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The First Bancshares, Inc. Reports a 93% Increase in Net Income Available to Common Shareholders; Increases Quarterly Dividend by 14%

HATTIESBURG, Miss.–(BUSINESS WIRE)–The First Bancshares, Inc. (NASDAQ: FBMS), holding company for The
First, A National Banking Association, (www.thefirstbank.com)
reported today net income available to common shareholders of $7.6
million for the quarter ended March 31, 2019, an increase of $3.7
million or 92.9%, compared to $4.0 million for the quarter ended March
31, 2018, and an increase of $0.8 million, or 11.3%, compared to $6.9
million for the fourth quarter of 2018. Operating net earnings increased
85.2%, or $4.6 million, for the quarter ended March 31, 2019, totaling
$9.9 million for the first quarter of 2019 as compared to $5.4 million
for the first quarter of 2018, and increased $0.8 million, or 8.6%, as
compared to $9.1 million for the fourth quarter of 2018. Operating net
earnings for the first quarter of 2019 excludes merger-related costs of
$2.5 million, net of tax and income in the form of an award from the U.
S. Department of the Treasury of $0.2 million, net of tax. Operating net
earnings for the first quarter of 2018 excludes merger-related costs of
$1.4 million, net of tax. Operating net earnings for the fourth quarter
of 2018 exclude merger-related costs of $3.2 million, net of tax as well
as $0.3 million, net of tax related to the sale of investment securities
and $0.7 million net of tax in awards from the U. S. Department of
Treasury.

For the first quarter of 2019, fully diluted earnings per share were
$0.48, compared to $0.34 for the first quarter of 2018 and $0.48 for the
fourth quarter of 2018. Excluding the impact of the merger-related costs
and income described above, fully diluted operating earnings per share
for the first quarter of 2019 were $0.63 as compared to $0.46 for the
first quarter of 2018, and $0.64 for the fourth quarter of 2018. Fully
diluted earnings per share for first quarter of 2019 include the
issuance of 2,377,501 shares of our common stock in connection with the
acquisition of FPB Financial Corp (“FPB”). Fully diluted earnings per
share for first quarter of 2018 include the issuance of 1,134,010 shares
of our common stock in connection with the acquisition of Southwest
Bancshares, Inc. (“Southwest”).

Highlights for the Quarter:

  • On March 2, 2019, the Company closed as planned the acquisition of FPB
    and its wholly-owned subsidiary, Florida Parishes Bank, which added 7
    locations servicing the Hammond and New Orleans areas in Louisiana.
    System integration for this acquisition was completed in March as well.
  • On March 28, 2019, the Company announced that its Board of Directors
    authorized a share repurchase program allowing the Company to purchase
    up to an aggregate of $20 million in shares of the Company’s issued
    and outstanding common stock.
  • During the quarter, the Company received a $0.23 million Financial
    Assistance Award from the Community Development Financial Institutions
    Fund of the U. S. Department of the Treasury as a result of our
    designation as a Community Development Financial Institution.
  • Excluding the acquisition of FPB, loans increased $33.3 million, or
    1.6% during the first quarter of 2019.
  • Excluding the acquisition of FPB, deposits increased $146.0 million,
    or 5.9% during the first quarter of 2019.
  • The Company’s Board of Directors increased the quarterly dividend by
    $0.01 to $0.08 per share, a 14% increase.

M. Ray “Hoppy” Cole, President and Chief Executive Officer, commented,
“We continue to see increasing profitability and strong overall
performance of our Company as a result of our regional expansion plan.
In addition to a 93% increase in net income year over year, we posted
solid organic growth in loans and deposits across our five-state
operating area. We also closed our merger and completed the operating
system integration of Florida Parishes Bank during the quarter. We are
excited to have Florida Parishes’ clients and team member become part of
The First. They are an experienced, well respected group of bankers that
will further our growth in Louisiana.”

Balance Sheet

Consolidated assets increased $529.0 million to $3.533 billion at March
31, 2019 from $3.004 billion at December 31, 2018. The acquisition of
FPB accounted for $436.1 million of the increase.

Total loans were $2.335 billion at March 31, 2019, as compared to $2.060
billion at December 31, 2018, and $1.517 billion at March 31, 2018,
representing increases of $274.9 million or 13.3%, and $818.8 million or
54.0%, respectively. The acquisition of FPB accounted for $241.6
million, net of fair value marks, of the total increase in loans as
compared to the fourth quarter of 2018. The acquisitions of Sunshine
Financial, Inc., (“Sunshine”), FMB Banking Corporation (“FMB”) and FPB
accounted for $705.1 million, net of fair value marks, of the total
increase in loans as compared to the first quarter of 2018. The increase
in loans, net of acquired loans, during the sequential quarter amounted
to $33.3 million.

Total deposits were $2.914 billion at March 31, 2019, as compared to
$2.457 billion at December 31, 2018, and $1.992 billion at March 31,
2018, representing increases of $456.9 million or 18.6%, and $922.7
million or 46.3%, respectively. The acquisition of FPB accounted for
$314.4 million of the total increase in deposits as compared to December
31, 2018. The acquisitions of Southwest, Sunshine and FMB accounted for
$866.0 million of the total increase in deposits as compared to March
31, 2018. The increase in deposits of $146.0 million, net of acquired,
during the first quarter of 2019 was largely due to increases in NOW
accounts of $131.6 million, of which $129.1 million is attributable to
the seasonality of the public fund deposits.

Asset Quality

Nonperforming assets totaled $39.2 million at March 31, 2019, an
increase of $4.9 million compared to $34.3 million at December 31, 2018
and an increase of $24.4 million compared to March 31, 2018. The
majority of the increases in both quarterly comparisons was related to
acquired loans. The ratio of the allowance for loan and leases losses
(ALLL) to total loans was 0.48% at March 31, 2019, 0.49% at December 31,
2018 and 0.57% at March 31, 2018. The ratio of annualized net
charge-offs (recoveries) to total loans was (0.008%) for the quarter
ended March 31, 2019 compared to 0.02% for the quarter ended December
31, 2018 and (0.02%) for the quarter ended March 31, 2018.

First Quarter 2019 vs. First Quarter 2018 Earnings Comparison

Net income available to common shareholders for the first quarter of
2019 totaled $7.6 million compared to $4.0 million for the first quarter
of 2018, an increase of $3.7 million or 92.9%.

Operating net earnings for the first quarter of 2019 totaled $9.9
million compared to $5.4 million for the first quarter of 2018, an
increase of $4.6 million or 85.2%. The calculation of operating net
earnings excludes the merger-related costs and non-recurring income for
each quarter as discussed above.

Net interest income for the first quarter of 2019 was $27.1 million, an
increase of $10.8 million when compared to the first quarter of 2018.
The increase was due to interest income earned on a higher volume of
loans as well as increased interest rates. Fully tax equivalent (“FTE”)
net interest income totaled $27.4 million and $16.6 million for the
first quarter of 2019 and 2018, respectively. FTE net interest income
increased $10.8 million in the prior year quarterly comparison due to
increased loan volume as well as increased interest rates. Purchase
accounting adjustments accounted for $1.1 million of the difference in
net interest income for the first quarter comparisons. First quarter
2019 FTE net interest margin of 3.89% included 18 basis points related
to purchase accounting adjustments compared to 3.67% for the same
quarter in 2018, which included 2 basis points related to purchase
accounting adjustments.

Non-interest income increased $2.1 million for the first quarter of 2019
as compared to the first quarter of 2018 due to increased service
charges and interchange fee income of $1.4 million primarily based on
the increased deposit base due to the acquisitions. Non-interest income
also included the Financial Assistance Award of $0.23 million from the
U.S. Department of the Treasury received during the first quarter of
2019 as a result of our designation as a Community Development Financial
Institution.

First quarter 2019 non-interest expense was $21.9 million, an increase
of $7.3 million, or 50.0% as compared to the first quarter of 2018.
Excluding the increase in acquisition charges of $1.4 million for first
quarter of 2019, non-interest expense increased $5.9 million in the
first quarter of 2019, of which $3.8 million was attributable to the
operations of Southwest, Sunshine, FMB and FPB, as compared to first
quarter of 2018.

Investment securities totaled $620.5 million, or 17.6% of total assets
at March 31, 2019, versus $441.9 million, or 19.2% of total assets at
March 31, 2018. The average balance of investment securities increased
$172.7 million in prior year quarterly comparison, primarily as a result
of the acquisitions. The average tax equivalent yield on investment
securities increased 28 basis points to 3.32% from 3.04% in prior year
quarterly comparison. The investment portfolio had a net unrealized gain
of $5.5 million at March 31, 2019 as compared to a net unrealized loss
of $5.1 million at March 31, 2018.

The FTE average yield on all earning assets increased 57 basis points in
prior year quarterly comparison, from 4.19% for the first quarter of
2018 to 4.76% for the first quarter of 2019. Average interest expense
increased 45 basis points from 0.67% for the first quarter of 2018 to
1.12% for the first quarter of 2019 due primarily to increased
interest-bearing deposit accounts as well as the issuance of
subordinated debt in the second quarter of 2018 and rising interest
rates. Cost of all deposits averaged 67 basis points for the first
quarter of 2019 compared to 44 basis points for the first quarter of
2018. Public funds increased $120.5 million when comparing March 31,
2019 to March 31, 2018.

First Quarter 2019 vs Fourth Quarter 2018 Earnings Comparison

Net income available to common shareholders for the first quarter of
2019 increased $0.8 million, or 11.3% to $7.6 million compared to $6.9
million for the fourth quarter of 2018. For the first quarter of 2019,
fully diluted earnings per share were $0.48, compared to $0.48 for the
fourth quarter of 2018.

Operating net earnings for the first quarter of 2019 compared to the
fourth quarter of 2018 increased $0.8 million or 8.6% from $9.1 million
to $9.9 million. Operating net earnings exclude the merger-related costs
and other excluded items for the first quarter of 2019 as discussed
above. Operating net earnings for the fourth quarter of 2018 exclude
merger-related costs of $3.2 million, net of tax as well as $0.3
million, net of tax related to the gain on sale of investment securities
and $0.7 million, net of tax in awards from the U. S. Department of
Treasury. Excluding the impact of the merger-related costs and other
items described above, fully diluted operating earnings per share for
the first quarter of 2019 were $0.63 as compared to $0.64 for the fourth
quarter of 2018.

Net interest income for the first quarter of 2019 was $27.1 million as
compared to $25.3 million for the fourth quarter of 2018, an increase of
$1.9 million. FTE net interest income increased $1.9 million to $27.4
million from $25.5 million in sequential-quarter comparison. The
increase was due to increased loan volume as well as increased interest
rates on both sides of the balance sheet. Interest income from purchase
accounting adjustments decreased $0.3 million in sequential quarter
comparison. First quarter 2019 FTE net interest margin of 3.89% included
18 basis points related to purchase accounting adjustments compared to
4.08% for the fourth quarter in 2018, which included 24 basis points
related to purchase accounting adjustments.

Investment securities totaled $620.5 million, or 17.6% of total assets
at March 31, 2019, versus $514.9 million, or 17.1% of total assets at
December 31, 2018. The average balance of investment securities
increased $69.5 million in sequential-quarter comparison, primarily as a
result of the acquisition of FPB. The average tax equivalent yield on
investment securities increased 17 basis points to 3.32% from 3.15% in
sequential-quarter comparison. The investment portfolio had a net
unrealized gain of $5.5 million at March 31, 2019 as compared to a net
unrealized loss of $2.5 million at December 31, 2018.

The FTE average yield on all earning assets decreased in
sequential-quarter comparison from 4.93% to 4.76%. Average interest
expense increased 3 basis points from 1.09% for the fourth quarter of
2018 to 1.12% for the first quarter of 2019 due primarily to increased
rates as well as an increase in borrowings. Cost of all deposits
averaged 67 basis points for the first quarter of 2019 compared to 61
basis points for the fourth quarter of 2018. Public funds increased
$129.1 million when comparing March 31, 2019 to December 31, 2018,
excluding the acquisition of FPB.

Non-interest income excluding the awards from the U. S. Department of
the Treasury and gain on sales of securities, increased $0.2 million in
sequential-quarter comparison resulting from increased interchange fee
income. Non-interest income for the first quarter of 2019 included the
Bank Enterprise Award received from the U. S. Department of the Treasury
for $0.23 million, and for the fourth quarter included the Financial
Assistance Award received from the U. S. Department of the Treasury for
$0.95 million, which resulted in a net decrease in non-interest income
of $0.7 million for the quarterly comparison.

Non-interest expense for the first quarter of 2019 was $21.9 million
compared to $22.2 million for the fourth quarter of 2018. Excluding
acquisition charges for each quarter, non-interest expense increased
$0.6 million in sequential-quarter comparison, which is largely
attributable to the operations of FPB acquired in the first quarter.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash
dividend of $0.08 per share, an increase of $0.01 per share, or 14% to
be paid on its common stock on May 24, 2019 to shareholders of record as
of the close of business on May 10, 2019.

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, 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 net earnings, operating earnings
per share, fully tax equivalent net interest income, 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 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; interest rate risk; legislation or regulatory
changes which adversely affect the ability of the consolidated Company
to conduct business combinations or new operations; and risks related
that the anticipated benefits from the transactions with Southwest,
Sunshine, FMB and FPB 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. These and other factors that
could cause results to differ materially from those described in the
forward-looking statements, as well as a discussion of the risks and
uncertainties that may affect our business, can be found in our Annual
Report on Form 10-K and in other filings we make with the Securities and
Exchange Commission, which are available on the SEC’s website, http://www.sec.gov.
The Company disclaims any obligation to update such factors or to
publicly announce the results of any revisions to any of the
forward-looking statements included herein to reflect future events or
developments.

 
FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

EARNINGS DATA

     

Quarter
Ended
3/31/19

   

Quarter
Ended
12/31/18

   

Quarter
Ended
9/30/18

   

Quarter
Ended
6/30/18

   

Quarter
Ended
3/31/18

Total Interest Income       $ 33,273     $ 30,555     $ 25,628     $ 25,037     $ 18,758
Total Interest Expense      

6,142

   

5,285

   

3,959

   

3,468

   

2,378

Net Interest Income      

27,131

   

25,270

   

21,669

   

21,569

   

16,380

FTE net interest income*      

27,388

   

25,524

   

21,925

   

21,826

   

16,609

Provision for loan losses       1,123     574     412     857     277
Non-interest income       5,554     6,396     5,074     5,632     3,459
Non-interest expense      

21,893

   

22,249

   

19,786

   

19,680

   

14,597

Earnings before income taxes       9,669     8,843     6,545     6,664     4,965
Income tax expense      

2,034

   

1,982

   

1,383

   

1,419

   

1,008

Net income available to common shareholders      

$ 7,635

   

$ 6,861

   

$ 5,162

   

$ 5,245

   

$ 3,957

                                 
                                 
PER COMMON SHARE DATA                                
Basic earnings per share       $ 0.49     $ 0.48     $ 0.39     $ 0.40     $ 0.34
Diluted earnings per share       0.48     0.48     0.39     0.40     0.34
Diluted earnings per share, operating*       0.63     0.64     0.62     0.62     0.46
Quarterly dividends per share       .07     .05     .05     .05     .05
Book value per common share at end of period       26.30     24.49     22.09     21.88     20.95
Tangible book value per common share at period end*       17.79     16.88     17.10     16.82     16.39
Market price at end of period       30.90     30.91     39.05     36.80     32.25
Shares outstanding at period end       17,272,731     14,830,598     13,074,516     13,065,953     12,339,492
Weighted average shares outstanding:                                
Basic       15,646,476     14,247,555     13,072,455     13,065,953     11,556,968
Diluted       15,770,622     14,371,562     13,192,207     13,167,969     11,652,959
                                 
                                 
AVERAGE BALANCE SHEET DATA                                
Total assets       $3,181,761     $2,812,212     $2,470,607     $2,443,176     $1,986,150
Loans and leases       2,167,495     1,959,179     1,720,884     1,696,737     1,325,272
Total deposits       2,599,842     2,296,966     2,069,910     2,115,661     1,683,999
Total common equity       390,217     328,250     284,839     274,535     230,255
Total tangible common equity*       262,553     222,402     219,077     217,092     196,326
                                 
                                 
SELECTED RATIOS                                
Annualized return on avg assets       0.96%     0.98%     0.84%     0.86%     0.80%
Annualized return on avg assets, operating*       1.25%     1.30%     1.33%     1.33%     1.08%
Annualized return on avg common equity, operating*       10.18%     11.14%     11.51%     11.85%     9.31%
Annualized return on avg tangible common equity, oper*       15.13%     16.44%     14.96%     14.99%     10.92%
Average loans to average deposits       83.37%     85.29%     83.14%     80.20%     78.70%
FTE Net Interest Margin*       3.89%     4.08%     3.97%     3.92%     3.67%
Efficiency Ratio       66.46%     69.69%     73.28%     71.67%     72.74%
Efficiency Ratio, operating*       57.21%     59.06%     58.25%     57.70%     63.98%
                                 
                                 
CREDIT QUALITY                                
Allowance for loan losses (ALLL) as a % of total loans       0.48%     0.49%     0.56%     0.56%     0.57%
Nonperforming assets to tangible equity + ALLL       12.32%     13.17%     10.05%     7.88%     6.99%
Nonperforming assets to total loans + OREO       1.67%     1.66%     1.33%     1.04%     0.97%
Annualized QTD net charge-offs (recoveries) to total loans       (0.008%)     0.02%     0.03%     0.003%     (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,
2019

   

Dec 31,
2018

   

Sept 30,
2018

   

June 30,
2018

   

Mar 31,
2018

Assets                                
Cash and cash equivalents       $ 248,576     $ 159,107     $ 122,371     $ 120,425     $ 162,521
Securities available-for-sale       598,796     492,701     424,940     437,011     425,529
Securities held-to-maturity       6,397     6,000     6,000     6,000     6,000
Other investments      

15,298

   

16,227

   

13,104

   

10,320

   

10.399

Total investment securities       620,491     514,928     444,044     453,331     441,928
Loans held for sale       6,238     4,838     4,269     5,914     2,538
Total loans       2,335,348     2,060,422     1,748,483     1,710,271     1,516,579
Allowance for loan losses      

(11,235)

   

(10,065)

   

(9,765)

   

(9,512)

   

(8,659)

Loans, net       2,324,113     2,050,357     1,738,718     1,700,759     1,507,920
Premises and equipment       94,624     74,783     62,342     62,289     57,430
Other Real Estate Owned       11,588     10,869     8,453     7,890     7,357
Goodwill and other intangibles       147,150     112,916     65,238     66,105     56,343
Other assets      

80,199

   

76,188

   

66,355

   

64,976

   

63,376

Total assets      

$3,532,979

   

$3,003,986

   

$2,511,790

   

$2,481,689

   

$2,299,413

                                 
Liabilities and Shareholders’ Equity                                
Non-interest bearing deposits       $ 655,900     $ 570,148     $ 430,430     $ 459,402     $ 414,142
Interest-bearing deposits      

2,258,418

   

1,887,311

   

1,616,016

   

1,637,833

   

1,577,502

Total deposits       2,914,318     2,457,459     2,046,446     2,097,235     1,991,644
Borrowings       61,750     85,500     85,508     10,516     29,034
Subordinated debentures       80,561     80,521     75,117     75,192     10,310
Other liabilities      

22,003

   

17,252

   

15,921

   

12,920

   

9,886

Total liabilities       3,078,632     2,640,732     2,222,992     2,195,863     2,040,874
Total shareholders’ equity      

454,347

   

363,254

   

288,798

   

285,826

   

258,539

Total liabilities and shareholders’ equity      

$3,532,979

   

$3,003,986

   

$2,511,790

   

$2,481,689

   

$2,299,413

                     

Contacts

M. Ray “Hoppy” Cole
Chief Executive Officer
Dee Dee Lowery
Chief
Financial Officer
(601) 268-8998

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