2022 Annual Report Message from the Executive Team Our stra Our strategic vision is to build a high performance community bank in the southeastern United States. Since our beginning 27 years ago, we have been focused on growing our franchise and building shareholder value by expanding into markets with above-average demographic profiles for income and population growth. Our strategy has been to grow through both acquisitive and organic means, opening new markets by acquiring banks and attracting talented local community bankers. During 2022, we have continued to execute our strategy by recording record organic loan growth and closing two acquisitions, Beach Bancorp (Beach Bank) on August 1, 2022 and Heritage Southeast Bancorporation (Heritage) effective January 1, 2023. Financial Results Our company continues to generate increasing profitability and returns while significantly growing its asset base. Net income operating (excluding one-time items) increased 6.1% from $64.4 million in 2021 to $68.3 million for 2022. This increase in operating income produced a Return on Assets Operating (ROA) of 1.10% and a Return on Tangible Common Equity Operating (ROTCE) of 16% for the year. Net interest income increased $14 million or 9% during 2022, driven by higher loan volumes and an improved net interest margin due to a higher interest rate environment. Non-interest income decreased $500,000 to $37 million due primarily to lower Mortgage Division volume. Our company is a top performer in our peer group in terms of expense control and operating efficiency with an Efficiency Ratio of 57%. Total assets grew $385 million in 2022, representing a 6.3% increase year over year. Total loans increased 27.5% and total deposits increased $268 million or 5.1% during 2022. Over the last 10 years, we have achieved compound average annual growth of 25% in total assets. Asset quality remained strong as the company ended the year with net recoveries on charged-off loans and a 42% decrease in non-performing assets. Highlights Acquired Beach Bancorp Acquired Heritage Southeast Bancorporation Expanded to 114 locations across the southeast Entered Atlanta, Savannah, Tampa and Jacksonville markets Became the largest community bank in the FL Panhandle Achieved $7.9 billion in assets on January 1, 2023 Increased core earnings by 6.1% to $68.3 million Declared a quarterly dividend of $0.21 Awarded $2.5 million in CDFI grants 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Achieved 5 Star Rating from Bauer Financial Loans and Deposits $ in milions Our balance sheet is geographically diversified with meaningful market share across the southeast. As of 12/31/2022, Mississippi and Florida represent the largest part of our company’s loans and deposits Loans by State % of Portfolio Deposits by State % of Portfolio 1 Shareholder Value The First has a strong history of paying consistent dividends. The dividend has gone from an annual dividend of $0.15 in 2012 to a quarterly dividend of $0.21 per share to be paid on February 24, 2023, to shareholders of record as of February 8, 2023. This quarterly payment would increase the annual dividend to $0.84, which would be a 23% increase over the $0.68 paid in 2022. In addition, the Board of Directors has approved a share repurchase program for 2023 for up to shares worth $50 million. Acquisitions The First completed the acquisition of Beach Bancorp, Inc. (Beach Bank) on August 1, 2022. Beach Bank was headquartered in Fort Walton, Florida with six branches in the Florida panhandle and one branch in Tampa, Florida. Beach added approximately $600 million in assets to the company. On January 1, 2023, The First completed the acquisition of Heritage Southeast Bank (Heritage), headquartered in Jonesboro, Georgia. Heritage added 23 total branches and approximately $1.6 billion in assets to the company. Heritage significantly expanded the company’s footprint in Georgia, adding 8 branches in Atlanta and entry into the fast growing markets of Savannah, Georgia and Jacksonville, Florida. Together the two acquisitions added approximately $2.2 billion in assets and 30 locations in Georgia and Florida to the company’s footprint. Branch Locations 2 Economies of New Markets Atlanta, GA The Metro Atlanta area consists of 21 counties with a growing population and employment forecast. The current population of Metro Atlanta is 6.1 million with a 1.55% increase from 2021. The projected total population is 8.6 million by 2050, according to the Atlanta Regional Commission. Atlanta's GDP in 2021 was $300.13 billion. Atlanta is the home of 157 major corporations, including Apple, Amazon, Mercedes Benz, CNN, the Turner Broadcasting System, Cox, Comcast, Delta Airlines, Home Depot, Publix and the Weather Channel. It has 52 institutions of higher education including Morehouse College, Emory University, Georgia Institute of Technology and Georgia State University. The Hartsfield -Jackson Atlanta International Airport is the number one airport in the United States with 75 million passengers in 2021. Savannah, GA Savannah has a population of 339,000, with 1.5% population growth and a 1.4% job market increase in 2021. Strong job growth of 38.5% is forecast for the next 10 years. The Port of Savannah, manufacturing, the military and tourism are Savannah’s four major economic drivers. Lodging, dining, entertainment and tourist related transportation account for $2 billion in tourist spending annually. People are attracted to its southern charm, moss draped trees, beautiful architecture and cuisine. Major companies are also drawn to Savannah and among these are: Union Camp, International Paper, Gulfstream Aerospace and Morris Multimedia. Jacksonville, FL The current metro area population is 1.6 million and it had a 1.31% increase in 2021. Job market growth is robust and saw a 2.8% increase in the last year. From the Naval Air Station with 21,900 employees to the Mayo Clinic with 4,970 employees to The University of North Florida with 1,540 employees, to Metronic with 650 employees- over 48 companies as well as institutions with over 600 employees are headquartered in the area. The population is trending to younger people with 35.9 being the median age and has a low poverty rate of 15% with a median household income of $55,591. Tampa Bay Area The Tampa Bay area is a major metropolitan area surrounding Tampa Bay on the Gulf Coast of Florida. The area includes Tampa, St. Petersburg and Clearwater. It is the 18th largest metropolitan area in the United States with a population of 3.1 million with Tampa being the largest city with a population of 392,800, the third largest city in Florida. The metropolitian area growth projection by 2050 is seven million. It has 16 colleges and universities which accounts for the large presence of professional, scientific and technical services in the area. Approximately 129,000 people work in that job sector. The five key industries of the Tampa Bay Area are defense and security, including McDill Air Force Base with 15,000 employees; information technology which has added 15,000 jobs in five years; financial and professional services, with Tampa being considered the "Wall Street of the South" due to one of four service firms in this sector; life sciences and healthcare which has grown 15% in the last five years; and manufacturing, distribution and logistics with the Port of Tampa Bay and Tampa International Airport as major players. The Tampa Bay Area with its strong economic base is poised for continued growth. Florida Panhandle The Florida Panhandle is the northwestern part of the state and it includes the cities of Tallahassee, Pensacola and Panama City. The total population of the Panhandle is 1.4 million. The First has operated in the Panhandle for a decade, but is continuing to expand the density of its operations. The largest city in the Panhandle is Tallahassee, the state capital with a metropolitan population of 385,000. However, the largest population grouping is the Pensacola Metropolitan area with a population of 511,502. Pensacola’s economy is powered by the military with the large Pensacola Naval Air Station, surrounded by naval and technical training operations and defense contractors. Eglin Air Force Base is also in the area. The job market in Pensacola grew by 1.9% in the last year. Tourism is also a major part of the economy throughout the Pensacola Metropolitan area which includes Crestview-Fort Walton Beach, Destin and Navarre. The First is looking forward to growing their operations in these new regions to take advantage of their strong economies and growing populations. Community Involvement The First has a primary mission to invest and serve underserved markets. We are one of the largest Certified Community Development Institutions (CDFI) in the country. This is a designation by the U.S. Treasury for financial institutions in which 60% of their business activities are in distressed markets. Our Bank has been a CDFI participant since 2010 and has awarded over $7.2 million in grants to organizations in our communities to help support economic growth and job creation. Our Bank believes that supporting its markets by investing in distressed communities, providing financial education and generating access to credit are fundamental building blocks that improve the standard of living across all of our markets. We have had an active year in accomplishing our mission. In 2022, The First received $2.5 million from the CDFI fund. The Financial Assistance awards through CDFI are required to match dollar-for-dollar with non-federal funds. This requirement enables CDFIs to multiply the impact of federal investment. The First Bank has leveraged that support to $30 million in direct financial services, some of which helped fund affordable housing projects in economically distressed areas. The First also participates in the Federal Home Loan Bank program that allows 10% of FHLB profits to be used to support affordable housing. During 2022, The First utilized $195,000 to assist 19 first time home buyers. The Bank also utilized $34,894 from the Special Needs Rehabilitation Assistance Program (SNAP) to assist six special needs homeowners with home rehabilitation and used other special funds to assist 31 homeowners with needed home repairs. Other community programs include a gift of $150,000 to the University of Southern Mississippi to provide financial literacy lessons to USM collegiate athletes, a donation of $100,000 to three Historically Black Colleges and Universities: Florida A&M University, Jackson State University and Southern University to support their Colleges of Business and Small Business Centers as well as scholarships. In addition, The First awarded $610,000 to the Petal School District and the Hattiesburg Public Schools, $650,000 in Florida to Step Up and AAA Scholarships and $350,000 in Georgia to an approved nonprofit to fund scholarships for disadvantaged children. The Bank also provided $80,000 to assist with tuition for low income children to attend four private schools in Mississippi. Our organization believes in education as a path to social mobility and we are proud of our contributions. 3 Talented Employees Leadership and Teamwork Our outstanding results and exceptional growth are directly attributable to the talents of our leadership team and associates. Our everyday efforts to live our strong values, serve our communities and achieve our goals is the driving force of success for our organization. In 2022, it was my honor to be named Chairman of the Board; so on their behalf, I want to thank our team members and our shareholders for having confidence in us and continuing to enable our progress. I want to especially welcome those team members who are new to The First and together we all look forward to another prosperous year. In 2022, The First continued to strive to provide opportunities for our employees to attain their personal and professional goals. In addition to our employee benefits, we work to maintain a healthy work environment for all of our employees, as well as providing free banking services to them. We use our employee portal to offer wide- ranging communications across the organization to inform and engage employees. We are also committed to diversity, and we value the benefits that diversity can bring. The First has a strong Diversity, Equity and Inclusion Policy. M. Ray “Hoppy” Cole, Jr. CEO/Chairman of the Board 4 DIRECTORS & CORPORATE OFFICERS Directors of the Bank and Holding Company Fred McMurry Dr. Rodney Bennett Vice President and General Manager, Former President, University of Southern Mississippi Havard Pest Control Dr. David W. Bomboy Orthopedic Surgeon, Retired Thomas E. Mitc hell President, Stuart Contracting Co., Inc. M. Ray (Hoppy) Cole, Jr. President, CEO, & Chairman of the Board for The First Bancshares, Inc. & The First Bank Renee Moore CPA, Topp McWhorter Harvey PLLC E. Ricky Gibson President and Owner, N & H Electronics Ted E. Parker Lead Director Ted Parker Cattle LLC Jonathan R. Levy Managing Partner, Redstone Investments Doug Seidenburg President, Molloy-Seidenburg & Co., Ltd., CPA's Charles R. Lightsey Social Security Disability Representative Andy Stetelman President, London & Stetelman Commercial Realtors Corporate Officers M. Ray (Hoppy) Cole, Jr., President & CEO Dee Dee Lowery, CFO Corporate Information A N N U A L M E E T I N G The Annual Meeting of Shareholders will be held Thursday, May 25, 2023 at 4:00 pm CST in a virtual only meeting format, via the internet. S TOC K T R A N S F E R A G E N T Computershare, Inc. 462 South 4th Street, Suite 1600 Louisville, KY 40202 I N D E P E N D EN T A U D I T O R FORVIS LLP Certified Public Accountants Jackson, Mississippi F I N A N C I A L I N F O R MAT I ON Copies of the form 10-K Annual Report to the Securities and Exchange Commission, including financial statements and financial statement schedules, are available without charge upon request at: THE FIRST BANCSHARES, INC. 6480 U.S. Highway 98 West (39402) P.O. Box 15549 Hattiesburg, MS 39404-5549 The Form 10-K Annual Report to the Securities and Exchange Commission, including financial statements and financial statement schedules, serves as the alternative annual disclosure statement pursuant to 12 CFR § 350.5 STOCK INFORMATION The Company's articles of incorporation authorize it to issue up to 40,000,000 shares of Common Stock. As of March 31, 2023, the Company had 31,054,546 shares outstanding, held by shareholders of record. The Common Stock of the Company is traded on Nasdaq Global Market under the symbol FBMS ADVISORY BOARDS Mississippi Ailrick D. Young Laurel Housing Authority M.J. "Trey" Bobinger, III Bobinger Law Firm/Lobbyist Sallie Dier Watkins Construction- Accountant Jim Stroo Realty Executives David Lawson Lil' Butcher Shoppe Steve Cunningham M.D. Comprehensive Radiology Services Kevin Smith Animal Health Clinic James A. Ladner (Jimmie) Tax Assessor Hancock County Joe Cloyd The Cottages, Owner Marshall Smith Gulf Sales & Supplies Billy Guice Guice Offshore Bobby Heinrich Heinrich and Associates Louisiana Leslie Landry Northshore Community Foundation Dr. Chuck Carr Brown Secretary Department of Environmental Quality Vince Garafola V's Holding, Windgate Properties V's Investments, Nick Gagliano, Jr. Gagliano Group, Inc. Anthony Mercante Ponchatoula Family Pharmacy South Georgia & Tallahassee Alabama & Florida Panhandle Leonard A. Kaiser Kaiser Sotheby's Real Estate Sales Richard Schwartz Doc's Seafood Shack Coleman Bryars Alabama Land Title Company Donald P. Robinson Superior Petroleum Services (Retired) James Robertson Robertson Andreoli & Covington Lee "Trip" Pittman Pittman Tractor Company Mike Reid White Spunner Real Estate John Sheldon Sheldon Rogers & Bryan PC Dr. J. Reid Cummings University of South Alabama Jimmy Lyons SSI (Retired) Tom Bramlett Office Equipment Company Juan Peasant PM Group Ed Ranelli UWF Business Enterprises Lloyd Reshard Cogni tive Big Data Systems Patrick Rooney Coastal CXO Fredrick (Scott) Meyer Diceburg, LLC Melissa Pilcher Florida Community Services, Inc. David (Randy) Wise Randy Wise Homes Wilson Carraway, III F. Gene D. Lor d Darlene K. Taylor Taylor Benefit Resource Danny Copeland COGI Athletics Johnny Cochran J Cochran Farms, Inc. John LaHood Fellowship Home at Brookside Mary Rose Sirianni TECO/AT&T (Retired) Karen Miller Tallahassee Lenders Consortium Ryan Yeary Camienz & Yeary, P.A. George Anthon, Jr. Anthon Chiropractic Care Vincent Roubique Tangi Electric & Maint. Co. Rhaoul Guillaume, Jr. Pointe-Marie/ Rag Development LLC/Gotech, Inc. Jason Dupree Cypress Title Company Terri Russo Lacy WestRiver Title John Holmes True Title The First Bancshares, Inc. 6480 Hwy 98 West Hattiesburg, MS 39402 www.TheFirstBank.com