The First Bancshares(FBMS) - 2024 Q1 - Quarterly Report

Financial Performance - Net income available to common shareholders for Q1 2024 was $20.6 million, an increase of 26.8% from $16.3 million in Q1 2023[143] - Net interest income for Q1 2024 decreased by $7.6 million, or 11.7%, totaling $57.3 million compared to $64.9 million in Q1 2023[145] - Non-interest income increased by $67 thousand in Q1 2024 compared to Q1 2023[148] - Non-interest income for Q1 2024 was $12.679 million, slightly up from $12.612 million in Q1 2023, with interchange fee income contributing $4.195 million[162] - Non-interest expense decreased to $43.425 million in Q1 2024 from $45.670 million in Q1 2023, with salaries and employee benefits accounting for 56.5% of total expenses[162] - The provision for income taxes was $6.0 million, representing 22.4% of earnings before income taxes for Q1 2024, compared to $4.6 million or 22.0% in Q1 2023[166] Asset and Liability Management - Total assets as of March 31, 2024, were $7.957 billion, a decrease of $36.4 million from $7.993 billion at December 31, 2023[151] - Loans decreased by $28.8 million to $5.144 billion, or 0.6%, during the first three months of 2024[151] - Deposits increased by $244.2 million to $6.721 billion as of March 31, 2024, compared to $6.476 billion at December 31, 2023[151] - The investment portfolio had a net unrealized loss of $127.6 million at March 31, 2024, compared to a loss of $137.6 million at the same time in 2023[149] - The investment portfolio increased by $10.6 million, or 0.6%, to $1.745 billion as of March 31, 2024, with a net unrealized loss of $127.6 million[170] - Total assets reached $8.006 billion as of March 31, 2024, slightly up from $8.003 billion at the end of 2023[156] Interest Rate and Yield Analysis - The net interest margin for Q1 2024 was 3.20%, down from 3.63% in Q1 2023, reflecting a decrease of 43 basis points[146] - The average yield on earning assets increased by 63 basis points, from 4.49% in Q1 2023 to 5.12% in Q1 2024[150] - Interest expense on average interest-bearing liabilities increased by 141 basis points, from 1.24% in Q1 2023 to 2.65% in Q1 2024[150] - The average yield on loans increased to 6.11% in Q1 2024 from 5.45% in Q1 2023, while the net interest margin decreased to 3.20% from 3.63%[156] - The yield on investment securities increased to 2.48% in Q1 2024 from 2.31% in Q1 2023[243] - The company's one-year cumulative GAP ratio is approximately 149.0%, indicating asset sensitivity to interest rate changes[248] Credit Quality and Loan Performance - Non-performing assets (NPAs) decreased to $17,704 thousand at March 31, 2024, down from $19,010 thousand at December 31, 2023, representing a reduction of $1,306 thousand[187] - The allowance for credit losses (ACL) was $54,032 thousand, or 1.05% of loans held for investment (LHFI), remaining stable compared to December 31, 2023[190] - Nonaccrual loans totaled $10,961 thousand at March 31, 2024, an increase of $271 thousand from December 31, 2023[186] - The ratio of annualized net charge-offs to total loans was 0.006% for the quarter ended March 31, 2024, compared to 0.061% for the previous quarter[187] - Total charge-offs for the quarter were $740 thousand, while total recoveries amounted to $667 thousand, resulting in net loan charge-offs of $73 thousand[193] - The provision for credit losses for the three months ended March 31, 2024, was $0, compared to $10,500 thousand for the same period in 2023[193] Capital and Equity Position - The Company had total shareholders' equity of $959.9 million at March 31, 2024, an increase of $10.9 million, or 1.1%, from $949.0 million at the end of 2023[218] - The Company’s estimated uninsured deposits increased to $2.410 billion at March 31, 2024, representing 35.9% of total deposits[211] - The Company's liquidity ratio was 14.6% as of March 31, 2024, exceeding the internal policy guideline of 10% minimum[206] - The Total Capital Ratio for the Company was 15.2% as of March 31, 2024, above the minimum required of 10.0%[223] - The Company’s Tier 1 Leverage Ratio was 10.8% as of March 31, 2024, above the minimum required of 5.0%[223] - Total consolidated equity capital at March 31, 2024, was $959.9 million, representing approximately 12.1% of total assets[227] Strategic Initiatives and Future Outlook - The Company received $6.2 million from the Community Development Financial Institutions Fund to expand lending activities in low- or moderate-income communities[163] - The Company authorized a new share repurchase program for 2024, allowing the purchase of up to $50 million in common stock[220] - The Company had outstanding BTFP debt of $110.0 million with pledged securities valued at $327.5 million as of March 31, 2024[215] - The capital conservation buffer under Basel III rules is fully phased-in at 2.5% since January 1, 2019[225] - Management believes both the Bank and the Company met all capital adequacy requirements as of March 31, 2024[226] - The Company uses non-GAAP financial measures to supplement performance evaluation, including operating net earnings and core net interest margin[239] Regulatory and Compliance - There were no changes in internal control over financial reporting during the fiscal quarter ended March 31, 2024[255] - The Company recorded no provision for credit losses on OBSC exposures for the three months ended March 31, 2024, compared to $500 thousand for the same period in 2023[196]