FBSI First Bancshares, Inc. (MM)

First Bancshares, Inc. (OTCQB:FBSI), the holding company for First Home Savings Bank ("Bank"), today announced its financial results for the fourth quarter and for its fiscal year ended June 30, 2012.

For the quarter ended June 30, 2012, the Company had net income of $100,000, or $0.06 per share – diluted, compared to a net loss of $1.9 million, or $(1.26) per share – diluted for the comparable period in 2011. The net loss for the year ended June 30, 2012 was $1.4 million, or $(0.92) per share – diluted, compared to a net loss of $4.1 million, or $(2.65) per share – diluted for the year ended June 30, 2011. Net income for the quarter ended June 30, 2012, as compared to the net loss for the quarter ended June 30, 2011, was attributable to decreases in the provision for loan losses and in non-interest expense, and to an improvement in non-interest income. These improvements were partially offset by a decrease in net interest income. The reduction in the net loss for the year ended June 30, 2012 compared to the year ended June 30, 2011, was attributable to decreases in the provision for loan losses and in non-interest expense, and to an improvement in non-interest income. These improvements were partially offset by a decrease in net interest income. The provision for loan losses and write-downs for impairment on real estate owned decreased for the quarter and year ended June 30, 2012 compared to the comparable periods in 2011.

During the quarter ended June 30, 2012, net interest income decreased by $272,000, or 17.7%, to $1.3 million from $1.5 million during the quarter ended June 30, 2011. This decrease was the result of a decrease in interest income of $352,000, or 18.0%, which was partially offset by a decrease in interest expense of $80,000, or 19.0%. The decrease in both interest income and interest expense was primarily the result of a significant decrease in market interest rates between the two periods.

Non-interest income improved by $580,000 to $866,000 during the 2012 quarter from $286,000 during the 2011 quarter. This change was the result of an increase of $584,000 in profit on the sale of securities available-for-sale and $24,000 in earnings from Bank Owned Life Insurance ("BOLI"). These increases were partially offset by decreases of $36,000, or 14.7%, and $5,000, or 100.0%, in service charges and other fee income and gain on the sale of loans, respectively. Service charge income has been decreasing during the last couple of years as a result of newly imposed regulatory changes and restrictions, and customers managing their accounts more carefully in the existing economic climate. The Company did not own any BOLI in fiscal 2011, and the increase in BOLI earnings was attributable to the purchase of BOLI during fiscal 2012.

During the quarter ended June 30, 2012, there was no provision for loan losses, compared to a provision of $466,000 during the quarter ended June 30, 2011. The allowance for loan losses was $1.8 million, or 1.86% of gross loans at June 30, 2012 compared to $2.0 million, or 2.03% of gross loans at June 30, 2011. Total non-performing assets at June 30, 2012 were $6.8 million, a decrease of $3.7 million from total non-performing assets of $10.5 million at June 30, 2011.

Non-interest expense decreased by $1.3 million, or 38.5%, to $2.0 million for the quarter ended June 30, 2012, compared to $3.3 million for the quarter ended June 30, 2011. There were decreases of $990,000, or 70.1%, in write-downs on impairment on real estate owned, $26,000, or 7.6%, in occupancy and equipment, $82,000, or 53.7%, in professional fees, $62,000, or 50.0%, in deposit insurance premiums, and $148,000, or 34.3%, in other non-interest expense during the 2012 quarter compared to the 2011 quarter. These decreases were offset by an increase of $34,000, or 4.1%, in compensation and benefits during the 2012 quarter compared to the 2011 quarter.

During the year ended June 30, 2012, net interest income decreased by $893,000, or 14.5%, to $5.3 million from $6.2 million during the year ended June 30, 2011. This decrease was the result of a decrease in interest income of $1.5 million, or 18.2%, which was partially offset by a decrease in interest expense of $613,000, or 29.1%. The decrease in both interest income and interest expense was primarily the result of a significant decrease in market interest rates between the two periods.

During fiscal 2012, non-interest income increased by $251,000, or 17.3%, to $1.7 million from $1.4 million during fiscal 2011. This increase was primarily the result of an increase of $80,000, or 100.0%, in income on BOLI and an increase of $397,000, 126.1%, in gain on the sale of securities. These positive changes were partially offset by decreases of $180,000, 17.6%, in service charges and other fee income, $16,000, or 66.5%, in gain on the sale of loans, $12,000, or 37.8%, in net gain on the sale of real estate owned and other repossessed assets and $42,000, or 36.0%, in other non-interest income.

During the year ended June 30, 2012, the provision for loan losses increased by $900,000, or 76.1%, to $282,000 from $1.2 million during the year ended June 30, 2011. During fiscal 2012, the allowance for loan losses decreased by $170,000 to $1.8 million from $2.0 million at June 30, 2011. The decrease during fiscal 2012 was the result of net charge-offs of $453,000, which was partially offset by the $282,000 provision for loan losses.

Non-interest expense decreased by $1.9 million, or 19.3%, during fiscal 2012 to $8.0 million from $9.9 million during fiscal 2011. The decrease in non-interest expense was primarily the result of decreases in write-downs for impairment on real estate owned of $1.1 million, or 48.8%, occupancy and equipment expense of $44,000, or 3.3%, professional fees of $203,000, or 26.6%, deposit insurance premiums of $298,00, or 64.0%, and in other non-interest expense of $424,000, or 24.3%.  These decreases were partially offset by an increase of $122,000, or 3.7%, in compensation and benefits. The decrease in deposit insurance premiums was the result of a decrease in deposit balances and an upward adjustment to the prepaid deposit insurance premiums.

Total consolidated assets at June 30, 2012 were $193.4 million, compared to $209.3 million at June 30, 2011, representing a decrease of $15.9 million, or 7.6%. Stockholders' equity at June 30, 2012 was $16.3 million, or 8.4% of assets, compared with $18.1 million, or 8.6% of assets, at June 30, 2011. Book value per common share decreased to $10.53 at June 30, 2012 from $11.65 at June 30, 2011. The decrease in equity was primarily attributable to the net loss of $1.4 million for the year ended June 30, 2012 and a negative change of $297,000, net of income taxes, in the market value of available-for-sale securities.

Net loans receivable decreased $296,000, or 0.3%, to $95.5 million at June 30, 2012 from $95.8 million at June 30, 2011. The decrease in loans receivable included decreases of $2.3 million, $613,000, $209,000, and $999,000, in single-family loans, commercial real estate loans, land loans and consumer loans, including second mortgages, respectively. These decreases were substantially offset by an increase of $3.7 million in commercial business loans. Customer deposits decreased $14.8 million, or 8.2%, to $165.9 million at June 30, 2012 from $180.7 million at June 30, 2011.

Non-performing assets decreased by $3.7 million, or 35.0%,  to $6.8 million at June 30, 2012 from $10.5 million at June 30, 2011.The decrease between June 30, 2011 and June 30, 2012 was the result of decreases in non-accruing loans of $226,000, and $3.8 million in real estate owned. These decreases were partially offset by an increase of $389,000 in impaired loans not past due. There were no accruing loans 90 days past due or repossessed assets on the books at either June 30, 2012 or June 30, 2011.

During the year ended June 30, 2012, the allowance for loan losses decreased $171,000 to $1.8 million from $2.0 million as of June 30, 2011, and the ratio of the allowance to gross loans decreased to 1.86% at June 30, 2012 from 2.03% at June 30, 2011.

First Bancshares, Inc. is the holding company for First Home Savings Bank, a FDIC-insured savings bank chartered by the State of Missouri that conducts business from its home office in Mountain Grove, Missouri, and eight full service offices in Marshfield, Ava, Gainesville, Sparta, Springfield, Crane, Kissee Mills and Rockaway Beach, Missouri.

The Company and its wholly-owned subsidiary, First Home Savings Bank, may from time to time make written or oral "forward-looking statements," including statements contained in its filings with the Securities and Exchange Commission, in its reports to stockholders, and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to the Company's beliefs, expectations, estimates and intentions that are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company's control. Such statements address the following subjects: future operating results; customer growth and retention; loan and other product demand; earnings growth and expectations; new products and services; credit quality and adequacy of reserves; results of examinations by our bank regulators, our compliance with the Company's Order to Cease and Desist and the Bank's Agreement with the Director of the Division of Finance of the State of Missouri, technology, and our employees. The following factors, among others, could cause the Company's financial performance to differ materially from the expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; inflation, interest rate, market, and monetary fluctuations; the timely development and acceptance of new products and services of the Company and the perceived overall value of these products and services by users; the impact of changes in financial services' laws and regulations; technological changes; acquisitions; changes in consumer spending and savings habits; and the success of the Company at managing and collecting assets of borrowers in default and managing the risks of the foregoing.

The foregoing list of factors is not exclusive. The Company does not undertake, and expressly disclaims any intent or obligation, to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

First Bancshares, Inc. and Subsidiaries
Financial Highlights
(In thousands, except per share amounts)
	Quarter Ended June 30,		Year Ended June 30,
	2012	2011	2012	2011
Operating Data:
Total interest income	$ 1,608	$ 1,960	$ 6,747	$ 8,253
Total interest expense	340	420	1,491	2,104
Net interest income	1,268	1,540	5,256	6,149
Provision for loan losses	--	466	282	1,182
Net interest income after provision for loan losses	1,268	1,074	4,974	4,967
Non-interest income	866	286	1,697	1,447
Non-interest expense	2,034	3,308	8,021	9,934
Income (loss) before income tax	100	(1,948)	(1,349)	(3,520)
Income tax provision	--	--	85	581
Net income (loss)	$ 100	$ (1,948)	$ (1,434)	$ (4,101)
Net income (loss) per share-basic	$ 0.06	$ (1.26)	$ (0.92)	$ (2.65)
Net income (loss) per share-diluted	$ 0.06	$ (1.26)	$ (0.92)	$ (2.65)
	At June 30,
Financial Condition Data:	2012	2011
Total assets	$ 193,417	$ 209,344
Loans receivable, net	95,521	95,817
Non-performing assets	6,812	10,474
Cash and cash equivalents	12,658	24,799
Investment securities, including certificates of deposit at other financial institutions	73,845	75,166
Customer deposits	165,858	180,661
Borrowed funds	9,846	9,417
Stockholders' equity	16,335	18,065
Book value per share	$ 10.53	$ 11.65

CONTACT: R. Bradley Weaver, President and CEO - (417) 926-5151