First Bancshares Inc. (FBSI, Financial) filed Quarterly Report for the period ended 2008-12-31.
First Bancshares Inc. has a market cap of $25.2 million; its shares were traded at around $12.95 with a P/E ratio of 70.9 and P/S ratio of 3.15.
compared to $249.2 million at June 30. 2008. The decrease in total assets of
$10.0 million, or 4.0%, was the result of a decrease of $18.9 million in loans
receivable, net. This decrease was partially offset by increases in
investments, real estate owned, cash and cash equivalents and deferred tax
assets, which totaled $6.5 million, $687,000, $528,000, and $1.3 million,
respectively. Deposits decreased $15.8 million and Federal Home Loan Bank of
Des Moines advances increased by $7.0 million. At December 31, 2008, there was
a total of $800,000 in loans originated for sale which were not yet funded by
the purchasers. The decrease in deposits was partially offset by an increase
of $139,000 in retail repurchase agreements.
As of December 31, 2008 the Company's stockholders' equity totaled $25.1
million, compared to $27.1 million as of June 30, 2008. The decrease of $2.0
million was due to the net loss of $2.8 million during the first six months of
the fiscal year which was partially offset by a positive change in the
mark-to-market adjustment, net of taxes, of $878,000 on the Company's
available for sale securities portfolio. In addition, there was a $20,000
increase resulting from the accounting treatment of stock based compensation.
There was a dividend of $0.10 per share on common stock, which totaled
$155,000, paid during the period. The Company's previously announced stock
repurchase program expired on December 31, 2008. No shares of common stock
were purchased under the program.
repossessed assets. The increase in non-performing assets consisted of an
increase of $3.7 million in non-accrual loans and an increase of $687,000 in
real estate owned and other repossessed assets. These increases were
partially offset by a decrease of $527,000 in loans 90 days or more delinquent
and still accruing interest, The increase in non-accrual loans consisted of
increases of $925,000 in non-accrual residential mortgages, $2.9 million in
non-accrual land loans, $95,000 in non-accrual second mortgages, $827,000 in
non-accrual commercial business loans and $42,000 in non-accrual consumer
loans. These increases were partially offset by a decrease of $1.2 million in
non-accrual commercial real estate loans. There were three loans totaling
$360,000 past due 90 days or more and still accruing interest at June 30,
2008. All three became non-accrual loans during the six months ended December
31, 2008. At December 31, 2008, loans 90 days past due and still accruing
consisted of one residential mortgage loan of $160,000 and one commercial
business loan of $50,000. Almost all of the loans that were moved to
non-accrual or became 90 days or more delinquent and still accruing as of
December 31, 2008, were loans that had been on the Company's list of watch
credits at June 30, 2008, September 30, 2008 or both. The increase in
non-performing assets is a result of two factors. First was the current
economic crisis which has had an adverse impact on individuals and businesses
in the Company's primary market areas. Secondly, there were issues with the
Bank's underwriting of some of the loans that were originated prior to May
2008. Since May 2008 the Bank has required that all loan originations,
renewals and modifications to be approved by the Board Loan Committee. As
discussed below, management believes the allowance for loan losses as of
December 31, 2008, was adequate to absorb the known and inherent risks of loss
in the loan portfolio at that date.
On the basis of management's review of its loans and other assets, at December
31, 2008, the Company had classified $9.4 million of its assets as
substandard, $1.4 million as doubtful and $1.5 million as loss. This compares
to classifications at June 30, 2008 of $5.1 million substandard, $718,000
doubtful and none as loss. The increase in classified loans to $12.3 million
at December 31, 2008 from $5.8 million at June 30, 2008 was the result of an
in depth review and analysis of the Bank's loan portfolio brought about by a
continually worsening economy, a change in management and the departure of
several loan officers. The review focused primarily on commercial real estate
loans, multi-family real estate loans, development loans and commercial
business loans. As a result of this review, the Bank added 65 loans with
principal balances totaling $12.6 million to either the classified asset list
or the internal watch list. Additionally, 33 loans which had appeared on
either the classified asset list or the internal watch list at November 30,
2008 were downgraded. During the quarter ended December 31, 2008, the Bank
recorded a provision for loan losses of $4.2 million. The $4.2 million
provision for loan losses included $3.2 million on 19 loans totaling $5.3
million made to six individuals or related parties. The largest provision was
for $1.4 million on a $2.8 million subdivision development loan, brought about
by cost overruns, diminishing collateral value and the weakening economic
climate. The second largest provision was $667,000 on seven loans totaling
$842,000 collateralized primarily by business assets and, to a lesser degree,
by real estate, to related entities. The business is not generating sufficient
cash flow to service its debt and the value of the business
Interest expense. Interest expense for the three months ended December 31,
2008 decreased $599,000 or 30.0%, to $1.4 million from $2.0 million for the
same period in 2007. Interest expense on deposits decreased $606,000 to $1.1
million in the three months ended December 31, 2008 from $1.7 million in the
same period in 2007. The decrease resulted from a decrease in average
interest-bearing deposit balances of $10.3 million to $171.0 million in the
2008 period from $181.3 million in the 2007 period. The decrease was also
attributable to a decrease in the average cost of deposits to 2.45% in the
2008 period from 3.63% in the 2007 period. Interest expense on other
interest-bearing liabilities increased $7,000 to $342,000 in the three months
ended December 31, 2008 from $335,000 in the comparable period in 2007. The
increase in interest expense on other interest-bearing liabilities was due to
an increase in the average outstanding balances of other interest-bearing
liabilities to $28.4 million during the 2008 period from $23.6 million during
the 2007 period which was partially offset by a decrease in the average cost
of other interest-bearing liabilities to 4.77% during the 2008 quarter from
5.34% during the 2007 quarter.
Interest expense. Interest expense for the six months ended December 31, 2008
decreased $1.2 million, or 28.6%, to $2.9 million from $4.1 million for the
same period in 2007. Interest expense on deposits decreased $1.2 million to
$2.2 million in the six months ended December 31, 2008 from $3.4 million in
the same period in 2007. The decrease resulted from a decrease in average
interest-bearing deposit balances of $5.7 million to $174.8 million in the
2008 period from $180.5 million in the 2007 period and to a decrease in the
average cost of deposits to 2.51% in the 2008 period from 3.73% in the 2007
period. Interest expense on other interest-bearing liabilities increased
$16,000 to $691,000 in the six months ended December 31, 2008 from $675,000 in
the comparable period in 2007. The increase in interest expense on other
interest-bearing liabilities was due to an increase in the average outstanding
balances of other interest-bearing liabilities to $27.5 million during the
2008 period from $23.8 million during the 2007 period, which was partially
offset by a decrease in the average cost on other interest-bearing liabilities
to 4.98% during the 2008 period from 5.63% during the 2007 period.
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First Bancshares Inc. has a market cap of $25.2 million; its shares were traded at around $12.95 with a P/E ratio of 70.9 and P/S ratio of 3.15.
Highlight of Business Operations:
As of December 31, 2008, First Bancshares, Inc. had assets of $239.2 million,compared to $249.2 million at June 30. 2008. The decrease in total assets of
$10.0 million, or 4.0%, was the result of a decrease of $18.9 million in loans
receivable, net. This decrease was partially offset by increases in
investments, real estate owned, cash and cash equivalents and deferred tax
assets, which totaled $6.5 million, $687,000, $528,000, and $1.3 million,
respectively. Deposits decreased $15.8 million and Federal Home Loan Bank of
Des Moines advances increased by $7.0 million. At December 31, 2008, there was
a total of $800,000 in loans originated for sale which were not yet funded by
the purchasers. The decrease in deposits was partially offset by an increase
of $139,000 in retail repurchase agreements.
As of December 31, 2008 the Company's stockholders' equity totaled $25.1
million, compared to $27.1 million as of June 30, 2008. The decrease of $2.0
million was due to the net loss of $2.8 million during the first six months of
the fiscal year which was partially offset by a positive change in the
mark-to-market adjustment, net of taxes, of $878,000 on the Company's
available for sale securities portfolio. In addition, there was a $20,000
increase resulting from the accounting treatment of stock based compensation.
There was a dividend of $0.10 per share on common stock, which totaled
$155,000, paid during the period. The Company's previously announced stock
repurchase program expired on December 31, 2008. No shares of common stock
were purchased under the program.
repossessed assets. The increase in non-performing assets consisted of an
increase of $3.7 million in non-accrual loans and an increase of $687,000 in
real estate owned and other repossessed assets. These increases were
partially offset by a decrease of $527,000 in loans 90 days or more delinquent
and still accruing interest, The increase in non-accrual loans consisted of
increases of $925,000 in non-accrual residential mortgages, $2.9 million in
non-accrual land loans, $95,000 in non-accrual second mortgages, $827,000 in
non-accrual commercial business loans and $42,000 in non-accrual consumer
loans. These increases were partially offset by a decrease of $1.2 million in
non-accrual commercial real estate loans. There were three loans totaling
$360,000 past due 90 days or more and still accruing interest at June 30,
2008. All three became non-accrual loans during the six months ended December
31, 2008. At December 31, 2008, loans 90 days past due and still accruing
consisted of one residential mortgage loan of $160,000 and one commercial
business loan of $50,000. Almost all of the loans that were moved to
non-accrual or became 90 days or more delinquent and still accruing as of
December 31, 2008, were loans that had been on the Company's list of watch
credits at June 30, 2008, September 30, 2008 or both. The increase in
non-performing assets is a result of two factors. First was the current
economic crisis which has had an adverse impact on individuals and businesses
in the Company's primary market areas. Secondly, there were issues with the
Bank's underwriting of some of the loans that were originated prior to May
2008. Since May 2008 the Bank has required that all loan originations,
renewals and modifications to be approved by the Board Loan Committee. As
discussed below, management believes the allowance for loan losses as of
December 31, 2008, was adequate to absorb the known and inherent risks of loss
in the loan portfolio at that date.
On the basis of management's review of its loans and other assets, at December
31, 2008, the Company had classified $9.4 million of its assets as
substandard, $1.4 million as doubtful and $1.5 million as loss. This compares
to classifications at June 30, 2008 of $5.1 million substandard, $718,000
doubtful and none as loss. The increase in classified loans to $12.3 million
at December 31, 2008 from $5.8 million at June 30, 2008 was the result of an
in depth review and analysis of the Bank's loan portfolio brought about by a
continually worsening economy, a change in management and the departure of
several loan officers. The review focused primarily on commercial real estate
loans, multi-family real estate loans, development loans and commercial
business loans. As a result of this review, the Bank added 65 loans with
principal balances totaling $12.6 million to either the classified asset list
or the internal watch list. Additionally, 33 loans which had appeared on
either the classified asset list or the internal watch list at November 30,
2008 were downgraded. During the quarter ended December 31, 2008, the Bank
recorded a provision for loan losses of $4.2 million. The $4.2 million
provision for loan losses included $3.2 million on 19 loans totaling $5.3
million made to six individuals or related parties. The largest provision was
for $1.4 million on a $2.8 million subdivision development loan, brought about
by cost overruns, diminishing collateral value and the weakening economic
climate. The second largest provision was $667,000 on seven loans totaling
$842,000 collateralized primarily by business assets and, to a lesser degree,
by real estate, to related entities. The business is not generating sufficient
cash flow to service its debt and the value of the business
Interest expense. Interest expense for the three months ended December 31,
2008 decreased $599,000 or 30.0%, to $1.4 million from $2.0 million for the
same period in 2007. Interest expense on deposits decreased $606,000 to $1.1
million in the three months ended December 31, 2008 from $1.7 million in the
same period in 2007. The decrease resulted from a decrease in average
interest-bearing deposit balances of $10.3 million to $171.0 million in the
2008 period from $181.3 million in the 2007 period. The decrease was also
attributable to a decrease in the average cost of deposits to 2.45% in the
2008 period from 3.63% in the 2007 period. Interest expense on other
interest-bearing liabilities increased $7,000 to $342,000 in the three months
ended December 31, 2008 from $335,000 in the comparable period in 2007. The
increase in interest expense on other interest-bearing liabilities was due to
an increase in the average outstanding balances of other interest-bearing
liabilities to $28.4 million during the 2008 period from $23.6 million during
the 2007 period which was partially offset by a decrease in the average cost
of other interest-bearing liabilities to 4.77% during the 2008 quarter from
5.34% during the 2007 quarter.
Interest expense. Interest expense for the six months ended December 31, 2008
decreased $1.2 million, or 28.6%, to $2.9 million from $4.1 million for the
same period in 2007. Interest expense on deposits decreased $1.2 million to
$2.2 million in the six months ended December 31, 2008 from $3.4 million in
the same period in 2007. The decrease resulted from a decrease in average
interest-bearing deposit balances of $5.7 million to $174.8 million in the
2008 period from $180.5 million in the 2007 period and to a decrease in the
average cost of deposits to 2.51% in the 2008 period from 3.73% in the 2007
period. Interest expense on other interest-bearing liabilities increased
$16,000 to $691,000 in the six months ended December 31, 2008 from $675,000 in
the comparable period in 2007. The increase in interest expense on other
interest-bearing liabilities was due to an increase in the average outstanding
balances of other interest-bearing liabilities to $27.5 million during the
2008 period from $23.8 million during the 2007 period, which was partially
offset by a decrease in the average cost on other interest-bearing liabilities
to 4.98% during the 2008 period from 5.63% during the 2007 period.
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