FBSI First Bancshares, Inc. (MM)

First Bancshares, Inc. (OTCQB:FBSI), the holding company for First Home Bank ("Bank"), today announced its financial results for the third quarter of its fiscal year ended June 30, 2014.

For the quarter ended March 31, 2014, the Company had net income of $180,000, or $0.11 per share – diluted, compared to net income of $141,000, or $0.09 per share – diluted for the quarter ended March 31, 2013. The $39,000 increase in net income for the quarter ended March 31, 2014 compared to the quarter ended March 31, 2013 is attributable to an increase of $74,000 in net interest income and an increase of $52,000 in non-interest income. This was partially offset by a decrease of $13,000 in gain on sale of investments and an increase of $74,000 in non-interest expense.

For the quarter ended March 31, 2014, net interest income increased by $74,000, or 6.3%, to $1.3 million from $1.2 million for the quarter ended March 31, 2013. This increase was the result of an increase in interest income of $26,000, or 1.7%, and a decrease of $48,000, or 15.5% in interest expense. The increase in interest income is attributable to growth in the Company's loan portfolio. The decrease in interest expense was primarily the result of a decrease in interest paid on FHLB advances and a decrease in repurchase agreements.

There was no provision for loan losses for the quarter ended March 31, 2014 and March 31, 2013. Classified loans at March 31, 2014 were $2.2 million compared to $4.5 million at March 31, 2013. The $2.3 million decrease in classified loans was the result of increased monitoring by management to identify and resolve issues with potential problem loans. The allowance for loan losses at March 31, 2014 was $1.6 million, or 1.5% of total loans, compared to $1.7 million, or 1.7% of total loans at March 31, 2013.

For the quarter ended March 31, 2014, the Company had a gain on sale of investments of $29,000, compared to gain on sale of investments of $42,000 during the quarter ended March 31, 2013. The $13,000 decrease during the quarter is attributable to the Company selling fewer securities than it did during the same quarter a year ago.

Non-interest income increased by $52,000, or 21.8%, to $290,000 for the quarter ended March 31, 2014 from $238,000 for the quarter ended March 31, 2013. The increase was attributable to an increase in gain on sale of other real estate owned ("OREO") of $102,000. This was partially offset by a decrease in gain on fixed assets of $21,000, a decrease in service charges of $8,000, a decrease in debit card and ATM fees of $7,000 and a decrease in other non-interest income items of $14,000.

Non-interest expense increased by $74,000, or 5.6%, to $1.4 million for the quarter ended March 31, 2014, compared to $1.3 million for the quarter ended March 31, 2013. The increase reflects an increase of $56,000 in premises and fixed assets and an increase of $79,000 in other non-interest expense items. These are partially offset by a decrease of $3,000 in salaries and employee benefits, a decrease of $12,000 in professional fees consisting of legal, accounting and consulting service related expenses, a decrease of $32,000 in FDIC insurance premiums and a decrease of $14,000 in OREO expenses.

For the nine months ended March 31, 2014, the Company had net income of $452,000, or $0.29 per share – diluted, compared to a net loss of $209,000, or $0.13 per share – diluted for the nine months ended March 31, 2013. The $661,000 increase in net income for the nine months ended March 31, 2014 compared to the nine months ended March 31, 2013 is attributable to an increase in net interest income of $144,000, an increase in non-interest income of $276,000 and a decrease in non-interest expense of $468,000. This was partially offset by a decrease of $227,000 in gain on sale of investments.

Net interest income increased by $144,000 for the nine months ended March 31, 2014 compared to the prior year. This was the result of an increase in interest income of $7,000, or 0.2% and a decrease in interest expense of $137,000, or 14.4%. The increase in interest income is attributable to increased loan demand and growth in the Company's loan portfolio. The decrease in interest expense is attributable to a decrease in interest paid on FHLB advances and a decrease in repurchase agreements.

There was no provision for loan losses for the nine months ended March 31, 2014 and March 31, 2013, which is attributable to the improved quality of the Company's loan portfolio. Classified loans have continued to decrease with increased monitoring by management that has resulted in the early identification and resolution of potential problem loans.

Gains on the sale of investments decreased by $227,000 to $79,000 for the nine months ended March 31, 2014 from $306,000 for the nine months ended March 31, 2013. The decrease is attributable to the decrease in the number of securities sold by the Company during the nine months ended March 31, 2014.

Non-interest income improved by $276,000, or 53.1%, to $796,000 for the nine months ended March 31, 2014 compared to $520,000 for the nine months ended March 31, 2013. This increase was the result of an increase in gain on sale of OREO of $336,000 and an increase of $21,000 in ATM fees. This was partially offset by a decrease of $27,000 in service charges, a decrease of $21,000 in gain on sale of fixed assets and a decrease of $33,000 in other non-interest income items.

Non-interest expense decreased by $468,000, or 10.0%, to $4.2 million for the nine months ended March 31, 2014 compared to $4.7 million for the nine months ended March 31, 2013. The decrease was the result of a decrease of $189,000 in salaries and employee benefits, a decrease of $42,000 in professional fees consisting of legal, accounting and consulting service related services, a decrease of $98,000 in FDIC insurance premiums, a decrease of $79,000 in OREO expenses and a decrease of $94,000 in other non-interest expense items. These were partially offset by an increase of $34,000 in premises and fixed assets.

Total consolidated assets at March 31, 2014 were $193.8 million, compared to $191.7 million at June 30, 2013, representing an increase of $2.1 million, or 1.1%. Stockholders' equity at March 31, 2014 was $13.9 million, or 7.2% of assets, compared with $14.25 million, or 7.4% of assets at June 30, 2013. The $374,000, or 2.6% decrease in stockholders' equity was attributable to an increase in the unrealized loss on available-for-sale securities, net of income taxes of $818,000 and share repurchases totaling $8,000. This was partially offset by net income for the nine months ended March 31, 2014 of $452,000.

Net loans receivable increased $10.4 million, or 10.9%, to $106.0 million at March 31, 2014 from $95.6 million at June 30, 2013. Deposits decreased $4.4 million, or 2.7%, to $168.2 million at March 31, 2014 from $163.8 at June 30, 2013. Retail repurchase agreements decreased $6.1 million or 95.0%, to $320,000 at March 31, 2014 from $6.4 million at June 30, 2013. The decrease in retail repurchase agreements is attributable to a large competitively bid account that was transferred during the quarter ended September 30, 2013. This transfer will save the Company approximately $40,000 a year in interest expense. FHLB advances increased $4.1 million, or 64.1%, to $10.5 million at March 31, 2014 from $6.4 million at June 30, 2013.

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

The Company and its wholly-owned subsidiary, First Home Bank, may from time to time make written or oral "forward-looking statements" 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, 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		Nine Months Ended
	March 31, 2014		March 31, 2014
	2014	2013	2014	2013
Operating Data:
Total interest income	$ 1,514	$ 1,488	$ 4,587	$ 4,580
Total interest expense	260	308	813	950
Net interest income	1,254	1,180	3,774	3,630
Provision for loan losses	--	--	--	--
Net interest income after provision for loan losses	1,254	1,180	3,774	3,630
Gain on sale of investments	29	42	79	306
Non-interest income	290	238	796	520
Non-interest expense	1,393	1,319	4,197	4,665
Income (loss) before taxes	180	141	452	(209)
Income tax expense	--	--	--	--
Net income (loss)	$ 180	$ 141	$ 452	$ (209)
Earnings per share	$ 0.11	$ 0.09	$ 0.29	$ (0.13)
	At	At
	March 31,	June 30,
Financial Condition Data:	2014	2013
Cash and cash equivalents (excludes CDs)	$ 8,900	$ 11,705
Investment securities (includes CDs)	70,004	73,395
Loans receivable, net	106,001	95,554
Total assets	193,772	191,680
Deposits	168,209	163,834
Repurchase agreements	320	6,391
FHLB advances	10,500	6,400
Stockholders' equity	13,876	14,250
Book value per share	$ 8.95	$ 9.19

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