FIRST BANCSHARES INC /MS/ (FBMS)·Q2 2024 Earnings Summary

Executive Summary

• Q2 2024 delivered stable profitability and margin expansion: diluted EPS was $0.62 (operating EPS $0.63), net income was $19.7M, and NIM (FTE) expanded 6 bps to 3.32% while core NIM (FTE) rose 9 bps to 3.19% .
• Loan growth was strong (+$111M; ~8.6% annualized) on robust originations ($448.7M at 7.92% blended yield); deposit costs plateaued (1.78%), supporting the margin backdrop .
• Credit quality remained solid: NPAs at 0.26% of assets, NCOs at 0.04% of total loans, and ACL at 1.05% of loans; minor upticks in NPAs/nonaccrual were described as manageable .
• Strategic catalyst: On July 29, FBMS announced an all-stock merger into Renasant (exchange ratio 1.00 Renasant share per FBMS share), positioning for regional scale; shareholder votes and regulatory approvals remain pending .

What Went Well and What Went Wrong

What Went Well

• Margin tailwinds: “We were able to see margin expansion, and our margin expanded 6 basis points, and our core margin was up, actually 9 basis points” .
• Deposit costs stabilized: CFO noted the “cost of deposits remained the same at 1.78%,” with monthly cadence improving into June (1.74%) .
• Production strength and footprint breadth: Q2 new loan production of $448.7M at 7.92% yield; Mississippi contributed 35% of production and Georgia had its strongest quarter since the merger .

What Went Wrong

• Sequential earnings dip driven by higher provision: Net earnings of $19.7M ($0.62 diluted) were down $0.9M q/q due to a $1.7M provision associated with loan growth (vs. 0 in Q1) .
• Deposit contraction and expected public funds runoff: Deposits decreased $84.2M q/q (~1.3%), including $38.3M public funds, with further runoff expected through year-end .
• Loan yields down slightly from late-fee dynamics and competitive pricing: Loan yield decline was partly due to lower late fees and some competitive pressure; new originations still near ~7.90% .

Financial Results

Segment/KPI detail:

• Non-interest income composition (Q2 2024): Interchange 37%, Service charges 25%, Mortgage 7%, Other fees 31% .
• Loan portfolio mix (Q2 2024): Owner-occupied CRE 24%, Non-owner CRE 22%, 1–4 family 19%, C&I 13%, C&D 12%, Multifamily 3%, HELOC 2%, Other 4% .
• Credit metrics (Q2 2024): NPAs/Assets 0.26%; NCOs/Loans 0.04%; ACL/Loans 1.05% .
• Capital/liquidity: CET1 12.4%, TCE/TA 8.3%, leverage ratio 10.0%; loan/deposit ~79% .
• Production: Q2 new loan production $448.7M; blended yield 7.92% .
• Deposits: Cost 1.78%; cumulative IB deposit beta 43%; uninsured deposits 16.0% .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We were very pleased with the performance… Loans grew by $111 million… our margin expanded 6 bps, and our core margin was up 9 bps… credit quality remains strong… pretax pre-provision income was up $800,000 or 2.9%” .
• CFO: “We did report net earnings of $19.7 million, which was $0.62 on a diluted share… core margin did increase 9 bps to 3.19%… cost of deposits remained the same at 1.78%” .
• CLO: “Q2 new loan production of about $450 million… Regionally, Mississippi… 35% of the entire Bank’s production; Georgia… accounted for about a 1/4 of all new originations” .
• CCO: “NPAs ticked up about 3 bps to 26 bps… Net charge-offs at 4 bps… $1.7 million provision kept our ACL at 1.05%… CRE concentrations at 215% of RBC; C&D at 69%” .

Q&A Highlights

• Loan growth outlook: Expect mid single-digit back-half growth; full-year around ~4% pace given Q1–Q2 mix .
• Margin path: Flattish near Q2 levels; modeled conservatively amid brokered CD replacements and public fund runoff .
• Deposit dynamics: Monthly deposit costs showed improvement into June; fewer broad-based competitor campaigns in June .
• Loan yield drivers: Slight q/q decline largely from lower late fees vs. rate; competition influences pricing into high-7% .
• Public funds: Seasonal business remains material; expect >$100M runoff rest of year; not actively “running it off” .
• Securities repositioning: Management evaluating repeating the Q4-style trade if earn-back and yield pickup justify .
• M&A: Optionality remains, with continuing conversations; valuation helps, but focus on fit and relationships .

Estimates Context

• Wall Street consensus via S&P Global was unavailable for FBMS at the time of this analysis due to a missing mapping in the SPGI CIQ database, so we cannot quantify beat/miss versus Street for Q2 2024. If you’d like, we can source public consensus from alternative providers or retry once S&P mapping is updated [GetEstimates error].

Key Takeaways for Investors

• Margin stabilization appears underway as deposit costs plateau and core NIM (FTE) improves; management guides flattish NIM in H2, a constructive setup for spread-sensitive banks .
• Robust originations, diversified by region and asset type, support loan growth even as competition nudges pricing; pipeline indicators are favorable into H2 .
• Credit remains a differentiator: low NCOs, moderate NPAs, and balanced CRE/C&D exposures below interagency thresholds suggest resilience in a higher-for-longer backdrop .
• Watch seasonal public funds runoff and brokered CD rollovers; these are key moving pieces for balance sheet and NIM in Q3–Q4 .
• Potential securities repositioning could provide incremental NIM uplift if economics match Q4 trade; timing and earn-back remain critical .
• The announced merger into Renasant is a strategic catalyst, pending approvals; investors should monitor integration economics, share exchange mechanics, and pro forma capital/earnings accretion .
• Expense guidance is higher (~$176–$177M FY), but operating efficiency modestly improved in Q2; expense discipline and revenue mix will be key to sustaining ROATCE .

Appendix: Additional Detail

KPIs (Quarterly)

Notes: All metrics from company’s Q2 2024 earnings materials and transcripts as cited above. Non-GAAP metrics are defined and reconciled in the slide appendix .