The First Bancshares, Inc. Reports Results for First Quarter ended March 31, 2023; Increases Quarterly Dividend 5%

The First Bancshares, Inc. (“FBMS” or “the Company”) (NASDAQ: FBMS), holding company for The First Bank, (www.thefirstbank.com) reported today financial results for the quarter ended March 31, 2023.

Highlights:

• Effective January 1, 2023, the Company closed its acquisition of Heritage Southeast Bancorporation, Inc., parent company of Heritage Southeast Bank (“Heritage Bank”) based in Jonesboro, Georgia. Heritage Bank increased the Company’s presence in Southern Georgia as well as provided entry into the fast growing markets of Atlanta and Savannah, Georgia and Jacksonville, Florida. Heritage Bank added approximately $1.6 billion of assets and twenty four locations.
• During the quarter, the Company completed the systems conversion related to the acquisition of Heritage Bank.
• Net income available to common shareholders totaled $16.3 million for the quarter ended March 31, 2023, representing no change when compared to $16.3 million for the quarter ended December 31, 2022. Several one-time items primarily related to the merger are detailed in the tables located in the appendix of this release.
• Excluding one-time items detailed in the tables located in the appendix of this release, net earnings available to common shareholders, operating (non-GAAP) increased $9.9 million, or 57.8% to $27.1 million for the quarter ended March 31, 2023 as compared to $17.2 million for the quarter ended December 31, 2022.
• Total loans, excluding Heritage Bank acquired loans, increased 1.0% for the quarter representing net growth of $36.7 million, or 4.0% on an annualized basis, as compared to the quarter ended December 31, 2022.
• Net interest margin increased 32 bps to 3.63% for the quarter ended March 31, 2023 from 3.31% for the quarter ended December 31, 2022.
• Recorded initial purchase accounting adjustments related to the Heritage Bank merger including goodwill of $91.4 million, core deposit intangible of $43.7 million and Current Expected Credit Losses (“CECL”) day one provision for credit losses and unfunded commitments of $10.7 million. Merger related expenses were recorded in the amount of $3.8 million.
• For additional information, see the investor presentation filed and available under presentations and press releases included in the investor relations section of the Company’s website: www.thefirstbank.com.

M. Ray “Hoppy” Cole, President and Chief Executive Officer, commented, “Our company produced another strong quarter as we enjoy significantly increased operating earnings associated with our two recent acquisitions and the remix of our earning assets away from the bond portfolio into new loans.

“An 18 basis point improvement in our core net interest margin, the realization of additional cost saves associated with the Beach transaction and the closing of the Heritage transaction combined to produce an annualized ROAA of 1.36%, an annualized ROTCE of 20.13% on an efficiency ratio of 53% during the first quarter, giving us an outstanding start for the year.

“Our company continues to operate with a relatively low loan to deposit ratio of 73%, ample liquidity, a well-diversified granular deposit base and a strong capital position. Even with the volatility within the industry and the uncertainty of the economic cycle, we remain optimistic about the tailwinds we enjoy from our recent expansion in terms of operating returns and the new markets we added for additional growth.”

Quarterly Earnings

Net income available to common shareholders totaled $16.3 million for the quarter ended March 31, 2023, representing no change when compared to $16.3 million for the quarter ended December 31, 2022.

Excluding one-time items detailed in the tables included with this press release, net earnings available to common shareholders, operating (non-GAAP) increased $9.9 million, or 57.8%, to $27.1 million for quarter ended March 31, 2023 as compared to $17.2 million for the quarter ended December 31, 2022. The increase in net earnings available to common shareholders resulted in part from the acquisitions of Beach Bank and Heritage Bank.

The Company recorded a provision for credit losses of $11.0 million for the quarter ended March 31, 2023 and $0.7 million for the quarter ended December 31, 2022. The $11.0 million provision in respect of the quarter ended March 31, 2023 included $10.7 million for the CECL day 1 provision for credit losses and unfunded commitments attributable to the acquired Heritage Bank loans.

Earnings Per Share

For the first quarter of 2023, fully diluted earnings per share were $0.52, compared to $0.67 for the fourth quarter of 2022 and $0.81 for the first quarter of 2022. The decrease in fully-diluted earnings per share when compared to the previous quarter was primarily attributable to expenses associated with the acquisitions as well as the additional shares issued for the acquisition of Heritage Bank.

Fully diluted earnings per share, operating (non-GAAP) were $0.86 for the first quarter of 2023 compared to $0.71 for the fourth quarter of 2022 and $0.72 for the first quarter of 2022.

Effective January 1, 2023, the Company issued 6,920,422 shares of its common stock in conjunction with the closing of the acquisition of Heritage Bank. Effective August 1, 2022, the Company issued 3,498,936 shares of its common stock in conjunction with the closing of the acquisition of Beach Bancorp, Inc. (“Beach Bank”).

Balance Sheet

Consolidated assets increased $1.556 billion to $8.017 billion at March 31, 2023 from $6.462 billion at December 31, 2022. The acquired Heritage Bank assets totaled $1.657 billion.

Total loans were $4.970 billion for the quarter ended March 31, 2023, as compared to $3.774 billion for the quarter ended December 31, 2022, and $2.970 billion for the quarter ended March 31, 2022, representing an increase of $1.196 billion, or 31.7%, for the sequential quarter comparison, and an increase of $2.000 billion, or 67.3%, for the prior year quarterly comparison. During January 2023, loans totaling $1.159 billion, net of purchase accounting adjustments, were recorded from the Heritage Bank acquisition. During August 2022, loans totaling $486.5 million, net of purchase accounting adjustments were recorded from the Beach Bank acquisition.

Excluding the acquired Heritage Bank loans, total loans increased $36.7 million, or 1.0% as compared to the quarter ended December 31, 2022, or 4.0% on an annualized basis.

Excluding the acquired Heritage Bank loans and Beach Bank loans, total loans increased $354.2 million, or 11.9% compared to the quarter ended March 31, 2022.

Total deposits were $6.668 billion for the quarter ended March 31, 2023, as compared to $5.494 billion for the quarter ended December 31, 2022, and $5.438 billion for the quarter ended March 31, 2022, representing an increase of $1.174 billion, or 21.4%, for the sequential quarter comparison, and an increase of $1.230 million, or 22.6%, for the prior year quarterly comparison. During January 2023, deposits totaling $1.392 billion, net of purchase accounting adjustments, were acquired in the Heritage Bank acquisition. During August 2022, deposits totaling $490.6 million, net of purchase accounting adjustments, were acquired in the Beach Bank acquisition.

Excluding the deposits acquired of Heritage Bank, deposits decreased $218.8 million, or 3.2% for the prior quarter comparison. Brokered certificate of deposits in the amount of $77.4 million matured during the quarter. Additionally public fund deposits increased $121.9 million during the quarter resulting in approximately $260 million in total deposit runoff during the quarter.

Book value per share increased to $28.58 at March 31, 2023 from $26.92 at December 31, 2022.

Tangible book value per share (non-GAAP) decreased to $17.49 at March 31, 2023 from $17.97 at December 31, 2022. This decrease was the result of increased common shares outstanding, increased goodwill and other intangibles which was partially offset by the change in accumulated other comprehensive income (loss) as well as earnings net of dividends for the quarter. The balance in accumulated other comprehensive income (loss) improved $18.2 million to $130.8 million at March 31, 2023 from $149.0 million at December 31, 2022.

Asset Quality

Nonperforming assets totaled $22.5 million at March 31, 2023, an increase of $4.7 million compared to $17.7 million at December 31, 2022 and a decrease of $5.1 million compared to $27.6 million at March 31, 2022. Nonperforming assets related to the acquisition of Heritage Bank totaled $3.8 million.

Nonaccrual loans totaled $17.3 million, an increase of $4.7 million as compared to December 31, 2022 and a decrease of $7.4 million as compared to March 31, 2022. During the quarter ended September 30, 2022, one large relationship with a balance of $10.2 million was upgraded to accrual status.

The ratio of the allowance for credit losses (ACL) to total loans was 1.06% at March 31, 2023, 1.03% at December 31, 2022 and 1.06% at March 31, 2022. The ratio of annualized net charge-offs (recoveries) to total loans was 0.01% for the quarter ended March 31, 2023 compared to 0.004% for the quarter ended December 31, 2022 and (0.12%) for the quarter ended March 31, 2022.

First Quarter 2023 vs Fourth Quarter 2022 Earnings Comparison

Net income available to common shareholders for the first quarter of 2023 remained flat when compared to $16.3 million for the fourth quarter of 2022.

Excluding one-time items detailed in the tables included with this press release, net earnings available to common shareholders, operating (non-GAAP) increased $9.9 million, or 57.8%, to $27.1 million for quarter ended March 31, 2023 as compared to $17.2 million for the quarter ended December 31, 2022. The increase in net earnings available to common shareholders resulted in part from the acquisitions of Beach Bank and Heritage Bank.

Net interest income for the first quarter of 2023 was $64.9 million as compared to $47.9 million for the fourth quarter of 2022, an increase of $17.0 million. The increase was largely due to the acquisition of Heritage Bank.

First quarter 2023 net interest margin of 3.63% included 21 basis points related to purchase accounting adjustments compared to 3.31% for the fourth quarter in 2022, which included 9 basis points related to purchase accounting adjustments.

Investment securities totaled $1.962 billion, or 24.5% of total assets at March 31, 2023, compared to $1.983 billion, or 30.7% of total assets at December 31, 2022. The average balance of investment securities decreased $51.7 million in sequential-quarter comparison. The average yield on investment securities increased 3 basis points to 2.31% from 2.28% in sequential-quarter comparison. The investment portfolio had a net unrealized loss of $137.6 million at March 31, 2023 as compared to a net unrealized loss of $161.2 million at December 31, 2022.

The average yield on all earning assets increased in sequential-quarter comparison from 4.00% to 4.49%. Interest expense on average interest bearing liabilities increased 25 basis points from 0.99% for the fourth quarter of 2022 to 1.24% for the first quarter of 2023.

Cost of all deposits averaged 72 basis points for the first quarter of 2023 compared to 57 basis points for the fourth quarter of 2022. This increase was a result of rising interest rates and increased competition for deposits.

Non-interest income increased $4.5 million from $8.1 million to $12.6 million in the sequential-quarter comparison, attributable to increases in service charges on deposit accounts of $1.4 million and interchange fee income of $1.4 million.

Non-interest expense for the first quarter of 2023 was $45.7 million compared to $35.0 million for the fourth quarter of 2022, an increase of $10.6 million, largely attributed to the increase in acquisition charges of $2.6 million as well as expenses related to the operations of Beach Bank and Heritage Bank of $7.9 million.

First Quarter 2023 vs. First Quarter 2022 Earnings Comparison

Net income available to common shareholders for the first quarter of 2023 totaled $16.3 million compared to $16.8 million for the first quarter of 2022, a decrease of $0.6 million or 3.3%.

Excluding one-time items detailed in the tables included with this press release, net earnings available to common shareholders, operating (non-GAAP) increased $12.1 million, or 81.0%, to $27.1 million for quarter ended March 31, 2023 as compared to $15.0 million for the quarter ended March 31, 2022.

Net interest income for the first quarter of 2023 was $64.9 million, an increase of $26.3 million or 68.0% when compared to the first quarter of 2022. FTE net interest income (non-GAAP) totaled $65.9 million and $39.5 million for the first quarter of 2023 and 2022, respectively. Purchase accounting adjustments increased $2.7 million for the first quarter comparisons. The increase was largely due to increased interest rates as well as the acquisitions of Beach Bank and Heritage Bank.

First quarter of 2023 net interest margin was 3.63% which included 21 basis points related to purchase accounting adjustments compared to 2.67% for the same quarter in 2022, which included 6 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) increased 74 basis point in prior year quarterly comparison primarily due to an increase in average loans as well as interest rate increases.

Non-interest income increased $1.5 million for the first quarter of 2023 as compared to the first quarter of 2022. This increase was attributable to increases in service charges on deposit accounts and interchange fee income of $2.9 million and partially offset by a decrease of $0.6 million in mortgage income.

First quarter 2023 non-interest expense was $45.7 million, an increase of $17.1 million, or 59.7% as compared to the first quarter of 2022. For the first quarter of 2023, charges related to the ongoing operations of Beach Bank and Heritage Bank totaled $12.7 million.

Investment securities totaled $1.962 billion, or 24.5% of total assets at March 31, 2023, compared to $1.986 billion, or 32.1% of total assets at March 31, 2022. For the first quarter of 2023 compared to the first quarter of 2022, the average balance of investment securities increased $131.0 million. The average yield on investment securities increased 50 basis points to 2.31% from 1.81% in the prior year quarterly comparison. The investment portfolio had a net unrealized loss of $137.6 million at March 31, 2023 as compared to a net unrealized loss of $92.2 million at March 31, 2022.

The average yield on all earnings assets increased 147 basis points in prior year quarter comparison, from 3.02% for the first quarter of 2022 to 4.49% for the first quarter of 2023. Interest expense on average interest bearing liabilities increased 82 basis points from 0.42% for the first quarter of 2022 to 1.24% for the first quarter of 2023.

Cost of all deposits averaged 72 basis points for the first quarter of 2023 compared to 17 basis points for the first quarter of 2022. This increase was a result of rising interest rates and increased competition for deposits.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.22 per share, a 5% increase over previous quarter, to be paid on its common stock on May 24, 2023 to shareholders of record as of the close of business on May 8, 2023.

Conference Call

The Company will host a conference call for analysts and investors to discuss the Company’s financial results at 10:00 a.m. Central Time on Thursday, April 27, 2023. Investors and analysts may participate by clicking on the Participant Conference Link: https://register.vevent.com/register/BI24f86c11813b4dd9a868c4c810de94bc. An audio archive of the conference call along with the transcript will be available within 24-48 hours after the call and placed in the Investor Relations section of our website.

About The First Bancshares, Inc.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi, is the parent company of The First Bank (“The First”). 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 pre-tax, pre-provision operating earnings, FTE net interest income, FTE net interest margin, core net interest margin, average tax equivalent yield on investment securities, FTE average yield on all earning assets, total tangible common equity, tangible book value per common share, net earnings available to common shareholders, operating, diluted earnings per share, operating efficiency ratio, operating 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, net interest margin, common equity, net earnings available to common shareholders, diluted earnings per share, efficiency ratio, average yield on investment securities, average yield on all earning assets, 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 and certain of our other filings with the Securities and Exchange Commission contain statements that constitute “forward looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential,” “positioned” and other similar words and expressions of the future or otherwise regarding the outlook for the Company’s future business and financial performance and/or the performance of the banking industry and economy in general. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risk and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: (1) competitive pressures among financial institutions increasing significantly; (2) prevailing, or changes in, economic or political conditions, either nationally or locally, particularly in areas in which the Company conducts operations, including the effects of declines in the real estate market, high unemployment rates, inflationary pressure, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing; (3) interest rate risk, including the effects of rising interest rates; (4) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; (5) changes in applicable laws, rules, or regulations; (6) risks related to the Company’s recently completed and pending acquisitions, including that the anticipated benefits from the recently completed acquisitions 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; (7) changes in management’s plans for the future; (8) credit risk associated with our lending activities; (9) changes in loan demand, real estate values, or competition; (10) changes in accounting principles, policies, or guidelines; (11) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic and related variants; (12) higher inflation and its impacts; (13) significant turbulence or disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities; (14) potential impacts of the recent adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; (15) the effects of war or other conflicts including the impacts relating to or resulting from Russia’s military action in Ukraine; and (16) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services.

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 SEC, which are available on the SEC’s website, http://www.sec.gov. Undue reliance should not be placed on forward-looking statements. 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) (Dollars in thousands except per share data)
EARNINGS DATA	Quarter Ended 3/31/23			Quarter Ended 12/31/22			Quarter Ended 9/30/22			Quarter Ended 6/30/22			Quarter Ended 3/31/22
Total Interest Income	$	80,338		$	57,923		$	53,874		$	45,847		$	42,741
Total Interest Expense		15,412			10,002			4,726			3,746			4,102
Net Interest Income		64,926			47,921			49,148			42,101			38,639
Net Interest Income excluding PPP Fee Income		64,718			47,899			48,986			41,563			37,643
FTE net interest income*		65,924			48,916			50,122			43,042			39,459
Provision for credit losses		11,000			705			4,300			600			-
Non-interest income		12,612			8,131			9,022			8,664			11,157
Non-interest expense		45,670			35,040			35,903			30,955			28,590
Earnings before income taxes		20,868			20,307			17,967			19,210			21,206
Income tax expense		4,597			4,012			3,924			3,457			4,377
Net income available to common shareholders	$	16,271		$	16,295		$	14,043		$	15,753		$	16,829
PER COMMON SHARE DATA
Basic earnings per share	$	0.52		$	0.68		$	0.61		$	0.77		$	0.81
Diluted earnings per share		0.52			0.67			0.61			0.76			0.81
Diluted earnings per share, operating*		0.86			0.71			0.85			0.80			0.72
Quarterly dividends per share		.21			.20			.19			.18			.17
Book value per common share at end of period		28.58			26.92			25.86			27.30			28.82
Tangible book value per common share at period end*		17.49			17.97			16.93			18.32			19.79
Market price at end of period		25.83			32.01			29.87			28.60			33.66
Shares outstanding at period end		31,364,973			24,025,762			24,028,120			20,529,124			20,484,830
Weighted average shares outstanding:
Basic		31,309,458			24,027,189			22,861,795			20,507,451			20,697,946
Diluted		31,541,213			24,168,544			22,979,529			20,615,928			20,846,997
AVERAGE BALANCE SHEET DATA
Total assets	$	8,003,254		$	6,446,521		$	6,372,872		$	6,112,241		$	6,202,669
Loans and leases		4,975,663			3,749,561			3,492,110			3,013,228			2,945,877
Total deposits		6,816,473			5,515,713			5,503,040			5,347,415			5,361,480
Total common equity		868,995			617,049			630,744			593,410			666,561
Total tangible common equity*		538,903			408,365			424,873			408,855			480,922
SELECTED RATIOS
Annualized return on avg assets (ROA)		0.81	%		1.01	%		0.88	%		1.03	%		1.09	%
Annualized return on avg assets, operating*		1.36	%		1.07	%		1.23	%		1.08	%		0.97	%
Annualized pre-tax, pre-provision, operating*		1.78	%		1.38	%		1.63	%		1.36	%		1.24	%
Annualized return on avg common equity, operating*		12.48	%		11.14	%		12.46	%		11.12	%		8.99	%
Annualized return on avg tangible common equity, oper*		20.13	%		16.83	%		18.49	%		16.14	%		12.46	%
Average loans to average deposits		72.99	%		67.98	%		63.46	%		56.35	%		54.95	%
FTE Net Interest Margin*		3.69	%		3.37	%		3.50	%		3.09	%		2.78	%
Efficiency Ratio		58.15	%		61.42	%		60.70	%		59.87	%		56.48	%
Efficiency Ratio, operating*		53.32	%		59.34	%		54.55	%		57.66	%		58.37	%
*See reconciliation of Non-GAAP financial measures
CREDIT QUALITY
Allowance for credit losses (ACL) as a % of total loans		1.06	%		1.03	%		1.03	%		1.04	%		1.06	%
Nonperforming assets to tangible equity + ACL		3.73	%		3.76	%		6.01	%		6.41	%		6.31	%
Nonperforming assets to total loans + OREO		0.45	%		0.47	%		0.72	%		0.84	%		0.93	%
Annualized QTD net charge-offs (recoveries) to total loans		0.01	%		0.004	%		(0.04	%)		(0.04	%)		(0.12	%)

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands)
BALANCE SHEET	Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Assets
Cash and cash equivalents	$	333,491		$	145,315		$	163,841		$	356,771		$	802,613
Securities available for sale		1,249,791			1,257,101			1,379,410			1,489,247			1,591,677
Securities held to maturity		678,161			691,484			593,553			593,154			372,062
Other investments		34,423			33,944			31,060			22,588			22,226
Total investment securities		1,962,375			1,982,529			2,004,023			2,104,989			1,985,965
Loans held for sale		4,073			4,443			2,225			6,703			8,213
Total loans		4,969,776			3,774,157			3,719,388			3,124,924			2,970,246
Allowance for credit losses		(52,450	)		(38,917	)		(38,356	)		(32,400	)		(31,620	)
Loans, net		4,917,326			3,735,240			3,681,032			3,092,524			2,938,626
Premises and equipment		186,688			153,068			150,480			132,724			131,813
Other Real Estate Owned		5,066			4,832			10,328			1,985			2,835
Goodwill and other intangibles		347,777			214,890			214,708			184,323			185,104
Other assets		260,520			221,400			228,211			157,406			140,926
Total assets	$	8,017,316		$	6,461,717		$	6,454,848		$	6,037,425		$	6,196,095
Liabilities and Shareholders’ Equity
Non-interest bearing deposits	$	2,082,441		$	1,630,203		$	1,770,848		$	1,658,288		$	1,648,451
Interest-bearing deposits		4,585,515			3,864,201			3,780,450			3,647,909			3,789,333
Total deposits		6,667,956			5,494,404			5,551,298			5,306,197			5,437,784
Borrowings		250,000			130,100			90,000			-			-
Subordinated debentures		154,127			145,027			144,952			144,876			144,801
Other liabilities		48,806			45,523			47,127			25,900			23,117
Total liabilities		7,120,889			5,815,054			5,833,377			5,476,973			5,605,655
Total shareholders’ equity		896,427			646,663			621,471			560,452			590,440
Total liabilities and shareholders’ equity	$	8,017,316		$	6,461,717		$	6,454,848		$	6,037,425		$	6,196,095

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands except per share data)
EARNINGS STATEMENT	Three Months Ended
	3/31/23		12/31/22			9/30/22			6/30/22			3/31/22
Interest Income:
Loans, including fees	$	64,264	$	45,583		$	41,456		$	34,058		$	33,354
Investment securities		11,707		11,251			11,598			11,152			8,574
Accretion of purchase accounting adjustments		3,469		1,086			818			605			800
Other interest income		898		3			2			32			13
Total interest income		80,338		57,923			53,874			45,847			42,741
Interest Expense:
Deposits		12,183		7,206			2,863			1,923			2,302
Borrowings		959		1,015			92			-			-
Subordinated debentures		2,176		1,946			1,886			1,841			1,819
Accretion of purchase accounting adjustments		94		(165	)		(115	)		(18	)		(19	)
Total interest expense		15,412		10,002			4,726			3,746			4,102
Net interest income		64,926		47,921			49,148			42,101			38,639
Provision for credit losses		11,000		705			4,300			600			-
Net interest income after provision for credit losses		53,926		47,216			44,848			41,501			38,639
Non-interest Income:
Service charges on deposit accounts		3,657		2,277			2,219			2,038			2,040
Mortgage Income		633		625			1,221			1,227			1,230
Interchange Fee Income		4,498		3,093			3,310			3,102			3,197
Gain (Loss) on securities, net		-		-			1			(80	)		(3	)
Financial Assistance Award/Bank Enterprise Award/RRP Grant		-		-			-			171			702
Bargain Purchase Gain and (Loss) on Sale of Land		-		-			-			165			-
BOLI income from death proceeds		-		-			-			-			1,630
Other charges and fees		3,824		2,136			2,271			2,041			2,361
Total non-interest income		12,612		8,131			9,022			8,664			11,157
Non-interest expense:
Salaries and employee benefits		23,572		19,934			19,099			17,237			16,799
Occupancy expense		5,296		4,305			3,826			3,828			3,876
FDIC/OCC premiums		670		514			496			546			566
Marketing		158		135			50			122			86
Amortization of core deposit intangibles		2,402		1,309			1,227			1,064			1,064
Other professional services		1,068		971			1,256			768			563
Acquisition and charter conversion charges		3,793		1,190			3,640			1,172			408
Other non-interest expense		8,711		6,682			6,309			6,218			5,228
Total Non-interest expense		45,670		35,040			35,903			30,955			28,590
Earnings before income taxes		20,868		20,307			17,967			19,210			21,206
Income tax expense		4,597		4,012			3,924			3,457			4,377
Net income available to common shareholders	$	16,271	$	16,295		$	14,043		$	15,753		$	16,829
Diluted earnings per common share	$	0.52	$	0.67		$	0.61		$	0.76		$	0.81
Diluted earnings per common share, operating*	$	0.86	$	0.71		$	0.85		$	0.80		$	0.72
*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	Quarter to Date
			2023				2022
Interest Income:
Loans, including fees		$	64,056			$	32,358
PPP loan fee income			208				996
Investment securities			11,707				8,574
Accretion of purchase accounting adjustments			3,469				800
Other interest income			898				13
Total interest income			80,338				42,741
Interest Expense:
Deposits			12,183				2,302
Borrowings			959				-
Subordinated debentures			2,176				1,819
Amortization of purchase accounting adjustments			94				(19	)
Total interest expense			15,412				4,102
Net interest income			64,926				38,639
Provision for credit losses			11,000				-
Net interest income after provision for credit losses			53,926				38,639
Non-interest Income:
Service charges on deposit accounts			3,657				2,040
Mortgage Income			633				1,230
Interchange Fee Income			4,498				3,197
Gain (loss) on securities, net			-				(3	)
Financial Assistance Award/Bank Enterprise Award/RRP Grant			-				702
Bargain Purchase Gain and Loss on Sale of Fixed Assets			-				-
BOLI income from death proceeds			-				1,630
Other charges and fees			3,824				2,361
Total non-interest income			12,612				11,157
Non-interest expense:
Salaries and employee benefits			23,572				16,799
Occupancy expense			5,296				3,876
FDIC/OCC premiums			670				566
Marketing			158				86
Amortization of core deposit intangibles			2,402				1,064
Other professional services			1,068				563
Acquisition & charter conversion charges			3,793				408
Other non-interest expense			8,711				5,228
Total Non-interest expense			45,670				28,590
Earnings before income taxes			20,868				21,206
Income tax expense			4,597				4,377
Net income available to common shareholders		$	16,271			$	16,829
Diluted earnings per common share		$	0.52			$	0.81
Diluted earnings per common share, operating*		$	0.86			$	0.72
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (Dollars in thousands)
COMPOSITION OF LOANS	Mar 31, 2023			Percent of Total		Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022			Percent of Total
Commercial, financial and agricultural	$	750,371		15.1	%	$	506,907		$	489,225		$	379,363		$	364,702		12.2	%
Real estate – construction		691,285		13.9	%		475,956			481,100			429,946			387,290		13.0	%
Real estate – commercial		2,181,384		43.9	%		1,626,066			1,595,944			1,319,821			1,249,203		41.9	%
Real estate – residential		1,262,244		25.4	%		1,094,204			1,082,488			932,268			911,568		30.6	%
Lease Financing Receivable		2,056		0.0	%		2,118			1,907			2,283			2,409		0.1	%
Obligations of States & subdivisions		31,652		0.6	%		26,143			25,757			20,784			15,842		0.5	%
Consumer		50,784		1.0	%		42,763			42,967			40,459			39,233		1.3	%
Loans held for sale		4,073		0.1	%		4,443			2,225			6,703			8,213		0.4	%
Total loans	$	4,973,849		100	%	$	3,778,600		$	3,721,613		$	3,131,627		$	2,978,460		100	%
COMPOSITION OF DEPOSITS	Mar 31, 2023			Percent of Total		Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022			Percent of Total
Non-interest bearing	$	2,082,441		31.2	%	$	1,630,203		$	1,770,848		$	1,658,288		$	1,648,451		30.3	%
NOW and other		2,095,599		31.4	%		1,769,699			1,786,213			1,790,980			1,885,145		34.7	%
Money Market/Savings		1,678,609		25.2	%		1,368,108			1,423,953			1,326,245			1,337,419		24.6	%
Time Deposits of less than $250,000		562,240		8.4	%		590,564			418,931			400,354			424,183		7.8	%
Time Deposits of $250,000 or more		249,067		3.8	%		135,830			151,353			130,330			142,539		2.6	%
Total Deposits	$	6,667,956		100	%	$	5,494,404		$	5,551,298		$	5,306,197		$	5,437,737		100	%
ASSET QUALITY DATA	Mar 31, 2023					Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Nonaccrual loans	$	17,312				$	12,591		$	15,844		$	23,678		$	24,736
Loans past due 90 days and over		73					289			571			527			-
Total nonperforming loans		17,385					12,880			16,415			24,205			24,736
Other real estate owned		5,066					4,832			10,328			1,985			2,834
Total nonperforming assets	$	22,451				$	17,712		$	26,743		$	26,190		$	27,570
Nonperforming assets to total assets		0.28	%				0.27	%		0.41	%		0.43	%		0.44	%
Nonperforming assets to total loans + OREO		0.45	%				0.47	%		0.72	%		0.84	%		0.93	%
ACL to nonperforming loans		301.70	%				302.15	%		233.66	%		133.86	%		127.83	%
ACL to total loans		1.06	%				1.03	%		1.03	%		1.04	%		1.06	%
Qtr-to-date net charge-offs (recoveries)	$	142				$	39		$	(353	)	$	(329	)	$	(879	)
Annualized QTD net chg-offs (recs) to loans		0.01	%				0.004	%		(0.04	%)		(0.04	%)		(0.12	%)

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(dollars in thousands)
Yield	Three Months Ended								Three Months Ended								Three Months Ended								Three Months Ended								Three Months Ended
Analysis	March 31, 2023								December 31, 2022								September 30, 2022								June 30, 2022								March 31, 2022
			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	$	1,565,623	$	8,758		2.24	%		$	1,522,953	$	8,312		2.18	%		$	1,612,066	$	8,723		2.16	%		$	1,634,679	$	8,372		2.05	%		$	1,413,523	$	6,152		1.74	%
Tax-exempt
securities		462,718		3,946		3.41	%			453,651		3,934		3.47	%			479,168		3,849		3.21	%			492,405		3,721		3.02	%			483,780		3,242		2.68	%
Total investment
securities		2,028,341		12,704		2.51	%			1,976,604		12,246		2.48	%			2,091,234		12,572		2.40	%			2,127,084		12,093		2.27	%			1,897,303		9,394		1.98	%
in other banks		146,663		898		2.45	%			72,910		3		0.02	%			143,867		2		0.01	%			432,851		32		0.03	%			825,877		13		0.01	%
Loans		4,975,663		67,734		5.45	%			3,749,561		46,670		4.98	%			3,492,110		42,274		4.84	%			3,013,228		34,663		4.60	%			2,945,877		34,154		4.64	%
Total Interest
earning assets		7,150,667		81,336		4.55	%			5,799,075		58,919		4.06	%			5,727,211		54,848		3.83	%			5,573,163		46,788		3.36	%			5,669,057		43,561		3.07	%
Other assets		852,587								647,446								645,661								539,078								533,612
Total assets	$	8,003,254							$	6,446,521							$	6,372,872							$	6,112,241							$	6,202,669
Interest-bearing
liabilities:
Deposits	$	4,738,076	$	12,277		1.04	%		$	3,801,632	$	7,042		0.74	%		$	3,777,059	$	2,748		0.29	%		$	3,706,711	$	1,905		0.21	%		$	3,786,808	$	2,283		0.24	%
Borrowed Funds		77,098		959		4.98	%			108,881		1,015		3.73	%			13,261		92		0.00	%			-		-						-		-		0.00	%
Subordinated
debentures		155,084		2,176		5.61	%			144,985		1,946		5.37	%			144,910		1,886		5.21	%			144,834		1,841		5.08	%			144,759		1,819		5.03	%
Total interest
bearing liabilities		4,970,258		15,412		1.24	%			4,055,498		10,002		0.99	%			3,935,230		4,726		0.48	%			3,851,545		3,746		0.39	%			3,931,567		4,102		0.42	%
Other liabilities		2,164,001								1,773,974								1,806,898								1,667,286								1,604,541
Shareholders' equity		868,995								617,049								630,744								593,410								666,561
Total liabilities and
shareholders'
equity	$	8,003,254							$	6,446,521							$	6,372,872							$	6,112,241							$	6,202,669
Net interest
income (FTE)*			$	65,924		3.31	%				$	48,917		3.08	%				$	50,122		3.35	%				$	43,042		2.97	%				$	39,459		2.66	%
Net interest margin (FTE)*						3.69	%							3.37	%							3.50	%							3.09	%							2.78	%
Core net interest
margin*						3.47	%							3.29	%							3.44	%							3.04	%							2.73	%
*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	Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Book value per common share	$	28.58		$	26.92		$	25.86		$	27.30		$	28.82
Effect of intangible assets per share		11.09			8.95			8.93			8.98			9.03
Tangible book value per common share	$	17.49		$	17.97		$	16.93		$	18.32		$	19.79
Diluted earnings per share	$	0.52		$	0.68		$	0.61		$	0.76		$	0.81
Effect of acquisition and charter conversion charges		0.11			0.05			0.16			0.05			0.02
Tax on acquisition and charter conversion charges		(0.02	)		(0.02	)		(0.05	)		(0.01	)		-
Initial provision for acquired loans		0.34			-			0.17			-			-
Tax on initial provision for acquired loans		(0.09	)		-			(0.04	)		-			-
Effect of bargain purchase gain and loss on sale of fixed assets		-			-			-			-			-
Tax on bargain purchase gain and loss on sale of fixed assets		-			-			-			-			-
Effect of Treasury awards		-			-			-			-			(0.03	)
BOLI income from death proceeds		-			-			-			-			(0.08	)
Diluted earnings per share, operating	$	0.86		$	0.71		$	0.85		$	0.80		$	0.72
	Year to Date
					2023						2022
Diluted earnings per share				$	0.52					$	0.81
Effect of acquisition and charter conversion charges					0.11						0.02
Tax on acquisition and charter conversion charges					(0.02	)					-
Effect of bargain purchase gain and loss on sale of fixed assets					-						-
Tax on loss on sale of fixed assets					-						-
Effect of Treasury awards					-						(0.03	)
Tax on Treasury awards					-
BOLI income from death proceeds					-						(0.08	)
Effect on Contributions related to Treasury awards					-						-
Tax on Contributions related to Treasury awards					-						-
Initial provision for acquired loans					0.34						-
Tax on initial provision for acquired loans					(0.09	)					-
Diluted earnings per share, operating				$	0.86					$	0.72
	Year to Date
					2023						2022
Net income available to common shareholders				$	16,271					$	16,829
Acquisition and charter conversion charges					3,793						408
Tax on acquisition and charter conversion charges					(960	)					(103	)
Bargain purchase gain and loss on sale of fixed assets					-						-
Tax on bargain purchase gain and loss on sale of fixed assets					-						-
Treasury awards					-						(702	)
Tax on Treasury awards					-						178
BOLI income from death proceeds					-						(1,630	)
Contributions related to Treasury awards					-						-
Tax on Contributions related to Treasury awards					-						-
Initial provision for acquired loans					10,727						-
Tax on initial provision for acquired loans					(2,714	)					-
Net earnings available to common shareholders, operating				$	27,117					$	14,980

		Three Months Ended
Average Balance Sheet Data		Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Total average assets	A	$	8,003,254		$	6,446,521		$	6,372,872		$	6,112,241		$	6,202,669
Total average earning assets	B		7,150,667		$	5,799,075		$	5,727,211		$	5,573,163		$	5,669,057
Common Equity	C	$	868,995		$	617,049		$	630,744		$	593,410		$	666,561
Less intangible assets			330,092			208,684			205,871			184,555			185,639
Total Tangible common equity	D	$	538,903		$	408,365		$	424,873		$	408,855		$	480,922
		Three Months Ended
Net Interest Income Fully Tax Equivalent		Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Net interest income	E	$	64,926		$	47,921		$	49,148		$	42,101		$	38,639
Tax-exempt investment income			(2,948	)		(2,939	)		(2,875	)		(2,780	)		(2,422	)
Taxable investment income			3,946			3,934			3,849			3,721			3,242
Net Interest Income Fully Tax Equivalent	F	$	65,924		$	48,916		$	50,122		$	43,042		$	39,459
Annualized Net Interest Margin	E/B		3.63	%		3.31	%		3.43	%		3.02	%		2.73	%
Annualized Net Interest Margin, Fully Tax Equivalent	F/B		3.69	%		3.37	%		3.50	%		3.09	%		2.78	%
Total Interest Income, Fully Tax Equivalent
Total Interest Income	R	$	80,338		$	57,923		$	53,874		$	45,847		$	42,741
Tax-exempt investment income			(2,948	)		(2,939	)		(2,875	)		(2,780	)		(2,422	)
Taxable investment income			3,946			3,934			3,849			3,721			3,242
Total Interest Income, Fully Tax Equivalent	G	$	81,336		$	58,918		$	54,848		$	46,788		$	43,561
Yield on Average Earning Assets	R/B		4.49	%		4.00	%		3.76	%		3.29	%		3.02	%
Yield on Average Earning Assets, Fully Tax Equivalent	G/B		4.55	%		4.06	%		3.83	%		3.36	%		3.07	%
Interest Income Investment Securities, Fully Tax Equivalent
Interest Income Investment Securities	S	$	11,706		$	11,251		$	11,598		$	11,152		$	8,574
Tax-exempt investment income			(2,948	)		(2,939	)		(2,875	)		(2,780	)		(2,422	)
Taxable investment Income			3,946			3,934			3,849			3,721			3,242
Interest Income Investment Securities, Fully Tax Equivalent	H	$	12,704		$	12,246		$	12,572		$	12,093		$	9,394
Average Investment Securities	I	$	2,028,341		$	1,976,604		$	2,091,234		$	2,127,084		$	1,897,303
Yield on Investment Securities	S/I		2.31	%		2.28	%		2.22	%		2.10	%		1.81	%
Yield on Investment Securities, Fully Tax Equivalent	H/I		2.51	%		2.48	%		2.40	%		2.27	%		1.98	%

		Three Months Ended
Core Net Interest Margin		Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Net interest income (FTE)		$	65,924		$	48,916		$	50,122		$	43,042		$	39,459
Less purchase accounting adjustments			3,469			1,086			818			605			800
Net interest income, net of purchase accounting adj	J	$	62,455		$	47,830		$	49,304		$	42,437		$	38,659
Total average earning assets		$	7,150,667		$	5,799,075		$	5,727,211		$	5,573,163		$	5,669,057
Add average balance of loan valuation discount			42,945			10,928			2,681			3,085			3,836
Avg earning assets, excluding loan valuation discount	K	$	7,193,612		$	5,810,003		$	5,729,892		$	5,576,248		$	5,672,893
Core net interest margin	J/K		3.47	%		3.29	%		3.44	%		3.04	%		2.73	%
		Three Months Ended
Efficiency Ratio		Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Operating Expense
Total non-interest expense		$	45,670		$	35,040		$	35,903		$	30,955		$	28,590
Pre-tax non-operating expenses			(3,793	)		(1,190	)		(3,641	)		(1,337	)		(408	)
Adjusted Operating Expense	L	$	41,877		$	33,850		$	32,262		$	29,618		$	28,182
Operating Revenue
Net interest income, FTE		$	65,924		$	48,916		$	50,122		$	43,042		$	39,459
Total non-interest income			12,612			8,131			9,022			8,664			11,157
Pre-tax non-operating items			-			-			-			(336	)		(2,331	)
Adjusted Operating Revenue	M	$	78,536		$	57,047		$	59,144		$	51,370		$	48,285
Efficiency Ratio, operating	L/M		53.32	%		59.34	%		54.55	%		57.66	%		58.37	%
		Three Months Ended
Return Ratios		Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Net income available to common shareholders	N	$	16,271		$	16,295		$	14,043		$	15,753		$	16,829
Acquisition and charter conversion charges			3,793			1,190			3,641			1,172			408
Tax on acquisition and charter conversion charges			(960	)		(301	)		(920	)		(296	)		(103	)
Initial provision for acquired loans			10,727			-			3,855
Tax on initial provision for acquired loans			(2,714	)		-			(976	)
Bargain purchase gain and loss on sale of fixed assets			-			-			-			(165	)		-
Tax on bargain purchase gain and loss on sale of fixed assets			-			-			-			41			-
Treasury awards			-			-			-			(171	)		(702	)
Tax on Treasury awards			-			-			-			43			178
Charitable contributions related to Treasury awards			-			-			-			165			-
Tax on charitable contributions related to Treasury awards			-			-			-			(42	)		-
BOLI income from death proceeds			-			-			-			-			(1,630	)
Net earnings available to common shareholders, operating	O	$	27,117		$	17,184		$	19,643		$	16,500		$	14,980

		Three Months Ended
Pre-Tax Pre-Provision Operating Earnings		Mar 31, 2023			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Earnings before income taxes	P	$	20,868		$	20,307		$	17,967		$	19,210		$	21,206
Acquisition and charter conversion charges			3,793			1,190			3,641			1,172			408
Provision for loan losses			11,000			705			4,300			600			-
Bargain purchase gain and loss on sale of fixed assets			-			-			-			(165	)		-
Treasury Awards			-			-			-			(171	)		(702	)
Charitable contributions related to Treasury awards			-			-			-			165			-
BOLI income from death proceeds			-			-			-			-			(1,630	)
Pre-Tax, Pre-Provision Operating Earnings	Q	$	35,661		$	22,202		$	25,908		$	20,811		$	19,282
Annualized return on avg assets	N/A		0.81	%		1.01	%		0.88	%		1.03	%		1.09	%
Annualized return on avg assets, oper	O/A		1.36	%		1.07	%		1.23	%		1.08	%		0.97	%
Annualized pre-tax, pre-provision, oper	Q/A		1.78	%		1.38	%		1.63	%		1.36	%		1.24	%
Annualized return on avg common equity, oper	O/C		12.48	%		11.14	%		12.46	%		11.12	%		8.99	%
Annualized return on avg tangible common equity, operating	O/D		20.13	%		16.83	%		18.49	%		16.14	%		12.46	%
		Three Months Ended
Capital Ratios		Mar 31, 2023*			Dec 31, 2022			Sept 30, 2022			June 30, 2022			Mar 31, 2022
Common equity tier 1 (CET1) ratio			11.2	%		12.7	%		12.6	%		12.7	%		13.1	%
Leverage (Tier 1) ratio			8.80	%		9.4	%		9.3	%		8.6	%		8.2	%
Total risk based capital ratio			14.72	%		16.7	%		16.7	%		17.3	%		17.9	%
Tangible common equity ratio			7.2	%		6.9	%		6.5	%		6.4	%		6.7	%
*estimated

 

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