U. S.
SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D. C. 20549





FORM
10-Q





x
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
      1934





FOR THE
QUARTERLY PERIOD ENDED:MARCH 31, 2009




OR


 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
      1934





COMMISSION
FILE NUMBER:33-94288





THE FIRST
BANCSHARES, INC.


(EXACT
NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)





MISSISSIPPI
              64-0862173(STATE
      OF INCORPORATION)
              (I.R.S.
      EMPLOYER IDENTIFICATION NO.)





6480
      U.S. HIGHWAY 98 WESTHATTIESBURG, MISSISSIPPI
            
            39402(ADDRESS
      OF PRINCIPAL
            
            (ZIP
      CODE)EXECUTIVE
      OFFICES)


(601)
268-8998


(ISSUER'S
TELEPHONE NUMBER, INCLUDING AREA CODE)





NONE


(FORMER
NAME, ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT)





INDICATE
BY CHECK MARK WHETHER THE ISSUER: (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED
BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE
PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED
TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS.


YES  x   NO    ̈





INDICATE
BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN
ACCELERATED FILER, OR A NON-ACCELERATED FILER.  SEE DEFINITION OF
“ACCELERATED FILER AND LARGE ACCELERATED FILER” IN RULE 12B-2 OF THE EXCHANGE
ACT.





LARGE
      ACCELERATED FILER  ̈
            ACCELERATED
      FILER  ̈
            NON-ACCELERATED
      FILER x




ON MARCH
31, 2009, 2,993,631 SHARES OF THE ISSUER'S COMMON STOCK, PAR VALUE
$1.00 PER SHARE, WERE ISSUED AND OUTSTANDING.





TRANSITIONAL
DISCLOSURE FORMAT (CHECK ONE):





YES  ̈  NO  x





INDICATE
BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE
12B-2 OF THE EXCHANGE ACT):    YES   ̈  NO  x





PART I -
FINANCIAL INFORMATION





ITEM NO.
1. FINANCIAL STATEMENTS





THE FIRST
BANCSHARES, INC.





CONSOLIDATED
BALANCE SHEETS





(Unaudited)($
      amounts in thousands)
                                                        
                                                        March
      31,
                                                        
                                                        
                                                        December
      31,2009
                                                        
                                                        
                                                        2008ASSETSCash
      and due from banks
                                                        
                                                        $
                                                        10,095
                                                        
                                                        
                                                        $
                                                        8,887Interest-bearing
      deposits with banks
                                                        
                                                        
                                                        2,958
                                                        
                                                        
                                                        
                                                        2,762Federal
      funds sold
                                                        
                                                        
                                                        29,934
                                                        
                                                        
                                                        
                                                        13,359Total
      cash and cash equivalents
                                                        
                                                        
                                                        42,987
                                                        
                                                        
                                                        
                                                        25,008Securities
      held-to-maturity, at amortized cost
                                                        
                                                        
                                                        12
                                                        
                                                        
                                                        
                                                        12Securities
      available-for-sale, at fair value
                                                        
                                                        
                                                        95,151
                                                        
                                                        
                                                        
                                                        99,679Other
      securities
                                                        
                                                        
                                                        2,612
                                                        
                                                        
                                                        
                                                        2,612Loans
      held for sale
                                                        
                                                        
                                                        4,174
                                                        
                                                        
                                                        
                                                        3,113Loans
                                                        
                                                        
                                                        314,751
                                                        
                                                        
                                                        
                                                        319,972Allowance
      for loan losses
                                                        
                                                        
                                                        (5,270
                                                        )
                                                        
                                                        
                                                        (4,785
                                                        )LOANS,
      NET
                                                        
                                                        
                                                        309,481
                                                        
                                                        
                                                        
                                                        315,187Premises
      and equipment
                                                        
                                                        
                                                        15,157
                                                        
                                                        
                                                        
                                                        15,279Interest
      receivable
                                                        
                                                        
                                                        2,331
                                                        
                                                        
                                                        
                                                        2,605Cash
      surrender value
                                                        
                                                        
                                                        5,712
                                                        
                                                        
                                                        
                                                        5,660Other
      real estate
                                                        
                                                        
                                                        1,527
                                                        
                                                        
                                                        
                                                        1,629Goodwill
                                                        
                                                        
                                                        702
                                                        
                                                        
                                                        
                                                        702Other
      assets
                                                        
                                                        
                                                        3,188
                                                        
                                                        
                                                        
                                                        3,338$
                                                        483,034
                                                        
                                                        
                                                        $
                                                        474,824LIABILITIES
      AND SHAREHOLDERS' EQUITYLIABILITIES:Deposits:Noninterest-bearing
                                                        
                                                        $
                                                        50,593
                                                        
                                                        
                                                        $
                                                        57,594Time,
      $100,000 or more
                                                        
                                                        
                                                        90,240
                                                        
                                                        
                                                        
                                                        87,944Interest-bearing
                                                        
                                                        
                                                        249,955
                                                        
                                                        
                                                        
                                                        232,541TOTAL
      DEPOSITS
                                                        
                                                        
                                                        390,788
                                                        
                                                        
                                                        
                                                        378,079Interest
      payable
                                                        
                                                        
                                                        678
                                                        
                                                        
                                                        
                                                        850Borrowed
      funds
                                                        
                                                        
                                                        35,508
                                                        
                                                        
                                                        
                                                        46,027Subordinated
      debentures
                                                        
                                                        
                                                        10,310
                                                        
                                                        
                                                        
                                                        10,310Other
      liabilities
                                                        
                                                        
                                                        3,508
                                                        
                                                        
                                                        
                                                        2,990TOTAL
      LIABILITIES
                                                        
                                                        
                                                        440,792
                                                        
                                                        
                                                        
                                                        438,256SHAREHOLDERS'
      EQUITY:Common
      stock, $1 par value authorized 10,000,000 shares; 3,020,125 shares issued
      at March 31, 2009 and 3,016,695  shares issued at December 31,
      2008
                                                        
                                                        
                                                        3,020
                                                        
                                                        
                                                        
                                                        3,017Preferred
      stock, no par value, $1,000 per share  4,730 liquidation,
      10,000,000 shares authorized; 5,000 shares issued and outstanding at March
      31, 2009 and no shares issued at December 31, 2008
                                                        
                                                        
                                                        -Treasury
      stock, at cost, 26,494 shares at March 31, 2009 and December 31,
      2008
                                                        
                                                        
                                                        (464
                                                        )
                                                        
                                                        
                                                        (464
                                                        )Additional
      paid-in capital
                                                        
                                                        
                                                        23,249
                                                        
                                                        
                                                        
                                                        22,942Retained
      earnings
                                                        
                                                        
                                                        11,621
                                                        
                                                        
                                                        
                                                        11,482Accumulated
      other comprehensive income (loss)
                                                        
                                                        
                                                        86
                                                        
                                                        
                                                        
                                                        (409
                                                        )TOTAL
      SHAREHOLDERS' EQUITY
                                                        
                                                        
                                                        42,242
                                                        
                                                        
                                                        
                                                        36,568$
                                                        483,034
                                                        
                                                        
                                                        $
                                                        474,824








THE FIRST
BANCSHARES, INC.





CONSOLIDATED
STATEMENTS OF INCOME





($
amounts in thousands except earnings per share)





(Unaudited)Three
      Months EndedMarch 31,2009
                                                                    
                                                                    
                                                                    2008INTEREST
      INCOME:Loans,
      including fees
                                                                    
                                                                    $
                                                                    5,596
                                                                    
                                                                    
                                                                    $
                                                                    7,530Securities:Taxable
                                                                    
                                                                    
                                                                    821
                                                                    
                                                                    
                                                                    
                                                                    833Tax
      exempt
                                                                    
                                                                    
                                                                    214
                                                                    
                                                                    
                                                                    
                                                                    198Federal
      funds sold
                                                                    
                                                                    
                                                                    35
                                                                    
                                                                    
                                                                    
                                                                    121TOTAL
      INTEREST INCOME
                                                                    
                                                                    
                                                                    6,666
                                                                    
                                                                    
                                                                    
                                                                    8,682INTEREST
      EXPENSE:Deposits
                                                                    
                                                                    
                                                                    2,248
                                                                    
                                                                    
                                                                    
                                                                    3,285Other
      borrowings
                                                                    
                                                                    
                                                                    564
                                                                    
                                                                    
                                                                    
                                                                    705TOTAL
      INTEREST EXPENSE
                                                                    
                                                                    
                                                                    2,812
                                                                    
                                                                    
                                                                    
                                                                    3,990NET
      INTEREST INCOME
                                                                    
                                                                    
                                                                    3,854
                                                                    
                                                                    
                                                                    
                                                                    4,692PROVISION
      FOR LOAN LOSSES
                                                                    
                                                                    
                                                                    628
                                                                    
                                                                    
                                                                    
                                                                    366NET
      INTEREST INCOME AFTER PROVISIONFOR LOAN
    LOSSES
                                                                    
                                                                    
                                                                    3,226
                                                                    
                                                                    
                                                                    
                                                                    4,326NONINTEREST
      INCOME:Service
      charges on deposit accounts
                                                                    
                                                                    
                                                                    474
                                                                    
                                                                    
                                                                    
                                                                    510Other
      service charges, commissions and fees
                                                                    
                                                                    
                                                                    210
                                                                    
                                                                    
                                                                    
                                                                    252TOTAL
      NONINTEREST INCOME
                                                                    
                                                                    
                                                                    684
                                                                    
                                                                    
                                                                    
                                                                    762NONINTEREST
      EXPENSES:Salaries
      and employee benefits
                                                                    
                                                                    
                                                                    2,128
                                                                    
                                                                    
                                                                    
                                                                    2,427Occupancy
      and equipmentexpense
                                                                    
                                                                    
                                                                    516
                                                                    
                                                                    
                                                                    
                                                                    490Other
      operating expenses
                                                                    
                                                                    
                                                                    1,014
                                                                    
                                                                    
                                                                    
                                                                    1,046TOTAL
      NONINTEREST EXPENSES
                                                                    
                                                                    
                                                                    3,658
                                                                    
                                                                    
                                                                    
                                                                    3,963INCOME
      BEFORE INCOME TAXES
                                                                    
                                                                    
                                                                    252
                                                                    
                                                                    
                                                                    
                                                                    1,125INCOME
      TAXES
                                                                    
                                                                    
                                                                    61
                                                                    
                                                                    
                                                                    
                                                                    335NET
      INCOME
                                                                    
                                                                    
                                                                    191
                                                                    
                                                                    
                                                                    
                                                                    790PREFERRED
      DIVIDENDS
                                                                    
                                                                    
                                                                    38
                                                                    
                                                                    
                                                                    
                                                                    -PREFERRED
      STOCK ACCRETION
                                                                    
                                                                    
                                                                    14
                                                                    
                                                                    
                                                                    
                                                                    -NET
      INCOME APPLICABLE TO COMMON
      STOCK
                                                                    
                                                                    $
                                                                    139
                                                                    
                                                                    
                                                                    $
                                                                    790EARNINGS
      PER SHARE - BASIC
                                                                    
                                                                    $
                                                                    .06
                                                                    
                                                                    
                                                                    $
                                                                    .26EARNINGS
      PER SHARE – DILUTED
                                                                    
                                                                    
                                                                    .06
                                                                    
                                                                    
                                                                    
                                                                    .26EARNINGS
      PER SHARE AVAILABLE TO COMMONSHAREHOLDERS –
      BASIC
                                                                    
                                                                    
                                                                    .05
                                                                    
                                                                    
                                                                    
                                                                    .26EARNINGS
      PER SHARE AVAILABLE TO COMMONSHAREHOLDERS –
      DILUTED
                                                                    
                                                                    
                                                                    .05
                                                                    
                                                                    
                                                                    
                                                                    .26DIVIDENDS
      PER SHARE - COMMON
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    .075





THE FIRST
BANCSHARES, INC.





CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY





Common
                      Stock
                    
                    
                    Preferred
                      Stock
                    
                    
                    Additional
                      Paid-in
                      Capital
                    
                    
                    Retained
                      Earnings
                    
                    
                    Accumulated
                      Other
                      Compre-
                      hensive
                      Income(loss)
                    
                    
                    Treasury
                      Stock
                    
                    
                    TotalBalance,
      January 1, 2008
                    
                    $
                    3,015
                    
                    
                    $
                    -
                    
                    
                    $
                    22,929
                    
                    
                    $
                    10,306
                    
                    
                    $
                    494
                    
                    
                    $
                    (464
                    )
                    
                    $
                    36,280Net
      earnings
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    790
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    790Net
      change in Unrealized gain (loss) on available- for-sale securities, net of
      tax
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    630
                    
                    
                    
                    -
                    
                    
                    
                    630Other
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2Exercise
      of stock options
                    
                    
                    1
                    
                    
                    
                    -
                    
                    
                    
                    6
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    7Cash
      dividend declared $.075 per share
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (224
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (224
                    )Balance,
      March 31, 2008
                    
                    $
                    3,016
                    
                    
                    $
                    -
                    
                    
                    $
                    22,937
                    
                    
                    $
                    10,872
                    
                    
                    $
                    1,124
                    
                    
                    $
                    (464
                    )
                    
                    $
                    37,485Balance,
      January 1, 2009
                    
                    $
                    3,017
                    
                    
                    $
                    -
                    
                    
                    $
                    22,942
                    
                    
                    $
                    11,482
                    
                    
                    $
                    (409
                    )
                    
                    $
                    (464
                    )
                    
                    $
                    36,568Net
      earnings
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    191
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    191Net
      change in unrealized gain (loss) on available- for-sale securities, net of
      tax
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    495
                    
                    
                    
                    -
                    
                    
                    
                    495Issuance
      of preferred stock and warrant
                    
                    
                    -
                    
                    
                    
                    4,716
                    
                    
                    
                    284
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    5,000Exercise
      of stock options
                    
                    
                    3
                    
                    
                    
                    -
                    
                    
                    
                    23
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    26Accretion
      of preferred stock discount
                    
                    
                    -
                    
                    
                    
                    14
                    
                    
                    
                    -
                    
                    
                    
                    (14
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Dividends
      on preferred stock
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (38
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (38
                    )Balance,
      March 31, 2009
                    
                    $
                    3,020
                    
                    
                    $
                    4,730
                    
                    
                    $
                    23,249
                    
                    
                    $
                    11,621
                    
                    
                    $
                    86
                    
                    
                    $
                    (464
                    )
                    
                    $
                    42,242








THE FIRST
BANCSHARES, INC.





CONSOLIDATED
STATEMENTS OF CASH FLOWS








($
Amounts in Thousands)


(Unaudited)Three
      Months EndedMarch 31,2009
                                  
                                  
                                  2008CASH
      FLOWS FROM OPERATING ACTIVITIES:NET
      INCOME
                                  
                                  $
                                  191
                                  
                                  
                                  $
                                  790Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation,
      amortization and accretion
                                  
                                  
                                  287
                                  
                                  
                                  
                                  320Provision
      for loan losses
                                  
                                  
                                  628
                                  
                                  
                                  
                                  366Loss
      on sale/writedown of ORE
                                  
                                  
                                  101
                                  
                                  
                                  
                                  61Increase
      in cash value of life insurance
                                  
                                  
                                  (52
                                  )
                                  
                                  
                                  (36
                                  )Federal
      Home Loan Bank stock dividends
                                  
                                  
                                  (10
                                  )
                                  
                                  
                                  (23
                                  )Changes
      in:Interest
      receivable
                                  
                                  
                                  274
                                  
                                  
                                  
                                  517Loans
      held for sale
                                  
                                  
                                  (1,061
                                  )
                                  
                                  
                                  1,170Interest
      payable
                                  
                                  
                                  (172
                                  )
                                  
                                  
                                  95Other,
      net
                                  
                                  
                                  857
                                  
                                  
                                  
                                  2,354NET
      CASH PROVIDED BYOPERATING ACTIVITIES
                                  
                                  
                                  1,043
                                  
                                  
                                  
                                  5,614CASH
      FLOWS FROM INVESTING ACTIVITIES:Maturities
      and calls of securities available-for-sale
                                  
                                  
                                  15,795
                                  
                                  
                                  
                                  7,340Purchases
      of securities available-for-sale
                                  
                                  
                                  (10,798
                                  )
                                  
                                  
                                  (9,370
                                  )Net
      decrease in loans
                                  
                                  
                                  4,800
                                  
                                  
                                  
                                  4,372Purchases
      of premises and equipment
                                  
                                  
                                  (77
                                  )
                                  
                                  
                                  (489
                                  )NET
      CASH PROVIDED BYINVESTING ACTIVITIES
                                  
                                  
                                  9,720
                                  
                                  
                                  
                                  1,853CASH
      FLOWS FROM FINANCING ACTIVITIES:Increase
      in deposits
                                  
                                  
                                  12,709
                                  
                                  
                                  
                                  45,699Net
      decrease in borrowed funds
                                  
                                  
                                  (10,519
                                  )
                                  
                                  
                                  (11,053)Dividend
      paid on common stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (224
                                  )Proceeds
      from issuance of preferred stock and warrants
                                  
                                  
                                  5,000
                                  
                                  
                                  
                                  -Exercise
      of stock options
                                  
                                  
                                  26
                                  
                                  
                                  
                                  7NET
      CASH PROVIDED BYFINANCING ACTIVITIES
                                  
                                  
                                  7,216
                                  
                                  
                                  
                                  34,429NET
      INCREASE IN CASH
                                  
                                  
                                  17,979
                                  
                                  
                                  
                                  41,896CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                                  
                                  
                                  25,008
                                  
                                  
                                  
                                  11,341CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                                  
                                  $
                                  42,987
                                  
                                  
                                  $
                                  53,237CASH
      PAYMENTS FOR INTEREST
                                  
                                  $
                                  2,984
                                  
                                  
                                  $
                                  3,895CASH
      PAYMENTS FOR INCOME TAXES
                                  
                                  
                                  196
                                  
                                  
                                  
                                  566








THE FIRST
BANCSHARES, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





NOTE A —
BASIS OF PRESENTATION





The
accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q of the Securities
and Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. However, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 31, 2009, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009. For further information, please
refer to the consolidated financial statements and footnotes thereto included in
the Company's Form 10-K for the year ended December 31, 2008.





NOTE B —
SUMMARY OF ORGANIZATION





The First
Bancshares, Inc., Hattiesburg, Mississippi (the "Company"), was incorporated
June 23, 1995, under the laws of the State of Mississippi for the
purpose of operating as a bank holding company. The Company’s primary asset is
its interest in its wholly-owned subsidiary, The First, A National Banking
Association.





At March
31, 2009, the Company had approximately $483.0 million in assets, $318.9 million
in loans,$390.8 million in deposits, and $42.2 million in shareholders' equity.
For the three months ended March 31, 2009, the Company reported a net income of
$191,000 ($139,000 applicable to common shareholders).





In the
first, second and third quarters of 2008, the Company declared and paid
quarterly dividends of $.075 per common share for each quarter and in the fourth
quarter of 2008, no dividend was paid.





No
dividend was paid on common shares in the first quarter of 2009.





NOTE C –
PREFERRED STOCK AND WARRANT





On
February 6, 2009, as part of the U.S. Department of Treasury’s (“Treasury”)
Capital Purchase Program (“CPP”), the Company received a $5.0 million equity
investment by issuing 5 thousand shares of Series A, no par value preferred
stock to the Treasury pursuant to a Letter Agreement and Securities Purchase
Agreement that was previously disclosed by the Company. The Company also issued
a warrant to the Treasury allowing it to purchase 54,705 shares of the Company’s
common stock at an exercise price of $13.71. The warrant can be exercised
immediately and has a term of 10 years.





The
non-voting Series A preferred shares issued, with a liquidation preference of $1
thousand per share, will pay a cumulative cash dividend quarterly at 5% per
annum during the first five years the preferred shares are outstanding,
resetting to 9% thereafter if not redeemed. The CPP also includes certain
restrictions on dividend payments of the Company’s lower ranking equity and the
ability to purchase its outstanding common shares.





The
Company allocated the proceeds received from the Treasury, net of transaction
costs, on a pro rata basis to the Series A preferred stock and the warrant based
on their relative fair values. The Company assigned $.3 million and $4.7 million
to the warrant and the Series A preferred stock, respectively. The resulting
discount on the Series A preferred stock is being accreted up to the $5.0
million liquidation amount over the five year expected life of the Series A
preferred stock.





NOTE D —
EARNINGS PER COMMON SHARE





Basic per
share data is calculated based on the weighted-average number of common
shares outstanding during the reporting period. Diluted per share data
includes any dilution from potential common stock outstanding, such as
exercise of stock options.








For the Three Months EndedMarch 31, 2009Net Income
                          
                          
                          Shares
                          
                          
                          Per Share(Numerator)
                          
                          
                          (Denominator)
                          
                          
                          DataBasic
      per share – Common Shareholders
                          
                          $
                          139,000
                          
                          
                          
                          2,990,487
                          
                          
                          $
                          .05Effect
      of dilutive shares:Stock
      options
                          
                          
                          
                          
                          
                          
                          13,646Diluted
      per share – Common Shareholders
                          
                          $
                          139,000
                          
                          
                          
                          3,004,133
                          
                          
                          $
                          .05





For
      the Three Months EndedMarch
      31, 2008Net
      Income
                        
                        
                        Shares
                        
                        
                        Per
      Share(Numerator)
                        
                        
                        (Denominator)
                        
                        
                        DataBasic
      per share
                        
                        $
                        790,000
                        
                        
                        
                        2,989,259
                        
                        
                        $
                        .26Effect
      of dilutive shares:Stock
      options
                        
                        
                        -
                        
                        
                        
                        74,390Diluted
      per share
                        
                        $
                        790,000
                        
                        
                        
                        3,063,649
                        
                        
                        $
                        .26





As of
March 31, 2009, all of the Company’s stock options were fully vested and no
stock options were granted during the three months ended March 31,
2009.





NOTE E —
COMPREHENSIVE INCOME





The
following table discloses Comprehensive Income for the periods reported in the
Consolidated Statements of Income:


(In
thousands)





Quarter
      EndedMarch 31,2008
                
                
                2008Net
      Income
                
                $
                191
                
                
                $
                790Other
      Comprehensive Income, net of tax:Unrealized
      holding gains on securities during the period
                
                
                495
                
                
                
                630Comprehensive
      Income
                
                $
                686
                
                
                $
                1,420Accumulated
      Other Comprehensive Income
                
                $
                86
                
                
                $
                1,124





NOTE F —
FAIR VALUE





SFAS No.
157, Fair Value
Measurements, became effective for the Company’s 2008 fiscal year. SFAS
No. 157 redefines fair value as the exchange price that would be received to
sell an asset or paid to transfer a liability in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. Although the exchange price concept
is not new, the new definition focuses on the exit price as opposed to the entry
price, or the price that would be paid to acquire an asset or received to assume
a liability. The standard also emphasizes that fair value is a market-based
measurement and not an entity-specific measurement and establishes a hierarchy
to prioritize the inputs that can be used in the fair value measurement process.
The inputs in the three levels of this hierarchy are described as
follows:





Level
1-Quoted prices in active markets for identical assets or liabilities. An active
market is one in which transactions occur with sufficient frequency and volume
to provide pricing information on an ongoing basis.





Level
2-Observable inputs other than Level 1 prices. This would include quoted prices
for similar assets or liabilities, quoted prices in markets that are not active,
or other inputs that are observable or can be corroborated by observable market
data.





Level
3-Unobservable inputs, to the extent that observable inputs are unavailable.
This allows for situations in which there is little or no market activity for
the asset or liability at the measurement date.





The
material assets or liabilities measured and reported at fair value by the
Company on a recurring basis are summarized below. The Level 2 fair value
measurement shown below was obtained from a third-party pricing service that
uses industry-standard pricing models. Substantially all of the model inputs are
observable in the marketplace or can be supported by observable market
data.





March 31, 2009Fair
      Value Measurement
      UsingLevel 1
                                
                                
                                Level 2
                                
                                
                                Level 3(In
      thousands)Investment
      securities available-for-sale
                                
                                
                                -
                                
                                
                                $
                                95,151
                                
                                
                                
                                -





NOTE G —
SECURITIES





The
following disclosure of the estimated fair value of financial instruments is
made in accordance with FASB Statement No. 107, Disclosures About Fair Value of
Financial Instruments. The estimated fair value amounts have been
determined using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required to
interpret market data to develop the estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the amounts that
could be realized in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.





A summary
of the amortized cost and estimated fair value of available-for-sale securities
and held-to-maturity securities at March 31, 2009 follows:





March 31, 2009Gross
                      
                      
                      GrossAmortized
                      
                      
                      Unrealized
                      
                      
                      Unrealized
                      
                      
                      EstimatedCost
                      
                      
                      Gains
                      
                      
                      Losses
                      
                      
                      Fair ValueAvailable-for-sale
      securities:Obligations
      of U.S. Government Agencies
                      
                      $
                      20,086
                      
                      
                      $
                      590
                      
                      
                      $
                      2
                      
                      
                      $
                      20,674Tax-exempt
      and taxable obligations of states and municipal
    subdivisions
                      
                      
                      24,332
                      
                      
                      
                      661
                      
                      
                      
                      152
                      
                      
                      
                      24,841Mortgage-backed
      securities
                      
                      
                      34,476
                      
                      
                      
                      696
                      
                      
                      
                      258
                      
                      
                      
                      34,914Corporate
      obligations
                      
                      
                      14,908
                      
                      
                      
                      12
                      
                      
                      
                      1,104
                      
                      
                      
                      13,816Other
                      
                      
                      1,219
                      
                      
                      
                      0
                      
                      
                      
                      313
                      
                      
                      
                      906Total
                      
                      $
                      95,021
                      
                      
                      $
                      1,959
                      
                      
                      $
                      1,829
                      
                      
                      $
                      95,151Held-to-maturity securities:Mortgage-backed
      securities
                      
                      $
                      12
                      
                      
                      $
                      0
                      
                      
                      $
                      0
                      
                      
                      $
                      12







NOTE H —
ALLOWANCE FOR LOAN LOSSES





The
Company has developed policies and procedures for evaluating the overall quality
of its credit portfolio and the timely identification of potential problem
loans. Management’s judgment as to the adequacy of the allowance is based upon a
number of assumptions about future events which it believes to be reasonable,
but which may not prove to be accurate, particularly given the Company’s short
operating history and rapid growth. Thus, there can be no assurance that
charge-offs in future periods will not exceed the allowance for loan losses or
that additional increases in the loan loss allowance will not be
required.





The
Company’s allowance consists of two parts. The first part is determined in
accordance with Financial Accounting Standard No. 5, Accounting for Contingencies(SFAS No. 5).The Company’s determination of this part of the allowance is based upon
quantitative and qualitative factors. A loan loss history based upon the prior
four years is utilized in determining the appropriate allowance. Historical loss
factors are determined by graded and ungraded loans by loan type. These
historical loss factors are applied to the loans by loan type to determine an
indicated allowance. The loss factors of peer groups are considered in the
determination of the allowance and are used to assist in the establishment of a
long term loss history for areas in which this data is unavailable and
incorporated into the qualitative factors to be considered. The historical loss
factors may also be modified based upon other qualitative factors including but
not limited to local and national economic conditions, trends of delinquent
loans, changes in lending policies and underwriting standards, concentrations,
and management’s knowledge of the loan portfolio. These factors require judgment
upon the part of management and are based upon state and national economic
reports received from various institutions and agencies including the Federal
Reserve Bank, United States Bureau of Economic Analysis, Bureau of Labor
Statistics, meetings with the Company’s loan officers and loan committees, and
data and guidance received or obtained from the Company’s regulatory
authorities.





The
second part of the allowance is determined in accordance with Financial
Accounting Standard No. 114, Accounting by Creditors for
Impairment of a Loan (SFAS No. 114). Impaired loans are determined based
upon a review by internal loan review and senior loan officers. Impaired loans
are loans for which the bank does not expect to receive contractual interest
and/or principal by the due date. A specific allowance is assigned to each loan
determined to be impaired based upon the value of the loan’s underlying
collateral. Appraisals are used by management to determine the value of the
collateral.





The sum
of the two parts constitutes management’s best estimate of an appropriate
allowance for loan losses. When the estimated allowance is determined, it is
presented to the Company’s audit committee for review and approval on a
quarterly basis.





A loan is
considered impaired when, based on current information and events, it is
probable that the Company will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining impairment include
payment status, collateral value, and the probability of collecting scheduled
principal and interest payments when due. Loans that experience insignificant
payment delays and payment shortfalls generally are not classified as impaired.
Management determines the significance of payment delays and payment shortfalls
on a case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of the delay, the
reasons for the delay, the borrower’s prior payment record, and the amount of
the shortfall in relation to the principal and interest owed. Impairment is
measured on a loan by loan basis. Impaired loans not deemed collateral dependent
are analyzed according to the ultimate repayment source, whether that is cash
flow from the borrower, guarantor or some other source of repayment. Impaired
loans are deemed collateral dependent if in the Company’s opinion the ultimate
source of repayment will be generated from the liquidation of
collateral.





The
Company discontinues accrual of interest on loans when management believes,
after considering economic and business conditions and collection efforts, that
a borrower’s financial condition is such that the collection of interest is
doubtful. Generally, the Company will place a delinquent loan in nonaccrual
status when the loan becomes 90 days or more past due. At the time a loan is
placed in nonaccrual status, all interest which has been accrued on the loan but
remains unpaid is reversed and deducted from earnings as a reduction of reported
interest income. No additional interest is accrued on the loan balance until the
collection of both principal and interest becomes reasonably
certain.





NOTE I –
REGULATORY EXAM





During a
recent examination by our banking regulators, the Company was asked to hire an
independent outside expert to evaluate our trust preferred securities for OTTI.
The financials represented for the quarter ended March 31, 2009 may change
dependent on the results of the evaluation.





ITEM NO. 2
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





FINANCIAL
CONDITION





The
following discussion contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management for
future operations, and projections of revenues and other financial items that
are based on the beliefs of the Company's management, as well as assumptions
made by and information currently available to the Company's management. The
words "expect," "estimate," "anticipate," and "believe," as well as similar
expressions, are intended to identify forward-looking statements. The Company's
actual results may differ materially from the results discussed in the
forward-looking statements, and the Company's operating performance each quarter
is subject to various risks and uncertainties that are discussed in detail in
the Company's filings with the Securities and Exchange Commission, including the
"Risk Factors" section in the Company's most recently filed Form
10-K.





The First
represents the primary asset of the Company. The First reported total assets of
$481.9 million at March 31, 2009, compared to $473.8 million at December 31,
2008. Loans decreased $4.2 million, or 1.3%, during the first three months of
2009. Deposits at March 31, 2009, totaled $391.2 million compared to $378.6
million at December 31, 2008. For the three month period ended March 31, 2009,
The First reported net income of $284,000 compared to $913,000 for the three
months ended March 31, 2008.





RECENT
GOVERNMENT REGULATION





Recent Legislative and Regulatory
Initiatives to Address Financial and Economic Crises.The Congress,
Treasury Department and the federal banking regulators, including the FDIC, have
taken broad action since early September, 2008 to address volatility in the U.S.
banking system.








Emergency Economic Stabilization Act
of 2008.  In October 2008, the Emergency Economic Stabilization
Act of 2008 (“EESA”) was enacted. The EESA authorizes the Treasury
Department to purchase from financial institutions and their holding companies
up to $700 billion in mortgage loans, mortgage-related securities and certain
other financial instruments, including debt and equity securities issued by
financial institutions and their holding companies in a troubled asset relief
program (“TARP”).  The purpose of TARP is to restore confidence and
stability to the U.S. banking system and to encourage financial institutions to
increase their lending to customers and to each other.  The Treasury
Department has allocated $250 billion towards the TARP Capital Purchase Program
(“CPP”).  Under the CPP, Treasury will purchase debt or equity
securities from participating institutions.  The TARP also will
include direct purchases or guarantees of troubled assets of financial
institutions. Participants in the CPP are subject to executive compensation
limits and are encouraged to expand their lending and mortgage loan
modifications.





On
February 6, 2009, as part of the TARP CPP, the Company entered into a Letter
Agreement and Securities Purchase Agreement (collectively, the “Purchase
Agreement”) with the Treasury Department, pursuant to which the Company sold (i)
5,000 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock,
Series UST, no par value per share (the “Series UST Preferred Stock”) and (ii) a
warrant (the “Warrant”) to purchase 54,705 shares of the Company’s common stock
(“the “Common Stock”), no par value per share, for an aggregate purchase price
of $5 million in cash.





The
Series UST Preferred Stock will qualify as Tier 1 capital and will be entitled
to cumulative dividends at a rate of 5% per annum for the first five years, and
9% per annum thereafter. The Series UST Preferred Stock may be redeemed by the
Company after three years. Prior to the end of three years, the Series UST
Preferred Stock may be redeemed by the Company only with proceeds from the sale
of qualifying equity securities of the Company. The Warrant has a 10-year term
and is immediately exercisable upon its issuance, with an exercise price,
subject to anti-dilution adjustments, equal to $13.71 per share of common
stock.  For more information, please see the Company’s Form 8-K filed
on February 12, 2009.





EESA also
increased FDIC deposit insurance on most accounts from $100,000 to
$250,000.  This increase is in place until the end of 2009 and is not
covered by deposit insurance premiums paid by the banking industry.





Following
a systemic risk determination, the FDIC established a Temporary Liquidity
Guarantee Program (“TLGP”) on October 14, 2008.  The TLGP includes the
Transaction Account Guarantee Program (“TAGP”), which provides unlimited deposit
insurance coverage through December 31, 2009 for noninterest-bearing transaction
accounts (typically business checking accounts) and certain funds swept into
noninterest-bearing savings accounts.  Institutions participating in
the TAGP pay a 10 basis points fee (annualized) on the balance of each covered
account in excess of $250,000, while the extra deposit insurance is in
place.  The TLGP also includes the Debt Guarantee Program (“DGP”),
under which the FDIC guarantees certain senior unsecured debt of FDIC-insured
institutions and their holding companies.  The unsecured debt must be
issued on or after October 14, 2008 and not later than June 30, 2009, and the
guarantee is effective through the earlier of the maturity date or June 30,
2012.  The DGP coverage limit is generally 125% of the eligible
entity’s eligible debt outstanding on September 30, 2008 and scheduled to mature
on or before June 30, 2009 or, for certain insured institutions, 2% of their
liabilities as of September 30, 2008.  Depending on the term of the
debt maturity, the nonrefundable DGP fee ranges from 50 to 100 basis points
(annualized) for covered debt outstanding until the earlier of maturity or June
30, 2012.  The TAGP and DGP are in effect for all eligible entities,
unless the entity opted out on or before December 5, 2008.  The
Company will participate in the TAGP but has opted out of the
DGP.







NONPERFORMING
ASSETS AND RISK ELEMENTS. Diversification within the loan portfolio is an
important means of reducing inherent lending risks. At March 31, 2009, The First
had no concentrations of ten percent or more of total loans in any single
industry or any geographical area outside its immediate market
areas.
  At March
31, 2009, The First had loans past due as follows:





($ In Thousands)Past
      due 30 through 89 days
                    
                    $
                    4,562Past
      due 90 days or more and still accruing
                    
                    
                    545





The
accrual of interest is discontinued on loans which become ninety days past due
(principal and/or interest), unless the loans are adequately secured and in the
process of collection. Nonaccrual loans totaled $5,265,000 at March 31, 2009, an
increase of $2.0 million from December 31, 2008.  This increase is due
to the weakening real estate markets.  These weakening economic
conditions are incorporated into the methodology of determining the amount of
our allowance for loan losses by adjusting historical loss factors. Any other
real estate owned is carried at fair value, determined by an appraisal. Other
real estate owned totaled $1,507,000 at March 31, 2009.  A loan is
classified as a restructured loan when the interest rate is materially reduced
or the term is extended beyond the original maturity date because of the
inability of the borrower to service the debt under the original terms. The
First had $5,686,000 in restructured loans at March 31, 2009.
  LIQUIDITY
AND CAPITAL RESOURCES





Liquidity
is adequate with cash and cash equivalents of $43.0 million as of March 31,
2009. In addition, loans and investment securities repricing or maturing within
one year or less exceed $155.0 million at  March 31,
2009.  Approximately $38.6 million in loan commitments could fund
within the next six months and other commitments, primarily standby letters of
credit, totaled $.8 million at March 31, 2009.
  There are
no known trends or any known commitments or uncertainties that will result in
The First’s liquidity increasing or decreasing in a material way.
  Total
consolidated equity capital at March 31, 2009, is $42.2 million, or
approximately 8.7% of total assets. The Company currently has adequate capital
positions to meet the minimum capital requirements for all regulatory agencies.
The Company’s capital ratios as of March 31, 2009, were as
follows:





Tier
      1 leverage
                    
                    
                    10.72
                    %Tier
      1 risk-based
                    
                    
                    14.04
                    %Total
      risk-based
                    
                    
                    15.29
                    %










On June
30, 2006, The Company issued $4,124,000 of floating rate junior subordinated
deferrable interest debentures to The First Bancshares Statutory Trust 2 in
which the Company owns all of the common equity.  The debentures are
the sole asset of the Trust.  The Trust issued $4,000,000 of Trust
Preferred Securities (TPSs) to investors.  The Company’s obligations
under the debentures and related documents, taken together, constitute a full
and unconditional guarantee by the Company of the Trust’s obligations under the
preferred securities.  The preferred securities are redeemable by the
Company in 2011, or earlier in the event the deduction of related interest for
federal income taxes is prohibited, treatment as Tier 1 capital is no longer
permitted, or certain other contingencies arise.  The preferred
securities must be redeemed upon maturity of the debentures in
2036.  Interest on the preferred securities is the three month London
Interbank Offer Rate (LIBOR) plus 1.65% and is payable quarterly.  The
terms of the subordinated debentures are identical to those of the preferred
securities.   On July 27, 2007, The Company issued $6,186,000 of
floating rate junior subordinated deferrable  interest debentures to
The First Bancshares Statutory Trust 3 in which the Company owns all of the
common equity.  The debentures are the sole asset of Trust
3.  The Trust issued $6,000,000 of Trust Preferred Securities (TPSs)
to investors.  The Company’s obligations under the debentures and
related documents, taken together, constitute a full and unconditional guarantee
by the Company of the Trust’s obligations under the preferred
securities.  The preferred securities are redeemable by the Company in
2012, or earlier in the event the deduction of related interest for federal
income taxes is prohibited, treatment as Tier 1 capital is no longer permitted,
or certain other contingencies arise.  The preferred securities must
be redeemed upon maturity of the debentures in 2037.  Interest on the
preferred securities is the three month LIBOR plus 1.40% and is payable
quarterly.  The terms of the subordinated debentures are identical to
those of the preferred securities.   In accordance with the
provisions of FASB
Interpretation No. 46R (FIN 46R), Consolidation of Variable
Interest Entities, An Interpretation of ARB No. 51, the trusts are not
included in the consolidated financial statements.





RESULTS
OF OPERATIONS





The
Company had a net income of $191,000 for the three months ended March 31, 2009,
compared with consolidated net income of $790,000 for the same period in
2008.





Net
interest income decreased to $3,854,000 from $4,692,000 for the three months
ended March 31, 2009, or a decrease of 17.9% as compared to the same period in
2008.  Earning assets through March 31, 2009, decreased $47.2 million
and  interest-bearing liabilities also decreased $45.5 million when
compared to March 31, 2008, reflecting a decrease of 9.5% and 10.6%,
respectively.





Noninterest
income for the three months ended March 31, 2009, was  $684,000
compared to $762,000 for the same period in 2008, reflecting a decrease of
$78,000, or 10.2%. Included in noninterest income is service charges on deposit
accounts, which for the three months ended March 31, 2009, totaled $474,000
compared to $510,000 for the same period in 2008.
  The
provision for loan losses was $628,000 in the first three months of 2009
compared with $366,000 for the same period in 2008. The allowance for loan
losses of $5.3 million at March 31, 2009 (approximately 1.6%  of
loans) is considered by management to be adequate to cover
losses  inherent in the loan portfolio.  The level of this
allowance is dependent  upon a number of factors, including the total
amount of past due loans,  general economic conditions, and
management's assessment of potential losses.   This evaluation is
inherently subjective as it requires estimates that are susceptible to
significant change.  Ultimately, losses may vary from current
estimates and future additions to the allowance may be
necessary.  Thus, there can be no assurance that charge-offs in future
periods will  not exceed the allowance for loan losses or that
additional increases in  the loan loss allowance will not be
required.  Management evaluates the adequacy of the allowance for loan
losses quarterly and makes provisions for loan losses based on this
evaluation.





Noninterest
expenses decreased by $305,000 or 7.7% for the three months  ended
March 31, 2009, when compared with the same period in 2008.  This
decrease is primarily due to an ongoing effort to reduce expenses while
maintaining our current level of customer service.





ITEM NO.
3.  CONTROLS AND PROCEDURES





As of
March 31, 2009, (the “Evaluation Date”), we carried out an evaluation, under the
supervision and with the participation of our Chief Executive Officer and our
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as of the end
of the period covered by this report.  Based on this evaluation, our
Chief Executive Officer and our Chief Financial Officer concluded that our
disclosure controls and procedures are effective to ensure that information we
are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized, and reported within the time periods
specified in SEC rules and forms.





There
have been no changes, significant or otherwise, in our internal controls over
financial reporting  that occurred during the quarter ended March 31,
2009, that have materially affected, or are reasonably likely to affect, our
internal control over financial reporting.





ITEM NO.
4.  RECENT ACCOUNTING PRONOUNCEMENTS




In
February 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities - Including an
Amendment of FASB Statement No. 115 (“SFAS No. 159”) which permits an
entity to choose to measure many financial instruments and certain other items
at fair value. Most of the provisions in SFAS No. 159 are elective; however, the
amendment to FASB Statement No. 115, Accounting for Certain Investments
in Debt and Equity Securities , applies to all entities with
available-for-sale and trading securities. The FASB’s stated objective in
issuing this standard is as follows: “to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions.”




The fair
value option established by SFAS No. 159 permits all entities to choose to
measure eligible items at fair value at specified election dates. A business
entity will report unrealized gains and losses on items for which the fair value
option has been elected in earnings at each subsequent reporting date. The fair
value option: (a) may be applied instrument by instrument, with a few
exceptions, such as investments otherwise accounted for by the equity method;
(b) is irrevocable (unless a new election date occurs); and (c) is applied only
to entire instruments and not to portions of instruments. We have not adopted
the provisions of SFAS No. 159 with regard to any assets or liabilities as of
March 31, 2009.





In
December 2007, FASB issued Statement No. 141R, Business Combinations (“SFAS
No. 141R”).  Under SFAS No. 141, organizations utilized the
announcement date as the measurement date for the purchase price of the acquired
entity. SFAS No. 141R requires measurement at the date the acquirer obtains
control of the acquiree, generally referred to as the acquisition date. SFAS No.
141R will have a significant impact on the accounting for transaction and
restructuring costs, as well as the initial recognition of contingent assets and
liabilities assumed during a business combination.  Under SFAS No.
141R, adjustments to the acquired entity’s deferred tax assets and uncertain tax
position balances occurring outside the measurement period are recorded as a
component of the income tax expense, rather than goodwill.  SFAS No.
141R is effective for business combinations for which the acquisition date is on
or after the beginning of the first annual reporting period beginning on or
after December 15, 2008.  As the provisions of SFAS No. 141R are
applied prospectively, the impact to the Company cannot be determined until a
transaction occurs.







In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (“SFAS No. 160”), which will require
noncontrolling interests (previously referred to as minority interests) to be
treated as a separate component of equity, not as a liability or other item
outside of permanent equity. SFAS No. 160 applies to the accounting for
noncontrolling interests and transactions with noncontrolling interest holders
in consolidated financial statements. SFAS No. 160 is effective for periods
beginning on or after December 15, 2008. Earlier application is prohibited.
SFAS No. 160 will be applied prospectively to all noncontrolling interests,
including any that arose before the effective date except that comparative
period information must be recast to classify noncontrolling interests in
equity, attribute net earnings and other comprehensive income to noncontrolling
interests, and provide other disclosures required by SFAS No. 160. The
Company does not expect the adoption of SFAS No. 160 to have any impact on
its financial position, results of operation, and cash flows.




In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133(“SFAS No. 161”).  SFAS No. 161 requires qualitative
disclosures about objectives and strategies for using derivatives, quantitative
disclosures about fair value amounts of derivative instruments and related gains
and losses, and disclosures about credit-risk-related contingent features in
derivative agreements. SFAS No. 161 is effective for financial statements issued
for fiscal years and interim periods beginning after November 15,
2008.  The statement provides only for enhanced
disclosures.  The Company does not participate in derivative
instruments or hedging activities. Therefore, adoption will have no impact on
our financial position, results of operations, and cash flows.




In
February 2008, the FASB issued FSP 157-2, Effective Date of FASB Statement No.
157, which deferred the effective date for one year for certain
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually) and was effective January 1, 2009. The adoption of FSP
157-2 during the first quarter of 2009 did not have a material impact on the
Company’s financial condition or results of operations.




In April
2008, the FASB issued FSP 142-3, Determination of the Useful Life of
Intangible Assets, which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible
Assets (“SFAS No. 142”).  The intent of the FSP is to improve
the consistency between the useful life of a recognized intangible asset under
SFAS No. 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS No. 141R and other U.S. generally accepted
accounting principles. This FSP is effective for financial statements issued for
fiscal years beginning after December 15, 2008. The adoption of FSP 142-3,
during the first quarter of 2009, did not have a material impact on the
Company’s financial condition or results of operations.




In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Principles, (“SFAS No. 162”) which is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles for
nongovernmental entities. SFAS No. 162 will be effective for fiscal periods
after July 1, 2009. The Company will adopt the provisions of SFAS No. 162, when
required, but does not expect the impact to be material to the Company’s
financial condition or results of operations.




In
October 2008, the FASB issued FSP No. 157-3, Determining the Fair Value of a
Financial Asset in a Market That is Not Active, which clarifies the
application of SFAS No. 157, Fair Value Measurements, in
an inactive market. Application issues clarified include: how management’s
internal assumptions should be considered when measuring fair value when
relevant observable data do not exist; how observable market information in a
market that is not active should be considered when measuring fair value; and
how the use of market quotes should be considered when assessing the relevance
of observable and unobservable data available to measure fair value. FSP 157-3
was effective immediately and did not have a material impact on the Company’s
financial condition or results of operations.









In
December 2008, the FASB issued FSP No. 132(R)-1, Employers’ Disclosures about
Postretirement Benefit Plan Assets, which provides guidance on an
employer’s disclosures about plan assets of a defined benefit pension or other
postretirement plan. The objectives of the disclosures are to provide users of
financial statements with an understanding of how investment allocation
decisions are made; the major categories of plan assets; the inputs and
valuation techniques used to measure fair value of plan assets; the effect of
fair value measurements using significant unobservable inputs (level 3) on
changes in plan assets for the period; and significant concentrations on risk
within plan assets. FAS No. 132(R)-1 is effective for fiscal years ending after
December 15, 2009. The Company is assessing the impact of adopting FSP No.
132(R)-1, but does not expect the impact to be material to the Company’s
financial condition or results of operations.




In
January 2009, FASB issued Emerging Issues Task Force (“EITF”) 99-20-1, Amendments to the Impairment
Guidance of EITF Issue No. 99-20. EITF No. 99-20-1 replaces the
requirement to use market participant assumptions when determining future cash
flows and, instead, requires an assessment of whether it is probable that there
has been an adverse change in estimated cash flows. It requires an entity to
consider all available information relevant to the collectability of the
security, including information about past events, current conditions, and
reasonable and supportable forecasts when developing estimates of future cash
flows. EITF 99-20-1 is effective for interim and annual reporting periods ending
after December 15, 2008, and shall be applied prospectively. The adoption of
EITF 99-20-1 did not have a material impact on the Company’s financial condition
or results of operations.




In
February 2009, the FASB issued FSP 141(R)-a, Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination that Arise from Contingenciesthat amends provisions related to the initial recognition and
measurement, subsequent measurement and disclosure of assets and liabilities
arising from contingencies in a business combination. The FSP is effective for
all business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. The impact on the Company’s financial condition or results of
operations is dependent on the extent of future business
combinations.




In April
2009, the FASB issued FSP-107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments. Under this FSP, a publicly traded company shall
include disclosures about the fair value of its financial instruments whenever
it issues summarized financial information for interim reporting periods. In
addition, an entity shall disclose in the body or in the accompanying notes of
its summarized financial information for interim reporting periods and in its
financial statements for annual reporting periods the fair value of all
financial instruments for which it is practicable to estimate that value,
whether recognized or not recognized in the statement of financial position. FSP
107-1 and APB 28-1 are effective for interim periods ending after June 15, 2009
with early adoption permitted for periods ending after March 15,
2009.





In April
2009, the FASB issued Staff Position No. FAS 115-2 and 124-2, “Recognition
and Presentation of Other-Than-Temporary Impairments.”  This position
revised the guidance for determining whether an impairment is other than
temporary for debt securities requires bifurcation of any other than temporary
impairment between the amount representing credit loss and the amount related to
all other factors and requires additional disclosures on other than temporary
impairment of debt and equity securities.  The Staff Position is
effective for interim and annual reporting periods ending after June 15, 2009
with early adoption permitted for periods ending after March 15,
2009.  The Company is evaluating the revised guidance and enhanced
disclosure requirements around other than temporary impairment and does not
anticipate a material impact on the Consolidated Financial
Statements.  The Company will adopt this Staff Position for the period
ending June 30, 2009.









In April
2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position (FSP) 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly. This FSP
affirms that the objective of fair value when the market for an asset is not
active is the price that would be received to sell the asset in an orderly
transaction; includes additional factors for determining whether there has been
a significant decrease in market activity for an asset when the market is
inactive; eliminates the presumption that all transactions are distressed unless
proven otherwise requiring an entity to base its conclusion on the weight of
evidence; and requires an entity to disclose a change in valuation technique
resulting from application of the FSP and to quantify its effects, if
practicable. FSP 157-4 is effective for interim and annual periods ending after
June 15, 2009 with early adoption permitted for periods ending after March 15,
2009. The Company is assessing the provisions of FSP 157-4, but does not expect
the impact to be material to the Company’s financial condition or results of
operations.





PART II —
OTHER INFORMATION





ITEM
1.  LEGAL PROCEEDINGS





On
October 8, 2007 The First Bancshares, Inc. (the "Company") and its subsidiary,
The First, A National Banking Association (the "Bank") were formally named
as defendants and served with a First Amended Complaint in litigation
styled Nick D. Welch v. Oak Grove Land Company, Inc., Fred McMurry, David E.
Johnson, J. Douglas Seidenburg, The First, a National Banking Association,
The First Bancshares, Inc., and John Does 1 through 10, Civil Action No.
2006-236-CV4, pending in the Circuit Court of Jones County, Mississippi,
Second Judicial District (the "First Amended Complaint").





The
allegations by Welch against the Company and the Bank include counts of 1)
Intentional Misrepresentation and Omission; 2) Negligent Misrepresentation
and/or Omission; 3) Breach of Fiduciary Duty; 4) Breach of Duty of Good Faith and
Fair Dealing; and 5) Civil Conspiracy.  The First Amended Complaint served by
Welch on October 8, 2007 added the Company and the Bank as defendants in this
ongoing litigation.  The First Amended Complaint seeks damages from all the
defendants, including $2,420,775.00, annual dividends for the year 2006 in the
amount of $.30 per share, punitive damages, and attorneys' fees and costs, and
is more fully described in Form 8-K filed by the Company on October 10, 2007.
Each of the Company and the Bank deny any liability to Welch, and they intend to
defend vigorously against this lawsuit.





ITEM
      1A.
            RISK
      FACTORS





There are
no material changes in the Company’s risk factors since December 31, 2008.
 Please refer to the Annual Report on Form 10-K of The First Bancshares,
Inc., filed with the Securities and Exchange Commission on March 31,
2009.









ITEM
      2.
            UNREGISTERED
      SALES OF EQUITY SECURITY AND USE OF
PROCEEDS





Not
Applicable





ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES





Not
Applicable





ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS





Not
Applicable





ITEM
      5.
            OTHER
      INFORMATION





Not
Applicable









ITEM
      6.
            EXHIBITS





(a)
            Exhibits





Exhibit
      No.31.1
                  
                  Certification
      of principal executive officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
                  
                  Certification
      of principal financial officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
                  
                  Certification
      of principal executive officer pursuant to 18 U. S. C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
                  
                  Certification
      of principal financial officer pursuant to 18 U. S. C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.




b)
            The
      Company filed three reports on Form 8-K during the quarter ended March 31,
      2009.





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.





THE
      FIRST BANCSHARES, INC.(Registrant)/s/ DAVID E. JOHNSONMay 20,2009
                    
                    David
      E. Johnson,(Date)
                    
                    Chief Executive Officer/s/ DEEDEE LOWERYMay  20, 2009
                    
                    DeeDee
      Lowery, Executive(Date)
                    
                    Vice
      President and ChiefFinancial
Officer