Here’s a mid-year update on this bank that is a good potential takeover target.
First US Bancshares, Inc. (FUSB)
From Contra the Heard Investment Letter
First US Bancshares, Inc. is based in Birmingham, Alabama. The company has 20 bank branches in Alabama, Tennessee, and Virginia. We continue to wait for it to fulfill its promise. While waiting, the company gives us a dividend that was increased by 50%, to $0.03 a quarter. That is far lower than the $0.27 it paid prior to the recession, but indications are the payout could increase further.
Revenues continue to ramp up, catalyzed by the takeover of The Peoples Bank, which helped to increase income by 180%. The capitalization ratios remain primo. Investors who buy will be purchasing a company at about half book.
The share count has remained flat at about six million shares, meaning that a further payout increase should not ding the bottom line very much. Insiders own about 6% and have recently increased their stake.
First US used to trade north of $33. It would not surprise to see this one move back to the $25 level, better than a triple from here. It could be a good tuck-in takeover at a significant premium for a player that wants to expand.
Benj Gallander, Contra the Heard Investment Letter, 416-410-4431 email@example.com, Contratheheard.com, June 19, 2020