First Bancshares Is Aggressively Building Its Footprint, But Organic Loan Growth Is Lacking

It’s been a while since I’ve written about First Bancshares (FBMS), and the shares of this Mississippi-based bank have not performed particularly well in the meantime, with the shares falling about 15% and definitely lagging their community bank peer group. Not only has First Bancshares been pursuing a growth-by-acquisition strategy at a time when acquisitions have generally been frowned upon, the company hasn’t been doing a particularly good job of generating organic loan growth from that expanding footprint, with disappointing results for three straight quarters.

I believe that when investors start shifting more from defense (who will suffer the least during this period of spread headwinds and tough loan growth) to offense, First Bancshares will get more of its due, but I won’t underplay the need for improvement in organic loan generation. Although I think the fair value range extends close to $40, the shares may wait on signs of better internal execution.

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First Bancshares Is Aggressively Building Its Footprint, But Organic Loan Growth Is Lacking