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First Banshares plants flag in Florida, Louisiana with new acquisitions

» Parent company of The First fulfills market expansion strategy set in 2009

By TED CARTER / Hattiesburg Business Today

Hattiesburg’s First Banshares first envisioned a market that stretched from Baton Rouge to Pensacola seven years ago. The $1.2billion holding company parent of The First reached that goal last week with agreements to acquire Iberville Bank in a cash deal and Gulf Coast Community Bank in an all-stock transaction.

The acquisitions carry a value of $33.3 million, with the takeover of Plaquemine, Louisiana-based Iberville Bank put at $31 million and the takeover of Pensacola’s Gulf Coast Community Bank at $2.3 million.

First Banshares expects to close on the acquisitions early in next year’s first quarter and merge operations by mid 2017. The acquisitions will give the holding company assets of $1.6 billion and expand the brand of The First, officially called The First, a National Bank Association, to 48 locations.

“It is a continued execution of a plan we laid out in 2009,” when publicly held First Banshares had assets of $478 million and 10 locations in the Pine Belt, said M. Ray “Hoppy” Cole, president and chief executive officer.

“We drew a box from Jackson to the north and south to the gulf coast, east to Pensacola and west to Baton Rouge,” Cole said in an interview Monday.

First Banshares, Cole added, got “great prices in great markets.”

“Pensacola, Florida, is an extremely attractive market with lots of job growth and development,” he said. Baton Rouge is having tremendous growth as well, he added.

Iberville Bank is headquartered in Plaquemine in Iberville Parish, an area that is part of the Baton Rouge metro area.

Cole said Iberville Bank, with assets of $258 million, is healthy with no significant asset- quality problems. Gulf Coast Community Bank, on the other hand, has “some legacy problems left over from the 2006-to-2009 period.”

“Those assets will be marked down… so we can move them pretty quickly,” Cole said.

With that accomplished, First Banshares can focus on growing Gulf Coast Community Bank, he said.

Gulf Coast Community Bank had assets of $133 million at the close of the second quarter and non-current loans and leases of $587,000, FDIC reports show.

Bank rating company BauerFinancial gave Gulf Coast Community Bank a “Zero-Stars” designation in its star ratings for this year’s second quarter.  Zero-Stars is Bauer’s lowest star rating. “These institutions are included on our Troubled & Problematic Report and are facing considerable challenges at this time,” Bauer said in detailing what the rating denotes.

By contrast, Bauer gave Iberville Bank a four-star rating, the second highest it awards. The designation denotes the bank is in “excellent” shape. “These institutions are also on BauerFinancial’s Recommended Report,” Bauer said.

First Banshares’ The First also has a four-star rating from Bauer for the second quarter.

The First reported profits of $7.5 million through the second quarter and $2.9 million for the quarter, the FDIC says.

“Our home market has been outstanding,” Cole said. “We have been very fortunate to produce double-digit increases each year with net income. We also have had organic growth in deposits and loans.”

The First grew its deposits from $956 million in the second quarter of 2015 to just over $1 billion through the second quarter of this year. Loans grew from $726 million through the second quarter of last year to $826 million at the close of the second quarter of this year, according to the FDIC.

FirstBanshares will consider additional acquisitions during its annual meeting in December, Cole said, noting plenty of attractive small-bank acquisition opportunities are available within the market box established in 2009.

“We think the next goal is to sort of reset,” Cole said. “In 2009 we said we wanted to be a $1 billion institution. We think in three to four years a $4 billion franchise is possible. We think that is kind of a sweet spot within the three-to-five-year range.”

First Banshares expects to meet its asset goals through a combination of organic growth and acquisitions, according to Cole, who has been CEO since 2009 and president since 2007.

Cole was a member of the founders of Hattiesburg’s First National Bank of South Mississippi in 1996. Three years later he joined a group that created First National Bank of the Pinebelt in Laurel. The two banks merged in 2003 to become First Banshares.

The new bank’s first acquisitions came with the 2011 purchase of seven Mississippi coast branches of New Orleans’s Whitney Bank which was in a merger with Gulfport’s Hancock Bank. The acquisitions gave First Banshares $179 million in new deposits.

More growth came in 2014 with the acquisitions of First National Bank of Baldwin county, Alabama, and Bay Bank in Mobile. The First National Bank of Baldwin County brought First Banshares $187 million in assets. The Bay Bank acquisition gave First Banshares four additional locations.

Shares of First Banshares (NASDAQ: FBMS) closed Tuesday at $21.60, down from a close of $21.80 on Monday, the first day of trading after the announcement of the Louisiana and Florida acquisitions. The bank holding company’s shares have a 52-week low of $15.32 and high of $22.

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