Business Wire | Oct 25, 2021 08:30AM EDT

First Bancshares, Inc. Reports Results for Third Quarter Ended September 30, 2021; Increases Quarterly Dividend 7%

Oct. 25, 2021

HATTIESBURG, Miss.--(BUSINESS WIRE)--Oct. 25, 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 September 30, 2021.

Highlights for the Quarter:

* Average loans, excluding Paycheck Protection Program ("PPP") loans, increased $9.0 million, 0.3% as compared to the quarter ended June 30, 2021, or 1.2% on an annualized basis. * Net income available to common shareholders totaled $16.1 million for the quarter ended September 30, 2021, representing an increase of $0.5 million, or 3.4%, compared to $15.6 million for the quarter ended June 30, 2021. * Total interest income increased $1.2 million, or 2.8% from $43.2 million for quarter end June 30, 2021 to $44.4 million for quarter end September 30, 2021 and total cost of deposits decreased 23% from 0.30% at quarter end June 30, 2021 to 0.23% at quarter end September 30, 2021. These changes resulted in an increase of 11 bps to our net interest margin. * In year-over-year comparison, net income available to common shareholders increased $11.2 million, or 30.1%, from $37.2 million for the nine months ended September 30, 2020 to $48.4 million for the same period ended September 30, 2021. * Total nonperforming assets decreased $8.9 million representing a 24% decrease as compared to June 30, 2021 and decreased $16.9 million representing a 38% decrease as compared to third quarter 2020. * Provision for credit losses totaled $0 for the quarter as compared to $0 for the sequential quarter comparison and $6.9 million for the third quarter of 2020. * As of September 30, 2021, total COVID-related modifications were $27.8 million, representing 0.9% 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 quarter, the Company received a $1.8 million grant from the U. S. Treasury Rapid Response Program ("RRP"). * During the quarter, the Company made $1.4 million in charitable contributions to the University of Mississippi's Children's Hospital, to 3 Historically Black Colleges and Universities, Florida A&M, Southern University and Jackson State University and set aside monies for down payment and closing cost assistance for low to moderate income mortgage applicants. These investments further our mission as a Community Development Financial Institution to support underserved communities throughout our trade area. * 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, "Our markets continue to show improvement in activity across our footprint as we recover from the effects of the pandemic. We were pleased to see improvements in profitability and credit quality across the organization. Loan demand appears to be increasing as economic activity picks up particularly in the construction portion of our loan portfolio as total commitments increased 18% quarter over quarter. We achieved an 11 basis point increase in our net interest margin during the quarter and lowered our deposit costs to 0.23%. We are encouraged that these are signs of increasing growth opportunities as we focus on continuing to expand our southeastern presence."

Quarterly Earnings

Net income available to common shareholders totaled $16.1 million for the quarter ended September 30, 2021, an increase of $0.5 million, or 3.4%, compared to $15.6 million for the quarter ended June 30, 2021. The Company recognized $0.4 million more in PPP loan fee income during the third quarter 2021 as compared to the second quarter 2021.

Net income available to common shareholders totaled $16.1 million for the quarter ended September 30, 2021, an increase of $4.2 million, or 35.4%, compared to $11.9 million for the quarter ended September 30, 2020.

Provision for credit losses totaled $0 for the quarter ended September 30, 2021 and quarter ended June 30, 2021, a decrease of $6.9 million, or $5.3 million net of tax, as compared to the third quarter of 2020.

Earnings Per Share

For the third quarter of 2021, fully diluted earnings per share were $0.76 compared to $0.74 for the second quarter of 2021 and $0.56 for the third quarter of 2020. The increase in sequential quarter comparison is due to an increase in net income available to common shareholders of $0.5 million.

Diluted earnings per share operating (non-GAAP) increased $0.20 from $0.56 for third quarter of 2020 to $0.76 for third quarter of 2021 due to the increase in operating net earnings available to shareholders (non-GAAP) of $4.0 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 $2.2 million to $5.512 billion at September 30, 2021 from $5.510 billion at June 30, 2021.

PPP loans at September 30, 2021 were $87.1 million, down $70.7 million from June 30, 2021, due to loan forgiveness under the PPP program.

Total average loans were $2.984 billion for the quarter ended September 30, 2021, as compared to $3.043 billion for the quarter ended June 30, 2021, and $3.166 billion for the quarter ended September 30, 2020, representing a decrease of $59.0 million, or 1.9%, for the sequential quarter comparison, and a decrease of $181.9 million, or 5.7%, for the prior year quarterly comparison. PPP loans averaged $112.3 million for the quarter ended September 30, 2021, $180.3 million for the quarter ended June 30, 2021, and $260.1 million for the quarter ended September 30, 2020.

Excluding the PPP loans, average loans increased $9.0 million, or 0.3% as compared to the quarter ended June 30, 2021.

Total average deposits were $4.666 billion for the quarter ended September 30, 2021, as compared to $4.629 billion for the quarter ended June 30, 2021, and $4.212 billion for the quarter ended September 30, 2020, representing an increase of $36.7 million, or 0.8%, for the sequential quarter comparison, and an increase of $453.5 million, or 10.8%, for the prior year quarterly comparison.

Average deposits increased $453.5 million, or 10.8% as compared to the quarter ended September 30, 2020 of which $230.1 million was attributable to increases in the non-interest bearing accounts.

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 September 30, 2021, $828.1 million in noninterest deposit balances and $854.0 million in NOW deposit accounts were reclassified as money market accounts.

Asset Quality

Nonperforming assets totaled $28.0 million at September 30, 2021, a decrease of $9.0 million compared to $37.0 million at June 30, 2021 and a decrease of $16.9 million compared to $44.9 million at September 30, 2020. Nonaccrual loans decreased $2.6 million as compared to June 30, 2021 and decreased $12.3 million as compared to September 30, 2020.

The ratio of the allowance for credit losses (ACL) to total loans was 1.09% at September 30, 2021 and 1.07% at June 30, 2021. The ratio of allowance for loan losses to total loans under the incurred loss model was 0.87% at September 30, 2020. The ratio of annualized net charge-offs (recoveries) to total loans was 0.005% for the quarter ended September 30, 2021 compared to 0.03% for the quarter ended June 30, 2021 and 0.09% for the quarter ended September 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.

Third Quarter 2021 vs. Third Quarter 2020 Earnings Comparison

Net income available to common shareholders for the third quarter of 2021 totaled $16.1 million compared to $11.9 million for the third quarter of 2020, an increase of $4.2 million or 35.4%. Provision for credit losses totaled $0 for the quarter ended September 30, 2021, a decrease of $6.9 million, or $5.3 million net of tax, as compared to the third quarter of 2020.

Net interest income for the third quarter of 2021 was $40.0 million, a slight increase when compared to the third quarter of 2020. Fully tax equivalent ("FTE") net interest income (non-GAAP) totaled $40.7 million and $40.6 million for the third quarter of 2021 and 2020, respectively. Purchase accounting adjustments decreased $0.7 million for the third quarter comparisons. Third quarter of 2021 FTE net interest margin (non-GAAP) was 3.25% which included 10 basis points related to purchase accounting adjustments compared to 3.58% for the same quarter in 2020, which included 17 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 26 basis points in prior year quarterly comparison.

Non-interest income increased $0.8 million for the third quarter of 2021 as compared to the third quarter of 2020. This increase is attributed to the $1.8 million RRP grant from the U.S. Treasury and was offset by the decrease in mortgage income of $1.2 million.

Third quarter 2021 non-interest expense was $29.1 million, an increase of $2.1 million, or 7.9% as compared to the third quarter of 2020. Charitable contributions of $1.4 million during the third quarter of 2021 contributed to the increase. These contributions related to the RRP grant and supported projects in underserved communities.

Investment securities totaled $1.485 billion, or 27.0% of total assets at September 30, 2021, compared to $984.9 million, or 19.1% of total assets at September 30, 2020. The average balance of investment securities increased $406.7 million in the prior year quarterly comparison. The average tax equivalent yield on investment securities (non-GAAP) decreased 26 basis points to 2.22% from 2.48% in the prior year quarterly comparison. The investment portfolio had a net unrealized gain of $18.2 million at September 30, 2021 as compared to a net unrealized gain of $33.2 million at September 30, 2020.

The FTE average yield on all earning assets (non-GAAP) decreased 54 basis points in prior year quarterly comparison, from 4.14% for the third quarter of 2020 to 3.60% for the third quarter of 2021. Interest expense on average interest bearing liabilities decreased 22 basis points from 0.61% for the third quarter of 2020 to 0.39% for the third quarter of 2021. Cost of all deposits averaged 22 basis points for the third quarter of 2021 compared to 47 basis points for the third second quarter of 2020.

Third Quarter 2021 vs Second Quarter 2021 Earnings Comparison

Net income available to common shareholders for the third quarter of 2021 increased $0.5 million to $16.1 million compared to $15.6 million for the second quarter of 2021.

Net interest income for the third quarter of 2021 was $40.0 million as compared to $38.1 million for the second quarter of 2021, an increase of $2.0 million which is attributed to an increase in income earned on investment securities of $1.0 million and a decrease in interest expense of $0.8 million. FTE net interest income (non-GAAP) increased $2.0 million to $40.7 million from $38.7 million in sequential-quarter comparison. Third quarter 2021 FTE net interest margin (non-GAAP) of 3.25% included 10 basis points related to purchase accounting adjustments compared to 3.14% for the second quarter in 2021, which included 9 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) increased 10 basis point in sequential quarter comparison.

Investment securities totaled $1.485 billion, or 27.0% of total assets at September 30, 2021, compared to $1.303 billion, or 23.6% of total assets at June 30, 2021. The average balance of investment securities increased $144.2 million in sequential-quarter comparison. The average tax equivalent yield on investment securities (non-GAAP) increased 7 basis points to 2.22% from 2.15% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $18.2 million at September 30, 2021 as compared to a net unrealized gain of $25.6 million at June 30, 2021.

The FTE average yield on all earning assets (non-GAAP) increased in sequential-quarter comparison from 3.56% to 3.60%. Interest expense on average interest bearing liabilities decreased 7 basis points from 0.46% for the second quarter of 2021 to 0.39% for the third quarter of 2021. Cost of all deposits averaged 22 basis points for the third quarter of 2021 compared to 28 basis points for the second quarter of 2021.

Non-interest income increased $0.8 million in sequential-quarter comparison resulting from the $1.8 million RRP grant from the U.S. Treasury and was offset by a decrease in mortgage income of $0.6 million.

Non-interest expense for the third quarter of 2021 was $29.1 million compared to $27.5 million for the second quarter of 2021, an increase of $1.6 million, which is attributed to the $1.4 million charitable contributions related to the RRP grant and $0.2 million in expense related to the early vesting of restricted stock held by our Directors.

Year-to-Date Earnings Comparison

In the year-over-year comparison, net income available to common shareholders increased $11.2 million, or 30.1%, from $37.2 million for the nine months ended September 30, 2020 to $48.4 million for the same period ended September 30, 2021. Excluding the bargain purchase and sale of land gains of $7.5 million, net of tax, and the decreased provision expense of $16.7 million, net of tax, recorded during the nine months ended September 2020, net income available to common shareholders increased $2.0 million in the year-over-year comparison.

Net interest income increased $4.1 million in the year-over-year comparison, primarily due to interest income earned on a higher volume of securities and a reduction in interest expense due to changes in rates.

Non-interest income increased $4.6 million in the year-over-year comparison excluding the gains mentioned above. Interchange fee income increased $1.7 million and the RRP grant of $1.8 million accounted for the increase in the year-over-year comparison.

Non-interest expense was $83.8 million for the nine months ended September 30, 2021 an increase of $5.3 million as compared to the same period ended September 30, 2020. An increase of $3.7 million in salaries and employee benefits, an increase of $1.7 million in occupancy expense and the $1.4 million in charitable contributions contributed to the increase.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.16 per share to be paid on its common stock on November 26, 2021 to shareholders of record as of the close of business on November 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, operating net earnings available to shareholder, 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 pending and recently completed acquisitions, including that the anticipated benefits from the pending and 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 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20

Total Interest $44,435 $43,238 $45,187 $45,613 $46,337Income

Total Interest 4,407 5,188 5,958 6,147 6,365Expense

Net Interest 40,028 38,050 39,229 39,466 39,972Income

FTE netinterest 40,673 38,696 39,884 40,119 40,608income*

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

Non-interest 9,586 8,822 9,472 10,928 8,794income

Non-interest 29,053 27,452 27,264 27,897 26,935expense

Earnings before 20,561 19,420 21,437 18,974 14,910income taxes

Income tax 4,429 3,820 4,793 3,639 2,993expense

Net incomeavailable to $ 16,132 $15,600 $16,644 $15,335 $11,917commonshareholders





PER COMMON SHARE DATA

Basic earnings $0.77 $0.74 $0.79 $0.72 $0.56per share

Dilutedearnings per 0.76 0.74 0.79 0.72 0.55share

Dilutedearnings per 0.76 0.74 0.79 0.65 0.56share,operating*

Quarterlydividends per .15 .14 .13 .12 .10share

Book value percommon share at 31.81 31.40 30.64 30.54 29.82end of period

Tangible bookvalue per 23.03 22.57 21.76 21.65 20.93common share atperiod end*

Market price at 38.78 37.43 36.61 30.88 20.97end of period

Sharesoutstanding at 21,019,897 21,020,723 21,018,744 21,115,009 21,408,017period end

Weightedaverage shares outstanding:

Basic 21,020,128 21,018,772 21,009,088 21,308,838 21,405,309

Diluted 21,211,716 21,207,660 21,200,558 21,421,367 21,544,040





AVERAGE BALANCE SHEET DATA

Total assets $5,504,107 $5,458,531 $5,337,264 $5,136,136 $5,085,340

Loans and 2,983,771 3,042,785 3,097,145 3,153,543 3,165,653leases

Total deposits 4,665,914 4,629,176 4,410,288 4,195,492 4,212,410

Total common 664,594 647,850 644,923 640,828 632,527equity

Total tangible 479,540 461,743 457,775 451,011 441,635common equity*





SELECTED RATIOS

Annualizedreturn on avg 1.17% 1.14% 1.25% 1.19% 0.94%assets (ROA)

Annualizedreturn on avg 1.17% 1.14% 1.25% 1.08% 0.95%assets,operating*

Annualizedpre-tax, 1.49% 1.42% 1.61% 1.62% 1.74%pre-provision,operating*

Annualizedreturn on avg 9.70% 9.63% 10.32% 8.63% 7.65%common equity,operating*

Annualizedreturn on avg 13.44% 13.51% 14.54% 12.27% 10.95%tangible commonequity, oper*

Average loansto average 63.95% 65.73% 70.23% 75.17% 75.15%deposits

FTE NetInterest 3.25% 3.14% 3.34% 3.51% 3.58%Margin*

Efficiency 57.81% 57.77% 55.24% 54.65% 54.52%Ratio

EfficiencyRatio, 56.62% 57.77% 55.24% 56.54% 54.04.%operating*

*Seereconciliationof Non-GAAP financialmeasures

CREDIT QUALITY

Allowance forcredit losses 1.09% 1.07% 1.07% 1.15% 1.09%(ACL) as a % oftotal loans**

Nonperformingassets to 5.43% 7.30% 7.52% 8.57% 9.31%tangible equity+ ACL

Nonperformingassets to total 0.95% 1.22% 1.20% 1.35% 1.42%loans + OREO

Annualized QTDnet charge-offs 0.005% 0.03% 0.47% 0.25% 0.09%(recoveries) tototal loans

**BeginningJanuary 1,2021,calculation isbased on CECLmethodology.Prior to January 1,2021,calculation wasbased uponincurred lossmethodology

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

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

Assets

Cash and cash $ 657,296 $ 762,486 $ 813,257 $ 562,554 $ 603,736equivalents

Securities 1,463,255 1,280,761 1,135,189 1,022,182 957,458available-for-sale

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

Total investment 1,485,480 1,302,986 1,157,326 1,049,657 984,919securities

Loans held for sale 8,540 6,000 15,119 21,432 22,482

Total loans 2,960,919 3,036,732 3,055,093 3,123,678 3,155,932

Allowance for (32,418) (32,457) (32,663) (35,820) (34,256)credit losses

Loans, net 2,937,041 3,004,275 3,022,430 3,087,858 3,121,676

Premises and 123,594 120,667 121,934 123,450 124,875equipment

Other Real Estate 2,580 3,529 5,769 5,802 5,202Owned

Goodwill and other 184,545 185,597 186,648 187,700 190,380intangibles

Other assets 121,348 124,193 120,315 114,307 110,889

Total assets $5,511,884 $5,509,733 $5,442,798 $5,152,760 $5,164,159



Liabilities andShareholders' Equity

Non-interest $ 596,126 $ 682,014 $ 632,485 $ 571,079 $ 482,236bearing deposits^

Interest-bearing 4,076,415 3,991,898 3,987,812 3,644,201 3,746,978deposits

Total deposits 4,672,541 4,673,912 4,620,297 4,215,280 4,229,214

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

Subordinated 144,650 144,611 144,572 144,592 144,709debentures

Other liabilities 26,010 31,158 29,514 33,426 36,040

Total liabilities 4,843,201 4,849,681 4,798,849 4,507,945 4,525,790

Total shareholders' 668,683 660,052 643,949 644,815 638,369equity

Total liabilitiesand shareholders' $5,511,884 $5,509,733 $5,442,798 $5,152,760 $5,164,159equity

^Reclassified$828,082 tointerest-bearingdeposits for Sept30, 2021FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

Three Months EndedEARNINGS STATEMENT 9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 21 21 21 20 20

Interest Income:

Loans, including fees $ $ $ $ $ 36,374 36,283 38,587 38,472 39,344

Investment securities 6,938 5,925 5,526 5,606 5,309

Accretion of purchase accounting 1,106 992 1,026 1,494 1,655adjustments

Other interest income 17 38 48 41 29

Total interest income 44,435 43,238 45,187 45,613 46,337

Interest Expense:

Deposits 2,649 3,375 3,910 4,262 5,110

Borrowings - 52 288 260 265

Subordinated debentures 1,819 1,821 1,821 1,823 1,188

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

Total interest expense 4,407 5,188 5,958 6,147 6,365

Net interest income 40,028 38,050 39,229 39,466 39,972

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

Net interest income after provision for 40,028 38,050 39,229 35,943 33,051credit losses



Non-interest Income:

Service charges on deposit accounts 1,846 1,756 1,761 1,925 1,780

Mortgage Income 1,732 2,372 3,162 3,270 2,961

Interchange Fee Income 2,744 3,145 2,644 2,562 2,491

Gain (loss) on securities, net 11 77 20 3 322

Financial Assistance Award/Bank 1,826 - - 968 -Enterprise Award/RRP Grant

Bargain Purchase Gain and (Loss) on Sale (397) - - 812 -of Land

Other charges and fees 1,824 1,472 1,885 1,388 1,530

Total non-interest income 9,586 8,822 9,472 10,928 8,794



Non-interest expense:

Salaries and employee benefits 16,246 16,036 16,054 16,642 15,494

Occupancy expense 3,922 3,813 3,879 3,890 3,826

FDIC/OCC premiums 532 499 494 520 447

Marketing 78 39 160 71 24

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

Other professional services 934 1,049 934 764 990

Acquisition charges 5 - - 41 238

Other non-interest expense 6,284 4,964 4,691 4,917 4,864

Total Non-interest expense 29,053 27,452 27,264 27,897 26,935

Earnings before income taxes 20,561 19,420 21,437 18,974 14,910

Income tax expense 4,429 3,820 4,793 3,639 2,993

Net income available to common $ $ $ $ $shareholders 16,132 15,600 16,644 15,335 11,917





Diluted earnings per common share $ 0.76 $ 0.74 $ 0.79 $ 0.72 $ 0.55

Diluted earnings per common share, $ 0.76 $ 0.74 $ 0.79 $ 0.65 $ 0.56operating*

*See reconciliation of Non-GAAPfinancial 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 $ 111,245 $ 112,818

Investment securities 18,389 15,800

Accretion of purchase accounting adjustments 3,123 4,779

Other interest income 103 337

Total interest income 132,860 133,734

Interest Expense:

Deposits 9,934 17,111

Borrowings 340 1,406

Subordinated debentures 5,461 3,567

Amortization of purchase accounting adjustments (182) (1,567)

Total interest expense 15,553 20,517

Net interest income 117,307 113,217

Provision for credit losses - 21,628

Net interest income after provision for credit losses 117,307 91,589



Non-interest Income:

Service charges on deposit accounts 5,363 5,291

Mortgage Income 7,266 7,174

Interchange Fee Income 8,533 6,872

Gain (loss) on securities, net 107 279

RRP Grant 1,826 -

Bargain Purchase Gain and Gain/(loss) on Sale of Land (397) 7,643

Other charges and fees 5,183 3,689

Total non-interest income 27,881 30,948



Non-interest expense:

Salaries and employee benefits 48,337 44,588

Occupancy expense 11,614 9,943

FDIC/OCC premiums 1,524 831

Marketing 277 262

Amortization of core deposit intangibles 3,155 3,041

Other professional services 2,917 2,848

Acquisition charges 5 3,273

Other non-interest expense 15,941 13,658

Total Non-interest expense 83,770 78,444

Earnings before income taxes 61,418 44,093

Income tax expense 13,042 6,922

Net income available to common shareholders $ 48,376 $ 37,171





Diluted earnings per common share $ 2.28 $ 1.80

Diluted earnings per common share, operating* $ 2.28 $ 1.56

*See reconciliation of Non-GAAP financial measures



FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(Dollars in thousands)

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

Commercial,financial and $ 426,342 14.3% $ 485,134 $ 532,122 $ 561,342 $ 576,812 18.1%agricultural

Real estate - 361,732 12.2% 341,864 304,457 301,283 330,070 10.4%construction

Real estate - 1,206,267 40.6% 1,215,103 1,217,505 1,214,602 1,191,514 37.6%commercial

Real estate - 910,618 30.7% 935,827 944,032 987,313 999,381 31.4%residential

Lease Financing 2,889 0.1% 3,291 3,382 2,733 2,478 0.1%Receivable

Obligations ofStates & 15,790 0.5% 16,489 14,996 15,369 13,345 0.4%subdivisions

Consumer 37,281 1.3% 39,024 38,599 41,036 42,332 1.3%

Loans held for 8,540 0.3% 6,000 15,119 21,432 22,482 0.7%sale

Total loans $2,969,459 100% $3,042,732 $3,070,212 $3,145,110 $3,178,414 100%



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

Non-interest $ 596,126 12.8% $682,014 $632,485 $571,079 $482,236 11.4%bearing^

NOW and other^ 670,888 14.4% 704,034 702,766 664,626 658,453 15.6%

Money Market/ 2,896,140 61.9% 2,758,957 2,734,873 2,398,526 2,456,504 58.1%Savings^

Time Deposits ofless than 390,289 8.4% 404,437 419,556 439,101 473,265 11.2%$250,000

Time Deposits of 119,098 2.5% 124,470 130,617 141,948 158,756 3.7%$250,000 or more

Total Deposits $4,672,541 100% $4,673,912 $4,620,297 $4,215,280 $4,229,214 100%



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

Non-interest $1,424,208 30.5% $1,393,724 $1,328,239 $1,185,980 $1,195,042 28.3%bearing

Now and other 1,524,935 32.6% 1,541,915 1,562,119 1,347,778 1,335,798 31.6%

Money Market/ 1,214,011 26.0% 1,209,366 1,179,749 1,100,473 1,066,353 25.2%Savings

Time Deposits ofless than 390,289 8.4% 404,437 419,556 439,101 473,265 11.2%$250,000

Time Deposits of 119,098 2.5% 124,470 130,617 141,948 158,756 3.7%$250,000 or more

Total Deposits $4,672,541 100% $4,673,912 $4,620,297 $4,215,280 $4,229,214 100%



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

Nonaccrual loans $ 25,012 $ 27,625 $ 29,981 $ 33,774 $ 37,300

Loans past due 456 5,834 1,079 2,692 2,396 90 days and over

Totalnonperforming 25,468 33,459 31,060 36,466 39,696 loans

Other real 2,580 3,529 5,769 5,802 5,202 estate owned

Totalnonperforming $ 28,048 $36,988 $36,829 $42,268 $ 44,898 assets



Nonperformingassets to total 0.51% 0.67% 0.68% 0.82% 0.87% assets

Nonperformingassets to total 0.95% 1.22% 1.20% 1.35% 1.42% loans + OREO

ACL tononperforming 127.29% 97.01% 105.16% 98.23% 86.30% loans

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



Qtr-to-date netcharge-offs $ 39 $ 207 $ 3,553 $ 1,959 $ 729 (recoveries)

Annualized QTDnet chg-offs 0.005% 0.03% 0.47% 0.25% 0.09% (recs) to loans

^Reclassified $828,082 to interest-bearing deposits for Sept 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 Ended

Analysis September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020

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 $ 986,821 $ 5,033 2.04% $ 853,180 $ 4,017 1.88% $ 699,585 $ 3,591 2.05% $ 659,243 $ 3,678 2.23% $ 616,168 $ 3,432 2.23%securitiesTax-exempt 377,610 2,550 2.70% 367,074 2,554 2.78% 367,322 2,590 2.82% 361,529 2,581 2.86% 341,550 2,513 2.94%securitiesTotal investmentsecurities 1,364,431 7,583 2.22% 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%

in other banks 656,891 17 0.01% 661,069 38 0.02% 614,283 48 0.03% 404,069 41 0.04% 413,786 29 0.03%

Loans 2,983,771 37,480 5.02% 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%

Total Interest 5,005,093 45,080 3.60% 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%earning assetsOther assets 506,134 534,423 558,929 557,752 548,183

$ $ $ $ $Total assets 5,511,227 5,458,531 5,337,264 5,136,136 5,085,340

Interest-bearingliabilities: $ $ 2,588 0.23% $ $ 3,315 0.30% $ $ 3,849 0.37% $ $ 4,064 0.41% $ $ 4,912 0.50%Deposits 4,422,690 4,374,372 4,172,326 3,971,379 3,960,054

Borrowed Funds 206 - 0.00% 3,355 52 6.20% 100,143 288 1.15% 115,430 260 0.90% 115,935 265 0.91%

Subordinated 144,630 1,819 5.03% 144,591 1,821 5.04% 144,590 1,821 5.04% 144,676 1,823 5.04% 81,470 1,188 5.83%debenturesTotal interest 4,567,526 4,407 0.39% 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%bearingliabilitiesOther 279,107 288,363 275,282 263,823 295,354liabilitiesShareholders' 664,594 647,850 644,923 640,828 632,527equityTotal $ $ $ $ $liabilities and 5,511,227 5,458,531 5,337,264 5,136,136 5,085,340shareholders'equity Net interest $ 40,673 3.22% $ 38,696 3.11% $ 39,884 3.30% $ 40,119 3.46% $ 40,608 3.53%income (FTE)* Net interest margin (FTE)* 3.25% 3.14% 3.34% 3.51% 3.58%

Core net 3.15% 3.05% 3.25% 3.35% 3.41%interest margin* *See reconciliation for Non-GAAP financial measuresFIRST BANCSHARES, INC and SUBSIDIARIES

Reconciliation of Non-GAAP FinancialMeasures (unaudited)

(in thousands except per share data)

Three Months Ended

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

Book value per common share $ $ 31.40 $ $ 30.54 $ 31.81 30.64 29.82

Effect of intangible assets per share 8.78 8.83 8.88 8.89 8.89

Tangible book value per common share $ $ 22.57 $ $ 21.65 $ 23.03 21.76 20.93



Diluted earnings per share $ $ 0.74 $ $ 0.72 $ 0.76 0.79 0.55

Effect of acquisition charges - - - 0.01 0.01

Tax on acquisition charges - - - - -

Effect of bargain purchase gain and .02 - - (0.04) -gain/loss on sale of land/fixed assets

Tax on gain/loss on sale of land/fixed - - - - -assets

Effect of Treasury awards (.09) - - (0.05) -

Tax on Treasury awards .02 - - 0.01 -

Effect on Contributions related to .07 - - - -Treasury awards

Tax on Contributions related to (.02) - - - -Treasury awards

Diluted earnings per share, operating $ $ 0.74 $ $ 0.65 $ 0.76 0.79 0.56



Year to Date

2021 2020

Diluted earnings per share $ 2.28 $ 1.80

Effect of acquisition charges - 0.16

Tax on acquisition charges - (0.03)

Effect of bargain purchase gain and .02 (0.38) gain/loss on sale of land/fixed assets

Tax on gain/loss on sale of land/fixed - 0.01 assets

Effect of Treasury awards (.09) -

Tax on Treasury awards .02 -

Effect on Contributions related to .07 - Treasury awards

Tax on Contributions related to (.02) - Treasury awards

Diluted earnings per share, operating $ 2.28 $ 1.56



Year to Date 2021 2020

Net income available to common $ $ shareholders 48,376 37,171

Acquisition charges 5 3,273

Tax on acquisition charges (1) (743)

Bargain purchase gain and gain/loss on 397 (7,643) sale of land/fixed assets

Tax on gain/loss on sale of land/fixed (100) 157 assets

Treasury awards (1,826) -

Tax on Treasury awards 462 -

Contributions related to Treasury 1,400 - awards

Tax on Contributions related to (354) - Treasury awards

Net earnings available to common $ $ shareholders, operating 48,359 32,215







Three Months Ended

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

Total average A $5,504,107 $5,458,531 $5,337,264 $5,136,136 $5,085,340assets

Total average B 5,005,093 $4,924,108 $4,778,335 $4,578,384 $4,537,157earning assets



Common Equity C $ 664,594 $ 647,850 $ 644,923 $ 640,828 $ 632,527

Less intangible 185,054 186,107 187,148 189,817 190,892assets

Total Tangible D $ 479,540 $ 461,743 $ 457,775 $ 451,011 $ 441,635common equity



Three Months Ended

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

Net interest E $ 40,028 $ 38,050 $ 39,229 $ 39,466 $ 39,972income

Tax-exempt (1,905) (1,908) (1,935) (1,928) (1,877)investment income

Taxable 2,550 2,554 2,590 2,581 2,513investment income

Net InterestIncome Fully Tax F $ 40,673 $ 38,696 $ 39,884 $ 40,119 $ 40,608Equivalent



Annualized Net EInterest Margin / 3.20% 3.09% 3.28% 3.45% 3.52% B

Annualized Net FInterest Margin, / 3.25% 3.14% 3.34% 3.51% 3.58%Fully Tax BEquivalent



Total InterestIncome, Fully Tax Equivalent

Total Interest $ 44,435 $ 43,238 $ 45,187 $ 45,613 $ 46,337Income

Tax-exempt (1,905) (1,908) (1,935) (1,928) (1,877)investment income

Taxable 2,550 2,554 2,590 2,581 2,513investment income

Total InterestIncome, Fully Tax G $ 45,080 $ 43,884 $ 45,842 $ 46,266 $ 46,973Equivalent



Yield on Average GEarning Assets, / 3.60% 3.56% 3.84% 4.04% 4.14%Fully Tax BEquivalent



Interest IncomeInvestment Securities, FullyTax Equivalent

Interest IncomeInvestment $ 6,938 $ 5,925 $ 5,526 $ 5,606 $ 5,309Securities

Tax-exempt (1,905) (1,908) (1,935) (1,928) (1,877)investment income

Taxable 2,550 2,554 2,590 2,581 2,513investment Income

Interest IncomeInvestment H $ 7,583 $ 6,571 $ 6,181 $ 6,259 $ 5,945Securities, FullyTax Equivalent



Average $ $ $Investment I 1,364,431 1,220,254 $1,066,907 1,020,772 $ 957,718Securities



Yield on HInvestment / 2.22% 2.15% 2.32% 2.45% 2.48%Securities, Fully ITax Equivalent



Three Months Ended

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

Net interest $ 40,673 $ 38,696 $ 39,884 $ 40,119 $ 40,608income (FTE)

Less purchaseaccounting 1,167 1,052 1,026 1,692 1,853adjustments

Net interestincome, net of J $ 39,506 $ 37,644 $ 38,858 $ 38,427 $ 38,755purchaseaccounting adj



Total average $5,005,093 $4,924,108 $4,778,335 $4,578,384 $4,537,157earning assets

Add averagebalance of loan 5,252 6,373 8,480 9,808 11,501valuationdiscount

Avg earningassets, excluding K $5,010,345 $4,930,481 $4,786,815 $4,588,192 $4,548,658loan valuationdiscount



Core net interest Jmargin / 3.15% 3.05% 3.25% 3.35% 3.41% K



Three Months Ended

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

Operating Expense

Total non-interest expense $ $ $ $ $ 29,053 27,452 27,264 27,897 26,935

Pre-tax non-operating expenses (1,405) - - (41) (238)

Adjusted Operating Expense L $ $ $ $ $ 27,648 27,452 27,264 27,856 26,697



Operating Revenue

Net interest income, FTE $ $ $ $ $ 40,673 38,696 39,884 40,119 40,608

Total non-interest income 9,586 8,822 9,472 10,928 8,794

Pre-tax non-operating items (1,429) - - (1,780) -

Adjusted Operating Revenue M $ $ $ $ $ 48,830 47,518 49,356 49,267 49,402



LEfficiency Ratio, operating / 56.62% 57.77% 55.24% 56.54% 54.04% M





Three Months Ended

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

Net income available to common N $ $ $ $ $shareholders 16,132 15,600 16,644 15,335 11,917

Acquisition charges 5 - - 41 238

Tax on acquisition charges (1) - - (10) (61)

Bargain purchase gain and loss 397 - - (812) -on sale of fixed assets

Tax on loss on sale of fixed (100) - - - -assets

Treasury awards (1,826) - - (968) -

Tax on Treasury awards 462 - - 245 -

Charitable contributions related 1,400 - - - -to Treasury awards

Tax on charitable contributions (354) - - - -related to Treasury awards

Net earnings available to common O $ $ $ $ $shareholders, operating 16,115 15,600 16,644 13,831 12,094





Pre-Tax Pre-Provision Operating Earnings

Earnings before income taxes P $ $ $ $ $ 20,561 19,420 21,437 18,974 14,910

Acquisition charges 5 - - 41 238

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

Loss on sale of fixed assets 397

Treasury Awards and Gains (1,826) - - (1,780) -

Charitable contributions related 1,400 - - - -to Treasury awards

Pre-Tax, Pre-Provision Operating Q $ $ $ $ $Earnings 20,537 19,420 21,437 20,758 22,069





NAnnualized return on avg assets / 1.17% 1.14% 1.25% 1.19% 0.94% A

Annualized return on avg assets, Ooper / 1.17% 1.14% 1.25% 1.08% 0.95% A

Annualized pre-tax, Qpre-provision, oper / 1.49% 1.42% 1.61% 1.62% 1.74% A

Annualized return on avg common Oequity, oper / 9.70% 9.63% 10.32% 8.63% 7.65% C

Annualized return on avg Otangible common equity, / 13.44% 13.51% 14.54% 12.27% 10.95%operating D







Mortgage Department

Net Interest Income after $ 92 $ 113 $ 140 $ 133 $ 142provision for credit losses

Loan fee income 1,732 2,372 3,162 3,270 2,961

Salaries and employee benefits (995) (1,165) (1,512) (1,329) (1,444)

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

Earnings before income taxes $ 698 $ 1,189 $ 1,664 $ 1,969 $ 1,549

View source version on businesswire.com: https://www.businesswire.com/news/home/20211025005253/en/

CONTACT: M. Ray "Hoppy" Cole Chief Executive Officer

CONTACT: Dee Dee Lowery Chief Financial Officer

CONTACT: (601) 268-8998