The First Bancshares, Inc. (FBMS): BCG Matrix [11-2024 Updated]

In the dynamic landscape of banking, understanding the strategic positioning of a company can be pivotal for investors and stakeholders alike. The First Bancshares, Inc. (FBMS) showcases a fascinating mix of Stars, Cash Cows, Dogs, and Question Marks as of 2024, reflecting its diverse portfolio and market challenges. From robust growth in commercial real estate lending to the evolving landscape of non-interest income, the BCG Matrix reveals critical insights into where FBMS stands today and where it could be heading. Dive deeper to explore these classifications and their implications for the bank's future.

Background of The First Bancshares, Inc. (FBMS)

The First Bancshares, Inc., incorporated on June 23, 1995, in Hattiesburg, Mississippi, operates as a bank holding company. Its primary asset is its wholly-owned subsidiary, The First Bank, which offers a comprehensive range of banking services to customers. As of September 30, 2024, the Company reported total assets of approximately $7.957 billion, a slight decrease from $7.993 billion at the end of 2023.

During the first nine months of 2024, The First Bancshares experienced a net income of $68.5 million, compared to $68.7 million during the same period in 2023, reflecting a marginal decline. The Company’s total consolidated equity capital stood at $1.012 billion, representing about 12.7% of its total assets. The First Bank focuses on various lending products, including commercial, real estate, and consumer loans, with loans held for investment totaling $5.263 billion as of September 30, 2024.

In 2023, The First Bancshares completed the acquisition of Heritage Southeast Bancorporation, expanding its operations into Georgia and the Florida panhandle. The acquisition resulted in significant goodwill and core deposit intangibles, further enhancing its market presence. Additionally, on May 30, 2024, the Company transitioned its stock listing from Nasdaq to the New York Stock Exchange (NYSE), where it trades under the symbol 'FBMS'.

The First Bancshares has also announced a merger agreement with Renasant Corporation, expected to close in the first half of 2025, wherein FBMS will merge into Renasant, with the latter continuing as the surviving entity. This strategic move aims to leverage synergies and expand the footprint of both companies in the financial services sector.

The First Bancshares, Inc. (FBMS) - BCG Matrix: Stars

Strong growth in commercial real estate lending, constituting 60.8% of total loans

As of September 30, 2024, The First Bancshares reported that commercial real estate loans accounted for 60.8% of total loans, reflecting significant growth in this segment.

Positive net income trends, reporting $20.6 million for Q3 2024

In the third quarter of 2024, net income reached $20.6 million, a decrease from $24.0 million in Q3 2023, indicating a positive yet declining trend in profitability.

Increase in interest income from loans, up to $82.1 million in Q3 2024

Interest income from loans increased to $82.1 million for Q3 2024, up from $74.6 million in Q3 2023, highlighting the bank's strong performance in loan generation.

Significant market presence in primary operating regions, enhancing competitive advantage

The First Bancshares maintains a strong market presence in its primary operating regions, which enhances its competitive advantage and supports its growth trajectory within the commercial real estate sector.

Diversification in loan portfolio, reducing risk concentrations

The company has diversified its loan portfolio, which as of September 30, 2024, included:

This diversification strategy effectively reduces risk concentrations and supports stable financial performance.

The First Bancshares, Inc. (FBMS) - BCG Matrix: Cash Cows

Established base of consumer real estate loans, stable at 24.2% of total loans.

The First Bancshares, Inc. has maintained a robust portfolio of consumer real estate loans, which account for 24.2% of total loans as of September 30, 2024. This stable base is indicative of the bank's strong market position in a mature sector.

Consistent non-interest income from service charges and fees, contributing $10.4 million in Q3 2024.

In the third quarter of 2024, non-interest income from service charges and fees amounted to $10.4 million. This consistent revenue stream is a critical component of the bank's cash flow, providing stability amidst fluctuating interest income.

Strong retention of clients, leading to reliable interest income streams.

The First Bancshares, Inc. has demonstrated strong client retention, which is essential for generating reliable interest income. As of Q3 2024, interest and fees on loans totaled $82.1 million, reflecting the bank's ability to maintain and grow its customer base effectively.

Low credit risk in diversified loan portfolio, maintaining healthy asset quality.

The company's diversified loan portfolio has resulted in low credit risk, with net loans held for investment (LHFI) at $5.263 billion as of September 30, 2024. This diversification helps maintain healthy asset quality, with an allowance for credit losses of $55.7 million, which is a mere 1.06% of total loans.

Steady dividends paid on common stock, reflecting solid cash flow management.

The First Bancshares, Inc. has consistently paid dividends, with a cash dividend of $0.25 per share paid in each quarter of 2024. This reflects solid cash flow management and a commitment to returning value to shareholders.

The First Bancshares, Inc. (FBMS) - BCG Matrix: Dogs

Decreased non-interest income primarily due to reduced U.S. Treasury awards, impacting revenues.

For the nine months ended September 30, 2024, non-interest income was reported at $38.2 million, a decrease of $6.1 million compared to the same period in 2023. This decline was largely attributed to a reduction in U.S. Treasury awards totaling $6.2 million.

Decline in overall net interest income, down $17.5 million compared to the previous year.

Net interest income for the nine months ended September 30, 2024, was $174.1 million, representing a decrease of $17.5 million from the same period in 2023.

Challenges in the mortgage fee income segment, with only $2.6 million reported.

Mortgage fee income for the third quarter of 2024 was reported at $927,000, up from $878,000 in the third quarter of 2023, but overall mortgage fee income remains low relative to expectations.

Limited growth in consumer installment loans, which represent only 0.9% of total loans.

As of September 30, 2024, consumer installment loans amounted to $47.4 million, which is 0.9% of total loans of $5.318 billion.

High operational costs relative to revenue generation in certain segments.

For the nine months ended September 30, 2024, non-interest expenses totaled $133.9 million, a decrease of $6.4 million compared to the same period in 2023. However, operational expenses remain high relative to the declining non-interest income.

The First Bancshares, Inc. (FBMS) - BCG Matrix: Question Marks

Fluctuating performance in investment securities, with unrealized losses impacting overall returns.

As of September 30, 2024, The First Bancshares reported a net unrealized loss of $91.6 million in its investment portfolio, compared to a net unrealized loss of $184.9 million at the same date in 2023.

Potential for growth in bank-owned life insurance income, currently underutilized.

The cash value of bank-owned life insurance increased to $29.5 million as of September 30, 2024, up from $26.6 million at December 31, 2023.

Uncertain outlook on economic conditions affecting loan demand and interest rates.

Average interest rates on loans increased to 6.21% for the third quarter of 2024, compared to 5.92% in the same quarter of 2023. The Company held loans totaling $5.32 billion as of September 30, 2024, reflecting a growth of $148.6 million, or 2.9%, year-to-date.

Need for strategic initiatives to boost non-interest income streams post-Treasury award decline.

Non-interest income for the nine months ended September 30, 2024, was $38.2 million, a decrease of $6.1 million compared to the same period in 2023, primarily due to a $6.2 million decrease in U.S. Treasury awards.

Exploration into new markets or products to enhance growth opportunities and mitigate risks.

The First Bancshares is currently exploring expansion into new markets, with specific focus on enhancing digital banking services and expanding its product offerings.

In summary, The First Bancshares, Inc. (FBMS) presents a diverse portfolio through its BCG Matrix analysis for 2024. The bank's Stars segment thrives on robust growth in commercial real estate lending and positive net income, while its Cash Cows ensure steady revenue from consumer real estate loans and non-interest income. However, the Dogs category highlights challenges with declining non-interest income and operational costs, and the Question Marks reflect uncertainties in investment securities and economic conditions. Addressing these factors will be crucial for FBMS to enhance its growth trajectory and maintain financial stability.

Updated on 16 Nov 2024

Resources:

1. The First Bancshares, Inc. (FBMS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The First Bancshares, Inc. (FBMS)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View The First Bancshares, Inc. (FBMS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.