First Bancshares, Inc. Reports Results for Third Quarter Ended September 30, 2021; Increases Quarterly Dividend 7%

Rhea-AI Summary

The First Bancshares, Inc. (FBMS) reported a net income of $16.1 million for Q3 2021, a 3.4% increase from Q2 2021 and a 35.4% increase year-over-year. Average loans, excluding PPP loans, rose by $9.0 million. Total interest income increased $1.2 million, while the cost of deposits decreased 23%, resulting in an increase in the net interest margin. The company also announced a cash dividend of $0.16 per share, payable on November 26, 2021. Nonperforming assets decreased 24% from Q2 2021, reflecting improved credit quality.

Positive

• Net income increased $4.2 million, or 35.4%, year-over-year.
• Total interest income rose $1.2 million or 2.8% from Q2 2021.
• Cost of deposits decreased 23% to 0.23%.
• Nonperforming assets decreased $8.9 million, or 24%, from Q2.
• Cash dividend of $0.16 per share announced.

Negative

• Average total loans decreased $59.0 million, or 1.9%, from Q2.
• Non-interest expense increased 7.9% compared to Q3 2020.

HATTIESBURG, Miss.--(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 September 30, 2021.

Highlights for the Quarter:

• Average loans, excluding Paycheck Protection Program (”PPP”) loans, increased $9.0 million, 0.3% as compared to the quarter ended June 30, 2021, or 1.2% on an annualized basis.
• Net income available to common shareholders totaled $16.1 million for the quarter ended September 30, 2021, representing an increase of $0.5 million, or 3.4%, compared to $15.6 million for the quarter ended June 30, 2021.
• Total interest income increased $1.2 million, or 2.8% from $43.2 million for quarter end June 30, 2021 to $44.4 million for quarter end September 30, 2021 and total cost of deposits decreased 23% from 0.30% at quarter end June 30, 2021 to 0.23% at quarter end September 30, 2021. These changes resulted in an increase of 11 bps to our net interest margin.
• In year-over-year comparison, net income available to common shareholders increased $11.2 million, or 30.1%, from $37.2 million for the nine months ended September 30, 2020 to $48.4 million for the same period ended September 30, 2021.
• Total nonperforming assets decreased $8.9 million representing a 24% decrease as compared to June 30, 2021 and decreased $16.9 million representing a 38% decrease as compared to third quarter 2020.
• Provision for credit losses totaled $0 for the quarter as compared to $0 for the sequential quarter comparison and $6.9 million for the third quarter of 2020.
• As of September 30, 2021, total COVID-related modifications were $27.8 million, representing 0.9% 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 quarter, the Company received a $1.8 million grant from the U. S. Treasury Rapid Response Program (“RRP”).
• During the quarter, the Company made $1.4 million in charitable contributions to the University of Mississippi’s Children’s Hospital, to 3 Historically Black Colleges and Universities, Florida A&M, Southern University and Jackson State University and set aside monies for down payment and closing cost assistance for low to moderate income mortgage applicants. These investments further our mission as a Community Development Financial Institution to support underserved communities throughout our trade area.
• 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, “Our markets continue to show improvement in activity across our footprint as we recover from the effects of the pandemic. We were pleased to see improvements in profitability and credit quality across the organization. Loan demand appears to be increasing as economic activity picks up particularly in the construction portion of our loan portfolio as total commitments increased 18% quarter over quarter. We achieved an 11 basis point increase in our net interest margin during the quarter and lowered our deposit costs to 0.23%. We are encouraged that these are signs of increasing growth opportunities as we focus on continuing to expand our southeastern presence.”

Quarterly Earnings

Net income available to common shareholders totaled $16.1 million for the quarter ended September 30, 2021, an increase of $0.5 million, or 3.4%, compared to $15.6 million for the quarter ended June 30, 2021. The Company recognized $0.4 million more in PPP loan fee income during the third quarter 2021 as compared to the second quarter 2021.

Net income available to common shareholders totaled $16.1 million for the quarter ended September 30, 2021, an increase of $4.2 million, or 35.4%, compared to $11.9 million for the quarter ended September 30, 2020.

Provision for credit losses totaled $0 for the quarter ended September 30, 2021 and quarter ended June 30, 2021, a decrease of $6.9 million, or $5.3 million net of tax, as compared to the third quarter of 2020.

Earnings Per Share

For the third quarter of 2021, fully diluted earnings per share were $0.76 compared to $0.74 for the second quarter of 2021 and $0.56 for the third quarter of 2020. The increase in sequential quarter comparison is due to an increase in net income available to common shareholders of $0.5 million.

Diluted earnings per share operating (non-GAAP) increased $0.20 from $0.56 for third quarter of 2020 to $0.76 for third quarter of 2021 due to the increase in operating net earnings available to shareholders (non-GAAP) of $4.0 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 $2.2 million to $5.512 billion at September 30, 2021 from $5.510 billion at June 30, 2021.

PPP loans at September 30, 2021 were $87.1 million, down $70.7 million from June 30, 2021, due to loan forgiveness under the PPP program.

Total average loans were $2.984 billion for the quarter ended September 30, 2021, as compared to $3.043 billion for the quarter ended June 30, 2021, and $3.166 billion for the quarter ended September 30, 2020, representing a decrease of $59.0 million, or 1.9%, for the sequential quarter comparison, and a decrease of $181.9 million, or 5.7%, for the prior year quarterly comparison. PPP loans averaged $112.3 million for the quarter ended September 30, 2021, $180.3 million for the quarter ended June 30, 2021, and $260.1 million for the quarter ended September 30, 2020.

Excluding the PPP loans, average loans increased $9.0 million, or 0.3% as compared to the quarter ended June 30, 2021.

Total average deposits were $4.666 billion for the quarter ended September 30, 2021, as compared to $4.629 billion for the quarter ended June 30, 2021, and $4.212 billion for the quarter ended September 30, 2020, representing an increase of $36.7 million, or 0.8%, for the sequential quarter comparison, and an increase of $453.5 million, or 10.8%, for the prior year quarterly comparison.

Average deposits increased $453.5 million, or 10.8% as compared to the quarter ended September 30, 2020 of which $230.1 million was attributable to increases in the non-interest bearing accounts.

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 September 30, 2021, $828.1 million in noninterest deposit balances and $854.0 million in NOW deposit accounts were reclassified as money market accounts.

Asset Quality

Nonperforming assets totaled $28.0 million at September 30, 2021, a decrease of $9.0 million compared to $37.0 million at June 30, 2021 and a decrease of $16.9 million compared to $44.9 million at September 30, 2020. Nonaccrual loans decreased $2.6 million as compared to June 30, 2021 and decreased $12.3 million as compared to September 30, 2020.

The ratio of the allowance for credit losses (ACL) to total loans was 1.09% at September 30, 2021 and 1.07% at June 30, 2021. The ratio of allowance for loan losses to total loans under the incurred loss model was 0.87% at September 30, 2020. The ratio of annualized net charge-offs (recoveries) to total loans was 0.005% for the quarter ended September 30, 2021 compared to 0.03% for the quarter ended June 30, 2021 and 0.09% for the quarter ended September 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.

Third Quarter 2021 vs. Third Quarter 2020 Earnings Comparison

Net income available to common shareholders for the third quarter of 2021 totaled $16.1 million compared to $11.9 million for the third quarter of 2020, an increase of $4.2 million or 35.4%. Provision for credit losses totaled $0 for the quarter ended September 30, 2021, a decrease of $6.9 million, or $5.3 million net of tax, as compared to the third quarter of 2020.

Net interest income for the third quarter of 2021 was $40.0 million, a slight increase when compared to the third quarter of 2020. Fully tax equivalent (“FTE”) net interest income (non-GAAP) totaled $40.7 million and $40.6 million for the third quarter of 2021 and 2020, respectively. Purchase accounting adjustments decreased $0.7 million for the third quarter comparisons. Third quarter of 2021 FTE net interest margin (non-GAAP) was 3.25% which included 10 basis points related to purchase accounting adjustments compared to 3.58% for the same quarter in 2020, which included 17 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 26 basis points in prior year quarterly comparison.

Non-interest income increased $0.8 million for the third quarter of 2021 as compared to the third quarter of 2020. This increase is attributed to the $1.8 million RRP grant from the U.S. Treasury and was offset by the decrease in mortgage income of $1.2 million.

Third quarter 2021 non-interest expense was $29.1 million, an increase of $2.1 million, or 7.9% as compared to the third quarter of 2020. Charitable contributions of $1.4 million during the third quarter of 2021 contributed to the increase. These contributions related to the RRP grant and supported projects in underserved communities.

Investment securities totaled $1.485 billion, or 27.0% of total assets at September 30, 2021, compared to $984.9 million, or 19.1% of total assets at September 30, 2020. The average balance of investment securities increased $406.7 million in the prior year quarterly comparison. The average tax equivalent yield on investment securities (non-GAAP) decreased 26 basis points to 2.22% from 2.48% in the prior year quarterly comparison. The investment portfolio had a net unrealized gain of $18.2 million at September 30, 2021 as compared to a net unrealized gain of $33.2 million at September 30, 2020.

The FTE average yield on all earning assets (non-GAAP) decreased 54 basis points in prior year quarterly comparison, from 4.14% for the third quarter of 2020 to 3.60% for the third quarter of 2021. Interest expense on average interest bearing liabilities decreased 22 basis points from 0.61% for the third quarter of 2020 to 0.39% for the third quarter of 2021. Cost of all deposits averaged 22 basis points for the third quarter of 2021 compared to 47 basis points for the third second quarter of 2020.

Third Quarter 2021 vs Second Quarter 2021 Earnings Comparison

Net income available to common shareholders for the third quarter of 2021 increased $0.5 million to $16.1 million compared to $15.6 million for the second quarter of 2021.

Net interest income for the third quarter of 2021 was $40.0 million as compared to $38.1 million for the second quarter of 2021, an increase of $2.0 million which is attributed to an increase in income earned on investment securities of $1.0 million and a decrease in interest expense of $0.8 million. FTE net interest income (non-GAAP) increased $2.0 million to $40.7 million from $38.7 million in sequential-quarter comparison. Third quarter 2021 FTE net interest margin (non-GAAP) of 3.25% included 10 basis points related to purchase accounting adjustments compared to 3.14% for the second quarter in 2021, which included 9 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) increased 10 basis point in sequential quarter comparison.

Investment securities totaled $1.485 billion, or 27.0% of total assets at September 30, 2021, compared to $1.303 billion, or 23.6% of total assets at June 30, 2021. The average balance of investment securities increased $144.2 million in sequential-quarter comparison. The average tax equivalent yield on investment securities (non-GAAP) increased 7 basis points to 2.22% from 2.15% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $18.2 million at September 30, 2021 as compared to a net unrealized gain of $25.6 million at June 30, 2021.

The FTE average yield on all earning assets (non-GAAP) increased in sequential-quarter comparison from 3.56% to 3.60%. Interest expense on average interest bearing liabilities decreased 7 basis points from 0.46% for the second quarter of 2021 to 0.39% for the third quarter of 2021. Cost of all deposits averaged 22 basis points for the third quarter of 2021 compared to 28 basis points for the second quarter of 2021.

Non-interest income increased $0.8 million in sequential-quarter comparison resulting from the $1.8 million RRP grant from the U.S. Treasury and was offset by a decrease in mortgage income of $0.6 million.

Non-interest expense for the third quarter of 2021 was $29.1 million compared to $27.5 million for the second quarter of 2021, an increase of $1.6 million, which is attributed to the $1.4 million charitable contributions related to the RRP grant and $0.2 million in expense related to the early vesting of restricted stock held by our Directors.

Year-to-Date Earnings Comparison

In the year-over-year comparison, net income available to common shareholders increased $11.2 million, or 30.1%, from $37.2 million for the nine months ended September 30, 2020 to $48.4 million for the same period ended September 30, 2021. Excluding the bargain purchase and sale of land gains of $7.5 million, net of tax, and the decreased provision expense of $16.7 million, net of tax, recorded during the nine months ended September 2020, net income available to common shareholders increased $2.0 million in the year-over-year comparison.

Net interest income increased $4.1 million in the year-over-year comparison, primarily due to interest income earned on a higher volume of securities and a reduction in interest expense due to changes in rates.

Non-interest income increased $4.6 million in the year-over-year comparison excluding the gains mentioned above. Interchange fee income increased $1.7 million and the RRP grant of $1.8 million accounted for the increase in the year-over-year comparison.

Non-interest expense was $83.8 million for the nine months ended September 30, 2021 an increase of $5.3 million as compared to the same period ended September 30, 2020. An increase of $3.7 million in salaries and employee benefits, an increase of $1.7 million in occupancy expense and the $1.4 million in charitable contributions contributed to the increase.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.16 per share to be paid on its common stock on November 26, 2021 to shareholders of record as of the close of business on November 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, operating net earnings available to shareholder, 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 pending and recently completed acquisitions, including that the anticipated benefits from the pending and 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 9/30/21		Quarter Ended 6/30/21		Quarter Ended 3/31/21		Quarter Ended 12/31/20		Quarter Ended 9/30/20
Total Interest Income		$44,435		$43,238		$45,187		$45,613		$46,337
Total Interest Expense		4,407		5,188		5,958		6,147		6,365
Net Interest Income		40,028		38,050		39,229		39,466		39,972
FTE net interest income*		40,673		38,696		39,884		40,119		40,608
Provision for credit losses**		-		-		-		3,523		6,921
Non-interest income		9,586		8,822		9,472		10,928		8,794
Non-interest expense		29,053		27,452		27,264		27,897		26,935
Earnings before income taxes		20,561		19,420		21,437		18,974		14,910
Income tax expense		4,429		3,820		4,793		3,639		2,993
Net income available to common shareholders		$ 16,132		$15,600		$16,644		$15,335		$11,917
PER COMMON SHARE DATA
Basic earnings per share		$0.77		$0.74		$0.79		$0.72		$0.56
Diluted earnings per share		0.76		0.74		0.79		0.72		0.55
Diluted earnings per share, operating*		0.76		0.74		0.79		0.65		0.56
Quarterly dividends per share		.15		.14		.13		.12		.10
Book value per common share at end of period		31.81		31.40		30.64		30.54		29.82
Tangible book value per common share at period end*		23.03		22.57		21.76		21.65		20.93
Market price at end of period		38.78		37.43		36.61		30.88		20.97
Shares outstanding at period end		21,019,897		21,020,723		21,018,744		21,115,009		21,408,017
Weighted average shares outstanding:
Basic		21,020,128		21,018,772		21,009,088		21,308,838		21,405,309
Diluted		21,211,716		21,207,660		21,200,558		21,421,367		21,544,040
AVERAGE BALANCE SHEET DATA
Total assets		$5,504,107		$5,458,531		$5,337,264		$5,136,136		$5,085,340
Loans and leases		2,983,771		3,042,785		3,097,145		3,153,543		3,165,653
Total deposits		4,665,914		4,629,176		4,410,288		4,195,492		4,212,410
Total common equity		664,594		647,850		644,923		640,828		632,527
Total tangible common equity*		479,540		461,743		457,775		451,011		441,635
SELECTED RATIOS
Annualized return on avg assets (ROA)		1.17%		1.14%		1.25%		1.19%		0.94%
Annualized return on avg assets, operating*		1.17%		1.14%		1.25%		1.08%		0.95%
Annualized pre-tax, pre-provision, operating*		1.49%		1.42%		1.61%		1.62%		1.74%
Annualized return on avg common equity, operating*		9.70%		9.63%		10.32%		8.63%		7.65%
Annualized return on avg tangible common equity, oper*		13.44%		13.51%		14.54%		12.27%		10.95%
Average loans to average deposits		63.95%		65.73%		70.23%		75.17%		75.15%
FTE Net Interest Margin*		3.25%		3.14%		3.34%		3.51%		3.58%
Efficiency Ratio		57.81%		57.77%		55.24%		54.65%		54.52%
Efficiency Ratio, operating*		56.62%		57.77%		55.24%		56.54%		54.04.%
*See reconciliation of Non-GAAP financial measures
CREDIT QUALITY
Allowance for credit losses (ACL) as a % of total loans**		1.09%		1.07%		1.07%		1.15%		1.09%
Nonperforming assets to tangible equity + ACL		5.43%		7.30%		7.52%		8.57%		9.31%
Nonperforming assets to total loans + OREO		0.95%		1.22%		1.20%		1.35%		1.42%
Annualized QTD net charge-offs (recoveries) to total loans		0.005%		0.03%		0.47%		0.25%		0.09%
**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		Sept 30, 2021		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Assets
Cash and cash equivalents		$ 657,296		$ 762,486		$ 813,257		$ 562,554		$ 603,736
Securities available-for-sale		1,463,255		1,280,761		1,135,189		1,022,182		957,458
Other investments		22,225		22,225		22,137		27,475		27,461
Total investment securities		1,485,480		1,302,986		1,157,326		1,049,657		984,919
Loans held for sale		8,540		6,000		15,119		21,432		22,482
Total loans		2,960,919		3,036,732		3,055,093		3,123,678		3,155,932
Allowance for credit losses		(32,418)		(32,457)		(32,663)		(35,820)		(34,256)
Loans, net		2,937,041		3,004,275		3,022,430		3,087,858		3,121,676
Premises and equipment		123,594		120,667		121,934		123,450		124,875
Other Real Estate Owned		2,580		3,529		5,769		5,802		5,202
Goodwill and other intangibles		184,545		185,597		186,648		187,700		190,380
Other assets		121,348		124,193		120,315		114,307		110,889
Total assets		$5,511,884		$5,509,733		$5,442,798		$5,152,760		$5,164,159
Liabilities and Shareholders’ Equity
Non-interest bearing deposits^		$ 596,126		$ 682,014		$ 632,485		$ 571,079		$ 482,236
Interest-bearing deposits		4,076,415		3,991,898		3,987,812		3,644,201		3,746,978
Total deposits		4,672,541		4,673,912		4,620,297		4,215,280		4,229,214
Borrowings		-		-		4,466		114,647		115,827
Subordinated debentures		144,650		144,611		144,572		144,592		144,709
Other liabilities		26,010		31,158		29,514		33,426		36,040
Total liabilities		4,843,201		4,849,681		4,798,849		4,507,945		4,525,790
Total shareholders’ equity		668,683		660,052		643,949		644,815		638,369
Total liabilities and shareholders’ equity		$5,511,884		$5,509,733		$5,442,798		$5,152,760		$5,164,159
^Reclassified $828,082 to interest-bearing deposits for Sept 30, 2021

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands except per share data)
EARNINGS STATEMENT		Three Months Ended
		9/30/21		6/30/21		3/31/21		12/31/20		9/30/20
Interest Income:
Loans, including fees		$ 36,374		$ 36,283		$ 38,587		$ 38,472		$ 39,344
Investment securities		6,938		5,925		5,526		5,606		5,309
Accretion of purchase accounting adjustments		1,106		992		1,026		1,494		1,655
Other interest income		17		38		48		41		29
Total interest income		44,435		43,238		45,187		45,613		46,337
Interest Expense:
Deposits		2,649		3,375		3,910		4,262		5,110
Borrowings		-		52		288		260		265
Subordinated debentures		1,819		1,821		1,821		1,823		1,188
Accretion of purchase accounting adjustments		(61)		(60)		(61)		(198)		(198)
Total interest expense		4,407		5,188		5,958		6,147		6,365
Net interest income		40,028		38,050		39,229		39,466		39,972
Provision for credit losses		-		-		-		3,523		6,921
Net interest income after provision for credit losses		40,028		38,050		39,229		35,943		33,051
Non-interest Income:
Service charges on deposit accounts		1,846		1,756		1,761		1,925		1,780
Mortgage Income		1,732		2,372		3,162		3,270		2,961
Interchange Fee Income		2,744		3,145		2,644		2,562		2,491
Gain (loss) on securities, net		11		77		20		3		322
Financial Assistance Award/Bank Enterprise Award/RRP Grant		1,826		-		-		968		-
Bargain Purchase Gain and (Loss) on Sale of Land		(397)		-		-		812		-
Other charges and fees		1,824		1,472		1,885		1,388		1,530
Total non-interest income		9,586		8,822		9,472		10,928		8,794
Non-interest expense:
Salaries and employee benefits		16,246		16,036		16,054		16,642		15,494
Occupancy expense		3,922		3,813		3,879		3,890		3,826
FDIC/OCC premiums		532		499		494		520		447
Marketing		78		39		160		71		24
Amortization of core deposit intangibles		1,052		1,052		1,052		1,052		1,052
Other professional services		934		1,049		934		764		990
Acquisition charges		5		-		-		41		238
Other non-interest expense		6,284		4,964		4,691		4,917		4,864
Total Non-interest expense		29,053		27,452		27,264		27,897		26,935
Earnings before income taxes		20,561		19,420		21,437		18,974		14,910
Income tax expense		4,429		3,820		4,793		3,639		2,993
Net income available to common shareholders		$ 16,132		$ 15,600		$ 16,644		$ 15,335		$ 11,917
Diluted earnings per common share		$ 0.76		$ 0.74		$ 0.79		$ 0.72		$ 0.55
Diluted earnings per common share, operating*		$ 0.76		$ 0.74		$ 0.79		$ 0.65		$ 0.56
*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		$ 111,245		$ 112,818
Investment securities		18,389		15,800
Accretion of purchase accounting adjustments		3,123		4,779
Other interest income		103		337
Total interest income		132,860		133,734
Interest Expense:
Deposits		9,934		17,111
Borrowings		340		1,406
Subordinated debentures		5,461		3,567
Amortization of purchase accounting adjustments		(182)		(1,567)
Total interest expense		15,553		20,517
Net interest income		117,307		113,217
Provision for credit losses		-		21,628
Net interest income after provision for credit losses		117,307		91,589
Non-interest Income:
Service charges on deposit accounts		5,363		5,291
Mortgage Income		7,266		7,174
Interchange Fee Income		8,533		6,872
Gain (loss) on securities, net		107		279
RRP Grant		1,826		-
Bargain Purchase Gain and Gain/(loss) on Sale of Land		(397)		7,643
Other charges and fees		5,183		3,689
Total non-interest income		27,881		30,948
Non-interest expense:
Salaries and employee benefits		48,337		44,588
Occupancy expense		11,614		9,943
FDIC/OCC premiums		1,524		831
Marketing		277		262
Amortization of core deposit intangibles		3,155		3,041
Other professional services		2,917		2,848
Acquisition charges		5		3,273
Other non-interest expense		15,941		13,658
Total Non-interest expense		83,770		78,444
Earnings before income taxes		61,418		44,093
Income tax expense		13,042		6,922
Net income available to common shareholders		$ 48,376		$ 37,171
Diluted earnings per common share		$ 2.28		$ 1.80
Diluted earnings per common share, operating*		$ 2.28		$ 1.56
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (Dollars in thousands)
COMPOSITION OF LOANS		Sept 30, 2021		Percent of Total		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020		Percent of Total
Commercial, financial and agricultural		$ 426,342		14.3%		$ 485,134		$ 532,122		$ 561,342		$ 576,812		18.1%
Real estate – construction		361,732		12.2%		341,864		304,457		301,283		330,070		10.4%
Real estate – commercial		1,206,267		40.6%		1,215,103		1,217,505		1,214,602		1,191,514		37.6%
Real estate – residential		910,618		30.7%		935,827		944,032		987,313		999,381		31.4%
Lease Financing Receivable		2,889		0.1%		3,291		3,382		2,733		2,478		0.1%
Obligations of States & subdivisions		15,790		0.5%		16,489		14,996		15,369		13,345		0.4%
Consumer		37,281		1.3%		39,024		38,599		41,036		42,332		1.3%
Loans held for sale		8,540		0.3%		6,000		15,119		21,432		22,482		0.7%
Total loans		$2,969,459		100%		$3,042,732		$3,070,212		$3,145,110		$3,178,414		100%
COMPOSITION OF DEPOSITS		Sept 30, 2021		Percent of Total		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020		Percent of Total
Non-interest bearing^		$ 596,126		12.8%		$682,014		$632,485		$571,079		$482,236		11.4%
NOW and other^		670,888		14.4%		704,034		702,766		664,626		658,453		15.6%
Money Market/Savings^		2,896,140		61.9%		2,758,957		2,734,873		2,398,526		2,456,504		58.1%
Time Deposits of less than $250,000		390,289		8.4%		404,437		419,556		439,101		473,265		11.2%
Time Deposits of $250,000 or more		119,098		2.5%		124,470		130,617		141,948		158,756		3.7%
Total Deposits		$4,672,541		100%		$4,673,912		$4,620,297		$4,215,280		$4,229,214		100%
Deposits Without Reclassification^		Sept 30, 2021		Percent of Total		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020		Percent of Total
Non-interest bearing		$1,424,208		30.5%		$1,393,724		$1,328,239		$1,185,980		$1,195,042		28.3%
Now and other		1,524,935		32.6%		1,541,915		1,562,119		1,347,778		1,335,798		31.6%
Money Market/Savings		1,214,011		26.0%		1,209,366		1,179,749		1,100,473		1,066,353		25.2%
Time Deposits of less than $250,000		390,289		8.4%		404,437		419,556		439,101		473,265		11.2%
Time Deposits of $250,000 or more		119,098		2.5%		124,470		130,617		141,948		158,756		3.7%
Total Deposits		$4,672,541		100%		$4,673,912		$4,620,297		$4,215,280		$4,229,214		100%
ASSET QUALITY DATA		Sept 30, 2021				June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Nonaccrual loans		$ 25,012				$ 27,625		$ 29,981		$ 33,774		$ 37,300
Loans past due 90 days and over		456				5,834		1,079		2,692		2,396
Total nonperforming loans		25,468				33,459		31,060		36,466		39,696
Other real estate owned		2,580				3,529		5,769		5,802		5,202
Total nonperforming assets		$ 28,048				$36,988		$36,829		$42,268		$ 44,898
Nonperforming assets to total assets		0.51%				0.67%		0.68%		0.82%		0.87%
Nonperforming assets to total loans + OREO		0.95%				1.22%		1.20%		1.35%		1.42%
ACL to nonperforming loans		127.29%				97.01%		105.16%		98.23%		86.30%
ACL to total loans		1.09%				1.07%		1.07%		1.15%		1.09%
Qtr-to-date net charge-offs (recoveries)		$ 39				$ 207		$ 3,553		$ 1,959		$ 729
Annualized QTD net chg-offs (recs) to loans		0.005%				0.03%		0.47%		0.25%		0.09%
^Reclassified $828,082 to interest-bearing deposits for Sept 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		September 30, 2021						June 30, 2021						March 31, 2021						December 31, 2020						September 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		$ 986,821		$ 5,033		2.04%		$ 853,180		$ 4,017		1.88%		$ 699,585		$ 3,591		2.05%		$ 659,243		$ 3,678		2.23%		$ 616,168		$ 3,432		2.23%
Tax-exempt securities		377,610		2,550		2.70%		367,074		2,554		2.78%		367,322		2,590		2.82%		361,529		2,581		2.86%		341,550		2,513		2.94%
Total investment
securities		1,364,431		7,583		2.22%		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%
in other banks		656,891		17		0.01%		661,069		38		0.02%		614,283		48		0.03%		404,069		41		0.04%		413,786		29		0.03%
Loans		2,983,771		37,480		5.02%		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%
Total Interest earning assets		5,005,093		45,080		3.60%		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%
Other assets		506,134						534,423						558,929						557,752						548,183
Total assets		$ 5,511,227						$ 5,458,531						$ 5,337,264						$ 5,136,136						$ 5,085,340
Interest-bearing liabilities:
Deposits		$ 4,422,690		$ 2,588		0.23%		$ 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%
Borrowed Funds		206		-		0.00%		3,355		52		6.20%		100,143		288		1.15%		115,430		260		0.90%		115,935		265		0.91%
Subordinated debentures		144,630		1,819		5.03%		144,591		1,821		5.04%		144,590		1,821		5.04%		144,676		1,823		5.04%		81,470		1,188		5.83%
Total interest bearing liabilities		4,567,526		4,407		0.39%		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%
Other liabilities		279,107						288,363						275,282						263,823						295,354
Shareholders' equity		664,594						647,850						644,923						640,828						632,527
Total liabilities and shareholders' equity		$ 5,511,227						$ 5,458,531						$ 5,337,264						$ 5,136,136						$ 5,085,340
Net interest income (FTE)*				$ 40,673		3.22%				$ 38,696		3.11%				$ 39,884		3.30%				$ 40,119		3.46%				$ 40,608		3.53%
Net interest margin (FTE)*						3.25%						3.14%						3.34%						3.51%						3.58%
Core net interest margin*						3.15%						3.05%						3.25%						3.35%						3.41%
*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			Sept 30, 2021			June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Book value per common share			$ 31.81			$ 31.40		$ 30.64		$ 30.54		$ 29.82
Effect of intangible assets per share			8.78			8.83		8.88		8.89		8.89
Tangible book value per common share			$ 23.03			$ 22.57		$ 21.76		$ 21.65		$ 20.93
Diluted earnings per share			$ 0.76			$ 0.74		$ 0.79		$ 0.72		$ 0.55
Effect of acquisition charges			-			-		-		0.01		0.01
Tax on acquisition charges			-			-		-		-		-
Effect of bargain purchase gain and gain/loss on sale of land/fixed assets			.02			-		-		(0.04)		-
Tax on gain/loss on sale of land/fixed assets			-			-		-		-		-
Effect of Treasury awards			(.09)			-		-		(0.05)		-
Tax on Treasury awards			.02			-		-		0.01		-
Effect on Contributions related to Treasury awards			.07			-		-		-		-
Tax on Contributions related to Treasury awards			(.02)			-		-		-		-
Diluted earnings per share, operating			$ 0.76			$ 0.74		$ 0.79		$ 0.65		$ 0.56
						Year to Date
						2021				2020
Diluted earnings per share						$ 2.28				$ 1.80
Effect of acquisition charges						-				0.16
Tax on acquisition charges						-				(0.03)
Effect of bargain purchase gain and gain/loss on sale of land/fixed assets						.02				(0.38)
Tax on gain/loss on sale of land/fixed assets						-				0.01
Effect of Treasury awards						(.09)				-
Tax on Treasury awards						.02				-
Effect on Contributions related to Treasury awards						.07				-
Tax on Contributions related to Treasury awards						(.02)				-
Diluted earnings per share, operating						$ 2.28				$ 1.56
						Year to Date
						2021				2020
Net income available to common shareholders						$ 48,376				$ 37,171
Acquisition charges						5				3,273
Tax on acquisition charges						(1)				(743)
Bargain purchase gain and gain/loss on sale of land/fixed assets						397				(7,643)
Tax on gain/loss on sale of land/fixed assets						(100)				157
Treasury awards						(1,826)				-
Tax on Treasury awards						462				-
Contributions related to Treasury awards						1,400				-
Tax on Contributions related to Treasury awards						(354)				-
Net earnings available to common shareholders, operating						$ 48,359				$ 32,215

			Three Months Ended
Average Balance Sheet Data			Sept 30, 2021		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Total average assets	A		$5,504,107		$5,458,531		$5,337,264		$5,136,136		$5,085,340
Total average earning assets	B		5,005,093		$4,924,108		$4,778,335		$4,578,384		$4,537,157
Common Equity	C		$ 664,594		$ 647,850		$ 644,923		$ 640,828		$ 632,527
Less intangible assets			185,054		186,107		187,148		189,817		190,892
Total Tangible common equity	D		$ 479,540		$ 461,743		$ 457,775		$ 451,011		$ 441,635
			Three Months Ended
Net Interest Income Fully Tax Equivalent			Sept 30, 2021		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Net interest income	E		$ 40,028		$ 38,050		$ 39,229		$ 39,466		$ 39,972
Tax-exempt investment income			(1,905)		(1,908)		(1,935)		(1,928)		(1,877)
Taxable investment income			2,550		2,554		2,590		2,581		2,513
Net Interest Income Fully Tax Equivalent	F		$ 40,673		$ 38,696		$ 39,884		$ 40,119		$ 40,608
Annualized Net Interest Margin	E/B		3.20%		3.09%		3.28%		3.45%		3.52%
Annualized Net Interest Margin, Fully Tax Equivalent	F/B		3.25%		3.14%		3.34%		3.51%		3.58%
Total Interest Income, Fully Tax Equivalent
Total Interest Income			$ 44,435		$ 43,238		$ 45,187		$ 45,613		$ 46,337
Tax-exempt investment income			(1,905)		(1,908)		(1,935)		(1,928)		(1,877)
Taxable investment income			2,550		2,554		2,590		2,581		2,513
Total Interest Income, Fully Tax Equivalent	G		$ 45,080		$ 43,884		$ 45,842		$ 46,266		$ 46,973
Yield on Average Earning Assets, Fully Tax Equivalent	G/B		3.60%		3.56%		3.84%		4.04%		4.14%
Interest Income Investment Securities, Fully Tax Equivalent
Interest Income Investment Securities			$ 6,938		$ 5,925		$ 5,526		$ 5,606		$ 5,309
Tax-exempt investment income			(1,905)		(1,908)		(1,935)		(1,928)		(1,877)
Taxable investment Income			2,550		2,554		2,590		2,581		2,513
Interest Income Investment Securities, Fully Tax Equivalent	H		$ 7,583		$ 6,571		$ 6,181		$ 6,259		$ 5,945
Average Investment Securities	I		$ 1,364,431		$ 1,220,254		$1,066,907		$ 1,020,772		$ 957,718
Yield on Investment Securities, Fully Tax Equivalent	H/I		2.22%		2.15%		2.32%		2.45%		2.48%
			Three Months Ended
Core Net Interest Margin			Sept 30, 2021		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Net interest income (FTE)			$ 40,673		$ 38,696		$ 39,884		$ 40,119		$ 40,608
Less purchase accounting adjustments			1,167		1,052		1,026		1,692		1,853
Net interest income, net of purchase accounting adj	J		$ 39,506		$ 37,644		$ 38,858		$ 38,427		$ 38,755
Total average earning assets			$5,005,093		$4,924,108		$4,778,335		$4,578,384		$4,537,157
Add average balance of loan valuation discount			5,252		6,373		8,480		9,808		11,501
Avg earning assets, excluding loan valuation discount	K		$5,010,345		$4,930,481		$4,786,815		$4,588,192		$4,548,658
Core net interest margin	J/K		3.15%		3.05%		3.25%		3.35%		3.41%

			Three Months Ended
Efficiency Ratio			Sept 30, 2021		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Operating Expense
Total non-interest expense			$ 29,053		$ 27,452		$ 27,264		$ 27,897		$ 26,935
Pre-tax non-operating expenses			(1,405)		-		-		(41)		(238)
Adjusted Operating Expense	L		$ 27,648		$ 27,452		$ 27,264		$ 27,856		$ 26,697
Operating Revenue
Net interest income, FTE			$ 40,673		$ 38,696		$ 39,884		$ 40,119		$ 40,608
Total non-interest income			9,586		8,822		9,472		10,928		8,794
Pre-tax non-operating items			(1,429)		-		-		(1,780)		-
Adjusted Operating Revenue	M		$ 48,830		$ 47,518		$ 49,356		$ 49,267		$ 49,402
Efficiency Ratio, operating	L/M		56.62%		57.77%		55.24%		56.54%		54.04%
			Three Months Ended
Return Ratios			Sept 30, 2021		June 30, 2021		Mar 31, 2021		Dec 31, 2020		Sept 30, 2020
Net income available to common shareholders	N		$ 16,132		$ 15,600		$ 16,644		$ 15,335		$ 11,917
Acquisition charges			5		-		-		41		238
Tax on acquisition charges			(1)		-		-		(10)		(61)
Bargain purchase gain and loss on sale of fixed assets			397		-		-		(812)		-
Tax on loss on sale of fixed assets			(100)		-		-		-		-
Treasury awards			(1,826)		-		-		(968)		-
Tax on Treasury awards			462		-		-		245		-
Charitable contributions related to Treasury awards			1,400		-		-		-		-
Tax on charitable contributions related to Treasury awards			(354)		-		-		-		-
Net earnings available to common shareholders, operating	O		$ 16,115		$ 15,600		$ 16,644		$ 13,831		$ 12,094
Pre-Tax Pre-Provision Operating Earnings
Earnings before income taxes	P		$ 20,561		$ 19,420		$ 21,437		$ 18,974		$ 14,910
Acquisition charges			5		-		-		41		238
Provision for loan losses			-		-		-		3,523		6,921
Loss on sale of fixed assets			397
Treasury Awards and Gains			(1,826)		-		-		(1,780)		-
Charitable contributions related to Treasury awards			1,400		-		-		-		-
Pre-Tax, Pre-Provision Operating Earnings	Q		$ 20,537		$ 19,420		$ 21,437		$ 20,758		$ 22,069
Annualized return on avg assets	N/A		1.17%		1.14%		1.25%		1.19%		0.94%
Annualized return on avg assets, oper	O/A		1.17%		1.14%		1.25%		1.08%		0.95%
Annualized pre-tax, pre-provision, oper	Q/A		1.49%		1.42%		1.61%		1.62%		1.74%
Annualized return on avg common equity, oper	O/C		9.70%		9.63%		10.32%		8.63%		7.65%
Annualized return on avg tangible common equity, operating	O/D		13.44%		13.51%		14.54%		12.27%		10.95%
Mortgage Department
Net Interest Income after provision for credit losses			$ 92		$ 113		$ 140		$ 133		$ 142
Loan fee income			1,732		2,372		3,162		3,270		2,961
Salaries and employee benefits			(995)		(1,165)		(1,512)		(1,329)		(1,444)
Other non-interest expense			(131)		(131)		(126)		(105)		(110)
Earnings before income taxes			$ 698		$ 1,189		$ 1,664		$ 1,969		$ 1,549

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211025005253/en/

M. Ray “Hoppy” Cole

Chief Executive Officer

Dee Dee Lowery

Chief Financial Officer

(601) 268-8998

Source: The First Bancshares, Inc.

FAQ

What is the net income for FBMS in Q3 2021?

FBMS reported a net income of $16.1 million for Q3 2021.

What dividend was declared by FBMS and when will it be paid?

FBMS declared a cash dividend of $0.16 per share, payable on November 26, 2021.

How much did nonperforming assets decrease for FBMS in Q3 2021?

Nonperforming assets decreased by $8.9 million, or 24%, from Q2 2021.

What was the change in total interest income for FBMS in Q3 2021?

Total interest income increased by $1.2 million, or 2.8%, from Q2 2021.

What was the cost of deposits for FBMS in Q3 2021?

The cost of deposits decreased to 0.23% in Q3 2021.