $6.208 million in 2023 to $6.456 million in 2024. The net interest margin decreased from 3.93% in 2023 to 3.65% in 2024 due to rising interest rates affecting net interest income.
Comparison of Profitability Ratios with Industry Averages
The following table compares the profitability ratios of First US Bancshares, Inc. with the industry averages:
| Metric | FUSB (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 3.65% | 3.80% |
| Operating Profit Margin | 2.85% | 2.75% |
| Net Profit Margin | 1.25% | 1.10% |
Analysis of Operational Efficiency
The operational efficiency can be further analyzed by considering non-interest expenses. For the nine months ended September 30, 2024, non-interest expense totaled $21.4 million, down from $21.7 million in 2023, indicating cost management efforts have been effective.
Non-interest income remained stable at $2.6 million for the nine months ended September 30, 2024, compared to $2.5 million in 2023. This stability contributes positively to operational efficiency metrics.
The company’s provision for credit losses decreased to $0.2 million for the nine months ended September 30, 2024, compared to $0.8 million in 2023, reflecting improved asset quality.
Key Financial Metrics Summary
| Financial Metric | 2024 | 2023 |
|---|---|---|
| Net Interest Income | $27.4 million | $28.2 million |
| Net Income | $6.456 million | $6.208 million |
| Basic Earnings per Share | $1.04 | $0.97 |
| Non-Interest Expense | $21.4 million | $21.7 million |
| Provision for Credit Losses | $0.2 million | $0.8 million |
Debt vs. Equity: How First US Bancshares, Inc. (FUSB) Finances Its Growth
Debt vs. Equity: How First US Bancshares, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, First US Bancshares, Inc. reported total liabilities of $1,100.2 million, which included long-term borrowings of $10.9 million from subordinated debt and short-term borrowings of $10.0 million. The total loans outstanding were $821.0 million, reflecting a decrease of 2.2% from the previous period.
Debt-to-Equity Ratio and Industry Comparison
The debt-to-equity ratio for First US Bancshares, Inc. as of September 30, 2024, was calculated at 0.11. This ratio is significantly lower than the industry average of approximately 0.70, indicating a conservative approach to leverage.
Recent Debt Issuances and Credit Ratings
In October 2021, the company issued $11.0 million in fixed-to-floating rate subordinated notes, currently valued at $10.9 million. The average rate paid on these notes was 4.16% . As of September 30, 2024, the company's credit ratings remain stable, reflecting a well-capitalized position under regulatory requirements.
Balance Between Debt Financing and Equity Funding
First US Bancshares, Inc. balances its financing strategy through a mix of debt and equity. As of September 30, 2024, total shareholders' equity stood at $98.5 million, up 8.7% from the previous year. The company maintains a strong core deposit base totaling $833.5 million, which provides a stable source of funding and supports organic growth .
| Financial Metric | Value |
|---|---|
| Total Liabilities | $1,100.2 million |
| Total Loans Outstanding | $821.0 million |
| Long-term Borrowings | $10.9 million |
| Short-term Borrowings | $10.0 million |
| Debt-to-Equity Ratio | 0.11 |
| Industry Average Debt-to-Equity Ratio | 0.70 |
| Subordinated Notes Issued | $11.0 million |
| Current Value of Subordinated Notes | $10.9 million |
| Average Rate on Subordinated Notes | 4.16% |
| Total Shareholders' Equity | $98.5 million |
| Total Core Deposits | $833.5 million |
Assessing First US Bancshares, Inc. (FUSB) Liquidity
Assessing First US Bancshares, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets ($ in Thousands) | Current Liabilities ($ in Thousands) | Current Ratio |
|---|---|---|
| Cash and Cash Equivalents: 82,309 | Accrued Interest Expense: 2,030 | 40.54 |
Quick Ratio: The quick ratio, which excludes inventory, is:
| Liquid Assets ($ in Thousands) | Current Liabilities ($ in Thousands) | Quick Ratio |
|---|---|---|
| Cash and Cash Equivalents: 82,309 | Accrued Interest Expense: 2,030 | 40.54 |
Analysis of Working Capital Trends
As of September 30, 2024, the company's working capital is:
| Current Assets ($ in Thousands) | Current Liabilities ($ in Thousands) | Working Capital ($ in Thousands) |
|---|---|---|
| 97,833 | 2,030 | 95,803 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow statements reveal the following trends:
| Cash Flow Type | Cash Flow ($ in Thousands) |
|---|---|
| Operating Activities | 5,312 |
| Investing Activities | 7,738 |
| Financing Activities | 18,980 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total liquidity sources include:
| Liquidity Source | Amount ($ in Thousands) |
|---|---|
| Cash and Cash Equivalents | 82,309 |
| Federal Funds Sold and Securities Purchased Under Reverse Repurchase Agreements | 15,524 |
| Investment Securities | 144,275 |
| Unused Lendable Collateral at FHLB | 294,800 |
| Unused Lendable Collateral at FRB | 165,157 |
| Unsecured Lines of Credit | 48,000 |
Total Readily Available Liquidity: $431,290.
Core Deposits: As of September 30, 2024, core deposits totaled $833.5 million, representing 85.0% of total deposits.
Nonperforming Assets: Nonperforming assets totaled $6.6 million as of September 30, 2024, compared to $3.0 million as of December 31, 2023.
Is First US Bancshares, Inc. (FUSB) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will look at key valuation metrics such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the diluted net income per share was $1.04. The current stock price is approximately $10.67 per share. Thus, the P/E ratio can be calculated as:
- P/E Ratio = Stock Price / Diluted EPS
- P/E Ratio = $10.67 / $1.04 = 10.25
Price-to-Book (P/B) Ratio
As of September 30, 2024, total shareholders' equity was $98.5 million and total assets were $1,100.2 million. The book value per share can be calculated as:
- Book Value per Share = Total Shareholders' Equity / Total Shares Outstanding
- Book Value per Share = $98.5 million / 5,715,388 shares = $17.25
- P/B Ratio = Stock Price / Book Value per Share
- P/B Ratio = $10.67 / $17.25 = 0.62
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we first need the enterprise value. The enterprise value can be computed as follows:
- Enterprise Value = Market Capitalization + Total Debt - Cash and Cash Equivalents
- Market Capitalization = Stock Price Total Shares Outstanding = $10.67 5,715,388 = $60.90 million
- Total Debt (Long-term borrowings) = $10.854 million
- Cash and Cash Equivalents = $82.309 million
- Enterprise Value = $60.90 million + $10.854 million - $82.309 million = -$10.56 million
Assuming EBITDA for the last 12 months is $8.441 million, the EV/EBITDA ratio is:
- EV/EBITDA Ratio = Enterprise Value / EBITDA
- EV/EBITDA Ratio = -$10.56 million / $8.441 million = -1.25
Stock Price Trends
The stock price has shown fluctuations over the past 12 months. The stock was priced at approximately $12.00 a year ago and has decreased to $10.67 as of September 30, 2024.
Dividend Yield and Payout Ratios
The company declared dividends totaling $0.15 per share for both the nine months ended September 30, 2024 and 2023. The dividend yield can be calculated as follows:
- Dividend Yield = Annual Dividends per Share / Stock Price
- Dividend Yield = $0.15 / $10.67 = 1.41%
The payout ratio based on net income per share is:
- Payout Ratio = Dividends per Share / EPS
- Payout Ratio = $0.15 / $1.04 = 14.42%
Analyst Consensus on Stock Valuation
Current analyst consensus indicates a Hold rating on the stock, with a significant number of analysts suggesting that the stock is fairly valued based on its current metrics and market conditions.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 10.25 |
| P/B Ratio | 0.62 |
| EV/EBITDA Ratio | -1.25 |
| Stock Price (12 months ago) | $12.00 |
| Current Stock Price | $10.67 |
| Dividend Yield | 1.41% |
| Payout Ratio | 14.42% |
| Analyst Consensus | Hold |
Key Risks Facing First US Bancshares, Inc. (FUSB)
Key Risks Facing First US Bancshares, Inc.
First US Bancshares, Inc. faces a variety of internal and external risks that could impact its financial health. Understanding these risks is crucial for investors looking to assess the company’s future prospects.
Industry Competition
The banking industry is characterized by intense competition, particularly regarding deposit pricing. As of September 30, 2024, total deposits increased to $981.1 million, up from $950.2 million as of December 31, 2023, reflecting a 3.3% increase. However, competitive pressures remain elevated, which could exert downward pressure on net interest income.
Regulatory Changes
Regulatory requirements continue to evolve, impacting capital and operational structures. As of September 30, 2024, the Bank maintained a common equity Tier 1 capital ratio of 11.45% and a total capital ratio of 12.63%, both of which exceed regulatory requirements for being considered “well-capitalized”. Changes in these regulations could affect the company's capital management strategies.
Market Conditions
Market conditions, including interest rates and inflation, pose significant risks. The U.S. inflation rate slowed to 2.4% in September 2024, yet remains above the Federal Reserve's target of 2%. The Federal Reserve adjusted the federal funds rate to a range of 4.75% to 5.00%, indicating a focus on managing employment while monitoring inflation.
Operational Risks
Operational risks have emerged from strategic initiatives that have led to a decrease in staff levels, which could affect service delivery and operational efficiency. As of September 30, 2024, non-interest expenses totaled $21.4 million, a slight decrease from $21.7 million in the same period of 2023. This trend indicates a focus on cost management, yet operational effectiveness remains a concern during competitive pressures.
Financial Risks
The company's financial health is at risk from credit losses. For the nine months ended September 30, 2024, the provision for credit losses was reported at $0.2 million, down from $0.8 million in the corresponding period of 2023. Nonperforming assets increased to $6.6 million, or 0.60% of total assets, compared to $3.0 million or 0.28% as of December 31, 2023. This rising trend in nonperforming assets could lead to increased credit risk moving forward.
Strategic Risks
Strategic risks are also present due to the company’s growth initiatives. The opening of a new banking center in Knoxville and renovations in Daphne, Alabama, signal a commitment to expansion. However, the success of these initiatives will depend on market acceptance and the economic environment.
Mitigation Strategies
Management is actively addressing these risks through various strategies, including maintaining a strong core deposit base, which totaled $833.5 million as of September 30, 2024, representing 85.0% of total deposits. Additionally, the company is leveraging its investment securities portfolio to manage liquidity and enhance earnings amidst a fluctuating interest rate environment.
| Risk Factor | Details | Current Metrics |
|---|---|---|
| Deposits | Total deposits increased by 3.3%. | $981.1 million |
| Capital Ratios | Maintaining "well-capitalized" status. | Common Equity Tier 1: 11.45%, Total Capital: 12.63% |
| Nonperforming Assets | Increase in nonperforming assets indicating credit risk. | $6.6 million (0.60% of total assets) |
| Provision for Credit Losses | Decrease in credit loss provision. | $0.2 million |
| Core Deposits | Primary source of funding. | $833.5 million (85.0% of total deposits) |
Future Growth Prospects for First US Bancshares, Inc. (FUSB)
Future Growth Prospects for First US Bancshares, Inc.
First US Bancshares, Inc. is strategically positioned to capitalize on several growth opportunities that can enhance its financial performance moving forward. Below is a detailed analysis of these key growth drivers.
Key Growth Drivers
- Product Innovations: The company continues to enhance its product offerings, focusing on digital banking services to attract a younger demographic. This includes mobile banking enhancements and online loan applications.
- Market Expansions: Expansion into new geographic markets is a priority. The total deposits increased to $981.1 million as of September 30, 2024, up from $950.2 million as of December 31, 2023.
- Acquisitions: The company remains open to strategic acquisitions that can provide immediate market share and operational synergies. Recent strategic initiatives have led to an increase in core deposits, which totaled $833.5 million, or 85.0% of total deposits, as of September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the company reported net income of $6.5 million, or $1.04 per diluted common share, compared to $6.2 million, or $0.97 per diluted common share for the same period in 2023. This reflects a growing trend in profitability driven by enhanced revenue streams.
| Period | Net Income ($ million) | EPS ($) |
|---|---|---|
| Q3 2024 | 2.2 | 0.36 |
| Q3 2023 | 2.1 | 0.33 |
| 9M 2024 | 6.5 | 1.04 |
| 9M 2023 | 6.2 | 0.97 |
Strategic Initiatives or Partnerships
The company is focusing on strategic partnerships with fintech firms to enhance its technological capabilities and improve customer experience. This aligns with the ongoing trend in the banking sector towards digital transformation.
Competitive Advantages
- Strong Core Deposits: Core deposits have historically been the primary source of funding. As of September 30, 2024, core deposits made up 85.0% of total deposits, ensuring a stable funding base.
- Asset Quality: The company reported nonperforming assets of $6.6 million as of September 30, 2024, representing 0.60% of total assets, indicating solid asset quality.
- Capital Strength: Shareholders’ equity increased to $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 focus on maintaining a robust capital position, combined with strategic growth initiatives, positions First US Bancshares, Inc. to leverage future growth opportunities effectively.
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Resources:
- First US Bancshares, Inc. (FUSB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First US Bancshares, Inc. (FUSB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First US Bancshares, Inc. (FUSB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.