The First Bancshares(US:FBMS)2024-01-28 16:08Financial Data and Key Metrics Changes - Fourth quarter 2023 operating earnings were $18.7 million or $0.59 per share, down from $24 million or $0.76 per share in the previous quarter, a decrease of about $5.3 million [12][29] - Interest income increased by $3 million for the quarter, while interest expense rose by $6.1 million, leading to a core margin decrease of 13 basis points to 3.14% [12][34] - For the full year 2023, operating income increased by 41.6% to $96 million, with a return on assets (ROA) of 1.22% and a return on tangible common equity of 17.5% [29][32] Business Line Data and Key Metrics Changes - The company experienced $80 million in net loan growth, maintaining a 6.3% annualized growth rate consistent with the previous quarter [2][36] - Noninterest income was flat, down $1 million, primarily due to a decrease in interchange fee income, which was elevated in the previous quarter [13][109] - The cost of deposits increased by 33 basis points for the quarter, reflecting competitive pressures in the market [34][25] Market Data and Key Metrics Changes - The company reported a flat deposit base when excluding public funds, with a slight decrease of $17 million overall [31] - Louisiana market showed strong performance with $38 million in net loan growth for the quarter, while Tampa and Private Bank also performed well [40][46] - The competition for deposits remains intense, with some banks offering rates as high as 5.5% for CDs [18][98] Company Strategy and Development Direction - The company plans to focus internally in the first half of the year, with potential for acquisitions in the latter half [115] - A bond restructure was executed to reposition a portion of the portfolio to improve yield and earnings per share [28][35] - The company aims to stabilize margins in the second quarter of 2024 after anticipated compression in the first quarter [26][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan production in the second half of the year, with December showing strong origination numbers [36][39] - Credit quality metrics remained strong, with improvements in nonaccrual loans and charge-offs [48][49] - The company anticipates continued competition for deposits, particularly in rural markets catching up to metro markets [98][117] Other Important Information - The company reported a $9.7 million loss on the sale of securities, which was part of the bond restructure [35] - The liquidity position remains strong, with a loan-to-deposit ratio of 80% and significant borrowing capacity [35][38] Q&A Session Summary Question: How will the margin react over the course of the year with potential rate cuts? - Management indicated that margin compression was greater than expected, but they anticipate some expansion later in the year, potentially reaching 3.60% [57][72] Question: What is the outlook for operating expenses in 2024? - Management expects operating expenses to average around $44 million per quarter for 2024, slightly higher than previous estimates [101][102] Question: What is the company's M&A outlook? - Management noted that while the industry has been slow, they remain open to potential deals in the latter half of the year [115][108] Question: How is the competition for deposits evolving? - Management highlighted that competition remains intense across various markets, with both local banks and larger regional banks participating [98][117]