First US Bancshares in Birmingham, Ala., will shutter its consumer finance unit.
The $947 million-asset company disclosed in a regulatory filing that it will close the 20 locations in Alabama and southeast Mississippi associated with Acceptance Loan Company. The unit will continue to service its remaining loan portfolio as management prepares for its closure.
The unit made personal loans, along with loans for automobiles, ATVs, smaller equipment and household appliances.
The closure is “part of a long-term strategy to reduce expenses, fortify asset quality and focus … loan growth efforts in other areas, including … commercial lending and consumer indirect lending efforts,” the company said in its filing.
First US Bancshares said it will cut 56 positions in the third quarter tied to the branch closures. The unit should be completely shuttered by the end of next year.
The company said it expects to incur about $1.2 million in pretax charges during the third quarter, including $400,000 tied to severance expenses. Cost savings tied to the closure, along with the closing of four bank branches, should offset the upfront expenses by the end of this year.
“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 [loan-loss allowance] at prudent levels to account for the inherent uncertainty that may result from ALC’s branch closures,” the filing said.