The First Bancshares, Inc. (FBMS) 25 Jul 242024 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to the review of the Second Quarter 2024 Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Hoppy Cole, CEO, please go ahead.

Thank you and good morning, everyone. Welcome to our Second Quarter Conference Call.

we'll up several end. to custom, morning remarks our open and questions it's start prepared with this As at the got Fletcher, with Lowery, members Chief Credit and several morning: our We've Dee Dee George us Noonan, our Chief our this JJ Officer. Lending Officer; CFO; team

X.X% with were by of an for and growth, on So pleased credit second up $XXX the of quality. we quarter, performance the grew million, profitability they so company about very Loans basis. were the in annualized terms

Our to provide markets us continue ample opportunities. growth

X And see are able margin expansion, We basis with net expanded margin basis X actually and basis up, points, to points. Credit growth. down core we points migration margin our income X and remains pretax was strong of $X.X only although our and bit, quality it to X was loan basis primarily points that was was million $XXX,XXX provision charge-offs X.X%. net the little Actually, income down with a due the or pre-provision up associated in took NPAs.

in were little again, talk performance and company about the like around. with financial would of pleased all our performance So of sort Dee detail? to the more Dee very we you a

last That had Hoppy million, which quarter solid was with happy provision with for as down expense net and $XX.X $X.X did million of results. report from was And share. quarter. record earnings $XXX,XXX but said, and we this all But $X.XX Thanks. I Hoppy. a we're very pleased around already first quarter Sure. a the very we X diluted quarter, did on

to million. totaled the difference $XX.X basically accounting million pre-provision there. Pretax So for operating that earnings $XX.X compared is

look pre-provision. have quarter when did at for the we a increase So pretax X.X% you

we remained did increase Anyways, As Hoppy to [ like deposits on X.XX%. our X.XX%, basis X The we're same deposits. our woohoo finally, at which ]. of like, feel there cost core we the points mentioned, margin

you ] did that? call [ How

Yes.

X basis increased on liabilities, of our basis X course, point. rate And earning had our Our points. assets interest of yield on we decrease then, a

actually portfolio at our percent noninterest-bearing deposit same basis back to stayed beta and the for our both quarter. -- cumulative X cost this And point to our increased XX% increased X.XX%, dollars interest-bearing in and quarter, So this XX%.

did deposits following was $XX.X of continue related million X.X%, decrease will this you our a million, $XX.X Our us, as to the portfolio. about we year know, which decrease that quarter funds. at rest because of And public to the with of deposits public throughout in see was fund

still liquidity our that strong. very expected. On So was remain position,

our above limits. well are ratios Our

loan ratio is XX%. Our deposit

$X have securities point have the our XX% borrowing, -- We of portfolio we for mean, X I Home Loan unpledged. about billion available and at Bank

the flows pleased over the over So cash ratios quarter, and our equity increased the at of XX.XX%. operating had XX.XX%, those with on off ratios, of $XXX X next the we looking million capital an quarters, about coming all we're ratio ROAA have numbers. And into for we to in X.X%. common tangible our next of cash of quarters. And efficiency then TCE, return ratios, book average securities X actually, And our an X.XX%, then

was last Our with quarter. was line ratio were all leverage in and risk XX.X%, our total which XX% base

we're overall, So very pleased.

originations talk you Great portfolio, ma'am. for report. JJ little to you, color us Thank loan quarter? would the like loan about, give on a

Yes, sir. Thank you, Hoppy.

in XX% funding. million a for first originated of being first Construction end decrease, growth, in the very quarter. net which had of at origination, to were the the terms you loans of be we first the with about we great did on a I originations at second note After the amount was see $XXX quarter. quarter, up continued $XXX about the in expected remember higher and those large first modest quarter, all $XXX robust funded about loan As of Hoppy million. quarter. would the increase than million, in pace, quarter quarter, from future a do reserved increase second and pipeline, solid said, lines based at lending that the in Originations actually number we track a is at approximately that

back So the bodes well entering the year, half we think. of

had average team the originations. basically the Bank's the entire X.XX% XX% overall, for a from production; and had yield They about X.XX% Our Georgia, for for an accounted Regionally, their the they and But at first or strongest of showing X/X did incredible X.XX% Mississippi had merger, since year-to-date. contract to slightly X% quarter. quarter. we're actually new time our of all

we're to that. see So glad

schedule. operationally the And platform, into XXXX then, migrated this George refine but consumer the expanding of and our we've business platform. legacy implementation we're done to speak branches continuing centralized ahead rest plan small year, may of to Lastly, to of the too, the the the end have that, by

support quarter. lending quarter. to make happen all lenders be the the staff, couldn't with folks I pleased great Appreciate overall, more all and So and that

credit Great. us Thanks, update quality? you George, on can JJ. Great [ ] report.

it here then I $X.X offs and Dee alluded continue quarter-end. see All to some our at leading X X as X.XX% to. past has dues about were Net good bps. Most we said, uptick moderate still continues XX-day already The across Nonaccrual level bps. up Year-to-date did Thank indicator total quarter. did we bps. over for at believe. a our X to were as slight very ACL be of XX That's at upticks average see was provision basis kept charge manageable. at Dee We acceptable And performance XX.X did metrics. you, there. a good last the at as credit very million manageable up quarter the bps XX X, points to Hoppy. think We of metrics, few bps, movement, ticked us, NPAs in most I but all see

interagency at we and but actually saw XXX% X of below comfortable RBC. Our think CRE bps the a level, still little C&D ticked a We a bit. come that's up concentrations guidance XXX% down bit, margin

at we capital did and plus we to down bps and of X by at XXX% as that quarter. in the loans see still with of capacity those actually They loans. came continue a combine move When that's RBC had XX our $X.X million Criticized, borrower percentage we're substandard substandard in So payoff up note well loans almost actually would but about ACL. manageable bps I X.XX%. level. XX% loans below the second payoff We you Classified to in

family strategic XX% for and continued CRE XX%. has C&I C&D. quarter-after-quarter. Overall seeing that and XX%, we that loan reflect continues been trend at XX%; Owner-occupied and a then So respectively, to we've nonowner-occupied at the X-X balance see. that portfolio XX%,

to you very residential continue our land subsets. try in X C&D X% among under construction categories only the We then as as exposure trend to represents development other same is for X.XX% apportioned deck: and loans, and the well. Kind major see of total multifamily construction balance X.X%; of all construction evenly CRE.

loans, X.XX Our professional office evenly Hotel and at owner-occupied at X.X% pretty of between but total Warehouse X.XX%, Center nonowner-occupied. that's is total at of Retail split Industrial at loans. and well X.XX%

next over average of category. office loans in loans. at closely. Nonowner-occupied balance categories And XX pretty the $XXX,XXX we monitor the office size months. constant maturing loan see last seen our in average X.XX% total of is the nonoffice these year, is we approximately nonowner-occupied very XX.XX% And we've remain our office So about

manageable that. horizon So a we for that's think very

tenant we turnover loan Top of category, at represent escalations our portfolio. In relationships multiple pressure Our But CRE portfolio X.XX% continues and loan well the loans markets some OpEx largest to have monitoring very or very in XX minimal putting comprise borrower closely have, and some as our issues. good renewal on across credit X/X XX expense thank only witnessed, portfolio, and about for cost single very we hover all But the of loan see the segments. as stability to insurance banks really issues seen have CRE $XX.X borrowers. total lease about as top few we're office million. We've about continued that goodness.

pressures. summary, very nominal we're risk But point tighter issues in basis some to rate categories the been with OpEx really or we've due some few to fortunate troublesome very charge-offs unacceptable increases witnessing environment the delinquencies, across see So and migration. of

the for XXXX. of see outcomes really and expect balance we to into So similar the year

Hoppy. you, thank So

Thank comments. now. open would We up for That it report. Great questions prepared George. concludes our you,

[Operator Olney of our Matt coming moment first Stephens. for question will One question. from Instructions] be And our first

the start on I loan If I'll front, loan we're year, really a annualized take just half growth look strong growth and report good growth the pace. think at a X% I first trends. the overall. back at loan step about A

the XQ is the look earlier, should pace curious reasonable half sounds it still Just like back a the like It this even of the really strong after for expect pipeline if the from report year? sounds results. we

curious growth half the just of back year? for expectations So loan on the

think I Yes, so, Matt.

be expectations the that mid what level for we growth quarter saw that range. loan this would of about think I single-digit last

I range the fair. of just think, think Kind lot into level it of if we that X pushed you quarters together, at second I kind out X% take had got the saying quarter. stuff of a early that I'm tight is

year? bit pressure And Okay, up then a really whether by same more any for back inflection? in side, easing quite any color encouraging month the any expectations or XQ. pressure the love at half to that's some cost of you see color, saw, all Would kind helpful. of kind Just an deposit hear of the then to of it's ease what that on on deposit and cost thing,

kind of we where and you things. some like quarter are about I going [ May. celebrating when look ] a matching our hand-in-hand was the while of had, as when pressure we Hoppy I through out And some seeing April ago with had looking and still it we still specials. there of there monthly were looked in when it some first markets was kind said, kind at still, it through a and little. mean -- we We're at talked battle market But

was you And May was so, April down X.XX%, X.XX% at look June X.XX%. it and was -- to when that

be play. like, of now. We have looks a So do couple in it we'll where tracking we around are think I things

dollars. maturing those have and the will adding just it, year to some continue public of a mentioned, that. of some do group we're for but are replacing and I As was, CDs mentioned additional brokered I that have then bit about rest And we those the little we those cost same the have the and tomorrow runoff also a to that -- fund,

say things feel like borrowings, reduction give the So margin we of the but brokered just cost, then in stay a I those couple Home with decrease those and really CDs. of should like I not take just just where the funds, deposit kind of Bank projecting couple overall feel right of or public that are. in basis forward, I kind would projecting the points, Loan that kind

feel We of forward. I stay we where kind like projecting kind So are. those of should

That's Dee Dee. helpful, Okay.

So margin it from sounds stable XQ. like relatively in we saw what

and bit? down liability mentioned? I side, Any that of wash some in a some asset balance I be kind could really funds Are of I of move levels little the bit really to the movements just earning puts on -- third some about mentioned going color those what a little the earning guess, the quarter think overall on takes a the also the was assets we that quarter? sheet You average you third side. little talking of bit public and see given lower. in on

for probably some securities assets up are would for there, the quarter with it cash on what see could we So book does the the out likely earning because end funding from we of flows than what loan more book. third depending in expectations increase

that that. of could some fund So

or you So could increase a flat. just see slight

Group. will moment Hovde which And question, one coming of next be Brett our from for Rabatin

I to or function, lines see competitors? share ask loan you if it the, customers I do or first from looking that of think as I correctly, you -- million Is it as are moving projects wanted to a guys $XXX maybe see on market of heard originations. some you draw

still also It's -- for credits have of getting clients business. doing that new too. is really originations. those generated of the So lending new competitors. new making quarters, X and A from internally know, kind don't think, we I that book talked strong groups, We're about got we've new again, of projects lose over by but those legacy, acquisitions. or I Really, we it. coming still lot And are sight our a moving that from teams. of

new So projects those all factors, of being a funded. I are new But think. it's really a are of originations combination lot that

[ They are funded. ]

refinances had out Yes. And and we've of those longstanding nonrecourse for market some customers. good

a been it's combination. So

thoughts Okay. you guys talk That's thoughts that M&A the think on to be for out think back you helpful. going Hoppy, might you And there? -- the higher, see playing half with what to over are about then more. year? you're you or any If looking out people any on M&A seeing how and I acquire obviously stocks just

certainly that so Well, help valuation as everybody.

keep So out optionality developing There's profile, of we but always there relationships. having our fit talk, would we a that We're conversations. always number interesting always our always we're open. in banks

Okay. I the And back to on then lastly, Wanted sure margin. just understood. make

to is the that's year, brokered sure I half asset to and So, the be funds you're understood flattish the yields? function Dee earning replace in narrative of to Dee, on additional margin the improvement want of back public expected CDs to going to make need Just use the a offsetting that. some that in

the to of CDs, down what going as at as is Bank trying then credit the rolling ] the cost to to looking Right. balance any us what to running kind just those in was to of book see I was X loans, and of kind on are kind basically out, is brokerage [ what the their get kind as far public increase not advances of earning funds really I the and on the thing. things. those they do side, funding Home Loan really that at more -- going But asset some additional paying things looking that what that looked sheet far of giving as was and kind do loan to impact going like of JJ side of

forecast. Conservative

the is -- we to does What what that conservative are where impact? am at of looking side. kind at. So what have and look that's adding was to I I I currently what

better a try more mean, to So, always I on the cost do little we'll so. model hope we obviously always that side, and conservative

nice. It's Okay, That's see of good to flatten cost the out. that's helpful. funds

moment One question. next for our

will from KBW. Catherine next be coming Our question Mealor of

pace was drove noticed the increases I yield back yield just on half margin, outlook the year? in the that also loans of on Any what a on And follow-up bit the this One quarter. little just maybe down decline this the quarter. of loan

Some I'll driven JJ fees. loan fees, of some decrease decline, of some but add yield Catherine, that late by about that some piece, let in was the

that So one-time to I was of don't expect I -- kind during little expect That really a quarter. continue. a of deal don't bit a the

on actual the loan Mine JJ yield more fees. So piece. can address was the

that Hoppy were Yes. And morning. I this Captain and about talking

first of several were in the seeing If you looked we guided the X%-s most of quarter, and to kind at the our for consistently that notes going from pressure we the markets into quarters. been X%-s, pretty we've

course competition. I So but really in we pricing that a start that think banks the stay the A+ early, and in sort potential do the of I sidelines to are markets. competitive deals. the now, of liquidity, the ones have right credit they're on but get driving pricing And really deals strong think rate good of cuts are to try it's to there's lot -- banks Maybe some only

we on cut credit. know, all you As don't

Hoppy, think every seeing committee what think that's like. week. Seems seeing at So there. we're I just pressure I we're

question there's it. just new about came originations no about about on under your now No, X.XX%. X%, But

close Still yes. X%. Yes, to

to X% close on Still originations. new

for the So do actual than had comparison yield. the the quarter-to-quarter more fee late with it real quarter, did to loan accrual

loans comes makes rate X.XX%, Okay. bit, the are there's X.XX%. mean mean down And new if if on And fixed even your say opportunity? then, portfolio still sense. enough little then I is repricing you That I coming would at that still a

the move quarters? fair of continues still that to overall the couple assume to portfolio higher over it's next So still

are and X%-s. in the going We've fixed of to the be $XXX in year roughly got Yes. those lower million rate rest

existing the, on well. the get book as some we'll bump on So there

peak Dee be all. public And kind amount it's Or do growth of back you hearing out way deposit to then public decline but there's of Bank, higher this that commentary funds? And know you expect bigger reliance I from size then Is made, we're we high? a push that to type? deposit fluctuate. like the think Great. just as as Okay. year, Dee. feels for you of the that public model funds the there on out less there effort will funds to an is It more business you year cost of banks any next other of the

It peak usually kind the when that the And seems public -- $XXX million course I decrease post a year. run to I mean, look continue we over continues funds, big you so that $XXX but the we increase -- of overall, increase every then of year. COVID and million was back increase and on to really that, think at

my exactly remember I we decrease. but top was, million, I have can't have still could I $XX of of off mean, mean, what this year think the -- quarter the the we $XXX-plus rest head with still So million first I

source And think report Right. was of I it's been But funding just a $XXX us. for good it's still, under, the million. like last

Right.

cost cost not change, million overall trying all run of not trying. $XXX and of million. was to -- $XXX we're Our off. We're public fund so some deposits the particularly it

We're didn't either. not [ out do aggressively, ] money there

Right. No.

of you what money. of seasonality not see So a more and a is replacement new

Yes.

Right.

Okay. sense. That makes

Okay. outlook fees on maybe fees? more excuse outlook I'm one sorry, just for not expenses. And Great. me, -- for then

I kind much pretty $XXX think in we're I've are, think, still at year. of we line. million looking where I given for Catherine, the

still year, for as be think $XX.X I million, last I bit, were we so a up $XXX tick that And we and think quarter around go $XX.X line little million at in the year. we're to million through the million. that'll And but $XXX

for That's Okay. steady you very all. Yes. usually Perfect.

One next our question. moment for

next LLC. Christopher Janney from Marinac will coming be of Scott question Our Montgomery

expense any year? next should little expense quarters? of going a couple further. into What's of inflationary we next just as expenses to expect maybe kind I drill on on your this guide the And just a want rate down thought

kind I was think, little that. a bit just of about talking

we think, million, the kind for $XXX year. were of I million showing $XXX

change I Because up. next we'll the of the X typically quarters. in be So think the operating $XX million ] some when expenses the [ year quarter true things on fourth

some as increase I at And I we're well. third be usually then we'll so year. and looking quarter million quarter X% $XX that's next think what X%, think change So an then fourth or of think for I we budget

by banks bigger up deposit helpful. conversation That's Do want earlier. follow or see Hoppy, midsize the other just or Great. from cost you campaigns back deposit to you that -- And would to did on any there we're surface the work happened of necessarily below and but happened impact out didn't maybe for the in you, June that just to have have kind team with?

as more much was many Chris, Not out those as there, pressure We as actual kind one-off has matching of there didn't of a been. an it than campaigns, campaign. see

I true for you markets? the And impact in various guess they would same be where Unions, Okay. Credit

out didn't Unions. just much of We Yes. see Credit

Great. the Thank very background you much for morning. this all

come And Matt next one our next from And will of for moment question Olney our question. Stephens.

guess. I I with me, George. up Lucky to wanted follow

substandard color any those to just mentioned the interesting kind examples? to some more equity project? George Are be of would the adding on capacity Or guarantors cases. in think about color borrower Any something these that additional I pay more loans, topic down interesting. on

variety, It's in say I would were But instances, sort assets specific actually the of sold. a Matt. several

it that deal, loans was was had seasoned outside that negotiated so, And had enough. there reduced. sufficient been and enough balances were The principal an the buyer a

rate down quarter, the risk sales, bit. if asset though had will, was little were already of you that a marked exit, past would I say just even So predominant the probably this we

that was driver the past quarter. So main this

be Okay. for more, then I'd if maybe All about one the appetite any in of sneak just right, restructuring. kind And securities I could Bank's curious George.

maybe this year completed little guys of over moved part weeks. have the late first few a year? you Rates last bit lower think, last I something down or

about securities sell that. Bank's curious Just to appetite and some the reinvest

accomplished in the bonds get actually of then this the December, January purchased and of did We year. at last Yes. week sale those

it we are So talking running looking it numbers. about at and the

consider loss that, we as think looks the kind if would something far I [ again. doing that as on do ] the So of iron like we back, it can

looking we'll probably at and We're on it. obviously, big, the If we'll just pull we're it about trigger running same -- the numbers. makes the sense, something size. So not nothing

Okay. Great All quarter. right.

now questions. I'm further for closing showing no the I call to remarks. would to turn like back Hoppy

a this quarter. attendance what Well, we'll you. Thank circle Appreciate thanks, everyone. the Very the Again, and morning. back pleased -- during next quarter. good performance up quarter, your with

Thanks.

for This conference participating. concludes today's you call. Thank

disconnect. may You now