The First Bancshares, Inc.

Second-quarter net earnings were $19.7 million, or $0.62 per diluted share, down $900,000 from Q1. Pretax pre-provision operating earnings were $27.4 million versus $26.6 million, up 2.9%. The core margin expanded 9 basis points to 3.19%, and the cost of deposits held at 1.78%; interest-bearing deposit cost was 2.46% and the cumulative beta was 43%. Loans increased by $111 million, originations were about $450 million, deposits declined $84.2 million, ROAA was 1.01%, ROATCE was 12.76%, the efficiency ratio was 60.65%, TCE was 8.3%, leverage was 10%, and total risk-based capital was 15.3%. Credit metrics included 4 basis points of net charge-offs, NPAs at 26 basis points, and ACL at 1.05%. For the next quarter/back half, management said loan growth should run in a mid-single-digit range, margins should stay roughly flat to a couple basis points either way, and expenses should be around $44 million-plus per quarter, with full-year expenses guided around $176 million to $177 million.

Milton Cole said the quarter was strong across growth, profitability, and credit quality, emphasizing that the bank is seeing ample opportunities in its markets. He highlighted loan growth, margin expansion, and low charge-offs as evidence that the platform is working, and said the lender teams are producing new business from both existing clients and new relationships. On M&A, he said the bank keeps its optionality open and continues to have conversations, but gave no firm deal plans.

Donna Lowery pointed to net earnings of $19.7 million and $0.62 diluted EPS, noting the decline from Q1 was driven mainly by the $1.7 million provision versus no provision last quarter. She said pretax pre-provision earnings rose to $27.4 million, the core margin improved to 3.19%, deposit cost stayed at 1.78%, and the non-interest-bearing deposit mix rose back to 28%. She also emphasized strong liquidity and capital, including a 79% loan-to-deposit ratio, $2 billion available at the Home Loan Bank, about 38% of securities unpledged, and capital ratios of TCE 8.3%, leverage 10%, and total risk-based 15.3%.

Analysts pressed on whether loan growth can remain at a mid-single-digit pace; management said that is a fair expectation for the back half of the year, with the two quarters together likely normalizing around that level. Questions on margin and deposit costs prompted management to say deposit pressure eased in April, May, and June, and that margin should stay roughly where it is as public funds runoff and brokered CD replacement are offset by other balance sheet moves. On credit, George Noonan said the main source of substandard loan payoffs this quarter was asset sales, and on securities, management said it is evaluating another restructuring of about similar size to last year if the economics work.