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First Bancshares, Inc. Reports Results for Second Quarter ended June 30, 2021; Increases Quarterly Dividend 7%

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HATTIESBURG, Miss., July 27, 2021--(BUSINESS WIRE)--The First Bancshares, Inc. ("FBMS" or "the Company") (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) reported today net income available to common shareholders for the quarter ended June 30, 2021.

Highlights for the Quarter:

  • Loans, excluding Paycheck Protection Program ("PPP") loans, increased $45.5 million, 1.6% as compared to the quarter ended March 31, 2021, or 6.4% on an annualized basis.

  • Net income available to common shareholders totaled $15.6 million for the quarter ended June 30, 2021, representing a decrease of $1.0 million, or 6.3%, compared to $16.6 million for the quarter ended March 31, 2021. A reduction in PPP fees of $1.6 million attributed to the decrease in net income in the sequential quarter comparison.

  • Net income available to common shareholders operating for the quarter ended June 30, 2021 totaled $15.6 million which represents an increase of $4.4 million, or 38.9% as compared to $11.2 million for the second quarter of 2020.

  • In year-over-year comparison, net income available to common shareholders increased $7.0 million, or 27.7%, from $25.3 million for the six months ended June 30, 2020 to $32.2 million for the same period ended June 30, 2021.

  • In year-over-year comparison, net income available to common shareholders operating increased $12.1 million, or 60.3%, from $20.1 million for the six months ended June 30, 2020 to $32.2 million for the same period ended June 30, 2021.

  • Total cost of deposits decreased 19% from 0.37% at quarter end March 31, 2021 to 0.30% at quarter end June 30, 2021.

  • Total nonperforming assets decreased $8.7 million representing a 19% decrease as compared to second quarter 2020.

  • Provision for credit losses totaled $0 for the quarter as compared to $0 for the sequential quarter comparison and $7.6 million for the second quarter of 2020.

  • As of June 30, 2021, total COVID related modifications were $34.9 million, representing 1.2% of the loan portfolio and down from a peak of $676 million or 21% of the loan portfolio in 2020. For additional details related to the effects of COVID-19, see the investor presentation 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 2021, the Company adopted the Current Expected Credit Losses ("CECL") methodology for estimating credit losses, effective January 1, 2021.

M. Ray "Hoppy" Cole, President and Chief Executive Officer, commented, "We are pleased with our results for the second quarter. Our earnings remain strong and our team was thrilled to record $45 million in organic loan growth for the quarter. I am encouraged by our efforts to defend our loan to deposit spreads however, our net interest margin continues to be negatively impacted by substantial excess liquidity in this challenging interest rate environment."

Quarterly Earnings

Net income available to common shareholders totaled $15.6 million for the quarter ended June 30, 2021, a decrease of $1.0 million, or 6.3%, compared to $16.6 million for the quarter ended March 31, 2021. The Company recognized $1.6 million less in PPP loan fee income during the second quarter 2021 as compared to the first quarter 2021 along with a decrease of $0.8 million in mortgage income.

Net income available to common shareholders totaled $15.6 million for the quarter ended June 30, 2021, a decrease of $1.3 million, or 7.9%, compared to $16.9 million for the quarter ended June 30, 2020. A reduction in purchase accounting accretion of $1.1 million partially attributed to the decrease in net income as compared to the second quarter of 2020.

Provision for credit losses totaled $0 for the quarter ended June 30, 2021 and quarter ended March 31, 2021, a decrease of $7.6 million, or $5.9 million net of tax, as compared to the second quarter of 2020.

Earnings Per Share

For the second quarter of 2021, fully diluted earnings per share were $0.74, compared to $0.79 for the first quarter of 2021 and the second quarter of 2020. The decrease in sequential quarter comparison is due to the decrease in net income available to common shareholders of $1.0 million.

Diluted earnings per share operating increased $0.22 from $0.52 for second quarter of 2020 to $0.74 for second quarter of 2021 due to the increase in operating net earnings of $4.4 million for the same period.

Fully diluted earnings per share include the purchase by the Company of 165,623 shares during the first quarter of 2021 and 289,302 shares during the fourth quarter of 2020.

Balance Sheet

Consolidated assets increased $66.9 million to $5.510 billion at June 30, 2021 from $5.443 billion at March 31, 2021. PPP loans at June 30, 2021 were $157.8 million, down $63.9 million from March 31, 2021, due to loan forgiveness under the PPP program.

Total average loans were $3.043 billion for the quarter ended June 30, 2021, as compared to $3.097 billion for the quarter ended March 31, 2021, and $3.157 billion for the quarter ended June 30, 2020, representing a decrease of $54.4 million, or 1.8%, for the sequential quarter comparison, and a decrease of $113.7 million, or 3.6%, for the prior year quarterly comparison. PPP loans averaged $180.3 million for the quarter ended June 30, 2021, $235.4 million for the quarter ended March 31, 2021, and $245.8 million for the quarter ended June 30, 2020.

Excluding the PPP loans, loans increased $45.5 million, or 1.6% as compared to the quarter ended March 31, 2021.

The $54.4 million decrease in average loans, for the sequential quarter comparison was largely related to the $55.1 million decrease in PPP loans over the same period.

Total average deposits were $4.629 billion for the quarter ended June 30, 2021, as compared to $4.410 billion for the quarter ended March 31, 2021, and $4.069 billion for the quarter ended June 30, 2020, representing an increase of $218.9 million, or 5.0%, for the sequential quarter comparison, and an increase of $559.9 million, or 13.8%, for the prior year quarterly comparison.

Average deposits increased $218.9 million, or 5.0% for the sequential quarter comparison of which $30.5 million is related to the seasonality of our public fund portfolio.

Average deposits increased $559.9 million, or 13.8% as compared to the quarter ended June 30, 2020 of which $119.9 is related to the seasonality of our public fund portfolio.

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 June 30, 2021, $711.7 million in noninterest deposit balances and $837.9 million in NOW deposit accounts were reclassified as money market accounts.

Asset Quality

Nonperforming assets totaled $37.0 million at June 30, 2021, an increase of $0.2 million compared to $36.8 million at March 31, 2021 and a decrease of $8.7 million compared to $45.7 million at June 30, 2020. Nonaccrual loans decreased $2.4 million as compared to March 31, 2021 and decreased $11.6 million as compared to June 30, 2020.

The ratio of the allowance for credit losses (ACL) to total loans was 1.07% at June 30, 2021 and March 31, 2021. The ratio of allowance for loan losses to total loans under the incurred loss model was 0.88% at June 30, 2020. The ratio of annualized net charge-offs (recoveries) to total loans was 0.03% for the quarter ended June 30, 2021 compared to 0.47% for the quarter ended March 31, 2021 and 0.04% for the quarter ended June 30, 2020.

Effective January 1, 2021, the Company adopted the CECL methodology for estimating credit losses. This adoption resulted in a net $0.4 million increase to the ACL and an unfunded commitment reserve of $0.7 million.

Second Quarter 2021 vs. Second Quarter 2020 Earnings Comparison

Net income available to common shareholders for the second quarter of 2021 totaled $15.6 million compared to $16.9 million for the second quarter of 2020, a decrease of $1.3 million or 7.9%. A reduction in purchase accounting accretion of $1.1 million partially attributed to the decrease in net income as compared to the second quarter of 2020.

Net interest income for the second quarter of 2021 was $38.1 million, a decrease of $1.1 million when compared to the second quarter of 2020. The decrease was due to interest income earned on a lower volume of loans and an overall reduction in the net interest margin. Fully tax equivalent ("FTE") net interest income (non-GAAP) totaled $38.7 million and $39.8 million for the second quarter of 2021 and 2020, respectively. FTE net interest income (non-GAAP) decreased $1.1 million in the prior year quarterly comparison mainly due to decreased loan volume. Purchase accounting adjustments decreased $1.1 million for the second quarter comparisons. Second quarter of 2021 FTE net interest margin (non-GAAP) was 3.14% which included 9 basis points related to purchase accounting adjustments compared to 3.63% for the same quarter in 2020, which included 21 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 37 basis points in prior year quarterly comparison.

Non-interest income decreased $6.9 million for the second quarter of 2021 as compared to the second quarter of 2020. This decrease is attributed to the $7.6 million bargain purchase gain and gain on sale of land recorded in the second quarter 2020.

Second quarter 2021 non-interest expense was $27.5 million, a decrease of $0.6 million, or 2.2% as compared to the second quarter of 2020. Excluding the net decrease in acquisition charges of $2.3 million for the quarterly comparison, non-interest expense increased $1.7 million in the second quarter of 2021, as compared to second quarter of 2020.

Investment securities totaled $1.303 billion, or 23.6% of total assets at June 30, 2021, versus $953.3 million, or 18.7% of total assets at June 30, 2020. The average balance of investment securities increased $313.7 million in the prior year quarterly comparison. The average tax equivalent yield on investment securities (non-GAAP) decreased 40 basis points to 2.15% from 2.55% in the prior year quarterly comparison. The investment portfolio had a net unrealized gain of $25.6 million at June 30, 2021 as compared to a net unrealized gain of $32.9 million at June 30, 2020.

The FTE average yield on all earning assets (non-GAAP) decreased 67 basis points in prior year quarterly comparison, from 4.23% for the second quarter of 2020 to 3.56% for the second quarter of 2021. Interest expense on average interest bearing liabilities decreased 21 basis points from 0.67% for the second quarter of 2020 to 0.46% for the second quarter of 2021. Cost of all deposits averaged 28 basis points for the second quarter of 2021 compared to 52 basis points for the second quarter of 2020.

Second Quarter 2021 vs First Quarter 2021 Earnings Comparison

Net income available to common shareholders for the second quarter of 2021 decreased $1.0 million to $15.6 million compared to $16.6 million for the first quarter of 2021.

Net interest income for the second quarter of 2021 was $38.1 million as compared to $39.2 million for the first quarter of 2021, a decrease of $1.2 million which is attributed to a decrease in PPP loan fee income of $1.6 million. FTE net interest income (non-GAAP) decreased $1.2 million to $38.7 million from $39.9 million in sequential-quarter comparison. Second quarter 2021 FTE net interest margin (non-GAAP) of 3.14% included 9 basis points related to purchase accounting adjustments compared to 3.34% for the first quarter in 2021, which also included 9 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 19 basis point in sequential quarter comparison.

Investment securities totaled $1.303 billion, or 23.6% of total assets at June 30, 2021, versus $1.157 billion, or 21.3% of total assets at March 31, 2021. The average balance of investment securities increased $153.3 million in sequential-quarter comparison. The average tax equivalent yield on investment securities (non-GAAP) decreased 17 basis points to 2.15% from 2.32% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $25.6 million at June 30, 2021 as compared to a net unrealized gain of $21.7 million at March 31, 2021.

The FTE average yield on all earning assets (non-GAAP) decreased in sequential-quarter comparison from 3.84% to 3.56%. Interest expense on average interest bearing liabilities decreased 8 basis points from 0.54% for the first quarter of 2021 to 0.46% for the second quarter of 2021. Cost of all deposits averaged 28 basis points for the second quarter of 2021 compared to 36 basis points for the first quarter of 2021.

Non-interest income decreased $0.7 million in sequential-quarter comparison resulting from decreased mortgage income in the amount of $0.8 million.

Non-interest expense for the second quarter of 2021 was $27.5 million compared to $27.3 million for the first quarter of 2021, an increase of $0.2 million, which is attributed to the write-down on other real estate of $0.3 million.

Year-to-Date Earnings Comparison

In the year-over-year comparison, net income available to common shareholders increased $7.0 million, or 27.7%, from $25.3 million for the six months ended June 30, 2020 to $32.2 million for the same period ended June 30, 2021. Excluding the bargain purchase and sale of land gains of $7.5 million, net of tax, and the decreased provision expense of $11.3 million, net of tax, net income available to common shareholders increased $3.1 million in the year-over-year comparison.

Net interest income increased $4.0 million in the year-over-year comparison, primarily due to interest income earned on a higher volume of loans and securities.

Non-interest income increased $3.8 million in the year-over-year comparison excluding the gains mentioned above. Mortgage income increased $1.3 million and interchange fee income increased $1.4 million in the year-over-year comparison.

Non-interest expense was $54.7 million for the six months ended June 30, 2021 an increase of $3.2 million as compared to the same period ended June 30, 2020. An increase of $3.0 million in salaries and employee benefits contributed to the increase.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.15 per share to be paid on its common stock on August 25, 2021 to shareholders of record as of the close of business on August 10, 2021.

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 efficiency ratio, pre-tax, pre-provision operating earnings, diluted operating earnings per common share, fully tax equivalent net interest income, fully tax equivalent net interest margin, core net interest margin, average tax equivalent yield on investment securities, fully tax equivalent average yield on all earning assets, 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, possibly 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)

(Dollars in thousands except per share data)

EARNINGS DATA

Quarter
Ended
6/30/21

Quarter
Ended
3/31/21

Quarter
Ended
12/31/20

Quarter
Ended
9/30/20

Quarter
Ended
6/30/20

Total Interest Income

$ 43,238

$ 45,187

$ 45,613

$ 46,337

$ 45,799

Total Interest Expense

5,188

5,958

6,147

6,365

6,619

Net Interest Income

38,050

39,229

39,466

39,972

39,180

FTE net interest income*

38,696

39,884

40,119

40,608

39,772

Provision for credit losses**

-

-

3,523

6,921

7,606

Non-interest income

8,822

9,472

10,928

8,794

15,680

Non-interest expense

27,452

27,264

27,897

26,935

28,070

Earnings before income taxes

19,420

21,437

18,974

14,910

19,184

Income tax expense

3,820

4,793

3,639

2,993

2,241

Net income available to common shareholders

$ 15,600

$ 16,644

$ 15,335

$ 11,917

$ 16,943

PER COMMON SHARE DATA

Basic earnings per share

$ 0.74

$ 0.79

$ 0.72

$ 0.56

$ 0.79

Diluted earnings per share

0.74

0.79

0.72

0.55

0.79

Diluted earnings per share, operating*

0.74

0.79

0.65

0.56

0.52

Quarterly dividends per share

.14

.13

.12

.10

.10

Book value per common share at end of period

31.40

30.64

30.54

29.82

29.34

Tangible book value per common share at period end*

22.57

21.76

21.65

20.93

20.40

Market price at end of period

37.43

36.61

30.88

20.97

22.50

Shares outstanding at period end

21,020,723

21,018,744

21,115,009

21,408,017

21,395,258

Weighted average shares outstanding:

Basic

21,018,772

21,009,088

21,308,838

21,405,309

21,341,913

Diluted

21,207,660

21,200,558

21,421,367

21,544,040

21,437,180

AVERAGE BALANCE SHEET DATA

Total assets

$5,458,531

$5,337,264

$5,136,136

$5,085,340

$4,913,620

Loans and leases

3,042,785

3,097,145

3,153,543

3,165,653

3,156,524

Total deposits

4,629,176

4,410,288

4,195,492

4,212,410

4,069,239

Total common equity

647,850

644,923

640,828

632,527

607,127

Total tangible common equity*

461,743

457,775

451,011

441,635

423,966

SELECTED RATIOS

Annualized return on avg assets (ROA)

1.14%

1.25%

1.19%

0.94%

1.38%

Annualized return on avg assets, operating*

1.14%

1.25%

1.08%

0.95%

0.91%

Annualized pre-tax, pre-provision, operating*

1.42%

1.61%

1.62%

1.74%

1.75%

Annualized return on avg common equity, operating*

9.63%

10.32%

8.63%

7.65%

7.40%

Annualized return on avg tangible common equity, oper*

13.51%

14.54%

12.27%

10.95%

10.60%

Average loans to average deposits

65.73%

70.23%

75.17%

75.15%

77.57%

FTE Net Interest Margin*

3.14%

3.34%

3.51%

3.58%

3.63%

Efficiency Ratio

57.77%

55.24%

54.65%

54.52%

50.62%

Efficiency Ratio, operating*

57.77%

55.24%

56.54%

54.04%

53.91%

*See reconciliation of Non-GAAP financial measures

CREDIT QUALITY

Allowance for credit losses (ACL) as a % of total loans**

1.07%

1.07%

1.15%

1.09%

0.88%

Nonperforming assets to tangible equity + ACL

7.30%

7.52%

8.57%

9.31%

9.84%

Nonperforming assets to total loans + OREO

1.22%

1.20%

1.35%

1.42%

1.44%

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

0.03%

0.47%

0.25%

0.09%

0.04%

**Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based upon incurred loss methodology

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

BALANCE SHEET

June 30,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Assets

Cash and cash equivalents

$ 762,486

$ 813,257

$ 562,554

$ 603,736

$ 539,125

Securities available-for-sale

1,280,761

1,135,189

1,022,182

957,458

927,205

Other investments

22,225

22,137

27,475

27,461

26,059

Total investment securities

1,302,986

1,157,326

1,049,657

984,919

953,264

Loans held for sale

6,000

15,119

21,432

22,482

18,632

Total loans

3,036,732

3,055,093

3,123,678

3,155,932

3,171,535

Allowance for credit losses

(32,457)

(32,663)

(35,820)

(34,256)

(28,064)

Loans, net

3,004,275

3,022,430

3,087,858

3,121,676

3,143,471

Premises and equipment

120,667

121,934

123,450

124,875

125,053

Other Real Estate Owned

3,529

5,769

5,802

5,202

5,471

Goodwill and other intangibles

185,597

186,648

187,700

190,380

191,431

Other assets

124,193

120,315

114,307

110,889

108,458

Total assets

$5,509,733

$5,442,798

$5,152,760

$5,164,159

$5,084,905

Liabilities and Shareholders’ Equity

Non-interest bearing deposits^

$ 682,014

$ 632,485

$ 571,079

$ 482,236

$ 486,039

Interest-bearing deposits

3,991,898

3,987,812

3,644,201

3,746,978

3,730,851

Total deposits

4,673,912

4,620,297

4,215,280

4,229,214

4,216,890

Borrowings

-

4,466

114,647

115,827

116,005

Subordinated debentures

144,611

144,572

144,592

144,709

80,756

Other liabilities

31,158

29,514

33,426

36,040

43,459

Total liabilities

4,849,681

4,798,849

4,507,945

4,525,790

4,457,110

Total shareholders’ equity

660,052

643,949

644,815

638,369

627,795

Total liabilities and shareholders’ equity

$5,509,733

$5,442,798

$5,152,760

$5,164,159

$5,084,905

^Reclassified $711,710 to interest-bearing deposits for June 30, 2021

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS STATEMENT

Three Months Ended

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

Interest Income:

Loans, including fees

$ 36,283

$ 38,587

$ 38,472

$ 39,344

$ 39,184

Investment securities

5,925

5,526

5,606

5,309

5,187

Accretion of purchase accounting adjustments

992

1,026

1,494

1,655

1,409

Other interest income

38

48

41

29

19

Total interest income

43,238

45,187

45,613

46,337

45,799

Interest Expense:

Deposits

3,375

3,910

4,262

5,110

5,967

Borrowings

52

288

260

265

224

Subordinated debentures

1,821

1,821

1,823

1,188

1,176

Accretion of purchase accounting adjustments

(60)

(61)

(198)

(198)

(748)

Total interest expense

5,188

5,958

6,147

6,365

6,619

Net interest income

38,050

39,229

39,466

39,972

39,180

Provision for credit losses

-

-

3,523

6,921

7,606

Net interest income after provision for credit losses

38,050

39,229

35,943

33,051

31,574

Non-interest Income:

Service charges on deposit accounts

1,756

1,761

1,925

1,780

1,597

Mortgage Income

...

3,162

3,270

2,961

2,646

Interchange Fee Income

3,145

2,644

2,562

2,491

2,395

Gain (loss) on securities, net

77

20

3

32

73

Financial Assistance Award/Bank Enterprise Award

-

-

968

-

-

Bargain Purchase Gain and Gain on Sale of Land

-

-

812

-

7,643

Other charges and fees

1,472

1,885

1,388

1,530

1,326

Total non-interest income

8,822

9,472

10,928

8,794

15,680

Non-interest expense:

Salaries and employee benefits

16,036

16,054

16,642

15,494

15,866

Occupancy expense

3,813

3,879

3,890

3,826

3,200

FDIC/OCC premiums

499

494

520

447

237

Marketing

39

160

71

24

25

Amortization of core deposit intangibles

1,052

1,052

1,052

1,052

1,052

Other professional services

1,049

934

764

990

984

Acquisition charges

-

-

41

238

2,295

Other non-interest expense

4,964

4,691

4,917

4,864

4,411

Total Non-interest expense

27,452

27,264

27,897

26,935

28,070

Earnings before income taxes

19,420

21,437

18,974

14,910

19,184

Income tax expense

3,820

4,793

3,639

2,993

2,241

Net income available to common shareholders

$ 15,600

$ 16,644

$ 15,335

$ 11,917

$ 16,943

Diluted earnings per common share

$ 0.74

$ 0.79

$ 0.72

$ 0.55

$ 0.79

Diluted earnings per common share, operating*

$ 0.74

$ 0.79

$ 0.65

$ 0.56

$ 0.52

*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

2021

2020

Interest Income:

Loans, including fees

$ 74,870

$ 73,474

Investment securities

11,451

10,491

Accretion of purchase accounting adjustments

2,018

3,124

Other interest income

86

308

Total interest income

88,425

87,397

Interest Expense:

Deposits

7,285

12,001

Borrowings

340

1,141

Subordinated debentures

3,642

2,379

Amortization of purchase accounting adjustments

(121)

(1,369)

Total interest expense

11,146

14,152

Net interest income

77,279

73,245

Provision for credit losses

-

14,708

Net interest income after provision for credit losses

77,279

58,537

Non-interest Income:

Service charges on deposit accounts

3,516

3,511

Mortgage Income

5,534

4,213

Interchange Fee Income

5,789

4,381

Gain (loss) on securities, net

97

247

Financial Assistance Award/Bank Enterprise Award

-

-

Bargain Purchase Gain and Gain on Sale of Land

-

7,643

Other charges and fees

3,359

2,161

Total non-interest income

18,295

22,154

Non-interest expense:

Salaries and employee benefits

32,091

29,094

Occupancy expense

7,692

6,118

FDIC/OCC premiums

993

384

Marketing

199

239

Amortization of core deposit intangibles

2,104

1,990

Other professional services

1,983

1,858

Acquisition charges

-

3,035

Other non-interest expense

9,655

8,790

Total Non-interest expense

54,717

51,508

Earnings before income taxes

40,857

29,183

Income tax expense

8,613

3,929

Net income available to common shareholders

$ 32,244

$ 25,254

Diluted earnings per common share

$ 1.52

$ 1.25

Diluted earnings per common share, operating*

$ 1.52

$ 1.00

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(Dollars in thousands)

COMPOSITION OF LOANS

June 30,
2021

Percent
of Total

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Percent
of Total

Commercial, financial and agricultural

$ 485,134

16.0%

$ 532,122

$ 561,342

$ 576,812

$ 629,497

19.7%

Real estate – construction

341,864

11.2%

304,457

301,283

330,070

337,337

10.6%

Real estate – commercial

1,215,103

39.9%

1,217,505

1,214,602

1,191,514

1,163,897

36.5%

Real estate – residential

935,827

30.8%

944,032

987,313

999,381

978,372

30.7%

Lease Financing Receivable

3,291

0.1%

3,382

2,733

2,478

2,811

0.1%

Obligations of States & subdivisions

16,489

0.5%

14,996

15,369

13,345

17,010

0.5%

Consumer

39,024

1.3%

38,599

41,036

42,332

42,611

1.3%

Loans held for sale

6,000

0.2%

15,119

21,432

22,482

18,632

0.6%

Total loans

$3,042,732

100%

$3,070,212

$3,145,110

$3,178,414

$3,190,167

100%

COMPOSITION OF DEPOSITS

June 30,
2021

Percent
of Total

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Percent
of Total

Noninterest bearing^

$ 682,014

14.6%

$632,485

$571,079

$482,236

$486,039

11.5%

NOW and other^

704,034

15.1%

702,766

664,626

658,453

601,195

14.3%

Money Market/Savings^

2,758,957

59.0%

2,734,873

2,398,526

2,456,504

2,451,991

58.2%

Time Deposits of less than $250,000

404,437

8.7%

419,556

439,101

473,265

499,406

11.8%

Time Deposits of $250,000 or more

124,470

2.6%

130,617

141,948

158,756

178,259

4.2%

Total Deposits

$4,673,912

100%

$4,620,297

$4,215,280

$4,229,214

$4,216,890

100%

Deposits Without Reclassification^

June 30,
2021

Percent
of Total

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Percent
of Total

Noninterest bearing

$1,393,724

29.8%

$1,328,236

$1,185,980

$1,195,042

$1,189,766

28.2%

Now and other

1,541,915

33.0%

1,562,119

1,347,778

1,335,798

1,347,324

32.0%

Money Market/Savings

1,209,366

25.9%

1,179,769

1,100,473

1,066,353

1,002,135

23.8%

Time Deposits of less than $250,000

404,437

8.7%

419,556

439,101

473,265

499,406

11.8%

Time Deposits of $250,000 or more

124,470

2.6%

130,617

141,948

158,756

178,259

4.2%

Total Deposits

$4,673,912

100%

$4,620,297

$4,215,280

$4,229,214

$4,216,890

100%

ASSET QUALITY DATA

June 30,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Nonaccrual loans

$ 27,625

$ 29,981

$ 33,774

$ 37,300

$ 39,201

Loans past due 90 days and over

5,834

1,079

2,692

2,396

1,009

Total nonperforming loans

33,459

31,060

36,466

39,696

40,210

Other real estate owned

3,529

5,769

5,802

5,202

5,471

Total nonperforming assets

$ 36,988

$36,829

$42,268

$44,898

$ 45,681

Nonperforming assets to total assets

0.67%

0.68%

0.82%

0.87%

0.90%

Nonperforming assets to total loans + OREO

1.22%

1.20%

1.35%

1.42%

1.44%

ACL to nonperforming loans

97.01%

105.16%

98.23%

86.30%

69.79%

ACL to total loans

1.07%

1.07%

1.15%

1.09%

0.88%

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

$ 207

$ 3,553

$ 1,959

$ 729

$ 346

Annualized QTD net chg-offs (recs) to loans

0.03%

0.47%

0.25%

0.09%

0.04%

^Reclassified $711,710 to interest-bearing deposits for June 30, 2021

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, 2021

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

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

$

853,180

$

4,017

1.88

%

$

699,585

$

3,591

2.05

%

$

659,243

$

3,678

2.23

%

$

616,168

$

3,432

2.23

%

$

605,626

$

3,439

2.27

%

Tax-exempt securities

367,074

2,554

2.78

%

367,322

2,590

2.82

%

361,529

2,581

2.86

%

341,550

2,513

2.94

%

300,922

2,340

3.11

%

Total investment securities

1,220,254

6,571

2.15

%

1,066,907

6,181

2.32

%

1,020,772

6,259

2.45

%

957,718

5,945

2.48

%

906,548

5,779

2.55

%

in other banks

661,069

38

0.02

%

614,283

48

0.03

%

404,069

41

0.04

%

413,786

29

0.03

%

321,559

19

0.02

%

Loans

3,042,785

37,275

4.90

%

3,097,145

39,613

5.12

%

3,153,543

39,966

5.07

%

3,165,653

40,999

5.18

%

3,156,524

40,593

5.14

%

Total Interest earning assets

4,924,108

43,884

3.56

%

4,778,335

45,842

3.84

%

4,578,384

46,266

4.04

%

4,537,157

46,973

4.14

%

4,384,631

46,391

4.23

%

Other assets

534,423

558,929

557,752

548,183

528,989

Total assets

$

5,458,531

$

5,337,264

$

5,136,136

$

5,085,340

$

4,913,620

Interest-bearing liabilities:

Deposits

$

4,374,372

$

3,315

0.30

%

$

4,172,326

$

3,849

0.37

%

$

3,971,379

$

4,064

0.41

%

$

3,960,054

$

4,912

0.50

%

$

3,746,535

$

5,219

0.56

%

Borrowed Funds

3,355

52

6.20

%

100,143

288

1.15

%

115,430

260

0.90

%

115,935

265

0.91

%

116,270

224

0.77

%

Subordinated

debentures

144,591

1,821

5.04

%

144,590

1,821

5.04

%

144,676

1,823

5.04

%

81,470

1,188

5.83

%

80,736

1,176

5.83

%

Total interest bearing liabilities

4,522,318

5,188

0.46

%

4,417,059

5,958

0.54

%

4,213,485

6,147

0.58

%

4,157,459

6,365

0.61

%

3,943,541

6,619

0.67

%

Other liabilities

288,363

275,282

263,823

295,354

362,952

Shareholders' equity

647,850

644,923

640,828

632,527

607,127

Total liabilities and shareholders' equity

$

5,458,531

$

5,337,264

$

5,136,136

$

5,085,340

$

4,913,620

Net interest income (FTE)*

$

38,696

3.11

%

$

39,884

3.30

%

$

40,119

3.46

%

$

40,608

3.53

%

$

39,772

3.56

%

Net interest margin (FTE)*

3.14

%

3.34

%

3.51

%

3.58

%

3.63

%

Core net interest margin*

3.05

%

3.25

%

3.35

%

3.41

%

3.42

%

*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,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Book value per common share

$ 31.40

$ 30.64

$ 30.54

$ 29.82

$ 29.34

Effect of intangible assets per share

8.83

8.88

8.89

8.89

8.94

Tangible book value per common share

$ 22.57

$ 21.76

$ 21.65

$ 20.93

$ 20.40

Diluted earnings per share

$ 0.74

$ 0.79

$ 0.72

$ 0.55

$ 0.79

Effect of acquisition charges

-

-

0.01

0.01

0.11

Tax on acquisition charges

-

-

-

-

(0.03)

Effect of bargain purchase gain and gain on sale of land

-

-

(0.04)

-

(0.36)

Tax on gain on sale of land

-

-

-

-

0.01

Effect of Treasury awards

-

-

(0.05)

-

-

Tax on Treasury awards

0.01

Diluted earnings per share, operating

$ 0.74

$ 0.79

$ 0.65

$ 0.56

$ 0.52

Year to Date

2021

2020

Diluted earnings per share

$ 1.52

$ 1.25

Effect of acquisition charges

-

0.15

Tax on acquisition charges

-

(0.03)

Effect of bargain purchase gain and gain on sale of land

-

(0.38)

Tax on gain on sale of land

-

0.01

Effect of Treasury awards

-

-

Tax on Treasury awards

-

-

Diluted earnings per share, operating

$ 1.52

$ 1.00

Year to Date

2021

2020

Net income available to common shareholders

$ 32,244

$ 25,254

Acquisition charges

-

3,035

Tax on acquisition charges

-

(683)

Bargain purchase gain and gain on sale of land

-

(7,643)

Tax on gain on sale of land

-

157

Treasury awards

-

-

Tax on Treasury awards

-

-

Net earnings available to common shareholders, operating

$ 32,244

$ 20,120

Three Months Ended

Average Balance Sheet Data

June 30,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Total average assets A

$5,458,531

$5,337,264

$5,136,136

$5,085,340

$4,913,620

Total average earning assets B

4,924,108

$4,778,335

$4,578,384

$4,537,157

$4,384,631

`

Common Equity C

$ 647,850

$ 644,923

$ 640,828

$ 632,527

$ 607,127

Less intangible assets

186,107

187,148

189,817

190,892

183,161

Total Tangible common equity D

$ 461,743

$ 457,775

$ 451,011

$ 441,635

$ 423,966

Three Months Ended

Net Interest Income Fully Tax Equivalent

June 30,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Net interest income E

$ 38,050

$ 39,229

$ 39,466

$ 39,972

$ 39,180

Tax-exempt investment income

(1,908)

(1,935)

(1,928)

(1,877)

(1,748)

Taxable investment income

2,554

2,590

2,581

2,513

2,340

Net Interest Income Fully Tax Equivalent F

$ 38,696

$ 39,884

$ 40,119

$ 40,608

$ 39,772

Annualized Net Interest Margin E/B

3.09%

3.28%

3.45%

3.52%

3.57%

Annualized Net Interest Margin, Fully Tax Equivalent F/B

3.14%

3.34%

3.51%

3.58%

3.63%

Total Interest Income, Fully Tax Equivalent

Total Interest Income

$ 43,238

$ 45,187

$ 45,613

$ 46,337

$ 45,799

Tax-exempt investment income

(1,908)

(1,935)

(1,928)

(1,877)

(1,748)

Taxable investment income

2,554

2,590

2,581

2,513

2,340

Total Interest Income, Fully Tax Equivalent G

$ 43,884

$ 45,842

$ 46,266

$ 46,973

$ 46,391

Yield on Average Earning Assets, Fully Tax Equivalent G/B

3.56%

3.84%

4.04%

4.14%

4.23%

Interest Income Investment Securities, Fully Tax Equivalent

Interest Income Investment Securities

$ 5,925

$ 5,526

$ 5,606

$ 5,309

$ 5,187

Tax-exempt investment income

(1,908)

(1,935)

(1,928)

(1,877)

(1,748)

Taxable investment Income

2,554

2,590

2,581

2,513

2,340

Interest Income Investment Securities, Fully Tax Equivalent H

$ 6,571

$ 6,181

$ 6,259

$ 5,945

$ 5,779

Average Investment Securities I

$ 1,220,254

$ 1,066,907

$1,020,772

$ 957,718

$ 906,548

Yield on Investment Securities, Fully Tax Equivalent H/I

2.15%

2.32%

2.45%

2.48%

2.55%

Three Months Ended

Core Net Interest Margin

June 30,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Net interest income (FTE)

$ 38,696

$ 39,884

$ 40,119

$ 40,608

$ 39,772

Less purchase accounting adjustments

1,052

1,026

1,692

1,853

2,157

Net interest income, net of purchase accounting adj J

$ 37,644

$ 38,858

$ 38,427

$ 38,755

$ 37,615

Total average earning assets

$4,924,108

$4,778,335

$4,578,384

$4,537,157

$4,384,631

Add average balance of loan valuation discount

6,373

8,480

9,808

11,501

10,651

Avg earning assets, excluding loan valuation discount K

$4,930,481

$4,786,815

$4,588,192

$4,548,658

$4,395,282

Core net interest margin J/K

3.05%

3.25%

3.35%

3.41%

3.42%

Three Months Ended

Efficiency Ratio

June 30,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Operating Expense

Total non-interest expense

$ 27,452

$ 27,264

$ 27,897

$ 26,935

$ 28,070

Pre-tax non-operating expenses

-

-

(41)

(238)

(2,295)

Adjusted Operating Expense L

$ 27,452

$ 27,264

$ 27,856

$ 26,697

$ 25,775

Operating Revenue

Net interest income, FTE

$ 38,696

$ 39,884

$ 40,119

$ 40,608

$ 39,772

Total non-interest income

8,822

9,472

10,928

8,794

15,680

Pre-tax non-operating items

-

-

(1,780)

-

(7,643)

Adjusted Operating Revenue M

$ 47,518

$ 49,356

$ 49,267

$ 49,402

$ 47,809

Efficiency Ratio, operating L/M

57.77%

55.24%

56.54%

54.04%

53.91%

Three Months Ended

Return Ratios

June 30,
2021

Mar 31,
2021

Dec 31,
2020

Sept 30,
2020

June 30,
2020

Net income available to common shareholders N

$ 15,600

$ 16,644

$ 15,335

$ 11,917

$ 16,943

Acquisition charges

-

-

41

238

2,295

Tax on acquisition charges

-

-

(10)

(61)

(518)

Bargain purchase gain and gain on sale of land

-

-

(812)

-

(7,643)

Tax on gain on sale of land

-

-

-

-

157

Treasury awards

-

-

(968)

-

-

Tax on Treasury awards

-

-

245

-

-

Net earnings available to common shareholders, operating O

$ 15,600

$ 16,644

$ 13,831

$ 12,094

$ 11,234

Pre-Tax Pre-Provision Operating Earnings

Earnings before income taxes P

$ 19,420

$ 21,437

$ 18,974

$ 14,910

$ 19,184

Acquisition charges

-

-

41

238

2,295

Provision for loan losses

-

-

3,523

6,921

7,606

Treasury Awards and Gains

-

-

(1,780)

-

(7,643)

Pre-Tax, Pre-Provision Operating Earnings Q

$ 19,420

$ 21,437

$ 20,758

$ 22,069

$ 21,442

Annualized return on avg assets N/A

1.14%

1.25%

1.19%

0.94%

1.38%

Annualized return on avg assets, oper O/A

1.14%

1.25%

1.08%

0.95%

0.91%

Annualized pre-tax, pre-provision, oper Q/A

1.42%

1.61%

1.62%

1.74%

1.75%

Annualized return on avg common equity, oper O/C

9.63%

10.32%

8.63%

7.65%

7.40%

Annualized return on avg tangible common equity, operating O/D

13.51%

14.54%

12.27%

10.95%

10.60%

Mortgage Department

Net Interest Income after provision for credit losses

$ 113

$ 140

$ 133

$ 142

$ 127

Loan fee income

2,372

3,162

3,270

2,961

2,646

Salaries and employee benefits

(1,165)

(1,512)

(1,329)

(1,444)

(1,246)

Other non-interest expense

(131)

(126)

(105)

(110)

(99)

Earnings before income taxes

$ 1,189

$ 1,664

$ 1,969

$ 1,549

$ 1,428

View source version on businesswire.com: https://www.businesswire.com/news/home/20210726005827/en/

Contacts

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

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