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The First Bancshares, Inc. Reports a 35.3% Increase in Year-Over-Year Results and Declares Quarterly Dividends

January 28, 2016 7:47 PM

HATTIESBURG, Miss.--(BUSINESS WIRE)-- The First Bancshares, Inc. (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) today reported net earnings available to common shareholders of $8.5 million or $1.55 in fully diluted earnings per share for the year ended December 31, 2015, up from $1.19 in fully diluted earnings per share for the year ended December 31, 2014. This represents an increase of $2.2 million in earnings available to common shareholders, a 35.3% increase over fiscal year 2014 results. Net income available to common shareholders for the quarter ended December 31, 2015 was $2.3 million as compared to $2.0 million for the same period in 2014, a 16.3% increase. Net income available to common shareholders increased $132,000, a 6.2% increase during the fourth quarter of 2015 as compared to the third quarter of 2015. Diluted earnings for the fourth quarter of 2015 were $0.42 per common share, compared to $0.36 per common share reported for the fourth quarter of 2014 and $0.39 per common share reported for the third quarter of 2015.

M. Ray “Hoppy” Cole, President & Chief Executive Officer, commented, “2015 was an outstanding year for our Company. Net income available to common shareholders increased 35.3% during 2015, in a year without any major acquisitions. This significantly improved profitability is the result of our team’s focus on client service, on growing existing as well as establishing new relationships while maintaining a disciplined approach to asset quality and expense control. We are pleased with our progress and remain nimble and opportunistic in seeking opportunities to grow our business in the Gulf South region.”

Balance Sheet

Consolidated assets increased $7.2 million or 0.6% to $1.1 billion for the quarter ended December 31, 2015. Total loans were $773 million at December 31, 2015 as compared to $747 million at September 30, 2015 representing a 3.5% increase. Increased loan volume was spread across commercial and residential categories with commercial construction experiencing the largest growth. Fundings for commercial construction loans increased $13.4 million or 15.6% quarter over quarter.

Total deposits decreased $47.1 million or 4.9% to $916.7 million for the quarter ended December 31, 2015. This decrease reflects seasonal fluctuations in our public deposit portfolio. Total deposits adjusted for seasonal public fund changes increased $4.4 million or .61% for quarter ended December 31, 2015.

Asset Quality

Nonperforming assets totaled $10.9 million at December 31, 2015, a decrease of $1.6 million compared to $12.5 million at September 30, 2015. The ALLL/total loans ratio was 0.87% at December 31, 2015 and 0.90% at September 30, 2015. Including valuation accounting adjustments on acquired loans, the total valuation plus ALLL was 1.11% of loans at December 31, 2015. The ratio of annualized net charge-offs (recoveries) to total loans was (0.002%) for the quarter ended December 31, 2015 compared to (0.03%) for the quarter ended September 30, 2015. As noted in our first quarter 10-Q, the Company had been notified that a recovery of $941,000 was more likely than not expected during 2015. We received the first installment during the second quarter of 2015 which totaled $481,000 and the second installment during the third quarter of 2015 which totaled $241,000. The remaining balance of $219,000 is expected to be received in 2016.

Energy Loans

At December 31, 2015 the company had direct energy related loans of $20.9 million, representing 2.7% of the total loan portfolio. $20.3 million or 97% of the outstanding are secured by marine assets that operate in the Gulf of Mexico, which are under term contracts to major operators tied primarily to oil and gas production not exploration.

All direct energy related loans are performing and are not adversely classified based on both internal and external reviews completed during the fourth quarter of 2015.

Fourth Quarter 2015 vs. Fourth Quarter 2014 Earnings Comparison

Fourth quarter 2015 net earnings available to common shareholders totaled $2.3 million compared to $2.0 million for the fourth quarter of 2014. Revenues from consolidated operations increased $603,000 in quarterly comparison. Net interest income increased $742,000 in quarterly comparison as interest income earned on a higher volume of loans attributed to this overall increase. Noninterest income decreased $152,000 in quarterly comparison for the fourth quarter of 2015 as compared to the fourth quarter of 2014 consisting mainly of decreased mortgage income.

Fourth quarter 2015 noninterest expenses increased $224,000, or 2.8% as compared to fourth quarter 2014 which included acquisition charges of $29,000. Exclusive of the acquisition charges, the fourth quarter 2015 noninterest expenses increased $253,000 or 3.1% as compared to the same quarter in 2014 mainly consisting of increases in expenses associated with other real estate, computer/data processing and rewards checking accounts. The increase in expenses associated with computer/data processing is a reclassification from previously being included in occupancy expense. The expense associated with rewards checking accounts have been more than offset from increased service charges on these accounts.

Fully taxable-equivalent (“FTE”) net interest income totaled $9.8 million and $9.1 million for the fourth quarter of 2015 and 2014, respectively. The FTE net interest income increased $709,000 in prior year quarterly comparison primarily due to an increase in interest earned on loans. The purchase accounting adjustments had a difference of $8,000 on net interest income for the fourth quarter comparisons. Fourth quarter 2015 net interest margin of 3.81% includes 4 bps related to purchase accounting adjustments.

Investment securities totaled $255.0 million, or 22.3% of total assets at December 31, 2015, versus $270.2 million, or 24.7% of total assets at December 31, 2014. The average volume of investment securities decreased $20.6 million in prior year quarterly comparison. The average tax equivalent yield on investment securities increased 7 basis points, from 2.60% to 2.67%. The investment portfolio had a net unrealized gain of $1.6 million at December 31, 2015 as compared to $2.3 million at September 30, 2015.

The average yield on all earnings assets increased 4 basis points in prior year quarterly comparison, from 4.09% for the fourth quarter of 2014 to 4.13% for the fourth quarter of 2015 and this increase was enhanced by a decrease in average interest expense of 2 basis points from 0.41% for the fourth quarter of 2014 to 0.39% for the fourth quarter of 2015.

Fourth Quarter 2015 vs Third Quarter 2015 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders increased $132,000 to $2.3 million.

Noninterest income decreased $79,000 in sequential-quarter comparison mainly consisting of decreases in service charges on deposit accounts and mortgage income.

Noninterest expenses increased $298,000 in sequential-quarter comparison mainly consisting of increases in marketing, salaries and employee benefits as well as other non-interest expense. Salaries and employee benefits included year end related payments as well as payroll for The Mortgage Connection.

FTE net interest income increased $334,000 to $9.8 million from $9.5 million in sequential-quarter comparison. The $318,000 increase in loan income was not impacted by accretion related to purchase accounting adjustments.

The average yield on all earnings assets increased 3 basis points in sequential-quarter comparison, from 4.10% for the third quarter of 2015 to 4.13% for the fourth quarter of 2015. Increased average loan growth of $25.2 million contributed to the overall increase in the earning asset yield.

Year-Over-Year Earnings Comparison

For the year ended December 31, 2015 total loans increased $67.9 million, a growth rate of 9.6%. Portfolio mix remained relatively consistent year over year with broad based growth across portfolio segments. Total deposits for the year ended December 31, 2015 increased $23.9 million, a growth rate of 2.7%.

In year-over-year comparison, net earnings available to common shareholders increased $2.2 million, from $6.3 million at December 31, 2014 to $8.5 million at December 31, 2015, an increase of 35.3%.

Excluding non-operating income, increases in non-interest income consisted of a $341,000 increase in interchange fee income and an increase in service charges on deposit accounts of $191,000 which was partially offset by a decrease of $446,000 in mortgage banking fees. Excluding the non-operating expenses in 2014, the increase in non-interest expense primarily included increases of $1,075,000 in salaries and employee benefits with approximately $500,000 associated with the acquisition of Bay Bank and The Mortgage Connection.

In year-over-year comparison, FTE net interest income increased $3,484,000. Interest income on loans increased $3,944,000 which does not include purchase accounting adjustments on acquired loans.

Interest expense increased $234,000 in year-over-year comparison primarily due to increased interest-bearing liabilities.

Dividends

The Board of Directors of The First Bancshares, Inc. announced a cash dividend was declared in the amount of $0.0375 per share to be paid on its common stock on February 25, 2016 to shareholders of record as of the close of business on February 9, 2016.

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 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 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.

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)

Quarter Quarter Quarter Quarter Quarter

EARNINGS DATA

Ended Ended Ended Ended Ended
12/31/15 9/30/15 6/30/15 3/31/15 12/31/14
Total Interest Income $ 10,417 $ 10,080 $ 10,022 $ 9,683 $ 9,662
Total Interest Expense 804 793 806 804 791
Net Interest Income 9,613 9,287 9,216 8,879 8,871
FTE net interest income 9,846 9,512 9,454 9,137 9,137
Provision for loan losses 10 250 - 150 152
Non-interest income 1,903 1,982 1,854 1,850 2,055
Non-interest expense 8,275 7,977 8,092 7,818 8,051
Earnings before income taxes 3,231 3,042 2,978 2,761 2,723
Income tax expense 873 815 793 732 682
Net earnings 2,358 2,227 2,185 2,029 2,041
Dividends and accretion on preferred stock 85 86 86 85 86
Net earnings available to common shareholders $ 2,273 $ 2,141 $ 2,099 $ 1,944 $ 1,955
PER COMMON SHARE DATA
Basic earnings per share $ 0.42 $ 0.40 $ 0.39 $ 0.36 $ 0.37
Diluted earnings per share 0.42 0.39 0.39 0.36 0.36
Diluted earnings per share, operating* 0.40 0.39 0.39 0.34 0.34
Quarterly dividends per share .0375 .0375 .0375 .0375 .0375
Book value per common share at end of period 16.05 15.72 15.13 15.19 14.88
Tangible common book value at period end 13.10 13.02 12.41 12.46 12.10
Market price at end of period 18.34 17.47 16.65 16.26 14.51
Shares outstanding at period end 5,376,665 5,376,665 5,374,415 5,374,415 5,316,176
Weighted average shares outstanding:
Basic 5,376,665 5,374,790 5,366,495 5,358,576 5,314,743
Diluted 5,449,851 5,441,980 5,424,242 5,415,100 5,357,644
AVERAGE BALANCE SHEET DATA
Total assets $ 1,131,924 $ 1,109,944 $ 1,119,648 $ 1,127,349 $ 1,073,287
Loans and leases 757,036 731,818 728,416 705,752 678,252
Total deposits 946,849 953,229 973,776 932,401 891,168
Total common equity 84,122 82,045 79,986 79,722 73,335
Total tangible common equity* 69,514 67,492 65,334 64,967 58,758
Total equity 101,245 99,168 97,109 96,845 90,458
SELECTED RATIOS
Annualized return on avg assets .83 % .80 % .78 % .72 % .76 %
Annualized return on avg assets, operating* .76 % .78 % .75 % .66 % .68 %
Annualized return on avg common equity, operating* 10.27 % 10.44 % 10.50 % 9.33 % 9.88 %
Annualized return on avg tangible common equity, oper* 12.43 % 12.69 % 12.85 % 11.45 % 12.34 %
Average loans to average deposits 79.95 % 76.77 % 74.80 % 75.69 % 76.11 %
Taxable-equivalent net interest margin 3.81 % 3.79 % 3.71 % 3.60 % 3.76 %
Efficiency Ratio 70.43 % 69.40 % 71.56 % 71.16 % 71.94 %
CREDIT QUALITY
Allowance for loan losses (ALLL) as a % of total loans .87 % .90 % .88 % .83 % .87 %
Nonperforming assets to tangible equity + ALLL 11.55 % 13.28 % 12.33 % 12.70 % 13.29 %
Nonperforming assets to total loans + ORE 1.40 % 1.66 % 1.51 % 1.58 % 1.64 %
Annualized QTD net charge-offs (recoveries) to total loans (0.002 %) (0.03 %) (0.27 %) .18 % .08 %

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
Dec 31, Sept 30, June 30, Mar 31, Dec 31,

BALANCE SHEET

2015 2015 2015 2015 2014
Assets
Cash and cash equivalents $ 41,259 $ 65,233 $ 62,021 $ 94,474 $ 44,618
Securities available-for-sale 239,732 239,631 236,476 246,842 254,744
Securities held-to-maturity 7,092 7,233 7,651 7,829 8,193
Other investments 8,135 6,249 5,787 7,235 7,234
Total investment securities 254,959 253,113 249,914 261,906 270,171
Loans held for sale 3,974 1,058 1,864 1,657 2,103
Total loans 772,515 746,588 731,037 716,359 704,531
Allowance for loan losses (6,747 ) (6,734 ) (6,419 ) (5,928 ) (6,095 )
Loans, net 765,768 739,854 724,618 710,431 698,436
Premises and equipment 33,623 33,610 33,571 33,769 34,810
Other Real Estate 3,083 4,104 4,116 4,598 4,654
Goodwill and other intangibles 15,891 14,490 14,691 14,691 14,791
Other assets 26,574 26,387 26,953 24,622 24,182
Total assets $ 1,145,131 $ 1,137,849 $ 1,117,648 $ 1,146,148 $ 1,093,768
Liabilities and Shareholders’ Equity
Non-interest bearing deposits $ 189,445 $ 187,542 $ 193,810 $ 203,766 $ 201,362
Interest-bearing deposits 727,250 776,298 768,289 780,877 691,413
Total deposits 916,695 963,840 962,099 984,643 892,775
Borrowings 110,321 58,986 43,991 49,446 89,450
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Other liabilities 4,369 3,091 2,814 2,708 5,017
Total liabilities 1,041,695 1,036,227 1,019,214 1,047,382 997,552
Total shareholders’ equity 103,436 101,622 98,434 98,766 96,216
Total liabilities and shareholders’ equity $ 1,145,131 $ 1,137,849 $ 1,117,648 $ 1,146,148 $ 1,093,768

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)

EARNINGS STATEMENT

Three Months Ended
12/31/15 9/30/15 6/30/15 3/31/15 12/31/14
Interest Income:
Loans, including fees $ 8,874 $ 8,556 $ 8,461 $ 8,147 $ 8,071
Investment securities 1,472 1,438 1,474 1,512 1,534
Accretion of purchase accounting adjustments 59 73 71 1 51
Other interest income 12 13 16 23 6
Total interest income 10,417 10,080 10,022 9,683 9,662
Interest Expense:
Deposits 657 693 704 679 678
Borrowings 131 100 102 127 114
Subordinated debentures 47 47 46 45 46
Accretion of purchase accounting adjustments (31 ) (47 ) (46 ) (47 ) (47 )
Total interest expense 804 793 806 804 791
Net interest income 9,613 9,287 9,216 8,879 8,871
Provision for loan losses 10 250 - 150 152
Net interest income after provision for loan losses 9,603 9,037 9,216 8,729 8,719
Non-interest Income:
Service charges on deposit accounts 674 737 591 568 608
Mortgage Income 245 341 357 334 445
Interchange Fee Income 650 611 612 571 561
Gain (loss) on securities, net - - - - (4 )
Gain on sale of premises and equipment - - - 110 -
BEA award, net 152 - - - 223
Other charges and fees 182 293 294 267 222
Total non-interest income 1,903 1,982 1,854 1,850 2,055
Non-interest expense:
Salaries and employee benefits 4,670 4,628 4,613 4,626 4,551
Occupancy expense 1,107 1,136 1,137 1,109 1,156
FDIC premiums 243 241 241 241 271
Marketing 150 64 161 62 160
Amortization of core deposit intangibles 100 100 100 100 100
Other professional services 377 318 379 258 412
Other non-interest expense 1,628 1,490 1,461 1,422 1,401
Total Non-interest expense 8,275 7,977 8,092 7,818 8,051
Earnings before income taxes 3,231 3,042 2,978 2,761 2,723
Income tax expense 873 815 793 732 682
Net earnings 2,358 2,227 2,185 2,029 2,041
Dividends and accretion on preferred stock 85 86 86 85 86
Net earnings available to common shareholders $ 2,273 $ 2,141 $ 2,099 $ 1,944 $ 1,955
Earnings per common share, diluted $ 0.42 $ 0.39 $ 0.39 $ 0.36 $ 0.36
Operating earnings per common share, diluted* $ 0.42 $ 0.39 $ 0.39 $ 0.34 $ 0.34

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)

Dec 31, Percent Sept 30, June 30, Mar 31, Dec 31,

Percent

COMPOSITION OF LOANS

2015 of Total 2015 2015 2015 2014

of Total

Commercial, financial and agricultural $ 129,197 16.6 % $ 123,872 $ 116,352 $ 110,806 $ 106,109 15.0 %
Real estate – construction 99,161 12.8 % 85,769 93,152 93,168 84,935 12.0 %
Real estate – commercial 253,309 32.6 % 251,631 245,537 242,969 238,602 33.8 %
Real estate – residential 272,180 35.1 % 265,763 259,610 254,844 256,406 36.3 %
Lease Financing Receivable 2,650 .3 % 2,303 - - - -
Consumer 16,018 2.1 % 17,250 16,386 14,572 18,479 2.6 %
Loans held for sale 3,974 .5 % 1,058 1,864 1,657 2,103 0.3 %
Total loans $ 776,489 100 % $ 747,646 $ 732,901 $ 718,016 $ 706,634 100 %

Dec 31,

Percent

Sept 30, June 30, Mar 31, Dec 31,

Percent

COMPOSITION OF DEPOSITS

2015

of Total

2015 2015 2015 2014

of Total

Noninterest bearing $ 189,445 20.7 % $ 187,542 $ 193,810 $ 203,766 $ 201,362 22.6 %
NOW and other 373,687 40.8 % 411,893 393,596 404,605 301,721 33.8 %
Money Market/Savings 174,090 19.0 % 181,861 185,033 183,048 183,633 20.6 %
Time Deposits of less than $100,000 73,865 8.0 % 75,022 77,815 80,606 85,365 9.6 %
Time Deposits of $100,000 or more 105,608 11.5 % 107,522 111,845 112,618 120,694 13.4 %
Total Deposits $ 916,695 100 % $ 963,840 $ 962,099 $ 984,643 $ 892,775 100 %

Dec 31,

Sept 30, June 30, Mar 31, Dec 31,

ASSET QUALITY DATA

2015

2015 2015 2015 2014
Nonaccrual loans $ 7,368 $ 7,949 $ 6,513 $ 5,995 $ 6,056
Loans past due 90 days and over 29 6 92 426 669
Total nonperforming loans 7,397 7,955 6,605 6,421 6,725
Other real estate 3,083 4,104 4,116 4,598 4,654
Nonaccrual securities 408 408 408 408 250
Total nonperforming assets $ 10,888 $ 12,467 $ 11,129 $ 11,427 $ 11,629
Nonperforming assets to total assets .95 % 1.10 % 1.00 % 1.00 % 1.06 %
Nonperforming assets to total loans + ORE 1.40 % 1.66 % 1.51 % 1.58 % 1.64 %
ALLL to nonperforming loans 91.21 % 84.65 % 97.18 % 92.32 % 90.63 %
ALLL to total loans .87 % .90 % .88 % .83 % .87 %
Quarter-to-date net charge-offs (recoveries) $ (3 ) $ (65 ) $ (490 ) $ 316 $ 141
Annualized QTD net chg/offs (recs) to loans (0.002 %) (0.03 %) (0.27 %) .18 % .08 %

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 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014
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 $ 177,964 $ 1,006 2.26 % $ 172,478 $ 976 2.26 % $ 179,580 $ 991 2.21 % $ 184,401 $ 992 2.15 % $ 189,691 $ 998 2.10 %

Tax-exempt securities

75,570 685 3.63 % 74,807 662 3.54 % 79,568 702 3.53 % 81,717 759 3.72 % 84,413 783 3.71 %

Total investment securities

253,534 1,691 2.67 % 247,285 1,638 2.65 % 259,148 1,693 2.61 % 266,118 1,751 2.63 % 274,106 1,781 2.60 %
Fed funds sold 405 1 0.99 % 5,502 13 0.95 % 6,702 16 0.95 % 16,248 23 0.57 % 408 6 5.88 %

Int bearing deposits in other banks

21,601 25 0.46 % 20,613 25 0.49 % 24,089 19 0.32 % 27,430 19 0.28 % 18,270 19 0.42 %
Loans 757,036 8,933 4.72 % 731,818 8,629 4.72 % 728,416 8,532 4.69 % 705,752 8,148 4.62 % 678,252 8,122 4.79 %

Total Interest earning assets

1,032,576 10,650 4.13 % 1,005,218 10,305 4.10 % 1,018,355 10,260 4.03 % 1,015,548 9,941 3.92 % 971,034 9,928 4.09 %
Other assets 99,348 104,726 101,293 111,801 102,253
Total assets $ 1,131,924 $ 1,109,944 $ 1,119,648 $ 1,127,349 $ 1,073,287

Interest-bearing liabilities:

Deposits $ 752,098 $ 626 0.33 % $ 759,939 $ 646 0.34 % $ 772,837 $ 658 0.34 % $ 736,199 $ 632 0.34 % $ 693,657 $ 630 0.36 %
Repo 5,000 48 3.84 % 5,000 48 3.84 % 5,000 48 3.84 % 5,000 48 3.84 % 5,000 49 3.92 %
Fed funds purchased 1,984 6 1.21 % 661 2 1.21 % 1,180 3 1.02 % 108 - 0.00 % 1,645 4 0.97 %
FHLB 60,961 77 0.51 % 37,716 50 0.53 % 27,117 51 0.75 % 78,892 78 0.40 % 63,040 62 0.39 %

Subordinated debentures

10,310 47 1.82 % 10,310 47 1.82 % 10,310 46 1.78 % 10,310 45 1.75 % 10,310 46 1.78 %

Total interest bearing liabilities

830,353 804 0.39 % 813,626 793 0.39 % 816,444 806 0.39 % 830,509 804 0.39 % 773,652 791 0.41 %
Other liabilities 200,326 197,150 206,095 199,995 209,177
Shareholders' equity 101,245 99,168 97,109 96,845 90,458

Total liabilities and shareholders' equity

$ 1,131,924 $ 1,109,944 $ 1,119,648 $ 1,127,349 $ 1,073,287

Net interest income (TE)

$ 9,846 3.74 % $ 9,512 3.71 % $ 9,454 3.64 % $ 9,137 3.53 % $ 9,137 3.68 %
Net interest margin 3.81 % 3.79 % 3.71 % 3.60 % 3.76 %

Core net interest margin*

3.77 % 3.73 % 3.66 % 3.57 % 3.72 %

FIRST BANCSHARES, INC and SUBSIDIARIES
Reconcilement of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)

Three Months Ended

Dec 31, Sept 30, June 30, Mar 31, Dec 31,
Per Common Share Data 2015 2015 2015 2015 2014
Book value per common share $ 16.05 $ 15.72 $ 15.13 $ 15.19 $ 14.88
Effect of intangible assets per share 2.95 2.70 2.72 2.73 2.78
Tangible book value per common share $ 13.10 $ 13.02 $ 12.41 $ 12.46 $ 12.10
Diluted earnings per share $ 0.42 $ 0.39 $ 0.39 $ 0.36 $ 0.36
Effect of gain on sale of other securities, after-tax - - - - -
Effect of gain on sale of bank premises, after-tax - - - (0.02 ) -
Effect of BAE, after-tax (0.02 ) - - - (0.02 )
Effect of acquisition charges, after-tax - - - - -
Diluted earnings per share, operating $ 0.40 $ 0.39 $ 0.39 $ 0.34 $ 0.34
Three Months Ended
Dec 31, Sept 30, June 30, Mar 31, Dec 31,
Average Balance Sheet Data 2015 2015 2015 2015 2014
Total average assets A $ 1,131,924 $ 1,109,944 $ 1,119,648 $ 1,127,349 $ 1,073,287
Total equity $ 101,245 $ 99,168 $ 97,109 $ 96,845 $ 90,458
Less preferred equity 17,123 17,123 17,123 17,123 17,123
Total common equity B 84,122 82,045 79,986 79,722 73,335
Less intangible assets 14,608 14,553 14,652 14,755 14,577
Tangible common equity C $ 69,514 $ 67,492 $ 65,334 $ 64,967 $ 58,758
Three Months Ended
Dec 31, Sept 30, June 30, Mar 31, Dec 31,
Core Net Interest Margin 2015 2015 2015 2015 2014
Net interest income (TE) $ 9,846 $ 9,512 $ 9,454 $ 9,137 $ 9,137
Less purchase accounting adjustments 90 120 117 48 98
Net interest income, net of purchase accounting adj D $ 9,756 $ 9,392 $ 9,337 $ 9,089 $ 9,039
Total average earning assets $ 1,032,576 $ 1,005,218 $ 1,018,355 $ 1,015,548 $ 971,034
Add average balance of loan valuation discount 1,583 1,657 1,727 1,730 1,780
Avg earning assets, excluding loan valuation discount E $ 1,034,159 $ 1,006,875 $ 1,020,082 $ 1,017,278 $ 972,814
Core net interest margin D/E 3.77 % 3.73 % 3.66 % 3.57 % 3.72 %
Three Months Ended
Dec 31, Sept 30, June 30, Mar 31, Dec 31,
Return Ratios 2015 2015 2015 2015 2014
Net earnings F $ 2,358 $ 2,227 $ 2,185 $ 2,029 $ 2,041
Dividends and accretion on preferred stock 85 86 86 85 86
Net earnings available to common shareholders 2,273 2,141 2,099 1,944 1,955
Gain on sale of other securities, after-tax - - - - -
Gain on sale of premises and equipment, after-tax - - - (84 ) -
BAE, after-tax (112 ) - - - (165 )
Acquisition charges, after-tax - - - - 22
Net earnings available to common shareholders, oper G $ 2,161 $ 2,141 $ 2,099 $ 1,860 $ 1,812
Annualized return on avg assets F/A .83 % .80 % .78 % .72 % .76 %
Annualized return on avg assets, oper G/A .76 % .78 % .75 % .66 % .68 %
Annualized return on avg common equity, oper G/B 10.27 % 10.44 % 10.50 % 9.33 % 9.88 %
Annualized return on avg tangible common equity, oper G/C 12.43 % 12.69 % 12.85 % 11.45 % 12.34 %

Certain financial information included in the earnings release and the associated Condensed Consolidated Financial Information (unaudited) is determined by methods other than in accordance with GAAP.

We use non-GAAP measures because we believe they are useful for evaluating our financial condition with a meaningful measure for assessing our financial condition as well as comparison to financial results for prior periods. These results should not be viewed as a substitute for results determined in accordance with GAAP, and are necessarily comparable to non-GAAP performance measures that other companies may use.

The First Bancshares, Inc.

M. Ray “Hoppy” Cole

Chief Executive Officer

or

Dee Dee Lowery, 601-268-8998

Chief Financial Officer

Source: The First Bancshares, Inc.

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