Business Wire | Oct 26, 2020 06:30PM EDT

The First Bancshares, Inc. Reports Results for Third Quarter Ended September 30, 2020; Increases Quarterly Dividend 20%

Oct. 26, 2020

HATTIESBURG, Miss.--(BUSINESS WIRE)--Oct. 26, 2020--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, 2020.

Highlights for the Quarter:

* Average loans increased $9.1 million, or 0.3% for the sequential quarter comparison. * Average deposits increased $143.2 million, or 3.5% for the sequential quarter comparison. * Provision for loan losses totaled $6.9 million for the quarter as compared to $7.6 million for the sequential quarter comparison and $1.0 million for the third quarter of 2019. * On September 25, 2020, the Company issued $65 million in aggregate principal amount of subordinated debt. * Pre-tax, pre-provision operating earnings which excludes acquisition charges, treasury awards, gains from bargain purchase of Southwest Georgia Financial Corporation ("SGB") and sale of land increased 26.5% to $22.1 million for the quarter ended September 30, 2020 as compared to $17.4 million for the third quarter of 2019. * Pre-tax, pre-provision operating earnings which excludes acquisition charges, treasury awards, gains from bargain purchase of SGB and sale of land increased 2.9% to $22.1 million for the quarter ended September 30, 2020 as compared to $21.4 million for the second quarter of 2020. * Due to the current economic environment, the allowance for loan losses increased 22% to $34.3 million or 1.09% of total loans at September 30, 2020 as compared to $28.1 million or 0.88% of total loans at June 30, 2020. The Company also has $8.8 million in credit marks associated with acquired loan portfolios. * As of October 21, 2020, total COVID related modifications were $78.5 million, representing 2.5% of the loan portfolio and down from a peak of $676 million or 21% of the loan portfolio. For additional details related to our response and potential 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 2020, the Company elected to delay the adoption of the Current Expected Credit Losses ("CECL") afforded through the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

M. Ray "Hoppy" Cole, President and Chief Executive Officer, commented, "We are pleased with the results of the third quarter and our Company continues to show strong performance in revenue growth and increasing profitability. Pre-tax, pre-provision income increased 26% year over year and 2.9% linked quarter. We are proud of this improvement given the challenging market conditions related to margin compression and the uncertainty in economic activity associated with the pandemic.

During the quarter we raised an additional $65MM of subordinated debt which positions our Company to take advantage of any opportunities that may arise post the pandemic, and to resume our previously approved share buyback program."

Quarterly Earnings

Net income available to common shareholders totaled $11.9 million for the quarter ended September 30, 2020, a decrease of $0.4 million, or 2.9%, compared to $12.3 million for the quarter ended September 30, 2019.

Net income available to common shareholders totaled $11.9 million for the quarter ended September 30, 2020, a decrease of $5.0 million, or 29.6%, compared to $16.9 million for the quarter ended June 30, 2020. The Company recorded a $7.0 million bargain purchase gain on the acquisition of SGB during the quarter ended June 30, 2020.

Pre-tax, pre-provision operating earnings, which exclude acquisition charges, treasury awards, and gains increased 26.5% to $22.1 million for the quarter ended September 30, 2020 as compared to $17.4 million for the third quarter of 2019 and increased 2.9% to $22.1 million for the quarter ended September 30, 2020 as compared to $21.4 million for the second quarter of 2020.

Provision for loan losses totaled $6.9 million for the quarter ended September 30, 2020, an increase of $5.9 million, or 611% as compared to $1.0 million for the third quarter of 2019 and a decrease of $0.7 million, or 9.0% as compared to $7.6 million for the second quarter of 2020. $5.8 million of the $6.9 million provision for loan loss expense for the quarter ended September 30, 2020 was related to the anticipated economic effects of COVID-19.

Earnings Per Share

For the third quarter of 2020, fully diluted earnings per share were $0.55, compared to $0.71 for the third quarter of 2019. The additional provision for loan losses expense of $5.9 million, or $4.5 million net of tax, for the quarter ended September 30, 2020, which is primarily attributable to the COVID-19 pandemic, represents a decrease of $0.21 in fully diluted earnings per share.

For the third quarter of 2020, fully diluted earnings per share were $0.55, compared to $0.79 for the second quarter of 2020. The bargain purchase and sale of land gains for the quarter ended June 30, 2020 accounted for an increase of $0.35 in fully diluted earnings per share.

Fully diluted earnings per share for the quarter ended September 30, 2020 include the issuance of 2,546,967 shares of our common stock during the second quarter of 2020 in association with the acquisition of SGB and the issuance of 1,682,889 shares of our common stock during the fourth quarter of 2019 in association with the acquisition of First Florida Bancorp, Inc. ("FFB"). Fully diluted earnings per share for all quarters of 2020 include the purchase by the Company of 168,188 shares throughout the calendar year of 2019.

Fully diluted earnings per share for the quarter ended September 30, 2019 include the issuance of 2,377,501 shares of our common stock during the first quarter of 2019 in association with the acquisition of FPB Financial Corp ("FPB").

Balance Sheet

Consolidated assets increased $79.3 million to $5.164 billion at September 30, 2020 from $5.085 billion at June 30, 2020. Assets include $260.2 million in PPP loans.

Total average loans were $3.166 billion for the quarter ended September 30, 2020, as compared to $3.157 billion for the quarter ended June 30, 2020, and $2.343 billion for the quarter ended September 30, 2019, representing an increase of $9.1 million, or 0.3%, for the sequential quarter comparison, and an increase of $822.3 million, or 35.1%, in prior year quarterly comparison. The acquisitions of FFB and SGB accounted for $647.2 million, net of fair value marks, of the total increase in average loans as compared to the third quarter of 2019.

Average loans increased $9.1 million, or 0.3% for the sequential quarter comparison. Excluding the acquired loans and PPP loans, average loans decreased $85.1 million, or 3.6% as compared to the quarter ended September 30, 2019.

Total average deposits were $4.212 billion for the quarter ended September 30, 2020, as compared to $4.069 billion for the quarter ended June 30, 2020, and $2.766 billion for the quarter ended September 30, 2019, representing an increase of $143.2 million, or 3.5%, for the sequential quarter comparison, and an increase of $1.447 billion, or 52.3%, in prior year quarterly comparison. The acquisitions of FFB and SGB accounted for $912.1 million of the total increase in average deposits as compared to the third quarter of 2019.

Average deposits increased $143.2 million, or 3.5% for the sequential quarter comparison. Excluding the acquired deposits, average deposits increased $534.5 million, or 19.3% as compared to the quarter ended September 30, 2019.

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 quarter end September 30, 2020, $712.8 million in noninterest deposit balances and $677.3 million in NOW deposit accounts were reclassified as money market accounts.

Asset Quality

Nonperforming assets totaled $44.9 million at September 30, 2020, a decrease of $0.8 million compared to $45.7 million at June 30, 2020 and a decrease of $2.4 million compared to $47.3 million at September 30, 2019. Nonaccrual loans decreased $1.9 million as compared to June 30, 2020 and increased $2.1 million as compared to September 30, 2019. Other real estate decreased $0.3 million as compared to June 30, 2020 and decreased $4.8 million as compared to September 30, 2019.

The ratio of the allowance for loan and leases losses (ALLL) to total loans was 1.09% at September 30, 2020, 0.88% at June 30, 2020 and 0.56% at September 30, 2019. The ratio of annualized net charge-offs (recoveries) to total loans was 0.09% for the quarter ended September 30, 2020 compared to 0.04% for the quarter ended June 30, 2020 and 0.004% for the quarter ended September 30, 2019.

Third Quarter 2020 vs. Third Quarter 2019 Earnings Comparison

Net income available to common shareholders for the third quarter of 2020 totaled $11.9 million compared to $12.3 million for the third quarter of 2019, a decrease of $0.4 million or 2.9%. In comparing the quarters, an increased provision for loan losses in the amount of $5.9 million more was expensed during the third quarter of 2020 as compared to the third quarter of 2019.

Net interest income for the third quarter of 2020 was $40.0 million, an increase of $9.5 million when compared to the third quarter of 2019. The increase was due to interest income earned on a higher volume of loans. Fully tax equivalent ("FTE") net interest income totaled $40.6 million and $30.7 million for the third quarter of 2020 and 2019, respectively. FTE net interest income increased $9.9 million in the prior year quarterly comparison due to increased loan volume. Purchase accounting adjustments accounted for $0.6 million of the difference in net interest income for the third quarter comparisons. Third quarter 2020 FTE net interest margin of 3.58% included 17 basis points related to purchase accounting adjustments compared to 4.05% for the same quarter in 2019, which included 19 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 45 basis points in prior year quarterly comparison.

Non-interest income increased $1.7 million for the third quarter of 2020 as compared to the third quarter of 2019. Mortgage income increased $1.2 million in prior year quarterly comparison.

Third quarter 2020 non-interest expense was $26.9 million, an increase of $6.1 million, or 29.3% as compared to the third quarter of 2019. Excluding the net decrease in acquisition charges of $0.5 million for the quarterly comparison, non-interest expense increased $6.6 million in the third quarter of 2020, of which $4.1 million was attributable to the operations of FFB and SGB, as compared to third quarter of 2019.

Investment securities totaled $984.9 million, or 19.1% of total assets at September 30, 2020, versus $640.8 million, or 18.4% of total assets at September 30, 2019. The average balance of investment securities increased $335.8 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities decreased 76 basis points to 2.48% from 3.24% in prior year quarterly comparison. The investment portfolio had a net unrealized gain of $33.2 million at September 30, 2020 as compared to a net unrealized gain of $13.9 million at September 30, 2019.

The FTE average yield on all earning assets decreased 80 basis points in prior year quarterly comparison, from 4.94% for the third quarter of 2019 to 4.14% for the third quarter of 2020. Average interest expense decreased 56 basis points from 1.17% for the third quarter of 2019 to 0.61% for the third quarter of 2020. Cost of all deposits averaged 47 basis points for the third quarter of 2020 compared to 76 basis points for the third quarter of 2019.

Third Quarter 2020 vs Second Quarter 2020 Earnings Comparison

Net income available to common shareholders for the third quarter of 2020 decreased $5.0 million to $11.9 million compared to $16.9 million for the second quarter of 2020. During the second quarter of 2020, the Company recorded a bargain purchase gain in the amount of $7.0 million, net of tax.

Net interest income for the third quarter of 2020 was $40.0 million as compared to $39.2 million for the second quarter of 2020, an increase of $0.8 million. FTE net interest income increased $0.8 million to $40.6 million from $39.8 million in sequential-quarter comparison. Third quarter 2020 FTE net interest margin of 3.58% included 17 basis points related to purchase accounting adjustments compared to 3.63% for the second quarter in 2020, which included 21 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 1 basis point in sequential quarter comparison.

Investment securities totaled $984.9 million, or 19.1% of total assets at September 30, 2020, versus $953.3 million, or 18.7% of total assets at June 30, 2020. The average balance of investment securities increased $51.2 million in sequential-quarter comparison. The average tax equivalent yield on investment securities decreased 7 basis points to 2.48% from 2.55% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $33.2 million at September 30, 2020 as compared to a net unrealized gain of $32.9 million at June 30, 2020.

The FTE average yield on all earning assets decreased in sequential-quarter comparison from 4.23% to 4.14%. Average interest expense decreased 6 basis points from 0.67% for the second quarter of 2020 to 0.61% for the third quarter of 2020. Cost of all deposits averaged 47 basis points for the third quarter of 2020 compared to 52 basis points for the second quarter of 2020.

Excluding the bargain purchase and sale of land gains, non-interest income increased $0.8 million in sequential-quarter comparison resulting from increased mortgage income in the amount of $0.3 million and increased service charges on deposit accounts in the amount of $0.2 million.

Non-interest expense for the third quarter of 2020 was $26.9 million compared to $28.1 million for the second quarter of 2020. Excluding acquisition charges for each quarter, non-interest expense increased $0.9 million.

Year-to-Date Earnings Comparison

In year-over-year comparison, net income available to common shareholders increased $5.3 million, or 16.6%, from $31.9 million for the nine months ended September 30, 2019 to $37.2 million for the same period ended September 30, 2020. Excluding the bargain purchase and sale of land gains of $7.5 million, net of tax, and the increased provision expense of $14.4 million, net of tax, net income available to common shareholders increased $12.2 million in year-over-year comparison.

Net interest income increased $24.9 million in year-over-year comparison, primarily due to interest income earned on a higher volume of loans and securities.

Non-interest income increased $4.2 million in year-over-year comparison excluding the awards and gains mentioned above. Mortgage income increased $2.9 million and interchange fee income increased $0.9 million in the year-over-year comparison.

Non-interest expense was $78.4 million for the nine months ended September 30, 2020 an increase of $14.8 million as compared to the same period ended September 30, 2019. $11.7 million of the increase is related to the operations of FFB and SGB.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend of $0.12 per share to be paid on its common stock on November 24, 2020 to shareholders of record as of the close of business on November 10, 2020.

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 net earnings, operating efficiency ratio, pre-tax, pre-provision operating earnings, operating earnings per share, 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 9/30/20 6/30/20 3/31/20 12/31/19 9/30/19

Total Interest Income $ 46,337 $ 45,799 $ 41,598 $ 40,444 $ 37,241

Total Interest Expense 6,365 6,619 7,533 7,000 6,782

Net Interest Income 39,972 39,180 34,065 33,444 30,459

FTE net interest income* 40,608 39,772 34,526 33,847 30,739

Provision for loan 6,921 7,606 7,102 850 974losses

Non-interest income 8,794 15,680 6,474 7,574 7,103

Non-interest expense 26,935 28,070 23,439 24,960 20,825

Earnings before income 14,910 19,184 9,998 15,208 15,763taxes

Income tax expense 2,993 2,241 1,687 3,353 3,491

Net income available to $ 11,917 $ 16,943 $ 8,311 $ 11,855 $ 12,272common shareholders





PER COMMON SHARE DATA

Basic earnings per share $ 0.56 $ 0.79 $ 0.44 $ 0.65 $ 0.72

Diluted earnings per 0.55 0.79 0.44 0.64 0.71share

Diluted earnings per 0.56 0.52 0.47 0.72 0.74share, operating*

Quarterly dividends per .10 .10 .10 .08 .08share

Book value per common 29.82 29.34 29.49 28.91 27.92share at end of period

Tangible book value percommon share at period 20.93 20.40 19.52 18.87 19.39end*

Market price at end of 20.97 22.50 19.07 35.52 32.30period

Shares outstanding at 21,408,017 21,395,258 18,851,955 18,802,266 17,123,625period end

Weighted average shares outstanding:

Basic 21,405,309 21,341,913 18,818,115 18,241,244 17,131,080

Diluted 21,544,040 21,437,180 18,942,129 18,398,609 17,267,953





AVERAGE BALANCE SHEET DATA

Total assets $5,085,340 $4,913,620 $3,990,493 $3,767,587 $3,439,202

Loans and leases 3,165,653 3,156,524 2,602,340 2,512,524 2,343,392

Total deposits 4,212,410 4,069,239 3,186,943 2,963,603 2,765,816

Total common equity 632,527 607,127 547,309 518,070 470,024

Total tangible common 441,635 423,966 358,889 346,742 324,619equity*





SELECTED RATIOS

Annualized return on avg 0.94% 1.38% 0.83% 1.26% 1.43%assets (ROA)

Annualized return on avg 0.95% 0.91% 0.89% 1.40% 1.49%assets, operating*

Annualized pre-tax,pre-provision, 1.74% 1.75% 1.79% 1.87% 2.03%operating*

Annualized return on avgcommon equity, 7.65% 7.40% 6.50% 10.16% 10.91%operating*

Annualized return on avgtangible common equity, 10.95% 10.60% 9.91% 15.18% 15.80%oper*

Average loans to average 75.15% 77.57% 81.66% 84.78% 84.73%deposits

FTE Net Interest Margin* 3.58% 3.63% 3.93% 4.06% 4.05%

Efficiency Ratio 54.52% 50.62% 57.17% 60.26% 55.03%

Efficiency Ratio, 54.04% 53.91% 55.36% 55.67% 53.17%operating*

*See reconciliation ofNon-GAAP financial measures

CREDIT QUALITY

Allowance for loanlosses (ALLL) as a % of 1.09% 0.88% 0.80% 0.53% 0.56%total loans

Nonperforming assets to 9.31% 9.84% 12.12% 13.13% 13.71%tangible equity + ALLL

Nonperforming assets to 1.42% 1.44% 1.81% 1.86% 2.00%total loans + OREO

Annualized QTD netcharge-offs (recoveries) 0.09% 0.04% 0.03% (0.002%) 0.0041%to total loans



FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands)

BALANCE SHEET Sept 30, June 30, Mar 31, Dec 31, Sept 30, 2020 2020 2020 2019 2019

Assets

Cash and cash $ 603,736 $ 539,125 $ 286,759 $ 168,864 $ 159,990equivalents

Securities 957,458 927,205 762,977 765,087 612,002available-for-sale

Securities - - - - 6,328held-to-maturity

Other investments 27,461 26,059 25,911 26,690 22.517

Total investment 984,919 953,264 788,888 791,777 640,847securities

Loans held for sale 22,482 18,632 13,288 10,810 11,104

Total loans 3,155,932 3,171,535 2,602,288 2,600,358 2,349,986

Allowance for loan (34,256) (28,064) (20,804) (13,908) (13,043)losses

Loans, net 3,121,676 3,143,471 2,581,484 2,586,450 2,336,943

Premises and equipment 124,875 125,053 108,013 104,980 96,726

Other Real Estate Owned 5,202 5,471 6,974 7,299 9,974

Goodwill and other 190,380 191,431 187,927 188,865 146,091intangibles

Other assets 110,889 108,458 88,468 82,818 80,256

Total assets $5,164,159 $5,084,905 $4,061,801 $3,941,863 $3,481,931



Liabilities and Shareholders' Equity

Non-interest bearing $ 482,236 $ 486,039 $ 340,606 $ 723,208 $ 642,054deposits^

Interest-bearing 3,746,978 3,730,851 2,937,188 2,353,325 2,119,181deposits

Total deposits 4,229,214 4,216,890 3,277,794 3,076,533 2,761,345

Borrowings 115,827 116,005 116,180 214,319 136,250

Subordinated debentures 144,709 80,756 80,717 80,678 80,639

Other liabilities 36,040 43,459 31,184 26,675 25,609

Total liabilities 4,525,790 4,457,110 3,505,875 3,398,205 3,003,843

Total shareholders' 638,369 627,795 555,926 543,658 478,088equity

Total liabilities and $5,164,159 $5,084,905 $4,061,801 $3,941,863 $3,481,931shareholders' equity

^Reclassified $712,806to interest-bearingdeposits FIRST BANCSHARES, INC and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)

Three Months EndedEARNINGS STATEMENT 9/30/20 6/30/20 3/31/20 12/31/ 9/30/19 19

Interest Income:

Loans, including fees $ $ $ $ $ 39,344 39,184 34,290 33,556 31,279

Investment securities 5,309 5,187 5,304 5,298 4,752

Accretion of purchase accounting 1,655 1,409 1,715 1,553 1,201adjustments

Other interest income 29 19 289 37 9

Total interest income 46,337 45,799 41,598 40,444 37,241

Interest Expense:

Deposits 5,110 5,967 6,034 5,489 5,156

Borrowings 265 224 917 771 451

Subordinated debentures 1,188 1,176 1,203 1,213 1,270

Accretion of purchase accounting (198) (748) (621) (473) (95)adjustments

Total interest expense 6,365 6,619 7,533 7,000 6,782

Net interest income 39,972 39,180 34,065 33,444 30,459

Provision for loan losses 6,921 7,606 7,102 850 974

Net interest income after provision for 33,051 31,574 26,963 32,594 29,485loan losses



Non-interest Income:

Service charges on deposit accounts 1,780 1,597 1,914 2,110 1,979

Mortgage Income 2,961 2,646 1,567 1,720 1,800

Interchange Fee Income 2,491 2,395 1,986 2,075 2,252

Gain (loss) on securities, net 32 73 174 (9) 57

Financial Assistance Award/Bank - - - 714 -Enterprise Award

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

Other charges and fees 1,530 1,326 833 964 1,015

Total non-interest income 8,794 15,680 6,474 7,574 7,103



Non-interest expense:

Salaries and employee benefits 15,494 15,866 13,228 13,092 11,612

Occupancy expense 3,826 3,200 2,918 3,190 2,632

FDIC/OCC premiums 447 237 147 147 111

Marketing 24 25 213 248 62

Amortization of core deposit intangibles 1,052 1,052 938 907 796

Other professional services 990 984 874 951 1,140

Acquisition charges 238 2,295 740 2,300 705

Other non-interest expense 4,864 4,411 4,381 4,125 3,767

Total Non-interest expense 26,935 28,070 23,439 24,960 20,825

Earnings before income taxes 14,910 19,184 9,998 15,208 15,763

Income tax expense 2,993 2,241 1,687 3,353 3,491

Net income available to common $ $ $ 8,311 $ $shareholders 11,917 16,943 11,855 12,272





Diluted earnings per common share $ 0.55 $ 0.79 $ 0.44 $ 0.64 $ 0.71

Diluted earnings per common share, $ 0.56 $ 0.52 $ 0.47 $ 0.72 $ 0.74operating*

*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 Date

EARNINGS STATEMENT 2020 2019

Interest Income:

Loans, including fees $ 112,818 $ 89,760

Investment securities 15,800 14,108

Accretion of purchase accounting adjustments 4,779 3,988

Other interest income 337 229

Total interest income 133,734 108,085

Interest Expense:

Deposits 17,111 14,808

Borrowings 1,406 1,285

Subordinated debentures 3,567 3,691

Amortization of purchase accounting adjustments (1,567) (61)

Total interest expense 20,517 19,723

Net interest income 113,217 88,362

Provision for loan losses 21,628 2,888

Net interest income after provision for loan losses 91,589 85,474



Non-interest Income:

Service charges on deposit accounts 5,291 5,728

Mortgage Income 7,174 4,268

Interchange Fee Income 6,872 5,949

Gain (loss) on securities, net 279 131

Financial Assistance Award/Bank Enterprise Award - 233

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

Other charges and fees 3,689 3,064

Total non-interest income 30,948 19,373



Non-interest expense:

Salaries and employee benefits 44,588 33,924

Occupancy expense 9,943 7,606

FDIC/OCC premiums 831 485

Marketing 262 397

Amortization of core deposit intangibles 3,041 2,308

Other professional services 2,848 3,040

Acquisition charges 3,273 3,975

Other non-interest expense 13,658 11,874

Total Non-interest expense 78,444 63,609

Earnings before income taxes 44,093 41,238

Income tax expense 6,922 9,348

Net income available to common shareholders $ 37,171 $ 31,890





Diluted earnings per common share $ 1.80 $ 1.90

Diluted earnings per common share, operating* $ 1.56 $ 2.07

*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 2020 of 2020 2020 2019 2019 of Total Total

Commercial,financial and $ 576,812 18.1% $ 629,497 $ 327,979 $ 332,600 $ 338,584 14.3%agricultural

Real estate - 330,070 10.4% 337,337 334,707 359,195 284,103 12.0%construction

Real estate - 1,191,514 37.5% 1,163,897 1,048,854 1,028,012 943,218 39.9%commercial

Real estate - 999,381 31.4% 978,372 828,378 814,282 724,860 30.7%residential

Lease Financing 2,478 0.1% 2,811 3,526 3,095 3,239 0.1%Receivable

Obligations ofStates & 13,345 0.4% 17,010 18,218 20,716 16,545 0.7%subdivisions

Consumer 42,332 1.3% 42,611 40,626 42,458 39,437 1.7%

Loans held for 22,482 0.8% 18,632 13,288 10,810 11,104 0.6%sale

Total loans $3,178,414 100% $3,190,167 $2,615,576 $2,611,168 $2,361,090 100%



COMPOSITION OF Sept 30, Percent June 30, Mar 31, Dec 31, Sept 30, PercentDEPOSITS 2020 of 2020 2020 2019 2019 of Total Total

Noninterest $ 482,236 11.4% $486,039 $340,606 $723,208 $642,054 23.3%bearing^

NOW and other^ 658,453 15.6% 601,195 478,526 941,598 926,704 33.5%

Money Market/ 2,456,504 58.1% 2,451,991 1,826,973 750,010 651,539 23.6%Savings^

Time Deposits ofless than 473,265 11.2% 499,406 462,808 479,386 401,549 14.5%$250,000

Time Deposits of 158,756 3.7% 178,259 168,881 182,331 139,489 5.1%$250,000 or more

Total Deposits $4,229,214 100% $4,216,890 $3,277,794 $3,076,533 $2,761,345 100%



Deposits Without Sept 30, Percent June 30,Reclassification 2020 of 2020 ^ Total

Noninterest $1,195,042 28.3% $1,189,766 bearing

Now and other 1,335,798 31.6% 1,347,324

Money Market/ 1,066,353 25.2% 1,002,135 Savings

Time Deposits ofless than 473,265 11.2% 499,406 $250,000

Time Deposits of 158,756 3.7% 178,259 $250,000 or more

Total Deposits $4,229,214 100% $4,216,890



ASSET QUALITY Sept 30, June 30, Mar 31, Dec 31, Sept 30, DATA 2020 2020 2020 2019 2019

Nonaccrual loans $ 37,300 $ 39,201 $ 37,751 $ 38,393 $ 35,175

Loans past due 2,396 1,009 2,393 2,715 2,116 90 days and over

Totalnonperforming 39,696 40,210 40,144 41,108 37,291 loans

Other real 5,202 5,471 6,974 7,299 9,974 estate owned

Nonaccrual - - - - 52 securities

Totalnonperforming $ 44,898 $45,681 $47,118 $48,407 $ 47,317 assets



Nonperformingassets to total 0.87% 0.90% 1.16% 1.23% 1.36% assets

Nonperformingassets to total 1.42% 1.44% 1.81% 1.86% 2.00% loans + OREO

ALLL tononperforming 86.30% 69.79% 51.82% 33.83% 34.98% loans

ALLL to total 1.09% 0.88% 0.80% 0.53% 0.56% loans



Qtr-to-date netcharge-offs $ 729 $ 346 $ 205 $ (15) $ 23 (recoveries)

Annualized QTDnet chg-offs 0.09% 0.04% 0.03% (0.002%) 0.004% (recs) to loans

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, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019

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 $ 616,168 $ 3,432 2.23% $ 605,626 $ 3,439 2.27% $ 560,613 $ 3,944 2.81% $ 556,004 $ 4,108 2.96% $ 494,184 $ 3,926 3.18%securitiesTax-exemptsecurities 341,550 2,513 2.94% 300,922 2,340 3.11% 224,212 1,821 3.25% 188,709 1,593 3.38% 127,750 1,108 3.47%

Total investmentsecurities 957,718 5,945 2.48% 906,548 5,779 2.55% 784,825 5,765 2.94% 744,713 5,701 3.06% 621,934 5,034 3.24%

in other banks 413,786 29 0.03% 321,559 19 0.02% 129,978 289 0.89% 80,612 37 0.18% 71,165 7 0.04%

Loans 3,165,653 40,999 5.18% 3,156,524 40,593 5.14% 2,602,340 36,005 5.53% 2,512,524 35,109 5.59% 2,343,392 32,480 5.54%

Total Interestearning assets 4,537,157 46,973 4.14% 4,384,631 46,391 4.23% 3,517,143 42,059 4.78% 3,337,849 40,847 4.90% 3,036,491 37,521 4.94%

Other assets 548,183 528,989 473,350 429,738 402,711

$ $ $ $ $Total assets 5,085,340 4,913,620 3,990,493 3,767,587 3,439,202

Interest-bearingliabilities: $ $ 4,912 0.50% $ $ 5,219 0.56% $ $ 5,413 0.71% $ $ 5,016 0.89% $ $ 5,061 0.95%Deposits 3,960,054 3,746,535 3,042,529 2,263,299 2,140,419

Borrowed Funds 115,935 265 0.91% 116,270 224 0.77% 145,267 917 2.53% 174,475 771 1.77% 95,241 451 1.89%

Subordinateddebentures 81,470 1,188 5.83% 80,736 1,176 5.83% 80,697 1,203 5.96% 80,658 1,213 6.02% 80,619 1,270 6.30%

Total interestbearing 4,157,459 6,365 0.61% 3,943,541 6,619 0.67% 3,268,493 7,533 0.92% 2,518,432 7,000 1.11% 2,316,279 6,782 1.17%liabilitiesOther liabilities 295,354 362,952 174,691 731,085 652,899

Shareholders' 632,527 607,127 547,309 518,070 470,024equityTotal liabilitiesandshareholders' $ $ $ $ $equity 5,085,340 4,913,620 3,990,493 3,767,587 3,439,202

Net interestincome (FTE)* $ 40,608 3.53% $ 39,772 3.56% $ 34,526 3.86% $ 33,847 3.78% $ 30,739 3.77%

Net interest margin (FTE)* 3.58% 3.63% 3.93% 4.06% 4.05%

Core net interestmargin* 3.41% 3.42% 3.65% 3.80% 3.86%

*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

Per Common Share Data Sept 30, June 30, Mar 31, Dec 31, Sept 30, 2020 2020 2020 2019 2019

Book value per common $ 29.82 $ 29.34 $ 29.49 $ 28.91 $ 27.92share

Effect of intangible 8.89 8.94 9.97 10.04 8.53assets per share

Tangible book value $ 20.93 $ 20.40 $ 19.52 $ 18.87 $ 19.39per common share



Diluted earnings per $ 0.55 $ 0.79 $ 0.44 $ 0.64 $ 0.71share

Effect of acquisition 0.01 0.11 0.04 0.14 0.04charges

Tax on acquisition - (0.03) (0.01) (0.03) (0.01)charges

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

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

Effect of Treasury - - - (0.04) -awards

Tax on Treasury awards - - - 0.01 -

Diluted earnings per $ 0.56 $ 0.52 $ 0.47 $ 0.72 $ 0.74share, operating



Year to Date

2020 2019

Diluted earnings per $ 1.80 $ 1.90 share

Effect of acquisition 0.16 0.24 charges

Tax on acquisition (0.03) (0.06) charges

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

Tax on gain on sale of .01 - land

Effect of Treasury - (0.01) awards

Tax on Treasury awards - -

Diluted earnings per $ 1.56 $ 2.07 share, operating



Year to Date

2020 2019

Net income available $ 37,171 $ 31,890 to common shareholders

Acquisition charges 3,273 3,975

Tax on acquisition (743) (887) charges

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

Tax on gain on sale of 157 - land

Treasury awards - (233)

Tax on Treasury awards - 59

Net earnings availableto common $ 32,215 $ 34,804 shareholders, operating



Three Months Ended

Average Balance Sheet Sept 30, June 30, Mar 31, Dec 31, Sept 30,Data 2020 2020 2020 2019 2019

Total average assets A $5,085,340 $4,913,620 $3,990,493 $3,767,587 $3,439,202

Total average earning B 4,537,157 $4,384,631 $3,517,143 $3,337,849 $3,036,492assets



Common Equity C $ 632,527 $ 607,127 $ 547,309 $ 518,070 $ 470,024

Less intangible assets 190,892 183,161 188,420 171,328 145,405

Total Tangible common D $ 441,635 $ 423,966 $ 358,889 $ 346,742 $ 324,619equity





Three Months Ended

Net Interest Income Sept 30, June 30, Mar 31, Dec 31, Sept 30,Fully Tax Equivalent 2020 2020 2020 2019 2019

Net interest income E $ 39,972 $ 39,180 $ 34,065 $ 33,444 $ 30,459

Tax-exempt investment (1,877) (1,748) (1,360) (1,190) (828)income

Taxable investment 2,513 2,340 1,821 1,593 1,108income

Net Interest Income F $ 40,608 $ 39,772 $ 34,526 $ 33,847 $ 30,739Fully Tax Equivalent



Annualized Net EInterest Margin / 3.52% 3.57% 3.87% 4.01% 4.01% B

Annualized Net FInterest Margin, Fully / 3.58% 3.63% 3.93% 4.06% 4.05%Tax Equivalent B



Total Interest Income, Fully Tax Equivalent

Total Interest Income $ 46,337 $ 45,799 $ 41,598 $ 40,444 $ 37,241

Tax-exempt investment (1,877) (1,748) (1,360) (1,190) (828)income

Taxable investment 2,513 2,340 1,821 1,593 1,108income

Total Interest Income, G $ 46,973 $ 46,391 $ 42,059 $ 40,847 $ 37,521Fully Tax Equivalent



Yield on Average GEarning Assets, Fully / 4.14% 4.23% 4.78% 4.90% 4.94%Tax Equivalent B



Interest IncomeInvestment Securities, Fully Tax Equivalent

Interest Income $ 5,309 $ 5,187 $ 5,304 $ 5,298 $ 4,752Investment Securities

Tax-exempt investment (1,877) (1,748) (1,360) (1,190) (828)income

Taxable investment 2,513 2,340 1,821 1,593 1,108Income

Interest IncomeInvestment Securities, H $ 5,945 $ 5,779 $ 5,765 $ 5,701 $ 5,034Fully Tax Equivalent



Average Investment I $ 957,718 $ 906,548 $ 784,825 $ 744,713 $ 621,934Securities



Yield on Investment HSecurities, Fully Tax / 2.48% 2.55% 2.94% 3.06% 3.24%Equivalent I



Three Months Ended

Core Net Interest Sept 30, June 30, Mar 31, Dec 31, Sept 30,Margin 2020 2020 2020 2019 2019

Net interest income $ 40,608 $ 39,772 $ 34,526 $ 33,847 $ 30,739(FTE)

Less purchase 1,853 2,157 2,336 2,026 1,296accounting adjustments

Net interest income,net of purchase J $ 38,755 $ 37,615 $ 32,190 $ 31,821 $ 29,443accounting adj



Total average earning $4,537,157 $4,384,631 $3,517,143 $3,337,849 $3,036,492assets

Add average balance ofloan valuation 11,501 10,651 12,237 12,252 13.679discount

Avg earning assets,excluding loan K $4,548,658 $4,395,282 $3,529,380 $3,350,101 $3,050,171valuation discount



Core net interest Jmargin / 3.41% 3.42% 3.65% 3.80% 3.86% K



Three Months Ended

Efficiency Ratio Sept 30, June 30, Mar 31, Dec 31, Sept 30, 2020 2020 2020 2019 2019

Operating Expense

Total non-interest $ 26,935 $ 28,070 $ 23,439 $ 24,960 $ 20,825expense

Pre-tax non-operating (238) (2,295) (740) (2,300) (705)expenses

Adjusted Operating L $ 26,697 $ 25,775 $ 22,699 $ 22,660 $ 20,120Expense



Operating Revenue

Net interest income, $ 40,608 $ 39,772 $ 34,526 $ 33,847 $ 30,739FTE

Total non-interest 8,794 15,680 6,474 7,574 7,103income

Pre-tax non-operating - (7,643) - (714) -items

Adjusted Operating M $ 49,402 $ 47,809 $ 41,000 $ 40,707 $ 37,842Revenue



Efficiency Ratio, Loperating / 54.04% 53.91% 55.36% 55.67% 53.17% M



Three Months Ended

Return Ratios Sept 30, June 30, Mar 31, Dec 31, Sept 30, 2020 2020 2020 2019 2019

Net income available N $ 11,917 $ 16,943 $ 8,311 $ 11,855 $ 12,272to common shareholders

Acquisition charges 238 2,295 740 2,300 705

Tax on acquisition (61) (518) (164) (461) (152)charges

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

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

Treasury awards - - - (714) -

Tax on Treasury awards - - - 181 -

Net earnings availableto common O $ 12,094 $ 11,234 $ 8,887 $ 13,161 $ 12,825shareholders,operating



Pre-Tax Pre-Provision Operating Earnings

Earnings before income P $ 14,910 $ 19,184 $ 9,998 $ 15,208 $ 15,763taxes

Acquisition charges 238 2,295 740 2,300 705

Provision for loan 6,921 7,606 7,102 850 974losses

Treasury Awards and - (7,643) - (714) -Gains

Pre-Tax, Pre-Provision Q $ 22,069 $ 21,442 $ 17,840 $ 17,644 $ 17,442Operating Earnings





Annualized return on Navg assets / 0.94% 1.38% 0.83% 1.26% 1.43% A

Annualized return on Oavg assets, oper / 0.95% 0.91% 0.89% 1.40% 1.49% A

Annualized pre-tax, Qpre-provision, oper / 1.74% 1.75% 1.79% 1.87% 2.03% A

Annualized return on Oavg common equity, / 7.65% 7.40% 6.50% 10.16% 10.91%oper C

Annualized return on Oavg tangible common / 10.95% 10.60% 9.91% 15.18% 15.80%equity, operating D



Mortgage Department

Net Interest Incomeafter provision for $ 142 $ 127 $ 119 $ 59 $ 200loan losses

Loan fee income 2,961 2,646 1,567 1,720 1,800

Salaries and employee (1,444) (1,246) (1,077) (975) (986)benefits

Other non-interest (110) (99) (152) (164) (134)expense

Earnings before income $ 1,549 $ 1,428 $ 457 $ 640 $ 880taxes

View source version on businesswire.com: https://www.businesswire.com/news/home/20201026005916/en/

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