The First Bancshares(US:FBMS)2024-07-25 23:11Financial Data and Key Metrics Changes - The company reported a net income of $19.7 million, or $0.62 per diluted share, which was a decrease of $900,000 from the previous quarter due to a $1.7 million provision expense this quarter compared to zero in the last quarter [70][71] - Loans grew by $111 million, representing an 8.6% annualized increase, with originations at approximately $450 million, up from $253 million in the first quarter [52][41] - The cost of deposits increased by 1 basis point to 2.46%, while the yield on earning assets increased by 1 basis point [43][48] Business Line Data and Key Metrics Changes - The loan portfolio continues to reflect a strategic balance, with owner-occupied commercial real estate (CRE) at 24%, non-owner-occupied at 22%, and 1-4 family loans at 19% [18] - Construction lending and lines remained strong, with about 40% of loans originated reserved for future funding [44] - The average yield on loans decreased slightly from 8.12% to 7.92% for the quarter, with new originations coming in at approximately 7.90% [74][106] Market Data and Key Metrics Changes - The Mississippi team accounted for 35% of the bank's total production, while Georgia contributed about a quarter of all new originations [53] - The company continues to monitor credit quality closely, with net charge-offs at 4 basis points and a slight uptick in classified loans as a percentage of capital plus allowance for credit losses [16][55] Company Strategy and Development Direction - The company is focused on maintaining a strong liquidity position, with a loan-to-deposit ratio of 79% and $2 billion available for borrowing from the Home Loan Bank [51] - There is an ongoing effort to refine the small business platform and complete the 1071 implementation ahead of schedule [75] - The company is exploring potential M&A opportunities, maintaining relationships with other banks that fit its profile [15] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook for the second half of the year, expecting loan growth to remain in the mid-single-digit range [9] - The company anticipates that deposit costs will stabilize, with some pressure still present in the market [10][12] - Management noted that credit quality remains strong, with minimal issues related to delinquencies and charge-offs [4][41] Other Important Information - The efficiency ratio for the quarter was reported at 60.65%, with a return on average tangible common equity of 12.76% [43] - The company has seen good tenant stability in its office loan portfolio, with minimal lease renewal issues [39] Q&A Session Summary Question: What are the expectations for loan growth in the second half of the year? - Management indicated that loan growth is expected to remain in the mid-single-digit range, with a strong pipeline still in place [9][24] Question: Can you provide more details on deposit cost pressures? - Management noted that while there is still some pressure in the market, they have seen a decrease in deposit costs in recent months, with specific monthly rates provided [10][11] Question: What is the company's strategy regarding M&A? - The company is open to exploring M&A opportunities, particularly with banks that align with its strategic profile [15][37]