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The First Bancshares, Inc. Reports Results for Second Quarter ended June 30, 2020; Declares Quarterly Dividend

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The First Bancshares, Inc. ("FBMS" or "the Company") (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) reported today an increase of 41.4% in net income available to common shareholders for the quarter ended June 30, 2020 as compared to same quarter 2019.

Highlights for the Quarter:

  • On April 3, 2020, the Company closed its acquisition with Southwest Georgia Financial Corporation ("SGB"), parent company of Southwest Georgia Bank, headquartered in Moultrie, GA. SGB added 8 locations servicing the areas of Moultrie, Valdosta, Albany and Tifton, Georgia and completion of system integration occurred during the quarter.

  • The Company recorded a bargain purchase gain of $7.0 million on the acquisition of SGB.

  • Excluding acquired SGB loans and Payroll Protection Program ("PPP") loans, average loans increased $5.3 million, or 0.2% for the sequential quarter comparison.

  • Excluding acquired SGB deposits, average deposits increased $381.0 million, or 12.0% on an annualized basis for the sequential quarter comparison.

  • Provision for loan losses totaled $7.6 million for the quarter of which $6.6 million was related to COVID-19 as compared to $7.1 million for the sequential quarter comparison and $0.8 million for the second quarter of 2019.

  • Pre-tax, pre-provision operating earnings which excludes acquisition charges, treasury awards, gains from bargain purchase of SGB and sale of land increased 28.5% to $21.4 million for the quarter ended June 30, 2020 as compared to $16.7 million for the second quarter of 2019.

  • Pre-tax, pre-provision operating earnings which excludes acquisition charges, treasury awards, gains from bargain purchase of SGB and sale of land increased 20.2% to $21.4 million for the quarter ended June 30, 2020 as compared $17.8 million for the first quarter of 2020.

  • Due to the current economic environment, the allowance for loan losses increased 35% to $28.1 million or 0.88% of total loans at June 30, 2020 as compared to $20.8 million or 0.80% of total loans at March 31, 2020. The Company also has $11.5 million in credit marks associated with acquired loan portfolios.

  • As of July 24, 2020, total COVID related modifications were $196 million, representing 6% of the loan portfolio and down from a peak of $676 million or 21% of the loan portfolio. For additional details related to our response and potential effects of COVID-19, see investor presentation to be filed and available under presentations and press releases included in the investor relations section of the company’s website: www.thefirstbank.com.

  • During the first quarter of 2020, the Company elected to delay the adoption of the Current Expected Credit Losses ("CECL") afforded through the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

M. Ray "Hoppy" Cole, President and Chief Executive Officer, commented, "Although there is a great deal of uncertainty surrounding the economic impact of the COVID-19 pandemic, our company had a strong quarter. Our team’s ability to perform at a high level, deliver outstanding service, and continue to execute on our strategic vision in a very difficult operating environment is exceptional.

During the quarter, we completed the merger and system integration of Southwest Georgia Bank adding 8 locations and approximately $550 million in assets in the markets of Moultrie, Valdosta and Tifton, Ga. Southwest Georgia Bank is a 100 year old institution, with excellent market share and a group of high performing community bankers. We are thrilled to have them join our team!

Our team also processed over 3,200 PPP loans totaling more than $260 million to help support our clients during this unprecedented time. Our clients have been very complimentary of the service provided which underscored the importance of our community bank model and its focus on the client. Our team members’ extra effort produced substantial growth in loans, deposits, and a 20% increase in pre-tax, pre-provision income as compared to the first quarter of 2020.

I am confident that our company is well positioned to navigate this uncertain environment with our current strong core earnings, strong capital and excellent liquidity. Our focus will continue to be on the needs of our clients and the safety and welfare of our team members."

Quarterly Earnings

Net income available to common shareholders totaled $16.9 million for the quarter ended June 30, 2020, an increase of $5.0 million, or 41.4%, compared to $12.0 million for the quarter ended June 30, 2019.

Net income available to common shareholders totaled $16.9 million for the quarter ended June 30, 2020, an increase of $8.6 million, or 103.9%, compared to $8.3 million for the quarter ended March 31, 2020. The Company recorded a $7.0 million bargain purchase gain on the acquisition of SGB for the quarter ended June 30, 2020.

Pre-tax, pre-provision operating earnings, which exclude acquisition charges, treasury awards, and gains increased 28.5% to $21.4 million for the quarter ended June 30, 2020 as compared to $16.7 million for the second quarter of 2019 and increased 20.2% to $21.4 million for the quarter ended June 30, 2020 as compared $17.8 million for the first quarter of 2020.

Provision for loan losses totaled $7.6 million for the quarter ended June 30, 2020, an increase of $6.8 million, or 862% as compared to $0.8 million for the second quarter of 2019 and an increase of $0.5 million, or 7.1% as compared to $7.1 million for the first quarter of 2020. $6.6 million of the $7.6 million provision for loan loss expense for the quarter ended June 30, 2020 was related to the anticipated economic effects of COVID-19.

Earnings Per Share

For the second quarter of 2020, fully diluted earnings per share were $0.79, compared to $0.69 for the second quarter of 2019. The additional provision for loan losses expense of $6.6 million, or $5.1 million net of tax, for the quarter ended June 30, 2020, which is primarily attributable to the COVID-19 pandemic, accounted for $0.24 in fully diluted earnings per share. The bargain purchase and sale of land gains for the quarter ended June 30, 2020 accounted for $0.35 in fully diluted earnings per share.

For the second quarter of 2020, fully diluted earnings per share were $0.79, compared to $0.44 for the first quarter of 2020. The bargain purchase and sale of land gains for the quarter ended June 30, 2020 accounted for $0.35 in fully diluted earnings per share.

Fully diluted earnings per share for the quarter ended June 30, 2020 include the issuance of 2,546,967 shares of our common stock during the second quarter of 2020 in association with the acquisition of SGB and the issuance of 1,682,889 shares of our common stock during the fourth quarter of 2019 in association with the acquisition of First Florida Bancorp, Inc. ("FFB"). Fully diluted earnings per share for the first and second quarters of 2020 include the purchase by the Company of 168,188 shares throughout the calendar year of 2019.

Fully diluted earnings per share for the quarter ended June 30, 2019 include the issuance of 2,377,501 shares of our common stock during the first quarter of 2019 in association with the acquisition of FPB Financial Corp ("FPB").

Balance Sheet

Consolidated assets increased $1.023 billion to $5.085 billion at June 30, 2020 from $4.062 billion at March 31, 2020. Excluding the acquisition of SGB, assets increased $486.2 million. Assets include $259.3 million in PPP loans.

Total average loans were $3.157 billion for the quarter ended June 30, 2020, as compared to $2.602 billion for the quarter ended March 31, 2020, and $2.338 billion for the quarter ended June 30, 2019, representing an increase of $554.2 million, or 21.3%, for the sequential quarter comparison, and an increase of $818.9 million, or 35.0%, in prior year quarterly comparison. The acquisitions of FFB and SGB accounted for $665.5 million, net of fair value marks, of the total increase in average loans as compared to the second quarter of 2019. The acquisition of SGB accounted for $419.3 million, net of fair value marks, of the total increase in average loans as compared to the first quarter of 2020.

Excluding the acquired loans and PPP loans, average loans increased $5.3 million, or 0.2% for the sequential quarter comparison. Excluding the acquired loans and PPP loans, average loans increased $23.8 million, or 1.0% as compared to the quarter ended June 30, 2019.

Total average deposits were $4.069 billion for the quarter ended June 30, 2020, as compared to $3.187 billion for the quarter ended March 31, 2020, and $2.863 billion for the quarter ended June 30, 2019, representing an increase of $882.2 million, or 27.7%, for the sequential quarter comparison, and an increase of $1.207 billion, or 42.1%, in prior year quarterly comparison. The acquisitions of FFB and SGB accounted for $856.9 million of the total increase in average deposits as compared to the second quarter of 2019. The acquisition of SGB accounted for $501.3 million, net of fair value marks, of the total increase in average deposits as compared to the first quarter of 2020.

Excluding the acquired deposits, average deposits increased $381.0 million, or 12.0% for the sequential quarter comparison. Excluding the acquired deposits, average deposits increased $349.7 million, or 12.2% as compared to the quarter ended June 30, 2019.

The Company implemented Deposit Reclassification at the beginning of 2020. This program reclassifies noninterest bearing deposits and NOW deposit balances to money market accounts. This program reduces our reserve balance required at the Federal Reserve Bank of Atlanta which provides additional funds for liquidity and lending. At quarter end June 30, 2020, $703.7 million in noninterest deposit balances and $746.1 million in NOW deposit accounts were reclassified as money market accounts.

Asset Quality

Nonperforming assets totaled $45.7 million at June 30, 2020, a decrease of $1.4 million compared to $47.1 million at March 31, 2020 and an increase of $7.7 million compared to $38.0 million at June 30, 2019. Nonaccrual loans increased $1.5 million as compared to March 31, 2020 and increased $13.6 million as compared to June 30, 2019. Other real estate decreased $1.5 million as compared to March 31, 2020 and decreased $5.7 million as compared to June 30, 2019.

The ratio of the allowance for loan and leases losses (ALLL) to total loans was 0.88% at June 30, 2020, 0.80% at March 31, 2020 and 0.51% at June 30, 2019. The ratio of annualized net charge-offs (recoveries) to total loans was 0.04% for the quarter ended June 30, 2020 compared to 0.03% for the quarter ended March 31, 2020 and (0.01%) for the quarter ended June 30, 2019.

Second Quarter 2020 vs. Second Quarter 2019 Earnings Comparison

Net income available to common shareholders for the second quarter of 2020 totaled $16.9 million compared to $12.0 million for the second quarter of 2019, an increase of $5.0 million or 41.4%. The Company recorded a $7.0 million bargain purchase gain on the acquisition of SGB for the quarter ended June 30, 2020. In comparing the quarters, an increased provision for loan losses in the amount of $6.8 million was expensed during the second quarter of 2020 as compared to the second quarter of 2019.

Net interest income for the second quarter of 2020 was $39.2 million, an increase of $8.4 million when compared to the second quarter of 2019. The increase was due to interest income earned on a higher volume of loans. Fully tax equivalent ("FTE") net interest income totaled $39.8 million and $31.0 million for the second quarter of 2020 and 2019, respectively. FTE net interest income increased $8.7 million in the prior year quarterly comparison due to increased loan volume. Purchase accounting adjustments accounted for $0.6 million of the difference in net interest income for the second quarter comparisons. Second quarter 2020 FTE net interest margin of 3.63% included 21 basis points related to purchase accounting adjustments compared to 4.07% for the same quarter in 2019, which included 23 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 42 basis points in prior year quarterly comparison.

Non-interest income increased $1.0 million for the second quarter of 2020 as compared to the second quarter of 2019 excluding the gains mentioned above. Mortgage income increased $1.1 million in prior year quarterly comparison.

Second quarter 2020 non-interest expense was $28.1 million, an increase of $7.2 million, or 34.4% as compared to the second quarter of 2019. Excluding the net increase in acquisition charges of $2.2 million for the quarterly comparison, non-interest expense increased $5.0 million in the second quarter of 2020, of which $3.9 million was attributable to the operations of FFB and SGB, as compared to second quarter of 2019.

Investment securities totaled $953.3 million, or 18.7% of total assets at June 30, 2020, versus $622.8 million, or 17.9% of total assets at June 30, 2019. The average balance of investment securities increased $284.2 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities decreased 85 basis points to 2.55% from 3.40% in prior year quarterly comparison. The investment portfolio had a net unrealized gain of $32.9 million at June 30, 2020 as compared to a net unrealized gain of $12.6 million at June 30, 2019.

The FTE average yield on all earning assets decreased 73 basis points in prior year quarterly comparison, from 4.96% for the second quarter of 2019 to 4.23% for the second quarter of 2020. Average interest expense decreased 49 basis points from 1.16% for the second quarter of 2019 to 0.67% for the second quarter of 2020. Cost of all deposits averaged 52 basis points for the second quarter of 2020 compared to 77 basis points for the second quarter of 2019.

Second Quarter 2020 vs First Quarter 2020 Earnings Comparison

Net income available to common shareholders for the second quarter of 2020 increased $8.6 million to $16.9 million compared to $8.3 million for the first quarter of 2020. As previously discussed, the bargain purchase and sale of land gains accounted for $7.5 million, net of tax of the $8.6 million increase in sequential quarter comparison.

Net interest income for the second quarter of 2020 was $39.2 million as compared to $34.1 million for the first quarter of 2020, an increase of $5.1 million. FTE net interest income increased $5.2 million to $39.8 million from $34.5 million in sequential-quarter comparison. Second quarter 2020 FTE net interest margin of 3.63% included 21 basis points related to purchase accounting adjustments compared to 3.93% for the first quarter in 2020, which included 28 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 23 basis points in sequential quarter comparison.

Investment securities totaled $953.3 million, or 18.7% of total assets at June 30, 2020, versus $788.9 million, or 19.4% of total assets at March 31, 2020. The average balance of investment securities increased $121.7 million in sequential-quarter comparison, primarily as a result of the acquisition of SGB. The average tax equivalent yield on investment securities decreased 39 basis points to 2.55% from 2.94% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $32.9 million at June 30, 2020 as compared to a net unrealized gain of $21.4 million at March 31, 2020.

The FTE average yield on all earning assets decreased in sequential-quarter comparison from 4.78% to 4.23%. Average interest expense decreased 25 basis points from 0.92% for the first quarter of 2020 to 0.67% for the second quarter of 2020. Cost of all deposits averaged 52 basis points for the second quarter of 2020 compared to 76 basis points for the first quarter of 2020.

Excluding the bargain purchase and sale of land gains, non-interest income increased $1.6 million in sequential-quarter comparison resulting from increased mortgage income in the amount of $1.1 million.

Non-interest expense for the second quarter of 2020 was $28.1 million compared to $23.4 million for the first quarter of 2020. Excluding acquisition charges for each quarter, non-interest expense increased $3.1 million of which $2.3 million is attributable to operating expenses association with SGB.

Year-to-Date Earnings Comparison

In year-over-year comparison, net income available to common shareholders increased $5.6 million, or 28.7%, from $19.6 million for the six months ended June 30, 2019 to $25.3 million for the same period ended June 30, 2020. Excluding the bargain purchase and sale of land gains of $7.5 million, net of tax, and the increased provision expense of $5.2 million, net of tax, net income available to common shareholders increased $3.3 million in year-over-year comparison.

Net interest income increased $15.3 million in year-over-year comparison, primarily due to interest income earned on a higher volume of loans and securities.

Non-interest income increased $2.5 million in year-over-year comparison excluding the grants and gains mentioned above. Mortgage income increased $1.7 million and interchange fee income increased $0.7 million in the year-over-year comparison.

Non-interest expense was $51.5 million for the six months ended June 30, 2020 an increase of $8.7 million as compared to the same period ended June 30, 2019. $5.8 million of the increase is related to the operations of FFB and SGB.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.10 per share to be paid on its common stock on August 24, 2020 to shareholders of record as of the close of business on August 10, 2020.

About The First Bancshares, Inc.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi, is the parent company of The First, A National Banking Association ("The First"). Founded in 1996, The First has operations in Mississippi, Louisiana, Alabama, Florida and Georgia. 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 efficiency ratio, pre-tax, pre-provision operating 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 and certain of our other filings with the Securities and Exchange Commission contain statements that constitute "forward looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as "believes," "anticipates," "expects," "may," "will," "assumes," "should," "predicts," "could," "would," "intends," "targets," "estimates," "projects," "plans," "potential," "positioned" and other similar words and expressions of the future or otherwise regarding the outlook for the Company’s future business and financial performance and/or the performance of the banking industry and economy in general. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risk and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: (1) competitive pressures among financial institutions increasing significantly; (2) changes in economic or political conditions, either nationally or locally, particularly in areas in which the Company conducts operations; (3) interest rate risk; (4) changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to COVID-19; (5) risks related to the Company’s recently completed acquisitions, including that the anticipated benefits from the recently completed acquisitions 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; (6) changes in management’s plans for the future; (7) credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values, or competition; (8) changes in accounting principles, policies, or guidelines; (9) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic; (10) the impact of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (11) potential increases in the provision for loan losses resulting from the COVID-19 pandemic; and (12) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. 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. Undue reliance should not be placed on forward-looking statements. 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.

Statements about the potential effects of the COVID-19 pandemic on the Company’s assets, business, liquidity, financial condition, prospects, and results of operations may constitute forward-looking statements and are subject to the risks that the actual effects may differ, possible materially, from what is reflected in these forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the depth, dispersion and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on customers, employees, third parties and the Company.

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS DATA

Quarter
Ended
6/30/20

Quarter
Ended
3/31/20

Quarter
Ended
12/31/19

Quarter
Ended
9/30/19

Quarter
Ended
6/30/19

Total Interest Income

$ 45,799

$ 41,598

$ 40,444

$ 37,241

$ 37,571

Total Interest Expense

6,619

7,533

7,000

6,782

6,799

Net Interest Income

39,180

34,065

33,444

30,459

30,772

FTE net interest income*

39,772

34,526

33,847

30,739

31,040

Provision for loan losses

7,606

7,102

850

974

791

Non-interest income

15,680

6,474

7,574

7,103

6,716

Non-interest expense

28,070

23,439

24,960

20,825

20,891

Earnings before income taxes

19,184

9,998

15,208

15,763

15,806

Income tax expense

2,241

1,687

3,353

3,491

3,823

Net income available to common shareholders

$ 16,943

$ 8,311

$ 11,855

$ 12,272

$ 11,983

PER COMMON SHARE DATA

Basic earnings per share

$ 0.79

$ 0.44

$ 0.65

$ 0.72

$ 0.70

Diluted earnings per share

0.79

0.44

0.64

0.71

0.69

Diluted earnings per share, operating*

0.52

0.47

0.72

0.74

0.70

Quarterly dividends per share

.10

.10

.08

.08

.08

Book value per common share at end of period

29.34

29.49

28.91

27.92

27.22

Tangible book value per common share at period end*

20.40

19.52

18.87

19.39

18.72

Market price at end of period

22.50

19.07

35.52

32.30

30.34

Shares outstanding at period end

21,395,258

18,851,955

18,802,266

17,123,625

17,129,915

Weighted average shares outstanding:

Basic

21,341,913

18,818,115

18,241,244

17,131,080

17,182,049

Diluted

21,437,180

18,942,129

18,398,609

17,267,953

17,311,626

AVERAGE BALANCE SHEET DATA

Total assets

$4,913,620

$3,990,493

$3,767,587

$3,439,202

$3,460,394

Loans and leases

3,156,524

2,602,340

2,512,524

2,343,392

2,337,583

Total deposits

4,069,239

3,186,943

2,963,603

2,765,816

2,862,653

Total common equity

607,127

547,309

518,070

470,024

454,965

Total tangible common equity*

423,966

358,889

346,742

324,619

308,303

SELECTED RATIOS

Annualized return on avg assets (ROA)

1.38%

0.83%

1.26%

1.43%

1.39%

Annualized return on avg assets, operating*

0.91%

0.89%

1.40%

1.49%

1.39%

Annualized pre-tax, pre-provision, operating*

1.75%

1.79%

1.87%

2.03%

1.93%

Annualized return on avg common equity, operating*

7.40%

6.50%

10.16%

10.91%

10.60%

Annualized return on avg tangible common equity, operating*

10.60%

9.91%

15.18%

15.80%

15.64%

Average loans to average deposits

77.57%

81.66%

84.78%

84.73%

81.66%

FTE Net Interest Margin*

3.63%

3.93%

4.06%

4.05%

4.07%

Efficiency Ratio

50.62%

57.17%

60.26%

55.03%

55.33%

Efficiency Ratio, operating*

53.91%

55.36%

55.67%

53.17%

55.09%

*See reconciliation of Non-GAAP financial measures

CREDIT QUALITY

Allowance for loan losses (ALLL) as a % of total loans

0.88%

0.80%

0.53%

0.56%

0.51%

Nonperforming assets to tangible equity + ALLL

9.84%

12.12%

13.13%

13.71%

11.42%

Nonperforming assets to total loans + OREO

1.44%

1.81%

1.86%

2.00%

1.61%

Annualized QTD net charge-offs (recoveries) to total loans

0.04%

0.03%

(0.002%)

0.0041%

(0.01%)

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

BALANCE SHEET

June 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Assets

Cash and cash equivalents

$ 539,125

$ 286,759

$ 168,864

$ 159,990

$ 165,984

Securities available-for-sale

927,205

762,977

765,087

612,002

598,607

Securities held-to-maturity

-

-

-

6,328

6,396

Other investments

26,059

25,911

26,690

22,517

17.819

Total investment securities

953,264

788,888

791,777

640,847

622,822

Loans held for sale

18,632

13,288

10,810

11,104

8,597

Total loans

3,171,535

2,602,288

2,600,358

2,349,986

2,351,998

Allowance for loan losses

(28,064)

(20,804)

(13,908)

(13,043)

(12,091)

Loans, net

3,143,471

2,581,484

2,586,450

2,336,943

2,339,907

Premises and equipment

125,053

108,013

104,980

96,726

97,115

Other Real Estate Owned

5,471

6,974

7,299

9,974

11,205

Goodwill and other intangibles

191,431

187,927

188,865

146,091

145,649

Other assets

108,458

88,468

82,818

80,256

81,305

Total assets

$5,084,905

$4,061,801

$3,941,863

$3,481,931

$3,472,584

Liabilities and Shareholders’ Equity

Non-interest bearing deposits^

$ 486,039

$ 340,606

$ 723,208

$ 642,054

$ 645,838

Interest-bearing deposits

3,730,851

2,937,188

2,353,325

2,119,181

2,185,362

Total deposits

4,216,890

3,277,794

3,076,533

2,761,345

2,831,200

Borrowings

116,005

116,180

214,319

136,250

71,250

Subordinated debentures

80,756

80,717

80,678

80,639

80,600

Other liabilities

43,459

31,184

26,675

25,609

23,253

Total liabilities

4,457,110

3,505,875

3,398,205

3,003,843

3,006,303

Total shareholders’ equity

627,795

555,926

543,658

478,088

466,281

Total liabilities and shareholders’ equity

$5,084,905

$4,061,801

$3,941,863

$3,481,931

$3,472,584

^Reclassified $703,727 to interest-bearing deposits

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS STATEMENT

Three Months Ended

6/30/20

3/31/20

12/30/19

9/30/19

6/30/19

Interest Income:

Loans, including fees

$ 39,184

$ 34,290

$ 33,556

$ 31,279

$ 30,912

Investment securities

5,187

5,304

5,298

4,752

5,017

Accretion of purchase accounting adjustments

1,409

1,715

1,553

1,201

1,552

Other interest income

19

289

37

9

90

Total interest income

45,799

41,598

40,444

37,241

37,571

Interest Expense:

Deposits

5,967

6,034

5,489

5,156

5,377

Borrowings

224

917

771

451

288

Subordinated debentures

1,176

1,203

1,213

1,270

1,188

Accretion of purchase accounting adjustments

(748)

(621)

(473)

(95)

(54)

Total interest expense

6,619

7,533

7,000

6,782

6,799

Net interest income

39,180

34,065

33,444

30,459

30,772

Provision for loan losses

7,606

7,102

850

974

791

Net interest income after provision for loan losses

31,574

26,963

32,594

29,485

29,981

Non-interest Income:

Service charges on deposit accounts

1,597

1,914

2,110

1,979

1,918

Mortgage Income

2,646

1,567

1,720

1,800

1,559

Interchange Fee Income

2,395

1,986

2,075

2,252

2,045

Gain (loss) on securities, net

73

174

(9)

57

36

Financial Assistance Award/Bank Enterprise Award

-

-

714

-

-

Bargain Purchase Gain and Gain on Sale of Land

7,643

-

-

-

-

Other charges and fees

1,326

833

964

1,015

1,158

Total non-interest income

15,680

6,474

7,574

7,103

6,716

Non-interest expense:

Salaries and employee benefits

15,866

13,228

13,092

11,612

11,615

Occupancy expense

3,200

2,918

3,190

2,632

2,532

FDIC/OCC premiums

237

147

147

111

426

Marketing

25

213

248

62

160

Amortization of core deposit intangibles

1,052

938

907

796

796

Other professional services

984

874

951

1,140

980

Acquisition charges

2,295

740

2,300

705

91

Other non-interest expense

4,411

4,381

4,125

3,767

4,291

Total Non-interest expense

28,070

23,439

24,960

20,825

20,891

Earnings before income taxes

19,184

9,998

15,208

15,763

15,806

Income tax expense

2,241

1,687

3,353

3,491

3,823

Net income available to common shareholders

$ 16,943

$ 8,311

$ 11,855

$ 12,272

$ 11,983

Diluted earnings per common share

$ 0.79

$ 0.44

$ 0.64

$ 0.71

$ 0.69

Diluted earnings per common share, operating*

$ 0.52

$ 0.47

$ 0.72

$ 0.74

$ 0.70

*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

2020

2019

Interest Income:

Loans, including fees

$ 73,474

$ 58,482

Investment securities

10,491

9,356

Accretion of purchase accounting adjustments

3,124

2,787

Other interest income

308

220

Total interest income

87,397

70,845

Interest Expense:

Deposits

12,001

9,652

Borrowings

1,141

834

Subordinated debentures

2,379

2,421

Amortization of purchase accounting adjustments

(1,369)

34

Total interest expense

14,152

12,941

Net interest income

73,245

57,904

Provision for loan losses

14,708

1,913

Net interest income after provision for loan losses

58,537

55,991

Non-interest Income:

Service charges on deposit accounts

3,511

3,750

Mortgage Income

4,213

2,469

Interchange Fee Income

4,381

3,697

Gain (loss) on securities, net

247

74

Financial Assistance Award/Bank Enterprise Award

-

233

Bargain Purchase Gain and Gain on Sale of Land

7,643

-

Other charges and fees

2,161

2,047

Total non-interest income

22,154

12,270

Non-interest expense:

Salaries and employee benefits

29,094

22,312

Occupancy expense

6,118

4,974

FDIC/OCC premiums

384

374

Marketing

239

335

Amortization of core deposit intangibles

1,990

1,513

Other professional services

1,858

1,900

Acquisition charges

3,035

3,270

Other non-interest expense

8,790

8,108

Total Non-interest expense

51,508

42,786

Earnings before income taxes

29,183

25,475

Income tax expense

3,929

5,857

Net income available to common shareholders

$ 25,254

$ 19,618

Diluted earnings per common share

$ 1.25

$ 1.19

Diluted earnings per common share, operating*

$ 1.00

$ 1.33

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

COMPOSITION OF LOANS

June 30,
2020

Percent
of Total

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Percent
of Total

Commercial, financial and agricultural

$ 629,497

19.7%

$ 327,979

$ 332,600

$ 338,584

$ 342,535

14.5%

Real estate – construction

337,337

10.6%

334,707

359,195

284,103

352,826

14.9%

Real estate – commercial

1,163,897

36.5%

1,048,854

1,028,012

943,218

881,831

37.4%

Real estate – residential

978,372

30.7%

828,378

814,282

724,860

713,350

30.2%

Lease Financing Receivable

2,811

0.1%

3,526

3,095

3,239

3,616

0.2%

Obligations of States & subdivisions

17,010

0.5%

18,218

20,716

16,545

17,192

0.7%

Consumer

42,611

1.3%

40,626

42,458

39,437

40,648

1.7%

Loans held for sale

18,632

0.6%

13,288

10,810

11,104

8,597

0.4%

Total loans

$3,190,167

100%

$2,615,576

$2,611,168

$2,361,090

$2,360,595

100%

COMPOSITION OF DEPOSITS

June 30,
2020

Percent
of Total

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Percent
of Total

Noninterest bearing^

$486,039

11.5%

$340,606

$723,208

$642,054

$645,838

22.8%

NOW and other^

601,195

14.3%

478,526

941,598

926,704

999,881

35.3%

Money Market/Savings^

2,451,991

58.1%

1,826,973

750,010

651,539

645,611

22.8%

Time Deposits of less than $250,000

499,406

11.8%

462,808

479,386

401,549

408,164

14.4%

Time Deposits of $250,000 or more

178,259

4.3%

168,881

182,331

139,489

131,706

4.7%

Total Deposits

$4,216,890

100%

$3,277,794

$3,076,533

$2,761,345

$2,831,200

100%

Deposits Without Reclassification^

June 30,
2020

Percent
of Total

Mar 31,
2020

Noninterest bearing

$1,189,766

28.2%

$749,939

Now and other

1,347,324

32.0%

1,122,027

Money Market/Savings

1,002,135

23.8%

774,139

Time Deposits of less than $250,000

499,406

11.8%

462,808

Time Deposits of $250,000 or more

178,259

4.2%

168,881

Total Deposits

$4,216,890

100%

$3,277,794

ASSET QUALITY DATA

June 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Nonaccrual loans

$ 39,201

$ 37,751

$ 38,393

$ 35,175

$ 25,608

Loans past due 90 days and over

1,009

2,393

2,715

2,116

989

Total nonperforming loans

40,210

40,144

41,108

37,291

26,597

Other real estate owned

5,471

6,974

7,299

9,974

11,205

Nonaccrual securities

-

-

-

52

208

Total nonperforming assets

$ 45,681

$47,118

$48,407

$47,317

$ 38,010

Nonperforming assets to total assets

0.90%

1.16%

1.23%

1.36%

1.09%

Nonperforming assets to total loans + OREO

1.44%

1.81%

1.86%

2.00%

1.61%

ALLL to nonperforming loans

69.79%

51.82%

33.83%

34.98%

45.46%

ALLL to total loans

0.88%

0.80%

0.53%

0.56%

0.51%

Qtr-to-date net charge-offs (recoveries)

$ 346

$ 205

$ (15)

$ 23

$ (65)

Annualized QTD net chg-offs (recs) to loans

0.04%

0.03%

(0.002%)

0.004%

(0.01%)

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, 2020

March 31, 2020

December 31, 2019

September 30, 2019

June 30, 2019

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

$ 605,626

$ 3,439

2.27%

$ 560,613

$ 3,944

2.81%

$ 556,004

$ 4,108

2.96%

$ 494,184

$ 3,926

3.18%

$ 497,988

$ 4,227

3.40%

Tax-exempt securities

300,922

2,340

3.11%

224,212

1,821

3.25%

188,709

1,593

3.38%

127,750

1,108

3.47%

124,367

1,058

3.40%

Total investment

securities

906,548

5,779

2.55%

784,825

5,765

2.94%

744,713

5,701

3.06%

621,934

5,034

3.24%

622,355

5,285

3.40%

in other banks

321,559

19

0.02%

129,978

289

0.89%

80,612

37

0.18%

71,165

7

0.04%

89,936

90

0.40%

Loans

3,156,524

40,593

5.14%

2,602,340

36,005

5.53%

2,512,524

35,109

5.59%

2,343,392

32,480

5.54%

2,337,583

32,464

5.56%

Total Interest

earning assets

4,384,631

46,391

4.23%

3,517,143

42,059

4.78%

3,337,849

40,847

4.90%

3,036,491

37,521

4.94%

3,049,874

37,839

4.96%

Other assets

528,989

473,350

429,738

402,711

410,520

Total assets

$ 4,913,620

$ 3,990,493

$ 3,767,587

$ 3,439,202

$ 3,460,394

Interest-bearing

liabilities:

Deposits

$ 3,746,535

$ 5,219

0.56%

$ 3,042,529

$ 5,413

0.71%

$ 2,263,299

$ 5,016

0.89%

$ 2,140,419

$ 5,061

0.95%

$ 2,231,462

$ 5,323

0.95%

Borrowed Funds

116,270

224

0.77%

145,267

917

2.53%

174,475

771

1.77%

95,241

451

1.89%

37,760

288

3.05%

Subordinated

debentures

80,736

1,176

5.83%

80,697

1,203

5.96%

80,658

1,213

6.02%

80,619

1,270

6.30%

80,579

1,188

5.90%

Total interest

bearing liabilities

3,943,541

6,619

0.67%

3,268,493

7,533

0.92%

2,518,432

7,000

1.11%

2,316,279

6,782

1.17%

2,349,801

6,799

1.16%

Other liabilities

362,952

174,691

731,085

652,899

655,628

Shareholders' equity

607,127

547,309

518,070

470,024

454,965

Total liabilities and

shareholders'

equity

$ 4,913,620

$ 3,990,493

$ 3,767,587

$ 3,439,202

$ 3,460,394

Net interest

income (FTE)*

$ 39,772

3.56%

$ 34,526

3.86%

$ 33,847

3.78%

$ 30,739

3.77%

$ 31,040

3.81%

Net interest margin (FTE)*

3.63%

3.93%

4.06%

4.05%

4.07%

Core net interest

margin*

3.42%

3.65%

3.80%

3.86%

3.84%

*See reconciliation for Non-GAAP financial measures

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,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Book value per common share

$ 29.34

$ 29.49

$ 28.91

$ 27.92

$ 27.22

Effect of intangible assets per share

8.94

9.97

10.04

8.53

8.50

Tangible book value per common share

$ 20.40

$ 19.52

$ 18.87

$ 19.39

$ 18.72

Diluted earnings per share

$ 0.79

$ 0.44

$ 0.64

$ 0.71

$ 0.69

Effect of acquisition charges

0.11

0.04

0.14

0.04

0.01

Tax on acquisition charges

(0.03)

(0.01)

(0.03)

(0.01)

-

Effect of bargain purchase gain and gain on sale of land

(0.36)

-

-

-

-

Tax on gain on sale of land

0.01

-

-

-

-

Effect of Treasury awards

-

-

(0.04)

-

-

Tax on Treasury awards

-

-

0.01

-

-

Diluted earnings per share, operating

$ 0.52

$ 0.47

$ 0.72

$ 0.74

$ 0.70

Year to Date

2020

2019

Diluted earnings per share

$ 1.25

$ 1.19

Effect of acquisition charges

0.15

0.19

Tax on acquisition charges

(0.03)

(0.04)

Effect of bargain purchase gain and gain on sale of land

(0.38)

-

Tax on gain on sale of land

.01

-

Effect of Treasury awards

-

(0.01)

Tax on Treasury awards

-

-

Diluted earnings per share, operating

$ 1.00

$ 1.33

Year to Date

2020

2019

Net income available to common shareholders

$ 25,254

$ 19,618

Acquisition charges

3,035

3,270

Tax on acquisition charges

(683)

(735)

Bargain purchase gain and gain on sale of land

(7,643)

-

Tax on gain on sale of land

157

-

Treasury awards

-

(233)

Tax on Treasury awards

-

59

Net earnings available to common shareholders, operating

$ 20,120

$ 21,979

Three Months Ended

Average Balance Sheet Data

June 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Total average assets

A

$4,913,620

$3,990,493

$3,767,587

$3,439,202

$3,460,394

Total average earning assets

B

4,384,631

$3,517,143

$3,337,849

$3,036,492

$3,049,874

`

Common Equity

C

$ 607,127

$ 547,309

$ 518,070

$ 470,024

$ 454,965

Less intangible assets

183,161

188,420

171,328

145,405

146,662

Tangible common equity

D

$ 423,966

$ 358,889

$ 346,742

$ 324,619

$ 308,303

Three Months Ended

Net Interest Income Fully Tax Equivalent

June 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Net interest income

E

$ 39,180

$ 34,065

$ 33,444

$ 30,459

$ 30,772

Tax-exempt investment income

(1,748)

(1,360)

(1,190)

(828)

(790)

Taxable investment income

2,340

1,821

1,593

1,108

1,058

Net Interest Income Fully Tax Equivalent

F

$ 39,772

$ 34,526

$ 33,847

$ 30,739

$ 31,040

Annualized Net Interest Margin

E/B

3.57%

3.87%

4.01%

4.01%

4.04%

Annualized Net Interest Margin, Fully Tax Equivalent

F/B

3.63%

3.93%

4.06%

4.05%

4.07%

Three Months Ended

Core Net Interest Margin

June 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Net interest income (FTE)

$ 39,772

$ 34,526

$ 33,847

$ 30,739

$ 31,040

Less purchase accounting adjustments

2,157

2,336

2,026

1,296

1,607

Net interest income, net of purchase accounting adj

G

$ 37,615

$ 32,190

$ 31,821

$ 29,443

$ 29,433

Total average earning assets

$4,384,631

$3,517,143

$3,337,849

$3,036,492

$3,049,874

Add average balance of loan valuation discount

10,651

12,237

12,252

13,679

15.265

Avg earning assets, excluding loan valuation discount

H

$4,395,282

$3,529,380

$3,350,101

$3,050,171

$3,065,139

Core net interest margin

G/H

3.42%

3.65%

3.80%

3.86%

3.84%

Three Months Ended

Efficiency Ratio

June 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Operating Expense

Total non-interest expense

$ 28,070

$ 23,439

$ 24,960

$ 20,825

$ 20,891

Pre-tax non-operating expenses

(2,295)

(740)

(2,300)

(705)

(91)

Adjusted Operating Expense

I

$ 25,775

$ 22,699

$ 22,660

$ 20,120

$ 20,800

Operating Revenue

Net interest income, FTE

$ 39,772

$ 34,526

$ 33,847

$ 30,739

$ 31,040

Total non-interest income

15,680

6,474

7,574

7,103

6,716

Pre-tax non-operating items

(7,643)

-

(714)

-

-

Adjusted Operating Revenue

J

$ 47,809

$ 41,000

$ 40,707

$ 37,842

$ 37,756

Efficiency Ratio, operating

I/J

53.91%

55.36%

55.67%

53.17%

55.09%

Three Months Ended

Return Ratios

June 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

June 30,
2019

Net income available to common shareholders

K

$ 16,943

$ 8,311

$ 11,855

$ 12,272

$ 11,983

Acquisition charges

2,295

740

2,300

705

91

Tax on acquisition charges

(518)

(164)

(461)

(152)

(23)

Bargain purchase gain and gain on sale of land

(7,643)

-

-

-

-

Tax on gain on sale of land

157

-

-

-

-

Treasury awards

-

-

(714)

-

-

Tax on Treasury awards

-

-

181

-

-

Net earnings available to common shareholders, operating

L

$ 11,234

$ 8,887

$ 13,161

$ 12,825

$ 12,051

Pre-Tax Pre-Provision Operating Earnings

Earnings before income taxes

L

$ 19,184

$ 9,998

$ 15,208

$ 15,763

$ 15,806

Acquisition charges

2,295

740

2,300

705

91

Provision for loan losses

7,606

7,102

850

974

791

Treasury Awards and Gains

(7,643)

-

(714)

-

-

Pre-Tax, Pre-Provision Operating Earnings

M

$ 21,442

$ 17,840

$ 17,644

$ 17,442

$ 16,688

Annualized return on avg assets

K/A

1.38%

0.83%

1.26%

1.43%

1.39%

Annualized return on avg assets, oper

L/A

0.91%

0.89%

1.40%

1.49%

1.39%

Annualized pre-tax, pre-provision, oper

M/A

1.75%

1.79%

1.87%

2.03%

1.93%

Annualized return on avg common equity, oper

L/C

7.40%

6.50%

10.16%

10.91%

10.60%

Annualized return on avg tangible common equity, operating

L/D

10.60%

9.91%

15.18%

15.80%

15.63%

Mortgage Department

Net Interest Income after provision for loan losses

$ 127

$ 119

$ 59

$ 200

$ 194

Loan fee income

2,646

1,567

1,720

1,800

1,559

Salaries and employee benefits

1,246

1,077

975

986

941

Other non-interest expense

99

152

164

134

140

Earnings before income taxes

$ 1,428

$ 457

$ 640

$ 880

$ 672

View source version on businesswire.com: https://www.businesswire.com/news/home/20200727005814/en/

Contacts

M. Ray "Hoppy" Cole
Chief Executive Officer
Dee Dee Lowery
Chief Financial Officer
(601) 268-8998