The First Bancshares, Inc. Reports a 121.7% Increase in Net Income Available to Common Shareholders and a 102.7% Increase in Operating Net Earnings for the Second Quarter Ended June 30, 2018; Declares

The First Bancshares, Inc. (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) reported today net income available to common shareholders of $5.2 million for the second quarter of 2018, an increase of $2.9 million or 121.7%, compared to $2.4 million for the second quarter of 2017. Operating net earnings increased 102.7% ($4.1 million) for the second quarter comparison, totaling $8.1 million for the second quarter of 2018 as compared to $4.0 million for the second quarter of 2017. Operating net earnings excludes merger-related costs of $2.9 million for the second quarter of 2018 and $1.6 million for the second quarter of 2017, net of tax.

For the second quarter of 2018, fully diluted earnings per share were $0.40, compared to $0.26 for the second quarter of 2017. Excluding the impact of the merger-related costs, fully diluted operating earnings per share for the second quarter of 2018 were $0.62 as compared to $0.44 for the second quarter of 2017. Fully diluted earnings per share for 2018 include the issuance of 2,012,500 shares of our common stock during the fourth quarter of 2017.

Highlights for the Quarter:

• On April 1, 2018, the Company closed as planned the acquisition of Sunshine Financial, Inc. and its wholly-owned subsidiary, Sunshine Community Bank, which added 5 locations serving Tallahassee, Florida.
• During the quarter, system integration was completed for First Community Bank which closed on March 1, 2018.
• Excluding the Sunshine Community Bank acquisition, loans increased $26.4 million or 1.7% during the second quarter of 2018.
• On April 30, 2017, the Company issued $66 million in aggregate principal amount of subordinated debt.
• During the quarter, the Company received a $0.9 million financial assistance grant from the U. S. Treasury as a result of our designation as a Community Development Financial Institution.

M. Ray “Hoppy” Cole, President & Chief Executive Officer, commented, “The Companies profitability and operating performance measures have continued to improve quarter over quarter. During the 2^nd quarter of 2018 we achieved an operating ROAA of 1.33% and an operating ROATCE of 15%. This improvement is the result of the substantial growth we have generated over the last year combined with increases in our net interest margin and operating efficiency.

During the 2^nd quarter our team members successfully integrated First Community Bank’s operating systems and closed on the Sunshine Bank acquisition. Both of these events, as well as solid organic growth contributed to the substantial improvement in the Company’s overall performance. Our team members continue to be focused on executing our strategic vision of growing our franchise in the Gulf South region.”

Balance Sheet

Consolidated assets increased $182.3 million to $2.482 billion at June 30, 2018 from $2.299 billion at March 31, 2018. The acquisition of Sunshine Community Bank added $223.6 million in assets.

Total loans were $1.710 billion at June 30, 2018, as compared to $1.517 billion at March 31, 2018, and $1.188 billion at June 30, 2017, representing increases of $193.7 million or 12.8%, and $522.3 million or 44.0%, respectively. The acquisition of Sunshine Community Bank accounted for $170.8 million, net of fair value mark of the total increase in loans as compared to the first quarter of 2018. The acquisitions of First Community Bank and Sunshine Community Bank accounted for $437.1 million, net of fair value mark of the total increase in loans as compared to the second quarter of 2017. Loans excluding those purchased from Sunshine Community Bank grew $26.4 million or 1.7% during the second quarter of 2018 as compared to the first quarter of 2018.

Total deposits were $2.097 billion at June 30, 2018, as compared to $1.992 billion at March 31, 2018, and $1.551 billion at June 30, 2017, representing increases of $105.6 million or 5.3%, and $546.4 million or 35.2%, respectively. The acquisition of Sunshine Community Bank accounted for $152.0 million, net of fair value mark of the total increase in deposits as compared to the first quarter of 2018. The acquisitions of First Community Bank and Sunshine Community Bank accounted for $509.2 million, net of fair value mark of the total increase in deposits as compared to the second quarter of 2017. Net of the deposits acquired from Sunshine Community Bank, deposits decreased $46.4 million for the sequential-quarter. The decrease in non-acquired deposits was largely due to a decrease in NOW accounts of $21.2 million, which is attributable to the seasonality of the public fund deposits.

During the quarter, the Company issued $66 million in aggregate principal amount of subordinated debt. The net proceeds of the issuance will be used to support future growth and general corporate purposes along with the repayment of an existing line of credit with a balance of $16 million.

Asset Quality

Nonperforming assets totaled $17.9 million at June 30, 2018, an increase of $3.1 million compared to $14.8 million at March 31, 2018 and an increase of $4.7 million compared to June 30, 2017. The majority of the increase in both quarterly comparisons was related to acquired nonaccrual loans. The ratio of the allowance for loan and leases losses (ALLL) to total loans was 0.56% at June 30, 2018 and 0.57% at March 31, 2018. Including total valuation accounting adjustments of $7.0 million on acquired loans, the total valuation plus ALLL was .97% of total loans at June 30, 2018. The ratio of annualized net charge-offs (recoveries) to total loans was 0.003% for the quarter ended June 30, 2018 compared to (0.02%) for the quarter ended March 31, 2018.

Second Quarter 2018 vs. Second Quarter 2017 Earnings Comparison

Net income available to common shareholders for the second quarter of 2018 totaled $5.2 million compared to $2.4 million for the second quarter of 2017, an increase of $2.9 million or 121.7%.

Operating net earnings for the second quarter of 2018 totaled $8.1 million compared to $4.0 million for the second quarter of 2017, an increase of $4.1 million or 102.7%. The calculation of operating net earnings excludes merger-related costs.

For the second quarter of 2018, revenues from consolidated operations increased $10.3 million in prior year quarterly comparison. Net interest income for the second quarter of 2018 was $21.5 million, an increase of $6.7 million when compared to the second quarter of 2017. The increase was due to interest income earned on a higher volume of loans as well as increased rates.

Non-interest income increased $1.9 million for the second quarter of 2018 as compared to the second quarter of 2017 due to increased service charges and interchange fee income of $1.0 million. The Company also received a financial assistance award of $0.9 million from the U.S. Treasury during the second quarter of 2018 as a result of our designation as a Community Development Financial Institution.

Second quarter 2018 non-interest expense was $19.7 million, an increase of $4.6 million, or 30.6% as compared to the second quarter of 2017. Excluding acquisition charges of $3.8 million and $2.7 million for second quarter of 2018 and 2017, respectively, non-interest expense increased $3.5 million in the second quarter of 2018 as compared to second quarter of 2017, of which $1.8 million is attributable to the salaries and benefits related to the acquisitions of First Community Bank and Sunshine Community Bank.

Net interest income was $21.6 million for the second quarter of 2018 as compared to $14.8 million for the second quarter of 2017. Fully tax equivalent (“FTE”) net interest income totaled $21.8 million and $15.1 million for the second quarter of 2018 and 2017, respectively. FTE net interest income increased $6.7 million in the prior year quarterly comparison due to increased loan volume as well as increased rates. Purchase accounting adjustments accounted for $0.4 million of the difference in net interest income for the second quarter comparisons. Second quarter 2018 FTE net interest margin of 3.92% includes 10 basis points related to purchase accounting adjustments compared to 3.84% for the same quarter in 2017 which included 3 basis points related to purchase accounting adjustments.

Investment securities totaled $453.3 million, or 18.3% of total assets at June 30, 2018, versus $382.0 million, or 21.3% of total assets at June 30, 2017. The average volume of investment securities increased $69.3 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities increased 43 basis points to 3.08% from 2.65% in prior year quarterly comparison. The investment portfolio had a net unrealized loss of $6.0 million at June 30, 2018 as compared to a net unrealized gain of $3.6 million at June 30, 2017.

The FTE average yield on all earning assets increased 29 basis points in prior year quarterly comparison, from 4.25% for the second quarter of 2017 to 4.54% for the second quarter of 2018. Average interest expense increased 28 basis points from 0.51% for the second quarter of 2017 to 0.79% for the second quarter of 2018 due primarily to increased deposit accounts as well as the new issuance of subordinated debt. Cost of all deposits averaged 49 basis points for the second quarter of 2018 compared to 33 basis points for the second quarter of 2017. Public funds increased $36.0 million when comparing June 30, 2018 to June 30, 2017.

Second Quarter 2018 vs First Quarter 2018 Earnings Comparison

Net income available to common shareholders for the second quarter of 2018 increased $1.3 million or 32.5% compared to $4.0 million in the first quarter of 2018.

Operating net earnings for the second quarter of 2018 compared to the first quarter of 2018 increased $2.8 million or 51.8% from $5.4 million for the first quarter of 2018 to $8.1 million for the second quarter of 2018. Operating net earnings exclude the merger-related costs discussed above.

Net interest income for the second quarter of 2018 was $21.6 million as compared to $16.4 million for the first quarter of 2018, an increase of $5.2 million. FTE net interest income increased $5.2 million to $21.8 million from $16.6 million in sequential-quarter comparison. The increase was due to increased loan volume as well as increased rates. Interest income from purchase accounting adjustments increased $0.5 million in sequential quarter comparison due to the acquisitions of First Community Bank and Sunshine Community Bank. Second quarter 2018 FTE net interest margin of 3.92% includes 10 basis points related to purchase accounting adjustments compared to 3.67% for the first quarter in 2018 which included 2 basis points related to purchase accounting adjustments.

Investment securities totaled $453.3 million, or 18.3% of total assets at June 30, 2018, versus $441.9 million, or 19.2% of total assets at March 31, 2018. The average volume of investment securities increased $66.0 million in sequential-quarter comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities increased 4 basis points to 3.08% from 3.04% in sequential-quarter comparison. The investment portfolio had a net unrealized loss of $6.0 million at June 30, 2018 as compared to a net unrealized loss of $5.1 million at March 31, 2018.

The FTE average yield on all earning assets increased in sequential-quarter comparison from 4.19% to 4.54%. Average interest expense increased 12 basis points from 0.67% for the first quarter of 2018 to 0.79% for the second quarter of 2018 due primarily to increased deposit accounts as well as the new issuance of subordinated debt. Cost of all deposits averaged 49 basis points for the second quarter of 2018 compared to 44 basis points for the first quarter of 2018. Public funds decreased $21.2 million when comparing June 30, 2018 to March 31, 2018.

Non-interest income increased $2.2 million in sequential-quarter comparison resulting from increased mortgage income of $0.4 million, increased service charges and interchange fee income of $0.8 million as well as the U. S. Treasury financial assistance award of $0.9 million.

Excluding acquisition charges, non-interest expense increased $3.0 million in sequential-quarter comparison, which reflects increases in salaries and employee benefits of $1.7 million, an increase in occupancy expense of $0.4 million, an increase in other professional services of $0.3 million and an increase in other non-interest expenses of $0.5 million. These increases are mainly due to the acquisitions of First Community Bank and Sunshine Bank.

Year to Date Earnings Comparison

In year-over-year comparison, net income available to common shareholders increased $5.7 million, or 163.8%, from $3.5 million at June 30, 2017 to $9.2 million at June 30, 2018. Operating net earnings increased $6.1 million or 82.5% from $7.4 million at June 30, 2017 to $13.5 million at June 30, 2018. Operating net earnings excludes merger-related costs of $4.3 million, net of tax for the year to date period ending June 30, 2018 and $3.9 million, net of tax for the year to date period ending June 30, 2017.

Net interest income increased $8.9 million in year-over-year comparison, primarily due to interest income earned on a higher volume of loans as well as increased rate.

Non-interest income was $9.1 million at June 30, 2018, an increase of $1.9 million in year-over-year comparison consisting of increases in service charges on deposit accounts, interchange fee income, other charges and fees as well as the financial assistance award.

Non-interest expense was $34.3 million at June 30, 2018, an increase of $3.1 million in year-over-year comparison primarily resulting from increases in salaries and benefits of $2.0 million which relates to the acquisitions of First Community Bank and Sunshine Bank. Increases in occupancy, FDIC premiums, amortization of core deposit intangibles and other non-interest expense were attributable to the acquisitions.

Declaration of Cash Dividend

The Company announced that its Board of Directors declared a cash dividend in the amount of $0.05 per share, to be paid on its common stock on August 22, 2018 to shareholders of record as of the close of business on August 7, 2018.

About The First Bancshares, Inc.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi, is the parent company of The First, A National Banking Association. Founded in 1996, The First has operations in Mississippi, Louisiana, Alabama and Florida. The Company’s stock is traded on the NASDAQ Global Market under the symbol FBMS. Information is available on the Company’s website: www.thefirstbank.com.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. This press release includes operating net earnings, operating earnings per share, fully tax equivalent net interest income, total tangible common equity, tangible book value per common share and certain ratios derived from these non-GAAP financial measures. The Company believes that the non-GAAP financial measures included in this press release allow management and investors to understand and compare results in a more consistent manner for the periods presented in this press release. Non-GAAP financial measures should be considered supplemental and not a substitute for the Company’s results reported in accordance with GAAP for the periods presented, and other bank holding companies may define or calculate these measures differently. These non-GAAP financial measures should not be considered in isolation and do not purport to be an alternative to net income, earnings per share, net interest income, book value or other GAAP financial measures as a measure of operating performance. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is provided in this press release following the Condensed Consolidated Financial Information (unaudited).

Forward Looking Statements

This news release contains statements regarding the projected performance of The First Bancshares, Inc. and its subsidiary. These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act. Actual results may differ materially from the projections provided in this release since such projections involve significant known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; interest rate risk; legislation or regulatory changes which adversely affect the ability of the consolidated Company to conduct business combinations or new operations; and risks related to the acquisitions of Southwest Banc Shares, Inc. and Sunshine Financial, Inc., including the risk that anticipated benefits from the transactions are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions or other unexpected factors or events. These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission, which are available on the SEC’s website, http://www.sec.gov. The Company disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS DATA				Quarter Ended 6/30/18					Quarter Ended 3/31/18					Quarter Ended 12/31/17					Quarter Ended 9/30/17					Quarter Ended 6/30/17
Total Interest Income				$	25,037				$	18,758				$	17,143				$	16,708				$	16,464
Total Interest Expense					3,468					2,378					1,922					1,773					1,629
Net Interest Income					21,569					16,380					15,221					14,935					14,835
FTE net interest income*					21,826					16,609					15,523					15,232					15,140
Provision for loan losses					857					277					122					90					248
Non-interest income					5,632					3,459					3,556					3,658					3,757
Non-interest expense					19,680					14,597					12,390					11,888					15,070
Earnings before income taxes					6,664					4,965					6,265					6,615					3,274
Income tax expense					1,419					1,008					3,851					1,901					908
Net income available to common shareholders				$	5,245				$	3,957				$	2,414				$	4,714				$	2,366
PER COMMON SHARE DATA
Basic earnings per share				$	0.40				$	0.34				$	0.23				$	0.52				$	0.26
Diluted earnings per share					0.40					0.34					0.23					0.51					0.26
Diluted earnings per share, operating*					0.62					0.46					0.45					0.51					0.44
Quarterly dividends per share					.05					.05					.0375					.0375					.0375
Book value per common share at end of period					21.88					20.95					19.92					18.24					17.80
Tangible common book value at period end*					16.82					16.39					17.71					15.48					15.00
Market price at end of period					36.80					32.25					34.20					30.15					27.60
Shares outstanding at period end					13,065,953					12,339,492					11,165,907					9,153,407					9,152,657
Weighted average shares outstanding:
Basic					13,065,953					11,556,968					10,521,236					9,152,674					9,145,179
Diluted					13,167,969					11,652,959					10,598,036					9,224,481					9,206,378
AVERAGE BALANCE SHEET DATA
Total assets				$	2,443,176				$	1,986,150				$	1,810,252				$	1,772,402				$	1,751,092
Loans and leases					1,696,737					1,325,272					1,215,962					1,185,493					1,155,699
Total deposits					2,115,661					1,683,999					1,475,628					1,512,616					1,527,119
Total common equity					274,535					230,255					205,580					164,455					155,667
Total tangible common equity*					217,092					196,326					180,322					139,013					130,789
SELECTED RATIOS
Annualized return on avg assets					0.86	%				0.80	%				0.53	%				1.06	%				0.54	%
Annualized return on avg assets, operating*					1.33	%				1.08	%				1.05	%				1.07	%				0.92	%
Annualized return on avg common equity, operating*					11.85	%				9.31	%				9.21	%				11.54	%				10.31	%
Annualized return on avg tangible common equity, oper*					14.99	%				10.92	%				10.49	%				13.65	%				12.27	%
Average loans to average deposits					80.20	%				78.70	%				82.40	%				78.37	%				75.68	%
FTE Net Interest Margin*					3.91	%				3.67	%				3.79	%				3.81	%				3.84	%
Efficiency Ratio					71.67	%				72.74	%				64.94	%				62.93	%				79.75	%
Efficiency Ratio, operating*					57.70	%				63.98	%				62.93	%				62.68	%				65.56	%
CREDIT QUALITY
Allowance for loan losses (ALLL) as a % of total loans					0.56	%				0.57	%				0.68	%				0.68	%				0.68	%
Nonperforming assets to tangible equity + ALLL					7.88	%				6.99	%				6.56	%				9.71	%				9.10	%
Nonperforming assets to total loans + ORE					1.04	%				0.97	%				1.10	%				1.21	%				1.11	%
Annualized QTD net charge-offs (recoveries) to total loans					0.003	%				(0.02	%)				0.003	%				(0.005	%)				(0.003	%)
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
BALANCE SHEET				June 30, 2018					Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017
Assets
Cash and cash equivalents				$	120,425				$	162,521				$	91,922				$	93,317				$	92,596
Securities available-for-sale					437,011					425,529					356,893					353,035					366,490
Securities held-to-maturity					6,000					6,000					6,000					6,000					6,000
Other investments					10,320					10,399					9,969					9,556					9,544
Total investment securities					453,331					441,928					372,862					368,591					382,034
Loans held for sale					5,914					2,538					4,790					4,588					5,907
Total loans					1,710,271					1,516,579					1,225,306					1,198,193					1,187,936
Allowance for loan losses					(9,512	)				(8,659	)				(8,288	)				(8,175	)				(8,070	)
Loans, net					1,700,759					1,507,920					1,217,018					1,190,018					1,179,866
Premises and equipment					62,289					57,430					46,426					46,203					44,766
Other Real Estate					7,890					7,357					7,158					7,855					8,072
Goodwill and other intangibles					66,105					56,343					24,670					25,325					25,615
Other assets					64,976					63,376					48,392					52,079					50,766
Total assets				$	2,481,689				$	2,299,413				$	1,813,238				$	1,787,976				$	1,789,622
Liabilities and Shareholders’ Equity
Non-interest bearing deposits				$	459,402				$	414,142				$	301,989				$	308,050				$	319,494
Interest-bearing deposits					1,637,833					1,577,502					1,168,576					1,199,941					1,231,305
Total deposits					2,097,235					1,991,644					1,470,565					1,507,991					1,550,799
Borrowings					10,516					29,034					104,072					94,321					59,367
Subordinated debentures					75,192					10,310					10,310					10,310					10,310
Other liabilities					12,920					9,886					5,823					8,374					6,267
Total liabilities					2,195,863					2,040,874					1,590,770					1,620,996					1,626,743
Total shareholders’ equity					285,826					258,539					222,468					166,980					162,879
Total liabilities and shareholders’ equity				$	2,481,689				$	2,299,413				$	1,813,238				$	1,787,976				$	1,789,622

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS STATEMENT				Three Months Ended
				6/30/18					3/31/18				12/31/17					9/30/17					6/30/17
Interest Income:
Loans, including fees				$	21,155				$	15,926			$	14,687				$	14,357				$	14,114
Investment securities					3,262					2,661				2,346					2,180					2,197
Accretion of purchase accounting adjustments					559					59				57					55					56
Other interest income					61					112				53					116					97
Total interest income					25,037					18,758				17,143					16,708					16,464
Interest Expense:
Deposits					2,498					1,840				1,455					1,436					1,364
Borrowings					69					460				392					357					259
Subordinated debentures					852					78				105					41					67
Accretion of purchase accounting adjustments					49					-				(30	)				(61	)				(61	)
Total interest expense					3,468					2,378				1,922					1,773					1,629
Net interest income					21,569					16,380				15,221					14,935					14,835
Provision for loan losses					857					277				122					90					248
Net interest income after provision for loan losses					20,712					16,103				15,099					14,845					14,587
Non-interest Income:
Service charges on deposit accounts					1,341					1,027				908					902					922
Mortgage Income					1,213					800				1,102					1,276					1,208
Interchange Fee Income					1,500					1,040				961					935					959
Gain (loss) on securities, net					(5	)				-				3					(10	)				(1	)
Gain on sale of premises and equipment					-					-				-					-					-
Financial Assistance Award					917					-				-					-					-
Other charges and fees					666					592				582					555					669
Total non-interest income					5,632					3,459				3,556					3,658					3,757
Non-interest expense:
Salaries and employee benefits					9,502					7,789				7,478					7,327					7,625
Occupancy expense					2,034					1,646				1,427					1,390					1,348
FDIC premiums					368					367				365					355					331
Marketing					70					80				118					50					99
Amortization of core deposit intangibles					356					201				173					160					182
Other professional services					438					189				194					367					567
Acquisition charges					3,838					1,758				384					-					2,682
Other non-interest expense					3,074					2,567				2,251					2,239					2,236
Total Non-interest expense					19,680					14,597				12,390					11,888					15,070
Earnings before income taxes					6,664					4,965				6,265					6,615					3,274
Income tax expense					1,419					1,008				3,851					1,901					908
Net income available to common shareholders				$	5,245				$	3,957			$	2,414				$	4,714				$	2,366
Diluted earnings per common share				$	0.40				$	0.34			$	0.23				$	0.51				$	0.26
Diluted earnings per common share, operating*				$	0.62				$	0.46			$	0.45				$	0.51				$	0.44
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS STATEMENT				Year to Date
				2018					2017
Interest Income:
Loans, including fees				$	37,081				$	27,558
Investment securities					5,923					4,326
Accretion of purchase accounting adjustments					618					112
Other interest income					173					221
Total interest income					43,795					32,217
Interest Expense:
Deposits					4,338					2,562
Borrowings					529					623
Subordinated debentures					930					130
Amortization (Accretion) of purchase accounting adjustments					49					(101	)
Total interest expense					5,846					3,214
Net interest income					37,949					29,003
Provision for loan losses					1,134					294
Net interest income after provision for loan losses					36,815					28,709
Non-interest Income:
Service charges on deposit accounts					2,368					1,790
Mortgage Income					2,013					2,124
Interchange Fee Income					2,540					1,862
Gain (loss) on securities, net					(5	)				(9	)
Gain on sale of premises and equipment					-					-
Financial Assistance Award					917					-
Other charges and fees					1,258					1,381
Total non-interest income					9,091					7,148
Non-interest expense:
Salaries and employee benefits					17,291					15,247
Occupancy expense					3,680					2,718
FDIC premiums					735					532
Marketing					150					168
Amortization of core deposit intangibles					557					331
Other professional services					627					910
Acquisition charges					5,596					6,280
Other non-interest expense					5,641					4,979
Total Non-interest expense					34,277					31,165
Earnings before income taxes					11,629					4,692
Income tax expense					2,427					1,204
Net income available to common shareholders				$	9,202				$	3,488
Diluted earnings per common share				$	0.74				$	0.38
Diluted earnings per common share, operating*				$	1.09				$	0.80
*See reconciliation of Non-GAAP financial measures

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
COMPOSITION OF LOANS				June 30, 2018					Percent of Total				Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017					Percent of Total
Commercial, financial and agricultural				$	228,643				13.3	%			$	213,118				$	165,780				$	164,577				$	167,799				14.1	%
Real estate – construction					229,164				13.4	%				213,712					183,328					171,609					169,971				14.2	%
Real estate – commercial					658,096				38.3	%				561,153					467,484					456,110					448,218				37.5	%
Real estate – residential					546,120				31.8	%				475,868					385,099					377,308					372,815				31.2	%
Lease Financing Receivable					2,476				0.1	%				2,433					2,450					2,008					2,189				0.2	%
Obligations of States & subdivisions					10,627				0.6	%				15,861					3,109					5,892					5,775				0.5	%
Consumer					35,145				2.2	%				34,434					18,056					20,689					21,169				1.8	%
Loans held for sale					5,914				0.3	%				2,538					4,790					4,588					5,907				0.5	%
Total loans				$	1,716,185				100	%			$	1,519,117				$	1,230,096				$	1,202,781				$	1,193,843				100	%
COMPOSITION OF DEPOSITS				June 30, 2018					Percent of Total				Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017					Percent of Total
Noninterest bearing				$	459,402				21.9	%			$	414,142				$	301,989				$	308,050				$	319,494				20.6	%
NOW and other					731,617				34.9	%				761,318					601,694					639,802					665,250				42.9	%
Money Market/Savings					519,516				24.7	%				434,569					283,5792					292,592					296,705				19.1	%
Time Deposits of less than $250,000					308,086				14.7	%				295,317					220,951					209,714					203,254				13.1	%
Time Deposits of $250,000 or more					78,614				3.8	%				86,298					62,352					57,833					66,096				4.3	%
Total Deposits				$	2,097,235				100	%			$	1,991,644				$	1,470,565				$	1,507,991				$	1,550,799				100	%
ASSET QUALITY DATA				June 30, 2018									Mar 31, 2018					Dec 31, 2017					June 30, 2017					June 30, 2017
Nonaccrual loans				$	8,440								$	5,746				$	5,674				$	4,852				$	3,979
Loans past due 90 days and over					940									1,096					285					1,436					760
Total nonperforming loans					9,380									6,842					5,959					6,288					4,739
Other real estate					7,890									7,357					7,158					7,855					8,072
Nonaccrual securities					616									616					408					408					408
Total nonperforming assets				$	17,886								$	14,815				$	13,525				$	14,551				$	13,219
Nonperforming assets to total assets					0.72	%								0.64	%				0.75	%				0.81	%				0.74	%
Nonperforming assets to total loans + ORE					1.04	%								0.97	%				1.10	%				1.21	%				1.11	%
ALLL to nonperforming loans					101.41	%								128.13	%				139.08	%				130.01	%				170.29	%
ALLL to total loans					0.56	%								0.57	%				0.68	%				0.68	%				0.68	%
Quarter-to-date net charge-offs (recs)				$	12								$	(94	)			$	9				$	(15	)			$	(97	)
Annualized QTD net chg/offs (recs) to loans					0.003	%								(0.02	%)				0.003	%				(0.005	%)				(0.003	%)

FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
Yield				Three Months Ended												Three Months Ended												Three Months Ended												Three Months Ended												Three Months Ended
Analysis				June 30, 2018												March 31, 2018												December 31, 2017												September 30, 2017												June 30, 2017
								Tax												Tax												Tax												Tax												Tax
				Avg				Equivalent				Yield/				Avg				Equivalent				Yield/				Avg				Equivalent				Yield/				Avg				Equivalent				Yield/				Avg				Equivalent				Yield/
				Balance				interest				Rate				Balance				interest				Rate				Balance				interest				Rate				Balance				interest				Rate				Balance				interest				Rate
Taxable securities				$	328,898			$	2,423			2.95	%			$	274,595			$	1,986			2.89	%			$	271,459			$	1,760			2.59	%			$	280,441			$	1,601			2.28	%			$	282,235			$	1,605			2.27	%
Tax-exempt securities					117,875				1,015			3.44	%				106,161				904			3.41	%				93,645				888			3.79	%				93,716				876			3.74	%				95,272				897			3.77	%
Total investment securities					446,773				3,438			3.08	%				380,756				2,890			3.04	%				365,104				2,648			2.90	%				374,157				2,477			2.65	%				377,507				2,502			2.65	%
Fed funds sold					17,242				61			1.42	%				11,368				35			1.23	%				54,640				46			0.34	%				36,591				113			1.24	%				39,048				95			0.97	%
Int bearing deposits in other banks					68,079				81			0.48	%				94,321				77			0.33	%				4,544				6			0.53	%				3,463				3			0.35	%				5,214				2			0.15	%
Loans					1,696,737				21,714			5.12	%				1,325,272				15,985			4.82	%				1,215,962				14,745			4.85	%				1,185,493				14,412			4.86	%				1,155,699				14,170			4.90	%
Total Interest earning assets					2,228,831				25,294			4.54	%				1,811,717				18,987			4.19	%				1,640,250				17,445			4.25	%				1,599,704				17,005			4.25	%				1,577,468				16,769			4.25	%
Other assets					214,345												174,433												170,002												172,698												173,624
Total assets				$	2,443,176											$	1,986,150											$	1,810,252											$	1,772,402											$	1,751,092
Interest-bearing liabilities:
Deposits				$	1,676,110			$	2,547			0.61	%			$	1,330,925			$	1,840			0.55	%			$	1,173,386			$	1,425			0.49	%			$	1,204,614			$	1,375			0.46	%			$	1,211,959			$	1,303			0.43	%
Repo					-				-			0.00	%				-				-			0.00	%				-				-			0.00	%				4,891				38			3.11	%				5,000				48			3.84	%
Fed funds purchased					1,382				9			2.60	%				202				1			1.98	%				2,543				11			1.73	%				3,816				19			1.99	%				1,906				8			1.68	%
FHLB & FTN					22,959				138			2.40	%				71,944				459			2.55	%				103,421				381			1.47	%				68,041				300			1.76	%				40,765				203			1.99	%
Subordinated debentures					54,036				774			5.73	%				10,310				78			3.03	%				10,310				105			4.07	%				10,310				41			1.59	%				10,310				67			2.60	%
Total interest bearing liabilities					1,754,487				3,468			0.79	%				1,413,381				2,378			0.67	%				1,289,660				1,922			0.60	%				1,291,672				1,773			0.55	%				1,269,940				1,629			0.51	%
Other liabilities					414,154												342,514												315,012												316,275												325,485
Shareholders' equity					274,535												230,255												205,580												164,455												155,667
Total liabilities and shareholders' equity				$	2,443,176											$	1,986,150											$	1,810,252											$	1,772,402											$	1,751,092
Net interest income (FTE)*								$	21,826			3.75	%							$	16,609			3.52	%							$	15,523			3.66	%							$	15,232			3.70	%							$	15,140			3.74	%
Net interest margin (FTE)*												3.92	%											3.67	%											3.79	%											3.81	%											3.84	%
Core net interest margin*												3.82	%											3.65	%											3.76	%											3.78	%											3.81	%

FIRST BANCSHARES, INC and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)
				Three Months Ended
Per Common Share Data				June 30, 2018					Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017
Book value per common share				$	21.88				$	20.95				$	19.92				$	18.24				$	17.80
Effect of intangible assets per share					5.06					4.56					2.21					2.76					2.80
Tangible book value per common share				$	16.82				$	16.39				$	17.71				$	15.48				$	15.00
Diluted earnings per share				$	0.40				$	0.34				$	0.23				$	0.51				$	0.26
Effect of acquisition charges					0.29					0.15					0.04					-					0.29
Taxes on acquisition charges					(0.07	)				(0.03	)				(0.01	)				-					(0.11	)
Charge related to reduction in deferred tax asset					-					-					0.19					-					-
Diluted earnings per share, operating				$	0.62				$	0.46				$	0.45				$	0.51				$	0.44
									Year to Date
									2018										2017
Diluted earnings per share									$	0.74									$	0.38
Effect of acquisition charges										0.45										0.68
Tax										(0.10	)									(0.26	)
Diluted earnings per share, operating									$	1.09									$	0.80
									Year to Date
									2018										2017
Net income available to common shareholders									$	9,202									$	3,488
Effect of acquisition charges										5,596										6,280
Tax										(1,303	)									(2,372	)
Net earnings available to common shareholders, operating									$	13,495									$	7,396
				Three Months Ended
Average Balance Sheet Data				June 30, 2018					Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017
Total average assets	A			$	2,443,176				$	1,986,150				$	1,810,252				$	1,772,402				$	1,751,092
Total average earning assets	B			$	2,228,831				$	1,811,717				$	1,640,250				$	1,599,704				$	1,577,468
Common Equity	C			$	274,535				$	230,255				$	205,580				$	164,455				$	155,667
Less intangible assets					57,443					33,929					25,258					25,442					24,878
Tangible common equity	D			$	217,092				$	196,326				$	180,322				$	139,013				$	130,789
				Three Months Ended
Net Interest Income Fully Tax Equivalent				June 30, 2018					Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017
Net interest income	E			$	21,569				$	16,380				$	15,221				$	14,935				$	14,835
Tax-exempt investment income					(758	)				(675	)				(586	)				(579	)				(592	)
Taxable investment income					1,015					904					888					876					897
Net Interest Income Fully Tax Equivalent	F			$	21,826				$	16,609				$	15,523				$	15,232				$	15,140
Annualized Net Interest Margin	E/B				3.87	%				3.62	%				3.71	%				3.73	%				3.76	%
Annualized Net Interest Margin, Fully Tax Equivalent	F/B				3.92	%				3.67	%				3.79	%				3.81	%				3.84	%

				Three Months Ended
Core Net Interest Margin				June 30, 2018					Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017
Net interest income (FTE)				$	21,826				$	16,609				$	15,523				$	15,232				$	15,140
Less purchase accounting adjustments					510					59					87					116					117
Net interest income, net of purchase accounting adj	G			$	21,316				$	16,550				$	15,436				$	15,116				$	15,023
Total average earning assets				$	2,228,831				$	1,811,717				$	1,640,250				$	1,599,704				$	1,577,468
Add average balance of loan valuation discount					6,046					1,578					1,558					1,640					1,721
Avg earning assets, excluding loan valuation discount	H			$	2,234,877				$	1,813,295				$	1,641,808				$	1,601,344				$	1,579,189
Core net interest margin	G/H				3.82	%				3.65	%				3.76	%				3.78	%				3.81	%
				Three Months Ended
Efficiency Ratio				June 30, 2018					Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017
Operating Expense
Total non-interest expense				$	19,680				$	14,598				$	12,390				$	11,888				$	15,070
Pre-tax non-operating expenses					(3,838	)				(1,758	)				(384	)				(47	)				(2,682	)
Adjusted Operating Expense	I			$	15,842				$	12,840				$	12,006				$	11,841				$	12,388
Operating Revenue
Net interest income, FTE				$	21,826				$	16,609				$	15,523				$	15,232				$	15,140
Total non-interest income					5,632					3,459					3,556					3,658					3,757
Pre-tax non-operating items					-					-					-					-					-
Adjusted Operating Revenue	J			$	27,458				$	20,068				$	19,079				$	18,890				$	18,897
Efficiency Ratio, operating	I/J				57.70	%				63.98	%				62.93	%				62.68	%				65.56	%
				Three Months Ended
Return Ratios				June 30, 2018					Mar 31, 2018					Dec 31, 2017					Sept 30, 2017					June 30, 2017
Net income available to common shareholders	K			$	5,245				$	3,957				$	2,414				$	4,714				$	2,366
Acquisition charges					3,838					1,758					384					47					2,682
Tax on acquisition charges					(948	)				(355	)				(148	)				(18	)				(1,035	)
Charge related to reduction in deferred tax asset					-					-					2,081					-					-
Net earnings available to common shareholders, oper	L			$	8,135				$	5,360				$	4,731				$	4,743				$	4,013
Annualized return on avg assets	K/A				0.86	%				0.80	%				0.53	%				1.06	%				0.54	%
Annualized return on avg assets, oper	L/A				1.33	%				1.08	%				1.05	%				1.07	%				0.92	%
Annualized return on avg common equity, oper	L/C				11.85	%				9.31	%				9.21	%				11.54	%				10.31	%
Annualized return on avg tangible common equity, oper	L/D				14.99	%				10.92	%				10.49	%				13.65	%				12.27	%
Mortgage Department
Net Interest Income after provision for loan losses				$	214				$	189				$	272				$	249				$	233
Loan fee income					1,213					800					1,102					1,276					1,208
Salaries and employee benefits					903					849					806					882					946
Other non-interest expense					127					97					101					102					99
Earnings before income taxes				$	397				$	43				$	467				$	541				$	396

View source version on businesswire.com: https://www.businesswire.com/news/home/20180723005798/en/

The First Bancshares, Inc.
M. Ray “Hoppy” Cole, 601-268-8998
Chief Executive Officer
or
Dee Dee Lowery, 601-268-8998
Chief Financial Officer