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The First Bancshares, Inc. Reports Quarterly Results and Declares Quarterly Dividend

HATTIESBURG, Miss.--(BUSINESS WIRE)-- The First Bancshares, Inc. (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) reported today a 90.7% increase ($2.2 million) in net income available to common shareholders for the third quarter of 2017 compared to the third quarter of 2016. Net income available to common shareholders totaled $4.7 million for the third quarter of 2017 as compared to $2.5 million for the third quarter of 2016.

Fully diluted earnings per share for the third quarter of 2017 were $0.51 as compared to $0.45 for the third quarter of 2016. Fully diluted earnings per share for the third quarter of 2017 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:

  • Net income available to common shareholders for the third quarter of 2017 compared to the third quarter of 2016 increased $2.2 million, or 90.7% to $4.7 million.
  • Operating net earnings (net income available to common shareholders adjusted for merger related costs) for the third quarter were $4.7 million compared to $4.0 million for the second quarter of 2017, an 18.2% increase.
  • The Company exceeded a 1.00% annualized return on average assets.
  • The Company was awarded a $917,000 Financial Assistance Award from the Community Development Financial Assistance Program which is expected to be received early 2018.
  • Total loans increased $10 million during the quarter.

M. Ray “Hoppy” Cole, President & Chief Executive Officer, commented, “We are proud of our third quarter results, particularly the substantial improvement in profitability. We surpassed our goal of an annualized ROAA of 1% and increased our net income 91% compared to the same quarter in 2016.

“Our improved performance is a result of the integration of our two recent acquisitions and continued growth throughout our markets. Our team has worked extremely hard and we believe their efforts are translating into substantially improved returns for our shareholders.”

Balance Sheet

Total assets decreased $1.6 million to $1.788 billion at September 30, 2017 due to the reduction in deposits related to the seasonality of our public fund portfolio.

Total loans were $1.198 billion at September 30, 2017 as compared to $1.187 billion at June 30, 2017 and $854.4 million at September 30, 2016, representing increases of $10.3 million, or 0.9% and $343.8 million, or 40.2%, respectively. Increased loan volume of $10.3 million for the third quarter was primarily distributed among all real estate categories. The acquisitions of Gulf Coast Community Bank and Iberville Bank accounted for $239.6 million of the total increase in loans as compared to the same quarter in 2016.

Total deposits decreased $42.8 million or 2.8% for the quarter ended September 30, 2017 compared to the same quarter of 2016. $25.4 million of the decrease was related to NOW accounts of which $23.0 million is attributable to the seasonality of the public fund deposits. Non-interest bearing deposits decreased $11.4 million which was related to normal balance fluctuations.

Asset Quality

Nonperforming assets totaled $14.6 million at September 30, 2017, an increase of $1.3 million compared to $13.2 million at June 30, 2017 and an increase of $3.3 million compared to September 30, 2016. The majority of the increase is the result of acquired assets with associated fair value marks. The ratio of the allowance for loan and leases losses (ALLL) to total loans was 0.68% at September 30, 2017 and June 30, 2017. Including valuation accounting adjustments on acquired loans, the total valuation plus ALLL was 1.16% of total loans at September 30, 2017. The ratio of annualized net charge-offs (recoveries) to total loans was (0.005%) for the quarter ended September 30, 2017 compared to (0.003%) for the quarter ended June 30, 2017.

Third Quarter 2017 vs. Third Quarter 2016 Earnings Comparison

Net income available to common shareholders for the third quarter of 2017 totaled $4.7 million compared to $2.5 million for the third quarter of 2016, an increase of $2.2 million or 90.7%.

Revenues from consolidated operations increased $6.0 million in quarterly comparison. Net interest income for the third quarter of 2017 was $14.9 million, an increase of $4.9 million when compared to third quarter 2016. The increase is primarily due to interest income earned on a higher volume of loans. Net interest margin for the third quarter of 2017 was 3.73% as compared to 3.62% for the same quarter in 2016.

Non-interest income increased $0.6 million in quarterly comparison for the third quarter of 2017 as compared to the third quarter of 2016 due to increased service charges and interchange fee income.

Third quarter 2017 non-interest expense increased $2.5 million, or 26.3% as compared to third quarter 2016. The majority of the increase is due to higher compensation expense, occupancy expense and other non-interest expense. Salaries increased $1.7 million of which $1.4 million resulted from increased employment numbers as a result of the acquisitions. $0.6 million in occupancy and other non-interest expense was attributable to the acquisitions.

Fully tax equivalent (“FTE”) net interest income totaled $15.2 million and $10.3 million for the third quarter of 2017 and 2016, respectively. The FTE net interest income increased $4.9 million in the prior year quarterly comparison primarily due to an increase in interest earned on loans. Purchase accounting adjustments accounted for $24,000 of the difference in net interest income for the third quarter comparisons. Third quarter 2017 FTE net interest margin of 3.81% includes 3 basis points related to purchase accounting adjustments.

Investment securities totaled $368.6 million, or 20.6% of total assets at September 30, 2017, versus $251.7 million, or 19.9% of total assets at September 30, 2016. The average volume of investment securities increased $119.9 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities increased 2 basis points to 2.65% from 2.63% in prior year quarterly comparison. The investment portfolio had a net unrealized gain of $2.7 million at September 30, 2017 as compared to $4.5 million at September 30, 2016.

The average yield on all earnings assets increased 12 basis points in prior year quarterly comparison, from 4.13% for the third quarter of 2016 to 4.25% for the third quarter of 2017. This increase was offset partially by an increase in average interest expense of 3 basis points from 0.52% for the third quarter of 2016 to 0.55% for the third quarter of 2017.

Third Quarter 2017 vs Second Quarter 2017 Earnings Comparison

Net income available to common shareholders for the third quarter of 2017 totaled $4.7 million compared to net income available to common shareholders of $2.4 million in sequential quarter comparison. Operating net earnings $0.7 million, or 18.2%, compared to operating net earnings of $4.0 million for the second quarter of 2017.

Net interest income for the third quarter of 2017 was $14.9 million. FTE net interest income increased $0.1 million to $15.2 million from $15.1 million in sequential-quarter comparison. The increase was due primarily to increased loan volume. Interest income from purchase accounting adjustments remained flat in sequential quarter comparison.

The average yield on all earnings assets remained unchanged in sequential-quarter comparison at 4.25%.

Non-interest income decreased $0.1 million in sequential-quarter comparison resulting from slight decreases in service charges and interchange fee income offset by an increase in mortgage income.

Non-interest expense decreased $3.2 million in sequential-quarter comparison, which reflects decreases in salaries and employee benefits, other professional services and other non-interest expense. $2.7 million in merger-related costs were included in other professional services and other non-interest expenses for the second quarter of 2017.

Year to Date Earnings Comparison

In year-over-year comparison, net income available to common shareholders increased $0.6 million, or 8.6%, from $7.6 million at September 30, 2016 to $8.2 million at September 30, 2017 which included one-time merger related charges of $6.3 million. Operating net earnings for the first nine months of 2017 totaled $12.1 million compared to $7.5 million for the same period in 2016, an increase of $4.6 million or 61.6%. Net interest income increased $14.3 million in year-over-year comparison as interest income earned on a higher volume of loans attributed to this overall increase.

Non-interest income increased $2.3 million in year-over-year comparison mainly consisting of increases in mortgage income of $0.2 million, service charges of $0.8 million and interchange fee income of $0.8 million.

Non-interest expense increased $16.3 million in year-over-year comparison primarily resulting from increases in salaries and benefits of $6.9 million, of which $5.4 million relates to the acquisitions, as well as $6.3 million in one-time merger related charges.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend in the amount of $0.0375 per share to be paid on its common stock on November 22, 2017 to shareholders of record as of the close of business on November 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.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. This press release includes operating net earnings, operating earnings per share, total tangible common equity, tangible book value per common share, fully taxable-equivalent net interest income and certain ratios derived from 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, book value, net interest income, or other GAAP measures as a measure of operating performance. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is provided in this press release following the Condensed Consolidated Financial Information (unaudited).

Forward Looking Statements

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

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS DATA

Quarter
Ended
9/30/17

Quarter
Ended
6/30/17

Quarter
Ended
3/31/17

Quarter
Ended
12/31/16

Quarter
Ended
9/30/16

Total Interest Income $ 16,708 $ 16,464 $15,753 $ 11,868 $ 11,269
Total Interest Expense 1,773 1,629 1,585 1,176 1,202
Net Interest Income 14,935 14,835 14,168 10,692 10,067
FTE net interest income* 15,232 15,140 14,470 10,935 10,306
Provision for loan losses 90 248 46 88 143
Non-interest income 3,658 3,757 3,391 2,705 3,099
Non-interest expense 11,888 15,070 16,095 10,132 9,416
Earnings before income taxes 6,615 3,274 1,418 3,177 3,607
Income tax expense 1,901 908 296 870 1,049
Net income 4,714 2,366 1,122 2,307 2,558
Dividends and accretion on preferred stock - - - 195 86
Net income available to common shareholders $ 4,714 $ 2,366 $ 1,122 $ 2,112 $ 2,472
PER COMMON SHARE DATA
Basic earnings per share $ 0.52 $ 0.26 $ 0.12 $ 0.39 $ 0.46
Diluted earnings per share 0.51 0.26 0.12 0.26 0.45
Diluted earnings per share, operating* 0.51 0.44 0.37 0.30 0.48
Quarterly dividends per share .0375 .0375 .0375 .0375 .0375
Book value per common share at end of period 18.24 17.80 17.39 17.19 17.60
Tangible common book value at period end* 15.48 15.00 14.61 15.46 14.73
Market price at end of period 30.15 27.60 28.50 27.50 19.10
Shares outstanding at period end 9,153,407 9,152,657 9,144,412 8,991,397 5,428,017
Weighted average shares outstanding:
Basic 9,152,674 9,145,179 9,123,271 5,463,651 5,425,567
Diluted 9,224,481 9,206,378 9,182,711 8,500,305 5,475,785
AVERAGE BALANCE SHEET DATA
Total assets $1,772,402 $1,751,092 $1,713,438 $1,275,538 $1,233,034
Loans and leases 1,185,493 1,155,699 1,117,135 856,798 836,931
Total deposits 1,512,616 1,527,119 1,460,787 1,037,877 1,044,428
Total common equity 164,455 155,667 157,184 94,750 94,007
Total tangible common equity* 139,013 130,789 134,809 79,112 78,347
Total equity 164,455 155,667 157,184 159,786 111,130
SELECTED RATIOS
Annualized return on avg assets 1.06% .54% .26% .72% .83%
Annualized return on avg assets, operating* 1.07% .92% .79% .75% .85%
Annualized return on avg common equity, operating* 11.54% 10.31% 8.61% 10.11% 11.14%
Annualized return on avg tangible common equity, oper* 13.65% 12.27% 10.04% 12.10% 13.37%
Average loans to average deposits 78.37% 75.68% 76.47% 82.55% 80.13%
FTE Net Interest Margin* 3.81% 3.84% 3.85% 3.77% 3.70%
Efficiency Ratio 62.93% 79.75% 90.11% 74.28% 70.24%
Efficiency Ratio, operating* 62.68% 65.56% 69.97% 71.40% 68.70%
CREDIT QUALITY
Allowance for loan losses (ALLL) as a % of total loans .68% .68% .69% .87% .88%
Nonperforming assets to tangible equity + ALLL 9.71% 9.10% 9.39% 6.74% 10.81%
Nonperforming assets to total loans + ORE 1.21% 1.11% 1.16% 1.14% 1.31%
Annualized QTD net charge-offs (recoveries) to total loans (0.005%) (0.003%) (0.09%) 0.03% (0.04%)

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

BALANCE SHEET

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Assets
Cash and cash equivalents $ 93,317 $ 92,596 $ 148,511 $ 62,119 $ 70,114
Securities available-for-sale 353,035 366,490 352,851 243,206 236,168
Securities held-to-maturity 6,000 6,000 6,000 6,000 6,000
Other investments 9,556 9,544 7,647 6,593 9,516
Total investment securities 368,591 382,034 366,498 255,799 251,684
Loans held for sale 4,588 5,907 5,473 5,880 9,437
Total loans 1,198,193 1,187,936 1,139,987 867,054 854,366
Allowance for loan losses (8,175) (8,070) (7,813) (7,510) (7,481)
Loans, net 1,190,018 1,179,866 1,132,174 859,544 846,885
Premises and equipment 46,203 44,766 45,438 34,624 33,427
Other Real Estate 7,855 8,072 7,579 6,008 4,670
Goodwill and other intangibles 25,325 25,615 25,379 15,507 15,596
Other assets 52,079 50,766 51,769 37,886 34,825
Total assets $1,787,976 $1,789,622 $1,783,204 $1,277,367 $1,266,638
Liabilities and Shareholders’ Equity
Non-interest bearing deposits $ 308,050 $ 319,494 $ 323,442 $ 202,478 $196,786
Interest-bearing deposits 1,199,941 1,231,305 1,245,055 836,713 875,003
Total deposits 1,507,991 1,550,799 1,568,497 1,039,191 1,071,789
Borrowings 94,321 59,367 39,411 69,000 68,000
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Other liabilities 8,374 6,267 5,981 4,339 3,881
Total liabilities 1,620,996 1,626,743 1,624,199 1,122,840 1,153,980
Total shareholders’ equity 166,980 162,879 159,005 154,527 112,658
Total liabilities and shareholders’ equity $1,787,976 $1,789,622 $1,783,204 $1,277,367 $1,266,638
FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS STATEMENT Year to Date
2017 2016
Interest Income:
Loans, including fees $ 41,916 $ 28,011
Investment securities 6,506 4,509
Accretion of purchase accounting adjustments 167 134
Other interest income 337 82
Total interest income 48,926 32,736
Interest Expense:
Deposits 3,998 2,475
Borrowings 980 502
Subordinated debentures 171 162
Accretion of purchase accounting adjustments (162) -
Total interest expense 4,987 3,139
Net interest income 43,939 29,597
Provision for loan losses 384 538
Net interest income after provision for loan losses 43,555 29,059
Non-interest Income:
Service charges on deposit accounts 2,692 1,847
Mortgage Income 3,400 3,228
Interchange Fee Income 2,797 1,991
Gain (loss) on securities, net (19) 129
Gain on sale of premises and equipment - -
BEA award, net - -
Other charges and fees 1,937 1,347
Total non-interest income 10,807 8,542
Non-interest expense:
Salaries and employee benefits 23,070 16,194
Occupancy expense 4,108 3,392
FDIC premiums 887 755
Marketing 218 280
Amortization of core deposit intangibles 491 294
Other professional services 6,179 1,013
Other non-interest expense 8,100 4,802
Total Non-interest expense 43,053 26,730
Earnings before income taxes 11,309 10,871
Income tax expense 3,107 3,060
Net income 8,202 7,811
Dividends and accretion on preferred stock - 257
Net income available to common shareholders $ 8,202 $ 7,554
Non-operating items* 3,937 (43)
Net earnings available to common shareholders, operating* $ 12,139 $ 7,511
Basic earnings per common share $ 0.90 $ 1.39
Diluted earnings per common share $ 0.89 $ 1.38
Diluted earnings per common share, operating* $ 1.32 $ 1.38
*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 Three Months Ended
9/30/17 6/30/17 3/31/17 12/31/16 9/30/16
Interest Income:
Loans, including fees $ 14,357 $ 14,114 $ 13,444 $ 9,922 $ 9,706
Investment securities 2,180 2,197 2,129 1,472 1,446
Accretion of purchase accounting adjustments 55 56 56 429 92
Other interest income 116 97 124 45 25
Total interest income 16,708 16,464 15,753 11,868 11,269
Interest Expense:
Deposits 1,436 1,364 1,198 968 962
Borrowings 357 259 364 148 160
Subordinated debentures 41 67 63 60 80
Accretion of purchase accounting adjustments (61) (61) (40) - -
Total interest expense 1,773 1,629 1,585 1,176 1,202
Net interest income 14,935 14,835 14,168 10,692 10,067
Provision for loan losses 90 248 46 88 143
Net interest income after provision for loan losses 14,845 14,587 14,122 10,604 9,924
Non-interest Income:
Service charges on deposit accounts 902 922 868 605 606
Mortgage Income 1,276 1,208 916 1,204 1,399
Interchange Fee Income 935 959 903 683 666
Gain (loss) on securities, net (10) (1) (8) (3) -
Gain on sale of premises and equipment - - - - -
BEA award, net - - - - -
Other charges and fees 555 669 712 216 428
Total non-interest income 3,658 3,757 3,391 2,705 3,099
Non-interest expense:
Salaries and employee benefits 7,327 7,762 7,981 5,943 5,645
Occupancy expense 1,390 1,348 1,370 1,222 1,209
FDIC premiums 355 331 201 265 254
Marketing 50 99 69 122 76
Amortization of core deposit intangibles 160 182 149 88 100
Other professional services 367 2,802 3,010 793 461
Other non-interest expense 2,239 2,546 3,315 1,699 1,671
Total Non-interest expense 11,888 15,070 16,095 10,132 9,416
Earnings before income taxes 6,615 3,274 1,418 3,177 3,607
Income tax expense 1,901 908 296 870 1,049
Net income 4,714 2,366 1,122 2,307 2,558
Dividends and accretion on preferred stock - - - 195 86
Net income available to common shareholders $ 4,714 $ 2,366 $ 1,122 $ 2,112 $ 2,472
Basic earnings per common share $ 0.52 $ 0.26 $ 0.12 $ 0.39 $ 0.46
Diluted earnings per common share $ 0.51 $ 0.26 $ 0.12 $ 0.26 $ 0.45
Diluted earnings per common share, operating* $ 0.51 $ 0.44 $ 0.37 $ 0.30 $ 0.48

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

COMPOSITION OF LOANS

Sept 30,
2017

Percent
of Total

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Percent
of Total

Commercial, financial and agricultural $ 164,577 13.7% $ 167,799 $ 156,786 $ 129,423 $ 121,963 14.1%
Real estate – construction 171,609 14.3% 169,971 163,249 109,394 104,644 12.1%
Real estate – commercial 456,110 37.9% 448,218 426,151 314,359 307,963 35.7%
Real estate – residential 377,308 31.4% 372,815 360,964 289,640 296,587 34.3%
Lease Financing Receivable 2,008 0.2% 2,189 2,196 2,204 2,211 0.3%
Obligations of States & subdivisions 5,892 0.5% 5,775 5,383 6,698 6,861 0.8%
Consumer 20,689 1.7% 21,169 25,258 15,336 14,137 1.6%
Loans held for sale 4,588 0.4% 5,907 5,473 5,880 9,437 1.1%
Total loans $1,202,781 100% $1,193,843 $1,145,460 $872,934 $863,803 100%
COMPOSITION OF DEPOSITS

Sept 30,
2017

Percent
of Total

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Percent
of Total

Noninterest bearing $308,050 20.4% $319,494 $323,442 $202,478 $196,786 18.4%
NOW and other 639,802 42.5% 665,250 661,300 430,903 465,404 43.3%
Money Market/Savings 292,592 19.4% 296,705 304,292 182,793 187,228 17.5%
Time Deposits of less than $250,000 209,714 13.9% 203,254 212,352 162,797 163,739 15.3%
Time Deposits of $250,000 or more 57,833 3.8% 66,096 67,111 60,220 58,632 5.5%
Total Deposits $1,507,991 100% $1,550,799 $1,568,497 $1,039,191 $1,071,789 100%
ASSET QUALITY DATA

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Nonaccrual loans $ 4,852 $ 3,979 $ 4,955 $3,265 $ 5,798
Loans past due 90 days and over 1,436 760 345 198 420
Total nonperforming loans 6,288 4,739 5,300 3,463 6,218
Other real estate 7,855 8,072 7,579 6,008 4,670
Nonaccrual securities 408 408 408 408 408
Total nonperforming assets $14,551 $13,219 $13,287 $9,879 $11,296
Nonperforming assets to total assets .81% .74% .75% .77% .89%
Nonperforming assets to total loans + ORE 1.21% 1.11% 1.16% 1.14% 1.31%
ALLL to nonperforming loans 130.01% 170.29% 147.42% 216.86% 120.31%
ALLL to total loans .68% .68% .69% .87% .88%
Quarter-to-date net charge-offs (recs) $ (15) $ (9) $ (257) $ 58 $ (79)
Annualized QTD net chg/offs (recs) to loans (0.005%) (0.003%) (0.09%) 0.03% (0.04%)
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
Yield Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months Ended
Analysis September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
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 $ 280,441 $ 1,601 2.28% $ 282,235 $ 1,605 2.27% $ 244,997 $ 1,534 2.50% $ 183,032 $ 997 2.18% $ 177,154 $ 965 2.18%

Tax-exempt securities

93,716 876 3.74% 95,272 897 3.77% 86,991 895 4.12% 77,909 715 3.67% 77,073 704 3.65%

Total investment securities

374,157 2,477 2.65% 377,507 2,502 2.65% 331,988 2,429 2.93% 260,941 1,712 2.62% 254,227 1,669 2.63%
Fed funds sold 36,591 113 1.24% 39,048 95 0.97% 50,700 124 0.98% 41,545 45 0.43% 10,356 25 0.97%

Int bearing deposits in other banks

3,463 3 0.35% 5,214 2 0.15% 5,000 2 0.16% 2,107 3 0.57% 11,961 16 0.54%
Loans 1,185,493 14,412 4.86% 1,155,699 14,170 4.90% 1,117,110 13,500 4.83% 856,798 10,351 4.83% 836,931 9,798 4.68%

Total Interest earning assets

1,599,704 17,005 4.25% 1,577,468 16,769 4.25% 1,504,798 16,055 4.27% 1,161,391 12,111 4.17% 1,113,475 11,508 4.13%
Other assets 172,698 173,624 208,640 114,147 119,559
Total assets $ 1,772,402 $ 40,054 $ 1,751,092 $ 1,713,438 $ 1,275,538 $ 1,233,034

Interest-bearing liabilities:

Deposits $ 1,204,614 $ 1,375 0.46% $ 1,211,959 $ 1,303 0.43% $ 1,149,287 $ 1,158 0.40% $ 844,101 $ 968 0.46% $ 850,442 $ 962 0.45%
Repo 4,891 38 3.11% 5,000 48 3.84% 5,000 48 3.84% 5,000 48 3.84% 5,000 49 3.92%
Fed funds purchased 3,816 19 1.99% 1,906 8 1.68% 975 2 0.82% 191 1 2.09% 1,926 5 1.04%
FHLB & FTN 68,041 300 1.76% 40,765 203 1.99% 79,581 314 1.58% 56,272 99 0.70% 55,337 106 0.77%

Subordinated debentures

10,310 41 1.59% 10,310 67 2.60% 10,310 63 2.44% 10,310 60 2.33% 10,310 80 3.10%

Total interest bearing liabilities

1,291,672 1,773 0.55% 1,269,940 1,629 0.51% 1,245,153 1,585 0.51% 915,874 1,176 0.51% 923,015 1,202 0.52%
Other liabilities 316,275 325,485 311,101 199,878 198,889
Shareholders' equity 164,455 155,667 157,184 159,786 111,130

Total liabilities and shareholders' equity

$ 1,772,402 $ 1,751,092 $ 1,713,438 $ 1,275,538 $ 1,233,034

Net interest income (FTE)*

$ 15,232 3.70% $ 15,140 3.74% $ 14,470 3.76% $ 10,935 3.66% $ 10,306 3.61%
Net interest margin (FTE)* 3.81% 3.84% 3.85% 3.77% 3.70%

Core net interest margin*

3.78% 3.81% 3.82% 3.61% 3.66%

*See reconciliation of 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

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Book value per common share $ 18.24 $ 17.80 $ 17.39 $ 17.19 $ 17.60
Effect of intangible assets per share 2.76 2.80 2.78 1.73 2.87
Tangible book value per common share $ 15.48 $ 15.00 $ 14.61 $ 15.46 $ 14.73
Diluted earnings per share $ 0.51 $ 0.26 $ 0.12 $ 0.26 $ 0.45
Effect of acquisition charges - 0.29 0.39 0.05 0.04
Taxes on acquisition charges - (0.11) (0.14) (0.01) (0.01)
Diluted earnings per share, operating $ 0.51 $ 0.44 $ 0.37 $ 0.30 $ 0.48
Year to Date
2017 2016
Diluted earnings per share $ 0.89 $ 1.38
Effect of gain on debit card conversion - (0.05)
Effect of acquisition charges 0.68 0.04
Tax (0.25) 0.01
Diluted earnings per share, operating $ 1.32 $ 1.38
Year to Date
2017 2016
Net income available to common shareholders $ 8,202 $ 7,554
Effect of gain on debit card conversion - (252)
Effect of acquisition charges 6,327 207
Tax (2,390) 2
Net earnings available to common shareholders, operating $ 12,139 $ 7,511
Three Months Ended
Average Balance Sheet Data

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Total average assets

A

$1,772,402 $1,751,092 $1,713,438 $1,275,538 $1,233,034

Total average earning assets

B

$1,599,704 $1,577,468 $1,504,798 $1,161,391 $1,113,475
Total equity $ 164,455 $ 155,667 $ 157,184 $ 159,786 $ 111,130
Less preferred equity - - - 65,036 17,123

Total common equity

C

164,455 155,667 157,184 94,750 94,007
Less intangible assets 25,442 24,878 22,375 15,638 15,660

Tangible common equity

D

$ 139,013 $ 130,789 $ 134,809 $ 79,112 $ 78,347
Three Months Ended
Net Interest Income Fully Tax Equivalent

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Net interest income

E

$ 14,935 $ 14,835 $ 14,168 $ 10,692 $ 10,067
Tax-exempt investment income (579) (592) (593) (472) (465)
Taxable investment income 876 897 895 715 704

Net Interest Income Fully Tax Equivalent

F

$ 15,232 $ 15,140 $ 14,470 $ 10,935 $ 10,306

Annualized Net Interest Margin

E/B

3.73% 3.76% 3.77% 3.68% 3.62%

Annualized Net Interest Margin, Fully Tax Equivalent

F/B

3.81% 3.84% 3.85% 3.77% 3.70%
Three Months Ended
Core Net Interest Margin

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Net interest income (FTE) $ 15,232 $ 15,140 $ 14,470 $ 10,935 $ 10,306
Less purchase accounting adjustments 116 117 96 429 92

Net interest income, net of purchase accounting adj

G

$ 15,116 $ 15,023 $ 14,374 $ 10,506 $ 10,214
Total average earning assets $1,599,704 $1,577,468 $1,504,798 $1,161,391 $1,113,475
Add average balance of loan valuation discount 1,640 1,721 2,159 1,358 1,484

Avg earning assets, excluding loan valuation discount

H

$1,601,344 $1,579,189 $1,506,957 $1,162,749 $1,114,959

Core net interest margin

G/H

3.78% 3.81% 3.82% 3.61% 3.66%
Three Months Ended
Efficiency Ratio

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Operating Expense
Total non-interest expense $ 11,888 $ 15,070 $ 16,095 $ 10,132 $ 9,416
Pre-tax non-operating expenses (47) (2,682) (3,598) (393) (207)

Adjusted Operating Expense

I

$ 11,841 $ 12,388 $ 12,497 $ 9,739 $ 9,209
Operating Revenue
Net interest income, FTE $ 15,232 $ 15,140 $ 14,470 $ 10,935 $ 10,306
Total non-interest income 3,658 3,757 3,391 2,705 3,099
Pre-tax non-operating items - - - - -

Adjusted Operating Revenue

J

$ 18,890 $ 18,897 $ 17,861 $ 13,640 $ 13,405

Efficiency Ratio, operating

I/J

62.68% 65.56% 69.97% 71.40% 68.70%
Three Months Ended
Return Ratios

Sept 30,
2017

June 30,
2017

Mar 31,
2017

Dec 31,
2016

Sept 30,
2016

Net income

$ 4,714 $ 2,366 $ 1,122 $ 2,307 $ 2,558
Dividends and accretion on preferred stock

K

- - - 195 86
Net income available to common shareholders 4,714 2,366 1,122 2,112 2,472
Acquisition charges 47 2,682 3,598 402 207
Tax on acquisition charges (18) (1,035) (1,337) (120) (61)

Net earnings available to common shareholders, oper

L

$ 4,743 $ 4,013 $ 3,383 $ 2,394 $ 2,618

Annualized return on avg assets

K/A

1.06% .54% .26% .72% .83%

Annualized return on avg assets, oper

L/A

1.07% .92% .79% .75% .85%

Annualized return on avg common equity, oper

L/C

11.54% 10.31% 8.61% 10.11% 11.14%

Annualized return on avg tangible common equity, oper

L/D

13.65% 12.27% 10.04% 12.10% 13.37%
Mortgage Department
Net Interest Income after provision for loan losses $ 249 $ 233 $ 253 $ 48 $ 24
Loan fee income 1,276 1,208 916 1,204 1,399
Other non-interest income - - - 1 1
Salaries and employee benefits 882 946 806 783 805
Other non-interest expense 102 99 114 144 124
Earnings before income taxes $ 541 $ 396 $ 249 $ 326 $ 495

View source version on businesswire.com: http://www.businesswire.com/news/home/20171024006772/en/

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

Source: The First Bancshares, Inc.