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The First Bancshares, Inc. Reports a 45% Increase in Operating Net Earnings and Declares Quarterly Dividends

HATTIESBURG, Miss.--(BUSINESS WIRE)--

The First Bancshares, Inc. (FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) reported today a 45% increase ($1.1 million) in operating net earnings (net income available to common shareholders adjusted for merger related costs) for the first quarter of 2017 compared to the first quarter of 2016. Operating net earnings available to common shareholders totaled $3.4 million for first quarter 2017 as compared to $2.3 million for first quarter 2016. Operating net earnings available to common shareholders excludes tax effected merger related expenses of $2.3 million in the first quarter of 2017. A one-time gain of $0.2 million occurred in the first quarter of 2016.

Fully diluted earnings per share for the first quarter of 2017 were $0.12 as compared to $0.46 for the first quarter of 2016. Fully diluted earnings per share for the first quarter of 2017 includes one-time merger related costs of $0.25 and also includes the issuance of 3,563,380 in new common shares during the fourth quarter of 2016 related to the capital raise in October 2016.

Highlights for the Quarter:

  • The acquisitions of Iberville Bank and Gulf Coast Community Bank closed as planned on January 1, 2017.
  • Acquisitions added loans of $239.6 million and deposits of $355.7 million (loan and deposit figures are net of credit and rate marks).
  • Excluding acquisitions, loans increased $33.3 million during the first quarter of 2017.
  • Excluding acquisitions, deposits increased $173.6 million during the first quarter of 2017.
  • Operating net earnings were $3.4 million for the first quarter of 2017 as compared to $2.4 million for the fourth quarter of 2016 and as compared to $2.3 million for the first quarter of 2016.

M. Ray “Hoppy” Cole, President & Chief Executive Officer, commented, “We are very pleased with first quarter results especially given the complexities of closing two mergers at once. We welcome our new clients and team members associated with Gulf Coast Community Bank and Iberville Bank. We are thrilled to have them on board.”

Balance Sheet

Total assets increased $505.8 million or 39.6% to $1,783.2 billion for the quarter ended March 31, 2017 of which approximately $390 million of asset growth was associated with the closing of the two acquisitions.

Total loans were $1,140.0 billion at March 31, 2017 as compared to $867.1 million at December 31, 2016 and as compared to $797.8 million at March 31, 2016 representing increases of $272.9 million, or 31.5% for the quarter ended March 31, 2017 and $342.2 million, or 42.9% as compared to first quarter 2016. The acquisitions accounted for $239.6 million of the total increase in loans during the quarter. Organic loan growth was $33.3 million or 3.8% for the quarter.

Total deposits increased $529.3 million or 50.9% for the quarter ended March 31, 2017, of which $355.7 million was a result of the acquisition. The balance of the increase was $173.6 million of which $151.2 million is due to season fluctuations in public deposit accounts.

Asset Quality

Nonperforming assets totaled $13.3 million at March 31, 2017, an increase of $3.4 million compared to $9.9 million at December 31, 2016 and an increase of $2.0 million compared to March 31, 2016. The majority of the increase is the result of acquired assets with associated fair value marks. The ALLL/total loans ratio was 0.69% at March 31, 2017 and 0.87% at December 31, 2016. Including valuation accounting adjustments on acquired loans, the total valuation plus ALLL was 1.24% of loans at March 31, 2017. The ratio of annualized net charge-offs (recoveries) to total loans was (0.10)% for the quarter ended March 31, 2017 compared to 0.03% for the quarter ended December 31, 2016. As noted in our first quarter 2015 10-Q, the Company had been notified that a recovery of $941,000 was more likely than not expected during 2015. We received the first installment during the second quarter of 2015 which totaled $481,000 and the second installment during the third quarter of 2015 which totaled $241,000. The remaining balance of $219,000 was received during the fourth quarter of 2016.

Energy Loans

At March 31, 2017 the company had direct energy related loans of $19.7 million, representing 1.7% of the total loan portfolio. A majority of the outstanding are secured by marine assets that operate in the Gulf of Mexico, which are under term contracts to major operators tied primarily to oil and gas production.

First Quarter 2017 vs. First Quarter 2016 Earnings Comparison

First quarter 2017 net earnings available to common shareholders (including merger related costs) totaled $1.1 million compared to $2.5 million for the first quarter of 2016.

Revenues from consolidated operations increased $6.1 million in quarterly comparison. Net interest income increased $4.5 million in quarterly comparison as interest income earned on a higher volume of loans attributed to this overall increase. Noninterest income increased $0.9 million in quarterly comparison for the first quarter of 2017 as compared to the first quarter of 2016 with increases spread over service charges, mortgage income and interchange fee income.

First quarter 2017 noninterest expense increased $7.7 million, or 91.7% as compared to first quarter 2016. The largest increases in noninterest expense were related to salaries and benefits of $2.8 million of which $2.2 million is associated with increased number of employees associated with the acquisitions and other professional services and other noninterest expenses included $3.6 million in before-tax merger costs.

Fully taxable-equivalent (“FTE”) net interest income totaled $14.5 million and $9.9 million for the first quarter of 2017 and 2016, respectively. The FTE net interest income increased $4.6 million in prior year quarterly comparison primarily due to an increase in interest earned on loans. Purchase accounting adjustments accounted for $74,000 of the difference in net interest income for the first quarter comparisons. First quarter 2017 net interest margin of 3.85% includes 3 bps related to purchase accounting adjustments.

Investment securities totaled $366.5 million, or 20.6% of total assets at March 31, 2017, versus $269.5 million, or 21.7% of total assets at March 31, 2016. The average volume of investment securities increased $65.9 million in prior year quarterly comparison primarily the result of the acquisitions. The average tax equivalent yield on investment securities increased 30 bps to 2.93%. The investment portfolio had a net unrealized gain of $0.6 million at March 31, 2017 as compared to a net unrealized gain of $3.7 million at March 31, 2016.

The average yield on all earnings assets increased 25 basis points in prior year quarterly comparison, from 4.02% for the first quarter of 2016 to 4.27% for the first quarter of 2017. This increase was offset partially by an increase in average interest expense of 10 basis points from 0.41% for the first quarter of 2016 to 0.51% for the first quarter of 2017.

First Quarter 2017 vs Fourth Quarter 2016 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders decreased $1.0 million to $1.1 million which included after-tax one-time acquisition charges of $2.3 million.

FTE net interest income increased $3.6 million to $14.5 million from $10.9 million in sequential-quarter comparison. The increase was due primarily to increased loan volume. Interest income from purchase accounting adjustments decreased $0.3 million in quarterly comparison.

The average yield on all earnings assets increased 10 basis points in sequential-quarter comparison, from 4.17% for the fourth quarter of 2016 to 4.27% for the first quarter of 2017.

Noninterest income increased $0.7 million in sequential-quarter comparison consisting of increases in service charges and interchange fee income and a decrease in mortgage income of $0.3 million.

Noninterest expense increased $5.9 million in sequential-quarter comparison which includes an increase in salaries and benefits of $2.1 million. The majority of this increase was associated with the acquisitions. Merger related costs were $3.6 million and included in other professional services and other noninterest expenses.

Other Events

The Company will make a presentation at the 21st Annual Burkenroad Reports Investment Conference at The Sheraton New Orleans Hotel in New Orleans, Louisiana, Friday, April 28, 2017 at 9:30 a.m. central time. This will be an interactive session between management and those attending the conference. The presentation will be available at the company’s internet site (www.thefirstbank.com) under the Investor Relations tab.

Dividends

The Board of Directors of The First Bancshares, Inc. announced a cash dividend was declared in the amount of $0.0375 per share to be paid on its common stock on May 24, 2017 to shareholders of record as of the close of business on May 3, 2017.

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 NASDAQ Global Market under the symbol FBMS. Information is available on the Company’s website: www.thefirstbank.com.

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; and legislation or regulatory changes which adversely affect the ability of the combined Company to conduct business combinations or new operations. 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. Further information on The First Bancshares, Inc. is available in its filings with the Securities and Exchange Commission, available at the SEC’s website, http://www.sec.gov.

 
 
 
FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS DATA      

Quarter

Ended

3/31/17

   

Quarter

Ended

12/31/16

   

Quarter

Ended

9/30/16

   

Quarter

Ended

6/30/16

   

Quarter

Ended

3/31/16

Total Interest Income       $ 15,753       $ 11,868       $ 11,269       $ 10,871       $ 10,597  
Total Interest Expense         1,585         1,176         1,202         1,016         922  
Net Interest Income         14,168         10,692         10,067         9,855         9,675  
FTE net interest income         14,470         10,935         10,306         10,099         9,912  
Provision for loan losses         46         88         143         204         190  
Non-interest income         3,391         2,705         3,099         2,961         2,483  
Non-interest expense         16,095         10,132         9,416         8,921         8,395  
Earnings before income taxes         1,418         3,177         3,607         3,691         3,573  
Income tax expense         296         870         1,049         1,042         969  
Net earnings         1,122         2,307         2,558         2,649         2,604  
Dividends and accretion on preferred stock         -         195         86         86         85  
Net earnings available to common shareholders       $ 1,122       $ 2,112       $ 2,472       $ 2,563       $ 2,519  
                                 
PER COMMON SHARE DATA                                
Basic earnings per share       $ 0.12       $ 0.39       $ 0.46       $ 0.47       $ 0.47  
Basic earnings per share, operating*         0.37         0.44         0.48         0.47         0.43  
Diluted earnings per share         0.12         0.26         0.45         0.47         0.46  
Diluted earnings per share, operating*         0.37         0.30         0.48         0.47         0.43  
Quarterly dividends per share         .0375         .0375         .0375         .0375         .0375  
Book value per common share at end of period         17.39         17.19         17.60         17.15         16.58  
Tangible common book value at period end         14.57         15.46         14.73         14.26         13.67  
Market price at end of period         28.50         27.50         19.10         17.27         15.63  
Shares outstanding at period end         9,144,412         8,991,397         5,428,017         5,432,014         5,432,014  
Weighted average shares outstanding:                                
Basic         9,123,271         5,463,651         5,425,567         5,432,014         5,415,339  
Diluted         9,182,711         8,500,305         5,475,785         5,490,592         5,478,703  
                                 
AVERAGE BALANCE SHEET DATA                                
Total assets       $ 1,713,438       $ 1,275,538       $ 1,233,034       $ 1,210,707       $ 1,196,328  
Loans and leases         1,117,135         856,798         836,931         809,806         779,418  
Total deposits         1,460,787         1,037,877         1,044,428         1,036,914         964,681  
Total common equity         157,184         94,750         94,007         88,643         87,155  
Total tangible common equity*         134,809         79,112         78,347         72,885         71,297  
Total equity         157,184         159,786         111,130         105,766         104,278  
                                 
SELECTED RATIOS                                
Annualized return on avg assets         .26 %       .72 %       .83 %       .88 %       .87 %
Annualized return on avg assets, operating*         .79 %       .75 %       .85 %       .85 %       .78 %
Annualized return on avg common equity, operating*         8.61 %       10.11 %       11.14 %       11.57 %       10.69 %
Annualized return on avg tangible common equity, oper*         10.04 %       12.10 %       13.37 %       14.07 %       13.07 %
Average loans to average deposits         76.47 %       82.55 %       80.13 %       78.10 %       80.80 %
Taxable-equivalent net interest margin         3.85 %       3.77 %       3.70 %       3.68 %       3.68 %
Efficiency Ratio         90.11 %       74.28 %       70.24 %       68.31 %       67.73 %
Efficiency Ratio, operating*         69.97 %       71.40 %       68.70 %       68.31 %       69.18 %
                                 
CREDIT QUALITY                                
Allowance for loan losses (ALLL) as a % of total loans         .69 %       .87 %       .88 %       .88 %       .88 %
Nonperforming assets to tangible equity + ALLL         9.42 %       6.74 %       10.81 %       10.93 %       11.43 %
Nonperforming assets to total loans + ORE         1.16 %       1.14 %       1.31 %       1.34 %       1.40 %
Annualized QTD net charge-offs (recoveries) to total loans         (0.10 )%       0.03 %       (0.04 %)       (0.03 %)       (0.02 %)
 

*See reconciliation of Non-GAAP financial measures

 
 
 
FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

BALANCE SHEET      

Mar 31,

2017

   

Dec 31,

2016

   

Sept 30,

2016

   

June 30,

2016

   

Mar 31,

2016

Assets                                
Cash and cash equivalents       $ 148,511       $ 62,119       $ 70,114       $ 54,777       $ 95,965  
Securities available-for-sale         352,851         243,206         236,168         242,855         253,126  
Securities held-to-maturity         6,000         6,000         6,000         6,025         6,851  
Other investments         7,647         6,593         9,516         9,578         9,570  
Total investment securities         366,498         255,799         251,684         258,458         269,547  
Loans held for sale         5,473         5,880         9,437         8,937         6,095  
Total loans         1,139,987         867,054         854,366         824,083         797,764  
Allowance for loan losses         (7,813 )       (7,510 )       (7,481 )       (7,259 )       (6,982 )
Loans, net         1,132,174         859,544         846,885         816,824         790,782  
Premises and equipment         45,438         34,624         33,427         33,502         33,353  
Other Real Estate         7,579         6,008         4,670         4,716         4,363  
Goodwill and other intangibles         25,762         15,507         15,596         15,696         15,796  
Other assets         51,769         37,886         34,825         31,990         26,050  
Total assets       $ 1,783,204       $ 1,277,367       $ 1,266,638       $ 1,224,900       $ 1,241,951  
                                 
Liabilities and Shareholders’ Equity                                
Non-interest bearing deposits       $ 323,442       $ 202,478       $ 196,786       $ 194,950       $ 194,433  
Interest-bearing deposits         1,245,055         836,713         875,003         837,413         846,672  
Total deposits         1,568,497         1,039,191         1,071,789         1,032,363         1,041,105  
Borrowings         39,411         69,000         68,000         68,000         78,976  
Subordinated debentures         10,310         10,310         10,310         10,310         10,310  
Other liabilities         5,981         4,339         3,881         3,929         4,363  
Total liabilities         1,624,199         1,122,840         1,153,980         1,114,602         1,134,754  
Total shareholders’ equity         159,005         154,527         112,658         110,298         107,197  
Total liabilities and shareholders’ equity       $ 1,783,204       $ 1,277,367       $ 1,266,638       $ 1,224,900       $ 1,241,951  
 
 
 

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS STATEMENT       Three Months Ended
      3/31/17     12/31/16     9/30/16     6/30/16     3/31/16
Interest Income:                                
Loans, including fees       $ 13,444       $ 9,922       $ 9,706     $ 9,293     $ 9,013
Investment securities         2,129         1,472         1,446       1,531       1,532
Accretion of purchase accounting adjustments         56         429         92       20       22
Other interest income         124         45         25       27       30
Total interest income         15,753         11,868         11,269       10,871       10,597
Interest Expense:                                
Deposits         1,198         968         962       813       701
Borrowings         376         148         160       149       193
Subordinated debentures         51         60         80       54       28
Accretion of purchase accounting adjustments         (40 )       -         -       -       -
Total interest expense         1,585         1,176         1,202       1,016       922
Net interest income         14,168         10,692         10,067       9,855       9,675
Provision for loan losses         46         88         143       204       190
Net interest income after provision for loan losses         14,122         10,604         9,924       9,651       9,485
                                 
Non-interest Income:                                
Service charges on deposit accounts         868         605         606       604       637
Mortgage Income         916         1,204         1,399       1,184       645
Interchange Fee Income         903         683         666       681       644
Gain (loss) on securities, net         (8 )       (3 )       -       129       -
Gain on sale of premises and equipment         -         -         -       -       -
BEA award, net         -         -         -       -       -
Other charges and fees         712         216         428       363       557
Total non-interest income         3,391         2,705         3,099       2,961       2,483
                                 
Non-interest expense:                                
Salaries and employee benefits         7,981         5,943         5,645       5,400       5,149
Occupancy expense         1,370         1,222         1,209       1,110       1,073
FDIC premiums         201         265         254       257       244
Marketing         69         122         76       132       72
Amortization of core deposit intangibles         149         88         100       100       94
Other professional services         3,010         793         461       321       231
Other non-interest expense         3,315         1,699         1,671       1,601       1,532
Total Non-interest expense         16,095         10,132         9,416       8,921       8,395
Earnings before income taxes         1,418         3,177         3,607       3,691       3,573
Income tax expense         296         870         1,049       1,042       969
Net earnings         1,122         2,307         2,558       2,649       2,604
Dividends and accretion on preferred stock         -         195         86       86       85
Net earnings available to common shareholders       $ 1,122       $ 2,112       $ 2,472     $ 2,563     $ 2,519
                                 
Basic earnings per common share       $ 0.12       $ 0.39       $ 0.46     $ 0.47     $ 0.47
Basic earnings per common share, operating*       $ 0.37       $ 0.44       $ 0.48     $ 0.47     $ 0.43
Diluted earnings per common share       $ 0.12       $ 0.26       $ 0.45     $ 0.47     $ 0.46
Diluted earnings per common share, operating*       $ 0.37       $ 0.30       $ 0.48     $ 0.47     $ 0.43
 

*See reconciliation of Non-GAAP financial measures

...
 
 
 
FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

COMPOSITION OF LOANS      

Mar 31,

2017

   

Percent

of Total

   

Dec 31,

2016

   

Sept 30,

2016

   

June 30,

2016

   

Mar 31,

2016

   

Percent

of Total

Commercial, financial and agricultural       $ 156,786       13.7 %     $ 129,423       $ 121,963       $ 118,924       $ 126,381       15.7 %
Real estate – construction         163,249       14.3 %       109,394         104,644         101,439         100,386       12.5 %
Real estate – commercial         426,151       37.2 %       314,359         307,963         296,676         270,085       33.6 %
Real estate – residential         360,964       31.5 %       289,640         296,587         282,420         276,272       34.4 %
Lease Financing Receivable         2,196       0.2 %       2,204         2,211         2,642         2,645       0.3 %
Obligations of States & subdivisions         5,383       0.5 %       6,698         6,861         6,965         7,034       0.9 %
Consumer         25,258       2.2 %       15,336         14,137         15,017         14,961       1.9 %
Loans held for sale         5,473       0.4 %       5,880         9,437         8,937         6,095       0.7 %