Business Wire | Jan 25, 2022 11:20PM EST

First Bancshares, Inc. Reports Results for Fourth Quarter ended December 31, 2021; Increases Quarterly Dividend 6%

Jan. 26, 2022

HATTIESBURG, Miss.--(BUSINESS WIRE)--Jan. 26, 2022--The First Bancshares, Inc. ("FBMS" or "the Company") (NASDAQ: FBMS), holding company for The First Bank, (www.thefirstbank.com) reported today net income available to common shareholders for the quarter ended December 31, 2021.

Highlights:

* On December 3, 2021, the Company closed its acquisition of seven branches from Cadence Bank ("Cadence") which included $40.5 million in loans and $410.2 million in deposits. The Company recorded a bargain purchase gain of $1.3 million related to this acquisition. * Average loans, excluding Paycheck Protection Program ("PPP") loans and acquired Cadence loans, increased $17.9 million, or 0.63%, as compared to the quarter ended September 30, 2021, or 2.5% on an annualized basis. * Net income available to common shareholders totaled $15.8 million for the quarter ended December 31, 2021, representing a decrease of $0.3 million, or 2.1%, compared to $16.1 million for the quarter ended September 30, 2021. During the quarter, various one-time items contributed to the decrease. * Net interest income, excluding accretion income and PPP fee income increased $0.2 million, or 0.45%, when comparing quarter end December 31, 2021 to quarter end September 30, 2021. * In year-over-year comparison, net income available to common shareholders increased $11.7 million, or 22.2%, from $52.5 million for the year ended December 31, 2020 to $64.2 million for the year ended December 31, 2021. * In year-over-year comparison, net interest income, excluding accretion income and PPP fee income increased $2.7 million, or 1.8%. * Provision for credit losses totaled a negative $1.1 million for the quarter as compared to $0 for the sequential quarter comparison and $3.5 million for the fourth quarter of 2020. * On December 14, 2021 the U.S. Department of Treasury informed the Company of their eligibility to receive $175 million of non-dilutive Tier 1 perpetual preferred capital under the Emergency Capital Investment Program. * Subsequent to quarter end, the Company converted from a national banking association to a Mississippi state-charted bank and a member bank of the Federal Reserve System. * For information 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, "2021 was a very special year for our Company in which we celebrated our 25th anniversary and achieved a number of significant milestones. We produced another record year of performance with net income available to common shareholders increasing 22.2% to $64.2 million.

In December, we closed on our branch acquisition from Cadence which provided approximately $400 million in deposits and 7 branches in the Starkville, Mississippi area. The closing of this transaction along with organic growth pushed our total assets to over $6 billion making us the 5th largest bank headquartered in Mississippi.

In addition to record financial performance, we also completed several strategic initiatives to help support continued growth of our franchise in terms of software platforms, processes and procedures and converting our charter from a national bank to a State Chartered, Federal Reserve member bank. We were notified in the 4th quarter by the U.S. Treasury that our Company was eligible to receive $175 million under the ECIP program to further our mission as a CDFI.

2021 was a great year for our Company and we feel well positioned to continue our strategic plan of building a high performing community bank across the South."

Quarterly Earnings

Net income available to common shareholders totaled $15.8 million for the quarter ended December 31, 2021, a decrease of $0.3 million, or 2.1%, compared to $16.1 million for the quarter ended September 30, 2021. The Company recognized $0.1 million less in PPP loan fee income during the fourth quarter 2021 as compared to the third quarter 2021 and recorded $0.3 million less in accretion of purchase accounting adjustments.

Pre-tax, Pre-provision Operating Earnings

Pre-tax, pre-provision Operating earnings decreased $1.7 million for the quarter ended December 31, 2021 as compared to the quarter ended September 30, 2021. One-time charges in salaries and employee benefits related to restricted stock expense, incentive accruals and sold vacation accounted for $1.1 million and charges related to professional services accounted for $0.3 million.

Net income available to common shareholders totaled $15.8 million for the quarter ended December 31, 2021, an increase of $0.5 million, or 3.0%, compared to $15.3 million for the quarter ended December 31, 2020.

The Company recorded a negative provision for credit losses of $1.1 million for the quarter ended December 31, 2021 and $0 for the quarter ended September 30, 2021, a decrease of $4.6 million, or $3.5 million net of tax, as compared to the fourth quarter of 2020.

Earnings Per Share

For the fourth quarter of 2021, fully diluted earnings per share were $0.75 compared to $0.76 for the third quarter of 2021 and $0.72 for the fourth quarter of 2020.

Diluted earnings per share operating (non-GAAP) increased $0.11 from $0.65 for fourth quarter of 2020 to $0.76 for fourth quarter of 2021 due to the increase in operating net earnings available to shareholders (non-GAAP) of $2.2 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 $565.5 million to $6.077 billion at December 31, 2021 from $5.512 billion at September 30, 2021. The Cadence branch acquisition contributed $400 million to the increase.

PPP loans at December 31, 2021 were $41.1 million, a decrease of $46.0 million from September 30, 2021, due to loan forgiveness under the PPP program.

Total average loans were $2.957 billion for the quarter ended December 31, 2021, as compared to $2.984 billion for the quarter ended September 30, 2021, and $3.154 billion for the quarter ended December 31, 2020, representing a decrease of $27.1 million, or 0.9%, for the sequential quarter comparison, and a decrease of $196.9 million, or 6.2%, for the prior year quarterly comparison. PPP loans averaged $55.8 million for the quarter ended December 31, 2021, $112.3 million for the quarter ended September 30, 2021, and $250.5 million for the quarter ended December 31, 2020. The acquired Cadence branch loan portfolio averaged $11.5 million for the quarter ended December 31, 2021.

Excluding the PPP and acquired Cadence loans, average loans increased $17.9 million, or 0.63% as compared to the quarter ended September 30, 2021.

Total average deposits were $4.815 billion for the quarter ended December 31, 2021, as compared to $4.666 billion for the quarter ended September 30, 2021, and $4.195 billion for the quarter ended December 31, 2020, representing an increase of $149.0 million, or 3.2%, for the sequential quarter comparison, and an increase of $619.5 million, or 14.8%, for the prior year quarterly comparison. The acquired Cadence branch deposit portfolio averaged $114.2 million for the quarter ended December 31, 2021.

Average deposits increased $149.0 million, or 3.2% as compared to the quarter ended September 30, 2021 of which $114.2 million was attributable to the acquired Cadence deposit 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 December 31, 2021, $794.3 million in noninterest deposit balances and $1.032 billion in NOW deposit accounts were reclassified as money market accounts.

Asset Quality

Nonperforming assets totaled $30.6 million at December 31, 2021, an increase of $2.6 million compared to $28.0 million at September 30, 2021 and a decrease of $11.6 million compared to $42.3 million at December 31, 2020. Nonaccrual loans increased $3.0 million as compared to September 30, 2021 and decreased $5.8 million as compared to December 31, 2020.

The ratio of the allowance for credit losses (ACL) to total loans was 1.04% at December 31, 2021 and 1.09% at September 30, 2021. The ratio of allowance for loan losses to total loans under the incurred loss model was 1.15% at December 31, 2020. The ratio of annualized net charge-offs (recoveries) to total loans was 0.03% for the quarter ended December 31, 2021 compared to 0.005% for the quarter ended September 30, 2021 and 0.25% for the quarter ended December 31, 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.

Fourth Quarter 2021 vs. Fourth Quarter 2020 Earnings Comparison

Net income available to common shareholders for the fourth quarter of 2021 totaled $15.8 million compared to $15.3 million for the fourth quarter of 2020, an increase of $0.5 million or 3.0%. Provision for credit losses totaled a negative $1.1 million for the quarter ended December 31, 2021, a decrease of $4.6 million, or $3.5 million net of tax, as compared to $3.5 million for the fourth quarter of 2020.

Net interest income for the fourth quarter of 2021 was $39.8 million, an increase of $0.3 million or 0.7% when compared to the fourth quarter of 2020. Fully tax equivalent ("FTE") net interest income (non-GAAP) totaled $40.4 million and $40.1 million for the fourth quarter of 2021 and 2020, respectively. Purchase accounting adjustments decreased $0.8 million for the fourth quarter comparisons. Fourth quarter of 2021 FTE net interest margin (non-GAAP) was 3.14% which included 7 basis points related to purchase accounting adjustments compared to 3.51% for the same quarter in 2020, which included 16 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 28 basis points in prior year quarterly comparison.

Non-interest income decreased $1.3 million for the fourth quarter of 2021 as compared to the fourth quarter of 2020. This decrease is attributed to a decrease in mortgage income of $1.7 million.

Fourth quarter 2021 non-interest expense was $30.8 million, an increase of $2.9 million, or 10.4% as compared to the fourth quarter of 2020. Charges related to the acquisition of the Cadence branches and charter conversion accounted for $1.6 million. Charges related to the ongoing operations of the Cadence branches totaled $0.2 million for the fourth quarter of 2021.

Investment securities totaled $1.774 billion, or 29.2% of total assets at December 31, 2021, compared to $1.050 billion, or 20.4% of total assets at December 31, 2020. For the fourth quarter of 2021 compared to the fourth quarter of 2020, the average balance of investment securities increased $543.6 million. The average tax equivalent yield on investment securities (non-GAAP) decreased 48 basis points to 1.97% from 2.45% in the prior year quarterly comparison. The investment portfolio had a net unrealized gain of $10.7 million at December 31, 2021 as compared to a net unrealized gain of $34.6 million at December 31, 2020.

The FTE average yield on all earning assets (non-GAAP) decreased 58 basis points in prior year quarterly comparison, from 4.04% for the fourth quarter of 2020 to 3.46% for the fourth quarter of 2021. Interest expense on average interest bearing liabilities decreased 23 basis points from 0.58% for the fourth quarter of 2020 to 0.35% for the fourth quarter of 2021. Cost of all deposits averaged 19 basis points for the fourth quarter of 2021 compared to 39 basis points for the fourth quarter of 2020.

Fourth Quarter 2021 vs Third Quarter 2021 Earnings Comparison

Net income available to common shareholders for the fourth quarter of 2021 decreased $0.3 million to $15.8 million compared to $16.1 million for the third quarter of 2021.

Net interest income for the fourth quarter of 2021 was $39.8 million as compared to $40.0 million for the third quarter of 2021, a decrease of $0.3 million which is attributed to a decrease in accretion of purchase accounting adjustments. FTE net interest income (non-GAAP) decreased $0.3 million to $40.4 million from $40.7 million in sequential-quarter comparison. Fourth quarter 2021 FTE net interest margin (non-GAAP) of 3.14% included 7 basis points related to purchase accounting adjustments compared to 3.25% for the third quarter in 2021, which included 10 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin (non-GAAP) decreased 8 basis points in sequential quarter comparison primarily due to the excess liquidity associated with the Cadence branch acquisition late in the 4th quarter of 2021.

Investment securities totaled $1.774 billion, or 29.2% of total assets at December 31, 2021, compared to $1.485 billion, or 27.0% of total assets at September 30, 2021. The average balance of investment securities increased $200.4 million in sequential-quarter comparison. The average tax equivalent yield on investment securities (non-GAAP) decreased 25 basis points to 1.97% from 2.22% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $10.7 million at December 31, 2021 as compared to a net unrealized gain of $18.2 million at September 30, 2021.

The FTE average yield on all earning assets (non-GAAP) decreased in sequential-quarter comparison from 3.60% to 3.46%. Interest expense on average interest bearing liabilities decreased 4 basis points from 0.39% for the third quarter of 2021 to 0.35% for the fourth quarter of 2021. Cost of all deposits averaged 19 basis points for the fourth quarter of 2021 compared to 22 basis points for the third quarter of 2021.

Non-interest income remained flat in sequential-quarter comparison.

Non-interest expense for the fourth quarter of 2021 was $30.8 million compared to $29.1 million for the third quarter of 2021, an increase of $1.7 million, largely attributed to the $1.6 million in acquisition charges and charter conversion expenses.

Year-to-Date Earnings Comparison

In the year-over-year comparison, net income available to common shareholders increased $11.7 million, or 22.2%, from $52.5 million for the year ended December 31, 2020 to $64.2 million for the year ended December 31, 2021. The change in provision expense in the year over year comparison accounted for $19.6 million, net of tax of the change.

The Company recorded bargain purchase and sale of land gains of $8.3 million, net of tax, along with a provision expense of $18.8 million, net of tax, during the year end December 31, 2020.

The Company recorded bargain purchase gain and loss on sale of land of $0.7 million, net of tax, along with a negative provision expense of $0.8 million, net of tax, during the year end December 31, 2021.

Net interest income increased $4.4 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 $2.3 million in the year-over-year comparison excluding the gains and grants detailed in the following tables. Interchange fee income increased $2.1 million in the year-over-year comparison.

Non-interest expense was $114.6 million for the year ended December 31, 2021 an increase of $8.2 million as compared to the same period ended December 31, 2020. An increase of $4.6 million in salaries and employee benefits and an increase of $1.7 million in occupancy expense contributed to the increase.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.17, a 6% increase over previous quarter, per share to be paid on its common stock on February 25, 2022 to shareholders of record as of the close of business on February 10, 2022.

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 operating efficiency ratio, pre-tax, pre-provision operating earnings, diluted operating earnings per common share, operating net earnings available to shareholders, 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 and related variants; (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 and related variants; (10) the impact of the COVID-19 pandemic and related variants 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 related variants; 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 ("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.

Statements about the potential effects of the COVID-19 pandemic and related variants 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 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20

Total Interest Income $ 43,885 $ 44,435 $ 43,238 $ 45,187 $ 45,613

Total Interest Expense 4,128 4,407 5,188 5,958 6,147

Net Interest Income 39,757 40,028 38,050 39,229 39,466

FTE net interest income* 40,425 40,673 38,696 39,884 40,119

Provision for credit (1,104) - - - 3,523losses**

Non-interest income 9,593 9,586 8,822 9,472 10,928

Non-interest expense 30,789 29,053 27,452 27,264 27,897

Earnings before income 19,665 20,561 19,420 21,437 18,974taxes

Income tax expense 3,874 4,429 3,820 4,793 3,639

Net income available to $ 15,791 $ 16,132 $ 15,600 $ 16,644 $ 15,335common shareholders





PER COMMON SHARE DATA

Basic earnings per share $ 0.75 $ 0.77 $ 0.74 $ 0.79 $ 0.72

Diluted earnings per 0.75 0.76 0.74 0.79 0.72share

Diluted earnings per 0.76 0.76 0.74 0.79 0.65share, operating*

Quarterly dividends per .16 .15 .14 .13 .12share

Book value per common 32.17 31.81 31.40 30.64 30.54share at end of period

Tangible book value percommon share at period 23.31 23.03 22.57 21.76 21.65end*

Market price at end of 38.62 38.78 37.43 36.61 30.88period

Shares outstanding at 21,019,037 21,019,897 21,020,723 21,018,744 21,115,009period end

Weighted average shares outstanding:

Basic 21,020,768 21,020,128 21,018,772 21,009,088 21,308,838

Diluted 21,175,323 21,211,716 21,207,660 21,200,558 21,421,367





AVERAGE BALANCE SHEET DATA

Total assets $5,664,336 $5,504,107 $5,458,531 $5,337,264 $5,136,136

Loans and leases 2,956,657 2,983,771 3,042,785 3,097,145 3,153,543

Total deposits 4,814,945 4,665,914 4,629,176 4,410,288 4,195,492

Total common equity 672,121 664,594 647,850 644,923 640,828

Total tangible common 500,639 479,540 461,743 457,775 451,011equity*





SELECTED RATIOS

Annualized return on avg 1.12% 1.17% 1.14% 1.25% 1.19%assets (ROA)

Annualized return on avg 1.13% 1.17% 1.14% 1.25% 1.08%assets, operating*

Annualized pre-tax,pre-provision, 1.33% 1.49% 1.42% 1.61% 1.62%operating*

Annualized return on avgcommon equity, 9.53% 9.70% 9.63% 10.32% 8.63%operating*

Annualized return on avgtangible common equity, 12.80% 13.44% 13.51% 14.54% 12.27%oper*

Average loans to average 61.41% 63.95% 65.73% 70.23% 75.17%deposits

FTE Net Interest Margin* 3.14% 3.25% 3.14% 3.34% 3.51%

Efficiency Ratio 61.56% 57.81% 57.77% 55.24% 54.65%

Efficiency Ratio, 59.91% 56.62% 57.77% 55.24% 56.54%operating*

*See reconciliation ofNon-GAAP financial measures

CREDIT QUALITY

Allowance for creditlosses (ACL) as a % of 1.04% 1.09% 1.07% 1.07% 1.15%total loans**

Nonperforming assets to 5.88% 5.43% 7.30% 7.52% 8.57%tangible equity + ACL

Nonperforming assets to 1.03% 0.95% 1.22% 1.20% 1.35%total loans + OREO

Annualized QTD netcharge-offs (recoveries) 0.03% 0.005% 0.03% 0.47% 0.25%to total loans

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

FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

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

Assets

Cash and cash $ 919,713 $ 657,296 $ 762,486 $ 813,257 $ 562,554equivalents

Securities 1,751,832 1,463,255 1,280,761 1,135,189 1,022,182available-for-sale

Other investments 22,226 22,225 22,225 22,137 27,475

Total investment 1,774,058 1,485,480 1,302,986 1,157,326 1,049,657securities

Loans held for sale 7,678 8,540 6,000 15,119 21,432

Total loans 2,959,553 2,960,919 3,036,732 3,055,093 3,123,678

Allowance for credit (30,742) (32,418) (32,457) (32,663) (35,820)losses

Loans, net 2,928,811 2,928,501 3,004,275 3,022,430 3,087,858

Premises and equipment 132,448 123,594 120,667 121,934 123,450

Other Real Estate Owned 2,565 2,580 3,529 5,769 5,802

Goodwill and other 186,171 184,545 185,597 186,648 187,700intangibles

Other assets 125,970 121,348 124,193 120,315 114,307

Total assets $6,077,414 $5,511,884 $5,509,733 $5,442,798 $5,152,760



Liabilities and Shareholders' Equity

Non-interest bearing $ 756,118 $ 596,126 $ 682,014 $ 632,485 $ 571,079deposits^

Interest-bearing 4,470,666 4,076,415 3,991,898 3,987,812 3,644,201deposits

Total deposits 5,226,784 4,672,541 4,673,912 4,620,297 4,215,280

Borrowings - - - 4,466 114,647

Subordinated debentures 144,726 144,650 144,611 144,572 144,592

Other liabilities 29,732 26,010 31,158 29,514 33,426

Total liabilities 5,401,242 4,843,201 4,849,681 4,798,849 4,507,945

Total shareholders' 676,172 668,683 660,052 643,949 644,815equity

Total liabilities and $6,077,414 $5,511,884 $5,509,733 $5,442,798 $5,152,760shareholders' equity

^Reclassified $794,263 to interest-bearing deposits for Dec 31, 2021





FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

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

Interest Income:

Loans, including fees $ $ $ $ $ 36,035 36,374 36,283 38,587 38,472

Investment securities 7,032 6,938 5,925 5,526 5,606

Accretion of purchase accounting 800 1,106 992 1,026 1,494adjustments

Other interest income 18 17 38 48 41

Total interest income 43,885 44,435 43,238 45,187 45,613

Interest Expense:

Deposits 2,371 2,649 3,375 3,910 4,262

Borrowings - - 52 288 260

Subordinated debentures 1,818 1,819 1,821 1,821 1,823

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

Total interest expense 4,128 4,407 5,188 5,958 6,147

Net interest income 39,757 40,028 38,050 39,229 39,466

Provision for credit losses (1,104) - - - 3,523

Net interest income after provision for 40,861 40,028 38,050 39,229 35,943credit losses



Non-interest Income:

Service charges on deposit accounts 1,901 1,846 1,756 1,761 1,925

Mortgage Income 1,556 1,732 2,372 3,162 3,270

Interchange Fee Income 3,029 2,744 3,145 2,644 2,562

Gain on securities, net 36 11 77 20 3

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

Bargain Purchase Gain and (Loss) on Sale of 1,300 (397) - - 812Land

Other charges and fees 1,771 1,824 1,472 1,885 1,388

Total non-interest income 9,593 9,586 8,822 9,472 10,928



Non-interest expense:

Salaries and employee benefits 17,519 16,246 16,036 16,054 16,642

Occupancy expense 3,948 3,922 3,813 3,879 3,890

FDIC/OCC premiums 550 532 499 494 520

Marketing 113 78 39 160 71

Amortization of core deposit intangibles 982 1,052 1,052 1,052 1,052

Other professional services 1,282 934 1,049 934 764

Acquisition and charter conversion charges 1,602 5 - - 41

Other non-interest expense 4,793 6,284 4,964 4,691 4,917

Total Non-interest expense 30,789 29,053 27,452 27,264 27,897

Earnings before income taxes 19,665 20,561 19,420 21,437 18,974

Income tax expense 3,874 4,429 3,820 4,793 3,639

Net income available to common shareholders $ $ $ $ $ 15,791 16,132 15,600 16,644 15,335





Diluted earnings per common share $ 0.75 $ 0.76 $ 0.74 $ 0.79 $ 0.72

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

*See reconciliation of Non-GAAP financialmeasures

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 $ 147,279 $ 151,290

Investment securities 25,420 21,406

Accretion of purchase accounting adjustments 3,924 6,273

Other interest income 122 379

Total interest income 176,745 179,348

Interest Expense:

Deposits 12,304 21,373

Borrowings 340 1,666

Subordinated debentures 7,279 5,390

Amortization of purchase accounting adjustments (242) (1,765)

Total interest expense 19,681 26,664

Net interest income 157,064 152,684

Provision for credit losses (1,104) 25,151

Net interest income after provision for credit losses 158,168 127,533



Non-interest Income:

Service charges on deposit accounts 7,264 7,216

Mortgage Income 8,823 10,446

Interchange Fee Income 11,562 9,433

Gain (loss) on securities, net 143 281

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

Bargain Purchase Gain and Gain/(loss) on Sale of Land 903 8,455

Other charges and fees 6,952 5,077

Total non-interest income 37,473 41,876



Non-interest expense:

Salaries and employee benefits 65,856 61,230

Occupancy expense 15,562 13,833

FDIC/OCC premiums 2,074 1,351

Marketing 391 333

Amortization of core deposit intangibles 4,137 4,093

Other professional services 4,198 3,613

Acquisition & charter conversion charges 1,607 3,315

Other non-interest expense 20,734 18,573

Total Non-interest expense 114,559 106,341

Earnings before income taxes 81,082 63,068

Income tax expense 16,915 10,563

Net income available to common shareholders $ 64,167 $ 52,505





Diluted earnings per common share $ 3.03 $ 2.52

Diluted earnings per common share, operating* $ 3.04 $ 2.21

*See reconciliation of Non-GAAP financial measures



FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(Dollars in thousands)

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

Commercial,financial and $ 375,379 12.6% $ 426,342 $ 485,134 $ 532,122 $ 561,342 17.8%agricultural

Real estate - 364,075 12.3% 361,732 341,864 304,457 301,283 9.6%construction

Real estate - 1,242,529 41.8% 1,206,267 1,215,103 1,217,505 1,214,602 38.6%commercial

Real estate - 916,179 30.9% 910,618 935,827 944,032 987,313 31.4%residential

Lease Financing 2,556 0.1% 2,889 3,291 3,382 2,733 0.1%Receivable

Obligations ofStates & 16,765 0.6% 15,790 16,489 14,996 15,369 0.5%subdivisions

Consumer 42,070 1.4% 37,281 39,024 38,599 41,036 1.3%

Loans held for 7,678 0.3% 8,540 6,000 15,119 21,432 0.7%sale

Total loans $2,967,231 100% $2,969,459 $3,042,732 $3,070,212 $3,145,110 100%



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

Non-interest $ 756,118 14.5% $596,126 $682,014 $ 632,485 $ 571,079 13.5%bearing^

NOW and other^ 739,153 14.1% 670,888 704,034 702,766 664,626 15.8%

Money Market/ 3,146,904 60.2% 2,896,140 2,758,957 2,734,873 2,398,525 56.9%Savings^

Time Deposits ofless than 445,879 8.5% 390,289 404,437 419,556 439,101 10.4%$250,000

Time Deposits of 138,730 2.7% 119,098 124,470 130,617 141,948 3.4%$250,000 or more

Total Deposits $5,226,784 100% $4,672,541 $4,673,912 $4,620,297 $4,215,280 100%



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

Non-interest $1,550,381 29.6% $1,424,208 $1,393,724 $1,328,239 $1,185,980 28.1%bearing

NOW and other 1,771,510 33.9% 1,524,935 1,541,915 1,562,119 1,347,778 32.0%

Money Market/ 1,320,284 25.3% 1,214,011 1,209,366 1,179,749 1,100,473 26.1%Savings

Time Deposits ofless than 445,879 8.5% 390,289 404,437 419,556 439,101 10.4%$250,000

Time Deposits of 138,730 2.7% 119,098 124,470 130,617 141,948 3.4%$250,000 or more

Total Deposits $5,226,784 100% $4,672,541 $4,673,912 $4,620,297 $4,215,280 100%



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

Nonaccrual loans $ 28,013 $ 25,012 $ 27,625 $ 29,981 $ 33,774

Loans past due 45 456 5,834 1,079 2,692 90 days and over

Totalnonperforming 28,058 25,468 33,459 31,060 36,466 loans

Other real 2,565 2,580 3,529 5,769 5,802 estate owned

Totalnonperforming $ 30,623 $28,048 $36,988 $36,829 $ 42,268 assets



Nonperformingassets to total 0.50% 0.51% 0.67% 0.68% 0.82% assets

Nonperformingassets to total 1.03% 0.95% 1.22% 1.20% 1.35% loans + OREO

ACL tononperforming 109.57% 127.29% 97.01% 105.16% 98.23% loans

ACL to total 1.04% 1.09% 1.07% 1.07% 1.15% loans



Qtr-to-date netcharge-offs $ 220 $ 39 $ 207 $ 3,553 $ 1,959 (recoveries)

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

^Reclassified $794,263 to interest-bearing deposits for Dec 31, 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 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 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 $ $ 5,059 1.73% $ 986,325 $ 5,033 2.04% $ 853,180 $ 4,017 1.88% $ 699,585 $ 3,591 2.05% $ 659,243 $ 3,678 2.23%securities 1,166,432

Tax-exempt 397,906 2,641 2.65% 377,610 2,550 2.70% 367,074 2,554 2.78% 367,322 2,590 2.82% 361,529 2,581 2.86%securitiesTotal investmentsecurities 1,564,338 7,700 1.97% 1,363,935 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%

in other banks 634,541 18 0.01% 657,387 17 0.01% 661,069 38 0.02% 614,283 48 0.03% 404,069 41 0.04%

Loans 2,956,657 36,835 4.98% 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%

Total Interest 5,155,536 44,553 3.46% 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%earning assetsOther assets 508,800 506,134 534,423 558,929 557,752

$ $ $ $ $Total assets 5,664,336 5,511,227 5,458,531 5,337,264 5,136,136

Interest-bearingliabilities: $ $ 2,310 0.20% $ $ 2,588 0.23% $ $ 3,315 0.30% $ $ 3,849 0.37% $ $ 4,064 0.41%Deposits 4,537,958 4,422,690 4,374,372 4,172,326 3,971,379

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

Subordinated 144,684 1,818 5.03% 144,630 1,819 5.03% 144,591 1,821 5.04% 144,590 1,821 5.04% 144,676 1,823 5.04%debenturesTotal interest 4,682,642 4,128 0.35% 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%bearingliabilitiesOther 309,573 279,107 288,363 275,282 263,823liabilitiesShareholders' 672,121 664,594 647,850 644,923 640,828equityTotal $ $ $ $ $liabilities and 5,664,336 5,511,227 5,458,531 5,337,264 5,136,136shareholders'equity Net interest $ 40,425 3.10% $ 40,673 3.22% $ 38,696 3.11% $ 39,884 3.30% $ 40,119 3.46%income (FTE)* Net interest margin (FTE)* 3.14% 3.25% 3.14% 3.34% 3.51%

Core net 3.07% 3.15% 3.05% 3.25% 3.35%interest margin* *See reconciliation for Non-GAAP financial measuresFIRST BANCSHARES, INC and SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures (unaudited)

(in thousands except per share data)

Three Months Ended

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

Book value per common share $ $ 31.81 $ $ 30.64 $ 32.17 31.40 30.54

Effect of intangible assets per share 8.86 8.78 8.83 8.88 8.89

Tangible book value per common share $ $ 23.03 $ $ 21.76 $ 23.31 22.57 21.65



Diluted earnings per share $ 0.75 $ 0.76 $ $ 0.79 $ 0.72 0.74

Effect of acquisition and charter 0.07 - - - 0.01conversion charges

Tax on acquisition and charter conversion (0.02) - - - -charges

Effect of bargain purchase gain and loss on (0.06) 0.02 - - (0.04)sale of fixed assets

Tax on loss on sale of fixed assets 0.02 - - - -

Effect of Treasury awards - (0.09) - - (0.05)

Tax on Treasury awards - .02 - - 0.01

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

Tax on Contributions related to Treasury - (0.02) - - -awards

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



Year to Date

2021 2020

Diluted earnings per share $ 3.03 $ 2.52

Effect of acquisition and charter 0.08 0.16 conversion charges

Tax on acquisition and charter conversion (0.02) (0.03) charges

Effect of bargain purchase gain and loss on (0.04) (0.42) sale of fixed assets

Tax on loss on sale of fixed assets 0.01 0.01

Effect of Treasury awards (0.09) (0.04)

Tax on Treasury awards 0.02 0.01

Effect on Contributions related to Treasury 0.07 - awards

Tax on Contributions related to Treasury (0.02) - awards

Diluted earnings per share, operating $ 3.04 $ 2.21



Year to Date

2021 2020

Net income available to common shareholders $ $ 64,167 52,505

Acquisition and charter conversion charges 1,607 3,314

Tax on acquisition and charter conversion (406) (753) charges

Bargain purchase gain and loss on sale of (903) (8,455) fixed assets

Tax on loss on sale of fixed assets 229 157

Treasury awards (1,826) (968)

Tax on Treasury awards 462 245

Contributions related to Treasury awards 1,400 -

Tax on Contributions related to Treasury (354) - awards

Net earnings available to common $ $ shareholders, operating 64,376 46,045



Three Months Ended

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

Total average assets A $5,664,336 $5,504,107 $5,458,531 $5,337,264 $5,136,136

Total average earning B 5,155,536 $5,005,093 $4,924,108 $4,778,335 $4,578,384assets



Common Equity C $ 672,121 $ 664,594 $ 647,850 $ 644,923 $ 640,828

Less intangible assets 171,482 185,054 186,107 187,148 189,817

Total Tangible common D $ 500,639 $ 479,540 $ 461,743 $ 457,775 $ 451,011equity



Three Months Ended

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

Net interest income E $ 39,757 $ 40,028 $ 38,050 $ 39,229 $ 39,466

Tax-exempt investment (1,973) (1,905) (1,908) (1,935) (1,928)income

Taxable investment 2,641 2,550 2,554 2,590 2,581income

Net Interest Income F $ 40,425 $ 40,673 $ 38,696 $ 39,884 $ 40,119Fully Tax Equivalent



Annualized Net EInterest Margin / 3.08% 3.20% 3.09% 3.28% 3.45% B

Annualized Net FInterest Margin, Fully / 3.14% 3.25% 3.14% 3.34% 3.51%Tax Equivalent B



Total Interest Income, Fully Tax Equivalent

Total Interest Income $ 43,885 $ 44,435 $ 43,238 $ 45,187 $ 45,613

Tax-exempt investment (1,973) (1,905) (1,908) (1,935) (1,928)income

Taxable investment 2,641 2,550 2,554 2,590 2,581income

Total Interest Income, G $ 44,553 $ 45,080 $ 43,884 $ 45,842 $ 46,266Fully Tax Equivalent



Yield on Average GEarning Assets, Fully / 3.46% 3.60% 3.56% 3.84% 4.04%Tax Equivalent B



Interest IncomeInvestment Securities, Fully Tax Equivalent

Interest Income $ 7,032 $ 6,938 $ 5,925 $ 5,526 $ 5,606Investment Securities

Tax-exempt investment (1,973) (1,905) (1,908) (1,935) (1,928)income

Taxable investment 2,641 2,550 2,554 2,590 2,581Income

Interest IncomeInvestment Securities, H $ 7,700 $ 7,583 $ 6,571 $ 6,181 $ 6,259Fully Tax Equivalent



Average Investment I $ $ $1,220,254 $ $Securities 1,564,338 1,364,431 1,066,907 1,020,772



Yield on Investment HSecurities, Fully Tax / 1.97% 2.22% 2.15% 2.32% 2.45%Equivalent I



Three Months Ended

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

Net interest income $ 40,425 $ 40,673 $ 38,696 $ 39,884 $ 40,119(FTE)

Less purchase 861 1,167 1,052 1,026 1,692accounting adjustments

Net interest income,net of purchase J $ 39,564 $ 39,506 $ 37,644 $ 38,858 $ 38,427accounting adj



Total average earning $5,155,536 $5,005,093 $4,924,108 $4,778,335 $4,578,384assets

Add average balance ofloan valuation 4,353 5,252 6,373 8,480 9,808discount

Avg earning assets,excluding loan K $5,159,889 $5,010,345 $4,930,481 $4,786,815 $4,588,192valuation discount



Core net interest Jmargin / 3.07% 3.15% 3.05% 3.25% 3.35% K

Three Months Ended

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

Operating Expense

Total non-interest expense $ $ $ $ $ 30,789 29,053 27,452 27,264 27,897

Pre-tax non-operating expenses (1,602) (1,405) - - (41)

Adjusted Operating Expense L $ $ $ $ $ 29,187 27,648 27,452 27,264 27,856



Operating Revenue

Net interest income, FTE $ $ $ $ $ 40,425 40,673 38,696 39,884 40,119

Total non-interest income 9,593 9,586 8,822 9,472 10,928

Pre-tax non-operating items (1,300) (1,429) - - (1,780

Adjusted Operating Revenue M $ $ $ $ $ 48,718 48,830 47,518 49,356 49,267



LEfficiency Ratio, operating / 59.91% 56.62% 57.77.% 55.24% 56.54% M





Three Months Ended

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

Net income available to common N $ $ $ $ $shareholders 15,791 16,132 15,600 16,644 15,335

Acquisition and charter conversion 1,602 5 - - 41charges

Tax on acquisition and charter (405) (1) - - (10)conversion charges

Bargain purchase gain and loss on (1,300) 397 - - (812)sale of fixed assets

Tax on loss on sale of fixed assets 329 (100) - - -

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

Tax on Treasury awards - 462 - - 245

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

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

Net earnings available to common O $ $ $ $ $shareholders, operating 16,017 16,115 15,600 16,644 13,831





Pre-Tax Pre-Provision Operating Earnings

Earnings before income taxes P $ $ $ $ $ 19,665 20,561 19,420 21,437 18,974

Acquisition and charter conversion 1,602 5 - - 41charges

Provision for loan losses (1,104) - - - 3,523

Bargain purchase gain and loss on (1,300) 397 - - -sale of fixed assets

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

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

Pre-Tax, Pre-Provision Operating Q $ $ $ $ $Earnings 18,863 20,537 19,420 21,437 20,758





NAnnualized return on avg assets / 1.12% 1.17% 1.14% 1.25% 1.19% A

OAnnualized return on avg assets, oper / 1.13% 1.17% 1.14% 1.25% 1.08% A

Annualized pre-tax, pre-provision, Qoper / 1.33% 1.49% 1.42% 1.61% 1.62% A

Annualized return on avg common Oequity, oper / 9.53% 9.70% 9.63% 10.32% 8.63% C

Annualized return on avg tangible Ocommon equity, operating / 12.80% 13.44% 13.51% 14.54% 12.27% D









Mortgage Department

Net Interest Income after provision $ 97 $ 92 $ 113 $ 140 $ 133for credit losses

Loan fee income 1,556 1,732 2,372 3,162 3,270

Salaries and employee benefits (1,171) (995) (1,165) (1,512) (1,329)

Other non-interest expense (125) (131) (131) (126) (105)

Earnings before income taxes $ 357 $ 698 $ 1,189 $ 1,664 $ 1,969

View source version on businesswire.com: https://www.businesswire.com/news/home/20220125006214/en/

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