The First Bancshares, Inc. Reports a 72.8% Increase in Net Income Available to Common Shareholders in Quarterly Comparison; Increases Quarterly Dividend 25%
The First Bancshares, Inc. (“FBMS” or “the Company”) (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) reported today net income available to common shareholders for the quarter and fiscal year ended December 31, 2019 and an increase in the quarterly dividend.
Quarterly Earnings
Net income available to common shareholders totaled $11.9 million for the quarter ended December 31, 2019, an increase of $5.0 million, or 72.8%, compared to $6.9 million for the quarter ended December 31, 2018, and a decrease of $0.4 million, compared to the third quarter of 2019.
Operating net earnings increased 44.0%, or $4.0 million, for the quarter ended December 31, 2019, totaling $13.2 million as compared to $9.1 million for the fourth quarter of 2018, and increased $0.3 million, or 2.6%, as compared to $12.8 million for the third quarter of 2019. Operating net earnings for the fourth quarter of 2019 excludes merger-related costs of $1.8 million, net of tax and income in the form of financial assistance grant from the U. S. Department of Treasury of $0.5 million, net of tax. Operating net earnings for the fourth quarter of 2018 excludes merger-related costs of $3.2 million, net of tax, income in the form of financial assistance grant from the U. S. Department of Treasury of $0.7 million, net of tax, and income from the sale of securities of $0.3 million, net of tax. Operating net earnings for the third quarter of 2019 excludes merger-related costs of $0.6 million, net of tax.
Yearly Earnings
Net income available to common shareholders totaled $43.7 million for the fiscal year ended December 31, 2019, an increase of $22.5 million, or 106.1%, compared to $21.2 million for the fiscal year ended December 31, 2018.
Operating net earnings increased 59.9%, or $18.0 million for the fiscal year ended December 31, 2019, totaling $48.0 million as compared to $30.0 million for the fiscal year ended December 31, 2018. Operating net earnings for fiscal year 2019 excludes merger-related costs of $4.9 million, net of tax, and income in the form of financial assistance grant from the U. S. Department of Treasury of $0.7 million, net of tax. Operating net earnings for fiscal year 2018 excludes merger-related costs of $10.6 million, net of tax, income in the form of financial assistance grant from the U. S. Department of Treasury of $1.6 million, net of tax, and income from the sale of securities of $0.3 million, net of tax.
Earnings Per Share
For the fourth quarter of 2019, fully diluted earnings per share were $0.64, compared to $0.48 for the fourth quarter of 2018 and $0.71 for the third quarter of 2019.
Excluding the impact of the merger-related costs and income described above, fully diluted operating earnings per share for the fourth quarter of 2019 were $0.72 as compared to $0.64 for the fourth quarter of 2018, and $0.74 for the third quarter of 2019.
For the full year 2019, fully diluted earnings per share were $2.55, compared to $1.62 for the full year 2018, an increase of 57.4%.
Excluding the impact of the merger-related costs and other income items described above, fully diluted operating earnings per share for the year ended December 31, 2019 were $2.79 as compared to $2.29 for 2018, an increase of 21.8%.
Fully diluted earnings per share for 2019 include the issuance of 2,377,501 shares of our common stock during the first quarter of 2019 in association with the acquisition of FPB Financial Corp (“FPB”) and the issuance of 1,682,889 shares of our common stock during the fourth quarter of 2019 in association with the acquisition of First Florida Bancorp, Inc. (“FFB”). Fully diluted earnings per share for 2019 include the purchase by the Company of 143,566 shares of our common stock during the second quarter of 2019, 13,873 shares of our common stock during the third quarter of 2019 and 10,749 shares of our common stock during the fourth quarter of 2019 related to the Company’s share repurchase program.
Fully diluted earnings per share for 2018 include the issuance of 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 1,763,036 shares issued in connection with the acquisition of FMB Banking Corporation (“FMB”) during the fourth quarter of 2018.
Highlights for the Quarter:
On November 1, 2019, the Company closed its acquisition of First Florida Bancorp, Inc. (“FFB”), parent company of First Florida Bank, headquartered in Destin, FL. which added 7 locations servicing the areas of Destin, Fort Walton, Crestview and Panama City, Florida, and completed systems integration during the quarter. On December 18, 2019, the Company announced the signing of an Agreement and Plan of Merger with Southwest Georgia Financial Corporation (“SGB”), parent company of Southwest Georgia Bank, headquartered in Moultrie, GA. Upon completion, the acquisition will add 8 full service offices servicing the areas of Moultrie, Valdosta, Albany and Tifton, Georgia. The closing of the transaction is expected to occur in the second quarter of 2020 and is subject to customary closing conditions, including regulatory approvals and approval by the shareholders of SGB. Operating net earnings increased 59.9% to $48.0 million for the fiscal year ended December 31, 2019 as compared to fiscal year ended December 31, 2018. Operating net earnings increased 44.0% to $13.2 million for the quarter ended December 31, 2019 as compared to the fourth quarter of 2018.M. Ray “Hoppy” Cole, President and Chief Executive Officer, commented, “Our team continues to execute on our strategic vision of creating a regional community bank that provides outstanding service to our clients and superior returns to our shareholders. The results of 2019 reflect that continued execution with 31.2% growth in total assets and a 21.8% increase in fully diluted operating earnings per share year over year. We are excited about the growth and profitability of our Company and look forward to the opportunities for continued growth that lie ahead.”
Balance Sheet
Consolidated assets increased $459.9 million to $3.942 billion at December 31, 2019 from $3.482 billion at September 30, 2019. The acquisition of FFB accounted for $401.6 million of the increase.
Total average loans were $2.513 billion for the quarter ended December 31, 2019, as compared to $2.343 billion for the quarter ended September 30, 2019, and $1.959 billion for the quarter ended December 31, 2018, representing an increase of $169.1 million, or 7.2%, for the sequential quarter comparison, and an increase of $553.3 million, or 28.2%, in prior year quarterly comparison. The acquisitions of FPB and FFB, accounted for $388.7 million, net of fair value marks, of the total increase in average loans as compared to the fourth quarter of 2018. Excluding the acquired loans, average loans increased $4.9 million for the sequential quarter comparison. Excluding the acquired loans, average loans increased $164.7 million, or 8.4% as compared to the quarter ended December 31, 2018.
Total average deposits were $2.963 billion for the quarter ended December 31, 2019, as compared to $2.766 billion for the quarter ended September 30, 2019, and $2.297 billion for the quarter ended December 31, 2018, representing an increase of $197.8 million, or 7.2%, for the sequential quarter comparison, and an increase of $666.6 million, or 29.0%, in prior year quarterly comparison. The acquisitions of FPB and FFB, accounted for $534.4 million of the total increase in average deposits as compared to the fourth quarter of 2018. Excluding the acquired deposits, average deposits decreased $40.8 million for the sequential quarter comparison. Excluding the acquired deposits, average deposits increased $132.2 million, or 5.8% as compared to the quarter ended December 31, 2018.
Asset Quality
Nonperforming assets totaled $48.4 million at December 31, 2019, an increase of $1.1 million compared to $47.3 million at September 30, 2019 and an increase of $11.0 million compared to $37.4 million at December 31, 2018. Nonaccrual loans and loans past due 90 days and over still accruing increased $14.8 million while other real estate decreased $3.6 million when comparing year end December 31, 2019 to year end December 31, 2018. Nonaccrual loans and loans past due 90 days and over still accruing increased $3.8 million while other real estate decreased $2.7 million for the linked quarter. The ratio of the allowance for loan and leases losses (ALLL) to total loans was 0.53% at December 31, 2019, 0.56% at September 30, 2019 and 0.49% at December 31, 2018. The ratio of annualized net charge-offs (recoveries) to total loans was (0.002%) for the quarter ended December 31, 2019 compared to 0.004% for the quarter ended September 30, 2019 and 0.02% for the quarter ended December 31, 2018.
Fourth Quarter 2019 vs. Fourth Quarter 2018 Earnings Comparison
Net income available to common shareholders for the fourth quarter of 2019 totaled $11.9 million compared to $6.9 million for the fourth quarter of 2018, an increase of $5.0 million or 72.8%.
Operating net earnings for the fourth quarter of 2019 totaled $13.2 million compared to $9.1 million for the fourth quarter of 2018, an increase of $4.0 million or 44.0%. The calculation of operating net earnings excludes the merger-related costs and the income for each quarter as discussed above.
Net interest income for the fourth quarter of 2019 was $33.4 million, an increase of $8.2 million when compared to the fourth quarter of 2018. The increase was due to interest income earned on a higher volume of loans. Fully tax equivalent (“FTE”) net interest income totaled $33.8 million and $25.5 million for the fourth quarter of 2019 and 2018, respectively. FTE net interest income increased $8.3 million in the prior year quarterly comparison due to increased loan volume. Purchase accounting adjustments accounted for $0.6 million of the difference in net interest income for the fourth quarter comparisons. Fourth quarter 2019 FTE net interest margin of 4.06% included 26 basis points related to purchase accounting adjustments compared to 4.08% for the same quarter in 2018, which included 24 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 4 basis points in prior year quarterly comparison.
Non-interest income increased $1.2 million for the fourth quarter of 2019 as compared to the fourth quarter of 2018 due to increased service charges and interchange fee income of $0.8 million, which increase is primarily attributable to the increase in our deposit base due to the acquisitions. Mortgage income increased $0.8 million in prior year quarterly comparison.
Fourth quarter 2019 non-interest expense was $25.0 million, an increase of $2.7 million, or 12.2% as compared to the fourth quarter of 2018. Excluding the decrease in acquisition charges of $1.9 million for the fourth quarter of 2019, non-interest expense increased $4.6 million in the fourth quarter of 2019, of which $3.1 million was attributable to the operations of FPB and FFB, as compared to fourth quarter of 2018.
Investment securities totaled $791.8 million, or 20.1% of total assets at December 31, 2019, versus $514.9 million, or 17.1% of total assets at December 31, 2018. The average balance of investment securities increased $260.8 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities decreased 9 basis points to 3.06% from 3.15% in prior year quarterly comparison. The investment portfolio had a net unrealized gain of $13.5 million at December 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 3 basis points in prior year quarterly comparison, from 4.93% for the fourth quarter of 2018 to 4.90% for the fourth quarter of 2019. Average interest expense increased 2 basis points from 1.09% for the fourth quarter of 2018 to 1.11% for the fourth quarter of 2019. Cost of all deposits averaged 73 basis points for the fourth quarter of 2019 compared to 68 basis points for the fourth quarter of 2018.
Fourth Quarter 2019 vs Third Quarter 2019 Earnings Comparison
Net income available to common shareholders for the fourth quarter of 2019 decreased $0.4 million to $11.9 million compared to $12.3 million for the third quarter of 2019. For the fourth quarter of 2019, fully diluted earnings per share were $0.64, compared to $0.71 for the third quarter of 2019.
Operating net earnings for the fourth quarter of 2019 compared to the third quarter of 2019 increased $0.4 million or 2.6% from $12.8 million to $13.2 million. Operating net earnings excludes the merger-related costs and the income discussed above. Fully diluted operating earnings per share for the fourth quarter of 2019 were $0.72 as compared to $0.74 for the third quarter of 2019.
Net interest income for the fourth quarter of 2019 was $33.4 million as compared to $30.5 million for the third quarter of 2019, an increase of $3.0 million. FTE net interest income increased $3.1 million to $33.8 million from $30.7 million in sequential-quarter comparison. Fourth quarter 2019 FTE net interest margin of 4.06% included 26 basis points related to purchase accounting adjustments compared to 4.05% for the third quarter in 2019, which included 19 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 6 basis points in sequential quarter comparison.
Investment securities totaled $791.8 million, or 20.1% of total assets at December 31, 2019, versus $640.8 million, or 18.4% of total assets at September 30, 2019. The average balance of investment securities increased $122.8 million in sequential-quarter comparison, primarily as a result of the acquisition of FFB. The average tax equivalent yield on investment securities decreased 18 basis points to 3.06% from 3.24% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $13.5 million at December 31, 2019 as compared to a net unrealized gain of $13.9 million at September 30, 2019.
The FTE average yield on all earning assets decreased in sequential-quarter comparison from 4.94% to 4.90%. Average interest expense decreased 6 basis points from 1.17% for the third quarter of 2019 to 1.11% for the fourth quarter of 2019. Cost of all deposits averaged 73 basis points for the fourth quarter of 2019 compared to 76 basis points for the third quarter of 2019.
Non-interest income increased $0.5 million in sequential-quarter comparison resulting from increased service charges on deposit accounts as well as income in the form of financial assistance grant from the U. S. Department of Treasury in the amount of $0.7 million offset partially by decreases in interchange fee income and other charges and fees.
Non-interest expense for the fourth quarter of 2019 was $25.0 million compared to $20.8 million for the third quarter of 2019. Excluding acquisition charges for each quarter, non-interest expense increased $2.5 million in sequential-quarter comparison, of which $1.3 million is attributable to the operations associated with FFB which was acquired in the fourth quarter.
Year-to-Date Earnings Comparison
In year-over-year comparison, net income available to common shareholders increased $22.5 million, or 106.1%, from $21.2 million for the twelve months ended December 31, 2018 to $43.7 million for the same period ended December 31, 2019. Operating net earnings increased $18.0 million or 59.9% from $30.0 million for the twelve months ended December 31, 2018 to $48.0 million for the same period ended December 31, 2019. Operating net earnings excludes merger-related costs of $4.9 million, net of tax, and financial assistance grants of $0.7 million, net of tax, for the year ended December 31, 2019, and merger-related costs of $10.6 million, net of tax, financial assistance grants of $1.6 million, net of tax, and gain on sale of securities of $0.3 million, net of tax, for the year ended December 31, 2018.
Net interest income increased $36.9 million in year-over-year comparison, primarily due to interest income earned on a higher volume of loans and securities.
Non-interest income was $26.9 million at December 31, 2019, an increase of $6.4 million in year-over-year comparison consisting of increases in service charges on deposit accounts, interchange fee income, mortgage income, as well as other charges and fees.
Non-interest expense was $88.6 million at December 31, 2019, an increase of $12.3 million in year-over-year comparison, of which $4.3 million is related to the operations of Southwest, Sunshine, FMB, FPB and FFB. The remaining increase of $8.0 million in expenses are related to increases in salaries and employee benefits of $3.7 million and increases in other expenses of $4.3 million.
Declaration of Cash Dividend
The Company announced that its Board of Directors declared a cash dividend of $0.10 per share to be paid on its common stock on February 21, 2020 to shareholders of record as of the close of business on February 7, 2020.
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 SGB and the acquisitions of Southwest, Sunshine, FMB, FPB and FFB, including the risk that the proposed acquisition of SGB does not close when expected or at all because conditions to closing are not satisfied on a timely basis or at all, the terms of the proposed transactions with SGB need to be modified to satisfy such conditions, and that the anticipated benefits from the transactions with Southwest, Sunshine, FMB, FPB, FFB and SGB 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
12/31/19
Quarter
Ended
9/30/19
Quarter
Ended
6/30/19
Quarter
Ended
3/31/19
Quarter
Ended
12/31/18
Total Interest Income
$ 40,444
$ 37,241
$ 37,571
$ 33,273
$ 30,555
Total Interest Expense
7,000
6,782
6,799
6,142
5,285
Net Interest Income
33,444
30,459
30,772
27,131
25,270
FTE net interest income*
33,847
30,739
31,040
27,388
25,524
Provision for loan losses
850
974
791
1,123
574
Non-interest income
7,574
7,103
6,716
5,554
6,396
Non-interest expense
24,960
20,825
20,891
21,893
22,249
Earnings before income taxes
15,208
15,763
15,806
9,669
8,843
Income tax expense
3,353
3,491
3,823
2,034
1,982
Net income available to common shareholders
$ 11,855
$ 12,272
$ 11,983
$ 7,635
$ 6,861
PER COMMON SHARE DATA
Basic earnings per share
$ 0.65
$ 0.72
$ 0.70
$ 0.49
$ 0.48
Diluted earnings per share
0.64
0.71
0.69
0.48
0.48
Diluted earnings per share, operating*
0.72
0.74
0.70
0.63
0.64
Quarterly dividends per share
.08
.08
.08
.07
.05
Book value per common share at end of period
28.91
27.92
27.22
26.30
24.49
Tangible book value per common share at period end*
18.87
19.39
18.72
17.79
16.88
Market price at end of period
35.52
32.30
30.34
30.90
30.91
Shares outstanding at period end
18,802,266
17,123,625
17,129,915
17,272,731
14,830,598
Weighted average shares outstanding:
Basic
18,241,244
17,131,080
17,182,049
15,646,476
14,247,555
Diluted
18,398,609
17,267,953
17,311,626
15,770,622
14,371,562
AVERAGE BALANCE SHEET DATA
Total assets
$3,767,587
$3,439,202
$3,460,394
$3,181,761
$2,812,212
Loans and leases
2,512,524
2,343,392
2,337,583
2,167,495
1,959,179
Total deposits
2,963,603
2,765,816
2,862,653
2,599,842
2,296,966
Total common equity
518,070
470,024
454,965
390,217
328,250
Total tangible common equity*
346,742
324,619
308,303
262,553
222,402
SELECTED RATIOS
Annualized return on avg assets
1.26%
1.43%
1.39%
0.96%
0.98%
Annualized return on avg assets, operating*
1.40%
1.49%
1.39%
1.25%
1.30%
Annualized return on avg common equity, operating*
10.16%
10.91%
10.60%
10.18%
11.14%
Annualized return on avg tangible common equity, oper*
15.18%
15.80%
15.64%
15.13%
16.44%
Average loans to average deposits
84.78%
84.73%
81.66%
83.37%
85.29%
FTE Net Interest Margin*
4.06%
4.05%
4.07%
3.89%
4.08%
Efficiency Ratio
60.26%
55.03%
55.33%
66.46%
69.69%
Efficiency Ratio, operating*
55.67%
53.17%
55.09%
57.21%
59.06%
CREDIT QUALITY
Allowance for loan losses (ALLL) as a % of total loans
0.53%
0.56%
0.51%
0.48%
0.49%
Nonperforming assets to tangible equity + ALLL
13.13%
13.71%
11.42%
12.32%
14.37%
Nonperforming assets to total loans + OREO
1.86%
2.00%
1.61%
1.67%
1.81%
Annualized QTD net charge-offs (recoveries) to total loans
(0.002%)
0.004%
(0.01%)
(0.008%)
0.02%
*See reconciliation of Non-GAAP financial measures
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
BALANCE SHEET
Dec 31,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Assets
Cash and cash equivalents
$ 168,864
$ 159,990
$ 165,984
$ 248,576
$ 159,107
Securities available-for-sale
765,087
612,002
598,607
598,796
492,701
Securities held-to-maturity
-
6,328
6,396
6,397
6,000
Other investments
26,690
22,517
17,819
15,298
16.227
Total investment securities
791,777
640,847
622,822
620,491
514,928
Loans held for sale
10,810
11,104
8,597
6,238
4,838
Total loans
2,600,358
2,349,986
2,351,998
2,335,348
2,060,422
Allowance for loan losses
(13,908)
(13,043)
(12,091)
(11,235)
(10,065)
Loans, net
2,586,450
2,336,943
2,339,907
2,324,113
2,050,357
Premises and equipment
104,980
96,726
97,115
94,624
74,783
Other Real Estate Owned
7,299
9,974
11,205
11,588
10,869
Goodwill and other intangibles
188,865
146,091
145,649
147,150
112,916
Other assets
82,818
80,256
81,305
80,199
76,188
Total assets
$3,941,863
$3,481,931
$3,472,584
$3,532,979
$3,003,986
Liabilities and Shareholders’ Equity
Non-interest bearing deposits
$ 723,208
$ 642,054
$ 645,838
$ 655,900
$ 570,148
Interest-bearing deposits
2,353,325
2,119,181
2,185,362
2,258,418
1,887,311
Total deposits
3,076,533
2,761,345
2,831,200
2,914,318
2,457,459
Borrowings
214,319
136,250
71,250
61,750
85,500
Subordinated debentures
80,678
80,639
80,600
80,561
80,521
Other liabilities
26,675
25,609
23,253
22,003
17,252
Total liabilities
3,398,205
3,003,843
3,006,303
3,078,632
2,640,732
Total shareholders’ equity
543,658
478,088
466,281
454,347
363,254
Total liabilities and shareholders’ equity
$3,941,863
$3,481,931
$3,472,584
$3,532,979
$3,003,986
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS STATEMENT
Three Months Ended
12/31/19
9/30/19
6/30/19
3/31/19
12/31/18
Interest Income:
Loans, including fees
$ 33,556
$ 31,279
$ 30,912
$ 27,569
$ 25,184
Investment securities
5,298
4,752
5,017
4,339
3,785
Accretion of purchase accounting adjustments
1,553
1,201
1,552
1,235
1,532
Other interest income
37
9
90
130
54
Total interest income
40,444
37,241
37,571
33,273
30,555
Interest Expense:
Deposits
5,489
5,156
5,377
4,275
3,506
Borrowings
771
451
288
546
482
Subordinated debentures
1,213
1,270
1,188
1,233
1,179
Accretion of purchase accounting adjustments
(473)
(95)
(54)
88
118
Total interest expense
7,000
6,782
6,799
6,142
5,285
Net interest income
33,444
30,459
30,772
27,131
25,270
Provision for loan losses
850
974
791
1,123
574
Net interest income after provision for loan losses
32,594
29,485
29,981
26,008
24,696
Non-interest Income:
Service charges on deposit accounts
2,110
1,979
1,918
1,831
1,887
Mortgage Income
1,720
1,800
1,559
909
969
Interchange Fee Income
2,075
2,252
2,045
1,652
1,527
Gain (loss) on securities, net
(9)
57
36
38
334
Financial Assistance Award/Bank Enterprise Award
714
-
-
233
950
Other charges and fees
964
1,015
1,158
891
729
Total non-interest income
7,574
7,103
6,716
5,554
6,396
Non-interest expense (benefit):
Salaries and employee benefits
13,092
11,612
11,615
10,697
10,336
Occupancy expense
3,190
2,632
2,532
2,442
2,281
FDIC/OCC premiums
147
111
426
(52)
369
Marketing
248
62
160
175
173
Amortization of core deposit intangibles
907
796
796
716
750
Other professional services
951
1,140
980
920
452
Acquisition charges
2,300
705
91
3,179
4,155
Other non-interest expense
4,125
3,767
4,291
3,816
3,733
Total Non-interest expense
24,960
20,825
20,891
21,893
22,249
Earnings before income taxes
15,208
15,763
15,806
9,669
8,843
Income tax expense
3,353
3,491
3,823
2,034
1,982
Net income available to common shareholders
$ 11,855
$ 12,272
$ 11,983
$ 7,635
$ 6,861
Diluted earnings per common share
$ 0.64
$ 0.71
$ 0.69
$ 0.48
$ 0.48
Diluted earnings per common share, operating*
$ 0.72
$ 0.74
$ 0.70
$ 0.63
$ 0.64
*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
2019
2018
Interest Income:
Loans, including fees
$ 123,316
$ 84,089
Investment securities
19,406
12,753
Accretion of purchase accounting adjustments
5,541
2,733
Other interest income
266
403
Total interest income
148,529
99,978
Interest Expense:
Deposits
20,297
10,584
Borrowings
2,056
1,142
Subordinated debentures
4,904
3,156
Amortization of purchase accounting adjustments
(534)
209
Total interest expense
26,723
15,091
Net interest income
121,806
84,887
Provision for loan losses
3,738
2,120
Net interest income after provision for loan losses
118,068
82,767
Non-interest Income:
Service charges on deposit accounts
7,838
5,793
Mortgage Income
5,988
4,048
Interchange Fee Income
8,024
5,247
Gain (loss) on securities, net
122
329
Financial Assistance Award/Bank Enterprise Award
947
2,100
Other charges and fees
4,028
3,044
Total non-interest income
26,947
20,561
Non-interest expense:
Salaries and employee benefits
47,016
36,893
Occupancy expense
10,796
8,125
FDIC/OCC premiums
632
1,382
Marketing
645
382
Amortization of core deposit intangibles
3,215
1,657
Other professional services
3,956
1,926
Acquisition charges
6,275
13,810
Other non-interest expense
16,034
12,136
Total Non-interest expense
88,569
76,311
Earnings before income taxes
56,446
27,017
Income tax expense
12,701
5,792
Net income available to common shareholders
$ 43,745
$ 21,225
Diluted earnings per common share
$ 2.55
$ 1.62
Diluted earnings per common share, operating*
$ 2.79
$ 2.29
*See reconciliation of Non-GAAP financial measures
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
COMPOSITION OF LOANS
Dec 31,
2019
Percent
of Total
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Percent
of Total
Commercial, financial and agricultural
$ 332,600
12.7%
$ 338,584
$ 342,535
$ 340,333
$ 301,182
14.6%
Real estate – construction
359,195
13.8%
284,103
352,826
348,788
298,718
14.5%
Real estate – commercial
1,028,012
39.4%
943,218
881,831
857,918
776,880
37.6%
Real estate – residential
814,282
31.2%
724,860
713,350
722,611
617,804
29.9%
Lease Financing Receivable
3,095
0.1%
3,239
3,616
3,060
2,891
0.1%
Obligations of States & subdivisions
20,716
0.8%
16,545
17,192
13,734
16,941
0.8%
Consumer
42,458
1.6%
39,437
40,648
48,904
46,006
2.2%
Loans held for sale
10,810
0.4%
11,104
8,597
6,238
4,838
0.3%
Total loans
$2,611,168
100%
$2,361,090
$2,360,595
$2,341,586
$2,065,260
100%
COMPOSITION OF DEPOSITS
Dec 31,
2019
Percent
of Total
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Percent
of Total
Noninterest bearing
$723,208
23.5%
$642,054
$645,838
$655,900
$570,148
23.2%
NOW and other
941,598
30.6%
926,704
999,881
1,062,112
835,434
34.0%
Money Market/Savings
750,010
24.4%
651,539
645,611
647,783
566,276
23.0%
Time Deposits of less than $250,000
479,386
15.6%
401,549
408,164
414,281
384,030
15.6%
Time Deposits of $250,000 or more
182,331
5.9%
139,489
131,706
134,242
101,571
4.2%
Total Deposits
$3,076,533
100%
$2,761,345
$2,831,200
$2,914,318
$2,457,459
100%
ASSET QUALITY DATA
Dec 31,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Nonaccrual loans
$ 38,393
$ 35,175
$ 25,608
$ 26,502
$ 25,073
Loans past due 90 days and over
2,715
2,116
989
943
1,265
Total nonperforming loans
41,108
37,291
26,597
27,445
26,338
Other real estate owned
7,299
9,974
11,205
11,588
10,869
Nonaccrual securities
-
52
208
208
208
Total nonperforming assets
$ 48,407
$47,317
$38,010
$39,241
$ 37,415
Nonperforming assets to total assets
1.23%
1.36%
1.09%
1.11%
1.25%
Nonperforming assets to total loans + OREO
1.86%
2.00%
1.61%
1.67%
1.81%
ALLL to nonperforming loans
33.83%
34.98%
45.46%
40.94%
38.21%
ALLL to total loans
0.53%
0.56%
0.51%
0.48%
0.49%
Quarter-to-date net charge-offs (recs)
$ (15)
$ 23
$ (65)
$ (47)
$ 93
Annualized QTD net chg-offs (recs) to loans
(0.002%)
0.004%
(0.01%)
(0.008%)
0.02%
$ 556,004
$ 4,108
2.96%
$ 494,184
$ 3,926
3.18%
$ 497,988
$ 4,227
3.40%
$ 435,576
$ 3,581
3.29%
$ 369,820
$ 2,808
3.04%
Tax-exempt securities188,709
1,593
3.38%
127,750
1,108
3.47%
124,367
1,058
3.40%
117,831
1,015
3.45%
114,055
1,003
3.52%
Total investment securities744,713
5,701
3.06%
621,934
5,034
3.24%
622,355
5,285
3.40%
553,407
4,596
3.32%
483,875
3,811
3.15%
FFS & Int bearing dep in other banks80,612
37
0.18%
71,165
7
0.04%
89,936
90
0.40%
94,778
130
0.55%
57,655
282
1.96%
Loans2,512,524
35,109
5.59%
2,343,392
32,480
5.54%
2,337,583
32,464
5.56%
2,167,495
28,804
5.32%
1,959,179
26,716
5.45%
Total Interest earning assets3,337,849
40,847
4.90%
3,036,491
37,521
4.94%
3,049,874
37,839
4.96%
2,815,680
33,530
4.76%
2,500,709
30,809
4.93%
Other assets429,738
402,711
410,520
366,081
311,503
Total assets
$ 3,767,587
$ 3,439,202
$ 3,460,394
$ 3,181,761
$ 2,812,212
Interest-bearing liabilities:
Deposits
$ 2,263,299
$ 5,016
0.89%
$ 2,140,419
$ 5,061
0.95%
$ 2,231,462
$ 5,323
0.95%
$ 2,024,718
$ 4,363
0.86%
$ 1,776,780
$ 3,615
0.81%
Repo-
-
0.00%
-
-
0.00%
-
-
0.00%
-
-
0.00%
-
-
0.00%
Fed funds purchased5,334
30
2.25%
6,708
11
0.66%
5,450
30
2.20%
150
5
13.33%
1,455
18
4.95%
FHLB & FTN169,141
741
1.75%
88,533
440
1.99%
32,310
258
3.19%
86,119
541
2.51%
92,352
465
2.01%
Subordinated debentures80,658
1,213
6.02%
80,619
1,270
6.30%
80,579
1,188
5.90%
80,540
1,233
6.12%
75,391
1,187
6.30%
Total interest bearing liabilities2,518,432
7,000
1.11%
2,316,279
6,782
1.17%
2,349,801
6,799
1.16%
2,191,527
6,142
1.12%
1,945,978
5,285
1.09%
Other liabilities731,085
652,899
655,628
600,017
537,984
Shareholders' equity
518,070
470,024
454,965
390,217
328,250
Total liabilities and shareholders' equity
$ 3,767,587
$ 3,439,202
$ 3,460,394
$ 3,181,761
$ 2,812,212
Net interest income (FTE)*
$ 33,847
3.78%
$ 30,739
3.77%
$ 31,040
3.81%
$ 27,388
3.64%
$ 25,524
3.84%
Net interest margin (FTE)*
4.06%
4.05%
4.07%
3.89%
4.08%
Core net interest margin*
3.80%
3.86%
3.84%
3.71%
3.84%
*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,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Book value per common share
$ 28.91
$ 27.92
$ 27.22
$ 26.30
$ 24.49
Effect of intangible assets per share
10.04
8.53
8.50
8.51
7.61
Tangible book value per common share
$ 18.87
$ 19.39
$ 18.72
$ 17.79
$ 16.88
Diluted earnings per share
$ 0.64
$ 0.71
$ 0.69
$ 0.48
$ 0.48
Effect of acquisition charges
0.14
0.04
0.01
0.21
0.29
Tax on acquisition charges
(0.03)
(0.01)
-
(0.05)
(0.07)
Effect of gain on sale of securities
-
-
-
-
(0.02)
Tax on gain on sale
-
-
-
-
.01
Effect of Treasury awards
(0.04)
-
-
(0.01)
(0.07)
Tax on Treasury awards
0.01
-
-
-
0.02
Diluted earnings per share, operating
$ 0.72
$ 0.74
$ 0.70
$ 0.63
$ 0.64
Year to Date
2019
2018
Diluted earnings per share
$ 2.55
$ 1.62
Effect of acquisition charges
0.37
1.05
Tax on acquisition charges
(0.08)
(0.24)
Effect of gain on sale of securities
-
(0.03)
Tax on gain on sale
-
0.01
Effect of Treasury awards
(0.06)
(0.16)
Tax on Treasury awards
0.01
0.04
Diluted earnings per share, operating
$ 2.79
$ 2.29
Year to Date
2019
2018
Net income available to common shareholders
$ 43,745
$ 21,225
Acquisition charges
6,275
13,810
Tax on acquisition charges
(1,348)
(3,221)
Gain on sale of securities
-
(342)
Tax on gain on sale
-
86
Treasury awards
(947)
(2,100)
Tax on Treasury awards
240
532
Net earnings available to common shareholders, operating
$ 47,965
$ 29,990
Three Months Ended
Average Balance Sheet Data
Dec 31,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Total average assets
A
$3,767,587
$3,439,202
$3,460,394
$3,181,761
$2,812,212
Total average earning assets
B
3,337,849
$3,036,492
$3,049,874
$2,815,680
$2,500,709
`
Common Equity
C
$ 518,070
$ 470,024
$ 454,965
$ 390,217
$ 328,250
Less intangible assets
171,328
145,405
146,662
127,664
105,848
Tangible common equity
D
$ 346,742
$ 324,619
$ 308,303
$ 262,553
$ 222,402
Three Months Ended
Net Interest Income Fully Tax Equivalent
Dec 31,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Net interest income
E
$ 33,444
$ 30,459
$ 30,772
$ 27,131
$ 25,270
Tax-exempt investment income
(1,190)
(828)
(790)
(758)
(749)
Taxable investment income
1,593
1,108
1,058
1,015
1,003
Net Interest Income Fully Tax Equivalent
F
$ 33,847
$ 30,739
$ 31,040
$ 27,388
$ 25,524
Annualized Net Interest Margin
E/B
4.01%
4.01%
4.04%
3.85%
4.04%
Annualized Net Interest Margin, Fully Tax Equivalent
F/B
4.06%
4.05%
4.07%
3.89%
4.08%
Three Months Ended
Core Net Interest Margin
Dec 31,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Net interest income (FTE)
$ 33,847
$ 30,739
$ 31,040
$ 27,388
$ 25,524
Less purchase accounting adjustments
2,026
1,296
1,607
1,147
1,414
Net interest income, net of purchase accounting adj
G
$ 31,821
$ 29,443
$ 29,433
$ 26,241
$ 24,110
Total average earning assets
$3,337,849
$3,036,492
$3,049,874
$2,815,680
$2,500,709
Add average balance of loan valuation discount
12,252
13,679
15,265
13,869
12.803
Avg earning assets, excluding loan valuation discount
H
$3,350,101
$3,050,171
$3,065,139
$2,829,549
$2,513,511
Core net interest margin
G/H
3.80%
3.86%
3.84%
3.71%
3.84%
Three Months Ended
Efficiency Ratio
Dec 31,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Operating Expense
Total non-interest expense
$ 24,960
$ 20,825
$ 20,891
$ 21,893
$ 22,245
Pre-tax non-operating expenses
(2,300)
(705)
(91)
(3,179)
(4,155)
Adjusted Operating Expense
I
$ 22,660
$ 20,120
$ 20,800
$ 18,714
$ 18,090
Operating Revenue
Net interest income, FTE
$ 33,847
$ 30,739
$ 31,040
$ 27,388
$ 25,524
Total non-interest income
7,574
7,103
6,716
5,554
6,396
Pre-tax non-operating items
(714)
-
-
(233)
(1,292)
Adjusted Operating Revenue
J
$ 40,707
$ 37,842
$ 37,756
$ 32,709
$ 30,628
Efficiency Ratio, operating
I/J
55.67%
53.17%
55.09%
57.21%
59.06%
Three Months Ended
Return Ratios
Dec 31,
2019
Sept 30,
2019
June 30,
2019
Mar 31,
2019
Dec 31,
2018
Net income available to common shareholders
K
$ 11,855
$ 12,272
$ 11,983
$ 7,635
$ 6,861
Acquisition charges
2,300
705
91
3,179
4,155
Tax on acquisition charges
(461)
(152)
(23)
(712)
(910)
Gain on sale
-
-
-
-
(342)
Tax on gain on sale
-
-
-
-
86
Treasury awards
(714)
-
-
(233)
(950)
Tax on Treasury awards
181
-
-
59
242
Net earnings available to common shareholders, oper
L
$ 13,161
$ 12,825
$ 12,051
$ 9,928
$ 9,142
Annualized return on avg assets
K/A
1.26%
1.43%
1.39%
0.96%
0.98%
Annualized return on avg assets, oper
L/A
1.40%
1.49%
1.39%
1.25%
1.30%
Annualized return on avg common equity, oper
L/C
10.16%
10.91%
10.60%
10.18%
11.14%
Annualized return on avg tangible common equity, oper
L/D
15.18%
15.80%
15.64%
15.13%
16.44%
Mortgage Department
Net Interest Income after provision for loan losses
$ 59
$ 200
$ 194
$ 176
$ 267
Loan fee income
1,720
1,800
1,559
909
969
Salaries and employee benefits
975
986
941
823
774
Other non-interest expense
164
134
140
154
124
Earnings before income taxes
$ 640
$ 880
$ 672
$ 108
$ 338
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