First Bancshares, Inc. · OTC:FIBH
First Bancshares — Merger or Acquisition (October 2017)
51 slides from First Bancshares's merger presentation, Oct 24, 2017
Slide 1: Growing in the Gulf South
Growing in the Gulf South Nasdaq: FBMS October 24, 2017
Slide 2: About The First Bancshares / No Offer or Solicitation
ABOUT THE FIRST BANCSHARES, INC.: The First Bancshares, Inc. (“FBMS” or the “Company”), 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
Slide 3: Forward Looking Statement
3 This presentation contains “forward - looking statements” as defined in the Private Securities Litigation Reform Act of 1995, and is intended to be protected by the safe harbor provided by the same. These statements are subject to numerous risks and uncertainties. These risks and uncertainties inc
Slide 4: Table of Contents
4 Table of Contents Section Offering Summary Franchise Overview Financial Results Acquisition Announcement Appendix I: Acquisition Related Supplemental Slides Appendix II: Historical Financials Appendix III: Non - GAAP Reconciliation 1 2 3 4 5 6 7
Slide 5: Offering Summary
Offering Summary QO Mekirg ee
Slide 6: Offering Summary
Offering Summary 6 The First Bancshares, Inc. (“FBMS” or “Company”) Issuer Exchange / Ticker Offering Type Security Base Deal Value Overallotment Lock Up Use of Proceeds Bookrunner Lead Manager Nasdaq / FBMS Follow - On Offering Common Stock $45 million (100% Primary) 15% 90 days for all officers an
Slide 7: Franchise Overview
QThetirst Franchise Overview
Slide 8: Overview of The First Bancshares, Inc.
Overview of The First Bancshares, Inc. 8 □ Attractive demographic footprint, operating in premier markets across Mississippi, Louisiana, Florida, and Alabama □ Experienced , performance - driven Management team with local market knowledge □ Successful acquirer, having closed six transactions since 2
Slide 9: Company Overview
□ The First Bancshares, Inc. (Nasdaq: FBMS) is a $1.8 billion asset bank holding company headquartered in Hattiesburg, Mississippi ▪ Founded in August 1996 ▪ Operates one subsidiary bank, The First, A National Banking Association ▪ Offers general commercial and retail banking services for small to m
Slide 10: Overview of Our Leadership Team
10 M. Ray "Hoppy" Cole, Jr. Dee Dee Lowery President, CEO Executive VP, CFO 30 years experience 26 years experience Ion Mixon Eric Waldron Executive VP, Risk Manager President, Northern Region 17 years experience 21 years experience Chris Ryals Carol Daniel Executive VP, COO Executive VP, Credit Adm
Slide 11: Evolution of Our Franchise
Evolution of Our Franchise… 11 December 31, 2009 FBMS Branch (9) September 30, 2017 FBMS Branch (45) FBMS LPO (4) Total Assets ($mm) $478 $503 $500 $540 $571 $647 $698 $830 $940 $181 $181 $370 $447 $447 $447 $848 $681 $721 $941 $1,094 $1,145 $1,277 $1,788 $0 $500 $1,000 $1,500 $2,000 2009 2010 2011
Slide 12: Through the Execution of Strategic Vision
… Through the Execution of Strategic Vision 12 Source: SNL Financial, Company documents Pricing data as of 10/23/17 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 Price Performance since 12/31/08 • In 2009, FBMS formul
Slide 13: Improving Diversification of Our Balance Sheet by State
Improving Diversification of Our Balance Sheet by State 13 2009 Deposits by State 2015 Deposits by State 2017 Deposits by State Mississippi 100% Mississippi 73% Alabama 23% Louisiana 4% Alabama 17% Louisiana 19% Florida 7 % Mississippi 57% Source: SNL Financial and Company 2009, 2015, and 2017 data
Slide 14: Market Demographics
Market Demographics 14 ‘ 18 – ‘ 23 Projected Population Growth (%) ‘ 18 – ‘ 23 Projected Median HHI Growth (%) 2023 Projected Median HHI ($) Source: SNL Financial Deposit data as of 6/30/17 Demographic data deposit weighted by county 3.1% 1.7% 6.7% 2.8% 0.8% 4.6% 3.8% 0.0% 2.0% 4.0% 6.0% 8.0% FBMS A
Slide 15: Continuously Evaluating Potential Acquisitions
15 Continuously Evaluating Potential Acquisitions Hattiesburg Mobile Baton Rouge Birmingham Tallahassee Atlanta Huntsville Chattanooga Columbus Montgomery Jacksonville Knoxville Nashville Jackson Metairie New Orleans Memphis Little Rock Shreveport Savannah Banks: $200 mm - $500 mm Banks: $500 mm - $
Slide 16: Financial Results
QThetirst Financial Results
Slide 17: Historical Performance Over Time
$2.2 $2.5 $3.6 $4.2 $6.3 $8.5 $9.7 $2.5 $3.4 $2.6 $4.0 $2.6 $4.7 $0.0 $3.0 $6.0 $9.0 $12.0 $0.51* $0.47* $0.47* $0.37* $0.46* Source : SNL Financial Yearly data for the twelve months ended 12/31 of each year, respectively; quarterly data for the three months ended each respective quarter * Operating
Slide 18: Net Interest Income Over Time
$16.3 $19.1 $22.2 $28.4 $33.4 $37.0 $40.3 $9.7 $14.2 $9.9 $14.8 $10.1 $14.9 $0.0 $12.5 $25.0 $37.5 $50.0 Net Interest Income Over Time 18 3.74% 3.99% 3.59% 3.44% 3.70% 3.72% 3.71% 3.85% 3.81% Net Interest Income ($mm) NIM (1) 3.70% 3.68% Source : SNL Financial Yearly data for the twelve months ended
Slide 19: Profitability Performance
19 Profitability Performance Core ROAA (%) (1) Net Interest Margin (%) Core Efficiency Ratio (%) (1) Core ROATCE (%) (1) Source: SNL Financial Data for the twelve months ended 12/31 each respective year , Q1 ’17 , Q2 ’17, Q3 ‘17 data for the three months ended, respectively (1) Non - GAAP measure. S
Slide 20: Historical Balance Sheet Growth
Historical Balance Sheet Growth 20 Assets ($mm) Source: SNL Financial Data as of 12/31 of each year, respectively; Q3 ‘17 data as of 9 /30/17 $478 $503 $681 $721 $941 $1,094 $1,145 $1,277 $1,788 $0 $450 $900 $1,350 $1,800 2009 2010 2011 2012 2013 2014 2015 2016 Q3 '17 Loans ($mm) Deposits ($mm) $315
Slide 21: Capital & Liquidity Position
Capital & Liquidity Position TCE / TA (%) (1) Leverage Ratio (%) Total Risk Based Capital (%) Loans / Deposits (%) Source: SNL Financial Data as of 12/31 of each year, respectively; Q3 ‘17 data as of 9/30/17 (1) Non - GAAP measure. See reconciliation to closest GAAP measure in Appendix III 21 5.9% 6
Slide 22: Loan Portfolio
22 Loan Portfolio C&D 14% 1 - 4 Family 27% Multifamily 3% Owner - Occupied CRE 21% Non Owner - Occupied CRE 16% C&I 13% Consumer & Other 3% Farmland 2% Q3 ‘17 Loan Composition Yield on Total Loans: 4.86% Dollars in Thousands Source : SNL Financial Data as of 12/31 of each year, respectively; Q3 ‘17
Slide 23: Focus on Credit Quality
Focus on Credit Quality NPAs / Loans + OREO (%) Annualized NCOs / Average Loans (%) Allowance for Loan Losses / Loans (%) NPAs Over Time ($) Source: SNL Financial Data as of or for the twelve months ended each respective year; Q1, Q2, Q3 ‘17 data as of or for the three months ended, respectively $3.
Slide 24: C&D and CRE Loan Concentrations
C&D and CRE Loan Concentrations C&D / Total Bank Capital (%) (1) Non - Owner Occupied CRE / Total Bank Capital (%) (2) Source : Company Documents Data as of 12/31 each respective year; Q2 ‘17 data as of 6/30/17 (1) C&D includes 1 - 4 family residential construction loans, other construction loans an
Slide 25: Deposit Composition
25 Deposit Composition Demand Deposits 20% NOW Accounts 42% Money Market & Savings 19% Retail Time Deposits 14% Jumbo Time Deposits 4% Cost of Total Deposits: 0.36% Source: SNL Financial Dollars in Thousands Note: Jumbo time deposits defined as greater than $250,000 Note: Pie chart percentages may n
Slide 26: Asset Liability Management
26 Asset Liability Management The First Bancshares is Asset Sensitive Change in Interest Rates % Change From Base Policy Limit % Change From Base Policy Limit Up 400 bps 17.9% -20.0% 31.8% -40.0% Up 300 bps 13.6% -15.0% 26.2% -30.0% Up 200 bps 9.1% -10.0% 19.2% -20.0% Up 100 bps 4.6% -5.0% 10.7% -10
Slide 27: Acquisition Announcement
TheFirst —— BANCSHARES, INC. Sp Acquisition Announcement
Slide 28: Transaction Rationale
28 Transaction Rationale □ Enhances our Alabama Gulf Coast presences □ Positions FBMS as the largest community bank by deposit market share along the Alabama Coast (1) □ Acquisition of 100+ year old bank with quality core customer base with 95% core deposits □ 2+ times more small to mid sized busine
Slide 29: Overview of Transaction Terms
First Bancshares, Inc. (Nasdaq: FBMS) / Southwest Banc Shares , Inc. (“Southwest”) Overview of Transaction Terms 29 Acquirer / Target Fixed Aggregate Deal Value (1) Fixed Cash Deal Value Fixed Stock Deal Value Implied FBMS Shares Issued to Target (2) Implied Exchange Ratio (2) Price / Tangible Book
Slide 30: Overview of Southwest Banc Shares, Inc.
30 Overview of Southwest Banc Shares, Inc. □ Holding Company for First Community Bank □ Headquartered in Mobile, Alabama □ Founded in 1909; family owned since inception □ Four branches in the Mobile, AL MSA and three in the Daphne - Fairhope - Foley, AL MSA, and two in Washington county □ 91 full ti
Slide 31: Strengthening Our Presence: Combined Deposit Market Share
31 Strengthening Our Presence… Combined Deposit Market Share (1) Alabama Gulf Coast Footprint Source: SNL Financial Data as of 6/30/17 (1) Deposit market share data includes Mobile, AL MSA and Daphne - Fairhope - Foley, AL MSA FBMS Southwest Deposits Market Rank Institution ($mm) Share Branches 1 Re
Slide 32: In Highly Desirable Markets
32 …in Highly Desirable Markets FBMS Counties of Operation (3) Source: SNL Financial; http://mobilechamber.com; http://asdd.com/; http://airbusaslabama.com; http://www.southalabama.edu Data as of 6/30/17, deposit data as of 6/30/17 (1) Small to mid - sized businesses defined as businesses with annua
Slide 33: Extensive Due Diligence Conducted
33 Extensive Due Diligence Conducted 33 □ Close coordination with Southwest’s Management team in all aspects of strategy and operations □ Risk management analysis done by FBMS’ senior management, including CEO, CFO, COO, Credit Risk Manager, Credit Administrator, Chief Retail Banking Officer, and lo
Slide 34: Transaction Assumptions
□ Estimated noninterest expense savings of 40% ▪ 50% realized during 2018 and 100% achieved in 2019 and thereafter Transaction Assumptions 34 Cost Savings Transaction Expenses Loan Mark Other Marks CDI Revenue Synergies □ Estimated one - time transaction expenses of $4.3 million (after - tax) □ Gros
Slide 35: Key Transaction Impacts to FBMS
35 Key Transaction Impacts to FBMS (1) 2019 EPS Impact IRR Initial Tangible Book Value Impact Tangible Book Value Earnback Period TCE / TA Leverage Ratio Common Equity Tier 1 Ratio Tier 1 Ratio Total Risk - Based Ratio C&D / Total Capital CRE / Total Capital Capital Ratios Loan Concentration (2) - -
Slide 36: Overview of Our Combined Company
Mississippi 44% Lousiana 18% Alabama 34% Florida 4% 36 Overview of Our Combined Company Combined Company Footprint Pro Forma Highlights Pro Forma Deposits by State Pro Forma Loans by State Source: SNL Financial Data as of or for the three months ended 6/30/17 Note: pro forma financial highlights exc
Slide 37: Summary
37 Summary 37 □ Ideal combination of strategic and financial attractiveness to all parties - We believe this will create long - term value for both FBMS and Southwest shareholders □ Creates a valuable Gulf Coast bank □ Experienced management team and dedicated board of directors who act as sharehold
Slide 38: Appendix I: Acquisition Related Supplemental Slides
APPENDIX I: ACQUISITION RELATED SUPPLEMENTAL SLIDES
Slide 39: Pro Forma Loan Composition
C&D 14% 1 - 4 Family 26% Multifamily 3% Owner - Occupied CRE 22% Non Owner - Occupied CRE 16% C&I 13% Consumer & Other 4% Farmland 2% 39 Pro Forma Loan Composition Southwest FBMS Pro Forma (1) C&D 14% 1 - 4 Family 27% Multifamily 3% Owner - Occupied CRE 22% Non Owner - Occupied CRE 16% C&I 13% Consu
Slide 40: Pro Forma Deposit Composition
40 Pro Forma Deposit Composition Southwest FBMS Pro Forma (1) Demand Deposits 20% NOW Accounts 42% Money Market & Savings 19% Retail Time Deposits 14% Jumbo Time Deposits 4% Demand Deposits 20% NOW Accounts 17% Money Market & Savings 35% Retail Time Deposits 23% Jumbo Time Deposits 5% Demand Deposit
Slide 41: Branch Overlap
3.25 miles 4.40 miles 2.60 miles 2.25 miles 1.00miles 41 Branch Overlap Mobile, AL and Daphne - Fairhope - Foley, AL MSAs Source: SNL Financial Distance shown for Southwest branches within five miles of a FBMS branch FBMS Southwest
Slide 42: Pro Forma Deposit Market Share
42 Pro Forma Deposit Market Share Mobile, AL MSA Daphne - Fairhope - Foley, AL MSA Deposits Market Rank Institution ($mm) Share Branches 1 Regions Financial Corp. $2,340 32.36% 25 2 PNC Financial Services Group Inc. 1,001 13.84 14 3 BBVA Compass Bancshares Inc. 889 12.29 12 4 Hancock Holding Co. 685
Slide 43: Appendix II: Historical Financials
APPENDIX II: HISTORICAL FINANCIALS
Slide 44: Historical Financials Highlights
44 Historical Financials Highlights Source : SNL Financial Yearly data as of or for the twelve months ended 12/31 each respective year, Q2 ’17 and Q3 ’17 data for the three months ende d 6/30/17 and 9/30/2017, respectively Note: Southwest data bank level (1) Non - GAAP measure. See reconciliation to
Slide 45: Appendix III: Non-GAAP Reconciliation
Appendix III: Non - GAAP Reconciliation
Slide 46: Core Efficiency Ratio
46 Core Efficiency Ratio Source: SNL Financial and Company Documents FBMS Core Efficiency Ratio Year ended Three months ended, December 31, December 31, March 31, June 30, September 30, (Dollars in thousands) 2015 2016 2017 2017 2017 Operating Expense Total noninterest expense $32,161 $36,862 $16,09
Slide 47: Tangible Common Equity to Tangible Assets Ratio
47 Tangible Common Equity to Tangible Assets Ratio Source: SNL Financial and Company Documents FBMS Tangible Common Equity to Tangible Assets Year ended, Three months ended, December 31, December 31, December 31, December 31, June 30, September 30, (Dollars in thousands) 2013 2014 2015 2016 2017 201
Slide 48: Core Return on Average Assets Ratio
48 Core Return on Average Assets Ratio Source: SNL Financial and Company Documents FBMS Core Return on Average Assets Year ended, Three months ended, December 31, December 31, March 31, June 30, September 30, (Dollars in thousands) 2015 2016 2017 2017 2017 Net Income Before Extraordinary Items $8,79
Slide 49: Core Return on Average Tangible Common Equity Ratio
49 Core Return on Average Tangible Common Equity Ratio Source: SNL Financial and Company Documents FBMS Core Return on Average Tangible Common Equity Year ended, Three months ended, December 31, December 31, March 31, June 30, September 30, (Dollars in thousands) 2015 2016 2017 2017 2017 Net Income
Slide 50: Operating Earnings per Share
50 Operating Earnings per Share Source: SNL Financial and Company Documents FBMS Operating Earnings Per Share Three months ended, March 31, June 30, September 30, March 31, June 30, September 30, 2016 2016 2016 2017 2017 2017 Diluted Earnings Per Share $0.46 $0.47 $0.45 $0.12 $0.26 $0.51 Effect of a
Slide 51: Southwest Tangible Common Equity
51 Southwest Tangible Common Equity Three months ended, June 30, (Dollars in thousands) 2017 Tangible Common Equity Total shareholders' equity $36,120 Less: Total preferred equity 0 Total Common equity 36,120 Less: Goodwill 0 Less: Core deposit intangibles 0 Tangible Common Equity $36,120 Southwest
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