The First Bancshares, Inc. Reports a 45% Increase in Operating Net Earnings and Declares Quarterly Dividends

Business Wire 21-Apr-2017 5:11 PM

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 45% increase ($1.1 million) in operating net earnings (net income available to common shareholders adjusted for merger related costs) for the first quarter of 2017 compared to the first quarter of 2016. Operating net earnings available to common shareholders totaled $3.4 million for first quarter 2017 as compared to $2.3 million for first quarter 2016. Operating net earnings available to common shareholders excludes tax effected merger related expenses of $2.3 million in the first quarter of 2017. A one-time gain of $0.2 million occurred in the first quarter of 2016.

Fully diluted earnings per share for the first quarter of 2017 were $0.12 as compared to $0.46 for the first quarter of 2016. Fully diluted earnings per share for the first quarter of 2017 includes one-time merger related costs of $0.25 and also 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:

  • The acquisitions of Iberville Bank and Gulf Coast Community Bank closed as planned on January 1, 2017.
  • Acquisitions added loans of $239.6 million and deposits of $355.7 million (loan and deposit figures are net of credit and rate marks).
  • Excluding acquisitions, loans increased $33.3 million during the first quarter of 2017.
  • Excluding acquisitions, deposits increased $173.6 million during the first quarter of 2017.
  • Operating net earnings were $3.4 million for the first quarter of 2017 as compared to $2.4 million for the fourth quarter of 2016 and as compared to $2.3 million for the first quarter of 2016.

M. Ray Hoppy Cole, President & Chief Executive Officer, commented, We are very pleased with first quarter results especially given the complexities of closing two mergers at once. We welcome our new clients and team members associated with Gulf Coast Community Bank and Iberville Bank. We are thrilled to have them on board.

Balance Sheet

Total assets increased $505.8 million or 39.6% to $1,783.2 billion for the quarter ended March 31, 2017 of which approximately $390 million of asset growth was associated with the closing of the two acquisitions.

Total loans were $1,140.0 billion at March 31, 2017 as compared to $867.1 million at December 31, 2016 and as compared to $797.8 million at March 31, 2016 representing increases of $272.9 million, or 31.5% for the quarter ended March 31, 2017 and $342.2 million, or 42.9% as compared to first quarter 2016. The acquisitions accounted for $239.6 million of the total increase in loans during the quarter. Organic loan growth was $33.3 million or 3.8% for the quarter.

Total deposits increased $529.3 million or 50.9% for the quarter ended March 31, 2017, of which $355.7 million was a result of the acquisition. The balance of the increase was $173.6 million of which $151.2 million is due to season fluctuations in public deposit accounts.

Asset Quality

Nonperforming assets totaled $13.3 million at March 31, 2017, an increase of $3.4 million compared to $9.9 million at December 31, 2016 and an increase of $2.0 million compared to March 31, 2016. The majority of the increase is the result of acquired assets with associated fair value marks. The ALLL/total loans ratio was 0.69% at March 31, 2017 and 0.87% at December 31, 2016. Including valuation accounting adjustments on acquired loans, the total valuation plus ALLL was 1.24% of loans at March 31, 2017. The ratio of annualized net charge-offs (recoveries) to total loans was (0.10)% for the quarter ended March 31, 2017 compared to 0.03% for the quarter ended December 31, 2016. As noted in our first quarter 2015 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 was received during the fourth quarter of 2016.

Energy Loans

At March 31, 2017 the company had direct energy related loans of $19.7 million, representing 1.7% of the total loan portfolio. A majority 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.

First Quarter 2017 vs. First Quarter 2016 Earnings Comparison

First quarter 2017 net earnings available to common shareholders (including merger related costs) totaled $1.1 million compared to $2.5 million for the first quarter of 2016.

Revenues from consolidated operations increased $6.1 million in quarterly comparison. Net interest income increased $4.5 million in quarterly comparison as interest income earned on a higher volume of loans attributed to this overall increase. Noninterest income increased $0.9 million in quarterly comparison for the first quarter of 2017 as compared to the first quarter of 2016 with increases spread over service charges, mortgage income and interchange fee income.

First quarter 2017 noninterest expense increased $7.7 million, or 91.7% as compared to first quarter 2016. The largest increases in noninterest expense were related to salaries and benefits of $2.8 million of which $2.2 million is associated with increased number of employees associated with the acquisitions and other professional services and other noninterest expenses included $3.6 million in before-tax merger costs.

Fully taxable-equivalent (FTE) net interest income totaled $14.5 million and $9.9 million for the first quarter of 2017 and 2016, respectively. The FTE net interest income increased $4.6 million in prior year quarterly comparison primarily due to an increase in interest earned on loans. Purchase accounting adjustments accounted for $74,000 of the difference in net interest income for the first quarter comparisons. First quarter 2017 net interest margin of 3.85% includes 3 bps related to purchase accounting adjustments.

Investment securities totaled $366.5 million, or 20.6% of total assets at March 31, 2017, versus $269.5 million, or 21.7% of total assets at March 31, 2016. The average volume of investment securities increased $65.9 million in prior year quarterly comparison primarily the result of the acquisitions. The average tax equivalent yield on investment securities increased 30 bps to 2.93%. The investment portfolio had a net unrealized gain of $0.6 million at March 31, 2017 as compared to a net unrealized gain of $3.7 million at March 31, 2016.

The average yield on all earnings assets increased 25 basis points in prior year quarterly comparison, from 4.02% for the first quarter of 2016 to 4.27% for the first quarter of 2017. This increase was offset partially by an increase in average interest expense of 10 basis points from 0.41% for the first quarter of 2016 to 0.51% for the first quarter of 2017.

First Quarter 2017 vs Fourth Quarter 2016 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders decreased $1.0 million to $1.1 million which included after-tax one-time acquisition charges of $2.3 million.

FTE net interest income increased $3.6 million to $14.5 million from $10.9 million in sequential-quarter comparison. The increase was due primarily to increased loan volume. Interest income from purchase accounting adjustments decreased $0.3 million in quarterly comparison.

The average yield on all earnings assets increased 10 basis points in sequential-quarter comparison, from 4.17% for the fourth quarter of 2016 to 4.27% for the first quarter of 2017.

Noninterest income increased $0.7 million in sequential-quarter comparison consisting of increases in service charges and interchange fee income and a decrease in mortgage income of $0.3 million.

Noninterest expense increased $5.9 million in sequential-quarter comparison which includes an increase in salaries and benefits of $2.1 million. The majority of this increase was associated with the acquisitions. Merger related costs were $3.6 million and included in other professional services and other noninterest expenses.

Other Events

The Company will make a presentation at the 21st Annual Burkenroad Reports Investment Conference at The Sheraton New Orleans Hotel in New Orleans, Louisiana, Friday, April 28, 2017 at 9:30 a.m. central time. This will be an interactive session between management and those attending the conference. The presentation will be available at the companys internet site (www.thefirstbank.com) under the Investor Relations tab.

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 May 24, 2017 to shareholders of record as of the close of business on May 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 Companys stock is traded on NASDAQ Global Market under the symbol FBMS. Information is available on the Companys 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 SECs website, http://www.sec.gov.

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS DATA

Quarter

Ended

3/31/17

Quarter

Ended

12/31/16

Quarter

Ended

9/30/16

Quarter

Ended

6/30/16

Quarter

Ended

3/31/16

Total Interest Income $ 15,753 $ 11,868 $ 11,269 $ 10,871 $ 10,597
Total Interest Expense 1,585 1,176 1,202 1,016 922
Net Interest Income 14,168 10,692 10,067 9,855 9,675
FTE net interest income 14,470 10,935 10,306 10,099 9,912
Provision for loan losses 46 88 143 204 190
Non-interest income 3,391 2,705 3,099 2,961 2,483
Non-interest expense 16,095 10,132 9,416 8,921 8,395
Earnings before income taxes 1,418 3,177 3,607 3,691 3,573
Income tax expense 296 870 1,049 1,042 969
Net earnings 1,122 2,307 2,558 2,649 2,604
Dividends and accretion on preferred stock - 195 86 86 85
Net earnings available to common shareholders $ 1,122 $ 2,112 $ 2,472 $ 2,563 $ 2,519
PER COMMON SHARE DATA
Basic earnings per share $ 0.12 $ 0.39 $ 0.46 $ 0.47 $ 0.47
Basic earnings per share, operating* 0.37 0.44 0.48 0.47 0.43
Diluted earnings per share 0.12 0.26 0.45 0.47 0.46
Diluted earnings per share, operating* 0.37 0.30 0.48 0.47 0.43
Quarterly dividends per share .0375 .0375 .0375 .0375 .0375
Book value per common share at end of period 17.39 17.19 17.60 17.15 16.58
Tangible common book value at period end 14.57 15.46 14.73 14.26 13.67
Market price at end of period 28.50 27.50 19.10 17.27 15.63
Shares outstanding at period end 9,144,412 8,991,397 5,428,017 5,432,014 5,432,014
Weighted average shares outstanding:
Basic 9,123,271 5,463,651 5,425,567 5,432,014 5,415,339
Diluted 9,182,711 8,500,305 5,475,785 5,490,592 5,478,703
AVERAGE BALANCE SHEET DATA
Total assets $ 1,713,438 $ 1,275,538 $ 1,233,034 $ 1,210,707 $ 1,196,328
Loans and leases 1,117,135 856,798 836,931 809,806 779,418
Total deposits 1,460,787 1,037,877 1,044,428 1,036,914 964,681
Total common equity 157,184 94,750 94,007 88,643 87,155
Total tangible common equity* 134,809 79,112 78,347 72,885 71,297
Total equity 157,184 159,786 111,130 105,766 104,278
SELECTED RATIOS
Annualized return on avg assets .26 % .72 % .83 % .88 % .87 %
Annualized return on avg assets, operating* .79 % .75 % .85 % .85 % .78 %
Annualized return on avg common equity, operating* 8.61 % 10.11 % 11.14 % 11.57 % 10.69 %
Annualized return on avg tangible common equity, oper* 10.04 % 12.10 % 13.37 % 14.07 % 13.07 %
Average loans to average deposits 76.47 % 82.55 % 80.13 % 78.10 % 80.80 %
Taxable-equivalent net interest margin 3.85 % 3.77 % 3.70 % 3.68 % 3.68 %
Efficiency Ratio 90.11 % 74.28 % 70.24 % 68.31 % 67.73 %
Efficiency Ratio, operating* 69.97 % 71.40 % 68.70 % 68.31 % 69.18 %
CREDIT QUALITY
Allowance for loan losses (ALLL) as a % of total loans .69 % .87 % .88 % .88 % .88 %
Nonperforming assets to tangible equity + ALLL 9.42 % 6.74 % 10.81 % 10.93 % 11.43 %
Nonperforming assets to total loans + ORE 1.16 % 1.14 % 1.31 % 1.34 % 1.40 %
Annualized QTD net charge-offs (recoveries) to total loans (0.10 )% 0.03 % (0.04 %) (0.03 %) (0.02 %)

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

BALANCE SHEET

Mar 31,

2017

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Assets
Cash and cash equivalents $ 148,511 $ 62,119 $ 70,114 $ 54,777 $ 95,965
Securities available-for-sale 352,851 243,206 236,168 242,855 253,126
Securities held-to-maturity 6,000 6,000 6,000 6,025 6,851
Other investments 7,647 6,593 9,516 9,578 9,570
Total investment securities 366,498 255,799 251,684 258,458 269,547
Loans held for sale 5,473 5,880 9,437 8,937 6,095
Total loans 1,139,987 867,054 854,366 824,083 797,764
Allowance for loan losses (7,813 ) (7,510 ) (7,481 ) (7,259 ) (6,982 )
Loans, net 1,132,174 859,544 846,885 816,824 790,782
Premises and equipment 45,438 34,624 33,427 33,502 33,353
Other Real Estate 7,579 6,008 4,670 4,716 4,363
Goodwill and other intangibles 25,762 15,507 15,596 15,696 15,796
Other assets 51,769 37,886 34,825 31,990 26,050
Total assets $ 1,783,204 $ 1,277,367 $ 1,266,638 $ 1,224,900 $ 1,241,951
Liabilities and Shareholders Equity
Non-interest bearing deposits $ 323,442 $ 202,478 $ 196,786 $ 194,950 $ 194,433
Interest-bearing deposits 1,245,055 836,713 875,003 837,413 846,672
Total deposits 1,568,497 1,039,191 1,071,789 1,032,363 1,041,105
Borrowings 39,411 69,000 68,000 68,000 78,976
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Other liabilities 5,981 4,339 3,881 3,929 4,363
Total liabilities 1,624,199 1,122,840 1,153,980 1,114,602 1,134,754
Total shareholders equity 159,005 154,527 112,658 110,298 107,197
Total liabilities and shareholders equity $ 1,783,204 $ 1,277,367 $ 1,266,638 $ 1,224,900 $ 1,241,951

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS STATEMENT Three Months Ended
3/31/17 12/31/16 9/30/16 6/30/16 3/31/16
Interest Income:
Loans, including fees $ 13,444 $ 9,922 $ 9,706 $ 9,293 $ 9,013
Investment securities 2,129 1,472 1,446 1,531 1,532
Accretion of purchase accounting adjustments 56 429 92 20 22
Other interest income 124 45 25 27 30
Total interest income 15,753 11,868 11,269 10,871 10,597
Interest Expense:
Deposits 1,198 968 962 813 701
Borrowings 376 148 160 149 193
Subordinated debentures 51 60 80 54 28
Accretion of purchase accounting adjustments (40 ) - - - -
Total interest expense 1,585 1,176 1,202 1,016 922
Net interest income 14,168 10,692 10,067 9,855 9,675
Provision for loan losses 46 88 143 204 190
Net interest income after provision for loan losses 14,122 10,604 9,924 9,651 9,485
Non-interest Income:
Service charges on deposit accounts 868 605 606 604 637
Mortgage Income 916 1,204 1,399 1,184 645
Interchange Fee Income 903 683 666 681 644
Gain (loss) on securities, net (8 ) (3 ) - 129 -
Gain on sale of premises and equipment - - - - -
BEA award, net - - - - -
Other charges and fees 712 216 428 363 557
Total non-interest income 3,391 2,705 3,099 2,961 2,483
Non-interest expense:
Salaries and employee benefits 7,981 5,943 5,645 5,400 5,149
Occupancy expense 1,370 1,222 1,209 1,110 1,073
FDIC premiums 201 265 254 257 244
Marketing 69 122 76 132 72
Amortization of core deposit intangibles 149 88 100 100 94
Other professional services 3,010 793 461 321 231
Other non-interest expense 3,315 1,699 1,671 1,601 1,532
Total Non-interest expense 16,095 10,132 9,416 8,921 8,395
Earnings before income taxes 1,418 3,177 3,607 3,691 3,573
Income tax expense 296 870 1,049 1,042 969
Net earnings 1,122 2,307 2,558 2,649 2,604
Dividends and accretion on preferred stock - 195 86 86 85
Net earnings available to common shareholders $ 1,122 $ 2,112 $ 2,472 $ 2,563 $ 2,519
Basic earnings per common share $ 0.12 $ 0.39 $ 0.46 $ 0.47 $ 0.47
Basic earnings per common share, operating* $ 0.37 $ 0.44 $ 0.48 $ 0.47 $ 0.43
Diluted earnings per common share $ 0.12 $ 0.26 $ 0.45 $ 0.47 $ 0.46
Diluted earnings per common share, operating* $ 0.37 $ 0.30 $ 0.48 $ 0.47 $ 0.43

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

COMPOSITION OF LOANS

Mar 31,

2017

Percent

of Total

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Percent

of Total

Commercial, financial and agricultural $ 156,786 13.7 % $ 129,423 $ 121,963 $ 118,924 $ 126,381 15.7 %
Real estate construction 163,249 14.3 % 109,394 104,644 101,439 100,386 12.5 %
Real estate commercial 426,151 37.2 % 314,359 307,963 296,676 270,085 33.6 %
Real estate residential 360,964 31.5 % 289,640 296,587 282,420 276,272 34.4 %
Lease Financing Receivable 2,196 0.2 % 2,204 2,211 2,642 2,645 0.3 %
Obligations of States & subdivisions 5,383 0.5 % 6,698 6,861 6,965 7,034 0.9 %
Consumer 25,258 2.2 % 15,336 14,137 15,017 14,961 1.9 %
Loans held for sale 5,473 0.4 % 5,880 9,437 8,937 6,095 0.7 %
Total loans $ 1,145,460 100 % $ 872,934 $ 863,803 $ 833,020 $ 803,859 100 %
COMPOSITION OF DEPOSITS

Mar 31,

2017

Percent

of Total

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Percent

of Total

Noninterest bearing $ 323,442 20.6 % $ 202,478 $ 196,786 $ 194,950 $ 194,433 18.7 %
NOW and other 661,300 42.2 % 430,903 465,404 466,118 493,319 47.4 %
Money Market/Savings 304,292 19.4 % 182,793 187,228 174,740 169,733 16.3 %
Time Deposits of less than $250,000 212,352 13.5 % 162,797 163,739 148,049 139,917 13.4 %
Time Deposits of $250,000 or more 67,111 4.3 % 60,220 58,632 48,506 43,703 4.2 %
Total Deposits $ 1,568,497 100 % $ 1,039,191 $ 1,071,789 $ 1,032,363 $ 1,041,105 100 %
ASSET QUALITY DATA

Mar 31,

2017

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Nonaccrual loans $ 4,955 $ 3,265 $ 5,798 $ 5,742 $ 5,851
Loans past due 90 days and over 345 198 420 267 628
Total nonperforming loans 5,300 3,463 6,218 6,009 6,479
Other real estate 7,579 6,008 4,670 4,716 4,363
Nonaccrual securities 408 408 408 408 408
Total nonperforming assets $ 13,287 $ 9,879 $ 11,296 $ 11,133 $ 11,250
Nonperforming assets to total assets .75 % .77 % .89 % .91 % .91 %
Nonperforming assets to total loans + ORE 1.16 % 1.14 % 1.31 % 1.34 % 1.40 %
ALLL to nonperforming loans 147.42 % 216.86 % 120.31 % 120.80 % 107.80 %
ALLL to total loans .69 % .87 % .88 % .88 % .88 %
Quarter-to-date net charge-offs (recoveries) $ (284 ) $ 58 $ (79 ) $ (72 ) $ (48 )
Annualized QTD net chg/offs (recs) to loans (0.10 )% 0.03 % (0.04 %) (0.03 %) (0.02 %)

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 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 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 $ 244,997 $ 1,534 2.50 % $ 183,032 $ 997 2.18 % $ 177,154 $ 965 2.18 % $ 186,615 $ 1,034 2.22 % $ 189,249 $ 1,056 2.23 %

Tax-exempt securities

86,991 895 4.12 % 77,909 715 3.67 % 77,073 704 3.65 % 78,290 721 3.68 % 76,795 693 3.61 %

Total investment securities

331,988 2,429 2.93 % 260,941 1,712 2.62 % 254,227 1,669 2.63 % 264,905 1,755 2.65 % 266,044 1,749 2.63 %
Fed funds sold 50,700 124 0.98 % 41,545 45 0.43 % 10,356 25 0.97 % 9,902 27 1.09 % 12,395 30 0.97 %

Int bearing deposits in other banks

5,000 2 0.16 % 2,107 3 0.57 % 11,961 16 0.54 % 12,522 20 0.64 % 20,909 20 0.38 %
Loans 1,117,110 13,500 4.83 % 856,798 10,351 4.83 % 836,931 9,798 4.68 % 809,806 9,313 4.60 % 779,418 9,035 4.64 %

Total Interest earning assets

1,504,798 16,055 4.27 % 1,161,391 12,111 4.17 % 1,113,475 11,508 4.13 % 1,097,135 11,115 4.05 % 1,078,766 10,834 4.02 %
Other assets 208,640 114,147 119,559 113,572 117,562
Total assets $ 1,713,438 $ 1,275,538 $ 1,233,034 $ 1,210,707 $ 1,196,328

Interest-bearing liabilities:

Deposits $ 1,149,287 $ 1,158 0.40 % $ 844,101 $ 968 0.46 % $ 850,442 $ 962 0.45 % $ 843,771 $ 813 0.39 % $ 777,692 $ 701 0.36 %
Repo 5,000 48 3.84 % 5,000 48 3.84 % 5,000 49 3.92 % 5,000 48 3.84 % 5,000 48 3.84 %
Fed funds purchased 975 2 0.82 % 191 1 2.09 % 1,926 5 1.04 % 2,894 8 1.11 % 782 2 1.02 %
FHLB & FTN 79,581 326 1.64 % 56,272 98 0.70 % 55,337 106 0.77 % 42,962 93 0.87 % 106,352 143 0.54 %
Subordinated
debentures 10,310 51 1.98 % 10,310 61 2.37 % 10,310 80 3.10 % 10,310 54 2.10 % 10,310 28 1.09 %

Total interest bearing liabilities

1,245,153 1,585 0.51 % 915,874 1,176 0.51 % 923,015 1,202 0.52 % 904,937 1,016 0.45 % 900,136 922 0.41 %
Other liabilities 311,101 199,878 198,889 200,004 191,914
Shareholders' equity 157,184 159,786 111,130 105,766 104,278

Total liabilities and shareholders' equity

$ 1,713,438 $ 1,275,538 $ 1,233,034 $ 1,210,707 $ 1,196,328
Net interest
income (TE) $ 14,470 3.76 % $ 10,935 3.66 % $ 10,306 3.61 % $ 10,099 3.60 % $ 9,912 3.61 %
Net interest margin 3.85 % 3.77 % 3.70 % 3.68 % 3.68 %

Core net interest margin*

3.82 % 3.61 % 3.66 % 3.67 % 3.66 %

FIRST BANCSHARES, INC and SUBSIDIARIES

Reconcilement of Non-GAAP Financial Measures (unaudited)

(in thousands except per share data)

Three Months Ended

Per Common Share Data

Mar 31,

2017

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Book value per common share $ 17.39 $ 17.19 $ 17.60 $ 17.15 $ 16.58
Effect of intangible assets per share 2.82 1.73 2.87 2.98 2.91
Tangible book value per common share $ 14.57 $ 15.46 $ 14.73 $ 14.26 $ 13.67
Diluted earnings per share $ 0.12 $ 0.26 $ 0.45 $ 0.47 $ 0.46
Effect of gain on debit card conversion, after-tax - - - - (0.03 )
Effect of gain on sale of bank premises, after-tax - - - - -
Effect of BAE, after-tax - - - - -
Effect of acquisition charges, after-tax 0.25 0.04 0.03 - -
Diluted earnings per share, operating $ 0.37 $ 0.30 $ 0.48 $ 0.47 $ 0.43
Three Months Ended
Average Balance Sheet Data

Mar 31,

2017

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Total average assets

A

$ 1,713,438 $ 1,275,538 $ 1,233,034 $ 1,210,707 $ 1,196,328
Total equity $ 157,184 $ 159,786 $ 111,130 $ 105,766 $ 104,278
Less preferred equity - 65,036 17,123 17,123 17,123

Total common equity

B

157,184 94,750 94,007 88,643 87,155

Less intangible assets

22,375 15,638 15,660 15,758 15,858

Tangible common equity

C

$ 134,809 $ 79,112 $ 78,347 $ 72,885 $ 71,297
Three Months Ended
Core Net Interest Margin

Mar 31,

2017

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Net interest income (TE) $ 14,470 $ 10,935 $ 10,306 $ 10,099 $ 9,912
Less purchase accounting adjustments 96 429 92 20 22

Net interest income, net of purchase accounting adj

D

$ 14,374 $ 10,506 $ 10,214 $ 10,079 $ 9,890
Total average earning assets $ 1,504,798 $ 1,161,391 $ 1,113,475 $ 1,097,135 $ 1,078,766
Add average balance of loan valuation discount 2,159 1,358 1,484 1,504 1,526

Avg earning assets, excluding loan valuation discount

E

$ 1,506,957 $ 1,162,749 $ 1,114,959 $ 1,098,639 $ 1,080,292

Core net interest margin

D/E

3.82 % 3.61 % 3.66 % 3.67 % 3.66 %

Three Months Ended
Return Ratios

Mar 31,

2017

Dec 31,

2016

Sept 30,

2016

June 30,

2016

Mar 31,

2016

Net earnings

F

$ 1,122 $ 2,307 $ 2,558 $ 2,649 $ 2,604
Dividends and accretion on preferred stock - 195 86 86 85
Net earnings available to common shareholders 1,122 2,112 2,472 2,563 2,519
Gain on debit card conversion, after-tax - - - - (189 )
Gain on sale of premises and equipment, after-tax - - - - -
BAE, after-tax - - - - -
Acquisition charges, after-tax 2,261 282 146 - -

Net earnings available to common shareholders, oper

G

$ 3,383 $ 2,394 $ 2,618 $ 2,563 $ 2,330

Annualized return on avg assets

F/A

.26 % .72 % .83 % .88 % .87 %

Annualized return on avg assets, oper

G/A

.79 % .75 % .85 % .85 % .78 %

Annualized return on avg common equity, oper

G/B

8.61 % 10.11 % 11.14 % 11.57 % 10.69 %

Annualized return on avg tangible common equity, oper

G/C

10.04 % 12.10 % 13.37 % 14.07 % 13.07 %
Mortgage Department
Net Interest Income after provision for loan losses $ 253 $ 48 $ 24 $ 59 $ 125
Loan fee income 916 1,204 1,399 1,184 645
Other non-interest income - 1 1 3 2-
Salaries and employee benefits 806 783 805 724 563
Other non-interest expense 114 144 124 110 90
Earnings before income taxes $ 249 $ 326 $ 495 $ 412 $ 119

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170421005860/en/

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

Source: The First Bancshares, Inc.

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