The First Bancshares(US:FBMS)2020-05-11 19:14Financial Performance - The company reported net income available to common shareholders of $8.3 million for Q1 2020, up from $7.6 million in Q1 2019[150]. - Operating net earnings for Q1 2020 were $8.9 million, a decrease of 10.5% from $9.9 million in Q1 2019[151]. - Non-interest income rose to $6.5 million in Q1 2020, reflecting a 16.6% increase from $5.6 million in Q1 2019[153]. - The provision for income taxes was $1.7 million, or 16.9% of earnings before income taxes for Q1 2020, down from $2.0 million or 21.0% in Q1 2019[173]. - Total stockholders' equity increased by $12.3 million, or 2.3%, to $555.9 million as of March 31, 2020, driven by net earnings of $8.3 million and an increase in accumulated comprehensive income[227]. Interest Income and Margin - Net interest income increased by 25.6% to $34.1 million in Q1 2020, compared to $27.1 million in Q1 2019, driven by higher loan volumes[152]. - The net interest margin improved to 3.87% in Q1 2020 from 3.85% in Q1 2019[166]. - The Company reported net interest income fully tax equivalent of $34,526,000 for the three months ended March 31, 2020, up from $27,388,000 in the same period of 2019, representing a growth of 26.2%[247]. - The net interest margin fully tax equivalent for Q1 2020 was 3.93%, slightly up from 3.89% in Q1 2019[247]. Loan and Asset Management - Total assets increased to $4.054 billion at March 31, 2020, up from $3.935 billion at December 31, 2019[157]. - Loans increased slightly by 0.1% to $2.602 billion during the first three months of 2020[157]. - The Company's gross loans and leases totaled $2.616 billion at March 31, 2020, an increase of $4.4 million, or 0.2%, from December 31, 2019, attributed to organic loan growth[180]. - The loan portfolio composition includes real estate - commercial at $1.048 billion (40.1%), real estate - residential at $828.4 million (31.7%), and real estate - construction at $334.7 million (12.8%) as of March 31, 2020[181]. - Average gross loans and leases outstanding during the quarter were $2.6 billion, an increase from $2.2 billion in the same period last year[200]. Provision for Loan Losses - Provision for loan losses totaled $7.1 million in Q1 2020, a significant increase of 532% from $1.1 million in Q1 2019, largely due to anticipated economic effects of COVID-19[155]. - The total allowance for loan losses increased by $6.9 million from December 31, 2019, reflecting a proactive approach to potential credit losses due to the COVID-19 pandemic[200]. - The allowance for loan losses (ALLL) to total loans ratio increased to 0.80% at March 31, 2020, from 0.53% at December 31, 2019, primarily due to concerns regarding the economic effects of COVID-19[188]. - The provision for loan losses was $7.1 million for the quarter ended March 31, 2020, compared to $3.7 million at December 31, 2019, and $1.1 million at March 31, 2019[198]. Deposits and Liquidity - Deposits grew to $3.280 billion at March 31, 2020, compared to $3.082 billion at December 31, 2019[157]. - The Company’s total deposits reached $3.28 billion as of March 31, 2020, with a notable increase in money market accounts, which comprised 46.7% of total deposits[222]. - The Company has $1.093 billion available on lines of credit from the FHLB as of March 31, 2020, providing significant liquidity support[215]. - Approximately $363.4 million in loan commitments could be funded within the next three months, indicating strong future lending capacity[218]. Economic Impact and Future Outlook - The company anticipates that the COVID-19 pandemic may lead to a decline in demand for banking products and services, impacting future financial conditions[160]. - The Company increased its allowance for loan and lease losses in response to the economic impacts of the COVID-19 pandemic[161]. - The Company has many non-branch personnel working remotely while all branches remain open with limited access by appointment only[161]. Non-Interest Income and Expenses - Non-interest expense was $23.4 million for Q1 2020, an increase of 7.1% compared to the same period in 2019[156]. - Total non-interest expense for Q1 2020 was $23.439 million, up from $21.893 million in Q1 2019, with salaries and employee benefits accounting for $13.228 million[169]. - Non-interest income for Q1 2020 was $6.474 million, an increase from $5.554 million in Q1 2019, with service charges on deposit accounts contributing $1.914 million[168]. Asset Quality - Non-performing assets decreased to $44.7 million at March 31, 2020, from $46.1 million at December 31, 2019, a reduction of $1.4 million[188]. - Total nonaccrual loans as a percentage of total loans and leases net of unearned income was 1.45% at March 31, 2020, compared to 1.49% at December 31, 2019[188]. - The Company had $31.1 million in troubled debt restructurings (TDRs) at March 31, 2020, with $6.2 million performing as agreed with modified terms[186]. - Nonaccrual loans, including PCI loans, totaled $37.8 million at March 31, 2020, a decrease of $1.0 million from December 31, 2019[184]. Interest Rate Sensitivity - The Company's one year cumulative GAP ratio is approximately 156.0%, indicating an asset-sensitive position[253]. - If interest rates were to increase by 200 basis points, net interest income would likely improve by $2.7 million, or 2.3%[252]. - The economic value of equity (EVE) is sensitive to interest rate changes, with a projected decline in EVE under decreasing rate scenarios[258]. - A 200 bp decrease in interest rates would result in a -2.3% change in EVE, while a 400 bp increase would yield a 30.3% increase[260].