Breaking Down The First Bancshares, Inc. (FBMS) Financial Health: Key Insights for Investors

If you are still looking at The First Bancshares, Inc. (FBMS) as a standalone entity, you defintely need to adjust your model because the biggest financial headline of 2025 is the fact that the company, which last reported approximately $8.0 billion in total assets, successfully merged with Renasant Corporation.

The $1.2 billion all-stock transaction closed on April 1, 2025, fundamentally changing the investment thesis; this wasn't just a simple acquisition, but a strategic move that created a regional powerhouse with a combined asset base of roughly $26.6 billion, giving the new entity the scale it needs to compete in the Southeast.

The first full quarter of combined operations, Q2 2025, showed the immediate impact, with adjusted earnings hitting $66 million, a figure that includes the initial noise of integration costs, but still points to significant future accretion.

The old FBMS is gone, but the value is now locked into a much larger player.

We need to look past the historical FBMS numbers and map out the near-term opportunities and risks within the newly formed, larger institution, focusing on how quickly they can realize the promised synergies and what that means for your returns.

Revenue Analysis

You need to know where The First Bancshares, Inc. (FBMS) makes its money, and the simple truth is it's a classic bank model: it's all about interest. The direct takeaway for the 2025 fiscal year is a slight contraction in total revenue, driven by pressure on their core lending margin, but the non-interest income segment is holding steady.

As of November 2025, the Trailing Twelve Months (TTM) revenue for The First Bancshares, Inc. stands at approximately $270 million. This is a decline of about -3.45% when compared to the full-year 2024 revenue of $279.64 million, which itself was down from 2023. This near-term dip signals the impact of the current interest rate environment on their primary revenue engine-Net Interest Income (NII).

Breakdown of Primary Revenue Sources

The company's revenue streams are clearly split into two main buckets, reflecting its structure as a bank holding company for The First Bank. The overwhelming majority of revenue is interest-driven, with non-interest income playing a crucial, but smaller, supporting role.

• Net Interest Income (NII): This is the profit from lending money (interest on loans and investments) minus the cost of funds (interest paid on deposits and borrowings). This is the core business.
• Total Non-Interest Income: This includes fees from services like mortgage banking, service charges on deposit accounts, and other non-lending-related fees.

For the most recent full fiscal year, which acts as a strong structural proxy for 2025, Net Interest Income contributed roughly 82.6% of total revenue, with Total Non-Interest Income making up the remaining 17.4%. That's a very high reliance on NII, so any pressure on interest margins hits the top line hard. You need to watch the NII number above all else.

Segment Contribution and Revenue Shifts

The First Bancshares, Inc. operates primarily through its Commercial/Retail Bank and Mortgage Banking Division segments. The Commercial/Retail Bank is the engine for the high NII contribution, generating interest from commercial loans, consumer loans, and investment securities.

Here's the quick math on the two main revenue components, showing the shifting dynamic from 2023 to 2024:

The significant change is the -6.04% drop in Net Interest Income from 2023 to 2024. This is a clear sign of margin compression (Net Interest Margin, or NIM, compression) as the cost of deposits rose faster than the yield on earning assets. Conversely, the Total Non-Interest Income actually increased by 5.26% over the same period, partially due to the absence of a large loss on the sale of investment securities that occurred in 2023. That non-interest growth helped cushion the overall revenue decline.

To be fair, the biggest near-term change is the definitive merger agreement with Renasant Corporation, which is expected to close in the first half of 2025. This event will defintely reshape the entire revenue structure and geographic footprint of the combined entity, making historical trends less predictive for the latter half of 2025 and beyond. For a deeper dive into the valuation implications, check out Breaking Down The First Bancshares, Inc. (FBMS) Financial Health: Key Insights for Investors.

Next step: Analyze the core profitability metrics to see how this revenue pressure translates to the bottom line.

Profitability Metrics

You're looking for a clear picture of The First Bancshares, Inc.'s (FBMS) earning power, especially with the anticipated merger with Renasant closing in the first half of 2025. The key takeaway is that FBMS entered the merger period with solid, though slightly compressed, profitability margins compared to its five-year average, but its operational efficiency is a point of concern.

For a bank, we translate traditional Gross Profit, Operating Profit, and Net Profit into three core metrics: Net Interest Margin (NIM), Pre-Tax Margin, and Net Profit Margin. The NIM, which is the bank's equivalent of a Gross Profit Margin, shows the spread earned on interest-generating assets. For the fourth quarter of 2024, The First Bancshares' Net Interest Margin was 3.37%, an increase of 4 basis points from the prior quarter, which is a positive sign of managing deposit costs.

Here's the quick math on the company's profitability ratios, using the Trailing Twelve Months (TTM) data as of the first quarter of 2025, which captures the most recent performance before the merger:

• Pre-Tax Margin (our proxy for Operating Profit Margin): 35.03%
• Net Profit Margin: 27.6%
• Return on Assets (ROA): 0.97%

Profitability Trends and Industry Comparison

The trend analysis reveals a slight erosion in the Net Profit Margin. The TTM Net Profit Margin of 27.6% is below the company's 5-year average of 30.06%. This compression is a common theme across the regional banking sector, largely driven by the rapid rise in interest rates over 2023 and 2024, which increased the cost of deposits faster than the yield on loans. The Q1 2025 diluted Earnings Per Share (EPS) is forecast to be $0.66 on $75 million in revenue, which, if achieved, would continue the trend of steady, albeit lower, earnings compared to peak periods.

When you compare The First Bancshares to the industry, the picture is mixed. While the regional bank industry average Net Profit Margin was around 24.89% as of Q2 2024, The First Bancshares' TTM margin of 27.6% suggests it is still outperforming the average peer in terms of bottom-line efficiency. However, the TTM Return on Equity (ROE) of 7.9% lags the broader regional bank industry, which generated an approximate 11% ROE in the third quarter of 2024. That gap is defintely where value is being left on the table.

Operational Efficiency and Cost Management

The operational efficiency of a bank is best measured by its Efficiency Ratio, which calculates non-interest expense as a percentage of total revenue; a lower ratio is better. The First Bancshares' operating Efficiency Ratio for the fourth quarter of 2024 was 62.84%. This is a critical metric to watch, as it marks an increase from the 60.63% reported in the third quarter of 2024, indicating that non-interest expenses are growing faster than revenue.

The rise in the efficiency ratio suggests a challenge in cost management, likely due to technology investments, branch network expansion, or pre-merger integration costs. The merger with Renasant, expected to close on April 1, 2025, is primarily a strategic move to gain scale and should, over time, lead to significant cost synergies (expense reductions) that will drive the combined entity's efficiency ratio down. Investors should focus on the post-merger integration plan for a clear timeline on when the combined entity expects to hit an efficiency ratio below 60%.

For a deeper dive into the strategic rationale and valuation, you can check out the full post: Breaking Down The First Bancshares, Inc. (FBMS) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You need a clear picture of how The First Bancshares, Inc. (FBMS) financed its operations right before its acquisition, and the data from the first quarter of 2025 tells a story of conservative capital management. The direct takeaway is that The First Bancshares, Inc. maintained a very strong equity position relative to its non-deposit debt, signaling a low-risk funding profile leading into the merger.

As of the end of the first quarter, March 31, 2025, The First Bancshares, Inc.'s total holding company equity capital stood at approximately $991,259 thousand [cite: 6, 7 from previous step]. This robust equity base was the primary source of funding outside of customer deposits, which are banks' main liability. Here's the quick math: with a Debt-to-Equity (D/E) ratio of 0.35 [cite: 7 from previous step], the company's non-deposit debt was roughly $346.94 million ($991.259 million 0.35). This is a solid, manageable level of leverage.

To be fair, a bank's balance sheet is different from a manufacturing company's. The D/E ratio for a bank typically excludes customer deposits from the debt calculation, focusing instead on long-term borrowings like subordinated notes and trust preferred securities. A lower ratio means less reliance on wholesale funding (debt financing) and more on shareholder capital (equity funding).

The First Bancshares, Inc.'s D/E ratio of 0.35 as of Q1 2025 was significantly below the US Regional Banks industry average of approximately 0.5. This tells you the company was less leveraged than its typical peer, which is defintely a sign of balance sheet strength and flexibility. They were not aggressively using debt to fuel growth, preferring to maintain a capital buffer.

The most significant recent activity in the company's financing structure was not a debt issuance, but the completion of its merger with Renasant Corporation on April 1, 2025 [cite: 1, 16 from previous step]. This event immediately redefined the capital structure and funding strategy of the combined entity. Just after the merger, KBRA upgraded The First Bancshares, Inc.'s senior unsecured debt rating to BBB+ from BBB, reflecting the improved credit profile of the larger, merged institution, before subsequently withdrawing the ratings as the entity was absorbed [cite: 1 from previous step].

The company's approach to balancing debt and equity financing was clearly equity-centric, especially in the lead-up to the acquisition. The preference for equity funding provided a strong capital base, which is a key factor in the valuation and successful execution of a merger. This conservative stance allowed them to maintain a strong capital cushion, which is essential for a regional bank operating in a dynamic interest rate environment.

• Debt-to-Equity Ratio: 0.35 in Q1 2025 [cite: 7 from previous step].
• Industry D/E Benchmark: Approximately 0.5.
• Credit Rating Action: Upgraded to BBB+ post-merger, then withdrawn [cite: 1 from previous step].
• Key Action: Acquired by Renasant on April 1, 2025 [cite: 1, 16 from previous step].

For a deeper dive into the players involved in this capital shift, you might want to look at Exploring The First Bancshares, Inc. (FBMS) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need a clear picture of The First Bancshares, Inc.'s (FBMS) ability to meet its near-term obligations, especially since the merger with Renasant Corporation closed in the first half of 2025. The direct takeaway is that while traditional liquidity ratios are less instructive for banks, the company maintained a solid, though tightening, liquidity position right up to the merger, driven by deposit growth and strategic asset management.

For a bank, 'liquidity' is less about a simple Current Ratio and more about the composition of assets and the stability of its deposit base. The standard Current and Quick Ratios (current assets divided by current liabilities) are not meaningful here because a bank's primary 'current liability' is customer deposits, which are its core funding. The reported ratios of 68.22 (Current) and 67.8 (Quick) from early 2025 data are likely a misapplication of the traditional formula and should be ignored for a bank holding company like The First Bancshares, Inc.

Instead, we look at cash and high-quality liquid assets (HQLA) relative to deposits. At the end of 2024, the company's total assets stood at approximately $8.005 billion. A key metric for individual investors is the Cash per Share, which was approximately $7.05 in the most recent quarter, indicating a strong cash buffer per share.

Here is a snapshot of the core liquidity components based on 2024 fiscal year-end data, which is the final complete standalone data before the 2025 merger:

The company's working capital position, which for a bank is essentially its net interest-earning assets, showed stability. Total deposits grew by $142.0 million in 2024, increasing the funding base. This growth helps offset the rising cost of deposits, which averaged 178 basis points in Q4 2024. You defintely want to see deposit growth in a challenging rate environment, and they delivered.

Cash Flow Statements Overview: Trends and Actions

Analyzing the Cash Flow Statement is crucial, as it shows how cash is generated and used. The 2024 fiscal year data reveals important trends that map directly to the 2025 merger action:

• Operating Cash Flow: The cash flow from operations for FY 2024 was $85.51 million, a decrease of 21.19% from the prior year's $108.51 million. This decline is a key near-term risk, signaling pressure on core earnings, likely from higher interest expense on deposits.
• Investing Cash Flow: This section shows the bank's core business of lending and investing. The company saw a net increase in loans of $237.2 million in 2024, which is a cash outflow of -$232.72 million from the investing section. This aggressive lending, while profitable, consumes cash and tightens liquidity.
• Financing Cash Flow: The company raised capital through increased deposits ($142.0 million increase in 2024) and paid out a quarterly cash dividend of $0.25 per share. The ability to grow deposits is a clear strength, but the dividend payout is a steady cash drain.

Here's the quick math: The drop in Operating Cash Flow and the significant cash deployment into new loans created a liquidity strain that the merger with Renasant Corporation, which closed in early 2025, was designed to address by creating a larger, more diversified financial institution with $26 billion in assets. This strategic action was the ultimate response to the near-term liquidity and capital pressures. You should read more on the full picture in our deep dive: Breaking Down The First Bancshares, Inc. (FBMS) Financial Health: Key Insights for Investors

Valuation Analysis

You're looking at The First Bancshares, Inc. (FBMS) and asking the right question: Is the stock priced fairly right now? Honestly, the current valuation metrics suggest the market sees it as reasonably priced, leaning slightly toward undervalued based on analyst targets, but you need to understand the context of the banking sector's recent volatility.

The stock's valuation ratios, using Trailing Twelve Months (TTM) data as of the most recent quarter in 2025, paint a clear picture. The Price-to-Earnings (P/E) ratio is sitting at 13.86, which is a solid, middle-of-the-road multiple for a regional bank. This is slightly below the TTM P/E of 15.2 reported closer to October 2025, suggesting a slight recent compression in the earnings multiple. The Price-to-Book (P/B) ratio, a critical metric for banks, is 1.05 as of March 2025, meaning the stock is trading just slightly above its net asset value, or book value, which is often considered a value-investing sweet spot. One clean one-liner: Anything close to 1.0x P/B is worth a deeper look.

Here's the quick math on key valuation multiples:

• P/E (TTM): 13.86
• P/B (MRQ): 1.05
• EV/EBITDA: 61.41

Now, let's talk about that Enterprise Value-to-EBITDA (EV/EBITDA) ratio. It's high at 61.41, but to be fair, for a financial institution like The First Bancshares, Inc., this metric is often less relevant than P/E and P/B because banks' core business involves managing debt and assets, which skews the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) calculation. We defintely prioritize the P/B and P/E for a bank.

Stock Performance and Analyst Sentiment

Looking at the stock price trend over the last 12 months (52-week range), the stock has traded between a low of $24.53 and a high of $39.21. As of March 31, 2025, the stock price was $33.81. This indicates that the stock is trading well off its 52-week high, but also significantly above its low, showing some consolidation after a period of volatility.

Analyst consensus leans toward an opportunity here. The average analyst rating is a 'Buy' with a 12-month price target of $45.00. This target represents a potential upside of approximately 33.3% from the recent price, which is a substantial return if they hit it.

The dividend profile is also attractive for income-focused investors. The First Bancshares, Inc. pays an annual dividend of $1.00 per share. This translates to a forward dividend yield of 2.96%. The payout ratio is manageable at around 41.00% of earnings, which shows the dividend is well-covered and leaves room for future increases or reinvestment into the business.

For a deeper dive into who is driving this stock's movement, you can check out Exploring The First Bancshares, Inc. (FBMS) Investor Profile: Who's Buying and Why?

What this estimate hides is the risk from rising nonaccrual loans, which totaled $20.3 million at the end of 2024, up from $10.7 million a year earlier, a trend that could pressure future earnings and, consequently, the P/E ratio. Still, the low P/B ratio and strong analyst consensus suggest a favorable risk/reward profile right now.

Risk Factors

You're holding shares in The First Bancshares, Inc. (FBMS) right now, but the ground beneath that investment shifted significantly with the Renasant Corporation merger, which closed on April 1, 2025. So, the risks you face are less about the standalone bank's future and more about the integration process and the market's view of the new, combined entity.

Here's the quick math: The all-stock deal was valued at approximately $1.2 billion when announced, with a fixed exchange ratio of 1.00 share of Renasant common stock for each FBMS share. This means your primary risk is the volatility of Renasant's stock price, not FBMS's. But we still need to look at the legacy risks that Renasant is absorbing, plus the new operational challenges.

• Stock volatility is your main risk now.

Merger Completion and Integration Risks

The biggest near-term risk has already been substantially mitigated since the merger received all necessary regulatory and shareholder approvals and closed on April 1, 2025. However, the integration of two regional banks is a monumental task, and failure to execute smoothly will directly hit the combined company's earnings. Management has estimated incurring $75 million in after-tax merger charges to make this happen.

The success of the deal hinges on realizing the projected cost savings, which are estimated to be 30% of FBMS's 2025 noninterest expense, with 40% of those savings expected to be realized in the second half of 2025. If onboarding takes 14+ days for key clients or technology systems don't mesh, churn risk rises, and those savings disappear. Losing key employees during the transition is a defintely operational risk that could disrupt client relationships.

Credit Quality and Interest Rate Headwinds

Even with the merger, the combined entity inherits The First Bancshares, Inc.'s existing balance sheet quality. While the bank's credit quality has been solid, we saw a notable uptick in non-performing assets (NPAs) toward the end of the standalone period. As of December 31, 2024, Nonperforming assets totaled $29.9 million, an increase of $9.7 million from the prior year. This pushed the ratio of nonperforming assets to total assets to 0.37%.

Here's the quick math: A rising NPA number, even from a low base, signals potential stress in the loan portfolio, especially as the high-rate environment continues to pressure borrowers, particularly in commercial real estate (CRE). Also, the bank carried a net unrealized loss of $115.7 million on its investment portfolio at the end of 2024. This is a paper loss, but it restricts liquidity and is a stark reminder of the interest rate risk embedded in the balance sheet that the new management team must manage.

To be fair, the combined company now has approximately $26 billion in assets, giving it greater scale to absorb these shocks. You can find more context on the bank's long-term vision here: Mission Statement, Vision, & Core Values of The First Bancshares, Inc. (FBMS).

Growth Opportunities

You need to look past The First Bancshares, Inc. (FBMS) as a standalone investment because the company was acquired by Renasant Corporation in an all-stock transaction that closed on April 1, 2025. The future growth story is now about the combined entity, which has significantly greater scale and a broader market reach across the Southeast.

The core growth driver is the immediate jump in size and the expected cost savings, which directly impact the new company's earnings power. The combined financial institution now boasts approximately $26 billion in total assets and operates over 250 locations across six Southeastern states. That's a serious regional player.

Here's the quick math on the near-term financial benefit: Management projected realizing 40% of the anticipated 30% of The First Bancshares, Inc.'s (FBMS) 2025 noninterest expense as cost savings in the second half of 2025. To be fair, this is offset by an estimated $75 million in after-tax merger charges, but the long-term cost efficiencies are the real prize.

• Gain significant scale in the regional banking market.
• Expand footprint across six key Southeastern states.
• Realize substantial post-merger cost efficiencies.

Strategic Initiatives and Market Expansion

The combined company is not just bigger; it's strategically positioned for deeper market penetration and new product offerings. One clear initiative is the expansion of specialized lending. The merged entity will now offer factoring and asset-based lending services on a nationwide basis, moving beyond the traditional regional banking footprint. This is a smart move to diversify revenue streams outside of core net interest income.

Also, a major commitment is the $10.3 billion, five-year Community Benefit Plan adopted by Renasant, which became effective upon the merger's completion. This plan is designed to foster economic growth and access to financial services within the combined company's operating area, which is a concrete investment that should drive relationship-based deposit and loan growth over the next five years.

Competitive Advantages of the Combined Entity

The competitive advantage for the former The First Bancshares, Inc. (FBMS) shareholders is now rooted in the combined entity's enhanced position. The First Bancshares, Inc.'s (FBMS) strength was its community banking model, which emphasized close local relationships. Merging this local expertise with Renasant's larger capital base and broader product set creates a more resilient and competitive bank.

The new company's scale allows it to compete more effectively against larger regional banks while still maintaining the personalized, community-focused approach that drove The First Bancshares, Inc.'s (FBMS) success. This balance is defintely the sweet spot in regional banking right now. For a deeper dive into the pre-merger financial picture, you can check out Breaking Down The First Bancshares, Inc. (FBMS) Financial Health: Key Insights for Investors.

The merger essentially trades The First Bancshares, Inc.'s (FBMS) independent future-which had $8.0 billion in assets as of June 30, 2024-for a stake in a much larger, more diversified institution with $26 billion in assets. This is a clear path to generating higher returns through scale and synergy capture.