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What changed in FIRST US BANCSHARES, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FIRST US BANCSHARES, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+249 added−262 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-14)

Top changes in FIRST US BANCSHARES, INC.'s 2025 10-K

249 paragraphs added · 262 removed · 197 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+11 added−25 removed139 unchanged
Biggest changeThe CFPB has adopted a number of rules that impact our lending practices, including, among other things, (1) requiring financial institutions to make a “reasonable and good faith determination” that a consumer has a “reasonable ability” to repay a residential mortgage loan before making such a loan, (2) requiring sponsors of asset-backed securities to retain at least 5% of the credit risk of the assets underlying the securities (and generally prohibiting sponsors from transferring or hedging that credit risk), and (3) imposing a number of new and enhanced requirements on the mortgage servicing industry, including rules regarding communications with borrowers, maintenance of customer account records, procedures for responding to written borrower requests and complaints of errors, servicing delinquent loans, and conducting foreclosure proceedings, among other measures.
Biggest changeThe CFPB has adopted a number of rules that impact our lending practices, including, among other things, (1) requiring financial institutions to make a “reasonable and good faith determination” that a consumer has a “reasonable ability” to repay a residential mortgage loan before making such a loan, (2) requiring sponsors of asset-backed securities to retain at least 5% of the credit risk of the assets underlying the securities (and generally prohibiting sponsors from transferring or hedging that credit risk), and (3) imposing a number of new and enhanced requirements on the mortgage servicing industry, including rules regarding communications with borrowers, maintenance of customer account records, procedures for responding to written borrower requests and complaints of errors, servicing delinquent loans, and conducting foreclosure proceedings, among other measures. 15 Regulation of Deposit Operations Our deposit operations are subject to federal laws applicable to depository accounts, including, among others, the following: • Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Truth-In-Savings Act, requiring certain disclosures for consumer deposit accounts; • Electronic Fund Transfer Act and Regulation E, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and • Rules and regulations of the various agencies charged with the responsibility of implementing these laws.
This Code of Business Conduct can be found on our website at http://www.fusb.com under the tabs “About – Investor Relations – FUSB Policies.” 13 Privacy of Customer Information The Financial Services Modernization Act of 1999 (also known as the “Gramm-Leach-Bliley Act” or the “GLBA”) and the implementing regulations issued by federal banking regulatory agencies require financial institutions to adopt policies and procedures regarding the disclosure of nonpublic personal information about their customers to non-affiliated third parties.
This Code of Business Conduct can be found on our website at http://www.fusb.com under the tabs “About – Investor Relations – FUSB Policies.” Privacy of Customer Information The Financial Services Modernization Act of 1999 (also known as the “Gramm-Leach-Bliley Act” or the “GLBA”) and the implementing regulations issued by federal banking regulatory agencies require financial institutions to adopt policies and procedures regarding the disclosure of nonpublic personal information about their customers to non-affiliated third parties.
The Growth Act, among other things, requires the federal banking agencies to issue regulations allowing community bank organizations with total assets of less than $10 billion and limited 9 amounts of certain assets and off-balance sheet exposures to access a simpler capital regime focused on a bank’s Tier 1 leverage capital levels rather than risk-based capital levels that are the focus of the capital rules issued under the Dodd-Frank Act implementing Basel III.
The Growth Act, among other things, requires the federal banking agencies to issue regulations allowing community bank organizations with total assets of less than $10 billion and limited amounts of certain assets and off-balance sheet exposures to access a simpler capital regime focused on a bank’s Tier 1 leverage capital levels rather than risk-based capital levels that are the focus of the capital rules issued under the Dodd-Frank Act implementing Basel III.
(Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021. FinCEN adopted a final regulation as 31 C.F.R. 101.380 on September 30, 2022 to implement the CTA. This became effective on January 1, 2024. These regulations require entities to report information about their beneficial owners and the individuals who created the entity (together, “beneficial ownership information” or “BOI”).
(Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021. FinCEN adopted a final regulation as 31 C.F.R. 101.380 on September 30, 2022 to implement the CTA. This became effective on January 1, 2024. These regulations require entities to report information about their 11 beneficial owners and the individuals who created the entity (together, “beneficial ownership information” or “BOI”).
Loans secured by certain readily marketable collateral are exempt from these limitations, as are loans secured by deposits and certain government securities. 7 Commercial Real Estate Concentration Limits In December 2006, the U.S. bank regulatory agencies issued guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” to address increased concentrations in commercial real estate (“CRE”) loans.
Loans secured by certain readily marketable collateral are exempt from these limitations, as are loans secured by deposits and certain government securities. Commercial Real Estate Concentration Limits In December 2006, the U.S. bank regulatory agencies issued guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” to address increased concentrations in commercial real estate (“CRE”) loans.
Although the CFPB does not examine or supervise banks with less than $10 billion in assets, banks of all sizes are affected by the CFPB’s regulations, and the precedents set in CFPB enforcement actions and interpretations. 12 Brokered Deposits The FDIC limits the ability to accept brokered deposits to those insured depository institutions that are well capitalized.
Although the CFPB does not examine or supervise banks with less than $10 billion in assets, banks of all sizes are affected by the CFPB’s regulations, and the precedents set in CFPB enforcement actions and interpretations. Brokered Deposits The FDIC limits the ability to accept brokered deposits to those insured depository institutions that are well capitalized.
Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy; requires the development of standards for testing technology and internal processes for Bank Secrecy Act compliance; expands 11 enforcement- and investigation-related authority, including increasing available sanctions for certain Bank Secrecy Act violations; and expands Bank Secrecy Act whistleblower incentives and protections.
Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy; requires the development of standards for testing technology and internal processes for Bank Secrecy Act compliance; expands enforcement- and investigation-related authority, including increasing available sanctions for certain Bank Secrecy Act violations; and expands Bank Secrecy Act whistleblower incentives and protections.
As such, institutions that are less than well capitalized that are permitted to accept, renew or roll over brokered deposits via a FDIC waiver generally may not pay an interest rate in excess of the national rate plus 75 basis points on such brokered deposits.
As such, institutions that are less than well capitalized that are permitted to accept, renew or roll over brokered deposits via a FDIC waiver generally may not pay 12 an interest rate in excess of the national rate plus 75 basis points on such brokered deposits.
Moreover, the federal banking agencies have adopted a joint agency policy statement, noting that the adequacy and effectiveness of a bank’s interest rate risk management process and the level of its interest rate exposures are critical factors in the evaluation of the bank’s capital adequacy. In 2018, the U.S.
Moreover, the 9 federal banking agencies have adopted a joint agency policy statement, noting that the adequacy and effectiveness of a bank’s interest rate risk management process and the level of its interest rate exposures are critical factors in the evaluation of the bank’s capital adequacy. In 2018, the U.S.
Furthermore, on December 18, 2023, the FDIC issued an advisory on Managing Commercial Real Estate Concentrations in a Challenging Economic Environment, which conveys certain key risk management practices for FDIC-supervised institutions to consider in managing CRE loan concentrations in the current economic environment.
Furthermore, in December 2023, the FDIC issued an advisory on Managing Commercial Real Estate Concentrations in a Challenging Economic Environment, which conveys certain key risk management practices for FDIC-supervised institutions to consider in managing CRE loan concentrations in the current economic environment.
In the event that there is no such amount, dividends may be paid out of the net profits of the corporation for the fiscal year in which the dividend is 8 declared and/or the immediately preceding fiscal year.
In the event that there is no such amount, dividends may be paid out of the net profits of the corporation for the fiscal year in which the dividend is declared and/or the immediately preceding fiscal year.
Bancshares is subject to comprehensive examination and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”), and the Bank and its subsidiaries are subject to comprehensive examination and supervision by the Alabama State Banking Department (the “ASBD”) and the Federal Deposit Insurance Corporation (the “FDIC”).
Bancshares is subject to comprehensive examination and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”), and the Bank and its subsidiary are subject to comprehensive examination and supervision by the Alabama State Banking Department (the “ASBD”) and the Federal Deposit Insurance Corporation (the “FDIC”).
Human Capital Resources Bancshares has no employees, other than the executive officers discussed in the information incorporated by reference in Part III, Item 10 of this report. As of December 31, 2024, the Bank had 151 full-time equivalent employees. None of our employees are party to a collective bargaining agreement. Management believes that the Company’s employee relations are satisfactory.
Human Capital Resources Bancshares has no employees, other than the executive officers discussed in the information incorporated by reference in Part III, Item 10 of this report. As of December 31, 2025, the Bank had 152 full-time equivalent employees. None of our employees are party to a collective bargaining agreement. Management believes that the Company’s employee relations are satisfactory.
Given the increased number and expansive nature of its regulatory initiatives, the CFPB has been subject to lawsuits brought by the banking industry and other providers of consumer financial products and services. The CFPB’s approach may change under the Trump administration, but it remains unclear exactly what changes will occur or how quickly.
Given the increased number and expansive nature of its regulatory initiatives, the CFPB has been subject to lawsuits brought by the banking industry and other providers of consumer financial products and services. The CFPB’s approach has changed under the Trump administration, but it remains unclear exactly what changes will occur or how quickly they will occur.
In July 2023, the federal banking regulators proposed revisions to the Basel III Capital Rules to implement the Basel Committee’s 2017 standards and make other changes to the Basel III Capital Rules. In September 2024, the federal banking regulators announced a reproposal of the revisions with some modifications.
In July 2023, the federal banking regulators proposed revisions to the Basel III Rule to implement the Basel Committee’s 2017 standards and make other changes to the Basel III Rule. In September 2024, the federal banking regulators announced a reproposal of the revisions with some modifications.
The FDIC has authority to increase insurance assessments. A significant increase in insurance assessments would likely have an adverse effect on our operating expense, results of operations, and cash flows. Management cannot predict what insurance assessment rates will be in the future.
A significant increase in insurance assessments would likely have an adverse effect on our operating expense, results of operations, and cash flows. Management cannot predict what insurance assessment rates will be in the future.
Prior to the issuance of the Executive Order, the CFPB published a report addressing the use by financial institutions of AI chatbots in the provision of financial products and services, which report also highlighted the limitations and various risks posed by such activity. States have also started to regulate the use of AI technologies.
In 2023, the CFPB published a report addressing the use by financial institutions of AI chatbots in the provision of financial products and services, which report also highlighted the limitations and various risks posed by such activity. States have also started to regulate the use of AI technologies.
Under the FDIC’s assessment system for banks with less than $10 billion in assets, the assessment rate is determined based on a number of factors, including the Bank’s CAMELS (supervisory) rating, leverage ratio, net income, non-performing loan ratios, other real estate owned (OREO) ratios, core deposit ratios, one-year organic asset growth and a loan mix index.
Under the FDIC’s assessment system for banks with less than $10 billion in assets, the assessment rate is determined based on a number of factors, including the Bank’s CAMELS (supervisory) rating, leverage ratio, net income, non-performing loan ratios, other real estate owned (OREO) ratios, core deposit ratios, one-year organic asset growth and a loan mix index. 8 The FDIC has authority to increase insurance assessments.
As of December 31, 2024, the Bank categorized $72.4 million, or 7.4% of its deposit liabilities, as brokered deposits. On December 15, 2020, the FDIC issued a final rule establishing a new framework for analyzing whether bank deposits obtained through third-party arrangements are brokered deposits pursuant to Section 29 of the Federal Deposit Insurance Act.
As of December 31, 2025, the Bank categorized $137.9 million, or 13.4% of its deposit liabilities, as brokered deposits. On December 15, 2020, the FDIC issued a final rule establishing a new framework for analyzing whether bank deposits obtained through third-party arrangements are brokered deposits pursuant to Section 29 of the Federal Deposit Insurance Act.
We encourage a customer-focused orientation that meets the diverse needs of consumers and businesses in the communities in which we serve. 5 Competition We face strong competition in making loans, acquiring deposits and attracting customers for investment services.
We encourage a customer-focused orientation that meets the diverse needs of consumers and businesses in the communities in which we serve. 5 Competition We face strong competition in making loans and acquiring deposits.
The Bank conducts a general commercial banking business and offers banking services such as demand, savings, individual retirement account and time deposits, personal and commercial loans, safe deposit box services and remote deposit capture.
Bancshares and the Bank are headquartered in Birmingham, Alabama. The Bank conducts a general commercial banking business and offers banking services such as demand, savings, individual retirement account and time deposits, personal and commercial loans, safe deposit box services and remote deposit capture.
Fair Access On January 23, 2025, President Trump signed an Executive Order titled “Strengthening American Leadership in the Digital Financial Technology” (the “Order”). The primary focus of the Order is promoting U.S. developments in blockchain, digital assets and other emerging financial technologies, including cryptocurrency.
The Bank received a “satisfactory” rating in its most recent CRA evaluation. Fair Access On January 23, 2025, President Trump signed an Executive Order titled “Strengthening American Leadership in the Digital Financial Technology” (the “Order”). The primary focus of the Order is promoting U.S. developments in blockchain, digital assets and other emerging financial technologies, including cryptocurrency.
In March 2024, the SEC adopted final rules for "The Enhancement and Standardization of Climate-Related Disclosures for Investors,” which would have required issuers to provide climate-related disclosures. In April 2024, the SEC stayed the effectiveness of the final rules pending the outcome of certain legal challenges. Website Information The Bank’s website address is https://www.fusb.com.
In March 2024, the SEC adopted final rules for "The Enhancement and Standardization of Climate-Related Disclosures for Investors,” which would have required issuers to provide climate-related disclosures. In April 2024, the SEC stayed the effectiveness of the final rules pending the outcome of certain legal challenges.
In December 2015, the U.S. bank regulatory agencies issued guidance titled “Statement on Prudent Risk Management for Commercial Real Estate Lending” to remind financial institutions of existing guidance on prudent risk management practices for CRE lending activity, including the 2006 guidance described above.
As of December 31, 2025, the Bank had CRE loans totaling 257.1% of total regulatory capital. In December 2015, the U.S. bank regulatory agencies issued guidance titled “Statement on Prudent Risk Management for Commercial Real Estate Lending” to remind financial institutions of existing guidance on prudent risk management practices for CRE lending activity, including the 2006 guidance described above.
In 2016, the Federal Reserve and the Office of Comptroller of the Currency also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2024, these rules have not been implemented.
In 2016, the Federal Reserve and the Office of Comptroller of the Currency also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping.
On October 19, 2023, the CFPB announced a proposed rule to adopt a regulation regarding personal financial data rights that is designed to promote “open banking.” If enacted as proposed, the regulation would require, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties upon request certain covered transaction, account and payment information.
On October 22, 2024, the CFPB announced the adoption of a regulation regarding personal financial data rights that is designed to promote “open banking.” The regulation requires, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties upon request certain covered transaction, account and payment information.
Overdrafts also have been a CFPB concern, and in 2021, this entity began refocusing on this issue with a view to “insure that banks continue to evolve their businesses to reduce reliance on overdraft and not sufficient funds fees.” Among other things, federal regulators require banks to monitor accounts and to limit the use of overdrafts by customers as a form of short-term, high-cost credit, including, for example, giving customers who overdraw their accounts on more than six occasions where a fee is charged in a rolling 12 month period a reasonable opportunity to choose a less costly alternative and decide whether to continue with fee-based overdraft coverage.
Among other things, federal regulators require banks to monitor accounts and to limit the use of overdrafts by customers as a form of short-term, high-cost credit, including, for example, giving customers who overdraw their accounts on more than six occasions where a fee is charged in a rolling 12 month period a reasonable opportunity to choose a less costly alternative and decide whether to continue with fee-based overdraft coverage.
Although the Company and the Bank are exempt from the CTA’s requirements to report their respective beneficial owners, the new CTA reporting requirements, if they become effective, may increase the Bank’s anti-money laundering diligence activities and costs.
The interim rule limits reporting to foreign reporting companies (foreign-formed entities registered to do business in the United States). Although the Company and the Bank are exempt from the CTA’s requirements to report their respective beneficial owners, the new CTA reporting requirements, if they become effective, may increase the Bank’s anti-money laundering diligence activities and costs.
Lending Limits Under Alabama law, the amount of loans that may be made by a bank in the aggregate to one person is limited.
As of December 31, 2025, these rules have not been implemented. 7 Lending Limits Under Alabama law, the amount of loans that may be made by a bank in the aggregate to one person is limited.
In December 2015, Congress amended the GLBA as part of the Fixing America’s Surface Transportation Act. This amendment provided financial institutions, which meet certain conditions, an exemption from the requirement to deliver an annual privacy notice. On August 10, 2018, the CFPB announced that it had finalized conforming amendments to its implementing regulation, Regulation P.
In December 2015, Congress amended the GLBA as part of the Fixing America’s Surface Transportation Act. This amendment provided financial institutions, which meet certain conditions, an exemption from the requirement to deliver an annual privacy notice.
Community Reinvestment Act The Community Reinvestment Act (the “CRA”) requires the federal banking regulatory agencies to assess all financial institutions that they regulate to determine whether these institutions are meeting the credit needs of the communities that they serve, including their assessment area(s) (as established for these purposes in accordance with applicable regulations based principally on the location of the institution’s branch offices).
This classification is primarily for the purpose of applying the federal prompt corrective action provisions and is not intended to be, and should not be, interpreted as a representation of our overall financial condition or prospects. 10 Community Reinvestment Act The Community Reinvestment Act (the “CRA”) requires the federal banking regulatory agencies to assess all financial institutions that they regulate to determine whether these institutions are meeting the credit needs of the communities that they serve, including their assessment area(s) (as established for these purposes in accordance with applicable regulations based principally on the location of the institution’s branch offices).
In this lawsuit, the plaintiffs alleged that the CFPB exceeded its statutory authority in adopting the rule. A variety of federal and state privacy laws govern the collection, safeguarding, sharing and use of customer information, and require that financial institutions have policies regarding information privacy and security.
A variety of federal and state privacy laws govern the collection, safeguarding, sharing and use of customer information, and require that financial institutions have policies regarding information privacy and security.
The law includes liability protections for companies that share cyber threat information with third parties so long as such sharing activity is conducted in accordance with CISA. 14 In October 2016, the federal bank regulatory agencies issued an Advance Notice of Proposed Rulemaking regarding enhanced cyber risk management standards which would apply to a wide range of large financial institutions and their third-party service providers, including Bancshares and the Bank.
In October 2016, the federal bank regulatory agencies issued an Advance Notice of Proposed Rulemaking regarding enhanced cyber risk management standards which would apply to a wide range of large financial institutions and their third-party service providers, including Bancshares and the Bank.
In July 2023, the SEC adopted amendments to its rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies that are subject to the reporting requirements of the Exchange Act.
Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack. 14 In July 2023, the SEC adopted amendments to its rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies that are subject to the reporting requirements of the Exchange Act.
For example, the California Privacy Protection Agency ("CCPA") is currently in the process of finalizing regulations under the CCPA regarding the use of automated decision making. 15 Regulation of Lending Practices Our lending practices are subject to a number of federal and state laws, as supplemented by the rules and regulations of the various agencies charged with the responsibility of implementing these laws.
Regulation of Lending Practices Our lending practices are subject to a number of federal and state laws, as supplemented by the rules and regulations of the various agencies charged with the responsibility of implementing these laws.
A qualifying community banking organization may opt into and out of the framework by completing the associated reporting requirements on its call report. We presently do not anticipate opting into the framework.
A qualifying community banking organization may opt into and out of the framework by completing the associated reporting requirements on its call report. We presently do not anticipate opting into the framework. In November 2025, the federal banking agencies published a proposed rule which would reduce the community bank leverage ratio requirement for the framework from 9% to 8%.
Additionally, in the event that a member financial institution fails, the right of the FHLBA to seek repayment of funds loaned to that institution will take priority over the rights of all other creditors. 16 Climate-Related Regulation and Risk Management In recent years, the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve and the broader financial system.
Climate-Related Regulation and Risk Management In recent years, the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve and the broader financial system.
On October 22, 2024, the CFPB issued a final rule to implement Section 1033 of the Dodd-Frank Act, which gives individuals the right to obtain data regarding consumer financial products and services they have obtained. The final rule requires certain entities, including the Bank, to comply with an established framework to govern consumer access to electronic financial data.
In August 2018, the CFPB announced that it had finalized conforming amendments to its implementing regulation, Regulation P. 13 On October 22, 2024, the CFPB issued a final rule to implement Section 1033 of the Dodd-Frank Act, which gives individuals the right to obtain data regarding consumer financial products and services they have obtained.
Compliance with the rule will be phased in over several years with the Bank required to be in compliance by April 1, 2030. Following the issuance of this rule, two trade associations and a national bank headquartered in Kentucky filed a lawsuit challenging the rule in the United States District Court for the Eastern District of Kentucky.
Following the issuance of this rule, two trade associations and a national bank headquartered in Kentucky filed a lawsuit challenging the rule in the United States District Court for the Eastern District of Kentucky. In this lawsuit, the plaintiffs alleged that the CFPB exceeded its statutory authority in adopting the rule.
CISA also authorizes companies to monitor their own systems notwithstanding any other provision of law and allows companies to carry out cybersecurity defensive measures on their own systems.
CISA also authorizes companies to monitor their own systems notwithstanding any other provision of law and allows companies to carry out cybersecurity defensive measures on their own systems. The law includes liability protections for companies that share cyber threat information with third parties so long as such sharing activity is conducted in accordance with CISA.
The Company is not a covered bank under the existing version of the Fair Access Rule, but additional rulemaking could broaden its scope to apply to the Company. Third-Party Risk Management On June 9, 2023, the OCC, Federal Reserve, and FDIC issued final interagency guidance on risk management of third-party relationships, including third-party lending relationships.
The Company continues to review and adjust policies and practices to ensure compliance. Third-Party Risk Management In June 2023, the OCC, Federal Reserve, and FDIC issued final interagency guidance on risk management of third-party relationships, including third-party lending relationships.
The Order also states that one of the administration’s objectives is “protecting and promoting fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike.” This objective appears to be related to a regulatory initiative in the first Trump administration that ultimately led to the OCC adopting a final rule on “Fair Access to Financial Services” (the “Fair Access Rule”) in the final days of that administration.
The Order also states that one of the administration’s objectives is “protecting and promoting fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike.” An Executive Order issued in August 2025 prohibits denial of financial services based on constitutionally or statutorily protected beliefs, affiliations, or political views, and prohibits politicized or unlawful “debanking.” Banking decisions must be based on individualized, objective, and risk-based analysis.
The new rules expand financial institutions’ obligations under the Customer Due Diligence Rule (the “CDD Rule”) to collect information and verify the beneficial ownership of legal entities. The constitutionality of the CTA has been challenged in federal court, and enforcement of the CTA is subject to an injunction pending the outcome of the related litigation.
The new rules expand financial institutions’ obligations under the Customer Due Diligence Rule (the “CDD Rule”) to collect information and verify the beneficial ownership of legal entities. In March 2025, FinCEN issued an interim final rule narrowing the BOI reporting obligation so that domestic reporting companies (U.S.-formed entities) are exempt from reporting.
As of December 31, 2024, the Bank was “well-capitalized” under the prompt corrective action rules. This classification is primarily for the purpose of applying the federal prompt corrective action provisions and is not intended to be, and should not be, interpreted as a representation of our overall financial condition or prospects.
As of December 31, 2025, the Bank was “well-capitalized” under the prompt corrective action rules.
Removed
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.
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The new administration has taken action that indicate its intention to generally reduce federal regulation of the financial services industry. For example, on February 8, 2025, the acting director of the CFPB issued a notice to its staff to cease all supervision and examination activity. It is currently unknown what, if any, of the CFPB’s policies or directives will continue.
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In addition, certain rules that the Biden administration CFPB finalized may be subject to reversal by either the U.S. Congress or the new CFPB administration.
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Congress or the federal bank regulatory agencies may modify or rescind rule making and regulatory guidance issued under the prior administration. However, the timing and impact of any changes to the regulatory, enforcement, and supervisory priorities of the federal bank regulatory agencies is not known at this time.
Removed
The Bank received a “satisfactory” rating in its most recent CRA evaluation. On October 24, 2023, the FDIC, the Federal Reserve Board, and the Office of the Comptroller of the Currency (the “OCC”) issued a final rule to strengthen and modernize the CRA regulations.
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The CFPB has a small dollar rule related to payday, vehicle title and certain high-cost installment loans ("the Small Dollar Rule"), which restricts lenders from attempting to withdraw payment from a borrower’s account after two consecutive failed attempts unless the borrower provides new authorization for the third attempt.
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Under the final rule, banks with assets of at least $600 million as of December 31 in both of the prior two calendar years and less than $2 billion as of December 31 in either of the prior two calendar 10 years will be an “intermediate bank,” and banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies will evaluate large banks under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.
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In order to begin re-attempting payments, the lender must follow certain guidelines and obtain new authorizations where applicable. The Small Dollar Rule became effective on March 30, 2025. Separately, in May 2020, the federal banking agencies issued interagency guidance to encourage banks, savings associations, and credit unions to offer responsible small-dollar loans to customers for consumer and small business purposes.
Removed
The agencies will evaluate intermediate banks under the Retail Lending Test and either the current community development test, referred to in the final rule as the Intermediate Bank Community Development Test, or, at the bank’s option, the Community Development Financing Test.
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As of the date of the filing of this Annual Report on Form 10-K, the Bank has not determined to offer such products, although this position may change as the Bank further refines its business plan in the future.
Removed
The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. However, in March 2024, a federal district court issued a preliminary injunction of the regulations, and litigation addressing the constitutionality of the regulations is still pending.
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The final rule would require certain entities, including the Bank, to comply with an established framework to govern consumer access to electronic financial data. Compliance with the rule was scheduled to be phased in over several years with the Bank required to be in compliance by April 1, 2030.
Removed
The Fair Access Rule would require “covered banks” (generally, national banks with over $100 billion in assets) to: • Make each financial service it offers available to all persons in the geographic market served by the covered bank on proportionally equal terms; • Not deny any person a financial service the covered bank offers unless the denial is justified by such person’s quantified and documented failure to meet quantitative, impartial risk-based standards established in advance by the covered bank; and • Not deny, in coordination with others, any person a financial service the covered bank offers.
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Following the change in administration in 2025, the CFPB declined to defend the rule and opened a new rulemaking to revisit the rule, In October 2025 the court enjoined enforcement of the rule until the CFPB completes its rulemaking process.
Removed
The Trump administration expressed concern, in particular, for banks denying access due to political or social concerns. The Biden administration paused implementation of the Fair Access Rule, and it never became effective. The new Trump administration may revive the Fair Access Rule or enact similar regulations. Any such rule could impose a regulatory burden on covered banks to document compliance.
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For example, the California Privacy Protection Agency ("CCPA") is currently in the process of finalizing regulations under the CCPA regarding the use of automated decision making. The new administration has expressed interest in encouraging the development of AI and removing regulatory barriers to such development.
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Federal bank regulators have been considering responsible small dollar lending, including overdrafts and related fee issues. In May 2020, they issued principals for offering small-dollar loans in a responsible manner.
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Although the administration has indicated that it will develop a national policy on AI, it is unclear what, if any, regulatory requirements will be developed at the national level.
Removed
CFPB Consumer Financial Protection Circular 2022-06 (Oct. 26, 2022) concluded that overdraft fee practices must comply with Regulation Z, Regulation E, and the prohibition against unfair, deceptive, and abusive acts or practices in Section 1036 of the Consumer Financial Protection Act.
Added
Additionally, in the event that a member financial institution fails, the right of the FHLBA to seek repayment of funds loaned to that institution will take priority over the rights of all other creditors.
Removed
Further, overdraft fees assessed by financial institutions on transactions that a consumer would not reasonably anticipate are likely unfair even if these comply with these other consumer laws and regulations.
Added
In March 2025, the SEC withdrew its defense of the final rules in the pending litigation. Website Information The Bank’s website address is https://www.fusb.com. Bancshares does not maintain a separate website.
Removed
The CFPB proposed on February 6, 2019 to rescind its mandatory underwriting standards for loans covered by its 2017 Payday, Vehicle Title and Certain High-Cost Installment Loans rule, and has separately proposed delaying the effectiveness of such 2017 rule.
Removed
As a result of this final rule, the Company's deposits that were classified as brokered deposits reduced significantly beginning with the June 30, 2021 reporting period. On July 30, 2024, the FDIC proposed a rule that would amend the current rules governing brokered deposits.
Removed
The proposed rule as drafted would, among other things, (1) amend the definition of “deposit broker”; (2) eliminate the exclusive deposit placement arrangement exception; (3) eliminate the enabling transactions designated business exception; (4) revise the “25 percent test” designated business exception for a primary purpose exception to be available only to broker-dealers and investment advisers and only if less than 10 percent of the total assets that the broker-dealer or investment adviser has under management for its customers is placed at one or more insured depository institutions; (5) revise the interpretation of the primary purpose exception to consider the third party’s intent in placing customer funds at a particular insured depository institution; (6) allow only insured depository institutions to file notices and applications for primary purpose exceptions; and (7) clarify how an insured depository institution that loses its “agent institution” status regains that status.
Removed
The Company is currently evaluating the effect of the proposed rule on the Company were it to be adopted as a final rule and monitoring the status of this rulemaking.
Removed
Based on recent statements from the new Acting Chairman of the FDIC, the proposed rule is unlikely to be adopted as proposed due to the change in Presidential administration and the prospects and timing for any re-proposal or supervisory action in this area remain uncertain at this time.
Removed
Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.
Removed
On October 30, 2023, the Biden administration issued an Executive Order on Safe, Secure and Trustworthy Development and Use of AI, emphasizing the need for transparency, accountability and fairness in the development and use of AI.
Removed
The order seeks to balance innovation with addressing risks associated with AI by providing eight guiding principles and priorities, such as ensuring that consumers are protected from fraud, discrimination and privacy risks related to AI.
Removed
The Executive Order also requires certain federal agencies, including the CFPB, to address potential discrimination in the housing and consumer financial markets relating to the use by financial institutions of AI technologies.
Removed
Regulation of Deposit Operations Our deposit operations are subject to federal laws applicable to depository accounts, including, among others, the following: • Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Truth-In-Savings Act, requiring certain disclosures for consumer deposit accounts; • Electronic Fund Transfer Act and Regulation E, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and • Rules and regulations of the various agencies charged with the responsibility of implementing these laws.
Removed
On October 21, 2021, the Financial Stability Oversight Council published a report identifying climate-related financial risks as an “emerging threat” to financial stability. On December 16, 2021, the Office of the Comptroller of the Currency (the “OCC”) issued proposed principles for climate-related financial risk management for national banks with more than $100 billion in total assets.
Removed
Although these risk management principles, if adopted as proposed, would not apply to the Bank directly based upon our current size, the OCC has indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management.
Removed
The federal banking agencies, either independently or on an interagency basis, are expected to adopt a more formal climate risk management framework for larger banking organizations in the coming months.
Removed
As climate-related supervisory guidance is formalized, and relevant risk areas and corresponding control expectations are further refined, we may be required to expend significant capital and incur compliance, operating, maintenance and remediation costs in order to conform to such requirements.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Legal, Reputational and Compliance Matters We are subject to extensive governmental regulation, and the costs of complying with such regulation could have an adverse impact on our operations. The financial services industry is extensively regulated and supervised under both federal and state law.
Biggest changeGenerative AI, if used to perpetrate fraud or launch cyberattacks, could create panic at a particular financial institution or securities exchange, which could pose a threat to financial stability. Risks Related to Legal, Reputational and Compliance Matters We are subject to extensive governmental regulation, and the costs of complying with such regulation could have an adverse impact on our operations.
Our acquisition activities could involve a number of additional risks, including the risks of: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating the terms of potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • being potentially exposed to unknown or contingent liabilities of banks and businesses we acquire; 25 • changes in asset quality and credit risk as a result of the transaction; • being required to expend time and expense to integrate the operations and personnel of the combined businesses; • experiencing higher operating expenses relative to operating income from the new operations; • creating an adverse short-term effect on our results of operations; • losing key team members and customers as a result of an acquisition that is poorly received; and • incurring significant problems relating to the conversion of the financial and customer data of the entity being acquired into our financial and customer product systems.
Our acquisition activities could involve a number of additional risks, including the risks of: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating the terms of potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • being potentially exposed to unknown or contingent liabilities of banks and businesses we acquire; 24 • changes in asset quality and credit risk as a result of the transaction; • being required to expend time and expense to integrate the operations and personnel of the combined businesses; • experiencing higher operating expenses relative to operating income from the new operations; • creating an adverse short-term effect on our results of operations; • losing key team members and customers as a result of an acquisition that is poorly received; and • incurring significant problems relating to the conversion of the financial and customer data of the entity being acquired into our financial and customer product systems.
Further, we may rely on AI 22 models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.
Further, we may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.
Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in 23 significant liabilities, fines or penalties, and could damage our reputation and otherwise adversely affect our business, consolidated financial condition, results of operations and cash flows.
Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise adversely affect our business, consolidated financial condition, results of operations and cash flows.
In addition, federal regulators have issued guidance outlining their expectations for third-party service provider oversight and monitoring by financial institutions. Any failure to adequately oversee the actions of our third-party service providers could result in regulatory actions against us, which could adversely affect our business, consolidated financial condition, results of operations and cash flows.
In addition, federal regulators have issued guidance outlining their expectations for third-party service provider oversight and monitoring by financial institutions. Any failure to adequately oversee the actions of our third-party service providers could result in 21 regulatory actions against us, which could adversely affect our business, consolidated financial condition, results of operations and cash flows.
These changes, if implemented and taken as a whole, may have varied effects on the economy that are difficult to predict. For instance, the delivery of government services and the distribution of federal program funds and benefits may be disrupted or, in some cases, eliminated as a result of funding cuts or recasting of federal agency mandates.
These changes, if implemented and taken as a whole, may have varied effects on the economy that are difficult to predict. For 18 instance, the delivery of government services and the distribution of federal program funds and benefits may be disrupted or, in some cases, eliminated as a result of funding cuts or recasting of federal agency mandates.
In addition, many of our non-bank competitors are not subject to the 19 same extensive federal regulations that govern bank holding companies and federally insured banks, and, as a result, may be able to offer certain products and services at a lower cost than we are able to offer, which could adversely affect our business.
In addition, many of our non-bank competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally insured banks, and, as a result, may be able to offer certain products and services at a lower cost than we are able to offer, which could adversely affect our business.
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the repayment or sale of loans and other sources could have a substantial negative effect on our liquidity. Our funding sources include federal funds, purchased 18 securities sold under repurchase agreements, core and non-core deposits, and short- and long-term debt.
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the repayment or sale of loans and other sources could have a substantial negative effect on our liquidity. Our funding sources include federal funds, purchased securities sold under repurchase agreements, core and non-core deposits, and short- and long-term debt.
Additionally, our competitors may have greater resources to invest in technological improvements than we do, and we may not be able to effectively implement new technology-driven products and services, which could reduce our ability to effectively compete. Our information systems may experience a failure or interruption. We rely heavily on communications and information systems to conduct our business.
Additionally, our competitors may have greater resources to invest in technological improvements than we do, and we may not be able to effectively implement new technology-driven products and services, which could reduce our ability to effectively compete. 20 Our information systems may experience a failure or interruption. We rely heavily on communications and information systems to conduct our business.
Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services. We also maintain important internal data, such as personally identifiable information about our employees and information relating to our operations.
Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services. We also maintain important internal data, such as personally identifiable information about our employees and 22 information relating to our operations.
Additional risks and uncertainties also could adversely affect our business, consolidated financial condition, results of operations and cash flows. If any of the following risks actually occurs, our business, financial condition or results of operations could be negatively affected, the market price of your common stock could decline, and you could lose all or a part of your investment.
Additional risks and uncertainties also could adversely affect our business, consolidated financial condition, results of operations and cash flows. If any of 16 the following risks actually occurs, our business, financial condition or results of operations could be negatively affected, the market price of your common stock could decline, and you could lose all or a part of your investment.
Information security risks for financial institutions have generally increased in recent years, in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased 21 sophistication and activities of organized crime, hackers, terrorists, activists and other external parties.
Information security risks for financial institutions have generally increased in recent years, in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists and other external parties.
Further, the income tax treatment of corporations may at any time be clarified and/or 24 modified through legislation, administration or judicial changes or interpretations. These changes or interpretations could adversely affect us, either directly or as a result of the effects on our customers.
Further, the income tax treatment of corporations may at any time be clarified and/or modified through legislation, administration or judicial changes or interpretations. These changes or interpretations could adversely affect us, either directly or as a result of the effects on our customers.
These factors could result in higher delinquencies and greater charge-offs in future periods, which could materially adversely affect our business, financial condition or results of operations. Our business is subject to liquidity risk, which could disrupt our ability to meet financial obligations.
These factors could result in higher delinquencies and greater charge-offs in future periods, which could materially adversely affect our business, financial condition or results of operations. 17 Our business is subject to liquidity risk, which could disrupt our ability to meet financial obligations.
In addition, Bancshares’ right to participate in any distribution of assets of any of its subsidiaries upon a subsidiary’s liquidation or otherwise will be subject to the prior claims of creditors of that subsidiary, except to the extent that any of Bancshares’ claims as a creditor of such subsidiary may be recognized.
In addition, Bancshares’ right to participate in any distribution of assets of its subsidiary upon a subsidiary’s liquidation or otherwise will be subject to the prior claims of creditors of that subsidiary, except to the extent that any of Bancshares’ claims as a creditor of such subsidiary may be recognized.
We make various assumptions and judgments about the collectability of our loan portfolio and 17 provide an allowance for potential credit losses based on a number of factors. We believe that our allowance for credit losses is adequate.
We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for potential credit losses based on a number of factors. We believe that our allowance for credit losses is adequate.
Further, a hurricane, tornado or other extreme weather event in any of our market areas could adversely impact the ability of borrowers to timely repay their loans and may adversely impact the value of collateral that we hold. 26 Securities issued by us, including our common stock, are not insured.
Further, a hurricane, tornado or other extreme weather event in any of our market areas could adversely impact the ability of borrowers to timely repay their loans and may adversely impact the value of collateral that we hold. 25 Securities issued by us, including our common stock, are not insured.
Private parties may also have the ability to challenge an institution's performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. Bancshares’ liquidity is subject to various regulatory restrictions applicable to its subsidiaries.
Private parties may also have the ability to challenge an institution's performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. 23 Bancshares’ liquidity is subject to various regulatory restrictions applicable to its subsidiary.
The community involvement of our executive officers and directors and our directors’ diverse and extensive business relationships are 27 important to our success. A material change in the composition of our management team or board of directors could cause our business to suffer.
The community involvement of our executive officers and directors and our directors’ diverse and extensive business relationships are 26 important to our success. A material change in the composition of our management team or board of directors could cause our business to suffer.
Federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government’s debt limit may increase the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States. On January 21, 2025, the U.S.
Federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government’s debt limit may increase the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States.
There are various regulatory restrictions on the ability of Bancshares’ subsidiaries to pay dividends or to make other payments to Bancshares.
There are various regulatory restrictions on the ability of Bancshares’ subsidiary to pay dividends or to make other payments to Bancshares.
Our failure to adequately implement enhanced risk management policies, procedures and controls could adversely affect our ability to increase this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio. At December 31, 2024, the Company had no CRE loans on nonaccrual status.
Our failure to adequately implement enhanced risk management policies, procedures and controls could adversely affect our ability to increase this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio. At December 31, 2025, the Company had $0.4 million of CRE loans on nonaccrual status.
Weakness in the residential real estate markets could adversely affect our performance. As of December 31, 2024, 1-4 family residential real estate loans represented approximately 9% of our total loan portfolio.
Weakness in the residential real estate markets could adversely affect our performance. As of December 31, 2025, 1-4 family residential real estate loans represented approximately 8% of our total loan portfolio.
The banking industry is highly competitive, which could result in loss of market share and adversely affect our business. We encounter strong competition in making loans, acquiring deposits and attracting customers for investment services.
The banking industry is highly competitive, which could result in loss of market share and adversely affect our business. We encounter strong competition in making loans and acquiring deposits.
Beginning in early 2022, in response to growing signs of inflation, the FRB increased interest rates rapidly, causing the federal funds rate to reach a 22-year high. Although the FRB reduced its benchmark rates in the latter part of 2024, the inflationary outlook in the United States is currently uncertain.
Beginning in early 2022, in response to growing signs of inflation, the FRB increased interest rates rapidly, causing the federal funds rate to reach a 22-year high. Although the FRB reduced its benchmark rates a total of six times in 2024 and 2025, the inflationary outlook in the United States is currently uncertain.
A further downgrade, or a downgrade by other rating agencies, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide and, therefore, materially adversely affect our business, financial condition and results of operations. 20 Any government shutdown could adversely affect the U.S. and global economy and our liquidity, financial condition and earnings.
A further downgrade, or a downgrade by other rating agencies, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide and, therefore, materially adversely affect our business, financial condition and results of operations.
Federal and state legislatures and regulatory agencies have continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
Federal and state legislatures and regulatory agencies have proposed and advanced numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
Our policy generally has been to originate CRE loans primarily in the states in which the Bank operates. At December 31, 2024, CRE loans, including owner occupied, investor, and real estate construction loans, totaled $293.3 million or 35.6%, of our total loan portfolio.
Our policy generally has been to originate CRE loans primarily in the states in which the Bank operates. At December 31, 2025, CRE loans, including owner occupied, investor, and real estate construction loans, totaled $293.2 million or 257.1%, of total regulatory capital.
In addition, actual net investment income and/or cash flows from investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, may differ from those anticipated at the time of investment as a result of interest rate fluctuations. The potential effect of these factors is heightened due to the current conditions in the financial markets and economic conditions generally.
In addition, actual net investment income and/or cash flows from investments that carry prepayment risk, such as mortgage-backed and other 19 asset-backed securities, may differ from those anticipated at the time of investment as a result of interest rate fluctuations.
Fiscal challenges facing the U.S. government could negatively impact financial markets which in turn could have an adverse effect on our financial position or results of operations.
The potential effect of these factors is heightened due to the current conditions in the financial markets and economic conditions generally. Fiscal challenges facing the U.S. government could negatively impact financial markets which in turn could have an adverse effect on our financial position or results of operations.
Various federal banking agencies have recently completed significant changes to their respective CRA regulations. Federal, state or local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans.
Federal, state or local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans.
If economic conditions in the United States or any of our local markets weaken, our growth and profitability from our operations could be constrained. The current economic environment is characterized by high inflation levels and interest rates. These conditions impact our ability to attract deposits and to generate attractive earnings through our loan and investment portfolios.
If economic conditions in the United States or any of our local markets weaken, our growth and profitability from our operations could be constrained. The current economic environment is characterized by high inflation levels and relatively high interest rates, despite recent FRB reductions in rates.
All of these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable.
These conditions impact our ability to attract deposits and to generate attractive earnings through our loan and investment portfolios. All of these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures. We are also exposed to risks arising from the use of AI technologies by bad actors to commit fraud and misappropriate funds and to facilitate cyberattacks.
We are subject to the supervision and regulation of the Federal Reserve, the FDIC and the ASBD. These regulations are intended primarily to protect depositors, the public and the FDIC’s Deposit Insurance Fund, rather than shareholders. Additionally, we are subject to supervision, regulation and examination by other regulatory authorities, such as the SEC and state securities and insurance regulators.
The financial services industry is extensively regulated and supervised under both federal and state law. We are subject to the supervision and regulation of the Federal Reserve, the FDIC and the ASBD. These regulations are intended primarily to protect depositors, the public and the FDIC’s Deposit Insurance Fund, rather than shareholders.
Removed
Treasury began taking extraordinary measures to prevent a default on U.S. government debt, which measures are expected to continue until such time as the U.S. Congress increases the debt ceiling. However, it is unclear how long such extraordinary measures will forestall a default in the event of extended Congressional negotiations or inaction.
Added
Digital banking trends may create deposit volatility, which could adversely affect our operations, profitability and competitive position. Our traditional banking model depends heavily on stable customer deposits as a primary source of funding. The rising popularity of alternative financial products, including fintech platforms, cryptocurrencies, money market funds, and digital wallets, may lead to increased volatility in our deposit base.
Removed
Disagreement over the federal budget has previously caused the U.S. federal government to shut down for periods of time. On December 21, 2024, President Biden signed a bipartisan continuing resolution to extend federal spending and avert a government shutdown through March 14, 2025.
Added
Significant fluctuations in deposits could adversely affect our liquidity position, funding costs, and overall financial stability. Although we actively manage our liquidity and funding sources, a substantial shift of customer deposits to these alternative products could negatively impact our operations, profitability, and competitive position.
Removed
Accordingly, without a final agreement regarding the federal budget in place prior to the expiration of the continuing resolution, or another continuing resolution, it is still possible that a partial shutdown of the U.S. government may occur.
Added
Any government shutdown could adversely affect the U.S. and global economy and our liquidity, financial condition and earnings.
Removed
The federal banking agencies, including the OCC, have emphasized that climate-related risks are faced by banking organizations of all types and sizes and are in the process of enhancing supervisory expectations regarding banks’ risk management practices. In December 2021, the OCC published proposed principles for climate risk management by banking organizations with more than $100 billion in assets.
Added
Recent U.S. government shutdowns have negatively impacted U.S. economic growth, and the suspension of government data collection and publication left policymakers without access to the latest data on employment, inflation, and economic growth, increasing the risk that a wrong decision will be made.
Removed
The OCC also has appointed its first ever Climate Change Risk Officer and established an internal climate risk implementation committee in order to assist with these initiatives and to support the agency’s efforts to enhance its supervision of climate change risk management.
Added
Additionally, we are subject to supervision, regulation and examination by other regulatory authorities, such as the SEC and state securities and insurance regulators.
Removed
Similar and even more expansive initiatives are expected, including potentially increasing supervisory expectations with respect to banks’ risk management practices, accounting for the effects of climate change in stress testing scenarios and systemic risk assessments, revising expectations for credit portfolio concentrations based on climate-related factors and encouraging investment by banks in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change.
Added
In the future, new regulations or guidance may be issued, or other regulatory or supervisory actions may be taken, in this area by the federal banking agencies or other regulatory agencies, or new statutory requirements may be adopted.
Removed
In March 2024, the SEC adopted final rules for "The Enhancement and Standardization of Climate-Related Disclosures for Investors,” which would have required issuers to provide climate-related disclosures. In April 2024, the SEC stayed the effectiveness of the final rules pending the outcome of certain legal challenges.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, our incident response plan coordinates the activities we take to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage. 28 Our processes also address cybersecurity threat risks associated with our use of third-party service providers, including those in our supply chain or who have access to our customer and employee data or our systems.
Biggest changeIn addition, our incident response plan coordinates the activities we take to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage. 27 Our processes also address cybersecurity threat risks associated with our use of third-party service providers, including those in our supply chain or who have access to our customer and employee data or our systems.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the opinion of management, based on a review and consultation with our legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on our consolidated financial statements or results of operation. 29
Biggest changeIn the opinion of management, based on a review and consultation with our legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on our consolidated financial statements or results of operation. 28

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn November 2024, the Board of Directors authorized the Company to repurchase an additional 600,000 shares under the program and to extend the expiration date of the program to December 31, 2025. As of December 31, 2024, Bancshares was authorized to repurchase up to 912,813 shares of common stock under the share repurchase program.
Biggest changeUnder the share repurchase program, the Board of Directors approved additional repurchases of 600,000 shares in November 2024 and 1,000,000 shares in November 2025, and extended the program’s expiration to December 31, 2026. As of December 31, 2025, Bancshares was authorized to repurchase up to 1,784,813 shares of common stock under the share repurchase program.
Share Repurchases The following table sets forth purchases made by or on behalf of Bancshares or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, of shares of Bancshares’ common stock during the fourth quarter of 2024.
Share Repurchases The following table sets forth purchases made by or on behalf of Bancshares or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, of shares of Bancshares’ common stock during the fourth quarter of 2025.
(2) 40,000 shares were repurchased during the fourth quarter pursuant to Bancshares’ publicly announced share repurchase program, which was initially approved by the Board of Directors on January 19, 2006 and authorized the repurchase of up to 642,785 shares of common stock.
(2) 88,000 shares were repurchased during the fourth quarter pursuant to Bancshares’ publicly announced share repurchase program, which was initially approved by the Board of Directors on January 19, 2006 and authorized the repurchase of up to 642,785 shares of common stock.
Bancshares’ common stock is listed on the Nasdaq Capital Market under the symbol “FUSB.” Prior to our name change on October 11, 2016, our common stock was listed on the Nasdaq Capital Market under the symbol “USBI.” As of March 3, 2025, there were approximately 616 record holders of Bancshares’ common stock (excluding any participants in any clearing agency and “street name” holders).
Bancshares’ common stock is listed on the Nasdaq Capital Market under the symbol “FUSB.” Prior to our name change on October 11, 2016, our common stock was listed on the Nasdaq Capital Market under the symbol “USBI.” As of March 6, 2026, there were approximately 586 record holders of Bancshares’ common stock (excluding any participants in any clearing agency and “street name” holders).
Bancshares declared total dividends of $0.22 per common share and $0.20 per common share during the years ended December 31, 2024 and 2023, respectively.
Bancshares declared total dividends of $0.28 per common share and $0.22 per common share during the years ended December 31, 2025 and 2024, respectively.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (2) Maximum Number of Shares that May Yet Be Purchased Under the Programs (2) October 1-31, 2024 595 $ 11.61 — 352,813 November 1-30, 2024 30,036 $ 12.32 30,000 922,813 December 1-31, 2024 10,060 $ 13.75 10,000 912,813 Total 40,691 $ 12.66 40,000 912,813 (1) 691 shares were purchased in open-market transactions by an independent trustee for Bancshares' 401(k) Plan during the fourth quarter of 2024.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) (2) Average Price Paid per Share (3) Total Number of Shares Purchased as Part of Publicly Announced Programs (2) Maximum Number of Shares that May Yet Be Purchased Under the Programs (2) October 1-31, 2025 733 $ 12.39 — 872,813 November 1-30, 2025 55,048 $ 13.76 55,000 1,817,813 December 1-31, 2025 33,048 $ 14.21 33,000 1,784,813 Total 88,829 $ 13.92 88,000 1,784,813 (1) 829 shares were purchased in open-market transactions by an independent trustee for Bancshares' 401(k) Plan during the fourth quarter of 2025.
Added
(3) Average price paid per share includes shares purchased in open-market transactions by an independent trustee for Bancshares' 401(k) Plan in addition to shares repurchased pursuant to Bancshares’ publicly announced share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe table below summarizes loan balances by portfolio category at the end of each of the most recent five years as of December 31, 2024: Year Ended December 31, 2024 2023 2022 2021 2020 (Dollars in Thousands) Real estate loans: Construction, land development and other land loans $ 65,537 $ 88,140 $ 53,914 $ 67,393 $ 37,377 Secured by 1-4 family residential properties 69,999 76,200 87,995 72,670 88,936 Secured by multi-family residential properties 101,057 62,397 67,852 46,021 54,421 Secured by non-farm, non-residential properties 227,751 213,586 200,156 198,000 184,622 Commercial and industrial loans 44,238 60,515 73,546 73,865 81,562 Consumer loans: Direct consumer 4,774 5,938 9,851 20,090 27,229 Branch retail 5,558 8,670 13,992 24,380 30,176 Indirect 304,125 306,345 266,567 205,931 141,521 Total loans $ 823,039 $ 821,791 $ 773,873 $ 708,350 $ 645,844 Allowance for credit losses 10,184 10,507 9,422 8,320 7,470 Net loans $ 812,855 $ 811,284 $ 764,451 $ 700,030 $ 638,374 As of December 31, 2024 and December 31, 2023, the composition of the non-farm, non-residential loan portfolio was as follows: December 31, 2024 December 31, 2023 Owner Occupied Non-Owner Occupied Total Owner Occupied Non-Owner Occupied Total (Dollars in Thousands) Office $ 10,093 $ 36,811 $ 46,904 $ 14,686 $ 30,693 $ 45,379 Hospitality — — — 501 5,346 5,847 Industrial 5,696 45,477 51,173 12,480 35,265 47,745 Nursing homes 17,961 — 17,961 — — — Retail services 15,031 — 15,031 16,016 — 16,016 Retail single credit tenant — 41,357 41,357 — 43,113 43,113 Retail with anchor 3,075 13,628 16,703 376 11,953 12,329 Retail without anchor — — — 3,166 8,010 11,176 Storage 780 14,835 15,615 831 15,254 16,085 Other 11,989 11,018 23,007 10,552 5,344 15,896 Total loans $ 64,625 $ 163,126 $ 227,751 $ 58,608 $ 154,978 $ 213,586 43 As of December 31, 2024 and December 31, 2023, the composition of the construction, land development, and other land loans loan portfolio was as follows: December 31, 2024 December 31, 2023 Owner Occupied Non-Owner Occupied Total Owner Occupied Non-Owner Occupied Total (Dollars in Thousands) Apartments $ — $ 61,118 $ 61,118 $ — $ 66,789 $ 66,789 Senior housing — — — 8,362 — 8,362 Medical office — — — — 6,584 6,584 Farmland 3,057 — 3,057 3,174 — 3,174 Residential — — — 1,152 — 1,152 Retail without anchor — — — 763 — 763 Other 440 922 1,362 725 591 1,316 Total loans $ 3,497 $ 62,040 $ 65,537 $ 14,176 $ 73,964 $ 88,140 44 The following table classifies the Company's fixed and variable rate loans as of December 31, 2024 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: December 31, 2024 One Year or Less After One Year Through Five Years After Five Years Through Fifteen Years After Fifteen Years Total (Dollars in Thousands) Total loans: Real estate loans: Construction, land development and other land loans $ 12,561 $ 52,832 $ 144 $ — $ 65,537 Secured by 1-4 family residential properties 1,201 14,107 23,659 31,032 69,999 Secured by multi-family residential properties 36,406 54,526 8,188 1,937 101,057 Secured by non-farm, non-residential properties 37,095 112,124 78,532 — 227,751 Commercial and industrial loans 15,540 22,768 5,930 — 44,238 Consumer loans: Direct consumer 1,547 3,179 48 — 4,774 Branch retail 221 2,701 2,636 — 5,558 Indirect 206 13,848 290,071 — 304,125 Total loans $ 104,777 $ 276,085 $ 409,208 $ 32,969 $ 823,039 Loans with fixed interest rates: Real estate loans: Construction, land development and other land loans $ 563 $ 2,721 $ 144 $ — $ 3,428 Secured by 1-4 family residential properties 1,093 6,348 5,438 14,283 27,162 Secured by multi-family residential properties 32 35,545 363 167 36,107 Secured by non-farm, non-residential properties 19,772 53,722 61,996 — 135,490 Commercial and industrial loans 6,273 16,473 5,930 — 28,676 Consumer loans: Direct consumer 1,535 3,179 48 — 4,762 Branch retail 221 2,701 2,636 — 5,558 Indirect 206 13,848 290,071 — 304,125 Total loans with fixed interest rates $ 29,695 $ 134,537 $ 366,626 $ 14,450 $ 545,308 Loans with variable interest rates: Real estate loans: Construction, land development and other land loans $ 11,998 $ 50,111 $ — $ — $ 62,109 Secured by 1-4 family residential properties 108 7,759 18,221 16,749 42,837 Secured by multi-family residential properties 36,374 18,981 7,825 1,770 64,950 Secured by non-farm, non-residential properties 17,323 58,402 16,536 — 92,261 Commercial and industrial loans 9,267 6,295 — — 15,562 Consumer loans: Direct consumer 12 — — — 12 Branch retail — — — — — Indirect — — — — — Total loans with variable interest rates $ 75,082 $ 141,548 $ 42,582 $ 18,519 $ 277,731 45 Allowance for Credit Losses on Loans and Leases The table below summarizes changes in the allowance for credit losses on loans and leases for each of the most recent five years as of December 31, 2024.
Biggest changeAs of December 31, 2025 and December 31, 2024, the composition of the non-residential commercial real estate loan portfolio was as follows: December 31, 2025 December 31, 2024 Owner Occupied Non-Owner Occupied Total Owner Occupied Non-Owner Occupied Total (Dollars in Thousands) Office $ 7,141 $ 33,170 $ 40,311 $ 10,093 $ 36,811 $ 46,904 Industrial 5,194 42,522 47,716 5,696 45,477 51,173 Nursing homes 17,965 — 17,965 17,961 — 17,961 Retail services 14,381 — 14,381 15,031 — 15,031 Retail single credit tenant 603 39,028 39,631 — 41,357 41,357 Retail with anchor 2,619 3,486 6,105 3,075 13,628 16,703 Storage 727 15,645 16,372 780 14,835 15,615 Other 10,222 7,996 18,218 11,989 11,018 23,007 Total loans $ 58,852 $ 141,847 $ 200,699 $ 64,625 $ 163,126 $ 227,751 43 As of December 31, 2025 and December 31, 2024, the composition of the construction, land development, and other land loans loan portfolio was as follows: December 31, 2025 December 31, 2024 Owner Occupied Non-Owner Occupied Total Owner Occupied Non-Owner Occupied Total (Dollars in Thousands) Apartments $ — $ 22,722 $ 22,722 $ — $ 61,118 $ 61,118 Farmland 2,322 — 2,322 3,057 — 3,057 Retail — 7,445 7,445 — — — Other — 129 129 440 922 1,362 Total loans $ 2,322 $ 30,296 $ 32,618 $ 3,497 $ 62,040 $ 65,537 44 The following table classifies the Company's fixed and variable rate loans as of December 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: December 31, 2025 One Year or Less After One Year Through Five Years After Five Years Through Fifteen Years After Fifteen Years Total (Dollars in Thousands) Total loans: Real estate loans: Construction, land development and other land loans $ 22 $ 32,596 $ — $ — $ 32,618 Secured by 1-4 family residential properties 3,247 11,356 25,062 27,331 66,996 Secured by multi-family residential properties 59,920 55,544 443 1,862 117,769 Secured by non-residential commercial real estate 40,092 112,780 47,827 — 200,699 Commercial and industrial loans 8,960 32,377 7,023 — 48,360 Consumer loans: Direct 1,690 3,154 — — 4,844 Indirect 481 17,327 363,924 — 381,732 Total loans $ 114,412 $ 265,134 $ 444,279 $ 29,193 $ 853,018 Loans with fixed interest rates: Real estate loans: Construction, land development and other land loans $ 22 $ 2,429 $ — $ — $ 2,451 Secured by 1-4 family residential properties 2,116 4,206 4,173 13,371 23,866 Secured by multi-family residential properties 7,317 27,401 443 776 35,937 Secured by non-residential commercial real estate 10,347 74,519 31,723 — 116,589 Commercial and industrial loans 3,702 15,134 6,904 — 25,740 Consumer loans: Direct 1,676 3,154 — — 4,830 Indirect 481 17,327 363,924 — 381,732 Total loans with fixed interest rates $ 25,661 $ 144,170 $ 407,167 $ 14,147 $ 591,145 Loans with variable interest rates: Real estate loans: Construction, land development and other land loans $ — $ 30,167 $ — $ — $ 30,167 Secured by 1-4 family residential properties 1,131 7,150 20,889 13,960 43,130 Secured by multi-family residential properties 52,603 28,143 — 1,086 81,832 Secured by non-residential commercial real estate 29,745 38,261 16,104 — 84,110 Commercial and industrial loans 5,258 17,243 119 — 22,620 Consumer loans: Direct 14 — — — 14 Indirect — — — — — Total loans with variable interest rates $ 88,751 $ 120,964 $ 37,112 $ 15,046 $ 261,873 45 Allowance for Credit Losses on Loans and Leases The table below summarizes changes in the allowance for credit losses ("ACL") on loans and leases for each of the most recent five years as of December 31, 2025.
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-for-maturity securities may be pledged at fair value with the FHLB and through the FRB discount window.
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.
Impairment exists when a reporting unit’s carrying amount of goodwill exceeds its implied fair value. In testing goodwill for 33 impairment, U.S. GAAP permits the Company to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Impairment exists when a reporting unit’s carrying amount of goodwill exceeds its implied fair value. In testing goodwill for impairment, U.S. GAAP permits the Company to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Fair value is measured based on a variety of inputs that the Company utilizes. Fair value may be based on 34 quoted market prices for identical assets or liabilities traded in active markets (Level 1 valuations).
Fair value is measured based on a variety of inputs that the Company utilizes. Fair value may be based on quoted market prices for identical assets or liabilities traded in active markets (Level 1 valuations).
As of both December 31, 2024 and 2023, the Bank exceeded all applicable minimum capital standards, and met applicable regulatory guidelines to be considered well-capitalized. No significant conditions or events have occurred since December 31, 2024 that management believes would affect the Bank’s classification as well-capitalized for regulatory purposes.
As of both December 31, 2025 and 2024, the Bank exceeded all applicable minimum capital standards, and met applicable regulatory guidelines to be considered well-capitalized. No significant conditions or events have occurred since December 31, 2025 that management believes would affect the Bank’s classification as well-capitalized for regulatory purposes.
The following discussion and financial information are presented to aid in an understanding of the Company’s consolidated financial position, changes in financial position, results of operations and cash flows and should be read in conjunction with the consolidated financial statements and notes thereto included herein. The emphasis of the discussion is on the years 2024 and 2023.
The following discussion and financial information are presented to aid in an understanding of the Company’s consolidated financial position, changes in financial position, results of operations and cash flows and should be read in conjunction with the consolidated financial statements and notes thereto included herein. The emphasis of the discussion is on the years 2025 and 2024.
As of December 31, 2024, the Company evaluated both the available-for-sale and held-to-maturity portfolios for credit losses and concluded that no credit losses were included in either portfolio and that the unrealized losses in both portfolios resulted from the prevailing interest rate environment.
As of December 31, 2025, the Company evaluated both the available-for-sale and held-to-maturity portfolios for credit losses and concluded that no credit losses were included in either portfolio and that the unrealized losses in both portfolios resulted from the prevailing interest rate environment.
Interest-bearing liabilities consist of interest-bearing demand deposits and savings and time deposits, as well as borrowings. The following table shows the average balances of each principal category of assets, liabilities and shareholders’ equity for the years ended December 31, 2024 and 2023.
Interest-bearing liabilities consist of interest-bearing demand deposits and savings and time deposits, as well as borrowings. The following table shows the average balances of each principal category of assets, liabilities and shareholders’ equity for the years ended December 31, 2025 and 2024.
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 amounts shown as liquidity from pledgable investment securities represent total investment securities as recorded on the consolidated balance sheets, less reductions for securities already pledged and discounts expected to be taken by the lender to determine collateral value.
MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements You should read the following discussion of our financial condition and results of operations in conjunction with the “Selected Financial Data” and our financial statements and the related notes included elsewhere in this Annual Report on Form 10-K for the year 30 ended December 31, 2024.
MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements You should read the following discussion of our financial condition and results of operations in conjunction with the “Selected Financial Data” and our financial statements and the related notes included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2025.
Goodwill impairment was neither indicated nor recorded during the years ended December 31, 2024 or 2023. In both years, the Company identified one reporting unit (the "Bank reporting unit") for goodwill impairment testing.
Goodwill impairment was neither indicated nor recorded during the years ended December 31, 2025 or 2024. In both years, the Company identified one reporting unit (the "Bank reporting unit") for goodwill impairment testing.
As of October 1, 2024, the date of the Company's most recent impairment test, the Bank reporting unit had a fair value that was in excess of its carrying value.
As of October 1, 2025, the date of the Company's most recent impairment test, the Bank reporting unit had a fair value that was in excess of its carrying value.
Refer to the section captioned “Regulatory Capital” included in Note 14, “Shareholders’ Equity,” in the Notes to the consolidated financial statements for an illustration of the Bank’s actual regulatory capital amounts and ratios under regulatory capital standards in effect as of December 31, 2024 and December 31, 2023.
Refer to the section captioned “Regulatory Capital” included in Note 14, “Shareholders’ Equity,” in the Notes to the consolidated financial statements for an illustration of the Bank’s actual regulatory capital amounts and ratios under regulatory capital standards in effect as of both December 31, 2025 and 2024.
The repurchased shares were allocated to treasury stock under the Company’s previously announced share repurchase program, which was expanded in 2024 to authorize the purchase of 600,000 additional shares. Share repurchases under the program may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate, subject to applicable regulatory requirements.
The repurchased shares were allocated to treasury stock under the Company’s previously announced share repurchase program, which was expanded in 2025 to authorize the purchase of 1,000,000 additional shares. Share repurchases under the program may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate, subject to applicable regulatory requirements.
The investment securities portfolio had an estimated average life of 3.6 years and 3.9 years as of December 31, 2024 and 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.
The investment securities portfolio had an estimated average life of 3.7 years and 3.6 years as of December 31, 2025 and 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.
Investment securities forecasted to mature or reprice in one year or less were estimated to be $29.6 million and $12.9 million of the investment portfolio as of December 31, 2024 and 2023, respectively. 49 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.
Investment securities forecasted to mature or reprice in one year or less were estimated to be $27.5 million and $29.6 million of the investment portfolio as of December 31, 2025 and 2024, respectively. 49 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.
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 December 31, 2024 and 2023, respectively.
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 December 31, 2025 and 2024.
As of December 31, 2024, the Company held the following derivative financial instruments: • Three forward interest rate swap contracts designated as fair value hedges that were intended to mitigate risk associated with rising interest rates by converting a portfolio of fixed rate loans to a variable rate • Two forward starting interest rate swap contracts designated as cash flow hedges with the objective of protecting the Company against variability in expected future cash flows attributed to changes in the SOFR interest rate on the designated notional amount of interest-bearing liabilities. • Two interest rate floor contracts not designated as hedging instruments that were intended to mitigate the Company’s risk of loss associated with downward shifts in the SOFR • Three credit risk participation agreements with lead participant banks with which the Company shares participation loans.
As of December 31, 2024, the Company held the following derivative financial instruments: • Three forward interest rate swap contracts designated as fair value hedges that were intended to mitigate risk associated with rising interest rates by converting a $30.0 million aggregate notional amount of fixed rate loans to a variable rate. • Two forward starting interest rate swap contracts designated as cash flow hedges with the objective of protecting the Company against variability in expected future cash flows attributed to changes in the SOFR interest rate on a $40.0 million aggregate notional amount of interest-bearing liabilities. • Two interest rate floor contracts not designated as hedging instruments that were intended to mitigate the Company’s risk of loss associated with downward shifts in the SOFR on an aggregate notional amount of $50.0 million. • Three credit risk participation agreements with lead participant banks with which the Company shares participation loans.
Summarized condensed consolidated statements of operations are included below for the years ended December 31, 2024 and 2023, respectively.
Summarized condensed consolidated statements of operations are included below for the years ended December 31, 2025 and 2024, respectively.
Regulatory Capital During 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 December 31, 2024, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.31%.
Regulatory Capital During 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 December 31, 2025, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.88%.
Held-to-maturity securities consisted of commercial mortgage-backed securities, obligations of U.S. government-sponsored agencies and obligations of states and political subdivisions. Net unrealized losses in the available-for-sale portfolio totaled $6.7 million as of December 31, 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.
Held-to-maturity securities consisted of commercial mortgage-backed securities, obligations of U.S. government-sponsored agencies and obligations of states and political subdivisions. Net unrealized losses in the available-for-sale portfolio totaled $1.0 million as of December 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.
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 $216.8 million, or 22.2% of total deposits, as of December 31, 2024. As of December 31, 2023, estimated uninsured deposits totaled $200.3 million, or 21.1% of total deposits.
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 $218.0 million, or 21.2% of total deposits, as of December 31, 2025. As of December 31, 2024, estimated uninsured deposits totaled $216.8 million, or 22.3% of total deposits.
Non-accruing loans averaged $3.1 million and $1.7 million for the years ended December 31, 2024 and 2023, respectively. (2) Loan fees are included in the interest amounts presented.
Non-accruing loans averaged $2.5 million and $3.1 million for the years ended December 31, 2025 and 2024, respectively. (2) Loan fees are included in the interest amounts presented.
The repurchase program does not obligate the Company to acquire any particular number of shares and may be suspended at any time at the Company’s discretion. As of December 31, 2024, 912,813 shares remained available for repurchase under the program.
The repurchase program does not obligate the Company to acquire any particular number of shares and may be suspended at any time at the Company’s discretion. As of December 31, 2025, 1,784,813 shares remained available for repurchase under the program.
The Bank manages the pricing of its deposits to maintain a desired deposit balance. The Company had $10.0 million in outstanding short-term borrowings under FHLB advances as of both December 31, 2024 and 2023.
The Bank manages the pricing of its deposits to maintain a desired deposit balance. The Company had no outstanding short-term borrowings as of December 31, 2025. As of December 31, 2024, the Company had $10.0 million in outstanding short-term borrowings under FHLB advances.
As of December 31, 2024, available-for-sale securities totaled $167.9 million, or 99.6% 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 notes, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
As of December 31, 2025, available-for-sale securities totaled $168.1 million, or 99.7% 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 notes, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
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 December 31, 2024, held-to-maturity securities totaled $0.7 million, or 0.4% 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 are recorded at amortized cost and represent securities that the Company both intends and has the ability to hold to maturity. As of December 31, 2025, held-to-maturity securities totaled $0.5 million, or 0.3% of the total investment portfolio, compared to $0.7 million, or 0.4% of the total investment portfolio, as of December 31, 2024.
Its total capital ratio was 12.47%, and its Tier 1 leverage ratio was 9.50%. Liquidity As of December 31, 2024, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations.
Its total capital ratio was 12.05%, and its Tier 1 leverage ratio was 9.03%. Liquidity As of December 31, 2025, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations.
As of both December 31, 2024 and 2023, these liabilities represented 2.5% of interest-bearing liabilities. The table below summarizes short- and long-term liabilities and related interest rate data as of and for the years ended December 31, 2024 and 2023.
As of December 31, 2025 and 2024, these liabilities represented 1.2% and 2.5%, respectively, of interest-bearing liabilities. The table below summarizes short- and long-term liabilities and related interest rate data as of and for the years ended December 31, 2025 and 2024.
The repurchases were completed under the Company’s previously announced share repurchase program, which was expanded in 2024 to authorize the purchase of 600,000 additional shares. As of December 31, 2024, a total of 912,813 shares remained available for repurchase under the program.
The repurchases were completed under the Company’s previously announced share repurchase program, which was expanded in 2025 to authorize the purchase of 1,000,000 additional shares. As of December 31, 2025, a total of 1,784,813 shares remained available for repurchase under the program.
As of December 31, 2024 and December 31, 2023, the Company's total remaining credit availability with the FHLB was $319.9 million and $279.4 million, respectively, subject to the pledging of additional collateral which may include eligible investment securities and loans.
As of December 31, 2025 and December 31, 2024, the Company's total remaining credit availability with the FHLB was $324.1 million and $319.9 million, respectively, subject to the pledging of additional collateral which may include eligible investment securities and loans.
Year Ended December 31, 2024 2023 2022 2021 2020 (Dollars in Thousands, except Per Share Amounts) Results of Operations: Interest income $ 58,260 $ 52,806 $ 41,197 $ 39,921 $ 40,377 Interest expense 22,111 15,456 4,256 2,950 4,611 Net interest income 36,149 37,350 36,941 36,971 35,766 Provision for credit losses 622 319 3,308 2,010 2,945 Non-interest income 3,583 3,381 3,451 3,521 5,010 Non-interest expense 28,356 29,141 28,072 32,756 34,299 Income before income taxes 10,754 11,271 9,012 5,726 3,532 Provision for income taxes 2,584 2,786 2,148 1,275 825 Net income $ 8,170 $ 8,485 $ 6,864 $ 4,451 $ 2,707 Per Share Data: Basic net income per share $ 1.40 $ 1.42 $ 1.13 $ 0.70 $ 0.43 Diluted net income per share $ 1.33 $ 1.33 $ 1.06 $ 0.66 $ 0.40 Dividends per share $ 0.22 $ 0.20 $ 0.14 $ 0.12 $ 0.12 Common stock price - High $ 14.30 $ 10.44 $ 12.00 $ 12.50 $ 12.00 Common stock price - Low $ 8.66 $ 6.54 $ 6.46 $ 7.54 $ 5.18 Period end price per share $ 12.59 $ 10.31 $ 8.68 $ 10.57 $ 9.02 Period end shares outstanding (in thousands) 5,696 5,735 5,812 6,172 6,177 Period-End Balance Sheet: Total assets $ 1,101,086 $ 1,072,940 $ 994,667 $ 958,302 $ 890,511 Total loans 823,039 821,791 773,873 708,350 645,844 Allowance for credit losses on loans 10,184 10,507 9,422 8,320 7,470 Investment securities, net 168,570 136,669 132,657 134,319 91,422 Total deposits 972,557 950,191 870,025 838,126 782,212 Short-term borrowings 10,000 10,000 20,038 10,046 10,017 Long-term borrowings 10,872 10,799 10,726 10,653 — Total shareholders’ equity 98,624 90,593 85,135 90,064 86,678 Book value per share 17.31 15.80 14.65 14.59 14.03 Performance Ratios: Total loans to deposits 84.6 % 86.5 % 88.9 % 84.5 % 82.6 % Net interest margin 3.59 % 3.87 % 4.07 % 4.23 % 4.69 % Return on average assets 0.76 % 0.82 % 0.70 % 0.47 % 0.32 % Return on average equity 8.62 % 9.88 % 7.99 % 5.01 % 3.17 % Asset Quality: Allowance for credit losses as % of loans 1.24 % 1.28 % 1.22 % 1.17 % 1.16 % Nonperforming assets as % of loans and other real estate 0.66 % 0.37 % 0.30 % 0.59 % 0.62 % Nonperforming assets as % of total assets 0.50 % 0.28 % 0.24 % 0.43 % 0.45 % Net charge-offs as a % of average loans 0.14 % 0.14 % 0.30 % 0.16 % 0.21 % Capital Adequacy: Common equity tier 1 risk-based capital ratio 11.31 % 10.88 % 11.07 % 11.36 % 11.78 % Tier 1 risk-based capital ratio 11.31 % 10.88 % 11.07 % 11.36 % 11.78 % Total risk-based capital ratio 12.47 % 12.11 % 12.19 % 12.44 % 12.92 % Tier 1 leverage ratio 9.50 % 9.36 % 9.39 % 9.17 % 8.98 % 31 DESCRIPTION OF THE BUSINESS 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”).
Year Ended December 31, 2025 2024 2023 2022 2021 (Dollars in Thousands, except Per Share Amounts) Results of Operations: Interest income $ 59,415 $ 58,260 $ 52,806 $ 41,197 $ 39,921 Interest expense 21,957 22,111 15,456 4,256 2,950 Net interest income 37,458 36,149 37,350 36,941 36,971 Provision for credit losses 4,031 622 319 3,308 2,010 Non-interest income 3,579 3,583 3,381 3,451 3,521 Non-interest expense 29,070 28,356 29,141 28,072 32,756 Income before income taxes 7,936 10,754 11,271 9,012 5,726 Provision for income taxes 1,944 2,584 2,786 2,148 1,275 Net income $ 5,992 $ 8,170 $ 8,485 $ 6,864 $ 4,451 Per Share Data: Basic net income per share $ 1.03 $ 1.40 $ 1.42 $ 1.13 $ 0.70 Diluted net income per share $ 1.00 $ 1.33 $ 1.33 $ 1.06 $ 0.66 Dividends per share $ 0.28 $ 0.22 $ 0.20 $ 0.14 $ 0.12 Common stock price - High $ 14.79 $ 14.30 $ 10.44 $ 12.00 $ 12.50 Common stock price - Low $ 10.30 $ 8.66 $ 6.54 $ 6.46 $ 7.54 Period end price per share $ 13.97 $ 12.59 $ 10.31 $ 8.68 $ 10.57 Period end shares outstanding (in thousands) 5,700 5,696 5,735 5,812 6,172 Period-End Balance Sheet: Total assets $ 1,154,785 $ 1,101,086 $ 1,072,940 $ 994,667 $ 958,302 Total loans 853,018 823,039 821,791 773,873 708,350 Allowance for credit losses on loans 10,704 10,184 10,507 9,422 8,320 Investment securities, net 168,540 168,570 136,669 132,657 134,319 Total deposits 1,027,962 972,557 950,191 870,025 838,126 Short-term borrowings — 10,000 10,000 20,038 10,046 Long-term borrowings 10,945 10,872 10,799 10,726 10,653 Total shareholders’ equity 105,648 98,624 90,593 85,135 90,064 Book value per share 18.53 17.31 15.80 14.65 14.59 Performance Ratios: Total loans to deposits 83.0 % 84.6 % 86.5 % 88.9 % 84.5 % Net interest margin 3.54 % 3.59 % 3.87 % 4.07 % 4.23 % Return on average assets 0.53 % 0.76 % 0.82 % 0.70 % 0.47 % Return on average common equity 5.86 % 8.62 % 9.88 % 7.99 % 5.01 % Asset Quality: Allowance for credit losses as % of loans 1.25 % 1.24 % 1.28 % 1.22 % 1.17 % Nonperforming assets as % of loans and other real estate 0.19 % 0.66 % 0.37 % 0.30 % 0.59 % Nonperforming assets as % of total assets 0.14 % 0.50 % 0.28 % 0.24 % 0.43 % Net charge-offs as a % of average loans 0.41 % 0.14 % 0.14 % 0.30 % 0.16 % Capital Adequacy: Common equity tier 1 risk-based capital ratio 10.88 % 11.31 % 10.88 % 11.07 % 11.36 % Tier 1 risk-based capital ratio 10.88 % 11.31 % 10.88 % 11.07 % 11.36 % Total risk-based capital ratio 12.05 % 12.47 % 12.11 % 12.19 % 12.44 % Tier 1 leverage ratio 9.03 % 9.50 % 9.36 % 9.39 % 9.17 % 31 DESCRIPTION OF THE BUSINESS 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”).
Deployment of Funds As of December 31, 2024, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $52.9 million, or 4.8% of total assets, compared to $59.8 million, or 5.6% of total assets, as of December 31, 2023.
Cash and Investment Securities As of December 31, 2025, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $78.4 million, or 6.8% of total assets, compared to $52.9 million, or 4.8% of total assets, as of December 31, 2024.
Excluding wholesale brokered deposits, as of December 31, 2024, the Company had approximately 29 thousand deposit accounts with an average balance of approximately $31.0 thousand per account.
Excluding wholesale brokered deposits, as of December 31, 2025, the Company had approximately 28 thousand deposit accounts with an average balance of approximately $32.0 thousand per account.
EXECUTIVE OVERVIEW For the year ended December 31, 2024, the Company earned net income of $8.2 million, or $1.33 per diluted common share, compared to net income of $8.5 million, or $1.33 per diluted common share, for the year ended December 31, 2023.
EXECUTIVE OVERVIEW For the year ended December 31, 2025, the Company earned net income of $6.0 million, or $1.00 per diluted common share, compared to net income of $8.2 million, or $1.33 per diluted common share, for the year ended December 31, 2024.
During the year ended December 31, 2024, the Company declared dividends totaling $0.22 per common share, or approximately $1.3 million in aggregate amount, compared to $0.20 per common share, or approximately $1.2 million in aggregate amount, during the year ended December 31, 2023.
During the year ended December 31, 2025, the Company declared dividends totaling $0.28 per common share, or approximately $1.6 million in aggregate amount, compared to $0.22 per common share, or approximately $1.3 million in aggregate amount, during the year ended December 31, 2024.
For the year ended December 31, 2024, the yield on taxable investment securities totaled 3.04%, compared to 2.24% for the year ended December 31, 2023. 41 Investment Securities Maturity Schedule The following tables summarize the carrying values and weighted average yield of the available-for-sale and held-to-maturity securities portfolios as of December 31, 2024, according to contractual maturity.
For the year ended December 31, 2025, the yield on investment securities totaled 3.59%, compared to 3.02% for the year ended December 31, 2024. 41 Investment Securities Maturity Schedule The following tables summarize the carrying values and weighted average yield of the available-for-sale and held-to-maturity securities portfolios as of December 31, 2025, according to contractual maturity.
The increase in shareholders’ equity during the year ended December 31, 2024 resulted primarily from earnings, net of dividends paid, partially offset by repurchases of shares of the Company's common stock.
The increase in shareholders’ equity during the year ended December 31, 2025 resulted primarily from earnings, net of dividends paid and repurchases of shares of the Company's common stock.
The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.
Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.
December 31, 2024 2023 (Dollars in Thousands) Total loans accounted for on a non-accrual basis $ 3,949 $ 2,400 Interest income that would have been recorded under original terms 120 107 Interest income reported and recorded during the year 471 50 Deposits Deposits totaled $972.6 million as of December 31, 2024, compared to $950.2 million as of December 31, 2023.
December 31, 2025 2024 (Dollars in Thousands) Total loans accounted for on a non-accrual basis $ 1,373 $ 3,949 Interest income that would have been recorded under original terms 46 120 Interest income reported and recorded during the year 16 471 Deposits Deposits totaled $1,028.0 million as of December 31, 2025, compared to $972.6 million as of December 31, 2024.
During the year ended December 31, 2024, the Company purchased $58.0 million in taxable U.S. agency-sponsored securities that are included in the available-for-sale portfolio. The purchased securities offset $28.5 million in proceeds received by the Company associated with maturities and prepayments in the portfolio.
During the year ended December 31, 2025, the Company purchased $43.6 million in taxable U.S. agency-sponsored securities that are included in the available-for-sale portfolio. The purchased securities partially offset $50.0 million in proceeds received by the Company associated with maturities, calls and prepayments in the portfolio.
Loans maturing or repricing in one year or less amounted to $279.0 million as of December 31, 2024 and $241.2 million as of December 31, 2023.
Loans maturing or repricing in one year or less amounted to $274.7 million as of December 31, 2025 and $279.0 million as of December 31, 2024.
In addition, shareholders' equity was positively impacted during 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.
In addition, shareholders' equity was positively impacted during the period by reductions in the Company's accumulated other comprehensive loss resulting from changes in market interest rates, the maturity of lower yielding investment securities, and purchases of investment securities at higher yields.
For years ended December 31, 2022 and prior, information presented is as determined in accordance with ASC 310, Receivables , prior to the adoption of ASC 326, Financial Instruments - Credit losses : Year Ended December 31, 2024 2023 2022 2021 2020 (Dollars in Thousands) Balance at beginning of period $ 10,507 $ 9,422 $ 8,320 $ 7,470 $ 5,762 Impact of adopting ASC 326 accounting guidance — 2,123 — — — Charge-offs: Real estate loans: Construction, land development and other loan loans — — — (23 ) — Secured by 1-4 family residential properties (2 ) (97 ) (40 ) (12 ) (61 ) Secured by multi-family residential properties — — — — — Secured by non-farm, non-residential properties (248 ) — — — — Commercial and industrial loans (121 ) — — (6 ) — Consumer loans: Direct consumer (62 ) (571 ) (1,958 ) (1,230 ) (1,621 ) Branch retail (63 ) (445 ) (633 ) (377 ) (374 ) Indirect (1,318 ) (932 ) (382 ) (483 ) (152 ) Total charge-offs (1,814 ) (2,045 ) (3,013 ) (2,131 ) (2,208 ) Recoveries Construction, land development and other loan loans 20 — 2 22 — Secured by 1-4 family residential properties 56 54 39 14 22 Secured by multi-family residential properties — — — — — Secured by non-farm, non-residential properties — — 5 5 14 Commercial and industrial loans 2 — — 21 10 Consumer loans: Direct consumer 300 619 565 626 725 Branch retail 148 243 151 215 186 Indirect 150 49 45 68 14 Total recoveries 676 965 807 971 971 Net charge-offs (1,138 ) (1,080 ) (2,206 ) (1,160 ) (1,237 ) Provision for credit losses 815 42 3,308 2,010 2,945 Ending balance $ 10,184 $ 10,507 $ 9,422 $ 8,320 $ 7,470 Ending balance as a percentage of loans 1.24 % 1.28 % 1.22 % 1.17 % 1.16 % Net charge-offs as a percentage of average loans 0.14 % 0.14 % 0.30 % 0.16 % 0.21 % Allowance for Credit Losses on Unfunded Lending Commitments 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.
For years ended December 31, 2022 and prior, information presented is as determined in accordance with Accounting Standards Codification ("ASC") 310, Receivables , prior to the adoption of ASC 326, Financial Instruments - Credit losses : Year Ended December 31, 2025 2024 2023 2022 2021 (Dollars in Thousands) Balance at beginning of period $ 10,184 $ 10,507 $ 9,422 $ 8,320 $ 7,470 Impact of adopting ASC 326 accounting guidance — — 2,123 — — Charge-offs: Real estate loans: Construction, land development and other loan loans — — — — (23 ) Secured by 1-4 family residential properties — (2 ) (97 ) (40 ) (12 ) Secured by multi-family residential properties — — — — — Secured by non-residential commercial real estate — (248 ) — — — Commercial and industrial loans (2,215 ) (121 ) — — (6 ) Consumer loans: Direct (9 ) (62 ) (571 ) (1,958 ) (1,230 ) Indirect (1,892 ) (1,381 ) (1,377 ) (1,015 ) (860 ) Total charge-offs (4,116 ) (1,814 ) (2,045 ) (3,013 ) (2,131 ) Recoveries Construction, land development and other loan loans — 20 — 2 22 Secured by 1-4 family residential properties 29 56 54 39 14 Secured by multi-family residential properties — — — — — Secured by non-residential commercial real estate 49 — — 5 5 Commercial and industrial loans 165 2 — — 21 Consumer loans: Direct 191 300 619 565 626 Indirect 200 298 292 196 283 Total recoveries 634 676 965 807 971 Net charge-offs (3,482 ) (1,138 ) (1,080 ) (2,206 ) (1,160 ) Provision for credit losses 4,002 815 42 3,308 2,010 Ending balance $ 10,704 $ 10,184 $ 10,507 $ 9,422 $ 8,320 Ending balance as a percentage of loans 1.25 % 1.24 % 1.28 % 1.22 % 1.17 % Net charge-offs as a percentage of average loans 0.41 % 0.14 % 0.14 % 0.30 % 0.16 % Allowance for Credit Losses on Unfunded Lending Commitments 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.
Provision for Income Taxes The provision for income taxes was $2.6 million and $2.8 million for the years ended December 31, 2024 and 2023, respectively. The Company’s effective tax rate was 24.0% and 24.7%, respectively, for the same periods.
Provision for Income Taxes 40 The provision for income taxes was $1.9 million and $2.6 million for the years ended December 31, 2025 and 2024, respectively. The Company’s effective tax rate was 24.5% and 24.0%, respectively, for the same periods.
Short-Term Borrowings (Maturity Less Than One Year) Long-Term Borrowings (Maturity One Year or Greater) (Dollars in Thousands) Other interest-bearing liabilities outstanding at year-end: 2024 $ 10,000 $ 10,872 2023 $ 10,000 $ 10,799 Weighted average interest rate at year-end: 2024 4.57 % 4.20 % 2023 5.46 % 4.20 % Maximum amount outstanding at any month end: 2024 $ 15,000 $ 10,872 2023 $ 35,048 $ 10,799 Average amount outstanding during the year: 2024 $ 2,568 $ 10,836 2023 $ 15,438 $ 10,766 Weighted average interest rate during the year: 2024 4.05 % 4.20 % 2023 5.12 % 4.20 % Shareholders’ Equity As of December 31, 2024, shareholders’ equity totaled $98.6 million, or 9.0% of total assets, compared to $90.6 million, or 8.4% of total assets, as of December 31, 2023.
Short-Term Borrowings (Maturity Less Than One Year) Long-Term Borrowings (Maturity One Year or Greater) (Dollars in Thousands) Other interest-bearing liabilities outstanding at year-end: 2025 $ — $ 10,945 2024 $ 10,000 10,872 Weighted average interest rate at year-end: 2025 — 4.20 % 2024 4.57 % 4.20 % Maximum amount outstanding at any month end: 2025 $ 45,000 $ 10,945 2024 15,000 10,872 Average amount outstanding during the year: 2025 13,271 10,909 2024 $ 2,568 $ 10,836 Weighted average interest rate during the year: 2025 4.48 % 4.20 % 2024 4.05 % 4.20 % Shareholders’ Equity As of December 31, 2025, shareholders’ equity totaled $105.6 million, or 9.1% of total assets, compared to $98.6 million, or 9.0% of total assets, as of December 31, 2024.
As of December 31, 2024, core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, totaled $837.7 million, or 86.1% of total deposits, compared to $819.5 million, or 86.2% of total deposits, as of December 31, 2023.
As of December 31, 2025, core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, totaled $838.3 million, or 81.6% of total deposits, compared to $837.7 million, or 86.1% of total deposits, as of December 31, 2024.
Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses.
Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Management makes decisions about whether to invest in tax-exempt instruments on a case-by-case basis after considering a number of factors, including investment return, credit quality and the consistency of such investments with the Company’s overall strategy.
Management makes decisions about whether to invest in tax-exempt instruments on a case-by-case basis after considering a number of factors, including investment return, credit quality and the consistency of such investments with the Company’s overall strategy. The Company’s effective tax rate is expected to fluctuate commensurate with the level of these investments as compared to total pre-tax income.
Management will continue to monitor core deposit levels closely to help ensure an adequate level of funding for the Company’s activities.
Management anticipates that core deposits will continue to be the Company’s primary source of funding in the future. Management will continue to monitor core deposit levels closely to help ensure an adequate level of funding for the Company’s activities.
Additionally, other real estate and certain other assets acquired in foreclosure are reported at the lower of the recorded investment or fair value of the property, less estimated cost to sell.
These assets and liabilities include securities available-for-sale, impaired loans and derivative instruments. Additionally, other real estate and certain other assets acquired in foreclosure are reported at the lower of the recorded investment or fair value of the property, less estimated cost to sell.
Cash Dividends The Company declared cash dividends totaling $0.22 per share on its common stock during 2024, compared to cash dividends totaling $0.20 per share on its common stock during 2023. Share Repurchases During 2024, the Company completed share repurchases totaling 146,500 shares of its common stock at a weighted average price of $11.22 per share.
Cash Dividends The Company declared cash dividends totaling $0.28 per share on its common stock during 2025, compared to cash dividends totaling $0.22 per share on its common stock during 2024. Share Repurchases During 2025, the Company completed share repurchases totaling 128,000 shares of its common stock at a weighted average price of $13.76 per share.
December 31, 2024 December 31, 2023 (Dollars in Thousands) (Unaudited) (Unaudited) Liquidity from cash and federal funds sold: Cash and cash equivalents $ 47,216 $ 50,279 Federal funds sold 5,727 9,475 Liquidity from cash and federal funds sold 52,943 59,754 Liquidity from pledgable investment securities: Investment securities available-for sale, at fair value 167,888 135,565 Investment securities held-to-maturity, at amortized cost 682 1,104 Less: securities pledged (72,110 ) (41,375 ) Less: estimated collateral value discounts (10,164 ) (11,129 ) Liquidity from pledgable investment securities 86,296 84,165 Liquidity from unused lendable collateral (loans) at FHLB 45,388 21,696 Liquidity from unused lendable collateral (loans and securities) at FRB 165,061 161,729 Unsecured lines of credit with banks 48,000 48,000 Total readily available liquidity $ 397,688 $ 375,344 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.
December 31, 2025 December 31, 2024 (Dollars in Thousands) (Unaudited) (Unaudited) Liquidity from cash, federal funds sold and securities purchased under reverse repurchase agreements: Cash and cash equivalents $ 73,547 $ 47,216 Federal funds sold and securities purchased under reverse repurchase agreements 4,850 5,727 Total liquidity from cash, federal funds sold and securities purchased under reverse repurchase agreements 78,397 52,943 Liquidity from pledgable investment securities: Investment securities available-for sale, at fair value 168,075 167,888 Investment securities held-to-maturity, at amortized cost 465 682 Less: securities pledged (58,497 ) (72,110 ) Less: estimated collateral value discounts (10,671 ) (10,164 ) Total liquidity from pledgable investment securities 99,372 86,296 Liquidity from unused lendable collateral (loans) at FHLB 30,504 45,388 Liquidity from unused lendable collateral (loans and securities) at FRB 210,921 165,061 Unsecured lines of credit with banks 48,000 48,000 Total readily available liquidity $ 467,194 $ 397,688 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.
During the year ended December 31, 2024 the Company completed repurchases of 146,500 shares of its common stock at a weighted average price of $11.22 per share, or $1.6 million in aggregate.
During the year ended December 31, 2025, the Company completed repurchases of 128,000 shares of its common stock at a weighted average price of $13.76 per share, or $1.8 million in aggregate.
Average Daily Amount of Deposits and Rates The average daily amount of deposits and rates paid on such deposits are summarized for the periods indicated in the following table: 2024 2023 Average Amount Rate Average Amount Rate (Dollars in Thousands) Non-interest-bearing demand deposit accounts $ 152,252 — $ 160,598 — Interest-bearing demand deposit accounts 205,581 0.87 % 212,010 0.37 % Savings deposits 251,772 2.72 % 229,238 2.18 % Time deposits 346,541 3.73 % 305,848 2.80 % Total deposits $ 956,146 2.25 % $ 907,694 1.58 % Total interest-bearing deposits $ 803,894 2.68 % $ 747,096 1.92 % Maturities of time deposits of greater than $250 thousand, as well as brokered deposits, outstanding as of December 31, 2024 and 2023 are summarized in the following table: Maturities December 31, 2024 2023 (Dollars in Thousands) Three months or less $ 43,397 $ 12,167 Over three through six months 23,865 26,032 Over six through twelve months 43,362 24,258 Over twelve months 24,267 68,213 Total $ 134,891 $ 130,670 Maturities of time certificates of deposit of greater than $100 thousand and less than $250 thousand outstanding as of December 31, 2024 and 2023 are summarized as follows: Maturities December 31, 2024 2023 (Dollars in Thousands) Three months or less $ 37,606 $ 7,521 Over three through six months 22,148 9,257 Over six through twelve months 25,912 32,323 Over twelve months 9,708 46,788 Total $ 95,374 $ 95,889 48 Other Interest-Bearing Liabilities Other interest-bearing liabilities consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances and subordinated debt that are used by the Company as alternative sources of funds.
Average Daily Amount of Deposits and Rates The average daily amount of deposits and rates paid on such deposits are summarized for the periods indicated in the following table: 2025 2024 Average Amount Rate Average Amount Rate (Dollars in Thousands) Non-interest-bearing demand deposit accounts $ 155,320 — $ 152,252 — Interest-bearing demand deposit accounts 202,661 0.84 % 205,581 0.87 % Savings deposits 285,624 2.60 % 251,772 2.72 % Time deposits 341,986 3.44 % 346,541 3.73 % Total deposits $ 985,591 2.12 % $ 956,146 2.25 % Total interest-bearing deposits $ 830,271 2.52 % $ 803,894 2.68 % Maturities of time deposits of greater than $250 thousand, as well as brokered deposits, outstanding as of December 31, 2025 and 2024 are summarized in the following table: Maturities December 31, 2025 2024 (Dollars in Thousands) Three months or less $ 97,847 $ 43,397 Over three through six months 51,564 23,865 Over six through twelve months 26,538 43,362 Over twelve months 13,694 24,267 Total $ 189,643 $ 134,891 Maturities of time certificates of deposit of greater than $100 thousand and less than $250 thousand outstanding as of December 31, 2025 and 2024 are summarized as follows: Maturities December 31, 2025 2024 (Dollars in Thousands) Three months or less $ 24,658 $ 37,606 Over three through six months 18,916 22,148 Over six through twelve months 19,189 25,912 Over twelve months 13,962 9,708 Total $ 76,725 $ 95,374 48 Other Interest-Bearing Liabilities Other interest-bearing liabilities consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances and subordinated debt that are used by the Company as alternative sources of funds.
At this time, management considers it to be more likely than not that the Company will have sufficient taxable income in the future to allow all deferred tax assets to be realized. Accordingly, a valuation allowance was not established for deferred tax assets as of either December 31, 2024 or 2023.
At this time, management considers it to be more likely than not that the Company will have sufficient taxable income in the future to allow all deferred tax assets to be realized.
Goodwill and Other Intangible Assets Goodwill arises from business combinations and is generally determined as the excess of cost over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.
Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses. 33 Goodwill and Other Intangible Assets Goodwill arises from business combinations and is generally determined as the excess of cost over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.
Year Ended December 31, 2024 2023 (Dollars in Thousands) Interest income $ 58,260 $ 52,806 Interest expense 22,111 15,456 Net interest income 36,149 37,350 Provision for credit losses 622 319 Net interest income after provision for credit losses 35,527 37,031 Non-interest income 3,583 3,381 Non-interest expense 28,356 29,141 Income before income taxes 10,754 11,271 Provision for income taxes 2,584 2,786 Net income $ 8,170 $ 8,485 Basic net income per share $ 1.40 $ 1.42 Diluted net income per share $ 1.33 $ 1.33 Dividends per share $ 0.22 $ 0.20 The discussion that follows summarizes the most significant activity that impacted changes in the Company’s operations during 2024 as compared to 2023, as well as significant changes in the Company’s balance sheet comparing December 31, 2024 to December 31, 2023.
Year Ended December 31, 2025 2024 (Dollars in Thousands) Interest income $ 59,415 $ 58,260 Interest expense 21,957 22,111 Net interest income 37,458 36,149 Provision for credit losses 4,031 622 Net interest income after provision for credit losses 33,427 35,527 Non-interest income 3,579 3,583 Non-interest expense 29,070 28,356 Income before income taxes 7,936 10,754 Provision for income taxes 1,944 2,584 Net income $ 5,992 $ 8,170 Basic net income per share $ 1.03 $ 1.40 Diluted net income per share $ 1.00 $ 1.33 Dividends per share $ 0.28 $ 0.22 The discussion that follows summarizes the most significant activity that impacted changes in the Company’s operations during 2025 as compared to 2024, as well as significant changes in the Company’s balance sheet comparing December 31, 2025 to December 31, 2024. 35 Net Interest Income and Margin Net interest income increased by $1.3 million, or 3.6%, comparing the year ended December 31, 2025 to the year ended December 31, 2024.
The Company has not entered into any unconditional purchase obligations or other long-term obligations, other than as included below. These types of obligations are further discussed in Note 9, “Borrowings,” and Note 15, “Leases,” in the Notes to consolidated financial statements. Many of the Bank’s lending relationships, including those with commercial and consumer customers, contain both funded and unfunded elements.
These types of obligations are further discussed in Note 9, “Borrowings,” and Note 15, “Leases,” in the Notes to consolidated financial statements. Many of the Bank’s lending relationships, including those with commercial and consumer customers, contain both funded and unfunded elements. The unfunded component of these commitments is not recorded in the consolidated balance sheets.
In addition, shareholders' equity was positively impacted during 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.
In addition, shareholders' equity was positively impacted during the period by reductions in the Company's accumulated other comprehensive loss resulting from the maturity of lower yielding investment securities combined with purchases of investment securities at higher yields.
The Bank conducts a general commercial banking business and offers banking services such as demand, savings, individual retirement account and time deposits, personal and commercial loans, safe deposit box services and remote deposit capture.
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. The Bank conducts a general commercial banking business and offers banking services such as demand, savings, individual retirement account and time deposits, personal and commercial loans, safe deposit box services and remote deposit capture.
Loan fees totaled $0.7 million and $0.6 million for the years ended December 31, 2024 and December 31, 2023, respectively. 38 The following table summarizes the impact of variances in volume and rate of interest-earning assets and interest-bearing liabilities on components of net interest income. 2024 Compared to 2023 Increase (Decrease) Due to Change In: 2023 Compared to 2022 Increase (Decrease) Due to Change In: Volume Average Rate Net Volume Average Rate Net (Dollars in Thousands) Interest earned on: Total loans $ 1,385 $ 2,335 $ 3,720 $ 3,715 $ 6,019 $ 9,734 Taxable investment securities 377 1,152 1,529 (254 ) 480 226 Tax-exempt investment securities — 0 — (20 ) (3 ) (23 ) Federal Home Loan Bank stock (27 ) 3 (24 ) 1 39 40 Federal funds sold 263 8 271 47 26 73 Interest-bearing deposits in banks (90 ) 48 (42 ) (3 ) 1,562 1,559 Total interest-earning assets 1,908 3,546 5,454 3,486 8,123 11,609 Interest expense on: Demand deposits (24 ) 1,026 1,002 (88 ) 227 139 Savings deposits 492 1,357 1,849 119 3,684 3,803 Time deposits 1,140 3,208 4,348 676 6,350 7,026 Borrowings (541 ) (3 ) (544 ) (110 ) 342 232 Total interest-bearing liabilities 1,067 5,588 6,655 597 10,603 11,200 Increase (decrease) in net interest income $ 841 $ (2,042 ) $ (1,201 ) $ 2,889 $ (2,480 ) $ 409 Note: Changes attributable to the combined effect of volume and interest rates have been allocated proportionately to the changes due to volume and the changes due to interest rates.
Loan fees totaled $0.7 million for both the years ended December 31, 2025 and December 31, 2024. 38 The following table summarizes the impact of variances in volume and rate of interest-earning assets and interest-bearing liabilities on components of net interest income. 2025 Compared to 2024 Increase (Decrease) Due to Change In: 2024 Compared to 2023 Increase (Decrease) Due to Change In: Volume Average Rate Net Volume Average Rate Net (Dollars in Thousands) Interest earned on: Loans $ 2,359 $ (1,982 ) $ 377 $ 1,385 $ 2,335 $ 3,720 Investment securities 446 915 1,361 377 1,152 1,529 Federal Home Loan Bank stock 38 (10 ) 28 (27 ) 3 (24 ) Federal funds sold (110 ) (47 ) (157 ) 263 8 271 Interest-bearing deposits in banks (83 ) (371 ) (454 ) (90 ) 48 (42 ) Total interest-earning assets 2,650 (1,495 ) 1,155 1,908 3,546 5,454 Interest expense on: Demand deposits (25 ) (42 ) (67 ) (24 ) 1,026 1,002 Money market/savings deposits 922 (365 ) 557 492 1,357 1,849 Time deposits (170 ) (965 ) (1,135 ) 1,140 3,208 4,348 Borrowings 452 39 491 (541 ) (3 ) (544 ) Total interest-bearing liabilities 1,179 (1,333 ) (154 ) 1,067 5,588 6,655 Increase (decrease) in net interest income $ 1,471 $ (162 ) $ 1,309 $ 841 $ (2,042 ) $ (1,201 ) Note: Changes attributable to the combined effect of volume and interest rates have been allocated proportionately to the changes due to volume and the changes due to interest rates.
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.
The expected average life of securities in the investment portfolio was 3.7 years and 3.6 years as of December 31, 2025 and 2024, respectively. 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.
No allowance for credit losses on unfunded commitments was recorded by the Company in the years prior to 2023. 46 Allocation of Allowance for Credit Losses on Loans and Leases While no portion of the allowance 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 December 31, 2024 and 2023. 2024 2023 Allowance Allocation Allowance as Percentage of Total Loans Net Charge-offs as a Percentage of Average Loans Allocation Allowance Allowance as Percentage of Total Loans Net Charge-offs as a Percentage of Average Loans (Dollars in Thousands) Real estate loans: Construction, land development and other land loans $ 352 0.54 % -0.03 % $ 565 0.64 % — Secured by 1-4 family residential properties 406 0.58 % -0.07 % 591 0.78 % 0.05 % Secured by multi-family residential properties 546 0.54 % — 415 0.66 % — Secured by non-farm, non-residential properties 1,428 0.63 % 0.11 % 1,425 0.67 % — Commercial and industrial loans 1,531 3.46 % 0.22 % 513 0.85 % — Consumer loans: Direct consumer 49 1.03 % -4.09 % 64 1.06 % -0.06 % Branch retail 70 1.26 % -1.08 % 436 5.03 % 1.82 % Indirect 5,802 1.91 % 0.39 % 6,498 2.12 % 0.31 % Total $ 10,184 1.24 % 0.14 % $ 10,507 1.28 % 0.14 % Nonperforming Assets Nonperforming assets at the end of the five most recent years as of December 31, 2024 were as follows: Year Ended December 31, 2024 2023 2022 2021 2020 (Dollars in Thousands) Non-accrual loans $ 3,949 $ 2,400 $ 1,651 $ 2,008 $ 3,086 Other real estate owned 1,509 602 686 2,149 949 Total $ 5,458 $ 3,002 $ 2,337 $ 4,157 $ 4,035 Nonperforming assets as a percentage of total loans and other real estate 0.66 % 0.37 % 0.30 % 0.59 % 0.62 % Nonperforming assets as a percentage of total assets 0.50 % 0.28 % 0.24 % 0.43 % 0.45 % Non-accrual loans as a percentage of total loans 0.48 % 0.29 % 0.21 % 0.28 % 0.48 % ACL as a percentage of non-accrual loans 257.89 % 437.79 % 570.68 % 414.34 % 242.06 % The increase in nonperforming assets during 2024 resulted primarily from one loan that was foreclosed and moved into OREO and another loan that moved into non-accrual status during the year.
As of both December 31, 2025 and 2024, the Company’s allowance for credit losses on unfunded commitments, which is recorded in other liabilities in the Company’s consolidated balance sheets, totaled $0.4 million. 46 Allocation of Allowance for Credit Losses on Loans and Leases While no portion of the allowance 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 December 31, 2025 and 2024. 2025 2024 Allowance Allocation Allowance as Percentage of Total Loans Net Charge-offs as a Percentage of Average Loans Allocation Allowance Allowance as Percentage of Total Loans Net Charge-offs as a Percentage of Average Loans (Dollars in Thousands) Real estate loans: Construction, land development and other land loans $ 222 0.68 % — $ 352 0.54 % -0.03 % Secured by 1-4 family residential properties 371 0.55 % -0.04 % 406 0.58 % -0.07 % Secured by multi-family residential properties 666 0.57 % — 546 0.54 % — Secured by non-residential commercial real estate 1,420 0.71 % -0.02 % 1,428 0.63 % 0.11 % Commercial and industrial loans 399 0.83 % 4.55 % 1,531 3.46 % 0.22 % Consumer loans: Direct 50 1.03 % -3.78 % 49 1.03 % -4.09 % Indirect 7,576 1.98 % 0.50 % 5,872 3.17 % -0.69 % Total $ 10,704 1.25 % 0.41 % $ 10,184 1.24 % 0.14 % Nonperforming Assets Nonperforming assets at the end of the five most recent years as of December 31, 2025 were as follows: Year Ended December 31, 2025 2024 2023 2022 2021 (Dollars in Thousands) Non-accrual loans $ 1,373 $ 3,949 $ 2,400 $ 1,651 $ 2,008 Other real estate owned 256 1,509 602 686 2,149 Total $ 1,629 $ 5,458 $ 3,002 $ 2,337 $ 4,157 Nonperforming assets as a percentage of total loans and other real estate 0.19 % 0.66 % 0.37 % 0.30 % 0.59 % Nonperforming assets as a percentage of total assets 0.14 % 0.50 % 0.28 % 0.24 % 0.43 % Non-accrual loans as a percentage of total loans 0.16 % 0.48 % 0.29 % 0.21 % 0.28 % ACL as a percentage of non-accrual loans 779.61 % 257.89 % 437.79 % 570.68 % 414.34 % Summarized below is information concerning income on those loans with deferred interest or principal payments resulting from deterioration in the financial condition of the borrower.
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, and our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed under Item 1A “Risk Factors” and elsewhere in this Annual Report.
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, and our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed under Item 1A “Risk Factors” and elsewhere in this Annual Report. 30 Selected Financial Data The selected consolidated financial and other data of the Company set forth below does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed information, including the consolidated financial statements and related notes, appearing elsewhere herein.
The following table presents the major components of non-interest income for the periods indicated: Year Ended December 31, 2024 2023 $ Change % Change (Dollars in Thousands) Service charges and other fees on deposit accounts $ 1,232 $ 1,197 $ 35 2.9 % Bank-owned life insurance 538 471 67 14.2 % Gain on sales of premises and equipment and other assets — 17 (17 ) (100.0 )% Lease income 1,033 949 84 8.9 % ATM fee income 381 415 (34 ) (8.2 )% Other income 399 332 67 20.2 % Total non-interest income $ 3,583 $ 3,381 $ 202 6.0 % The Company’s non-interest income increased by $0.2 million comparing 2024 to 2023, due primarily to increases in lease income, bank-owned life insurance, and other miscellaneous revenue sources.
The following table presents the major components of non-interest income for the periods indicated: Year Ended December 31, 2025 2024 $ Change % Change (Dollars in Thousands) Service charges and other fees on deposit accounts $ 1,140 $ 1,232 $ (92 ) (7.5 )% Bank-owned life insurance 556 538 18 3.3 % Lease income 1,082 1,033 49 4.7 % ATM fee income 367 381 (14 ) (3.7 )% Other income 434 399 35 8.8 % Total non-interest income $ 3,579 $ 3,583 $ (4 ) (0.1 )% The Company’s non-interest income remained relatively consistent at $3.6 million comparing 2025 to 2024.
Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. The allowance for credit losses on loans and leases is adjusted through the provision for credit losses. Management estimates the allowance by using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.
Management estimates the allowance by using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for estimation of expected credit losses.
Remaining deferred gains associated with terminated swaps totaled $0.3 million and $1.2 million as of December 31, 2024 and 2023, respectively On a net basis, derivative financial instruments (including gains recognized on terminated instruments) increased the Company’s income before income taxes by $1.5 million during both years ended December 31, 2024 and 2023.
On a net basis, derivative financial instruments (including gains recognized on terminated instruments) increased the Company’s income before income taxes by $0.3 million and $1.5 million during the years ended December 31, 2025 and 2024, respectively. See Note 16, “Derivative Financial Instruments,” in the consolidated financial statements for additional information related to these derivative instruments.
Allowance for Credit Losses on Loans and Leases The allowance for credit losses is a contra-asset valuation account that is deducted from the amortized cost basis of the loans to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes 32 the uncollectibility of a loan balance is confirmed.
The estimates include accounting for the allowance for credit losses, goodwill and other intangible assets, other real estate owned, valuation of deferred tax assets and fair value measurements. 32 Allowance for Credit Losses on Loans and Leases The allowance for credit losses is a contra-asset valuation account that is deducted from the amortized cost basis of the loans to present the net amount expected to be collected on the loans.
As a percentage of total assets, nonperforming assets totaled 0.50% as of December 31, 2024, compared to 0.28% as of December 31, 2023. Deposit Growth Deposits totaled $972.6 million as of December 31, 2024, compared to $950.2 million as of December 31, 2023.
Deposit Growth Deposits totaled $1,028.0 million as of December 31, 2025, compared to $972.6 million as of December 31, 2024.
Historical credit loss experience provides the basis for estimation of expected credit losses. Adjustments to historical loss information are made for differences in loan-specific risk characteristics such as changes in economic and business conditions, underwriting standards, portfolio mix, and delinquency level.
Adjustments to historical loss information are made for differences in loan-specific risk characteristics such as changes in economic and business conditions, underwriting standards, portfolio mix, and delinquency level. Considerations related to environmental conditions include reasonable and supportable current and forecasted data related to economic factors such as inflation, unemployment levels, and interest rates.
The Company’s effective tax rate is expected to fluctuate commensurate with the level of these investments as compared to total pre-tax income. 40 BALANCE SHEET ANALYSIS Investment Securities 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.
BALANCE SHEET ANALYSIS Investment Securities 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 increase in shareholders’ equity during the year ended December 31, 2024 resulted primarily from earnings, net of dividends paid, which was partially offset by repurchases of shares of the Company's common stock.
Shareholders’ Equity As of December 31, 2025, shareholders’ equity totaled $105.6 million, or 9.15% of total assets, compared to $98.6 million, or 8.96% of total assets, as of December 31, 2024. The increase in shareholders’ equity during the year ended December 31, 2025 resulted primarily from earnings, net of dividends paid and repurchases of shares of the Company's common stock.
Fair Value Measurements Portions of the Company’s assets and liabilities are carried at fair value, with changes in fair value recorded either in earnings or accumulated other comprehensive income (loss). These assets and liabilities include securities available-for-sale, impaired loans and derivative instruments.
Accordingly, a valuation allowance was not established for deferred tax assets as of either December 31, 2025 or 2024. 34 Fair Value Measurements Portions of the Company’s assets and liabilities are carried at fair value, with changes in fair value recorded either in earnings or accumulated other comprehensive income (loss).
The following table presents the major components of non-interest expense for the periods indicated: Year Ended December 31, 2024 2023 $ Change % Change (Dollars in Thousands) Salaries and employee benefits $ 15,460 $ 16,076 $ (616 ) (3.8 )% Net occupancy and equipment 3,761 3,479 282 8.1 % Computer services 1,687 1,756 (69 ) (3.9 )% Insurance expense and assessments 1,510 1,583 (73 ) (4.6 )% Fees for professional services 1,184 1,105 79 7.1 % Postage, stationery and supplies 560 620 (60 ) (9.7 )% Telephone/data communication 779 722 57 7.9 % Collection and recoveries 169 292 (123 ) (42.1 )% Directors fees 380 471 (91 ) (19.3 )% Software amortization 356 412 (56 ) (13.6 )% Other real estate/foreclosure expense, net 230 68 162 238.2 % Other expense 2,280 2,557 (277 ) (10.8 )% Total non-interest expense $ 28,356 $ 29,141 $ (785 ) (2.7 )% The Company’s non-interest expense decreased by $0.8 million comparing 2024 to 2023.
The following table presents the major components of non-interest expense for the periods indicated: Year Ended December 31, 2025 2024 $ Change % Change (Dollars in Thousands) Salaries and employee benefits $ 15,273 $ 15,460 $ (187 ) (1.2 )% Net occupancy and equipment 3,796 3,761 35 0.9 % Computer services 1,707 1,687 20 1.2 % Insurance expense and assessments 1,409 1,510 (101 ) (6.7 )% Fees for professional services 1,349 1,184 165 13.9 % Postage, stationery and supplies 581 560 21 3.8 % Telephone/data communication 795 779 16 2.1 % Collection and recoveries 293 169 124 73.4 % Directors fees 404 380 24 6.3 % Software amortization 454 356 98 27.5 % Other real estate/foreclosure expense, net 269 230 39 17.0 % Outside services 405 299 106 35.5 % Other expense 2,335 1,981 354 17.9 % Total non-interest expense $ 29,070 $ 28,356 $ 714 2.5 % Non-interest expense increased to $29.1 million for the year ended December 31, 2025, compared to $28.4 million for the year ended December 31, 2024, an increase of $0.7 million, or 2.5%.
Including the pledging of these loans, along with selected securities, the Company had $165.1 million and $161.7 million in borrowing capacity as of December 31, 2024 and December 31, 2023, respectively. The table below provides information on the Company’s on-balance sheet liquidity, as well as readily available off-balance sheet sources of liquidity as of both December 31, 2024 and 2023.
The table below provides information on the Company’s on-balance sheet liquidity, as well as readily available off-balance sheet sources of liquidity as of both December 31, 2025 and 2024.
The growth in 2024 included an increase of $20.0 million in interest-bearing deposits and an increase in certificates of deposit of $16.9 million, partially offset by a decrease of $8.9 million in money market and savings deposits. The deposit growth in 2024 was partially offset by a decrease of $10.3 million in wholesale brokered deposits.
The growth in 2025 included an increase of $54.3 million in money market and savings deposits and an increase in brokered deposits of $65.6 million, partially offset by decreases of $21.9 million in interest-bearing demand deposits, $40.5 million in certificates of deposit and $2.1 million in non-interest bearing deposits.
For participating in the agreements, the Company received one-time fees which were included in other liabilities. These derivatives are not eligible for hedge accounting treatment.
For participating in the agreements, the Company received one-time fees which were included in other liabilities. These derivatives are not eligible for hedge accounting treatment. The value of all derivative financial instruments totaled a net asset position of $0.9 million and $0.6 million as of December 31, 2025 and 2024, respectively.
Year Ended December 31, 2024 2023 Average Balance Interest Annualized Yield/ Rate % Average Balance Interest Annualized Yield/ Rate % (Dollars in Thousands) ASSETS Interest-earning assets: Total loans (1) $ 818,524 $ 51,469 6.29 % $ 795,446 $ 47,749 6.00 % Taxable investment securities 144,503 4,387 3.04 % 127,653 2,858 2.24 % Tax-exempt investment securities 1,020 13 1.27 % 1,042 13 1.25 % Federal Home Loan Bank stock 891 69 7.74 % 1,264 93 7.36 % Federal funds sold 6,930 366 5.28 % 1,841 95 5.16 % Interest-bearing deposits in banks 36,399 1,956 5.37 % 38,111 1,998 5.24 % Total interest-earning assets 1,008,267 58,260 5.78 % 965,357 52,806 5.47 % Noninterest-earning assets 65,931 63,765 Total $ 1,074,198 $ 1,029,122 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing liabilities: Demand deposits $ 205,581 $ 1,779 0.87 % $ 212,010 $ 777 0.37 % Savings deposits 251,772 6,856 2.72 % 229,238 5,007 2.18 % Time deposits 346,541 12,914 3.73 % 305,848 8,566 2.80 % Total interest-bearing deposits 803,894 21,549 2.68 % 747,096 14,350 1.92 % Noninterest-bearing demand deposits 152,252 — — 160,598 — — Total deposits 956,146 21,549 2.25 % 907,694 14,350 1.58 % Borrowings 13,404 562 4.19 % 26,252 1,106 4.21 % Total funding costs 969,550 22,111 2.28 % 933,946 15,456 1.65 % Other noninterest-bearing liabilities 9,898 9,302 Shareholders’ equity 94,750 85,874 Total $ 1,074,198 $ 1,029,122 Net interest income (2) $ 36,149 $ 37,350 Net interest margin 3.59 % 3.87 % (1) For the purpose of these computations, non-accruing loans are included in the average loan amounts outstanding.
Year Ended December 31, 2025 2024 Average Balance Interest Annualized Yield/ Rate % Average Balance Interest Annualized Yield/ Rate % (Dollars in Thousands) ASSETS Interest-earning assets: Loans (1) $ 856,035 $ 51,846 6.06 % $ 818,524 $ 51,469 6.29 % Investment securities 160,272 5,761 3.59 % 145,523 4,400 3.02 % Federal Home Loan Bank stock 1,388 97 6.99 % 891 69 7.74 % Federal funds sold 4,850 209 4.31 % 6,930 366 5.28 % Interest-bearing deposits in banks 34,859 1,502 4.31 % 36,399 1,956 5.37 % Total interest-earning assets 1,057,404 59,415 5.62 % 1,008,267 58,260 5.78 % Noninterest-earning assets 64,133 65,931 Total assets $ 1,121,537 $ 1,074,198 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing liabilities: Demand deposits $ 202,661 $ 1,712 0.84 % $ 205,581 $ 1,779 0.87 % Money market/savings deposits 285,624 7,413 2.60 % 251,772 6,856 2.72 % Time deposits 341,986 11,779 3.44 % 346,541 12,914 3.73 % Total interest-bearing deposits 830,271 20,904 2.52 % 803,894 21,549 2.68 % Noninterest-bearing demand deposits 155,320 — — 152,252 — — Total deposits 985,591 20,904 2.12 % 956,146 21,549 2.25 % Borrowings 24,180 1,053 4.35 % 13,404 562 4.19 % Total funding liabilities 1,009,771 21,957 2.17 % 969,550 22,111 2.28 % Other noninterest-bearing liabilities 9,534 9,898 Shareholders’ equity 102,232 94,750 Total liabilities and shareholders' equity $ 1,121,537 $ 1,074,198 Net interest income (2) $ 37,458 $ 36,149 Net interest margin 3.54 % 3.59 % (1) For the purpose of these computations, non-accruing loans are included in the average loan amounts outstanding.
Considerations related to environmental conditions include reasonable and supportable current and forecasted data related to economic factors such as inflation, unemployment levels, and interest rates. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed7 unchanged
Biggest changeAverage Change in Net Interest Margin from Level Interest Rate Forecast (basis points, pre-tax): 1 Year 2 Years +1% 10 11 +2% 19 20 +3% 27 28 -1% (15 ) (16 ) -2% (31 ) (36 ) -3% (49 ) (59 ) Cumulative Change in Net Interest Income from Level Interest Rate Forecast (dollars in thousands, pre-tax): 1 Year 2 Years +1% $ 1,109 $ 2,339 +2% 2,150 4,484 +3% 3,003 6,241 -1% (1,647 ) (3,529 ) -2% (3,481 ) (8,069 ) -3% (5,386 ) (12,969 ) 53
Biggest changeAverage Change in Net Interest Margin from Level Interest Rate Forecast (basis points, pre-tax): 1 Year 2 Years +1% 9 10 +2% 16 18 +3% 22 24 -1% (5 ) (7 ) -2% (9 ) (13 ) -3% (12 ) (17 ) 53 Cumulative Change in Net Interest Income from Level Interest Rate Forecast (dollars in thousands, pre-tax): 1 Year 2 Years +1% $ 1,000 $ 2,281 +2% 1,900 4,264 +3% 2,570 5,628 -1% (603 ) (1,609 ) -2% (1,065 ) (3,101 ) -3% (1,358 ) (3,981 )
The tables below depict how, as of December 31, 2024, pre-tax net interest margin and net interest income are forecasted to change over timeframes of one year and two years under the six listed interest rate scenarios. The interest rate scenarios contemplate immediate and parallel shifts in short- and long-term interest rates.
The tables below depict how, as of December 31, 2025, pre-tax net interest margin and net interest income are forecasted to change over timeframes of one year and two years under the six listed interest rate scenarios. The interest rate scenarios contemplate immediate and parallel shifts in short- and long-term interest rates.

Other FUSB 10-K year-over-year comparisons