The First Bancshares, Inc. Reports 2nd Quarter 2014 Earnings and Declaration of Dividend

HATTIESBURG, Miss.--(BUSINESS WIRE)--July 28, 2014--The First Bancshares, Inc. (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) today reported earnings for the quarter ended June 30, 2014. The First Bancshares, Inc. also announced a quarterly dividend of $.0375 per common share. The record date will be August 7, 2014 with a payable date of August 21, 2014.

Net income available to common stockholders for the three months ended June 30, 2014 amounted to $1,527,000, or $0.29 per diluted share, compared to $706,000, or $0.18 per diluted share for the same quarter in 2013, an increase of 821,000 or 116.3% in net income available to common shareholders. Net income available to common shareholders exclusive of merger related costs and a gain on sale of securities for the three months ended June 30, 2014 was $1,438,000, or $0.27 per diluted share, a 26.8% increase in net income available to common shareholders over the same quarter in 2013 adjusted for merger related costs.

Net income available to common stockholders for the six months ended June 30, 2014 amounted to $2,848,000, or $0.55 per diluted share, compared to $1,825,000, or $0.51 per diluted share for the same period in 2013, an increase of $1,023,000 or 56.1% in net income available to common shareholders. Net income available to common shareholders exclusive of one-time items for the six months ended June 30, 2014 was $2,748,000, or $0.53 per diluted share, a 24.9% increase in net income available to common shareholders over the same period in 2013 adjusted for merger related costs.

M. Ray “Hoppy” Cole, President & Chief Executive Officer, commented, “Our company reached a milestone in the accomplishment of our strategic plan ending the quarter with over $1 billion in total assets. The company posted significant increases in loans and deposits which produced improved profitability and operating results. We are encouraged by the growth opportunities that lie ahead for our company in both our legacy and newly established markets.”

Total assets for the Company totaled $1.0 billion at June 30, 2014, an increase of $20.7 million compared with March 31, 2014. The increase during the second quarter of 2014 was attributable to an increase in the Company’s deposit balances.

June 30, 2014 loans outstanding increased by $16.5 million, or approximately 11.1% on an annualized basis, compared with March 31, 2014, and increased $52.3 million, or 9.4%, compared to June 30, 2013 total loans outstanding.

Non-performing assets totaled $13.3 million at June 30, 2014 compared to $9.9 million of non-performing assets at March 31, 2014 and $9.9 million at June 30, 2013. Non-performing assets represented 1.32% of total assets at June 30, 2014 compared to 1.00% of total assets at March 31, 2014, and compared to 1.02% at June 30, 2013. Non-performing loans totaled $6.5 million at June 30, 2014 compared to $2.7 million at March 31, 2014 and compared to $2.2 million of non-performing loans at June 30, 2013. Non-performing loans represented 1.07% of total loans at June 30, 2014 compared with 0.46% of total outstanding loans at March 31, 2014 and 0.40% of total loans outstanding at June 30, 2013. The increase in non-performing assets is due to placing one loan relationship on non-accrual that was previously classified substandard since 2009.

The Company’s allowance for loan losses totaled $6.0 million at June 30, 2014 representing an increase of $188,000, or 12.94% on an annualized basis, from March 31, 2014 and an increase of $606,000, or 11.24%, from June 30, 2013. The allowance for loan losses represented 0.98% of period-end loans at June 30, 2014 compared with 0.98% of period-end loans at March 31, 2014 and 0.97% of period-end loans at June 30, 2013. Under acquisition accounting treatment, loans acquired are recorded at fair value which includes a credit risk component, and therefore the allowance on loans acquired is not carried over from the seller. The allowance for loan losses represented 1.16% of period end loans excluding those booked at fair value at June 30, 2014 compared with 1.20% at March 31, 2014 and 1.26% at June 30, 2013.

Total deposits increased $20.3 million or 9.40% on an annualized basis, as of June 30, 2014 compared with March 31, 2014 total deposits and increased by approximately $40.5 million or 4.81% compared with June 30, 2013.

Net income available to common stockholders for the quarter ended June 30, 2014 totaled $1,527,000 or $0.29 per diluted share, an increase of $206,000 or 15.59% from the first quarter of 2014 net income available to common stockholders of $1,321,000 or $0.25 per diluted share.

During the quarter ended June 30, 2014, net interest income totaled $7,848,000 representing an increase of $1,062,000, or 15.6%, compared with the quarter ended June 30, 2013 net interest income of $6,786,000. The tax equivalent net interest margin for the quarter ended June 30, 2014 was 3.52% compared to 3.29% in the second quarter of 2013. The increase in net interest income and the net interest margin during the quarter ended June 30, 2014 compared with the second quarter of 2013 was attributable primarily to increased average loans outstanding.

Fair value accounting adjustments on acquired assets and liabilities contributed approximately 4 basis points on an annualized basis to the net interest margin in the second quarter of 2014 and 9 basis points in the second quarter of 2013.

During the quarter ended June 30, 2014, non-interest income totaled $2,055,000, an increase of $383,000 or 22.9%, compared with the quarter ended March 31, 2014, and an increase of $165,000, or 8.7%, compared with the second quarter of 2013. The increase for the quarter ended June 30, 2014 is attributed primarily to a gain of $254,000 from the sale of other investments.


	Quarter Ended		Quarter Ended		Quarter Ended
Non-interest Income	06/30/14		03/31/14		06/30/13
(dollars in thousands)

Service Charges on Deposit Accounts	$	594	$	561	$	601
Mortgage Income		407		349		613
Interchange Fee Income		507		472		460
Other Operating Income		547		290		216
Total Non-interest Income	$	2,055	$	1,672	$	1,890

During the quarter ended June 30, 2014, non-interest expense totaled $7,384,000, an increase of $157,000, or 2.17%, compared with the quarter ended March 30, 2014, and an increase of $139,000, or 1.92%, compared with the second quarter of 2013.


	Quarter Ended		Quarter Ended		Quarter Ended
Non-interest Expense	06/30/14		03/31/14		06/30/13
(dollars in thousands)

Salaries and Employee Benefits	$	4,260	$	4,097	$	3,729
Occupancy, Furniture and Equipment Expense		1,093		1,068		940
FDIC Premiums		222		223		168
Professional Fees		456		389		911
Advertising and Promotion		87		53		109
Intangible Amortization		94		94		89
Other Operating Expenses		1,172		1,303		1,299
Total Non-interest Expense	$	7,384	$	7,227	$	7,245

Total non-interest expense increases in salaries due to the expansion into Baton Rouge and the acquisition of First National Bank of Baldwin County were mostly offset by the decrease in professional fees. Acquisition costs for First National Bank of Baldwin County of $447,000 were expensed during the second quarter of 2013 which were larger than the acquisition costs for Bay Bank of $128,000 that were expensed during the second quarter of 2014 which resulted in an overall decrease in professional fees.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi, is the parent company of The First, A National Banking Association. Founded in 1996, the First has operations in south Mississippi, Louisiana and south Alabama. The Company’s stock is traded on NASDAQ Global Market under the symbol FBMS. Information is available on the Company’s website: www.thefirstbank.com.

This news release contains statements regarding the projected performance of The First Bancshares, Inc. and its subsidiary. These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act. Actual results may differ materially from the projections provided in this release since such projections involve significant known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; and legislation or regulatory changes which adversely affect the ability of the combined Company to conduct business combinations or new operations. The Company disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information on The First Bancshares, Inc. is available in its filings with the Securities and Exchange Commission, available at the SEC’s website, http://www.sec.gov.


THE FIRST BANCSHARES, INC.
(unaudited, dollars in thousands except per shares data)

Consolidated Balance Sheets
	June 30, 2014			Mar 31, 2014			June 30, 2013

ASSETS
Cash and Due from Banks	$	25,677		$	28,514		$	27,811
Federal funds sold		2,477			22,261			4,941
Interest-bearing deposits with banks		27,289			31,203			49,089
Investment Securities		276,099			251,037			260,586
Loans held for sale		3,220			2,586			2,933
Loans, Net of Unearned Income		606,812			590,947			554,838
Allowance for Loan Losses		(5,999	)		(5,811	)		(5,393	)
Net Loans		600,813			585,136			549,445
Premises and Equipment		31,339			31,416			32,696
Other Real Estate Owned		4,875			5,221			5,687
Goodwill		10,621			10,621			10,713
Other Assets		26,879			20,572			21,536
TOTAL ASSETS	$	1,009,289		$	988,567		$	965,437

LIABILITIES
Non-interest-bearing Demand Deposits	$	183,226		$	179,334		$	167,246
Interest-bearing Accounts		498,527			476,958			454,172
Time Deposits		202,119			207,289			221,921
Total Deposits		883,872			863,581			843,339
Borrowings		13,500			15,000			16,500
Subordinated Debentures		10,310			10,310			10,310
Other Liabilities		11,830			12,180			12,671
TOTAL LIABILITIES		919,512			901,071			882,820

STOCKHOLDER’S EQUITY
Preferred Stock		17,123			17,123			17,062
Common Stock		5,180			5,176			5,120
Surplus		42,239			42,107			41,902
Retained Earnings		24,972			23,637			20,538
Accumulated Other Comprehensive Income (Loss)		727			(83	)		(1,541	)
Treasury Stock		(464	)		(464	)		(464	)
TOTAL STOCKHOLDERS’ EQUITY		89,777			87,496			82,617

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,009,289		$	988,567		$	965,437

END OF PERIOD SHARES OUTSTANDING		5,180,287			5,175,774			5,119,949

TANGIBLE BOOK VALUE PER SHARE	$	11.49		$	11.05		$	10.15


THE FIRST BANCSHARES, INC.
(unaudited, dollars in thousands except per share data)

Consolidated Statements of Income
	Three Months Ended				Six Months Ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
INTEREST INCOME
Interest and Fees on Loans	$	7,091	$	6,318	$	14,095	$	11,549
Interest and Dividends on Securities		1,453		1,269		2,885		2,676
Interest on Fed Funds Sold		30		22		41		34
TOTAL INTEREST INCOME		8,574		7,609		17,021		14,259

INTEREST EXPENSE
Interest on Deposits		584		666		1,050		1,284
Interest on Borrowings		142		157		299		298
TOTAL INTEREST EXPENSE		726		823		1,349		1,582

NET INTEREST INCOME		7,848		6,786		15,672		12,677
Provision for Loan Losses		277		349		635		660
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		7,571		6,437		15,037		12,017

NON-INTEREST INCOME		2,055		1,890		3,727		3,820

NON-INTEREST EXPENSE		7,384		7,245		14,611		13,224
Income before Income Taxes		2,242		1,082		4,153		2,613
Income Taxes		629		270		1,113		576
NET INCOME		1,613		812		3,040		2,037

Preferred Stock Accretion & Dividends		86		106		192		212
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	1,527	$	706	$	2,848	$	1,825

BASIC EARNINGS PER SHARE	$	0.30	$	0.18	$	0.55	$	0.52

DILUTED EARNINGS PER SHARE	$	0.29	$	0.18	$	0.55	$	0.51

WEIGHTED AVG SHARES OUTSTANDING		5,152,784		3,955,243		5,142,227		3,536,362

DILUTED WEIGHTED AVG SHS OUTSTANDING		5,180,019		4,001,481		5,190,576		3,582,600


THE FIRST BANCSHARES, INC.
(unaudited, dollars in thousands except per share data)

	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
EARNINGS PERFORMANCE RATIOS
Annualized Return on Average Assets		0.64	%		0.36	%		0.61	%		0.49	%
Annualized Return on Average Assets(1)		0.60	%		0.55	%		0.59	%		0.58	%
Annualized Return on Average Equity		7.38	%		3.80	%		7.03	%		5.26	%
Annualized Return on Average Equity(1)		6.97	%		5.80	%		6.79	%		6.22	%
Net Interest Margin		3.52	%		3.29	%		3.62	%		3.49	%
Efficiency Ratio(2)		72.68	%		80.96	%		73.32	%		77.66	%
Efficiency Ratio(1)(2)		73.26	%		73.85	%		73.47	%		73.71	%
Net Overhead Expense to Average Earning Assets(3)		2.32	%		2.50	%		2.43	%		2.48	%

Net Overhead Expense to Average Earning Assets(1)(3)		2.37	%		2.20	%		2.46	%		2.33	%

ASSET QUALITY RATIOS
Annualized Net Charge-offs to Average Loans		0.06	%		(0.09	%)		0.12	%		(0.002	%)
Allowance for Loan Losses to Period End Loans		0.98	%		0.97	%
Non-performing Assets to Period End Assets		1.32	%		1.02	%
Non-performing Loans to Period End Loans		1.07	%		0.40	%
Loans 30-89 Days Past Due to Period End Loans		0.71	%		0.80	%

SELECTED BALANCE SHEET & OTHER FINANCIAL DATA
Average Assets	$	1,015,679		$	908,495		$	990,327		$	827,238
Average Earning Assets	$	919,716		$	857,731		$	895,064		$	757,751
Average Total Loans	$	600,114		$	556,121		$	595,697		$	484,857
Average Demand Deposits	$	178,137		$	150,232		$	172,861		$	132,742
Average Interest Bearing Liabilities	$	738,546		$	707,968		$	719,811		$	640,573
Average Equity	$	87,480		$	85,584		$	86,546		$	77,500


Period End Non-performing Assets	$	13,335		$	9,874
Period End Non-performing Loans	$	6,510		$	2,238
Period End Loans 30-89 Days Past Due	$	4,322		$	4,446


Tax Equivalent Net Interest Income	$	8,104		$	7,059		$	16,200		$	13,209
Net Charge-offs (Recoveries) during Period	$	89		$	(126	)	$	364		$	(6	)


(1)Excludes merger related costs and one-time items
(2)Efficiency Ratio is defined as Non-interest Expense divided by the sum of Net Interest Income,on a tax equivalent basis, and Non-Interest Income
(3)Net Overhead Expense is defined as Total Non-interest Expense less Total Non-interest income

CONTACT:
The First Bancshares, Inc.
M. Ray “Hoppy” Cole
Chief Executive Officer
or
Dee Dee Lowery, 601-268-8998
Chief Financial Officer


End of Period Loan Balances	06/30/14		03/31/14		06/30/13
(dollars in thousands)

Loans held for sale	$	3,220	$	2,586	$	2,933
Commercial		81,958		84,898		69,376
Real Estate:
Mortgage-commercial		204,101		198,984		186,219
Mortgage-residential		230,310		218,901		210,543
Construction		74,105		73,523		72,349
Consumer and other		16,337		14,641		16,351
	$	610,031	$	593,533	$	557,771


Non-Performing Assets	06/30/14		03/31/14		06/30/13
(dollars in thousands)

Non-Accrual Loans	$	6,063	$	2,267	$	1,886
Past Due Loans (90 days or more)		447		443		352
Total Non-Performing Loans		6,510		2,710		2,238
Non-Accrual Securities		1,950		1,950		1,950
Other Real Estate		4,875		5,221		5,686
Total Non-Performing Assets	$	13,335	$	9,881	$	9,874


End of Period Deposit Balances	06/30/14		03/31/14		06/30/13
(dollars in thousands)

Non-interest-bearing Demand Deposits	$	183,226	$	179,334	$	167,246
IB Demand, Savings, and MMDA Accounts		498,527		476,958		454,172
Time Deposits < $100,000		80,144		82,780		96,841
Time Deposits > $100,000		121,975		124,509		125,080
	$	883,872	$	863,581	$	843,339