The First Bancshares, Inc. (FBMS): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at the final competitive snapshot for The First Bancshares, Inc. (FBMS) right before it was absorbed by Renasant in April 2025-a move that instantly created a regional powerhouse with about $26 billion in assets. Honestly, even as a standalone entity in late 2024, FBMS was navigating serious headwinds; they posted strong loan growth, adding $88.6 million in Q4, and managed a net interest margin of 3.37%. But that very need for scale is what drove the merger, and a deep dive into Porter's Five Forces reveals the intense pressures-from high supplier power due to rising deposit costs to fierce rivalry in a consolidating Southeast market-that defined the final chapter of the FBMS business. Find out below exactly how these forces stacked up.

The First Bancshares, Inc. (FBMS) - Porter's Five Forces: Bargaining power of suppliers

When looking at The First Bancshares, Inc. (FBMS), the suppliers are primarily the providers of funding, which means depositors and wholesale creditors. You need to understand their leverage because it directly impacts the bank's cost of funds and, ultimately, its net interest margin (NIM).

Depositors, especially those with significant balances, hold considerable power in the current rate environment. We saw this pressure clearly in the fourth quarter of 2024. The cost of all deposits for The First Bancshares, Inc. averaged 178 basis points for the quarter ended December 31, 2024. This number reflects the competition for funds, which you, as an analyst, know is a direct function of depositor power against the backdrop of rising interest rates. It's a tightrope walk; you have to pay more to keep the money, but you need that money to fund your loan growth.

To be fair, The First Bancshares, Inc. has a substantial base that offers some insulation. The core deposit base, which you are tracking, was reported at $6.605 billion as of Q4 2024. This large, relatively sticky base of customer funds limits the immediate, day-to-day leverage that individual depositors can exert. Still, the trend matters more than the absolute number in the long run.

Here's a quick look at the funding cost dynamics:

The power of retail depositors is tempered by the low switching costs associated with basic accounts. Honestly, moving a checking or savings account today is far easier than it was a decade ago, especially with the proliferation of digital banking options. If The First Bancshares, Inc. lags on digital experience or rates, customers can vote with their feet quickly.

Wholesale funding-that is, money borrowed from creditors or the broader interbank market-presents a different risk profile. This supplier group is highly sensitive to two things you must monitor:

• Credit ratings and perceived financial health.
• Broader market liquidity conditions.

If market confidence wavers, the cost of wholesale funding for The First Bancshares, Inc. can spike immediately, regardless of the bank's internal deposit strategy. The fact that the company was in the final stages of its merger with Renasant Corporation, expected to close in H1 2025, also plays into this dynamic, as it creates a temporary strategic overhang that creditors watch closely.

The stability provided by the $6.605 billion deposit base is your key counter-lever against this supplier power. Finance: draft the sensitivity analysis on deposit beta for a 50 basis point rate shock by Friday.

The First Bancshares, Inc. (FBMS) - Porter's Five Forces: Bargaining power of customers

Borrowers in the Southeast footprint faced a moderately competitive loan market, which grants them some leverage. For context, in the first quarter of 2025, traditional commercial and industrial lending showed only about a 0.5% growth rate, while lending to non-bank financial institutions grew by 5.7%. The last reported standalone loan growth for The First Bancshares, Inc. (FBMS) showed total loans increasing by $88.6 million (a 6.7% annualized increase) in the fourth quarter of 2024.

Customer switching power is a tangible risk, as many clients can easily move funds or loans to larger national banks or local community banks. Research from early 2025 indicated that the perception of safety at smaller banks suffered lasting damage following the 2023 banking turmoil, leading many to see the four biggest U.S. banks as the only truly safe option. Furthermore, community bankers in 2025 reported continuous competition from local regional banks and other community banks specifically for transaction deposits.

Commercial loan customers, especially those with larger loan sizes, retain negotiation power. The First Bancshares, Inc. reported total loans of $6.605 billion at the end of the fourth quarter of 2024. This scale of lending activity means that larger commercial clients can benchmark terms against competitors. For the broader market, nearly a quarter of middle-market companies planned to seek funding from non-traditional lenders in 2025.

The power of customers within the Mortgage Banking Division segment is considered high, driven by product standardization and the ease of comparing rates online. The industry saw a significant shift in profitability for mortgage subsidiaries of chartered banks: the average pre-tax net production profit was $1,201 per loan in the third quarter of 2025, a substantial improvement from a $28 per loan loss in the first quarter of 2025. This environment of high per-loan profitability can make customers more willing to shop for the best rate. Industry-wide, the average loan balance for first mortgages increased to $374,151 in the second quarter of 2025.

Here is a quick look at some comparative data points relevant to customer power:

The ability for customers to switch is amplified by the perceived safety of larger institutions. Consider the following factors influencing customer choice:

• Trust ratings for smaller banks declined since 2023.
• The four biggest U.S. banks are seen as the safest option by business owners.
• Community bankers noted ongoing competition for transaction deposits.
• Nearly 25% of middle-market companies plan to seek non-traditional funding.

The First Bancshares, Inc. (FBMS) - Porter's Five Forces: Competitive rivalry

Rivalry is high among regional banks in the five-state Southeast market (MS, LA, AL, FL, GA).

The industry is consolidating; the Renasant merger created a larger entity with approximately $26.6 billion in assets as of Q2 2025, intensifying scale competition. This combination, which closed on April 1, 2025, involved Renasant with pre-merger assets of approximately $18.0 billion and The First Bancshares, Inc. (FBMS) with approximately $8.0 billion in assets as of December 31, 2024.

Competition is based on rate, local relationships, and technology investment.

Slow loan growth in 2024 intensifies the fight for market share. For The First Bancshares, Inc. (FBMS), Q3 2024 annualized loan growth was 5.2%, with total loans growing by $67.7 million quarter-over-quarter.

The competitive environment is further shaped by other large regional transactions, such as the merger of Pinnacle Bank and Synovus Bank, which is projected to create a $116 billion-asset bank upon its expected January 1, 2026, close. This consolidation trend highlights the pursuit of scale to compete effectively.

Key competitive metrics and market shifts:

• The First Bancshares, Inc. Q3 2024 Net Interest Margin (NIM): 3.33%.
• Renasant Bank's Mississippi deposit share increased from 7.6% pre-merger to 10.2% post-merger.
• The combined Renasant/The First entity operates over 250 locations across the Southeast.
• The industry average for completed bank M&A deals has seen low volume in 2023 and 2024 compared to the historical average of around 235 deals per year since 2000.

The pressure to invest in technology is significant, as scale is needed to fund the development of consumer-facing applications comparable to those offered by fintechs.

Competition for deposits also remains a key factor, with The First Bancshares, Inc. reporting a decrease in deposits by $65.4 million quarter-over-quarter in Q3 2024.

The First Bancshares, Inc. (FBMS) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for The First Bancshares, Inc. (FBMS) is substantial, driven by non-bank financial technology providers, specialized lenders, and alternative cash management vehicles. You need to see these external pressures clearly to map out the competitive landscape for First US Bank.

High threat from FinTech for payments, lending, and investment services.

FinTech is rapidly capturing market share, especially in high-volume transaction areas. The U.S. Fintech Market size is projected to be valued at US$95.2 Bn in 2025, with expectations to grow to US$248.5 Bn by 2032 at a Compound Annual Growth Rate (CAGR) of 14.7%. This growth is fueled by digital convenience, which directly challenges traditional bank offerings.

For payments specifically, this segment is the market leader, accounting for over 35% share in 2025. To put the scale into perspective, digital payments controlled 47.43% of the United States fintech market share in 2024. In the investment space, Wealth tech funding surged to $1.9 billion in Q2 2025 alone. Furthermore, the risk associated with digital adoption is evident: mobile payment fraud losses reached $12.5 billion in 2024, a 25% increase from 2023.

Here are key FinTech segment metrics from the first half of 2025:

Credit unions and non-bank lenders serve as strong substitutes for commercial and consumer loans.

Credit unions are actively prioritizing loan growth, with 40% of them citing it as a top strategic priority for 2025, while The First Bancshares, Inc. is focused on deposit growth (64% of banks). This focus difference means credit unions are aggressively competing for the same lending assets. While credit union loan growth was 2.8% annualized in Q4 2024, it remains below their long-run average of about 7%. Banks, in general, saw loan growth around 3.6% YoY (April 2024 to April 2025), also below their long-run average of 5.7%.

The cost structure for community banks like The First Bancshares, Inc. has been severely strained, making it harder to compete on price for loans. Community banks saw their average cost of funds increase from 0.74% in 2020 to 2.85% by early 2024, a 285% jump. Non-bank lenders and credit unions, which have historically closed fewer branches, can often operate with a lower cost-to-serve model, especially as they embed fintech into their digital offerings.

• Credit unions are significantly more bullish on increasing tech investments (47% plan 6-10% increase) versus banks (16%).
• Non-bank lenders offer borrowers quick turnaround times for loan applications.
• Credit unions added to their service footprint while banks consistently closed branches.

Large national banks offer superior digital platforms, substituting for local branch convenience.

While The First Bancshares, Inc. operates across the Gulf Coast, large national banks substitute for local convenience by offering superior, scalable digital experiences. Mobile apps represented 70.79% of the United States fintech market share in 2024, showing the consumer preference for digital access. National banks can spread the high fixed costs of developing and maintaining these platforms across a much larger customer base than The First Bancshares, Inc. can.

The investment in technology by smaller institutions is often incremental compared to the massive, platform-wide overhauls seen at national competitors. For instance, while 76% of all financial institutions plan to increase technology spend in 2025, most banks plan increases between 1% and 5%. This gap in digital investment capability means that The First Bancshares, Inc.'s local branch convenience is increasingly substituted by the 24/7, feature-rich digital ecosystems offered by larger players.

Money market funds and Treasury bills are strong substitutes for traditional low-yield deposits.

For the deposit-gathering side of The First Bancshares, Inc.'s business, money market funds (MMFs) are a direct, non-FDIC insured substitute, especially when yields are attractive. In the U.S., MMF assets reached $7 trillion in 2024. The substitution effect is real: historically, a 1% increase in bank deposits is associated with a 0.2% decline in MMF assets, showing active reallocation by investors.

When policy rates rise, MMF yields accelerate faster than bank deposit rates, creating a spread that pulls funds away from traditional accounts. As of November 12, 2025, specific MMF yields were competitive:

The need for The First Bancshares, Inc. to compete for core deposits is underscored by the fact that MMFs offer daily liquidity, a feature that rivals the convenience of bank checking accounts, though MMFs lack FDIC insurance. The pressure on deposit costs for community banks, which saw costs jump 285% between 2020 and 2024, is directly linked to the attractiveness of these higher-yielding, non-deposit alternatives.

The First Bancshares, Inc. (FBMS) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for The First Bancshares, Inc. (FBMS) now that it has merged into the larger Renasant franchise. Honestly, for a traditional, full-service bank charter, the threat of a brand-new entrant setting up shop right next to you is still pretty low, but the landscape is definitely shifting.

The threat is low for a de novo (new) bank due to high capital requirements and strict post-2023 regulatory scrutiny. Look at the history: from 2010 to 2023, the U.S. averaged fewer than 6 new bank charters annually. While there's legislative movement, like the proposed bill offering a three-year phase-in for capital requirements, the current reality is tough. For example, the OCC granted conditional approval to Erebor Bank in October 2025, but it immediately subjected the new entity to enhanced scrutiny for its first three years, including a minimum 12% Tier 1 leverage ratio. That's a steep initial climb, definitely keeping most small-scale competitors on the sidelines.

Threat is high in specific product lines from FinTechs that bypass traditional bank charters. These non-chartered players don't face the same capital hurdles or the multi-state regulatory compliance burden The First Bancshares, Inc. managed. They can focus capital on digital delivery, which is a real competitive edge in lending and deposit services, even if they don't hold the charter themselves.

The acceleration of M&A, like the FBMS/Renasant deal, raises the minimum scale needed to compete effectively. The merger, valued at approximately $1.2 billion, instantly created a combined entity with roughly $25 billion in total assets as of June 30, 2024. That scale is what the CEOs mentioned they needed to compete in today's operating environment. If you're a new entrant today, you're not just competing with the old local banks; you're competing against a franchise that, pre-merger, was already substantial and is now significantly larger.

New entrants must overcome the high initial cost of building a 111-branch network across five states. The First Bancshares, Inc. footprint spans Mississippi, Louisiana, Alabama, Florida, and Georgia. Replicating that physical presence, even if a new bank focused only on a few key MSAs, requires massive upfront investment in real estate, personnel, and local market penetration that a de novo simply can't match on day one.

Here's a quick look at the scale and regulatory environment shaping this force:

Still, you can't ignore the digital-first players. They are chipping away at specific, high-margin product lines. The key for The First Bancshares, Inc. within the combined entity is to use its scale to fight back on price and service where FinTechs are weakest, which is often complex, relationship-based commercial lending.

The regulatory environment itself presents a mixed signal for potential entrants:

• Proposed legislation suggests a three-year capital phase-in period.
• Regulators finalized a rule in late 2025 trimming the eSLR for bank subsidiaries to 4% from 6%.
• The OCC is granting charters, but with enhanced scrutiny for the first three years.
• The historical average for new charters remains extremely low, under 6 per year.

Finance: draft a competitive analysis memo comparing the capital burden of a new $500M asset de novo versus the post-merger Renasant entity by next Tuesday.