First US Bancshares, Inc. Announces Branch Closures at Acceptance Loan Company Subsidiary
03 Septiembre 2021 - 4:02PM
First US Bancshares, Inc. (Nasdaq: FUSB) (the “Company”), the
parent company of First US Bank (the “Bank”), today announced that,
effective immediately, the Bank’s wholly owned subsidiary,
Acceptance Loan Company, Inc. (“ALC”), will cease new business
development and permanently close its 20 branch lending locations
in Alabama and Mississippi to the public. ALC will continue to
service its remaining portfolio of loans from its headquarters in
Mobile, Alabama, and management will begin to prepare for the
subsidiary’s eventual closure.
The cessation of new business and closure of ALC’s branch
locations was approved by the boards of directors of ALC, the Bank
and the Company on August 25, 2021. These efforts are being
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. The closure of ALC’s
branches will eliminate 56 full-time employment positions during
the third quarter of 2021. The Company currently expects the
closure of ALC to occur by the end of 2023.
In connection with the ALC branch closures, the Company expects
to record pre-tax charges of approximately $1.2 million during the
third quarter of 2021. These one-time expenses include severance
and related personnel costs, lease termination costs, fixed asset
valuation adjustments, termination of technology contracts, and
other costs to administrate the branch closures, summarized below.
These estimates are preliminary as management is still in the
process of evaluating the costs of closing the ALC branches.
|
$ in millions |
Severance and personnel expenses |
$ |
0.4 |
Lease termination costs |
|
0.4 |
Fixed asset valuation adjustments |
|
0.2 |
Termination of technology contracts |
|
0.1 |
Other expenses |
|
0.1 |
|
$ |
1.2 |
It is expected that the one-time expenses will be fully offset
by the end of 2021 with ongoing cost savings that result from the
ALC branch closures, as well as the previously announced closure of
four Bank branches that will be completed in the third quarter.
Revenue associated with ALC’s portfolio of loans is expected to
diminish over time as loans mature and are paid off. The timing of
revenue reductions, or the need for additional loan loss
provisioning as the portfolio pays off, cannot be predicted at this
time. The Company’s ongoing efforts will be focused on replacing
reduced revenues at ALC with continued loan growth in the Bank’s
other loan portfolios, while maintaining the allowance for loan
losses at prudent levels to account for the inherent uncertainty
that may result from ALC’s branch closures.
Forward-Looking Statements
This press release contains forward-looking
statements, as defined by federal securities laws. Statements
contained in this press release that are not historical facts are
forward-looking statements. These statements may address issues
that involve significant risks, uncertainties, estimates and
assumptions made by management. These forward-looking statements
include, but are not limited to, statements relating to the
expected completion date of ALC’s wind-down, the timing and amounts
of charges and expense savings, and other statements of
expectations regarding the Company’s plan to wind-down ALC. The
Company undertakes no obligation to update these statements
following the date of this press release, except as required by
law. In addition, the Company, through its senior management, may
make from time to time forward-looking public statements concerning
the matters described herein. Such forward-looking statements are
necessarily estimates reflecting the best judgment of the Company’s
senior management based upon current information and involve a
number of risks and uncertainties.
Certain factors that could affect the accuracy
of such forward-looking statements are identified in the public
filings made by the Company with the SEC, and forward-looking
statements contained in this press release or in other public
statements of the Company or its senior management should be
considered in light of those factors. Specifically, with respect to
statements relating to the sufficiency of the allowance for loan
and lease losses, loan demand, cash flows, interest costs, growth
and earnings potential, expansion and the Company’s positioning to
handle the challenges presented by COVID-19, these factors include,
but are not limited to, the rate of growth (or lack thereof) in the
economy generally and in the Bank’s and ALC’s service areas; market
conditions and investment returns; changes in interest rates; the
impact of the current COVID-19 pandemic on the Company’s business,
the Company’s customers, the communities that the Company serves
and the United States economy, including the impact of actions
taken by governmental authorities to try to contain the virus and
protect against it, through vaccinations and otherwise, or address
the impact of the virus on the United States economy (including,
without limitation, the Coronavirus Aid, Relief and Economic
Security (CARES) Act and subsequent federal legislation) and the
resulting effect on the Company’s operations, liquidity and capital
position and on the financial condition of the Company’s borrowers
and other customers; the pending discontinuation of LIBOR as an
interest rate benchmark; the availability of quality loans in the
Bank’s and ALC’s service areas; the relative strength and weakness
in the consumer and commercial credit sectors and in the real
estate markets; collateral values; cybersecurity threats; and risks
related to the Paycheck Protection Program. There can be no
assurance that such factors or other factors will not affect the
accuracy of such forward-looking statements.
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