Business Wire | Jul 26, 2021 08:00PM EDT

First Bancshares, Inc. Reports Results for Second Quarter ended June 30, 2021; Increases Quarterly Dividend 7%

Jul. 27, 2021

HATTIESBURG, Miss.--(BUSINESS WIRE)--Jul. 27, 2021--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 ended June 30, 2021.

Highlights for the Quarter:

* Loans, excluding Paycheck Protection Program ("PPP") loans, increased $45.5 million, 1.6% as compared to the quarter ended March 31, 2021, or 6.4% on an annualized basis. * Net income available to common shareholders totaled $15.6 million for the quarter ended June 30, 2021, representing a decrease of $1.0 million, or 6.3%, compared to $16.6 million for the quarter ended March 31, 2021. A reduction in PPP fees of $1.6 million attributed to the decrease in net income in the sequential quarter comparison. * Net income available to common shareholders operating for the quarter ended June 30, 2021 totaled $15.6 million which represents an increase of $4.4 million, or 38.9% as compared to $11.2 million for the second quarter of 2020. * In year-over-year comparison, net income available to common shareholders increased $7.0 million, or 27.7%, from $25.3 million for the six months ended June 30, 2020 to $32.2 million for the same period ended June 30, 2021. * In year-over-year comparison, net income available to common shareholders operating increased $12.1 million, or 60.3%, from $20.1 million for the six months ended June 30, 2020 to $32.2 million for the same period ended June 30, 2021. * Total cost of deposits decreased 19% from 0.37% at quarter end March 31, 2021 to 0.30% at quarter end June 30, 2021. * Total nonperforming assets decreased $8.7 million representing a 19% decrease as compared to second quarter 2020. * Provision for credit losses totaled $0 for the quarter as compared to $0 for the sequential quarter comparison and $7.6 million for the second quarter of 2020. * As of June 30, 2021, total COVID related modifications were $34.9 million, representing 1.2% of the loan portfolio and down from a peak of $676 million or 21% of the loan portfolio in 2020. For additional details related to the effects of COVID-19, 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. * During the first quarter of 2021, the Company adopted the Current Expected Credit Losses ("CECL") methodology for estimating credit losses, effective January 1, 2021.

M. Ray "Hoppy" Cole, President and Chief Executive Officer, commented, "We are pleased with our results for the second quarter. Our earnings remain strong and our team was thrilled to record $45 million in organic loan growth for the quarter. I am encouraged by our efforts to defend our loan to deposit spreads however, our net interest margin continues to be negatively impacted by substantial excess liquidity in this challenging interest rate environment."

Quarterly Earnings

Net income available to common shareholders totaled $15.6 million for the quarter ended June 30, 2021, a decrease of $1.0 million, or 6.3%, compared to $16.6 million for the quarter ended March 31, 2021. The Company recognized $1.6 million less in PPP loan fee income during the second quarter 2021 as compared to the first quarter 2021 along with a decrease of $0.8 million in mortgage income.

Net income available to common shareholders totaled $15.6 million for the quarter ended June 30, 2021, a decrease of $1.3 million, or 7.9%, compared to $16.9 million for the quarter ended June 30, 2020. A reduction in purchase accounting accretion of $1.1 million partially attributed to the decrease in net income as compared to the second quarter of 2020.

Provision for credit losses totaled $0 for the quarter ended June 30, 2021 and quarter ended March 31, 2021, a decrease of $7.6 million, or $5.9 million net of tax, as compared to the second quarter of 2020.

Earnings Per Share

For the second quarter of 2021, fully diluted earnings per share were $0.74, compared to $0.79 for the first quarter of 2021 and the second quarter of 2020. The decrease in sequential quarter comparison is due to the decrease in net income available to common shareholders of $1.0 million.

Diluted earnings per share operating increased $0.22 from $0.52 for second quarter of 2020 to $0.74 for second quarter of 2021 due to the increase in operating net earnings of $4.4 million for the same period.

Fully diluted earnings per share include the purchase by the Company of 165,623 shares during the first quarter of 2021 and 289,302 shares during the fourth quarter of 2020.

Balance Sheet

Consolidated assets increased $66.9 million to $5.510 billion at June 30, 2021 from $5.443 billion at March 31, 2021. PPP loans at June 30, 2021 were $157.8 million, down $63.9 million from March 31, 2021, due to loan forgiveness under the PPP program.

Total average loans were $3.043 billion for the quarter ended June 30, 2021, as compared to $3.097 billion for the quarter ended March 31, 2021, and $3.157 billion for the quarter ended June 30, 2020, representing a decrease of $54.4 million, or 1.8%, for the sequential quarter comparison, and a decrease of $113.7 million, or 3.6%, for the prior year quarterly comparison. PPP loans averaged $180.3 million for the quarter ended June 30, 2021, $235.4 million for the quarter ended March 31, 2021, and $245.8 million for the quarter ended June 30, 2020.

Excluding the PPP loans, loans increased $45.5 million, or 1.6% as compared to the quarter ended March 31, 2021.

The $54.4 million decrease in average loans, for the sequential quarter comparison was largely related to the $55.1 million decrease in PPP loans over the same period.

Total average deposits were $4.629 billion for the quarter ended June 30, 2021, as compared to $4.410 billion for the quarter ended March 31, 2021, and $4.069 billion for the quarter ended June 30, 2020, representing an increase of $218.9 million, or 5.0%, for the sequential quarter comparison, and an increase of $559.9 million, or 13.8%, for the prior year quarterly comparison.

Average deposits increased $218.9 million, or 5.0% for the sequential quarter comparison of which $30.5 million is related to the seasonality of our public fund portfolio.

Average deposits increased $559.9 million, or 13.8% as compared to the quarter ended June 30, 2020 of which $119.9 is related to the seasonality of our public fund portfolio.

The Company implemented Deposit Reclassification at the beginning of 2020. This program reclassifies noninterest bearing deposits and NOW deposit balances to money market accounts. This program reduces our reserve balance required at the Federal Reserve Bank of Atlanta which provides additional funds for liquidity and lending. At June 30, 2021, $711.7 million in noninterest deposit balances and $837.9 million in NOW deposit accounts were reclassified as money market accounts.

Asset Quality

Nonperforming assets totaled $37.0 million at June 30, 2021, an increase of $0.2 million compared to $36.8 million at March 31, 2021 and a decrease of $8.7 million compared to $45.7 million at June 30, 2020. Nonaccrual loans decreased $2.4 million as compared to March 31, 2021 and decreased $11.6 million as compared to June 30, 2020.

The ratio of the allowance for credit losses (ACL) to total loans was 1.07% at June 30, 2021 and March 31, 2021. The ratio of allowance for loan losses to total loans under the incurred loss model was 0.88% at June 30, 2020. The ratio of annualized net charge-offs (recoveries) to total loans was 0.03% for the quarter ended June 30, 2021 compared to 0.47% for the quarter ended March 31, 2021 and 0.04% for the quarter ended June 30, 2020.

Effective January 1, 2021, the Company adopted the CECL methodology for estimating credit losses. This adoption resulted in a net $0.4 million increase to the ACL and an unfunded commitment reserve of $0.7 million.

Second Quarter 2021 vs. Second Quarter 2020 Earnings Comparison

Net income available to common shareholders for the second quarter of 2021 totaled $15.6 million compared to $16.9 million for the second quarter of 2020, a decrease of $1.3 million or 7.9%. A reduction in purchase accounting accretion of $1.1 million partially attributed to the decrease in net income as compared to the second quarter of 2020.

Net interest income for the second quarter of 2021 was $38.1 million, a decrease of $1.1 million when compared to the second quarter of 2020. The decrease was due to interest income earned on a lower volume of loans and an overall reduction in the net interest margin. Fully tax equivalent ("FTE") net interest income (non-GAAP) totaled $38.7 million and $39.8 million for the second quarter of 2021 and 2020, respectively. FTE net interest income (non-GAAP) decreased $1.1 million in the prior year quarterly comparison mainly due to decreased loan volume. Purchase accounting adjustments decreased $1.1 million for the second quarter comparisons. Second quarter of 2021 FTE net interest margin (non-GAAP) was 3.14% which included 9 basis points related to purchase accounting adjustments compared to 3.63% for the same quarter in 2020, which included 21 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 37 basis points in prior year quarterly comparison.

Non-interest income decreased $6.9 million for the second quarter of 2021 as compared to the second quarter of 2020. This decrease is attributed to the $7.6 million bargain purchase gain and gain on sale of land recorded in the second quarter 2020.

Second quarter 2021 non-interest expense was $27.5 million, a decrease of $0.6 million, or 2.2% as compared to the second quarter of 2020. Excluding the net decrease in acquisition charges of $2.3 million for the quarterly comparison, non-interest expense increased $1.7 million in the second quarter of 2021, as compared to second quarter of 2020.

Investment securities totaled $1.303 billion, or 23.6% of total assets at June 30, 2021, versus $953.3 million, or 18.7% of total assets at June 30, 2020. The average balance of investment securities increased $313.7 million in the prior year quarterly comparison. The average tax equivalent yield on investment securities (non-GAAP) decreased 40 basis points to 2.15% from 2.55% in the prior year quarterly comparison. The investment portfolio had a net unrealized gain of $25.6 million at June 30, 2021 as compared to a net unrealized gain of $32.9 million at June 30, 2020.

The FTE average yield on all earning assets (non-GAAP) decreased 67 basis points in prior year quarterly comparison, from 4.23% for the second quarter of 2020 to 3.56% for the second quarter of 2021. Interest expense on average interest bearing liabilities decreased 21 basis points from 0.67% for the second quarter of 2020 to 0.46% for the second quarter of 2021. Cost of all deposits averaged 28 basis points for the second quarter of 2021 compared to 52 basis points for the second quarter of 2020.

Second Quarter 2021 vs First Quarter 2021 Earnings Comparison

Net income available to common shareholders for the second quarter of 2021 decreased $1.0 million to $15.6 million compared to $16.6 million for the first quarter of 2021.

Net interest income for the second quarter of 2021 was $38.1 million as compared to $39.2 million for the first quarter of 2021, a decrease of $1.2 million which is attributed to a decrease in PPP loan fee income of $1.6 million. FTE net interest income (non-GAAP) decreased $1.2 million to $38.7 million from $39.9 million in sequential-quarter comparison. Second quarter 2021 FTE net interest margin (non-GAAP) of 3.14% included 9 basis points related to purchase accounting adjustments compared to 3.34% for the first quarter in 2021, which also included 9 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 19 basis point in sequential quarter comparison.

Investment securities totaled $1.303 billion, or 23.6% of total assets at June 30, 2021, versus $1.157 billion, or 21.3% of total assets at March 31, 2021. The average balance of investment securities increased $153.3 million in sequential-quarter comparison. The average tax equivalent yield on investment securities (non-GAAP) decreased 17 basis points to 2.15% from 2.32% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $25.6 million at June 30, 2021 as compared to a net unrealized gain of $21.7 million at March 31, 2021.

The FTE average yield on all earning assets (non-GAAP) decreased in sequential-quarter comparison from 3.84% to 3.56%. Interest expense on average interest bearing liabilities decreased 8 basis points from 0.54% for the first quarter of 2021 to 0.46% for the second quarter of 2021. Cost of all deposits averaged 28 basis points for the second quarter of 2021 compared to 36 basis points for the first quarter of 2021.

Non-interest income decreased $0.7 million in sequential-quarter comparison resulting from decreased mortgage income in the amount of $0.8 million.

Non-interest expense for the second quarter of 2021 was $27.5 million compared to $27.3 million for the first quarter of 2021, an increase of $0.2 million, which is attributed to the write-down on other real estate of $0.3 million.

Year-to-Date Earnings Comparison

In the year-over-year comparison, net income available to common shareholders increased $7.0 million, or 27.7%, from $25.3 million for the six months ended June 30, 2020 to $32.2 million for the same period ended June 30, 2021. Excluding the bargain purchase and sale of land gains of $7.5 million, net of tax, and the decreased provision expense of $11.3 million, net of tax, net income available to common shareholders increased $3.1 million in the year-over-year comparison.

Net interest income increased $4.0 million in the year-over-year comparison, primarily due to interest income earned on a higher volume of loans and securities.

Non-interest income increased $3.8 million in the year-over-year comparison excluding the gains mentioned above. Mortgage income increased $1.3 million and interchange fee income increased $1.4 million in the year-over-year comparison.

Non-interest expense was $54.7 million for the six months ended June 30, 2021 an increase of $3.2 million as compared to the same period ended June 30, 2020. An increase of $3.0 million in salaries and employee benefits contributed to the increase.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.15 per share to be paid on its common stock on August 25, 2021 to shareholders of record as of the close of business on August 10, 2021.

About The First Bancshares, Inc.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi, is the parent company of The First, A National Banking Association ("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 operating efficiency ratio, pre-tax, pre-provision operating earnings, diluted operating earnings per common share, fully tax equivalent net interest income, fully tax equivalent net interest margin, core net interest margin, average tax equivalent yield on investment securities, fully tax equivalent average yield on all earning assets, 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 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) changes in economic or political conditions, either nationally or locally, particularly in areas in which the Company conducts operations; (3) interest rate risk; (4) changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to COVID-19; (5) risks related to the Company's recently completed 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; (6) changes in management's plans for the future; (7) credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values, or competition; (8) changes in accounting principles, policies, or guidelines; (9) 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; (10) the impact of the COVID-19 pandemic on the Company's assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (11) potential increases in the provision for loan losses resulting from the COVID-19 pandemic; and (12) 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 Securities and Exchange Commission, 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.

Statements about the potential effects of the COVID-19 pandemic on the Company's assets, business, liquidity, financial condition, prospects, and results of operations may constitute forward-looking statements and are subject to the risks that the actual effects may differ, possibly materially, from what is reflected in these forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the depth, dispersion and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on customers, employees, third parties and the Company.

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(Dollars in thousands except per share data)

Quarter Quarter Quarter Quarter QuarterEARNINGS DATA Ended Ended Ended Ended Ended 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20

Total Interest Income $ 43,238 $ 45,187 $ 45,613 $ 46,337 $ 45,799

Total Interest Expense 5,188 5,958 6,147 6,365 6,619

Net Interest Income 38,050 39,229 39,466 39,972 39,180

FTE net interest income* 38,696 39,884 40,119 40,608 39,772

Provision for credit - - 3,523 6,921 7,606losses**

Non-interest income 8,822 9,472 10,928 8,794 15,680

Non-interest expense 27,452 27,264 27,897 26,935 28,070

Earnings before income 19,420 21,437 18,974 14,910 19,184taxes

Income tax expense 3,820 4,793 3,639 2,993 2,241

Net income available to $ 15,600 $ 16,644 $ 15,335 $ 11,917 $ 16,943common shareholders





PER COMMON SHARE DATA

Basic earnings per share $ 0.74 $ 0.79 $ 0.72 $ 0.56 $ 0.79

Diluted earnings per 0.74 0.79 0.72 0.55 0.79share

Diluted earnings per 0.74 0.79 0.65 0.56 0.52share, operating*

Quarterly dividends per .14 .13 .12 .10 .10share

Book value per common 31.40 30.64 30.54 29.82 29.34share at end of period

Tangible book value percommon share at period 22.57 21.76 21.65 20.93 20.40end*

Market price at end of 37.43 36.61 30.88 20.97 22.50period

Shares outstanding at 21,020,723 21,018,744 21,115,009 21,408,017 21,395,258period end

Weighted average shares outstanding:

Basic 21,018,772 21,009,088 21,308,838 21,405,309 21,341,913

Diluted 21,207,660 21,200,558 21,421,367 21,544,040 21,437,180





AVERAGE BALANCE SHEET DATA

Total assets $5,458,531 $5,337,264 $5,136,136 $5,085,340 $4,913,620

Loans and leases 3,042,785 3,097,145 3,153,543 3,165,653 3,156,524

Total deposits 4,629,176 4,410,288 4,195,492 4,212,410 4,069,239

Total common equity 647,850 644,923 640,828 632,527 607,127

Total tangible common 461,743 457,775 451,011 441,635 423,966equity*





SELECTED RATIOS

Annualized return on avg 1.14% 1.25% 1.19% 0.94% 1.38%assets (ROA)

Annualized return on avg 1.14% 1.25% 1.08% 0.95% 0.91%assets, operating*

Annualized pre-tax,pre-provision, 1.42% 1.61% 1.62% 1.74% 1.75%operating*

Annualized return on avgcommon equity, 9.63% 10.32% 8.63% 7.65% 7.40%operating*

Annualized return on avgtangible common equity, 13.51% 14.54% 12.27% 10.95% 10.60%oper*

Average loans to average 65.73% 70.23% 75.17% 75.15% 77.57%deposits

FTE Net Interest Margin* 3.14% 3.34% 3.51% 3.58% 3.63%

Efficiency Ratio 57.77% 55.24% 54.65% 54.52% 50.62%

Efficiency Ratio, 57.77% 55.24% 56.54% 54.04% 53.91%operating*

*See reconciliation ofNon-GAAP financial measures

CREDIT QUALITY

Allowance for creditlosses (ACL) as a % of 1.07% 1.07% 1.15% 1.09% 0.88%total loans**

Nonperforming assets to 7.30% 7.52% 8.57% 9.31% 9.84%tangible equity + ACL

Nonperforming assets to 1.22% 1.20% 1.35% 1.42% 1.44%total loans + OREO

Annualized QTD netcharge-offs (recoveries) 0.03% 0.47% 0.25% 0.09% 0.04%to total loans

**Beginning January 1,2021, calculation isbased on CECLmethodology. Prior to January 1, 2021,calculation was basedupon incurred lossmethodology

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

BALANCE SHEET June 30, Mar 31, Dec 31, Sept 30, June 30, 2021 2021 2020 2020 2020

Assets

Cash and cash $ 762,486 $ 813,257 $ 562,554 $ 603,736 $ 539,125equivalents

Securities 1,280,761 1,135,189 1,022,182 957,458 927,205available-for-sale

Other investments 22,225 22,137 27,475 27,461 26,059

Total investment 1,302,986 1,157,326 1,049,657 984,919 953,264securities

Loans held for sale 6,000 15,119 21,432 22,482 18,632

Total loans 3,036,732 3,055,093 3,123,678 3,155,932 3,171,535

Allowance for credit (32,457) (32,663) (35,820) (34,256) (28,064)losses

Loans, net 3,004,275 3,022,430 3,087,858 3,121,676 3,143,471

Premises and equipment 120,667 121,934 123,450 124,875 125,053

Other Real Estate Owned 3,529 5,769 5,802 5,202 5,471

Goodwill and other 185,597 186,648 187,700 190,380 191,431intangibles

Other assets 124,193 120,315 114,307 110,889 108,458

Total assets $5,509,733 $5,442,798 $5,152,760 $5,164,159 $5,084,905



Liabilities and Shareholders' Equity

Non-interest bearing $ 682,014 $ 632,485 $ 571,079 $ 482,236 $ 486,039deposits^

Interest-bearing 3,991,898 3,987,812 3,644,201 3,746,978 3,730,851deposits

Total deposits 4,673,912 4,620,297 4,215,280 4,229,214 4,216,890

Borrowings - 4,466 114,647 115,827 116,005

Subordinated debentures 144,611 144,572 144,592 144,709 80,756

Other liabilities 31,158 29,514 33,426 36,040 43,459

Total liabilities 4,849,681 4,798,849 4,507,945 4,525,790 4,457,110

Total shareholders' 660,052 643,949 644,815 638,369 627,795equity

Total liabilities and $5,509,733 $5,442,798 $5,152,760 $5,164,159 $5,084,905shareholders' equity

^Reclassified $711,710 to interest-bearing deposits for June 30, 2021

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data) Three Months EndedEARNINGS STATEMENT 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 21 21 20 20 20

Interest Income:

Loans, including fees $ $ $ $ $ 36,283 38,587 38,472 39,344 39,184

Investment securities 5,925 5,526 5,606 5,309 5,187

Accretion of purchase accounting 992 1,026 1,494 1,655 1,409adjustments

Other interest income 38 48 41 29 19

Total interest income 43,238 45,187 45,613 46,337 45,799

Interest Expense:

Deposits 3,375 3,910 4,262 5,110 5,967

Borrowings 52 288 260 265 224

Subordinated debentures 1,821 1,821 1,823 1,188 1,176

Accretion of purchase accounting (60) (61) (198) (198) (748)adjustments

Total interest expense 5,188 5,958 6,147 6,365 6,619

Net interest income 38,050 39,229 39,466 39,972 39,180

Provision for credit losses - - 3,523 6,921 7,606

Net interest income after provision for 38,050 39,229 35,943 33,051 31,574credit losses



Non-interest Income:

Service charges on deposit accounts 1,756 1,761 1,925 1,780 1,597

Mortgage Income 2,372 3,162 3,270 2,961 2,646

Interchange Fee Income 3,145 2,644 2,562 2,491 2,395

Gain (loss) on securities, net 77 20 3 32 73

Financial Assistance Award/Bank - - 968 - -Enterprise Award

Bargain Purchase Gain and Gain on Sale - - 812 - 7,643of Land

Other charges and fees 1,472 1,885 1,388 1,530 1,326

Total non-interest income 8,822 9,472 10,928 8,794 15,680



Non-interest expense:

Salaries and employee benefits 16,036 16,054 16,642 15,494 15,866

Occupancy expense 3,813 3,879 3,890 3,826 3,200

FDIC/OCC premiums 499 494 520 447 237

Marketing 39 160 71 24 25

Amortization of core deposit 1,052 1,052 1,052 1,052 1,052intangibles

Other professional services 1,049 934 764 990 984

Acquisition charges - - 41 238 2,295

Other non-interest expense 4,964 4,691 4,917 4,864 4,411

Total Non-interest expense 27,452 27,264 27,897 26,935 28,070

Earnings before income taxes 19,420 21,437 18,974 14,910 19,184

Income tax expense 3,820 4,793 3,639 2,993 2,241

Net income available to common $ $ $ $ $shareholders 15,600 16,644 15,335 11,917 16,943





Diluted earnings per common share $ 0.74 $ 0.79 $ 0.72 $ 0.55 $ 0.79

Diluted earnings per common share, $ 0.74 $ 0.79 $ 0.65 $ 0.56 $ 0.52operating*

*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

Year to DateEARNINGS STATEMENT 2021 2020

Interest Income:

Loans, including fees $ 74,870 $ 73,474

Investment securities 11,451 10,491

Accretion of purchase accounting adjustments 2,018 3,124

Other interest income 86 308

Total interest income 88,425 87,397

Interest Expense:

Deposits 7,285 12,001

Borrowings 340 1,141

Subordinated debentures 3,642 2,379

Amortization of purchase accounting adjustments (121) (1,369)

Total interest expense 11,146 14,152

Net interest income 77,279 73,245

Provision for credit losses - 14,708

Net interest income after provision for credit losses 77,279 58,537



Non-interest Income:

Service charges on deposit accounts 3,516 3,511

Mortgage Income 5,534 4,213

Interchange Fee Income 5,789 4,381

Gain (loss) on securities, net 97 247

Financial Assistance Award/Bank Enterprise Award - -

Bargain Purchase Gain and Gain on Sale of Land - 7,643

Other charges and fees 3,359 2,161

Total non-interest income 18,295 22,154



Non-interest expense:

Salaries and employee benefits 32,091 29,094

Occupancy expense 7,692 6,118

FDIC/OCC premiums 993 384

Marketing 199 239

Amortization of core deposit intangibles 2,104 1,990

Other professional services 1,983 1,858

Acquisition charges - 3,035

Other non-interest expense 9,655 8,790

Total Non-interest expense 54,717 51,508

Earnings before income taxes 40,857 29,183

Income tax expense 8,613 3,929

Net income available to common shareholders $ 32,244 $ 25,254





Diluted earnings per common share $ 1.52 $ 1.25

Diluted earnings per common share, operating* $ 1.52 $ 1.00

*See reconciliation of Non-GAAP financial measures



FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(Dollars in thousands)

COMPOSITION OF June 30, Percent Mar 31, Dec 31, Sept 30, June 30, PercentLOANS 2021 of 2021 2020 2020 2020 of Total Total

Commercial,financial and $ 485,134 16.0% $ 532,122 $ 561,342 $ 576,812 $ 629,497 19.7%agricultural

Real estate - 341,864 11.2% 304,457 301,283 330,070 337,337 10.6%construction

Real estate - 1,215,103 39.9% 1,217,505 1,214,602 1,191,514 1,163,897 36.5%commercial

Real estate - 935,827 30.8% 944,032 987,313 999,381 978,372 30.7%residential

Lease Financing 3,291 0.1% 3,382 2,733 2,478 2,811 0.1%Receivable

Obligations ofStates & 16,489 0.5% 14,996 15,369 13,345 17,010 0.5%subdivisions

Consumer 39,024 1.3% 38,599 41,036 42,332 42,611 1.3%

Loans held for 6,000 0.2% 15,119 21,432 22,482 18,632 0.6%sale

Total loans $3,042,732 100% $3,070,212 $3,145,110 $3,178,414 $3,190,167 100%



COMPOSITION OF June 30, Percent Mar 31, Dec 31, Sept 30, June 30, PercentDEPOSITS 2021 of 2021 2020 2020 2020 of Total Total

Noninterest $ 682,014 14.6% $632,485 $571,079 $482,236 $486,039 11.5%bearing^

NOW and other^ 704,034 15.1% 702,766 664,626 658,453 601,195 14.3%

Money Market/ 2,758,957 59.0% 2,734,873 2,398,526 2,456,504 2,451,991 58.2%Savings^

Time Deposits ofless than 404,437 8.7% 419,556 439,101 473,265 499,406 11.8%$250,000

Time Deposits of 124,470 2.6% 130,617 141,948 158,756 178,259 4.2%$250,000 or more

Total Deposits $4,673,912 100% $4,620,297 $4,215,280 $4,229,214 $4,216,890 100%



Deposits Without June 30, Percent Mar 31, Dec 31, Sept 30, June 30, PercentReclassification 2021 of 2021 2020 2020 2020 of^ Total Total

Noninterest $1,393,724 29.8% $1,328,236 $1,185,980 $1,195,042 $1,189,766 28.2%bearing

Now and other 1,541,915 33.0% 1,562,119 1,347,778 1,335,798 1,347,324 32.0%

Money Market/ 1,209,366 25.9% 1,179,769 1,100,473 1,066,353 1,002,135 23.8%Savings

Time Deposits ofless than 404,437 8.7% 419,556 439,101 473,265 499,406 11.8%$250,000

Time Deposits of 124,470 2.6% 130,617 141,948 158,756 178,259 4.2%$250,000 or more

Total Deposits $4,673,912 100% $4,620,297 $4,215,280 $4,229,214 $4,216,890 100%



ASSET QUALITY June 30, Mar 31, Dec 31, Sept 30, June 30, DATA 2021 2021 2020 2020 2020

Nonaccrual loans $ 27,625 $ 29,981 $ 33,774 $ 37,300 $ 39,201

Loans past due 5,834 1,079 2,692 2,396 1,009 90 days and over

Totalnonperforming 33,459 31,060 36,466 39,696 40,210 loans

Other real 3,529 5,769 5,802 5,202 5,471 estate owned

Totalnonperforming $ 36,988 $36,829 $42,268 $44,898 $ 45,681 assets



Nonperformingassets to total 0.67% 0.68% 0.82% 0.87% 0.90% assets

Nonperformingassets to total 1.22% 1.20% 1.35% 1.42% 1.44% loans + OREO

ACL tononperforming 97.01% 105.16% 98.23% 86.30% 69.79% loans

ACL to total 1.07% 1.07% 1.15% 1.09% 0.88% loans



Qtr-to-date netcharge-offs $ 207 $ 3,553 $ 1,959 $ 729 $ 346 (recoveries)

Annualized QTDnet chg-offs 0.03% 0.47% 0.25% 0.09% 0.04% (recs) to loans

^Reclassified $711,710 to interest-bearing deposits for June 30, 2021

FIRST BANCSHARES, INC and SUBSIDIARIESCondensed Consolidated Financial Information (unaudited)(in thousands) Yield Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months EndedAnalysis June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 Tax Tax Tax Tax Tax Avg Equivalent Yield/ Avg Equivalent Yield/ Avg Equivalent Yield/ Avg Equivalent Yield/ AvgEquivalentYield/ Balance interest Rate Balance interest Rate Balance interest Rate Balance interest Rate BalanceinterestRate $

605,626

$Taxable securities $ 853,180 $ 4,017 1.88 % $ 699,585 $ 3,591 2.05 % $ 659,243 $ 3,678 2.23 % $ 616,168 $ 3,432 2.23 % 3,439

2.27

%



300,922

Tax-exempt securities 367,074 2,554 2.78 % 367,322 2,590 2.82 % 361,529 2,581 2.86 % 341,550 2,513 2.94 % 2,340

3.11

%



906,548

Total investment securities 1,220,254 6,571 2.15 % 1,066,907 6,181 2.32 % 1,020,772 6,259 2.45 % 957,718 5,945 2.48 % 5,779

2.55

%



321,559

in other banks 661,069 38 0.02 % 614,283 48 0.03 % 404,069 41 0.04 % 413,786 29 0.03 % 19

0.02

%



3,156,524

Loans 3,042,785 37,275 4.90 % 3,097,145 39,613 5.12 % 3,153,543 39,966 5.07 % 3,165,653 40,999 5.18 % 40,593

5.14

%



4,384,631

Total Interest earning 4,924,108 43,884 3.56 % 4,778,335 45,842 3.84 % 4,578,384 46,266 4.04 % 4,537,157 46,973 4.14 %assets 46,391

4.23

%

Other assets 534,423 558,929 557,752 548,183 528,989

$Total assets $ 5,458,531 $ 5,337,264 $ 5,136,136 $ 5,085,340 4,913,620

Interest-bearingliabilities: $

3,746,535

$Deposits $ 4,374,372 $ 3,315 0.30 % $ 4,172,326 $ 3,849 0.37 % $ 3,971,379 $ 4,064 0.41 % $ 3,960,054 $ 4,912 0.50 % 5,219

0.56

%



116,270

Borrowed Funds 3,355 52 6.20 % 100,143 288 1.15 % 115,430 260 0.90 % 115,935 265 0.91 % 224

0.77

%

Subordinated

80,736

debentures 144,591 1,821 5.04 % 144,590 1,821 5.04 % 144,676 1,823 5.04 % 81,470 1,188 5.83 % 1,176

5.83

%



3,943,541

Total interest bearing 4,522,318 5,188 0.46 % 4,417,059 5,958 0.54 % 4,213,485 6,147 0.58 % 4,157,459 6,365 0.61 %liabilities 6,619

0.67

%

Other liabilities 288,363 275,282 263,823 295,354 362,952

Shareholders' equity 647,850 644,923 640,828 632,527 607,127

$Total liabilities and $ 5,458,531 $ 5,337,264 $ 5,136,136 $ 5,085,340shareholders' equity 4,913,620

$

39,772Net interest income (FTE)* $ 38,696 3.11 % $ 39,884 3.30 % $ 40,119 3.46 % $ 40,608 3.53 % 3.56

%

3.63Net interest margin (FTE)* 3.14 % 3.34 % 3.51 % 3.58 % %

3.42Core net interest margin* 3.05 % 3.25 % 3.35 % 3.41 % %

*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

June 30, Mar 31, Dec 31, Sept 30, June 30, 2021 2021 2020 2020 2020Per Common Share Data

Book value per common $ 31.40 $ 30.64 $ 30.54 $ 29.82 $ 29.34share

Effect of intangible 8.83 8.88 8.89 8.89 8.94assets per share

Tangible book value per $ 22.57 $ 21.76 $ 21.65 $ 20.93 $ 20.40common share



Diluted earnings per $ 0.74 $ 0.79 $ 0.72 $ 0.55 $ 0.79share

Effect of acquisition - - 0.01 0.01 0.11charges

Tax on acquisition - - - - (0.03)charges

Effect of bargainpurchase gain and gain - - (0.04) - (0.36)on sale of land

Tax on gain on sale of - - - - 0.01land

Effect of Treasury - - (0.05) - -awards

Tax on Treasury awards 0.01

Diluted earnings per $ 0.74 $ 0.79 $ 0.65 $ 0.56 $ 0.52share, operating



Year to Date 2021 2020

Diluted earnings per share $ 1.52 $ 1.25

Effect of acquisition - 0.15 charges

Tax on acquisition - (0.03) charges

Effect of bargainpurchase gain and gain - (0.38) on sale of land

Tax on gain on sale of - 0.01 land

Effect of Treasury - - awards

Tax on Treasury awards - -

Diluted earnings per $ 1.52 $ 1.00 share, operating



Year to Date 2021 2020

Net income available to common $ 32,244 $ 25,254 shareholders

Acquisition charges - 3,035

Tax on acquisition - (683) charges

Bargain purchase gain - (7,643) and gain on sale of land

Tax on gain on sale of - 157 land

Treasury awards - -

Tax on Treasury awards - -

Net earnings availableto common shareholders, $ 32,244 $ 20,120 operating



Three Months Ended

Average Balance Sheet June 30, Mar 31, Dec 31, Sept 30, June 30,Data 2021 2021 2020 2020 2020

Total average assets A $5,458,531 $5,337,264 $5,136,136 $5,085,340 $4,913,620

Total average earning 4,924,108 $4,778,335 $4,578,384 $4,537,157 $4,384,631assets B

'

Common Equity C $ 647,850 $ 644,923 $ 640,828 $ 632,527 $ 607,127

Less intangible assets 186,107 187,148 189,817 190,892 183,161

Total Tangible common $ 461,743 $ 457,775 $ 451,011 $ 441,635 $ 423,966equity D





Three Months Ended

Net Interest Income June 30, Mar 31, Dec 31, Sept 30, June 30,Fully Tax Equivalent 2021 2021 2020 2020 2020

Net interest income E $ 38,050 $ 39,229 $ 39,466 $ 39,972 $ 39,180

Tax-exempt investment (1,908) (1,935) (1,928) (1,877) (1,748)income

Taxable investment 2,554 2,590 2,581 2,513 2,340income

Net Interest Income $ 38,696 $ 39,884 $ 40,119 $ 40,608 $ 39,772Fully Tax Equivalent F



Annualized Net Interest 3.09% 3.28% 3.45% 3.52% 3.57%Margin E/B

Annualized Net InterestMargin, Fully Tax 3.14% 3.34% 3.51% 3.58% 3.63%Equivalent F/B



Total Interest Income, Fully Tax Equivalent

Total Interest Income $ 43,238 $ 45,187 $ 45,613 $ 46,337 $ 45,799

Tax-exempt investment (1,908) (1,935) (1,928) (1,877) (1,748)income

Taxable investment 2,554 2,590 2,581 2,513 2,340income

Total Interest Income, $ 43,884 $ 45,842 $ 46,266 $ 46,973 $ 46,391Fully Tax Equivalent G



Yield on Average EarningAssets, Fully Tax 3.56% 3.84% 4.04% 4.14% 4.23%Equivalent G/B



Interest IncomeInvestment Securities, Fully Tax Equivalent

Interest Income $ 5,925 $ 5,526 $ 5,606 $ 5,309 $ 5,187Investment Securities

Tax-exempt investment (1,908) (1,935) (1,928) (1,877) (1,748)income

Taxable investment 2,554 2,590 2,581 2,513 2,340Income

Interest IncomeInvestment Securities, $ 6,571 $ 6,181 $ 6,259 $ 5,945 $ 5,779Fully Tax Equivalent H



Average Investment $ $ $1,020,772 $ 957,718 $ 906,548Securities I 1,220,254 1,066,907



Yield on InvestmentSecurities, Fully Tax 2.15% 2.32% 2.45% 2.48% 2.55%Equivalent H/I



Three Months Ended

Core Net Interest Margin June 30, Mar 31, Dec 31, Sept 30, June 30, 2021 2021 2020 2020 2020

Net interest income $ 38,696 $ 39,884 $ 40,119 $ 40,608 $ 39,772(FTE)

Less purchase accounting 1,052 1,026 1,692 1,853 2,157adjustments

Net interest income, netof purchase accounting $ 37,644 $ 38,858 $ 38,427 $ 38,755 $ 37,615adj J



Total average earning $4,924,108 $4,778,335 $4,578,384 $4,537,157 $4,384,631assets

Add average balance of 6,373 8,480 9,808 11,501 10,651loan valuation discount

Avg earning assets,excluding loan valuation $4,930,481 $4,786,815 $4,588,192 $4,548,658 $4,395,282discount K



Core net interest margin 3.05% 3.25% 3.35% 3.41% 3.42%J/K



Three Months Ended

Efficiency Ratio June 30, Mar 31, Dec 31, Sept 30, June 30, 2021 2021 2020 2020 2020

Operating Expense

Total non-interest $ 27,452 $ 27,264 $ 27,897 $ 26,935 $ 28,070expense

Pre-tax non-operating - - (41) (238) (2,295)expenses

Adjusted Operating $ 27,452 $ 27,264 $ 27,856 $ 26,697 $ 25,775Expense L



Operating Revenue

Net interest income, FTE $ 38,696 $ 39,884 $ 40,119 $ 40,608 $ 39,772

Total non-interest 8,822 9,472 10,928 8,794 15,680income

Pre-tax non-operating - - (1,780) - (7,643)items

Adjusted Operating $ 47,518 $ 49,356 $ 49,267 $ 49,402 $ 47,809Revenue M



Efficiency Ratio, 57.77% 55.24% 56.54% 54.04% 53.91%operating L/M



Three Months Ended

Return Ratios June 30, Mar 31, Dec 31, Sept 30, June 30, 2021 2021 2020 2020 2020

Net income available to $ 15,600 $ 16,644 $ 15,335 $ 11,917 $ 16,943common shareholders N

Acquisition charges - - 41 238 2,295

Tax on acquisition - - (10) (61) (518)charges

Bargain purchase gain - - (812) - (7,643)and gain on sale of land

Tax on gain on sale of - - - - 157land

Treasury awards - - (968) - -

Tax on Treasury awards - - 245 - -

Net earnings availableto common shareholders, $ 15,600 $ 16,644 $ 13,831 $ 12,094 $ 11,234operating O



Pre-Tax Pre-Provision Operating Earnings

Earnings before income $ 19,420 $ 21,437 $ 18,974 $ 14,910 $ 19,184taxes P

Acquisition charges - - 41 238 2,295

Provision for loan - - 3,523 6,921 7,606losses

Treasury Awards and - - (1,780) - (7,643)Gains

Pre-Tax, Pre-Provision $ 19,420 $ 21,437 $ 20,758 $ 22,069 $ 21,442Operating Earnings Q





Annualized return on avg 1.14% 1.25% 1.19% 0.94% 1.38%assets N/A

Annualized return on avg 1.14% 1.25% 1.08% 0.95% 0.91%assets, oper O/A

Annualized pre-tax, 1.42% 1.61% 1.62% 1.74% 1.75%pre-provision, oper Q/A

Annualized return on avg 9.63% 10.32% 8.63% 7.65% 7.40%common equity, oper O/C

Annualized return on avgtangible common equity, 13.51% 14.54% 12.27% 10.95% 10.60%operating O/D



Mortgage Department

Net Interest Incomeafter provision for $ 113 $ 140 $ 133 $ 142 $ 127credit losses

Loan fee income 2,372 3,162 3,270 2,961 2,646

Salaries and employee (1,165) (1,512) (1,329) (1,444) (1,246)benefits

Other non-interest (131) (126) (105) (110) (99)expense

Earnings before income $ 1,189 $ 1,664 $ 1,969 $ 1,549 $ 1,428taxes

View source version on businesswire.com: https://www.businesswire.com/news/home/20210726005827/en/

CONTACT: M. Ray "Hoppy" Cole Chief Executive Officer Dee Dee Lowery Chief Financial Officer (601) 268-8998