The First Bancshares, Inc. Reports 2013 Earnings and Declaration of Dividend

Company Release - 2/4/2014 7:21 PM ET

HATTIESBURG, Miss.--(BUSINESS WIRE)-- The First Bancshares, Inc. (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) today reported earnings for the fourth quarter and fiscal year ended December 31, 2013. The First Bancshares, Inc. also announced a quarterly dividend of $.0375 per common share. The record date will be February 14, 2014 with a payable date of March 3, 2014.

Net income available to common stockholders for the three months ended December 31, 2013 amounted to $1,392,000, or $0.27 per diluted share, compared to $1,062,000, or $0.34 per diluted share for the same quarter in 2012, an increase of $330,000 or 31.1% in net income available to common stockholders.

Net income available to common stockholders for the year ended December 31, 2013 amounted to $4,215,000, or $0.96 per diluted share, compared to $3,624,000, or $1.16 per diluted share for the same period in 2012, an increase of $591,000 or 16.3% in net income available to common stockholders. Net income available to common stockholders exclusive of one-time items for the twelve months ended December 31, 2013 was $4,878,000, or $1.12 per diluted share, a 35.0% increase in net income available to common stockholders over the same period in 2012.

M. Ray “Hoppy” Cole, President & Chief Executive Officer, commented, “We are pleased with the results of 2013. We were successful in growing our Company, increasing our presence in existing markets and opening up new markets for further expansion. Our growth was both organic and acquisitive as we completed the acquisition of The First National Bank of Baldwin County during the year. Total assets increased 30.4% in 2013 and net income to common shareholders increased 16.3% year over year which included $1,439,000 of one-time pretax charges associated with the acquisition. We are excited about the opportunities throughout our footprint, which we believe will continue to create value for our shareholders.”

Balance Sheet Highlights

Total assets for the Company totaled $940.9 million at December 31, 2013, a decrease of $11.0 million compared with September 30, 2013. The decrease during the fourth quarter of 2013 was attributable to a decline in the Company’s deposit balances associated with seasonal fluctuations and a reduction in high cost funds acquired through acquisition.

December 31, 2013 loans outstanding increased by $10.8 million, or approximately 8% on an annualized basis, compared with September 30, 2013, and increased $169.6 million, or 41.0%, compared to December 31, 2012 total loans outstanding. Loans of $124.2 million were acquired from First National Bank of Baldwin County on April 30, 2013. The remaining increase in loans of $45.4 million was broad based across all categories and throughout the Company’s market area.


End of Period Loan Balances	12/31/13		09/30/13		12/31/12
(dollars in thousands)
Loans held for sale	$	3,680	$	1,399	$	5,585
Commercial		81,792		79,094		53,234
Real Estate:
Mortgage-commercial		212,388		198,123		142,046
Mortgage-residential		202,343		211,494		140,703
Construction		67,287		66,745		57,529
Consumer and other		15,813		15,658		14,600
	$	583,303	$	572,513	$	413,697

Non-performing assets totaled $10.3 million at December 31, 2013 compared to $10.4 million of non-performing assets at September 30, 2013 and $12.5 million at December 31, 2012. Non-performing assets represented 1.09% of total assets at December 31, 2013 compared to 1.09% of total assets at September 30, 2013, and compared to 1.73% at December 31, 2012. Non-performing loans totaled $3.3 million at December 31, 2013 compared to $3.2 million at September 30, 2013 and compared to $3.7 million of non-performing loans at December 31, 2012. Non-performing loans represented 0.57% of total loans at December 31, 2013 compared with 0.55% of total outstanding loans at September 30, 2013 and 0.91% of total loans outstanding at December 31, 2012.


Non-Performing Assets	12/31/13		09/30/13		12/31/12
(dollars in thousands)
Non-Accrual Loans	$	3,181	$	2,681	$	3,589
Past Due Loans (90 days or more)		159		471		158
Total Non-Performing Loans		3,340		3,152		3,747
Non-Accrual Securities		1,950		1,950		1,950
Other Real Estate		5,010		5,292		6,782
Total Non-Performing Assets	$	10,300	$	10,394	$	12,479

The Company’s allowance for loan losses totaled $5.7 million at December 31, 2013 representing an increase of $56,000, or 3.9% on an annualized basis, from September 30, 2013 and an increase of $1,001,000, or 21.2%, from December 31, 2012. The allowance for loan losses represented 0.98% of period-end loans at December 31, 2013 compared with 0.99% of period-end loans at September 30, 2013 and 1.14% of period-end loans at December 31, 2012. Under acquisition accounting treatment, loans acquired are recorded at fair value which includes a credit risk component, and therefore the allowance on loans acquired is not carried over from the seller. The allowance for loan losses represented 1.21% of period end loans excluding those booked at fair value at December 31, 2013 compared with 1.26% at September 30, 2013 and 1.20% at December 31, 2012.

Total deposits decreased $34.0 million or 16.7% on an annualized basis, as of December 31, 2013 compared with September 30, 2013 total deposits and increased by approximately $183.3 million or 30.7% compared with December 31, 2012. Deposits of $185.8 million were acquired from First National Bank of Baldwin County on April 30, 2013.


End of Period Deposit Balances	12/31/13		09/30/13		12/31/12
(dollars in thousands)
Non-interest-bearing Demand Deposits	$	173,794	$	169,001	$	109,624
IB Demand, Savings, and MMDA Accounts		403,190		434,449		326,067
Time Deposits < $100,000		85,880		88,907		69,115
Time Deposits > $100,000		117,107		121,608		91,821
	$	779,971	$	813,965	$	596,627

Results of Operations Highlights – Quarter ended September 30, 2013

Net income available to common stockholders for the quarter ended December 31, 2013 totaled $1,392,000 or $0.27 per diluted share, an increase of $330,000 or 31.1% from the fourth quarter of 2012 net income available to common stockholders of $1,062,000 or $0.34 per diluted share.

During the quarter ended December 31, 2013, net interest income totaled $7,766,000 representing an increase of $1,996,000, or 34.6%, compared with the quarter ended December 31, 2012 net interest income of $5,770,000. The tax equivalent net interest margin for the quarter ended December 31, 2013 was 3.76% compared to 3.73% in the fourth quarter of 2012. The increase in net interest income and the net interest margin during the quarter ended December 31, 2013 compared with the fourth quarter of 2012 was attributable primarily to increased average loans outstanding.

Fair value accounting adjustments on acquired assets and liabilities contributed approximately 11 basis points on an annualized basis to the net interest margin in the fourth quarter of 2013 and 5 basis points in the fourth quarter of 2012.

During the quarter ended December 31, 2013, non-interest income totaled $1,671,000, an increase of $79,000 or 4.9%, compared with the quarter ended September 30, 2013, and a decrease of $150,000, or 8.2%, compared with the fourth quarter of 2012. The decrease for the quarter ended December 31, 2013 is attributed to a $443,000, or 57.3% decline in mortgage income as compared to the quarter ended December 31, 2012.


	Quarter Ended		Quarter Ended		Quarter Ended
Non-interest Income	12/31/13		09/30/13		12/31/12
(dollars in thousands)
Service Charges on Deposit Accounts	$	617	$	649	$	515
Mortgage Income		330		454		773
Interchange Fee Income		479		472		381
Other Operating Income		245		17		152
Total Non-interest Income	$	1,671	$	1,592	$	1,821

During the quarter ended December 31, 2013, non-interest expense totaled $7,308,000, a decrease of $322,000, or 4.2%, compared with the quarter ended September 30, 2013, and an increase of $1,517,000, or 26.2%, compared with the fourth quarter of 2012.


	Quarter Ended		Quarter Ended		Quarter Ended
Non-interest Expense	12/31/13		09/30/13		12/31/12
(dollars in thousands)
Salaries and Employee Benefits	$	3,932	$	4,010	$	2,992
Occupancy, Furniture and Equipment Expense		1,057		802		830
FDIC Premiums		231		181		182
Professional Fees		375		618		291
Advertising and Promotion		160		98		111
Intangible Amortization		94		94		77
Other Operating Expenses		1,459		1,827		1,308
Total Non-interest Expense	$	7,308	$	7,630	$	5,791

Total non-interest expense increases are primarily related to increases in operating costs associated with the acquisition of First National Bank of Baldwin County on April 30, 2013. One-time acquisition costs expensed during the fourth quarter of 2013 amounted to $30,000 and one-time acquisition costs expensed during 2013 amounted to $1,439,000.

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 south Mississippi, Louisiana and south Alabama. The Company’s stock is traded on NASDAQ Global Market under the symbol FBMS. Information is available on the Company’s website: www.thefirstbank.com.

Forward Looking Statement

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


THE FIRST BANCSHARES, INC.
(unaudited, dollars in thousands except per shares data)

Consolidated Balance Sheets
	Dec 31, 2013			Sept 30, 2013			Dec 31, 2012
ASSETS
Cash and Due from Banks	$	24,080		$	26,110		$	20,225
Federal funds sold		967			1,328			1,064
Interest-bearing deposits with banks		14,205			24,326			9,588
Investment Securities		258,023			264,883			226,301
Loans held for sale		3,680			1,399			5,585
Loans, Net of Unearned Income		579,623			571,114			408,112
Allowance for Loan Losses		(5,728	)		(5,672	)		(4,727	)
Net Loans		573,895			565,442			403,385
Premises and Equipment		31,532			32,551			22,243
Other Real Estate Owned		5,010			5,292			6,782
Goodwill		10,621			10,621			9,362
Other Assets		18,877			19,943			16,850
TOTAL ASSETS	$	940,890		$	951,895		$	721,385
LIABILITIES
Non-interest-bearing Demand Deposits	$	173,794		$	169,001		$	109,625
Interest-bearing Accounts		403,190			434,449			326,066
Time Deposits		202,987			210,515			160,936
Total Deposits		779,971			813,965			596,627
Borrowings		52,000			30,000			36,771
Subordinated Debentures		10,310			10,310			10,310
Other Liabilities		13,501			13,860			11,792
TOTAL LIABILITIES		855,782			868,135			655,500
STOCKHOLDER’S EQUITY
Preferred Stock		17,103			17,082			17,021
Common Stock		5,123			5,134			3,134
Surplus		42,086			41,994			23,711
Retained Earnings		22,509			21,305			19,951
Accumulated Other Comprehensive Income (Loss)		(1,249	)		(1,291	)		2,533
Treasury Stock		(464	)		(464	)		(464	)
TOTAL STOCKHOLDERS’ EQUITY		85,108			83,760			65,885
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	940,890		$	951,895		$	721,385
END OF PERIOD SHARES OUTSTANDING		5,096,447			5,107,131			3,107,102
TANGIBLE BOOK VALUE PER SHARE	$	10.73		$	10.43		$	11.96


THE FIRST BANCSHARES, INC.
(unaudited, dollars in thousands except per share data)
Consolidated Statements of Income
	Three Months Ended				Twelve Months Ended
	Dec 31, 2013		Dec 31, 2012		Dec 31, 2013		Dec 31, 2012
INTEREST INCOME
Interest and Fees on Loans	$	6,971	$	5,401	$	25,736	$	21,412
Interest and Dividends on Securities		1,430		1,187		5,502		4,868
Interest on Fed Funds Sold		10		9		80		51
TOTAL INTEREST INCOME		8,411		6,597		31,318		26,331
INTEREST EXPENSE
Interest on Deposits		476		627		2,300		3,067
Interest on Borrowings		169		200		617		1,070
TOTAL INTEREST EXPENSE		645		827		2,917		4,137
NET INTEREST INCOME		7,766		5,770		28,401		22,194
Provision for Loan Losses		59		484		1,079		1,228
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		7,707		5,286		27,322		20,966

NON-INTEREST INCOME		1,671		1,821		7,083		6,324
NON-INTEREST EXPENSE		7,308		5,791		28,162		22,164
Income before Income Taxes		2,070		1,316		6,243		5,126
Income Taxes		572		148		1,604		1,078
NET INCOME		1,498		1,168		4,639		4,048
Preferred Stock Accretion & Dividends		106		106		424		424
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	1,392	$	1,062	$	4,215	$	3,624
BASIC EARNINGS PER SHARE	$	0.27	$	0.34	$	0.98	$	1.17
DILUTED EARNINGS PER SHARE	$	0.27	$	0.34	$	0.96	$	1.16
WEIGHTED AVG SHARES OUTSTANDING		5,102,644		3,108,573		4,319,485		3,101,411
DILUTED WEIGHTED AVG SHS OUTSTANDING		5,156,089		3,132,429		4,372,930		3,125,267


THE FIRST BANCSHARES, INC.
(unaudited, dollars in thousands except per share data)

	Three Months Ended						Twelve Months Ended
	Dec 31, 2013			Dec 31, 2012			Dec 31, 2013			Dec 31, 2012
EARNINGS PERFORMANCE RATIOS
Annualized Return on Average Assets		0.59	%		0.58	%		0.45	%		0.51	%
Annualized Return on Average Assets(1)		0.60	%		0.58	%		0.52	%		0.51	%
Annualized Return on Average Equity		6.73	%		6.47	%		4.95	%		5.77	%
Annualized Return on Average Equity(1)		6.84	%		6.47	%		5.73	%		5.77	%
Net Interest Margin		3.76	%		3.73	%		3.44	%		3.63	%
Efficiency Ratio(2)		75.18	%		73.72	%		76.98	%		74.96	%
Efficiency Ratio(1)(2)		74.87	%		73.72	%		73.88	%		74.96	%
Net Overhead Expense to Average Earning Assets(3)		2.63	%		2.45	%		2.46	%		2.47	%
Net Overhead Expense to Average Earning Assets(1)(3)		2.62	%		2.45	%		2.34	%		2.47	%

ASSET QUALITY RATIOS
Annualized Net Charge-offs to Average Loans		0.00	%		0.16	%		0.01	%		0.26	%
Allowance for Loan Losses to Period End Loans		0.98	%		1.14	%
Non-performing Assets to Period End Assets		1.09	%		1.73	%
Non-performing Loans to Period End Loans		0.57	%		0.91	%
Loans 30-89 Days Past Due to Period End Loans		0.95	%		1.12	%

SELECTED BALANCE SHEET & OTHER FINANCIAL DATA
Average Assets	$	937,584		$	729,524		$	941,742		$	714,953
Average Earning Assets	$	857,034		$	647,904		$	857,405		$	640,898
Average Total Loans	$	575,310		$	405,008		$	583,200		$	388,097
Average Demand Deposits	$	121,835		$	75,398		$	116,289		$	73,584
Average Interest Bearing Liabilities	$	720,668		$	579,326		$	728,322		$	572,351
Average Equity	$	82,727		$	65,629		$	85,081		$	62,778

Period End Non-performing Assets	$	10,300		$	12,479
Period End Non-performing Loans	$	3,340		$	3,747
Period End Loans 30-89 Days Past Due	$	5,553		$	4,644

Tax Equivalent Net Interest Income	$	8,050		$	6,034		$	29,502		$	23,245
Net Charge-offs during Period	$	0		$	157		$	75		$	1,012


(1) Excludes merger related costs and one-time items
(2) Efficiency Ratio is defined as Non-interest Expense divided by the sum of Net Interest Income, on a tax equivalent basis, and Non-Interest Income
(3) Net Overhead Expense is defined as Total Non-interest Expense less Total Non-interest income

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.

Press Release

The First Bancshares, Inc. Reports 2013 Earnings and Declaration of Dividend