Entering text into the input field will update the search result below

First US Bancshares: Investing In A Lagger Among Laggards

Philip MacKellar profile picture
Philip MacKellar


  • First US Bancshares has low valuations versus peers, the market, and its own historic averages.
  • The stock has lagged the banking sector, which in turn has lagged the S&P and the Russell.
  • Insiders have been buying.
  • Risks include COVID-19 impacts, a spike in loan loss provisions, and a long economic slump.
  • Bet sizing, patience, and stomaching volatility may be important given the economic backdrop.


First US Bancshares (NASDAQ:FUSB) is a small regional bank headquartered in Birmingham, Alabama. It has 21 branches, operates in three states, and conducts the majority of its business in Alabama. Together with its two wholly owned subsidiaries, Acceptance Loan Company and FUSB Reinsurance, it is a typical regional bank. It offers personal and business banking services to depositors and provides personal, commercial, and mortgage loans to borrowers.

In the aftermath of the Financial Crisis, it fell from over $32.00 in 2005 to under $4.00 in 2011. Over the past decade it crawled back and hit highs over $14.00, but never retained its former glory. Now that COVID has hit, the bank – like the sector in general – is under pressure.

Here at Contra the Heard Investment Newsletter, we bought many financials in the aftermath of the Financial Crisis. FUSB was purchased by Benj Gallander at $8.32 in December 2015, before it changed its symbol from USBI to FUSB. After sitting on the sidelines for years, I recently bought a half-sized position for myself around $7.60.

Why Invest Now?

My rationale for a purchase now was threefold. First, the valuations are low. This table from Morningstar shows FUSB’s present ratios versus its 5-year average and the index. Price-to-book, for example, currently rests at 0.52. This is materially better than the index at 2.92 or its own 5-year trailing average of 0.79.

Source: FUSB’s Morningstar valuation table, June 2020.

The bank also looks cheap versus peers. Here, Seeking Alpha’s valuation table shows FUSB is undervalued versus other financials on most measures:

Source: FUSB’s Seeking Alpha valuation table, June 2020.

To summarize, the valuations appear low on a historic basis as well as on a relative basis versus peers and the overall market.

Second, FUSB has not participated in the market’s rebound, and

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long FUSB, BAC, FUNC, SYF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.