FBMS - Earnings call transcript Q1 2024 | The First Bancshares, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everybody. Good day, and thank you for standing by, and welcome to the review of the first quarter 2024 financial results conference call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Hoppy Cole, Chairman and CEO.

Milton Cole

Good morning, everyone, and welcome to our first quarter earnings call. our with of today. several got team us members We've

each JJ Lowery, Chief our We after give I and for respective Dee few quarter. on CFO; some Chief those Fletcher, color us Officer; cover Noonan, have Dee areas, George our our their will and Lending Credit highlights a of the Officer;

to was point and a quarter Let's drive go great beginning right and strong good in. the start a for a I XXXX. thought it year, really

million, $XX.X expense. to that quarter-over-quarter see XX% up were expenses provision earnings to due reduced some margin. operating And and reduced the Operating was did stabilization and in we

were core margin for XX balances to quarter. the Our compared Loan only balances was at quarter basis but up points points decreased last X quarter. basis end down average actually

unexpected on at large loans some of quarter. got few payoffs right the a end the We

The loan in-depth lot pretty We that sales. and have on a color pipelines also us will more JJ grew report. give this SBA substantially, in

remained do quality NPAs continuing to We low charge-offs an improvement low basis XX at well points. were strong, past and basis in at point. had Credit dues X with

quite year, quarter credit has a $X.XX a continues quality extremely the perform We time. or which internal our $X.XX per dividend some to for So share or tangible increased during per value been X% quarter to grew on our We $X quarterly book $X.XX basis. well. quarterly remain by by goal per share an

the we the to the and what all rest year. So pleased thought we where for was year. looks strong in all, are of like progress the really it Pleased with a start with

for financial quarter? an Dee, would Dee you So us to give the update the on performance like

Donna Lowery

and in mentioned, that Thanks, a several Hoppy no really great as quarters Sure. nonoperating first items. Obviously, time quarter we had several, Hoppy.

dollars. few very thousand So

of all was per $XX to million and to last for million. great noise because have do do up operating But it's to have through diluted on did explain. not had increase But $XX.X million several go you $X.XX basis, which share things. to I million, $XX.X that all in from earnings have quarter, -- there we an that So $X.X to

So that. pleased very with

mentioned, Hoppy in of and no ACL $X expense quarter, million, driven then reserve so by an noninterest And million. provision decrease by our was -- expenses down a X.XX%. the needed as at And was we're most this that of provision still $X.X

X were those big So the drivers.

Our deposits cost a number XXX to income points, the basis flat quarter in our based good was our net the our interest -- for about for really still basically increased right on of portfolio. $XXX,XXX down The at XX quarter. points deposit granularity

that Our basis points our interest-bearing X.XX% and last deposit XX% so about increased XX from X to basis drove to XX% points. costs beta quarter,

increase, also an Our obviously, our but X our increased XX earning liabilities yield on points. we basis basis had of points, in interest-bearing assets

the into we led compression -- stabilizing. was good this midyear, what And had a which core This to staying is in kind our would good, of and points pretty margin quarter so of of then basis and quarter, quarter we next as for see than last that kind points, mentioned that pretty Hoppy basis obviously decrease this less we hopefully stable. quarter is we did maybe X -- have X

points. think talking about I we'll a a But second here still into we're see quarter. more basis compression little the few

to cost see deposits could a either if go our So But on think still the up some going think Fed, it's that. rates change in -- few this depending of I we're factors, way I go on next no from quarter.

to having cutting, reprice competition. competition, we're and we're still from facing still we're the with not Just still match the to having Fed

we still offering were fourth of for out the to And specials what of competition. year, those the the at rates expired in specials, we're quarter, because the our we but there end close what's had in higher

to having costs. still have we're So increased

costs our start going So bringing to some. that, think that on down bit be are can still I increasing go, cut see until as a we hopefully we but deposit a little

as average million. loans our did Hoppy mentioned, increased $XX.X decrease million, loans, Our but $XX.X actually

So on public increased that million average quarter. million was give JJ quarter that funds. was the for great on some information -- that. for $XXX more will that Deposits the of $XXX.X and was

overall, million, you exclude decrease. about we really $X for public the if So basically which down funds, quarter were flat a is the small

you so funds about from then be is talked part of in $XXX our anywhere that as year our we're expecting out public this $XXX the and public increasing recall, we past, million go forward. fund to see season through spend that the the amount, a if we've million, And for as where large we'll remaining

also during We the quarter $XXX borrowings by our million. paid down

our so bank in will little And expire noninterest-bearing to portfolio. down funding $XXX And to want we're still December. at also about million, talk a the That deposit program. term I bit then

XX.X% quarter. of quarter. was was quarter, that last decreased this noticed It XX.X% it deposits You this total and

noninterest-bearing So public down the all is same. just that, that, influx X%, we just If based interest-bearing. increase funds, have all because the the piece which big about of the almost deposits same, a in remain of over little interest-bearing, a would without is of but was been our from

strong. our on liquidity position our remains still liquidity, So

at XX%. well deposit ratio on Our ratios above are loan our limits

of have billion. about Home Loan We is $XXX million. then which of are $X.X at securities about capacity unpledged, Bank borrowing the we XX% a our And have

points. securities out X quarters, million, at coming cash about is our estimated Over $XXX and the next XXX out flows that that's coming of portfolio, about basis

the we've been kind sheet. of the balance quarters just the part of last really So of talking restructuring of several is about kind it

these we'll come It see year, loans. continue that at think XXX. will cash that off to or flows I as in funds go Fed this

up some still And plan. kind balance so year that. this we'll sheet is definitely But remixing see pick yield of in the from the

efficiency for ratio was ratios was our our XX%. return then was common on tangible and quarter, the Our ROA and X.XX% average XX.XX%,

of total risk from a capital X.X% leverage All base were of in ratio XX.X%. and of our line ratios TCE, X.X% last quarter.

of me, So where very That's quarter with all was that today. all and Hoppy. last sitting pleased overall, we're for

Milton Cole

that like I color report. JJ, on some to Dee. appreciate Thank you, lending? you would give a Dee

JJ Fletcher

Yes, you, Hoppy. sir. Thank

and to, positive decrease As that were Hoppy net But Dee of in that, both a a loans. lot alluded have during there the slight we happened behind factors Dee did quarter.

legacy of to at secondary which all, happy terms sold million. a integrating through SBA First And we that the company. in that again, about SBA really, did because the division record not had in $XX Group, we the quarter the of we're loans first, began the have HSBI, see market,

legacy really loans from be also or of that and from be that And the then first to able so had was First lot Bank a of in result either HSBI construction seasoned a to quarter. sold referrals mature

in income that that that. see to happy really came the from So

million The positive But Hoppy as $XX other note, did were about in couple on and at we made end said, that X of a the priced quarter. thing, at of the credits, a large up have, payoffs of were X.XX. the majority

give in redeploy be And this in will additional quarter the that we'll which one was that hospitality rates. able of in So higher much the area. at some sector, to credits, capacity largest us those one

decrease, a lot to So but of numbers. again, net those attributes a positive

of quarter little look million, large X into again, a in decline which amounted if from we one is had number, deeper C&I X.XX%. that that modest bit you credits to did a credit. yield X.XX% $XX large a origination Average to But very

our other we for competitive groups Absent X.XX% The relationship on those yield that about of one that those with, been deals. top quarter. X, the we're full development have our have X real of would

decrease though, in pressure, all to some see through the to begin in did rates We 'XX. signaled Fed regions, then as and potentially the pause

start did in banks Some X. the pricing

So more markets. often mid-Xs in we're several seeing the on in that average

basis. be a we'll that So looking at go-forward on

XX% pipelines. had end from was a of at that It slight really one Probably out increase. complete alluded across the Hoppy the the averaged in total And board, year, was pipelines. quarter, the really to, we the area end most the that contraction the We quarter, up throughout there positive were of had substantial footprint. no but thing the at almost

a pipeline in standpoint. third we're forward So second and the that looking quarter to very from

team uneventful of was in production, systems. pretty that We everybody that, say a had Regionally, always than it George And consistent. quarter. a business were progress a I $XXX,XXX which rolling Other below, respond express and will about his to would our those out we've lot needs. pretty small beta a loan help and then quickly lastly, team but test for for talk modest that. made commercial our

consumer month or centralized underwriting but color end should our of the then have next by And on this may month. integrated. really George this more really platform this, be

fully by quarter, efficiency end consumer this that integrated, on which add So of will side. the our the to there be will

of positives all, even loan though growth, on lending a in quarter net standpoint. all negative from out the came lot So number a

Milton Cole

quality? credit Thank you, George, JJ.

George Noonan

Hoppy. you, Thank

quarter. generally in see first to trends quality our credit continue We acceptable most and for improving metrics of the

Our XX-day past favorable. indicator XX under XX delinquencies earlier, was We dues as in metric points really there. said of [indiscernible] average that our of leading so basis basis tracks early points, annual movement good XX-day certainly Hoppy finished,

Asset compared X 'XX. when quarter to reflected the quality, I think stability

of a manageable on remain in That's almost were as by bps NPAs consecutive NPA leveled loans percentage nonaccrual quarter. $XXX,XXX Our [ NPAs in OREO ] the XX for X%. declined $X.X quarter. decrease up second total and minimally a there. loans of very but by million at the

ratio for XXX% plus problematic risk-based an at capital, by of $XXX,XXX XX at from When Net uptick loan in increase This charge-off, the manageable no from small XXX% of was loan bit and midsized that's to comprised quarter. resulted classified remained positive ACL. a XXX% We're comfortably fees, charge-offs XXX% we're in among a them percentage of level of excluding a for there. CRE the really increase basis relationships There loan a looking there. guidance charge-offs by loans percentage time really favorably little a minus our capital increase and handful the concentration X.XXX% ACL X [ from a small at agency to of XXX% in as XXX% basis point our was ]. standpoint. level. X.XX%. still net in points below territory ACL recoveries delinquencies exceeding from to for just of the a NPLs XXX% ratio decreased as over

XX% at XX%; you see major loan strategic as types. our CRE our Overall, CRE, and at XX%; C&D total at X-X a balance XX% still stands loans; to our portfolio charts, nonowner-occupied in C&I XX%. overall by pie at family reflect continues at loan occupied of On the

and both and the segment side, with continues priority be to high this production CRE Managing especially respect a from to C&D segments. credit

me, exposure, CRE, overall Professional really. XX% exceed at portfolio Our only XX%, trends year the segments X residential so, C&D or last chart. at pie for of multifamily center XX% excuse XX%, reflect the X retail in at and XX% XX%, our In of of major XX% other at land pretty segments development stable -- office portfolio XX%.

loan in of of total outstanding of XX.X% X% largest average relationship level. from at to loans Average the in at continues ranking, conservative. the for single down remain We're XX borrowing represent million a loans. of And portfolio the from level, A $XX.X is bank-wide. top the an portfolio loan relationships outstanding comprised And $XX $XX XX $XXX,XXX borrower size side bank the our and ranges million the to total top loan million relationships only portfolio. that stack

Professional well in continues average $XXX,XXX professional loan size to quality office of an with perform office.

think we the to positioned no Metro relatively exposure segment. we're tower with office So well

X, X heights with over buildings Our floors.

this -- progression minimal and continue those we costs, but escalating our not seen issues, renewal markets. BXC see in little acceptable insurance We're we credit for all tenant office no segments. monitor closely across our continuing margin quarter, about issues We to stability and portfolio. loan CRE bit across last office, talked operating only that have to And a lease

I Substandard office our loan. were total combined portfolio. office office nonowner-occupied less office note, professional of at loan loans our with think outstanding X, than quarter make particular about loans our delinquencies professional the and total X.X% close total at point office loans of And of in professional XX-day basis loans up represented unchanged X.X% owner of X

So we trend. like that

'XX And that markets. continues have loan improvement asset process and beyond. solid combined review new credit internal management risk us recently, with for ongoing the our resiliency across borrower within summary, certainly demonstrate quality review continued enhancements initiatives a In quality We credit been think a augment added bank. help will with our our and external to function loan

Milton Cole

resilient Thank of great there the some and making stresses remains in strong Credit quality in the you, George, out face market. report.

that. That appreciate questions open So great We I up report, comments. our for prepared now. concludes it

Operator

Hovde [Operator Instructions] first comes from our Rabatin And question Brett Group. from

Brett Rabatin

stabilization, like you DDA DDA it I seasonal. it And it's but other, now on to, had then in gotten seems level the been wanted anything? if thinking the the somewhat Any just deposits would and levels? -- to to a strong attribute the you start growth and thoughts again of just about that also could on what the was have

Milton Cole

is there in seasonality going Panhandle, South pretty now yes, to markets, particularly Florida, market DDAs, good there's into some -- be markets. we'll we've because Mississippi, Tampa tourist stabilization, share Alabama, South it got and in

So we'll noninterest-bearing or will their should as into the those DDAs, through in seasons we those markets and get increase see some increase an money now, see season. cycle

So we were the a at quarter. the low probably of at beginning point first

Dee, stabilize begin inflows? about so do And we as Dee you to want talk that the move to see public we forward.

Donna Lowery

the our fund a account, of that that and Yes. really portion public I was was public They're million, in Yes. now The that now $XXX was inflow. funds. in and considered big other believe,

on business fund the about public XXX. So right that's overall is that. most The of really book of

Brett Rabatin

helpful. and I you loans growth is this expectations securities loan a about year? of this talk then we how about much That's And to maybe are like Okay. sounds lot loan remix talking building might it growth? pipeline from then year. see your think banks And the mid-single-digit Can for

JJ Fletcher

currently, Now just little that a of hard it's had the have but growth. we see. know Again, that bit quarter. where the don't goes we've to to quarter I over the tell had this guidance really of We really recently, year. X nice pipeline kind this rest has changed another,

Milton Cole

that our remix you our year, coming I budget mid-single out think of a portfolio. -- mentioned. still be and we're lot thinking securities digits, still will the for budget That's of as

essentially that's loan. out portfolio, of in using the So flow cash of the up remixed that all securities

Brett Rabatin

Yes.

you see Okay. one And here to the can to pressure Is management. can then level? throughout sneak XQ I It's are expense in flat really just -- last one, if that points there the Or this good there relative on expenses. keep there? from

Donna Lowery

think will the approvals uptick usually $XXX into flat. is Usually, -- be that we year there kind some our consensus quarter, fairly think the kind million this. been I good I that's I of the a I've from for haven't fourth quarter. out And just little would we but think an pretty of I million But -- year. an of increase $XX-or-so million talking bit needed this overall, be a think $XX.X a number which had about

Operator

Olney And our for question next from from Stephens. our moment question. comes Matt One next

Matt Olney

and I'm ask you're the I want markets competition what your weeks. in recent about the And to seeing more cost deposit around curious that. in

mentioned I promotional January think of remarks, prepared a in just -- the you handful think as Any rates. mentioned competitors back in still you some well. I that with

looking if the or recent Just level in same see in pressure? to still there's weeks change that of any

Donna Lowery

we're -- was names I a we seeing from have competition that X X% big is but our specials. months stress and what with last the X.XX%. there -- to dropped are But X-month think the of at X%. we fall. we're now And still is mentioned, it's X it changed I still at ended like running out We what -- we've a months, it's little, as their X.XX% months, still pressure X had

I So markets some are from money we had little mentioned one-off, the last -- different think that smaller higher. we still a bit it's running as pressure. banks have I little But bit market of quarter in

was -- rate, that going markets months, special it and X% guaranteed then money was for was had X-month We X it the the drop. for to

due so for where cycling them, had that as the X-month tiered product what we have. set we into those they're ends And up that come period

so X.X%. their that's X.X% on depending to from balance, And anywhere

because just the to they're need when and I out, X this. X, as so coming so and But close be had had you know, to well, I

repricing bit will of some into that reprice still So But pressure. mentioned. that face to having tiers these obviously a I But... little we're

Milton Cole

as I it's don't the quite think quarter as fast fourth though.

Donna Lowery

Definitely not quarter. fourth

Milton Cole

seems to was your that really pressure JJ less Yes, it pressure. Is intense it that -- fourth folks? compared there's you little a from an quarter, But battle. fair little to a like hear

JJ Fletcher

yes. regions, I hear we throughout what That's the agree.

Matt Olney

And overall Can just the first of be the second remind remarks, the quarter. the we Okay. you of the you prepared the size us just the in sheet. that for quarter, forecasting balance in seasonality mentioned seasonality then should

I expect of average think what balance contraction XQ sheet of XQ, just last the of the years X for the you on some kind we've the this of overall in balances in year. seen size curious

Donna Lowery

we balances. in year's start that. Well, places bit maybe think I that I didn't customers kind look that we'll still have funds back they'll April, at then little but But the seasonality, in that pick their start XQ, you're last still talking a seasonality that spending destination are May Hoppy usually, and we from up -- we get about -- if the public will of on mentioned also our

thinking So -- are. kind kind of of I offset kind Those where we we'll mean of other. kind each I'm of things be

Milton Cole

And kind the you Kind their flat. public double of the got see it money you spinning more when plus really tourist the out Yes. quarter, third fourth out got you've -- markets in of of things when on the so funds you got sort season. of are quarter

So earned months. they've there's money during enough summer the the

in probably see fourth Matt. you the So the contraction quarter, biggest

Matt Olney

Okay. just That's helpful. the yields. And then securities on lastly

we appetite ago. from the benefit some And what Just you the to trade, previously, a financials quarter reasonable there. the curious few markets today? the the curve? like and appetite then and the you you're of there. repurchases trade it of that as similar a for given in at sales of additional kind Curious market, is is look assume restructuring yield as such kind the think seeing of security I months a of Or what the first did saw

Donna Lowery

that it numbers We pickup. funds and of -- kind run able if get bigger purchased a for do were gain. yesterday Fed back sell we about rates -- past to see and we can the of Well, been same the same some were actually, able those we that process did just it's kind trade have that alternatives to talking before the treasuries when short kind on so have we starting were if They the were we and were were have we and in of to term. sell lower to

obviously, again, it quarter, for the and will numbers -- that. can we makes this the in it something we can running similar, growing do say, sense, we're we're do if numbers. So I but would And we now if

Operator

next our our for from moment question from Mealor and question, one KBW. And next Catherine comes

Catherine Mealor

ask to the want I on buyback.

earlier authorization this the quarter. announced You

thoughts curious active you'll think that? be on you on how Just your

Milton Cole

did we gets still look renewed. So lower quarter, XXs, in management of it one our tools. use earlier got announce is We It capital makes down the to more as I it a for us. not attractive. as lot the Catherine, that it at Stock XX price sense to think

Catherine Mealor

Great. Okay.

more then, sensitive anything. So yes. than price And

you see we scenario bit there the think we On higher think this up? quarter. more so about costs expand you to you will is Do do downside margin see for just little margin a if a we just your don't in -- Or the could environment? more how for be guidance next the should trend? start a about of even to margin, half as year? the rate back in deposit pricing see keep you think How down NIM longer How gave actually cuts your

Donna Lowery

Yes.

and increase looking think kind but been that built looking single-digit July November of higher in. cut forward. about that's our has cuts I have at the projections in margin, X what on to modeling part also talking of we And was

reprice pickup loans. I are we'll that of new as on those that. some some that we'll room the there, and going So loans cash in out our still see pickup in think still flows see yield on, There's

quarters, But up have been as seen increasing I has the the in yields. that. pick we see think past it few I from don't loan still much as on as

investment, just from on pick in I see the whether think it's loan the pickup yield the up deposits flow that. in from cash yields in out we'll or of coming but

not, no been -- think really because those rates, years just much. rate." there, -- have the some in believe "Hey, And a we're but offset, or gland so there many still people, I may which need or freight now they few occasional cost if things. we only this of been, it how X.X deposit earn saying, with repricing change I'm after have those one the we're where going a is but better come up. has The it So thinking, of I you're I like pressure

cost, hopefully, looking we're deck March March. looks we looking per of it out it much April in think, then February, pretty you month, January, and like kind at on the is trending just I you at and deposit with at April, But line look when maintaining for label the

pricing I'm I just some toward things. but that few So leaning whole a compression lot always still difference, see think bit of we a still we a facing shouldn't are little competition of because and

So on I'm always side. be that going to

lot being Yes. moving I basis points, of seems but think. it a It's pieces X down positive, just there, just And little very with that's...

Milton Cole

They the are positive. cash to then the reprice out. It's coming flow curve, up but also time

So margin seeing because helping be the substantial back gives comfort year me flow loan the [indiscernible]. out really of reprice around XXX, half of that coming curve, that to back able use something bond up the we'll increase portfolio cash the the the in some in just pipeline

Catherine Mealor

in of and then loan yields seen past couple really nice in loan That And on quarters. Yes. increase makes yields, the you've sense.

So next picks until in of the you're C&D couple little that should bit growth quarters moderate up? a

Milton Cole

Catherine, yes. so, think I

Operator

And moment And next from Marinac for Scott Christopher Janney one from our question our comes next LLC. question. Montgomery

Christopher Marinac

for a second. down drill just to office portfolio on wanted the Just

should we office, residual component the of Is that then was be correct get holistically in Hoppy, your number of to nonowner-occupied cited as the us the and slides? the combination that total to So that in owner occupied. thinking construction a

Milton Cole

components. those include Yes. That would all of

Christopher Marinac

Great. Okay.

adjust year can of already process And kind for may that of kind And and stressing us unfolds? coverage clarify. that be through Or extent debt done? as something is those? this would to classifieds the then you that what service wanted walk Just criticized on to and

George Noonan

a curve will, of renewals every of rate point an bandwidth, the this of methodology, at probably looking realizing shock the with at at point, using now. we're shock that our right as stressing in approval stress most at that loan that's We're we And the use. looking all has from similar if to still points, standpoint. up a top and those XXX essentially approval -- still you basis XXX but we're basis course, shock a similar, we're We're

has it our really not So changed there. methodology

Christopher Marinac

Great. a question And side. just I guess similar multifamily on the

Just trends for you multifamily or sheet? you on seeing permanent that the any are different And there? what are either in are just for construction balance that keeping

George Noonan

We multifamily still in have, A I maybe think, X markets or XX be their seeing those apartment projects of tends good to move metropolitan recent larger over absorption from forecast. where in some construction complexes necessarily lot are are are occupancy. We're into very good to competition track more perm. areas and of The our for predominant. the most on right in not

And so options. there fewer are

object you it newest complete I a in when And are the smaller shiny absorption the think market, helps shorten period.

our larger developers at not we're footprint, we as look rent permanent things those of made see any some larger our multifamily see don't really concessions markets. there. in oversaturated problems around maybe seeing we and metropolitan among loans, of you Most So your being that

Christopher Marinac

that for Got a the strategic it. Thank for is sort Or find are same? engage quick of you than just guess the you do you with conversation now Hoppy, still other you then more standpoint, Great. I background past? willing to from that question and banks a

Milton Cole

uncertainty gosh, or came the new the again, kind the And that proposal and is challenging are lot I it. math guess, still some out new of the you saw of a market. that about there's people the guidance -- FDIC, are somewhat came Conversations in think out But on from I merger. thinking

on side I approval. think they'll using be application mergers

a ton know or not doesn't on conversations don't it's of now. -- I haven't right -- seen So it going a if we ton

Operator

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

Milton Cole

the quarter appreciate Well, balance the the for we and had position strong good a Again, a participating good a start of to We you this thanks, good. and year Well, we everyone. think really year. really morning.

questions, for that are for there further call our will -- this no morning So if conclude quarter. this

Operator

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

You may now disconnect.

The First Bancshares, Inc. (FBMS) 25 Apr 242024 Q1 Earnings call transcript