Market Overview

The First Bancshares, Inc. Reports a 121.7% Increase in Net Income Available to Common Shareholders and a 102.7% Increase in Operating Net Earnings for the Second Quarter Ended June 30, 2018; Declares Quarterly Dividend of $0.05

Share:

The First Bancshares, Inc. (NASDAQ:FBMS), holding company for The
First, A National Banking Association, (www.thefirstbank.com)
reported today net income available to common shareholders of $5.2
million for the second quarter of 2018, an increase of $2.9 million or
121.7%, compared to $2.4 million for the second quarter of 2017.
Operating net earnings increased 102.7% ($4.1 million) for the second
quarter comparison, totaling $8.1 million for the second quarter of 2018
as compared to $4.0 million for the second quarter of 2017. Operating
net earnings excludes merger-related costs of $2.9 million for the
second quarter of 2018 and $1.6 million for the second quarter of 2017,
net of tax.

For the second quarter of 2018, fully diluted earnings per share were
$0.40, compared to $0.26 for the second quarter of 2017. Excluding the
impact of the merger-related costs, fully diluted operating earnings per
share for the second quarter of 2018 were $0.62 as compared to $0.44 for
the second quarter of 2017. Fully diluted earnings per share for 2018
include the issuance of 2,012,500 shares of our common stock during the
fourth quarter of 2017.

Highlights for the Quarter:

  • On April 1, 2018, the Company closed as planned the acquisition of
    Sunshine Financial, Inc. and its wholly-owned subsidiary, Sunshine
    Community Bank, which added 5 locations serving Tallahassee, Florida.
  • During the quarter, system integration was completed for First
    Community Bank which closed on March 1, 2018.
  • Excluding the Sunshine Community Bank acquisition, loans increased
    $26.4 million or 1.7% during the second quarter of 2018.
  • On April 30, 2017, the Company issued $66 million in aggregate
    principal amount of subordinated debt.
  • During the quarter, the Company received a $0.9 million financial
    assistance grant from the U. S. Treasury as a result of our
    designation as a Community Development Financial Institution.

M. Ray "Hoppy" Cole, President & Chief Executive Officer, commented,
"The Companies profitability and operating performance measures have
continued to improve quarter over quarter. During the 2nd
quarter of 2018 we achieved an operating ROAA of 1.33% and an operating
ROATCE of 15%. This improvement is the result of the substantial growth
we have generated over the last year combined with increases in our net
interest margin and operating efficiency.

During the 2nd quarter our team members successfully
integrated First Community Bank's operating systems and closed on the
Sunshine Bank acquisition. Both of these events, as well as solid
organic growth contributed to the substantial improvement in the
Company's overall performance. Our team members continue to be focused
on executing our strategic vision of growing our franchise in the Gulf
South region."

Balance Sheet

Consolidated assets increased $182.3 million to $2.482 billion at June
30, 2018 from $2.299 billion at March 31, 2018. The acquisition of
Sunshine Community Bank added $223.6 million in assets.

Total loans were $1.710 billion at June 30, 2018, as compared to $1.517
billion at March 31, 2018, and $1.188 billion at June 30, 2017,
representing increases of $193.7 million or 12.8%, and $522.3 million or
44.0%, respectively. The acquisition of Sunshine Community Bank
accounted for $170.8 million, net of fair value mark of the total
increase in loans as compared to the first quarter of 2018. The
acquisitions of First Community Bank and Sunshine Community Bank
accounted for $437.1 million, net of fair value mark of the total
increase in loans as compared to the second quarter of 2017. Loans
excluding those purchased from Sunshine Community Bank grew $26.4
million or 1.7% during the second quarter of 2018 as compared to the
first quarter of 2018.

Total deposits were $2.097 billion at June 30, 2018, as compared to
$1.992 billion at March 31, 2018, and $1.551 billion at June 30, 2017,
representing increases of $105.6 million or 5.3%, and $546.4 million or
35.2%, respectively. The acquisition of Sunshine Community Bank
accounted for $152.0 million, net of fair value mark of the total
increase in deposits as compared to the first quarter of 2018. The
acquisitions of First Community Bank and Sunshine Community Bank
accounted for $509.2 million, net of fair value mark of the total
increase in deposits as compared to the second quarter of 2017. Net of
the deposits acquired from Sunshine Community Bank, deposits decreased
$46.4 million for the sequential-quarter. The decrease in non-acquired
deposits was largely due to a decrease in NOW accounts of $21.2 million,
which is attributable to the seasonality of the public fund deposits.

During the quarter, the Company issued $66 million in aggregate
principal amount of subordinated debt. The net proceeds of the issuance
will be used to support future growth and general corporate purposes
along with the repayment of an existing line of credit with a balance of
$16 million.

Asset Quality

Nonperforming assets totaled $17.9 million at June 30, 2018, an increase
of $3.1 million compared to $14.8 million at March 31, 2018 and an
increase of $4.7 million compared to June 30, 2017. The majority of the
increase in both quarterly comparisons was related to acquired
nonaccrual loans. The ratio of the allowance for loan and leases losses
(ALLL) to total loans was 0.56% at June 30, 2018 and 0.57% at March 31,
2018. Including total valuation accounting adjustments of $7.0 million
on acquired loans, the total valuation plus ALLL was .97% of total loans
at June 30, 2018. The ratio of annualized net charge-offs (recoveries)
to total loans was 0.003% for the quarter ended June 30, 2018 compared
to (0.02%) for the quarter ended March 31, 2018.

Second Quarter 2018 vs. Second Quarter 2017 Earnings Comparison

Net income available to common shareholders for the second quarter of
2018 totaled $5.2 million compared to $2.4 million for the second
quarter of 2017, an increase of $2.9 million or 121.7%.

Operating net earnings for the second quarter of 2018 totaled $8.1
million compared to $4.0 million for the second quarter of 2017, an
increase of $4.1 million or 102.7%. The calculation of operating net
earnings excludes merger-related costs.

For the second quarter of 2018, revenues from consolidated operations
increased $10.3 million in prior year quarterly comparison. Net interest
income for the second quarter of 2018 was $21.5 million, an increase of
$6.7 million when compared to the second quarter of 2017. The increase
was due to interest income earned on a higher volume of loans as well as
increased rates.

Non-interest income increased $1.9 million for the second quarter of
2018 as compared to the second quarter of 2017 due to increased service
charges and interchange fee income of $1.0 million. The Company also
received a financial assistance award of $0.9 million from the U.S.
Treasury during the second quarter of 2018 as a result of our
designation as a Community Development Financial Institution.

Second quarter 2018 non-interest expense was $19.7 million, an increase
of $4.6 million, or 30.6% as compared to the second quarter of 2017.
Excluding acquisition charges of $3.8 million and $2.7 million for
second quarter of 2018 and 2017, respectively, non-interest expense
increased $3.5 million in the second quarter of 2018 as compared to
second quarter of 2017, of which $1.8 million is attributable to the
salaries and benefits related to the acquisitions of First Community
Bank and Sunshine Community Bank.

Net interest income was $21.6 million for the second quarter of 2018 as
compared to $14.8 million for the second quarter of 2017. Fully tax
equivalent ("FTE") net interest income totaled $21.8 million and $15.1
million for the second quarter of 2018 and 2017, respectively. FTE net
interest income increased $6.7 million in the prior year quarterly
comparison due to increased loan volume as well as increased rates.
Purchase accounting adjustments accounted for $0.4 million of the
difference in net interest income for the second quarter comparisons.
Second quarter 2018 FTE net interest margin of 3.92% includes 10 basis
points related to purchase accounting adjustments compared to 3.84% for
the same quarter in 2017 which included 3 basis points related to
purchase accounting adjustments.

Investment securities totaled $453.3 million, or 18.3% of total assets
at June 30, 2018, versus $382.0 million, or 21.3% of total assets at
June 30, 2017. The average volume of investment securities increased
$69.3 million in prior year quarterly comparison, primarily as a result
of the acquisitions. The average tax equivalent yield on investment
securities increased 43 basis points to 3.08% from 2.65% in prior year
quarterly comparison. The investment portfolio had a net unrealized loss
of $6.0 million at June 30, 2018 as compared to a net unrealized gain of
$3.6 million at June 30, 2017.

The FTE average yield on all earning assets increased 29 basis points in
prior year quarterly comparison, from 4.25% for the second quarter of
2017 to 4.54% for the second quarter of 2018. Average interest expense
increased 28 basis points from 0.51% for the second quarter of 2017 to
0.79% for the second quarter of 2018 due primarily to increased deposit
accounts as well as the new issuance of subordinated debt. Cost of all
deposits averaged 49 basis points for the second quarter of 2018
compared to 33 basis points for the second quarter of 2017. Public funds
increased $36.0 million when comparing June 30, 2018 to June 30, 2017.

Second Quarter 2018 vs First Quarter 2018 Earnings Comparison

Net income available to common shareholders for the second quarter of
2018 increased $1.3 million or 32.5% compared to $4.0 million in the
first quarter of 2018.

Operating net earnings for the second quarter of 2018 compared to the
first quarter of 2018 increased $2.8 million or 51.8% from $5.4 million
for the first quarter of 2018 to $8.1 million for the second quarter of
2018. Operating net earnings exclude the merger-related costs discussed
above.

Net interest income for the second quarter of 2018 was $21.6 million as
compared to $16.4 million for the first quarter of 2018, an increase of
$5.2 million. FTE net interest income increased $5.2 million to $21.8
million from $16.6 million in sequential-quarter comparison. The
increase was due to increased loan volume as well as increased rates.
Interest income from purchase accounting adjustments increased $0.5
million in sequential quarter comparison due to the acquisitions of
First Community Bank and Sunshine Community Bank. Second quarter 2018
FTE net interest margin of 3.92% includes 10 basis points related to
purchase accounting adjustments compared to 3.67% for the first quarter
in 2018 which included 2 basis points related to purchase accounting
adjustments.

Investment securities totaled $453.3 million, or 18.3% of total assets
at June 30, 2018, versus $441.9 million, or 19.2% of total assets at
March 31, 2018. The average volume of investment securities increased
$66.0 million in sequential-quarter comparison, primarily as a result of
the acquisitions. The average tax equivalent yield on investment
securities increased 4 basis points to 3.08% from 3.04% in
sequential-quarter comparison. The investment portfolio had a net
unrealized loss of $6.0 million at June 30, 2018 as compared to a net
unrealized loss of $5.1 million at March 31, 2018.

The FTE average yield on all earning assets increased in
sequential-quarter comparison from 4.19% to 4.54%. Average interest
expense increased 12 basis points from 0.67% for the first quarter of
2018 to 0.79% for the second quarter of 2018 due primarily to increased
deposit accounts as well as the new issuance of subordinated debt. Cost
of all deposits averaged 49 basis points for the second quarter of 2018
compared to 44 basis points for the first quarter of 2018. Public funds
decreased $21.2 million when comparing June 30, 2018 to March 31, 2018.

Non-interest income increased $2.2 million in sequential-quarter
comparison resulting from increased mortgage income of $0.4 million,
increased service charges and interchange fee income of $0.8 million as
well as the U. S. Treasury financial assistance award of $0.9 million.

Excluding acquisition charges, non-interest expense increased $3.0
million in sequential-quarter comparison, which reflects increases in
salaries and employee benefits of $1.7 million, an increase in occupancy
expense of $0.4 million, an increase in other professional services of
$0.3 million and an increase in other non-interest expenses of $0.5
million. These increases are mainly due to the acquisitions of First
Community Bank and Sunshine Bank.

Year to Date Earnings Comparison

In year-over-year comparison, net income available to common
shareholders increased $5.7 million, or 163.8%, from $3.5 million at
June 30, 2017 to $9.2 million at June 30, 2018. Operating net earnings
increased $6.1 million or 82.5% from $7.4 million at June 30, 2017 to
$13.5 million at June 30, 2018. Operating net earnings excludes
merger-related costs of $4.3 million, net of tax for the year to date
period ending June 30, 2018 and $3.9 million, net of tax for the year to
date period ending June 30, 2017.

Net interest income increased $8.9 million in year-over-year comparison,
primarily due to interest income earned on a higher volume of loans as
well as increased rate.

Non-interest income was $9.1 million at June 30, 2018, an increase of
$1.9 million in year-over-year comparison consisting of increases in
service charges on deposit accounts, interchange fee income, other
charges and fees as well as the financial assistance award.

Non-interest expense was $34.3 million at June 30, 2018, an increase of
$3.1 million in year-over-year comparison primarily resulting from
increases in salaries and benefits of $2.0 million which relates to the
acquisitions of First Community Bank and Sunshine Bank. Increases in
occupancy, FDIC premiums, amortization of core deposit intangibles and
other non-interest expense were attributable to the acquisitions.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash
dividend in the amount of $0.05 per share, to be paid on its common
stock on August 22, 2018 to shareholders of record as of the close of
business on August 7, 2018.

About The First Bancshares, Inc.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi,
is the parent company of The First, A National Banking Association.
Founded in 1996, The First has operations in Mississippi, Louisiana,
Alabama and Florida. The Company's stock is traded on the NASDAQ Global
Market under the symbol FBMS. Information is available on the Company's
website: www.thefirstbank.com.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted
accounting principles ("GAAP") in the United States and prevailing
practices in the banking industry. However, certain non-GAAP measures
are used by management to supplement the evaluation of our performance.
This press release includes operating net earnings, operating earnings
per share, fully tax equivalent net interest income, total tangible
common equity, tangible book value per common share and certain ratios
derived from these non-GAAP financial measures. The Company believes
that the non-GAAP financial measures included in this press release
allow management and investors to understand and compare results in a
more consistent manner for the periods presented in this press release.
Non-GAAP financial measures should be considered supplemental and not a
substitute for the Company's results reported in accordance with GAAP
for the periods presented, and other bank holding companies may define
or calculate these measures differently. These non-GAAP financial
measures should not be considered in isolation and do not purport to be
an alternative to net income, earnings per share, net interest income,
book value or other GAAP financial measures as a measure of operating
performance. A reconciliation of these non-GAAP financial measures to
the most comparable GAAP measure is provided in this press release
following the Condensed Consolidated Financial Information (unaudited).

Forward Looking Statements

This news release contains statements regarding the projected
performance of The First Bancshares, Inc. and its subsidiary. These
statements constitute forward-looking information within the meaning of
the Private Securities Litigation Reform Act. Actual results may differ
materially from the projections provided in this release since such
projections involve significant known and unknown risks and
uncertainties. Factors that might cause such differences include, but
are not limited to: competitive pressures among financial institutions
increasing significantly; economic conditions, either nationally or
locally, in areas in which the Company conducts operations being less
favorable than expected; interest rate risk; legislation or regulatory
changes which adversely affect the ability of the consolidated Company
to conduct business combinations or new operations; and risks related to
the acquisitions of Southwest Banc Shares, Inc. and Sunshine Financial,
Inc., including the risk that anticipated benefits from the transactions
are not realized in the time frame anticipated or at all as a result of
changes in general economic and market conditions or other unexpected
factors or events. These and other factors that could cause results to
differ materially from those described in the forward-looking
statements, as well as a discussion of the risks and uncertainties that
may affect our business, can be found in our Annual Report on Form 10-K
and in other filings we make with the Securities and Exchange
Commission, which are available on the SEC's website, http://www.sec.gov.
The Company disclaims any obligation to update such factors or to
publicly announce the results of any revisions to any of the
forward-looking statements included herein to reflect future events or
developments.

 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS DATA      

Quarter
Ended
6/30/18

   

Quarter
Ended
3/31/18

   

Quarter
Ended
12/31/17

   

Quarter
Ended
9/30/17

   

Quarter
Ended
6/30/17

Total Interest Income       $ 25,037       $ 18,758       $ 17,143       $ 16,708       $ 16,464  
Total Interest Expense        

3,468

       

2,378

       

1,922

       

1,773

       

1,629

 
Net Interest Income        

21,569

       

16,380

       

15,221

       

14,935

       

14,835

 
FTE net interest income*        

21,826

       

16,609

       

15,523

       

15,232

       

15,140

 
Provision for loan losses         857         277         122         90         248  
Non-interest income         5,632         3,459         3,556         3,658         3,757  
Non-interest expense        

19,680

       

14,597

       

12,390

       

11,888

       

15,070

 
Earnings before income taxes         6,664         4,965         6,265         6,615         3,274  
Income tax expense        

1,419

       

1,008

       

3,851

       

1,901

       

908

 
Net income available to common shareholders      

$

5,245

     

$

3,957

     

$

2,414

     

$

4,714

     

$

2,366

 
                                 
                                 
PER COMMON SHARE DATA                                
Basic earnings per share       $ 0.40       $ 0.34       $ 0.23       $ 0.52       $ 0.26  
Diluted earnings per share         0.40         0.34         0.23         0.51         0.26  
Diluted earnings per share, operating*         0.62         0.46         0.45         0.51         0.44  
Quarterly dividends per share         .05         .05         .0375         .0375         .0375  
Book value per common share at end of period         21.88         20.95         19.92         18.24         17.80  
Tangible common book value at period end*         16.82         16.39         17.71         15.48         15.00  
Market price at end of period         36.80         32.25         34.20         30.15         27.60  
Shares outstanding at period end         13,065,953         12,339,492         11,165,907         9,153,407         9,152,657  
Weighted average shares outstanding:                                
Basic         13,065,953         11,556,968         10,521,236         9,152,674         9,145,179  
Diluted         13,167,969         11,652,959         10,598,036         9,224,481         9,206,378  
                                 
                                 
AVERAGE BALANCE SHEET DATA                                
Total assets       $ 2,443,176       $ 1,986,150       $ 1,810,252       $ 1,772,402       $ 1,751,092  
Loans and leases         1,696,737         1,325,272         1,215,962         1,185,493         1,155,699  
Total deposits         2,115,661         1,683,999         1,475,628         1,512,616         1,527,119  
Total common equity         274,535         230,255         205,580         164,455         155,667  
Total tangible common equity*         217,092         196,326         180,322         139,013         130,789  
                                 
                                 
SELECTED RATIOS                                
Annualized return on avg assets         0.86 %       0.80 %       0.53 %       1.06 %       0.54 %
Annualized return on avg assets, operating*         1.33 %       1.08 %       1.05 %       1.07 %       0.92 %
Annualized return on avg common equity, operating*         11.85 %       9.31 %       9.21 %       11.54 %       10.31 %
Annualized return on avg tangible common equity, oper*         14.99 %       10.92 %       10.49 %       13.65 %       12.27 %
Average loans to average deposits         80.20 %       78.70 %       82.40 %       78.37 %       75.68 %
FTE Net Interest Margin*         3.91 %       3.67 %       3.79 %       3.81 %       3.84 %
Efficiency Ratio         71.67 %       72.74 %       64.94 %       62.93 %       79.75 %
Efficiency Ratio, operating*         57.70 %       63.98 %       62.93 %       62.68 %       65.56 %
                                 
                                 
CREDIT QUALITY                                
Allowance for loan losses (ALLL) as a % of total loans         0.56 %       0.57 %       0.68 %       0.68 %       0.68 %
Nonperforming assets to tangible equity + ALLL         7.88 %       6.99 %       6.56 %       9.71 %       9.10 %
Nonperforming assets to total loans + ORE         1.04 %       0.97 %       1.10 %       1.21 %       1.11 %
Annualized QTD net charge-offs (recoveries) to total loans         0.003 %       (0.02 %)       0.003 %       (0.005 %)       (0.003 %)
                                 

*See reconciliation of Non-GAAP financial measures

 

 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
BALANCE SHEET      

June 30,
2018

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

Assets                                
Cash and cash equivalents       $ 120,425       $ 162,521       $ 91,922       $ 93,317       $ 92,596  
Securities available-for-sale         437,011         425,529         356,893         353,035         366,490  
Securities held-to-maturity         6,000         6,000         6,000         6,000         6,000  
Other investments        

10,320

       

10,399

       

9,969

       

9,556

       

9,544

 
Total investment securities         453,331         441,928         372,862         368,591         382,034  
Loans held for sale         5,914         2,538         4,790         4,588         5,907  
Total loans         1,710,271         1,516,579         1,225,306         1,198,193         1,187,936  
Allowance for loan losses        

(9,512

)

     

(8,659

)

     

(8,288

)

     

(8,175

)

     

(8,070

)

Loans, net         1,700,759         1,507,920         1,217,018         1,190,018         1,179,866  
Premises and equipment         62,289         57,430         46,426         46,203         44,766  
Other Real Estate         7,890         7,357         7,158         7,855         8,072  
Goodwill and other intangibles         66,105         56,343         24,670         25,325         25,615  
Other assets        

64,976

       

63,376

       

48,392

       

52,079

       

50,766

 
Total assets      

$

2,481,689

     

$

2,299,413

     

$

1,813,238

     

$

1,787,976

     

$

1,789,622

 
                                 
Liabilities and Shareholders' Equity                                
Non-interest bearing deposits       $ 459,402       $ 414,142       $ 301,989       $ 308,050       $ 319,494  
Interest-bearing deposits        

1,637,833

       

1,577,502

       

1,168,576

       

1,199,941

       

1,231,305

 
Total deposits         2,097,235         1,991,644         1,470,565         1,507,991         1,550,799  
Borrowings         10,516         29,034         104,072         94,321         59,367  
Subordinated debentures         75,192         10,310         10,310         10,310         10,310  
Other liabilities        

12,920

       

9,886

       

5,823

       

8,374

       

6,267

 
Total liabilities         2,195,863         2,040,874         1,590,770         1,620,996         1,626,743  
Total shareholders' equity        

285,826

       

258,539

       

222,468

       

166,980

       

162,879

 
Total liabilities and shareholders' equity      

$

2,481,689

     

$

2,299,413

     

$

1,813,238

     

$

1,787,976

     

$

1,789,622

 
                     

 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS STATEMENT       Three Months Ended
      6/30/18     3/31/18     12/31/17     9/30/17     6/30/17
Interest Income:                                
Loans, including fees       $ 21,155       $ 15,926     $ 14,687       $ 14,357       $ 14,114  
Investment securities         3,262         2,661       2,346         2,180         2,197  
Accretion of purchase accounting adjustments         559         59       57         55         56  
Other interest income        

61

       

112

     

53

       

116

       

97

 
Total interest income         25,037         18,758       17,143         16,708         16,464  
Interest Expense:                                
Deposits         2,498         1,840       1,455         1,436         1,364  
Borrowings         69         460       392         357         259  
Subordinated debentures         852         78       105         41         67  
Accretion of purchase accounting adjustments        

49

       

-

     

(30

)

     

(61

)

     

(61

)

Total interest expense        

3,468

       

2,378

     

1,922

       

1,773

       

1,629

 
Net interest income         21,569         16,380       15,221         14,935         14,835  
Provision for loan losses        

857

       

277

     

122

       

90

       

248

 
Net interest income after provision for loan losses         20,712         16,103       15,099         14,845         14,587  
                                 
Non-interest Income:                                
Service charges on deposit accounts         1,341         1,027       908         902         922  
Mortgage Income         1,213         800       1,102         1,276         1,208  
Interchange Fee Income         1,500         1,040       961         935         959  
Gain (loss) on securities, net         (5 )       -       3         (10 )       (1 )
Gain on sale of premises and equipment         -         -       -         -         -  
Financial Assistance Award         917         -       -         -         -  
Other charges and fees        

666

       

592

     

582

       

555

       

669

 
Total non-interest income         5,632         3,459       3,556         3,658         3,757  
                                 
Non-interest expense:                                
Salaries and employee benefits         9,502         7,789       7,478         7,327         7,625  
Occupancy expense         2,034         1,646       1,427         1,390         1,348  
FDIC premiums         368         367       365         355         331  
Marketing         70         80       118         50         99  
Amortization of core deposit intangibles         356         201       173         160         182  
Other professional services         438         189       194         367         567  
Acquisition charges         3,838         1,758       384         -         2,682  
Other non-interest expense        

3,074

       

2,567

     

2,251

       

2,239

       

2,236

 
Total Non-interest expense        

19,680

       

14,597

     

12,390

       

11,888

       

15,070

 
Earnings before income taxes         6,664         4,965       6,265         6,615         3,274  
Income tax expense        

1,419

       

1,008

     

3,851

       

1,901

       

908

 
Net income available to common shareholders      

$

5,245

     

$

3,957

   

$

2,414

     

$

4,714

     

$

2,366

 
                                 
Diluted earnings per common share      

$

0.40

     

$

0.34

   

$

0.23

     

$

0.51

     

$

0.26

 
Diluted earnings per common share, operating*      

$

0.62

     

$

0.46

   

$

0.45

     

$

0.51

     

$

0.44

 
*See reconciliation of Non-GAAP financial measures

 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS STATEMENT       Year to Date
      2018     2017
Interest Income:              
Loans, including fees       $ 37,081       $ 27,558  
Investment securities         5,923         4,326  
Accretion of purchase accounting adjustments         618         112  
Other interest income        

173

       

221

 
Total interest income         43,795         32,217  
Interest Expense:              
Deposits         4,338         2,562  
Borrowings         529         623  
Subordinated debentures         930         130  

Amortization (Accretion) of purchase accounting adjustments

       

49

       

(101

)

Total interest expense        

5,846

       

3,214

 
Net interest income         37,949         29,003  
Provision for loan losses        

1,134

       

294

 
Net interest income after provision for loan losses         36,815         28,709  
               
Non-interest Income:              
Service charges on deposit accounts         2,368         1,790  
Mortgage Income         2,013         2,124  
Interchange Fee Income         2,540         1,862  
Gain (loss) on securities, net         (5 )       (9 )
Gain on sale of premises and equipment         -         -  
Financial Assistance Award         917         -  
Other charges and fees        

1,258

       

1,381

 
Total non-interest income         9,091         7,148  
               
Non-interest expense:              
Salaries and employee benefits         17,291         15,247  
Occupancy expense         3,680         2,718  
FDIC premiums         735         532  
Marketing         150         168  
Amortization of core deposit intangibles         557         331  
Other professional services         627         910  
Acquisition charges         5,596         6,280  
Other non-interest expense        

5,641

       

4,979

 
Total Non-interest expense         34,277         31,165  
Earnings before income taxes         11,629         4,692  
Income tax expense        

2,427

       

1,204

 
Net income available to common shareholders      

$

9,202

     

$

3,488

 
               
Diluted earnings per common share      

$

0.74

     

$

0.38

 
Diluted earnings per common share, operating*      

$

1.09

     

$

0.80

 
*See reconciliation of Non-GAAP financial measures
               

 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
COMPOSITION OF LOANS      

June 30,
2018

   

Percent
of Total

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

   

Percent
of Total

Commercial, financial and agricultural       $ 228,643       13.3 %     $ 213,118       $ 165,780       $ 164,577       $ 167,799       14.1 %
Real estate – construction         229,164       13.4 %       213,712         183,328         171,609         169,971       14.2 %
Real estate – commercial         658,096       38.3 %       561,153         467,484         456,110         448,218       37.5 %
Real estate – residential         546,120       31.8 %       475,868         385,099         377,308         372,815       31.2 %
Lease Financing Receivable         2,476       0.1 %       2,433         2,450         2,008         2,189       0.2 %
Obligations of States & subdivisions         10,627       0.6 %       15,861         3,109         5,892         5,775       0.5 %
Consumer         35,145       2.2 %       34,434         18,056         20,689         21,169       1.8 %
Loans held for sale        

5,914

     

0.3

%

     

2,538

       

4,790

       

4,588

       

5,907

     

0.5

%

Total loans      

$

1,716,185

     

100

%

   

$

1,519,117

     

$

1,230,096

     

$

1,202,781

     

$

1,193,843

     

100

%

                                             
                                             
COMPOSITION OF DEPOSITS      

June 30,
2018

   

Percent
of Total

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

   

Percent
of Total

Noninterest bearing       $ 459,402       21.9 %     $ 414,142       $ 301,989       $ 308,050       $ 319,494       20.6 %
NOW and other         731,617       34.9 %       761,318         601,694         639,802         665,250       42.9 %
Money Market/Savings         519,516       24.7 %       434,569         283,5792         292,592         296,705       19.1 %
Time Deposits of less than $250,000         308,086       14.7 %       295,317         220,951         209,714         203,254       13.1 %
Time Deposits of $250,000 or more        

78,614

     

3.8

%

     

86,298

       

62,352

       

57,833

       

66,096

     

4.3

%

Total Deposits      

$

2,097,235

     

100

%

   

$

1,991,644

     

$

1,470,565

     

$

1,507,991

     

$

1,550,799

     

100

%

                                             
                                             
ASSET QUALITY DATA      

June 30,
2018

         

Mar 31,
2018

   

Dec 31,
2017

   

June 30,
2017

   

June 30,
2017

     
Nonaccrual loans       $ 8,440             $ 5,746       $ 5,674       $ 4,852       $ 3,979        
Loans past due 90 days and over        

940

             

1,096

       

285

       

1,436

       

760

       
Total nonperforming loans         9,380               6,842         5,959         6,288         4,739        
Other real estate         7,890               7,357         7,158         7,855         8,072        
Nonaccrual securities        

616

             

616

       

408

       

408

       

408

       
Total nonperforming assets      

$

17,886

           

$

14,815

     

$

13,525

     

$

14,551

     

$

13,219

       
                                             
Nonperforming assets to total assets         0.72 %             0.64 %       0.75 %       0.81 %       0.74 %      
Nonperforming assets to total loans + ORE         1.04 %             0.97 %       1.10 %       1.21 %       1.11 %      
ALLL to nonperforming loans         101.41 %             128.13 %       139.08 %       130.01 %       170.29 %      
ALLL to total loans         0.56 %             0.57 %       0.68 %       0.68 %       0.68 %      
                                             
Quarter-to-date net charge-offs (recs)       $ 12             $ (94 )     $ 9       $ (15 )     $ (97 )      
Annualized QTD net chg/offs (recs) to loans         0.003 %             (0.02 %)       0.003 %       (0.005 %)       (0.003 %)      
                                             

 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
                                                             
Yield Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months Ended
Analysis June 30, 2018     March 31, 2018     December 31, 2017     September 30, 2017     June 30, 2017
Tax Tax Tax Tax Tax
Avg Equivalent Yield/ Avg Equivalent Yield/ Avg Equivalent Yield/ Avg Equivalent Yield/ Avg Equivalent Yield/
Balance     interest     Rate     Balance     interest     Rate     Balance     interest     Rate     Balance     interest     Rate     Balance     interest     Rate
 
Taxable securities $ 328,898 $ 2,423 2.95 % $ 274,595 $ 1,986 2.89 % $ 271,459 $ 1,760 2.59 % $ 280,441 $ 1,601 2.28 % $ 282,235 $ 1,605 2.27 %

Tax-exempt securities

  117,875       1,015 3.44 %   106,161       904 3.41 %   93,645       888 3.79 %   93,716       876 3.74 %   95,272       897 3.77 %

Total investment securities

446,773 3,438 3.08 % 380,756 2,890 3.04 % 365,104 2,648 2.90 % 374,157 2,477 2.65 % 377,507 2,502 2.65 %
Fed funds sold 17,242 61 1.42 % 11,368 35 1.23 % 54,640 46 0.34 % 36,591 113 1.24 % 39,048 95 0.97 %

Int bearing deposits in other banks

68,079 81 0.48 % 94,321 77 0.33 % 4,544 6 0.53 % 3,463 3 0.35 % 5,214 2 0.15 %
Loans   1,696,737       21,714 5.12 %   1,325,272       15,985 4.82 %   1,215,962       14,745 4.85 %   1,185,493       14,412 4.86 %   1,155,699       14,170 4.90 %

Total Interest earning assets

2,228,831 25,294 4.54 % 1,811,717 18,987 4.19 % 1,640,250 17,445 4.25 % 1,599,704 17,005 4.25 % 1,577,468 16,769 4.25 %
Other assets   214,345   174,433   170,002   172,698   173,624
Total assets $ 2,443,176 $ 1,986,150 $ 1,810,252 $ 1,772,402 $ 1,751,092
 

Interest-bearing liabilities:

Deposits $ 1,676,110 $ 2,547 0.61 % $ 1,330,925 $ 1,840 0.55 % $ 1,173,386 $ 1,425 0.49 % $ 1,204,614 $ 1,375 0.46 % $ 1,211,959 $ 1,303 0.43 %
Repo - - 0.00 % - - 0.00 % - - 0.00 % 4,891 38 3.11 % 5,000 48 3.84 %
Fed funds purchased 1,382 9 2.60 % 202 1 1.98 % 2,543 11 1.73 % 3,816 19 1.99 % 1,906 8 1.68 %
FHLB & FTN 22,959 138 2.40 % 71,944 459 2.55 % 103,421 381 1.47 % 68,041 300 1.76 % 40,765 203 1.99 %

Subordinated debentures

  54,036       774 5.73 %   10,310       78 3.03 %   10,310       105 4.07 %   10,310       41 1.59 %   10,310       67 2.60 %

Total interest bearing liabilities

1,754,487   3,468 0.79 % 1,413,381   2,378 0.67 % 1,289,660   1,922 0.60 % 1,291,672   1,773 0.55 % 1,269,940   1,629 0.51 %
Other liabilities 414,154 342,514 315,012 316,275 325,485
Shareholders' equity   274,535   230,255   205,580   164,455   155,667

Total liabilities and shareholders' equity

$ 2,443,176 $ 1,986,150 $ 1,810,252 $ 1,772,402 $ 1,751,092
 

Net interest income (FTE)*

$ 21,826 3.75 % $ 16,609 3.52 % $ 15,523 3.66 % $ 15,232 3.70 % $ 15,140 3.74 %
 
Net interest margin (FTE)* 3.92 % 3.67 % 3.79 % 3.81 % 3.84 %
 

Core net interest margin*

3.82 % 3.65 % 3.76 % 3.78 % 3.81 %
 

 
FIRST BANCSHARES, INC and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)

 

     

Three Months Ended

Per Common Share Data

     

June 30,
2018

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

Book value per common share       $ 21.88       $ 20.95       $ 19.92       $ 18.24       $ 17.80  
Effect of intangible assets per share        

5.06

       

4.56

       

2.21

       

2.76

       

2.80

 
Tangible book value per common share      

$

16.82

     

$

16.39

     

$

17.71

     

$

15.48

     

$

15.00

 
                                 
Diluted earnings per share       $ 0.40       $ 0.34       $ 0.23       $ 0.51       $ 0.26  
Effect of acquisition charges         0.29         0.15         0.04         -         0.29  
Taxes on acquisition charges         (0.07 )       (0.03 )       (0.01 )       -         (0.11 )
Charge related to reduction in deferred tax asset        

-

       

-

       

0.19

       

-

       

-

 
Diluted earnings per share, operating      

$

0.62

     

$

0.46

     

$

0.45

     

$

0.51

     

$

0.44

 
                                 
     

 

   

Year to Date

   
            2018           2017      
Diluted earnings per share             $ 0.74             $ 0.38        
Effect of acquisition charges               0.45               0.68        
Tax               (0.10 )             (0.26 )      
Diluted earnings per share, operating            

$

1.09

           

$

0.80

       
                                 
 

 

Year to Date

            2018           2017      
Net income available to common shareholders             $ 9,202             $ 3,488        
Effect of acquisition charges               5,596               6,280        
Tax               (1,303 )             (2,372 )      
Net earnings available to common shareholders, operating            

$

13,495

           

$

7,396

       
                                 
        Three Months Ended
Average Balance Sheet Data      

June 30,
2018

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

Total average assets

A

    $ 2,443,176       $ 1,986,150       $ 1,810,252       $ 1,772,402       $ 1,751,092  

Total average earning assets

B

    $ 2,228,831       $ 1,811,717       $ 1,640,250       $ 1,599,704       $ 1,577,468  
                                 

Common Equity

C

    $ 274,535       $ 230,255       $ 205,580       $ 164,455       $ 155,667  
Less intangible assets        

57,443

       

33,929

       

25,258

       

25,442

       

24,878

 

Tangible common equity

D

   

$

217,092

     

$

196,326

     

$

180,322

     

$

139,013

     

$

130,789

 
                                 
                                 
        Three Months Ended
Net Interest Income Fully Tax Equivalent      

June 30,
2018

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

Net interest income

E

    $ 21,569       $ 16,380       $ 15,221       $ 14,935       $ 14,835  
Tax-exempt investment income         (758 )       (675 )       (586 )       (579 )       (592 )
Taxable investment income        

1,015

       

904

       

888

       

876

       

897

 

Net Interest Income Fully Tax Equivalent

F

   

$

21,826

     

$

16,609

     

$

15,523

     

$

15,232

     

$

15,140

 
                                 

Annualized Net Interest Margin

E/B

      3.87 %       3.62 %       3.71 %       3.73 %       3.76 %

Annualized Net Interest Margin, Fully Tax Equivalent

F/B

      3.92 %       3.67 %       3.79 %       3.81 %       3.84 %

        Three Months Ended
Core Net Interest Margin      

June 30,
2018

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

Net interest income (FTE)       $ 21,826       $ 16,609       $ 15,523       $ 15,232       $ 15,140  
Less purchase accounting adjustments        

510

       

59

       

87

       

116

       

117

 

Net interest income, net of purchase accounting adj

G

   

$

21,316

     

$

16,550

     

$

15,436

     

$

15,116

     

$

15,023

 
                                 
Total average earning assets       $ 2,228,831       $ 1,811,717       $ 1,640,250       $ 1,599,704       $ 1,577,468  
Add average balance of loan valuation discount        

6,046

       

1,578

       

1,558

       

1,640

       

1,721

 

Avg earning assets, excluding loan valuation discount

H

   

$

2,234,877

     

$

1,813,295

     

$

1,641,808

     

$

1,601,344

     

$

1,579,189

 
                                 

Core net interest margin

G/H

     

3.82

%

     

3.65

%

     

3.76

%

     

3.78

%

     

3.81

%

                                 
                                 
        Three Months Ended
Efficiency Ratio      

June 30,
2018

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

Operating Expense                                
Total non-interest expense       $ 19,680       $ 14,598       $ 12,390       $ 11,888       $ 15,070  
Pre-tax non-operating expenses        

(3,838

)

     

(1,758

)

     

(384

)

     

(47

)

     

(2,682

)

Adjusted Operating Expense

I

   

$

15,842

     

$

12,840

     

$

12,006

     

$

11,841

     

$

12,388

 
                                 
Operating Revenue                                
Net interest income, FTE       $ 21,826       $ 16,609       $ 15,523       $ 15,232       $ 15,140  
Total non-interest income         5,632         3,459         3,556         3,658         3,757  
Pre-tax non-operating items        

-

       

-

       

-

       

-

       

-

 

Adjusted Operating Revenue

J

   

$

27,458

     

$

20,068

     

$

19,079

     

$

18,890

     

$

18,897

 
                                 

Efficiency Ratio, operating

I/J

      57.70 %       63.98 %       62.93 %       62.68 %       65.56 %
                                 
                                 
        Three Months Ended
Return Ratios      

June 30,
2018

   

Mar 31,
2018

   

Dec 31,
2017

   

Sept 30,
2017

   

June 30,
2017

Net income available to common shareholders

K

    $ 5,245       $ 3,957       $ 2,414       $ 4,714       $ 2,366  
Acquisition charges         3,838         1,758         384         47         2,682  
Tax on acquisition charges         (948 )       (355 )       (148 )       (18 )       (1,035 )
Charge related to reduction in deferred tax asset        

-

       

-

       

2,081

       

-

       

-

 

Net earnings available to common shareholders, oper

L

   

$

8,135

     

$

5,360

     

$

4,731

     

$

4,743

     

$

4,013

 
                                 

Annualized return on avg assets

K/A

      0.86 %       0.80 %       0.53 %       1.06 %       0.54 %

Annualized return on avg assets, oper

L/A

      1.33 %       1.08 %       1.05 %       1.07 %       0.92 %

Annualized return on avg common equity, oper

L/C

      11.85 %       9.31 %       9.21 %       11.54 %       10.31 %

Annualized return on avg tangible common equity, oper

L/D

      14.99 %       10.92 %       10.49 %       13.65 %       12.27 %
                                 
Mortgage Department                                
Net Interest Income after provision for loan losses       $ 214       $ 189       $ 272       $ 249       $ 233  
Loan fee income         1,213         800         1,102         1,276         1,208  
Salaries and employee benefits         903         849         806         882         946  
Other non-interest expense        

127

       

97

       

101

       

102

       

99

 
Earnings before income taxes      

$

397

     

$

43

     

$

467

     

$

541

     

$

396

 
                   

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