This bank is growing at triple-digit rates and its shares look undervalued.
First US Bancshares, Inc. (FUSB)
From Contra the Heard Investment Letter
Founded in 1952, First US Bancshares, Inc. (FUSB) was also our pick last year and it has moved up smartly. Far more is expected.
The company makes money, revenues have been trending upwards, and it sells at a large discount to book value. Capital ratios are solid, and the dividend was delivered once again at the two-cent level. Prior to the recession it paid a regular quarterly dividend of $0.27 a quarter, which is one reason that we stand by our belief that this will be hiked, and likely before the end of 2021.
The share count has remained flat at six million shares meaning that a payout increase should not ding the bottom line very much. Insiders own about six percent.
FUSB is based in Birmingham, Alabama. There are 20 bank branches in Alabama and Virginia. The latter state joined the bank through a takeover of the Peoples Bank in 2018 and the digestion process appears to have gone well.
First U.S. used to trade north of $33. It would not surprise to see this one move back to the $25 level; better than a double from here. It could be a good tuck-in takeover for a player that wants to expand.
Benj Gallander, Contra the Heard Investment Letter, 416-410-4431 gall@pathcom.com, www.contratheheard.com, December 19, 2019