First Bancshares, Inc.
120 North Street, Bellevue, Ohio 44811
419-483-7340 – Fax 419-483-0006
www.fnblifetime.com
October 25, 2024

Dear Shareholder,

The Board of Directors have declared a third-quarter dividend of thirty-three cents ($0.33) per share. This is consistent with the amount paid for the last seven quarters. The payment is enclosed with this letter or has been direct deposited per your instructions. All others that are enrolled in the Dividend Reinvestment Plan will have shares purchased for your benefit.

The summary data for the year-to-date financial information is enclosed for your review and reflects a substantial increase in our net interest income. As we reported previously, margins have been under pressure for a while now since the Federal Reserve increased interest rates rapidly starting in early 2022 before stopping in mid-2023. Year over year, we can report an increase in net interest income of over $500k equating to roughly 9% improvement. This has been helpful to offset the decrease in non-interest income we continue to experience mainly due to the soft loan demand in residential mortgages and commercial lending as a result of the high interest rates. Non-interest expense this year is higher than year to date 2023 as data processing costs, franchise tax and other professional fees drove much of this change. The end result is very positive with net income improving over $187,000, which is almost 24% better than last year. While we are still not where we want to be or have historically been, we are continuing to see improvement and positive trends which should flow through the remainder of the year.

As you review the other information provided, there are many more positive figures that reflect the continued improvement in the bank’s financial performance that should allow us to report good news going forward. One notable area to focus on is the significant improvement in the book value per share. This has grown substantially from a year ago as rates come down and the depreciation of our investment portfolio lessens. Regular principal paydowns also help in improving this metric.

Recently, the Federal Reserve dropped the Federal Funds rate by 50 basis points for the first time in well over four years. With additional rate reductions expected to continue and longer-term treasury rates declining, this will help us continue to see improvement in our net interest margin. In addition, this should help drive loan demand, of which we are already seeing improvement. While there is still uncertainty surrounding the economy due to inflationary pressure and a job market that is being monitored closely, it seems to be a coin flip whether we will see a soft landing as hoped or a recession is imminent. We feel we are positioned well to manage through either scenario.

Our directors, officers and staff continue to work hard to deliver quality banking services to the markets we serve, which we know is a key factor in our success. We do not take for granted your value as a supporter and investor in our company and will strive to retain that trust. As always, please feel free to reach out with any questions.

Sincerely,
James V. Stouffer Jr.-Chairman

Dean J. Miller-President and CEO