The First Bancshares, Inc.

Good day, and thank you for standing by. Welcome to the review of the second quarter 2024 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. 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.

Well, thank you, and good morning, everyone. Welcome to our second quarter conference call. As is our custom, we'll start with several prepared remarks this morning and open up to questions at the end. We've got several team members with us this morning, Denny Lowry, our CFO, Ted Day-Fletcher, our Chief Lending Officer, and George Noonan, our Chief Credit Officer. So for the second quarter, we were very pleased with the performance of the company in terms of growth, profitability, and credit quality. Loans grew by $111 million, so they were up about 8.6% on an annualized basis. Our markets continue to provide us ample growth opportunities. We were able to see margin expansion, and our margin expanded six basis points. Our core margin was up actually nine basis points. Credit quality remains strong with only four basis points of net charge-offs and three basis points of migration and MPAs. And although net income was down a little bit, it was down primarily due to the $1.7 million provision that we took associated with the loan growth. Actually, pre-tax, pre-provision income was up 800,000 or 2.9%. So, again, we were very pleased with the performance of the company. Dini, would you like to talk about our financial performance in a little more detail?

Sure. Happy thanks. As Tapial did, what he said, we're very pleased with the quarter and very happy with all-around solid results. But we did report net earnings of $19.7 million, which was $0.62 on a diluted share. That was now $900,000 from first quarter, but we did record a $1.7 million provision expense this quarter and zero for last quarter. So that is basically accounting for the difference there. Pre-tax, pre-provision, operating earnings totaled $27.4 million compared to $26.6 million. So we did have a 2.9% increase for the quarter when you look at pre-tax, pre-provision. As Javi mentioned, our core margin did increase nine basis points to 319. The cost of deposits remained the same at 178, which I'd be like, woo-hoo. We feel like we're there, finally on our deposits. Yes. Our yield on our earning assets increased one basis point, and then, of course, on our interest-bearing liabilities, we had a decrease of three basis points. So our non-interest-bearing portfolio actually increased both in dollars and percent this quarter back to 28%. Our interest-free deposit costs increased one basis point to 246, and our cumulative beta stayed the same at 43% for this quarter. Our deposits did decrease this quarter, 84.2 million, which was about 1.3%, but 38.3 million of that was related to public funds. And as you know, following us, we will continue to see a decrease in deposits throughout the rest of the year. because of our public fund portfolio. So that was expected. On our liquidity position, still remain very strong. Our ratios are well above our limits. Our loan deposit ratio is 79%. We have $2 billion available at the home loan bank for borrowing, and we have about 38% of our securities portfolio unpledged. So we're all pleased with all of those numbers. And actually over the next four quarters, we have about $266 million in cash flows coming off the securities book into cash over the next four quarters. And then our ratios for the quarter, looking at operating ratios, we had an ROA of 101, and our return on average tangible common equity of 1276, and efficiency ratio of 60.65. And then our capital ratios, TCE increased to 8.3. Our leverage ratio was 10, and our total risk base was 15.3, which all were in line with last quarter. So overall, we're very pleased.