GlobeNewswire Inc | Oct 30, 2020 04:30PM EDT

October 30, 2020

BIRMINGHAM, Ala., Oct. 30, 2020 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq: FUSB) (the Company), the parent company of First US Bank (the Bank), today reported net income of $0.4 million, or $0.06 per diluted share, for the quarter ended September 30, 2020 (3Q2020), compared to $0.4 million, or $0.06 per diluted share, for the quarter ended June 30, 2020 (2Q2020) and $1.1 million, or $0.16 per diluted share, for the quarter ended September 30, 2019 (3Q2019). For the nine months ended September 30, 2020, the Companys net income totaled $1.7 million, or $0.25 per diluted share, compared to $3.4 million, or $0.49 per diluted share, for the nine months ended September 30, 2019.

Net interest income improved to $9.0 million in 3Q2020, compared to $8.6 million in the previous quarter. The increase in net interest income was driven by significant loan growth during the quarter. Total loans averaged $609.6 million during 3Q2020, compared to $557.5 million during 2Q2020, an increase of $52.1 million, or 9.3%. The linked quarter growth in net interest income was partially offset by an increase in the provision for loan and lease losses in response to loan growth, as well as a modest reserve build in light of the current economic environment.

James F. House, President and CEO of the Company, stated, We are pleased with the third quarter results, particularly in light of the challenging operating environment that we have experienced in 2020. The strong credit quality of our loan portfolio that has been built over the past several years has provided a solid footing that enables us to move forward in pursuing our loan growth initiatives. Our COVID-19-related payment deferments decreased to $18.4 million, or 2.9% of the loan portfolio, as of September 30, 2020, compared to $95.2 million, or 16.5% of the loan portfolio, as of June 30, 2020. In addition, we continue to gain insight as to the impact of the pandemic on our portfolio. As a result of the improving clarity and outlook, we were able to focus considerable effort during the quarter on loan growth, as well as our initiatives to reduce deposit costs, both of which should enhance earnings over time.

Third Quarter 2020 Highlights

Loan Growth Total loans increased by $61.1 million as of September 30, 2020 compared to June 30, 2020. The increase was most pronounced in indirect sales lending and commercial real estate lending, which grew by $35.4 million and $27.6 million, respectively, in 3Q2020, and the residential 1-4 family real estate portfolio also grew by $2.1 million in 3Q2020. The Companys indirect sales portfolio is comprised of loans secured by collateral that generally includes recreational vehicles, campers, boats and horse trailers. Effective January 1, 2020, the portfolio was transferred to the Bank from Acceptance Loan Company, the Banks wholly owned subsidiary (ALC). During the COVID-19 pandemic, demand for this financing has grown substantially as consumers seek alternatives to more traditional travel and leisure activities. The growth in commercial real estate lending was focused on borrowers that management determined to be of appropriate credit quality and structure in the current environment under the Banks established underwriting criteria. Growth in indirect lending and commercial real estate lending was partially offset by decreases in the Banks commercial and industrial portfolio totaling $0.9 million, as well as a reduction in direct consumer lending, primarily through ALCs branch system, that totaled $3.1 million during the quarter.

Net Interest Income 3Q2020 net interest income increased by $0.3 million as a result of loan growth and the resulting shift of a portion of excess cash balances to higher-yielding assets. Net interest margin decreased nine basis points to 4.56% for 3Q2020, compared to 4.65% for 2Q2020. However, as a result of earning asset mix changes, combined with continued efforts to reduce deposit costs, reductions in net interest margin slowed in 3Q2020 compared to the previous quarter.

The interest rate environment precipitated by the pandemic has put significant pressure on our net interest margin, particularly in 2Q2020, as yields on interest-earning assets generally shifted downward more rapidly than rates on interest-bearing liabilities. During 3Q2020, management continued efforts to reprice deposit products in a manner consistent with the current environment. As a result of these efforts, the weighted average annualized rate paid for interest-bearing liabilities decreased to 0.68% for 3Q2020, compared to 0.80% for 2Q2020 and 1.16% for 3Q2019. Annualized total funding costs (including both interest-bearing and non-interest-bearing deposits and borrowings) decreased 10 basis points to 0.54% for 3Q2020, compared to 0.64% for 2Q2020 and 0.97% for 3Q2019. If the current interest rate environment continues, management expects to further reduce interest costs as interest-bearing liabilities continue to reprice.

Balance Sheet Growth Total assets as of September 30, 2020 increased by $7.2 million, or 0.9%, compared to June 30, 2020. Liabilities experienced continued growth in 3Q2020 primarily due to deposit growth. Deposit growth during 2020 has reflected the impact of the pandemic on both business and consumer deposit holders, including preferences for liquidity, loan payment deferments, tax payment deferments, stimulus checks and lower consumer spending. Total deposits as of September 30, 2020 were $7.0 million, or 1.0%, higher than deposit balances as of June 30, 2020 and were $61.7 million, or 9.0%, higher than deposit balances as of December 31, 2019. Of the total year-to-date increase in deposits as of September 30, 2020, $40.2 million represented non-interest-bearing deposits, while $21.5 million were interest-bearing.

Loan Loss Provision The ratio of net charge-offs to average loans was 0.19% annualized for 3Q2020, compared to 0.27% annualized for 2Q2020 and 0.28% annualized for 3Q2019. Although net charge-off experience improved, the Companys provision for loan losses increased to $1.0 million in 3Q2020, compared to $0.9 million in both 2Q2020 and 3Q2019. The provision increase in 3Q2020 occurred primarily to reserve for the significant loan growth during the quarter, as well as a modest reserve build in light of the economic uncertainty that continues to exist related to the pandemic. Excluding loans originated under the Paycheck Protection Program (PPP Loans), which are guaranteed by the Small Business Administration (the SBA), the allowance as a percentage of total loans was 1.16% as of September 30, 2020, compared to 1.15% as of June 30, 2020 and 1.02% as of September 30, 2019.

In accordance with relevant accounting guidance for smaller reporting companies, the Company has not yet adopted the Current Expected Credit Loss (CECL) accounting model for the calculation of credit losses. Management believes that the allowance for loan and lease losses as of September 30, 2020, which was calculated under an incurred loss model, was sufficient to absorb losses in the Companys loan portfolio based on circumstances existing as of the balance sheet date. However, due to the uncertainty of the economic environment resulting from the pandemic, management will continue to closely monitor the impact of changing economic circumstances on the Companys loan portfolio.

Asset Quality Non-performing assets, including loans in non-accrual status and other real estate owned (OREO), were $4.0 million as of September 30, 2020, compared to $4.8 million as of December 31, 2019. As a percentage of total assets, non-performing assets totaled 0.47% as of September 30, 2020, compared to 0.61% as of December 31, 2019.

Non-interest Income Non-interest income totaled $1.4 million in 3Q2020, compared to $1.3 million in 2Q2020 and $1.4 million in 3Q2019. For both of the nine-month periods ended September 30, 2020 and 2019, non-interest income totaled $4.0 million.

Non-interest Expense Non-interest expense totaled $8.7 million during 3Q2020, compared to $8.6 million during 2Q2020 and $8.5 million during 3Q2019. Non-interest expense totaled $25.8 million for the nine-month period ended September 30, 2020, compared to $25.5 million for the nine-month period ended September 30, 2019.

Cash Dividend The Company declared a cash dividend of $0.03 per share on its common stock in each quarter of 2020, resulting in a dividend of $0.09 per share for the nine months ended September 30, 2020, compared to $0.06 per share for the nine months ended September 30, 2019.

Regulatory Capital During 3Q2020, the Bank continued to maintain capital ratios at higher levels than the ratios required to be considered a well-capitalized institution under applicable banking regulations. As of September 30, 2020, the Banks common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.71%. Its total capital ratio was 12.81%, and its Tier 1 leverage ratio was 9.08%.

Liquidity As of September 30, 2020, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations. The Company benefits from a strong core deposit base, a liquid investment securities portfolio and access to funding from a variety of sources, including federal funds lines, Federal Home Loan Bank advances and brokered deposits.

COVID-19 Borrower Support Actions Following the declaration of COVID-19 as a global pandemic in March 2020, the Company participated in a number of actions to support borrowers, including the origination of PPP Loans to deliver funding to small business owners, as well as processing loan payment deferments for consumer and business borrowers.

About First US Bancshares, Inc.

First US Bancshares, Inc. is a bank holding company that operates banking offices in Alabama, Tennessee and Virginia through First US Bank. In addition, the Companys operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Banks and ALCs consumer loan customers. The Company files periodic reports with the U.S. Securities and Exchange Commission (the SEC). Copies of its filings may be obtained through the SECs 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 Companys 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 Companys 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 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. Specifically, with respect to statements relating to the sufficiency of the allowance for loan and lease losses, loan demand, cash flows, interest costs, growth and earnings potential, expansion and the Companys positioning to handle the challenges presented by COVID-19, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy generally and in the Banks and ALCs service areas; market conditions and investment returns; changes in interest rates; the impact of the current COVID-19 pandemic on the Companys business, the Companys customers, the communities that the Company serves and the United States economy, including the impact of actions taken by governmental authorities to try to contain the virus or address the impact of the virus on the United States economy (including, without limitation, the Coronavirus Aid, Relief and Economic Security (CARES) Act and subsequent federal legislation) and the resulting effect on the Companys operations, liquidity and capital position and on the financial condition of the Companys borrowers and other customers; the pending discontinuation of LIBOR as an interest rate benchmark; the availability of quality loans in the Banks and ALCs service areas; the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets; collateral values; and cybersecurity threats. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.



Contact: Thomas S. Elley 205-582-1200



FIRST US BANCSHARES, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA ? LINKED QUARTERS (Dollars in Thousands, Except Per Share Data) (Unaudited) Quarter Ended Nine Months Ended 2020 2019 2020 2019 September June March December September September September 30, 30, 31, 31, 30, 30, 30,Results of Operations:Interest $ 9,996 $ 9,780 $ 10,397 $ 10,825 $ 11,027 $ 30,173 $ 32,763 incomeInterest 1,031 1,157 1,511 1,636 1,680 3,699 5,010 expenseNet interest 8,965 8,623 8,886 9,189 9,347 26,474 27,753 incomeProvision forloan and 1,046 850 580 716 883 2,476 1,998 lease lossesNet interestincome afterprovision for 7,919 7,773 8,306 8,473 8,464 23,998 25,755 loanand leaselossesNon-interest 1,375 1,330 1,297 1,396 1,414 4,002 3,970 incomeNon-interest 8,747 8,581 8,494 8,279 8,546 25,822 25,503 expenseIncome before 547 522 1,109 1,590 1,332 2,178 4,222 income taxesProvision for 136 118 262 381 214 516 865 income taxesNet income $ 411 $ 404 $ 847 $ 1,209 $ 1,118 $ 1,662 $ 3,357 Per Share Data:Basic netincome per $ 0.07 $ 0.07 $ 0.13 $ 0.19 $ 0.17 $ 0.27 $ 0.52 shareDiluted netincome per $ 0.06 $ 0.06 $ 0.13 $ 0.18 $ 0.16 $ 0.25 $ 0.49 shareDividends $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.02 $ 0.09 $ 0.06 declaredKey Measures (Period End):Total assets $ 852,941 $ 845,747 $ 788,565 $ 788,738 $ 771,930 Tangible 844,439 837,142 779,850 779,913 762,996 assets ^(1)Loans, net ofallowance for 627,605 566,062 539,685 545,243 544,519 loan lossesAllowance forloan and 7,185 6,423 5,954 5,762 5,585 lease lossesInvestmentsecurities, 93,405 103,964 110,079 108,356 114,309 netTotal 745,336 738,290 682,595 683,662 677,640 depositsShort-term 10,045 10,334 10,152 10,025 221 borrowingsTotalshareholders? 85,658 85,281 84,332 84,748 83,790 equityTangiblecommon equity 77,156 76,676 75,617 75,923 74,856 ^(1)Book valueper common 13.87 13.81 13.73 13.76 13.47 shareTangible bookvalue per 12.49 12.41 12.31 12.33 12.03 common share^(1)Key Ratios: Return onaverage 0.19 % 0.20 % 0.43 % 0.61 % 0.57 % 0.27 % 0.57 %assets(annualized)Return onaverage 1.91 % 1.91 % 4.02 % 5.68 % 5.28 % 2.61 % 5.45 %common equity(annualized)Return onaveragetangible 2.12 % 2.13 % 4.49 % 6.35 % 5.92 % 2.90 % 6.13 %common equity(annualized)^(1)Net interest 4.56 % 4.65 % 4.97 % 5.12 % 5.23 % 4.72 % 5.20 %marginEfficiency 84.6 % 86.2 % 83.4 % 78.2 % 79.4 % 84.7 % 80.4 %ratio ^(2)Net loans to 84.2 % 76.7 % 79.1 % 79.8 % 80.4 % depositsNet loans to 73.6 % 66.9 % 68.4 % 69.1 % 70.5 % assetsTangiblecommon equity 9.14 % 9.16 % 9.70 % 9.73 % 9.81 % to tangibleassets ^(1)Tier 1leverage 9.08 % 9.36 % 9.46 % 9.61 % 9.55 % ratio ^(3)Allowance forloan losses 1.13 % 1.12 % 1.09 % 1.05 % 1.02 % as % of loans^(4)Nonperformingassets as % 0.47 % 0.52 % 0.60 % 0.61 % 0.35 % of totalassets

^(1) Refer to Non-GAAP reconciliation of tangible balances and measuresbeginning on page 11^(2) Efficiency ratio = non-interest expense / (net interest income +non-interest income)^(3) First US Bank Tier 1 leverage ratio^(4) The allowance for loan losses as a % of loans excluding PPP Loans, whichare guaranteed by the SBA, was 1.16% as of September 30, 2020

FIRST US BANCSHARES, INC. AND SUBSIDIARIESNET INTEREST MARGINTHREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019(Dollars in Thousands)(Unaudited)

Three Months Ended Three Months Ended September 30, 2020 September 30, 2019 Average Annualized Average Annualized Balance Interest Yield/ Balance Interest Yield/ Rate % Rate %ASSETS Interest-earning assets:Total Loans $ 609,609 $ 9,557 6.24 % $ 538,294 $ 10,114 7.45 %Taxable investment 95,402 393 1.64 % 124,592 626 1.99 %securitiesTax-exemptinvestment 3,530 16 1.80 % 1,981 14 2.80 %securitiesFederal Home Loan 1,135 11 3.86 % 1,138 22 7.67 %Bank stockFederal funds sold 80 ? ? 14,442 85 2.34 %Interest-bearing 72,288 19 0.10 % 28,858 166 2.28 %deposits in banksTotalinterest-earning 782,044 9,996 5.08 % 709,305 11,027 6.17 %assetsNon-interest-earning assets:Other assets 68,424 72,414 Total $ 850,468 $ 781,719 LIABILITIES AND SHAREHOLDERS? EQUITYInterest-bearing liabilities:Demand deposits $ 203,842 $ 130 0.25 % $ 165,877 $ 217 0.52 %Savings deposits 161,699 147 0.36 % 157,822 389 0.98 %Time deposits 226,269 717 1.26 % 241,433 1,016 1.67 %Totalinterest-bearing 591,810 994 0.67 % 565,132 1,622 1.14 %depositsBorrowings 10,252 37 1.44 % 10,166 58 2.26 %Totalinterest-bearing 602,062 1,031 0.68 % 575,298 1,680 1.16 %liabilities ^(1)Non-interest-bearing liabilities:Demand deposits 153,112 111,845 Other liabilities 9,638 10,585 Shareholders? equity 85,656 83,991 Total $ 850,468 $ 781,719 Net interest income $ 8,965 $ 9,347 Net interest margin 4.56 % 5.23 %

^(1) The annualized rate on total average funding costs, including totalaverage interest-bearing liabilities and average non-interest-bearing demanddeposits, was 0.54% and 0.97% for the three-month periods ended September 30,2020 and 2019, respectively

FIRST US BANCSHARES, INC. AND SUBSIDIARIESNET INTEREST MARGINNINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019(Dollars in Thousands)(Unaudited)

Nine Months Ended Nine Months Ended September 30, 2020 September 30, 2019 Average Annualized Average Annualized Balance Interest Yield/ Balance Interest Yield/ Rate % Rate %ASSETS Interest-earning assets:Total Loans $ 571,881 $ 28,433 6.64 % $ 521,304 $ 29,620 7.60 %Taxable investment 101,303 1,417 1.87 % 137,793 2,156 2.09 %securitiesTax-exemptinvestment 2,158 39 2.41 % 2,125 43 2.71 %securitiesFederal Home Loan 1,136 41 4.82 % 853 45 7.05 %Bank stockFederal funds sold 6,302 45 0.95 % 12,246 227 2.48 %Interest-bearing 66,325 198 0.40 % 38,890 672 2.31 %deposits in banksTotalinterest-earning 749,105 30,173 5.38 % 713,211 32,763 6.14 %assetsNon-interest-earning assets:Other assets 71,594 71,834 Total $ 820,699 $ 785,045 LIABILITIES AND SHAREHOLDERS? EQUITYInterest-bearing liabilities:Demand deposits $ 185,667 $ 442 0.32 % $ 168,284 $ 639 0.51 %Savings deposits 161,026 605 0.50 % 163,981 1,309 1.07 %Time deposits 232,824 2,553 1.46 % 246,961 3,004 1.63 %Totalinterest-bearing 579,517 3,600 0.83 % 579,226 4,952 1.14 %depositsBorrowings 10,201 99 1.30 % 3,574 58 2.17 %Totalinterest-bearing 589,718 3,699 0.84 % 582,800 5,010 1.15 %liabilities ^(1)Non-interest-bearing liabilities:Demand deposits 136,052 110,291 Other liabilities 9,816 9,633 Shareholders? equity 85,113 82,321 Total $ 820,699 $ 785,045 Net interest income $ 26,474 $ 27,753 Net interest margin 4.72 % 5.20 %

(1) The annualized rate on total average funding costs, including total average interest-bearing liabilities and average non-interest-bearing demand deposits, was 0.68% and 0.97% for the nine-month periods ended September 30, 2020 and 2019, respectively

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

September December 30, 31, 2020 2019 (Unaudited) ASSETS Cash and due from banks $ 14,709 $ 11,939 Interest-bearing deposits in banks 50,934 45,091 Total cash and cash equivalents 65,643 57,030 Federal funds sold 86 10,080 Investment securities available-for-sale, at fair 85,682 94,016 valueInvestment securities held-to-maturity, at 7,723 14,340 amortized costFederal Home Loan Bank stock, at cost 1,135 1,137 Loans and leases, net of allowance for loan andlease losses of $7,185 and 627,605 545,243 $5,762, respectivelyPremises and equipment, net of accumulateddepreciation of $23,443 28,337 29,216 and $22,570, respectivelyCash surrender value of bank-owned life insurance 15,771 15,546 Accrued interest receivable 2,883 2,488 Goodwill and core deposit intangible, net 8,502 8,825 Other real estate owned 985 1,078 Other assets 8,589 9,739 Total assets $ 852,941 $ 788,738 LIABILITIES AND SHAREHOLDERS? EQUITY Deposits: Non-interest-bearing $ 152,942 $ 112,729 Interest-bearing 592,394 570,933 Total deposits 745,336 683,662 Accrued interest expense 365 537 Other liabilities 11,537 9,766 Short-term borrowings 10,045 10,025 Total liabilities 767,283 703,990 Shareholders? equity: Common stock, par value $0.01 per share, 10,000,000shares authorized;7,596,351 and 7,568,053 shares issued, 75 75 respectively; 6,176,556 and 6,157,692shares outstanding, respectivelyAdditional paid-in capital 13,680 13,814 Accumulated other comprehensive loss, net of tax (106 ) (46 )Retained earnings 93,862 92,755 Less treasury stock: 1,419,795 and 1,410,361 shares (21,853 ) (21,850 )at cost, respectivelyTotal shareholders? equity 85,658 84,748 Total liabilities and shareholders? equity $ 852,941 $ 788,738

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

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Interest income: Interest and fees on loans $ 9,557 $ 10,114 $ 28,433 $ 29,620 Interest on investment 439 913 1,740 3,143 securitiesTotal interest income 9,996 11,027 30,173 32,763 Interest expense: Interest on deposits 994 1,622 3,600 4,952 Interest on borrowings 37 58 99 58 Total interest expense 1,031 1,680 3,699 5,010 Net interest income 8,965 9,347 26,474 27,753 Provision for loan and lease 1,046 883 2,476 1,998 losses Net interest income afterprovision for loan and lease 7,919 8,464 23,998 25,755 losses Non-interest income: Service and other charges on 298 472 995 1,375 deposit accountsCredit insurance income 54 175 252 426 Net gain on sales andprepayments of investment ? 45 326 67 securitiesMortgage fees from secondary 196 91 499 380 marketLease income 206 212 630 633 Other income, net 621 419 1,300 1,089 Total non-interest income 1,375 1,414 4,002 3,970 Non-interest expense: Salaries and employee benefits 5,138 5,089 15,467 15,272 Net occupancy and equipment 1,078 1,055 3,074 3,190 Computer services 470 421 1,311 1,105 Fees for professional services 325 316 1,004 879 Other expense 1,736 1,665 4,966 5,057 Total non-interest expense 8,747 8,546 25,822 25,503 Income before income taxes 547 1,332 2,178 4,222 Provision for income taxes 136 214 516 865 Net income $ 411 $ 1,118 $ 1,662 $ 3,357 Basic net income per share $ 0.07 $ 0.17 $ 0.27 $ 0.52 Diluted net income per share $ 0.06 $ 0.16 $ 0.25 $ 0.49 Dividends per share $ 0.03 $ 0.02 $ 0.09 $ 0.06

COVID-19 Loan Deferments

Uncertainty continues to exist as to what the ultimate economic impact of the COVID-19 pandemic will be on the Companys borrowers. In response to this uncertainty, during the first nine months of 2020, the Company increased qualitative factors in the calculation of the allowance for loan and lease losses. Although we believe that the allowance was sufficient to absorb losses in the portfolio based on circumstances existing as of September 30, 2020, management is continuing to closely monitor the Companys loan portfolio for indications of credit deterioration, particularly with respect to those loans that have had payments deferred in connection with the pandemic.

In accordance with section 4013 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Company implemented initiatives to provide short-term payment relief to borrowers who have been negatively impacted by COVID-19. Over 1,800 of the Companys borrowers requested and were granted pandemic-related deferments by the Company during the nine months ended September 30, 2020. Although the interpretive guidance defines short-term as six months, the majority of deferments granted by the Company were for terms of 90 days or less. During 3Q2020, the principal balance of loans that were under COVID-19 deferment was reduced by $76.8 million. The table below summarizes all remaining COVID-19 payment deferments as of September 30, 2020 and June 30, 2020.

As of September 30, 2020 As of June 30, 2020 Principal Principal Number Balance % of Number Balance % of of Loans of Portfolio of Loans of Portfolio Deferred Loans Balance Deferred Loans Balance Deferred Deferred (Dollars in Thousands) Loans secured by real estate:Construction,land development 1 $ 2,259 6.4 % 7 $ 4,544 14.5 %and other landloansSecured by 1-4family 8 398 0.4 % 50 9,474 10.2 %residentialpropertiesSecured bymulti-family ? ? ? 12 29,726 60.9 %residentialpropertiesSecured bynon-farm, 10 14,084 7.7 % 49 42,797 26.6 %non-residentialpropertiesCommercial and 2 529 0.6 % 9 1,460 1.7 %industrial loansConsumer loans: Direct consumer 77 284 0.9 % 442 2,188 6.6 %Branch retail 36 353 1.1 % 172 1,856 5.6 %Indirect sales 19 509 0.4 % 123 3,199 3.6 %Total loans 153 $ 18,416 2.9 % 864 $ 95,244 16.5 %

Although the credit quality of these deferred loans will continue to be evaluated on an ongoing basis in accordance with the Companys uniform framework for establishing and monitoring credit risk, in accordance with regulatory guidance related to the CARES Act, loans for which payments were deferred related to COVID-19 will generally not be considered troubled debt restructurings or placed in past due or nonaccrual status during the deferment period.

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 Companys 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 Companys current financial performance and position. Management believes that these presentations provide meaningful comparisons of financial performance and position in various periods and can be used as a supplement to the GAAP-based measures presented in this press release. The non-GAAP financial results presented should not be considered a substitute for the GAAP-based results. Management believes that both GAAP measures of the Companys 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 operating income, 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 each relevant non-GAAP measure to GAAP-based measures included in the financial statements previously presented in the press release.

Operating Income

In addition to GAAP-based measures of net income, management periodically reviews certain non-GAAP measures of pre-tax income that factor out the impact of discrete income or expense items that, although not unusual, infrequent or nonrecurring, tend to fluctuate significantly from quarter to quarter or are based on events that are not necessarily indicative of the Companys core operating earnings as a financial institution. An example includes the provision for loan and lease losses, which, although a core part of the Companys operating activities, may fluctuate significantly based on the level of loan growth in a quarter, changes in economic factors or other events during the quarter. Examples of items that are not necessarily considered by management to be core to the Companys operating earnings include accretion and amortization of discounts, premiums and intangible assets associated with purchase accounting. In its own analysis, management has defined operating income as a non-GAAP financial measure that adjusts net income for the following items:

-- Provision for (benefit from) income taxes -- Accretion of discount on purchased loans -- Accretion of premium on purchased time deposits -- Gains (losses) on sales and prepayments of investment securities -- Gains (losses) on settlements of derivative contracts -- Gains (losses) on sales of foreclosed real estate -- Gains on sales of fixed and other assets -- Provision for loan and lease losses -- Amortization of core deposit intangible asset -- Acquisition expenses

A reconciliation of the Companys net income to its operating income for each of the most recent five quarters as of September 30, 2020 is set forth below. A limitation of the non-GAAP calculation of operating income presented below is that the adjustments to the comparable GAAP measure (net income) include gains, losses or expenses that the Company does not expect to continue to recognize at a consistent level in the future; however, the adjustments of these items should not be construed as an inference that these gains, losses or expenses are unusual, infrequent or nonrecurring.

FIRST US BANCSHARES, INC. AND SUBSIDIARIESOPERATING INCOME ? LINKED QUARTERS(Non-U.S. GAAP Unaudited Reconciliation)

Quarter Ended 2020 2019 September June March December September 30, 30, 31, 31, 30, (Dollars in Thousands) Net income $ 411 $ 404 $ 847 $ 1,209 $ 1,118 Add back: Provision for income 136 118 262 381 214 taxesIncome before income 547 522 1,109 1,590 1,332 taxesSubtract adjustments to net interest income:Accretion of discount (140 ) (226 ) (131 ) (174 ) (180 )on purchased loansAccretion of premium on (3 ) (5 ) (9 ) (11 ) (21 )purchased time depositsNet adjustments to net (143 ) (231 ) (140 ) (185 ) (201 )interest incomeAdd back (subtract)non-interest adjustments:Net gain on sales andprepayments of ? (326 ) ? (25 ) (45 )investment securitiesNet loss on sales of 6 5 5 30 19 foreclosed real estateGain on sales of fixed (315 ) ? ? ? ? and other assetsProvision for loan and 1,046 850 580 716 883 lease lossesAmortization of core 103 110 110 110 122 deposit intangibleNet non-interest 840 639 695 831 979 adjustmentsOperating income $ 1,244 $ 930 $ 1,664 $ 2,236 $ 2,110

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 Companys capitalization to other organizations. In managements 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 Companys 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 Companys consolidated financial statements in their entirety and not to rely on any single financial measure. The table below reconciles the Companys calculations of these measures to amounts reported in accordance with GAAP.

Quarter Ended Nine Months Ended 2020 2019 2020 2019 September June March December September September September 30, 30, 31, 31, 30, 30, 30, (Dollars in Thousands, Except Per Share Data) (Unaudited Reconciliation) TANGIBLE BALANCESTotal assets $ 852,941 $ 845,747 $ 788,565 $ 788,738 $ 771,930 Less: 7,435 7,435 7,435 7,435 7,435 GoodwillLess: Coredeposit 1,067 1,170 1,280 1,390 1,499 intangibleTangible (a) $ 844,439 $ 837,142 $ 779,850 $ 779,913 $ 762,996 assets Totalshareholders? $ 85,658 $ 85,281 $ 84,332 $ 84,748 $ 83,790 equityLess: 7,435 7,435 7,435 7,435 7,435 GoodwillLess: Coredeposit 1,067 1,170 1,280 1,390 1,499 intangibleTangible (b) $ 77,156 $ 76,676 $ 75,617 $ 75,923 $ 74,856 common equity Averageshareholders? $ 85,656 $ 84,953 $ 84,721 $ 84,345 $ 83,991 $ 85,112 $ 82,321 equityLess: Average 7,435 7,435 7,435 7,435 7,435 7,435 7,435 goodwillLess: Averagecore deposit 1,115 1,224 1,332 1,442 1,556 1,223 1,685 intangibleAveragetangible (c) $ 77,106 $ 76,294 $ 75,954 $ 75,468 $ 75,000 $ 76,454 $ 73,201 shareholders?equity Net income (d) $ 411 $ 404 $ 847 $ 1,209 $ 1,118 $ 1,662 $ 3,357 Common sharesoutstanding (e) 6,177 6,176 6,143 6,158 6,222 (inthousands) TANGIBLE MEASURESTangible book (b)/value per (e) $ 12.49 $ 12.41 $ 12.31 $ 12.33 $ 12.03 common share Tangiblecommon equity (b)/ 9.14 % 9.16 % 9.70 % 9.73 % 9.81 % to tangible (a)assets Return onaveragetangible (1 ) 2.12 % 2.13 % 4.49 % 6.35 % 5.92 % 2.90 % 6.13 %common equity(annualized)

(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)