The First Bancshares, Inc. Reports a 9.5% Increase in Net Income Available to Common Shareholders and a 72.8% Increase in Operating Net Earnings for the Third Quarter Ended September 30, 2018; Declares Quarterly Dividend of $0.05

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 third quarter of 2018, an increase of $0.4 million or 9.5%, compared to $4.7 million for the third quarter of 2017. Operating net earnings increased 72.8% ($3.5 million) for the third quarter comparison, totaling $8.2 million for the third quarter of 2018 as compared to $4.7 million for the third quarter of 2017. Operating net earnings excludes merger-related costs of $3.0 million for the third quarter of 2018, net of tax.

For the third quarter of 2018, fully diluted earnings per share were $0.39, compared to $0.51 for the third quarter of 2017. Excluding the impact of the merger-related costs described above, fully diluted operating earnings per share for the third quarter of 2018 were $0.62 as compared to $0.51 for the third 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, 1,134,010 shares issued in connection with the acquisition of Southwest during the first quarter of 2018 and 726,461 shares issued in connection with the acquisition of Sunshine during the second quarter of 2018.

Highlights for the Quarter:

  • On July 23, 2018, the Company announced the signing of an Agreement and Plan of Merger with FMB Banking Corporation (FMB), parent company of Farmers & Merchants Bank, headquartered in Monticello, FL. Upon completion, the acquisition will add 6 locations servicing Jefferson and Leon counties in Florida and Thomas County, Georgia and is expected to close during the fourth quarter of 2018 subject to FMB shareholder approval and customary closing conditions.
  • During the quarter, systems integration was completed for Sunshine Community Bank, which closed on April 1, 2018.
  • Loans increased $38.2 million or 2.2% during the third quarter of 2018.
  • During the quarter, the Company received a $0.2 million Bank Enterprise Award from the Community Development Financial Institutions Fund of the U. S. Department of the Treasury as a result of our designation as a Community Development Financial Institution.

M. Ray Hoppy Cole, President & Chief Executive Officer, commented, We are pleased with our strong performance during the third quarter characterized by continued increases in operating net earnings, on an annual and linked quarter basis. Our improvement in operating net earnings is being driven by our recent acquisitions as well as solid organic growth. During the quarter, we were excited to announce the pending merger with FMB Banking Corporation headquartered in Monticello, FL. FMB is a well-run community bank and we believe our partnership will enhance the financial position of the overall company as well as provide additional management resources to increase our presence throughout Florida and Georgia.

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Balance Sheet

Consolidated assets increased $30.1 million to $2.512 billion at September 30, 2018 from $2.482 billion at June 30, 2018.

Total loans were $1.748 billion at September 30, 2018, as compared to $1.710 billion at June 30, 2018, and $1.198 billion at September 30, 2017, representing increases of $38.2 million or 2.2%, and $550.3 million or 45.9%, respectively. The acquisitions of First Community Bank and Sunshine Community Bank accounted for $437.1 million, net of fair value marks, of the total increase in loans as compared to the third quarter of 2017.

Total deposits were $2.046 billion at September 30, 2018, as compared to $2.097 billion at June 30, 2018, and $1.508 billion at September 30, 2017, representing a decrease of $50.8 million or 2.4%, and representing an increase of $538.5 million or 35.7%, respectively. The acquisitions of First Community Bank and Sunshine Community Bank accounted for $463.9 million of the total increase in deposits as compared to the third quarter of 2017. The decrease in deposits during the sequential quarter was largely due to a decrease in NOW accounts of $25.8 million, which is attributable to the seasonality of the public fund deposits.

Asset Quality

Nonperforming assets totaled $23.4 million at September 30, 2018, an increase of $5.6 million compared to $17.9 million at June 30, 2018 and an increase of $8.9 million compared to September 30, 2017. The majority of the increase in both quarterly comparisons was related to acquired loans. The ratio of the allowance for loan and leases losses (ALLL) to total loans was 0.56% at September 30, 2018 and June 30, 2018. The ratio of annualized net charge-offs (recoveries) to total loans was 0.03% for the quarter ended September 30, 2018 compared to 0.003% for the quarter ended June 30, 2018.

Third Quarter 2018 vs. Third Quarter 2017 Earnings Comparison

Net income available to common shareholders for the third quarter of 2018 totaled $5.2 million compared to $4.7 million for the third quarter of 2017, an increase of $0.4 million or 9.5%.

Operating net earnings for the third quarter of 2018 totaled $8.2 million compared to $4.7 million for the third quarter of 2017, an increase of $3.5 million or 72.8%. The calculation of operating net earnings excludes the merger-related costs discussed above.

Net interest income for the third quarter of 2018 was $21.7 million, an increase of $6.7 million when compared to the third quarter of 2017. The increase was due to interest income earned on a higher volume of loans as well as increased interest rates.

Non-interest income increased $1.4 million for the third quarter of 2018 as compared to the third quarter of 2017 due to increased service charges and interchange fee income of $0.9 million on an increased deposit base due to the acquisitions. The Company also received a Bank Enterprise Award of $0.2 million from the U.S. Department of the Treasury during the third quarter of 2018 as a result of our designation as a Community Development Financial Institution.

Third quarter 2018 non-interest expense was $19.8 million, an increase of $7.9 million, or 66.4% as compared to the third quarter of 2017. Excluding acquisition charges of $4.1 million for third quarter of 2018, non-interest expense increased $3.8 million in the third quarter of 2018 as compared to third quarter of 2017, of which $2.7 million is attributable to First Community Bank and Sunshine Community Bank.

Net interest income was $21.7 million for the third quarter of 2018 as compared to $14.9 million for the third quarter of 2017. Fully tax equivalent (FTE) net interest income totaled $21.9 million and $15.2 million for the third 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 interest rates. Purchase accounting adjustments accounted for $0.4 million of the difference in net interest income for the third quarter comparisons. Third quarter 2018 FTE net interest margin of 3.97% includes 11 basis points related to purchase accounting adjustments compared to 3.81% for the same quarter in 2017, which included 3 basis points related to purchase accounting adjustments.

Investment securities totaled $444.0 million, or 17.7% of total assets at September 30, 2018, versus $368.6 million, or 20.6% of total assets at September 30, 2017. The average balance of investment securities increased $73.7 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities increased 37 basis points to 3.02% from 2.65% in prior year quarterly comparison. The investment portfolio had a net unrealized loss of $8.4 million at September 30, 2018 as compared to a net unrealized gain of $2.7 million at September 30, 2017.

The FTE average yield on all earning assets increased 43 basis points in prior year quarterly comparison, from 4.25% for the third quarter of 2017 to 4.68% for the third quarter of 2018. Average interest expense increased 37 basis points from 0.55% for the third quarter of 2017 to 0.92% for the third quarter of 2018 due primarily to increased deposit accounts as well as the issuance of subordinated debt in the second quarter of 2018 and rising interest rates. Cost of all deposits averaged 53 basis points for the third quarter of 2018 compared to 36 basis points for the third quarter of 2017. Public funds increased $95.7 million when comparing September 30, 2018 to September 30, 2017.

Third Quarter 2018 vs Second Quarter 2018 Earnings Comparison

Net income available to common shareholders for the third quarter of 2018 remained consistent at $5.2 million compared to the second quarter of 2018.

Operating net earnings for the third quarter of 2018 compared to the second quarter of 2018 increased $0.1 million or 0.7% from $8.1 million for the second quarter of 2018 to $8.2 million for the third quarter of 2018. Operating net earnings exclude the merger-related costs discussed above.

Net interest income for the third quarter of 2018 was $21.7 million as compared to $21.6 million for the second quarter of 2018, an increase of $0.1 million. FTE net interest income increased $0.1 million to $21.9 million from $21.8 million in sequential-quarter comparison. The increase was due to increased loan volume as well as increased interest rates on both sides of the balance sheet. Interest income from purchase accounting adjustments were stable in sequential quarter comparison. Third quarter 2018 FTE net interest margin of 3.97% includes 11 basis points related to purchase accounting adjustments compared to 3.92% for the second quarter in 2018, which included 10 basis points related to purchase accounting adjustments.

Investment securities totaled $444.0 million, or 17.7% of total assets at September 30, 2018, versus $453.3 million, or 18.3% of total assets at June 30, 2018. The average balance of investment securities increased $1.1 million in sequential-quarter comparison. The average tax equivalent yield on investment securities decreased six basis points to 3.02% from 3.08% in sequential-quarter comparison. The investment portfolio had a net unrealized loss of $8.4 million at September 30, 2018 as compared to a net unrealized loss of $6.0 million at June 30, 2018.

The FTE average yield on all earning assets increased in sequential-quarter comparison from 4.54% to 4.68%. Average interest expense increased 13 basis points from 0.79% for the second quarter of 2018 to 0.92% for the third quarter of 2018 due primarily to increased deposit rates as well as the issuance of subordinated debt during the second quarter. Cost of all deposits averaged 53 basis points for the third quarter of 2018 compared to 49 basis points for the second quarter of 2018. Public funds decreased $30.0 million when comparing September 30, 2018 to June 30, 2018.

Non-interest income decreased $0.6 million in sequential-quarter comparison resulting from decreased interchange fee income of $0.3 million. Non-interest income for the second quarter of 2018 included the Financial Assistance Award received from the U. S. Department of the Treasury for $0.9 million, and for the third quarter included the Bank Enterprise Award received from the U. S. Department of the Treasury for $0.2 million, which resulted in a net decrease in non-interest income of $0.7 million for the quarterly comparison.

Non-interest expense for the third quarter of 2018 was $19.8 million compared to $19.7 million for the second quarter of 2018. Excluding acquisition charges, non-interest expense decreased $0.1 million in sequential-quarter comparison, which reflects increases and decreases spread throughout all categories.

Year to Date Earnings Comparison

In year-over-year comparison, net income available to common shareholders increased $6.2 million, or 75.1%, from $8.2 million at September 30, 2017 to $14.4 million at September 30, 2018. Operating net earnings increased $9.6 million or 78.7% from $12.1 million at September 30, 2017 to $21.7 million at September 30, 2018. Operating net earnings excludes merger-related costs of $7.3 million, net of tax, for the year to date period ending September 30, 2018 and $3.9 million, net of tax, for the year to date period ending September 30, 2017.

Net interest income increased $15.7 million, or 35.7% in year-over-year comparison, primarily due to interest income earned on a higher volume of loans as well as increased rates.

Non-interest income was $14.2 million at September 30, 2018, an increase of $3.4 million, or 31.1% 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 receipt of the Financial Assistance Award received and the Bank Enterprise Award discussed above.

Non-interest expense was $54.1 million at September 30, 2018, an increase of $11.0 million, or 25.6% in year-over-year comparison primarily resulting from increases in salaries and benefits of $4.0 million related to the acquisitions of First Community Bank and Sunshine Bank and increased acquisition charges of $3.3 million. Increases in occupancy, FDIC premiums, amortization of core deposit intangibles and other non-interest expense for the year-to-date period of 2018 were also 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 November 23, 2018 to shareholders of record as of the close of business on November 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 Companys stock is traded on the NASDAQ Global Market under the symbol FBMS. Information is available on the Companys 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 Companys 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 proposed acquisition of FMB and the acquisitions of Southwest Banc Shares, Inc. (Southwest) and Sunshine Financial, Inc., (Sunshine), including the risk that the proposed acquisition of FMB does not close when expected or at all because of required shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, the terms of the proposed transactions with FMB may need to be modified to satisfy such approvals or conditions, and that anticipated benefits from the transactions with FMB, Sunshine and Southwest 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 SECs 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)
  Quarter   Quarter   Quarter   Quarter   Quarter
EARNINGS DATA Ended Ended Ended Ended Ended
    9/30/18   6/30/18   3/31/18   12/31/17   9/30/17
Total Interest Income   $ 25,628     $ 25,037     $ 18,758     $ 17,143     $ 16,708  
Total Interest Expense    

3,959

     

3,468

     

2,378

     

1,922

     

1,773

 
Net Interest Income    

21,669

     

21,569

     

16,380

     

15,221

     

14,935

 
FTE net interest income*    

21,925

     

21,826

     

16,609

     

15,523

     

15,232

 
Provision for loan losses     412       857       277       122       90  
Non-interest income     5,074       5,632       3,459       3,556       3,658  
Non-interest expense    

19,786

     

19,680

     

14,597

     

12,390

     

11,888

 
Earnings before income taxes     6,545       6,664       4,965       6,265       6,615  
Income tax expense    

1,383

     

1,419

     

1,008

     

3,851

     

1,901

 
Net income available to common shareholders   $

5,162

    $

5,245

    $

3,957

    $

2,414

    $

4,714

 
                     
                     
PER COMMON SHARE DATA                    
Basic earnings per share   $ 0.39     $ 0.40     $ 0.34     $ 0.23     $ 0.52  
Diluted earnings per share     0.39       0.40       0.34       0.23       0.51  
Diluted earnings per share, operating*     0.62       0.62       0.46       0.45       0.51  
Quarterly dividends per share     .05       .05       .05       .0375       .0375  
Book value per common share at end of period     22.09       21.88       20.95       19.92       18.24  
Tangible common book value at period end*     17.10       16.82       16.39       17.71       15.48  
Market price at end of period     39.05       36.80       32.25       34.20       30.15  
Shares outstanding at period end     13,074,516       13,065,953       12,339,492       11,165,907       9,153,407  
Weighted average shares outstanding:                    
Basic     13,072,455       13,065,953       11,556,968       10,521,236       9,152,674  
Diluted     13,192,207       13,167,969       11,652,959       10,598,036       9,224,481  
                     
                     
AVERAGE BALANCE SHEET DATA                    
Total assets   $ 2,470,607     $ 2,443,176     $ 1,986,150     $ 1,810,252     $ 1,772,402  
Loans and leases     1,720,884       1,696,737       1,325,272       1,215,962       1,185,493  
Total deposits     2,069,910       2,115,661       1,683,999       1,475,628       1,512,616  
Total common equity     284,839       274,535       230,255       205,580       164,455  
Total tangible common equity*     219,077       217,092       196,326       180,322       139,013  
                     
                     
SELECTED RATIOS                    
Annualized return on avg assets     0.84 %     0.86 %     0.80 %     0.53 %     1.06 %
Annualized return on avg assets, operating*     1.33 %     1.33 %     1.08 %     1.05 %     1.07 %
Annualized return on avg common equity, operating*     11.51 %     11.85 %     9.31 %     9.21 %     11.54 %
Annualized return on avg tangible common equity, oper*     14.96 %     14.99 %     10.92 %     10.49 %     13.65 %
Average loans to average deposits     83.14 %     80.20 %     78.70 %     82.40 %     78.37 %
FTE Net Interest Margin*     3.97 %     3.92 %     3.67 %     3.79 %     3.81 %
Efficiency Ratio     73.28 %     71.67 %     72.74 %     64.94 %     62.93 %
Efficiency Ratio, operating*     58.25 %     57.70 %     63.98 %     62.93 %     62.68 %
                     
                     
CREDIT QUALITY                    
Allowance for loan losses (ALLL) as a % of total loans     0.56 %     0.56 %     0.57 %     0.68 %     0.68 %
Nonperforming assets to tangible equity + ALLL     10.05 %     7.88 %     6.99 %     6.56 %     9.71 %
Nonperforming assets to total loans + ORE     1.33 %     1.04 %     0.97 %     1.10 %     1.21 %
Annualized QTD net charge-offs (recoveries) to total loans     0.03 %     0.003 %     (0.02 %)     0.003 %     (0.005 %)
 

*See reconciliation of Non-GAAP financial measures

 
 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
  Sept 30,   June 30,   Mar 31,   Dec 31,   Sept 30,
BALANCE SHEET   2018   2018   2018   2017   2017
Assets                    
Cash and cash equivalents   $ 122,371     $ 120,425     $ 162,521     $ 91,922     $ 93,317  
Securities available-for-sale     424,940       437,011       425,529       356,893       353,035  
Securities held-to-maturity     6,000       6,000       6,000       6,000       6,000  
Other investments    

13,104

     

10,320

     

10,399

     

9,969

     

9,556

 
Total investment securities     444,044       453,331       441,928       372,862       368,591  
Loans held for sale     4,269       5,914       2,538       4,790       4,588  
Total loans     1,748,483       1,710,271       1,516,579       1,225,306       1,198,193  
Allowance for loan losses    

(9,765

)

   

(9,512

)

   

(8,659

)

   

(8,288

)

   

(8,175

)

Loans, net     1,738,718       1,700,759       1,507,920       1,217,018       1,190,018  
Premises and equipment     62,342       62,289       57,430       46,426       46,203  
Other Real Estate     8,453       7,890       7,357       7,158       7,855  
Goodwill and other intangibles     65,238       66,105       56,343       24,670       25,325  
Other assets    

66,355

     

64,976

     

63,376

     

48,392

     

52,079

 
Total assets  

$

2,511,790

   

$

2,481,689

   

$

2,299,413

   

$

1,813,238

   

$

1,787,976

 
                     
Liabilities and Shareholders Equity                    
Non-interest bearing deposits   $ 430,430     $ 459,402     $ 414,142     $ 301,989     $ 308,050  
Interest-bearing deposits    

1,616,016

     

1,637,833

     

1,577,502

     

1,168,576

     

1,199,941

 
Total deposits     2,046,446       2,097,235       1,991,644       1,470,565       1,507,991  
Borrowings     85,508       10,516       29,034       104,072       94,321  
Subordinated debentures     75,117       75,192       10,310       10,310       10,310  
Other liabilities    

15,921

     

12,920

     

9,886

     

5,823

     

8,374

 
Total liabilities     2,222,992       2,195,863       2,040,874       1,590,770       1,620,996  
Total shareholders equity    

288,798

     

285,826

     

258,539

     

222,468

     

166,980

 
Total liabilities and shareholders equity  

$

2,511,790

   

$

2,481,689

   

$

2,299,413

   

$

1,813,238

   

$

1,787,976

 
 
 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS STATEMENT   Three Months Ended
  9/30/18   6/30/18   3/31/18   12/31/17   9/30/17
Interest Income:                    
Loans, including fees   $ 21,824   $ 21,155     $ 15,926   $ 14,687     $ 14,357  
Investment securities     3,126     3,181       2,661     2,346       2,180  
Accretion of purchase accounting adjustments     583     559       59     57       55  
Other interest income    

95

   

142

     

112

   

53

     

116

 
Total interest income     25,628     25,037       18,758     17,143       16,708  
Interest Expense:                    
Deposits     2,740     2,498       1,840     1,455       1,436  
Borrowings     52     147       460     392       357  
Subordinated debentures     1,125     774       78     105       41  
Accretion of purchase accounting adjustments    

42

   

49

     

   

(30

)

   

(61

)

Total interest expense    

3,959

   

3,468

     

2,378

   

1,922

     

1,773

 
Net interest income     21,669     21,569       16,380     15,221       14,935  
Provision for loan losses    

412

   

857

     

277

   

122

     

90

 
Net interest income after provision for loan losses     21,257     20,712       16,103     15,099       14,845  
                     
Non-interest Income:                    
Service charges on deposit accounts     1,538     1,341       1,027     908       902  
Mortgage Income     1,066     1,213       800     1,102       1,276  
Interchange Fee Income     1,180     1,500       1,040     961       935  
Gain (loss) on securities, net         (5 )         3       (10 )
Gain on sale of premises and equipment                          
Financial Assistance Award/Bank Enterprise Award     233     917                  
Other charges and fees    

1,057

   

666

     

592

   

582

     

555

 
Total non-interest income     5,074     5,632       3,459     3,556       3,658  
                     
Non-interest expense:                    
Salaries and employee benefits     9,266     9,502       7,789     7,478       7,327  
Occupancy expense     2,163     2,034       1,647     1,427       1,390  
FDIC premiums     278     368       367     365       355  
Marketing     60     70       80     118       50  
Amortization of core deposit intangibles     349     356       201     173       160  
Other professional services     847     438       189     194       367  
Acquisition charges     4,059     3,838       1,758     384        
Other non-interest expense    

2,764

   

3,074

     

2,566

   

2,251

     

2,239

 
Total Non-interest expense    

19,786

   

19,680

     

14,597

   

12,390

     

11,888

 
Earnings before income taxes     6,545     6,664       4,965     6,265       6,615  
Income tax expense    

1,383

   

1,419

     

1,008

   

3,851

     

1,901

 
Net income available to common shareholders  

$

5,162

 

$

5,245

   

$

3,957

 

$

2,414

   

$

4,714

 
                     
Diluted earnings per common share  

$

0.39

 

$

0.40

   

$

0.34

 

$

0.23

   

$

0.51

 
Diluted earnings per common share, operating*  

$

0.62

 

$

0.62

   

$

0.46

 

$

0.45

   

$

0.51

 
*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   $

58,905

    $ 41,915  
Investment securities     8,968       6,506  
Accretion of purchase accounting adjustments     1,201       167  
Other interest income    

348

     

337

 
Total interest income     69,422       48,926  
Interest Expense:        
Deposits     7,076       3,998  
Borrowings     659       980  
Subordinated debentures     1,977       171  
Amortization (Accretion) of purchase accounting adjustments    

91

     

(162

)

Total interest expense    

9,803

     

4,987

 
Net interest income     59,619       43,939  
Provision for loan losses    

1,546

     

384

 
Net interest income after provision for loan losses     58,073       43,555  
         
Non-interest Income:        
Service charges on deposit accounts     3,906       2,692  
Mortgage Income     3,079       3,400  
Interchange Fee Income     3,720       2,797  
Gain (loss) on securities, net     (5 )     (19 )
Gain on sale of premises and equipment            
Financial Assistance Award/Bank Enterprise Award     1,150        
Other charges and fees    

2,314

     

1,937

 
Total non-interest income     14,164       10,807  
         
Non-interest expense:        
Salaries and employee benefits     26,557       22,574  
Occupancy expense     5,844       4,108  
FDIC premiums     1,013       887  
Marketing     210       218  
Amortization of core deposit intangibles     906       491  
Other professional services     1,474       1,201  
Acquisition charges     9,655       6,327  
Other non-interest expense    

8,405

     

7,250

 
Total Non-interest expense     54,064       43,056  
Earnings before income taxes     18,173       11,306  
Income tax expense    

3,809

     

3,104

 
Net income available to common shareholders  

$

14,364

   

$

8,202

 
         
Diluted earnings per common share  

$

1.13

   

$

0.89

 
Diluted earnings per common share, operating*  

$

1.71

   

$

1.32

 
*See reconciliation of Non-GAAP financial measures        
 
 
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
  Sept 30,   Percent   June 30,   Mar 31,   Dec 31,   Sept 30,   Percent
COMPOSITION OF LOANS   2018   of Total   2018   2018   2017   2017   of Total
Commercial, financial and agricultural   $ 246,401     14.1 %   $ 228,643     $ 213,118     $ 165,780     $ 164,577     13.7 %
Real estate “ construction     251,240     14.3 %     229,164       213,712       183,328       171,609     14.3 %
Real estate “ commercial     654,040     37.3 %     658,096       561,153       467,484       456,110     37.9 %
Real estate “ residential     529,515     30.2 %     546,120       475,868       385,099       377,308     31.4 %
Lease Financing Receivable     2,659     0.2 %     2,476       2,433       2,450       2,008     0.2 %
Obligations of States & subdivisions     16,374     0.9 %     10,627       15,861       3,109       5,892     0.5 %
Consumer     48,254     2.8 %     35,145       34,434       18,056       20,689     1.7 %
Loans held for sale    

4,269

   

0.2

%

   

5,914

     

2,538

     

4,790

     

4,588

   

0.3

%

Total loans  

$

1,752,752

   

100

%

 

$

1,716,185

   

$

1,519,117

   

$

1,230,096

   

$

1,202,781

   

100

%

                             
                             
Sept 30, Percent June 30, Mar 31, Dec 31, Sept 30, Percent
COMPOSITION OF DEPOSITS   2018   of Total   2018   2018   2017   2017   of Total
Noninterest bearing   $ 430,430     21.0 %   $ 459,402     $ 414,142     $ 301,989     $ 308,050     20.4 %
NOW and other     705,851     34.5 %     731,617       761,318       601,694       639,802     42.4 %
Money Market/Savings     503,772     24.6 %     519,516       434,569       283,579       292,592     19.4 %
Time Deposits of less than $250,000     321,619     15.7 %     308,086       295,317       220,951       209,714     13.9 %
Time Deposits of $250,000 or more    

84,774

   

4.2

%

   

78,614

     

86,298

     

62,352

     

57,833

   

3.9

%

Total Deposits  

$

2,046,446

   

100

%

 

$

2,097,235

   

$

1,991,644

   

$

1,470,565

   

$

1,507,991

   

100

%

                             
                             
Sept 30, June 30, Mar 31, Dec 31, Sept 30,
ASSET QUALITY DATA   2018       2018   2018   2017   2017    
Nonaccrual loans   $ 13,572         $ 8,440     $ 5,746     $ 5,674     $ 4,852      
Loans past due 90 days and over    

805

         

940

     

1,096

     

285

     

1,436

     
Total nonperforming loans     14,377           9,380       6,842       5,959       6,288      
Other real estate     8,453           7,890       7,357       7,158       7,855      
Nonaccrual securities    

616

         

616

     

616

     

408

     

408

     
Total nonperforming assets  

$

23,446

       

$

17,886

   

$

14,815

   

$

13,525

   

$

14,551

     
                             
Nonperforming assets to total assets     0.93 %         0.72 %     0.64 %     0.75 %     0.81 %    
Nonperforming assets to total loans + ORE     1.33 %         1.04 %     0.97 %     1.10 %     1.21 %    
ALLL to nonperforming loans     67.92 %         101.41 %     128.13 %     139.08 %     130.01 %    
ALLL to total loans     0.56 %         0.56 %     0.57 %     0.68 %     0.68 %    
                             
Quarter-to-date net charge-offs (recs)   $ 151         $ 12     $ (94 )   $ 9     $ (15 )    
Annualized QTD net chg/offs (recs) to loans     0.03 %         0.003 %     (0.02 %)     0.003 %     (0.005 %)    
 
                       
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 September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017   September 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 $ 331,601 $ 2,369 2.86 % $ 328,898 $ 2,423 2.95 % $ 274,595 $ 1,986 2.89 % $ 271,459 $ 1,760 2.59 % $ 280,441 $ 1,601 2.28 %

Tax-exempt securities

  116,235   1,013 3.49 %   117,875   1,015 3.44 %   106,161   904 3.41 %   93,645   888 3.79 %   93,716   876 3.74 %

Total investment securities

447,836 3,382 3.02 % 446,773 3,438 3.08 % 380,756 2,890 3.04 % 365,104 2,648 2.90 % 374,157 2,477 2.65 %
Fed funds sold 355 5 5.63 % 17,242 61 1.42 % 11,368 35 1.23 % 54,640 46 0.34 % 36,591 113 1.24 %

Int bearing deposits in other banks

41,819 90 0.86 % 68,079 81 0.48 % 94,321 77 0.33 % 4,544 6 0.53 % 3,463 3 0.35 %
Loans   1,720,884   22,407 5.21 %   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 %

Total Interest earning assets

2,210,894 25,884 4.68 % 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 %
Other assets   259,713   214,345   174,433   170,002   172,698
Total assets $ 2,470,607 $ 2,443,176 $ 1,986,150 $ 1,810,252 $ 1,772,402
 

Interest-bearing liabilities:

Deposits $ 1,629,195 $ 2,782 0.68 % $ 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 %
Repo 0.00 % 0.00 % 0.00 % 0.00 % 4,891 38 3.11 %
Fed funds purchased 1,893 27 5.71 % 1,382 9 2.60 % 202 1 1.98 % 2,543 11 1.73 % 3,816 19 1.99 %
FHLB & FTN 22,469 25 0.45 % 22,959 138 2.40 % 71,944 459 2.55 % 103,421 381 1.47 % 68,041 300 1.76 %

Subordinated debentures

  75,124   1,125 5.99 %   54,036   774 5.73 %   10,310   78 3.03 %   10,310   105 4.07 %   10,310   41 1.59 %

Total interest bearing liabilities

1,728,681   3,959 0.92 % 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 %
Other liabilities 457,087 414,154 342,514 315,012 316,275
Shareholders’ equity   284,839   274,535   230,255   205,580   164,455

Total liabilities and shareholders’ equity

$ 2,470,607 $ 2,443,176 $ 1,989,150 $ 1,810,252 $ 1,772,402
 

Net interest income (FTE)*

$ 21,925 3.77 % $ 21,826 3.75 % $ 16,609 3.52 % $ 15,523 3.66 % $ 15,232 3.70 %
 
Net interest margin (FTE)* 3.97 % 3.92 % 3.67 % 3.79 % 3.81 %
 

Core net interest margin*

3.86 % 3.82 % 3.65 % 3.76 % 3.78 %
 
             
FIRST BANCSHARES, INC and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)

 

 

Three Months Ended

  Sept 30,   June 30,   Mar 31,   Dec 31,   Sept 30,

Per Common Share Data

    2018   2018   2018   2017   2017
Book value per common share     $ 22.09     $ 21.88     $ 20.95     $ 19.92     $ 18.24  
Effect of intangible assets per share      

4.99

     

5.06

     

4.56

     

2.21

     

2.76

 
Tangible book value per common share    

$

17.10

   

$

16.82

   

$

16.39

   

$

17.71

   

$

15.48

 
                       
Diluted earnings per share     $ 0.39     $ 0.40     $ 0.34     $ 0.23     $ 0.51  
Effect of acquisition charges       0.31       0.29       0.15       0.04        
Taxes on acquisition charges       (0.08 )     (0.07 )     (0.03 )     (0.01 )      
Charge related to reduction in deferred tax asset                         0.19        
Diluted earnings per share, operating    

$

0.62

   

$

0.62

   

$

0.46

   

$

0.45

   

$

0.51

 
                       
 

 

Year to Date

        2018       2017    
Diluted earnings per share         $ 1.13         $ 0.89      
Effect of acquisition charges           0.76           0.68      
Tax           (0.18 )         (0.25 )    
Diluted earnings per share, operating        

$

1.71

       

$

1.32

     
                       
 

 

Year to Date

        2018       2017    
Net income available to common shareholders         $ 14,364         $ 8,202      
Effect of acquisition charges           9,655           6,327      
Tax           (2,330 )         (2,390 )    
Net earnings available to common shareholders, operating        

$

21,689

       

$

12,139

     
             

 

       
     

Three Months Ended

Sept 30, June 30, Mar 31, Dec 31, Sept 30,
Average Balance Sheet Data     2018   2018   2018   2017   2017

Total average assets

A

  $ 2,470,607     $ 2,443,176     $ 1,986,150     $ 1,810,252     $ 1,772,402  

Total average earning assets

B

  $ 2,210,894     $ 2,228,831     $ 1,811,717     $ 1,640,250     $ 1,599,704  
                       

Common Equity

C

  $ 284,839     $ 274,535     $ 230,255     $ 205,580     $ 164,455  
Less intangible assets      

65,762

     

57,443

     

33,929

     

25,258

     

25,442

 

Tangible common equity

D

 

$

219,077

   

$

217,092

   

$

196,326

   

$

180,322

   

$

139,013

 
                       
      Three Months Ended
Sept 30, June 30, Mar 31, Dec 31, Sept 30,
Net Interest Income Fully Tax Equivalent     2018   2018   2018   2017   2017

Net interest income

E

  $ 21,669     $ 21,569     $ 16,380     $ 15,221     $ 14,935  
Tax-exempt investment income       (757 )     (758 )     (675 )     (586 )     (579 )
Taxable investment income      

1,013

     

1,015

     

904

     

888

     

876

 

Net Interest Income Fully Tax Equivalent

F

 

$

21,925

   

$

21,826

   

$

16,609

   

$

15,523

   

$

15,232

 
                       

Annualized Net Interest Margin

E/B

    3.92 %     3.87 %     3.62 %     3.71 %     3.73 %

Annualized Net Interest Margin, Fully Tax Equivalent

F/B

    3.97 %     3.92 %     3.67 %     3.79 %     3.81 %
       
      Three Months Ended
Sept 30, June 30, Mar 31, Dec 31, Sept 30,
Core Net Interest Margin     2018   2018   2018   2017   2017
Net interest income (FTE)     $ 21,925     $ 21,826     $ 16,609     $ 15,523     $ 15,232  
Less purchase accounting adjustments      

541

     

510

     

59

     

87

     

116

 

Net interest income, net of purchase accounting adj

G

 

$

21,384

   

$

21,316

   

$

16,550

   

$

15,436

   

$

15,116

 
                       
Total average earning assets     $ 2,210,894     $ 2,228,831     $ 1,811,717     $ 1,640,250     $ 1,599,704  
Add average balance of loan valuation discount      

6,836

     

6,046

     

1,578

     

1,558

     

1,640

 

Avg earning assets, excluding loan valuation discount

H

 

$

2,217,730

   

$

2,234,877

   

$

1,813,295

   

$

1,641,808

   

$

1,601,344

 
                       

Core net interest margin

G/H

   

3.86

%

   

3.82

%

   

3.65

%

   

3.76

%

   

3.78

%

                       
      Three Months Ended
Sept 30, June 30, Mar 31, Dec 31, Sept 30,
Efficiency Ratio     2018   2018   2018   2017   2017
Operating Expense                      
Total non-interest expense     $ 19,786     $ 19,680     $ 14,598     $ 12,390     $ 11,888  
Pre-tax non-operating expenses      

(4,059

)

   

(3,838

)

   

(1,758

)

   

(384

)

   

(47

)

Adjusted Operating Expense

I

 

$

15,727

   

$

15,842

   

$

12,840

   

$

12,006

   

$

11,841

 
                       
Operating Revenue                      
Net interest income, FTE     $ 21,925     $ 21,826     $ 16,609     $ 15,523     $ 15,232  
Total non-interest income       5,074       5,632       3,459       3,556       3,658  
Pre-tax non-operating items                                

Adjusted Operating Revenue

J

 

$

26,999

   

$

27,458

   

$

20,068

   

$

19,079

   

$

18,890

 
                       

Efficiency Ratio, operating

I/J

    58.25 %     57.70 %     63.98 %     62.93 %     62.68 %
                       
      Three Months Ended
Sept 30, June 30, Mar 31, Dec 31, Sept 30,
Return Ratios     2018   2018   2018   2017   2017

Net income available to common shareholders

K

  $ 5,162     $ 5,245     $ 3,957     $ 2,414     $ 4,714  
Acquisition charges       4,059       3,838       1,758       384       47  
Tax on acquisition charges       (1,027 )     (948 )     (355 )     (148 )     (18 )
Charge related to reduction in deferred tax asset                         2,081        

Net earnings available to common shareholders, oper

L

 

$

8,194

   

$

8,135

   

$

5,360

   

$

4,731

   

$

4,743

 
                       

Annualized return on avg assets

K/A

    0.84 %     0.86 %     0.80 %     0.53 %     1.06 %

Annualized return on avg assets, oper

L/A

    1.33 %     1.33 %     1.08 %     1.05 %     1.07 %

Annualized return on avg common equity, oper

L/C

    11.51 %     11.85 %     9.31 %     9.21 %     11.54 %

Annualized return on avg tangible common equity, oper

L/D

    14.96 %     14.99 %     10.92 %     10.49 %     13.65 %
                       
Mortgage Department                      
Net Interest Income after provision for loan losses     $ 154     $ 214     $ 189     $ 272     $ 249  
Loan fee income       1,066       1,213       800       1,102       1,276  
Salaries and employee benefits       855       903       849       806       882  
Other non-interest expense      

136

     

127

     

97

     

101

     

102

 
Earnings before income taxes    

$

229

   

$

397

   

$

43

   

$

467

   

$

541

 
 

The First Bancshares, Inc.
M. Ray “Hoppy” Cole, 601-268-8998
Chief
Executive Officer
or
Dee Dee Lowery, 601-268-8998
Chief
Financial Officer

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