More Related Content Similar to FBMS Burkenroad Report 2016 (20) 1.
March 29th, 2016
THE FIRST BANCSHARES
INCORPORATED
FBMS/NASDAQ
Continuing Coverage:
Big Bank Products, Small Bank Feel
Investment Rating: Market Outperform
PRICE: $ 15.62 S&P 500: 2,055.01 DJIA: 17,633.11 RUSSELL 2000: 1,109.08
Only a small percentage of loans tied to oil industry
Loan to deposit ratio begins to stabilize
Smart acquisitions target the growing southeast U.S.
Increasing return on assets remains management focus
Our 12‐month target price is $24.00.
Valuation 2015 A 2016 E 2017 E
EPS* $ 1.64 $ 1.92 $ 2.03
P/E 9.5x 8.1x 7.7x
CFPS $ 2.11 $ 2.96 $ 3.13
P/CFPS 7.4x 5.3x 5.0x
* Excluding non‐recurring items
Market Capitalization Stock Data
Equity Market Cap (MM): $ 84 52‐Week Range: $15.32 ‐ $19.32
Enterprise Value (MM): $ 126 12‐Month Stock Performance: ‐2.98%
Shares Outstanding (MM): 5.40 Dividend Yield: 0.96%
Estimated Float (MM): 4.60 Book Value Per Share: $ 19.14
6‐Mo. Avg. Daily Volume: 6,909 Beta: 0.34
Company Quick View:
Smart, growth‐minded bankers in the heart of Dixie. First Bancshares, a Hattiesburg,
Mississippi based bank, has 32 locations throughout Mississippi, Alabama, and Louisiana.
The bank offers investment accounts, interest and non‐interest bearing checking and saving
accounts, and credit and debit card service. In addition, the Company provides commercial
and consumer lending. First Bancshares specializes in loans to individuals for mortgages.
Company: www.thefirstbank.com
Analysts: Investment Research Manager:
Brigid Doherty Jianrui Zhao
Chris Sullivan
Ian Levy
Joe Bonner
Scott Merritt
The BURKENROAD REPORTS are produced solely as a part of an educational program of Tulane University's
Freeman School of Business. The reports are not investment advice and you should not and may not rely on
them in making any investment decision. You should consult an investment professional and/or conduct your
own primary research regarding any potential investment.
Wall Street's Farm Team
BURKENROADREPORTS
2. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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Figure 1: Five‐year Stock Price Performance
Source: Yahoo! Finance March 29, 2016
INVESTMENT SUMMARY
We give The First Bancshares, Inc. a rating of Market Outperform with a 12‐month target
price of $24.00 per share. To derive this target price, we used an analysis of the Company’s
historical price to book value ratio, discounted cash flow for banks analysis, and a price to
earnings analyses.
The First Bancshares is a publicly traded bank holding company for The First, A National
Banking Association. The First, headquartered in Hattiesburg, Mississippi, has 32 locations
across Mississippi, Alabama, and Louisiana. A map of the Company’s operations can be seen in
Figure 2. The Company strives to provide its customers with the breadth of products and
services comparable to those offered by large regional banks, while maintaining the quick
response and personal service of a locally owned and managed bank. As such, the Company
provides commercial and retail financial services to small to medium‐sized businesses and
individuals. Loans for construction and land development, commercial and industrial use, and
residential families are the largest predictors of future performance. As of December 31,
2015, the Company reported roughly $1.13 billion in assets, a 4% increase from 2014.
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Figure 2: Map of Current Locations
Source: FBMS Management March 31, 2016
Though the Company strives for 5‐7% organic growth annually, it expands its customer base
primarily through acquisitions of other banks. From 2009 to 2014, the Company enacted a
five‐year expansion plan which grew the bank from 9 to 32 locations across southern
Mississippi, southern Alabama, and southeastern Louisiana. As the Company continues to
expand, acquisitions become easier as smaller banks begin to suffer from changes in the
regulatory environment. Though the Company has an advantage over the smaller banks, it is
not immune to changes in the regulatory environment such as the potential for negative
interest rates. In order to maintain a competitive advantage, the Company must continue to
acquire smaller banks and expand.
Table 1: Historical Burkenroad Ratings and Prices
Date Price Rating Price Target
4/2/15 $16.00 Market Perform $17.00
INVESTMENT THESIS
We established a 12‐month target price of $24.00 and a rating of Market Outperform.
The First Bancshares, Inc. has both steady organic growth and growth by acquisitions of other
small banks. With the rapid decline of the energy industry, we expect the next acquisition to
be further away from areas closely tied to energy. The First Bancshares had a successful five
year plan beginning in 2009 that resulted in assets increasing from $478 million to $1.145
billion and return on assets increasing from 0.30% to 0.79%. Looking forward, management’s
goal is to achieve $2.5 billion in assets by 2021.
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Figure 3: Total Assets in Millions of Dollars
Source: Bloomberg March 29, 2016
Only a small percentage of loans tied to oil industry
Currently, the Company only has about $20 million, or less than 3% of its loan portfolio,
directly tied to falling oil prices. Furthermore, the overwhelming majority of the $20 million is
in two major loans to large players in the oil industry. Due to the small exposure to oil, the
drop in prices has not affected the Company and management does not see it becoming a
problem in the future.
The small amount invested into the oil industry can prove to be a competitive advantage for
First Bancshares. While some of its peers may have to increase their allowance for bad debt,
the management at the Company does not currently see this need.
Loan to deposit ratio begins to stabilize
The loan to deposit ratio (LTD) compares money received by a bank with money being paid
out. Too high of a ratio may mean the bank does not have enough cash, while too low a ratio
may show that the bank can be earning more. Over the past few years, First Bancshares has
budgeted for a LTD ratio of 85%. At the beginning of 2016, the Company had a LTD ratio that
had grown to 84%. After years of steady LTD growth, the LTD ratio is expected to level off
close to where it is now. If this ratio is maintained, future interest revenue is expected to grow
at a similar rate to deposits (see Figure 4).
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2009 2010 2011 2012 2013 2014 2015 2016
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Figure 4: Loan to Deposit Ratio
Source: Bloomberg March 29, 2016
Smart acquisitions target the growing southeastern U.S.
Throughout the past five years, the Company has expanded throughout the Gulf South
through acquisitions. The Company picked acquisition targets carefully by examining
fundamentals of the business and the economies in which the businesses operate. First
Bancshares buys‐out companies based in cities that have a fast growing population and
economic growth. So, with population levels in the southeast growing, the Company expects
to see deposits grow at a similar or even better rate than the Company has previously
experienced.
However, for the first time in three years, First Bancshares went through 2015 without an
acquisition. Consequently, the Company is eager to make an acquisition and expand in 2016.
Specifically, management is constantly looking for new acquisition targets with less than $500
million in assets in Mississippi, Alabama, Louisiana, and western Florida.
Increasing return on assets remains management focus
Over the past few years, management has received criticism for a return on assets (ROA)
below its Company peers. However, the low ROA has partially been due to the Company’s
acquisition expenses over the last couple of years.
Management is aware of this concern and has an attractive ROA target for the end of 2016
and 2017. With a current ROA of .79%, the Company plans to increase ROA to .85% in 2016
and above the peer average to .90% in 2017. Figure 5 shows ROA growth and the upward
trend over the last six years.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2013 2014 2015 2016
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Figure 5: Return on Assets
Source: Bloomberg March 29, 2016
VALUATION
We determined our 12‐month target price of $24.00 by calculating the average of three price
valuation methods: discounted cash flow (DCF) for Banks, price to earnings value (P/E) ratio
analysis, and price to tangible book value (P/TBV) ratio analysis. We determined this target
price by equally weighing the values we calculated for these three valuation methods. When
calculating our multiples, we decided to exclude MidSouth Bancorp because, unlike the First
and other companies in the peer group, this company has a large stake in the oil industry.
Relative Multiple Method: P/E
We decided to include the relative multiple valuation of P/E in our 12‐month target price
projection because P/E ratio is one of the most popular valuation measures used by investors
and analysts. The ratio denotes the multiple of the volume at which a stock is trading by each
dollar of earnings per share (EPS). In Table 1, the peer average is 13.82x, which is higher than
FBMS’ value of 11.35x. We then multiplied the peer average ratio by our predicted EPS for the
next four periods of $1.96, which yielded a 12‐month target price of $27.15.
Relative Multiple Method: P/TBV
In our second analysis, we applied the relative multiple valuation of the P/TBV model. This
model has been proven to be reliable, as the P/TBV ratio consists of the price of the security
over the total book value of a company’s assets. The P/TBV ratio represents the amount of
money per share the debtholders and shareholders would receive if a company were to
liquidate its physical assets. After calculating FBMS’ P/TBV multiple, we compared this value
to the peer average. The peer average and Company ratios are both 1.08x, meaning the price
is 1.08 times the earnings. This valuation method yielded a 12‐month target price of $22.19.
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
0.90%
2009 2010 2011 2012 2013 2014 2015 2016
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Discounted Cash Flow
The last valuation method that we used was a DCF analysis. We decided to include this
method because DCF attempts to measure the value created by a business directly and
precisely, for the value of a firm is ultimately derived from the inherent value of its future cash
flows to its stakeholders. DCF analysis allowed us to calculate the present value of our
projected five‐year net incomes, which we discounted by the Company’s weighted average
cost of capital (WACC). To derive the Company’s WACC of 8.20%, we utilized a 2.50% 20‐year
Treasury rate as risk‐free rate, a 5.70% market risk premium, and a beta of 1. The DCF analysis
resulted in a 12‐month target price of $21.76.
Figure 6:Valuation Results and Target Price
Source: Yahoo! Finance March 29, 2016
After conducting the three valuation methods, we equally weighed each valuation result and
set our 12‐month target price at $24.00. Figure 6 reveals that a gap exists between the
current share price and the projected prices stemming from these three valuation methods.
We consider the 12‐month target price to be set reasonably higher than the current price.
Finally, considering the Company’s historic reliance on acquisitions, we predict that FBMS will
have at least one acquisition in the upcoming year.
INDUSTRY ANALYSIS
The U.S. banking industry consists of institutions that primarily earn revenue through interest
on loans. These financial institutions earn profit primarily by the interest spread, or the
difference between the interest rate the banks receive on loans made and the interest rate
banks pay out on deposits. Banks also earn revenue through the trading of securities, charging
transaction fees on deposits, and potentially issuing its’ own securities.
Banks are organized in three categories: national, regional, or community banks. A national
bank is generally headquartered in a major financial city in the U.S. and engaged in a variety of
activities including commercial lending, auto loans, credit cards, international lending, and
foreign currency operations. Community banks tend to operate more locally but can still
operate across a few states. Community banks are generally differentiated through a deep
understanding of the financial needs of community members and strong local connections.
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Position in the Banking Industry
The First Bancshares, Inc. operates as a community bank in the Southeastern U.S. The
Company extends into three states, with 31 locations throughout Mississippi, Alabama, and
Louisiana. As of September 30, 2015, the Company reported total assets of $1.1 billion and
deposits totaling $964 million.
Drivers of the Community Banking Industry
The success of the Company is largely dependent on the regional economy. Gulf South state
economies depend largely on manufacturing, oil and gas, agriculture, and tourism. Low oil
prices affect the Louisiana economy, and have a negative impact on the Louisiana branches.
On a broad scale, the entire banking industry is impacted by actions of the Federal Reserve.
However, due to the rising interest rates, First Bank’s branches should see an increase in
revenue.
Regulations in the Banking Industry
At the federal level, banks are regulated by the Federal Deposit Insurance Corporation (FDIC),
the Office of the Comptroller of the Currency, and the Federal Reserve Board. On the state
level, state regulated charters monitor banks. The federal and state regulators work to
eliminate the banks’ right to privacy and the likelihood of fraud. Furthermore, the recent
passing of the Dodd‐Frank Act in 2010 increases banks’ transparency by requiring the
disclosure of public statements.
Threat of Entry
New entrants into First Bancshares’ market face two threats: 1) New, regional banks opening
in the southeast; and 2) Nation‐wide, major banks expanding into these areas.
Bank startups face many regulatory and capital requirements. Due to licensure laws, capital
requirements, access to financing, regulatory compliance, and security concerns, the present
threat of new entrants is relatively low. According to the FDIC, an average of 215 new banks
opened each year between 1977 and 2002. Due to mergers and bank failures, however, the
average number of total banks has decreased by roughly 253 a year in the same timeframe.
Because the industry deals with customers’ wealth and financial information, new banks find
it very difficult to enter the industry. Due to the nature of the industry, people are more
willing to place their money in major, well known banks that are considered trustworthy. The
banking industry also has gone through a transformation in which major banks seek to serve
all of a customer’s needs in the same location. Since a customer is more likely to allow one
bank to hold all of their accounts and fulfill their financial needs, this consolidation furthers
the role of trust as a barrier to entry. As a regional bank located only in the southeast, the
Company places a large emphasis on maintaining close, personal relationships with its
customers.
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While it is nearly impossible for new banks to enter the industry, it is also difficult for smaller
banks to open on a regional level. Considering the large number of major banks as well as
community banks available in the southeast, a new bank would have a hard time gaining
market share in this region.
Bargaining Power of Suppliers
The bargaining power of suppliers in the banking industry is relatively high. There are four
major suppliers of capital for banks: customer deposits, mortgages and loans, mortgage‐
backed securities, and loans from other institutions. By utilizing these four major suppliers,
the bank can have the necessary resources required to service the customers’ borrowing
needs while maintaining enough capital to meet withdrawal expectations. The power of the
suppliers is largely based on the markets and fluctuates. While capital might not pose a big
threat, the threat of suppliers luring away capital does. First Bancshares must consistently
maintain enough capital to serve its customers’ broad needs.
Bargaining Power of Buyers
Similarly, buyers have a great deal of bargaining power. Individual customers do not pose
much of a threat to the banking industry. One major factor affecting the power of buyers is
the relatively high cost of switching banks. If a person has one bank that services their banking
needs, mortgage, saving, checking, etc., it can be time consuming and expensive for an
individual to switch to another bank. In an attempt to lure customers from competitors, banks
will lower switching cost. However, the internet has greatly increased the power of the
customer in the banking industry by giving consumers the power to compare rates offered by
numerous banks.
On the other hand, large corporate clients have high bargaining power in the banking
industry. By offering better exchange rates, more services, and exposure to foreign capital
markets, financial institutions work extremely hard to lure and maintain high‐margin
corporate clients.
Availability of Substitutes
While the threat of substitutes are high within the banking industry, the largest threat of
substitution is among non‐financial competitors. Insurances, mutual funds, and fixed income
securities are some of the many financial services that are also offered by non‐banking
companies. Additionally, on the lending side of business, banks are seeing competition from
unconventional companies. Big name electronics, jewelers, car dealers, etc. tend to offer
preferred financing on “big ticket” items. These non‐banking companies offer lower interest
rates on payments than the customer would otherwise get from a traditional banking loan.
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Competitive Rivals
Competition among banks is often a race to determine which bank can offer both the most
attractive and efficient services. However, this often causes banks to experience a lower ROA
(return on assets). Given the nature of the industry, it is more likely to see further
consolidation because major banks tend to prefer to acquire or merge with other banks than
to spend money marketing and advertising.
Though First Bancshares has many competitors, the Company is differentiated in the banking
industry by targeting individuals and medium sized businesses looking for a close, personal
banking relationship. The Company intentionally avoids competing with many larger
institutions operating in the states in which it operates. The First Bancshares’ unique target
market lessens the competition facing the company in the banking industry.
ABOUT FIRST BANCSHARES
First Bancshares, Inc. (FBMS/NASDAQ) was incorporated on June 23, 1995, and serves as a
bank holding company for The First, A National Banking Association (“The First”). Located in
Hattiesburg, Mississippi, The First began operations on August 5, 1996 and began selling
stock on August 30, 1995. Since then, The First has aggressively expanded with the following
acquisitions: First National Bank of Wiggins, 2006; eight Whitney Bank branches, 2011; the de
novo expansion into Ocean Springs, 2013; First National Bank of Baldwin County, 2013; the
acquisition of Bay Bank in Mobile, Alabama, 2014; and the most recent acquisition of The
Mortgage Connection, LLC in December 2015. With 32 locations in South Mississippi, South
Alabama, and Louisiana, the Company engages in general commercial and retail banking
characterized by personalized service and local decision‐making, emphasizing the banking
needs of small and medium‐sized businesses, professional concerns, and individuals.
Products
First Bancshares provides commercial and retail banking services for small to medium sized
businesses and individuals. These services include checking accounts, savings accounts, time
deposits, and individual retirement accounts. The Company serves as a direct distributor that
offers commercial secured and unsecured loans for working capital, business expansion,
purchases of equipment, and the refinancing of mortgages. Loans for car payments, personal
investing, education, real estate construction and acquisition, and home improvement are
also available. The Company provides an online banking service that allows clients to stay up
to date on their accounts and loans.
Competition
First Bancshares competes with both local and national banks. Direct competitors are
regional banks in the southeast. The three biggest direct competitors are Home Bancorp
(HBCP), Bancorp South, Inc. (BXS), and Auburn National (AUBN). Among these banks, First
Bancshares is the smallest, with a market capitalization of $87.2 million.
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Competitive Advantage
The First prides itself on customer service. Because it is a small, local bank, The First is able to
give each client more attention than larger banks and ensure that the proper products and
services are provided.
Corporate Strategy
The strategy of First Bancshares has remained relatively constant throughout the last five
years. With a short term goal to increase net income and build value for investors, The First
has a long term goal of expanding to cities within the region that have had an increase in
population and average wages over the last ten years. The Company will continue to look for
potential expansion locations with similar demographics, as acquisition targets are still
plentiful. In 2015, The First identified over 100 possible acquisition targets in states in which
it operates.
Latest Developments
In recent years, First Bancshares has had many major developments. In 2009, the Company
enacted the beginning of its “Tri‐State Expansion Strategy Five Year Plan.” The Company
began branch expansion in growing areas of Mississippi, Alabama, and Louisiana, and ended
2009 with less than $500 million in assets. In 2010, when Whitney Bank merged with Hancock
Bank, and in 2011, the Company acquired eight Whitney Bank branches in Mississippi,
totaling $179 million in deposits. In 2013, the Company had a successful private placement
and sold securities totaling $20 million. Additionally, in 2013, the Company acquired First
National Bank of Baldwin County, which brought in $187 million in assets. First Bancshares
acquired BCB Holding Co. of Mobile (Bay Bank) and secured four locations to total ten
locations and $250 million in deposits in “Mobile MSA.” Furthermore, in 2014, the Company
opened loan production offices in Baton Rouge and Slidell, Louisiana. By 2014, the Company
ended its second quarter with over $1 billion in assets operating in only three states. In
December 2015 the Company acquired The Mortgage Connection, LLC with two locations in
Brandon, Mississippi and Madison, Mississippi.
Recent Stock Performance
Since 2010, First Bancshares’ stock has surged due to a recovering economy. Over the last six
years, the stock has gone up over 140% to $15.62 (see Figure 7).
12. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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Figure 7: Return Compared to Major Indexes
Source: First Bancshares 2016 10‐K March 30, 2016
PEER ANALYSIS
While First Bancshares has many competitors, three main factors were considered in selecting
the Company’s main peers: products, market capitalization, and area of operation. First, the
Company’s main source of revenue comes from loan interest and commercial banking
services. Second, First Bancshares main peers operate in the southeast U.S. Thus, the peer
group consists of five of the main small to mid‐sized competitors: Renasant Corporation,
MidSouth Bancorp, Home Bancorp, Citizens Holding, and Auburn National, as seen in Table 2.
Table 2: Peer Analysis
Company Market Cap. P/E P/BV NIM Div. Yield ROE ROA
The First
Bancshares
87.2 M 11.35x 1.08x 3.75% 0.87% 8.69% 0.77%
Renasant Corp 1240 M 16.43x 1.22x 4.37% 2.14% 7.75% 0.99%
MidSouth Bancorp 89.19 M 7.43x .53x 4.26% 4.68% 6.12% 0.66%
Home Bancorp 184.33 M 14.22x 1.11x 4.44% 1.41% 7.86% 0.91%
Citizens Holding 111.15 M 14.64x 1.32x 3.14% 4.15% 9.12% 0.78%
Auburn National 98.01 M 12.47x 1.22x 3.03% 3.24% 10.11% 0.94%
Peer Average 345 M 12.75x 1.08x 3.85% 3.12% 8.19% 0.86%
Source: Yahoo! Finance and bankregdata.com March 29, 2016
Renasant Corp (RSNT/Nasdaq)
Based in Tupelo, Mississippi, Renasant Corp. specializes in banking, insurance, and wealth
management. Renasant has over $5.8 billion in assets and operates in Misssissippi, Tennessee,
Alabama, and Georgia. Most recently, Renasant made changes to management by electing a
new president.
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2010 2011 2012 2013 2014 2015
FBMS NASDAQ Composite NASDAQ Bank Index
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MidSouth Bancorp (MSL/NYSE)
MidSouth Bancorp has over 60 branches throughout Louisiana and Texas. The company offers
commercial banking and investment opportunities to its customers. In addition, MidSouth
offers loans to individuals and to businesses including real estate and industrial sectors. In the
third quarter of 2015, MidSouth had almost $2 billion in assets.
Home Bancorp, Inc (HBCP/Nasdaq)
With the acquisition of Louisiana Bancorp in September of 2015, Home Bancorp finished the
fiscal year with over $1.5 billion in assets. Headquartered in Lafayette, Louisiana, the company
has 22 branches located throughout Louisiana.
Citizens Holding Company (CIZN/Nasdaq)
With 23 locations throughout Mississippi, Citizens Holding Company has $960 million in
assets. It is the parent company to The Citizens Bank, which is also headquartered in
Philadelphia, Mississippi. In November of 2015, Citizens Holding increased the cash dividend
to $0.24 per share.
Auburn National Bancorporation, Inc. (AUBN/Nasdaq)
Auburn National was found in 1907 as a holding company to AuburnBank, located in Auburn,
Alabama. Auburn National’s main source of revenue comes from interest on loans given to
individuals and small to mid‐sized businesses. In September of 2015, Auburn had $817 million
in total assets. Auburn National currently has ten branches all located within the state of
Alabama.
MANAGEMENT PERFORMANCE AND BACKGROUND
First Bancshares’ management team will play a key role in the Company’s continued success.
In 2009, M. Ray “Hoppy” Cole was named Chief Executive Office (CEO) of The First, A National
Banking Association and First Bancshares. Mr. Cole was named CEO by Board Chairman David
E. Johnson. Mr. Johnson continued as Chairman of the Board and carried‐out newly‐
expanded responsibilities of that office. When commenting on the transition, Mr. Johnson
stated that market conditions and growth within the bank brought about the need to
separate the critical duties of the CEO and Chairman of the Board to ensure protection to the
Company’s shareholders. E. Ricky Gibson is currently the independent Chairman of the Board
and Dee Dee Lowery was appointed to Chief Financial Officer, Executive Vice President of the
Company in 2014. The Company continues to rapidly expand, but the management team still
encourages developing intimate relationships with all of its customers.
Return on Invested Capital
Return on invested capital (ROIC) measures operating performance against available capital
resources. ROIC is often used to evaluate management’s ability to generate returns for
shareholders. Though ROIC is a good indicator of a management’s performance, other
industry specific metrics offer a more comprehensive view of a company’s performance.
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E. Ricky Gibson, 58
Chairman of the Board
E. Ricky Gibson is an independent Chairman of the Board of The First Bancshares, Inc. Mr.
Gibson serve as Chairman of the Board and has been a Director of the Company since 1995.
He has also served as President and Owner of N&H Electronics, Inc., a wholesale electronics
distributor since 1988 and of Mid‐South Electronics, a wholesale consumer distributor since
1993.
M. Ray “Hoppy” Cole, Jr., 54
President, CEO
M. Ray Cole is President, Chief Executive Officer, and Director of The First Bancshares, Inc.
Prior to joining the bank in September 2002, Mr. Cole was Secretary/Treasurer and Chief
Financial Officer of the Headrick Companies, Inc. for 11 years. Mr. Cole began his career with
the First National Bank of Commerce in New Orleans, Louisiana and held the position of
Corporate Banking Officer from 1985 to 1988. In December of 1988, Mr. Cole joined Sunburst
Bank in Laurel, Mississippi serving as Senior Lender and later as President of the Laurel office.
He served as director of the Company twice from 1998 to 1999, and then from 2001 through
the present. He also served as a Director of the Company’s Laurel bank prior to consolidation
and currently serves on the board of the bank.
Dee Dee Lowery, 49
Executive VP, CFO
Dee Dee T. Lowery, CPA, is Chief Financial Officer, Executive Vice President of the Company.
Prior to joining the bank in February 2005, Mrs. Lowery was Vice President and Investment
Portfolio Manager of Hancock Holding Company for four years. Mrs. Lowery was appointed
CFO in 2005.
Other Executives
The First has several other top executives, each with at least 14 years of experience.
Ion Mixon‐ Senior Vice President, Risk Manager
Chris Ryals‐ Executive Vice President, Chief Operating Officer
Carol Daniel‐ Executive Vice President, Credit Administrator
Hayden Mitchell‐ Executive Vice President, Chief Retail Banking Office
David Bush‐ Executive Vice President, Private Banking Manager
Ray Wesson‐ President, Southern Region
Eric Waldron‐ President, Northern Region
Wade Neth‐ President, Alabama Region
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SHAREHOLDER ANALYSIS
First Bancshares, Inc. had 5.40 million shares outstanding with a market capitalization of $84
million as of March 29th
, 2016. The majority, or 35%, of the Company’s shareholders are
institutional investors, while insiders own 11% of the Company’s shares. The largest non‐
industrial shareholder is a David Bomboy with 2.04% of shares outstanding. The Company’s
largest shareholder is The Banc Funds Company, L.L.C. with 8.44% of shares outstanding (as
seen in Tables 3 and 4).
Table 3: Largest Shareholders ‐ Individuals
Holder Name Shares % Outstanding
Bomboy, David W 110,995 2.04%
Gibson, E. Ricky 93,244 1.72%
McMurry, Fred A. 83,885 1.54%
Seidenburg, J. Douglas 82,656 1.52%
Parker, Ted E. 70,813 1.30%
Chancellor, Michael 67,300 1.24%
Cole, M. Ray Jr. 62,620 1.19%
Source: Bloomberg March 29, 2016
Table 4: Largest Shareholders ‐ Companies
Holder Name Shares % Outstanding
Banc Funds Company, L.L.C. (The) 458,730 8.44%
Mendon Capital Advisor 353,031 6.50%
Burnham Asset Management 304,385 5.60%
JCSD Capital, LLC 290,395 5.36%
Stieven Capital Advisors, L.P. 235,041 4.33%
Manulife Asset Management 210,000 3.87%
Basswood Capital Management 184,953 3.40%
RMB Capital Management, LLC 139,254 2.56%
Vanguard Group, Inc. (The) 62,250 1.15%
Pinnacle Holdings, LLC 55,666 1.02%
Source: Bloomberg March 29, 2016
The large amount of institutional holdings makes the Company’s stock considerably less liquid.
However, the large number of companies with shares shows that investors see long, stable
growth in the Company’s future.
16. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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RISK ANALYSIS AND INVESTMENT CAVEATS
First Bancshares (The First) faces several risks that may have a potentially negative effect on
business. Some of these risks apply to the broader banking industry, while other risks are
unique to First Bancshares and the niche markets in which it operates.
Vulnerability to Certain Sectors of the Economy
A significant portion of First Bancshares loan portfolio is secured by real estate and energy. If
real estate values decline and oil prices continue to stay at record lows, The First could suffer
greatly. If the real estate values depreciate beyond a certain point, the collateral value of the
portfolio and the revenue stream from those loans could come under stress and possibly
require additional loan loss accruals, negatively impacting the Company’s earnings.
Difficult Market Conditions
Dramatic housing market declines in recent years have caused home prices to fall and have
increased foreclosures, unemployment, and under‐employment. If these events occur again,
it would negatively impact First Bancshares’ credit performance of its mortgage loans and
would result in significant write‐downs of asset values. Since many lenders are still wary
about the stability of financial markets, lenders have reduced funding capital, including to
other financial institutions. Further market turmoil and tightening of credit could lead to a
lack of consumer confidence and a widespread reduction of business activity.
General Economic Condition in the Areas of Operations
A sudden or severe downturn in the economies of Mississippi, Louisiana, or Alabama may
affect the ability of customers to meet loan payment obligations on a timely basis. The local
economic conditions in these areas have a direct impact on the Company’s commercial, real
estate, and construction loans. In addition, the local economy has an effect on both the
ability of the borrowers to pay back these loans as well as the value of the collateral securing
these loans. Further, adverse economic conditions in these states could cause customers to
withdraw their deposit balances, which would cause a strain on the bank’s liquidity.
Interest‐Rate Risk
First Bancshares’ assets and liabilities are primarily monetary, and as a result, the Company is
subject to significant risks connected to changes in interest rates. The bank’s profitability is
largely dependent upon net interest rate. Net interest rate is the spread between the cost of
borrowing and the interest rate a bank can earn on its’ money. Unexpected movements in
interest rates could cause net interest margins to decrease, subsequently decreasing net
interest income. Such changes could also adversely affect the valuation of the bank’s assets
and liabilities. The Company’s current one‐year interest rate sensitivity position is slightly
asset sensitive, but a gradual increase in interest rates during the next 12 months should not
have a significant impact on net interest income during that period.
17. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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The difference between interest rates charged on interest‐earning assets and interest rates
paid on interest‐bearing liabilities may be affected by changes in the market interest rate.
Changes in relationships between interest rate indices, and/or changes in the relationships
between long‐term and short‐term market interest rates may be a factor as well. A change in
this difference might result in an increase in interest expense relative to interest income, or a
decrease in the Company’s interest rate spread.
Changes in Monetary Policies
First Bancshares’ operations are affected by credit policies of monetary authorities,
particularly the Board of Governors of the Federal Reserve System. In view of changing
conditions in the national economy and in the money markets, particularly in light of the
continuing threat of terrorist attacks, unrest in Eastern Europe, and the current military
operations in the middle east, the Company cannot predict possible future changes in
interest rates, deposit levels, loan demand or the Company’s business and earnings. The
response of the U.S. to developing global conflict may result in currency fluctuations,
exchange controls, market disruptions, or other adverse effects.
Risk of Natural Disasters
First Bancshares’ market areas are susceptible to natural disasters such as hurricanes and
tornados. Natural disasters can disrupt operations, result in damage to properties that may
be securing loan assets, and can negatively affect the local economies in which the bank
operates. The Company cannot predict the impact of possible disasters on operations or
economies. But, such events could cause a decline in loan originations, a decline in the value
or destruction of property securing the loans, and an increase in the risk of delinquencies,
foreclosures, or loan losses.
Subject to various Federal and State Entities
The Company and The First are subject to the regulations of the Securities and Exchange
Commission (SEC), the Consumer Financial Bureau, the Federal Reserve Board, the Federal
Deposit Insurance Corporation (FDIC), and the Options Clearing Corporation (OCC). New
regulations issued by these agencies may adversely affect the bank’s ability to carry on its
business activities. The Company and the First are also subject to the accounting rules and
regulations of the SEC and the Financial Accounting Standards Board. Changes in accounting
rules could adversely affect the reported financial statements or results of operations of the
Company. In addition, new regulations may also require extraordinary efforts or additional
costs to implement.
Reliance on Financial Markets
The Company’s common stock is listed and traded on the NASDAQ stock market. Although
the Company anticipates that its capital resources will be adequate for the foreseeable future
to meet its capital requirements, at times it may depend on the liquidity of the NASDAQ stock
market to raise equity capital. If the market should fail to operate, or if conditions in the
capital markets are adverse, the Company may be constrained in raising capital.
18. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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The Dodd‐Frank Wall Street Reform and Consumer Protection Act
The Dodd‐Frank Act was signed into law in 2010. It implements financial regulatory reforms
impacting most aspects of the financial services industry. The Act created the Financial
Stability Oversight Council to oversee and coordinate the efforts of the U.S. financial
regulatory agencies to stabilize the financial industry. It also decreased banks’ profits by
increasing compliance costs. In particular, the Act regulates many consumer rights and
increases the security of financial information. Finally, Dodd‐Frank gave the FDIC more power
in managing the Deposit Insurance Fund and raised the minimum reserve ratio that a bank
must have to 1.35%.
Risk of Greater Loan Loss
The Company is exposed to the risk that its customers will be unable to repay their loans in
accordance with their terms and that any collateral securing the payment of their loans may
not be sufficient to assure repayment. FBMS has many loans involving real estate and
construction and if the economy goes into a recession, the credit worthiness of the
companies with these loans may decrease. The value of the real estate serving as security for
repayment of the loan would also decrease in this scenario.
Acquisitions of other Companies
First Bancshares has grown primarily through acquisitions over the past few years. Investors
could potentially perceive acquisitions of companies as a poor investment. Acquisitions can
increase turnover with both customers and employees, and thus, increase the cost of
operating the new business. Difficulty with integrating new businesses may make profitability
hard to achieve.
Industry Competition
The Company operates in an industry with fierce competition. Many of the competitors are
much larger and may have more resources available. FBMS faces competition from
commercial banks, savings and loan associations, credit unions, internet banks, finance
companies, mutual funds, insurance companies, brokerage and investment banking firms,
and other financial intermediaries. Additionally, some of the Company’s competitors are not
banks and are not subject to the same regulatory rules as the Company.
Changes in Technology
New technology‐driven products and services are rapidly being introduced in the financial
service industry. The Company will need to use technology competitively in the future to
ensure it is not left behind.
19. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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FINANCIAL PERFORMANCE AND PROJECTIONS
Since 2012, First Bancshares has rapidly grown through acquisitions. Due to the lack of
involvement in the oil industry, the Company has managed to maintain steady growth, unlike
other banks in the Gulf South.
By excluding quarters that involved an acquisition, we were able to determine a growth rate
to predict future revenue. In order to keep revenue from growing to unattainable amounts,
the growth rate used declines over time and begins to level off around 4%. In addition, we
used a historical correlation analysis to determine not only the driving factor in loans but also
the percentage of each type of loan. We decided to keep these historic percentages constant
throughout our projections and divide up the loans accordingly.
After speaking with management, we accounted for some of the Company’s long‐term goals
in our financial projections. First, over the past few years, the loan to deposit ratio has grown
at a steady rate. However, even though management budgets for loans to equal 85% of
deposits, we project it to remain somewhat constant near the current level of 79%. Secondly,
we took into account management’s intention to achieve a return on asset (ROA) ratio of
over 1%.
While calculating our projections we made a few assumptions. The biggest assumption is that
the Gulf South will continue to see a growing population. This growing population signals an
improving economy and will provide the Company with new potential customers. Our second
assumption relates to acquisitions and future growth. Even though the Company has gone
through many acquisitions in the past five years, we cannot assume: 1) continued
acquisitions; or, 2) the size of future acquisitions.
Investing and Financing Activities
Acquisitions comprise the primary investing activity of the Company. Since 2011, the
Company has gone through multiple acquisitions, increasing its presence in Mississippi,
Alabama, and Louisiana. To finance the acquisitions, the Company has taken two steps. First,
the Company has reinvested excess cash; second, the Company has issued new stock.
SITE VISIT
On February 12, 2016 our analyst team traveled to Hattiesburg, Mississippi, a little over two
hours northeast of New Orleans, to meet with the executives of The First Bancshares. After
arriving, we were shown to the Company’s board room where we met Chief Financial Officer
(CFO) Donna “Dee Dee” T. Lowery. President and Chief Executive Officer (CEO) M. Ray
“Hoppy” Cole entered the board room about 15 minutes later after concluding his meeting
with Blake Wilson, the President and CEO of the Mississippi Economic Council.
20. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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After a brief discussion with Ms. Lowery, Mr. Cole explained how the Company has changed
since 2009. In 2009 the Company had assets $478 million and nine locations. Mr. Cole
explained that many of the members of the Board of Directors (including himself) wanted to
increase the value of the Company because many of the members were the original investors
in the Company. According to Mr. Cole, the Company considered going private, but the
advantages to being a public firm were too great. These advantages, according to Mr. Cole,
include access to capital and constant pressure to perform.
The First Bancshares has grown significantly since 2009, through both organic growth and
acquisitions. The Company targets an organic growth rate of 5‐7% annually and believes this
is achievable in its largest markets. The Company has also been active with acquisitions. Both
Mr. Cole and Ms. Lowery implied that an acquisition in the next year is more than likely. They
also indicated that the ideal size of an acquisition for the Company is less than $500 million in
assets.
Even though the Company doubled in size in the last five years, Mr. Cole and Ms. Lowery
believe that growing the Company to $2‐2.5 billion in the next five years is a reasonable goal.
Acquiring smaller banks is a smart strategy for the Company because, as Mr. Cole explained,
acquiring a bank around $250 million in assets increases the Company’s assets by 20‐25%.
A key area of focus for the Company is maintaining its small bank feel. The Company believes
that growing the bank allows it to achieve efficiencies of scale. Still, the Company also hopes
to remain nimble, poised, and responsive enough to move with the market.
With a little over $1 billion in assets, the Company is still a relatively small bank. Mr. Cole
stressed that the growth through acquisition has allowed the Company to have price and
product offerings competitive to Bancorp South and Whitney. Mr. Cole also said that The
First is small enough that normal customers can still call him with specific questions.
The biggest risks to the Company moving forward are millennials and mobile platforms. At
this time the Company believes that the convenience of individual branches is still important
in the markets where the Company operates. Executives believe the Company’s target
customers want to personally know the people where they deposit their money. Mr. Cole
also stated that the Company’s customers like to come in to open their accounts but then
generally use the online banking features afterwards.
The Company considers oil prices going down as a net benefit. According to Mr. Cole the
drivers of the bank are education, healthcare, tourism, and gambling. He believes, in
particular, that lower fuel prices will lead to increased expendable income and help the
Company.
Ms. Lowery attributes the high increase in net income to two things. First, the Company went
a full year without acquisitions, decreasing expenses. Second, the Company benefitted from
the successful Bay Bank acquisition.
21. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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Mr. Cole believes the future of banking points to more industry consolidation with banks
under $500 million in assets. He also believes that technology levels the playing field between
mid‐size and large banks and will continue to do so in the future.
Site Visit Photo
INDEPENDENT OUTSIDE RESEARCH
While conducting our research, we spoke to two analysts following First Bancshares. The
analysts reinforced information given to us by Mr. Cole and Ms. Lowery during our site visit.
In their professional opinion, it is strategic to be a bank in the Gulf South with a small stake in
energy. We learned from one of the analysts that falling gas prices may even mean more
revenue for the Company. Southern Mississippi has a market for tourism and cheaper road
travel has the potential to bring more people to the state on vacation. If this market
continues to grow, the population in the Gulf South could rise supplying the Company with
more possible clients. Additionally, the analysts reinforced that it is important for a bank as
small as First Bancshares to continue growing in order to keep up with local competitors and
rising compliance costs.
Additionally, we utilized several online resources. Information from the Federal Deposit
Insurance Corporation gave us well‐organized, concise outlines of the Company’s basic
financials. We used the Federal Financial Institutions Examination Council’s website to
identify the Company’s Tier I and Tier II Basel liquidity ratios (11.04% and 11.81%,
respectively), and to compare the Company to similar competitors. We also used applications
such as Yahoo! Finance to track the Company’s stock history. Other online resources used
were Bloomberg, Google Finance, BankRegData.com, and the SEC filings from the Company’s
website.
22. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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ANOTHER WAY TO LOOK AT IT
ALTMAN Z‐SCORE
Edward Altman created the Z‐score analysis in 1968 in order to measure the insolvency of
companies. While it has been proven to be fairly accurate, it is not applicable to banks.
PETER LYNCH EARNINGS MULTIPLE VALUATION
Peter Lynch, the author of One Up on Wall Street, introduces the earning multiple valuation
technique to help simplify the investment decision process. The method helps tell if a stock is
over or under priced by comparing the stock price to a line that is equal to the 12‐month
trailing earnings per share (EPS) times 15. At any given time, if the stock price is greater than
the value of the line, then the stock is overvalued. Similarly, if the price is less than the value
of the line, the stock is undervalued.
First Bancshares currently has a stock price of $15.62 and a 12‐month trailing EPS of $21.60.
Since the trailing EPS is greater than the stock price, Peter Lynch would say the stock is
undervalued.
Figure 8 shows the historical values of the Company’s 12‐month trailing EPS and the stock
price. In the last seven years, there have been periods over time where the stock has been
overvalued as well as undervalued.
Figure 8: Earnings Multiple Valuation
Source: Yahoo! Finance March 14, 2016
0
5
10
15
20
25
30
35
1‐Apr‐09 1‐Apr‐10 1‐Apr‐11 1‐Apr‐12 1‐Apr‐13 1‐Apr‐14 1‐Apr‐15
12‐Month Trailing EPS Stock Price
23. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
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WWBD?
What Would Ben (Graham) Do?
Benjamin Graham, the author of The Intelligent Investor, is considered to be the “father of
value investing.” The Ben Graham Analysis is used to analyze the value of a company, past
growth performance, and future growth potential.
The analysis consists of eight different “hurdles” created by Graham. If a company overcomes
four hurdles, it is considered an attractive investment. Six of the hurdles measure value and
two measure growth.
Based on 2015 numbers, First Bancshares passed five hurdles, including three value hurdles
and two growth hurdles. If Graham were given the opportunity to invest in the Company
today, he would.
Figure 9: Ben Graham Dial
24. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org) March 29, 2016
24
Earnings per share (ttm) 1.60$ Price: 15.62$
Earnings to Price Yield 10.27%
10 Year Treasury (2X) 3.62%
P/E ratio as of 2011 7.7
P/E ratio as of 2012 7.4
P/E ratio as of 2013 13.8
P/E ratio as of 2014 11.7
P/E ratio as of 2015 11.4
Current P/E Ratio 9.7
Dividends per share (ttm) 0.15$ Price: 15.62$
Dividend Yield 0.96%
1/2 Yield on 10 Year Treasury 0.91%
Stock Price 15.62$
Book Value per share as of 12/31/15 19.14$
150% of book Value per share as of 12/31/15 28.72$
Interest‐bearing debt as of 12/31/15 120,631$
Book value as of 12/31/15 103,436$
Current assets as of 12/31/15 ‐$
Current liabilities as of 12/31/15 ‐$
Current ratio as of 12/31/15 #DIV/0!
EPS for year ended 2015 1.62$
EPS for year ended 2014 1.25$
EPS for year ended 2013 1.06$
EPS for year ended 2012 1.29$
EPS for year ended 2011 0.93$
EPS for year ended 2015 1.62$ 30%
EPS for year ended 2014 1.25$ 18%
EPS for year ended 2013 1.06$ ‐18%
EPS for year ended 2012 1.29$ 39%
EPS for year ended 2011 0.93$
Stock price data as of M arch 29th, 2016
Yes
Hurdle # 3: A Dividend Yield of 1/2 the Yield on 10 Year Treasury
Yes
Hurdle # 4: A Stock Price less than 1.5 BV
Yes
Hurdle # 5: Total Debt less than Book Value
No
Hurdle # 6: Current Ratio of Two or More
N/A
Hurdle # 7: Earnings Growth of 7% or Higher over past 5 years
Yes
Hurdle # 8: Stability in Growth of Earnings
No
The First Bancshares, Inc (FBMS)
Ben Graham Analysis
Hurdle # 1: An Earnings to Price Yield of 2X the Yield on 10 Year Treasury
Yes
Hurdle # 2: A P/E Ratio Down to 1/2 of the Stocks Highest in 5 Yrs
25. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org)March 29, 2016
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The First Bancshares, Inc (FBMS)
Quarterly and Annual Earnings
In thousands
For the period ended 2013 A 2014 A 2015 A31‐Mar‐16 E30‐Jun‐16 E30‐Sep‐16 E31‐Dec‐16 E 2016 E1‐Apr‐17 E1‐Jul‐17 E1‐Oct‐17 E1‐Jan‐18 E 2017 E
Interest Income:
Loans, included fees25,736$ 30,276$ 34,242$ 8,907$ 9,019$ 9,131$ 9,245$ 36,302$ 9,361$ 9,478$ 9,596$ 9,716$ 38,152$
Securites:
Taxable3,279 3,884 3,948 995 1,042 1,053 1,099 4,188 1,012 1,060 1,072 1,118 4,262
Tax exempt2,140 2,072 1,854 637 667 675 704 2,683 648 679 687 716 2,730
Federal funds sold62 53 63 13 13 13 13 53 13 13 14 14 54
Interest on deposits in banks100 85 93 91 91 98 98
Total interest income31,318 36,371 40,201 10,552 10,741 10,873 11,152 43,318 11,035 11,230 11,368 11,662 45,295
Interest expense:
Deposits2,300 520 762 546 553 560 567 2,226 574 581 588 596 2,340
Other borrowings1,849 1,800
Interest on borrowed funds618 603 645 156 156 156 156 623 156 156 156 156 623
Total interest expense2,917 2,973 3,207 702 709 716 723 2,849 730 737 744 752 2,962
Net interest income28,401 33,398 36,994 9,850 10,032 10,157 10,430 40,469 10,305 10,493 10,624 10,910 42,333
Provision for loan losses1,076 1,418 410 465 301 414 419 1,598 424 430 435 440 1,729
Net interest income after provision for loan losses27,325 31,980 36,584 9,386 9,731 9,743 10,011 38,871 9,881 10,064 10,189 10,470 40,603
Noninterest income:
Service charges on deposit accounts3,979 4,262 5,014 1,114 1,117 1,120 1,123 4,473 1,128 1,134 1,139 1,145 4,546
Other service charges, commissions and fees2,187 2,163 1,546 684 749 594 81 2,108 684 749 594 81 2,108
Gain on sale of investment securities
Bank owned life insurance income152 370 409 409 409 409 409
Gain on sale of premises133
Gain(loss) on other real estate(77) (85) (247)
Other841 1,094 734 1,200 1,200 1,200 1,200
Total noninterest income7,083 7,803 7,589 1,798 1,866 1,714 2,812 8,189 1,812 1,883 1,734 2,834 8,263
Noninterest expenses:
Salaries and employee benefits14,855 17,462 15,089 4,920 4,920 4,920 4,920 19,681 5,117 5,117 5,117 5,117 20,468
Employee benefits3,447
Occupancy and equipment expense3,919 4,526 4,621 1,153 1,153 1,153 1,153 4,610 1,176 1,176 1,176 1,176 4,703
Supplies and printing455 498 300 498 498 498 498
Professional and consulting fees2,433 1,618 1,332 1,656 1,656 1,656 1,656
Marekting and public relations451 445 497 395 395 395 395
FDIC and OCC assessments767 938 966 799 799 799 799
ATM expense763
Telephone631
Other5,285 5,246 4,515 1,776 1,827 2,094 (1,049) 4,649 1,776 1,827 2,094 (1,049) 4,649
Total noninterest expense28,165 30,734 32,161 7,849 7,900 8,167 8,372 32,288 8,069 8,120 8,387 8,592 33,167
Income before income taxes6,243 9,050 12,011 3,335 3,697 3,290 4,450 14,772 3,624 3,826 3,536 4,712 15,699
Income tax expense (benefit)1,604 2,436 3,213 893 991 882 1,192 3,958 971 1,025 947 1,262 4,206
Net income (loss) 4,639 6,614 8,798 2,441 2,707 2,409 3,258 10,815 2,653 2,801 2,589 3,450 11,493
Preferred dividends424 363 342 86 86 86 86 342 86 86 86 86 342
Net income applicable to common stock4,215$ 6,251$ 8,456$ 2,356$ 2,621$ 2,323$ 3,172$ 10,472$ 2,567$ 2,716$ 2,503$ 3,364$ 11,150$
Net income (loss) per common share:
Basic
Net income (loss)1.07$ 1.27$ 1.64$ 0.44$ 0.48$ 0.43$ 0.58$ 1.92$ 0.47$ 0.50$ 0.46$ 0.61$ 2.03$
Diluted
Net income (loss)1.06$ 1.25$ 1.62$ 0.43$ 0.48$ 0.42$ 0.58$ 1.91$ 0.47$ 0.49$ 0.45$ 0.61$ 2.02$
15.37%12.55%
Dividends per common share0.15$ 0.15$ 0.0375$ 0.0375$ 0.0375$ 0.0375$ 0.0375$ 0.1500$ 0.0400$ 0.0400$ 0.0400$ 0.0400$ 0.1600$
Weighted average shares outstanding:
Basic 4,319 5,228 5,403 5,414 5,424 5,434 5,444 5,444 5,454 5,463 5,473 5,482 5,482
Diluted 4,373 5,271 5,442 5,462 5,472 5,482 5,492 5,492 5,502 5,511 5,521 5,530 5,530
2017 E2016 E
27. The First Bancshares Inc. (FBMS) BURKENROAD REPORTS (www.burkenroad.org)March 29, 2016
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The First Bancshares, Inc (FBMS)
Quarterly and Annual Balance Sheets
In thousands
As of31‐Dec‐13 A31‐Dec‐14 A31‐Dec‐15 A31‐Mar‐16 E30‐Jun‐16 E30‐Sep‐16 E31‐Dec‐16 E31‐Dec‐16 E1‐Apr‐17 E1‐Jul‐17 E1‐Oct‐17 E1‐Jan‐18 E31‐Dec‐17 E
Cash and due from banks24,080$ 30,333$ 23,635$ 52,077$ 57,862$ 62,949$ 69,084$ 69,084$ 74,369$ 80,345$ 85,722$ 92,169$ 92,169$
Interest‐bearing deposits with banks14,205 13,899 17,303 17,303 17,303 17,303 17,303 17,303 17,303 17,303 17,303 17,303 17,303
Federal funds sold967 386 321 321 321 321 321 321 321 321 321 321 321
Total cash and cash equivalents39,252 44,618 41,259 69,701 75,487 80,573 86,709 86,709 91,994 97,970 103,347 109,793 109,793
Securities held‐to‐maturity, at amortized cost8,438 8,193 7,092 7,092 7,092 7,092 7,092 7,092 7,092 7,092 7,092 7,092 7,092
Securities available‐for‐sale, at fair value244,051 254,746 239,732 239,732 239,732 239,732 239,732 239,732 239,732 239,732 239,732 239,732 239,732
Other securities5,534 7,234 8,135 8,135 8,135 8,135 8,135 8,135 8,135 8,135 8,135 8,135 8,135
Total securities258,023 270,174 254,959 254,959 254,959 254,959 254,959 254,959 254,959 254,959 254,959 254,959 254,959
Loans held for sale3,680 2,103 3,974 1,058 1,058 1,058 1,058 1,058 1,058 1,058 1,058 1,058 1,058
Loans579,623 704,531 772,515 757,810 767,283 776,874 786,585 786,585 796,417 806,372 816,452 826,658 826,658
Allowance for loan losses(5,728) (6,095) (6,747) (6,886) (6,863) (6,949) (7,036) (7,036) (7,124) (7,213) (7,303) (7,394) (7,394)
Loans, Net573,895 700,540 769,742 751,982 761,478 770,983 780,607 780,607 790,352 800,218 810,207 820,322 820,322
Premises and equipment32,072 34,810 33,623 33,563 33,546 33,528 33,509 33,509 33,490 33,471 33,451 33,431 33,431
Interest receivable3,292 3,659 3,953 4,295 4,057 4,224 4,228 4,228 4,492 4,242 4,416 4,421 4,421
Cash surrender value6,593 14,463 14,872 14,872 14,872 14,872 14,872 14,872 14,872 14,872 14,872 14,872 14,872
Other real estate3,083 3,083 3,083 3,083 3,083 3,083 3,083 3,083 3,083 3,083 3,083
Goodwill10,621 12,276 13,776 13,776 13,776 13,776 13,776 13,776 13,776 13,776 13,776 13,776 13,776
Other assets13,463 13,229 9,864 9,768 9,672 9,576 9,481 9,481 9,398 9,315 9,232 9,150 9,150
Total assets940,890$ 1,093,768$ 1,145,131$ 1,155,999$ 1,170,930$ 1,185,574$ 1,201,224$ 1,201,224$ 1,216,415$ 1,231,906$ 1,247,344$ 1,263,807$ 1,263,807$
Current liabilities:
Deposits
Noninterest‐bearing173,794$ 201,362$ 189,445$ 196,327$ 198,806$ 201,288$ 203,801$ 203,801$ 206,345$ 208,920$ 211,529$ 214,169$ 214,169$
Interest‐bearing606,177 691,413 727,250 780,273 790,126 799,989 809,975 809,975 820,086 830,323 840,689 851,183 851,183
Total Deposits779,971 892,775 916,695 976,600 988,932 1,001,277 1,013,776 1,013,776 1,026,431 1,039,244 1,052,217 1,065,353 1,065,353
Interest payable400 316 246 212 213 213 216 216 223 224 224 227 227
Borrowed funds52,000 89,450 110,321 58,986 58,986 58,986 58,986 58,986 58,986 58,986 58,986 58,986 58,986
Subrodinated debentrues10,310 10,310 10,310 10,310 10,310 10,310 10,310 10,310 10,310 10,310 10,310 10,310 10,310
Other liabilities13,101 4,701 4,123 4,123 4,123 4,123 4,123 4,123 4,123 4,123 4,123 4,123 4,123
Total liabilities855,782 997,552 1,041,695 1,050,231 1,062,564 1,074,908 1,087,410 1,087,410 1,100,072 1,112,886 1,125,860 1,138,998 1,138,998
Stockholders' equity:
Preferred stock17,103 17,123 17,123 17,123 17,123 17,123 17,123 17,123 17,123 17,123 17,123 17,123 17,123
Common stock, $1 par value:5,123 5,343 5,403 5,403 5,403 5,403 5,403 5,403 5,403 5,403 5,403 5,403 5,403
Additional paid in capital42,086 44,420 44,650 44,830 45,010 45,190 45,370 45,370 45,550 45,730 45,910 46,090 46,090
Retained earnings22,509 27,975 35,625 37,777 40,195 42,314 45,282 45,282 47,632 50,129 52,413 55,558 55,558
Accumulated other comprehensive income(1,249) 1,818 1,099 1,099 1,099 1,099 1,099 1,099 1,099 1,099 1,099 1,099 1,099
Treasury stock(464) (464) (464) (464) (464) (464) (464) (464) (464) (464) (464) (464) (464)
Total stockholders' equity85,108 96,216 103,436 105,768 108,366 110,665 113,813 113,813 116,343 119,020 121,484 124,809 124,809
Total liabilities and stockholders' equity940,890$ 1,093,768$ 1,145,131$ 1,155,999$ 1,170,930$ 1,185,574$ 1,201,223$ 1,201,223$ 1,216,415$ 1,231,906$ 1,247,344$ 1,263,807$ 1,263,807$
2017 E2016 E
