First US Bancshares, Inc. FUSB Q2 2026 earnings

July 29, 2026

CEO Commentary

“We are pleased to report significantly improved year-over-year earnings, along with solid loan growth and quarter-over-quarter expansion of net interest margin,” stated James F. House, President and CEO of the Company. “Diluted earnings per share doubled comparing the first six months of 2026 to the same period of 2025. While the geopolitical and economic environments remain uncertain, we continued to see resilience in the markets that we serve during the second quarter. We experienced robust loan growth during the quarter, particularly in the Bank’s construction and indirect consumer lending portfolios. In addition, we saw substantial margin improvement from 1Q2026 as we were able to manage deposit costs downward in a meaningful way,” continued Mr. House.

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 increased by $16.9 million, or 2.0%, in 2Q2026 compared to 1Q2026. Growth in the construction and consumer indirect categories was partially offset by decreases in other categories, primarily in non-residential commercial real estate, multi-family residential and 1-4 family residential. The decreases in the commercial real estate and multi-family categories resulted primarily from the payoff of real estate projects that had been anticipated to occur in the normal course of the project life cycle. The growth in the construction category was consistent with economic growth in the Company’s service territories, while the growth in the indirect consumer category was consistent with typical seasonal trends. 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 at the time of funding for the portfolio was 785. Growth in the total loan portfolio during 2Q2026 offset reductions in 1Q2026. For the six months ended June 30, 2026, total loans increased by $7.6 million, or 0.9%. Average total loans over the six-month period ended June 30, 2026 were $11.3 million, or 1.3%, higher than average total loans over the corresponding period of 2025. Consistent with reductions in the Federal funds rate in the latter part of 2025, the average yield on loans decreased in the first six months of 2026 relative to the corresponding period of 2025. The average yield on total loans was 5.90% in 2Q2026, compared to 5.95% during 1Q2026 and 6.07% in 2Q2025. For the six months ended June 30, 2026, the average yield on loans totaled 5.92%, compared to 6.05% during the six months ended June 30, 2025.

Deposits – Total deposits decreased by $40.9 million, or 3.9%, in 2Q2026. Included in the decrease were $20.1 million in wholesale brokered time deposits that matured and were not replaced. Of the remaining decrease, $15.1 million represented interest-bearing demand deposit accounts and $6.4 million interest-bearing time deposits. These decreases were partially offset by an increase in noninterest-bearing demand deposits of $0.7 million during the quarter. The decrease in both wholesale deposits, as well as other interest-bearing deposits, assisted management’s efforts to reduce overall deposit costs, while maintaining an appropriate level of core funding. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $835.2 million, or 83.7% of total deposits, as of June 30, 2026, compared to $853.8 million or 82.2% of total deposits, as of March 31, 2026, and $838.3 million, or 81.6% of total deposits, as of December 31, 2025. The average rate on deposits totaled 1.98% during 2Q2026, compared to 2.18% during 1Q2026 and 2.08% during 2Q2025. For the six months ended June 30, 2026, the average rate on deposits totaled 2.08%, compared to 2.07% during the six months ended June 30, 2025.

Cash and Investment Securities – As of June 30, 2026, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $63.8 million, or 5.6% of total assets, compared to $78.4 million, or 6.8% of total assets, as of December 31, 2025. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $166.0 million as of June 30, 2026, compared to $168.5 million as of December 31, 2025. During the six months ended June 30, 2026, the Company purchased $25.4 million in investment securities at market rates in existence at the time of purchase. In addition, the Company sold investment securities with a principal balance totaling $7.1 million and recorded a gain on sale totaling $0.5 million during 2Q2026. These purchases and sales, combined with the maturity and paydown of investment securities at lower rates, have led to continued improvement in yield on the portfolio. The average yield on investment securities, including both available-for-sale and held-to-maturity securities, totaled 3.95% during 2Q2026, compared to 3.89% during 1Q2026, and 3.46% during 2Q2025. For the six months ended June 30, 2026, the average yield on investment securities totaled 3.92%, compared to 3.45% during the six months ended June 30, 2025. As of June 30, 2026, the expected average life of securities in the investment portfolio was 3.6 years compared to 3.7 years as of December 31, 2025.

Net Interest Income and Margin – Net interest income in 2Q2026 increased by $0.3 million, or 3.1%, compared to 1Q2026 and increased by $24 thousand, or 0.3%, compared to 2Q2025. Net interest margin was 3.56% for 2Q2026, compared to 3.37% for 1Q2026 and 3.59% for 2Q2025. For the six months ended June 30, 2026, net interest margin totaled 3.46%, compared to 3.56% for the six months ended June 30, 2025. The decrease in net interest margin comparing the first half of 2026 to the corresponding period of 2025 resulted primarily from reductions in loan yields that occurred following the reduction of the Federal funds rate during the latter part of 2025.

Asset Quality – Nonperforming assets, including loans in non-accrual status, other real estate owned, and repossessed assets, totaled $1.9 million as of June 30, 2026, compared to $1.6 million as of December 31, 2025. As a percentage of total assets, nonperforming assets totaled 0.17% as of June 30, 2026, compared to 0.14% as of December 31, 2025. Net charge-offs as a percentage of average loans totaled 0.30% in 2Q2026, compared to 0.23% in 1Q2026 and 0.79% during 2Q2025. For the six months ended June 30, 2026, net charge-offs as a percentage of average loans totaled 0.27%, compared to 0.47% during the six months ended June 30, 2025. The decrease in net charge-offs comparing the first half of 2026 to the corresponding period of 2025 was due to the partial charge-off in 2Q2025 of one individually evaluated commercial loan totaling $1.2 million that was not repeated in 2026. The increase in net charge-offs comparing 2Q2026 to 1Q2026 was due to an uptick in charge-offs associated with the indirect portfolio.

Provision for Credit Losses – During 2Q2026, the Company recorded a provision for credit losses totaling $0.9 million, compared to $0.3 million in 1Q2026 and $2.7 million in 2Q2025. For the six months ended June 30, 2026, the provision for credit losses totaled $1.2 million, compared to $3.2 million for the six months ended June 30, 2025. The increase in provision in 2Q2026 compared to 1Q2026 was due primarily to loan growth in 2Q2026, as well as changes in the economic forecasting associated with the Company’s credit forecasting model. The decreased provision comparing the first half of 2026 to the corresponding periods of 2025 resulted primarily from provisioning for specifically identified commercial loans in 2Q2025. The credit issues associated with additional provisioning in 2Q2025 were resolved later in 2025, and accordingly, the same level of provisioning was not repeated during 2026. As of June 30, 2026, the Company’s ACL on loans and leases as a percentage of total loans was 1.26%, compared to 1.25% as of December 31, 2025. While management believes that the ACL is adequate to absorb credit losses within the Company’s loan portfolio, inherent uncertainty exists pertaining to the ultimate impact on the portfolio of both geopolitical and economic matters, including prospective inflation, unemployment levels, tariffs, and consumer affordability.

Pre-tax Pre-provision Net Revenue (“PPNR”) – PPNR totaled $3.2 million in 2Q2026, compared to $2.7 million in 1Q2026 and $2.9 million in 2Q2025. As a percentage of average assets, PPNR totaled 1.12% in 2Q2026, compared to 0.94% in 1Q2026 and 1.03% in 2Q2025. For the six months ended June 30, 2026, PPNR as a percentage of average assets was 1.03%, compared to 1.05% for the six months ended June 30, 2025. Refer to the non-GAAP Financial Measures section for a reconciliation of PPNR to net income.

Non-interest Income – Non-interest income increased to $1.3 million in 2Q2026, compared to $0.8 million in both 1Q2026 and 2Q2025. The increase in non-interest income in 2Q2026 compared to both prior periods resulted from gains on sale of securities totaling $0.5 million. For the six months ended June 30, 2026, non-interest income totaled $2.2 million, compared to $1.7 million for the six months ended June 30, 2025, an increase of $0.5 million resulting from the gains on sale of securities taken in 2Q2026.

Non-interest Expense – Non-interest expense totaled $7.6 million in 2Q2026, compared to $7.3 million in 1Q2026 and $7.4 million in 2Q2025. For the six months ended June 30, 2026, non-interest expense totaled $15.0 million, compared to $14.4 million for the six months ended June 30, 2025. The expense increases, comparing both 2Q2026 and the six-month period ended June 30, 2026 to prior periods, resulted primarily from inflationary increases in various expense categories, as well as an increase in net occupancy expenses associated with expansion of the Company’s banking center footprint.

Shareholders’ Equity – As of June 30, 2026, shareholders’ equity totaled $104.3 million, or 9.09% of total assets, compared to $105.6 million, or 9.15% of total assets, as of December 31, 2025. While earnings, net of dividends paid, increased shareholders’ equity during the six months ended June 30, 2026, the increase was fully offset by share repurchases, combined with an increase in the Company’s accumulated other comprehensive loss resulting primarily from the increasing interest rate environment and the sale of investment securities during the period. The Company’s ratio of tangible common equity to tangible assets was 8.49% as of June 30, 2026, compared to 8.56% as of December 31, 2025.

Cash Dividend – In 2Q2026, the Company declared a cash dividend of $0.07 per share on its common stock, consistent with the dividend paid in 1Q2026 and all four quarters of 2025.

Share Repurchases – During 2Q2026, the Company completed the repurchase of 91,000 shares of its common stock at a weighted average price of $15.83 per share, bringing total share repurchases for the six months ended June 30, 2026 to 237,500 shares at a weighted average price of $15.33 per share. All repurchases were completed under the Company’s previously announced share repurchase program, which was expanded in 2025. As of June 30, 2026, 1,547,313 shares remained available for repurchase under the program.

Regulatory Capital – During 2Q2026, the Bank continued to maintain capital ratios at higher levels than required to be considered a “well-capitalized” institution under applicable banking regulations. As of June 30, 2026, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.85%, its total capital ratio was 12.02%, and its Tier 1 leverage ratio was 9.16%.

Liquidity – As of June 30, 2026, 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 2Q2026, the Company opened a new banking center office in Daphne, Alabama. The location will serve as the Bank’s initial deposit gathering facility in the Daphne/Mobile area. In addition, during 2Q2026, the Company purchased an office in Orange Beach, Alabama, which is expected to serve as a banking center following the completion of renovations. The location is expected to open to the public in 2027.

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 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 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; effects of changes in the policies of monetary authorities and other government action; 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”); risks of dependence on outside third parties for the processing and handling of our records and data; 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.

FIRST US BANCSHARES, INC. AND SUBSIDIARY

NET INTEREST MARGIN

THREE MONTHS ENDED June 30, 2026 AND 2025

(Dollars in Thousands)

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NET INTEREST MARGIN

SIX MONTHS ENDED June 30, 2026 AND 2025

(Dollars in Thousands)

(Unaudited)

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

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

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)

Non-GAAP Financial Measures

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

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

Liquidity Measures

The table below provides information combining the Company’s on-balance sheet liquidity with readily available off-balance sheet sources of liquidity as of both June 30, 2026 and December 31, 2025.

The table above calculates readily available liquidity by combining cash and cash equivalents, federal funds sold, securities purchased under reverse repurchase agreements and unencumbered investment security values on the Company’s consolidated balance sheet with off-balance sheet liquidity that is readily available through unused collateral pledged to the FHLB and FRB, as well as unsecured lines of credit with other banks. Liquidity from pledgable investment securities and total readily available liquidity are non-GAAP measures used by management and regulators to analyze a portion of the Company's liquidity. Management uses these measures to evaluate the Company's liquidity position.

Pledgable investment securities are considered by management as a readily available source of liquidity since the Company has the ability to pledge the securities with the FHLB or FRB to obtain immediate funding. Both available-for-sale and held-to-maturity securities may be pledged at fair value with the FHLB and through the FRB discount window. The amounts shown as liquidity from pledgable investment securities represent total investment securities as recorded on the consolidated balance sheet, less reductions for securities already pledged and discounts expected to be taken by the lender to determine collateral value.

The Company’s readily available liquidity position decreased to $409.9 million as of June 30, 2026, compared to $467.2 million as of December 31, 2025 due to a combination of factors, including a reduction in cash and cash equivalents commensurate with efforts to improve balance sheet efficiency, combined with increased usage of secured short-term borrowings as of June 30, 2026. While readily available liquidity decreased comparing June 30, 2026 to December 31, 2025, the Company maintained ample access to liquidity relative to estimated uninsured deposits. Excluding wholesale brokered deposits, as of June 30, 2026, the Bank had approximately 27 thousand deposit accounts with an average balance of approximately $32.2 thousand per account. Estimated uninsured deposits (calculated as deposit amounts per deposit holder in excess of $250 thousand, the maximum amount of federal deposit insurance, and excluding deposits secured by pledged assets) totaled $176.7 million, or 17.6 % of total deposits, as of June 30, 2026. As of December 31, 2025, estimated uninsured deposits totaled $218.0 million, or 21.2% of total deposits.

Pre-tax Pre-provision Net Revenue

The Company utilizes pre-tax pre-provision net revenue (“PPNR”) as a supplemental measure of profitability in addition to earnings measures defined by GAAP, including income before income taxes and net income. PPNR measures the Company’s profitability before accounting for the provisions for credit losses and income taxes. Management believes PPNR provides a means to effectively measure the Company’s core operating profitability on a trended basis. In management’s experience, PPNR and PPNR as a percentage of average assets are commonly used by stock analysts and investors in conjunction with their evaluation of financial institutions. The table below reconciles the Company’s calculation of PPNR to amounts recorded in accordance with GAAP.

Tangible Balances and Measures

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

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

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

(1)

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