The First Bancshares, Inc. : Reports a 100% Increase in Net Income Available to Common Shareholders; Increases Quarterly Dividend by 40%

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 $21.2 million for the fiscal year ended December 31, 2018, an increase of $10.6 million or 99.9%, compared to $10.6 million for the fiscal year ended December 31, 2017. Operating net earnings increased 77.8% ($13.1 million) for the fiscal year ended December 31, 2018, totaling $30.0 million for fiscal year 2018 as compared to $16.9 million for fiscal year 2017. Operating net earnings for fiscal year 2018 excludes merger-related costs of $10.6 million, net of tax, gain on sale of securities of $0.26 million, net of tax, and non-recurring income in the form of awards from the U. S. Department of the Treasury of $1.6 million, net of tax. Operating net earnings for the fiscal year 2017 excludes merger-related costs of $4.2 million, net of tax, and a $2.1 million charge to income tax expense related to a reduction in our deferred tax asset resulting from the change in tax rate under the Tax Cuts and Jobs Act enacted in December of 2017.

Net income available to common shareholders for the fourth quarter of 2018 totaled $6.9 million compared to $2.4 million for the fourth quarter of 2017, an increase of 184.2%. Operating net earnings for the fourth quarter of 2018 totaled $9.1 million as compared to $4.7 million for the fourth quarter of 2017 representing a 93.2% increase, excluding merger-related costs of $3.2 million, net of tax, in the fourth quarter of 2018 as well as a gain on the sale of securities of $0.26 million, net of tax, and Financial Assistance Award from the U. S. Department of the Treasury of $0.7 million, net of tax, in the fourth quarter of 2018, and excluding merger-related costs of $0.2 million, net of tax, as well as the $2.1 million income tax charge discussed above in the fourth quarter of 2017.

For the full year 2018, fully diluted earnings per share were $1.62, compared to $1.11 for the full year 2017. Fully diluted earnings per share for the quarter ended December 31, 2018, were $0.48, compared to $0.23 for the quarter ended December 31, 2017. Excluding the impact of the merger-related costs and other non-recurring items described above, fully diluted operating earnings per share for the year ended December 31, 2018 were $2.29 as compared to $1.76 for 2017, and were $0.64 for the fourth quarter of 2018 as compared to $0.45 for the fourth quarter of 2017. Fully diluted earnings per share for 2018 include the issuance of 2,012,500 shares of our common stock during the fourth quarter of 2017, 1,134,010 shares issued in connection with the acquisition of Southwest Bancshares, Inc. (“Southwest”) during the first quarter of 2018, 726,461 shares issued in connection with the acquisition of Sunshine Financial, Inc. (“Sunshine”) during the second quarter of 2018 and 1,763,042 shares issued in connection with the acquisition of FMB Banking Corporation (“FMB”) during the fourth quarter of 2018.

Highlights for the Quarter:

• On November 6, 2018, the Company announced the signing of an Agreement and Plan of Merger with FPB Financial Corp (“FPB”), parent company of Florida Parishes Bank, headquartered in Hammond, La. Upon completion, the acquisition will add 7 locations servicing the Hammond and New Orleans areas in Louisiana and is expected to close during the first quarter of 2019 subject to FPB shareholder approval and customary closing conditions. The Company has received regulatory approval for the acquisition.
• On November 1, 2018, the Company closed as planned the acquisition of FMB Banking Corporation (“FMB”), and its wholly-owned subsidiary, Farmers & Merchants Bank, which added 6 locations servicing Jefferson and Leon counties in Florida and Thomas County in Georgia and completed systems integration during the fourth quarter.
• The Company’s Board of Directors increased the quarterly dividend by $0.02 to $0.07 per share, a 40% increase.
• During the quarter, the Company received a $0.95 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.

M. Ray “Hoppy” Cole, President & Chief Executive Officer, commented, “2018 was a phenomenal year for our Company. Through continued execution of our regional expansion strategy, we closed and integrated 3 acquisitions and posted organic growth of 11.4% in outstanding loans and 5.4% in deposits during the year. As a result, our Company surpassed $3B in total assets at year-end 2018 and posted a 77.8% increase in net operating earnings year over year. I commend the hard work, dedication and extra effort of our team members to achieve such exceptional results. We are thankful for the opportunities and achievement of 2018 and are excited about the prospects for continued growth in 2019.”

Balance Sheet

Consolidated assets increased $492.2 million to $3.004 billion at December 31, 2018 from $2.512 billion at September 30, 2018.

Total loans were $2.060 billion at December 31, 2018, as compared to $1.748 billion at September 30, 2018, and $1.225 billion at December 31, 2017, representing increases of $311.9 million or 17.8%, and $835.1 million or 68.2%, respectively. The acquisitions of Southwest, Sunshine and FMB accounted for $695.1 million, net of fair value marks, of the total increase in loans as compared to the fourth quarter of 2017. The acquisition of FMB accounted for $305.6 million, net of fair value marks, of the total increase in loans as compared to the third quarter of 2018. The increase in loans, net of acquired loans, during the sequential quarter amounted to $8.1 million.

Total deposits were $2.457 billion at December 31, 2018, as compared to $2.046 billion at September 30, 2018, and $1.471 billion at December 31, 2017, representing increases of $411.0 million or 20.1%, and $986.0 million or 67.1%, respectively. The acquisitions of Southwest, Sunshine and FMB accounted for $889.2 million of the total increase in deposits as compared to the fourth quarter of 2017. The acquisition of FMB accounted for $445.9 million of the total increase in deposits as compared to the third quarter of 2018. The decrease in deposits of $34.9 million, net of acquired, during the sequential quarter was largely due to a decrease in NOW accounts of $24.4 million, of which $16.0 million is attributable to the seasonality of the public fund deposits.

Asset Quality

Nonperforming assets totaled $34.3 million at December 31, 2018, an increase of $10.9 million compared to $23.4 million at September 30, 2018 and an increase of $20.8 million compared to December 31, 2017. 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 0.49% at December 31, 2018, 0.56% at September 30, 2018 and 0.68% at December 31, 2018. The ratio of annualized net charge-offs (recoveries) to total loans was 0.02% for the quarter ended December 31, 2018 compared to 0.03% for the quarter ended September 30, 2018 and 0.003% for the quarter ended December 31, 2017.

Fourth Quarter 2018 vs. Fourth Quarter 2017 Earnings Comparison

Net income available to common shareholders for the fourth quarter of 2018 totaled $6.9 million compared to $2.4 million for the fourth quarter of 2017, an increase of $4.4 million or 184.2%.

Operating net earnings for the fourth quarter of 2018 totaled $9.1 million compared to $4.7 million for the fourth quarter of 2017, an increase of $4.4 million or 93.2%. The calculation of operating net earnings excludes the merger-related costs and other excluded items for each quarter as discussed above.

Net interest income for the fourth quarter of 2018 was $25.3 million, an increase of $10.0 million when compared to the fourth quarter of 2017. The increase was due to interest income earned on a higher volume of loans as well as increased interest rates.

Non-interest income increased $2.8 million for the fourth quarter of 2018 as compared to the fourth quarter of 2017 due to increased service charges and interchange fee income of $1.5 million on the increased deposit base due to the acquisitions. Non-interest income also included the Financial Assistance Award of $0.95 million from the U.S. Department of the Treasury received during the fourth quarter of 2018 as a result of our designation as a Community Development Financial Institution.

Fourth quarter 2018 non-interest expense was $22.2 million, an increase of $9.9 million, or 79.5% as compared to the fourth quarter of 2017. Excluding the increase in acquisition charges of $3.8 million for fourth quarter of 2018, non-interest expense increased $6.1 million in the fourth quarter of 2018, of which $3.9 million was attributable to the operations of Southwest, Sunshine and FMB, as compared to fourth quarter of 2017.

Net interest income was $25.3 million for the fourth quarter of 2018 as compared to $15.2 million for the fourth quarter of 2017. Fully tax equivalent (“FTE”) net interest income totaled $25.5 million and $15.5 million for the fourth quarter of 2018 and 2017, respectively. FTE net interest income increased $10.0 million in the prior year quarterly comparison due to increased loan volume as well as increased interest rates. Purchase accounting adjustments accounted for $1.4 million of the difference in net interest income for the fourth quarter comparisons. Fourth quarter 2018 FTE net interest margin of 4.08% included 24 basis points related to purchase accounting adjustments compared to 3.79% for the same quarter in 2017, which included 3 basis points related to purchase accounting adjustments.

Investment securities totaled $514.9 million, or 17.1% of total assets at December 31, 2018, versus $372.9 million, or 20.9% of total assets at December 31, 2017. The average balance of investment securities increased $118.8 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities increased 25 basis points to 3.15% from 2.90% in prior year quarterly comparison. The investment portfolio had a net unrealized loss of $2.5 million at December 31, 2018 as compared to a net unrealized loss of $0.6 million at December 31, 2017.

The FTE average yield on all earning assets increased 68 basis points in prior year quarterly comparison, from 4.25% for the fourth quarter of 2017 to 4.93% for the fourth quarter of 2018. Average interest expense increased 49 basis points from 0.60% for the fourth quarter of 2017 to 1.09% for the fourth quarter of 2018 due primarily to increased 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 57 basis points for the fourth quarter of 2018 compared to 37 basis points for the fourth quarter of 2017. Public funds increased $75.8 million when comparing December 31, 2018 to December 31, 2017.

Fourth Quarter 2018 vs Third Quarter 2018 Earnings Comparison

Net income available to common shareholders for the fourth quarter of 2018 increased $1.7 million, or 32.9% to $6.9 million for the fourth quarter of 2018 compared to $5.2 million for the third quarter of 2018.

Operating net earnings for the fourth quarter of 2018 compared to the third quarter of 2018 increased $0.9 million or 11.6% from $8.2 million for the third quarter of 2018 to $9.1 million for the fourth quarter of 2018. Operating net earnings exclude the merger-related costs and other excluded items for the fourth quarter of 2018 as discussed above, and merger-related costs of $3.0 million, net of tax, for the third quarter of 2018.

Net interest income for the fourth quarter of 2018 was $25.3 million as compared to $21.7 million for the third quarter of 2018, an increase of $3.6 million. FTE net interest income increased $3.6 million to $25.5 million from $21.9 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 increased $0.9 million in sequential quarter comparison. Fourth quarter 2018 FTE net interest margin of 4.08% included 24 basis points related to purchase accounting adjustments compared to 3.97% for the third quarter in 2018, which included 11 basis points related to purchase accounting adjustments.

Investment securities totaled $514.9 million, or 17.1% of total assets at December 31, 2018, versus $444.0 million, or 17.7% of total assets at September 30, 2018. The average balance of investment securities increased $36.0 million in sequential-quarter comparison, primarily as a result of the acquisition of FMB. The average tax equivalent yield on investment securities increased 13 basis points to 3.15% from 3.02% in sequential-quarter comparison. The investment portfolio had a net unrealized loss of $2.5 million at December 31, 2018 as compared to a net unrealized loss of $8.4 million at September 30, 2018.

The FTE average yield on all earning assets increased in sequential-quarter comparison from 4.68% to 4.93%. Average interest expense increased 17 basis points from 0.92% for the third quarter of 2018 to 1.09% for the fourth quarter of 2018 due primarily to increased rates as well as an increase in borrowings. Cost of all deposits averaged 57 basis points for the fourth quarter of 2018 compared to 50 basis points for the third quarter of 2018. Public funds decreased $16.0 million when comparing December 31, 2018 to September 30, 2018 when excluding the acquisition of FMB.

Non-interest income increased $1.3 million in sequential-quarter comparison resulting from increased service charges and increased interchange fee income on the increased deposit base related to the acquisition of FMB. Non-interest income for the fourth quarter of 2018 included the Financial Assistance Award received from the U. S. Department of the Treasury for $0.95 million, and for the third quarter included the Bank Enterprise Award received from the U. S. Department of the Treasury for $0.2 million, which resulted in a net increase in non-interest income of $0.7 million for the quarterly comparison.

Non-interest expense for the fourth quarter of 2018 was $22.2 million compared to $19.8 million for the third quarter of 2018. Excluding acquisition charges for each quarter, non-interest expense increased $2.4 million in sequential-quarter comparison, which is attributable to the operations of FMB acquired in the fourth quarter.

Year to Date Earnings Comparison

In year-over-year comparison, net income available to common shareholders increased $10.6 million, or 99.9%, from $10.6 million for the fiscal year December 31, 2017 to $21.2 million for the fiscal year ended December 31, 2018. Operating net earnings increased $13.1 million or 77.8% from $16.9 million for the fiscal year ended December 31, 2017 to $30.0 million for the fiscal year ended December 31, 2018. Operating net earnings excludes merger-related costs, nonrecurring income, gain on sale and other charges described above.

Net interest income increased $25.7 million, or 43.5% in year-over-year comparison, primarily due to interest income earned on a higher volume of loans as well as increased interest rates. Purchase accounting adjustments accounted for only $2.1 million of the increase.

Non-interest income was $20.6 million at December 31, 2018, an increase of $6.2 million, or 43.2% in year-over-year comparison consisting of increases in service charges on deposit accounts of $2.2 million and interchange fee income of $1.5 million on the increased deposit base related to the acquisitions, as well as the receipt of the Financial Assistance and Bank Enterprise Awards in the amounts of $2.1 million.

Non-interest expense was $76.3 million at December 31, 2018, an increase of $20.9 million, or 37.6% in year-over-year comparison primarily resulting from increases in salaries and benefits of $5.9 million related to the acquisitions of Southwest, Sunshine and FMB and increased acquisition charges of $7.1 million. Increases in occupancy, amortization of core deposit intangibles and other non-interest expense for the year-to-date period of 2018 were also attributable to the acquisitions.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.07 per share, an increase of $0.02 per share, or 40.0% to be paid on its common stock on February 26, 2019 to shareholders of record as of the close of business on February 11, 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 to the proposed acquisition of FPB and the acquisitions of Southwest, Sunshine and FMB, including the risk that the proposed acquisition of FPB does not close when expected or at all because of required shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, the terms of the proposed transactions with FPB need to be modified to satisfy such approvals or conditions, and that 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 12/31/18				Quarter Ended 9/30/18				Quarter Ended 6/30/18				Quarter Ended 3/31/18				Quarter Ended 12/31/17
Total Interest Income			$	30,555			$	25,628			$	25,037			$	18,758			$	17,143
Total Interest Expense				5,285				3,959				3,468				2,378				1,922
Net Interest Income				25,270				21,669				21,569				16,380				15,221
FTE net interest income*				25,524				21,925				21,826				16,609				15,523
Provision for loan losses				574				412				857				277				122
Non-interest income				6,396				5,074				5,632				3,459				3,556
Non-interest expense				22,249				19,786				19,680				14,597				12,390
Earnings before income taxes				8,843				6,545				6,664				4,965				6,265
Income tax expense				1,982				1,383				1,419				1,008				3,851
Net income available to common shareholders			$	6,861			$	5,162			$	5,245			$	3,957			$	2,414
PER COMMON SHARE DATA
Basic earnings per share			$	0.48			$	0.39			$	0.40			$	0.34			$	0.23
Diluted earnings per share				0.48				0.39				0.40				0.34				0.23
Diluted earnings per share, operating*				0.64				0.62				0.62				0.46				0.45
Quarterly dividends per share				.05				.05				.05				.05				.0375
Book value per common share at end of period				24.49				22.09				21.88				20.95				19.92
Tangible common book value at period end*				16.88				17.10				16.82				16.39				17.71
Market price at end of period				30.91				39.05				36.80				32.25				34.20
Shares outstanding at period end				14,830,598				13,074,516				13,065,953				12,339,492				11,165,907
Weighted average shares outstanding:
Basic				14,247,555				13,072,455				13,065,953				11,556,968				10,521,236
Diluted				14,371,562				13,192,207				13,167,969				11,652,959				10,598,036
AVERAGE BALANCE SHEET DATA
Total assets			$	2,812,212			$	2,470,607			$	2,443,176			$	1,986,150			$	1,810,252
Loans and leases				1,959,179				1,720,884				1,696,737				1,325,272				1,215,962
Total deposits				2,296,966				2,069,910				2,115,661				1,683,999				1,475,628
Total common equity				328,250				284,839				274,535				230,255				205,580
Total tangible common equity*				222,402				219,077				217,092				196,326				180,322
SELECTED RATIOS
Annualized return on avg assets				0.98%				0.84%				0.86%				0.80%				0.53%
Annualized return on avg assets, operating*				1.30%				1.33%				1.33%				1.08%				1.05%
Annualized return on avg common equity, operating*				11.14%				11.51%				11.85%				9.31%				9.21%
Annualized return on avg tangible common equity, oper*				16.44%				14.96%				14.99%				10.92%				10.49%
Average loans to average deposits				85.29%				83.14%				80.20%				78.70%				82.40%
FTE Net Interest Margin*				4.08%				3.97%				3.92%				3.67%				3.79%
Efficiency Ratio				69.69%				73.28%				71.67%				72.74%				64.94%
Efficiency Ratio, operating*				59.06%				58.25%				57.70%				63.98%				62.93%
CREDIT QUALITY
Allowance for loan losses (ALLL) as a % of total loans				0.49%				0.56%				0.56%				0.57%				0.68%
Nonperforming assets to tangible equity + ALLL				13.17%				10.05%				7.88%				6.99%				6.56%
Nonperforming assets to total loans + ORE				1.66%				1.33%				1.04%				0.97%				1.10%
Annualized QTD net charge-offs (recoveries) to total loans				0.02%				0.03%				0.003%				(0.02%)				0.003%
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands)
BALANCE SHEET			Dec 31, 2018				Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Assets
Cash and cash equivalents			$	159,107			$	122,371			$	120,425			$	162,521			$	91,922
Securities available-for-sale				492,701				424,940				437,011				425,529				356,893
Securities held-to-maturity				6,000				6,000				6,000				6,000				6,000
Other investments				16,227				13,104				10,320				10,399				9,969
Total investment securities				514,928				444,044				453,331				441,928				372,862
Loans held for sale				4,838				4,269				5,914				2,538				4,790
Total loans				2,060,422				1,748,483				1,710,271				1,516,579				1,225,306
Allowance for loan losses				(10,065)				(9,765)				(9,512)				(8,659)				(8,288)
Loans, net				2,050,357				1,738,718				1,700,759				1,507,920				1,217,018
Premises and equipment				74,783				62,342				62,289				57,430				46,426
Other Real Estate				10,869				8,453				7,890				7,357				7,158
Goodwill and other intangibles				112,916				65,238				66,105				56,343				24,670
Other assets				76,188				66,355				64,976				63,376				48,392
Total assets			$	3,003,986			$	2,511,790			$	2,481,689			$	2,299,413			$	1,813,238
Liabilities and Shareholders’ Equity
Non-interest bearing deposits			$	570,148			$	430,430			$	459,402			$	414,142			$	301,989
Interest-bearing deposits				1,887,311				1,616,016				1,637,833				1,577,502				1,168,576
Total deposits				2,457,459				2,046,446				2,097,235				1,991,644				1,470,565
Borrowings				85,500				85,508				10,516				29,034				104,072
Subordinated debentures				80,521				75,117				75,192				10,310				10,310
Other liabilities				17,252				15,921				12,920				9,886				5,823
Total liabilities				2,640,732				2,222,992				2,195,863				2,040,874				1,590,770
Total shareholders’ equity				363,254				288,798				285,826				258,539				222,468
Total liabilities and shareholders’ equity			$	3,003,986			$	2,511,790			$	2,481,689			$	2,299,413			$	1,813,238

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands except per share data)
EARNINGS STATEMENT			Three Months Ended
			12/31/18				9/30/18				6/30/18				3/31/18				12/31/17
Interest Income:
Loans, including fees			$	25,184			$	21,824			$	21,155			$	15,926			$	14,687
Investment securities				3,785				3,126				3,181				2,661				2,346
Accretion of purchase accounting adjustments				1,532				583				559				59				57
Other interest income				54				95				142				112				53
Total interest income				30,555				25,628				25,037				18,758				17,143
Interest Expense:
Deposits				3,506				2,740				2,498				1,840				1,455
Borrowings				482				52				147				460				392
Subordinated debentures				1,179				1,125				774				78				105
Accretion of purchase accounting adjustments				118				42				49				-				(30)
Total interest expense				5,285				3,959				3,468				2,378				1,922
Net interest income				25,270				21,669				21,569				16,380				15,221
Provision for loan losses				574				412				857				277				122
Net interest income after provision for loan losses				24,696				21,257				20,712				16,103				15,099
Non-interest Income:
Service charges on deposit accounts				1,887				1,538				1,341				1,027				908
Mortgage Income				969				1,066				1,213				800				1,102
Interchange Fee Income				1,527				1,180				1,500				1,040				961
Gain (loss) on securities, net				334				-				(5)				-				3
Gain on sale of premises and equipment				-				-				-				-				-
Financial Assistance Award/Bank Enterprise Award				950				233				917				-				-
Other charges and fees				729				1,057				666				592				582
Total non-interest income				6,396				5,074				5,632				3,459				3,556
Non-interest expense:
Salaries and employee benefits				10,336				9,266				9,502				7,789				7,478
Occupancy expense				2,281				2,163				2,034				1,647				1,427
FDIC premiums				369				278				368				367				365
Marketing				173				60				70				80				118
Amortization of core deposit intangibles				750				349				356				201				173
Other professional services				452				847				438				189				194
Acquisition charges				4,155				4,059				3,838				1,758				384
Other non-interest expense				3,733				2,764				3,074				2,566				2,251
Total Non-interest expense				22,249				19,786				19,680				14,597				12,390
Earnings before income taxes				8,843				6,545				6,664				4,965				6,265
Income tax expense				1,982				1,383				1,419				1,008				3,851
Net income available to common shareholders			$	6,861			$	5,162			$	5,245			$	3,957			$	2,414
Diluted earnings per common share			$	0.48			$	0.39			$	0.40			$	0.34			$	0.23
Diluted earnings per common share, operating*			$	0.64			$	0.62			$	0.62			$	0.46			$	0.45
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands except per share data)
EARNINGS STATEMENT			Year to Date
							2018						2017
Interest Income:
Loans, including fees							$	84,089					$	56,903
Investment securities								12,753						8,852
Accretion of purchase accounting adjustments								2,733						224
Other interest income								403						390
Total interest income								99,978						66,069
Interest Expense:
Deposits								10,584						5,453
Borrowings								1,142						1,372
Subordinated debentures								3,156						276
Amortization (Accretion) of purchase accounting adjustments								209						(192)
Total interest expense								15,091						6,909
Net interest income								84,887						59,160
Provision for loan losses								2,120						506
Net interest income after provision for loan losses								82,767						58,654
Non-interest Income:
Service charges on deposit accounts								5,793						3,600
Mortgage Income								4,048						4,502
Interchange Fee Income								5,247						3,758
Gain (loss) on securities, net								329						(16)
Gain on sale of premises and equipment								-						-
Financial Assistance Award/Bank Enterprise Award								2,100						-
Other charges and fees								3,044						2,519
Total non-interest income								20,561						14,363
Non-interest expense:
Salaries and employee benefits								36,893						30,052
Occupancy expense								8,125						5,535
FDIC premiums								1,382						1,252
Marketing								382						336
Amortization of core deposit intangibles								1,657						664
Other professional services								1,926						1,395
Acquisition charges								13,810						6,711
Other non-interest expense								12,136						9,501
Total Non-interest expense								76,311						55,446
Earnings before income taxes								27,017						17,571
Income tax expense								5,792						6,955
Net income available to common shareholders							$	21,225					$	10,616
Diluted earnings per common share							$	1.62					$	1.11
Diluted earnings per common share, operating*							$	2.29					$	1.76
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands)
COMPOSITION OF LOANS			Dec 31, 2018				Percent of Total			Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017				Percent of Total
Commercial, financial and agricultural			$	301,182			14.6%			$	246,401			$	228,643			$	213,118			$	165,780			13.5%
Real estate – construction				298,718			14.5%				251,240				229,164				213,712				183,328			14.9%
Real estate – commercial				776,880			37.6%				654,040				658,096				561,153				467,484			38.0%
Real estate – residential				617,804			29.9%				529,515				546,120				475,868				385,099			31.3%
Lease Financing Receivable				2,891			0.1%				2,659				2,476				2,433				2450			0.2%
Obligations of States & subdivisions				16,941			0.8%				16,374				10,627				15,861				3,109			0.3%
Consumer				46,006			2.2%				48,254				35,145				34,434				18,056			1.5%
Loans held for sale				4,838			0.3%				4,269				5,914				2,538				4,790			0.3%
Total loans			$	2,065,260			100%			$	1,752,752			$	1,716,185			$	1,519,117			$	1,230,096			100%
COMPOSITION OF DEPOSITS			Dec 31, 2018				Percent of Total			Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017				Percent of Total
Noninterest bearing			$	570,148			23.2%			$	430,430			$	459,402			$	414,142			$	301,989			20.5%
NOW and other				835,434			34.0%				705,851				731,617				761,318				601,694			40.9%
Money Market/Savings				566,276			23.0%				503,772				519,516				434,569				283,579			19.3%
Time Deposits of less than $250,000				384,030			15.6%				321,619				308,086				295,317				220,951			15.0%
Time Deposits of $250,000 or more				101,571			4.2%				84,774				78,614				86,298				62,352			4.3%
Total Deposits			$	2,457,459			100%			$	2,046,446			$	2,097,235			$	1,991,644			$	1,470,565			100%
ASSET QUALITY DATA			Dec 31, 2018							Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Nonaccrual loans			$	21,895						$	13,572			$	8,440			$	5,746			$	5,674
Loans past due 90 days and over				1,325							805				940				1,096				285
Total nonperforming loans				23,220							14,377				9,380				6,842				5,959
Other real estate				10,869							8,453				7,890				7,357				7,158
Nonaccrual securities				208							616				616				616				408
Total nonperforming assets			$	34,297						$	23,446			$	17,886			$	14,815			$	13,525
Nonperforming assets to total assets				1.14%							0.93%				0.72%				0.64%				0.75%
Nonperforming assets to total loans + ORE				1.66%							1.33%				1.04%				0.97%				1.10%
ALLL to nonperforming loans				43.35%							67.92%				101.41%				128.13%				139.08%
ALLL to total loans				0.49%							0.56%				0.56%				0.57%				0.68%
Quarter-to-date net charge-offs (recs)			$	93						$	151			$	12			$	(94)			$	9
Annualized QTD net chg/offs (recs) to loans				0.02%							0.03%				0.003%				(0.02%)				0.003%

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, 2018												September 30, 2018												June 30, 2018												March 31, 2018												December 31, 2017
							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			$	369,820			$	2,808			3.04	%			$	331,601			$	2,369			2.86	%			$	328,898			$	2,423			2.95	%			$	274,595			$	1,986			2.89	%			$	271,459			$	1,760			2.59	%
Tax-exempt
securities				114,055				1,003			3.52	%				116,235				1,013			3.49	%				117,875				1,015			3.44	%				106,161				904			3.41	%				93,645				888			3.79	%
Total investment
securities				483,875				3,811			3.15	%				447,836				3,382			3.02	%				446,773				3,438			3.08	%				380,756				2,890			3.04	%				365,104				2,648			2.90	%
FFS & Int bearing dep				-												-
in other banks				57,655				282			1.96	%				42,174				95			0.90	%				85,321				142			0.67	%				105,689				112			0.42	%				59,184				52			0.35	%
Loans				1,959,179				26,716			5.45	%				1,720,884				22,407			5.21	%				1,696,737				21,714			5.12	%				1,325,272				15,985			4.82	%				1,215,962				14,745			4.85	%
Total Interest
earning assets				2,500,709				30,809			4.93	%				2,210,894				25,884			4.68	%				2,228,831				25,294			4.54	%				1,811,717				18,987			4.19	%				1,640,250				17,445			4.25	%
Other assets				311,503												259,713												214,345												174,433												170,002
Total assets			$	2,812,212											$	2,470,607											$	2,443,176											$	1,986,150											$	1,810,252
Interest-bearing
liabilities:
Deposits			$	1,776,780			$	3,615			0.81	%			$	1,629,195			$	2,782			0.68	%			$	1,676,110			$	2,547			0.61	%			$	1,330,925			$	1,840			0.55	%			$	1,173,386			$	1,425			0.49	%
Repo				-				-			0.00	%				-				-			0.00	%				-				-			0.00	%				-				-			0.00	%				-				-			0.00	%
Fed funds purchased				1,455				18			4.95	%				1,893				27			5.71	%				1,382				9			2.60	%				202				1			1.98	%				2,543				11			1.73	%
FHLB & FTN				92,352				465			2.01	%				22,469				25			0.45	%				22,959				138			2.40	%				71,944				459			2.55	%				103,421				381			1.47	%
Subordinated
debentures				75,391				1,187			6.30	%				75,124				1,125			5.99	%				54,036				774			5.73	%				10,310				78			3.03	%				10,310				105			4.07	%
Total interest
bearing liabilities				1,945,978				5,285			1.09	%				1,728,681				3,959			0.92	%				1,754,487				3,468			0.79	%				1,413,381				2,378			0.67	%				1,289,660				1,922			0.60	%
Other liabilities				537,984												457,087												414,154												342,514												315,012
Shareholders' equity				328,250												284,839												274,535												230,255												205,580
Total liabilities and
shareholders'
equity			$	2,812,212											$	2,470,607											$	2,443,176											$	1,989,150											$	1,810,252
Net interest
income (FTE)*							$	25,524			3.84	%							$	21,925			3.77	%							$	21,826			3.75	%							$	16,609			3.52	%							$	15,523			3.66	%
Net interest margin (FTE)*											4.08	%											3.97	%											3.92	%											3.67	%											3.79	%
Core net interest
margin*											3.84	%											3.86	%											3.82	%											3.65	%											3.76	%
*See reconciliation for Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES Reconciliation of Non-GAAP Financial Measures (unaudited) (in thousands except per share data)
					Three Months Ended
Per Common Share Data					Dec 31, 2018				Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Book value per common share					$	24.49			$	22.09			$	21.88			$	20.95			$	19.92
Effect of intangible assets per share						7.61				4.99				5.06				4.56				2.21
Tangible book value per common share					$	16.88			$	17.10			$	16.82			$	16.39			$	17.71
Diluted earnings per share					$	0.48			$	0.39			$	0.40			$	0.34			$	0.23
Effect of acquisition charges						0.29				0.31				0.29				0.15				0.04
Tax on acquisition charges						(0.07)				(0.08)				(0.07)				(0.03)				(0.01)
Effect of gain on sale of securities						(0.02)				-				-				-				-
Tax on gain on sale						.01				-				-				-				-
Effect of Treasury awards						(0.07)				-				-				-				-
Tax on Treasury awards						0.02				-				-				-				-
Charge related to reduction in deferred tax asset						-				-				-				-				0.19
Diluted earnings per share, operating					$	0.64			$	0.62			$	0.62			$	0.46			$	0.45
									Year to Date
									2018								2017
Diluted earnings per share									$	1.62							$	1.11
Effect of acquisition charges										1.05								0.70
Tax on acquisition charges										(0.24)								(0.27)
Effect of gain on sale of securities										(0.03)								-
Tax on gain on sale										0.01								-
Effect of Treasury awards										(0.16)								-
Tax on Treasury awards										0.04								-
Charge related to reduction in deferred tax asset										-								0.22
Diluted earnings per share, operating									$	2.29							$	1.76
									Year to Date
									2018								2017
Net income available to common shareholders									$	21,225							$	10,616
Acquisition charges										13,810								6,711
Tax on acquisition charges										(3,221)								(2,538)
Gain on sale of securities										(342)								-
Tax on gain on sale										86								-
Treasury awards										(2,100)								-
Tax on Treasury awards										532								-
Charge related to reduction in deferred tax asset										-								2,081
Net earnings available to common shareholders, operating									$	29,990							$	16,870
					Three Months Ended
Average Balance Sheet Data					Dec 31, 2018				Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Total average assets		A			$	2,812,212			$	2,470,607			$	2,443,176			$	1,986,150			$	1,810,252
Total average earning assets		B			$	2,500,709			$	2,210,894			$	2,228,831			$	1,811,717			$	1,640,250
Common Equity		C			$	328,250			$	284,839			$	274,535			$	230,255			$	205,580
Less intangible assets						105,848				65,762				57,443				33,929				25,258
Tangible common equity		D			$	222,402			$	219,077			$	217,092			$	196,326			$	180,322
					Three Months Ended
Net Interest Income Fully Tax Equivalent					Dec 31, 2018				Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Net interest income		E			$	25,270			$	21,669			$	21,569			$	16,380			$	15,221
Tax-exempt investment income						(749)				(757)				(758)				(675)				(586)
Taxable investment income						1,003				1,013				1,015				904				888
Net Interest Income Fully Tax Equivalent		F			$	25,524			$	21,925			$	21,826			$	16,609			$	15,523
Annualized Net Interest Margin		E/B				4.04%				3.92%				3.87%				3.62%				3.71%
Annualized Net Interest Margin, Fully Tax Equivalent		F/B				4.08%				3.97%				3.92%				3.67%				3.79%
					Three Months Ended
Core Net Interest Margin					Dec 31, 2018				Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Net interest income (FTE)					$	25,524			$	21,925			$	21,826			$	16,609			$	15,523
Less purchase accounting adjustments						1,414				541				510				59				87
Net interest income, net of purchase accounting adj		G			$	24,110			$	21,384			$	21,316			$	16,550			$	15,436
Total average earning assets					$	2,500,709			$	2,210,894			$	2,228,831			$	1,811,717			$	1,640,250
Add average balance of loan valuation discount						12,803				6,836				6,046				1,578				1,558
Avg earning assets, excluding loan valuation discount		H			$	2,513,511			$	2,217,730			$	2,234,877			$	1,813,295			$	1,641,808
Core net interest margin		G/H				3.84%				3.86%				3.82%				3.65%				3.76%
					Three Months Ended
Efficiency Ratio					Dec 31, 2018				Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Operating Expense
Total non-interest expense					$	22,245			$	19,786			$	19,680			$	14,598			$	12,390
Pre-tax non-operating expenses						(4,155)				(4,059)				(3,838)				(1,758)				(384)
Adjusted Operating Expense		I			$	18,090			$	15,727			$	15,842			$	12,840			$	12,008
Operating Revenue
Net interest income, FTE					$	25,524			$	21,925			$	21,826			$	16,609			$	15,523
Total non-interest income						6,396				5,074				5,632				3,459				3,556
Pre-tax non-operating items						(1,292)				-				-				-				-
Adjusted Operating Revenue		J			$	30,628			$	26,999			$	27,458			$	20,068			$	19,079
Efficiency Ratio, operating		I/J				59.06%				58.25%				57.70%				63.98%				62.93%
					Three Months Ended
Return Ratios					Dec 31, 2018				Sept 30, 2018				June 30, 2018				Mar 31, 2018				Dec 31, 2017
Net income available to common shareholders		K			$	6,861			$	5,162			$	5,245			$	3,957			$	2,414
Acquisition charges						4,155				4,059				3,838				1,758				384
Tax on acquisition charges						(910)				(1,027)				(948)				(355)				(148)
Gain on sale						(342)				-				-				-				-
Tax on gain on sale						86				-				-				-				-
Treasury awards						(950)				-				-				-				-
Tax on Treasury awards						242				-				-				-				-
Charge related to reduction in deferred tax asset						-				-				-				-				2,081
Net earnings available to common shareholders, oper		L			$	9,142			$	8,194			$	8,135			$	5,360			$	4,731
Annualized return on avg assets		K/A				0.98%				0.84%				0.86%				0.80%				0.53%
Annualized return on avg assets, oper		L/A				1.30%				1.33%				1.33%				1.08%				1.05%
Annualized return on avg common equity, oper		L/C				11.14%				11.51%				11.85%				9.31%				9.21%
Annualized return on avg tangible common equity, oper		L/D				16.44%				14.96%				14.99%				10.92%				10.49%
Mortgage Department
Net Interest Income after provision for loan losses					$	267			$	154			$	214			$	189			$	272
Loan fee income						969				1,066				1,213				800				1,102
Salaries and employee benefits						774				855				903				849				806
Other non-interest expense						124				136				127				97				101
Earnings before income taxes					$	338			$	229			$	397			$	43			$	467

View source version on businesswire.com: https://www.businesswire.com/news/home/20190128005784/en/