10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED December 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO .

Commission file number: 000-14549

FIRST US BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	63-0843362
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
3291 U.S. Highway 280 Birmingham, Alabama	35243
(Address of Principal Executive Offices)	(Zip Code)

(205) 582-1200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.01 per share	FUSB	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $60,150,607.

As of March 8, 2023, the registrant had outstanding 5,869,391 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the 2023 Annual Meeting of Shareholders to be held on April 27, 2023 are incorporated by reference into Part III of this Annual Report on Form 10-K.

Auditor Firm PCAOB ID: 213 Auditor Name: Carr, Riggs & Ingram, LLC Auditor Location: Atlanta, Georgia, United States

First US Bancshares, Inc.

Annual Report on Form 10-K

for the fiscal year ended

December 31, 2022

Table of Contents

Part	Item	Caption	Page No.
Forward-Looking Statements			4
PART I
	1	Business	5
	1A	Risk Factors	14
	1B	Unresolved Staff Comments	23
	2	Properties	23
	3	Legal Proceedings	23
	4	Mine Safety Disclosures	23
PART II
	5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
	6	Reserved	24
	7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	7A	Quantitative and Qualitative Disclosures About Market Risk	46
	8	Financial Statements and Supplementary Data	47
	9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	99
	9A	Controls and Procedures	99
	9B	Other Information	99
	9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspection	99
PART III
	10	Directors, Executive Officers and Corporate Governance*	100
	11	Executive Compensation*	100
	12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*	100
	13	Certain Relationships and Related Transactions, and Director Independence*	100
	14	Principal Accountant Fees and Services*	100
PART IV
	15	Exhibits and Financial Statement Schedules	101
	16	Form 10-K Summary	104
Signatures			105

* Portions of the definitive proxy statement for the registrant’s 2023 Annual Meeting of Shareholders to be held on April 27, 2023 are incorporated by reference into Part III of this Annual Report on Form 10-K.

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FORWARD-LOOKING STATEMENTS

Statements contained in this Annual Report on Form 10-K that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). In addition, First US Bancshares, Inc. (“Bancshares” and, together with its subsidiaries, the “Company”), through its senior management, from time to time makes forward-looking statements concerning our expected future operations and performance and other developments. The words “estimate,” “project,” “intend,” “anticipate,” “expect,” “believe,” “continues” and similar expressions are indicative of forward-looking statements. Such forward-looking statements are necessarily estimates reflecting the Company’s best judgment based on current information and involve a number of risks and uncertainties, and various factors could cause results to differ materially from those contemplated by such forward-looking statements. Such factors could include those identified from time to time in the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements, including the factors described in this Annual Report on Form 10-K for the year ended December 31, 2022. Such factors include, but are not limited to, the adverse effects of the COVID-19 pandemic and any similar health crisis in the future on the Company’s business, the communities that the Company serves and the United States economy; risks related to the Company’s credit, including that if loan losses are greater than anticipated; the rate of growth (or lack thereof) in the economy generally and in the Company’s service areas; market conditions and investment returns; changes in interest rates; the pending phasing out of the London Interbank Offer Rate (LIBOR) as an interest rate benchmark; potential failures or interruptions in our information systems and those of our third-party service providers and cybersecurity threats; the increasing and uncertain costs of complying with governmental regulations applicable to the financial services industry; the impact of climate change and related legislative and regulatory initiatives; and risks related to acquisitions, including that the strategic benefits may not materialize and unforeseen integration difficulties may arise. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to revise forward-looking statements to reflect circumstances or events that occur after the dates on which the forward-looking statements are made, except as required by law.

In addition, our business is subject to a number of general and market risks that could affect any forward-looking statements, including the risks discussed under Item 1A herein entitled “Risk Factors.”

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PART I

Item 1. Business.

First US Bancshares, Inc., a Delaware corporation (“Bancshares” and, together with its subsidiaries, the “Company”), is a bank holding company formed in 1983 registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Bancshares operates one banking subsidiary, First US Bank, an Alabama banking corporation (the “Bank”). Prior to its name change on October 11, 2016, Bancshares was known as United Security Bancshares, Inc. 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. The Bank operates and serves its customers through 15 full-service banking offices located in Birmingham, Butler, Calera, Centreville, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama; Knoxville and Powell, Tennessee; and Rose Hill, Virginia; as well as loan production offices in Mobile, Alabama and the Chattanooga, Tennessee area. The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals. The Bank also performs indirect lending through third-party retailers and currently conducts this lending in 12 states, including Alabama, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. During the third quarter of 2021, the Company closed four banking offices located in Bucksville, Columbiana and south Tuscaloosa, Alabama, as well as Ewing, Virginia.

The Bank has two wholly owned subsidiaries: Acceptance Loan Company, Inc., an Alabama corporation (“ALC”), and FUSB Reinsurance, Inc., an Arizona corporation (“FUSB Reinsurance”). As used herein, unless the context suggests otherwise, references to the “Company,” “we,” “us” and “our” refer to Bancshares, as well as the Bank, ALC, and FUSB Reinsurance, collectively.

The Bank owns all of the stock of ALC. ALC is a finance company headquartered in Mobile, Alabama. During the third quarter of 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. ALC continues to service its remaining portfolio of loans from its headquarters in Mobile, Alabama.

FUSB Reinsurance was designed to reinsure or “underwrite” credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. FUSB Reinsurance was responsible for the first level of risk on these policies up to a specified maximum amount, while the primary third-party insurer retained the remaining risk. While FUSB Reinsurance underwrote insurance contracts for both the Bank and ALC, in recent years, the majority of contracts were associated with ALC’s loans. Due to reduced contract volume, particularly following the cessation of business of ALC, during 2022, management of FUSB Reinsurance began procedures to terminate the entity’s activities. During 2022, FUSB Reinsurance ceased writing new insurance contracts, and reached an agreement with a third-party insurance provider to indemnify FUSB Reinsurance for all remaining liabilities associated with previously underwritten insurance policies. As of December 31, 2022, the remaining assets and liabilities of FUSB Reinsurance were transferred to the Bank, and it is anticipated that FUSB Reinsurance will be legally dissolved during 2023.

Strategy

Our strategy focuses on increasing franchise value by building and maintaining a strong and diversified balance sheet through continued loan and deposit growth that leverages our branch network, loan production offices, and digital market capabilities. We foster a culture that adheres to effective credit underwriting standards, pricing discipline, and expense control. Our longer-term growth strategy seeks to grow loan production offices to levels that support limited branching, expansion of our customer base through digital banking offerings, and consideration of acquisition opportunities to enter new markets.

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, 2022, the Bank had 149 full-time equivalent employees, and ALC had six full-time equivalent employees. FUSB Reinsurance has no employees. None of our employees are party to a collective bargaining agreement. Management believes that the Company’s employee relations are good.

To facilitate talent attraction and retention, we strive to make the Company an inclusive, safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, health and welfare programs. Our talent acquisition team uses internal and external resources to recruit highly skilled and talented workers across our markets, and we encourage employee referrals for open positions.

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As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees in order to attract and retain superior talent. In addition to healthy base wages, additional programs include bonus opportunities, Company matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, vacation and paid time off, family and military leave, flexible work schedules and employee assistance programs.

The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees. We provide our employees and their families with access to a variety of flexible and convenient health and welfare programs, including benefits that support their physical and mental health by providing tools and resources to help them improve or maintain their health status; and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.

We strive to maintain an inclusive workplace and seek to foster an environment where all of our employees can thrive through active engagement in the ongoing success of our organization. It is essential to our business that we continually attract and retain a talented workforce, and our practices are designed to promote diversity and fairness in the hiring process. We encourage a customer-focused orientation that meets the diverse needs of consumers and businesses in the communities in which we serve.

As of December 31, 2022, 77% of our workforce was comprised of females, and 20% of our workforce was comprised of individuals who are racially or ethnically diverse. Our Board of Directors includes three females and one racially or ethnically diverse member (representing 36% of Directors). Women and individuals who are racially or ethnically diverse represent 31% of our senior management team, which includes our executive officers.

Competition

We face strong competition in making loans, acquiring deposits and attracting customers for investment services. Competition among financial institutions is based on interest rates offered on deposit accounts, interest rates charged on loans, other credit and service charges relating to loans, the quality and scope of the services rendered, the convenience of banking facilities and, in the case of loans to commercial borrowers, relative lending limits. We compete with numerous other financial services providers, including commercial banks, online banks, credit unions, finance companies, mutual funds, insurance companies, investment banking companies, brokerage firms and other financial intermediaries operating in Alabama and elsewhere. Many of these competitors, some of which are affiliated with large bank holding companies, have substantially greater resources and lending limits than we do. 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.

The financial services industry is likely to become more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries.

Supervision and Regulation

General

We are extensively regulated under both federal and state law. These laws restrict permissible activities and investments and require compliance with various consumer protection provisions applicable to lending, deposit, brokerage and fiduciary activities. They also impose capital adequacy requirements and condition Bancshares’ ability to repurchase stock or to receive dividends from the Bank. 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”). These regulatory agencies generally have broad discretion to impose restrictions and limitations on our operations. This supervisory framework could materially impact the conduct and profitability of our activities.

To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the text of such provisions. Proposals to change the laws and regulations governing the banking industry are frequently raised at both the state and federal level. The likelihood and timing of any changes in these laws and regulations, as well as the impact that such changes may have on us, are difficult to ascertain. A change in applicable laws and regulations, or in the manner in which such laws or regulations are interpreted by regulatory agencies or courts, may have a material effect on our business, operations and earnings.

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Regulation of Bancshares

Bancshares is registered as a bank holding company and is subject to regulation and supervision by the Federal Reserve. The BHCA requires a bank holding company to secure the approval of the Federal Reserve before it owns or controls, directly or indirectly, more than five percent (5%) of the voting shares or substantially all of the assets of any bank or thrift, or merges or consolidates with another bank or thrift holding company. Further, under the BHCA, the activities of a bank holding company and any nonbank subsidiary are limited to: (1) those activities that the Federal Reserve determines to be so closely related to banking as to be a proper incident thereto and (2) investments in companies not engaged in activities closely related to banking, subject to quantitative limitations on the value of such investments. Prior approval of the Federal Reserve may be required before engaging in certain activities. In making such determinations, the Federal Reserve is required to weigh the expected benefits to the public, such as greater convenience, increased competition and gains in efficiency, against the possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest, and unsound banking practices.

There are a number of restrictions imposed on us by law and regulatory policy that are designed to minimize potential losses to the depositors of the Bank and the Deposit Insurance Fund maintained by the FDIC (as discussed in more detail below) if the Bank should become insolvent. For example, the Federal Reserve requires bank holding companies to serve as a source of financial strength to their subsidiary depository institutions and to commit resources to support such institutions in circumstances in which they might not otherwise do so. The Federal Reserve also has the authority to require a bank holding company to terminate any activity or to relinquish control of a non-bank subsidiary upon the Federal Reserve’s determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.

Any capital loan by Bancshares to the Bank is subordinate in right of payment to deposits and certain other indebtedness of the Bank. In addition, in the event of Bancshares’ bankruptcy, any commitment by Bancshares to a federal banking regulatory agency to maintain the capital of the Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.

The Federal Deposit Insurance Act provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as a subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution. If an insured depository institution fails, then insured and uninsured depositors, along with the FDIC, will have priority of payment over unsecured, non-deposit creditors, including the institution’s holding company, with respect to any extensions of credit that they have made to such insured depository institution.

Regulation of the Bank

The operations and investments of the Bank are limited by federal and state statutes and regulations. The Bank is subject to supervision and regulation by the ASBD and the FDIC and to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types, amount and terms and conditions of loans that it may originate, and limits on the types of other activities in which the Bank may engage and the investments it may make.

The Bank is subject to federal laws that limit the amount of transactions between the Bank and its nonbank affiliates, including Bancshares, but excluding operating subsidiaries, such as ALC. Under these provisions, transactions by the Bank with nonbank affiliates (such as loans or investments) are generally limited to 10% of the Bank’s capital and surplus for all covered transactions with any one affiliate and 20% of capital and surplus for all covered transactions with all affiliates. Any extensions of credit to affiliates, with limited exceptions, must be secured by eligible collateral in specified amounts. The Bank is also prohibited from purchasing any “low quality” assets from an affiliate. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) imposed additional requirements on transactions with affiliates, including an expansion of the definition of “covered transactions” and an increase in the length of time for which collateral requirements regarding covered transactions must be maintained.

The Dodd-Frank Act requires the banking agencies and the SEC to establish joint rules or guidelines for financial institutions with more than $1 billion in assets which prohibit incentive compensation arrangements that the agencies determine to encourage inappropriate risks by the institution. The banking agencies issued proposed rules in 2011 and issued guidance on sound incentive compensation policies. 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, 2022, these rules have not been implemented. With assets of approximately $995 million, we currently would not be subject to the rules as presently proposed but would become subject to the rules if our assets increased to $1 billion.

Lending Limits

Under Alabama law, the amount of loans that may be made by a bank in the aggregate to one person is limited. Alabama law provides that unsecured loans by a bank to one person may not exceed an amount equal to 10% of the capital and unimpaired surplus of the bank or 20% in the case of secured loans. For purposes of calculating these limits, loans to various business interests of the

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borrower, including companies in which a substantial portion of the stock is owned or partnerships in which a person is a partner, must be aggregated with those made to the borrower individually. 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. The guidance describes the criteria the agencies will use as indicators to identify institutions potentially exposed to CRE concentration risk. An institution that has (i) experienced rapid growth in CRE lending, (ii) notable exposure to a specific type of CRE, (iii) total reported loans for construction, land development, and other land representing 100% or more of the institution’s capital, or (iv) total CRE loans representing 300% or more of the institution’s capital, and the outstanding balance of the institution’s CRE portfolio has increased by 50% or more in the prior 36 months, may be identified for further supervisory analysis of the level and nature of its CRE concentration risk.

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 the 2015 guidance, the agencies noted their belief that financial institutions had eased CRE underwriting standards in recent years. The 2015 guidance went on to identify actions that financial institutions should take to protect themselves from CRE-related credit losses during difficult economic cycles. The 2015 guidance also indicated that the agencies would pay special attention in the future to potential risks associated with CRE lending.

Securities and Exchange Commission

Bancshares is under the jurisdiction of the Securities and Exchange Commission (“SEC”) for matters relating to the offer and sale of its securities and is subject to the SEC’s rules and regulations related to periodic reporting, reporting to shareholders, proxy solicitations and insider trading regulations.

Monetary Policy

Our earnings are and will be affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The monetary policies of the Federal Reserve have a substantial effect on the operating results of commercial banks, including the Bank. The Federal Reserve has a significant impact on the levels of bank loans, investments and deposits through its open market operations in United States government securities and through its regulation of, among other things, the discount rate on borrowings of member banks and the reserve requirements against member banks’ deposits. It is not possible to predict the nature and impact of future changes in monetary and fiscal policies.

Deposit Insurance

The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund maintained by the FDIC. As a result, the Bank is required to pay periodic assessments to maintain insurance coverage for its deposits. 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.

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. Furthermore, deposit insurance may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

Dividend Restrictions

Under Delaware law, dividends may be paid only out of the amount calculated as the present fair value of the total assets of the corporation, minus the present fair value of the total liabilities of the corporation, minus the capital of the corporation. 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. Dividends may not be paid, however, out of net profits of the corporation if the capital represented by the issued and outstanding stock of all classes having a preference on the distribution of assets is impaired. Further, the Federal Reserve permits bank holding companies to pay dividends only out of current earnings and only if future retained earnings would be consistent with the company’s capital, asset quality and financial condition.

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Since it has no significant independent sources of income, Bancshares’ ability to pay dividends depends on its ability to receive dividends from the Bank. Under Alabama law, the Bank may not pay a dividend in excess of 90% of its net earnings unless its surplus is equal to at least 20% of capital. The Bank is also required by Alabama law to seek the approval of the Superintendent of the ASBD prior to the payment of dividends if the total of all dividends declared by the Bank in any calendar year will exceed the total of (1) the Bank’s net earnings for that year, plus (2) its retained net earnings for the preceding two years, less any required transfers to surplus. Alabama law defines net earnings as the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets, after deducting from the total thereof all current operating expenses, actual losses, accrued dividends on preferred stock, if any, and all federal, state and local taxes. The Bank must be able to satisfy the conditions described above in order to declare or pay a dividend to Bancshares without obtaining the prior approval of the Superintendent of the ASBD. In addition, the FDIC prohibits the payment of cash dividends if (1) as a result of such payment, the bank would be undercapitalized or (2) the bank is in default with respect to any assessment due to the FDIC, including a deposit insurance assessment. These restrictions could materially influence the Bank’s, and therefore Bancshares’, ability to pay dividends.

Capital Adequacy

In July 2013, the federal banking regulatory agencies adopted regulations to implement the framework developed by the Basel Committee on Banking Supervision (“Basel Committee”) for strengthening international capital and liquidity, known as “Basel III” (the “Basel III Rule”). The Basel III Rule provides risk-based capital guidelines designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks, to account for off-balance sheet exposures, and to minimize disincentives for holding liquid assets. Under these guidelines, assets and off-balance sheet items are assigned to broad risk categories, each with appropriate risk-weights. The net amount of assets remaining after applying the risk-weights to the gross asset values represents the institution’s total risk-weighted assets (“RWA”). An institution’s total RWA are used to calculate its regulatory capital ratios. The Basel III Rule establishes minimum capital and leverage ratios that supervised financial institutions are required to maintain, while also providing countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness. Under the Basel III Rule, banks must maintain a specified capital conservation buffer above each of the required minimum capital levels in order to avoid limitations on paying dividends, engaging in share repurchases and paying certain discretionary bonuses.

In December 2017, the Basel Committee published the last version of the Basel III accord, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets, which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk, which will facilitate the comparability of banks’ capital ratios; constraining the use of internally modeled approaches; and complementing the risk-weighted capital ratio with a finalized leverage ratio and a revised and robust capital floor. Leadership of the federal banking agencies who are tasked with implementing Basel IV has indicated that it is considering how to appropriately apply these revisions in the United States. Although it is uncertain at this time, some, if not all, of the Basel IV accord may be incorporated into the capital requirements framework applicable to Bancshares and the Bank.

Banking organizations must have appropriate capital planning processes, with proper oversight from the board of directors. Accordingly, pursuant to a separate, general supervisory letter from the Federal Reserve, bank holding companies are expected to conduct and document comprehensive capital adequacy analyses prior to the declaration of any dividends (on common stock, preferred stock, trust preferred securities or other Tier 1 capital instruments), capital redemptions or capital repurchases. 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. Congress passed, and the President signed into law, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (the “Growth Act”) to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Act. While the Growth Act maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with total assets of less than $10 billion and for large banks with total assets of more than $50 billion. 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.

Among other changes, the Growth Act expands the definition of qualified mortgages that may be held by a financial institution and simplifies the regulatory capital rules for financial institutions and their holding companies with total consolidated assets of less than $10 billion by instructing the federal banking regulators to establish a single “Community Bank Leverage Ratio” of between 8% and 10% to replace the leverage and risk-based regulatory capital ratios. The Growth Act also includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule (proprietary trading prohibitions), mortgage disclosures, and risk weights for certain high-risk commercial real estate loans. It is difficult to predict at this time when or how any

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new standards under the Growth Act will ultimately be applied to us or what specific impact the Growth Act and the yet-to-be-written implementing rules and regulations will have on community banks.

Pursuant to the Growth Act, in October 2019, the federal banking agencies adopted regulations that exempt a qualifying community bank and its holding company that have Tier 1 leverage ratios of greater than 9% from the risk-based capital requirements of the capital rules issued under the Dodd-Frank Act. A qualifying community organization is a depository institution or its holding company that has less than $10 billion in average total consolidated assets; has off-balance-sheet exposures of 25% or less of total consolidated assets; has trading assets plus trading liabilities of 5% or less of total consolidated assets; and is not an advanced approaches banking organization. A qualifying community banking organization and its holding company that have chosen the proposed framework will not be required to calculate the existing risk-based and leverage capital requirements. A qualifying community banking organization will also be considered to have met the capital ratio requirements to be well capitalized for the agencies’ prompt corrective action rules provided it has a community bank leverage ratio greater than 9%.The new community bank leverage ratio framework first became available for banking organizations to use on March 31, 2020. 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.

Prompt Corrective Action

In addition to the required minimum capital levels described above, federal law establishes a system of “prompt corrective actions” that federal banking agencies are required to take, and certain actions that they have discretion to take, based on the capital category into which a federally regulated depository institution falls. Regulations set forth detailed procedures and criteria for implementing prompt corrective action in the case of any institution that is not adequately capitalized. Each institution is assigned to one of five categories based on its capital ratios: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Institutions categorized as “undercapitalized” or worse become subject to increasing levels of regulatory oversight and restrictions, which may include, among other things, limitations on growth and activities and payment of dividends.

As of December 31, 2022, 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.

Legislative and Regulatory Responses to the COVID-19 Pandemic

The COVID-19 pandemic created extensive disruptions to the global economy, to businesses, and to the lives of individuals throughout the world. There have been a number of regulatory actions intended to help mitigate the adverse economic impact of the COVID-19 pandemic on borrowers, including several mandates from the bank regulatory agencies, requiring financial institutions to work constructively with borrowers affected by the pandemic.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. Several provisions within the CARES Act led to action from the bank regulatory agencies and there were also separate provisions within the legislation that directly impacted financial institutions. Section 4022 of the CARES Act allows, until the date the national emergency declared by the President terminates, borrowers with federally-backed one-to-four family mortgage loans experiencing a financial hardship due to the pandemic to request forbearance, regardless of delinquency status, for up to 360 days. Section 4022 also prohibited servicers of federally-backed mortgage loans from initiating foreclosures during the 60-day period beginning March 18, 2020. The FHFA announced that the FNMA and FHLMC would extend this single-family moratorium on foreclosures and evictions through December 31, 2020 and then through March 31, 2021. In addition, under Section 4023 of the CARES Act, until the date the national emergency declared by the President terminates, borrowers with federally-backed multifamily mortgage loans whose payments were current as of February 1, 2020, but who have since experienced financial hardship due to COVID-19, may request a forbearance for up to 90 days. Borrowers receiving such forbearance may not evict or charge late fees to tenants for its duration. On December 23, 2020, the FHFA announced an extension of forbearance programs for qualifying multifamily properties through March 31, 2021. On January 30, 2023, the President announced his intent to end the national emergency related to the COVID-19 pandemic on May 11, 2023, but various regulatory and legislative actions may be expanded, extended and amended in the future.

The Paycheck Protection Program (“PPP”), originally established under the CARES Act and extended under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, authorized financial institutions to make federally-guaranteed loans to qualifying small businesses and non-profit organizations. These loans carried an interest rate of 1% per annum and a maturity of 2 years for loans originated prior to June 5, 2020 and 5 years for loans originated on or after June 5, 2020. The PPP provided that such loans may be forgiven if the borrowers met certain requirements with respect to maintaining employee headcount and payroll and the use of the loan proceeds after the loan was originated. The initial phase of the PPP, after being extended multiple times by Congress, expired on August 8, 2020. However, on January 11, 2021, the SBA reopened the PPP for First Draw PPP loans to small business and

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non-profit organizations that did not receive a loan through the initial PPP phase. Further, on January 13, 2021, the SBA reopened the PPP for Second Draw PPP loans to small businesses and non-profit organizations that did receive a loan through the initial PPP phase. The PPP ended on May 31, 2021, but additional governmental assistance programs may be implemented in the future.

In addition, the federal bank regulatory agencies issued several interim final rules throughout the course of 2020 to neutralize the regulatory capital and liquidity effects for banks that participate in the Federal Reserve liquidity facilities. The interim final rule issued on April 9, 2020, clarified that a zero percent risk weight applies to loans covered by the PPP for capital purposes and the interim final rule issued on May 15, 2020, permitted depository institutions to choose to exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the supplementary leverage ratio. These interim final rules were finalized on September 29, 2020.

On March 11 2021, the American Rescue Plan Act of 2021 (the “ARP Act”) was enacted, implementing a $1.9 trillion package of stimulus and relief proposals. Among other things, the ARP Act provided (i) additional funding for the PPP program and an expansion of the program for the benefit of certain nonprofits, (ii) funding for the SBA to make targeted grants for restaurants and similar establishments, (iii) direct cash payments of up to $1,400 to individuals, subject to income provisions, (iv) an increase in the maximum annual Child Tax Credit, subject to income limitation provisions, (v) $300 a week in expanded unemployment insurance lasting through September 6, 2021 and made $10,200 in unemployment benefits tax free for households, subject to income limitation provisions, (vi) tax relief making any student loan forgiveness incurred between December 31, 2020, and January 1, 2026 non-taxable income, and (vii) funding to support state and local governments; K-12 schools and higher education; the Centers for Disease Control; public transit; rental assistance; child care; and airline industry workers.

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). Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve” or “unsatisfactory.” An institution’s record in meeting the requirements of the CRA is made publicly available and is taken into consideration in connection with any applications that it files with federal regulators to engage in certain activities, including approval of branches or other deposit facilities, mergers and acquisitions, office relocations or expansions into non-banking activities. The Bank received a “satisfactory” rating in its most recent CRA evaluation.

Anti-Money Laundering Laws

Under various federal laws, including the Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act”), as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act, financial institutions are subject to prohibitions against specified financial transactions and account relationships, as well as enhanced due diligence and “know your customer” standards in their dealings with foreign financial institutions and foreign customers. These laws also mandate that financial institutions establish anti-money laundering programs meeting certain standards and require the federal banking regulators to consider the effectiveness of a financial institution’s anti-money laundering activities when reviewing bank mergers and bank holding company acquisitions.

The Anti-Money Laundering Act of 2020 (“AMLA”), which amends the Bank Secrecy Act, was enacted in January 2021. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws. Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the U.S. 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. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. In June 2021, the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury, issued the priorities for anti-money laundering and countering the financing of terrorism policy required under the AMLA. The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) comprehensively revised the laws affecting corporate governance, auditing, executive compensation and corporate reporting for entities with equity or debt securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Among other things, Sarbanes-Oxley and its implementing regulations

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established new membership requirements and additional responsibilities for audit committees, imposed restrictions on the relationships between public companies and their outside auditors (including restrictions on the types of non-audit services that auditors may provide), imposed additional responsibilities for public companies’ external financial statements on the chief executive officer and chief financial officer, and expanded the disclosure requirements for corporate insiders. The requirements are intended to allow stockholders to more easily and efficiently monitor the performance of companies and directors. We and our Board of Directors have, as appropriate, adopted or modified our policies and practices in order to comply with these regulatory requirements and to enhance our corporate governance practices.

As required by Sarbanes-Oxley, we have adopted a Code of Business Conduct and Ethics applicable to our Board, executives and employees. 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. In general, financial institutions are required to explain to customers their policies and procedures regarding the disclosure of such nonpublic personal information, and, unless otherwise required or permitted by law, financial institutions are prohibited from disclosing such information except as provided in their policies and procedures. Specifically, the GLBA established certain information security guidelines that require each financial institution, under the supervision and ongoing oversight of its board of directors or an appropriate committee thereof, to develop, implement, and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, to protect against anticipated threats or hazards to the security or integrity of such information, and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.

Cybersecurity

The Cybersecurity Information Sharing Act of 2015 (“CISA”) was intended to improve cybersecurity in the United States by enhanced sharing of information about security threats among the U.S. government and private sector entities, including financial institutions. 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.

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. The proposed standards would expand existing cybersecurity regulations and guidance to focus on cyber risk governance and management, management of internal and external dependencies, and incident response, cyber resilience, and situational awareness. In addition, the proposal contemplates more stringent standards for institutions with systems that are critical to the financial sector.

The federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance cyber risk management standards among financial institutions. A financial institution is expected to establish multiple lines of defense and to ensure its risk management processes address the risk posed by potential threats to the institution. A financial institution’s management is expected to maintain sufficient processes to effectively respond and recover the institution’s operations after a cyber-attack. A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls victim to this type of cyber-attack.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements. We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our customers are located.

In March 2021, Virginia adopted the Consumer Data Protection Act (the “VCDPA”), which imposes certain restrictions and requirements on businesses that collect consumer data for at least 100,000 consumers in Virginia. The Bank currently has fewer than 100,000 customers in Virginia but may become subject to the VCDPA if its customer base grows above that level. The Company could face enforcement actions by the Virginia Attorney General and penalties for noncompliance with the VCDPA.

In November 2021, the U.S. federal bank regulatory agencies adopted a rule regarding notification requirements for banking organizations related to significant computer security incidents. Under the final rule, a bank holding company, such as the Company, and an FDIC-supervised insured depository institution, such as the Bank, are required to notify the Federal Reserve or FDIC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key

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operations of the banking organization, or impact the stability of the financial sector. Service providers are required under the rule to notify any affected bank client it provides services to as soon as possible when it determines it has experienced a computer-security incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, covered services provided by that entity to the bank for four or more hours.

In March 2022, the SEC proposed 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. Specifically, the proposed amendments require current reporting about material cybersecurity incidents, periodic disclosures about a registrant’s policies and procedures to identify and manage cybersecurity risk, management’s role in implementing cybersecurity policies and procedures, and the board of directors’ cybersecurity expertise, if any, and its oversight of cybersecurity risk. Additionally, the proposed rules would require registrants to provide updates about previously reported cybersecurity incidents in their periodic reports.

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. These include, among others, the following:

•Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

•Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities that it serves;

•Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other specified factors in extending credit;

•Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act, governing the use and provision of information to credit reporting agencies, certain identity theft protections and certain credit and other disclosures;

•Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies;

•Real Estate Settlement Procedures Act, requiring certain disclosures concerning loan closing costs and escrows, and governing transfers of loan servicing and the amounts of escrows in connection with loans secured by one-to-four family residential properties; and

•Rules and regulations established by the National Flood Insurance Program.

In addition, the Dodd-Frank Act created the Consumer Financial Protection Bureau (the “CFPB”), an independent bureau with broad authority to regulate the consumer finance industry, including regulated financial institutions, non-banks and others involved in extending credit to consumers. The CFPB has authority through rulemaking, orders, policy statements, guidance and enforcement actions to administer and enforce federal consumer financial laws. Although the CFPB has the power to interpret, administer and enforce federal consumer financial laws, the Dodd-Frank Act provides that the federal banking regulatory agencies continue to have examination and enforcement powers over the financial institutions that they supervise relating to the matters within the jurisdiction of the CFPB if the supervised institutions have less than $10 billion in assets. Even so, the 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.

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;

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•Truth-In-Savings Act, requiring certain disclosures for consumer deposit accounts;

•Electronic Funds 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.

Federal Home Loan Bank Membership

The Bank is a member of the Federal Home Loan Bank of Atlanta (“FHLBA”). Each member of the FHLBA is required to maintain a minimum investment in the Class B stock of the FHLBA. The Board of Directors of the FHLBA can increase the minimum investment requirements if it concludes that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency. Because the extent of any obligation to increase the level of investment in the FHLBA depends entirely on the occurrence of a future event, we are unable to determine the extent of future required potential payments to the FHLBA at this time. 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.

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. Accordingly, the agencies have begun to enhance their supervisory expectations regarding the climate risk management practices of larger banking organizations, including by encouraging such banks to: ensure that management of climate-related risk exposures has been incorporated into existing governance structures; evaluate the potential impact of climate-related risks on the bank’s financial condition, operations and business objectives as part of its strategic planning process; account for the effects of climate change in stress testing scenarios and systemic risk assessments; revise expectations for credit portfolio concentrations based on climate-related factors; consider investments in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change; evaluate the impact of climate change on the bank’s borrowers and consider possible changes to underwriting criteria to account for climate-related risks to mortgaged properties; incorporate climate-related financial risk into the bank’s internal reporting, monitoring and escalation processes; and prepare for the transition risks to the bank associated with the adjustment to a low-carbon economy and related changes in laws, regulations, governmental policies, technology, and consumer behavior and expectations.

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. 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. 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. 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.

Website Information

The Bank’s website address is https://www.fusb.com. Bancshares does not maintain a separate website. Bancshares makes available free of charge on or through the Bank’s website, under the tabs “Investors – SEC filings,” its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with the SEC. These reports are also available on the SEC’s website, https://www.sec.gov. Bancshares will provide paper copies of these reports to shareholders free of charge upon written request. Bancshares is not including the information contained on or available through the Bank’s website as a part of, or incorporating such information into, this Annual Report on Form 10-K.

Item 1A. Risk Factors.

Making or continuing an investment in our common stock involves certain risks that you should carefully consider. The risks and uncertainties described below are not the only risks that may have a material adverse effect on us. 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

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price of your common stock could decline, and you could lose all or a part of your investment. Further, to the extent that any of the information contained in this Annual Report on Form 10-K constitutes forward-looking statements, the risk factors set forth below also are cautionary statements identifying important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf.

Risks Related to Credit and Liquidity

If loan losses are greater than anticipated, our earnings may be adversely affected.

As a lender, we are exposed to the risk that customers will be unable to repay their loans according to their terms and that any collateral securing the payment of their loans may not be sufficient to assure repayment. Credit losses are inherent in the business of making loans. Our credit risk with respect to our real estate and construction loan portfolio relates principally to the creditworthiness of individuals and the value of the real estate serving as security for the repayment of loans, and the credit risk with respect to our commercial and consumer loan portfolio relates principally to the general creditworthiness of businesses and individuals within the local markets in which we operate. We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for potential loan losses based on a number of factors. We believe that our allowance for loan losses is adequate. However, if estimates, assumptions or judgments used in calculating this allowance are incorrect, the allowance for loan losses may not be sufficient to cover our actual loan losses. Deterioration of economic conditions affecting borrowers, new information regarding existing loans, inaccurate management assumptions, identification of additional problem loans and other factors, both within and outside of our control, may result in higher levels of nonperforming assets and charge-offs and loan losses in excess of our current allowance for loan losses, requiring us to make material additions to our allowance for loan losses, which could have a material adverse effect on our business, consolidated financial condition, results of operations and cash flows. The actual amount of future provisions for loan losses cannot be determined at this time and may vary from the amounts of past provisions. In addition, banking regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further charge-offs if the regulators’ judgments are different than those of our management. Material additions to the allowance could materially decrease our net income.

Our business is subject to liquidity risk, which could disrupt our ability to meet financial obligations.

Liquidity risk refers to the ability of the Company to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs and other corporate purposes. Liquidity risk arises whenever the maturities of financial instruments included in assets and liabilities differ or when assets cannot be liquidated at fair market value as needed. The Company obtains funding through deposits and various short-term and long-term wholesale borrowings, including federal funds purchased and securities sold under repurchase agreements, the Federal Reserve Discount Window and Federal Home Loan Bank (FHLB) advances. Any restriction or disruption of the Company’s ability to obtain funding from these or other sources could have a negative effect on the Company’s ability to satisfy its current and future financial obligations, which could materially affect the Company’s condition or results of operations.

Risks Related to Our Market and Industry

Our business and operations may be materially adversely affected by national and local market economic conditions.

Our business and operations, which primarily consist of banking activities, including lending money to customers in the form of loans and borrowing money from customers in the form of deposits, are sensitive to general business and economic conditions in the United States generally, and in our local markets in particular. If economic conditions in the United States or any of our local markets weaken, our growth and profitability from our operations could be constrained. Economic activity generally improved during 2022 as COVID-19 cases declined across the United States and restrictions were lifted; however, economic concerns remain due to ongoing uncertainty regarding the long-term effectiveness of the COVID-19 vaccine. In addition, the impact of the COVID-19 pandemic continues to influence the economy through ongoing supply chain shortages, workforce displacement, heightened volatility in the financial markets, and increased economic risks in certain industries. The current economic environment is characterized by high inflation levels and interest rates that have increased rapidly since March 2022. 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. Unfavorable market conditions can result in a deterioration in the credit quality of our borrowers and the demand for our products and services, an increase in the number of delinquencies, defaults and charge-offs, additional provisions for loan losses, a decline in the value of our collateral, and an overall material adverse effect on the quality of our loan portfolio. Additionally, national financial markets may be adversely affected by sustained high levels of inflation, and the current or anticipated impact of military conflict, including the current conflict between Russia and Ukraine, terrorism or other geopolitical events.

The economic conditions in our local markets may be different from the economic conditions in the United States as a whole. Our success depends to a certain extent on the general economic conditions of the geographic markets that we serve in Alabama,

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Tennessee and Virginia. Local economic conditions in these areas have a significant impact on our commercial, real estate and construction loans, the ability of borrowers to repay these loans and the value of the collateral securing these loans. Adverse changes in the economic conditions of the southeastern United States in general or any one or more of these local markets could negatively impact the financial results of our banking operations and have a negative effect on our profitability.

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. We compete with commercial banks, online banks, credit unions, finance companies, mutual funds, insurance companies, investment banking companies, brokerage firms and other financial intermediaries operating in our markets and elsewhere in various segments of the financial services market. Many of these competitors, some of which are affiliated with large bank holding companies, have substantially greater resources and lending limits than we do. 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.

Rapid and significant changes in market interest rates may adversely affect our performance.

Most of our assets and liabilities are monetary in nature and are therefore subject to significant risks from changes in interest rates. Our profitability depends to a large extent on net interest income, and changes in interest rates can impact our net interest income as well as the valuation of our assets and liabilities. Our consolidated results of operations are affected by changes in interest rates and our ability to manage interest rate risks. Changes in market interest rates, changes in the relationships between short-term and long-term market interest rates and changes in the relationships between different interest rate indices can affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. These differences could result in an increase in interest expense relative to interest income or a decrease in our interest rate spread. For a more detailed discussion of these risks and our management strategies for these risks, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our net interest margin depends on many factors that are partly or completely out of our control, including competition, federal economic monetary and fiscal policies and general economic conditions. Despite the implementation of strategies to manage interest rate risks, changes in interest rates may have a material adverse impact on our profitability.

The performance of our investment portfolio is subject to fluctuations due to changes in interest rates and market conditions.

Changes in interest rates can negatively affect the performance of most of our investments. Interest rate volatility can reduce gains or create losses in our investment portfolios. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. Fluctuations in interest rates affect returns on, and the market value of, investment securities. The fair market value of the securities in our portfolio and the investment income from these securities also fluctuate depending on general economic and market conditions. 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.

Changes in the policies of monetary authorities and other government action could adversely affect our profitability.

Our consolidated results of operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. The instruments of monetary policy employed by the Federal Reserve include open market operations in United States government securities, changes in the discount rate or the federal funds rate on bank borrowings and changes in reserve requirements against bank deposits. In view of changing conditions in the national economy and in the money markets, we cannot predict future changes in interest rates, deposit levels, loan demand or our business and earnings. Furthermore, the actions of the United States government and other governments in responding to such conditions may result in currency fluctuations, exchange controls, market disruption and other adverse effects.

Uncertainty relating to the LIBOR calculation process and the phasing out of LIBOR may adversely affect our results of operations.

The United Kingdom’s Financial Conduct Authority and ICE Benchmark Administration (“IBA”), the administrators of LIBOR, have announced that the publication of the most commonly used U.S. dollar London Interbank Offered Rate (“LIBOR”) settings will cease to be published or cease to be representative after June 30, 2023. The publication of all other LIBOR settings ceased to be published as of December 31, 2021. Given consumer protection, litigation, and reputational risks, the bank regulatory agencies indicated that entering into new contracts that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks and that they would examine bank practices accordingly. The Adjustable Interest Rate (LIBOR) Act, enacted in March 2022, provides a statutory framework to replace U.S. dollar LIBOR with a benchmark rate based on the Secured Overnight

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Financing Rate (“SOFR”) for contracts governed by U.S. law that have no or ineffective fallbacks, and in December 2022, the Federal Reserve Board adopted related implementing rules.

As of December 31, 2021, we no longer originate new loans or their products using any LIBOR index. As of December 31, 2022, approximately $66.5 million of our outstanding loans, and, in addition, certain derivative contracts, borrowings and other financial instruments have attributes that are either directly or indirectly dependent on LIBOR. The transition from LIBOR has resulted in and could continue to result in added costs and employee efforts and could present additional risk. We are subject to litigation and reputational risks if we are unable to renegotiate and amend existing contracts with counterparties that are dependent on LIBOR, including contracts that do not have fallback language. We may incur significant expenses in effecting the transition, and may be subject to disputes or litigation with contract counterparties over the appropriateness or comparability to LIBOR of the substitute indices, which could have an adverse effect on our results of operations.

At this time, it is impossible to predict the effect of alternative rates, including SOFR, on the value of LIBOR-based securities and variable rate loans, subordinated debentures, or other securities or financial arrangements, given LIBOR’s role in determining market interest rates globally. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR may adversely affect LIBOR rates and the value of LIBOR-based loans and securities in our portfolio and may impact the availability and cost of hedging instruments and borrowings.

Risks Related to Privacy and Technology

Technological changes in the banking and financial services industries may negatively impact our results of operations and our ability to compete.

The banking and financial services industries are undergoing rapid changes, with frequent introductions of new technology-driven products and services. In addition to enhancing the level of service provided to customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. To remain competitive, financial institutions must continuously evaluate changing customer preferences with respect to emerging technologies and develop plans to address such changes in the most cost-effective manner possible. Our future success will depend, in part, on our ability to use technology to offer products and services that provide convenience to customers and create additional efficiencies in operations, and our failure to do so could negatively impact 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.

Our information systems may experience a failure or interruption.

We rely heavily on communications and information systems to conduct our business. Any failure or interruption in the operation of these systems could impair or prevent the effective operation of our customer relationship management, general ledger, deposit, lending or other functions. While we have policies and procedures designed to prevent or limit the effect of a failure or interruption in the operation of our information systems, there can be no assurance that any such failures or interruptions will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures or interruptions impacting our information systems could damage our reputation, result in a loss of customer business, and expose us to additional regulatory scrutiny, civil litigation and possible financial liability, any of which could have a material adverse effect on our business, consolidated financial condition, results of operations and cash flows.

We use information technology in our operations and offer online banking services to our customers, and unauthorized access to our customers’ confidential or proprietary information as a result of a cyber-attack or otherwise could expose us to reputational harm and litigation and adversely affect our ability to attract and retain customers.

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. We are under continuous threat of loss due to hacking and cyber-attacks, especially as we continue to expand customer capabilities to utilize the internet and other remote channels to transact business. Our risk and exposure to these matters remains heightened because of the evolving nature and complexity of these threats from cybercriminals and hackers, our plans to continue to provide internet banking channels, and our plans to develop additional remote connectivity solutions to serve our customers. Therefore, the secure processing, transmission and storage of information in connection with our online banking services are critical elements of our operations. However, our network could be vulnerable to unauthorized access, computer viruses and other malware, phishing schemes or other security failures. In addition, our customers may use personal smartphones, tablet PCs or other mobile devices that are beyond our control systems in order to access our products and services. Our technologies, systems and networks, and our customers’ devices, may become the target of

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cyber-attacks, electronic fraud or information security breaches that could result in the unauthorized release, gathering, monitoring, use, loss or destruction of our or our customers’ confidential, proprietary and other information, or otherwise disrupt our or our customers’ or other third parties’ business operations. As cyber threats continue to evolve, we may be required to spend significant capital and other resources to protect against these threats or to alleviate or investigate problems caused by such threats. To the extent that our activities or the activities of our customers involve the processing, storage or transmission of confidential customer information, any breaches or unauthorized access to such information could present significant regulatory costs and expose us to litigation and other possible liabilities. Any inability to prevent these types of security threats could also cause existing customers to lose confidence in our systems and could adversely affect our reputation and ability to generate deposits. In addition, we may not have adequate insurance coverage to compensate for losses from a cyber threat event. In February 2022, the New York State Department of Financial Services issued a warning that the Russian invasion of Ukraine significantly elevates the cyber risk for the U.S. financial sector. While we have not experienced any material losses relating to cyber-attacks or other information security breaches to date, we may suffer such losses in the future. The occurrence of any cyber-attack or information security breach could result in potential legal liability, reputational harm, damage to our competitive position, additional compliance costs, and the disruption of our operations, all of which could adversely affect our business, consolidated financial condition, results of operations and cash flows.

We depend on outside third parties for the processing and handling of our records and data, which exposes us to additional risk for cybersecurity breaches and regulatory action.

We rely on software and internet-based platforms developed by third-party vendors to process various transactions. In some cases, we have contracted with third parties to run their proprietary software on our behalf. These systems include, but are not limited to, general ledger, payroll, employee benefits, loan and deposit processing and securities portfolio accounting. If these third-party service providers experience difficulties, are subject to cybersecurity breaches or terminate their services, and we are unable to replace them with other service providers on a timely basis, our operations could be interrupted. If an interruption were to continue for a significant period of time, our business, consolidated financial condition and results of operations could be adversely affected. While we perform a review of controls instituted by the applicable vendors over these programs in accordance with industry standards and perform our own testing of user controls, we must rely on the continued maintenance of controls by these third-party vendors, including safeguards over the security of customer data. In addition, we maintain, or contract with third parties to maintain, daily backups of key processing outputs in the event of a failure on the part of any of these systems. Nonetheless, we may incur a temporary disruption in our ability to conduct business or process transactions, or damage to our reputation, if the third-party vendor fails to adequately maintain internal controls or institute necessary changes to systems. Such a disruption or breach of security could have a material adverse effect on our business.

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.

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.

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. Additionally, we are subject to supervision, regulation and examination by other regulatory authorities, such as the SEC and state securities and insurance regulators. If, as a result of an examination, the Federal Reserve, the FDIC or the ASBD were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate. These actions include the power to require us to remediate any such adverse examination findings. We are also subject to changes in federal and state laws, as well as regulations and governmental policies, income tax laws and accounting principles. Regulations affecting banks and other financial institutions are undergoing continuous change, and the ultimate effect of such changes cannot be predicted. Regulations and laws may be modified at any time, and new legislation may be enacted that could affect us. We cannot assure you that any changes in regulations or new laws will not adversely affect our performance or consolidated results of operations. Our regulatory framework is discussed in greater detail under “Item 1. Business – Supervision and Regulation.”

We are subject to laws regarding the privacy, information security and protection of personal information, and any violation of these laws or unauthorized disclosure of such information could damage our reputation and otherwise adversely affect our operations and financial condition.

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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. We are subject to complex and evolving laws and regulations governing the privacy and protection of personal information of individuals (including customers, employees, suppliers and other third parties). For example, our business is subject to the Gramm-Leach-Bliley Act, which, among other things: (1) imposes certain limitations on our ability to share nonpublic personal information about our customers with nonaffiliated third parties; (2) requires us to provide certain disclosures to customers about our information collection, sharing and security practices and to afford customers the right to “opt out” of any information sharing by us with nonaffiliated third parties (with certain exceptions); and (3) requires us to develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches. Various state and federal banking regulators and state legislatures have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in the event of a security breach. Ensuring that our collection, use, transfer and storage of personal information complies with all applicable laws and regulations can increase our costs. Furthermore, we may not be able to ensure that all of our clients, suppliers, counterparties and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means. If personal, confidential or proprietary information of customers or others were to be mishandled or misused (in situations where, for example, such information was erroneously provided to unauthorized persons, or where such information was intercepted or otherwise compromised by third parties), we could be exposed to litigation or regulatory sanctions under applicable laws and regulations. Concerns about the effectiveness of our measures to safeguard personal information could cause us to lose customers or potential customers for our products and services and thereby reduce our revenues. 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.

Our FDIC deposit insurance premiums and assessments may increase and thereby adversely affect our financial results.

The Bank’s deposits are insured by the FDIC up to legal limits, and, accordingly, the Bank is subject to periodic insurance assessments by the FDIC. The Bank’s regular assessments are determined by its risk classification, which is based on its regulatory capital levels and the level of supervisory concern that it poses. Numerous bank failures during the financial crisis and increases in the statutory deposit insurance limits increased resolution costs to the FDIC and put significant pressure on the Deposit Insurance Fund. The FDIC has authority to increase insurance assessments, and any significant increase in insurance assessments would likely have an adverse effect on us.

We face a risk of noncompliance and enforcement action under the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The Bank Secrecy Act of 1970, the USA PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports. We are required to comply with these and other anti-money laundering requirements. Our federal and state banking regulators, the Financial Crimes Enforcement Network and other government agencies are authorized to impose significant civil money penalties for violations of anti-money laundering requirements. We are also subject to increased scrutiny with respect to our compliance with the regulations issued and enforced by the Office of Foreign Assets Control. If our program is deemed deficient, we could be subject to liability, including fines, civil money penalties and other regulatory actions, which may include restrictions on our business operations and our ability to pay dividends, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have significant reputational consequences for us. Any of these circumstances could have a material adverse effect on our business, consolidated financial condition, results of operations and cash flows.

Bancshares’ liquidity is subject to various regulatory restrictions applicable to its subsidiaries.

There are various regulatory restrictions on the ability of Bancshares’ subsidiaries to pay dividends or to make other payments to Bancshares. 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.

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The internal controls that we have implemented to mitigate risks inherent to the business of banking might fail or be circumvented.

Management regularly reviews and updates our internal controls and procedures that are designed to manage the various risks in our business, including credit risk, operational risk, financial risk, compliance risk and interest rate risk. No system of controls, however well-designed and operated, can provide absolute assurance that the objectives of the system will be met. If such a system fails or is circumvented, there could be a material adverse effect on our business, consolidated financial condition, results of operations and cash flows.

Changes in tax laws and interpretations and tax challenges may adversely affect our financial results.

The enactment of federal tax reform has had, and is expected to continue to have, far reaching and significant effects on us, our customers and the United States economy. 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.

In the course of our business, we are sometimes subject to challenges from taxing authorities, including the Internal Revenue Service, individual states and municipalities, regarding amounts due. These challenges may result in adjustments to the timing or amount of taxable income or deductions or allocation of income among tax jurisdictions, all of which may require a greater provisioning for taxes or otherwise negatively affect our financial results.

Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact the Company’s business.

Political and social attention to the issue of climate change has increased in recent years. 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. 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. 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. 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. To the extent that these initiatives lead to the promulgation of new regulations or supervisory guidance applicable to the Company or the Bank, we would likely experience increased compliance costs and other compliance-related risks. The lack of empirical data surrounding the credit and other financial risks posed by climate change render it impossible to predict how specifically climate change may impact the Company’s financial condition and results of operations.

Risks Related to Strategic Planning

We intend to engage in acquisitions of other banking institutions from time to time. These acquisitions may not produce revenue or earnings enhancements or cost savings at levels, or within time frames, originally anticipated and may result in unforeseen integration difficulties.

We regularly evaluate opportunities to strengthen our current market position through acquisitions, subject to regulatory approval. Such transactions could, individually or in the aggregate, have a material effect on our operating results and financial condition, including short and long-term liquidity. Our acquisition activities could be material to our business. These activities could require us to use a substantial amount of cash or other liquid assets and/or incur debt. In addition, if goodwill recorded in connection with acquisitions were determined to be impaired, then we would be required to recognize a charge against our earnings, which could materially and adversely affect our results of operations during the period in which the impairment was recognized. 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;

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•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.

Depending on the condition of any institutions or assets that are acquired, any acquisition may, at least in the near term, materially adversely affect our capital and earnings and, if not successfully integrated following the acquisition, may continue to have such effects.

Generally, any acquisition of target financial institutions, banking centers or other banking assets by us may require approval by, and cooperation from, a number of governmental regulatory agencies, possibly including the Federal Reserve and the FDIC, as well as state banking regulators. Such regulators could deny our application based on their regulatory criteria or other considerations, which could restrict our growth, or the regulatory approvals may not be granted on terms that are acceptable to us. For example, we could be required to sell banking centers as a condition to receiving regulatory approvals, and such a condition may not be acceptable to us or may reduce the benefit of any acquisition.

We cannot assure you that we will be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions. Our inability to overcome these risks could have an adverse effect on levels of reported net income, return on equity and return on assets and the ability to achieve our business strategy and maintain market value.

We may not be able to maintain consistent growth, earnings or profitability.

There can be no assurance that we will be able to continue to grow and to remain profitable in future periods, or, if profitable, that our overall earnings will remain consistent with our prior results of operations or increase in the future. Our growth in recent years has been driven by a number of factors, including strong growth in our indirect lending portfolio and demand in the commercial and real estate loan markets in certain of the communities that we serve. A downturn in economic conditions in our markets, heightened competition from other financial services providers, an inability to retain or grow our core deposit base, regulatory and legislative considerations, and failure to attract and retain high-performing talent, among other factors, could limit our ability to grow our assets or increase our profitability to the same extent as in recent periods. Sustainable growth requires that we manage our risks by following prudent loan underwriting standards, balancing loan and deposit growth without materially increasing interest rate risk or compressing our net interest margin, maintaining adequate capital, hiring and retaining qualified employees and successfully implementing our strategic initiatives. A failure to sustain our recent rate of growth or adequately manage the factors that have contributed to our growth or successfully enter new markets could have a material adverse effect on our earnings and profitability and, therefore on our business, consolidated financial condition, results of operations and cash flows.

General Risks

We cannot guarantee that we will pay dividends in the future.

Dividends from the Bank are Bancshares’ primary source of funds for the payment of dividends to its shareholders, and there are various legal and regulatory limits regarding the extent to which the Bank may pay dividends or otherwise supply funds to Bancshares. The ability of both the Bank and Bancshares to pay dividends will continue to be subject to and limited by the results of operations of the Bank and by certain legal and regulatory restrictions. Further, any lenders making loans to Bancshares or the Bank may impose financial covenants that may be more restrictive than the legal and regulatory requirements with respect to the payment of dividends. There can be no assurance as to whether or when Bancshares may pay dividends to its shareholders.

Extreme weather could cause a disruption in our operations, which could have an adverse impact on our profitability.

Some of our operations are located in areas near the Gulf of Mexico, a region that is susceptible to hurricanes and other forms of extreme weather. Such weather events could disrupt our operations and have a material adverse effect on our overall results of operations. 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.

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Securities issued by us, including our common stock, are not insured.

Securities issued by us, including our common stock, are not savings or deposit accounts or other obligations of any bank and are not insured by the Deposit Insurance Fund maintained by the FDIC or by any other governmental agency or instrumentality, or any private insurer, and are subject to investment risk, including the possible loss of principal.

Future issuances of additional securities by us could result in dilution of your ownership.

We may decide from time to time to issue additional securities in order to raise capital, support growth or fund acquisitions. Further, we may issue stock options or other stock grants to retain and motivate employees. Such issuances of securities by us would dilute the respective ownership interests of our shareholders.

Our common stock price could be volatile, which could result in losses for individual shareholders.

The market price of our common stock may be subject to significant fluctuations in response to a variety of factors, including, but not limited to:

•general economic, business and political conditions;

•changing market conditions in the broader stock market in general, or in the financial services industry in particular;

•monetary and fiscal policies, laws and regulations and other activities of the government, agencies and similar organizations;

•actual or anticipated variations in our operating results, financial condition or asset quality;

•our failure to meet analyst predictions and projections;

•collectability of loans;

•cost and other effects of legal and administrative cases and proceedings, claims, settlements and judgments;

•additions or departures of key personnel;

•trades of large blocks of our stock;

•announcements of innovations or new services by us or our competitors;

•future sales of our common stock or other securities; and

•other events or factors, many of which are beyond our control.

Due to these factors, you may not be able to sell your stock at or above the price you paid for it, which could result in substantial losses.

Our performance and results of operations depend in part on the soundness of other financial institutions.

Our ability to engage in routine investment and banking transactions, as well as the quality and value of our investments in equity securities and obligations of other financial institutions, could be adversely affected by the actions, financial condition and profitability of such other financial institutions with which we transact, including, without limitation, the FHLBA and our correspondent banks. Financial services institutions are interrelated as a result of shared credits, trading, clearing, counterparty and other relationships. As a result, defaults by, or even rumors or questions about, one or more financial institutions, or the financial services industry generally, could lead to market-wide liquidity problems and losses of depositor, creditor or counterparty confidence in certain institutions, and could lead to losses or defaults by other institutions. Any defaults by, or failures of, the institutions with whom we transact could adversely affect our debt and equity holdings in such other institutions, our participation interests in loans originated by other institutions, and our business, including our liquidity, consolidated financial condition and earnings.

Liquidity risks could affect our operations and jeopardize our financial condition.

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. We maintain a portfolio of securities that can be used as a source of liquidity. Other sources of liquidity are available should they be needed, such as through our

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acquisition of additional non-core deposits. Bancshares may be able, depending on market conditions, to issue and sell debt securities and preferred or common equity securities in public or private transactions. Our access to funding sources in amounts adequate to finance or capitalize our activities or on acceptable terms could be impaired by factors that affect us specifically or the financial services industry or economy in general, such as further disruption in the financial markets, negative views and expectations about the prospects for the financial services industry, deterioration within the credit markets, or the financial condition, liquidity or profitability of the financial institutions with which we transact.

We depend on the services of our management team and board of directors, and the unexpected loss of key officers or directors may adversely affect our operations.

A departure of any of our executive officers, other key personnel or directors could adversely affect our operations. The community involvement of our executive officers and directors and our directors’ diverse and extensive business relationships are important to our success. A material change in the composition of our management team or board of directors could cause our business to suffer.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

With the exception of its offices located in Knoxville and Powell, Tennessee, which are leased, the Bank owns all of its offices, including its executive offices, without encumbrances. ALC owns a commercial building in Jackson, Alabama, and leases additional office space in its Mobile, Alabama headquarters location. Bancshares does not separately own any property, and to the extent that its activities require the use of physical office facilities, such activities are conducted at the offices of the Bank. We believe that our properties are sufficient for our operations at the current time.

Item 3. Legal Proceedings.

We are party to certain ordinary course litigation, and we intend to vigorously defend ourselves in all such litigation. In 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.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

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 8, 2023, there were approximately 652 record holders of Bancshares’ common stock (excluding any participants in any clearing agency and “street name” holders).

Bancshares declared total dividends of $0.14 per common share and $0.12 per common share during the years ended December 31, 2022 and 2021, respectively. Bancshares expects to continue to pay comparable cash dividends in the future, subject to the results of operations of Bancshares and the Bank, legal and regulatory requirements and potential limitations imposed by financial covenants with third parties. See note 15, "Shareholders' Equity", in the consolidated financial statements for additional information on dividend restrictions.

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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 2022.

	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, 2022		—	$	—		—		596,813
November 1-30, 2022		909	$	8.43		—		596,813
December 1-31, 2022		9	$	8.97		—		596,813
Total		918	$	8.44		—		596,813

(1)918 shares were purchased in open-market transactions by an independent trustee for Bancshares' 401(k) Plan during the fourth quarter of 2022.

(2)All shares have been repurchased to date 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. On each of December 18, 2019 and April 28, 2021, the Board approved the repurchase of additional shares of common stock under the share repurchase program, and the Board has periodically extended the expiration date of the program, most recently to December 31, 2023. As of December 31, 2022, Bancshares was authorized to repurchase up to 596,813 shares of common stock under the share repurchase program.

Securities Authorized for Issuance under Equity Compensation Plans

Information regarding securities authorized for issuance under our equity compensation plans is incorporated by reference to Item 12 of this Annual Report on Form 10-K.

Item 6. Reserved

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF 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, 2022. 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.

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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.

	Year Ended December 31,
	2022			2021			2020			2019			2018
	(Dollars in Thousands, except Per Share Amounts)
Results of Operations:
Interest income	$	41,197		$	39,921		$	40,377		$	43,588		$	37,138
Interest expense		4,256			2,950			4,611			6,646			4,350
Net interest income		36,941			36,971			35,766			36,942			32,788
Provision for loan and lease losses		3,308			2,010			2,945			2,714			2,622
Non-interest income		3,451			3,521			5,010			5,366			5,610
Non-interest expense		28,072			32,756			34,299			33,782			32,385
Income before income taxes		9,012			5,726			3,532			5,812			3,391
Provision for income taxes		2,148			1,275			825			1,246			901
Net income	$	6,864		$	4,451		$	2,707		$	4,566		$	2,490
Per Share Data:
Basic net income per share	$	1.13		$	0.70		$	0.43		$	0.71		$	0.40
Diluted net income per share	$	1.06		$	0.66		$	0.40		$	0.67		$	0.37
Dividends per share	$	0.14		$	0.12		$	0.12		$	0.09		$	0.08
Common stock price - High	$	12.00		$	12.50		$	12.00		$	11.93		$	13.62
Common stock price - Low	$	6.46		$	7.54		$	5.18		$	7.60		$	7.60
Period end price per share	$	8.68		$	10.57		$	9.02		$	11.61		$	7.95
Period end shares outstanding (in thousands)		5,812			6,172			6,177			6,158			6,298
Period-End Balance Sheet:
Total assets	$	994,667		$	958,302		$	890,511		$	788,738		$	791,939
Loans, net of allowance for loan and lease losses		764,451			700,030			638,374			545,243			514,867
Allowance for loan and lease losses		9,422			8,320			7,470			5,762			5,055
Investment securities, net		132,657			134,319			91,422			108,356			153,949
Total deposits		870,025			838,126			782,212			683,662			704,725
Short-term borrowings		20,038			10,046			10,017			10,025			527
Long-term borrowings		10,726			10,653			—			—			—
Total shareholders’ equity		85,135			90,064			86,678			84,748			79,437
Book value		14.65			14.59			14.03			13.76			12.61
Performance Ratios:
Loans to deposits		87.9	%		83.5	%		81.6	%		79.8	%		73.1	%
Net interest margin		4.07	%		4.23	%		4.69	%		5.18	%		5.27	%
Return on average assets		0.70	%		0.47	%		0.32	%		0.58	%		0.36	%
Return on average equity		7.99	%		5.01	%		3.17	%		5.51	%		3.26	%
Asset Quality:
Allowance for loan and lease losses as % of loans		1.22	%		1.17	%		1.16	%		1.05	%		0.97	%
Nonperforming assets as % of loans and other real estate		0.30	%		0.59	%		0.62	%		0.87	%		0.82	%
Nonperforming assets as % of total assets		0.24	%		0.43	%		0.45	%		0.61	%		0.54	%
Net charge-offs as a % of average loans		0.30	%		0.16	%		0.21	%		0.38	%		0.57	%
Capital Adequacy:
Common equity tier 1 risk-based capital ratio		11.07	%		11.36	%		11.78	%		12.78	%		12.62	%
Tier 1 risk-based capital ratio		11.07	%		11.36	%		11.78	%		12.78	%		12.62	%
Total risk-based capital ratio		12.19	%		12.44	%		12.92	%		13.77	%		13.53	%
Tier 1 leverage ratio		9.39	%		9.17	%		8.98	%		9.61	%		8.96	%

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DESCRIPTION OF THE BUSINESS

First US Bancshares, Inc., a Delaware corporation (“Bancshares” and, together with its subsidiaries, the “Company”), is a bank holding company formed in 1983 registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Bancshares operates one banking subsidiary, First US Bank, an Alabama banking corporation (the “Bank”). Prior to its name change on October 11, 2016, Bancshares was known as United Security Bancshares, Inc. 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. The Bank operates and serves its customers through 15 full-service banking offices located in Birmingham, Butler, Calera, Centreville, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama; Knoxville and Powell, Tennessee; and Rose Hill, Virginia; as well as loan production offices in Mobile, Alabama and the Chattanooga, Tennessee area. The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals. The Bank also performs indirect lending through third-party retailers and currently conducts this lending in 12 states, including Alabama, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. During the third quarter of 2021, the Company closed four banking offices located in Bucksville, Columbiana and south Tuscaloosa, Alabama, as well as Ewing, Virginia.

The Bank has two wholly owned subsidiaries: Acceptance Loan Company, Inc., an Alabama corporation (“ALC”), and FUSB Reinsurance, Inc., an Arizona corporation (“FUSB Reinsurance”). As used herein, unless the context suggests otherwise, references to the “Company,” “we,” “us” and “our” refer to Bancshares, as well as the Bank, ALC, and FUSB Reinsurance, collectively.

The Bank owns all of the stock of ALC. ALC is a finance company headquartered in Mobile, Alabama. During the third quarter of 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. ALC continues to service its remaining portfolio of loans from its headquarters in Mobile, Alabama.

FUSB Reinsurance was designed to reinsure or “underwrite” credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. FUSB Reinsurance was responsible for the first level of risk on these policies up to a specified maximum amount, while the primary third-party insurer retained the remaining risk. While FUSB Reinsurance underwrote insurance contracts for both the Bank and ALC, in recent years, the majority of contracts were associated with ALC’s loans. Due to reduced contract volume, particularly following the cessation of business of ALC, during 2022, management of FUSB Reinsurance began procedures to terminate the entity’s activities. During 2022, FUSB Reinsurance ceased writing new insurance contracts, and reached an agreement with a third-party insurance provider to indemnify FUSB Reinsurance for all remaining liabilities associated with previously underwritten insurance policies. As of December 31, 2022, the remaining assets and liabilities of FUSB Reinsurance were transferred to the Bank, and it is anticipated that FUSB Reinsurance will be legally dissolved during 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 2022 and 2021. All yields and ratios presented and discussed herein are recorded and presented on the accrual basis and not on the tax-equivalent basis, unless otherwise indicated.

RECENT MARKET CONDITIONS

During 2022, certain economic conditions benefited from declining COVID-19 cases and the related lifting of COVID-19 restrictions throughout the United States. However, economic uncertainty remains with respect to the long-term effectiveness of efforts to reduce the impact of COVID-19 both globally and domestically. In addition, during 2022, economic uncertainty emerged from geopolitical developments surrounding the invasion of Ukraine by Russia and further COVID-19 lockdowns in China. Furthermore, inflation reached 40-year highs during 2022 in the United States, and market rates of interest rose significantly after a prolonged period at historical lows. In March 2022, the Federal Reserve Board (FRB) raised the target federal funds rate for the first time in over three years, and between March 16, 2022 and February 1, 2023 increased the federal funds rate by a total of 450 basis points. Further increases are expected in 2023 as the FRB continues its efforts to reduce inflation.

As interest rates increase, competitive pressures on both loan and deposit pricing have increased and are expected to remain at a heightened level. The pace and magnitude of changes in interest rates, and the impact that such changes will have on the Company’s operating results, cannot be fully predicted. During this still-ongoing and still-volatile transition period, the yield curve has flattened and often becomes inverted. Unusual yield curve effects, including inversion, may continue. Further, if the rate of inflation persists or accelerates, the Company’s operations could be impacted by, among other things, accelerating cost of goods and services, including

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the cost of salaries and benefits. Additionally, the Company’s borrowers could be negatively impacted by rising expense levels, leading to deterioration of credit quality and/or reductions in the Company’s lending activities. The higher interest rate environment has also led to unrealized losses in the Company’s investment portfolio which consists primarily of fixed rate instruments.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Company’s consolidated financial statements requires management to make subjective judgments associated with estimates. These estimates are necessary to comply with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and general banking practices. The estimates include accounting for the allowance for loan losses, goodwill and other intangible assets, other real estate owned, valuation of deferred tax assets and fair value measurements.

Allowance for Loan and Lease Losses

The Company maintains the allowance for loan and lease losses at a level deemed adequate by management to absorb probable losses from loans and leases in the portfolio at the balance sheet date. In determining the adequacy of the allowance for loan and lease losses, management considers numerous factors, including, but not limited to, management’s estimate of: (a) loan and lease loss experience; (b) the financial condition and liquidity of certain loan customers; and (c) collateral values of property securing certain loans and leases. Because these factors and others involve the use of management’s estimation and judgment, the allowance for loan and lease losses is inherently subject to adjustment at future dates. Unfavorable changes in the factors used by management to determine the adequacy of the allowance, including increased loan or lease delinquencies and subsequent charge-offs, or the availability of new information could require additional provisions in excess of normal provisions to the allowance for loan and lease losses in future periods. No allowance for loan and lease losses is carried over or established at acquisition for purchased loans acquired in business combinations. Loans acquired in business combinations that are deemed impaired at acquisition, purchased credit impaired (“PCI”) loans, are grouped into pools and evaluated separately from the non-PCI portfolio. The estimated cash flows to be collected on PCI loans are discounted at a market rate of interest. Subsequent to the acquisition of PCI loans, estimates of cash flows expected to be collected are updated each reporting period based on updated assumptions regarding default rates, loss severities and other factors that are reflective of current market conditions. Subsequent decreases in expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows will generally result in a reversal of the provision for loan losses to the extent of prior charges. Changes in the estimates and assumptions are possible and may have a material impact on our allowance, and as a result, on our consolidated financial statements or results of operations. There can be no assurance that loan and lease losses in future periods will not exceed the allowance for loan and lease losses or that additions to the allowances will not be required. See “Summary of Loan Loss Experience” for additional analysis of the activity in the allowance for loan and lease losses.

Due to its classification as a smaller reporting company by the Securities and Exchange Commission, as of December 31, 2022, the Company was not required to adopt, and had not adopted, the Current Expected Credit Loss (CECL) model to account for credit losses. Effective January 1, 2023, the Company adopted the CECL accounting model, and recorded a transition adjustment that increased loan loss reserves by approximately $2.4 million. Of this amount, approximately $0.7 million, or 29%, was associated with ALC’s run-off loan portfolio, while the remainder was associated with the Bank’s loan portfolio. In accordance with CECL transition accounting guidance, the transition adjustment was recorded directly to retained earnings during the first quarter of 2023 and will not impact current period earnings.

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. Goodwill is determined to have an indefinite useful life and is not amortized, but is tested for impairment at least annually or more frequently if events or circumstances exist that indicate that a goodwill impairment test should be performed. The Company performs its annual goodwill impairment test as of October 1. 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. In this qualitative assessment, the Company evaluates events and circumstances that may include, but are not limited to, the general economic environment, banking industry and market conditions, the overall financial performance of the Company, the performance of the Company’s common stock, the key financial performance metrics of the Company’s reporting units and events affecting the reporting units to determine if it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. If the quantitative impairment test is required or the decision to bypass the qualitative assessment is elected, the Company performs the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. A recognized impairment loss cannot be reversed in future periods even if the fair value of the reporting unit subsequently recovers. Goodwill impairment was neither indicated nor recorded during the years ended December 31, 2022 or 2021. As of October 1, 2022, the date of our most recent impairment test, the Bank reporting unit had a fair value that was in excess of its carrying value. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations.

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Other intangible assets consist of core deposit intangible assets arising from acquisitions. Core deposit intangible assets have definite useful lives and are amortized on an accelerated basis over their estimated useful lives. The Company’s core deposit intangibles have estimated useful lives of seven years. Intangible assets are evaluated for impairment whenever events or circumstances exist that indicate that the carrying amount should be reevaluated. As of December 31, 2022, the Company had $0.4 million in other intangible assets, and there was no indication of impairment.

Other Real Estate Owned

Other real estate owned (“OREO”) consists of properties obtained through foreclosure or in satisfaction of loans, as well as closed Bank and ALC branches. It is reported at the net realizable value of the property, less estimated costs to sell. 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.

Deferred Tax Asset Valuation

Income tax expense and current and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in the future. Deferred tax assets may also arise from the carryforward of operating loss or tax credit carryforwards as allowed by applicable federal or state tax jurisdictions. In addition, there may be transactions and calculations for which the ultimate tax outcomes are uncertain and the Company’s tax returns are subject to audit by various tax authorities. Although we believe that estimates related to income taxes are reasonable, no assurance can be given that the final tax outcome will not be materially different than that which is reflected in the consolidated financial statements. In evaluating the ability to recover deferred tax assets in the tax jurisdictions from which they arise, management considers all available positive and negative evidence, including the Company’s historical earnings and, in particular, the results of recent operations, expected reversals of temporary differences, the ability to utilize tax planning strategies and the expiration dates of any operating loss and tax credit carryforwards. A valuation allowance is recognized for a deferred tax asset if, based on the weight of all available evidence, it is more likely than not that some portion of or the entire deferred tax asset will not be realized. The assumptions about the amount of future taxable income require the use of significant judgment and are consistent with the plans and estimates that management uses in the underlying business. 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, 2022 or 2021.

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. 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. While management uses judgment when determining the price at which willing market participants would transact when there has been a significant decrease in the volume or level of activity for the asset or liability in relation to “normal” market activity, management’s objective is to determine the point within the range of fair value estimates that is most representative of a sale to a third party under current market conditions. The value to the Company if the asset or liability were held to maturity is not included in the fair value estimates.

A fair value measure should reflect the assumptions that market participants would use in pricing the asset or liability, including the assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset and the risk of nonperformance. 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). If market prices are not available, the Company may use quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market (Level 2 valuations). Where observable market data is not available, the valuation is generated from model-based techniques that use significant assumptions not observable in the market, but that are observable based on Company-specific data (Level 3 valuations). These unobservable assumptions reflect the Company’s own estimates for assumptions that market participants would use in pricing the asset or liability. The valuation of financial instruments when quoted market prices are not available (Levels 2 and 3) may require significant management judgment to assess assumptions and observable inputs. Detailed information regarding fair value measurements can be found in Note 21, "Fair Value of Financial Instruments," in the consolidated financial statements contained herein.

Other Significant Accounting Policies

Other significant accounting policies, not involving the same level of measurable uncertainties as those discussed above, are nevertheless important to an understanding of the consolidated financial statements. Policies related to the right of use asset and lease liability, revenue recognition, investment securities and long-lived assets require difficult judgments on complex matters that are often subject to multiple and recent changes in the authoritative guidance. Certain of these matters are among topics currently under

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re-examination by accounting standard setters and regulators. Specific conclusions have not been reached by these standard setters, and outcomes cannot be predicted with confidence. See Note 2, “Summary of Significant Accounting Policies,” in the consolidated financial statements, which discusses accounting policies that we have selected from acceptable alternatives.

EXECUTIVE OVERVIEW

Update on Strategic Initiatives

Beginning in 2021, the Company initiated certain strategic initiatives designed to improve the Company’s operating efficiency, focus the Company’s loan growth activities, and fortify asset quality. The discussion below provides an update as of December 31, 2022 regarding these ongoing strategic initiatives.

Cessation of Business at ALC

On September 3, 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. As of December 31, 2022, ALC employed six full-time equivalent employees that continued to collect payments on loans through ALC’s Mobile, Alabama headquarters office. The objectives of this initiative included the simplification of the Company’s business processes, reduction of non-interest expense, and improvement of the Company’s asset quality. The timing of the Company’s ability to achieve each of these objectives will be different with some objectives being achieved relatively quickly after execution of the initiative, while others will take more time as ALC’s loan portfolio continues to pay down. For example, a significant reduction of non-interest expense was achieved beginning in the fourth quarter of 2021 and continuing in 2022 due to the reduction of personnel, termination of branch leases, and reduction of technology and other overhead expenses. For the year ended December 31, 2022, non-interest expense at ALC totaled $1.8 million, compared to $6.6 million for the year ended December 31, 2021.

Though the initiative resulted in significant non-interest expense reductions relatively early in its execution, it has also resulted in increased expense related to loan loss provisioning. As a result of branch closures, charge-offs associated with ALC loans have increased since the inception of the initiative compared to periods immediately prior to the closures. Net charge-offs at ALC totaled $1.9 million for the year ended December 31, 2022, compared to $0.8 million for the year ended December 31, 2021. The increased charge-offs at ALC in 2022 resulted in part from the closure of ALC’s branches, and in part from worsening economic conditions in 2022, including elevated inflation levels and rising interest rates, that have impacted ALC’s borrowers. The combination of increased charge-off levels and worsening economic conditions resulted in additional loan loss provisions at ALC in 2022 compared to 2021. For the year ended December 31, 2022, loan loss provision expense specific to ALC’s loans totaled $2.0 million, compared to $0.5 million for the year ended December 31, 2021. The reduction of loans at ALC is expected to continue to improve the Company’s asset quality over time and result in reduced charge-off levels. ALC’s loans, and in particular its direct consumer portfolio, have historically had the Company’s highest level of credit losses. Approximately 85.5% and 66.1% of the Company’s total net charge-offs were associated with ALC’s loan portfolio during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, ALC's remaining loans, net of unearned interest and fees, totaled $20.2 million, compared to $40.8 million as of December 31, 2021.

While the ALC cessation of business strategy is expected to provide ongoing expense reductions, interest income earned on ALC’s loans will also continue to decline in future periods as the loans pay down. For the year ended December 31, 2022, interest income earned on ALC’s loans totaled $4.7 million, compared to $9.0 million for the year ended December 31, 2021. Accordingly, the Company’s focus remains on continued loan growth in other areas of the Bank’s portfolio, as well as efforts to continue to simplify the Company’s ongoing operations and further reduce expenses.

Organizational Efforts

In January 2022, management reorganized the Bank’s retail banking, technology and deposit operations functions under a single organizational structure. Under this structure, management expects to further improve the efficiency of its retail banking operation, while also improving the promotion and deployment of the Bank’s digital products and services. The Company continues to evaluate opportunities throughout the organization to improve its processes and simplify business models.

Financial Highlights

For the year ended December 31, 2022, the Company earned net income of $6.9 million, or $1.06 per diluted common share, compared to net income of $4.5 million, or $0.66 per diluted common share, for the year ended December 31, 2021. Earnings improvement in 2022, compared to 2021, was driven primarily by reductions in non-interest expense resulting from the strategic initiatives that were initiated by the Company beginning in 2021 and, in particular, the ALC cessation of business initiative. The Company’s total non-interest expense was reduced by $4.7 million, or 14.3%, comparing 2022 to 2021.

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Summarized condensed consolidated statements of operations are included below for the years ended December 31, 2022 and 2021, respectively.

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands)
Interest income	$	41,197	$	39,921
Interest expense		4,256		2,950
Net interest income		36,941		36,971
Provision for loan losses		3,308		2,010
Net interest income after provision for loan losses		33,633		34,961
Non-interest income		3,451		3,521
Non-interest expense		28,072		32,756
Income before income taxes		9,012		5,726
Provision for income taxes		2,148		1,275
Net income	$	6,864	$	4,451
Basic net income per share	$	1.13	$	0.70
Diluted net income per share	$	1.06	$	0.66
Dividends per share	$	0.14	$	0.12

The discussion that follows summarizes the most significant activity that impacted changes in the Company’s operations during 2022 as compared to 2021, as well as significant changes in the Company’s balance sheet comparing December 31, 2022 to December 31, 2021.

Net Interest Income and Margin

Net interest income decreased by $30 thousand comparing the year ended December 31, 2022 to the year ended December 31, 2021. A decrease in net interest income was anticipated by management in 2022 due to the reduction in ALC’s higher yielding loans compared to 2021. As a result of the ALC cessation of business strategy, interest and fees on ALC loans decreased by $4.3 million during the year ended December 31, 2022, compared to the year ended December 31, 2021. In addition, due to the rising interest rate environment, the Company’s interest expense increased by $1.3 million, comparing 2022 to 2021. However, the year-over-year reduction in interest income on ALC loans, combined with the increase in interest expense, was mostly offset by an increase of $5.6 million in interest and fee income attributable to the Bank’s other interest-earning asset categories. Revenue growth in these categories was primarily attributable to growth in average balances of loans, and to a lesser extent, improved yields on the Company’s securities investments and cash and cash equivalent balances.

As ALC’s loan portfolio continues to pay down, there will be continued reduction in interest and fees attributable to ALC’s loans. These reductions are expected to put downward pressure on total loan yield and net interest margin in the future. As a result of the changing mix of loans, combined with increased interest expense, the Company’s net interest margin decreased to 4.07% during the year ended December 31, 2022, compared to 4.23% for the year ended December 31, 2021. However, as discussed in the section above entitled “Update on Strategic Initiatives,” while revenue associated with ALC’s loans will continue to decrease, management also expects continued reduction in non-interest expense as ALC’s operations wind down, as well as further reductions in provision for loan losses as ALC’s loans continue to decrease.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $3.3 million for the year ended December 31, 2022, compared to $2.0 million during the year ended December 31, 2021. The increase in provision expense in 2022 compared to 2021 reflected both an increase in charge-offs associated with ALC’s loan portfolio, as well as qualitative adjustments applied to the portfolio in response to heightened inflationary trends and other economic uncertainties that emerged during the year. In management’s view, the combination of the ALC business cessation strategy, coupled with deteriorating economic conditions, including elevated inflation levels, increased overall credit risk in ALC’s loan portfolio as of December 31, 2022, compared to December 31, 2021. Loan loss provisions recorded by the Company in 2022 included expense of $2.0 million associated with ALC’s loans and $1.3 million associated with the Bank’s portfolio. While loan loss provisioning at ALC resulted primarily from increased charge-offs and heightened economic risk factors, provisions at the Bank resulted primarily from loan growth.

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Non-interest Income

Non-interest income totaled $3.5 million for both years ended December 31, 2022 and 2021.

Non-interest Expense

Non-interest expense decreased to $28.1 million for the year ended December 31, 2022, compared to $32.8 million for the year ended December 31, 2021. The decrease in 2022 resulted primarily from implementation of the ALC business cessation strategy, as well as other efficiency efforts conducted at the Bank. As a result of these efforts, significant expense reductions were realized associated with salaries and employee benefits, occupancy and equipment, as well as other expenses associated with technology, communications, and professional services. Non-interest expense was reduced by nonrecurring gains on sale of other real estate (OREO) totaling $0.4 million in 2022 and $0.5 million in 2021.

Total Assets

As of December 31, 2022, the Company's assets totaled $994.7 million, compared to $958.3 million as of December 31, 2021, an increase of 3.8%.

Loan Growth

Total loans increased by $64.2 million, or 9.0%, as of December 31, 2022, compared to December 31, 2021. Loan volume increases included growth in the Bank’s indirect consumer, residential (secured by multi-family and 1-4 family residential properties), commercial real estate (secured by non-farm, non-residential collateral), and commercial and industrial (C&I) portfolios. Growth in these categories in 2022 was consistent with continued robust commercial economic activity and consumer demand in the markets in which the Company operates. The growth in these categories was partially offset by reductions in ALC’s loans, construction loans and Paycheck Protection Plan (PPP) loans during the year ended December 31, 2022.

Asset Quality

The Company’s non-performing assets, including loans in non-accrual status and OREO, totaled $2.3 million as of December 31, 2022, compared to $4.2 million as of December 31, 2021. The reduction in nonperforming assets during the year ended December 31, 2022 resulted mostly from the sale of OREO properties during the period. Reductions in OREO totaled $1.5 million and included the sale of banking centers that were closed by the Company in 2021. As a percentage of total assets, non-performing assets were reduced to 0.24% as of December 31, 2022, compared to 0.43% as of December 31, 2021. As a percentage of average loans, net charge-offs increased to 0.30% for the year ended December 31, 2022, compared to 0.16% for the year ended December 31, 2021. The increase in net charge-offs in 2022 resulted from elevated charge-offs in ALC’s runoff loan portfolio.

Investment Securities

The investment securities portfolio continues to provide the Company with additional liquidity and allows management to fund a portion of loan growth from the maturity and payoff of securities within the portfolio. As of December 31, 2022, the investment securities portfolio, including both the available-for-sale and held-to-maturity portfolios, totaled $132.7 million, compared to $134.3 million as of December 31, 2021. Management monitors its liquidity position, including forecasted expectations related to loan growth, when making determinations about whether to re-invest in the securities portfolio. The investment portfolio is maintained at average durations that are expected to provide monthly cash flows that can be utilized to reinvest in earning assets at current market rates. As of December 31, 2022, the expected average life of investment securities was 3.5 years, compared to 3.7 years as of December 31, 2021. During the fourth quarter of 2022, the Company sold investment securities with principal balances totaling $8.6 million at a net loss of $83 thousand. The intent of these sales was to effectively prune the investment portfolio and allow for reinvestment in higher earning assets in future periods.

Deposits and Borrowings

Deposits totaled $870.0 million as of December 31, 2022, compared to $838.1 million as of December 31, 2021. Core deposits, which exclude time deposits of $250 thousand or greater, totaled $778.1 million, or 89.4% of total deposits, as of December 31, 2022, compared to $775.1 million, or 92.5% of total deposits, as of December 31, 2021. Average deposit costs, including both interest- and noninterest-bearing deposits, totaled 0.40% for 2022, compared to 0.32% for 2021. Given the rising interest rate environment, competition for deposits increased significantly, particularly during the latter portion of 2022. During the third and fourth quarters of 2022, management utilized wholesale funding sources, including brokered deposits and short-term borrowings, as a tool to provide

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greater flexibility in managing balance sheet levels and long-term interest expense relative to actual and expected growth in earning assets. As of December 31, 2022, the Company’s short-term borrowings totaled $20.0 million, compared to $10.0 million as of December 31, 2021. In addition, as of both December 31, 2022 and 2021, the Company held long-term borrowings of $10.7 million (net of unamortized debt issuance costs) resulting from the issuance of subordinated debt with a 10-year term on October 1, 2021. Interest on the subordinated debt is fixed at 3.50% for the first five years of the term, resetting to a variable interest rate for the last five years of the term. For the year ended December 31, 2022, the Company’s funding costs (including interest and non-interest bearing deposits and borrowings) totaled 0.48%, compared to 0.35% for the year ended December 31, 2021.

Shareholders’ Equity

As of December 31, 2022, shareholders’ equity totaled $85.1 million, compared to $90.1 million as of December 31, 2021. The decrease in shareholders’ equity resulted from increases in accumulated other comprehensive loss due to declines in the market value of the Company’s available-for-sale investment portfolio, as well as repurchases of shares of the Company’s common stock during the year ended December 31, 2022. The market value declines in investment securities available-for-sale were the direct result of the increasing interest rate environment in 2022. No other-than-temporary impairment was recognized in the portfolio as of December 31, 2022. The market value decrease in available-for-sale securities was partially offset by an increase in the market value of cash flow derivative instruments that hedge certain deposits and borrowings on the Company’s balance sheet.

Cash Dividends

Commensurate with the earnings growth experienced during 2022, the Company increased its quarterly cash dividend in the fourth quarter of 2022 by $0.02 per share. For the year ended December 31, 2022, the Company declared total dividends of $0.14 per share, compared to $0.12 per share for the year ended December 31, 2021.

Share Repurchases

During 2022, the Company completed share repurchases totaling 412,400 shares of its common stock at a weighted average price of $10.87 per share. The share repurchases were completed under the Company’s existing share repurchase program, which was amended in each of December 2019 and April 2021 to allow the repurchase of additional shares, and the Company's Board of Directors has periodically extended the expiration date of the program, most recently to December 31, 2023. As of December 31, 2022, a total of 596,813 shares remained available for repurchase under the program.

Regulatory Capital

During 2022, 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, 2022, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 11.07%, its total capital ratio was 12.19%, and its Tier 1 leverage ratio was 9.39%.

Liquidity

As of December 31, 2022, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations. The Company benefits from a strong core deposit base, a liquid investment securities portfolio and access to funding from a variety of sources, including federal funds lines, Federal Home Loan Bank advances and brokered deposits.

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RESULTS OF OPERATIONS

Net Interest Income

Net interest income is calculated as the difference between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The Company’s earning assets consist of loans, taxable and tax-exempt investments, Federal Home Loan Bank stock, federal funds sold by the Bank and interest-bearing deposits in banks. 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, 2022 and 2021. Additionally, the table provides an analysis of interest revenue or expense associated with each category, along with the accompanying yield or rate percentage. Net interest margin is calculated for each period presented as net interest income divided by average total interest-earning assets.

	Year Ended December 31,
	2022							2021
	Average Balance		Interest		Annualized Yield/ Rate %			Average Balance		Interest		Annualized Yield/ Rate %
	(Dollars in Thousands)
ASSETS
Interest-earning assets:
Total loans (Note A)	$	724,639	$	38,015		5.25	%	$	685,010	$	38,229		5.58	%
Taxable investment securities		141,283		2,631		1.86	%		107,141		1,503		1.40	%
Tax-exempt investment securities		2,342		36		1.54	%		3,370		60		1.78	%
Federal Home Loan Bank stock		1,247		53		4.25	%		928		34		3.66	%
Federal funds sold		584		22		3.77	%		83		—		—
Interest-bearing deposits in banks		38,379		440		1.15	%		76,972		95		0.12	%
Total interest-earning assets		908,474		41,197		4.53	%		873,504		39,921		4.57	%
Noninterest-earning assets		65,855							66,782
Total	$	974,329						$	940,286
LIABILITIES AND SHAREHOLDERS’    EQUITY
Interest-bearing liabilities:
Demand deposits	$	246,124	$	638		0.26	%	$	236,084	$	553		0.23	%
Savings deposits		208,672		1,204		0.58	%		193,766		599		0.31	%
Time deposits		212,591		1,540		0.72	%		226,425		1,517		0.67	%
Total interest-bearing deposits		667,387		3,382		0.51	%		656,275		2,669		0.41	%
Noninterest-bearing demand deposits		182,032		—		—			172,187		—		—
Total deposits		849,419		3,382		0.40	%		828,462		2,669		0.32	%
Borrowings		30,048		874		2.91	%		13,512		281		2.08	%
Total funding costs		879,467		4,256		0.48	%		841,974		2,950		0.35	%
Other noninterest-bearing liabilities		8,977							9,416
Shareholders’ equity		85,885							88,896
Total	$	974,329						$	940,286
Net interest income (Note B)			$	36,941						$	36,971
Net interest margin						4.07	%						4.23	%

Note A — For the purpose of these computations, non-accruing loans are included in the average loan amounts outstanding. Non-accruing loans averaged $1.8 million for both years ended December 31, 2022 and 2021.

Note B — Loan fees are included in the interest amounts presented. Loan fees totaled $0.9 million and $1.7 million for 2022 and 2021, respectively.

33

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.

	2022 Compared to 2021 Increase (Decrease) Due to Change In:									2021 Compared to 2020 Increase (Decrease) Due to Change In:
	Volume			Average Rate			Net			Volume			Average Rate			Net
	(Dollars in Thousands)
Interest earned on:
Total loans	$	2,212		$	(2,426	)	$	(214	)	$	6,145		$	(6,167	)	$	(22	)
Taxable investments		479			649			1,128			143			(401	)		(258	)
Tax-exempt investments		(18	)		(6	)		(24	)		19			(14	)		5
Federal Home Loan Bank stock		12			7			19			(9	)		(8	)		(17	)
Federal funds		0			22			22			(44	)		(1	)		(45	)
Interest-bearing deposits in banks		(48	)		393			345			37			(156	)		(119	)
Total interest-earning assets		2,637			(1,361	)		1,276			6,291			(6,747	)		(456	)
Interest expense on:
Demand deposits		24			61			85			132			(156	)		(24	)
Savings deposits		46			559			605			145			(302	)		(157	)
Time deposits		(93	)		116			23			(99	)		(1,527	)		(1,626	)
Other borrowings		344			249			593			45			101			146
Total interest-bearing liabilities		321			985			1,306			223			(1,884	)		(1,661	)
Increase (decrease) in net interest income	$	2,316		$	(2,346	)	$	(30	)	$	6,068		$	(4,863	)	$	1,205

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.

Net interest income for the year ended December 31, 2022 decreased by $30 thousand compared to the year ended December 31, 2021. A decrease in net interest income was anticipated by management in 2022 due to the reduction in ALC’s higher yielding loans compared to 2021. As a result of the ALC cessation of business strategy, interest and fees on ALC loans decreased by $4.3 million during the year ended December 31, 2022, compared to the year ended December 31, 2021. In addition, due primarily to the rising interest rate environment, combined with long-term debt issued by the Company in the fourth quarter of 2021, the Company’s interest expense increased by $1.3 million, comparing 2022 to 2021. However, the year-over-year reduction in interest income on ALC loans, combined with the increase in interest expense, was mostly offset by an increase of $5.6 million in interest and fee income attributable to the Bank’s other interest-earning asset categories. Revenue growth in these categories was primarily attributable to growth in average balances of loans, and to a lesser extent, improved yields on the Company’s securities investments and cash and cash equivalent balances.

As ALC’s loan portfolio continues to pay down, there will be continued reduction in interest and fees attributable to ALC’s loans. These reductions are expected to put downward pressure on total loan yield and net interest margin in the future. As a result of the changing mix of loans, combined with increased interest expense, the Company’s net interest margin decreased to 4.07% during the year ended December 31, 2022, compared to 4.23% for the year ended December 31, 2021. However, as discussed in the Executive Summary under the section entitled “Update on Strategic Initiatives,” while revenue associated with ALC’s loans will continue to decrease, management also expects continued reduction in non-interest expense as ALC’s operations wind down, as well as reductions in provision for loan losses as ALC’s loans continue to decrease.

It is expected that net interest income will continue to be impacted significantly by the interest rate environment. Management’s interest rate risk modeling generally indicates that both net interest margin and net interest income would benefit in a rising interest rate environment, specifically with increases up to 200 basis points from December 31, 2022 levels. However, this modeling also indicates that net interest income and margin would decrease in a declining interest rate environment, or in an upward rate environment with increases in excess of 200 basis point from December 31, 2022 levels. The Company’s strategy to cease new business development at ALC is expected to reduce average yields on loans in the near term until the ALC portfolio has paid down to nominal levels. Management expects that growth in loan volume with loans of sufficient credit quality will enhance net interest income over time as earning assets are shifted from lower earning cash and federal funds sold balances into loan assets. However, the environment for both loan and deposit generation is highly competitive, particularly in the current rising interest rate environment. Reductions in either loan volume or deposit levels could result in downward pressure on net interest income.

34

Based on recent statements by Federal Reserve officials, it is expected that the Federal Open Market Committee will continue raising interest rates to address inflationary pressures in the near-term, and, monetary tightening may continue through much of 2023. The level of interest rate increases or decreases is unpredictable and can result in rates rising in an uneven manner that causes unpredictable effects. In addition, higher rates could negatively affect the economy, loan demand and borrowers’ financial position.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $3.3 million for the year ended December 31, 2022, compared to $2.0 million for the year ended December 31, 2021. The increase in provision expense in 2022 compared to 2021 reflected both an increase in charge-offs associated with ALC’s loan portfolio, as well as qualitative adjustments applied to the portfolio in response to heightened inflationary trends and other economic uncertainties that emerged during the year. In management’s view, the combination of the ALC business cessation strategy, coupled with deteriorating economic conditions, including elevated inflation levels, increased overall credit risk in ALC’s loan portfolio as of December 31, 2022, compared to December 31, 2021. Loan loss provisions recorded by the Company in 2022 included expense of $2.0 million associated with ALC’s loans and $1.3 million associated with the Bank’s portfolio. While loan loss provisioning at ALC resulted primarily from increased charge-offs and heightened economic risk factors, provisions at the Bank resulted primarily from loan growth. The Company’s net charge-offs totaled $2.2 million, or 0.30% of average loans, in 2022, compared to $1.2 million, or 0.16% of average loans, in 2021. Of the $2.2 million in net charge-offs in 2022, $1.9 million was associated ALC’s loans, while the remaining $0.3 million was associated with the Bank’s portfolio. Of the $1.2 million in net charge-offs in 2021, $0.8 million was associated with ALC’s loans, while $0.4 million was associated with the Bank’s portfolio.

Management believes that the allowance for loan and lease losses as of December 31, 2022, which was calculated under an incurred loss model, was sufficient to absorb losses in the Company’s loan portfolio based on circumstances existing as of the balance sheet date. Furthermore, we believe that continued runoff of ALC’s direct consumer loans will continue to lead to reduced provisions over time. However, uncertainty continues to exist related to various economic factors, including, but not limited to, the ultimate impact on the Company’s borrowers of inflation, elevated interest levels, supply chain disruption, geopolitical activities, and any future impacts of the COVID-19 pandemic. Accordingly, management will continue to monitor circumstances associated with the loan portfolio. Should economic circumstances deteriorate, additional loan loss provisioning may be required.

Due to its classification as a smaller reporting company by the Securities and Exchange Commission, as of December 31, 2022, the Company was not required to adopt, and had not adopted, the Current Expected Credit Loss (CECL) model to account for credit losses. Effective January 1, 2023, the Company adopted the CECL accounting model, and recorded a transition adjustment that increased loan loss reserves by approximately $2.4 million. Of this amount, approximately $0.7 million, or 29%, was associated with ALC’s run-off loan portfolio, while approximately $1.7 million, or 71%, was associated with the Bank’s loan portfolio. In accordance with CECL transition accounting guidance, the transition adjustment was recorded directly to retained earnings during the first quarter of 2023 and did not impact current period earnings.

Non-Interest Income

Non-interest income represents fees and income derived from sources other than interest-earning assets. The following table presents the major components of non-interest income for the periods indicated:

	Year Ended December 31,
	2022			2021		$ Change			% Change
	(Dollars in Thousands)
Service charges and other fees on deposit accounts	$	1,154		$	1,069	$	85			8.0	%
Bank-owned life insurance		451			439		12			2.7	%
Net (loss) gain on sale and prepayment of investment securities		(83	)		22		(105	)	NM
Lease income		864			830		34			4.1	%
Other income		1,065			1,161		(96	)		(8.3	)%
Total non-interest income	$	3,451		$	3,521	$	(70	)		(2.0	)%

NM: Not Meaningful

The Company’s non-interest income decreased in 2022 compared to 2021 primarily due to nonrecurring net losses on sales of investment securities totaling $83 thousand in 2022, compared to a gain of $22 thousand in 2021. During the fourth quarter of 2022, investment securities with principal balances totaling $8.6 million were sold at a net loss of $83 thousand. The intent of these sales was to effectively prune the investment portfolio and allow for reinvestment in higher earning assets in future periods. In addition to the impact of investment security sales, other income decreased in 2022 compared to 2021 due primarily to reductions in credit insurance revenues associated with FUSB Reinsurance which ceased writing new insurance contracts in 2022.

35

Certain of the Company’s non-interest revenue sources, including gains or losses on the sale of investments and other assets are largely dependent on facts and circumstances at a given point in time, and accordingly, revenues from these sources cannot be forecasted with any certainty. Non-interest revenues earned from service charges and other fees on deposit accounts have generally declined during recent years based on changes in depositor preferences for liquidity, particularly during the COVID-19 pandemic. Management will continue to evaluate opportunities to add new non-interest revenue streams or to grow existing streams; however, significant growth in non-interest income is not expected in the near term.

Non-Interest Expense

Non-interest expense represents expenses incurred from sources other than interest-bearing liabilities. The following table presents the major components of non-interest expense for the periods indicated:

	Year Ended December 31,
	2022			2021			$ Change			% Change
	(Dollars in Thousands)
Salaries and employee benefits	$	16,418		$	19,157		$	(2,739	)		(14.3	)%
Net occupancy and equipment expense		3,281			4,388			(1,107	)		(25.2	)%
Computer services		1,639			1,832			(193	)		(10.5	)%
Insurance expense and assessments		1,250			1,361			(111	)		(8.2	)%
Fees for professional services		1,060			1,275			(215	)		(16.9	)%
Postage, stationery and supplies		614			802			(188	)		(23.4	)%
Telephone/data communication		682			903			(221	)		(24.5	)%
Other real estate/foreclosure expense, net		(331	)		(371	)		40			(10.8	)%
Other		3,459			3,409			50			1.5	%
Total non-interest expense	$	28,072		$	32,756		$	(4,684	)		(14.3	)%

Non-interest expense was reduced in 2022, compared to 2021, due primarily to the strategic initiatives executed by the Company beginning in the third quarter of 2021. The initiatives, which included the ALC cessation of business strategy, Bank branch closures and other operational efficiency efforts at the Bank, led to significant reductions in the Company’s personnel levels, reduced levels of occupancy and equipment expense, and decreases in various other expense categories.

Salaries and employee benefits expense reductions were achieved through the reduction of employee levels, the most notable of which was realized during the third quarter of 2021 following implementation of the ALC business cessation strategy. Further reductions of employee levels were achieved through the Company’s ongoing efficiency efforts. As of December 31, 2022, the Company employed 155 full-time equivalent employees (including 149 at the Bank and six at ALC), compared to 175 as of December 31, 2021, and 259 as of June 30, 2021 (the quarter-end date immediately prior to execution of the strategic initiatives).

The reduction in occupancy and equipment expense resulted primarily from the termination of the majority of ALC’s lease contracts following cessation of business at its branches, as well as the closure of four bank branches in the third quarter of 2021. As of December 31, 2022, all previously existing ALC leases had been terminated except for the ongoing lease of ALC’s headquarters office that continues to house the remaining ALC staff. During the year ended December 31, 2022, non-interest expense was also reduced by one-time net gains on the sale of OREO that totaled $0.4 million. The gains were primarily generated by the sale of the Bank’s closed branch assets.

Due to the strategic initiatives, additional expense reductions were also realized related to telephone/data communications, computer services, professional services, postage and supplies and various other expense categories, comparing the year ended December 31, 2022 to the year ended December 31, 2021.

Both years presented included certain one-time restructuring charges associated with the ALC cessation of business strategy. These charges included expenses associated with employee severances, termination of leases and technology contracts, fixed asset valuation adjustments, and miscellaneous other expenses. The restructuring charges totaled $0.2 million during the year ended December 31, 2022, compared to $0.9 million during the year ended December 31, 2021. As of December 31, 2022, the majority of estimated restructuring charges associated with the ALC strategy have been incurred. The strategic initiatives are expected to continue to reduce the Company’s expense structure in the near term, although the reductions may be offset by inflationary pressures affecting the Company’s ongoing operations. One of management’s primary focuses continues to be business simplification and process improvements in an effort to continue improving the Company’s overall efficiency levels.

36

Provision for Income Taxes

The provision for income taxes was $2.1 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively. The Company’s effective tax rate was 23.8% and 22.3%, respectively, for the same periods.

The effective tax rate is impacted by recurring items, such as changes in tax-exempt interest income earned from bank-qualified municipal bonds and loans and the cash surrender value of bank-owned life insurance. 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.

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 expected average life of securities in the investment portfolio was 3.5 years and 3.7 years as of December 31, 2022 and 2021, respectively.

Available-for-sale securities are recorded at estimated fair value, with unrealized gains or losses recognized, net of taxes, in accumulated other comprehensive income or loss, a separate component of shareholders’ equity. As of December 31, 2022, available-for-sale securities totaled $130.8 million, or 98.6% of the total investment portfolio, compared to $130.9 million, or 97.4% of the total investment portfolio, as of December 31, 2021. Available-for-sale securities consisted of residential and commercial mortgage-backed securities, U.S. Treasury securities, corporate bonds 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, 2022, held-to-maturity securities totaled $1.9 million, or 1.4% of the total investment portfolio, compared to $3.4 million, or 2.6% of the total investment portfolio, as of December 31, 2021. Held-to-maturity securities consisted of commercial mortgage-backed securities, obligations of U.S. government-sponsored agencies and obligations of states and political subdivisions.

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, 2022, according to contractual maturity. Available-for-sale securities are stated at fair value. Held-to-maturity securities are stated at amortized cost. The calculations of the weighted average yields for each maturity category are based upon yield weighted by the respective costs of the securities.

	Available-for-Sale
	Stated Maturity as of December 31, 2022
	Within One Year					After One But Within Five Years					After Five But Within Ten Years					After Ten Years
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(Dollars in Thousands)
Investment securities available-for-sale:
Mortgage-backed securities:
Residential	$	6		3.42	%	$	5,639		2.35	%	$	37,356		1.81	%	$	5,227		1.85	%
Commercial		6		7.17	%		2,510		1.81	%		3,211		1.92	%		5,967		4.81	%
Obligations of states and political subdivisions		500		3.25	%		512		1.09	%		—		—			1,060		1.09	%
Corporate notes		—		—			—		—			15,920		3.48	%		—		—
U.S. Treasury securities		—		—			48,497		1.58	%		4,384		1.44	%		—		—
Total	$	512		3.29	%	$	57,158		1.66	%	$	60,871		2.22	%	$	12,254		3.23	%
Total securities with stated maturity																$	130,795		1.91	%

37

	Held-to-Maturity
	Stated Maturity as of December 31, 2022
	Within One Year				After One But Within Five Years				After Five But Within Ten Years					After Ten Years
	Amount		Yield		Amount		Yield		Amount		Yield			Amount		Yield
	(Dollars in Thousands)
Investment securities held-to-maturity:
Mortgage-backed securities:
Residential	$	—		—	$	—		—	$	610		2.29	%	$	—		—
Commercial		—		—		—		—		997		2.25	%		170		1.86	%
Obligations of states and political subdivisions		—		—		—		—		—		0.00	%		85		3.05	%
Total	$	—		—	$	—		—	$	1,607		2.26	%	$	255		2.26	%
Total securities with stated maturity														$	1,862		2.26	%

Condensed Portfolio Maturity Schedule

Maturity Summary as of December 31, 2022	Dollar Amount		Portfolio Percentage
	(Dollars in Thousands)
Maturing in three months or less	$	500		0.4	%
Maturing after three months to one year		12		0.0	%
Maturing after one year to three years		35,129		26.5	%
Maturing after three years to five years		22,030		16.6	%
Maturing after five years to fifteen years		62,478		47.1	%
Maturing in more than fifteen years		12,508		9.4	%
Total	$	132,657		100.0	%

Loans and Allowance for Loan Losses

The tables below summarize loan balances by portfolio category at the end of each of the most recent five years as of December 31, 2022:

	Year Ended December 31,
	2022		2021		2020		2019		2018
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	54,396	$	67,048	$	37,282	$	30,820	$	42,648
Secured by 1-4 family residential properties		88,426		72,727		88,856		104,537		110,756
Secured by multi-family residential properties		67,917		46,000		54,326		50,910		23,009
Secured by non-farm, non-residential properties		199,965		197,901		184,528		162,981		156,162
Commercial and industrial loans		73,561		73,947		81,735		90,957		85,779
Consumer loans:
Direct consumer		10,053		21,689		29,788		38,040		38,583
Branch retail		14,237		25,692		32,094		32,305		28,324
Indirect		266,567		205,940		141,514		45,503		40,609
Total loans	$	775,122	$	710,944	$	650,123	$	556,053	$	525,870
Less unearned interest, fees and deferred cost		1,249		2,594		4,279		5,048		5,948
Allowance for loan losses		9,422		8,320		7,470		5,762		5,055
Net loans	$	764,451	$	700,030	$	638,374	$	545,243	$	514,867

38

The tables below summarize changes in the allowance for loan and lease losses for each of the most recent five years as of December 31, 2022:

	Year Ended December 31,
	2022			2021			2020			2019			2018
	(Dollars in Thousands)
Balance at beginning of period	$	8,320		$	7,470		$	5,762		$	5,055		$	4,774
Charge-offs:
Real estate loans:
Construction, land development and other loan loans		—			(23	)		—			—			—
Secured by 1-4 family residential properties		(40	)		(12	)		(61	)		(101	)		(101	)
Secured by multi-family residential properties		—			—			—			—			—
Secured by non-farm, non-residential properties		—			—			—			—			—
Commercial and industrial loans		—			(6	)		—			—			(3	)
Consumer loans:
Direct consumer		(1,958	)		(1,230	)		(1,621	)		(2,000	)		(2,482	)
Branch retail		(633	)		(377	)		(374	)		(425	)		(415	)
Indirect		(382	)		(483	)		(152	)		(301	)		(116	)
Total charge-offs		(3,013	)		(2,131	)		(2,208	)		(2,827	)		(3,117	)
Recoveries		807			971			971			820			776
Net charge-offs		(2,206	)		(1,160	)		(1,237	)		(2,007	)		(2,341	)
Provision for loan and lease losses		3,308			2,010			2,945			2,714			2,622
Ending balance	$	9,422		$	8,320		$	7,470		$	5,762		$	5,055
Ending balance as a percentage of loans		1.22	%		1.17	%		1.16	%		1.05	%		0.97	%
Net charge-offs as a percentage of average loans		0.30	%		0.16	%		0.21	%		0.38	%		0.57	%

Nonperforming Assets

Nonperforming assets at the end of the five most recent years as of December 31, 2022 were as follows:

	Year Ended December 31,
	2022			2021			2020			2019			2018
	(Dollars in Thousands)
Non-accrual loans	$	1,651		$	2,008		$	3,086		$	3,723		$	2,759
Other real estate owned		686			2,149			949			1,078			1,505
Total	$	2,337		$	4,157		$	4,035		$	4,801		$	4,264
Nonperforming assets as a percentage of loans and other    real estate		0.30	%		0.59	%		0.62	%		0.87	%		0.82	%
Nonperforming assets as a percentage of total assets		0.24	%		0.43	%		0.45	%		0.61	%		0.54	%

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.

	December 31,
	2022		2021
	(Dollars in Thousands)
Total loans accounted for on a non-accrual basis	$	1,651	$	2,008
Interest income that would have been recorded under original    terms		60		52
Interest income reported and recorded during the year		29		30

39

Allocation of Allowance for Loan and Lease Losses

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 loan and lease losses as of the end of the five years indicated.

	2022					2021					2020					2019					2018
	Allocation Allowance		% Loans in Each Category			Allocation Allowance		% Loans in Each Category			Allocation Allowance		% Loans in Each Category			Allocation Allowance		% Loans in Each Category			Allocation Allowance		% Loans in Each Category
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	517		7.0	%	$	628		9.4	%	$	393		5.7	%	$	197		5.5	%	$	241		8.1	%
Secured by 1-4 family residential properties		832		11.4	%		690		10.2	%		639		13.7	%		466		18.8	%		346		21.1	%
Secured by multi-family residential properties		646		8.8	%		437		6.5	%		577		8.4	%		422		9.2	%		128		4.4	%
Secured by non-farm, non-residential properties		1,970		25.8	%		1,958		27.8	%		1,566		28.4	%		964		29.3	%		831		29.7	%
Commercial and industrial loans		919		9.5	%		860		10.4	%		1,008		12.5	%		1,377		16.4	%		1,138		16.3	%
Consumer loans:
Director consumer		866		1.3	%		1,004		3.1	%		1,202		4.6	%		1,625		6.8	%		1,799		7.3	%
Branch retail		518		1.8	%		304		3.6	%		373		4.9	%		395		5.8	%		427		5.4	%
Indirect		3,154		34.4	%		2,439		29.0	%		1,712		21.8	%		316		8.2	%		145		7.7	%
Total	$	9,422		100.0	%	$	8,320		100.0	%	$	7,470		100.0	%	$	5,762		100.0	%	$	5,055		100.0	%

40

Summary of Loan Loss Experience

The following table summarizes the Company’s loan loss experience for each of the two years indicated.

	2022			2021
	(Dollars in Thousands)
Balance of allowance for loan and lease losses at beginning    of period	$	8,320		$	7,470
Charge-offs:
Real estate loans:
Construction, land development and other land loans		—			(23	)
Secured by 1-4 family residential properties		(40	)		(12	)
Secured by multi-family residential properties		—			—
Secured by non-farm, non-residential properties		—			—
Commercial and industrial loans		—			(6	)
Consumer loans:
Direct consumer		(1,958	)		(1,230	)
Branch retail		(633	)		(377	)
Indirect		(382	)		(483	)
Total charge-offs		(3,013	)		(2,131	)
Recoveries:
Real estate loans:
Construction, land development and other land loans		2			22
Secured by 1-4 family residential properties		39			14
Secured by multi-family residential properties		—			—
Secured by non-farm, non-residential properties		5			5
Commercial and industrial loans		—			21
Consumer loans:
Direct consumer		565			626
Branch retail		151			215
Indirect		45			68
Total recoveries		807			971
Net charge-offs		(2,206	)		(1,160	)
Provision for loan and lease losses		3,308			2,010
Balance of allowance for loan and lease losses at end of period	$	9,422		$	8,320
Ratio of net charge-offs during period to average loans    outstanding		0.30	%		0.16	%

Deposits

Total deposits increased by 3.8% to $870.0 million as of December 31, 2022, from $838.1 million as of December 31, 2021. Core deposits, which exclude time deposits of $250 thousand or more, provide a relatively stable funding source that supports earning assets. Core deposits totaled $778.1 million, or 89.4% of total deposits, as of December 31, 2022, compared to $775.1 million, or 92.5% of total deposits, as of December 31, 2021.

Deposits, in particular core deposits, have historically been the Company’s primary source of funding and have enabled the Company to successfully meet both short-term and long-term liquidity needs. Management anticipates that such deposits will continue to be the Company’s primary source of funding in the future. We will continue to monitor deposit levels closely to help ensure an adequate level of funding for the Company’s activities. However, various economic and competitive factors could affect this funding source in the future, including increased competition from other financial institutions in deposit gathering, national and local economic conditions and interest rate policies adopted by the Federal Reserve and other central banks.

41

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:

	2022					2021
	Average Amount		Rate			Average Amount		Rate
	(Dollars in Thousands)
Non-interest-bearing demand deposit accounts	$	182,032		—		$	172,187		—
Interest-bearing demand deposit accounts		246,124		0.26	%		236,084		0.23	%
Savings deposits		208,672		0.58	%		193,766		0.31	%
Time deposits		212,591		0.72	%		226,425		0.67	%
Total deposits	$	849,419		0.40	%	$	828,462		0.32	%
Total interest-bearing deposits	$	667,387		0.51	%	$	656,275		0.41	%

As of December 31, 2022 and 2021, uninsured demand and savings deposits (deposits in excess of $250 thousand, which is the maximum amount for federal deposit insurance) totaled $148.3 million and $156.9 million, respectively. Maturities of time deposits of greater than $250 thousand outstanding as of December 31, 2022 and 2021 are summarized as follows:

Maturities	December 31,
	2022		2021
	(Dollars in Thousands)
Three months or less	$	22,024	$	13,340
Over three through six months		1,976		6,794
Over six through twelve months		16,553		6,291
Over twelve months		52,244		36,576
Total	$	92,797	$	63,001

Maturities of time certificates of deposit of greater than $100 thousand and less than $250 thousand outstanding as of December 31, 2022 and 2021 are summarized as follows:

Maturities	December 31,
	2022		2021
	(Dollars in Thousands)
Three months or less	$	7,971	$	13,951
Over three through six months		5,968		9,993
Over six through twelve months		8,834		17,240
Over twelve months		45,156		13,944
Total	$	67,929	$	55,128

42

Other Interest-Bearing Liabilities

Other interest-bearing liabilities consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances and subordinated debt. These liabilities continue to be utilized by the Company as alternative sources of funds. As of December 31, 2022, these liabilities represented 4.2% of interest-bearing liabilities, compared to 3.0% as of December 31, 2021.

	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:
2022	$	20,038		$	10,726
2021	$	10,046		$	—
Weighted average interest rate at year-end:
2022		4.40	%		4.20	%
2021		0.18	%		4.20	%
Maximum amount outstanding at any month end:
2022	$	48,095		$	10,726
2021	$	10,046		$	10,653
Average amount outstanding during the year:
2022	$	19,293		$	10,689
2021	$	10,028		$	2,682
Weighted average interest rate during the year:
2022		2.44	%		4.20	%
2021		0.17	%		4.20	%

Shareholders’ Equity

The Company has historically placed significant emphasis on maintaining its strong capital base and continues to do so. As of December 31, 2022, shareholders’ equity totaled $85.1 million, or 8.6% of total assets, compared to $90.1 million, or 9.4% of total assets, as of December 31, 2021. The decrease in shareholders’ equity during 2022 was due primarily to an increase in accumulated other comprehensive loss associated with unrealized losses on available-for-sale investment securities, as well as the repurchase of common shares by the Company in accordance with its established share repurchase program.

The increase in unrealized losses within the securities portfolio resulted from significant increases in interest rates during 2022 which reduced the fair value of securities. The reductions in security valuations were partially offset by increases in the fair value of cash flow hedges during the year. Changes in both the fair value of the available-for-sales investment securities portfolio and changes in the fair value of cash flow hedges are recorded (net of tax) in accumulated other comprehensive income (loss). The total impact of these fair value adjustments was to increase the Company’s accumulated net loss by $7.0 million (net of tax), comparing December 31, 2022 to December 31, 2021.

During the year ended December 31, 2022 the Company completed repurchases of 412,400 shares of its common stock at a weighted average price of $10.87 per share, or $4.5 million in aggregate. The repurchased shares were allocated to treasury stock under the Company’s existing share repurchase program that was amended by the Board of Directors in each of December 2019 and April 2021 to allow the repurchase of additional shares. The Board has periodically extended the expiration date of the share repurchase program, most recently to December 31, 2023. 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 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, 2022, 596,813 shares remained available for repurchase under the program.

The reductions to shareholders’ equity as a result of changes in accumulated other comprehensive loss and share repurchases were partially offset by the Company’s net income for the year ended December 31, 2022, less dividends paid to shareholders. Commensurate with the growth in net income in 2022, the Company increased its quarterly cash dividend in the fourth quarter of 2022 by $0.02 per share. For the year ended December 31, 2022, the Company declared total dividends of $0.14 per share, compared to $0.12 per share for the year ended December 31, 2021.

43

Shareholders’ equity is also impacted by share-based awards granted to the Company’s employees or non-employee directors. Share-based awards granted to date are governed under the Company’s 2013 Incentive Plan. The Company recognizes the cost of services received in exchange for share-based awards based on the grant date fair value of the award, with compensation expense recognized over the awards vesting period. In addition, non-employee directors may elect to defer payment of all or any portion of their director fees under the Company’s Non-Employee Deferred Compensation Plan (the “Deferral Plan”). The Deferral Plan permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash or shares of the Company’s common stock. All deferred fees, whether in the form of cash or shares of common stock, are reflected as compensation expense in the period in which service is rendered by the non-employee director. As of December 31, 2022 and 2021, a total of 114,190 and 117,825 shares of stock, respectively, were deferred in connection with the Deferral Plan. The Company classifies all share-based awards and deferred directors’ fees allocated to be paid in shares of stock as additional paid-in capital. The Company may use issued shares or shares of treasury stock to satisfy these obligations when due.

Liquidity and Capital Resources

The asset portion of the balance sheet provides liquidity primarily from the following sources: (1) excess cash and interest-bearing deposits in banks, (2) federal funds sold, (3) principal payments and maturities of loans and (4) principal payments and maturities from the investment portfolio. Loans maturing or repricing in one year or less amounted to $212.5 million as of December 31, 2022 and $102.4 million as of December 31, 2021. Investment securities forecasted to mature or reprice in one year or less were estimated to be $7.1 million and $9.5 million of the investment portfolio as of December 31, 2022 and 2021, respectively.

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. As of December 31, 2022, the investment securities portfolio had an estimated average life of 3.5 years. However, management does not rely solely upon the investment portfolio to generate cash flows to fund loans, capital expenditures, dividends, debt repayment and other cash requirements. These activities are also funded by cash flows from loan payments, as well as increases in deposits and short-term borrowings.

The liability portion of the balance sheet provides liquidity through interest-bearing and non-interest-bearing deposit accounts, which represent the Company’s primary sources of funds. In addition, federal funds purchased, FHLB advances, securities sold under agreements to repurchase and short-term and long-term borrowings are additional sources of available liquidity. Liquidity management involves the continual monitoring of the sources and uses of funds to maintain an acceptable cash position. Long-term liquidity management focuses on considerations related to the total balance sheet structure. The Bank manages the pricing of its deposits to maintain a desired deposit balance.

As of December 31, 2022 and 2021, the Company had $20.0 million and $10.0 million, respectively, in outstanding short-term borrowings under FHLB advances. In addition, on October 1, 2021, the Company completed a private placement of $11.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes that will mature on October 1, 2031. Net of unamortized debt issuance costs, the subordinated notes were recorded as long-term borrowings totaling $10.7 million as of both December 31, 2022 and 2021.

The Company had up to $246.8 million and $237.0 million in remaining unused credit from the FHLB (subject to available collateral) as of December 31, 2022 and 2021, respectively. In addition, the Company had $45.0 million and $46.0 million in unused established federal funds lines as of December 31, 2022 and 2021, respectively. The Company believes that these potential funding sources will continue to be available.

Management believes that the Company has adequate sources of liquidity to cover its contractual obligations and commitments over the next twelve months.

44

Regulatory Capital

The Bank is subject to the revised capital requirements as described in the section captioned “Supervision and Regulation – Capital Adequacy” included in Part I, Item I of this report. Under these requirements, the Bank is subject to minimum risk-based capital and leverage capital requirements, which are administered by the federal banking regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Failure to meet minimum capital requirements can result in mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of Bancshares and the Bank, and could impact Bancshares’ ability to pay dividends. As of both December 31, 2022 and 2021, 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, 2022 that management believes would affect the Bank’s classification as well-capitalized for regulatory purposes.

Refer to the section captioned “Regulatory Capital” included in Note 15, “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, 2022 and December 31, 2021. Additionally, refer to the section captioned “Dividend Restrictions” included in Note 15 for a discussion regarding restrictions that could materially influence the Bank’s, and therefore Bancshares’, ability to pay dividends.

Asset/Liability Management

Market risk reflects the potential risk of loss arising from adverse changes in interest rates and market prices. The Company has risk management policies and procedures in place to monitor and limit exposure to market risk. The Company’s primary market risk is interest rate risk created by core banking activities. Interest rate risk is the potential variability of the Company’s income that results from changes in various market interest rates. The Bank’s Asset/Liability Committee routinely reassesses the Company’s strategies to manage interest rate risk in accordance with policies established by the Company’s Board of Directors. A key objective of the asset/liability management program is to quantify, monitor and manage interest rate risk and to assist management in maintaining stability in net interest margin under varying interest rate environments.

As part of interest rate risk management, the Company may use derivative instruments in accordance with policies established by the Board of Directors. Derivative instruments may include the use of interest rate swaps, caps and floors. In an effort to dampen the Company’s risk exposure to downward interest rates, during 2022 and subsequent to December 31, 2022, the Company terminated certain pay fixed interest rate swaps. During the second quarter of 2022, the Company terminated one interest rate swap and recorded a deferred gain of $0.3 million. The deferred gain is being accreted to net interest income over the remaining life of the original term of the swap. As of December 31, 2022, the Bank held four forward interest rate swap contracts. The interest rate swap contracts, which were designated as either cash flow hedges or fair value hedges, were intended to mitigate risk associated with rising interest rates by converting floating interest rate payments to a fixed rate or by converting a pool of fixed rate loans to a variable rate. Subsequent to December 31, 2022, the Company terminated all four interest rate swap contracts that were in place as of December 31, 2022 and recorded deferred gains totaling $2.2 million. The deferred gains will be accreted to net interest income over the remaining life of the original term of each swap. See Note 17, “Derivative Financial Instruments,” in the consolidated financial statements for additional information related to these derivative instruments.

Contractual Obligations

The Company has contractual obligations to make future payments under debt and lease agreements. Long-term debt and operating lease obligations are reflected on the consolidated balance sheets. 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 10, “Borrowings,” and Note 16, “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. These commitments are further discussed in Note 20, “Guarantees, Commitments and Contingencies,” in the consolidated financial statements.

45

The following table summarizes the Company’s contractual obligations as of December 31, 2022:

	Payment Due by Period
Contractual Obligations	Total		Less than One Year		One to Three Years		Three to Five Years		More than Five Years
	(Dollars in Thousands)
Time deposits	$	252,712	$	115,494	$	119,680	$	17,439	$	99
Commitments to extend credit		186,169		186,169		—		—		—
Subordinated notes (1)		12,540		385		770		385		11,000
FHLB advances		20,000		20,000		—		—		—
Operating leases		2,146		432		777		699		238
Standby letters of credit		556		556		—		—		—
Total	$	474,123	$	323,036	$	121,227	$	18,523	$	11,337

(1)Contractual obligations for the subordinated notes include the contractual fixed interest payments during the first five years of the note, as well as the final principal payment at the end of the 10-year term of the note. The note is callable by the Company after the first five years. If not called, the interest rate becomes variable. Since interest payments under a variable rate cannot be forecasted with certainty, contractual interest during the variable period is not included in the table above.

Off-Balance Sheet Obligations

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources other than as described in Note 16 “Leases,” Note 17 “Derivative Financial Instruments” and Note 20 “Guarantees, Commitments and Contingencies” in the consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Market/Interest Rate Risk Management

The primary purpose of managing interest rate risk is to invest capital effectively and preserve the value created by our core banking business. This is accomplished through the development and implementation of lending, funding, pricing and hedging strategies designed to maximize net interest income performance under varying interest rate environments, subject to liquidity and interest rate risk guidelines. Effective interest rate sensitivity management ensures that both assets and liabilities respond to changes in interest rates within an acceptable timeframe, thereby minimizing the effect of such interest rate movements on short- and long-term net interest margin and net interest income.

Financial simulation models are the primary tools used by the Company’s Asset/Liability Committee to measure interest rate exposure. Using a wide range of scenarios, management is provided with extensive information on the potential impact on net interest income caused by changes in interest rates. In these simulations, assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of the Company’s balance sheet resulting from both strategic plans and customer behavior. Simulation models also incorporate management’s assumptions regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates paid on deposits and charged on loans.

Assessing Short-Term Interest Rate Risk – Net Interest Margin Simulation

On a periodic basis, management simulates how changes in short- and long-term interest rates will impact future profitability, as reflected by changes in the Bank’s net interest margin and net interest income. The tables below depict how, as of December 31, 2022, pre-tax net interest margin and net interest income are forecasted to change over timeframes of six months, one year, two years and five years under the 8 listed interest rate scenarios. The interest rate scenarios contemplate immediate and parallel shifts in short- and long-term interest rates.

46

Average Change in Net Interest Margin from Level Interest Rate Forecast (basis points, pre-tax):

	6 Months			1 Year			2 Years			5 Years
+1%		5			6			8			15
+2%		1			3			7			23
+3%		(12	)		(10	)		(4	)		21
+4%		(23	)		(21	)		(13	)		21
-1%		(10	)		(11	)		(13	)		(20	)
-2%		(24	)		(27	)		(33	)		(48	)
-3%		(42	)		(47	)		(55	)		(75	)
-4%		(58	)		(65	)		(76	)		(101	)

Cumulative Change in Net Interest Income from Level Interest Rate Forecast (dollars in thousands, pre-tax):

	6 Months			1 Year			2 Years			5 Years
+1%	$	265		$	603		$	1,634		$	7,731
+2%		68			268			1,434			11,718
+3%		(598	)		(1,030	)		(758	)		10,445
+4%		(1,160	)		(2,114	)		(2,525	)		10,497
-1%		(512	)		(1,125	)		(2,691	)		(10,266	)
-2%		(1,220	)		(2,747	)		(6,633	)		(24,171	)
-3%		(2,094	)		(4,670	)		(11,008	)		(37,846	)
-4%		(2,920	)		(6,530	)		(15,319	)		(50,614	)

Item 8. Financial Statements and Supplementary Data.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets;

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on its assessment and those criteria, management has concluded that we maintained effective internal control over financial reporting as of December 31, 2022.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting is not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us, as a non-accelerated filer, to provide only management’s report on internal control over financial reporting.

47

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

First US Bancshares, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of First US Bancshares, Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Loan and Lease Losses

As described in Notes 2 and 5 to the consolidated financial statements, the Company’s allowance for loan and lease losses (“allowance”) reflects the Company’s estimation of probable incurred losses in its loan portfolio. The allowance was $9,422,000 on loans of $775 million as of December 31, 2022 and consisted of two components: the allowance for loans individually evaluated for impairment (“specific reserve”), and the allowance for loans collectively evaluated for impairment (“general reserve”).

The general reserve is based on the Company’s recent loss experience, adjusted for qualitative factors. The qualitative factors include consideration of the following: the nature of the loan portfolio, credit concentrations, trends in historical loss experience, current economic conditions and trends, current asset quality trends, and other risks inherent in the portfolio. As disclosed by management, the estimation of the allowance is inherently subjective and involves complex judgment. The use of different assumptions in developing and applying the qualitative factors could result in a materially different amount for the allowance.

48

We have determined that the allowance is a critical audit matter. The principal considerations for our determination of the allowance as a critical audit matter is the subjectivity of the assumptions that management utilized in developing and applying the qualitative factors in the allowance model. Therefore, especially subjective auditor judgment was involved in selecting and conducting audit procedures to evaluate management’s determination and application of the qualitative factors.

The primary procedures we performed to address this critical audit matter included substantively testing management’s process, including evaluating the judgments and assumptions used, for developing and applying the qualitative factors, which included:

•Evaluation of the completeness and accuracy of data inputs used as a basis for the qualitative factors.

•Evaluation of the reasonableness of management’s judgments related to the qualitative and quantitative assessment of the data used in the determination of the qualitative factors and the resulting allocation to the allowance.

•Evaluating the qualitative factors year over year for directional consistency, testing for reasonableness, and obtaining evidence for significant changes.

•Testing the mathematical accuracy of the allowance calculation, including the application of the qualitative factors.

/s/ Carr, Riggs & Ingram, LLC

We have served as the Company’s auditor since 2008.

Atlanta, Georgia

March 10, 2023

49

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

	December 31, 2022			December 31, 2021
ASSETS
Cash and due from banks	$	11,844		$	10,843
Interest-bearing deposits in banks		18,308			50,401
Total cash and cash equivalents		30,152			61,244
Federal funds sold		1,768			82
Investment securities available-for-sale, at fair value		130,795			130,883
Investment securities held-to-maturity, at amortized cost		1,862			3,436
Federal Home Loan Bank stock, at cost		1,359			870
Loans, net of allowance for loan and lease losses of $9,422 and $8,320, respectively		764,451			700,030
Premises and equipment, net of accumulated depreciation of $21,623 and $21,916,    respectively		24,439			25,123
Cash surrender value of bank-owned life insurance		16,399			16,141
Accrued interest receivable		3,011			2,556
Goodwill and core deposit intangible, net		7,801			8,069
Other real estate owned		686			2,149
Other assets		11,944			7,719
Total assets	$	994,667		$	958,302
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	169,822		$	174,501
Interest-bearing		700,203			663,625
Total deposits		870,025			838,126
Accrued interest expense		607			224
Other liabilities		8,136			9,189
Short-term borrowings		20,038			10,046
Long-term borrowings		10,726			10,653
Total liabilities		909,532			868,238
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,680,856 and    7,634,918 shares issued, respectively; 5,812,258 and 6,172,378 shares    outstanding, respectively		75			75
Additional paid-in capital		14,510			14,163
Accumulated other comprehensive loss, net of tax		(7,241	)		(276	)
Retained earnings		104,460			98,428
Less treasury stock: 1,868,598 and 1,462,540 shares at cost, respectively		(26,669	)		(22,326	)
Total shareholders’ equity		85,135			90,064
Total liabilities and shareholders’ equity	$	994,667		$	958,302

The accompanying notes are an integral part of these consolidated statements.

50

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)

	Year Ended December 31,
	2022			2021
Interest income:
Interest and fees on loans	$	38,015		$	38,229
Interest on investment securities		3,182			1,692
Total interest income		41,197			39,921
Interest expense:
Interest on deposits		3,382			2,669
Interest on borrowings		874			281
Total interest expense		4,256			2,950
Net interest income		36,941			36,971
Provision for loan and lease losses		3,308			2,010
Net interest income after provision for loan and lease losses		33,633			34,961
Non-interest income:
Service and other charges on deposit accounts		1,154			1,069
Net (loss) gain on sales and prepayments of investment securities		(83	)		22
Lease income		864			830
Other income, net		1,516			1,600
Total non-interest income		3,451			3,521
Non-interest expense:
Salaries and employee benefits		16,418			19,157
Net occupancy and equipment		3,281			4,388
Computer services		1,639			1,832
Fees for professional services		1,060			1,275
Other expense		5,674			6,104
Total non-interest expense		28,072			32,756
Income before income taxes		9,012			5,726
Provision for income taxes		2,148			1,275
Net income	$	6,864		$	4,451
Basic net income per share	$	1.13		$	0.70
Diluted net income per share	$	1.06		$	0.66
Dividends per share	$	0.14		$	0.12

The accompanying notes are an integral part of these consolidated statements.

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Dollars in Thousands)

	Year Ended December 31,
	2022			2021
Net income	$	6,864		$	4,451
Other comprehensive loss:
Unrealized holding losses on securities available-for-sale arising during the    year, net of tax benefit of $2,844 and $369, respectively		(8,534	)		(1,106	)
Reclassification adjustment for net losses (gains) on securities available-for-sale realized in net income, net of tax expense (benefit) of $21 and $(6), respectively		62			(16	)
Unrealized holding gains on effective cash flow hedge derivatives arising    during the year, net of tax expense of $480 and $298, respectively		1,437			898
Reclassification adjustment for net gains on cash flow hedge derivatives realized in net   income, net of tax expense of $25 and $0, respectively		70			—
Other comprehensive loss		(6,965	)		(224	)
Total comprehensive (loss) income	$	(101	)	$	4,227

The accompanying notes are an integral part of these consolidated statements.

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In Thousands, Except Share and Per Share Data)

	Common Stock Shares Outstanding			Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock, at Cost			Total Shareholders’ Equity
Balance, December 31, 2020		6,176,556		$	75	$	13,786		$	(52	)	$	94,722		$	(21,853	)		86,678
Net income		—			—		—			—			4,451			—			4,451
Net change in fair value of    securities available-for-sale,    net of tax		—			—		—			(1,122	)		—			—			(1,122	)
Net change in fair value of    derivative instruments,    net of tax		—			—		—			898			—			—			898
Dividends declared: $.12 per share		—			—		—			—			(745	)		—			(745	)
Impact of stock-based    compensation plans, net		37,722			—		436			—			—			(7	)		429
Reissuance of treasury stock as    compensation		3,848			—		(59	)		—			—			59			—
Treasury stock repurchases		(45,748	)		—		—			—			—			(525	)		(525	)
Balance, December 31, 2021		6,172,378		$	75	$	14,163		$	(276	)	$	98,428		$	(22,326	)	$	90,064
Net income		—			—		—			—			6,864			—			6,864
Net change in fair value of    securities available-for-sale,    net of tax		—			—		—			(8,472	)		—			—			(8,472	)
Net change in fair value of    derivative instruments,    net of tax		—			—		—			1,507			—			—			1,507
Dividends declared: $.14 per share		—			—		—			—			(832	)		—			(832	)
Impact of stock-based    compensation plans, net		43,096			—		485			—			—			—			485
Reissuance of treasury stock as    compensation		9,184			—		(138	)		—			—			138			—
Treasury stock repurchases		(412,400	)		—		—			—			—			(4,481	)		(4,481	)
Balance, December 31, 2022		5,812,258		$	75	$	14,510		$	(7,241	)	$	104,460		$	(26,669	)	$	85,135

The accompanying notes are an integral part of these consolidated statements.

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

	Year Ended December 31,
	2022			2021
Cash flows from operating activities:
Net income	$	6,864		$	4,451
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		1,614			1,692
Provision for loan and lease losses		3,308			2,010
Deferred income tax benefit		(367	)		(401	)
Net loss (gain) on sale and prepayment of investment securities		83			(22	)
Cash received in settlement of derivatives contracts		324			—
Stock-based compensation expense		485			436
Net amortization of securities		195			338
Amortization of intangible assets		268			341
Net gain on premises and equipment and other real estate		(207	)		(53	)
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable		(455	)		251
Decrease in other assets		333			1,137
Increase (decrease) in accrued interest expense		383			(68	)
Decrease in other liabilities		(299	)		(287	)
Net cash provided by operating activities		12,529			9,825
Cash flows from investing activities:
Net (increase) decrease in federal funds sold		(1,686	)		3
Purchases of investment securities, available-for-sale		(39,255	)		(86,642	)
Proceeds from sales of investment securities, available-for-sale		8,531			—
Proceeds from maturities and prepayments of investment    securities, available-for-sale		19,250			38,975
Proceeds from maturities and prepayments of investment securities,    held-to-maturity		1,563			2,957
Net (increase) decrease in Federal Home Loan Bank stock		(489	)		265
Proceeds from the sale of premises and equipment and other real estate		3,084			2,061
Net increase in loans		(69,935	)		(65,112	)
Purchases of premises and equipment		(1,262	)		(822	)
Net cash used in investing activities		(80,199	)		(108,315	)
Cash flows from financing activities:
Net increase in customer deposits		31,899			55,914
Net increase in short-term borrowings		9,992			29
Net proceeds from long-term borrowings		—			10,653
Net share-based compensation transactions		—			(7	)
Treasury stock repurchases		(4,481	)		(525	)
Dividends paid		(832	)		(745	)
Net cash provided by financing activities		36,578			65,319
Net decrease in cash and cash equivalents		(31,092	)		(33,171	)
Cash and cash equivalents, beginning of period		61,244			94,415
Cash and cash equivalents, end of period	$	30,152		$	61,244

The accompanying notes are an integral part of these consolidated statements.

54

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 AND 2021

1.DESCRIPTION OF BUSINESS

First US Bancshares, Inc., a Delaware corporation (“Bancshares” and, together with its subsidiaries, the “Company”), is a bank holding company formed in 1983 registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Bancshares operates one banking subsidiary, First US Bank, an Alabama banking corporation (the “Bank”). Prior to its name change on October 11, 2016, Bancshares was known as United Security Bancshares, Inc. 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. The Bank operates and serves its customers through 15 full-service banking offices located in Birmingham, Butler, Calera, Centreville, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama; Knoxville and Powell, Tennessee; and Rose Hill, Virginia; as well as loan production offices in Mobile, Alabama and the Chattanooga, Tennessee area. The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals. The Bank also performs indirect lending through third-party retailers and currently conducts this lending in 12 states, including Alabama, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. During the third quarter of 2021, the Company closed four banking offices located in Bucksville, Columbiana and south Tuscaloosa, Alabama, as well as Ewing, Virginia.

The Bank has two wholly owned subsidiaries: Acceptance Loan Company, Inc., an Alabama corporation (“ALC”), and FUSB Reinsurance, Inc., an Arizona corporation (“FUSB Reinsurance”). As used herein, unless the context suggests otherwise, references to the “Company,” “we,” “us” and “our” refer to Bancshares, as well as the Bank, ALC, and FUSB Reinsurance, collectively.

The Bank owns all of the stock of ALC. ALC is a finance company headquartered in Mobile, Alabama. During the third quarter of 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. ALC continues to service its remaining portfolio of loans from its headquarters in Mobile, Alabama.

FUSB Reinsurance was designed to reinsure or “underwrite” credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. FUSB Reinsurance was responsible for the first level of risk on these policies up to a specified maximum amount, while the primary third-party insurer retained the remaining risk. While FUSB Reinsurance underwrote insurance contracts for both the Bank and ALC, in recent years, the majority of contracts were associated with ALC’s loans. Due to reduced contract volume, particularly following the cessation of business of ALC, during 2022, management of FUSB Reinsurance began procedures to terminate the entity’s activities. During 2022, FUSB Reinsurance ceased writing new insurance contracts, and reached an agreement with a third-party insurance provider to indemnify FUSB Reinsurance for all remaining liabilities associated with previously underwritten insurance policies. As of December 31, 2022, the remaining assets and liabilities of FUSB Reinsurance were transferred to the Bank, and it is anticipated that FUSB Reinsurance will be legally dissolved during 2023.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Bancshares, the Bank and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. The Company consolidates an entity if the Company has a controlling financial interest in the entity.

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Use of Estimates

The accounting principles and reporting policies of the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with general practices within the financial services industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated balance sheets, and revenues and expenses for the period included in the consolidated statements of operations and of cash flows. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term relate to the accounting for the allowance for loan and lease losses, the right-of-use asset and lease liability, the value of other real estate owned (“OREO”) and certain collateral-dependent loans, consideration related to goodwill impairment testing and deferred tax asset valuation. In connection with the determination of the allowance for loan losses and OREO, management generally obtains independent appraisals for significant properties, evaluates the overall portfolio characteristics and delinquencies and monitors economic conditions.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, instruments with an original maturity of less than 90 days from issuance and amounts due from banks.

Supplemental disclosures of cash flow information and non-cash transactions related to cash flows for the years ended December 31, 2022 and 2021 are as follows:

	2022		2021
	(Dollars in Thousands)
Cash paid during the year for:
Interest	$	3,873	$	3,018
Income taxes		2,855		1,375
Non-cash transactions:
Assets acquired in settlement of loans		907		806
Transfers of closed branch assets to OREO		391		1,978
Reissuance of treasury stock as compensation		138		59

Revenue Recognition

The Company records revenue when control of the promised products or services is transferred to the customer in an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for those products and services.

Interest Income

The majority of the Company’s revenue is generated through interest earned on financial instruments, including loans and investment securities. This revenue is recognized on an accrual basis and calculated through the use of non-discretionary formulas based on written contracts including loan agreements or securities contracts. Loan origination fees are accreted into interest income over the term of the loan.

Service Charges on Deposit Accounts

Service charges on deposit accounts include non-sufficient fund fees, overdraft fees and other service charges. When a depositor presents an item for payment in excess of available funds, non-sufficient funds fees are earned when an item is returned unpaid, and overdraft fees are earned when the Company provides the necessary funds to complete the transaction. The Company generates other service charges by providing depositors with proper safeguard and remittance of funds, as well as by providing optional services such as check imaging or treasury management. Charges for proper safeguard and remittance of funds are recognized monthly as the deposit customer maintains funds in the account, while revenue for optional services are recognized when the customer completes the transaction.

Gains or Losses on the Sale of Investment Securities

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Gains or losses on the sale of investment securities are recognized as the sale transaction occurs with the cost of securities sold based on the specific identification method.

Lease Income

The Bank leases certain office facilities to third parties and classifies the leases as operating leases. Lease income is recognized on a monthly basis based on the contractual terms of the lease agreement.

Bank-owned Life Insurance

Bank-owned life insurance income represents income earned from the appreciation of the cash surrender value of insurance contracts held and the proceeds of insurance benefits. The Company recognizes revenue each period in the amount of the appreciation of the cash surrender value of the contracts. Revenue recognized from the proceeds of insurance benefits is recognized at the time the claim is confirmed.

ATM Fee Income

Fee income is generated by allowing the Bank’s debit cardholders to withdraw funds from the ATM’s of other financial institutions and by allowing non-customers to withdraw funds from the Bank’s ATMs. The Bank satisfies performance obligations for each transaction when the withdrawal is processed. The Bank does not direct the activities of the related processing network’s service and recognizes revenue on a net basis as the agent in each transaction.

Other Miscellaneous Income

Other miscellaneous income includes mortgage fees, credit insurance income, auto club revenue, wire transfer fees, safe deposit box fee income, check fees and other miscellaneous sources of income. The Company recognizes revenue associated with these sources of income in accordance with the satisfaction of the performance obligation based on the timing of the occurrence of a transaction or when service is provided.

Reinsurance Activities

Before FUSB Reinsurance ceased writing new insurance contracts in 2022, the Company assumed insurance risk related to credit life and credit accident and health insurance written by a non-affiliated insurance company for its customers that choose such coverage through a quota share reinsurance agreement. Assumed premiums on credit life insurance were deferred and earned over the period of insurance coverage using either a pro rata method or the effective yield method, depending on whether the amount of insurance coverage generally remains level or declines. Assumed premiums for accident and health policies were earned on an average of the pro rata and the effective yield methods.

Investment Securities

The investment portfolio consists of debt securities, including U.S. Treasury securities, obligations of U.S. government agencies, municipal bonds, residential and commercial mortgage-backed securities and corporate notes. Securities may be held in one of three portfolios: trading account securities, securities held-to-maturity or securities available-for-sale. Trading account securities are carried at estimated fair value, with unrealized gains and losses included in operations. The Company held no trading account securities as of December 31, 2022 or 2021. Investment securities held-to-maturity are carried at cost, adjusted for amortization of premiums and accretion of discounts. With regard to investment securities held-to-maturity, management has the intent and the Bank has the ability to hold such securities until maturity. Investment securities available-for-sale are carried at fair value, with any unrealized gains or losses excluded from operations and reflected, net of tax, as a separate component of shareholders’ equity in accumulated other comprehensive income or loss. Investment securities available-for-sale are so classified because management may decide to sell certain securities prior to maturity for liquidity, tax planning or other valid business purposes. When the fair value of a security falls below carrying value, an evaluation must be made to determine whether the unrealized loss is a temporary or other-than-temporary impairment. Impaired securities that are not deemed to be temporarily impaired are written down by a charge to operations to the extent that the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income or loss. The Company uses a systematic methodology to evaluate potential impairment of its investments that considers, among other things, the magnitude and duration of the decline in fair value, the financial health and business outlook of the issuer and the Company’s ability and intent to hold the investment until such time as the security recovers its fair value.

57

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Interest earned on investment securities available-for-sale is included in interest income. Amortization of premiums and discounts on investment securities is determined by the interest method and included in interest income. Gains and losses on the sale of investment securities available-for-sale, computed principally on the specific identification method, are shown separately in non-interest income.

The Company also holds Federal Home Loan Bank (“FHLB”) stock, which, based on the redemption provision of the FHLB, has no quoted market value and is carried at cost. Dividends earned on FHLB stock are included in interest income.

Derivatives and Hedging Activities

The Company uses derivative instruments to minimize unplanned fluctuations in earnings and cash flows caused by interest rate volatility. The Company’s interest rate risk management strategy involves modifying the repricing characteristics of certain assets and liabilities so that changes in interest rates do not adversely affect net interest margin and cash flow. Derivative instruments utilized by the Company generally include interest rate swaps, caps and floors, and are carried as assets and/or liabilities at fair value on the Company’s consolidated balance sheets. The Company does not use derivatives for trading or speculative purposes and generally enters into transactions that have a qualifying hedge relationship. Depending upon the characteristics of the hedged item, derivatives are classified as either cash flow hedges or fair value hedges. When cash flow or fair value hedging strategies are utilized, the Company specifically identifies the derivative instrument as a hedge and identifies the risk that is being hedged contemporaneously with the execution of the hedge transaction.

Cash flow hedge relationships mitigate exposure to variability of future cash flows or other forecasted transactions. The change in fair value of cash flow hedges is recorded, net of tax, in accumulated other comprehensive income (loss) except for amounts excluded from hedge effectiveness. Amounts excluded from hedge effectiveness are recorded in earnings.

Fair value hedge relationships mitigate exposure to the change in fair value of the hedged risk in an asset, liability, or firm commitment. Gains or losses attributable to the derivative instrument, as well as gains or losses attributable to changes in the fair value of the hedged item are recognized in interest income or interest expense in the same income statement line item with the hedged item in the period in which the change in fair value occurs. To the extent the changes in fair value of the derivative instrument do not offset the changes in the fair value of the hedged item, the difference is recognized in earnings. The corresponding adjustment to the hedged asset or liability is included in the basis of the hedged item, while the corresponding change in the fair value of the derivative instrument is recorded as an adjustment to other assets or other liabilities, as applicable. The Company has entered into certain fair value hedges using the last-of-layer method, which allows the Company to hedge the interest rate risk of prepayable financial assets by designating as the hedged item a stated amount of a closed portfolio that is not expected to be affected by prepayments, defaults, or other factors impacting the timing and amount of cash flows.

If a hedge relationship is de-designated or if hedge accounting is discontinued because the hedged item no longer exists, or does not meet the definition of a firm commitment, or because it is probable that the forecasted transaction will no longer occur, the derivative instrument will continue to be recorded in other assets or liabilities in the consolidated balance sheets at its estimated fair value, with changes in fair value recognized in non-interest expense. Any asset or liability that was recognized pursuant to a firm commitment is removed from the consolidated balance sheets and recognized in non-interest expense. Gains or losses that were unrecognized and aggregated in accumulated other comprehensive gain (loss) pursuant to a cash flow hedging relationship are recognized immediately in non-interest expense.

The Company may also enter into derivative contracts that are not designated as hedges in order to mitigate economic risks or risks associated with volatility in connection with customer derivative transactions.

Loans and Interest Income

Loans are reported at principal amounts outstanding, adjusted for unearned income, net deferred loan origination fees and costs, purchase premiums and discounts, write-downs and the allowance for loan losses. Loan origination fees, net of certain deferred origination costs, and purchase premiums and discounts are recognized as an adjustment to the yield of the related loans, on an effective yield basis.

Interest on all loans is accrued and credited to income based on the principal amount outstanding. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to make payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed against current income unless

58

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the collateral for the loan is sufficient to cover the accrued interest. Interest received on non-accrual loans generally is either applied against principal or reported as interest income in accordance with management’s judgment as to the collectability of principal. The policy for interest recognition on impaired loans is consistent with the non-accrual interest recognition policy. Generally, loans are restored to accrual status when the obligation is brought current and the borrower has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is determined based on various components for individually impaired loans and for homogeneous pools of loans and leases. The allowance for loan and lease losses is increased by a provision for loan and lease losses, which is charged to expense, and reduced by charge-offs, net of recoveries by portfolio segment. The methodology for determining charge-offs is consistently applied to each segment. The allowance for loan and lease losses is maintained at a level that, in management’s judgment, is adequate to absorb credit losses inherent in the loan and lease portfolio. The amount of the allowance is based on management’s evaluation of the collectability of the loan and lease portfolio, including the nature of the portfolio, and changes in its risk profile, credit concentrations, historical trends and economic conditions. This evaluation also considers the balance of impaired loans. Losses on individually identified impaired loans are measured based on the present value of expected future cash flows, discounted at each loan’s original effective market interest rate. As a practical expedient, impairment may be measured based on the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent. When the measure of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through the provision added to the allowance for loan losses. In general, all loans of $0.5 million or more and, at ALC, any loans of $50 thousand or more that are 90 days or more past due are identified for impairment analysis. One-to-four family residential mortgages and consumer installment loans are subjected to a collective evaluation for impairment, considering delinquency and repossession statistics, loss experience and other factors. Though management believes the allowance for loan and lease losses to be adequate, ultimate losses may vary from estimates. However, estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings during periods in which they become known.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation, and amortization is computed principally by the straight-line method over the estimated useful lives of the assets or the expected lease terms for leasehold improvements, whichever is shorter. Useful lives for all premises and equipment range from three to forty years.

Bank Owned Life Insurance

The Company has purchased life insurance policies on certain directors and former executives. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

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. Goodwill is determined to have an indefinite useful life and is not amortized but tested for impairment at least annually or more frequently if events or circumstances exist that indicate that a goodwill impairment test should be performed. The Company performs its annual goodwill impairment test as of October 1st.

59

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Other intangible assets consist of core deposit intangible assets arising from acquisitions. Core deposit intangibles have definite useful lives and are amortized on an accelerated basis over their estimated useful lives. The Company’s core deposit intangible assets have estimated useful lives of seven years. In addition, these intangible assets are evaluated for impairment whenever events or circumstances exist that indicate that the carrying amount should be reevaluated.

Other Real Estate Owned (OREO)

OREO consists of properties acquired through a foreclosure or in satisfaction of loans, as well as closed Bank and ALC branches. These properties are carried at net realizable value, less estimated selling costs. Losses arising from the acquisition of properties are charged against the allowance for loan losses. Gains or losses realized upon the sale of OREO and additional losses related to subsequent valuation adjustments are determined on a specific property basis and are included as a component of non-interest expense along with carrying costs.

Income Taxes

The Company accounts for income taxes on the accrual basis through the use of the asset and liability method. Under the asset and liability method, deferred taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the consolidated financial statement carrying amounts and the basis of existing assets and liabilities. Deferred tax assets are also recorded for any tax attributes, such as tax credit and net operating loss carryforwards. The net balance of deferred tax assets and liabilities is reported in other assets in the consolidated balance sheets. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company evaluates the realization of deferred tax assets based on all positive and negative evidence available at the balance sheet date. Realization of deferred tax assets is based on the Company’s judgments about relevant factors affecting realization, including taxable income within any applicable carryback periods, future projected taxable income, reversal of taxable temporary differences and other tax planning strategies to maximize realization of deferred tax assets. A valuation allowance is recorded for any deferred tax assets that are not “more likely than not” to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit for which there is a greater than 50% likelihood that such amount would be realized upon examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest expense, interest income and penalties related to unrecognized tax benefits within current income tax expense.

Stock-Based Compensation

Compensation expense is recognized for stock options and restricted stock awards issued to employees based on the fair value of these awards at the date of grant. The Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.

Compensation expense is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. The Company’s accounting policy is to recognize compensation expense net of forfeitures.

Treasury Stock

Treasury stock purchases and sales are accounted for using the cost method.

Advertising Costs

Advertising costs for promoting the Company are minimal and expensed as incurred.

Segment Reporting

Management has identified two reportable operating segments of Bancshares: the Bank and ALC. The reportable segments were determined based on the internal management reporting system and comprise Bancshares’ and the Bank’s significant subsidiaries. Segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions were eliminated in the determination of consolidated balances.

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Reclassification

Certain disclosures in the notes to the prior period consolidated financial statements have been reclassified to conform to the 2022 presentation. These reclassifications had no effect on the Company’s results of operations, financial position or net cash flow.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding (basic shares). Included in basic shares are shares that have been accrued as of the balance sheet date as deferred compensation for members of Bancshares’ Board of Directors, as well as shares of restricted stock that have been granted pursuant to Bancshares’ 2013 Incentive Plan (as amended, the “2013 Incentive Plan”) previously approved by Bancshares’ shareholders. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period (dilutive shares). The dilutive shares consist of nonqualified stock option grants issued to employees and members of Bancshares’ Board of Directors pursuant to the 2013 Incentive Plan. The following table reflects weighted average shares used to calculate basic and diluted net income per share for the years ended December 31, 2022 and 2021.

	Year Ended December 31,
	2022		2021
Weighted average shares outstanding		5,969,575		6,205,261
Weighted average director deferred shares		114,483		114,096
Basic shares		6,084,058		6,319,357
Dilutive shares		419,650		420,250
Diluted shares		6,503,708		6,739,607

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands, Except Per Share Data)
Net income	$	6,864	$	4,451
Basic net income per share	$	1.13	$	0.70
Diluted net income per share	$	1.06	$	0.66

Comprehensive Income

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities, settlement of derivative contracts or changes in the fair value of cash flow derivatives.

Accounting Policies Recently Adopted

ASU 2020-04 and ASU 2021-01, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These ASUs provide optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contracts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. The Company utilizes LIBOR, among other indexes, as a reference rate for underwriting certain variable rate loans and interest rate hedging instruments. Management has identified all contracts referencing LIBOR and will continue to monitor risks associated with the discontinuance of LIBOR until remediation of such contracts is complete. Reference rate reform has not had, nor does the Company expect it to have, a material effect on the Company’s consolidated balance sheet, operations or cash flows.

ASU 2022-01, "Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic 815)." In March 2022, the FASB issued ASU 2022-01. The amendments in this standard update expand the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. This standard update

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is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2022-01 on January 1, 2023. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements; however, the impact will be dependent on future hedging activity.

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Issued in January 2017, ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity, prior to the amendments in ASU 2017-04, had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. As originally issued, ASU 2017-04 was effective prospectively for annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2017-04 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023. The adoption of this standard update is not currently expected to have a material effect on the Company’s financial statements; however, the impact will be dependent on future evaluations of goodwill impairment that will continue to be performed by management on an annual basis.

ASU 2016-13, "Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Known as the Current Expected Credit Loss (CECL) model, the revised guidance removes all current recognition thresholds and requires companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. The standard also adds disclosure requirements intended to enable users of the financial statements to understand credit risk in the portfolio and how management monitors credit quality, management’s estimate of expected credit losses, and changes in the estimate of credit losses during the period. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by three years for smaller reporting companies, including the Company. The standard became effective for the Company on January 1, 2023, and the Company recorded a transition adjustment that increased loan loss reserves by approximately $2.4 million. In accordance with transition accounting guidance, the transition adjustment was recorded directly to retained earnings during the first quarter of 2023 and will not impact current period earnings. In 2022, the FASB introduced ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures.” ASU 2022-02 seeks to improve the decision usefulness of information provided to investors concerning certain loan refinancings, restructurings and write-offs. The ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL accounting model and enhances the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted the amendments of ASU 2022-02 on January 1, 2023, concurrent with the adoption of the CECL accounting model. The amendments of ASU 2022-02 include only changes to certain financial statement disclosures; and, therefore, adoption of ASU 2022-02 is not expected to have a material impact on the Company’s consolidated financial statements or results of operations.

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3.RESTRUCTURING CHARGES

Effective September 3, 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. The closure of ALC’s branches eliminated the majority of ALC’s full-time employment positions during the third quarter of 2021. ALC continues to service its remaining portfolio of loans from its headquarters in Mobile, Alabama. The cessation of new business and closure of ALC’s branch locations were undertaken by the Company as part of a long-term strategy to reduce expenses, fortify asset quality, and focus the Company’s loan growth efforts in other areas, including the Bank’s commercial lending and consumer indirect lending efforts.

Total restructuring charges incurred during the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended		Year Ended
	December 31, 2022		December 31, 2021		Total
	(Dollars in Thousands)
Expense Category
Severance and personnel expenses	$	108	$	263	$	371
Lease termination costs		2		224		226
Fixed asset valuation adjustments		—		239		239
Termination of technology contracts		45		85		130
Other expenses		—		93		93
Total expenses	$	155	$	904	$	1,059

As of December 31, 2022, the majority of restructuring charges associated with the closure of ALC's branches have been incurred.

4.INVESTMENT SECURITIES

Details of investment securities available-for-sale and held-to-maturity as of December 31, 2022 and 2021 were as follows:

	Available-for-Sale
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	47,659	$	2	$	(3,704	)	$	43,957
Commercial		12,169		4		(480	)		11,693
Obligations of U.S. government-sponsored agencies		5,116		—		(846	)		4,270
Obligations of states and political subdivisions		2,166		—		(94	)		2,072
Corporate notes		17,817		2		(1,898	)		15,921
U.S. Treasury securities		56,956		—		(4,074	)		52,882
Total	$	141,883	$	8	$	(11,096	)	$	130,795

	Held-to-Maturity
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,167	$	—	$	(41	)	$	1,126
Obligations of U.S. government-sponsored agencies		610		—		(40	)		570
Obligations of states and political subdivisions		85		—		(12	)		73
Total	$	1,862	$	—	$	(93	)	$	1,769

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	Available-for-Sale
	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	46,020	$	450	$	(242	)	$	46,228
Commercial		24,647		371		(47	)		24,971
Obligations of U.S. government-sponsored agencies		5,207		—		(15	)		5,192
Obligations of states and political subdivisions		4,247		80		(10	)		4,317
Corporate notes		15,458		76		(52	)		15,482
U.S. Treasury securities		35,097		—		(404	)		34,693
Total	$	130,676	$	977	$	(770	)	$	130,883

	Held-to-Maturity
	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	2,115	$	29	$	—	$	2,144
Obligations of U.S. government-sponsored agencies		768		10		—		778
Obligations of states and political subdivisions		553		2		—		555
Total	$	3,436	$	41	$	—	$	3,477

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of December 31, 2022 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	511	$	511	$	—	$	—
Maturing after one to five years		61,068		57,159		—		—
Maturing after five to ten years		67,309		60,872		1,606		1,536
Maturing after ten years		12,995		12,253		256		233
Total	$	141,883	$	130,795	$	1,862	$	1,769

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities generally mature earlier than their weighted-average contractual maturities because of principal prepayments.

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The following table reflects gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2022 and 2021.

	Available-for-Sale
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	19,876	$	(952	)	$	23,903	$	(2,752	)
Commercial		9,720		(357	)		1,247		(123	)
Obligations of U.S. government-sponsored agencies		—		—			4,270		(846	)
Obligations of states and political subdivisions		1,559		(41	)		512		(53	)
Corporate notes		6,845		(898	)		8,075		(1,000	)
U.S. Treasury securities		21,240		(698	)		31,642		(3,376	)
Total	$	59,240	$	(2,946	)	$	69,649	$	(8,150	)

	Held-to-Maturity
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,125	$	(41	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		215		(7	)		356		(33	)
Obligations of states and political subdivisions		73		(12	)		—		—
Total	$	1,413	$	(60	)	$	356	$	(33	)

	Available-for-Sale
	December 31, 2021
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	31,346	$	(240	)	$	253	$	(2	)
Commercial		2,245		(12	)		2,970		(35	)
Obligations of U.S. government-sponsored agencies		4,987		(13	)		194		(2	)
Obligations of states and political subdivisions		561		(10	)		—		—
Corporate notes		9,092		(52	)		—		—
U.S. Treasury securities		34,692		(404	)		—		—
Total	$	82,923	$	(731	)	$	3,417	$	(39	)

There were no held-to-maturity securities in an unrealized loss position as of December 31, 2021.

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Due to the increasing interest rate environment during the year ended December 31, 2022, gross unrealized losses increased, particularly within the Company’s available-for-sale portfolio. Management evaluates securities for other-than-temporary impairment no less frequently than quarterly and more frequently when economic or market concerns warrant such evaluation. Consideration is given to: (i) the length of time and the extent to which fair value has been less than cost; (ii) the financial condition and near-term prospects of the issuer; (iii) whether the Company intends to sell the securities; and (iv) whether it is more likely than not that the Company will be required to sell the securities before recovery of their amortized cost bases.

As of December 31, 2022, 38 debt securities had been in a loss position for more than 12 months, and 86 debt securities had been in a loss position for less than 12 months. As of December 31, 2021, ten debt securities had been in a loss position for more than 12 months, and 32 debt securities had been in a loss position for less than 12 months. As of both December 31, 2022 and 2021, the losses for all securities were considered to be a direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers. Further, the Company has the current intent and ability to retain its investments in the issuers for a period of time that management believes to be sufficient to allow for any anticipated recovery in fair value. The Company did not recognize any other-than-temporary impairments as of December 31, 2022 and 2021.

Investment securities with a carrying value of $54.7 million and $52.2 million as of December 31, 2022 and 2021, respectively, were pledged to secure public deposits and for other purposes.

5.LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

Portfolio Segments

The Company has divided the loan portfolio into the following portfolio segments based on risk characteristics:

Construction, land development and other land loans – Commercial construction, land and land development loans include loans for the development of residential housing projects, loans for the development of commercial and industrial use property, loans for the purchase and improvement of raw land and loans primarily for agricultural production that are secured by farmland. These loans are secured in whole or in part by the underlying real estate collateral and are generally guaranteed by the principals of the borrowing entity.

Secured by 1-4 family residential properties – These loans include conventional mortgage loans on one-to-four family residential properties. The properties may serve as the borrower’s primary residence, vacation home or investment property. Also included in this portfolio are home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows customers to borrow against the equity in their home.

Secured by multi-family residential properties – This portfolio segment includes mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties – This portfolio segment includes real estate loans secured by commercial and industrial properties, office or mixed-use facilities, strip shopping centers or other commercial property. These loans are generally guaranteed by the principals of the borrowing entity.

Commercial and industrial loans and leases – This portfolio segment includes loans and leases to commercial customers for use in the normal course of business. These credits may be loans, lines of credit and leases to financially strong borrowers, secured by inventories, equipment or receivables, and are generally guaranteed by the principals of the borrowing entity.

Direct consumer – This portfolio segment includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purposes and all other direct consumer installment loans.

Branch retail – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom ALC had an established relationship through its branch network to provide financing for the retail products sold if applicable underwriting standards were met. The collateral securing these loans generally includes personal property items such as furniture, ATVs and home appliances.

Indirect consumer – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom the Company has an established relationship to provide financing for the retail products sold if applicable underwriting standards are met. The collateral securing these loans generally includes recreational vehicles, campers, boats, horse trailers and cargo trailers.

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As of December 31, 2022 and 2021, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	December 31, 2022
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	54,396	$	—	$	54,396
Secured by 1-4 family residential properties		86,946		1,480		88,426
Secured by multi-family residential properties		67,917		—		67,917
Secured by non-farm, non-residential properties		199,965		—		199,965
Commercial and industrial loans (1)		73,561		—		73,561
Consumer loans:
Direct consumer		5,145		4,908		10,053
Branch retail		—		14,237		14,237
Indirect		266,567		—		266,567
Total loans		754,497		20,625		775,122
Less: Unearned interest, fees and deferred cost		799		450		1,249
Allowance for loan losses		8,057		1,365		9,422
Net loans	$	745,641	$	18,810	$	764,451

	December 31, 2021
	Bank			ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	67,048		$	—	$	67,048
Secured by 1-4 family residential properties		70,439			2,288		72,727
Secured by multi-family residential properties		46,000			—		46,000
Secured by non-farm, non-residential properties		197,901			—		197,901
Commercial and industrial loans (1)		73,947			—		73,947
Consumer loans:
Direct consumer		5,972			15,717		21,689
Branch retail		—			25,692		25,692
Indirect		205,940			—		205,940
Total loans		667,247			43,697		710,944
Less: Unearned interest, fees and deferred cost		(324	)		2,918		2,594
Allowance for loan losses		7,038			1,282		8,320
Net loans	$	660,533		$	39,497	$	700,030

(1)Includes equipment financing leases and PPP loans. As of December 31, 2022 and 2021, equipment financing leases totaled $10.3 million and $11.0 million, respectively. As of December 31, 2022 and 2021, PPP loans totaled $6 thousand and $1.7 million, respectively.

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 53.0% and 54.0%% of the portfolio was concentrated in loans secured by real estate as of December 31, 2022 and 2021, respectively.

Loans with a carrying value of $68.2 million and $66.6 million were pledged as collateral to secure FHLB borrowings as of December 31, 2022 and 2021, respectively.

Related Party Loans

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with unrelated parties. Management believes that such loans do not represent more than a normal risk of collectability, nor do they present other unfavorable features. The aggregate balances of such related party loans and commitments as of December 31, 2022 and 2021 were $0.2 million and $0.3 million, respectively. During the year ended December 31, 2022, there were no new

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loans to these parties, and repayments by active related parties were $0.1 million. During the year ended December 31, 2021, there were no new loans to these parties, and repayments by active related parties were $0.1 million.

Allowance for Loan and Lease Losses

The following tables present changes in the allowance for loan and lease losses during the years ended December 31, 2022 and 2021 and the related loan balances by loan type as of December 31, 2022 and 2021:

	As of and for the Year Ended December 31, 2022
	Construction, Land Development, and Other			1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer			Branch Retail			Indirect			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	628		$	690		$	437	$	1,958	$	860	$	1,004		$	304		$	2,439		$	8,320
Charge-offs		—			(40	)		—		—		—		(1,958	)		(633	)		(382	)		(3,013	)
Recoveries		2			39			—		5		0		565			151			45			807
Provision		(113	)		143			209		7		59		1,255			696			1,052			3,308
Ending balance	$	517		$	832		$	646	$	1,970	$	919	$	866		$	518		$	3,154		$	9,422
Ending balance of allowance    attributable to loans:
Individually evaluated for    impairment	$	—		$	7		$	—	$	—	$	252	$	—		$	—		$	—		$	259
Collectively evaluated for    impairment		517			825			646		1,970		667		866			518			3,154			9,163
Total allowance for loan and lease losses	$	517		$	832		$	646	$	1,970	$	919	$	866		$	518		$	3,154		$	9,422
Ending balance of loans    receivable:
Individually evaluated for    impairment	$	—		$	582		$	—	$	2,492	$	2,429	$	18		$	—		$	—		$	5,521
Collectively evaluated for    impairment		54,396			87,844			67,917		197,473		71,132		10,035			14,237			266,567			769,601
Total loans receivable	$	54,396		$	88,426		$	67,917	$	199,965	$	73,561	$	10,053		$	14,237		$	266,567		$	775,122

	As of and for the Year Ended December 31, 2021
	Construction, Land Development, and Other			1-4 Family			Real Estate Multi- Family			Non- Farm Non- Residential		Commercial and Industrial			Direct Consumer			Branch Retail			Indirect			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	393		$	639		$	577		$	1,566	$	1,008		$	1,202		$	373		$	1,712		$	7,470
Charge-offs		(23	)		(12	)		—			—		(6	)		(1,230	)		(377	)		(483	)		(2,131	)
Recoveries		22			14			—			5		21			626			215			68			971
Provision		236			49			(140	)		387		(163	)		406			93			1,142			2,010
Ending balance	$	628		$	690		$	437		$	1,958	$	860		$	1,004		$	304		$	2,439		$	8,320
Ending balance of allowance    attributable to loans:
Individually evaluated for    impairment	$	—		$	10		$	—		$	—	$	57		$	—		$	—		$	—		$	67
Collectively evaluated for    impairment		628			680			437			1,958		803			1,004			304			2,439			8,253
Total allowance for loan and lease losses	$	628		$	690		$	437		$	1,958	$	860		$	1,004		$	304		$	2,439		$	8,320
Ending balance of loans    receivable:
Individually evaluated for    impairment	$	—		$	646		$	—		$	1,051	$	880		$	21		$	—		$	—		$	2,598
Collectively evaluated for    impairment		67,048			72,081			46,000			196,850		73,067			21,668			25,692			205,940			708,346
Total loans receivable	$	67,048		$	72,727		$	46,000		$	197,901	$	73,947		$	21,689		$	25,692		$	205,940		$	710,944

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Credit Quality Indicators

The Company utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, construction, land, multi-family real estate, other commercial real estate, and commercial and industrial loans are graded based on pre-determined risk metrics and categorized into one of nine risk grades. These risk grades can be summarized into categories described as pass, special mention, substandard, doubtful and loss, as described in further detail below.

•Pass (Risk Grades 1-5): Loans in this category include obligations in which the probability of default is considered low.

•Special Mention (Risk Grade 6): Loans in this category exhibit potential credit weaknesses or downward trends deserving management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Although a special mention asset has a higher probability of default than pass-rated categories, its default is not imminent.

•Substandard (Risk Grade 7): Loans in this category have defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

•Doubtful (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans, with the added characteristic that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable or improbable. Serious problems exist such that partial loss of principal is likely; however, because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans’ classification as estimated losses is deferred until a more exact status may be determined. Such pending factors may include proposed merger, acquisition or liquidation procedures, capital injection, perfection of liens on additional collateral and refinancing plans. Loans classified as doubtful may include loans to borrowers that have demonstrated a history of failing to live up to agreements. The Company did not have any loans classified as Doubtful (Risk Grade 8) as of December 31, 2022 or 2021.

•Loss (Risk Grade 9): Loans are classified in this category when borrowers are deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectable and of such little value that continuance as active assets of the Company is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not prudent to defer writing off these assets, even though partial recovery may be realized in the future. The Company did not have any loans classified as Loss (Risk Grade 9) as of December 31, 2022 or 2021.

Because residential real estate and consumer loans are more uniform in nature, each loan is categorized into one of two risk grades, depending on whether the loan is considered to be performing or nonperforming. Performing loans are loans that are paying principal and interest in accordance with a contractual agreement. Nonperforming loans are loans that have demonstrated characteristics that indicate a probability of loss.

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2022:

	December 31, 2022
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	54,396		$	—		$	—		$	54,396
Secured by multi-family residential properties		67,917			—			—			67,917
Secured by non-farm, non-residential properties		196,813			651			2,501			199,965
Commercial and industrial loans		70,515			—			3,046			73,561
Total	$	389,641		$	651		$	5,547		$	395,839
As a percentage of total loans		98.43	%		0.17	%		1.40	%		100.00	%

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	December 31, 2022
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	87,302		$	1,124		$	88,426
Consumer loans:
Direct consumer		10,007			46			10,053
Branch retail		14,205			32			14,237
Indirect		266,496			71			266,567
Total	$	378,010		$	1,273		$	379,283
As a percentage of total loans		99.66	%		0.34	%		100.00	%

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2021:

	December 31, 2021
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	67,046		$	—		$	2		$	67,048
Secured by multi-family residential properties		43,472			2,528			—			46,000
Secured by non-farm, non-residential properties		189,425			7,442			1,034			197,901
Commercial and industrial loans		72,116			333			1,498			73,947
Total	$	372,059		$	10,303		$	2,534		$	384,896
As a percentage of total loans		96.66	%		2.68	%		0.66	%		100.00	%

	December 31, 2021
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	71,526		$	1,201		$	72,727
Consumer loans:
Direct consumer		20,939			750			21,689
Branch retail		25,486			206			25,692
Indirect		205,940			—			205,940
Total	$	323,891		$	2,157		$	326,048
As a percentage of total loans		99.34	%		0.66	%		100.00	%

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The following table provides an aging analysis of past due loans by class as of December 31, 2022:

	As of December 31, 2022
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	54,396		$	54,396		$	—
Secured by 1-4 family residential    properties		800			87			78			965			87,461			88,426			—
Secured by multi-family residential    properties		—			—			—			—			67,917			67,917			—
Secured by non-farm, non-residential    properties		137			—			—			137			199,828			199,965			—
Commercial and industrial loans		61			—			300			361			73,200			73,561			—
Consumer loans:
Direct consumer		250			49			30			329			9,724			10,053			—
Branch retail		257			85			32			374			13,863			14,237
Indirect		186			55			71			312			266,255			266,567			—
Total	$	1,691		$	276		$	511		$	2,478		$	772,644		$	775,122		$	—
As a percentage of total loans		0.21	%		0.04	%		0.07	%		0.32	%		99.68	%		100.00	%

The following table provides an aging analysis of past due loans by class as of December 31, 2021:

	As of December 31, 2021
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	67,048		$	67,048		$	—
Secured by 1-4 family residential    properties		349			23			20			392			72,335			72,727			—
Secured by multi-family residential    properties		—			—			—			—			46,000			46,000			—
Secured by non-farm, non-residential    properties		403			—			—			403			197,498			197,901			—
Commercial and industrial loans		54			—			234			288			73,659			73,947			—
Consumer loans:
Direct consumer		652			589			730			1,971			19,718			21,689			—
Branch retail		377			182			206			765			24,927			25,692
Indirect		43			14			—			57			205,883			205,940			—
Total	$	1,878		$	808		$	1,190		$	3,876		$	707,068		$	710,944		$	—
As a percentage of total loans		0.27	%		0.11	%		0.17	%		0.55	%		99.45	%		100.00	%

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The following table provides an analysis of non-accruing loans by class as of December 31, 2022 and 2021:

	Loans on Non-Accrual Status
	December 31, 2022		December 31, 2021
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	2
Secured by 1-4 family residential properties		914		780
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		—		—
Commercial and industrial loans		605		277
Consumer loans:
Direct consumer		29		743
Branch retail		32		206
Indirect		71		—
Total loans	$	1,651	$	2,008

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the related loan agreement. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the liquidation of the collateral at the Bank. All loans of $0.5 million or more that have a credit quality risk grade of seven or above are identified for impairment analysis. At management’s discretion, additional loans may be impaired based on homogeneous factors such as changes in the nature and volume of the portfolio, portfolio quality, adequacy of the underlying collateral value, loan concentrations, historical charge-off trends and economic conditions that may affect the borrower’s ability to pay. At ALC, all loans of $50 thousand or more that are 90 days or more past due are identified for impairment analysis. As of both December 31, 2022 and 2021, there were $0.1 million of impaired loans with no related allowance recorded at ALC. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

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As of December 31, 2022, the carrying amount of the Company’s impaired loans consisted of the following:

	December 31, 2022
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		568		568		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,076		2,076		—
Direct consumer		18		18		—
Total impaired loans with no related allowance recorded	$	5,154	$	5,154	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		14		14		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		353		353		252
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	367	$	367	$	259
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		582		582		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,429		2,429		252
Direct consumer		18		18		—
Total impaired loans	$	5,521	$	5,521	$	259

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As of December 31, 2021, the carrying amount of the Company’s impaired loans consisted of the following:

	December 31, 2021
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		630		630		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,051		1,051		—
Commercial and industrial		823		823		—
Direct consumer		21		21		—
Total impaired loans with no related allowance recorded	$	2,525	$	2,525	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		16		16		10
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		57		57		57
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	73	$	73	$	67
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		646		646		10
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,051		1,051		—
Commercial and industrial		880		880		57
Direct consumer		21		21		—
Total impaired loans	$	2,598	$	2,598	$	67

The average net investment in impaired loans and interest income recognized and received on impaired loans during the years ended December 31, 2022 and 2021 was as follows:

	Year Ended December 31, 2022
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	87	$	—	$	—
Secured by 1-4 family residential properties		614		14		6
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,529		49		48
Commercial and industrial		1,279		8		5
Direct consumer		19		1		1
Total	$	3,528	$	72	$	60

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	Year Ended December 31, 2021
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		773		31		31
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,377		140		108
Commercial and industrial		637		61		40
Direct consumer		22		9		2
Total	$	3,809	$	241	$	181

Loans on which the accrual of interest has been discontinued totaled $1.7 million and $2.0 million as of December 31, 2022 and 2021, respectively. If interest on those loans had been accrued, there would have been $60 thousand and $52 thousand of interest accrued for the years ended December 31, 2022 and 2021, respectively. Interest income related to these loans for the years ended December 31, 2022 and 2021 was $29 thousand and $30 thousand, respectively.

Troubled Debt Restructurings

Troubled debt restructurings include loans with respect to which concessions have been granted to borrowers that generally would not have otherwise been considered had the borrowers not been experiencing financial difficulty. The concessions granted may include payment schedule modifications, interest rate reductions, maturity date extensions, modifications of note structure, principal balance reductions or some combination of these concessions. There were no loans modified with concessions granted during the years ended December 31, 2022 or 2021. Restructured loans may involve loans remaining on non-accrual, moving to non-accrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Non-accrual restructured loans are included with all other non-accrual loans. In addition, all accruing restructured loans are reported as troubled debt restructurings. Generally, restructured loans remain on non-accrual until the customer has attained a sustained period of repayment performance under the modified loan terms (generally a minimum of six months). However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can meet the new terms and whether the loan should be returned to or maintained on non-accrual status. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, then the loan remains on non-accrual. As of both December 31, 2022 and 2021, the Company did not have any non-accruing loans that were previously restructured and that remained on non-accrual status. For both of the years ended December 31, 2022 and 2021, the Company had no loans that were restored to accrual status based on a sustained period of repayment performance.

The following table provides, as of December 31, 2022 and 2021, the number of loans remaining in each loan category that the Company had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

	December 31, 2022						December 31, 2021
	Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance		Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties		1		23		12		1		23		12
Secured by non-farm, non-residential properties		2		621		612		2		621		617
Commercial loans		1		71		22		1		71		31
Total		4	$	715	$	646		4	$	715	$	660

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of December 31, 2022 and 2021, no loans that previously had been modified in a troubled debt restructuring had defaulted subsequent to modification.

Restructured loan modifications primarily included maturity date extensions and payment schedule modifications. There were no modifications to principal balances of the loans that were restructured. Accordingly, there was no impact on the Company’s allowance for loan losses resulting from the modifications.

All loans with a principal balance of $0.5 million or more that have been modified in a troubled debt restructuring are considered impaired and evaluated individually for impairment. The nature and extent of impairment of restructured loans, including those that have experienced a subsequent payment default, are considered in the determination of an appropriate level of allowance for loan losses. This evaluation resulted in an allowance for loan losses attributable to such restructured loans of $6 thousand and $7 thousand as of December 31, 2022 and 2021, respectively.

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6.OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS

Other Real Estate Owned

Other real estate and certain other assets acquired in foreclosure are reported at the net realizable value of the property, less estimated costs to sell. The following table summarizes foreclosed property activity during the years ended December 31, 2022 and 2021:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)
Beginning balance	$	2,149		$	949
Additions (1)		411			1,981
Sales proceeds		(2,232	)		(1,205	)
Gross gains		386			491
Gross losses		(27	)		—
Net gains		359			491
Impairment		(1	)		(67	)
Ending balance	$	686		$	2,149

(1)Additions to other real estate owned (“OREO”) include transfers from loans, transfers from closed Bank and ALC branches, and capitalized improvements to existing OREO properties.

Valuation adjustments are recorded in other non-interest expense and are primarily post-foreclosure write-downs that are a result of continued declining property values based on updated appraisals or other indications of value, such as offers to purchase. Net realizable value less estimated costs to sell of foreclosed residential real estate held by the Company was $20 thousand and $151 thousand as of December 31, 2022 and 2021, respectively. In addition, the Company did not hold any consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of both December 31, 2022 and 2021.

Repossessed Assets

In addition to the other real estate and other assets acquired in foreclosure, the Company also acquires assets through the repossession of the underlying collateral of loans in default. The following table summarizes repossessed asset activity during the years ended December 31, 2022 and 2021:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)
Beginning balance	$	154		$	245
Transfers from loans		887			803
Sales proceeds		(506	)		(798	)
Gross gains		—			—
Gross losses		(452	)		(96	)
Net losses		(452	)		(96	)
Impairment		—			—
Ending balance	$	83		$	154

Repossessed assets are included in Other Assets in the Company’s consolidated balance sheet.

7.GOODWILL AND OTHER INTANGIBLE ASSETS

The Company recorded $7.4 million of goodwill as a result of its acquisition of The Peoples Bank (“TPB”) in 2018. Goodwill impairment was neither indicated nor recorded during the years ended December 31, 2022 or 2021.

Goodwill is tested for impairment annually, or more often if circumstances warrant. If, as a result of impairment testing, it is determined that the implied fair value of goodwill is lower than its carrying amount, impairment is indicated, and goodwill must

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be written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the consolidated financial statements. Goodwill totaled $7.4 million as of both December 31, 2022 and 2021.

Core deposit premiums are amortized over a seven-year period and are periodically evaluated, at least annually, as to the recoverability of their carrying value. Core deposit premiums of $2.0 million were recorded during 2018 as part of the TPB acquisition.

The Company’s goodwill and other intangibles (carrying basis and accumulated amortization) as of December 31, 2022 were as follows:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)			(Dollars in Thousands)
Goodwill	$	7,435		$	7,435
Core deposit intangible:
Gross carrying amount		2,048			2,048
Accumulated amortization		(1,682	)		(1,414	)
Core deposit intangible, net		366			634
Total	$	7,801		$	8,069

The Company’s estimated remaining amortization expense on intangible assets as of December 31, 2022 was as follows:

	Amortization Expense
	(Dollars in Thousands)
2023		195
2024		122
2025		49
Total	$	366

The net carrying amount of the Company’s core deposit assets is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use and eventual disposition. That assessment is based on the carrying amount of the intangible assets subject to amortization at the date on which it is tested for recoverability. Intangible assets subject to amortization are tested by the Company for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

8.PREMISES AND EQUIPMENT

Premises and equipment and applicable depreciable lives are summarized as follows:

	December 31,
	2022			2021
	(Dollars in Thousands)
Land	$	5,390		$	5,486
Premises (40 years)		24,880			25,924
Furniture, fixtures and equipment (3-7 years)		15,792			15,629
Total cost of premises and equipment		46,062			47,039
Less accumulated depreciation		(21,623	)		(21,916	)
Total premises and equipment, net	$	24,439		$	25,123

Depreciation expense of $1.6 million and $1.7 million was recorded in 2022 and 2021, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9.DEPOSITS

As of December 31, 2022, the scheduled maturities of the Company’s time deposits were as follows:

	(Dollars in Thousands)
2023	$	115,494
2024		56,104
2025		63,576
2026		13,274
2027		4,264
Total	$	252,712

Time deposits greater than $250 thousand totaled $29.5 million and $31.0 million as of December 31, 2022 and 2021, respectively. Included in deposits, the Company held brokered certificates of deposit totaling $62.5 million as of December 31, 2022 and $32.0 million as of December 31, 2021. Deposits from related parties held by the Company totaled $4.1 million and $4.2 million as of December 31, 2022 and 2021, respectively.

10.BORROWINGS

Short-Term Borrowings

Short-term borrowings may consist of federal funds purchased, securities sold under repurchase agreements, and short-term FHLB advances with original maturities of one year or less.

•Federal funds purchased, which represent unsecured lines of credit that generally mature within one to four days, are available to the Bank through arrangements with correspondent banks and the Federal Reserve. As of both December 31, 2022 and 2021, there were no federal funds purchased outstanding.

•Securities sold under repurchase agreements, which are secured borrowings, generally are reflected at the amount of cash received in connection with the transaction. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. The Bank monitors the fair value of the underlying securities on a daily basis. Securities sold under repurchase agreements as of December 31, 2022 and 2021 totaled $38 thousand and $46 thousand, respectively.

•Short-term FHLB advances are secured borrowings available to the Bank as an alternative funding source. As of December 31, 2022 and 2021, the Bank had $20.0 million and $10.0 million in outstanding FHLB advances with original maturities of less than one year, respectively.

Long-Term Borrowings

FHLB Advances

The Company may use FHLB advances with original maturities of more than one year as an alternative to funding sources with similar maturities, such as certificates of deposit or other deposit programs. These advances generally offer more attractive rates than other mid-term financing options. They are also flexible, allowing the Company to quickly obtain the necessary maturities and rates that best suit its overall asset/liability strategy. FHLB advances with an original maturity of more than one year are classified as long-term. As of both December 31, 2022 and 2021, the Company did not have any long-term FHLB advances outstanding.

Subordinated Debt

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 (the “Notes”). The Notes bear interest at a rate of 3.50% per annum for the first five years; then the interest rate will be reset quarterly to a benchmark interest rate per annum which,

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subject to certain conditions provided in the Notes, will be equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points. The Company has used and expects to continue to use the net proceeds for general corporate purposes, which may include the repurchase of the Company’s common stock, and to support organic growth plans, including the maintenance of capital ratios. Following receipt of the net proceeds of the Notes, the Company invested $5.0 million into capital surplus of the Bank. As of both December 31, 2022 and 2021, the Notes were recorded as long-term borrowings totaling $10.7 million, net of unamortized debt issuance costs.

	2022			2021
	(Dollars in Thousands)
Balance at year-end	$	10,726		$	10,653
Average balance during the year	$	10,689		$	2,682
Maximum month-end balance during the year	$	10,726		$	10,653
Average rate paid during the year, including amortization of debt issuance costs		4.20	%		4.20	%
Weighted average remaining maturity (in years)		8.75			9.75

Available Credit

As an additional funding source, the Company has available unused lines of credit with correspondent banks, the Federal Reserve and the FHLB. Certain of these funding sources are subject to underlying collateral availability. As of December 31, 2022 and 2021, the Company’s available unused lines of credit consisted of the following:

Available Unused Lines of Credit	Collateral Requirements	December 31, 2022	December 31, 2021
Correspondent banks	None	$45.0 million	$45.0 million
Federal Reserve (discount window)	Subject to collateral	$15.0 million	$15.0 million
FHLB advances (1)	Subject to collateral	$246.8 million	$237.0 million

(1)These amounts represent the total remaining credit the Company has from the FHLB, but this credit can only be utilized to the extent that underlying collateral exists. Assets pledged (including loans and investment securities) associated with FHLB advances and letters of credit totaled $68.2 million and $66.6 million as of December 31, 2022 and 2021, respectively. The Company’s collateral exposure with the FHLB in the form of advances and letters of credit was $50.0 million and $40.0 million as of December 31, 2022 and 2021, respectively, leaving an excess of collateral of $18.2 million and $26.6 million available to utilize for additional credit as of the respective dates.

11.INCOME TAXES

The consolidated provisions for income taxes for the years ended December 31, 2022 and 2021 were as follows:

	2022			2021
	(Dollars in Thousands)
Federal
Current	$	2,025		$	1,522
Deferred		(291	)		(527	)
Total federal		1,734			995
State
Current		490			154
Deferred		(76	)		126
Total state		414			280
Total	$	2,148		$	1,275

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The consolidated tax expense differed from the amount computed by applying the Company’s federal statutory income tax rate of 21.0% in 2022 and 2021 as described in the following table:

	2022			2021
	(Dollars in Thousands)
Income tax expense at federal statutory rate	$	1,892		$	1,202
Increase (decrease) resulting from:
Tax-exempt interest		(76	)		(88	)
Bank-owned life insurance		(62	)		(62	)
State income tax expense, net of federal income taxes		329			169
Other		65			54
Total	$	2,148		$	1,275

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021 are presented below:

	2022		2021
	(Dollars in Thousands)
Deferred tax assets:
Allowance for loan losses	$	2,333	$	2,065
Deferred compensation		895		947
Deferred commissions and fees		407		243
Unrealized loss on securities available-for-sale		2,715		—
Unrealized loss on cash flow hedges		—		144
Other		905		862
Total gross deferred tax assets		7,255		4,261
Deferred tax liabilities:
Premises and equipment		1,288		1,248
Core deposit intangible		91		158
Limited partnerships		94		87
Unrealized gain on securities available-for-sale		—		52
Unrealized gain on cash flow hedges		301		—
Other		341		266
Total gross deferred tax liabilities		2,115		1,811
Net deferred tax asset, included in other assets	$	5,140	$	2,450

The Company did not have any federal or state net operating loss carryforwards as of December 31, 2022 or December 31, 2021. The Company files income tax returns with the federal government and several states. The majority of its income is attributable to the states of Alabama and Tennessee. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the states in which it filed for the years ended December 31, 2014 through 2022.

As of December 31, 2022, the Company had no unrecognized tax benefits related to federal or state income tax matters and does not anticipate any material increase or decrease in unrecognized tax benefits relative to any tax positions taken prior to December 31, 2022. As of December 31, 2022, the Company had accrued no interest and no penalties related to uncertain tax positions.

12.EMPLOYEE BENEFIT PLANS

The Company sponsors a 401(k) Plan (the “401(k) Plan”). The 401(k) Plan allows participants to defer a portion of their compensation on a pre-tax basis, subject to the statutory annual contribution limit. For 2022 and 2021, the Company made “safe harbor” contributions on behalf of participants in the form of a match that was equal to 100% of each participant’s elective deferrals, up to a maximum of 4% of the participant’s eligible compensation. The 401(k) Plan also allows the Company to make discretionary matching contributions on behalf of participants equal to 2% of each participant’s elective deferrals. No discretionary match was made in 2022 or 2021. The Company’s matching contributions to the 401(k) Plan totaled $0.4 million in 2022 and 0.5 million 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Participants can elect to invest up to 20% of incoming contributions (measured at the time of investment) in the 401(k) Plan in the form of Company stock. The 401(k) Plan held 184,987 and 238,514 shares of Company stock as of December 31, 2022 and 2021, respectively. These shares are allocated to participants in the 401(k) Plan and, accordingly, are included in the earnings per share calculations.

13.DEFERRED COMPENSATION PLANS

The Company has entered into separate supplemental retirement compensation benefits agreements with certain non-employee directors and former executive officers. These agreements are structured as nonqualified retirement plans for federal income tax purposes. The Company’s obligation under these agreements is accrued as deferred compensation in accordance with the terms of the individual contracts over the required service period to the date the employee is eligible to receive benefits. The Company’s deferred compensation obligation under these agreements totaled $3.1 million and $3.2 million as of December 31, 2022 and 2021, respectively.

Non-employee directors may elect to defer payment of all or any portion of their Bancshares and Bank director fees under Bancshares’ Non-Employee Directors’ Deferred Compensation Plan (the “Deferral Plan”). The Deferral Plan permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash and/or shares of Bancshares’ common stock. Neither Bancshares nor the Bank makes any contribution to participants’ accounts under the Deferral Plan. As of December 31, 2022 and 2021, a total of 114,190 and 117,825 shares of Bancshares common stock, respectively, were deferred in connection with the Deferral Plan. All deferred fees, whether in the form of cash or shares of Bancshares common stock, are reflected as compensation expense in the period earned. The Company classifies all deferred directors’ fees allocated to be paid in shares as additional paid-in capital. The Company may use issued shares or shares of treasury stock to satisfy these obligations when due.

14.STOCK AWARDS

In accordance with the 2013 Incentive Plan, stock awards, including stock options and restricted stock, have been granted to certain employees and non-employee directors. Shares of common stock available for distribution to satisfy the grants may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. Stock-based compensation expense related to stock awards totaled $0.4 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively.

Stock Options

Stock option awards have been granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and have vesting periods ranging from one to three years, with 10-year contractual terms. The Company recognizes the cost of services received in exchange for stock option awards based on the grant date fair value of the award, with compensation expense recognized on a straight-line basis over the award’s vesting period. The fair value of outstanding awards was determined using the Black-Scholes option pricing model at the date of grant. The Company did not grant any stock option awards during the years ended December 31, 2022 and 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes the Company’s stock option activity for the periods presented.

	Year Ended
	December 31, 2022				December 31, 2021
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of year		420,250	$	9.79		421,000	$	9.79
Granted		—		—		—		—
Exercised		—		—		750		8.23
Forfeited		600		10.86		—		—
Options outstanding, end of year		419,650	$	9.79		420,250	$	9.79
Options exercisable, end of year		416,249	$	9.77		395,678	$	9.74

The aggregate intrinsic value of stock options outstanding (calculated as the amount by which the market value of underlying stock exceeds the exercise price of the option) was approximately $0.1 million as of December 31, 2022 and $0.6 million as of December 31, 2021.

Restricted Stock

During the years ended December 31, 2022 and 2021, 45,935 shares and 38,430 shares, respectively, of restricted stock were granted. Awards granted to employees had a three-year vesting period, while awards granted to non-employee directors had a one-year vesting period. The Company recognizes the cost of services received in exchange for restricted stock awards based on the grant date closing price of the stock, with compensation expense recognized on a straight-line basis over the award’s vesting period.

15.SHAREHOLDERS’ EQUITY

Dividends are paid at the discretion of the Company’s Board of Directors, based on the Company’s operating performance and financial position, including earnings, capital and liquidity. Dividends from the Bank are the Company’s primary source of funds for the payment of dividends to shareholders. In addition, federal and state regulatory agencies have the authority to prevent the Company from paying a dividend to shareholders. During the year ended December 31, 2022, the Company declared dividends totaling $0.8 million, or $0.14 per share, compared to $0.7 million, or $0.12 per share, during the year ended December 31, 2021.

Regulatory Capital

The Bank is subject to the revised capital requirements as described in the section captioned “Supervision and Regulation – Capital Adequacy” included in Part I, Item I of this report. Under these requirements, the Bank is subject to minimum risk-based capital and leverage capital requirements, which are administered by the federal bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of the Bank and Bancshares, and could impact Bancshares’ ability to pay dividends. The Bank’s minimum risk-based capital requirements include the fully implemented capital conservation buffer of 2.50%. As of both December 31, 2022 and 2021, the Bank exceeded all applicable minimum capital standards. In addition, the Bank met applicable regulatory guidelines to be considered well-capitalized as of both December 31, 2022 and 2021. To be categorized in this manner, the Bank maintained common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios as set forth in the tables below. In addition, the Bank was not subject to any written agreement, order, capital directive or prompt corrective action directive issued by its primary federal regulator to meet and maintain a specific level for any capital measures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following tables provide the Bank’s actual regulatory capital amounts and ratios under regulatory capital standards in effect (Basel III) at December 31, 2022 and 2021:

	2022
	Actual Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
	(Dollars in Thousands)
Common equity Tier 1 capital (to risk-weighted assets)	$	92,853		11.07	%		7.00	%		6.50	%
Tier 1 capital (to risk-weighted assets)		92,853		11.07	%		8.50	%		8.00	%
Total capital (to risk-weighted assets)		102,275		12.19	%		10.50	%		10.00	%
Tier 1 leverage (to average assets)		92,853		9.39	%		4.00	%		5.00	%

	2021
	Actual Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
	(Dollars in Thousands)
Common equity Tier 1 capital (to risk-weighted assets)	$	87,379		11.36	%		7.00	%		6.50	%
Tier 1 capital (to risk-weighted assets)		87,379		11.36	%		8.50	%		8.00	%
Total capital (to risk-weighted assets)		95,699		12.44	%		10.50	%		10.00	%
Tier 1 leverage (to average assets)		87,379		9.17	%		4.00	%		5.00	%

No significant conditions or events have occurred since December 31, 2022 that management believes have affected the Bank’s classification as “well-capitalized.” Because of the size of the Company’s balance sheet, there is currently no requirement for separate reporting of capital amounts and ratios for Bancshares. Accordingly, such amounts and ratios are not included.

Under the FDIC’s final rule establishing the methodology for calculating deposit insurance assessments for banks with less than $10 billion in assets, the rate is determined based on a number of factors, including the bank’s CAMELS ratings, leverage ratio, net income, non-performing loan ratios, OREO ratios, core deposit ratios, one-year organic asset growth and a loan mix index. The CAMELS rating system is a supervisory rating system developed to classify a bank’s overall condition by taking into account capital adequacy, assets, management capability, earnings, liquidity and sensitivity to market and interest rate risk. The loan mix index component of the assessment model requires banks to calculate each of their loan categories as a percentage of assets and then multiply each category by a standardized historical charge-off rate percentage provided by the FDIC, with a higher index leading to a higher assessment rate. The rule implements maximum assessment rates for institutions with a composite CAMELS rating of 1 or 2 and minimum rates for institutions with a rating of 3, 4 or 5.

Dividend Restrictions

Under Delaware law, dividends may be paid only out of “surplus,” defined as an amount equal to the present fair value of the total assets of the corporation, minus the present fair value of the total liabilities of the corporation, minus the capital of the corporation. In the event that there is no surplus, 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. Dividends may not be paid, however, out of net profits of the corporation if the capital represented by the issued and outstanding stock of all classes having a preference on the distribution of assets is impaired. Further, the Federal Reserve permits bank holding companies to pay dividends only out of current earnings and only if future retained earnings would be consistent with the company’s capital, asset quality and financial condition.

Since it has no significant independent sources of income, Bancshares’ ability to pay dividends depends on its ability to receive dividends from the Bank. Under Alabama law, a state-chartered bank must annually transfer to surplus at least 10% of its “net earnings” (defined as the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets, less all current operating expenses, actual losses, accrued dividends on preferred stock and all federal, state and local taxes) until the bank’s surplus is at least 20% of its capital. Until the bank’s surplus reaches this level, a bank may not declare a dividend in excess of 90% of its net earnings. Once a bank’s surplus equals or exceeds 20% of its capital, if the total of all dividends declared by the bank in a calendar year will exceed the sum of its net earnings for that year and its retained net earnings for the preceding two years (less any required transfers to surplus), then the bank must obtain prior written approval from the Superintendent of the Alabama State Banking Department. The bank may not pay any dividends or make any withdrawals or transfers from surplus without the prior written approval of the Superintendent. The FDIC prohibits the payment of cash dividends if (1) as a result of such payment, the bank would be undercapitalized or (2) the bank is in default with respect to any assessment due to the FDIC, including a deposit insurance assessment. These restrictions could materially influence the Bank’s, and therefore Bancshares’, ability to pay dividends.

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16.LEASES

The Bank and ALC are involved in a number of operating leases, primarily for branch locations. Branch leases have remaining lease terms ranging from two years to six years, some of which include options to extend the leases for up to five years, and some of which include an option to terminate the lease within one year. The Bank leases certain office facilities to third parties and classifies these leases as operating leases.

The following table provides a summary of the components of lease income and expense, as well as the reporting location in the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021:

		Year Ended
	Location	December 31, 2022		December 31, 2021
		(Dollars in Thousands)
Operating lease expense (1)	Net occupancy and equipment	$	434	$	999
Operating lease income (2)	Lease income	$	864	$	830

(1)Includes short-term lease costs. For the years ended December 31, 2022 and 2021, short-term lease costs were nominal in amount.

(2)Operating lease income includes rental income from owned properties.

The following table provides supplemental lease information for operating leases on the Consolidated Balance Sheet as of December 31, 2022:

	Location	December 31, 2022			December 31, 2021
		(Dollars in Thousands)			(Dollars in Thousands)
Operating lease right-of-use assets	Other assets	$	1,883		$	2,245
Operating lease liabilities	Other liabilities	$	1,961		$	2,317
Weighted-average remaining lease term (in years)			5.03			5.90
Weighted-average discount rate			3.30	%		3.29	%

The following table provides supplemental lease information for the Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021:

	Year Ended
	December 31, 2022		December 31, 2021
	(Dollars in Thousands)
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	427	$	859

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of December 31, 2022:

	Minimum Rental Payments
	(Dollars in Thousands)
2023	$	432
2024		438
2025		339
2026		346
2027		353
2028 and thereafter		238
Total future minimum lease payments	$	2,146
Less: Imputed interest		185
Total	$	1,961

17.DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments to add stability to interest income or expense and to manage its exposure to movements in interest rates. The Company does not use derivatives for trading or speculative purposes and only enters into transactions that have a qualifying hedge relationship. The Company’s hedging strategies involving interest rate derivatives are classified as either cash flow hedges or fair value hedges, depending upon the rate characteristic of the hedged item.

Cash Flow Hedges

The Bank has entered into forward interest rate swap contracts on certain variable-rate money market deposit accounts (indexed to the Federal Funds effective rate’s daily weighted average). The money market account balances are expected to exceed the notional amount for the duration of the hedges and the rates on these deposits are anticipated to move closely with changes in one-month LIBOR, or a comparable benchmark interest rate. These interest rate swaps were designated as derivative instruments in cash flow hedges with the objective of converting the floating interest payments to a fixed rate. Under the swap arrangements, the Bank pays a fixed interest rate and receives a variable interest rate based on one-month LIBOR, or a comparable benchmark interest rate, on the notional amount, with monthly net settlements.

Fair Value Hedges

The Bank has entered into forward interest rate swap contracts on fixed rate commercial real estate loans. The interest rate swaps were designated as derivative instruments in fair value hedges with the objective of effectively converting pools of fixed rate assets to variable rate throughout the hedge durations. Under the swap arrangements, the Bank pays a fixed interest rate and receives a variable interest rate based on one-month LIBOR, or a comparable benchmark interest rate, on the notional amount, with monthly net settlements. The Bank recognized no gains or losses on the fair value hedges during the years ended December 31, 2022 and 2021.

Terminated Hedges

Cash Flow Hedge Terminated in 2022

During the second quarter of 2022, the Bank terminated a forward interest rate swap contract on a variable FHLB advance that was previously designated as a cash flow hedge. The termination of the swap resulted in a net deferred gain of $0.3 million which will remain in accumulated other comprehensive income and be reclassified into earnings over the original term of the interest rate swap contract. During the year ended December 31, 2022, a gain of $70 thousand, net of income taxes, was reclassified from other comprehensive income (loss) related to the terminated contract. There were no gains or losses reclassified from other comprehensive income (loss) related to cash flow hedges for the year ended December 31, 2021.

Hedges Terminated Subsequent to December 31, 2022

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Subsequent to December 31, 2022, the Company terminated all four interest rate swap contracts that were in place as of December 31, 2022 and recorded deferred gains totaling $2.2 million associated with the terminations. The purpose of the terminations was to partially mitigate interest rate risk in downward interest rate scenarios. The deferred gains will be accreted to net interest income over the remaining life of the original term of each swap.

Presentation

The Company has elected to offset derivative fair value amounts under master netting agreements, given that all of the Company’s hedges are with the same counterparty.

The following table reflects the notional amount and fair value of derivative instruments included on the Company’s Consolidated Balance Sheets on a net basis as of December 31, 2022 and 2021.

	As of December 31, 2022				As of December 31, 2021
			Estimated Fair Value				Estimated Fair Value
	Notional Amount		Gain (Loss) (1)		Notional Amount		Gain (Loss) (1)
	(Dollars in Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to fixed rate commercial real estate loans	$	20,000	$	1,101	$	20,000	$	(198	)
Total fair value hedges				1,101				(198	)
Cash flow hedges:
Interest rate swaps related to variable-rate money market deposit accounts		20,000		1,205		20,000		(472	)
Interest rate swaps related to FHLB advances		—		—		10,000		(104	)
Total cash flow hedges				1,205				(576	)
Total hedges designated as hedging instruments, net			$	2,306			$	(774	)

(1) Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

The Company has elected the last-of-layer method with respect to both of its fair value hedges. This approach allows the Company to designate as the hedged item a stated amount of the assets that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows. Relative to the identified pools of loans, this represents the last dollar amount of the designated commercial loans, which is equivalent to the notional amounts of the derivative instruments.

The following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

Location in the Consolidated Balance Sheet in Which the Hedged	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Item is Included	December 31, 2022
	(Dollars in Thousands)
Loans and leases, net of allowance for loan and lease losses (1)	$	32,233	$	1,101

(1)These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. As of December 31, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships was $33.3 million, the cumulative basis adjustments associated with these hedging relationships were $1.1 million, and the amounts of the designated hedged items were $20 million.

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table presents the effect of hedging derivative instruments on the Company’s Consolidated Statements of Operations.

	Location in the	Year Ended December 31,
	Consolidated Statements	2022			2021
	of Operations	(Dollars in Thousands)
Interest income	Interest and fees on loans	$	75		$	(253	)
Interest expense	Interest on deposits		56			(127	)
Interest expense	Interest on short-term borrowings		(5	)		(333	)
	Net increase (decrease) to income before income taxes	$	126		$	(713	)

18.SEGMENT REPORTING

In the tables below, information is disclosed for the two reportable operating segments of Bancshares: the Bank and ALC. The reportable segments were determined using the internal management reporting system. These segments comprise Bancshares’ and the Bank’s significant subsidiaries. The accounting policies for each segment are the same as those described in Note 2, “Summary of Significant Accounting Policies.” The segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions have been eliminated to determine the consolidated balances. The parent company and FUSB Reinsurance are included in the "All Other" column. The results for the two reportable segments of the Company are included in the tables below:

	2022
	Bank		ALC		All Other			Eliminations			Consolidated
	(Dollars in Thousands)
Total interest income	$	37,510	$	4,716	$	5		$	(1,034	)	$	41,197
Total interest expense		3,803		1,029		458			(1,034	)		4,256
Net interest income		33,707		3,687		(453	)		—			36,941
Provision for loan and lease losses		1,338		1,970		—			—			3,308
Net interest income after provision		32,369		1,717		(453	)		—			33,633
Total non-interest income		3,535		204		8,091			(8,379	)		3,451
Total non-interest expense		25,278		1,751		1,238			(195	)		28,072
Income (loss) before income taxes		10,626		170		6,400			(8,184	)		9,012
Provision for income taxes		2,475		45		(372	)		—			2,148
Net income (loss)	$	8,151	$	125	$	6,772		$	(8,184	)	$	6,864
Other significant items:
Total assets	$	998,727	$	19,772	$	101,072		$	(124,904	)	$	994,667
Total investment securities		132,657		—		—			—			132,657
Total loans, net		763,941		18,810		—			(18,300	)		764,451
Goodwill and core deposit intangible, net		7,801		—		—			—			7,801
Investment in subsidiaries		—		—		93,414			(93,414	)		—
Fixed asset additions		1,262		—		—			—			1,262
Depreciation and amortization expense		1,579		35		—			—			1,614
Total interest income from external customers		36,481		4,716		—			—			41,197
Total interest income from affiliates		1,029		—		5			(1,034	)		—

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FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	2021
	Bank		ALC		All Other			Eliminations			Consolidated
	(Dollars in Thousands)
Total interest income	$	32,537	$	9,019	$	7		$	(1,642	)	$	39,921
Total interest expense		2,842		1,635		115			(1,642	)		2,950
Net interest income		29,695		7,384		(108	)		—			36,971
Provision for loan and lease losses		1,515		495		—			—			2,010
Net interest income after provision		28,180		6,889		(108	)		—			34,961
Total non-interest income		3,206		576		5,697			(5,958	)		3,521
Total non-interest expense		25,188		6,599		1,421			(452	)		32,756
Income (loss) before income taxes		6,198		866		4,168			(5,506	)		5,726
Provision for income taxes		1,305		221		(251	)		—			1,275
Net income (loss)	$	4,893	$	645	$	4,419		$	(5,506	)	$	4,451
Other significant items:
Total assets	$	961,572	$	40,924	$	106,247		$	(150,441	)	$	958,302
Total investment securities		134,238		—		81			—			134,319
Total loans, net		699,600		39,499		—			(39,069	)		700,030
Goodwill and core deposit intangible, net		8,069		—		—			—			8,069
Investment in subsidiaries		—		—		95,172			(95,172	)		—
Fixed asset additions		816		6		—			—			822
Depreciation and amortization expense		1,613		79		—			—			1,692
Total interest income from external customers		30,902		9,019		—			—			39,921
Total interest income from affiliates		1,635		—		7			(1,642	)		—

On September 3, 2021, the Company announced that, effective immediately, ALC had ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. See Note 3 for additional discussion.

19.OTHER OPERATING INCOME AND EXPENSE

Other operating income for the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Bank-owned life insurance	$	451		$	439
Credit insurance commissions and fees	$	(93	)	$	192
ATM fee income		532			577
Mortgage fees from secondary market		17			23
Wire transfer fees		52			64
Gain on sales of premises and equipment and other assets		301			19
Other income		256			286
Total	$	1,516		$	1,600

Other operating expense for the years ended December 31, 2022 and 2021 consisted of the following:

89

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Postage, stationery and supplies	$	614		$	802
Telephone/data communication		682			903
Advertising and marketing		189			167
Travel and business development		225			147
Collection and recoveries		261			168
Other services		323			322
Insurance expense		566			635
FDIC insurance and state assessments		684			726
Loss on sales of premises and equipment and other assets		69			150
Core deposit intangible amortization		268			341
Other real estate/foreclosure expense, net		(331	)		(371	)
Other expense		2,124			2,114
Total	$	5,674		$	6,104

20.GUARANTEES, COMMITMENTS AND CONTINGENCIES

The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making these commitments as it does for on-balance sheet instruments. For interest rate swap transactions and commitments to purchase or sell securities for forward delivery, the contract or notional amounts do not represent exposure to credit loss. The Bank controls the credit risk of these derivative instruments through credit approvals, limits and monitoring procedures. Certain derivative contracts have credit risk for the carrying value plus the amount to replace such contracts in the event of counterparty default. All of the Bank’s financial instruments are held for risk management and not for trading purposes. During the years ended December 31, 2022 and 2021, there were no credit losses associated with derivative contracts.

In the normal course of business, there are outstanding commitments and contingent liabilities, such as commitments to extend credit, letters of credit and other commitments, that are not included in the consolidated financial statements. The financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the financial statements. A summary of these commitments and contingent liabilities is presented below:

	December 31,
	2022		2021
	(Dollars in Thousands)
Standby letters of credit	$	—	$	—
Standby performance letters of credit	$	556	$	582
Commitments to extend credit	$	186,169	$	164,247

Standby letters of credit and standby performance letters of credit are contingent commitments issued by the Bank generally to guarantee the performance of a customer to a third party. The Bank has recourse against the customer for any amount that it is required to pay to a third party under a standby letter of credit or standby performance letter of credit. Revenues are recognized over the lives of the standby letters of credit and standby performance letters of credit. As of December 31, 2022 and 2021, the potential amounts of future payments that the Bank could be required to make under its standby letters of credit and standby performance letters of credit, which represent the Bank’s total credit risk in these categories, are included in the table above.

A commitment to extend credit is an agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon the extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

90

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company is self-insured for a significant portion of employee health benefits. However, the Company maintains stop-loss coverage with third-party insurers to limit the Company’s individual claim and total exposure related to self-insurance. The Company estimates accrued liability for the ultimate costs to settle known claims, as well as claims incurred but not yet reported, as of the balance sheet date. The Company’s recorded estimated liability for self-insurance is based on the insurance companies’ incurred loss estimates and management’s judgment, including assumptions and evaluation of factors related to the frequency and severity of claims, the Company’s claims development history and the Company’s claims settlement practices. The assessment of loss contingencies and self-insurance reserves is a highly subjective process that requires judgments about future events. Contingencies are reviewed at least quarterly to determine the adequacy of self-insurance accruals. Self-insurance accruals totaled $0.2 million as of both December 31, 2022 and 2021. The ultimate settlement of loss contingencies and self-insurance reserves may differ significantly from amounts accrued in the Company’s consolidated financial statements.

Litigation

The Company is party to certain ordinary course litigation from time to time, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

21.FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows a uniform framework for estimating and classifying the fair value of financial instruments. The assumptions used in the estimation of the fair value of the Company’s financial instruments are detailed below. The following disclosures should not be considered a representation of the liquidation value of the Company, but rather represent a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Fair Value Hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. In determining fair value, the Company uses various methods, including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair value. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

● Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange or Nasdaq. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

● Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

● Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

The Company rarely transfers assets and liabilities measured at fair value between Level 1 and Level 2 measurements. Trading account assets and securities available-for-sale may be periodically transferred to or from Level 3 valuation based on management’s conclusion regarding the best method of pricing for an individual security. Such transfers are accounted for as if they occurred at the beginning of a reporting period. There were no such transfers during the years ended December 31, 2022 or 2021.

Fair Value Measurements on a Recurring Basis

Securities Available-for-Sale

91

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include exchange-traded equities. Level 2 securities include U.S. Treasury and agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. Level 2 fair values are obtained from quoted prices of securities with similar characteristics. In certain cases, where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Interest Rate Derivative Agreements

Interest rate derivative agreements are used by the Company to mitigate risk associated with changes in interest rates. The fair value of these agreements is based on information obtained from third-party financial institutions. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party valuations. The Company classifies these derivative assets within Level 2 of the valuation hierarchy.

The following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021.

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	43,957	$	—	$	43,957	$	—
Commercial		11,693		—		11,693		—
Obligations of U.S. government-sponsored agencies		4,270		—		4,270		—
Obligations of states and political subdivisions		2,072		—		2,072		—
Corporate notes		15,921				14,921		1,000
U.S. Treasury securities		52,882		52,882		—		—
Other assets - derivatives		2,306		—		2,306		—

	Fair Value Measurements as of December 31, 2021 Using
	Totals At December 31, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	46,228	$	—	$	46,228	$	—
Commercial		24,971		—		24,971		—
Obligations of U.S. government-sponsored agencies		5,192		—		5,182		10
Obligations of states and political subdivisions		4,317		—		4,317		—
Corporate notes		15,482				15,482		—
U.S. Treasury securities		34,693		34,693		—		—
Other liabilities - derivatives		774		—		774		—

92

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Fair Value Measurements on a Non-recurring Basis

Impaired Loans

Loans that are considered impaired are loans for which, based on current information and events, it is probable that the Company will be unable to collect all principal and interest payments due under the contractual terms of the loan agreement. Impaired loans can be measured based on the present value of expected payments using the loan’s original effective rate as the discount rate, the loan’s observable market price or the fair value of the collateral less estimated selling cost if the loan is collateral-dependent. For the Company, the fair value of impaired loans is primarily measured based on the value of the collateral securing the loans (typically real estate). The Company determines the fair value of the collateral based on independent appraisals performed by qualified licensed appraisers. The appraisals may include a single valuation approach or a combination of approaches, including comparable sales and income approaches. Appraised values are discounted for estimated costs to sell and may be discounted further based on management’s knowledge of the collateral, changes in market conditions since the most recent appraisal and/or management’s knowledge of the borrower and the borrower’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Impaired loans are evaluated by management for additional impairment at least quarterly and are adjusted accordingly.

OREO and Other Assets Held-for-Sale

OREO consists of properties obtained through foreclosure or in satisfaction of loans and is recorded at net realizable value, less estimated cost to sell. 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 significant unobservable inputs for determining fair value.

As of both December 31, 2022 and 2021, included within OREO were certain assets that were formerly included as premises and equipment but have been removed from service, and as of the balance sheet date, were designated as assets to be disposed of by sale. These include assets associated with branches of the Bank and ALC that have been closed. When an asset is designated as held-for-sale, the Company ceases depreciation of the asset, and the asset is recorded at the lower of its carrying amount or fair value less estimated cost to sell. 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.

The following table presents the balances of impaired loans, OREO and other assets held-for-sale measured at fair value on a non-recurring basis as of December 31, 2022 and 2021:

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	108	$	—	$	—	$	108
OREO and other assets held-for-sale		686		—		—		686

	Fair Value Measurements as of December 31, 2021 Using
	Totals At December 31, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	6	$	—	$	—	$	6
OREO and other assets held-for-sale		2,149		—		—		2,149

93

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Non-recurring Fair Value Measurements Using Significant Unobservable Inputs

The following table presents information regarding assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of December 31, 2022. The table includes the valuation techniques and the significant unobservable inputs utilized. The range of each unobservable input and the weighted average within the range utilized as of December 31, 2022 are both included. Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value December 31, 2022		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Impaired loans	$	108	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9%-10%	(9.5)%
OREO and other assets held-for-sale	$	686	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9%-10%	(9.5)%

Impaired loans

Impaired loans are valued based on multiple data points indicating the fair value for each loan. The primary data point is the appraisal value of the underlying collateral, to which a discount is applied. Management establishes this discount or comparability adjustment based on recent sales of similar property types. As liquidity in the market increases or decreases, the comparability adjustment and the resulting asset valuation are impacted.

OREO

OREO under a binding contract for sale is valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Other Assets Held-for-Sale

Assets designated as held-for-sale that are under a binding contract are valued based on the contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

94

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash, due from banks and federal funds sold: The carrying amount of cash, due from banks and federal funds sold approximates fair value.

Federal Home Loan Bank stock: Based on the redemption provision of the FHLB, the stock has no quoted market value and is carried at cost.

Investment securities: Fair values of investment securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments.

Derivative instruments: The fair value of derivative instruments is based on information obtained from a third-party financial institution. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party information.

Accrued interest receivable and payable: The carrying amount of accrued interest approximates fair value.

Loans, net: The fair value of loans is estimated on an exit price basis incorporating contractual cash flow, prepayment discount spreads, credit loss and liquidity premiums.

Demand and savings deposits: The fair values of demand deposits are equal to the carrying value of such deposits. Demand deposits include non-interest-bearing demand deposits, savings accounts, NOW accounts and money market demand accounts.

Time deposits: The fair values of relatively short-term time deposits are equal to their carrying values. Discounted cash flows are used to value long-term time deposits. The discount rate used is based on interest rates currently offered by the Company on comparable deposits as to amount and term.

Short-term borrowings: These borrowings may consist of federal funds purchased, securities sold under agreements to repurchase and the floating rate borrowings from the FHLB account. Due to the short-term nature of these borrowings, fair values approximate carrying values.

Long-term borrowings: The fair value of this debt is estimated using discounted cash flows based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements as of the determination date.

Off-balance sheet instruments: The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance sheet financial instruments is based on fees currently charged to enter into such agreements.

95

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of December 31, 2022 and 2021 were as follows:

	December 31, 2022
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	30,152	$	30,152	$	30,152	$	—	$	—
Investment securities available-for-sale		130,795		130,795		52,882		76,913		1,000
Investment securities held-to-maturity		1,862		1,769		—		1,769		—
Federal funds sold		1,768		1,768		—		1,768		—
Federal Home Loan Bank stock		1,359		1,359		—		—		1,359
Loans, net of allowance for loan losses		764,451		730,961		—		—		730,961
Liabilities:
Deposits		870,025		788,161		—		788,161		—
Short-term borrowings		20,038		20,038		—		20,038		—
Long-term borrowings		10,726		9,702				9,702
Other assets - derivatives		2,306		2,306		—		2,306		—

	December 31, 2021
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	61,244	$	61,244	$	61,244	$	—	$	—
Investment securities available-for-sale		130,883		130,883		34,612		96,260		11
Investment securities held-to-maturity		3,436		3,477		—		3,477		—
Federal funds sold		82		82		—		82		—
Federal Home Loan Bank stock		870		870		—		—		870
Loans, net of allowance for loan losses		700,030		694,744		—		—		694,744
Liabilities:
Deposits		838,126		837,439		—		837,439		—
Short-term borrowings		10,046		10,046		—		10,046		—
Long-term borrowings		10,653		10,804				10,804
Other liabilities - derivatives		774		774		—		774		—

22.FIRST US BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION

Balance Sheets

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands)
Assets:
Cash on deposit	$	2,855	$	5,890
Investment in subsidiaries		93,414		95,172
Other assets		78		83
Total assets	$	96,347	$	101,145
Liabilities:
Other liabilities	$	485	$	428
Long-term borrowings		10,726		10,653
Shareholders’ equity		85,136		90,064
Total liabilities and shareholders’ equity	$	96,347	$	101,145

96

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Statements of Operations

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands)
Income:
Dividend income, First US Bank	$	3,463	$	1,570
Total income		3,463		1,570
Expense		1,320		1,055
Gain before equity in undistributed income of subsidiaries		2,143		515
Equity in undistributed income of subsidiaries		4,721		3,936
Net income	$	6,864	$	4,451

Statements of Cash Flows

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Cash flows from operating activities:
Net income	$	6,864		$	4,451
Adjustments to reconcile net income to net cash provided    by operating activities:
Distributions in excess of undistributed income    of subsidiaries		(4,721	)		(3,936	)
Change in other assets and liabilities		135			580
Net cash provided by operating activities		2,278			1,095
Cash flows from investing activities:
Investment in subsidiaries		-			(5,000	)
Net cash used in investing activities		—			(5,000	)
Cash flows from financing activities:
Net proceeds from long-term borrowings		-			10,653
Net share-based compensation transactions		-			(7	)
Dividends paid		(832	)		(745	)
Treasury stock repurchases		(4,481	)		(525	)
Net cash provided by (used in) in financing activities		(5,313	)		9,376
Net increase (decrease) in cash		(3,035	)		5,471
Cash at beginning of year		5,890			419
Cash at end of year	$	2,855		$	5,890

97

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

23.QUARTERLY DATA (UNAUDITED)

	Year Ended December 31,
	2022								2021
	Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter		First Quarter
	(Dollars in Thousands)
Interest income	$	11,621	$	10,670	$	9,525	$	9,381	$	9,987	$	10,030	$	10,059	$	9,845
Interest expense		1,730		1,155		699		672		727		695		747		781
Net interest income		9,891		9,515		8,826		8,709		9,260		9,335		9,312		9,064
Provision for loan and lease losses		527		1,165		895		721		493		618		498		401
Net interest income after provision    for loan and lease losses		9,364		8,350		7,931		7,988		8,767		8,717		8,814		8,663
Non-interest:
Income		678		1,088		856		829		865		896		809		951
Expense		7,106		7,032		6,878		7,056		7,414		8,547		8,399		8,396
Income before income taxes		2,936		2,406		1,909		1,761		2,218		1,066		1,224		1,218
Provision for income taxes		708		546		494		400		507		229		271		268
Net income after taxes	$	2,228	$	1,860	$	1,415	$	1,361	$	1,711	$	837	$	953	$	950
Earnings per common share:
Basic earnings	$	0.37	$	0.31	$	0.23	$	0.22	$	0.27	$	0.13	$	0.15	$	0.15
Diluted earnings	$	0.35	$	0.29	$	0.22	$	0.20	$	0.25	$	0.13	$	0.14	$	0.14

98

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting

Bancshares maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in Bancshares’ Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to Bancshares’ management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Bancshares’ management carried out an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Bancshares’ disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) as of December 31, 2022, pursuant to the evaluation of these controls and procedures required by Rule 13a-15 of the Exchange Act. Based on that evaluation, Bancshares’ management concluded, as of December 31, 2022, that Bancshares’ disclosure controls and procedures are effective at the reasonable assurance level to ensure that the information required to be disclosed in Bancshares’ periodic filings with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified.

There were no changes in Bancshares’ internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, Bancshares’ internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

This report is included in Item 8 beginning on page 47 and is incorporated herein by reference.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

99

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Bancshares has adopted a Code of Business Conduct and Ethics for directors, officers (including its Chief Executive Officer and Chief Financial Officer) and employees. This Code of Business Conduct and Ethics can be found on our website at http://www.fusb.com under the tabs “Investors – Governance – FUSB Policies.” Bancshares will provide any interested person a copy of the Code of Business Conduct and Ethics free of charge, upon written request to First US Bancshares, Inc., Attention: Beverly J. Dozier, Corporate Secretary, 131 West Front Street, Post Office Box 249, Thomasville, Alabama 36784.

Other information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Bancshares’ definitive proxy statement for the 2023 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

Item 11. Executive Compensation.

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Bancshares’ definitive proxy statement for the 2023 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Securities Authorized for Issuance under Equity Compensation Plans

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Bancshares’ definitive proxy statement for the 2023 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Bancshares’ definitive proxy statement for the 2023 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

Item 14. Principal Accountant Fees and Services.

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Bancshares’ definitive proxy statement for the 2023 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)Documents filed as part of this report

(1)Financial Statements.

The consolidated financial statements of Bancshares and its subsidiaries, included herein in Item 8, are as follows:

•Management’s Annual Report on Internal Control over Financial Reporting;

•Report of Independent Registered Public Accounting Firm – Carr, Riggs & Ingram, LLC (PCAOB ID 213);

•Consolidated Balance Sheets – December 31, 2022 and 2021;

•Consolidated Statements of Operations – Years Ended December 31, 2022 and 2021;

•Consolidated Statements of Changes in Shareholders’ Equity – Years Ended December 31, 2022 and 2021;

•Consolidated Statements of Comprehensive (Loss) Income – Years Ended December 31, 2022 and 2021;

•Consolidated Statements of Cash Flows – Years Ended December 31, 2022 and 2021; and

•Notes to Consolidated Financial Statements – Years Ended December 31, 2022 and 2021.

(2)Financial Statement Schedules.

The financial statement schedules required to be included pursuant to this Item are not included herein because they are not applicable, or the required information is shown in the financial statements or notes thereto, which are incorporated by reference at subsection (a)(1) of this Item, above.

(3)Exhibits.

The exhibits to this report are listed in the exhibit index below.

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(b)Description of Exhibits

The following exhibits are filed with this report or incorporated by reference.

Exhibit No.	Description
2.1#	Stock Purchase and Affiliate Merger Agreement, dated April 16, 2018, by and among First US Bancshares, Inc., First US Bank, The Peoples Bank, Tracy E. Thompson and Tyler S. Thompson, and Tracy E. Thompson as shareholder representative (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 000-14549), filed on April 17, 2018)
3.1	Certificate of Incorporation of United Security Bancshares, Inc. (incorporated by reference to Exhibit 3(i) to the Quarterly Report on Form 10-Q (File No. 000-14549), filed on November 12, 1999)
3.1A	Certificate of Amendment to the Certificate of Incorporation of United Security Bancshares, Inc., effective as of October 11, 2016 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-14549), filed on October 11, 2016)
3.2	Bylaws of First US Bancshares, Inc., effective as of November 16, 2022 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-14549), filed on November 16, 2022)
4.1	Description of Registrant’s Securities Registered Pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 18, 2020)
10.1	Amended and Restated Executive Employment Agreement, dated December 19, 2013 (effective as of January 1, 2014), by and among United Security Bancshares, Inc., First United Security Bank and James F. House (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-14549), filed on December 19, 2013)*
10.2	Amended and Restated Change in Control Agreement dated March 1, 2022, by and among First US Bancshares, Inc., First US Bank and Thomas S. Elley (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K (File No. 000-14549), filed on March 4, 2022)*
10.3	Second Amended and Restated Change in Control Agreement dated March 1, 2022, by and among First US Bancshares, Inc., First US Bank, and William C. Mitchell (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 000-14549), filed on March 4, 2022)*
10.4	Change in Control Agreement dated May 20, 2014, by and among United Security Bancshares, Inc., First United Security Bank and Beverly J. Dozier (incorporated by reference to Exhibit 10.5 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 11, 2016)*
10.5	Amended and Restated Change in Control Agreement dated March 3, 2023, by and among First US Bancshares, Inc., First US Bank and Eric H. Mabowitz*
10.6	Form of Director Indemnification Agreement between United Security Bancshares, Inc. and its directors (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-14549), filed on October 30, 2009)*
10.7	First US Bancshares, Inc. 2013 Incentive Plan, as amended on May 2, 2019 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 000-14549), filed on May 10, 2019)*
10.8	Form of Nonqualified Stock Option Agreement (Employees – Three-Year Vesting – 2016 Grants) (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 11, 2016)*
10.9	Form of Nonqualified Stock Option Agreement (Employees – Three-Year Vesting – 2017, 2018 and 2019 Grants) (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 15, 2018)*
10.10	Form of Restricted Stock Award Agreement (Five-Year Vesting) under the United Security Bancshares, Inc. 2013 Incentive Plan (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 15, 2017)*
10.11	Form of Nonqualified Stock Option Agreement (Employees – Three-Year Vesting) (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 18, 2020)*
10.12	Form of Restricted Stock Award Agreement (Employees – Three-Year Vesting) (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 18, 2020)*

102

10.13	Form of Restricted Stock Award Agreement (Non-Employee Directors – One-Year Vesting) (incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 18, 2020)*
10.14	First United Security Bank Director Retirement Agreement dated October 17, 2002, with John C. Gordon (incorporated by reference to Exhibit 10.10 to the Quarterly Report on Form 10-Q (File No. 000-14549), filed on November 14, 2002)*
10.14A	First Amendment to the First United Security Bank Director Retirement Agreement for John C. Gordon, dated November 20, 2008 (incorporated by reference to Exhibit 10.13A to the Annual Report on Form 10-K (File No. 000-14549), filed on March 16, 2009)*
10.14B	Second Amendment to the First United Security Bank Director Retirement Agreement for John C. Gordon, dated January 25, 2017 (incorporated by reference to Exhibit 10.15B to the Annual Report on Form 10-K (File No. 000-14549), filed on March 15, 2017)*
10.15	First United Security Bank Director Retirement Agreement dated October 16, 2002, with William G. Harrison (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 21, 2003)*
10.15A	First Amendment to the First United Security Bank Director Retirement Agreement for William G. Harrison, dated November 20, 2008 (incorporated by reference to Exhibit 10.14A to the Annual Report on Form 10-K (File No. 000-14549), filed on March 16, 2009)*
10.15B	Second Amendment to the First United Security Bank Director Retirement Agreement for William G. Harrison, dated January 25, 2017 (incorporated by reference to Exhibit 10.16B to the Annual Report on Form 10-K (File No. 000-14549), filed on March 15, 2017)*
10.16	First United Security Bank Director Retirement Agreement dated October 17, 2002, with Jack Meigs (incorporated by reference to Exhibit 10.13 to the Quarterly Report on Form 10-Q (File No. 000-14549), filed on November 14, 2002)*
10.16A	First Amendment to the First United Security Bank Director Retirement Agreement for Jack Meigs, dated November 20, 2008 (incorporated by reference to Exhibit 10.16A to the Annual Report on Form 10-K (File No. 000-14549), filed on March 16, 2009)*
10.16B	Second Amendment to the First United Security Bank Director Retirement Agreement for Jack Meigs, dated January 25, 2017 (incorporated by reference to Exhibit 10.17B to the Annual Report on Form 10-K (File No. 000-14549), filed on March 15, 2017)*
10.17	First United Security Bank Director Retirement Agreement dated October 17, 2002, with Bruce N. Wilson (incorporated by reference to Exhibit 10.18 to the Quarterly Report on Form 10-Q (File No. 000-14549), filed on November 14, 2002)*
10.17A	First Amendment to the First United Security Bank Director Retirement Agreement for Bruce N. Wilson, dated November 20, 2008 (incorporated by reference to Exhibit 10.21A to the Annual Report on Form 10-K (File No. 000-14549), filed on March 16, 2009)*
10.17B	Second Amendment to the First United Security Bank Director Retirement Agreement for Bruce N. Wilson, dated January 25, 2017 (incorporated by reference to Exhibit 10.19B to the Annual Report on Form 10-K (File No. 000-14549), filed on March 15, 2017)*
10.18	First United Security Bank Director Retirement Agreement dated November 17, 2011, with Andrew C. Bearden, Jr. (incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 30, 2012)*
10.19	First United Security Bank Director Retirement Agreement dated November 30, 2011, with J. Lee McPhearson (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 30, 2012)*
10.20	United Security Bancshares, Inc. Non-Employee Directors’ Deferred Compensation Plan (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K (File No. 000-14549), filed on March 12, 2004)*
10.20A	Amendment One to the United Security Bancshares, Inc. Non-Employee Directors’ Deferred Compensation Plan dated December 18, 2008 (incorporated by reference to Exhibit 10.22A to the Annual Report on Form 10-K (File No. 000-14549), filed on March 16, 2009)*
10.20B	Amendment Two to the United Security Bancshares, Inc. Non-Employee Directors’ Deferred Compensation Plan dated December 30, 2010 (incorporated by reference to Exhibit 10.22B to the Annual Report on Form 10-K (File No. 000-14549), filed on March 15, 2011)*

103

10.21	First US Bancshares, Inc. 2020 Cash Incentive Program (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File. No. 000-14549), filed on March 3, 2020)*
10.22	First US Bancshares, Inc. Non-Employee Director Fee Schedule (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 000-14549), filed on August 11, 2021)*
10.23A	Real Estate Sales Agreement, dated April 20, 2015 (incorporated by reference to Exhibit 10.1A to the Current Report on Form 8-K (File No. 000-14549), filed on March 11, 2016)
10.23B	First Amendment to Real Estate Sales Agreement, dated May 26, 2015 (incorporated by reference to Exhibit 10.1B to the Current Report on Form 8-K (File No. 000-14549), filed on March 11, 2016)
10.23C	Second Amendment to Real Estate Sales Agreement, dated August 25, 2015 (incorporated by reference to Exhibit 10.1C to the Current Report on Form 8-K (File No. 000-14549), filed on March 11, 2016)
10.23D	Third Amendment to Real Estate Sales Agreement, dated September 17, 2015 (incorporated by reference to Exhibit 10.1D to the Current Report on Form 8-K (File No. 000-14549), filed on March 11, 2016)
10.23E	Fourth Amendment to Real Estate Sales Agreement, dated October 17, 2015 (incorporated by reference to Exhibit 10.1E to the Current Report on Form 8-K (File No. 000-14549), filed on March 11, 2016)
10.24	2021 Cash Incentive Program (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-14549), filed on February 26, 2021)*
10.25	Form of Subordinated Note Purchase Agreement, dated October 1, 2021, by and among First US Bancshares, Inc. and the Purchasers (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-14549), filed on October 4, 2021)
10.26	2022 Cash Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-14549), filed on January 26, 2022)*
10.27	2023 Cash Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-14549), filed on January 25, 2023)*
21	Subsidiaries of First US Bancshares, Inc.
23	Consent of Carr, Riggs & Ingram, LLC
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as amended
32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from the Company’s Form 10-K Report for the year ended December 31, 2022, formatted in Inline XBRL: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Changes in Shareholders' Equity; (v) the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

# Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. First US Bancshares, Inc. agrees to furnish a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

* Indicates a management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary.

Bancshares has elected not to provide a summary of the information contained in this report at this time.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 10th day of March, 2023.

FIRST US BANCSHARES, INC.
By:	/s/ James F. House
	James F. House
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ James F. House	President, Chief Executive Officer and Director	March 10, 2023
James F. House	(Principal Executive Officer)
/s/ Thomas S. Elley	Senior Executive Vice President, Treasurer, Assistant Secretary, Chief Financial Officer and Principal Accounting Officer	March 10, 2023
Thomas S. Elley	(Principal Financial Officer and Principal Accounting Officer)
/s/ Robert Stephen Briggs	Director	March 10, 2023
Robert Stephen Briggs
/s/ Sheri S. Cook	Director	March 10, 2023
Sheri S. Cook
/s/ John C. Gordon	Director	March 10, 2023
John C. Gordon
/s/ David P. Hale	Director	March 10, 2023
David P. Hale
/s/ Marlene M. McCain	Director	March 10, 2023
Marlene M. McCain
/s/ J. Lee McPhearson	Director	March 10, 2023
J. Lee McPhearson
/s/ Jack W. Meigs	Director	March 10, 2023
Jack W. Meigs
/s/ Aubrey S. Miller	Director	March 10, 2023
Aubrey S. Miller
/s/ Donna D. Smith	Director	March 10, 2023
Donna D. Smith
/s/ Bruce N. Wilson	Director	March 10, 2023
Bruce N. Wilson

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EX-10

EXHIBIT 10.5

AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

(First US Bancshares, Inc. and First US Bank)

THIS AGREEMENT (this “Agreement”) is made as of the 3rd day of March, 2023 (the “Effective Date”), by and between Eric H. Mabowitz (the “Employee”); First US Bank, an Alabama banking corporation (the “Bank”); and First US Bancshares, Inc., a Delaware corporation (“FUSB”; together with the Bank, the “Company”).

WHEREAS, as of the Effective Date, the Employee serves as Senior Executive Vice President, Chief Risk Officer, Chief Compliance Officer, and CRA Officer of the Bank, which is a wholly-owned subsidiary of FUSB.

WHEREAS, the Company desires to provide certain compensation to the Employee in the event of a Change in Control.

WHEREAS, the Company and the Employee are parties to that certain Change in Control Agreement effective as of May 20, 2014 (as previously amended, the “Existing Agreement”), and the parties desire to amend, restate and replace the Existing Agreement in its entirety as of the Effective Date on the terms and conditions set forth in this Agreement.

WHEREAS, capitalized terms used in this Agreement that are not otherwise defined herein have the meanings assigned in Section 19 below.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Severance Benefits Upon Termination of Employment.

(a) Payments and Benefits. If, during the Term, the Employee either (1) experiences an involuntary Termination of Employment by the Company without Cause during the Post-Change in Control Period, or (2) voluntarily resigns effecting a Termination of Employment for Good Reason during the Post-Change in Control Period, or (3) voluntarily resigns effecting a Termination of Employment without Good Reason during the Post-Change in Control Window Period (each, a “Qualifying Termination of Employment”), then the Employee will be entitled to:

(i)a one-time lump sum payment in an amount equal to two hundred percent (200%) of the sum of (A) Base Salary plus (B) Target Bonus (the “Severance Benefit”); provided, however, that if the Qualifying Termination of Employment occurs pursuant to Section 1(a)(3) during the Post-Change in Control Window Period, then the percentage in this Section 1(a)(i) shall be one hundred percent (100%) rather than two hundred percent (200%). Subject to Section 15, the Severance Benefit shall be paid with the Company’s first regular payroll following the 60-day anniversary of the Qualifying Termination of Employment;

(ii)any Base Salarythat is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividingBase Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed, all as

of the effective date of the Termination of Employment and payable with the Company’s first regular payroll following the Qualifying Termination of Employment;

(iii)a prorated annual bonus equal to the product of (A) the Target Bonus and (B) a fraction, the numerator of which is the number of days the Employee was employed by the Company during the calendar year in which the Qualifying Termination of Employment occurs and the denominator of which is the total number of days in such calendar year (a “Pro-Rata Bonus”). Subject to Section 15, the Employee’s Pro Rata Bonus shall be paid with the Company’s first regular payroll following the 60-day anniversary of the Qualifying Termination of Employment;

(iv)if the Employee continues to participate in the Company’s group medical plan by electing COBRA health continuation coverage, the Company shall reimburse (on an after-tax basis) any premiums paid by the Employee for such coverage (including for the Employee’s eligible dependents) during the period beginning on the date of the Termination of Employment and ending on the expiration of the COBRA health continuation coverage period under the Company’s group health plan (“Benefit Continuation”); provided, however, that the Company’s obligation to reimburse such COBRA payments will immediately cease if the Employee becomes eligible for any health benefits pursuant to the Medicare program or a subsequent employer’s plan, or as otherwise permitted or required under COBRA regulations; and

(v)any rights and benefits (if any) expressly provided to the Employee under plans and programs of the Company upon termination of employment, determined in accordance with the applicable terms and provisions of such plans and programs.

(b) Release Condition. Notwithstanding any other provision of this Agreement to the contrary, as a condition of the Company’s payment of the Severance Benefit, the Pro-Rata Bonus, and the Benefit Continuation, the Employee must (i) execute a general release agreement in favor of the Company and its affiliates in such form as is acceptable to the Company within the 60-day period following the Qualifying Termination of Employment (but prior to the payment of the Severance Benefit) and (ii) not timely revoke the general release agreement during any revocation period ending prior to the 60-day period pursuant to the terms of the general release agreement. If the Employee fails to satisfy the release condition set forth in this Section 1(b), the Employee shall be required to repay the Company, in cash, within five (5) business days after written demand made therefor by the Company, an amount equal to the Severance Benefit, Pro-Rata Bonus, and Benefit Continuation previously received by the Employee.

(c) Section 280G Golden Parachute. If, in the good faith determination of the Company’s independent certified public accountants (the “Accountants”), the Employee may be obligated to satisfy taxes (“Excise Taxes”) under Sections 280G and/or 4999 of the Code with respect to the Severance Benefit, the Pro-Rata Bonus, the Benefit Continuation and/or any other payments or benefits to the Employee in the nature of compensation that are contingent on a change in ownership or effective control of FUSB or the Bank or in the ownership of a substantial portion of the assets of FUSB or the Bank (the “Aggregate Severance”), then the Aggregate Severance shall be either (i) provided in full pursuant to the terms of this Agreement and any other applicable agreement, or (ii) provided as to such lesser extent which would result in no portion of such Aggregate Severance being subject to the Excise Taxes (“Reduced Amount”), whichever of the foregoing amounts, taking into account the applicable federal, state, local and foreign income, employment and other taxes and the Excise Taxes (including, without limitation, any interest or penalties on such taxes), results in the receipt by the Employee, on an after-tax basis, of the greatest amount of payments and benefits provided for hereunder or otherwise, notwithstanding that all or some portion of

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such Aggregate Severance may be subject to the Excise Taxes. Any determination required under this Section 1(c) shall be made by the Accountants, whose determination shall be conclusive and binding upon the Employee and the Company for all purposes. If Section 1(c)(ii) above applies, then the Accountants shall determine (consistent with the requirements of Section 409A) which and how much of the Aggregate Severance (including the accelerated vesting of equity compensation awards) to be otherwise received by the Employee shall be eliminated or reduced to achieve the Reduced Amount. The Company shall bear all costs that the Accountants may reasonably incur in connection with any calculations contemplated by this Section 1(c). Neither the Company, the Employee, nor the Accountants will have any liability to each other for actions taken in compliance with the provisions of this Section 1(c).

2. No Mitigation. Except as provided in Section 1(a)(iv), no amounts or benefits payable to the Employee hereunder shall be subject to mitigation or reduction by income or benefits that the Employee receives from other sources.

3. Taxes. All amounts payable and benefits provided hereunder shall be subject to any and all applicable taxes, as required by applicable federal, state, local and foreign laws and regulations. The Company may withhold such taxes in accordance with customary payroll practices. Notwithstanding any other provision in this Agreement to the contrary, the Employee, and not the Company, shall be solely responsible for the payment when and as due of any and all taxes in connection with payments and benefits provided to the Employee by the Company, including without limitation all income taxes and any excise taxes that may be due, and no taxes shall be subject to payment or reimbursement by the Company.

4. Restrictive Covenants.

(a) Unauthorized Disclosure. During the period of the Employee’s employment with the Company and for 3 years following any Termination of Employment, without the prior written consent of the Company, except to the extent required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency, in which event, the Employee shall use the Employee’s best efforts to consult with the Company prior to responding to any such order or subpoena, and except as required in performance of the Employee’s duties hereunder, the Employee shall not use for the benefit of, or disclose to, any Person other than the Company any documents or information, whether written or not, that come into his possession or knowledge during his course of employment with the Company, including without limitation the identity, borrowing arrangements, financial and business conditions and goals and operations of customers of the Company and the Company’s business methods, business records, documentation, sales, services and techniques (collectively, “Confidential Information”), unless such Confidential Information has been previously disclosed to the public generally or is in the public domain, in each case, other than by reason of the Employee’s breach of this Section 4(a).

(b) Non-Competition. During the Non-Compete Period, the Employee shall not (other than on behalf of the Company), directly or indirectly, by or through any Person in any capacity (whether as a principal, employee, consultant, agent, lender, member, organizer or shareholder), (i) carry on or engage in the business of banking or any similar business (including without limitation any business that involves managing banks, accepting deposits and/or making, brokering, servicing or originating loans) in any County in the State of Alabama in which the Bank or any of its subsidiaries has an office or branch at such time (the “Territory”) or (ii) perform services for any bank, bank holding company, bank or bank holding company in organization, corporation or other Person that has a branch or office in, or conducts any banking or similar business in, the Territory. For the sake of clarity, following a Termination of Employment the restrictive covenants in this Section 4(b) shall only apply under the circumstances described herein and shall not apply, for example, following any Termination of Employment that occurs before or after the Post-Change in Control Period or following a Termination of Employment at any time either (x) by the Company

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with Cause or (y) by the Employee without Good Reason (unless such Termination of Employment without Good Reason occurs during the Post-Change in Control Window Period).

(c) Non-Solicitation. During the Restriction Period, the Employee shall not (other than on behalf of the Company), directly or indirectly, for the Employee’s own account or for the account of any other Person (i) solicit, represent in any capacity (or otherwise be involved in any way), accept or transact any business with or from any Customers or prospective Customers that were Customers or prospective Customers at any time during the period within 3 years prior to the Termination of Employment, (ii) take any action reasonably likely to damage the business or prospects of the Company, including without limitation inducing or attempting to induce or encourage any of such Customers or prospective Customers to withdraw or fail to renew any business with, or otherwise curtail, cancel or divert any business away from, the Company, or (iii) solicit or hire (as an employee, independent contractor, consultant or otherwise) any person, or solicit or facilitate the employment (as an employee, independent contractor, consultant or otherwise) of any such person by another entity or person, who is employed or retained by the Company or who was employed or retained by the Company at any time during the period within 12 months prior to the Termination of Employment.

(d) Return of Documents. Upon the Termination of Employment, the Employee shall deliver to the Company (i) all property of the Company or any of its affiliates then in the Employee’s possession and (ii) all documents and data of any nature and in whatever medium of the Company or any of its affiliates, and the Employee shall not take with the Employee any such property, documents or data or any reproduction thereof, or any documents containing or pertaining to any Confidential Information.

(e) Non-Disparagement. The Employee will not, at any time during the Restriction Period, disparage the Bank or FUSB or any of their respective current, former or future directors, officers, management personnel or representatives. The Employee and the Company hereby knowingly and expressly disclaim the applicability of the Alabama Non-Disparagement Obligations Act (Ala. Code § 8-1-220, et seq.) without conceding its applicability to this Agreement. Nothing in this Section 4(e) or otherwise in this Agreement prevents the Employee from complying with any applicable laws, providing truthful information in response to a lawful subpoena issued by a court of competent jurisdiction, or providing truthful information in cooperation with an investigation by a governmental agency.

(f) Tolling. If the Employee violates any of the provisions of Section 4(b) or (c) above, the period during which the covenants set forth therein shall apply shall be extended one day for each day in which a violation of such covenants occurs. The purpose of this provision is to prevent the Employee from profiting from his own wrong if he violates such covenants.

(g) Acknowledgements. The Employee acknowledges and agrees that he has and will have a prominent role in the development of the goodwill of the Company and its affiliates, and has and will establish and develop relations and contacts with the principal business relationships of the Company and its affiliates in the State of Alabama and beyond, all of which constitute valuable goodwill of, and could be used by the Employee to compete unfairly with, the Company and its affiliates and that (i) in the course of the Employee’s employment, the Employee will obtain confidential and proprietary information and trade secrets concerning the business and operations of the Company and its affiliates that could be used to compete unfairly with the Company and its affiliates; (ii) the covenants and restrictions contained in this Section 4 are intended to protect the legitimate interests of the Company and its affiliates and their respective goodwill, trade secrets and other confidential and proprietary information; (iii) the Employee desires to be bound by such covenants and restrictions; and (iv) the Employee agrees that the covenants in this Section 4 are reasonable with respect to their duration, geographical area and scope.

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(h) Remedies. The Employee acknowledges and agrees that the covenants, obligations and agreements of the Employee contained in this Section 4 relate to special, unique and extraordinary matters and that a material violation of any of the terms of such covenants, obligations or agreements will cause the Company and its affiliates irreparable injury for which adequate remedies are not available at law. Therefore, the Employee agrees that the Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) to restrain the Employee from committing any violation of such covenants, obligations or agreements. These injunctive remedies are cumulative and in addition to any other rights and remedies that the Company and its affiliates may have.

5. Terminable At Will Employment. Nothing herein shall entitle the Employee to continued employment with the Bank, FUSB or any of their respective affiliates or to continued tenure in any specific office or position. The Employee’s employment with the Bank and FUSB shall be terminable at the will of the Company, with or without Cause, subject to the terms of any other written agreement as may be in effect between the parties.

6. Assignment; Successors. This Agreement will be binding upon any successor to the Company, its assets or its business (whether as a result of the occurrence of a Change in Control or otherwise), in the same manner and to the same extent that the Company would be obligated under this Agreement if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Agreement, the Company shall require any successor to the Company to expressly and unconditionally assume this Agreement in writing and honor the obligations of the Company hereunder, in the same manner and to the same extent that the Company would be required to perform if no succession had taken place. In the event of a Change in Control, the terms “Bank,” “FUSB” and “Company” as defined herein will refer to the Company’s successor, and the Employee will not be deemed to have terminated employment hereunder until the Employee terminates employment from such successor. All payments and benefits that become due to the Employee under this Agreement will inure to the benefit of his or her heirs, assigns, designees or legal representatives; provided, however, that the Employee shall not have any right to sell, assign, transfer, pledge, anticipate or otherwise encumber, transfer, hypothecate or convey any amounts payable under this Agreement prior to the date that such amounts are paid, except that, in the case of the Employee’s death, such amounts shall be paid to the Employee’s estate or heirs, as applicable.

7. Notice. All notices, consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile with confirmation of transmission by the transmitting equipment; or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the to the Employee at the last address or facsimile number on file with the Company or, in the case of the Company, to the President of FUSB at FUSB’s principal offices.

8. Headings. Sections or other headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

9. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. All prior understandings and agreements relating to the subject matter of this Agreement, including without limitation the Existing Agreement, by and between Employee, the Bank and FUSB, are hereby expressly terminated; provided, however, that the restrictive covenants and other provisions in Section 4 of this Agreement are in addition to, and shall not supersede or terminate, any restrictive covenant contained in any other agreement between the Employee and FUSB and/or the Bank entered into on or prior to the Effective Date. In addition, any payments that otherwise may become due

- 5 –

to the Employee under any generally applicable severance plan or similar policy pursuant to which the Employee is or may become eligible for benefits, which plan or policy does not provide for payments of nonqualified deferred compensation, as contemplated by Code Section 409A, shall be reduced by the amount of the Severance Benefit that becomes payable pursuant to this Agreement.

10. Severability. If any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. The Employee and the Company agree that the covenants contained in Section 4 hereof are reasonable covenants under the circumstances, and further agree that if, in the opinion of any court of competent jurisdiction, such covenants are not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended. The parties agree that the scope of this Agreement is intended to extend to the Company the maximum protection permitted by law.

11. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial; Attorney’s Fees. This Agreement shall be governed in all respects, including as to interpretation, substantive effect and enforceability, by the internal laws of the State of Alabama, without regard to conflicts of laws provisions thereof that would require application of the laws of another jurisdiction, other than those that mandatorily apply. Each party hereby irrevocably submits to the jurisdiction of the state courts sitting in Jefferson County, Alabama, and the federal courts of the United States located in the Northern District of Alabama, solely in respect of the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated hereby. Each party hereby waives and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation and enforcement hereof, or in respect of any such transaction, that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts. Each party hereby consents to and grants any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agrees that the mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 7, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. Each party acknowledges and agrees that any controversy that may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each party hereby irrevocably and unconditionally waives any right that such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this Agreement, or the breach, termination or validity of this Agreement, or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (a) no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver; (b) each such party understands and has considered the implications of this waiver; (c) each such party makes this waiver voluntarily; and (d) each such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 11. In addition to all other amounts payable under this Agreement, the Company will pay all legal fees and expenses incurred by the Employee in connection with any dispute arising out of or relating to this Agreement or the interpretation thereof (including, without limitation, all such fees and expenses, if any, incurred in seeking to obtain or enforce any right or benefit provided by this Agreement), regardless of the outcome of such proceeding; provided, however, that the Employee will not be entitled to recover such fees and costs if the court determines that the Employee’s claim was brought in bad faith or was frivolous. Any attorneys’ fees incurred by the Employee with respect to such a dispute shall be paid by the Company in advance of the final disposition of such action or challenge, as such fees and expenses are incurred, and the Employee agrees to repay such amounts if it is ultimately determined by the court that the Employee’s claim was brought in bad faith or was frivolous.

- 6 –

12. Term. The term of this Agreement (the “Term”) shall become effective as of the Effective Date and shall remain in effect until the earliest of:

(a) the Employee’s Termination of Employment, regardless of the manner in which it was effected, prior to the effective date of a Change in Control;

(b) the conclusion of the Post-Change in Control Period, provided there has been no Qualifying Termination of Employment prior thereto;

(c) a termination pursuant to Section 13; or

(d) the date on which all amounts that may be payable to the Employee pursuant to Section 1 have been paid in connection with a Qualifying Termination of Employment.

13. Amendment. This Agreement may not be modified, amended, supplemented or terminated except by a written agreement between the Company and the Employee.

14. Survival. The provisions of Sections 2 through 19 of this Agreement shall survive the expiration of the Term or any other termination of this Agreement.

15. Section 409A. The parties intend that any amounts payable hereunder comply with or are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) (including under Treasury Regulation §§ 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exceptions under subparagraph (iii) and subparagraph (v)(D)) and other applicable provisions of Treasury Regulation §§ 1.409A-1 through A-6). Notwithstanding any provision of this Agreement to the contrary, if the Employee is a “specified employee” within the meaning of Section 409A, any amounts under this Agreement that are “deferred compensation” within the meaning of Section 409A shall not be made before the date that is six (6) months after the date of the Termination of Employment, or if earlier, his date of death. On the first business day following the expiration of the applicable Section 409A six (6) month period, all payments deferred pursuant to the preceding sentence shall be paid to the Employee in a lump sum and all remaining payments due Employee pursuant to this Agreement shall be paid as otherwise provided herein. For purposes of Section 409A, each of the payments that may be made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A. To the extent the Employee will be reimbursed for costs and expenses of in-kind benefits, except as otherwise permitted by Section 409A, (a) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit, (b) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (c) such payments shall be made on or before the last day of the taxable year following the taxable year in which the expense was incurred. This Agreement shall be administered, interpreted and construed in a manner that does not result in the imposition of additional taxes, penalties or interest under Section 409A. The Company and the Employee agree to negotiate in good faith to make amendments to this Agreement, as the parties mutually agree are necessary or desirable to avoid the imposition of taxes, penalties or interest under Section 409A. Notwithstanding the foregoing, the Company does not guarantee any particular tax effect, and the Employee shall be solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on or for the account of the Employee in connection with this Agreement (including any taxes, penalties and interest under Section 409A), and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold the Employee (or any beneficiary) harmless from any or all of such taxes, penalties or interest.

- 7 –

16. Regulatory Matters. The Company’s obligations under this Agreement are subject to the orders, rules and regulations of the federal and state banking regulators as may be in effect from time to time, including without limitation FDIC regulations governing “golden parachute payments” set forth at 12 CFR Part 359. If the Company is prevented from discharging its obligations hereunder as a result of any such orders, rules or regulations, the Company shall be released from its obligations and shall not be deemed to have breached this Agreement, to that extent. The Company shall have no obligation to petition the FDIC (and/or other regulatory agency having jurisdiction over the Company) for permission to treat any payments as “permissible golden parachute payments.”

17. Clawback. Notwithstanding any other provisions in this Agreement to the contrary (but subject to compliance with Section 409A, as applicable), any compensation paid to the Employee pursuant to this Agreement or any other agreement or arrangement with the Company that is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deduction and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company to the extent that it implements the requirements of any such law, government regulation or stock exchange listing requirement).

18. Counterparts. This Agreement may be executed by facsimile, electronically transmitted signature and/or by “PDF,” and in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

19. Definitions. For purposes of this Agreement, the following terms and conditions shall have the meanings set forth in this Section 19:

(a)“Base Salary” means the Employee’s annual basesalary in effect as of the effective date of the Termination of Employment.

(b)“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

(c)“Board” means the board of directors of FUSB.

(d)“Cause” shall be determined by the Board in the exercise of good faith and reasonable judgment and shall mean (i) failure of the Employee to perform his duties or responsibilities or to follow the lawful and reasonable direction of the Board or the Company’s senior management, as the case may be; (ii) the Employee’s material violation of the written policies or procedures of the Company or its affiliates; (iii) the Employee’s engaging in fraud, willful misconduct, dishonesty or any other knowing or willful conduct that has caused or is reasonably expected to result in material injury or reputational harm to the Company or any of its affiliates; (iv) any breach by the Employee of any fiduciary duty owed to the Company any of its affiliates; (v) the Employee’s commission of, or entering a plea of guilty or nolo contendere to, (A) a crime that constitutes a felony in the jurisdiction involved or (B) a misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (vi) any material breach by the Employee of any of his obligations under this Agreement or under any other written agreement or covenant with the Company or any of its affiliates; (vii) the Employee’s misappropriation, theft or embezzlement of funds or property; (viii) the Employee’s insubordination or gross negligence in connection with his employment or the performance of his duties; (ix) the Employee’s knowing or intentional failure or unwillingness to cooperate with any internal investigation or investigation by regulatory or law enforcement authorities, or knowing or intentional destruction or failure to preserve documents or other materials relevant to such investigation, or the knowing or intentional inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation; or (x) the Employee’s violation of federal or state banking laws or

- 8 –

suspension or removal by any federal or state banking regulator. Except in the event of a failure, violation or breach that, by its nature, cannot reasonably be expected to be cured, if a termination for Cause is based on items (i), (ii) or (vi) above, the Board shall not make any such determination without first providing the Employee with a written notice of the reason(s) that the Board believes Cause exists and giving the Employee a reasonable period within which to cure or to take substantial steps to cure or remediate the results or actions underlying or constituting Cause.

(e)For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred and be effective as of the first day that any one or more of the following conditions has been satisfied after the Effective Date:

(i) any Person (other than (A) those Persons in control of FUSB as of the Effective Date, (B) a trustee or other fiduciary holding securities under an employee benefit plan of FUSB or (C) a corporation or holding company owned directly or indirectly by the shareholders of FUSB in substantially the same proportions as their ownership of stock of FUSB) becomes the Beneficial Owner of securities of the Company representing more than 50% of the combined voting power of FUSB’s then outstanding securities; or

(ii) consummation of the sale or disposition of all or substantially all of the assets of FUSB; or

(iii) consummation of a merger, consolidation or reorganization of FUSB with or involving any other corporation, other than a merger, consolidation or reorganization that results in the voting securities of FUSB outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) greater than 50% of the combined voting power of the voting securities of FUSB (or the surviving entity, or an entity that as a result of such transaction owns FUSB or other surviving entity or all or substantially all of FUSB’s assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization.

Notwithstanding the foregoing, no Change in Control shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Employee participates in a capacity other than in the Employee’s capacity as an employee or director of FUSB, the Bank or any affiliate or as a shareholder of FUSB, and no Change in Control shall be deemed to have occurred for purposes of the transactions described in subparagraphs (i), (ii), or (iii) above unless such transaction also constitutes a “change in the ownership or effective control” of FUSB or a “change in the ownership of a substantial portion of the assets” of FUSB within the meaning of Section 409A.

(f)“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

(g)“Customers” shall include, without limitation, any and all customers, clients, depositors and borrowers of the Bank or any of its subsidiaries or affiliates.

(h)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(i)“Good Reason” means, with respect to a resignation by the Employee, any one of the following events arising after the Effective Date, but only if (i) such event occurs without the Employee’s prior written consent; (ii) such event is not cured within 30 days after the Employee gives written notice to the Company describing such event in detail and demanding cure; (iii) such cure notice is given within 90 days after the

- 9 –

Employee learns of the occurrence of such event; and (iv) the Termination Employment occurs within 10 days after the expiration of any cure right: (A) a material, adverse change in the Employee’s title, reporting relationship, authority, duties or responsibilities as they existed, in each case, immediately prior to the Post-Change in Control Period (other than temporarily while the Employee is physically or mentally incapacitated or as required by applicable law), or (B) a material decrease in the Employee’s annual base salary rate or target annual bonus opportunity as they existed, in each case, immediately prior to the Post-Change in Control Period, or (C) a material breach of this Agreement by the Company, or (D) a relocation of the Employee’s principal place of employment by more than 50 miles from the Employee’s principal place of employment immediately prior to the Post-Change in Control Period, or (E) the Company’s failure to obtain an agreement from any successor to the Company to assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform, except where such assumption occurs automatically by operation of law.

(j)“Non-Compete Period” means the period of the Employee’s employment with the Company and for 2 years following a Qualifying Termination of Employment that results in the Employee being entitled to the Severance Benefit and other rights and benefits set forth in Section 1(a) of this Agreement; provided, however, that if the Qualifying Termination of Employment occurs pursuant to Section 1(a)(3) during the Post-Change in Control Window Period, then the reference above in this definition to 2 years shall instead be 1 year.

(k)“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).

(l)“Post-Change in Control Period” means the period beginning on the effective date of a Change in Control and ending on the last day of the eighteenth (18th) calendar month immediately following the calendar month containing the effective date of such Change in Control.

(m)“Post-Change in Control Window Period” means the period beginning on the effective date of a Change in Control and ending on the last day of the sixth (6th) calendar month immediately following the calendar month containing the effective date of such Change in Control.

(n)“Restriction Period” means the period of the Employee’s employment with the Company and for 2 years following any Termination of Employment.

(o)“Target Bonus” means the Employee’s target bonus opportunity under the Company’s cash incentive program in effect for the year in which Termination of Employment occurs. If no cash incentive program is in effect for the year in which Termination of Employment occurs, then the Target Bonus shall be the highest of the five (5) most recent annual bonus amounts paid to the Employee prior to Termination of Employment.

(p)“Termination of Employment” means a termination of the Employee’s employment with the Bank, FUSB, and all affiliated companies that, together with the Bank and FUSB, constitute the “service recipient” within the meaning of Code Section 409A and the regulations thereunder, which termination constitutes a “separation from service” within the meaning of Code Section 409A.

- 10 –

IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date and year first above written.

FIRST US BANCSHARES, INC.

By: /s/ Robert Stephen Briggs

Robert Stephen Briggs

Chairperson of the Board

FIRST US BANK

By: /s/ Robert Stephen Briggs

Robert Stephen Briggs

Chairperson of the Board

EMPLOYEE:

/s/ Eric H. Mabowitz

Eric H. Mabowitz

- 11 –

EX-21

EXHIBIT 21

Subsidiaries ofFirst USBancshares, Inc.

Name of Subsidiary	State of Organization
First US Bank	Alabama
Acceptance Loan Company, Inc. (subsidiary of First US Bank)	Alabama
FUSB Reinsurance, Inc. (subsidiary of First US Bank)	Arizona

EX-23

EXHIBIT 23

CONSENT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference of our report dated March 10, 2023, relating to our audit of First US Bancshares, Inc. and subsidiaries’ (the “Company”) consolidated financial statements as of and for the year ended December 31, 2022, which appears in this Annual Report on Form 10-K, in the Company’s following Registration Statements:

●Registration Statement No. 333–111071 on Form S-3,

●Registration Statement No. 333–37995 on Form S-8,

●Registration Statement No. 333–110013 on Form S-8,

●Registration Statement No. 333–112127 on Form S-8,

●Registration Statement No. 333–189113 on Form S-8,

●Registration Statement No. 333–189767 on Form S-8,

●Registration Statement No. 333–233118 on Form S-8; and

●Registration Statement No. 333–255577 on Form S-8.

/s/ Carr, Riggs & Ingram, LLC

Atlanta, Georgia

March 10, 2023

EX-31

EXHIBIT 31.1

CERTIFICATION

I, James F. House, certify that:

1.I have reviewed this annual report on Form 10-K of First US Bancshares, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2023	By:	/s/ James F. House
		James F. House President and Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATION

I, Thomas S. Elley, certify that:

1.I have reviewed this annual report on Form 10-K of First US Bancshares, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2023	By:	/s/ Thomas S. Elley
		Thomas S. Elley Senior Executive Vice President, Treasurer, Assistant Secretary, Chief Financial Officer and Principal Accounting Officer

EX-32

EXHIBIT 32

CERTIFICATION

PURSUANT TO 18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, James F. House, President and Chief Executive Officer of First US Bancshares, Inc., and Thomas S. Elley, Senior Executive Vice President, Treasurer, Assistant Secretary, Chief Financial Officer and Principal Accounting Officer of First US Bancshares, Inc., certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of First US Bancshares, Inc. for the fiscal year ended December 31, 2022, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of First US Bancshares, Inc.

/s/ James F. House

James F. House

President and Chief Executive Officer

March 10, 2023

/s/ Thomas S. Elley

Thomas S. Elley

Senior Executive Vice President, Treasurer, Assistant Secretary, Chief

Financial Officer and Principal Accounting Officer

March 10, 2023

XML

Document And Entity Information - USD ($)

12 Months Ended

Dec. 31, 2022

Mar. 08, 2023

Jun. 30, 2022

Cover [Abstract]

Entity Registrant Name

FIRST US BANCSHARES, INC

Document Type

10-K

Trading Symbol

FUSB

Current Fiscal Year End Date

--12-31

Entity Common Stock, Shares Outstanding

5,869,391

Entity Central Index Key

0000717806

Entity Filer Category

Non-accelerated Filer

Document Period End Date

Dec. 31, 2022

Document Fiscal Year Focus

2022

Document Fiscal Period Focus

FY

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Shell Company

false

Entity Small Business

true

Entity Emerging Growth Company

false

Security Exchange Name

NASDAQ

Entity File Number

000-14549

Entity Incorporation, State or Country Code

DE

Entity Tax Identification Number

63-0843362

Entity Address, Address Line One

3291 U.S. Highway 280

Entity Address, City or Town

Birmingham

Entity Address, State or Province

AL

Entity Address, Postal Zip Code

35243

City Area Code

205

Local Phone Number

582-1200

Document Annual Report

true

Document Transition Report

false

ICFR Auditor Attestation Flag

false

Title of 12(b) Security

Common Stock, par value $0.01 per share

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Public Float

$ 60,150,607

Amendment Flag

false

Auditor Firm ID

213

Auditor Name

Carr, Riggs & Ingram, LLC

Auditor Location

Atlanta, Georgia, United States

Documents Incorporated by Reference

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the 2023 Annual Meeting of Shareholders to be held on April 27, 2023 are incorporated by reference into Part III of this Annual Report on Form 10-K.

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
ASSETS
Cash and due from banks	$ 11,844	$ 10,843
Interest-bearing deposits in banks	18,308	50,401
Total cash and cash equivalents	30,152	61,244
Federal funds sold	1,768	82
Investment securities available-for-sale, at fair value	130,795	130,883
Investment securities held-to-maturity, at amortized cost	1,862	3,436
Federal Home Loan Bank stock, at cost	1,359	870
Loans, net of allowance for loan and lease losses of $9,422 and $8,320, respectively	764,451	700,030
Premises and equipment, net of accumulated depreciation of $21,623 and $21,916, respectively	24,439	25,123
Cash surrender value of bank-owned life insurance	16,399	16,141
Accrued interest receivable	3,011	2,556
Goodwill and core deposit intangible, net	7,801	8,069
Other real estate owned	686	2,149
Other assets	11,944	7,719
Total assets	994,667	958,302
LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest-bearing	169,822	174,501
Interest-bearing	700,203	663,625
Total deposits	870,025	838,126
Accrued interest expense	607	224
Other liabilities	8,136	9,189
Short-term borrowings	20,038	10,046
Long-term borrowings	10,726	10,653
Total liabilities	909,532	868,238
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,680,856 and 7,634,918 shares issued, respectively; 5,812,258 and 6,172,378 shares outstanding, respectively	75	75
Additional paid-in capital	14,510	14,163
Accumulated other comprehensive loss, net of tax	(7,241)	(276)
Retained earnings	104,460	98,428
Less treasury stock: 1,868,598 and 1,462,540 shares at cost, respectively	(26,669)	(22,326)
Total shareholders’ equity	85,135	90,064
Total liabilities and shareholders’ equity	$ 994,667	$ 958,302

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Consolidated Balance Sheets Details (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Loans, allowance for loan losses	$ 9,422	$ 8,320
Accumulated depreciation	$ 21,623	$ 21,916
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	7,680,856	7,634,918
Common stock, shares outstanding (in shares)	5,812,258	6,172,378
Treasury stock, shares (in shares)	1,868,598	1,462,540

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Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Interest income:
Interest and fees on loans	$ 38,015	$ 38,229
Interest on investment securities	3,182	1,692
Total interest income	41,197	39,921
Interest expense:
Interest on deposits	3,382	2,669
Interest on borrowings	874	281
Total interest expense	4,256	2,950
Net interest income	36,941	36,971
Provision for loan and lease losses	3,308	2,010
Net interest income after provision for loan and lease losses	33,633	34,961
Non-interest income:
Net (loss) gain on sales and prepayments of investment securities	(83)	22
Lease income	864	830
Other income, net	1,516	1,600
Total non-interest income	3,451	3,521
Non-interest expense:
Salaries and employee benefits	16,418	19,157
Net occupancy and equipment	3,281	4,388
Computer services	1,639	1,832
Fees for professional services	1,060	1,275
Other expense	5,674	6,104
Total non-interest expense	28,072	32,756
Income before income taxes	9,012	5,726
Provision for income taxes	2,148	1,275
Net income	$ 6,864	$ 4,451
Basic net income per share	$ 1.13	$ 0.70
Diluted net income per share	1.06	0.66
Dividends per share	$ 0.14	$ 0.12
Service [Member]
Non-interest income:
Revenue from Contract with Customer, Including Assessed Tax	$ 1,154	$ 1,069

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Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 6,864	$ 4,451
Other comprehensive (loss):
Unrealized holding losses on securities available-for-sale arising during the year, net of tax benefit of $2,844 and $369, respectively	(8,534)	(1,106)
Reclassification adjustment for net losses (gains) on securities available-for-sale realized in net income, net of tax expense (benefit) of $21 and $(6), respectively	62	(16)
Unrealized holding gains on effective cash flow hedge derivatives arising during the year, net of tax expense of $480 and $298, respectively	1,437	898
Reclassification adjustment for net gains on cash flow hedge derivatives realized in net income, net of tax expense of $25 and $0, respectively	70
Other comprehensive loss	(6,965)	(224)
Total comprehensive (loss) income	$ (101)	$ 4,227

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Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Unrealized holding losses on securities available-for-sale arising during the year, tax benefit	$ (2,844)	$ (369)
Reclassification adjustment for net losses (gains) on securities available-for-sale realized in net income, tax expense (benefit)	21	(6)
Unrealized holding gains on effective cash flow hedge derivatives arising during the year, tax expense	480	298
Reclassification adjustment for net gains on cash flow hedge derivatives realized in net income, tax expense	$ 25	$ 0

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Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Treasury Stock [Member]
Beginning balance, value at Dec. 31, 2020	$ 86,678	$ 75	$ 13,786	$ (52)	$ 94,722	$ (21,853)
Balance (in shares) at Dec. 31, 2020		6,176,556
Net income	4,451				4,451
Net change in fair value of securities available-for-sale, net of tax	(1,122)			(1,122)
Net change in fair value of derivative instruments, net of tax	898			898
Dividends declared	(745)				(745)
Impact of stock-based compensation plans, net	429		436			(7)
Impact of stock-based compensation plans, net (in shares)		37,722
Reissuance of treasury stock as compensation	59		(59)			59
Reissuance of treasury stock as compensation (in shares)		3,848
Treasury stock repurchases	(525)					(525)
Treasury stock repurchases (in shares)		(45,748)
Ending balance, value at Dec. 31, 2021	90,064	$ 75	14,163	(276)	98,428	(22,326)
Balance (in shares) at Dec. 31, 2021		6,172,378
Net income	6,864				6,864
Net change in fair value of securities available-for-sale, net of tax	(8,472)			(8,472)
Net change in fair value of derivative instruments, net of tax	1,507			1,507
Dividends declared	(832)				(832)
Impact of stock-based compensation plans, net	485		485
Impact of stock-based compensation plans, net (in shares)		43,096
Reissuance of treasury stock as compensation	138		(138)			138
Reissuance of treasury stock as compensation (in shares)		9,184
Treasury stock repurchases	(4,481)					(4,481)
Treasury stock repurchases (in shares)		(412,400)
Ending balance, value at Dec. 31, 2022	$ 85,135	$ 75	$ 14,510	$ (7,241)	$ 104,460	$ (26,669)
Balance (in shares) at Dec. 31, 2022		5,812,258

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Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Dividends per share	$ 0.14	$ 0.12

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net income	$ 6,864	$ 4,451
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	1,614	1,692
Provision for loan and lease losses	3,308	2,010
Deferred income tax benefit	(367)	(401)
Net loss (gain) on sale and prepayment of investment securities	83	(22)
Cash received in settlement of derivatives contracts	324
Stock-based compensation expense	485	436
Net amortization of securities	195	338
Amortization of intangible assets	268	341
Net gain on premises and equipment and other real estate	(207)	(53)
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable	(455)	251
Decrease in other assets	333	1,137
Increase (decrease) in accrued interest expense	383	(68)
Decrease in other liabilities	(299)	(287)
Net cash provided by operating activities	12,529	9,825
Cash flows from investing activities:
Net (increase) decrease in federal funds sold	(1,686)	3
Purchases of investment securities, available-for-sale	(39,255)	(86,642)
Proceeds from sales of investment securities, available-for-sale	8,531
Proceeds from maturities and prepayments of investment securities, available-for-sale	19,250	38,975
Proceeds from maturities and prepayments of investment securities, held-to-maturity	1,563	2,957
Net (increase) decrease in Federal Home Loan Bank stock	(489)	265
Proceeds from the sale of premises and equipment and other real estate	3,084	2,061
Net increase in loans	(69,935)	(65,112)
Purchases of premises and equipment	(1,262)	(822)
Net cash used in investing activities	(80,199)	(108,315)
Cash flows from financing activities:
Net increase in customer deposits	31,899	55,914
Net increase in short-term borrowings	9,992	29
Net proceeds from long-term borrowings		10,653
Net share-based compensation transactions		(7)
Treasury stock repurchases	(4,481)	(525)
Dividends paid	(832)	(745)
Net cash provided by financing activities	36,578	65,319
Net decrease in cash and cash equivalents	(31,092)	(33,171)
Cash and cash equivalents, beginning of period	61,244	94,415
Cash and cash equivalents, end of period	$ 30,152	$ 61,244

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Description of Business

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

1.DESCRIPTION OF BUSINESS

First US Bancshares, Inc., a Delaware corporation (“Bancshares” and, together with its subsidiaries, the “Company”), is a bank holding company formed in 1983 registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Bancshares operates one banking subsidiary, First US Bank, an Alabama banking corporation (the “Bank”). Prior to its name change on October 11, 2016, Bancshares was known as United Security Bancshares, Inc. 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. The Bank operates and serves its customers through 15 full-service banking offices located in Birmingham, Butler, Calera, Centreville, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama; Knoxville and Powell, Tennessee; and Rose Hill, Virginia; as well as loan production offices in Mobile, Alabama and the Chattanooga, Tennessee area. The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals. The Bank also performs indirect lending through third-party retailers and currently conducts this lending in 12 states, including Alabama, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. During the third quarter of 2021, the Company closed four banking offices located in Bucksville, Columbiana and south Tuscaloosa, Alabama, as well as Ewing, Virginia.

The Bank has two wholly owned subsidiaries: Acceptance Loan Company, Inc., an Alabama corporation (“ALC”), and FUSB Reinsurance, Inc., an Arizona corporation (“FUSB Reinsurance”). As used herein, unless the context suggests otherwise, references to the “Company,” “we,” “us” and “our” refer to Bancshares, as well as the Bank, ALC, and FUSB Reinsurance, collectively.

The Bank owns all of the stock of ALC. ALC is a finance company headquartered in Mobile, Alabama. During the third quarter of 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. ALC continues to service its remaining portfolio of loans from its headquarters in Mobile, Alabama.

FUSB Reinsurance was designed to reinsure or “underwrite” credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. FUSB Reinsurance was responsible for the first level of risk on these policies up to a specified maximum amount, while the primary third-party insurer retained the remaining risk. While FUSB Reinsurance underwrote insurance contracts for both the Bank and ALC, in recent years, the majority of contracts were associated with ALC’s loans. Due to reduced contract volume, particularly following the cessation of business of ALC, during 2022, management of FUSB Reinsurance began procedures to terminate the entity’s activities. During 2022, FUSB Reinsurance ceased writing new insurance contracts, and reached an agreement with a third-party insurance provider to indemnify FUSB Reinsurance for all remaining liabilities associated with previously underwritten insurance policies. As of December 31, 2022, the remaining assets and liabilities of FUSB Reinsurance were transferred to the Bank, and it is anticipated that FUSB Reinsurance will be legally dissolved during 2023.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Bancshares, the Bank and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. The Company consolidates an entity if the Company has a controlling financial interest in the entity.

Use of Estimates

The accounting principles and reporting policies of the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with general practices within the financial services industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated balance sheets, and revenues and expenses for the period included in the consolidated statements of operations and of cash flows. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term relate to the accounting for the allowance for loan and lease losses, the right-of-use asset and lease liability, the value of other real estate owned (“OREO”) and certain collateral-dependent loans, consideration related to goodwill impairment testing and deferred tax asset valuation. In connection with the determination of the allowance for loan losses and OREO, management generally obtains independent appraisals for significant properties, evaluates the overall portfolio characteristics and delinquencies and monitors economic conditions.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, instruments with an original maturity of less than 90 days from issuance and amounts due from banks.

Supplemental disclosures of cash flow information and non-cash transactions related to cash flows for the years ended December 31, 2022 and 2021 are as follows:

	2022		2021
	(Dollars in Thousands)
Cash paid during the year for:
Interest	$	3,873	$	3,018
Income taxes		2,855		1,375
Non-cash transactions:
Assets acquired in settlement of loans		907		806
Transfers of closed branch assets to OREO		391		1,978
Reissuance of treasury stock as compensation		138		59

Revenue Recognition

The Company records revenue when control of the promised products or services is transferred to the customer in an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for those products and services.

Interest Income

The majority of the Company’s revenue is generated through interest earned on financial instruments, including loans and investment securities. This revenue is recognized on an accrual basis and calculated through the use of non-discretionary formulas based on written contracts including loan agreements or securities contracts. Loan origination fees are accreted into interest income over the term of the loan.

Service Charges on Deposit Accounts

Service charges on deposit accounts include non-sufficient fund fees, overdraft fees and other service charges. When a depositor presents an item for payment in excess of available funds, non-sufficient funds fees are earned when an item is returned unpaid, and overdraft fees are earned when the Company provides the necessary funds to complete the transaction. The Company generates other service charges by providing depositors with proper safeguard and remittance of funds, as well as by providing optional services such as check imaging or treasury management. Charges for proper safeguard and remittance of funds are recognized monthly as the deposit customer maintains funds in the account, while revenue for optional services are recognized when the customer completes the transaction.

Gains or Losses on the Sale of Investment Securities

Gains or losses on the sale of investment securities are recognized as the sale transaction occurs with the cost of securities sold based on the specific identification method.

Lease Income

The Bank leases certain office facilities to third parties and classifies the leases as operating leases. Lease income is recognized on a monthly basis based on the contractual terms of the lease agreement.

Bank-owned Life Insurance

Bank-owned life insurance income represents income earned from the appreciation of the cash surrender value of insurance contracts held and the proceeds of insurance benefits. The Company recognizes revenue each period in the amount of the appreciation of the cash surrender value of the contracts. Revenue recognized from the proceeds of insurance benefits is recognized at the time the claim is confirmed.

ATM Fee Income

Fee income is generated by allowing the Bank’s debit cardholders to withdraw funds from the ATM’s of other financial institutions and by allowing non-customers to withdraw funds from the Bank’s ATMs. The Bank satisfies performance obligations for each transaction when the withdrawal is processed. The Bank does not direct the activities of the related processing network’s service and recognizes revenue on a net basis as the agent in each transaction.

Other Miscellaneous Income

Other miscellaneous income includes mortgage fees, credit insurance income, auto club revenue, wire transfer fees, safe deposit box fee income, check fees and other miscellaneous sources of income. The Company recognizes revenue associated with these sources of income in accordance with the satisfaction of the performance obligation based on the timing of the occurrence of a transaction or when service is provided.

Reinsurance Activities

Before FUSB Reinsurance ceased writing new insurance contracts in 2022, the Company assumed insurance risk related to credit life and credit accident and health insurance written by a non-affiliated insurance company for its customers that choose such coverage through a quota share reinsurance agreement. Assumed premiums on credit life insurance were deferred and earned over the period of insurance coverage using either a pro rata method or the effective yield method, depending on whether the amount of insurance coverage generally remains level or declines. Assumed premiums for accident and health policies were earned on an average of the pro rata and the effective yield methods.

Investment Securities

The investment portfolio consists of debt securities, including U.S. Treasury securities, obligations of U.S. government agencies, municipal bonds, residential and commercial mortgage-backed securities and corporate notes. Securities may be held in one of three portfolios: trading account securities, securities held-to-maturity or securities available-for-sale. Trading account securities are carried at estimated fair value, with unrealized gains and losses included in operations. The Company held no trading account securities as of December 31, 2022 or 2021. Investment securities held-to-maturity are carried at cost, adjusted for amortization of premiums and accretion of discounts. With regard to investment securities held-to-maturity, management has the intent and the Bank has the ability to hold such securities until maturity. Investment securities available-for-sale are carried at fair value, with any unrealized gains or losses excluded from operations and reflected, net of tax, as a separate component of shareholders’ equity in accumulated other comprehensive income or loss. Investment securities available-for-sale are so classified because management may decide to sell certain securities prior to maturity for liquidity, tax planning or other valid business purposes. When the fair value of a security falls below carrying value, an evaluation must be made to determine whether the unrealized loss is a temporary or other-than-temporary impairment. Impaired securities that are not deemed to be temporarily impaired are written down by a charge to operations to the extent that the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income or loss. The Company uses a systematic methodology to evaluate potential impairment of its investments that considers, among other things, the magnitude and duration of the decline in fair value, the financial health and business outlook of the issuer and the Company’s ability and intent to hold the investment until such time as the security recovers its fair value.

Interest earned on investment securities available-for-sale is included in interest income. Amortization of premiums and discounts on investment securities is determined by the interest method and included in interest income. Gains and losses on the sale of investment securities available-for-sale, computed principally on the specific identification method, are shown separately in non-interest income.

The Company also holds Federal Home Loan Bank (“FHLB”) stock, which, based on the redemption provision of the FHLB, has no quoted market value and is carried at cost. Dividends earned on FHLB stock are included in interest income.

Derivatives and Hedging Activities

The Company uses derivative instruments to minimize unplanned fluctuations in earnings and cash flows caused by interest rate volatility. The Company’s interest rate risk management strategy involves modifying the repricing characteristics of certain assets and liabilities so that changes in interest rates do not adversely affect net interest margin and cash flow. Derivative instruments utilized by the Company generally include interest rate swaps, caps and floors, and are carried as assets and/or liabilities at fair value on the Company’s consolidated balance sheets. The Company does not use derivatives for trading or speculative purposes and generally enters into transactions that have a qualifying hedge relationship. Depending upon the characteristics of the hedged item, derivatives are classified as either cash flow hedges or fair value hedges. When cash flow or fair value hedging strategies are utilized, the Company specifically identifies the derivative instrument as a hedge and identifies the risk that is being hedged contemporaneously with the execution of the hedge transaction.

Cash flow hedge relationships mitigate exposure to variability of future cash flows or other forecasted transactions. The change in fair value of cash flow hedges is recorded, net of tax, in accumulated other comprehensive income (loss) except for amounts excluded from hedge effectiveness. Amounts excluded from hedge effectiveness are recorded in earnings.

Fair value hedge relationships mitigate exposure to the change in fair value of the hedged risk in an asset, liability, or firm commitment. Gains or losses attributable to the derivative instrument, as well as gains or losses attributable to changes in the fair value of the hedged item are recognized in interest income or interest expense in the same income statement line item with the hedged item in the period in which the change in fair value occurs. To the extent the changes in fair value of the derivative instrument do not offset the changes in the fair value of the hedged item, the difference is recognized in earnings. The corresponding adjustment to the hedged asset or liability is included in the basis of the hedged item, while the corresponding change in the fair value of the derivative instrument is recorded as an adjustment to other assets or other liabilities, as applicable. The Company has entered into certain fair value hedges using the last-of-layer method, which allows the Company to hedge the interest rate risk of prepayable financial assets by designating as the hedged item a stated amount of a closed portfolio that is not expected to be affected by prepayments, defaults, or other factors impacting the timing and amount of cash flows.

If a hedge relationship is de-designated or if hedge accounting is discontinued because the hedged item no longer exists, or does not meet the definition of a firm commitment, or because it is probable that the forecasted transaction will no longer occur, the derivative instrument will continue to be recorded in other assets or liabilities in the consolidated balance sheets at its estimated fair value, with changes in fair value recognized in non-interest expense. Any asset or liability that was recognized pursuant to a firm commitment is removed from the consolidated balance sheets and recognized in non-interest expense. Gains or losses that were unrecognized and aggregated in accumulated other comprehensive gain (loss) pursuant to a cash flow hedging relationship are recognized immediately in non-interest expense.

The Company may also enter into derivative contracts that are not designated as hedges in order to mitigate economic risks or risks associated with volatility in connection with customer derivative transactions.

Loans and Interest Income

Loans are reported at principal amounts outstanding, adjusted for unearned income, net deferred loan origination fees and costs, purchase premiums and discounts, write-downs and the allowance for loan losses. Loan origination fees, net of certain deferred origination costs, and purchase premiums and discounts are recognized as an adjustment to the yield of the related loans, on an effective yield basis.

Interest on all loans is accrued and credited to income based on the principal amount outstanding. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to make payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed against current income unless

the collateral for the loan is sufficient to cover the accrued interest. Interest received on non-accrual loans generally is either applied against principal or reported as interest income in accordance with management’s judgment as to the collectability of principal. The policy for interest recognition on impaired loans is consistent with the non-accrual interest recognition policy. Generally, loans are restored to accrual status when the obligation is brought current and the borrower has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is determined based on various components for individually impaired loans and for homogeneous pools of loans and leases. The allowance for loan and lease losses is increased by a provision for loan and lease losses, which is charged to expense, and reduced by charge-offs, net of recoveries by portfolio segment. The methodology for determining charge-offs is consistently applied to each segment. The allowance for loan and lease losses is maintained at a level that, in management’s judgment, is adequate to absorb credit losses inherent in the loan and lease portfolio. The amount of the allowance is based on management’s evaluation of the collectability of the loan and lease portfolio, including the nature of the portfolio, and changes in its risk profile, credit concentrations, historical trends and economic conditions. This evaluation also considers the balance of impaired loans. Losses on individually identified impaired loans are measured based on the present value of expected future cash flows, discounted at each loan’s original effective market interest rate. As a practical expedient, impairment may be measured based on the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent. When the measure of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through the provision added to the allowance for loan losses. In general, all loans of $0.5 million or more and, at ALC, any loans of $50 thousand or more that are 90 days or more past due are identified for impairment analysis. One-to-four family residential mortgages and consumer installment loans are subjected to a collective evaluation for impairment, considering delinquency and repossession statistics, loss experience and other factors. Though management believes the allowance for loan and lease losses to be adequate, ultimate losses may vary from estimates. However, estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings during periods in which they become known.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation, and amortization is computed principally by the straight-line method over the estimated useful lives of the assets or the expected lease terms for leasehold improvements, whichever is shorter. Useful lives for all premises and equipment range from three to forty years.

Bank Owned Life Insurance

The Company has purchased life insurance policies on certain directors and former executives. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

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. Goodwill is determined to have an indefinite useful life and is not amortized but tested for impairment at least annually or more frequently if events or circumstances exist that indicate that a goodwill impairment test should be performed. The Company performs its annual goodwill impairment test as of October 1st.

Other intangible assets consist of core deposit intangible assets arising from acquisitions. Core deposit intangibles have definite useful lives and are amortized on an accelerated basis over their estimated useful lives. The Company’s core deposit intangible assets have estimated useful lives of seven years. In addition, these intangible assets are evaluated for impairment whenever events or circumstances exist that indicate that the carrying amount should be reevaluated.

Other Real Estate Owned (OREO)

OREO consists of properties acquired through a foreclosure or in satisfaction of loans, as well as closed Bank and ALC branches. These properties are carried at net realizable value, less estimated selling costs. Losses arising from the acquisition of properties are charged against the allowance for loan losses. Gains or losses realized upon the sale of OREO and additional losses related to subsequent valuation adjustments are determined on a specific property basis and are included as a component of non-interest expense along with carrying costs.

Income Taxes

The Company accounts for income taxes on the accrual basis through the use of the asset and liability method. Under the asset and liability method, deferred taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the consolidated financial statement carrying amounts and the basis of existing assets and liabilities. Deferred tax assets are also recorded for any tax attributes, such as tax credit and net operating loss carryforwards. The net balance of deferred tax assets and liabilities is reported in other assets in the consolidated balance sheets. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company evaluates the realization of deferred tax assets based on all positive and negative evidence available at the balance sheet date. Realization of deferred tax assets is based on the Company’s judgments about relevant factors affecting realization, including taxable income within any applicable carryback periods, future projected taxable income, reversal of taxable temporary differences and other tax planning strategies to maximize realization of deferred tax assets. A valuation allowance is recorded for any deferred tax assets that are not “more likely than not” to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit for which there is a greater than 50% likelihood that such amount would be realized upon examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest expense, interest income and penalties related to unrecognized tax benefits within current income tax expense.

Stock-Based Compensation

Compensation expense is recognized for stock options and restricted stock awards issued to employees based on the fair value of these awards at the date of grant. The Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.

Compensation expense is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. The Company’s accounting policy is to recognize compensation expense net of forfeitures.

Treasury Stock

Treasury stock purchases and sales are accounted for using the cost method.

Advertising Costs

Advertising costs for promoting the Company are minimal and expensed as incurred.

Segment Reporting

Management has identified two reportable operating segments of Bancshares: the Bank and ALC. The reportable segments were determined based on the internal management reporting system and comprise Bancshares’ and the Bank’s significant subsidiaries. Segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions were eliminated in the determination of consolidated balances.

Reclassification

Certain disclosures in the notes to the prior period consolidated financial statements have been reclassified to conform to the 2022 presentation. These reclassifications had no effect on the Company’s results of operations, financial position or net cash flow.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding (basic shares). Included in basic shares are shares that have been accrued as of the balance sheet date as deferred compensation for members of Bancshares’ Board of Directors, as well as shares of restricted stock that have been granted pursuant to Bancshares’ 2013 Incentive Plan (as amended, the “2013 Incentive Plan”) previously approved by Bancshares’ shareholders. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period (dilutive shares). The dilutive shares consist of nonqualified stock option grants issued to employees and members of Bancshares’ Board of Directors pursuant to the 2013 Incentive Plan. The following table reflects weighted average shares used to calculate basic and diluted net income per share for the years ended December 31, 2022 and 2021.

	Year Ended December 31,
	2022		2021
Weighted average shares outstanding		5,969,575		6,205,261
Weighted average director deferred shares		114,483		114,096
Basic shares		6,084,058		6,319,357
Dilutive shares		419,650		420,250
Diluted shares		6,503,708		6,739,607

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands, Except Per Share Data)
Net income	$	6,864	$	4,451
Basic net income per share	$	1.13	$	0.70
Diluted net income per share	$	1.06	$	0.66

Comprehensive Income

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities, settlement of derivative contracts or changes in the fair value of cash flow derivatives.

Accounting Policies Recently Adopted

ASU 2020-04 and ASU 2021-01, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These ASUs provide optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contracts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. The Company utilizes LIBOR, among other indexes, as a reference rate for underwriting certain variable rate loans and interest rate hedging instruments. Management has identified all contracts referencing LIBOR and will continue to monitor risks associated with the discontinuance of LIBOR until remediation of such contracts is complete. Reference rate reform has not had, nor does the Company expect it to have, a material effect on the Company’s consolidated balance sheet, operations or cash flows.

ASU 2022-01, "Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic 815)." In March 2022, the FASB issued ASU 2022-01. The amendments in this standard update expand the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. This standard update

is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2022-01 on January 1, 2023. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements; however, the impact will be dependent on future hedging activity.

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Issued in January 2017, ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity, prior to the amendments in ASU 2017-04, had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. As originally issued, ASU 2017-04 was effective prospectively for annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2017-04 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023. The adoption of this standard update is not currently expected to have a material effect on the Company’s financial statements; however, the impact will be dependent on future evaluations of goodwill impairment that will continue to be performed by management on an annual basis.

ASU 2016-13, "Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Known as the Current Expected Credit Loss (CECL) model, the revised guidance removes all current recognition thresholds and requires companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. The standard also adds disclosure requirements intended to enable users of the financial statements to understand credit risk in the portfolio and how management monitors credit quality, management’s estimate of expected credit losses, and changes in the estimate of credit losses during the period. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by three years for smaller reporting companies, including the Company. The standard became effective for the Company on January 1, 2023, and the Company recorded a transition adjustment that increased loan loss reserves by approximately $2.4 million. In accordance with transition accounting guidance, the transition adjustment was recorded directly to retained earnings during the first quarter of 2023 and will not impact current period earnings. In 2022, the FASB introduced ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures.” ASU 2022-02 seeks to improve the decision usefulness of information provided to investors concerning certain loan refinancings, restructurings and write-offs. The ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL accounting model and enhances the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted the amendments of ASU 2022-02 on January 1, 2023, concurrent with the adoption of the CECL accounting model. The amendments of ASU 2022-02 include only changes to certain financial statement disclosures; and, therefore, adoption of ASU 2022-02 is not expected to have a material impact on the Company’s consolidated financial statements or results of operations.

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Restructuring Charges

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Restructuring Charges

3.RESTRUCTURING CHARGES

Effective September 3, 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. The closure of ALC’s branches eliminated the majority of ALC’s full-time employment positions during the third quarter of 2021. ALC continues to service its remaining portfolio of loans from its headquarters in Mobile, Alabama. The cessation of new business and closure of ALC’s branch locations were undertaken by the Company as part of a long-term strategy to reduce expenses, fortify asset quality, and focus the Company’s loan growth efforts in other areas, including the Bank’s commercial lending and consumer indirect lending efforts.

Total restructuring charges incurred during the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended		Year Ended
	December 31, 2022		December 31, 2021		Total
	(Dollars in Thousands)
Expense Category
Severance and personnel expenses	$	108	$	263	$	371
Lease termination costs		2		224		226
Fixed asset valuation adjustments		—		239		239
Termination of technology contracts		45		85		130
Other expenses		—		93		93
Total expenses	$	155	$	904	$	1,059

As of December 31, 2022, the majority of restructuring charges associated with the closure of ALC's branches have been incurred.

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Investment Securities

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Investment Securities

4.INVESTMENT SECURITIES

Details of investment securities available-for-sale and held-to-maturity as of December 31, 2022 and 2021 were as follows:

	Available-for-Sale
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	47,659	$	2	$	(3,704	)	$	43,957
Commercial		12,169		4		(480	)		11,693
Obligations of U.S. government-sponsored agencies		5,116		—		(846	)		4,270
Obligations of states and political subdivisions		2,166		—		(94	)		2,072
Corporate notes		17,817		2		(1,898	)		15,921
U.S. Treasury securities		56,956		—		(4,074	)		52,882
Total	$	141,883	$	8	$	(11,096	)	$	130,795

	Held-to-Maturity
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,167	$	—	$	(41	)	$	1,126
Obligations of U.S. government-sponsored agencies		610		—		(40	)		570
Obligations of states and political subdivisions		85		—		(12	)		73
Total	$	1,862	$	—	$	(93	)	$	1,769

	Available-for-Sale
	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	46,020	$	450	$	(242	)	$	46,228
Commercial		24,647		371		(47	)		24,971
Obligations of U.S. government-sponsored agencies		5,207		—		(15	)		5,192
Obligations of states and political subdivisions		4,247		80		(10	)		4,317
Corporate notes		15,458		76		(52	)		15,482
U.S. Treasury securities		35,097		—		(404	)		34,693
Total	$	130,676	$	977	$	(770	)	$	130,883

	Held-to-Maturity
	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	2,115	$	29	$	—	$	2,144
Obligations of U.S. government-sponsored agencies		768		10		—		778
Obligations of states and political subdivisions		553		2		—		555
Total	$	3,436	$	41	$	—	$	3,477

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of December 31, 2022 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	511	$	511	$	—	$	—
Maturing after one to five years		61,068		57,159		—		—
Maturing after five to ten years		67,309		60,872		1,606		1,536
Maturing after ten years		12,995		12,253		256		233
Total	$	141,883	$	130,795	$	1,862	$	1,769

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities generally mature earlier than their weighted-average contractual maturities because of principal prepayments.

The following table reflects gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2022 and 2021.

	Available-for-Sale
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	19,876	$	(952	)	$	23,903	$	(2,752	)
Commercial		9,720		(357	)		1,247		(123	)
Obligations of U.S. government-sponsored agencies		—		—			4,270		(846	)
Obligations of states and political subdivisions		1,559		(41	)		512		(53	)
Corporate notes		6,845		(898	)		8,075		(1,000	)
U.S. Treasury securities		21,240		(698	)		31,642		(3,376	)
Total	$	59,240	$	(2,946	)	$	69,649	$	(8,150	)

	Held-to-Maturity
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,125	$	(41	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		215		(7	)		356		(33	)
Obligations of states and political subdivisions		73		(12	)		—		—
Total	$	1,413	$	(60	)	$	356	$	(33	)

	Available-for-Sale
	December 31, 2021
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	31,346	$	(240	)	$	253	$	(2	)
Commercial		2,245		(12	)		2,970		(35	)
Obligations of U.S. government-sponsored agencies		4,987		(13	)		194		(2	)
Obligations of states and political subdivisions		561		(10	)		—		—
Corporate notes		9,092		(52	)		—		—
U.S. Treasury securities		34,692		(404	)		—		—
Total	$	82,923	$	(731	)	$	3,417	$	(39	)

There were no held-to-maturity securities in an unrealized loss position as of December 31, 2021.

Due to the increasing interest rate environment during the year ended December 31, 2022, gross unrealized losses increased, particularly within the Company’s available-for-sale portfolio. Management evaluates securities for other-than-temporary impairment no less frequently than quarterly and more frequently when economic or market concerns warrant such evaluation. Consideration is given to: (i) the length of time and the extent to which fair value has been less than cost; (ii) the financial condition and near-term prospects of the issuer; (iii) whether the Company intends to sell the securities; and (iv) whether it is more likely than not that the Company will be required to sell the securities before recovery of their amortized cost bases.

As of December 31, 2022, 38 debt securities had been in a loss position for more than 12 months, and 86 debt securities had been in a loss position for less than 12 months. As of December 31, 2021, ten debt securities had been in a loss position for more than 12 months, and 32 debt securities had been in a loss position for less than 12 months. As of both December 31, 2022 and 2021, the losses for all securities were considered to be a direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers. Further, the Company has the current intent and ability to retain its investments in the issuers for a period of time that management believes to be sufficient to allow for any anticipated recovery in fair value. The Company did not recognize any other-than-temporary impairments as of December 31, 2022 and 2021.

Investment securities with a carrying value of $54.7 million and $52.2 million as of December 31, 2022 and 2021, respectively, were pledged to secure public deposits and for other purposes.

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Loans and Allowance for Loan and Lease Losses

12 Months Ended

Dec. 31, 2022

Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]

Loans and Allowance for Loan and Lease Losses

5.LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

Portfolio Segments

The Company has divided the loan portfolio into the following portfolio segments based on risk characteristics:

Construction, land development and other land loans – Commercial construction, land and land development loans include loans for the development of residential housing projects, loans for the development of commercial and industrial use property, loans for the purchase and improvement of raw land and loans primarily for agricultural production that are secured by farmland. These loans are secured in whole or in part by the underlying real estate collateral and are generally guaranteed by the principals of the borrowing entity.

Secured by 1-4 family residential properties – These loans include conventional mortgage loans on one-to-four family residential properties. The properties may serve as the borrower’s primary residence, vacation home or investment property. Also included in this portfolio are home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows customers to borrow against the equity in their home.

Secured by multi-family residential properties – This portfolio segment includes mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties – This portfolio segment includes real estate loans secured by commercial and industrial properties, office or mixed-use facilities, strip shopping centers or other commercial property. These loans are generally guaranteed by the principals of the borrowing entity.

Commercial and industrial loans and leases – This portfolio segment includes loans and leases to commercial customers for use in the normal course of business. These credits may be loans, lines of credit and leases to financially strong borrowers, secured by inventories, equipment or receivables, and are generally guaranteed by the principals of the borrowing entity.

Direct consumer – This portfolio segment includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purposes and all other direct consumer installment loans.

Branch retail – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom ALC had an established relationship through its branch network to provide financing for the retail products sold if applicable underwriting standards were met. The collateral securing these loans generally includes personal property items such as furniture, ATVs and home appliances.

Indirect consumer – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom the Company has an established relationship to provide financing for the retail products sold if applicable underwriting standards are met. The collateral securing these loans generally includes recreational vehicles, campers, boats, horse trailers and cargo trailers.

As of December 31, 2022 and 2021, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	December 31, 2022
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	54,396	$	—	$	54,396
Secured by 1-4 family residential properties		86,946		1,480		88,426
Secured by multi-family residential properties		67,917		—		67,917
Secured by non-farm, non-residential properties		199,965		—		199,965
Commercial and industrial loans (1)		73,561		—		73,561
Consumer loans:
Direct consumer		5,145		4,908		10,053
Branch retail		—		14,237		14,237
Indirect		266,567		—		266,567
Total loans		754,497		20,625		775,122
Less: Unearned interest, fees and deferred cost		799		450		1,249
Allowance for loan losses		8,057		1,365		9,422
Net loans	$	745,641	$	18,810	$	764,451

	December 31, 2021
	Bank			ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	67,048		$	—	$	67,048
Secured by 1-4 family residential properties		70,439			2,288		72,727
Secured by multi-family residential properties		46,000			—		46,000
Secured by non-farm, non-residential properties		197,901			—		197,901
Commercial and industrial loans (1)		73,947			—		73,947
Consumer loans:
Direct consumer		5,972			15,717		21,689
Branch retail		—			25,692		25,692
Indirect		205,940			—		205,940
Total loans		667,247			43,697		710,944
Less: Unearned interest, fees and deferred cost		(324	)		2,918		2,594
Allowance for loan losses		7,038			1,282		8,320
Net loans	$	660,533		$	39,497	$	700,030

(1)Includes equipment financing leases and PPP loans. As of December 31, 2022 and 2021, equipment financing leases totaled $10.3 million and $11.0 million, respectively. As of December 31, 2022 and 2021, PPP loans totaled $6 thousand and $1.7 million, respectively.

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 53.0% and 54.0%% of the portfolio was concentrated in loans secured by real estate as of December 31, 2022 and 2021, respectively.

Loans with a carrying value of $68.2 million and $66.6 million were pledged as collateral to secure FHLB borrowings as of December 31, 2022 and 2021, respectively.

Related Party Loans

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with unrelated parties. Management believes that such loans do not represent more than a normal risk of collectability, nor do they present other unfavorable features. The aggregate balances of such related party loans and commitments as of December 31, 2022 and 2021 were $0.2 million and $0.3 million, respectively. During the year ended December 31, 2022, there were no new

loans to these parties, and repayments by active related parties were $0.1 million. During the year ended December 31, 2021, there were no new loans to these parties, and repayments by active related parties were $0.1 million.

Allowance for Loan and Lease Losses

The following tables present changes in the allowance for loan and lease losses during the years ended December 31, 2022 and 2021 and the related loan balances by loan type as of December 31, 2022 and 2021:

	As of and for the Year Ended December 31, 2022
	Construction, Land Development, and Other			1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer			Branch Retail			Indirect			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	628		$	690		$	437	$	1,958	$	860	$	1,004		$	304		$	2,439		$	8,320
Charge-offs		—			(40	)		—		—		—		(1,958	)		(633	)		(382	)		(3,013	)
Recoveries		2			39			—		5		0		565			151			45			807
Provision		(113	)		143			209		7		59		1,255			696			1,052			3,308
Ending balance	$	517		$	832		$	646	$	1,970	$	919	$	866		$	518		$	3,154		$	9,422
Ending balance of allowance    attributable to loans:
Individually evaluated for    impairment	$	—		$	7		$	—	$	—	$	252	$	—		$	—		$	—		$	259
Collectively evaluated for    impairment		517			825			646		1,970		667		866			518			3,154			9,163
Total allowance for loan and lease losses	$	517		$	832		$	646	$	1,970	$	919	$	866		$	518		$	3,154		$	9,422
Ending balance of loans    receivable:
Individually evaluated for    impairment	$	—		$	582		$	—	$	2,492	$	2,429	$	18		$	—		$	—		$	5,521
Collectively evaluated for    impairment		54,396			87,844			67,917		197,473		71,132		10,035			14,237			266,567			769,601
Total loans receivable	$	54,396		$	88,426		$	67,917	$	199,965	$	73,561	$	10,053		$	14,237		$	266,567		$	775,122

	As of and for the Year Ended December 31, 2021
	Construction, Land Development, and Other			1-4 Family			Real Estate Multi- Family			Non- Farm Non- Residential		Commercial and Industrial			Direct Consumer			Branch Retail			Indirect			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	393		$	639		$	577		$	1,566	$	1,008		$	1,202		$	373		$	1,712		$	7,470
Charge-offs		(23	)		(12	)		—			—		(6	)		(1,230	)		(377	)		(483	)		(2,131	)
Recoveries		22			14			—			5		21			626			215			68			971
Provision		236			49			(140	)		387		(163	)		406			93			1,142			2,010
Ending balance	$	628		$	690		$	437		$	1,958	$	860		$	1,004		$	304		$	2,439		$	8,320
Ending balance of allowance    attributable to loans:
Individually evaluated for    impairment	$	—		$	10		$	—		$	—	$	57		$	—		$	—		$	—		$	67
Collectively evaluated for    impairment		628			680			437			1,958		803			1,004			304			2,439			8,253
Total allowance for loan and lease losses	$	628		$	690		$	437		$	1,958	$	860		$	1,004		$	304		$	2,439		$	8,320
Ending balance of loans    receivable:
Individually evaluated for    impairment	$	—		$	646		$	—		$	1,051	$	880		$	21		$	—		$	—		$	2,598
Collectively evaluated for    impairment		67,048			72,081			46,000			196,850		73,067			21,668			25,692			205,940			708,346
Total loans receivable	$	67,048		$	72,727		$	46,000		$	197,901	$	73,947		$	21,689		$	25,692		$	205,940		$	710,944

Credit Quality Indicators

The Company utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, construction, land, multi-family real estate, other commercial real estate, and commercial and industrial loans are graded based on pre-determined risk metrics and categorized into one of nine risk grades. These risk grades can be summarized into categories described as pass, special mention, substandard, doubtful and loss, as described in further detail below.

•Pass (Risk Grades 1-5): Loans in this category include obligations in which the probability of default is considered low.

•Special Mention (Risk Grade 6): Loans in this category exhibit potential credit weaknesses or downward trends deserving management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Although a special mention asset has a higher probability of default than pass-rated categories, its default is not imminent.

•Substandard (Risk Grade 7): Loans in this category have defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

•Doubtful (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans, with the added characteristic that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable or improbable. Serious problems exist such that partial loss of principal is likely; however, because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans’ classification as estimated losses is deferred until a more exact status may be determined. Such pending factors may include proposed merger, acquisition or liquidation procedures, capital injection, perfection of liens on additional collateral and refinancing plans. Loans classified as doubtful may include loans to borrowers that have demonstrated a history of failing to live up to agreements. The Company did not have any loans classified as Doubtful (Risk Grade 8) as of December 31, 2022 or 2021.

•Loss (Risk Grade 9): Loans are classified in this category when borrowers are deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectable and of such little value that continuance as active assets of the Company is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not prudent to defer writing off these assets, even though partial recovery may be realized in the future. The Company did not have any loans classified as Loss (Risk Grade 9) as of December 31, 2022 or 2021.

Because residential real estate and consumer loans are more uniform in nature, each loan is categorized into one of two risk grades, depending on whether the loan is considered to be performing or nonperforming. Performing loans are loans that are paying principal and interest in accordance with a contractual agreement. Nonperforming loans are loans that have demonstrated characteristics that indicate a probability of loss.

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2022:

	December 31, 2022
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	54,396		$	—		$	—		$	54,396
Secured by multi-family residential properties		67,917			—			—			67,917
Secured by non-farm, non-residential properties		196,813			651			2,501			199,965
Commercial and industrial loans		70,515			—			3,046			73,561
Total	$	389,641		$	651		$	5,547		$	395,839
As a percentage of total loans		98.43	%		0.17	%		1.40	%		100.00	%

	December 31, 2022
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	87,302		$	1,124		$	88,426
Consumer loans:
Direct consumer		10,007			46			10,053
Branch retail		14,205			32			14,237
Indirect		266,496			71			266,567
Total	$	378,010		$	1,273		$	379,283
As a percentage of total loans		99.66	%		0.34	%		100.00	%

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2021:

	December 31, 2021
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	67,046		$	—		$	2		$	67,048
Secured by multi-family residential properties		43,472			2,528			—			46,000
Secured by non-farm, non-residential properties		189,425			7,442			1,034			197,901
Commercial and industrial loans		72,116			333			1,498			73,947
Total	$	372,059		$	10,303		$	2,534		$	384,896
As a percentage of total loans		96.66	%		2.68	%		0.66	%		100.00	%

	December 31, 2021
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	71,526		$	1,201		$	72,727
Consumer loans:
Direct consumer		20,939			750			21,689
Branch retail		25,486			206			25,692
Indirect		205,940			—			205,940
Total	$	323,891		$	2,157		$	326,048
As a percentage of total loans		99.34	%		0.66	%		100.00	%

The following table provides an aging analysis of past due loans by class as of December 31, 2022:

	As of December 31, 2022
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	54,396		$	54,396		$	—
Secured by 1-4 family residential    properties		800			87			78			965			87,461			88,426			—
Secured by multi-family residential    properties		—			—			—			—			67,917			67,917			—
Secured by non-farm, non-residential    properties		137			—			—			137			199,828			199,965			—
Commercial and industrial loans		61			—			300			361			73,200			73,561			—
Consumer loans:
Direct consumer		250			49			30			329			9,724			10,053			—
Branch retail		257			85			32			374			13,863			14,237
Indirect		186			55			71			312			266,255			266,567			—
Total	$	1,691		$	276		$	511		$	2,478		$	772,644		$	775,122		$	—
As a percentage of total loans		0.21	%		0.04	%		0.07	%		0.32	%		99.68	%		100.00	%

The following table provides an aging analysis of past due loans by class as of December 31, 2021:

	As of December 31, 2021
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	67,048		$	67,048		$	—
Secured by 1-4 family residential    properties		349			23			20			392			72,335			72,727			—
Secured by multi-family residential    properties		—			—			—			—			46,000			46,000			—
Secured by non-farm, non-residential    properties		403			—			—			403			197,498			197,901			—
Commercial and industrial loans		54			—			234			288			73,659			73,947			—
Consumer loans:
Direct consumer		652			589			730			1,971			19,718			21,689			—
Branch retail		377			182			206			765			24,927			25,692
Indirect		43			14			—			57			205,883			205,940			—
Total	$	1,878		$	808		$	1,190		$	3,876		$	707,068		$	710,944		$	—
As a percentage of total loans		0.27	%		0.11	%		0.17	%		0.55	%		99.45	%		100.00	%

The following table provides an analysis of non-accruing loans by class as of December 31, 2022 and 2021:

	Loans on Non-Accrual Status
	December 31, 2022		December 31, 2021
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	2
Secured by 1-4 family residential properties		914		780
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		—		—
Commercial and industrial loans		605		277
Consumer loans:
Direct consumer		29		743
Branch retail		32		206
Indirect		71		—
Total loans	$	1,651	$	2,008

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the related loan agreement. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the liquidation of the collateral at the Bank. All loans of $0.5 million or more that have a credit quality risk grade of seven or above are identified for impairment analysis. At management’s discretion, additional loans may be impaired based on homogeneous factors such as changes in the nature and volume of the portfolio, portfolio quality, adequacy of the underlying collateral value, loan concentrations, historical charge-off trends and economic conditions that may affect the borrower’s ability to pay. At ALC, all loans of $50 thousand or more that are 90 days or more past due are identified for impairment analysis. As of both December 31, 2022 and 2021, there were $0.1 million of impaired loans with no related allowance recorded at ALC. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

As of December 31, 2022, the carrying amount of the Company’s impaired loans consisted of the following:

	December 31, 2022
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		568		568		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,076		2,076		—
Direct consumer		18		18		—
Total impaired loans with no related allowance recorded	$	5,154	$	5,154	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		14		14		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		353		353		252
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	367	$	367	$	259
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		582		582		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,429		2,429		252
Direct consumer		18		18		—
Total impaired loans	$	5,521	$	5,521	$	259

As of December 31, 2021, the carrying amount of the Company’s impaired loans consisted of the following:

	December 31, 2021
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		630		630		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,051		1,051		—
Commercial and industrial		823		823		—
Direct consumer		21		21		—
Total impaired loans with no related allowance recorded	$	2,525	$	2,525	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		16		16		10
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		57		57		57
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	73	$	73	$	67
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		646		646		10
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,051		1,051		—
Commercial and industrial		880		880		57
Direct consumer		21		21		—
Total impaired loans	$	2,598	$	2,598	$	67

The average net investment in impaired loans and interest income recognized and received on impaired loans during the years ended December 31, 2022 and 2021 was as follows:

	Year Ended December 31, 2022
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	87	$	—	$	—
Secured by 1-4 family residential properties		614		14		6
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,529		49		48
Commercial and industrial		1,279		8		5
Direct consumer		19		1		1
Total	$	3,528	$	72	$	60

	Year Ended December 31, 2021
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		773		31		31
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,377		140		108
Commercial and industrial		637		61		40
Direct consumer		22		9		2
Total	$	3,809	$	241	$	181

Loans on which the accrual of interest has been discontinued totaled $1.7 million and $2.0 million as of December 31, 2022 and 2021, respectively. If interest on those loans had been accrued, there would have been $60 thousand and $52 thousand of interest accrued for the years ended December 31, 2022 and 2021, respectively. Interest income related to these loans for the years ended December 31, 2022 and 2021 was $29 thousand and $30 thousand, respectively.

Troubled Debt Restructurings

Troubled debt restructurings include loans with respect to which concessions have been granted to borrowers that generally would not have otherwise been considered had the borrowers not been experiencing financial difficulty. The concessions granted may include payment schedule modifications, interest rate reductions, maturity date extensions, modifications of note structure, principal balance reductions or some combination of these concessions. There were no loans modified with concessions granted during the years ended December 31, 2022 or 2021. Restructured loans may involve loans remaining on non-accrual, moving to non-accrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Non-accrual restructured loans are included with all other non-accrual loans. In addition, all accruing restructured loans are reported as troubled debt restructurings. Generally, restructured loans remain on non-accrual until the customer has attained a sustained period of repayment performance under the modified loan terms (generally a minimum of six months). However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can meet the new terms and whether the loan should be returned to or maintained on non-accrual status. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, then the loan remains on non-accrual. As of both December 31, 2022 and 2021, the Company did not have any non-accruing loans that were previously restructured and that remained on non-accrual status. For both of the years ended December 31, 2022 and 2021, the Company had no loans that were restored to accrual status based on a sustained period of repayment performance.

The following table provides, as of December 31, 2022 and 2021, the number of loans remaining in each loan category that the Company had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

	December 31, 2022						December 31, 2021
	Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance		Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties		1		23		12		1		23		12
Secured by non-farm, non-residential properties		2		621		612		2		621		617
Commercial loans		1		71		22		1		71		31
Total		4	$	715	$	646		4	$	715	$	660

As of December 31, 2022 and 2021, no loans that previously had been modified in a troubled debt restructuring had defaulted subsequent to modification.

Restructured loan modifications primarily included maturity date extensions and payment schedule modifications. There were no modifications to principal balances of the loans that were restructured. Accordingly, there was no impact on the Company’s allowance for loan losses resulting from the modifications.

All loans with a principal balance of $0.5 million or more that have been modified in a troubled debt restructuring are considered impaired and evaluated individually for impairment. The nature and extent of impairment of restructured loans, including those that have experienced a subsequent payment default, are considered in the determination of an appropriate level of allowance for loan losses. This evaluation resulted in an allowance for loan losses attributable to such restructured loans of $6 thousand and $7 thousand as of December 31, 2022 and 2021, respectively.

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Other Real Estate Owned and Repossessed Assets

12 Months Ended

Dec. 31, 2022

Other Real Estate [Abstract]

Other Real Estate Owned and Repossessed Assets

6.OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS

Other Real Estate Owned

Other real estate and certain other assets acquired in foreclosure are reported at the net realizable value of the property, less estimated costs to sell. The following table summarizes foreclosed property activity during the years ended December 31, 2022 and 2021:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)
Beginning balance	$	2,149		$	949
Additions (1)		411			1,981
Sales proceeds		(2,232	)		(1,205	)
Gross gains		386			491
Gross losses		(27	)		—
Net gains		359			491
Impairment		(1	)		(67	)
Ending balance	$	686		$	2,149

(1)Additions to other real estate owned (“OREO”) include transfers from loans, transfers from closed Bank and ALC branches, and capitalized improvements to existing OREO properties.

Valuation adjustments are recorded in other non-interest expense and are primarily post-foreclosure write-downs that are a result of continued declining property values based on updated appraisals or other indications of value, such as offers to purchase. Net realizable value less estimated costs to sell of foreclosed residential real estate held by the Company was $20 thousand and $151 thousand as of December 31, 2022 and 2021, respectively. In addition, the Company did not hold any consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of both December 31, 2022 and 2021.

Repossessed Assets

In addition to the other real estate and other assets acquired in foreclosure, the Company also acquires assets through the repossession of the underlying collateral of loans in default. The following table summarizes repossessed asset activity during the years ended December 31, 2022 and 2021:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)
Beginning balance	$	154		$	245
Transfers from loans		887			803
Sales proceeds		(506	)		(798	)
Gross gains		—			—
Gross losses		(452	)		(96	)
Net losses		(452	)		(96	)
Impairment		—			—
Ending balance	$	83		$	154

Repossessed assets are included in Other Assets in the Company’s consolidated balance sheet.

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

7.GOODWILL AND OTHER INTANGIBLE ASSETS

The Company recorded $7.4 million of goodwill as a result of its acquisition of The Peoples Bank (“TPB”) in 2018. Goodwill impairment was neither indicated nor recorded during the years ended December 31, 2022 or 2021.

Goodwill is tested for impairment annually, or more often if circumstances warrant. If, as a result of impairment testing, it is determined that the implied fair value of goodwill is lower than its carrying amount, impairment is indicated, and goodwill must

be written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the consolidated financial statements. Goodwill totaled $7.4 million as of both December 31, 2022 and 2021.

Core deposit premiums are amortized over a seven-year period and are periodically evaluated, at least annually, as to the recoverability of their carrying value. Core deposit premiums of $2.0 million were recorded during 2018 as part of the TPB acquisition.

The Company’s goodwill and other intangibles (carrying basis and accumulated amortization) as of December 31, 2022 were as follows:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)			(Dollars in Thousands)
Goodwill	$	7,435		$	7,435
Core deposit intangible:
Gross carrying amount		2,048			2,048
Accumulated amortization		(1,682	)		(1,414	)
Core deposit intangible, net		366			634
Total	$	7,801		$	8,069

The Company’s estimated remaining amortization expense on intangible assets as of December 31, 2022 was as follows:

	Amortization Expense
	(Dollars in Thousands)
2023		195
2024		122
2025		49
Total	$	366

The net carrying amount of the Company’s core deposit assets is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use and eventual disposition. That assessment is based on the carrying amount of the intangible assets subject to amortization at the date on which it is tested for recoverability. Intangible assets subject to amortization are tested by the Company for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

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Premises and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Premises and Equipment

8.PREMISES AND EQUIPMENT

Premises and equipment and applicable depreciable lives are summarized as follows:

	December 31,
	2022			2021
	(Dollars in Thousands)
Land	$	5,390		$	5,486
Premises (40 years)		24,880			25,924
Furniture, fixtures and equipment (3-7 years)		15,792			15,629
Total cost of premises and equipment		46,062			47,039
Less accumulated depreciation		(21,623	)		(21,916	)
Total premises and equipment, net	$	24,439		$	25,123

Depreciation expense of $1.6 million and $1.7 million was recorded in 2022 and 2021, respectively.

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Deposits

12 Months Ended

Dec. 31, 2022

Disclosure Text Block [Abstract]

Deposits

9.DEPOSITS

As of December 31, 2022, the scheduled maturities of the Company’s time deposits were as follows:

	(Dollars in Thousands)
2023	$	115,494
2024		56,104
2025		63,576
2026		13,274
2027		4,264
Total	$	252,712

Time deposits greater than $250 thousand totaled $29.5 million and $31.0 million as of December 31, 2022 and 2021, respectively. Included in deposits, the Company held brokered certificates of deposit totaling $62.5 million as of December 31, 2022 and $32.0 million as of December 31, 2021. Deposits from related parties held by the Company totaled $4.1 million and $4.2 million as of December 31, 2022 and 2021, respectively.

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Borrowings

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Borrowings

10.BORROWINGS

Short-Term Borrowings

Short-term borrowings may consist of federal funds purchased, securities sold under repurchase agreements, and short-term FHLB advances with original maturities of one year or less.

•Federal funds purchased, which represent unsecured lines of credit that generally mature within one to four days, are available to the Bank through arrangements with correspondent banks and the Federal Reserve. As of both December 31, 2022 and 2021, there were no federal funds purchased outstanding.

•Securities sold under repurchase agreements, which are secured borrowings, generally are reflected at the amount of cash received in connection with the transaction. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. The Bank monitors the fair value of the underlying securities on a daily basis. Securities sold under repurchase agreements as of December 31, 2022 and 2021 totaled $38 thousand and $46 thousand, respectively.

•Short-term FHLB advances are secured borrowings available to the Bank as an alternative funding source. As of December 31, 2022 and 2021, the Bank had $20.0 million and $10.0 million in outstanding FHLB advances with original maturities of less than one year, respectively.

Long-Term Borrowings

FHLB Advances

The Company may use FHLB advances with original maturities of more than one year as an alternative to funding sources with similar maturities, such as certificates of deposit or other deposit programs. These advances generally offer more attractive rates than other mid-term financing options. They are also flexible, allowing the Company to quickly obtain the necessary maturities and rates that best suit its overall asset/liability strategy. FHLB advances with an original maturity of more than one year are classified as long-term. As of both December 31, 2022 and 2021, the Company did not have any long-term FHLB advances outstanding.

Subordinated Debt

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 (the “Notes”). The Notes bear interest at a rate of 3.50% per annum for the first five years; then the interest rate will be reset quarterly to a benchmark interest rate per annum which,

subject to certain conditions provided in the Notes, will be equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points. The Company has used and expects to continue to use the net proceeds for general corporate purposes, which may include the repurchase of the Company’s common stock, and to support organic growth plans, including the maintenance of capital ratios. Following receipt of the net proceeds of the Notes, the Company invested $5.0 million into capital surplus of the Bank. As of both December 31, 2022 and 2021, the Notes were recorded as long-term borrowings totaling $10.7 million, net of unamortized debt issuance costs.

	2022			2021
	(Dollars in Thousands)
Balance at year-end	$	10,726		$	10,653
Average balance during the year	$	10,689		$	2,682
Maximum month-end balance during the year	$	10,726		$	10,653
Average rate paid during the year, including amortization of debt issuance costs		4.20	%		4.20	%
Weighted average remaining maturity (in years)		8.75			9.75

Available Credit

As an additional funding source, the Company has available unused lines of credit with correspondent banks, the Federal Reserve and the FHLB. Certain of these funding sources are subject to underlying collateral availability. As of December 31, 2022 and 2021, the Company’s available unused lines of credit consisted of the following:

Available Unused Lines of Credit	Collateral Requirements	December 31, 2022	December 31, 2021
Correspondent banks	None	$45.0 million	$45.0 million
Federal Reserve (discount window)	Subject to collateral	$15.0 million	$15.0 million
FHLB advances (1)	Subject to collateral	$246.8 million	$237.0 million

(1)These amounts represent the total remaining credit the Company has from the FHLB, but this credit can only be utilized to the extent that underlying collateral exists. Assets pledged (including loans and investment securities) associated with FHLB advances and letters of credit totaled $68.2 million and $66.6 million as of December 31, 2022 and 2021, respectively. The Company’s collateral exposure with the FHLB in the form of advances and letters of credit was $50.0 million and $40.0 million as of December 31, 2022 and 2021, respectively, leaving an excess of collateral of $18.2 million and $26.6 million available to utilize for additional credit as of the respective dates.

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Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

11.INCOME TAXES

The consolidated provisions for income taxes for the years ended December 31, 2022 and 2021 were as follows:

	2022			2021
	(Dollars in Thousands)
Federal
Current	$	2,025		$	1,522
Deferred		(291	)		(527	)
Total federal		1,734			995
State
Current		490			154
Deferred		(76	)		126
Total state		414			280
Total	$	2,148		$	1,275

The consolidated tax expense differed from the amount computed by applying the Company’s federal statutory income tax rate of 21.0% in 2022 and 2021 as described in the following table:

	2022			2021
	(Dollars in Thousands)
Income tax expense at federal statutory rate	$	1,892		$	1,202
Increase (decrease) resulting from:
Tax-exempt interest		(76	)		(88	)
Bank-owned life insurance		(62	)		(62	)
State income tax expense, net of federal income taxes		329			169
Other		65			54
Total	$	2,148		$	1,275

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021 are presented below:

	2022		2021
	(Dollars in Thousands)
Deferred tax assets:
Allowance for loan losses	$	2,333	$	2,065
Deferred compensation		895		947
Deferred commissions and fees		407		243
Unrealized loss on securities available-for-sale		2,715		—
Unrealized loss on cash flow hedges		—		144
Other		905		862
Total gross deferred tax assets		7,255		4,261
Deferred tax liabilities:
Premises and equipment		1,288		1,248
Core deposit intangible		91		158
Limited partnerships		94		87
Unrealized gain on securities available-for-sale		—		52
Unrealized gain on cash flow hedges		301		—
Other		341		266
Total gross deferred tax liabilities		2,115		1,811
Net deferred tax asset, included in other assets	$	5,140	$	2,450

The Company did not have any federal or state net operating loss carryforwards as of December 31, 2022 or December 31, 2021. The Company files income tax returns with the federal government and several states. The majority of its income is attributable to the states of Alabama and Tennessee. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the states in which it filed for the years ended December 31, 2014 through 2022.

As of December 31, 2022, the Company had no unrecognized tax benefits related to federal or state income tax matters and does not anticipate any material increase or decrease in unrecognized tax benefits relative to any tax positions taken prior to December 31, 2022. As of December 31, 2022, the Company had accrued no interest and no penalties related to uncertain tax positions.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Disclosure Text Block [Abstract]

Employee Benefit Plans

12.EMPLOYEE BENEFIT PLANS

The Company sponsors a 401(k) Plan (the “401(k) Plan”). The 401(k) Plan allows participants to defer a portion of their compensation on a pre-tax basis, subject to the statutory annual contribution limit. For 2022 and 2021, the Company made “safe harbor” contributions on behalf of participants in the form of a match that was equal to 100% of each participant’s elective deferrals, up to a maximum of 4% of the participant’s eligible compensation. The 401(k) Plan also allows the Company to make discretionary matching contributions on behalf of participants equal to 2% of each participant’s elective deferrals. No discretionary match was made in 2022 or 2021. The Company’s matching contributions to the 401(k) Plan totaled $0.4 million in 2022 and 0.5 million 2021.

Participants can elect to invest up to 20% of incoming contributions (measured at the time of investment) in the 401(k) Plan in the form of Company stock. The 401(k) Plan held 184,987 and 238,514 shares of Company stock as of December 31, 2022 and 2021, respectively. These shares are allocated to participants in the 401(k) Plan and, accordingly, are included in the earnings per share calculations.

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Deferred Compensation Plans

12 Months Ended

Dec. 31, 2022

Compensation Related Costs [Abstract]

Deferred Compensation Plans

13.DEFERRED COMPENSATION PLANS

The Company has entered into separate supplemental retirement compensation benefits agreements with certain non-employee directors and former executive officers. These agreements are structured as nonqualified retirement plans for federal income tax purposes. The Company’s obligation under these agreements is accrued as deferred compensation in accordance with the terms of the individual contracts over the required service period to the date the employee is eligible to receive benefits. The Company’s deferred compensation obligation under these agreements totaled $3.1 million and $3.2 million as of December 31, 2022 and 2021, respectively.

Non-employee directors may elect to defer payment of all or any portion of their Bancshares and Bank director fees under Bancshares’ Non-Employee Directors’ Deferred Compensation Plan (the “Deferral Plan”). The Deferral Plan permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash and/or shares of Bancshares’ common stock. Neither Bancshares nor the Bank makes any contribution to participants’ accounts under the Deferral Plan. As of December 31, 2022 and 2021, a total of 114,190 and 117,825 shares of Bancshares common stock, respectively, were deferred in connection with the Deferral Plan. All deferred fees, whether in the form of cash or shares of Bancshares common stock, are reflected as compensation expense in the period earned. The Company classifies all deferred directors’ fees allocated to be paid in shares as additional paid-in capital. The Company may use issued shares or shares of treasury stock to satisfy these obligations when due.

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Stock Awards

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock Awards

14.STOCK AWARDS

In accordance with the 2013 Incentive Plan, stock awards, including stock options and restricted stock, have been granted to certain employees and non-employee directors. Shares of common stock available for distribution to satisfy the grants may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. Stock-based compensation expense related to stock awards totaled $0.4 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively.

Stock Options

Stock option awards have been granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and have vesting periods ranging from one to three years, with 10-year contractual terms. The Company recognizes the cost of services received in exchange for stock option awards based on the grant date fair value of the award, with compensation expense recognized on a straight-line basis over the award’s vesting period. The fair value of outstanding awards was determined using the Black-Scholes option pricing model at the date of grant. The Company did not grant any stock option awards during the years ended December 31, 2022 and 2021.

The following table summarizes the Company’s stock option activity for the periods presented.

	Year Ended
	December 31, 2022				December 31, 2021
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of year		420,250	$	9.79		421,000	$	9.79
Granted		—		—		—		—
Exercised		—		—		750		8.23
Forfeited		600		10.86		—		—
Options outstanding, end of year		419,650	$	9.79		420,250	$	9.79
Options exercisable, end of year		416,249	$	9.77		395,678	$	9.74

The aggregate intrinsic value of stock options outstanding (calculated as the amount by which the market value of underlying stock exceeds the exercise price of the option) was approximately $0.1 million as of December 31, 2022 and $0.6 million as of December 31, 2021.

Restricted Stock

During the years ended December 31, 2022 and 2021, 45,935 shares and 38,430 shares, respectively, of restricted stock were granted. Awards granted to employees had a three-year vesting period, while awards granted to non-employee directors had a one-year vesting period. The Company recognizes the cost of services received in exchange for restricted stock awards based on the grant date closing price of the stock, with compensation expense recognized on a straight-line basis over the award’s vesting period.

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Shareholder's Equity

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Shareholder's Equity

15.SHAREHOLDERS’ EQUITY

Dividends are paid at the discretion of the Company’s Board of Directors, based on the Company’s operating performance and financial position, including earnings, capital and liquidity. Dividends from the Bank are the Company’s primary source of funds for the payment of dividends to shareholders. In addition, federal and state regulatory agencies have the authority to prevent the Company from paying a dividend to shareholders. During the year ended December 31, 2022, the Company declared dividends totaling $0.8 million, or $0.14 per share, compared to $0.7 million, or $0.12 per share, during the year ended December 31, 2021.

Regulatory Capital

The Bank is subject to the revised capital requirements as described in the section captioned “Supervision and Regulation – Capital Adequacy” included in Part I, Item I of this report. Under these requirements, the Bank is subject to minimum risk-based capital and leverage capital requirements, which are administered by the federal bank regulatory agencies. These capital requirements, as defined by federal regulations, involve quantitative and qualitative measures of assets, liabilities and certain off-balance sheet instruments. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of the Bank and Bancshares, and could impact Bancshares’ ability to pay dividends. The Bank’s minimum risk-based capital requirements include the fully implemented capital conservation buffer of 2.50%. As of both December 31, 2022 and 2021, the Bank exceeded all applicable minimum capital standards. In addition, the Bank met applicable regulatory guidelines to be considered well-capitalized as of both December 31, 2022 and 2021. To be categorized in this manner, the Bank maintained common equity Tier 1 risk-based capital, Tier 1 risk-based capital, total risk-based capital and Tier 1 leverage ratios as set forth in the tables below. In addition, the Bank was not subject to any written agreement, order, capital directive or prompt corrective action directive issued by its primary federal regulator to meet and maintain a specific level for any capital measures.

The following tables provide the Bank’s actual regulatory capital amounts and ratios under regulatory capital standards in effect (Basel III) at December 31, 2022 and 2021:

	2022
	Actual Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
	(Dollars in Thousands)
Common equity Tier 1 capital (to risk-weighted assets)	$	92,853		11.07	%		7.00	%		6.50	%
Tier 1 capital (to risk-weighted assets)		92,853		11.07	%		8.50	%		8.00	%
Total capital (to risk-weighted assets)		102,275		12.19	%		10.50	%		10.00	%
Tier 1 leverage (to average assets)		92,853		9.39	%		4.00	%		5.00	%

	2021
	Actual Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
	(Dollars in Thousands)
Common equity Tier 1 capital (to risk-weighted assets)	$	87,379		11.36	%		7.00	%		6.50	%
Tier 1 capital (to risk-weighted assets)		87,379		11.36	%		8.50	%		8.00	%
Total capital (to risk-weighted assets)		95,699		12.44	%		10.50	%		10.00	%
Tier 1 leverage (to average assets)		87,379		9.17	%		4.00	%		5.00	%

No significant conditions or events have occurred since December 31, 2022 that management believes have affected the Bank’s classification as “well-capitalized.” Because of the size of the Company’s balance sheet, there is currently no requirement for separate reporting of capital amounts and ratios for Bancshares. Accordingly, such amounts and ratios are not included.

Under the FDIC’s final rule establishing the methodology for calculating deposit insurance assessments for banks with less than $10 billion in assets, the rate is determined based on a number of factors, including the bank’s CAMELS ratings, leverage ratio, net income, non-performing loan ratios, OREO ratios, core deposit ratios, one-year organic asset growth and a loan mix index. The CAMELS rating system is a supervisory rating system developed to classify a bank’s overall condition by taking into account capital adequacy, assets, management capability, earnings, liquidity and sensitivity to market and interest rate risk. The loan mix index component of the assessment model requires banks to calculate each of their loan categories as a percentage of assets and then multiply each category by a standardized historical charge-off rate percentage provided by the FDIC, with a higher index leading to a higher assessment rate. The rule implements maximum assessment rates for institutions with a composite CAMELS rating of 1 or 2 and minimum rates for institutions with a rating of 3, 4 or 5.

Dividend Restrictions

Under Delaware law, dividends may be paid only out of “surplus,” defined as an amount equal to the present fair value of the total assets of the corporation, minus the present fair value of the total liabilities of the corporation, minus the capital of the corporation. In the event that there is no surplus, 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. Dividends may not be paid, however, out of net profits of the corporation if the capital represented by the issued and outstanding stock of all classes having a preference on the distribution of assets is impaired. Further, the Federal Reserve permits bank holding companies to pay dividends only out of current earnings and only if future retained earnings would be consistent with the company’s capital, asset quality and financial condition.

Since it has no significant independent sources of income, Bancshares’ ability to pay dividends depends on its ability to receive dividends from the Bank. Under Alabama law, a state-chartered bank must annually transfer to surplus at least 10% of its “net earnings” (defined as the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets, less all current operating expenses, actual losses, accrued dividends on preferred stock and all federal, state and local taxes) until the bank’s surplus is at least 20% of its capital. Until the bank’s surplus reaches this level, a bank may not declare a dividend in excess of 90% of its net earnings. Once a bank’s surplus equals or exceeds 20% of its capital, if the total of all dividends declared by the bank in a calendar year will exceed the sum of its net earnings for that year and its retained net earnings for the preceding two years (less any required transfers to surplus), then the bank must obtain prior written approval from the Superintendent of the Alabama State Banking Department. The bank may not pay any dividends or make any withdrawals or transfers from surplus without the prior written approval of the Superintendent. The FDIC prohibits the payment of cash dividends if (1) as a result of such payment, the bank would be undercapitalized or (2) the bank is in default with respect to any assessment due to the FDIC, including a deposit insurance assessment. These restrictions could materially influence the Bank’s, and therefore Bancshares’, ability to pay dividends.

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Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

16.LEASES

The Bank and ALC are involved in a number of operating leases, primarily for branch locations. Branch leases have remaining lease terms ranging from two years to six years, some of which include options to extend the leases for up to five years, and some of which include an option to terminate the lease within one year. The Bank leases certain office facilities to third parties and classifies these leases as operating leases.

The following table provides a summary of the components of lease income and expense, as well as the reporting location in the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021:

		Year Ended
	Location	December 31, 2022		December 31, 2021
		(Dollars in Thousands)
Operating lease expense (1)	Net occupancy and equipment	$	434	$	999
Operating lease income (2)	Lease income	$	864	$	830

(1)Includes short-term lease costs. For the years ended December 31, 2022 and 2021, short-term lease costs were nominal in amount.

(2)Operating lease income includes rental income from owned properties.

The following table provides supplemental lease information for operating leases on the Consolidated Balance Sheet as of December 31, 2022:

	Location	December 31, 2022			December 31, 2021
		(Dollars in Thousands)			(Dollars in Thousands)
Operating lease right-of-use assets	Other assets	$	1,883		$	2,245
Operating lease liabilities	Other liabilities	$	1,961		$	2,317
Weighted-average remaining lease term (in years)			5.03			5.90
Weighted-average discount rate			3.30	%		3.29	%

The following table provides supplemental lease information for the Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021:

	Year Ended
	December 31, 2022		December 31, 2021
	(Dollars in Thousands)
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	427	$	859

The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of December 31, 2022:

	Minimum Rental Payments
	(Dollars in Thousands)
2023	$	432
2024		438
2025		339
2026		346
2027		353
2028 and thereafter		238
Total future minimum lease payments	$	2,146
Less: Imputed interest		185
Total	$	1,961

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

17.DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments to add stability to interest income or expense and to manage its exposure to movements in interest rates. The Company does not use derivatives for trading or speculative purposes and only enters into transactions that have a qualifying hedge relationship. The Company’s hedging strategies involving interest rate derivatives are classified as either cash flow hedges or fair value hedges, depending upon the rate characteristic of the hedged item.

Cash Flow Hedges

The Bank has entered into forward interest rate swap contracts on certain variable-rate money market deposit accounts (indexed to the Federal Funds effective rate’s daily weighted average). The money market account balances are expected to exceed the notional amount for the duration of the hedges and the rates on these deposits are anticipated to move closely with changes in one-month LIBOR, or a comparable benchmark interest rate. These interest rate swaps were designated as derivative instruments in cash flow hedges with the objective of converting the floating interest payments to a fixed rate. Under the swap arrangements, the Bank pays a fixed interest rate and receives a variable interest rate based on one-month LIBOR, or a comparable benchmark interest rate, on the notional amount, with monthly net settlements.

Fair Value Hedges

The Bank has entered into forward interest rate swap contracts on fixed rate commercial real estate loans. The interest rate swaps were designated as derivative instruments in fair value hedges with the objective of effectively converting pools of fixed rate assets to variable rate throughout the hedge durations. Under the swap arrangements, the Bank pays a fixed interest rate and receives a variable interest rate based on one-month LIBOR, or a comparable benchmark interest rate, on the notional amount, with monthly net settlements. The Bank recognized no gains or losses on the fair value hedges during the years ended December 31, 2022 and 2021.

Terminated Hedges

Cash Flow Hedge Terminated in 2022

During the second quarter of 2022, the Bank terminated a forward interest rate swap contract on a variable FHLB advance that was previously designated as a cash flow hedge. The termination of the swap resulted in a net deferred gain of $0.3 million which will remain in accumulated other comprehensive income and be reclassified into earnings over the original term of the interest rate swap contract. During the year ended December 31, 2022, a gain of $70 thousand, net of income taxes, was reclassified from other comprehensive income (loss) related to the terminated contract. There were no gains or losses reclassified from other comprehensive income (loss) related to cash flow hedges for the year ended December 31, 2021.

Hedges Terminated Subsequent to December 31, 2022

Subsequent to December 31, 2022, the Company terminated all four interest rate swap contracts that were in place as of December 31, 2022 and recorded deferred gains totaling $2.2 million associated with the terminations. The purpose of the terminations was to partially mitigate interest rate risk in downward interest rate scenarios. The deferred gains will be accreted to net interest income over the remaining life of the original term of each swap.

Presentation

The Company has elected to offset derivative fair value amounts under master netting agreements, given that all of the Company’s hedges are with the same counterparty.

The following table reflects the notional amount and fair value of derivative instruments included on the Company’s Consolidated Balance Sheets on a net basis as of December 31, 2022 and 2021.

	As of December 31, 2022				As of December 31, 2021
			Estimated Fair Value				Estimated Fair Value
	Notional Amount		Gain (Loss) (1)		Notional Amount		Gain (Loss) (1)
	(Dollars in Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to fixed rate commercial real estate loans	$	20,000	$	1,101	$	20,000	$	(198	)
Total fair value hedges				1,101				(198	)
Cash flow hedges:
Interest rate swaps related to variable-rate money market deposit accounts		20,000		1,205		20,000		(472	)
Interest rate swaps related to FHLB advances		—		—		10,000		(104	)
Total cash flow hedges				1,205				(576	)
Total hedges designated as hedging instruments, net			$	2,306			$	(774	)

(1) Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

The Company has elected the last-of-layer method with respect to both of its fair value hedges. This approach allows the Company to designate as the hedged item a stated amount of the assets that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows. Relative to the identified pools of loans, this represents the last dollar amount of the designated commercial loans, which is equivalent to the notional amounts of the derivative instruments.

The following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

Location in the Consolidated Balance Sheet in Which the Hedged	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Item is Included	December 31, 2022
	(Dollars in Thousands)
Loans and leases, net of allowance for loan and lease losses (1)	$	32,233	$	1,101

(1)These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. As of December 31, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships was $33.3 million, the cumulative basis adjustments associated with these hedging relationships were $1.1 million, and the amounts of the designated hedged items were $20 million.

The following table presents the effect of hedging derivative instruments on the Company’s Consolidated Statements of Operations.

	Location in the	Year Ended December 31,
	Consolidated Statements	2022			2021
	of Operations	(Dollars in Thousands)
Interest income	Interest and fees on loans	$	75		$	(253	)
Interest expense	Interest on deposits		56			(127	)
Interest expense	Interest on short-term borrowings		(5	)		(333	)
	Net increase (decrease) to income before income taxes	$	126		$	(713	)

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Segment Reporting

12 Months Ended

Dec. 31, 2021

Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]

Segment Reporting

18.SEGMENT REPORTING

In the tables below, information is disclosed for the two reportable operating segments of Bancshares: the Bank and ALC. The reportable segments were determined using the internal management reporting system. These segments comprise Bancshares’ and the Bank’s significant subsidiaries. The accounting policies for each segment are the same as those described in Note 2, “Summary of Significant Accounting Policies.” The segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions have been eliminated to determine the consolidated balances. The parent company and FUSB Reinsurance are included in the "All Other" column. The results for the two reportable segments of the Company are included in the tables below:

	2022
	Bank		ALC		All Other			Eliminations			Consolidated
	(Dollars in Thousands)
Total interest income	$	37,510	$	4,716	$	5		$	(1,034	)	$	41,197
Total interest expense		3,803		1,029		458			(1,034	)		4,256
Net interest income		33,707		3,687		(453	)		—			36,941
Provision for loan and lease losses		1,338		1,970		—			—			3,308
Net interest income after provision		32,369		1,717		(453	)		—			33,633
Total non-interest income		3,535		204		8,091			(8,379	)		3,451
Total non-interest expense		25,278		1,751		1,238			(195	)		28,072
Income (loss) before income taxes		10,626		170		6,400			(8,184	)		9,012
Provision for income taxes		2,475		45		(372	)		—			2,148
Net income (loss)	$	8,151	$	125	$	6,772		$	(8,184	)	$	6,864
Other significant items:
Total assets	$	998,727	$	19,772	$	101,072		$	(124,904	)	$	994,667
Total investment securities		132,657		—		—			—			132,657
Total loans, net		763,941		18,810		—			(18,300	)		764,451
Goodwill and core deposit intangible, net		7,801		—		—			—			7,801
Investment in subsidiaries		—		—		93,414			(93,414	)		—
Fixed asset additions		1,262		—		—			—			1,262
Depreciation and amortization expense		1,579		35		—			—			1,614
Total interest income from external customers		36,481		4,716		—			—			41,197
Total interest income from affiliates		1,029		—		5			(1,034	)		—

	2021
	Bank		ALC		All Other			Eliminations			Consolidated
	(Dollars in Thousands)
Total interest income	$	32,537	$	9,019	$	7		$	(1,642	)	$	39,921
Total interest expense		2,842		1,635		115			(1,642	)		2,950
Net interest income		29,695		7,384		(108	)		—			36,971
Provision for loan and lease losses		1,515		495		—			—			2,010
Net interest income after provision		28,180		6,889		(108	)		—			34,961
Total non-interest income		3,206		576		5,697			(5,958	)		3,521
Total non-interest expense		25,188		6,599		1,421			(452	)		32,756
Income (loss) before income taxes		6,198		866		4,168			(5,506	)		5,726
Provision for income taxes		1,305		221		(251	)		—			1,275
Net income (loss)	$	4,893	$	645	$	4,419		$	(5,506	)	$	4,451
Other significant items:
Total assets	$	961,572	$	40,924	$	106,247		$	(150,441	)	$	958,302
Total investment securities		134,238		—		81			—			134,319
Total loans, net		699,600		39,499		—			(39,069	)		700,030
Goodwill and core deposit intangible, net		8,069		—		—			—			8,069
Investment in subsidiaries		—		—		95,172			(95,172	)		—
Fixed asset additions		816		6		—			—			822
Depreciation and amortization expense		1,613		79		—			—			1,692
Total interest income from external customers		30,902		9,019		—			—			39,921
Total interest income from affiliates		1,635		—		7			(1,642	)		—

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Other Operating Income and Expense

12 Months Ended

Dec. 31, 2022

Other Income and Expenses [Abstract]

Other Operating Income and Expense

19.OTHER OPERATING INCOME AND EXPENSE

Other operating income for the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Bank-owned life insurance	$	451		$	439
Credit insurance commissions and fees	$	(93	)	$	192
ATM fee income		532			577
Mortgage fees from secondary market		17			23
Wire transfer fees		52			64
Gain on sales of premises and equipment and other assets		301			19
Other income		256			286
Total	$	1,516		$	1,600

Other operating expense for the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Postage, stationery and supplies	$	614		$	802
Telephone/data communication		682			903
Advertising and marketing		189			167
Travel and business development		225			147
Collection and recoveries		261			168
Other services		323			322
Insurance expense		566			635
FDIC insurance and state assessments		684			726
Loss on sales of premises and equipment and other assets		69			150
Core deposit intangible amortization		268			341
Other real estate/foreclosure expense, net		(331	)		(371	)
Other expense		2,124			2,114
Total	$	5,674		$	6,104

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Guarantees, Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Guarantees, Commitments and Contingencies

20.GUARANTEES, COMMITMENTS AND CONTINGENCIES

The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making these commitments as it does for on-balance sheet instruments. For interest rate swap transactions and commitments to purchase or sell securities for forward delivery, the contract or notional amounts do not represent exposure to credit loss. The Bank controls the credit risk of these derivative instruments through credit approvals, limits and monitoring procedures. Certain derivative contracts have credit risk for the carrying value plus the amount to replace such contracts in the event of counterparty default. All of the Bank’s financial instruments are held for risk management and not for trading purposes. During the years ended December 31, 2022 and 2021, there were no credit losses associated with derivative contracts.

In the normal course of business, there are outstanding commitments and contingent liabilities, such as commitments to extend credit, letters of credit and other commitments, that are not included in the consolidated financial statements. The financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the financial statements. A summary of these commitments and contingent liabilities is presented below:

	December 31,
	2022		2021
	(Dollars in Thousands)
Standby letters of credit	$	—	$	—
Standby performance letters of credit	$	556	$	582
Commitments to extend credit	$	186,169	$	164,247

Standby letters of credit and standby performance letters of credit are contingent commitments issued by the Bank generally to guarantee the performance of a customer to a third party. The Bank has recourse against the customer for any amount that it is required to pay to a third party under a standby letter of credit or standby performance letter of credit. Revenues are recognized over the lives of the standby letters of credit and standby performance letters of credit. As of December 31, 2022 and 2021, the potential amounts of future payments that the Bank could be required to make under its standby letters of credit and standby performance letters of credit, which represent the Bank’s total credit risk in these categories, are included in the table above.

A commitment to extend credit is an agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon the extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

The Company is self-insured for a significant portion of employee health benefits. However, the Company maintains stop-loss coverage with third-party insurers to limit the Company’s individual claim and total exposure related to self-insurance. The Company estimates accrued liability for the ultimate costs to settle known claims, as well as claims incurred but not yet reported, as of the balance sheet date. The Company’s recorded estimated liability for self-insurance is based on the insurance companies’ incurred loss estimates and management’s judgment, including assumptions and evaluation of factors related to the frequency and severity of claims, the Company’s claims development history and the Company’s claims settlement practices. The assessment of loss contingencies and self-insurance reserves is a highly subjective process that requires judgments about future events. Contingencies are reviewed at least quarterly to determine the adequacy of self-insurance accruals. Self-insurance accruals totaled $0.2 million as of both December 31, 2022 and 2021. The ultimate settlement of loss contingencies and self-insurance reserves may differ significantly from amounts accrued in the Company’s consolidated financial statements.

Litigation

The Company is party to certain ordinary course litigation from time to time, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

21.FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows a uniform framework for estimating and classifying the fair value of financial instruments. The assumptions used in the estimation of the fair value of the Company’s financial instruments are detailed below. The following disclosures should not be considered a representation of the liquidation value of the Company, but rather represent a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Fair Value Hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. In determining fair value, the Company uses various methods, including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair value. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

● Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange or Nasdaq. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

● Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

● Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

The Company rarely transfers assets and liabilities measured at fair value between Level 1 and Level 2 measurements. Trading account assets and securities available-for-sale may be periodically transferred to or from Level 3 valuation based on management’s conclusion regarding the best method of pricing for an individual security. Such transfers are accounted for as if they occurred at the beginning of a reporting period. There were no such transfers during the years ended December 31, 2022 or 2021.

Fair Value Measurements on a Recurring Basis

Securities Available-for-Sale

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include exchange-traded equities. Level 2 securities include U.S. Treasury and agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. Level 2 fair values are obtained from quoted prices of securities with similar characteristics. In certain cases, where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Interest Rate Derivative Agreements

Interest rate derivative agreements are used by the Company to mitigate risk associated with changes in interest rates. The fair value of these agreements is based on information obtained from third-party financial institutions. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party valuations. The Company classifies these derivative assets within Level 2 of the valuation hierarchy.

The following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021.

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	43,957	$	—	$	43,957	$	—
Commercial		11,693		—		11,693		—
Obligations of U.S. government-sponsored agencies		4,270		—		4,270		—
Obligations of states and political subdivisions		2,072		—		2,072		—
Corporate notes		15,921				14,921		1,000
U.S. Treasury securities		52,882		52,882		—		—
Other assets - derivatives		2,306		—		2,306		—

	Fair Value Measurements as of December 31, 2021 Using
	Totals At December 31, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	46,228	$	—	$	46,228	$	—
Commercial		24,971		—		24,971		—
Obligations of U.S. government-sponsored agencies		5,192		—		5,182		10
Obligations of states and political subdivisions		4,317		—		4,317		—
Corporate notes		15,482				15,482		—
U.S. Treasury securities		34,693		34,693		—		—
Other liabilities - derivatives		774		—		774		—

Fair Value Measurements on a Non-recurring Basis

Impaired Loans

Loans that are considered impaired are loans for which, based on current information and events, it is probable that the Company will be unable to collect all principal and interest payments due under the contractual terms of the loan agreement. Impaired loans can be measured based on the present value of expected payments using the loan’s original effective rate as the discount rate, the loan’s observable market price or the fair value of the collateral less estimated selling cost if the loan is collateral-dependent. For the Company, the fair value of impaired loans is primarily measured based on the value of the collateral securing the loans (typically real estate). The Company determines the fair value of the collateral based on independent appraisals performed by qualified licensed appraisers. The appraisals may include a single valuation approach or a combination of approaches, including comparable sales and income approaches. Appraised values are discounted for estimated costs to sell and may be discounted further based on management’s knowledge of the collateral, changes in market conditions since the most recent appraisal and/or management’s knowledge of the borrower and the borrower’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Impaired loans are evaluated by management for additional impairment at least quarterly and are adjusted accordingly.

OREO and Other Assets Held-for-Sale

OREO consists of properties obtained through foreclosure or in satisfaction of loans and is recorded at net realizable value, less estimated cost to sell. 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 significant unobservable inputs for determining fair value.

As of both December 31, 2022 and 2021, included within OREO were certain assets that were formerly included as premises and equipment but have been removed from service, and as of the balance sheet date, were designated as assets to be disposed of by sale. These include assets associated with branches of the Bank and ALC that have been closed. When an asset is designated as held-for-sale, the Company ceases depreciation of the asset, and the asset is recorded at the lower of its carrying amount or fair value less estimated cost to sell. 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.

The following table presents the balances of impaired loans, OREO and other assets held-for-sale measured at fair value on a non-recurring basis as of December 31, 2022 and 2021:

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	108	$	—	$	—	$	108
OREO and other assets held-for-sale		686		—		—		686

	Fair Value Measurements as of December 31, 2021 Using
	Totals At December 31, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	6	$	—	$	—	$	6
OREO and other assets held-for-sale		2,149		—		—		2,149

Non-recurring Fair Value Measurements Using Significant Unobservable Inputs

The following table presents information regarding assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of December 31, 2022. The table includes the valuation techniques and the significant unobservable inputs utilized. The range of each unobservable input and the weighted average within the range utilized as of December 31, 2022 are both included. Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value December 31, 2022		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Impaired loans	$	108	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9%-10%	(9.5)%
OREO and other assets held-for-sale	$	686	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9%-10%	(9.5)%

Impaired loans

Impaired loans are valued based on multiple data points indicating the fair value for each loan. The primary data point is the appraisal value of the underlying collateral, to which a discount is applied. Management establishes this discount or comparability adjustment based on recent sales of similar property types. As liquidity in the market increases or decreases, the comparability adjustment and the resulting asset valuation are impacted.

OREO

OREO under a binding contract for sale is valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Other Assets Held-for-Sale

Assets designated as held-for-sale that are under a binding contract are valued based on the contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash, due from banks and federal funds sold: The carrying amount of cash, due from banks and federal funds sold approximates fair value.

Federal Home Loan Bank stock: Based on the redemption provision of the FHLB, the stock has no quoted market value and is carried at cost.

Investment securities: Fair values of investment securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments.

Derivative instruments: The fair value of derivative instruments is based on information obtained from a third-party financial institution. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party information.

Accrued interest receivable and payable: The carrying amount of accrued interest approximates fair value.

Loans, net: The fair value of loans is estimated on an exit price basis incorporating contractual cash flow, prepayment discount spreads, credit loss and liquidity premiums.

Demand and savings deposits: The fair values of demand deposits are equal to the carrying value of such deposits. Demand deposits include non-interest-bearing demand deposits, savings accounts, NOW accounts and money market demand accounts.

Time deposits: The fair values of relatively short-term time deposits are equal to their carrying values. Discounted cash flows are used to value long-term time deposits. The discount rate used is based on interest rates currently offered by the Company on comparable deposits as to amount and term.

Short-term borrowings: These borrowings may consist of federal funds purchased, securities sold under agreements to repurchase and the floating rate borrowings from the FHLB account. Due to the short-term nature of these borrowings, fair values approximate carrying values.

Long-term borrowings: The fair value of this debt is estimated using discounted cash flows based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements as of the determination date.

Off-balance sheet instruments: The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance sheet financial instruments is based on fees currently charged to enter into such agreements.

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of December 31, 2022 and 2021 were as follows:

	December 31, 2022
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	30,152	$	30,152	$	30,152	$	—	$	—
Investment securities available-for-sale		130,795		130,795		52,882		76,913		1,000
Investment securities held-to-maturity		1,862		1,769		—		1,769		—
Federal funds sold		1,768		1,768		—		1,768		—
Federal Home Loan Bank stock		1,359		1,359		—		—		1,359
Loans, net of allowance for loan losses		764,451		730,961		—		—		730,961
Liabilities:
Deposits		870,025		788,161		—		788,161		—
Short-term borrowings		20,038		20,038		—		20,038		—
Long-term borrowings		10,726		9,702				9,702
Other assets - derivatives		2,306		2,306		—		2,306		—

	December 31, 2021
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	61,244	$	61,244	$	61,244	$	—	$	—
Investment securities available-for-sale		130,883		130,883		34,612		96,260		11
Investment securities held-to-maturity		3,436		3,477		—		3,477		—
Federal funds sold		82		82		—		82		—
Federal Home Loan Bank stock		870		870		—		—		870
Loans, net of allowance for loan losses		700,030		694,744		—		—		694,744
Liabilities:
Deposits		838,126		837,439		—		837,439		—
Short-term borrowings		10,046		10,046		—		10,046		—
Long-term borrowings		10,653		10,804				10,804
Other liabilities - derivatives		774		774		—		774		—

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First US Bancshares, Inc. (Parent Company Only) Financial Information

12 Months Ended

Dec. 31, 2022

Disclosure Text Block [Abstract]

Condensed Financial Information of Parent Company Only Disclosure

22.FIRST US BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION

Balance Sheets

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands)
Assets:
Cash on deposit	$	2,855	$	5,890
Investment in subsidiaries		93,414		95,172
Other assets		78		83
Total assets	$	96,347	$	101,145
Liabilities:
Other liabilities	$	485	$	428
Long-term borrowings		10,726		10,653
Shareholders’ equity		85,136		90,064
Total liabilities and shareholders’ equity	$	96,347	$	101,145

Statements of Operations

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands)
Income:
Dividend income, First US Bank	$	3,463	$	1,570
Total income		3,463		1,570
Expense		1,320		1,055
Gain before equity in undistributed income of subsidiaries		2,143		515
Equity in undistributed income of subsidiaries		4,721		3,936
Net income	$	6,864	$	4,451

Statements of Cash Flows

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Cash flows from operating activities:
Net income	$	6,864		$	4,451
Adjustments to reconcile net income to net cash provided    by operating activities:
Distributions in excess of undistributed income    of subsidiaries		(4,721	)		(3,936	)
Change in other assets and liabilities		135			580
Net cash provided by operating activities		2,278			1,095
Cash flows from investing activities:
Investment in subsidiaries		-			(5,000	)
Net cash used in investing activities		—			(5,000	)
Cash flows from financing activities:
Net proceeds from long-term borrowings		-			10,653
Net share-based compensation transactions		-			(7	)
Dividends paid		(832	)		(745	)
Treasury stock repurchases		(4,481	)		(525	)
Net cash provided by (used in) in financing activities		(5,313	)		9,376
Net increase (decrease) in cash		(3,035	)		5,471
Cash at beginning of year		5,890			419
Cash at end of year	$	2,855		$	5,890

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Quarterly Data (Unaudited)

12 Months Ended

Dec. 31, 2022

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information

23.QUARTERLY DATA (UNAUDITED)

	Year Ended December 31,
	2022								2021
	Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter		First Quarter
	(Dollars in Thousands)
Interest income	$	11,621	$	10,670	$	9,525	$	9,381	$	9,987	$	10,030	$	10,059	$	9,845
Interest expense		1,730		1,155		699		672		727		695		747		781
Net interest income		9,891		9,515		8,826		8,709		9,260		9,335		9,312		9,064
Provision for loan and lease losses		527		1,165		895		721		493		618		498		401
Net interest income after provision    for loan and lease losses		9,364		8,350		7,931		7,988		8,767		8,717		8,814		8,663
Non-interest:
Income		678		1,088		856		829		865		896		809		951
Expense		7,106		7,032		6,878		7,056		7,414		8,547		8,399		8,396
Income before income taxes		2,936		2,406		1,909		1,761		2,218		1,066		1,224		1,218
Provision for income taxes		708		546		494		400		507		229		271		268
Net income after taxes	$	2,228	$	1,860	$	1,415	$	1,361	$	1,711	$	837	$	953	$	950
Earnings per common share:
Basic earnings	$	0.37	$	0.31	$	0.23	$	0.22	$	0.27	$	0.13	$	0.15	$	0.15
Diluted earnings	$	0.35	$	0.29	$	0.22	$	0.20	$	0.25	$	0.13	$	0.14	$	0.14

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Bancshares, the Bank and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. The Company consolidates an entity if the Company has a controlling financial interest in the entity.

Use of Estimates

Use of Estimates

The accounting principles and reporting policies of the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with general practices within the financial services industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated balance sheets, and revenues and expenses for the period included in the consolidated statements of operations and of cash flows. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term relate to the accounting for the allowance for loan and lease losses, the right-of-use asset and lease liability, the value of other real estate owned (“OREO”) and certain collateral-dependent loans, consideration related to goodwill impairment testing and deferred tax asset valuation. In connection with the determination of the allowance for loan losses and OREO, management generally obtains independent appraisals for significant properties, evaluates the overall portfolio characteristics and delinquencies and monitors economic conditions.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, instruments with an original maturity of less than 90 days from issuance and amounts due from banks.

Supplemental disclosures of cash flow information and non-cash transactions related to cash flows for the years ended December 31, 2022 and 2021 are as follows:

	2022		2021
	(Dollars in Thousands)
Cash paid during the year for:
Interest	$	3,873	$	3,018
Income taxes		2,855		1,375
Non-cash transactions:
Assets acquired in settlement of loans		907		806
Transfers of closed branch assets to OREO		391		1,978
Reissuance of treasury stock as compensation		138		59

Revenue Recognition

Revenue Recognition

The Company records revenue when control of the promised products or services is transferred to the customer in an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for those products and services.

Interest Income

The majority of the Company’s revenue is generated through interest earned on financial instruments, including loans and investment securities. This revenue is recognized on an accrual basis and calculated through the use of non-discretionary formulas based on written contracts including loan agreements or securities contracts. Loan origination fees are accreted into interest income over the term of the loan.

Service Charges on Deposit Accounts

Service charges on deposit accounts include non-sufficient fund fees, overdraft fees and other service charges. When a depositor presents an item for payment in excess of available funds, non-sufficient funds fees are earned when an item is returned unpaid, and overdraft fees are earned when the Company provides the necessary funds to complete the transaction. The Company generates other service charges by providing depositors with proper safeguard and remittance of funds, as well as by providing optional services such as check imaging or treasury management. Charges for proper safeguard and remittance of funds are recognized monthly as the deposit customer maintains funds in the account, while revenue for optional services are recognized when the customer completes the transaction.

Gains or Losses on the Sale of Investment Securities

Gains or losses on the sale of investment securities are recognized as the sale transaction occurs with the cost of securities sold based on the specific identification method.

Lease Income

The Bank leases certain office facilities to third parties and classifies the leases as operating leases. Lease income is recognized on a monthly basis based on the contractual terms of the lease agreement.

Bank-owned Life Insurance

Bank-owned life insurance income represents income earned from the appreciation of the cash surrender value of insurance contracts held and the proceeds of insurance benefits. The Company recognizes revenue each period in the amount of the appreciation of the cash surrender value of the contracts. Revenue recognized from the proceeds of insurance benefits is recognized at the time the claim is confirmed.

ATM Fee Income

Fee income is generated by allowing the Bank’s debit cardholders to withdraw funds from the ATM’s of other financial institutions and by allowing non-customers to withdraw funds from the Bank’s ATMs. The Bank satisfies performance obligations for each transaction when the withdrawal is processed. The Bank does not direct the activities of the related processing network’s service and recognizes revenue on a net basis as the agent in each transaction.

Other Miscellaneous Income

Other miscellaneous income includes mortgage fees, credit insurance income, auto club revenue, wire transfer fees, safe deposit box fee income, check fees and other miscellaneous sources of income. The Company recognizes revenue associated with these sources of income in accordance with the satisfaction of the performance obligation based on the timing of the occurrence of a transaction or when service is provided.

Reinsurance Activities

Reinsurance Activities

Before FUSB Reinsurance ceased writing new insurance contracts in 2022, the Company assumed insurance risk related to credit life and credit accident and health insurance written by a non-affiliated insurance company for its customers that choose such coverage through a quota share reinsurance agreement. Assumed premiums on credit life insurance were deferred and earned over the period of insurance coverage using either a pro rata method or the effective yield method, depending on whether the amount of insurance coverage generally remains level or declines. Assumed premiums for accident and health policies were earned on an average of the pro rata and the effective yield methods.

Investment Securities

Investment Securities

The investment portfolio consists of debt securities, including U.S. Treasury securities, obligations of U.S. government agencies, municipal bonds, residential and commercial mortgage-backed securities and corporate notes. Securities may be held in one of three portfolios: trading account securities, securities held-to-maturity or securities available-for-sale. Trading account securities are carried at estimated fair value, with unrealized gains and losses included in operations. The Company held no trading account securities as of December 31, 2022 or 2021. Investment securities held-to-maturity are carried at cost, adjusted for amortization of premiums and accretion of discounts. With regard to investment securities held-to-maturity, management has the intent and the Bank has the ability to hold such securities until maturity. Investment securities available-for-sale are carried at fair value, with any unrealized gains or losses excluded from operations and reflected, net of tax, as a separate component of shareholders’ equity in accumulated other comprehensive income or loss. Investment securities available-for-sale are so classified because management may decide to sell certain securities prior to maturity for liquidity, tax planning or other valid business purposes. When the fair value of a security falls below carrying value, an evaluation must be made to determine whether the unrealized loss is a temporary or other-than-temporary impairment. Impaired securities that are not deemed to be temporarily impaired are written down by a charge to operations to the extent that the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income or loss. The Company uses a systematic methodology to evaluate potential impairment of its investments that considers, among other things, the magnitude and duration of the decline in fair value, the financial health and business outlook of the issuer and the Company’s ability and intent to hold the investment until such time as the security recovers its fair value.

Interest earned on investment securities available-for-sale is included in interest income. Amortization of premiums and discounts on investment securities is determined by the interest method and included in interest income. Gains and losses on the sale of investment securities available-for-sale, computed principally on the specific identification method, are shown separately in non-interest income.

The Company also holds Federal Home Loan Bank (“FHLB”) stock, which, based on the redemption provision of the FHLB, has no quoted market value and is carried at cost. Dividends earned on FHLB stock are included in interest income.

Derivatives and Hedging Activities

Derivatives and Hedging Activities

The Company uses derivative instruments to minimize unplanned fluctuations in earnings and cash flows caused by interest rate volatility. The Company’s interest rate risk management strategy involves modifying the repricing characteristics of certain assets and liabilities so that changes in interest rates do not adversely affect net interest margin and cash flow. Derivative instruments utilized by the Company generally include interest rate swaps, caps and floors, and are carried as assets and/or liabilities at fair value on the Company’s consolidated balance sheets. The Company does not use derivatives for trading or speculative purposes and generally enters into transactions that have a qualifying hedge relationship. Depending upon the characteristics of the hedged item, derivatives are classified as either cash flow hedges or fair value hedges. When cash flow or fair value hedging strategies are utilized, the Company specifically identifies the derivative instrument as a hedge and identifies the risk that is being hedged contemporaneously with the execution of the hedge transaction.

Cash flow hedge relationships mitigate exposure to variability of future cash flows or other forecasted transactions. The change in fair value of cash flow hedges is recorded, net of tax, in accumulated other comprehensive income (loss) except for amounts excluded from hedge effectiveness. Amounts excluded from hedge effectiveness are recorded in earnings.

Fair value hedge relationships mitigate exposure to the change in fair value of the hedged risk in an asset, liability, or firm commitment. Gains or losses attributable to the derivative instrument, as well as gains or losses attributable to changes in the fair value of the hedged item are recognized in interest income or interest expense in the same income statement line item with the hedged item in the period in which the change in fair value occurs. To the extent the changes in fair value of the derivative instrument do not offset the changes in the fair value of the hedged item, the difference is recognized in earnings. The corresponding adjustment to the hedged asset or liability is included in the basis of the hedged item, while the corresponding change in the fair value of the derivative instrument is recorded as an adjustment to other assets or other liabilities, as applicable. The Company has entered into certain fair value hedges using the last-of-layer method, which allows the Company to hedge the interest rate risk of prepayable financial assets by designating as the hedged item a stated amount of a closed portfolio that is not expected to be affected by prepayments, defaults, or other factors impacting the timing and amount of cash flows.

If a hedge relationship is de-designated or if hedge accounting is discontinued because the hedged item no longer exists, or does not meet the definition of a firm commitment, or because it is probable that the forecasted transaction will no longer occur, the derivative instrument will continue to be recorded in other assets or liabilities in the consolidated balance sheets at its estimated fair value, with changes in fair value recognized in non-interest expense. Any asset or liability that was recognized pursuant to a firm commitment is removed from the consolidated balance sheets and recognized in non-interest expense. Gains or losses that were unrecognized and aggregated in accumulated other comprehensive gain (loss) pursuant to a cash flow hedging relationship are recognized immediately in non-interest expense.

The Company may also enter into derivative contracts that are not designated as hedges in order to mitigate economic risks or risks associated with volatility in connection with customer derivative transactions.

Loans and Interest Income

Loans and Interest Income

Loans are reported at principal amounts outstanding, adjusted for unearned income, net deferred loan origination fees and costs, purchase premiums and discounts, write-downs and the allowance for loan losses. Loan origination fees, net of certain deferred origination costs, and purchase premiums and discounts are recognized as an adjustment to the yield of the related loans, on an effective yield basis.

Interest on all loans is accrued and credited to income based on the principal amount outstanding. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to make payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed against current income unless

the collateral for the loan is sufficient to cover the accrued interest. Interest received on non-accrual loans generally is either applied against principal or reported as interest income in accordance with management’s judgment as to the collectability of principal. The policy for interest recognition on impaired loans is consistent with the non-accrual interest recognition policy. Generally, loans are restored to accrual status when the obligation is brought current and the borrower has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Allowance for Loan and Lease Losses

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is determined based on various components for individually impaired loans and for homogeneous pools of loans and leases. The allowance for loan and lease losses is increased by a provision for loan and lease losses, which is charged to expense, and reduced by charge-offs, net of recoveries by portfolio segment. The methodology for determining charge-offs is consistently applied to each segment. The allowance for loan and lease losses is maintained at a level that, in management’s judgment, is adequate to absorb credit losses inherent in the loan and lease portfolio. The amount of the allowance is based on management’s evaluation of the collectability of the loan and lease portfolio, including the nature of the portfolio, and changes in its risk profile, credit concentrations, historical trends and economic conditions. This evaluation also considers the balance of impaired loans. Losses on individually identified impaired loans are measured based on the present value of expected future cash flows, discounted at each loan’s original effective market interest rate. As a practical expedient, impairment may be measured based on the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent. When the measure of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through the provision added to the allowance for loan losses. In general, all loans of $0.5 million or more and, at ALC, any loans of $50 thousand or more that are 90 days or more past due are identified for impairment analysis. One-to-four family residential mortgages and consumer installment loans are subjected to a collective evaluation for impairment, considering delinquency and repossession statistics, loss experience and other factors. Though management believes the allowance for loan and lease losses to be adequate, ultimate losses may vary from estimates. However, estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings during periods in which they become known.

Premises and Equipment

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation, and amortization is computed principally by the straight-line method over the estimated useful lives of the assets or the expected lease terms for leasehold improvements, whichever is shorter. Useful lives for all premises and equipment range from three to forty years.

Bank Owned Life Insurance

Bank Owned Life Insurance

The Company has purchased life insurance policies on certain directors and former executives. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Goodwill and Other Intangible Assets

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. Goodwill is determined to have an indefinite useful life and is not amortized but tested for impairment at least annually or more frequently if events or circumstances exist that indicate that a goodwill impairment test should be performed. The Company performs its annual goodwill impairment test as of October 1st.

Other intangible assets consist of core deposit intangible assets arising from acquisitions. Core deposit intangibles have definite useful lives and are amortized on an accelerated basis over their estimated useful lives. The Company’s core deposit intangible assets have estimated useful lives of seven years. In addition, these intangible assets are evaluated for impairment whenever events or circumstances exist that indicate that the carrying amount should be reevaluated.

Other Real Estate Owned (OREO)

Other Real Estate Owned (OREO)

OREO consists of properties acquired through a foreclosure or in satisfaction of loans, as well as closed Bank and ALC branches. These properties are carried at net realizable value, less estimated selling costs. Losses arising from the acquisition of properties are charged against the allowance for loan losses. Gains or losses realized upon the sale of OREO and additional losses related to subsequent valuation adjustments are determined on a specific property basis and are included as a component of non-interest expense along with carrying costs.

Income Taxes

Income Taxes

The Company accounts for income taxes on the accrual basis through the use of the asset and liability method. Under the asset and liability method, deferred taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the consolidated financial statement carrying amounts and the basis of existing assets and liabilities. Deferred tax assets are also recorded for any tax attributes, such as tax credit and net operating loss carryforwards. The net balance of deferred tax assets and liabilities is reported in other assets in the consolidated balance sheets. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company evaluates the realization of deferred tax assets based on all positive and negative evidence available at the balance sheet date. Realization of deferred tax assets is based on the Company’s judgments about relevant factors affecting realization, including taxable income within any applicable carryback periods, future projected taxable income, reversal of taxable temporary differences and other tax planning strategies to maximize realization of deferred tax assets. A valuation allowance is recorded for any deferred tax assets that are not “more likely than not” to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit for which there is a greater than 50% likelihood that such amount would be realized upon examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest expense, interest income and penalties related to unrecognized tax benefits within current income tax expense.

Stock Based Compensation

Stock-Based Compensation

Compensation expense is recognized for stock options and restricted stock awards issued to employees based on the fair value of these awards at the date of grant. The Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.

Compensation expense is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. The Company’s accounting policy is to recognize compensation expense net of forfeitures.

Treasury Stock

Treasury Stock

Treasury stock purchases and sales are accounted for using the cost method.

Advertising Cost

Advertising Costs

Advertising costs for promoting the Company are minimal and expensed as incurred.

Segment Reporting

Segment Reporting

Management has identified two reportable operating segments of Bancshares: the Bank and ALC. The reportable segments were determined based on the internal management reporting system and comprise Bancshares’ and the Bank’s significant subsidiaries. Segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions were eliminated in the determination of consolidated balances.

Reclassification and Restatement

Reclassification

Certain disclosures in the notes to the prior period consolidated financial statements have been reclassified to conform to the 2022 presentation. These reclassifications had no effect on the Company’s results of operations, financial position or net cash flow.

Net Income Per Share

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding (basic shares). Included in basic shares are shares that have been accrued as of the balance sheet date as deferred compensation for members of Bancshares’ Board of Directors, as well as shares of restricted stock that have been granted pursuant to Bancshares’ 2013 Incentive Plan (as amended, the “2013 Incentive Plan”) previously approved by Bancshares’ shareholders. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period (dilutive shares). The dilutive shares consist of nonqualified stock option grants issued to employees and members of Bancshares’ Board of Directors pursuant to the 2013 Incentive Plan. The following table reflects weighted average shares used to calculate basic and diluted net income per share for the years ended December 31, 2022 and 2021.

	Year Ended December 31,
	2022		2021
Weighted average shares outstanding		5,969,575		6,205,261
Weighted average director deferred shares		114,483		114,096
Basic shares		6,084,058		6,319,357
Dilutive shares		419,650		420,250
Diluted shares		6,503,708		6,739,607

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands, Except Per Share Data)
Net income	$	6,864	$	4,451
Basic net income per share	$	1.13	$	0.70
Diluted net income per share	$	1.06	$	0.66

Comprehensive Income

Comprehensive Income

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities, settlement of derivative contracts or changes in the fair value of cash flow derivatives.

Accounting Policies Recently Adopted

Accounting Policies Recently Adopted

ASU 2020-04 and ASU 2021-01, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These ASUs provide optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contracts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. The Company utilizes LIBOR, among other indexes, as a reference rate for underwriting certain variable rate loans and interest rate hedging instruments. Management has identified all contracts referencing LIBOR and will continue to monitor risks associated with the discontinuance of LIBOR until remediation of such contracts is complete. Reference rate reform has not had, nor does the Company expect it to have, a material effect on the Company’s consolidated balance sheet, operations or cash flows.

ASU 2022-01, "Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic 815)." In March 2022, the FASB issued ASU 2022-01. The amendments in this standard update expand the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. This standard update

is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2022-01 on January 1, 2023. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements; however, the impact will be dependent on future hedging activity.

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Issued in January 2017, ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity, prior to the amendments in ASU 2017-04, had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. As originally issued, ASU 2017-04 was effective prospectively for annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2017-04 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023. The adoption of this standard update is not currently expected to have a material effect on the Company’s financial statements; however, the impact will be dependent on future evaluations of goodwill impairment that will continue to be performed by management on an annual basis.

ASU 2016-13, "Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Known as the Current Expected Credit Loss (CECL) model, the revised guidance removes all current recognition thresholds and requires companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. The standard also adds disclosure requirements intended to enable users of the financial statements to understand credit risk in the portfolio and how management monitors credit quality, management’s estimate of expected credit losses, and changes in the estimate of credit losses during the period. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by three years for smaller reporting companies, including the Company. The standard became effective for the Company on January 1, 2023, and the Company recorded a transition adjustment that increased loan loss reserves by approximately $2.4 million. In accordance with transition accounting guidance, the transition adjustment was recorded directly to retained earnings during the first quarter of 2023 and will not impact current period earnings. In 2022, the FASB introduced ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures.” ASU 2022-02 seeks to improve the decision usefulness of information provided to investors concerning certain loan refinancings, restructurings and write-offs. The ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL accounting model and enhances the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted the amendments of ASU 2022-02 on January 1, 2023, concurrent with the adoption of the CECL accounting model. The amendments of ASU 2022-02 include only changes to certain financial statement disclosures; and, therefore, adoption of ASU 2022-02 is not expected to have a material impact on the Company’s consolidated financial statements or results of operations.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

Supplemental disclosures of cash flow information and non-cash transactions related to cash flows for the years ended December 31, 2022 and 2021 are as follows:

	2022		2021
	(Dollars in Thousands)
Cash paid during the year for:
Interest	$	3,873	$	3,018
Income taxes		2,855		1,375
Non-cash transactions:
Assets acquired in settlement of loans		907		806
Transfers of closed branch assets to OREO		391		1,978
Reissuance of treasury stock as compensation		138		59

Schedule of Earnings Per Share, Basic and Diluted

The following table reflects weighted average shares used to calculate basic and diluted net income per share for the years ended December 31, 2022 and 2021.

	Year Ended December 31,
	2022		2021
Weighted average shares outstanding		5,969,575		6,205,261
Weighted average director deferred shares		114,483		114,096
Basic shares		6,084,058		6,319,357
Dilutive shares		419,650		420,250
Diluted shares		6,503,708		6,739,607

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands, Except Per Share Data)
Net income	$	6,864	$	4,451
Basic net income per share	$	1.13	$	0.70
Diluted net income per share	$	1.06	$	0.66

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Restructuring Charges (Tables)

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Scheduled of Restructuring Charges

Total restructuring charges incurred during the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended		Year Ended
	December 31, 2022		December 31, 2021		Total
	(Dollars in Thousands)
Expense Category
Severance and personnel expenses	$	108	$	263	$	371
Lease termination costs		2		224		226
Fixed asset valuation adjustments		—		239		239
Termination of technology contracts		45		85		130
Other expenses		—		93		93
Total expenses	$	155	$	904	$	1,059

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Investment Securities Available-for-Sale and Held-to-Maturity

Details of investment securities available-for-sale and held-to-maturity as of December 31, 2022 and 2021 were as follows:

	Available-for-Sale
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	47,659	$	2	$	(3,704	)	$	43,957
Commercial		12,169		4		(480	)		11,693
Obligations of U.S. government-sponsored agencies		5,116		—		(846	)		4,270
Obligations of states and political subdivisions		2,166		—		(94	)		2,072
Corporate notes		17,817		2		(1,898	)		15,921
U.S. Treasury securities		56,956		—		(4,074	)		52,882
Total	$	141,883	$	8	$	(11,096	)	$	130,795

	Held-to-Maturity
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,167	$	—	$	(41	)	$	1,126
Obligations of U.S. government-sponsored agencies		610		—		(40	)		570
Obligations of states and political subdivisions		85		—		(12	)		73
Total	$	1,862	$	—	$	(93	)	$	1,769

	Available-for-Sale
	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	46,020	$	450	$	(242	)	$	46,228
Commercial		24,647		371		(47	)		24,971
Obligations of U.S. government-sponsored agencies		5,207		—		(15	)		5,192
Obligations of states and political subdivisions		4,247		80		(10	)		4,317
Corporate notes		15,458		76		(52	)		15,482
U.S. Treasury securities		35,097		—		(404	)		34,693
Total	$	130,676	$	977	$	(770	)	$	130,883

	Held-to-Maturity
	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	2,115	$	29	$	—	$	2,144
Obligations of U.S. government-sponsored agencies		768		10		—		778
Obligations of states and political subdivisions		553		2		—		555
Total	$	3,436	$	41	$	—	$	3,477

Maturities of Investment Securities Available-for-Sale and Held-to-Maturity

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of December 31, 2022 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	511	$	511	$	—	$	—
Maturing after one to five years		61,068		57,159		—		—
Maturing after five to ten years		67,309		60,872		1,606		1,536
Maturing after ten years		12,995		12,253		256		233
Total	$	141,883	$	130,795	$	1,862	$	1,769

Schedule of Unrealized Loss on Investments

The following table reflects gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2022 and 2021.

	Available-for-Sale
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	19,876	$	(952	)	$	23,903	$	(2,752	)
Commercial		9,720		(357	)		1,247		(123	)
Obligations of U.S. government-sponsored agencies		—		—			4,270		(846	)
Obligations of states and political subdivisions		1,559		(41	)		512		(53	)
Corporate notes		6,845		(898	)		8,075		(1,000	)
U.S. Treasury securities		21,240		(698	)		31,642		(3,376	)
Total	$	59,240	$	(2,946	)	$	69,649	$	(8,150	)

	Held-to-Maturity
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,125	$	(41	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		215		(7	)		356		(33	)
Obligations of states and political subdivisions		73		(12	)		—		—
Total	$	1,413	$	(60	)	$	356	$	(33	)

	Available-for-Sale
	December 31, 2021
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	31,346	$	(240	)	$	253	$	(2	)
Commercial		2,245		(12	)		2,970		(35	)
Obligations of U.S. government-sponsored agencies		4,987		(13	)		194		(2	)
Obligations of states and political subdivisions		561		(10	)		—		—
Corporate notes		9,092		(52	)		—		—
U.S. Treasury securities		34,692		(404	)		—		—
Total	$	82,923	$	(731	)	$	3,417	$	(39	)

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Loans and Allowance for Loan and Lease Losses (Tables)

12 Months Ended

Dec. 31, 2022

Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]

Schedule of Loan Portfolio

As of December 31, 2022 and 2021, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	December 31, 2022
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	54,396	$	—	$	54,396
Secured by 1-4 family residential properties		86,946		1,480		88,426
Secured by multi-family residential properties		67,917		—		67,917
Secured by non-farm, non-residential properties		199,965		—		199,965
Commercial and industrial loans (1)		73,561		—		73,561
Consumer loans:
Direct consumer		5,145		4,908		10,053
Branch retail		—		14,237		14,237
Indirect		266,567		—		266,567
Total loans		754,497		20,625		775,122
Less: Unearned interest, fees and deferred cost		799		450		1,249
Allowance for loan losses		8,057		1,365		9,422
Net loans	$	745,641	$	18,810	$	764,451

	December 31, 2021
	Bank			ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	67,048		$	—	$	67,048
Secured by 1-4 family residential properties		70,439			2,288		72,727
Secured by multi-family residential properties		46,000			—		46,000
Secured by non-farm, non-residential properties		197,901			—		197,901
Commercial and industrial loans (1)		73,947			—		73,947
Consumer loans:
Direct consumer		5,972			15,717		21,689
Branch retail		—			25,692		25,692
Indirect		205,940			—		205,940
Total loans		667,247			43,697		710,944
Less: Unearned interest, fees and deferred cost		(324	)		2,918		2,594
Allowance for loan losses		7,038			1,282		8,320
Net loans	$	660,533		$	39,497	$	700,030

(1)Includes equipment financing leases and PPP loans. As of December 31, 2022 and 2021, equipment financing leases totaled $10.3 million and $11.0 million, respectively. As of December 31, 2022 and 2021, PPP loans totaled $6 thousand and $1.7 million, respectively.

Allowance for Loan Losses

The following tables present changes in the allowance for loan and lease losses during the years ended December 31, 2022 and 2021 and the related loan balances by loan type as of December 31, 2022 and 2021:

	As of and for the Year Ended December 31, 2022
	Construction, Land Development, and Other			1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer			Branch Retail			Indirect			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	628		$	690		$	437	$	1,958	$	860	$	1,004		$	304		$	2,439		$	8,320
Charge-offs		—			(40	)		—		—		—		(1,958	)		(633	)		(382	)		(3,013	)
Recoveries		2			39			—		5		0		565			151			45			807
Provision		(113	)		143			209		7		59		1,255			696			1,052			3,308
Ending balance	$	517		$	832		$	646	$	1,970	$	919	$	866		$	518		$	3,154		$	9,422
Ending balance of allowance    attributable to loans:
Individually evaluated for    impairment	$	—		$	7		$	—	$	—	$	252	$	—		$	—		$	—		$	259
Collectively evaluated for    impairment		517			825			646		1,970		667		866			518			3,154			9,163
Total allowance for loan and lease losses	$	517		$	832		$	646	$	1,970	$	919	$	866		$	518		$	3,154		$	9,422
Ending balance of loans    receivable:
Individually evaluated for    impairment	$	—		$	582		$	—	$	2,492	$	2,429	$	18		$	—		$	—		$	5,521
Collectively evaluated for    impairment		54,396			87,844			67,917		197,473		71,132		10,035			14,237			266,567			769,601
Total loans receivable	$	54,396		$	88,426		$	67,917	$	199,965	$	73,561	$	10,053		$	14,237		$	266,567		$	775,122

	As of and for the Year Ended December 31, 2021
	Construction, Land Development, and Other			1-4 Family			Real Estate Multi- Family			Non- Farm Non- Residential		Commercial and Industrial			Direct Consumer			Branch Retail			Indirect			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	393		$	639		$	577		$	1,566	$	1,008		$	1,202		$	373		$	1,712		$	7,470
Charge-offs		(23	)		(12	)		—			—		(6	)		(1,230	)		(377	)		(483	)		(2,131	)
Recoveries		22			14			—			5		21			626			215			68			971
Provision		236			49			(140	)		387		(163	)		406			93			1,142			2,010
Ending balance	$	628		$	690		$	437		$	1,958	$	860		$	1,004		$	304		$	2,439		$	8,320
Ending balance of allowance    attributable to loans:
Individually evaluated for    impairment	$	—		$	10		$	—		$	—	$	57		$	—		$	—		$	—		$	67
Collectively evaluated for    impairment		628			680			437			1,958		803			1,004			304			2,439			8,253
Total allowance for loan and lease losses	$	628		$	690		$	437		$	1,958	$	860		$	1,004		$	304		$	2,439		$	8,320
Ending balance of loans    receivable:
Individually evaluated for    impairment	$	—		$	646		$	—		$	1,051	$	880		$	21		$	—		$	—		$	2,598
Collectively evaluated for    impairment		67,048			72,081			46,000			196,850		73,067			21,668			25,692			205,940			708,346
Total loans receivable	$	67,048		$	72,727		$	46,000		$	197,901	$	73,947		$	21,689		$	25,692		$	205,940		$	710,944

Loans By Credit Quality Indicators

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2022:

	December 31, 2022
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	54,396		$	—		$	—		$	54,396
Secured by multi-family residential properties		67,917			—			—			67,917
Secured by non-farm, non-residential properties		196,813			651			2,501			199,965
Commercial and industrial loans		70,515			—			3,046			73,561
Total	$	389,641		$	651		$	5,547		$	395,839
As a percentage of total loans		98.43	%		0.17	%		1.40	%		100.00	%

	December 31, 2022
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	87,302		$	1,124		$	88,426
Consumer loans:
Direct consumer		10,007			46			10,053
Branch retail		14,205			32			14,237
Indirect		266,496			71			266,567
Total	$	378,010		$	1,273		$	379,283
As a percentage of total loans		99.66	%		0.34	%		100.00	%

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2021:

	December 31, 2021
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	67,046		$	—		$	2		$	67,048
Secured by multi-family residential properties		43,472			2,528			—			46,000
Secured by non-farm, non-residential properties		189,425			7,442			1,034			197,901
Commercial and industrial loans		72,116			333			1,498			73,947
Total	$	372,059		$	10,303		$	2,534		$	384,896
As a percentage of total loans		96.66	%		2.68	%		0.66	%		100.00	%

	December 31, 2021
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	71,526		$	1,201		$	72,727
Consumer loans:
Direct consumer		20,939			750			21,689
Branch retail		25,486			206			25,692
Indirect		205,940			—			205,940
Total	$	323,891		$	2,157		$	326,048
As a percentage of total loans		99.34	%		0.66	%		100.00	%

Aging Analysis of Past Due Loans

The following table provides an aging analysis of past due loans by class as of December 31, 2022:

	As of December 31, 2022
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	54,396		$	54,396		$	—
Secured by 1-4 family residential    properties		800			87			78			965			87,461			88,426			—
Secured by multi-family residential    properties		—			—			—			—			67,917			67,917			—
Secured by non-farm, non-residential    properties		137			—			—			137			199,828			199,965			—
Commercial and industrial loans		61			—			300			361			73,200			73,561			—
Consumer loans:
Direct consumer		250			49			30			329			9,724			10,053			—
Branch retail		257			85			32			374			13,863			14,237
Indirect		186			55			71			312			266,255			266,567			—
Total	$	1,691		$	276		$	511		$	2,478		$	772,644		$	775,122		$	—
As a percentage of total loans		0.21	%		0.04	%		0.07	%		0.32	%		99.68	%		100.00	%

The following table provides an aging analysis of past due loans by class as of December 31, 2021:

	As of December 31, 2021
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	67,048		$	67,048		$	—
Secured by 1-4 family residential    properties		349			23			20			392			72,335			72,727			—
Secured by multi-family residential    properties		—			—			—			—			46,000			46,000			—
Secured by non-farm, non-residential    properties		403			—			—			403			197,498			197,901			—
Commercial and industrial loans		54			—			234			288			73,659			73,947			—
Consumer loans:
Direct consumer		652			589			730			1,971			19,718			21,689			—
Branch retail		377			182			206			765			24,927			25,692
Indirect		43			14			—			57			205,883			205,940			—
Total	$	1,878		$	808		$	1,190		$	3,876		$	707,068		$	710,944		$	—
As a percentage of total loans		0.27	%		0.11	%		0.17	%		0.55	%		99.45	%		100.00	%

Non-accruing Loans

The following table provides an analysis of non-accruing loans by class as of December 31, 2022 and 2021:

	Loans on Non-Accrual Status
	December 31, 2022		December 31, 2021
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	2
Secured by 1-4 family residential properties		914		780
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		—		—
Commercial and industrial loans		605		277
Consumer loans:
Direct consumer		29		743
Branch retail		32		206
Indirect		71		—
Total loans	$	1,651	$	2,008

Impaired Loans

As of December 31, 2022, the carrying amount of the Company’s impaired loans consisted of the following:

	December 31, 2022
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		568		568		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,076		2,076		—
Direct consumer		18		18		—
Total impaired loans with no related allowance recorded	$	5,154	$	5,154	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		14		14		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		353		353		252
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	367	$	367	$	259
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		582		582		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,429		2,429		252
Direct consumer		18		18		—
Total impaired loans	$	5,521	$	5,521	$	259

As of December 31, 2021, the carrying amount of the Company’s impaired loans consisted of the following:

	December 31, 2021
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		630		630		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,051		1,051		—
Commercial and industrial		823		823		—
Direct consumer		21		21		—
Total impaired loans with no related allowance recorded	$	2,525	$	2,525	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		16		16		10
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		57		57		57
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	73	$	73	$	67
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		646		646		10
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,051		1,051		—
Commercial and industrial		880		880		57
Direct consumer		21		21		—
Total impaired loans	$	2,598	$	2,598	$	67

The average net investment in impaired loans and interest income recognized and received on impaired loans during the years ended December 31, 2022 and 2021 was as follows:

	Year Ended December 31, 2022
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	87	$	—	$	—
Secured by 1-4 family residential properties		614		14		6
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,529		49		48
Commercial and industrial		1,279		8		5
Direct consumer		19		1		1
Total	$	3,528	$	72	$	60

	Year Ended December 31, 2021
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		773		31		31
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,377		140		108
Commercial and industrial		637		61		40
Direct consumer		22		9		2
Total	$	3,809	$	241	$	181

Loans Modified in a Troubled Debt Restructuring

The following table provides, as of December 31, 2022 and 2021, the number of loans remaining in each loan category that the Company had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

	December 31, 2022						December 31, 2021
	Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance		Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties		1		23		12		1		23		12
Secured by non-farm, non-residential properties		2		621		612		2		621		617
Commercial loans		1		71		22		1		71		31
Total		4	$	715	$	646		4	$	715	$	660

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Other Real Estate Owned and Repossessed Assets (Tables)

12 Months Ended

Dec. 31, 2022

Other Real Estate [Abstract]

Summary of Foreclosed Property Activity

Other Real Estate Owned

Other real estate and certain other assets acquired in foreclosure are reported at the net realizable value of the property, less estimated costs to sell. The following table summarizes foreclosed property activity during the years ended December 31, 2022 and 2021:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)
Beginning balance	$	2,149		$	949
Additions (1)		411			1,981
Sales proceeds		(2,232	)		(1,205	)
Gross gains		386			491
Gross losses		(27	)		—
Net gains		359			491
Impairment		(1	)		(67	)
Ending balance	$	686		$	2,149

(1)Additions to other real estate owned (“OREO”) include transfers from loans, transfers from closed Bank and ALC branches, and capitalized improvements to existing OREO properties.

Summary of Repossessed Assets Activity

The following table summarizes repossessed asset activity during the years ended December 31, 2022 and 2021:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)
Beginning balance	$	154		$	245
Transfers from loans		887			803
Sales proceeds		(506	)		(798	)
Gross gains		—			—
Gross losses		(452	)		(96	)
Net losses		(452	)		(96	)
Impairment		—			—
Ending balance	$	83		$	154

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Goodwill and Other Intangible Assets

The Company’s goodwill and other intangibles (carrying basis and accumulated amortization) as of December 31, 2022 were as follows:

	December 31, 2022			December 31, 2021
	(Dollars in Thousands)			(Dollars in Thousands)
Goodwill	$	7,435		$	7,435
Core deposit intangible:
Gross carrying amount		2,048			2,048
Accumulated amortization		(1,682	)		(1,414	)
Core deposit intangible, net		366			634
Total	$	7,801		$	8,069

Schedule of Estimated Remaining Amortization Expense

The Company’s estimated remaining amortization expense on intangible assets as of December 31, 2022 was as follows:

	Amortization Expense
	(Dollars in Thousands)
2023		195
2024		122
2025		49
Total	$	366

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Premises and Equipment (Table)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Premises and Equipment

Premises and equipment and applicable depreciable lives are summarized as follows:

	December 31,
	2022			2021
	(Dollars in Thousands)
Land	$	5,390		$	5,486
Premises (40 years)		24,880			25,924
Furniture, fixtures and equipment (3-7 years)		15,792			15,629
Total cost of premises and equipment		46,062			47,039
Less accumulated depreciation		(21,623	)		(21,916	)
Total premises and equipment, net	$	24,439		$	25,123

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Deposits (Tables)

12 Months Ended

Dec. 31, 2022

Disclosure Text Block [Abstract]

Scheduled Maturities of Time Deposits

As of December 31, 2022, the scheduled maturities of the Company’s time deposits were as follows:

	(Dollars in Thousands)
2023	$	115,494
2024		56,104
2025		63,576
2026		13,274
2027		4,264
Total	$	252,712

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Summary of Long-Term Borrowings

	2022			2021
	(Dollars in Thousands)
Balance at year-end	$	10,726		$	10,653
Average balance during the year	$	10,689		$	2,682
Maximum month-end balance during the year	$	10,726		$	10,653
Average rate paid during the year, including amortization of debt issuance costs		4.20	%		4.20	%
Weighted average remaining maturity (in years)		8.75			9.75

Schedule of Available Unused Lines of Credit

As of December 31, 2022 and 2021, the Company’s available unused lines of credit consisted of the following:

Available Unused Lines of Credit	Collateral Requirements	December 31, 2022	December 31, 2021
Correspondent banks	None	$45.0 million	$45.0 million
Federal Reserve (discount window)	Subject to collateral	$15.0 million	$15.0 million
FHLB advances (1)	Subject to collateral	$246.8 million	$237.0 million

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The consolidated provisions for income taxes for the years ended December 31, 2022 and 2021 were as follows:

	2022			2021
	(Dollars in Thousands)
Federal
Current	$	2,025		$	1,522
Deferred		(291	)		(527	)
Total federal		1,734			995
State
Current		490			154
Deferred		(76	)		126
Total state		414			280
Total	$	2,148		$	1,275

Schedule of Effective Income Tax Rate Reconciliation

The consolidated tax expense differed from the amount computed by applying the Company’s federal statutory income tax rate of 21.0% in 2022 and 2021 as described in the following table:

	2022			2021
	(Dollars in Thousands)
Income tax expense at federal statutory rate	$	1,892		$	1,202
Increase (decrease) resulting from:
Tax-exempt interest		(76	)		(88	)
Bank-owned life insurance		(62	)		(62	)
State income tax expense, net of federal income taxes		329			169
Other		65			54
Total	$	2,148		$	1,275

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021 are presented below:

	2022		2021
	(Dollars in Thousands)
Deferred tax assets:
Allowance for loan losses	$	2,333	$	2,065
Deferred compensation		895		947
Deferred commissions and fees		407		243
Unrealized loss on securities available-for-sale		2,715		—
Unrealized loss on cash flow hedges		—		144
Other		905		862
Total gross deferred tax assets		7,255		4,261
Deferred tax liabilities:
Premises and equipment		1,288		1,248
Core deposit intangible		91		158
Limited partnerships		94		87
Unrealized gain on securities available-for-sale		—		52
Unrealized gain on cash flow hedges		301		—
Other		341		266
Total gross deferred tax liabilities		2,115		1,811
Net deferred tax asset, included in other assets	$	5,140	$	2,450

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Stock Awards (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock Option Activity

The following table summarizes the Company’s stock option activity for the periods presented.

	Year Ended
	December 31, 2022				December 31, 2021
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of year		420,250	$	9.79		421,000	$	9.79
Granted		—		—		—		—
Exercised		—		—		750		8.23
Forfeited		600		10.86		—		—
Options outstanding, end of year		419,650	$	9.79		420,250	$	9.79
Options exercisable, end of year		416,249	$	9.77		395,678	$	9.74

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Shareholder's Equity (Tables)

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

The following tables provide the Bank’s actual regulatory capital amounts and ratios under regulatory capital standards in effect (Basel III) at December 31, 2022 and 2021:

	2022
	Actual Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
	(Dollars in Thousands)
Common equity Tier 1 capital (to risk-weighted assets)	$	92,853		11.07	%		7.00	%		6.50	%
Tier 1 capital (to risk-weighted assets)		92,853		11.07	%		8.50	%		8.00	%
Total capital (to risk-weighted assets)		102,275		12.19	%		10.50	%		10.00	%
Tier 1 leverage (to average assets)		92,853		9.39	%		4.00	%		5.00	%

	2021
	Actual Regulatory Capital					Minimum			To Be Well
	Amount		Ratio			Requirement			Capitalized
	(Dollars in Thousands)
Common equity Tier 1 capital (to risk-weighted assets)	$	87,379		11.36	%		7.00	%		6.50	%
Tier 1 capital (to risk-weighted assets)		87,379		11.36	%		8.50	%		8.00	%
Total capital (to risk-weighted assets)		95,699		12.44	%		10.50	%		10.00	%
Tier 1 leverage (to average assets)		87,379		9.17	%		4.00	%		5.00	%

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Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Components of Lease Expense

The following table provides a summary of the components of lease income and expense, as well as the reporting location in the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021:

		Year Ended
	Location	December 31, 2022		December 31, 2021
		(Dollars in Thousands)
Operating lease expense (1)	Net occupancy and equipment	$	434	$	999
Operating lease income (2)	Lease income	$	864	$	830

(1)Includes short-term lease costs. For the years ended December 31, 2022 and 2021, short-term lease costs were nominal in amount.

(2)Operating lease income includes rental income from owned properties.

	Location	December 31, 2022			December 31, 2021
		(Dollars in Thousands)			(Dollars in Thousands)
Operating lease right-of-use assets	Other assets	$	1,883		$	2,245
Operating lease liabilities	Other liabilities	$	1,961		$	2,317
Weighted-average remaining lease term (in years)			5.03			5.90
Weighted-average discount rate			3.30	%		3.29	%

	Year Ended
	December 31, 2022		December 31, 2021
	(Dollars in Thousands)
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	427	$	859

Future Minimum Operating Lease Payments

The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of December 31, 2022:

	Minimum Rental Payments
	(Dollars in Thousands)
2023	$	432
2024		438
2025		339
2026		346
2027		353
2028 and thereafter		238
Total future minimum lease payments	$	2,146
Less: Imputed interest		185
Total	$	1,961

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Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amount and Fair Value of Derivative Instruments Included on Company's Consolidated Balance Sheets on a net Basis

The following table reflects the notional amount and fair value of derivative instruments included on the Company’s Consolidated Balance Sheets on a net basis as of December 31, 2022 and 2021.

	As of December 31, 2022				As of December 31, 2021
			Estimated Fair Value				Estimated Fair Value
	Notional Amount		Gain (Loss) (1)		Notional Amount		Gain (Loss) (1)
	(Dollars in Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to fixed rate commercial real estate loans	$	20,000	$	1,101	$	20,000	$	(198	)
Total fair value hedges				1,101				(198	)
Cash flow hedges:
Interest rate swaps related to variable-rate money market deposit accounts		20,000		1,205		20,000		(472	)
Interest rate swaps related to FHLB advances		—		—		10,000		(104	)
Total cash flow hedges				1,205				(576	)
Total hedges designated as hedging instruments, net			$	2,306			$	(774	)

(1) Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

Schedule of Cumulative Basis Adjustments for Fair Value Hedges

The following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

Location in the Consolidated Balance Sheet in Which the Hedged	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Item is Included	December 31, 2022
	(Dollars in Thousands)
Loans and leases, net of allowance for loan and lease losses (1)	$	32,233	$	1,101

(1)These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. As of December 31, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships was $33.3 million, the cumulative basis adjustments associated with these hedging relationships were $1.1 million, and the amounts of the designated hedged items were $20 million.

Schedule of Hedging Derivative Instruments' Effect on Company's Consolidated Statement of Operations

The following table presents the effect of hedging derivative instruments on the Company’s Consolidated Statements of Operations.

	Location in the	Year Ended December 31,
	Consolidated Statements	2022			2021
	of Operations	(Dollars in Thousands)
Interest income	Interest and fees on loans	$	75		$	(253	)
Interest expense	Interest on deposits		56			(127	)
Interest expense	Interest on short-term borrowings		(5	)		(333	)
	Net increase (decrease) to income before income taxes	$	126		$	(713	)

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Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2021

Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]

Schedule of Segment Reporting Information, by Segment

The results for the two reportable segments of the Company are included in the tables below:

	2022
	Bank		ALC		All Other			Eliminations			Consolidated
	(Dollars in Thousands)
Total interest income	$	37,510	$	4,716	$	5		$	(1,034	)	$	41,197
Total interest expense		3,803		1,029		458			(1,034	)		4,256
Net interest income		33,707		3,687		(453	)		—			36,941
Provision for loan and lease losses		1,338		1,970		—			—			3,308
Net interest income after provision		32,369		1,717		(453	)		—			33,633
Total non-interest income		3,535		204		8,091			(8,379	)		3,451
Total non-interest expense		25,278		1,751		1,238			(195	)		28,072
Income (loss) before income taxes		10,626		170		6,400			(8,184	)		9,012
Provision for income taxes		2,475		45		(372	)		—			2,148
Net income (loss)	$	8,151	$	125	$	6,772		$	(8,184	)	$	6,864
Other significant items:
Total assets	$	998,727	$	19,772	$	101,072		$	(124,904	)	$	994,667
Total investment securities		132,657		—		—			—			132,657
Total loans, net		763,941		18,810		—			(18,300	)		764,451
Goodwill and core deposit intangible, net		7,801		—		—			—			7,801
Investment in subsidiaries		—		—		93,414			(93,414	)		—
Fixed asset additions		1,262		—		—			—			1,262
Depreciation and amortization expense		1,579		35		—			—			1,614
Total interest income from external customers		36,481		4,716		—			—			41,197
Total interest income from affiliates		1,029		—		5			(1,034	)		—

	2021
	Bank		ALC		All Other			Eliminations			Consolidated
	(Dollars in Thousands)
Total interest income	$	32,537	$	9,019	$	7		$	(1,642	)	$	39,921
Total interest expense		2,842		1,635		115			(1,642	)		2,950
Net interest income		29,695		7,384		(108	)		—			36,971
Provision for loan and lease losses		1,515		495		—			—			2,010
Net interest income after provision		28,180		6,889		(108	)		—			34,961
Total non-interest income		3,206		576		5,697			(5,958	)		3,521
Total non-interest expense		25,188		6,599		1,421			(452	)		32,756
Income (loss) before income taxes		6,198		866		4,168			(5,506	)		5,726
Provision for income taxes		1,305		221		(251	)		—			1,275
Net income (loss)	$	4,893	$	645	$	4,419		$	(5,506	)	$	4,451
Other significant items:
Total assets	$	961,572	$	40,924	$	106,247		$	(150,441	)	$	958,302
Total investment securities		134,238		—		81			—			134,319
Total loans, net		699,600		39,499		—			(39,069	)		700,030
Goodwill and core deposit intangible, net		8,069		—		—			—			8,069
Investment in subsidiaries		—		—		95,172			(95,172	)		—
Fixed asset additions		816		6		—			—			822
Depreciation and amortization expense		1,613		79		—			—			1,692
Total interest income from external customers		30,902		9,019		—			—			39,921
Total interest income from affiliates		1,635		—		7			(1,642	)		—

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Other Operating Income and Expense (Tables)

12 Months Ended

Dec. 31, 2022

Other Income and Expenses [Abstract]

Other Operating Income

Other operating income for the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Bank-owned life insurance	$	451		$	439
Credit insurance commissions and fees	$	(93	)	$	192
ATM fee income		532			577
Mortgage fees from secondary market		17			23
Wire transfer fees		52			64
Gain on sales of premises and equipment and other assets		301			19
Other income		256			286
Total	$	1,516		$	1,600

Other Operating Expense

Other operating expense for the years ended December 31, 2022 and 2021 consisted of the following:

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Postage, stationery and supplies	$	614		$	802
Telephone/data communication		682			903
Advertising and marketing		189			167
Travel and business development		225			147
Collection and recoveries		261			168
Other services		323			322
Insurance expense		566			635
FDIC insurance and state assessments		684			726
Loss on sales of premises and equipment and other assets		69			150
Core deposit intangible amortization		268			341
Other real estate/foreclosure expense, net		(331	)		(371	)
Other expense		2,124			2,114
Total	$	5,674		$	6,104

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Guarantees, Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Summary of Commitment and Contingent Liabilities

A summary of these commitments and contingent liabilities is presented below:

	December 31,
	2022		2021
	(Dollars in Thousands)
Standby letters of credit	$	—	$	—
Standby performance letters of credit	$	556	$	582
Commitments to extend credit	$	186,169	$	164,247

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis

The following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021.

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	43,957	$	—	$	43,957	$	—
Commercial		11,693		—		11,693		—
Obligations of U.S. government-sponsored agencies		4,270		—		4,270		—
Obligations of states and political subdivisions		2,072		—		2,072		—
Corporate notes		15,921				14,921		1,000
U.S. Treasury securities		52,882		52,882		—		—
Other assets - derivatives		2,306		—		2,306		—

	Fair Value Measurements as of December 31, 2021 Using
	Totals At December 31, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	46,228	$	—	$	46,228	$	—
Commercial		24,971		—		24,971		—
Obligations of U.S. government-sponsored agencies		5,192		—		5,182		10
Obligations of states and political subdivisions		4,317		—		4,317		—
Corporate notes		15,482				15,482		—
U.S. Treasury securities		34,693		34,693		—		—
Other liabilities - derivatives		774		—		774		—

Fair Value Assets Measured on Nonrecurring Basis

The following table presents the balances of impaired loans, OREO and other assets held-for-sale measured at fair value on a non-recurring basis as of December 31, 2022 and 2021:

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	108	$	—	$	—	$	108
OREO and other assets held-for-sale		686		—		—		686

	Fair Value Measurements as of December 31, 2021 Using
	Totals At December 31, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	6	$	—	$	—	$	6
OREO and other assets held-for-sale		2,149		—		—		2,149

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques

Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value December 31, 2022		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Impaired loans	$	108	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9%-10%	(9.5)%
OREO and other assets held-for-sale	$	686	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9%-10%	(9.5)%

Fair Value, by Balance Sheet Grouping

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of December 31, 2022 and 2021 were as follows:

	December 31, 2022
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	30,152	$	30,152	$	30,152	$	—	$	—
Investment securities available-for-sale		130,795		130,795		52,882		76,913		1,000
Investment securities held-to-maturity		1,862		1,769		—		1,769		—
Federal funds sold		1,768		1,768		—		1,768		—
Federal Home Loan Bank stock		1,359		1,359		—		—		1,359
Loans, net of allowance for loan losses		764,451		730,961		—		—		730,961
Liabilities:
Deposits		870,025		788,161		—		788,161		—
Short-term borrowings		20,038		20,038		—		20,038		—
Long-term borrowings		10,726		9,702				9,702
Other assets - derivatives		2,306		2,306		—		2,306		—

	December 31, 2021
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	61,244	$	61,244	$	61,244	$	—	$	—
Investment securities available-for-sale		130,883		130,883		34,612		96,260		11
Investment securities held-to-maturity		3,436		3,477		—		3,477		—
Federal funds sold		82		82		—		82		—
Federal Home Loan Bank stock		870		870		—		—		870
Loans, net of allowance for loan losses		700,030		694,744		—		—		694,744
Liabilities:
Deposits		838,126		837,439		—		837,439		—
Short-term borrowings		10,046		10,046		—		10,046		—
Long-term borrowings		10,653		10,804				10,804
Other liabilities - derivatives		774		774		—		774		—

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First US Bancshares, Inc. (Parent Company Only) Financial Information (Tables)

12 Months Ended

Dec. 31, 2022

Table Text Block [Abstract]

Balance Sheet

Balance Sheets

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands)
Assets:
Cash on deposit	$	2,855	$	5,890
Investment in subsidiaries		93,414		95,172
Other assets		78		83
Total assets	$	96,347	$	101,145
Liabilities:
Other liabilities	$	485	$	428
Long-term borrowings		10,726		10,653
Shareholders’ equity		85,136		90,064
Total liabilities and shareholders’ equity	$	96,347	$	101,145

Income Statement

Statements of Operations

	Year Ended December 31,
	2022		2021
	(Dollars in Thousands)
Income:
Dividend income, First US Bank	$	3,463	$	1,570
Total income		3,463		1,570
Expense		1,320		1,055
Gain before equity in undistributed income of subsidiaries		2,143		515
Equity in undistributed income of subsidiaries		4,721		3,936
Net income	$	6,864	$	4,451

Cash Flow Statement

Statements of Cash Flows

	Year Ended December 31,
	2022			2021
	(Dollars in Thousands)
Cash flows from operating activities:
Net income	$	6,864		$	4,451
Adjustments to reconcile net income to net cash provided    by operating activities:
Distributions in excess of undistributed income    of subsidiaries		(4,721	)		(3,936	)
Change in other assets and liabilities		135			580
Net cash provided by operating activities		2,278			1,095
Cash flows from investing activities:
Investment in subsidiaries		-			(5,000	)
Net cash used in investing activities		—			(5,000	)
Cash flows from financing activities:
Net proceeds from long-term borrowings		-			10,653
Net share-based compensation transactions		-			(7	)
Dividends paid		(832	)		(745	)
Treasury stock repurchases		(4,481	)		(525	)
Net cash provided by (used in) in financing activities		(5,313	)		9,376
Net increase (decrease) in cash		(3,035	)		5,471
Cash at beginning of year		5,890			419
Cash at end of year	$	2,855		$	5,890

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Quarterly Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2022

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information

	Year Ended December 31,
	2022								2021
	Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter		First Quarter
	(Dollars in Thousands)
Interest income	$	11,621	$	10,670	$	9,525	$	9,381	$	9,987	$	10,030	$	10,059	$	9,845
Interest expense		1,730		1,155		699		672		727		695		747		781
Net interest income		9,891		9,515		8,826		8,709		9,260		9,335		9,312		9,064
Provision for loan and lease losses		527		1,165		895		721		493		618		498		401
Net interest income after provision    for loan and lease losses		9,364		8,350		7,931		7,988		8,767		8,717		8,814		8,663
Non-interest:
Income		678		1,088		856		829		865		896		809		951
Expense		7,106		7,032		6,878		7,056		7,414		8,547		8,399		8,396
Income before income taxes		2,936		2,406		1,909		1,761		2,218		1,066		1,224		1,218
Provision for income taxes		708		546		494		400		507		229		271		268
Net income after taxes	$	2,228	$	1,860	$	1,415	$	1,361	$	1,711	$	837	$	953	$	950
Earnings per common share:
Basic earnings	$	0.37	$	0.31	$	0.23	$	0.22	$	0.27	$	0.13	$	0.15	$	0.15
Diluted earnings	$	0.35	$	0.29	$	0.22	$	0.20	$	0.25	$	0.13	$	0.14	$	0.14

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Description Of Business - Additional Information (Details) - Branch		3 Months Ended	12 Months Ended
	Sep. 03, 2021	Sep. 30, 2021	Dec. 31, 2022
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of states			12
ALC [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of office closed	20	20

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Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) Portfolio TradingSecurities Segment	Dec. 31, 2021 USD ($) TradingSecurities	Jan. 01, 2023 USD ($)
Finite Lived Intangible Assets [Line Items]
Maximum maturity period for cash equivalents	90 days
Number of investment portfolios | Portfolio	3
Number of securities held as trading securities | TradingSecurities	0	0
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 1,700	$ 2,000
Useful lives of premises and equipment	three to forty years
Number of reportable segments | Segment	2
Core Deposits [Member]
Finite Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life	7 years
Subsequent Event [Member]
Finite Lived Intangible Assets [Line Items]
Transition adjustment increase in loan loss reserves			$ 2,400
Minimum [Member]
Finite Lived Intangible Assets [Line Items]
Loans Modified in a Troubled Debt Restructuring, Individually Evaluated for Impairment, Principal Balance, Threshold	$ 500
ALC [Member] | Minimum [Member]
Finite Lived Intangible Assets [Line Items]
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 50

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Summary of Significant Accounting Policies - Disclosures of Cash Flow Information and Non-cash Transactions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Interest	$ 3,873	$ 3,018
Income taxes	2,855	1,375
Non-cash transactions:
Assets acquired in settlement of loans	907	806
Transfers of closed branch assets to OREO	391	1,978
Reissuance of treasury stock as compensation	$ 138	$ 59

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Summary of Significant Accounting Policies - Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
Weighted average shares outstanding									5,969,575	6,205,261
Weighted average director deferred shares									114,483	114,096
Basic shares									6,084,058	6,319,357
Dilutive shares									419,650	420,250
Diluted shares									6,503,708	6,739,607
Net income									$ 6,864	$ 4,451
Basic net income per share	$ 0.37	$ 0.31	$ 0.23	$ 0.22	$ 0.27	$ 0.13	$ 0.15	$ 0.15	$ 1.13	$ 0.70
Diluted net income per share	$ 0.35	$ 0.29	$ 0.22	$ 0.20	$ 0.25	$ 0.13	$ 0.14	$ 0.14	$ 1.06	$ 0.66

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Restructuring Charges - Additional Information (Details) - ALC [Member] $ in Thousands		3 Months Ended	12 Months Ended		24 Months Ended
	Sep. 03, 2021 Branch	Sep. 30, 2021 Branch	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($)
Restructuring Cost And Reserve [Line Items]
Number of office closed | Branch	20	20
Pre-tax charges of restructuring | $			$ 155	$ 904	$ 1,059

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Restructuring Charges - Scheduled of Restructuring Charges (Details) - ALC [Member] - USD ($) $ in Thousands	12 Months Ended		24 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022
Expense Category
Severance and personnel expenses	$ 108	$ 263	$ 371
Lease termination costs	2	224	226
Fixed asset valuation adjustments		239	239
Termination of technology contracts	45	85	130
Other expenses		93	93
Total expenses	$ 155	$ 904	$ 1,059

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Investment Securities - Available-for-Sale and Held-to-Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	$ 141,883	$ 130,676
Available-for-sale, gross unrealized gains	8	977
Available-for-sale, gross unrealized losses	(11,096)	(770)
Investment securities available-for-sale, at fair value	130,795	130,883
Held-to-maturity, amortized cost	1,862	3,436
Held-to-maturity, gross unrealized gains		41
Held-to-maturity, gross unrealized losses	(93)
Held-to-maturity, estimated fair value	1,769	3,477
Residential Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	47,659	46,020
Available-for-sale, gross unrealized gains	2	450
Available-for-sale, gross unrealized losses	(3,704)	(242)
Investment securities available-for-sale, at fair value	43,957	46,228
Commercial Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	12,169	24,647
Available-for-sale, gross unrealized gains	4	371
Available-for-sale, gross unrealized losses	(480)	(47)
Investment securities available-for-sale, at fair value	11,693	24,971
Held-to-maturity, amortized cost	1,167	2,115
Held-to-maturity, gross unrealized gains		29
Held-to-maturity, gross unrealized losses	(41)
Held-to-maturity, estimated fair value	1,126	2,144
US Government Agencies Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	5,116	5,207
Available-for-sale, gross unrealized losses	(846)	(15)
Investment securities available-for-sale, at fair value	4,270	5,192
Held-to-maturity, amortized cost	610	768
Held-to-maturity, gross unrealized gains		10
Held-to-maturity, gross unrealized losses	(40)
Held-to-maturity, estimated fair value	570	778
US States and Political Subdivisions Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	2,166	4,247
Available-for-sale, gross unrealized gains		80
Available-for-sale, gross unrealized losses	(94)	(10)
Investment securities available-for-sale, at fair value	2,072	4,317
Held-to-maturity, amortized cost	85	553
Held-to-maturity, gross unrealized gains		2
Held-to-maturity, gross unrealized losses	(12)
Held-to-maturity, estimated fair value	73	555
Corporate Note Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	17,817	15,458
Available-for-sale, gross unrealized gains	2	76
Available-for-sale, gross unrealized losses	(1,898)	(52)
Investment securities available-for-sale, at fair value	15,921	15,482
US Treasury Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	56,956	35,097
Available-for-sale, gross unrealized losses	(4,074)	(404)
Investment securities available-for-sale, at fair value	$ 52,882	$ 34,693

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Investment Securities - Scheduled Maturities of Investment Securities Available-for-Sale and Held-to-Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Available-for-sale, maturing within one year, amortized cost	$ 511
Available-for-sale, maturing after one to five years, amortized cost	61,068
Available-for-sale, maturing after five to ten years, amortized cost	67,309
Available-for-sale, maturing after ten years, amortized cost	12,995
Available-for-sale, amortized cost	141,883	$ 130,676
Available-for-sale, maturing within one year, estimated fair value	511
Available-for-sale, maturing after one to five years, estimated fair value	57,159
Available-for-sale, maturing after five to ten years, estimated fair value	60,872
Available-for-sale, maturing after ten years, estimated fair value	12,253
Available-for-sale, amortized cost	130,795	130,883
Held-to-maturity, maturing after five to ten years, amortized cost	1,606
Held-to-maturity, maturing after ten years, amortized cost	256
Held-to-maturity, amortized cost	1,862	3,436
Held-to-maturity, maturity after five to ten years, estimated fair value	1,536
Held-to-maturity, maturing after ten years, estimated fair value	233
Held-to-maturity, amortized cost	$ 1,769	$ 3,477

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Investment Securities - Securities in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	$ 59,240	$ 82,923
Available-for-sale, less than 12 months, unrealized losses	(2,946)	(731)
Available-for-sale, 12 months or more, fair value	69,649	3,417
Available-for-sale, 12 months or more, unrealized losses	(8,150)	(39)
Held-to-maturity, less than 12 months, fair value	1,413
Held-to-maturity, less than 12 months, unrealized losses	(60)
Held-to-maturity, 12 months or more, fair value	356
Held-to-maturity, 12 months or more, unrealized losses	(33)
Residential Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	19,876	31,346
Available-for-sale, less than 12 months, unrealized losses	(952)	(240)
Available-for-sale, 12 months or more, fair value	23,903	253
Available-for-sale, 12 months or more, unrealized losses	(2,752)	(2)
Commercial Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	9,720	2,245
Available-for-sale, less than 12 months, unrealized losses	(357)	(12)
Available-for-sale, 12 months or more, fair value	1,247	2,970
Available-for-sale, 12 months or more, unrealized losses	(123)	(35)
Held-to-maturity, less than 12 months, fair value	1,125
Held-to-maturity, less than 12 months, unrealized losses	(41)
US Government Agencies Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value		4,987
Available-for-sale, less than 12 months, unrealized losses		(13)
Available-for-sale, 12 months or more, fair value	4,270	194
Available-for-sale, 12 months or more, unrealized losses	(846)	(2)
Held-to-maturity, less than 12 months, fair value	215
Held-to-maturity, less than 12 months, unrealized losses	(7)
Held-to-maturity, 12 months or more, fair value	356
Held-to-maturity, 12 months or more, unrealized losses	(33)
US States and Political Subdivisions Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	1,559	561
Available-for-sale, less than 12 months, unrealized losses	(41)	(10)
Available-for-sale, 12 months or more, fair value	512
Available-for-sale, 12 months or more, unrealized losses	(53)
Held-to-maturity, less than 12 months, fair value	73
Held-to-maturity, less than 12 months, unrealized losses	(12)
Corporate Note Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	6,845	9,092
Available-for-sale, less than 12 months, unrealized losses	(898)	(52)
Available-for-sale, 12 months or more, fair value	8,075
Available-for-sale, 12 months or more, unrealized losses	(1,000)
US Treasury Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	21,240	34,692
Available-for-sale, less than 12 months, unrealized losses	(698)	$ (404)
Available-for-sale, 12 months or more, fair value	31,642
Available-for-sale, 12 months or more, unrealized losses	$ (3,376)

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Investment Securities - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) DebtSecurities	Dec. 31, 2021 USD ($) DebtSecurities
Investments, Debt and Equity Securities [Abstract]
Debt securities held to maturities in unrealized loss position	$ 60
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | DebtSecurities	38	10
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year | DebtSecurities	86	32
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Total	$ 0	$ 0
Debt Securities, Available-for-sale, Restricted	$ 54,700	$ 52,200

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Loans and Allowance for Loan and Lease Losses - Schedule of Loan Portfolio (Details) - USD ($) $ in Thousands		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Loans		$ 775,122	$ 710,944
Less: Unearned interest, fees and deferred cost		1,249	2,594
Loans, allowance for loan losses		9,422	8,320	$ 7,470
Net loans		764,451	700,030
Construction, Land Development and Other Land Loans [Member]
Loans		54,396	67,048
Loans, allowance for loan losses		517	628	393
Secured by 1-4 Family Residential Properties [Member]
Loans		88,426	72,727
Loans, allowance for loan losses		832	690	639
Secured By Multi family Residential Properties [Member]
Loans		67,917	46,000
Loans, allowance for loan losses		646	437	577
Secured By Non-farm Non residential Properties [Member]
Loans		199,965	197,901
Loans, allowance for loan losses		1,970	1,958	1,566
FUSB [Member]
Loans		754,497	667,247
Less: Unearned interest, fees and deferred cost		799	(324)
Loans, allowance for loan losses		8,057	7,038
Net loans		745,641	660,533
ALC [Member]
Loans		20,625	43,697
Less: Unearned interest, fees and deferred cost		450	2,918
Loans, allowance for loan losses		1,365	1,282
Net loans		18,810	39,497
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Loans		54,396	67,048
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans		88,426	72,727
Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Loans		67,917	46,000
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Loans		199,965	197,901
Real Estate [Member] | FUSB [Member] | Construction, Land Development and Other Land Loans [Member]
Loans		54,396	67,048
Real Estate [Member] | FUSB [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans		86,946	70,439
Real Estate [Member] | FUSB [Member] | Secured By Multi family Residential Properties [Member]
Loans		67,917	46,000
Real Estate [Member] | FUSB [Member] | Secured By Non-farm Non residential Properties [Member]
Loans		199,965	197,901
Real Estate [Member] | ALC [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans		1,480	2,288
Commercial and Industrial Loans and Leases [Member]
Loans	[1]	73,561	73,947
Commercial and Industrial Loans and Leases [Member] | FUSB [Member]
Loans	[1]	73,561	73,947
Consumer Portfolio Segment [Member] | Direct Consumer [Member]
Loans		10,053	21,689
Loans, allowance for loan losses		866	1,004	1,202
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Loans		14,237	25,692
Loans, allowance for loan losses		518	304	373
Consumer Portfolio Segment [Member] | Indirect [Member]
Loans		266,567	205,940
Loans, allowance for loan losses		3,154	2,439	$ 1,712
Consumer Portfolio Segment [Member] | FUSB [Member] | Direct Consumer [Member]
Loans		5,145	5,972
Consumer Portfolio Segment [Member] | FUSB [Member] | Indirect [Member]
Loans		266,567	205,940
Consumer Portfolio Segment [Member] | ALC [Member] | Direct Consumer [Member]
Loans		4,908	15,717
Consumer Portfolio Segment [Member] | ALC [Member] | Branch Retail [Member]
Loans		$ 14,237	$ 25,692

[1] Includes equipment financing leases and PPP loans. As of December 31, 2022 and 2021, equipment financing leases totaled $10.3 million and $11.0 million, respectively. As of December 31, 2022 and 2021, PPP loans totaled $6 thousand and $1.7 million, respectively.

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Loans and Allowance for Loan and Lease Losses - Schedule of Loan Portfolio (Parenthetical) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Loans	$ 775,122	$ 710,944
Equipment Financing Leases [Member]
Loans	10,300	11,000
PPP Loans [Member]
Loans	$ 6	$ 1,700

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Loans and Allowance for Loan and Lease Losses - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2022 USD ($) Loan	Dec. 31, 2022 USD ($) DebtSecurityNumber	Dec. 31, 2022 USD ($) Contract	Dec. 31, 2021 USD ($)	Dec. 31, 2021 USD ($) Loan	Dec. 31, 2021 USD ($) DebtSecurityNumber	Dec. 31, 2021 USD ($) Contract	Dec. 31, 2020 USD ($)
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans and Leases Receivable, Related Parties, Ending Balance	$ 200				$ 300
Loans and Leases Receivable, Related Parties, Additions	0				0
Loans and Leases Receivable, Related Parties, Proceeds	100				100
Loan, aggregate principal balance	10,726	$ 10,726	$ 10,726	$ 10,726	10,653	$ 10,653	$ 10,653	$ 10,653
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	1,700	1,700	1,700	1,700	2,000	2,000	2,000	2,000
Financing Receivable, Troubled Debt Restructuring	100	100	100	100	100	100	100	100
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	60				52
Interest Income Recorded	29	$ 29	$ 29	29	30	$ 30	$ 30	30
Number of loans		0	4			0	4
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Cash Flows Expected to be Collected at Acquisition	0	$ 0	$ 0	$ 0	0	$ 0	$ 0	$ 0
Financing Receivable, Troubled Debt Restructuring, Subsequent Default, Number of Contracts | Contract				0				0
Loans, allowance for loan losses	9,422	9,422	9,422	$ 9,422	8,320	8,320	8,320	$ 8,320	$ 7,470
Pledged as Collateral [Member] | FHLB Borrowings [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans pledged as collateral	68,200	68,200	68,200	68,200	66,600	66,600	66,600	66,600
Restructured Loan Modified through Extended Maturity and Payment Schedule Modification [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Financing Receivable, Restructuring Recorded Investment With Nonaccrual Status	500	500	500	500
Loans, allowance for loan losses	6	6	6	6	$ 7	$ 7	$ 7	$ 7
Minimum [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans Modified in a Troubled Debt Restructuring, Individually Evaluated for Impairment, Principal Balance, Threshold	500	500	500	500
Minimum [Member] | ALC [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 50	$ 50	$ 50	$ 50
Real Estate [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Percentage of Loan Portfolio	53.00%	53.00%	53.00%	53.00%	54.00%	54.00%	54.00%	54.00%

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Loans and Allowance for Loan and Lease Losses - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Beginning balance	$ 8,320	$ 7,470
Charge-offs	(3,013)	(2,131)
Recoveries	807	971
Provision	3,308	2,010
Ending balance	9,422	8,320
Individually evaluated for impairment	259	67
Collectively evaluated for impairment	9,163	8,253
Individually evaluated for impairment	5,521	2,598
Collectively evaluated for impairment	769,601	708,346
Loans	775,122	710,944
Construction, Land Development and Other Land Loans [Member]
Beginning balance	628	393
Charge-offs		(23)
Recoveries	2	22
Provision	(113)	236
Ending balance	517	628
Collectively evaluated for impairment	517	628
Collectively evaluated for impairment	54,396	67,048
Loans	54,396	67,048
Secured by 1-4 Family Residential Properties [Member]
Beginning balance	690	639
Charge-offs	(40)	(12)
Recoveries	39	14
Provision	143	49
Ending balance	832	690
Individually evaluated for impairment	7	10
Collectively evaluated for impairment	825	680
Individually evaluated for impairment	582	646
Collectively evaluated for impairment	87,844	72,081
Loans	88,426	72,727
Secured By Multi family Residential Properties [Member]
Beginning balance	437	577
Provision	209	(140)
Ending balance	646	437
Collectively evaluated for impairment	646	437
Collectively evaluated for impairment	67,917	46,000
Loans	67,917	46,000
Secured By Non-farm Non residential Properties [Member]
Beginning balance	1,958	1,566
Recoveries	5	5
Provision	7	387
Ending balance	1,970	1,958
Collectively evaluated for impairment	1,970	1,958
Individually evaluated for impairment	2,492	1,051
Collectively evaluated for impairment	197,473	196,850
Loans	199,965	197,901
Commercial and Industrial Loans [Member]
Beginning balance	860	1,008
Charge-offs		(6)
Recoveries	0	21
Provision	59	(163)
Ending balance	919	860
Individually evaluated for impairment	252	57
Collectively evaluated for impairment	667	803
Individually evaluated for impairment	2,429	880
Collectively evaluated for impairment	71,132	73,067
Loans	73,561	73,947
Consumer Portfolio Segment [Member] | Direct Consumer [Member]
Beginning balance	1,004	1,202
Charge-offs	(1,958)	(1,230)
Recoveries	565	626
Provision	1,255	406
Ending balance	866	1,004
Collectively evaluated for impairment	866	1,004
Individually evaluated for impairment	18	21
Collectively evaluated for impairment	10,035	21,668
Loans	10,053	21,689
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Beginning balance	304	373
Charge-offs	(633)	(377)
Recoveries	151	215
Provision	696	93
Ending balance	518	304
Collectively evaluated for impairment	518	304
Collectively evaluated for impairment	14,237	25,692
Loans	14,237	25,692
Consumer Portfolio Segment [Member] | Indirect [Member]
Beginning balance	2,439	1,712
Charge-offs	(382)	(483)
Recoveries	45	68
Provision	1,052	1,142
Ending balance	3,154	2,439
Collectively evaluated for impairment	3,154	2,439
Collectively evaluated for impairment	266,567	205,940
Loans	$ 266,567	$ 205,940

XML

Loans and Allowance for Loan and Lease Losses - Loans By Credit Quality Indicators (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Financing Receivable Recorded Investment [Line Items]
Loans	$ 775,122	$ 710,944
As a percentage of total loans	100.00%	100.00%
Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 54,396	$ 67,048
Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	67,917	46,000
Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	199,965	197,901
Secured by 1-4 Family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	88,426	72,727
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	54,396	67,048
Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	67,917	46,000
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	199,965	197,901
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	88,426	72,727
Commercial and Industrial Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	73,561	73,947
Consumer Portfolio Segment [Member] | Direct Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	10,053	21,689
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	14,237	25,692
Consumer Portfolio Segment [Member] | Indirect [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	266,567	205,940
FUSB [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	754,497	667,247
FUSB [Member] | Pass And Criticized [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 389,641	$ 372,059
As a percentage of total loans	98.43%	96.66%
FUSB [Member] | Special Mention
Financing Receivable Recorded Investment [Line Items]
Loans	$ 651	$ 10,303
As a percentage of total loans	0.17%	2.68%
FUSB [Member] | Pass And Criticized [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 5,547	$ 2,534
As a percentage of total loans	1.40%	0.66%
FUSB [Member] | Pass And Criticized [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 395,839	$ 384,896
As a percentage of total loans	100.00%	100.00%
FUSB [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 54,396	$ 67,048
FUSB [Member] | Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	67,917	46,000
FUSB [Member] | Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	199,965	197,901
FUSB [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	86,946	70,439
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	54,396	67,046
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	67,917	43,472
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	196,813	189,425
FUSB [Member] | Real Estate [Member] | Special Mention | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		2,528
FUSB [Member] | Real Estate [Member] | Special Mention | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	651	7,442
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		2
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	2,501	1,034
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	54,396	67,048
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	67,917	46,000
FUSB [Member] | Real Estate [Member] | Pass And Criticized [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	199,965	197,901
FUSB [Member] | Commercial and Industrial Loans [Member] | Pass And Criticized [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	70,515	72,116
FUSB [Member] | Commercial and Industrial Loans [Member] | Special Mention
Financing Receivable Recorded Investment [Line Items]
Loans		333
FUSB [Member] | Commercial and Industrial Loans [Member] | Pass And Criticized [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	3,046	1,498
FUSB [Member] | Commercial and Industrial Loans [Member] | Pass And Criticized [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	73,561	73,947
FUSB [Member] | Consumer Portfolio Segment [Member] | Direct Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	5,145	5,972
FUSB [Member] | Consumer Portfolio Segment [Member] | Indirect [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	266,567	205,940
ALC [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	20,625	43,697
ALC [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	$ 378,010	$ 323,891
As a percentage of total loans	99.66%	99.34%
ALC [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	$ 1,273	$ 2,157
As a percentage of total loans	0.34%	0.66%
ALC [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	$ 379,283	$ 326,048
As a percentage of total loans	100.00%	100.00%
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 1,480	$ 2,288
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	87,302	71,526
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	1,124	1,201
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	88,426	72,727
ALC [Member] | Consumer Portfolio Segment [Member] | Direct Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	4,908	15,717
ALC [Member] | Consumer Portfolio Segment [Member] | Direct Consumer [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	10,007	20,939
ALC [Member] | Consumer Portfolio Segment [Member] | Direct Consumer [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	46	750
ALC [Member] | Consumer Portfolio Segment [Member] | Direct Consumer [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	10,053	21,689
ALC [Member] | Consumer Portfolio Segment [Member] | Branch Retail [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	14,237	25,692
ALC [Member] | Consumer Portfolio Segment [Member] | Branch Retail [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	14,205	25,486
ALC [Member] | Consumer Portfolio Segment [Member] | Branch Retail [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	32	206
ALC [Member] | Consumer Portfolio Segment [Member] | Branch Retail [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	14,237	25,692
ALC [Member] | Consumer Portfolio Segment [Member] | Indirect [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	266,496	205,940
ALC [Member] | Consumer Portfolio Segment [Member] | Indirect [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	71
ALC [Member] | Consumer Portfolio Segment [Member] | Indirect [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	$ 266,567	$ 205,940

XML

Loans and Allowance for Loan and Lease Losses - Aging Analysis of Past Due Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Loans	$ 775,122	$ 710,944
As a percentage of total loans	100.00%	100.00%
As a percentage of total loans, Total Past Due	0.32%	0.55%
As a percentage of total loans, Current	99.68%	99.45%
Construction, Land Development and Other Land Loans [Member]
Loans	$ 54,396	$ 67,048
Secured by 1-4 Family Residential Properties [Member]
Loans	88,426	72,727
Secured By Multi family Residential Properties [Member]
Loans	67,917	46,000
Secured By Non-farm Non residential Properties [Member]
Loans	199,965	$ 197,901
Financial Asset, 30 to 59 Days Past Due
As a percentage of total loans		0.27%
Financial Asset, 60 to 89 Days Past Due
As a percentage of total loans		0.11%
Financial Asset, Equal to or Greater than 90 Days Past Due
As a percentage of total loans		0.17%
Total Past Due
Loans	2,478	$ 3,876
Current
Loans	772,644	707,068
ALC [Member]
Loans	20,625	43,697
ALC [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	$ 1,691	1,878
As a percentage of total loans	0.21%
ALC [Member] | Financial Asset, 60 to 89 Days Past Due
Loans	$ 276	808
As a percentage of total loans	0.04%
ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans	$ 511	1,190
As a percentage of total loans	0.07%
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Loans	$ 54,396	67,048
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans	88,426	72,727
Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Loans	67,917	46,000
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Loans	199,965	197,901
Real Estate [Member] | Total Past Due | Secured by 1-4 Family Residential Properties [Member]
Loans	965	392
Real Estate [Member] | Total Past Due | Secured By Non-farm Non residential Properties [Member]
Loans	137	403
Real Estate [Member] | Current | Construction, Land Development and Other Land Loans [Member]
Loans	54,396	67,048
Real Estate [Member] | Current | Secured by 1-4 Family Residential Properties [Member]
Loans	87,461	72,335
Real Estate [Member] | Current | Secured By Multi family Residential Properties [Member]
Loans	67,917	46,000
Real Estate [Member] | Current | Secured By Non-farm Non residential Properties [Member]
Loans	199,828	197,498
Real Estate [Member] | ALC [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans	1,480	2,288
Real Estate [Member] | ALC [Member] | Financial Asset, 30 to 59 Days Past Due | Secured by 1-4 Family Residential Properties [Member]
Loans	800	349
Real Estate [Member] | ALC [Member] | Financial Asset, 30 to 59 Days Past Due | Secured By Non-farm Non residential Properties [Member]
Loans	137	403
Real Estate [Member] | ALC [Member] | Financial Asset, 60 to 89 Days Past Due | Secured by 1-4 Family Residential Properties [Member]
Loans	87	23
Real Estate [Member] | ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due | Secured by 1-4 Family Residential Properties [Member]
Loans	78	20
Commercial and Industrial Loans [Member]
Loans	73,561	73,947
Commercial and Industrial Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans		234
Commercial and Industrial Loans [Member] | Total Past Due
Loans	361	288
Commercial and Industrial Loans [Member] | Current
Loans	73,200	73,659
Commercial and Industrial Loans [Member] | ALC [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	61	54
Commercial and Industrial Loans [Member] | ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans	300
Consumer Portfolio Segment [Member] | Direct Consumer [Member]
Loans	10,053	21,689
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Loans	14,237	25,692
Consumer Portfolio Segment [Member] | Indirect [Member]
Loans	266,567	205,940
Consumer Portfolio Segment [Member] | Total Past Due | Direct Consumer [Member]
Loans	329	1,971
Consumer Portfolio Segment [Member] | Total Past Due | Branch Retail [Member]
Loans	374	765
Consumer Portfolio Segment [Member] | Total Past Due | Indirect [Member]
Loans	312	57
Consumer Portfolio Segment [Member] | Current | Direct Consumer [Member]
Loans	9,724	19,718
Consumer Portfolio Segment [Member] | Current | Branch Retail [Member]
Loans	13,863	24,927
Consumer Portfolio Segment [Member] | Current | Indirect [Member]
Loans	266,255	205,883
Consumer Portfolio Segment [Member] | ALC [Member] | Direct Consumer [Member]
Loans	4,908	15,717
Consumer Portfolio Segment [Member] | ALC [Member] | Branch Retail [Member]
Loans	14,237	25,692
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, 30 to 59 Days Past Due | Direct Consumer [Member]
Loans	250	652
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, 30 to 59 Days Past Due | Branch Retail [Member]
Loans	257	377
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, 30 to 59 Days Past Due | Indirect [Member]
Loans	186	43
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, 60 to 89 Days Past Due | Direct Consumer [Member]
Loans	49	589
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, 60 to 89 Days Past Due | Branch Retail [Member]
Loans	85	182
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, 60 to 89 Days Past Due | Indirect [Member]
Loans	55	14
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due | Direct Consumer [Member]
Loans	30	730
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due | Branch Retail [Member]
Loans	32	$ 206
Consumer Portfolio Segment [Member] | ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due | Indirect [Member]
Loans	$ 71

XML

Loans and Allowance for Loan and Lease Losses - Non-accruing Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Non-accruing loans	$ 1,651	$ 2,008
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Non-accruing loans		2
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Non-accruing loans	914	780
Commercial and Industrial Loans [Member]
Non-accruing loans	605	277
Consumer Portfolio Segment [Member] | Direct Consumer [Member]
Non-accruing loans	29	743
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Non-accruing loans	32	$ 206
Consumer Portfolio Segment [Member] | Indirect [Member]
Non-accruing loans	$ 71

XML

Loans and Allowance for Loan and Lease Losses - Impaired Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Impaired loans with no related allowance recorded, carrying amount	$ 5,154	$ 2,525
Impaired loans with no related allowance recorded, unpaid principal balance	5,154	2,525
Impaired loans, related allowances	259	67
Impaired loans with an allowance recorded, carrying amount	367	73
Impaired loans with an allowance recorded, unpaid principal balance	367	73
Impaired loans, carrying amount	5,521	2,598
Impaired loans, unpaid principal balance	5,521	2,598
Impaired loans, average recorded investment	3,528	3,809
Impaired loans, interest income recognized	72	241
Impaired loans, interest income received	60	181
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Impaired loans, average recorded investment	87
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Impaired loans with no related allowance recorded, carrying amount	568	630
Impaired loans with no related allowance recorded, unpaid principal balance	568	630
Impaired loans, related allowances	7	10
Impaired loans with an allowance recorded, carrying amount	14	16
Impaired loans with an allowance recorded, unpaid principal balance	14	16
Impaired loans, carrying amount	582	646
Impaired loans, unpaid principal balance	582	646
Impaired loans, average recorded investment	614	773
Impaired loans, interest income recognized	14	31
Impaired loans, interest income received	6	31
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Impaired loans with no related allowance recorded, carrying amount	2,492	1,051
Impaired loans with no related allowance recorded, unpaid principal balance	2,492	1,051
Impaired loans, carrying amount	2,492	1,051
Impaired loans, unpaid principal balance	2,492	1,051
Impaired loans, average recorded investment	1,529	2,377
Impaired loans, interest income recognized	49	140
Impaired loans, interest income received	48	108
Commercial and Industrial Loans [Member]
Impaired loans with no related allowance recorded, carrying amount	2,076	823
Impaired loans with no related allowance recorded, unpaid principal balance	2,076	823
Impaired loans, related allowances	252	57
Impaired loans with an allowance recorded, carrying amount	353	880
Impaired loans with an allowance recorded, unpaid principal balance	353	880
Impaired loans, carrying amount	2,429	57
Impaired loans, unpaid principal balance	2,429	57
Impaired loans, average recorded investment	1,279	637
Impaired loans, interest income recognized	8	61
Impaired loans, interest income received	5	40
Direct Consumer [Member]
Impaired loans with no related allowance recorded, carrying amount	18
Impaired loans with no related allowance recorded, unpaid principal balance	18
Impaired loans, related allowances		0
Impaired loans with an allowance recorded, carrying amount		21
Impaired loans with an allowance recorded, unpaid principal balance		21
Impaired loans, carrying amount	18	21
Impaired loans, unpaid principal balance	18	21
Impaired loans, average recorded investment	19	22
Impaired loans, interest income recognized	1	9
Impaired loans, interest income received	$ 1	$ 2

XML

Loans and Allowance for Loan and Lease Losses - Loans Modified in a Troubled Debt Restructuring (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 Loan	Dec. 31, 2022 DebtSecurityNumber	Dec. 31, 2022 USD ($)	Dec. 31, 2021 Loan	Dec. 31, 2021 DebtSecurityNumber	Dec. 31, 2021 USD ($)
Number of loans	0	4		0	4
Pre- Modification Outstanding Principal Balance			$ 715			$ 715
Post- Modification Principal Balance			646			660
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Number of loans | DebtSecurityNumber		1			1
Pre- Modification Outstanding Principal Balance			23			23
Post- Modification Principal Balance			12			12
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Number of loans | DebtSecurityNumber		2			2
Pre- Modification Outstanding Principal Balance			621			621
Post- Modification Principal Balance			612			617
Commercial and Industrial Loans [Member]
Number of loans | DebtSecurityNumber		1			1
Pre- Modification Outstanding Principal Balance			71			71
Post- Modification Principal Balance			$ 22			$ 31

XML

Other Real Estate Owned and Repossessed Assets - Summary of Foreclosed Property Activity (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021
Other Real Estate [Abstract]
Beginning balance		$ 2,149	$ 949
Additions	[1]	411	1,981
Sales proceeds		(2,232)	(1,205)
Gross gains		386	491
Gross losses		(27)
Net gains		359	491
Impairment		(1)	(67)
Ending balance		$ 686	$ 2,149

[1] Additions to other real estate owned (“OREO”) include transfers from loans, transfers from closed Bank and ALC branches, and capitalized improvements to existing OREO properties.

XML

Other Real Estate Owned and Repossessed Assets - Additional Information (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Other Real Estate [Abstract]
Foreclosed real estate owned, fair value less disposal costs	$ 20,000	$ 151,000
Mortgage loans in process of foreclosure, amount	$ 0	$ 0

XML

Other Real Estate Owned and Repossessed Assets - Summary of Repossessed Assets Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Other Real Estate And Other Assets Acquired In Foreclosure [Line Items]
Sales proceeds	$ (2,232)	$ (1,205)
Gross gains	386	491
Gross losses	(27)
Net gains	359	491
Impairment	(1)	(67)
Repossessed Assets [Member]
Other Real Estate And Other Assets Acquired In Foreclosure [Line Items]
Beginning balance	154	245
Transfers from loans	887	803
Sales proceeds	(506)	(798)
Gross losses	(452)	(96)
Net gains	(452)	(96)
Ending balance	$ 83	$ 154

XML

Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2018
Goodwill And Other Intangible Assets [Line Items]
Goodwill, Ending Balance	$ 7,435	$ 7,435
Finite-Lived Intangible Assets, Net, Ending Balance	$ 366	$ 634
Core Deposits [Member]
Goodwill And Other Intangible Assets [Line Items]
Finite-lived intangible asset, useful life	7 years
Finite-Lived Intangible Assets, Net, Ending Balance			$ 2,000
The Peoples Bank [Member]
Goodwill And Other Intangible Assets [Line Items]
Goodwill, Ending Balance			$ 7,400

XML

Goodwill and Other Intangible Assets - Summary of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 7,435	$ 7,435
Gross carrying amount	2,048	2,048
Accumulated amortization	(1,682)	(1,414)
Core deposit intangible, net	366	634
Total	$ 7,801	$ 8,069

XML

Goodwill and Other Intangible Assets - Estimated Remaining Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
2023	$ 195
2024	122
2025	49
Core deposit intangible, net	$ 366	$ 634

XML

Premises and Equipment - Summary of Premises and Equipment and Applicable Depreciable Lives (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property Plant And Equipment [Line Items]
Premises and equipment, gross	$ 46,062	$ 47,039
Less accumulated depreciation	(21,623)	(21,916)
Total premises and equipment, net	24,439	25,123
Land [Member]
Property Plant And Equipment [Line Items]
Premises and equipment, gross	5,390	5,486
Premises [Member]
Property Plant And Equipment [Line Items]
Premises and equipment, gross	24,880	25,924
Furniture, Fixtures and Equipment [Member]
Property Plant And Equipment [Line Items]
Premises and equipment, gross	$ 15,792	$ 15,629

XML

Premises and Equipment - Summary of Premises and Equipment and Applicable Depreciable Lives (Details) (Parenthetical)	12 Months Ended
	Dec. 31, 2022
Premises [Member]
Property Plant And Equipment [Line Items]
Useful lives for all premises and equipment (Year)	40 years
Maximum [Member] | Furniture, Fixtures and Equipment [Member]
Property Plant And Equipment [Line Items]
Useful lives for all premises and equipment (Year)	7 years
Minimum [Member] | Furniture, Fixtures and Equipment [Member]
Property Plant And Equipment [Line Items]
Useful lives for all premises and equipment (Year)	3 years

XML

Premises and Equipment - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 1,614	$ 1,692

XML

Deposits - Scheduled Maturities of the Bank's Time Deposits (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Disclosure Text Block [Abstract]
2023	$ 115,494
2024	56,104
2025	63,576
2026	13,274
2027	4,264
Total	$ 252,712

XML

Deposits - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Disclosure Text Block [Abstract]
Time Deposits, at or Above FDIC Insurance Limit	$ 29.5	$ 31.0
Brokered Certificates of Deposit	62.5	32.0
Related Party Deposit Liabilities	$ 4.1	$ 4.2

XML

Borrowings - Additional Information (Details) - USD ($)		12 Months Ended
	Oct. 01, 2021	Dec. 31, 2022	Dec. 31, 2021
Short Term Debt [Line Items]
Federal Funds Purchased		$ 0	$ 0
Securities Sold under Agreements to Repurchase, Total		38,000	46,000
Federal Home Loan Bank, Advances, Maturities Summary, Due in Next Twelve Months, Total		20,000,000.0	10,000,000.0
Long-term Federal Home Loan Bank advances		0	0
Long-Term Debt		$ 10,726,000	10,653,000
Subordinated Debt [Member]
Short Term Debt [Line Items]
Maturity date	Oct. 01, 2031
Interest rate, description		The Notes bear interest at a rate of 3.50% per annum for the first five years; then the interest rate will be reset quarterly to a benchmark interest rate per annum which, subject to certain conditions provided in the Notes, will be equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points.
Variable rate, description		three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points
Loan, fixed interest rate	3.50%
Variable interest rate	2.75%
Investment into capital surplus	$ 5,000,000.0
Long-Term Debt		$ 10,726,000	$ 10,653,000
Private Placement [Member] | Subordinated Debt [Member]
Short Term Debt [Line Items]
Principal amount	$ 11,000,000.0
Minimum [Member]
Short Term Debt [Line Items]
Maturity Period of Federal Funds		1 day
Maximum [Member]
Short Term Debt [Line Items]
Maturity Period of Federal Funds		4 days

XML

Borrowings - Summary of Long-Term Borrowings (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Beginning balance	$ 10,653
Ending balance	10,726	$ 10,653
Subordinated Debt [Member]
Debt Instrument [Line Items]
Beginning balance	10,653
Average balance during the year	10,689	2,682
Ending balance	$ 10,726	$ 10,653
Average rate paid during the year, including amortization of debt issuance costs	4.20%	4.20%
Weighted average remaining maturity (in years)	8 years 9 months	9 years 9 months

XML

Borrowings - Schedule of Available Unused Lines of Credit (Details) - Unused lines of Credit [Member] - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021
Correspondent Banks [Member]
Short Term Debt [Line Items]
Collateral Requirements		None
Available lines of credit		$ 45.0	$ 45.0
Federal Reserve (Discount Window) [Member]
Short Term Debt [Line Items]
Collateral Requirements		Subject to collateral
Available lines of credit		$ 15.0	15.0
FHLB Advances [Member]
Short Term Debt [Line Items]
Collateral Requirements	[1]	Subject to collateral
Available lines of credit	[1]	$ 246.8	$ 237.0

[1] These amounts represent the total remaining credit the Company has from the FHLB, but this credit can only be utilized to the extent that underlying collateral exists. Assets pledged (including loans and investment securities) associated with FHLB advances and letters of credit totaled $68.2 million and $66.6 million as of December 31, 2022 and 2021, respectively. The Company’s collateral exposure with the FHLB in the form of advances and letters of credit was $50.0 million and $40.0 million as of December 31, 2022 and 2021, respectively, leaving an excess of collateral of $18.2 million and $26.6 million available to utilize for additional credit as of the respective dates.

XML

Borrowings - Schedule of Available Unused Lines of Credit (Parenthetical) (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Federal Home Loan Bank, advances, general debt obligations, disclosures, collateral pledged	$ 68.2	$ 66.6
Collateral exposure with FHLB in form of advances	50.0	40.0
Collateral pledged in excess available to utilize additional credit	$ 18.2	$ 26.6

XML

Income Taxes - Consolidated Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Federal
Current									$ 2,025	$ 1,522
Deferred									(291)	(527)
Total federal									1,734	995
State
Current									490	154
Deferred									(76)	126
Total state									414	280
Total	$ 708	$ 546	$ 494	$ 400	$ 507	$ 229	$ 271	$ 268	$ 2,148	$ 1,275

XML

Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Operating Loss Carryforwards [Line Items]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%
Open Tax Year	2014 2015 2016 2017 2018 2019 2020 2021 2022
Unrecognized Tax Benefits, Ending Balance	$ 0
Unrecognized Tax Benefits, Period Increase (Decrease), Total	0
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	0
Unrecognized Tax Benefits, Income Tax Penalties Accrued	0
Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	0	$ 0
State [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 0	$ 0

XML

Income Taxes - Schedule of Effective Income Tax Rate (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Income tax expense at federal statutory rate									$ 1,892	$ 1,202
Increase (decrease) resulting from:
Tax-exempt interest									(76)	(88)
Bank-owned life insurance									(62)	(62)
State income tax expense, net of federal income taxes									329	169
Other									65	54
Total	$ 708	$ 546	$ 494	$ 400	$ 507	$ 229	$ 271	$ 268	$ 2,148	$ 1,275

XML

Income Taxes - Effects of Temporary Differences of Deferred Tax Assets and Deferred Tax Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Allowance for loan losses	$ 2,333	$ 2,065
Deferred compensation	895	947
Deferred commissions and fees	407	243
Unrealized loss on securities available-for-sale	2,715
Unrealized loss on cash flow hedges		144
Other	905	862
Total gross deferred tax assets	7,255	4,261
Deferred tax liabilities:
Premises and equipment	1,288	1,248
Core deposit intangible	91	158
Limited partnerships	94	87
Unrealized gain on securities available-for-sale		52
Unrealized gain on cash flow hedges	301
Other	341	266
Total gross deferred tax liabilities	2,115	1,811
Net deferred tax asset, included in other assets	$ 5,140	$ 2,450

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Employee Benefit Plans - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	100.00%	100.00%
Defined Contribution Plan, Discretionary Contribution Percent	2.00%
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 0.4	$ 0.5
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent	20.00%
Defined Benefit Plan, Plan Assets, Employer, Related Party, Number of Shares	184,987	238,514
Maximum [Member]
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	4.00%

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Deferred Compensation Plans - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Deferred Compensation Arrangement With Individual Share Based Payments [Line Items]
Deferred Compensation Arrangement with Individual, Common Stock Reserved for Future Issuance	114,190	117,825
Other Liabilities [Member]
Deferred Compensation Arrangement With Individual Share Based Payments [Line Items]
Deferred Compensation Liability, Current and Noncurrent, Total	$ 3.1	$ 3.2

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Stock Awards - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted (in shares)	0	0
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value	$ 0.1	$ 0.6
Employee Stock Option [Member] | Omnibus Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment arrangement, expense	$ 0.4	$ 0.3
Share-based compensation arrangement by share-based payment award, options, vested and expected to vest, outstanding, weighted average remaining contractual term	10 years
Employee Stock Option [Member] | Omnibus Incentive Plan [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	1 year
Employee Stock Option [Member] | Omnibus Incentive Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	3 years
Restricted Stock [Member] | Omnibus Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, equity instruments other than options, grants in period	45,935	38,430
Restricted Stock [Member] | Omnibus Incentive Plan [Member] | Employees [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	3 years
Restricted Stock [Member] | Omnibus Incentive Plan [Member] | Non-employee Directors [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	1 year

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Stock Awards - Stock Option Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning of year (in shares)	420,250	421,000
Granted (in shares)	0	0
Exercised (in shares)	0	750
Forfeited (in shares)	600	0
Options outstanding, end of year (in shares)	419,650	420,250
Options exercisable, end of year (in shares)	416,249	395,678
Outstanding, beginning of year, average exercise price (in dollars per share)	$ 9.79	$ 9.79
Granted, average exercise price (in dollars per share)	0	0
Exercised, average exercise price (in dollars per share)	0	8.23
Forfeited, average exercise price (in dollars per share)	10.86	0
Options outstanding, end of year, average exercise price (in dollars per share)	9.79	9.79
Options exercisable, end of year, average exercise price (in dollars per share)	$ 9.77	$ 9.74

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Shareholder's Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Equity [Abstract]
Common Stock, Dividends, Per Share, Declared	$ 0.14	$ 0.12
Dividends, Common Stock, Total	$ 832	$ 745
Capital conservation buffer	2.50%
Dividend payment restrictions schedule, description	Under Alabama law, a state-chartered bank must annually transfer to surplus at least 10% of its “net earnings” (defined as the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets, less all current operating expenses, actual losses, accrued dividends on preferred stock and all federal, state and local taxes) until the bank’s surplus is at least 20% of its capital. Until the bank’s surplus reaches this level, a bank may not declare a dividend in excess of 90% of its net earnings. Once a bank’s surplus equals or exceeds 20% of its capital, if the total of all dividends declared by the bank in a calendar year will exceed the sum of its net earnings for that year and its retained net earnings for the preceding two years (less any required transfers to surplus), then the bank must obtain prior written approval from the Superintendent of the Alabama State Banking Department. The bank may not pay any dividends or make any withdrawals or transfers from surplus without the prior written approval of the Superintendent. The FDIC prohibits the payment of cash dividends if (1) as a result of such payment, the bank would be undercapitalized or (2) the bank is in default with respect to any assessment due to the FDIC, including a deposit insurance assessment. These restrictions could materially influence the Bank’s, and therefore Bancshares’, ability to pay dividends.

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Shareholder's Equity - Summary of Actual Capital Amount and Well Capitalized Total Risk-Based, Tier I Risk-Based, and Tier I Leverage Ratios (Details) $ in Thousands	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Equity [Abstract]
Common equity Tier 1 capital (to risk-weighted assets), Actual Regulatory Capital, Amount	$ 92,853	$ 87,379
Tier 1 capital (to risk-weighted assets) Actual Regulatory Capital, Amount	92,853	87,379
Total capital (to risk-weighted assets), Actual Regulatory Capital, Amount	102,275	95,699
Tier 1 capital (to risk-weighted assets), Actual Regulatory Capital, Amount	$ 92,853	$ 87,379
Common equity Tier 1 capital (to risk-weighted assets), Actual Regulatory Capital, Ratio	0.1107	0.1136
Tier 1 capital (to risk-weighted assets), Actual Regulatory Capital, Ratio	0.1107	0.1136
Total capital (to risk-weighted assets), Actual Regulatory Capital, Ratio	0.1219	0.1244
Tier 1 leverage (to average assets), Actual Regulatory Capital, Ratio	0.0939	0.0917
Common equity Tier 1 capital (to risk-weighted assets), Minimum Requirement	7.00%	7.00%
Tier 1 capital (to risk-weighted assets), Minimum Requirement	0.0850	0.0850
Total capital (to risk-weighted assets), Minimum Requirement	0.1050	0.1050
Tier 1 leverage (to average assets), Minimum Requirement	0.0400	0.0400
Common equity Tier 1 capital (to risk-weighted assets), To Be Well Capitalized	6.50%	6.50%
Tier 1 capital (to risk-weighted assets), To Be Well Capitalized	0.0800	0.0800
Total capital (to risk-weighted assets), To Be Well Capitalized	0.1000	0.1000
Tier 1 leverage (to average assets), To Be Well Capitalized	0.0500	0.0500

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Leases - Additional Information (Details)	12 Months Ended
	Dec. 31, 2022
Lessee Lease Description [Line Items]
Lessee, Operating Lease, Renewal Term	5 years
Lessee, Operating Lease, Period of Option to Terminate	1 year
Minimum [Member]
Lessee Lease Description [Line Items]
Lessee, Operating Lease, Remaining Term of Contract	2 years
Maximum [Member]
Lessee Lease Description [Line Items]
Lessee, Operating Lease, Remaining Term of Contract	6 years

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Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Operating lease expense	[1]	$ 434	$ 999
Operating lease income	[2]	864	830
Operating lease right-of-use assets		1,883	2,245
Operating lease liabilities		$ 1,961	$ 2,317
Weighted-average remaining lease term (in years)		5 years 10 days	5 years 10 months 24 days
Weighted-average discount rate		3.30%	3.29%
Operating cash flows from operating leases		$ 427	$ 859

[1] Includes short-term lease costs. For the years ended December 31, 2022 and 2021, short-term lease costs were nominal in amount.

[2] Operating lease income includes rental income from owned properties.

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Leases - Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
2023	$ 432
2024	438
2025	339
2026	346
2027	353
2028 and thereafter	238
Total future minimum lease payments	2,146
Less: Imputed interest	185
Total	$ 1,961	$ 2,317

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Derivative Financial Instruments - Additional Information (Details)		3 Months Ended	12 Months Ended
	Jan. 01, 2023 USD ($) Contract	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Subsequent Event [Member]
Derivative [Line Items]
Derivative instruments, gain reclassified from accumulated oci into income, effective portion	$ 2,200,000
Number of interest rate swap contracts terminated | Contract	4
Cash Flow Hedging [Member]
Derivative [Line Items]
Derivative instruments, gain reclassified from accumulated oci into income, effective portion		$ 300,000
Derivative instruments, gain (loss) reclassified from accumulated OCI into income, effective portion, net			$ 70,000	$ 0
Fair Value Hedging [Member] | Forward Interest Rate Swap Contracts [Member]
Derivative [Line Items]
Derivative instruments, gain (loss) reclassified from accumulated OCI into income, effective portion, net			$ 0	$ 0

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Derivative Financial Instruments - Schedule of Notional Amount and Fair Value of Derivative Instruments Included on Company's Consolidated Balance Sheets on a net Basis (Details) - Derivatives Designated as Hedging Instruments [Member] - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021
Derivatives Fair Value [Line Items]
Estimated Fair Value Gain (Loss)	[1]	$ 2,306	$ (774)
Fair Value Hedging [Member]
Derivatives Fair Value [Line Items]
Estimated Fair Value Gain (Loss)	[1]	1,101	(198)
Fair Value Hedging [Member] | Interest Rate Swaps Related to Fixed Rate Commercial Real Estate Loans [Member]
Derivatives Fair Value [Line Items]
Notional Amount		20,000	20,000
Estimated Fair Value Gain (Loss)	[1]	1,101	(198)
Cash Flow Hedging [Member]
Derivatives Fair Value [Line Items]
Estimated Fair Value Gain (Loss)	[1]	1,205	(576)
Cash Flow Hedging [Member] | Interest Rate Swaps Related to Variable-Rate Money Market Deposit Accounts [Member]
Derivatives Fair Value [Line Items]
Notional Amount		20,000	20,000
Estimated Fair Value Gain (Loss)	[1]	$ 1,205	(472)
Cash Flow Hedging [Member] | Interest Rate Swaps Related to FHLB Advances [Member]
Derivatives Fair Value [Line Items]
Notional Amount			10,000
Estimated Fair Value Gain (Loss)	[1]		$ (104)

[1] Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

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Derivative Financial Instruments - Schedule of Cumulative Basis Adjustments for Fair Value Hedges (Details) $ in Thousands	Dec. 31, 2022 USD ($)	[1]
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Carrying Amount of the Hedged Assets	$ 32,233
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets	$ 1,101

[1] These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. As of December 31, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships was $33.3 million, the cumulative basis adjustments associated with these hedging relationships were $1.1 million, and the amounts of the designated hedged items were $20 million.

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Derivative Financial Instruments - Schedule of Cumulative Basis Adjustments for Fair Value Hedges (Parenthetical) (Details) $ in Millions	Dec. 31, 2022 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Amortized cost basis of closed portfolios used in hedging relationships	$ 33.3
Cumulative basis adjustments associated with hedging relationships	1.1
Designated hedged items	$ 20.0

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Derivative Financial Instruments - Schedule of Hedging Derivative Instruments' Effect on Company's Consolidated Statement of Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Interest and Fees on Loans [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	$ 75	$ (253)
Interest on Deposits [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	56	(127)
Interest on Short-Term Borrowings [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	(5)	(333)
Net Increase (Decrease) to Income Before Income Taxes [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	$ 126	$ (713)

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Segment Reporting - Additional Information (Details)		3 Months Ended	12 Months Ended
	Sep. 03, 2021 Branch	Sep. 30, 2021 Branch	Dec. 31, 2022 Segment
Segment Reporting Information [Line Items]
Number of reportable segments | Segment			2
ALC [Member]
Segment Reporting Information [Line Items]
Number of office closed | Branch	20	20

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Segment Reporting - Results for Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Segment Reporting Revenue Reconciling Item [Line Items]
Total interest income	$ 11,621	$ 10,670	$ 9,525	$ 9,381	$ 9,987	$ 10,030	$ 10,059	$ 9,845	$ 41,197	$ 39,921
Total interest expense	1,730	1,155	699	672	727	695	747	781	4,256	2,950
Net interest income	9,891	9,515	8,826	8,709	9,260	9,335	9,312	9,064	36,941	36,971
Provision									3,308	2,010
Net interest income after provision for loan and lease losses	9,364	8,350	7,931	7,988	8,767	8,717	8,814	8,663	33,633	34,961
Total non-interest income	678	1,088	856	829	865	896	809	951	3,451	3,521
Total non-interest expense	7,106	7,032	6,878	7,056	7,414	8,547	8,399	8,396	28,072	32,756
Income before income taxes	2,936	2,406	1,909	1,761	2,218	1,066	1,224	1,218	9,012	5,726
Provision for income taxes	708	546	494	400	507	229	271	268	2,148	1,275
Net income (loss)	2,228	$ 1,860	$ 1,415	$ 1,361	1,711	$ 837	$ 953	$ 950	6,864	4,451
Total assets	994,667				958,302				994,667	958,302
Total investment securities	132,657				134,319				132,657	134,319
Total loans, net	764,451				700,030				764,451	700,030
Goodwill and core deposit intangible, net	7,801				8,069				7,801	8,069
Fixed asset additions									1,262	822
Depreciation and amortization expense									1,614	1,692
Total interest income from external customers									41,197	39,921
Intersegment Eliminations [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Total interest income									(1,034)	(1,642)
Total interest expense									(1,034)	(1,642)
Total non-interest income									(8,379)	(5,958)
Total non-interest expense									(195)	(452)
Income before income taxes									(8,184)	(5,506)
Net income (loss)									(8,184)	(5,506)
Total assets	(124,904)				(150,441)				(124,904)	(150,441)
Total loans, net	(18,300)				(39,069)				(18,300)	(39,069)
Investment in subsidiaries	(93,414)				(95,172)				(93,414)	(95,172)
Total interest income from affiliates									(1,034)	(1,642)
FUSB [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Total loans, net	745,641				660,533				745,641	660,533
FUSB [Member] | Operating Segments [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Total interest income									37,510	32,537
Total interest expense									3,803	2,842
Net interest income									33,707	29,695
Provision									1,338	1,515
Net interest income after provision for loan and lease losses									32,369	28,180
Total non-interest income									3,535	3,206
Total non-interest expense									25,278	25,188
Income before income taxes									10,626	6,198
Provision for income taxes									2,475	1,305
Net income (loss)									8,151	4,893
Total assets	998,727				961,572				998,727	961,572
Total investment securities	132,657				134,238				132,657	134,238
Total loans, net	763,941				699,600				763,941	699,600
Goodwill and core deposit intangible, net	7,801				8,069				7,801	8,069
Fixed asset additions									1,262	816
Depreciation and amortization expense									1,579	1,613
Total interest income from external customers									36,481	30,902
Total interest income from affiliates									1,029	1,635
ALC [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Total loans, net	18,810				39,497				18,810	39,497
ALC [Member] | Operating Segments [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Total interest income									4,716	9,019
Total interest expense									1,029	1,635
Net interest income									3,687	7,384
Provision									1,970	495
Net interest income after provision for loan and lease losses									1,717	6,889
Total non-interest income									204	576
Total non-interest expense									1,751	6,599
Income before income taxes									170	866
Provision for income taxes									45	221
Net income (loss)									125	645
Total assets	19,772				40,924				19,772	40,924
Total loans, net	18,810				39,499				18,810	39,499
Fixed asset additions										6
Depreciation and amortization expense									35	79
Total interest income from external customers									4,716	9,019
Other Segments [Member] | Operating Segments [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Total interest income									5	7
Total interest expense									458	115
Net interest income									(453)	(108)
Net interest income after provision for loan and lease losses									(453)	(108)
Total non-interest income									8,091	5,697
Total non-interest expense									1,238	1,421
Income before income taxes									6,400	4,168
Provision for income taxes									(372)	(251)
Net income (loss)									6,772	4,419
Total assets	101,072				106,247				101,072	106,247
Total investment securities					81					81
Investment in subsidiaries	$ 93,414				$ 95,172				93,414	95,172
Total interest income from affiliates									$ 5	$ 7

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Other Operating Income and Expense - Other Operating Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Other Income and Expenses [Abstract]
Bank-owned life insurance	$ 451	$ 439
Credit insurance commissions and fees	(93)	192
ATM fee income	532	577
Mortgage fees from secondary market	17	23
Wire transfer fees	52	64
Gain on sales of premises and equipment and other assets	301	19
Other income	256	286
Total	$ 1,516	$ 1,600

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Other Operating Income and Expense - Other Operating Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Postage, stationery and supplies	$ 614	$ 802
Telephone/data communication	682	903
Advertising and marketing	189	167
Travel and business development	225	147
Collection and recoveries	261	168
Other services	323	322
Insurance expense	566	635
FDIC insurance and state assessments	684	726
Loss on sales of premises and equipment and other assets	69	150
Amortization of intangible assets	268	341
Other real estate/foreclosure expense, net	(331)	(371)
Other expense	2,124	2,114
Total	5,674	6,104
Core Deposits [Member]
Amortization of intangible assets	$ 268	$ 341

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Guarantees, Commitments and Contingencies - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Credit losses associated with derivative contracts	$ 0	$ 0
Securities Committed to Sell Amount	0	0
Self Insurance Reserve	$ 200,000	$ 200,000

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Guarantees, Commitments and Contingencies - Summary of Commitment and Contingent Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Standby Letters of Credit [Member]
Fair Value Off Balance Sheet Risks Disclosure Information [Line Items]
Commitments and contingent liabilities	$ 0	$ 0
Standby Performance Letters of Credit [Member]
Fair Value Off Balance Sheet Risks Disclosure Information [Line Items]
Commitments and contingent liabilities	556	582
Commitments to Extend Credit [Member]
Fair Value Off Balance Sheet Risks Disclosure Information [Line Items]
Commitments and contingent liabilities	$ 186,169	$ 164,247

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Fair Value of Financial Instruments - Additional Information (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	$ 0	$ 0

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Fair Value of Financial Instruments - Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	$ 130,795	$ 130,883
Residential Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	43,957	46,228
Residential Mortgage Backed Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	43,957	46,228
Residential Mortgage Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	43,957	46,228
Commercial Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	11,693	24,971
Commercial Mortgage Backed Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	11,693	24,971
Commercial Mortgage Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	11,693	24,971
US Government Agencies Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	4,270	5,192
US Government Agencies Debt Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	4,270	5,192
US Government Agencies Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	4,270	5,182
US Government Agencies Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value		10
US States and Political Subdivisions Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	2,072	4,317
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	2,072	4,317
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	2,072	4,317
Corporate Note Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	15,921	15,482
Corporate Note Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	15,921	15,482
Corporate Note Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	14,921	15,482
Corporate Note Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	1,000
US Treasury Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	52,882	34,693
US Treasury Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	52,882	34,693
US Treasury Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	52,882	34,693
Other Assets [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	2,306
Other Assets [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	$ 2,306
Other Liabilities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value		774
Other Liabilities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value		$ 774

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Fair Value of Financial Instruments - Assets Measured at Fair Value on Non-recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	$ 108
OREO and other assets held-for-sale	686
Fair Value, Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	108	$ 6
OREO and other assets held-for-sale	686	2,149
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	108	6
OREO and other assets held-for-sale	$ 686	$ 2,149

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Fair Value of Financial Instruments - Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) (Details) - Fair Value, Inputs, Level 3 [Member] $ in Thousands	Dec. 31, 2022 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	$ 108
OREO and other assets held-for-sale	$ 686
Minimum [Member] | Measurement Input, Comparability Adjustment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	9
OREO and other assets held-for-sale	9
Maximum [Member] | Measurement Input, Comparability Adjustment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	10
OREO and other assets held-for-sale	10
Weighted Average [Member] | Measurement Input, Comparability Adjustment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	9.5
OREO and other assets held-for-sale	9.5

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Fair Value of Financial Instruments - Estimated Fair Value and Related Carrying or Notional Amounts of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Assets:
Investment securities available-for-sale	$ 130,795	$ 130,883
Investment securities held-to-maturity	1,769	3,477
Carrying Amount [Member]
Assets:
Cash and cash equivalents	30,152	61,244
Investment securities available-for-sale	130,795	130,883
Investment securities held-to-maturity	1,862	3,436
Federal funds sold	1,768	82
Federal Home Loan Bank stock	1,359	870
Loans, net of allowance for loan losses	764,451	700,030
Liabilities:
Deposits	870,025	838,126
Short-term borrowings	20,038	10,046
Long-term borrowings	10,726	10,653
Other liabilities - derivatives	2,306	774
Estimate of Fair Value Measurement [Member]
Assets:
Cash and cash equivalents	30,152	61,244
Investment securities available-for-sale	130,795	130,883
Investment securities held-to-maturity	1,769	3,477
Federal funds sold	1,768	82
Federal Home Loan Bank stock	1,359	870
Loans, net of allowance for loan losses	730,961	694,744
Liabilities:
Deposits	788,161	837,439
Short-term borrowings	20,038	10,046
Long-term borrowings	9,702	10,804
Other liabilities - derivatives	2,306	774
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Cash and cash equivalents	30,152	61,244
Investment securities available-for-sale	52,882	34,612
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Investment securities available-for-sale	76,913	96,260
Investment securities held-to-maturity	1,769	3,477
Federal funds sold	1,768	82
Liabilities:
Deposits	788,161	837,439
Short-term borrowings	20,038	10,046
Long-term borrowings	9,702	10,804
Other liabilities - derivatives	2,306	774
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Investment securities available-for-sale	1,000	11
Federal Home Loan Bank stock	1,359	870
Loans, net of allowance for loan losses	$ 730,961	$ 694,744

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First US Bancshares, Inc. (Parent Company Only) Financial Information - Statements of Balance Sheet (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash on deposit	$ 30,152	$ 61,244
Other assets	11,944	7,719
Total assets	994,667	958,302
Other liabilities	8,136	9,189
Long-term borrowings	10,726	10,653
Shareholders’ equity	85,135	90,064	$ 86,678
Total liabilities and shareholders’ equity	994,667	958,302
FUSB [Member]
Cash on deposit	2,855	5,890
Investment in subsidiaries	93,414	95,172
Other assets	78	83
Total assets	96,347	101,145
Other liabilities	485	428
Long-term borrowings	10,726	10,653
Shareholders’ equity	85,136	90,064
Total liabilities and shareholders’ equity	$ 96,347	$ 101,145

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First US Bancshares, Inc. (Parent Company Only) Financial Information - Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Income:
Expense									$ 5,674	$ 6,104
Net income (loss)	$ 2,228	$ 1,860	$ 1,415	$ 1,361	$ 1,711	$ 837	$ 953	$ 950	6,864	4,451
FUSB [Member]
Income:
Dividend income, First US Bank									3,463	1,570
Total income									3,463	1,570
Expense									1,320	1,055
Gain before equity in undistributed income of subsidiaries									2,143	515
Equity in undistributed income of subsidiaries									4,721	3,936
Net income (loss)									$ 6,864	$ 4,451

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First US Bancshares, Inc. (Parent Company Only) Financial Information - Statements of Cash Flow (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net income	$ 2,228	$ 1,860	$ 1,415	$ 1,361	$ 1,711	$ 837	$ 953	$ 950	$ 6,864	$ 4,451
Adjustments to reconcile net income to net cash provided by operating activities:
Net cash provided by operating activities									12,529	9,825
Cash flows from investing activities:
Net cash used in investing activities									(80,199)	(108,315)
Cash flows from financing activities:
Net proceeds from long-term borrowings										10,653
Net share-based compensation transactions										(7)
Dividends paid									(832)	(745)
Treasury stock repurchases									(4,481)	(525)
Net cash provided by financing activities									36,578	65,319
Net decrease in cash and cash equivalents									(31,092)	(33,171)
Cash and cash equivalents, beginning of period				61,244				94,415	61,244	94,415
Cash and cash equivalents, end of period	30,152				61,244				30,152	61,244
FUSB [Member]
Cash flows from operating activities:
Net income									6,864	4,451
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions in excess of undistributed income of subsidiaries									(4,721)	(3,936)
Change in other assets and liabilities									135	580
Net cash provided by operating activities									2,278	1,095
Cash flows from investing activities:
Investment in subsidiaries										(5,000)
Net cash used in investing activities										(5,000)
Cash flows from financing activities:
Net proceeds from long-term borrowings										10,653
Net share-based compensation transactions										(7)
Dividends paid									(832)	(745)
Treasury stock repurchases									(4,481)	(525)
Net cash provided by financing activities									(5,313)	9,376
Net decrease in cash and cash equivalents									(3,035)	5,471
Cash and cash equivalents, beginning of period				$ 5,890				$ 419	5,890	419
Cash and cash equivalents, end of period	$ 2,855				$ 5,890				$ 2,855	$ 5,890

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Quarterly Data (Unaudited) - Summary of Quarterly Data (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Quarterly Financial Information Disclosure [Abstract]
Interest income	$ 11,621	$ 10,670	$ 9,525	$ 9,381	$ 9,987	$ 10,030	$ 10,059	$ 9,845	$ 41,197	$ 39,921
Interest expense	1,730	1,155	699	672	727	695	747	781	4,256	2,950
Net interest income	9,891	9,515	8,826	8,709	9,260	9,335	9,312	9,064	36,941	36,971
Provision for loan and lease losses	527	1,165	895	721	493	618	498	401	3,308	2,010
Net interest income after provision for loan and lease losses	9,364	8,350	7,931	7,988	8,767	8,717	8,814	8,663	33,633	34,961
Non-interest:
Income	678	1,088	856	829	865	896	809	951	3,451	3,521
Expense	7,106	7,032	6,878	7,056	7,414	8,547	8,399	8,396	28,072	32,756
Income before income taxes	2,936	2,406	1,909	1,761	2,218	1,066	1,224	1,218	9,012	5,726
Provision for income taxes	708	546	494	400	507	229	271	268	2,148	1,275
Net income (loss)	$ 2,228	$ 1,860	$ 1,415	$ 1,361	$ 1,711	$ 837	$ 953	$ 950	$ 6,864	$ 4,451
Earnings Per Share [Abstract]
Basic earnings	$ 0.37	$ 0.31	$ 0.23	$ 0.22	$ 0.27	$ 0.13	$ 0.15	$ 0.15	$ 1.13	$ 0.70
Diluted earnings	$ 0.35	$ 0.29	$ 0.22	$ 0.20	$ 0.25	$ 0.13	$ 0.14	$ 0.14	$ 1.06	$ 0.66