3/8/25
The First Bancshares, Inc. (FBMS) is a regional bank with a strong footprint in the southeastern United States. Headquartered in Mississippi, it operates a network of community-focused banks that offer personal and business banking services. Over the years, FBMS has steadily expanded, growing its customer base and revenue while maintaining a disciplined approach to lending and asset management.
For dividend investors, this stock presents an interesting opportunity. With a moderate dividend yield, a healthy payout ratio, and consistent earnings growth, FBMS has the potential to provide both income and stability. Let’s take a closer look at its dividend profile and what it means for long-term investors.
Key Dividend Metrics
📌 Dividend Yield: 2.90% (Forward & Trailing)
📌 Annual Dividend: $1.00 per share
📌 Five-Year Average Dividend Yield: 2.33%
📌 Payout Ratio: 40.98%
📌 Dividend Growth: Steady and consistent
📌 Last Dividend Payment: February 26, 2025
📌 Ex-Dividend Date: February 10, 2025
Dividend Overview
FBMS offers a dividend yield of 2.90%, which is solid for a regional bank. While it’s not the highest yield out there, it’s a respectable payout that provides a steady income stream for investors. One of the best things about this dividend is its sustainability. With a payout ratio of just under 41%, the company is distributing a reasonable portion of its earnings while keeping enough capital to reinvest in its business.
Another key point is that FBMS has a history of maintaining and gradually increasing its dividend. While it doesn’t deliver rapid dividend growth, it’s been a reliable payer. This makes it an attractive option for investors looking for consistency rather than aggressive income growth.
Dividend Growth and Safety
The safety of a dividend is just as important as the yield itself. FBMS is in a strong position when it comes to sustaining and potentially growing its payouts. The company has solid profitability, with an operating margin above 50% and a net profit margin of 27.61%. That kind of efficiency means it can continue rewarding shareholders while still growing its business.
With quarterly earnings up 65.6% year-over-year, there’s good reason to believe that future dividend increases are possible. Earnings per share currently sit at $2.44, giving the company plenty of room to keep payments steady even in an economic downturn.
Chart Analysis
Price Action and Trend
The price action on this chart shows a clear uptrend that began around mid-2024, with a strong breakout above previous resistance levels. The stock moved decisively above both the 50-day and 200-day moving averages, confirming the bullish trend. Over the past few months, it has been trading in a higher range, consolidating around the mid-$30s.
However, there has been a recent pullback, with the price dipping below the 50-day moving average. This suggests some near-term weakness, possibly a correction after the strong rally. The 200-day moving average continues to trend upward, which is typically a sign of longer-term strength.
Moving Averages
The 50-day moving average acted as strong support during the latter half of 2024, with the stock bouncing off it multiple times. Recently, the price has dropped below this level, which could indicate a shift in momentum. If the stock fails to reclaim the 50-day moving average, it may test lower support levels.
The 200-day moving average remains well below the current price, suggesting the longer-term trend is still intact. A deeper pullback toward this level would be a key area to watch for potential support.
Volume and Market Participation
Volume spikes occurred during key breakout points, particularly in late summer 2024. This confirms that institutional buying played a role in the rally. More recently, trading volume has remained relatively steady, though there has been a slight increase on down days, which could indicate some profit-taking.
If volume starts to pick up again alongside a price recovery, it could suggest renewed buying interest. Conversely, declining volume on a further drop would indicate weakening demand.
Relative Strength Index (RSI)
The RSI is trending lower, currently sitting near the lower end of its range. This suggests the stock is approaching oversold conditions, which could lead to a short-term bounce. However, if RSI remains weak and fails to recover above the mid-range, it could signal continued downward pressure.
Support and Resistance Levels
The most immediate support level appears to be around $34, where the stock recently found some stability. If this level holds, it could serve as a base for another move higher. Below that, the next key support zone would be around $32, near the 200-day moving average.
On the upside, resistance is evident around the $37-$38 range, where the stock previously struggled to push higher. A break above this area would indicate a return to bullish momentum.
Analyst Ratings
📈 Upgrade Alert – In August 2024, Keefe, Bruyette & Woods raised their rating on FBMS from “Market Perform” to “Outperform” 🚀. They also lifted their price target from $31 to $40, citing the bank’s strong financial performance and promising growth outlook. Analysts at the firm pointed to the company’s revenue expansion and improving margins as key reasons for their bullish stance.
📉 Downgrade Notice – On the flip side, Janney Montgomery Scott shifted its rating on FBMS from “Buy” to “Neutral” ⚖️ in October 2024. Their decision was based on valuation concerns, as the stock had already gained significant ground in the months prior. The firm suggested that while FBMS remains a well-managed regional bank, much of its upside may already be reflected in the current stock price.
💰 Consensus Price Target – Analysts covering FBMS have set an average 12-month price target of $38.75, indicating a potential upside of 12% from its current price of $34.59. Price targets vary, with the lowest estimate at $32.50 and the highest reaching $45.00. This range reflects differing opinions on the bank’s ability to sustain earnings growth and navigate economic conditions.
These mixed ratings suggest that while FBMS has strong fundamentals, investors should weigh both the growth potential and valuation risks before making decisions.
Earning Report Summary
The First Bancshares, Inc. (FBMS) wrapped up its latest quarter with a steady performance, showing solid loan growth while keeping a close eye on risks. The company reported net income of 18.3 million, which was just a bit lower than the previous quarter’s 18.6 million. The slight dip was mainly due to setting aside a little more for potential loan losses, which isn’t unusual in today’s economic climate.
One of the standout positives was loan growth, which came in at an annualized 6.7 percent, adding another 88.6 million to the books. That helped improve the net interest margin, which edged up a few basis points to 3.37 percent, meaning the bank is making a little more on its lending activities. Deposit costs, on the other hand, actually declined to 1.78 percent from the previous quarter’s 1.83 percent, which is good news since it means they’re paying out less in interest on deposits while still growing their business.
Asset quality is holding up well. Loans that were past due actually went down slightly to 21.8 million, now making up just 0.40 percent of total loans. Net charge-offs, which represent loans that were written off as losses, stayed very low at 0.6 million. That suggests customers are managing their debt fairly well and that FBMS isn’t seeing major credit issues.
One small concern was the increase in nonperforming assets, which ticked up to 29.9 million, or 0.37 percent of total assets. It’s not a red flag just yet, but it’s something worth keeping an eye on in the coming quarters.
Looking at the full year, FBMS showed 2.3 percent growth in net income, bringing in 77.2 million. Total loans increased by 4.6 percent, and deposits also rose by 2.2 percent, hitting 6.605 billion.
For dividend investors, the company maintained its quarterly dividend of 0.25 per share, payable on February 26, 2025. That’s a reassuring sign that management remains committed to rewarding shareholders.
The biggest news, though, was the announcement of a merger with Renasant Corporation. This all-stock deal, set to close in the first half of 2025, could bring more growth opportunities and improve operational efficiencies. Of course, it still needs regulatory approval, but if it goes through, it could make FBMS an even stronger regional player.
All in all, it was a solid quarter, with steady growth and a continued focus on managing risks while expanding the business.
Financial Health and Stability
A company’s ability to pay dividends depends on more than just earnings. Financial strength plays a huge role, and FBMS is in good shape.
- Profitability remains strong, with a return on equity of 7.90%
- Cash reserves are healthy at $230.27 million
- The company carries $352.07 million in debt, which is manageable given its size
- Revenue growth of 19% year-over-year is a good sign for future expansion
One of the standout factors is that FBMS continues to grow its revenue while maintaining disciplined cost controls. Banks can be vulnerable to economic cycles, but this one has positioned itself well for stability and long-term growth.
Valuation and Stock Performance
At its current price of $34.48, FBMS trades at a price-to-earnings (P/E) ratio of 14.13, which is reasonable for a bank of its size. Looking ahead, the forward P/E is projected to be 12.53, suggesting that the stock is trading at a fair valuation relative to its expected earnings.
Other key valuation metrics include:
- Price-to-Book (P/B) Ratio: 1.07, indicating the stock is valued close to its book value
- Price-to-Sales (P/S) Ratio: 3.94, showing a moderate valuation based on revenue
- Beta (5Y Monthly): 0.91, meaning the stock is slightly less volatile than the overall market
Looking at price trends, FBMS has ranged between $22.96 and $39.21 over the past year. Its 50-day moving average is $36.07, while the 200-day moving average sits at $32.47. This suggests that the stock has pulled back slightly from recent highs, which could present a potential entry point for long-term investors.
Risks and Considerations
Every investment comes with risks, and FBMS is no exception. While it has a solid foundation, there are a few factors investors should keep in mind.
- As a regional bank, its growth is tied to the southeastern U.S. economy. If local economic conditions weaken, loan demand and profitability could take a hit.
- Interest rate changes can impact net interest margins, affecting the bank’s earnings and dividend potential.
- The stock is subject to volatility, especially during periods of uncertainty in the financial sector.
- Institutional investors own over 74% of outstanding shares, which means large moves by investment funds could create price swings.
Despite these risks, FBMS has proven resilient, maintaining steady earnings growth and a well-managed balance sheet.
Final Thoughts
For investors looking for a mix of stability and income, FBMS is a name worth considering. With a 2.90% dividend yield, a reasonable payout ratio, and consistent revenue growth, it offers a reliable stream of passive income. While it may not be the highest-yielding stock in the market, its steady approach and strong financials make it a solid choice for dividend-focused portfolios.
The company’s ability to generate profits and sustain its dividend, even in challenging economic conditions, makes it a dependable pick for long-term investors seeking reliable banking sector dividends.