UNITED
STATES


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:  June 30, 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 June
30, 2009, 3,019,869 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 o  NO  x





PART I -
FINANCIAL INFORMATION





ITEM NO.
1. FINANCIAL STATEMENTS





THE FIRST
BANCSHARES, INC.





CONSOLIDATED
BALANCE SHEETS





($
      Amounts in Thousands)
                                                                        
                                                                        (Unaudited)June
      30,
                                                                        
                                                                        
                                                                        December
      31,2009
                                                                        
                                                                        
                                                                        2008ASSETSCash
      and due from banks
                                                                        
                                                                        $
                                                                        7,942
                                                                        
                                                                        
                                                                        $
                                                                        8,887Interest-bearing
      deposits with banks
                                                                        
                                                                        
                                                                        2,953
                                                                        
                                                                        
                                                                        
                                                                        2,762Federal
      funds sold
                                                                        
                                                                        
                                                                        15,369
                                                                        
                                                                        
                                                                        
                                                                        13,359Total
      cash and cash equivalents
                                                                        
                                                                        
                                                                        26,264
                                                                        
                                                                        
                                                                        
                                                                        25,008Securities
      held-to-maturity, at amortized cost
                                                                        
                                                                        
                                                                        12
                                                                        
                                                                        
                                                                        
                                                                        12Securities
      available-for-sale, at fair value
                                                                        
                                                                        
                                                                        112,328
                                                                        
                                                                        
                                                                        
                                                                        99,679Other
      securities
                                                                        
                                                                        
                                                                        2,412
                                                                        
                                                                        
                                                                        
                                                                        2,612Loans
      held for sale
                                                                        
                                                                        
                                                                        3,985
                                                                        
                                                                        
                                                                        
                                                                        3,113Loans
                                                                        
                                                                        
                                                                        317,362
                                                                        
                                                                        
                                                                        
                                                                        319,972Allowance
      for loan losses
                                                                        
                                                                        
                                                                        (5,253
                                                                        )
                                                                        
                                                                        
                                                                        (4,785
                                                                        )LOANS,
      NET
                                                                        
                                                                        
                                                                        312,109
                                                                        
                                                                        
                                                                        
                                                                        315,187Premises
      and equipment
                                                                        
                                                                        
                                                                        14,580
                                                                        
                                                                        
                                                                        
                                                                        15,279Interest
      receivable
                                                                        
                                                                        
                                                                        2,274
                                                                        
                                                                        
                                                                        
                                                                        2,605Cash
      surrender value
                                                                        
                                                                        
                                                                        5,764
                                                                        
                                                                        
                                                                        
                                                                        5,660Other
      real estate
                                                                        
                                                                        
                                                                        1,441
                                                                        
                                                                        
                                                                        
                                                                        1,629Goodwill
                                                                        
                                                                        
                                                                        702
                                                                        
                                                                        
                                                                        
                                                                        702Other
      assets
                                                                        
                                                                        
                                                                        3,242
                                                                        
                                                                        
                                                                        
                                                                        3,338$
                                                                        485,113
                                                                        
                                                                        
                                                                        $
                                                                        474,824LIABILITIES
      AND SHAREHOLDERS' EQUITYLIABILITIES:Deposits:Noninterest-bearing
                                                                        
                                                                        $
                                                                        49,994
                                                                        
                                                                        
                                                                        $
                                                                        57,594Time,
      $100,000 or more
                                                                        
                                                                        
                                                                        93,941
                                                                        
                                                                        
                                                                        
                                                                        87,944Interest-bearing
                                                                        
                                                                        
                                                                        247,926
                                                                        
                                                                        
                                                                        
                                                                        232,541TOTAL
      DEPOSITS
                                                                        
                                                                        
                                                                        391,861
                                                                        
                                                                        
                                                                        
                                                                        378,079Interest
      payable
                                                                        
                                                                        
                                                                        712
                                                                        
                                                                        
                                                                        
                                                                        850Borrowed
      funds
                                                                        
                                                                        
                                                                        35,461
                                                                        
                                                                        
                                                                        
                                                                        46,027Subordinated
      debentures
                                                                        
                                                                        
                                                                        10,310
                                                                        
                                                                        
                                                                        
                                                                        10,310Other
      liabilities
                                                                        
                                                                        
                                                                        4,609
                                                                        
                                                                        
                                                                        
                                                                        2,990TOTAL
      LIABILITIES
                                                                        
                                                                        
                                                                        442,953
                                                                        
                                                                        
                                                                        
                                                                        438,256SHAREHOLDERS'
      EQUITY:Common
      stock, $1 par value authorized 10,000,000 shares; 3,046,363 shares issued
      at June 30, 2009 and 3,016,695 shares issued at December 31,
      2008
                                                                        
                                                                        
                                                                        3,046
                                                                        
                                                                        
                                                                        
                                                                        3,017Preferred
      stock, no par value $1,000 per share liquidation, 10,000,000 shares
      authorized; 5,000 shares issued and outstanding at June 30, 2009 and no
      shares issued at December 31, 2008
                                                                        
                                                                        
                                                                        4,744
                                                                        
                                                                        
                                                                        
                                                                        -Treasury
      stock, at cost, 26,494 shares at June 30, 2009 and December 31,
      2008
                                                                        
                                                                        
                                                                        (464
                                                                        )
                                                                        
                                                                        
                                                                        (464
                                                                        )Additional
      paid-in capital
                                                                        
                                                                        
                                                                        23,421
                                                                        
                                                                        
                                                                        
                                                                        22,942Retained
      earnings
                                                                        
                                                                        
                                                                        11,725
                                                                        
                                                                        
                                                                        
                                                                        11,482Accumulated
      other comprehensive loss
                                                                        
                                                                        
                                                                        (312
                                                                        )
                                                                        
                                                                        
                                                                        (409
                                                                        )TOTAL
      SHAREHOLDERS' EQUITY
                                                                        
                                                                        
                                                                        42,160
                                                                        
                                                                        
                                                                        
                                                                        36,568$
                                                                        485,113
                                                                        
                                                                        
                                                                        $
                                                                        474,824










THE FIRST
BANCSHARES, INC.





CONDENSED
CONSOLIDATED STATEMENTS OF INCOME





($
Amounts in Thousands, Except Per Share Data)





(Unaudited)
                                                                                              
                                                                                              
                                                                                              (Unaudited)Three
      Months Ended
                                                                                              
                                                                                              
                                                                                              Six
      Months EndedJune
      30,
                                                                                              
                                                                                              
                                                                                              June
      30,2009
                                                                                              
                                                                                              
                                                                                              2008
                                                                                              
                                                                                              
                                                                                              2009
                                                                                              
                                                                                              
                                                                                              2008INTEREST
      INCOME:Loans,
      including fees
                                                                                              
                                                                                              $
                                                                                              5,617
                                                                                              
                                                                                              
                                                                                              $
                                                                                              6,879
                                                                                              
                                                                                              
                                                                                              $
                                                                                              11,213
                                                                                              
                                                                                              
                                                                                              $
                                                                                              14,409Securities:Taxable
                                                                                              
                                                                                              
                                                                                              730
                                                                                              
                                                                                              
                                                                                              
                                                                                              916
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,551
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,749Tax
      exempt
                                                                                              
                                                                                              
                                                                                              227
                                                                                              
                                                                                              
                                                                                              
                                                                                              210
                                                                                              
                                                                                              
                                                                                              
                                                                                              441
                                                                                              
                                                                                              
                                                                                              
                                                                                              408Other
                                                                                              
                                                                                              
                                                                                              34
                                                                                              
                                                                                              
                                                                                              
                                                                                              163
                                                                                              
                                                                                              
                                                                                              
                                                                                              69
                                                                                              
                                                                                              
                                                                                              
                                                                                              284TOTAL
      INTEREST INCOME
                                                                                              
                                                                                              
                                                                                              6,608
                                                                                              
                                                                                              
                                                                                              
                                                                                              8,168
                                                                                              
                                                                                              
                                                                                              
                                                                                              13,274
                                                                                              
                                                                                              
                                                                                              
                                                                                              16,850INTEREST
      EXPENSE:Deposits
                                                                                              
                                                                                              
                                                                                              2,214
                                                                                              
                                                                                              
                                                                                              
                                                                                              3,180
                                                                                              
                                                                                              
                                                                                              
                                                                                              4,462
                                                                                              
                                                                                              
                                                                                              
                                                                                              6,465Other
      borrowings
                                                                                              
                                                                                              
                                                                                              420
                                                                                              
                                                                                              
                                                                                              
                                                                                              636
                                                                                              
                                                                                              
                                                                                              
                                                                                              984
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,341TOTAL
      INTEREST EXPENSE
                                                                                              
                                                                                              
                                                                                              2,634
                                                                                              
                                                                                              
                                                                                              
                                                                                              3,816
                                                                                              
                                                                                              
                                                                                              
                                                                                              5,446
                                                                                              
                                                                                              
                                                                                              
                                                                                              7,806NET
      INTEREST INCOME
                                                                                              
                                                                                              
                                                                                              3,974
                                                                                              
                                                                                              
                                                                                              
                                                                                              4,352
                                                                                              
                                                                                              
                                                                                              
                                                                                              7,828
                                                                                              
                                                                                              
                                                                                              
                                                                                              9,044PROVISION
      FOR LOAN LOSSES
                                                                                              
                                                                                              
                                                                                              464
                                                                                              
                                                                                              
                                                                                              
                                                                                              634
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,092
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,000NET
      INTEREST INCOME AFTERPROVISION FOR LOAN
      LOSSES
                                                                                              
                                                                                              
                                                                                              3,510
                                                                                              
                                                                                              
                                                                                              
                                                                                              3,718
                                                                                              
                                                                                              
                                                                                              
                                                                                              6,736
                                                                                              
                                                                                              
                                                                                              
                                                                                              8,044NONINTEREST
      INCOME:Service
      charges on deposit accounts
                                                                                              
                                                                                              
                                                                                              485
                                                                                              
                                                                                              
                                                                                              
                                                                                              570
                                                                                              
                                                                                              
                                                                                              
                                                                                              959
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,080Other
      service charges, commissions and fees
                                                                                              
                                                                                              
                                                                                              190
                                                                                              
                                                                                              
                                                                                              
                                                                                              345
                                                                                              
                                                                                              
                                                                                              
                                                                                              400
                                                                                              
                                                                                              
                                                                                              
                                                                                              597TOTAL
      NONINTEREST INCOME
                                                                                              
                                                                                              
                                                                                              675
                                                                                              
                                                                                              
                                                                                              
                                                                                              915
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,359
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,677NONINTEREST
      EXPENSES:Salaries
      and employee benefits
                                                                                              
                                                                                              
                                                                                              2,087
                                                                                              
                                                                                              
                                                                                              
                                                                                              2,418
                                                                                              
                                                                                              
                                                                                              
                                                                                              4,215
                                                                                              
                                                                                              
                                                                                              
                                                                                              4,845Occupancy
      and equipment expense
                                                                                              
                                                                                              
                                                                                              474
                                                                                              
                                                                                              
                                                                                              
                                                                                              602
                                                                                              
                                                                                              
                                                                                              
                                                                                              990
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,092Impairment
      loss – security
                                                                                              
                                                                                              
                                                                                              71
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              71
                                                                                              
                                                                                              
                                                                                              
                                                                                              -Other
      operating expenses
                                                                                              
                                                                                              
                                                                                              1,329
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,156
                                                                                              
                                                                                              
                                                                                              
                                                                                              2,343
                                                                                              
                                                                                              
                                                                                              
                                                                                              2,202TOTAL
      NONINTEREST EXPENSES
                                                                                              
                                                                                              
                                                                                              3,961
                                                                                              
                                                                                              
                                                                                              
                                                                                              4,176
                                                                                              
                                                                                              
                                                                                              
                                                                                              7,619
                                                                                              
                                                                                              
                                                                                              
                                                                                              8,139INCOME
      BEFORE INCOME TAXES
                                                                                              
                                                                                              
                                                                                              224
                                                                                              
                                                                                              
                                                                                              
                                                                                              457
                                                                                              
                                                                                              
                                                                                              
                                                                                              476
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,582INCOME
      TAXES
                                                                                              
                                                                                              
                                                                                              43
                                                                                              
                                                                                              
                                                                                              
                                                                                              118
                                                                                              
                                                                                              
                                                                                              
                                                                                              104
                                                                                              
                                                                                              
                                                                                              
                                                                                              453NET
      INCOME
                                                                                              
                                                                                              
                                                                                              181
                                                                                              
                                                                                              
                                                                                              
                                                                                              339
                                                                                              
                                                                                              
                                                                                              
                                                                                              372
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,129PREFERRED
      DIVIDENDS
                                                                                              
                                                                                              
                                                                                              63
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              101
                                                                                              
                                                                                              
                                                                                              
                                                                                              -PREFERRED
      STOCK ACCRETION
                                                                                              
                                                                                              
                                                                                              14
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              28
                                                                                              
                                                                                              
                                                                                              
                                                                                              -NET
      INCOME APPLICABLE TO COMMON STOCK
                                                                                              
                                                                                              $
                                                                                              104
                                                                                              
                                                                                              
                                                                                              $
                                                                                              339
                                                                                              
                                                                                              
                                                                                              $
                                                                                              243
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1,129EARNINGS
      PER SHARE APPLICABLE TO COMMON
                                                                                                SHAREHOLDERS
      – BASIC
                                                                                              
                                                                                              
                                                                                              .03
                                                                                              
                                                                                              
                                                                                              
                                                                                              .11
                                                                                              
                                                                                              
                                                                                              
                                                                                              .08
                                                                                              
                                                                                              
                                                                                              
                                                                                              .38EARNINGS
      PER SHARE APPLICABLE TO COMMON
                                                                                                SHAREHOLDERS
      – DILUTED
                                                                                              
                                                                                              
                                                                                              .03
                                                                                              
                                                                                              
                                                                                              
                                                                                              .11
                                                                                              
                                                                                              
                                                                                              
                                                                                              .08
                                                                                              
                                                                                              
                                                                                              
                                                                                              .37DIVIDENDS
      PER SHARE - COMMON
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              .075
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              .15










THE FIRST
BANCSHARES, INC.





CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


($
Amounts in Thousands)




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
      income
                          
                          
                          -
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,129
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,129Net
      change in unrealized gain (loss) on available- for-sale securities, net of
      tax
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (475
                          )
                          
                          
                          -
                          
                          
                          
                          (475
                          )Adoption
      of SFAS 123R
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          2
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          2Exercise
      of stock options
                          
                          
                          1
                          
                          
                          
                          
                          
                          
                          
                          6
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          7Cash
      dividend declared $.15per
      share
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (448
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (448
                          )Balance,
      June 30, 2008
                          
                          $
                          3,016
                          
                          
                          $
                          -
                          
                          
                          $
                          22,937
                          
                          
                          $
                          10,987
                          
                          
                          $
                          19
                          
                          
                          $
                          (464
                          )
                          
                          $
                          36,495Balance,
      January 1, 2009
                          
                          $
                          3,017
                          
                          
                          $
                          -
                          
                          
                          $
                          22,942
                          
                          
                          $
                          11,482
                          
                          
                          $
                          (409
                          )
                          
                          $
                          (464
                          )
                          
                          $
                          36,568Net
      income
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          372
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          372Net
      change in unrealized gain (loss) on available- for-sale securities, net of
      tax
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          97
                          
                          
                          
                          
                          
                          
                          
                          97Issuance
      of preferred stock and warrant
                          
                          
                          -
                          
                          
                          
                          4,716
                          
                          
                          
                          284
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          5,000Exercise
      of stock options
                          
                          
                          29
                          
                          
                          
                          -
                          
                          
                          
                          195
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          224Accretion
      of preferred stock discount
                          
                          
                          -
                          
                          
                          
                          28
                          
                          
                          
                          -
                          
                          
                          
                          (28
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Dividends
      on preferred stock
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (101
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (101
                          )Balance,
      June 30, 2009
                          
                          $
                          3,046
                          
                          
                          $
                          4,744
                          
                          
                          $
                          23,421
                          
                          
                          $
                          11,725
                          
                          
                          $
                          (312
                          )
                          
                          $
                          (464
                          )
                          
                          $
                          42,160









THE FIRST
BANCSHARES, INC.





CONSOLIDATED
STATEMENTS OF CASH FLOWS





($
      Amounts in Thousands)(Unaudited)Six
      Months EndedJune
      30,2009
                                                                      
                                                                      
                                                                      2008CASH
      FLOWS FROM OPERATING ACTIVITIES:NET
      INCOME
                                                                      
                                                                      $
                                                                      372
                                                                      
                                                                      
                                                                      $
                                                                      1,129Adjustments
      to reconcile net income to net cash provided by (used in)operating
      activities:Depreciation
      and amortization
                                                                      
                                                                      
                                                                      614
                                                                      
                                                                      
                                                                      
                                                                      593Provision
      for loan losses
                                                                      
                                                                      
                                                                      1,092
                                                                      
                                                                      
                                                                      
                                                                      1,000Impairment
      loss on security
                                                                      
                                                                      
                                                                      71
                                                                      
                                                                      
                                                                      
                                                                      -Loss
      on sale/writedown of ORE
                                                                      
                                                                      
                                                                      106
                                                                      
                                                                      
                                                                      
                                                                      61Loss
      on disposal of premises and equipment
                                                                      
                                                                      
                                                                      28
                                                                      
                                                                      
                                                                      
                                                                      -Increase
      in cash value of life insurance
                                                                      
                                                                      
                                                                      (104
                                                                      )
                                                                      
                                                                      
                                                                      (90
                                                                      )Federal
      Home Loan Bank stock dividends
                                                                      
                                                                      
                                                                      (10
                                                                      )
                                                                      
                                                                      
                                                                      (46
                                                                      )Changes
      in:Interest
      receivable
                                                                      
                                                                      
                                                                      331
                                                                      
                                                                      
                                                                      
                                                                      557Loans
      held for sale
                                                                      
                                                                      
                                                                      (872
                                                                      )
                                                                      
                                                                      
                                                                      1,745Interest
      payable
                                                                      
                                                                      
                                                                      (138
                                                                      )
                                                                      
                                                                      
                                                                      (186
                                                                      )Other,
      net
                                                                      
                                                                      
                                                                      2,136
                                                                      
                                                                      
                                                                      
                                                                      1,875NET
      CASH PROVIDED BY OPERATING ACTIVITIES
                                                                      
                                                                      
                                                                      3,626
                                                                      
                                                                      
                                                                      
                                                                      6,638CASH
      FLOWS FROM INVESTING ACTIVITIES:Maturities
      and calls of securities available-for-sale
                                                                      
                                                                      
                                                                      26,709
                                                                      
                                                                      
                                                                      
                                                                      15,781Purchases
      of securities available-for-sale
                                                                      
                                                                      
                                                                      (39,056
                                                                      )
                                                                      
                                                                      
                                                                      (30,851
                                                                      )Net
      decrease in loans
                                                                      
                                                                      
                                                                      1,571
                                                                      
                                                                      
                                                                      
                                                                      16,740Net
      (additions) disposals of premises and equipment
                                                                      
                                                                      
                                                                      278
                                                                      
                                                                      
                                                                      
                                                                      (570
                                                                      )Increase
      in other securities
                                                                      
                                                                      
                                                                      (210
                                                                      )
                                                                      
                                                                      
                                                                      (68
                                                                      )NET
      CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
                                                                      
                                                                      
                                                                      (10,708
                                                                      )
                                                                      
                                                                      
                                                                      1,032CASH
      FLOWS FROM FINANCING ACTIVITIES:Increase
      in deposits
                                                                      
                                                                      
                                                                      13,782
                                                                      
                                                                      
                                                                      
                                                                      37,443Net
      increase (decrease)in borrowed funds
                                                                      
                                                                      
                                                                      (10,566
                                                                      )
                                                                      
                                                                      
                                                                      (21,118
                                                                      )Dividend
      paid on common stock
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      (448
                                                                      )Dividend
      paid on preferred stock
                                                                      
                                                                      
                                                                      (101
                                                                      )
                                                                      
                                                                      
                                                                      -Proceeds
      from issuance of preferred stock and warrant
                                                                      
                                                                      
                                                                      5,000
                                                                      
                                                                      
                                                                      
                                                                      -Exercise
      of stock options
                                                                      
                                                                      
                                                                      223
                                                                      
                                                                      
                                                                      
                                                                      7Other
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      2NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                                                                      
                                                                      
                                                                      8,338
                                                                      
                                                                      
                                                                      
                                                                      15,886NET
      INCREASE IN CASH
                                                                      
                                                                      
                                                                      1,256
                                                                      
                                                                      
                                                                      
                                                                      23,556CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                                                                      
                                                                      
                                                                      25,008
                                                                      
                                                                      
                                                                      
                                                                      11,341CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                                                                      
                                                                      $
                                                                      26,264
                                                                      
                                                                      
                                                                      $
                                                                      34,897SUPPLEMENTAL
      DISCLOSURES:CASH
      PAYMENTS FOR INTEREST
                                                                      
                                                                      $
                                                                      5,584
                                                                      
                                                                      
                                                                      $
                                                                      7,992CASH
      PAYMENTS FOR INCOME TAXES
                                                                      
                                                                      
                                                                      544
                                                                      
                                                                      
                                                                      
                                                                      1,151LOANS
      TRANSFERRED TO OTHER REAL ESTATE
                                                                      
                                                                      
                                                                      415
                                                                      
                                                                      
                                                                      
                                                                      221









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 six months ended June 30, 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 June
30, 2009, the Company had approximately $485.1 million in assets, $321.3 million
in loans, $391.9 million in deposits, and $42.2 million in shareholders'
equity.  For the six months ended June 30, 2009, the Company reported
a net income of $372,000 ($243,000 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 and second quarters 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 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 APPLICABLE TO COMMON SHAREHOLDERS





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 EndedJune
      30, 2009Net
      Income
                                          
                                          
                                          Shares
                                          
                                          
                                          Per
      Share(Numerator)
                                          
                                          
                                          (Denominator)
                                          
                                          
                                          DataBasic
      per share
                                          
                                          $
                                          104,000
                                          
                                          
                                          
                                          3,015,496
                                          
                                          
                                          $
                                          .03Diluted
      per share
                                          
                                          $
                                          104,000
                                          
                                          
                                          
                                          3,015,496
                                          
                                          
                                          $
                                          .03For
      the Six Months EndedJune
      30, 2009Net
      Income
                                          
                                          
                                          Shares
                                          
                                          
                                          Per
      Share(Numerator)
                                          
                                          
                                          (Denominator)
                                          
                                          
                                          DataBasic
      per share
                                          
                                          $
                                          243,000
                                          
                                          
                                          
                                          3,002,991
                                          
                                          
                                          $
                                          .08Diluted
      per share
                                          
                                          $
                                          243,000
                                          
                                          
                                          
                                          3,002,991
                                          
                                          
                                          $
                                          .08










For
      the Three Months EndedJune
      30, 2008Net
      Income
                                                  
                                                  
                                                  Shares
                                                  
                                                  
                                                  Per
      Share(Numerator)
                                                  
                                                  
                                                  (Denominator)
                                                  
                                                  
                                                  DataBasic
      per share
                                                  
                                                  $
                                                  339,000
                                                  
                                                  
                                                  
                                                  2,989,401
                                                  
                                                  
                                                  $
                                                  .11Effect
      of dilutive shares:Stock
      options
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  73,097Diluted
      per share
                                                  
                                                  $
                                                  339,000
                                                  
                                                  
                                                  
                                                  3,062,498
                                                  
                                                  
                                                  $
                                                  .11For
      the Six Months EndedJune
      30, 2008Net
      Income
                                                  
                                                  
                                                  Shares
                                                  
                                                  
                                                  Per
      Share(Numerator)
                                                  
                                                  
                                                  (Denominator)
                                                  
                                                  
                                                  DataBasic
      per share
                                                  
                                                  $
                                                  1,129,000
                                                  
                                                  
                                                  
                                                  2,989,330
                                                  
                                                  
                                                  $
                                                  .38Effect
      of dilutive shares:Stock
      options
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  73,097Diluted
      per share
                                                  
                                                  $
                                                  1,129,000
                                                  
                                                  
                                                  
                                                  3,062,427
                                                  
                                                  
                                                  $
                                                  .37





No stock
options were granted during the six months ended June 30, 2009.





NOTE E -
COMPREHENSIVE INCOME





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


($
      Amounts in Thousands)Three
      Months EndedJune
      30,2009
                                              
                                              
                                              2008Net
      Income
                                              
                                              $
                                              181
                                              
                                              
                                              $
                                              339Other
      Comprehensive Loss net of tax:Unrealized
      holding losses on securitiesduring the period
                                              
                                              
                                              (398
                                              )
                                              
                                              
                                              (1,105
                                              )Comprehensive
      Loss
                                              
                                              $
                                              (217
                                              )
                                              
                                              $
                                              (766
                                              )Unrealized
      holding losses on securities during the period
                                              
                                              $
                                              (398
                                              )
                                              
                                              $
                                              (1,105
                                              )Accumulated
      Other Comprehensive Income (Loss)beginning of period
                                              
                                              
                                              86
                                              
                                              
                                              
                                              1,124Accumulated
      Other Comprehensive Income (Loss), end of period
                                              
                                              $
                                              (312
                                              )
                                              
                                              $
                                              19










Six
      Months EndedJune
      30,2009
                                  
                                  
                                  2008Net
      Income
                                  
                                  $
                                  372
                                  
                                  
                                  $
                                  1,129Other
      Comprehensive Income (Loss) net of tax:Unrealized
      holding gains (losses) on securities during the period
                                  
                                  
                                  97
                                  
                                  
                                  
                                  (475
                                  )Comprehensive
      Income
                                  
                                  $
                                  469
                                  
                                  
                                  $
                                  654Unrealized
      holding gains (losses) on securitiesduring the period
                                  
                                  $
                                  97
                                  
                                  
                                  $
                                  (475
                                  )Accumulated
      Other Comprehensive Income (Loss)beginning of period
                                  
                                  
                                  (409
                                  )
                                  
                                  
                                  494Accumulated
      Other Comprehensive Income (Loss),end of period
                                  
                                  $
                                  (312
                                  )
                                  
                                  $
                                  19





NOTE F —
FAIR VALUE OF ASSETS AND LIABILITIES




Effective
January 1, 2008, the Corporation adopted Statement of Financial Accounting
Standards No. 157 (“FAS 157”), Fair Value Measurements. FAS
157 defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. FAS 157 has been applied
prospectively as of the beginning of the period.




FAS 157
defines the fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. FAS 157 also establishes a fair value
hierarchy which requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value.




In
accordance with FAS 157, the Corporation groups its financial assets and
financial liabilities measured at fair value in three levels, based on the
markets in which the assets and liabilities are traded and the reliability of
the assumptions used to determine fair value. These levels are:




Level
      1:
            Valuations
      for assets and liabilities traded in active exchange markets, such as the
      New York Stock Exchange. Valuations are obtained from readily available
      pricing sources for market transactions involving identical assets or
      liabilities.









Level
      2:
            Valuations
      for assets and liabilities traded in less active dealer or broker markets.
      Valuations are obtained from third party pricing services for identical or
      comparable assets or liabilities which use observable inputs other than
      Level 1 prices, such as 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 for
      substantially the full term of the assets and
  liabilities.




Level
      3:
            Unobservable
      inputs that are supported by little or no market activity and that are
      significant to the fair value of the assets or
  liabilities.




Following
is a description of the valuation methodologies used for instruments measured at
fair value on a recurring basis and recognized in the accompanying balance
sheet.




Available-for-Sale
Securities




The fair
value of available-for-sale securities is determined by various valuation
methodologies. Where quoted market prices are available in an active market,
securities are classified within Level 1. The Corporation has no securities
classified within Level 1. If quoted market prices are not available, then fair
values are estimated by using pricing models or quoted prices of securities with
similar characteristics. Level 2 securities include U.S. Treasury securities,
obligations of U.S. government corporations and agencies, obligations of states
and political subdivisions, mortgage-backed securities and collateralized
mortgage obligations. In certain cases where Level 1 or Level 2 inputs are not
available, securities are classified within Level 3 of the
hierarchy.




The
following table presents the Corporation’s assets that are measured at fair
value on a recurring basis and the level within the FAS 157 hierarchy in which
the fair value measurements fall as of June 30, 2009 and December 31, 2008 (in
thousands):




June 30,
2009




Fair Value Measurements UsingFair Value
                                      
                                      
                                      Quoted
                                        Prices in
                                        Active
                                        Markets for
                                        Identical
                                        Assets
                                        (Level 1)
                                      
                                      
                                      Significant
                                        Other
                                        Observable
                                        Inputs
                                        (Level 2)
                                      
                                      
                                      Significant
                                        Unobservable
                                        Inputs
                                        (Level 3)Available-for-sale
      securities
                                      
                                      $
                                      112,328
                                      
                                      
                                      $
                                      0
                                      
                                      
                                      $
                                      107,061
                                      
                                      
                                      $
                                      5,267









December 31,
2008




Fair Value Measurements UsingFair Value
                                    
                                    
                                    Quoted
                                      Prices in
                                      Active
                                      Markets for
                                      Identical
                                      Assets
                                      (Level 1)
                                    
                                    
                                    Significant
                                      Other
                                      Observable
                                      Inputs
                                      (Level 2)
                                    
                                    
                                    Significant
                                      Unobservable
                                      Inputs
                                      (Level 3)Available-for-sale
      securities
                                    
                                    $
                                    99,679
                                    
                                    
                                    $
                                    0
                                    
                                    
                                    $
                                    99,679
                                    
                                    
                                    $
                                    0




Following
is a description of the valuation methodologies used for assets and liabilities
measured at fair value on a non-recurring basis and recognized in the
accompanying balance sheets, as well as the general classification of such
assets and liabilities pursuant to the valuation hierarchy.




Impaired
Loans




Loans for
which it is probable that the Corporation will not collect all principal and
interest due according to contractual terms are measured for impairment in
accordance with the provisions of Financial Accounting Standard No. 114 (“FAS
114”), Accounting by Creditors
for Impairment of a Loan. Allowable methods for estimating fair value
include using the fair value of the collateral for collateral dependent loans
or, where a loan is determined not to be collateral dependent, using the
discounted cash flow method.




If the
impaired loan is identified as collateral dependent, then the fair value method
of measuring the amount of impairment is utilized. This method requires
obtaining a current independent appraisal of the collateral and applying a
discount factor to the value. If the impaired loan is determined not to be
collateral dependent, then the discounted cash flow method is used. This method
requires the impaired loan to be recorded at the present value of expected
future cash flows discounted at the loan’s effective interest rate. The
effective interest rate of a loan is the contractual interest rate adjusted for
any net deferred loan fees or costs, premiums or discount existing at
origination or acquisition of the loan. Impaired loans are classified within
Level 2 of the fair value hierarchy.




Other
Real Estate Owned




Other
real estate owned acquired through loan foreclosure is initially recorded at
fair value less costs to sell when acquired, establishing a new cost basis. The
adjustment at the time of foreclosure is recorded through the allowance for loan
losses. Due to the subjective nature of establishing the fair value when the
asset is acquired, the actual fair value of the other real estate owned or
foreclosed asset could differ from the original estimate. If it is determined
the fair value declines subsequent to foreclosure, a valuation allowance is
recorded through non-interest expense. Operating costs associated with the
assets after acquisition are also recorded as non-interest expense. Gains and
losses on the disposition of other real estate owned and foreclosed assets are
netted and posted to other non-interest expense. Other real estate owned
measured at fair value on a non-recurring basis at June 30, 2009, amounted to
$1.4 million.




The
following table presents the fair value measurement of assets and liabilities
measured at fair value on a nonrecurring basis and the level within the FAS 157
fair value hierarchy in which the fair value measurements fall at June 30, 2009
and December 31, 2008.







June 30, 2009





Fair Value Measurements UsingFair
                                          Value
                                        
                                        
                                        Quoted
                                          Prices in
                                          Active
                                          Markets
                                          for
                                          Identical
                                          Assets
                                          (Level 1)
                                        
                                        
                                        Significant
                                          Other
                                          Observable
                                          Inputs
                                          (Level 2)
                                        
                                        
                                        Significant
                                          Unobservable
                                          Inputs
                                          (Level 3)Impaired
      loans
                                        
                                        $
                                        5,086
                                        
                                        
                                        $
                                        0
                                        
                                        
                                        $
                                        5,086
                                        
                                        
                                        $
                                        0Other
      real estate owned
                                        
                                        $
                                        1,441
                                        
                                        
                                        $
                                        0
                                        
                                        
                                        $
                                        1,441
                                        
                                        
                                        $
                                        0




December 31,
2008





Fair Value Measurements UsingFair
                                          Value
                                        
                                        
                                        Quoted
                                          Prices in
                                          Active
                                          Markets for
                                          Identical
                                          Assets
                                          (Level 1)
                                        
                                        
                                        Significant
                                          Other
                                          Observable
                                          Inputs
                                          (Level 2)
                                        
                                        
                                        Significant
                                          Unobservable
                                          Inputs
                                          (Level 3)Impaired
      loans
                                        
                                        $
                                        6,101
                                        
                                        
                                        $
                                        0
                                        
                                        
                                        $
                                        6,101
                                        
                                        
                                        $
                                        0Other
      real estate owned
                                        
                                        $
                                        1,629
                                        
                                        
                                        $
                                        0
                                        
                                        
                                        $
                                        1,629
                                        
                                        
                                        $
                                        0





The
following methods and assumptions were used to estimate the fair value of each
class of financial instrument for which it is practicable to estimate that
value:





Cash and Cash Equivalents –
For such short-term instruments, the carrying amount is a reasonable estimate of
fair value.





Investment in securities
available-for-sale and held-to-maturity – The fair value measurement for
securities available-for-sale was discussed earlier.  The same
measurement approach was used for securities held-to-maturity.





Loans –
The fair value of loans is estimated by discounting the future cash flows using
the current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.





Deposits –
The fair values of demand deposits are, as required by Statement No. 107, equal
to the carrying value of such deposits.  Demand deposits include
noninterest-bearing demand deposits, savings accounts, NOW accounts, and money
market demand accounts.  The fair value of variable rate term
deposits, those repricing within six months or less, approximates the carrying
value of these deposits.  Discounted cash flows have been used to
value fixed rate term deposits and variable rate term deposits repricing after
six months.  The discount rate used is based on interest rates
currently being offered on comparable deposits as to amount and
term.





Short-Term Borrowings – The
carrying value of any federal funds purchased and other short-term borrowings
approximates their fair values.








FHLB and Other Borrowings –
The fair value of the fixed rate borrowings are estimated using discounted cash
flows, based on current incremental borrowing rates for similar types of
borrowing arrangements.  The carrying amount of any variable rate
borrowing approximates its fair value.





Subordinated Debentures–The
subordinated debentures bear interest at a variable rate and the carrying value
approximates the fair value.





Off-Balance Sheet
Instruments–
Fair values of off-balance sheet financial instruments are based on fees charged
to enter into similar agreements.  However, commitments to extend
credit do not represent a significant value until such commitments are funded or
closed.  Management has determined that these instruments do not have
a distinguishable fair value and no fair value has been assigned.





As
      of
                        June
      30, 2009
                      
                      
                      As
      of
                        December
      31, 2008Carrying
                        Amount
                      
                      
                      Estimated
                        Fair
                        Value
                      
                      
                      Carrying
                        Amount
                      
                      
                      Estimated
                        Fair
                        Value(In
      thousands)Financial
      Instruments:Assets:Cash
      and cash equivalents
                      
                      $
                      26,264
                      
                      
                      $
                      26,264
                      
                      
                      $
                      25,008
                      
                      
                      $
                      25,008Securities
      available-for-sale
                      
                      
                      112,328
                      
                      
                      
                      112,328
                      
                      
                      
                      99,679
                      
                      
                      
                      99,679Securities
      held-to-maturity
                      
                      
                      12
                      
                      
                      
                      12
                      
                      
                      
                      12
                      
                      
                      
                      12Other
      securities
                      
                      
                      2,412
                      
                      
                      
                      2,412
                      
                      
                      
                      2,612
                      
                      
                      
                      2,612Loans,
      net
                      
                      
                      316,094
                      
                      
                      
                      330,625
                      
                      
                      
                      318,300
                      
                      
                      
                      332,389Liabilities:Noninterest-bearing Deposits
                      
                      $
                      49,994
                      
                      
                      $
                      49,994
                      
                      
                      $
                      57,594
                      
                      
                      $
                      57,594Interest-bearing
      deposits
                      
                      
                      341,867
                      
                      
                      
                      344,260
                      
                      
                      
                      320,485
                      
                      
                      
                      325,777Subordinated
      debentures
                      
                      
                      10,310
                      
                      
                      
                      10,310
                      
                      
                      
                      10,310
                      
                      
                      
                      10,310FHLB
      and other borrowings
                      
                      
                      35,461
                      
                      
                      
                      35,461
                      
                      
                      
                      46,027
                      
                      
                      
                      46,027





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 June 30, 2009, follows:








Gross
                    
                    
                    GrossAmortized
                    
                    
                    Unrealized
                    
                    
                    Unrealized
                    
                    
                    EstimatedCost
                    
                    
                    Gains
                    
                    
                    Losses
                    
                    
                    Fair ValueAvailable-for-sale
      securities:Obligations
      of U.S. Government Agencies
                    
                    $
                    30,417
                    
                    
                    $
                    519
                    
                    
                    $
                    73
                    
                    
                    $
                    30,863Tax-exempt
      and taxable obligations of states and municipal
    subdivisions
                    
                    
                    34,108
                    
                    
                    
                    482
                    
                    
                    
                    335
                    
                    
                    
                    34,255Mortgage-backed
      securities
                    
                    
                    33,255
                    
                    
                    
                    802
                    
                    
                    
                    167
                    
                    
                    
                    33,890Corporate
      obligations
                    
                    
                    13,899
                    
                    
                    
                    23
                    
                    
                    
                    1,512
                    
                    
                    
                    12,410Other
                    
                    
                    1,229
                    
                    
                    
                    -
                    
                    
                    
                    319
                    
                    
                    
                    910Total
                    
                    $
                    112,908
                    
                    
                    $
                    1,826
                    
                    
                    $
                    2,406
                    
                    
                    $
                    112,328Held-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 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.
After the evaluation of our trust preferred securities, no adjustment was needed
for the quarter ended March 31, 2009.





NOTE J –
SUBSEQUENT EVENTS





Subsequent
events have been evaluated through August 13, 2009, which is the date the
financial statements were available to be issued. For the second quarter ended
June 30, 2009, the Company recognized an impairment loss of $71,000 on trust
preferred securities.





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 $483.9 million at June 30, 2009, compared to $473.8 million at
December 31, 2008.  Loans decreased $2.6 million, or .8%, during the
first six months of 2009.  Deposits at June 30, 2009, totaled $392.2
million compared to $378.6 million at December 31, 2008. For the six month
period ended June 30, 2009, The First reported net income of $.58 million
compared to $1.44 million for the six months ended June 30, 2008.





NONPERFORMING
ASSETS AND RISK ELEMENTS





Diversification
within the loan portfolio is an important means of reducing inherent lending
risks. At June 30, 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 June
30, 2009, The First had loans past due as follows:





($
      In Thousands)Past
      due 30 through 89 days
                    
                    $
                    5,013Past
      due 90 days or more and still accruing
                    
                    
                    1,077




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 $5.8 million at June 30, 2009,
an increase of $2.5 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 (consisting of foreclosed
properties) totaled $1.4 million at June 30, 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 $1.9 million in restructured loans at June 30,
2009.


LIQUIDITY
AND CAPITAL RESOURCES





Liquidity
is adequate with cash and cash equivalents of $26.3 million as of June 30, 2009.
In addition, loans and investment securities repricing or maturing within one
year or less exceed $148 million at  June 30,
2009.  Approximately $37.3 million in loan commitments could fund
within the next six months and other commitments, primarily standby letters of
credit, totaled $.8 million at June 30, 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 June 30, 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 June 30, 2009, were as
follows:





Tier
      1 leverage
                    
                    
                    10.54
                    %Tier
      1 risk-based
                    
                    
                    14.36
                    %Total
      risk-based
                    
                    
                    15.06
                    %










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 FASBInterpretation 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 $181,000 for the three months ended June 30, 2009,
compared with consolidated net income of $339,000 for the same period last
year.





Net
interest income after provision for loan losses decreased to $3,510,000 from
$3,718,000 for the three months ended June 30, 2009, or a decrease of 5.6% as
compared to the same period in 2008.  Earning assets through June 30,
2009, decreased $20.5 million and interest-bearing liabilities also decreased
$24.6 million when compared to June 30, 2008, reflecting a decrease of 4.3% and
6.2%, respectively.





Noninterest
income for the three months ended June 30, 2009, was  $675,000
compared to $915,000 for the same period in 2008, reflecting a decrease of
$240,000 or 26.2%. Included in noninterest income are service charges on deposit
accounts, which for the three months ended June 30, 2009, totaled $485,000
compared to $570,000 for the same period in 2008.  A one time gain on
the sale of bank property of $92,000 was recognized during the second quarter of
2008.










The
provision for loan losses was $464,000 in the three months ended June 30, 2009,
compared with $634,000 for the same period in 2008. The allowance for loan
losses of $5.3 million at June 30, 2009 (approximately 1.66%  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 $215,000 or 5.2% for the three months ended June 30, 2009,
when compared with the same period in 2008.  We achieved this overall
decrease even with the FDIC special assessment of $215,000 that was accrued
during the first quarter.





ITEM
      NO. 3.
            CONTROLS
      AND PROCEDURES





As of
June 30, 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.  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 June 30,
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
June 30, 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.




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 Financial Accounting Standards Board (FASB) issued three amendments in
the form of FASB Staff Positions (“FSP”) to the fair value measurement,
disclosure and other-than-temporary impairment standards:




FSP FAS
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,  provides a list of factors that a reporting entity
should evaluate to determine whether there has been a significant decrease in
the volume and level of activity for the asset or liability in relation to
normal market activity for the asset or liability. When the reporting entity
concludes there has been a significant decrease in the volume and level of
activity for the asset or liability, further analysis of the information from
that market is needed and significant adjustments to the related prices may be
necessary to estimate fair value in accordance with FAS 157.









FSP FAS
157-4 clarifies that when there has been a significant decrease in the volume
and level of activity for the asset or liability, some transactions may not be
orderly. In those situations, the entity must evaluate the weight of evidence to
determine whether the transaction is orderly. It also provides a list of
circumstances that may indicate that a transaction is not orderly. A transaction
price that is not associated with an orderly transaction is given little, if
any, weight when estimating fair value.




FSP FAS
115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairment,clarifies the interaction of the factors
that should be considered when determining whether a debt security is
other–than-temporarily impaired. For debt securities, management must assess
whether (a) it has the intent to sell the security and (b) it is more likely
than not that it will be required to sell the security prior to its anticipated
recovery. These steps are done before assessing whether the entity will recover
the cost basis of the investment. Previously, this assessment required
management to assert it has both the intent and the ability to hold a security
for a period of time sufficient to allow for anticipated recovery in fair value
to avoid recognizing an other-than-temporary impairment. This change does not
affect the need to forecast recovery of the value of the security through either
cash flows or market price.




In
instances when a determination is made that an other-than-temporary impairment
exists but the investor does not intend to sell the debt security and it is not
more likely than not that it will be required to sell the debt security prior to
its anticipated recovery, FSP FAS 115-2 and FAS 124-2 change the
presentation and amount of the other-than-temporary impairment recognized in the
income statement. The other-than-temporary impairment is separated into (a) the
amount of the total other-than-temporary impairment related to a decrease in
cash flows expected to be collected from the debt security (the credit loss) and
(b) the amount of the total other-than-temporary impairment related to all other
factors. The amount of the total other-than-temporary impairment related to the
credit loss is recognized in earnings. The amount of the total
other-than-temporary impairment related to all other factors is recognized in
other comprehensive income.




FSP FAS
107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments amends FASB
Statement No. 107 (“FAS 107”), Disclosures about Fair Value of
Financial Instruments,to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. FAS 107-1 also amends APB Opinion No.
28, Interim Financial
Reporting, to require those disclosures in summarized financial
information at interim reporting periods.




All three
FASB Staff Positions discussed herein include substantial additional disclosure
requirements. The effective date for these new standards is the same: interim
and annual reporting periods ending after June 15, 2009. The Company adopted
these standards at June 30, 2009 and there was not a material impact on its
consolidated financial statements.








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.





The
Defendants removed the case to the United States District Court for the Southern
District of Mississippi, Hattiesburg Division, on March 12, 2008 based upon the
Court's federal question jurisdiction.  On April 11, 2008, the Plaintiff
filed a Motion to Remand the case to the Circuit Court of Jones County,
Mississippi.  The Motion to Remand was granted, and the case is
currently pending in the Circuit Court of Jones County, Mississippi, Second
Judicial District.  The case is set for trial on Monday, November 30,
2009 in the Circuit Court of Jones County, Mississippi.





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





At the
Company's annual meeting of stockholders held May 21, 2009, the
following proposals were approved:





Proposal
No. 1:





The
following individuals were elected to serve as Class II directors of the Company
for terms that expire at the annual meeting of stockholders to be held in
2012:





David
      E. JohnsonMichael
      W. ChancellorAndrew
      D. StetelmanRalph
      T. SimmonsCharles
      R. Lightsey










Set forth
below is the number of votes cast for, against, or withheld, with respect to
each nominee for office:





For
                        
                        
                        Against
                        
                        
                        WithheldDavid
      E. Johnson
                        
                        
                        1,985,459
                        
                        
                        
                        
                        
                        
                        
                        6,286Michael
      W. Chancellor
                        
                        
                        1,984,859
                        
                        
                        
                        
                        
                        
                        
                        6,886Andrew
      D. Stetelman
                        
                        
                        1,985,859
                        
                        
                        
                        
                        
                        
                        
                        5,886Ralph
      T. Simmons
                        
                        
                        1,930,725
                        
                        
                        
                        
                        
                        
                        
                        61,020Charles
      R. Lightsey
                        
                        
                        1,985,859
                        
                        
                        
                        
                        
                        
                        
                        5,886





The terms
of the Class II directors expire at the 2012 Annual  Shareholders
Meeting, the terms of the Class III directors will expire at the 2010 Annual
Shareholders Meeting, and the terms of the Class I directors will expire at the
2011 Annual Shareholders Meeting.  The directors and their classes
are:





Class
      I
              Class
      II
              Class
      IIIGregory
      H. Mitchell
              Michael
      W. Chancellor
              David
      W. Bomboy, M.D.Ted
      E. Parker
              David
      E. Johnson
              E.
      Ricky GibsonDennis
      L. Pierce
              Andrew
      D. Stetelman
              Fred
      A. McMurryJ.
      Douglas Seidenburg
              Ralph
      T. Simmons
              M.
      Ray (Hoppy) Cole, Jr.Charles
      R. Lightsey





Proposal
No. 2 Approval of Independent Public Accountants





Set forth
below is the number of votes cast for, against, or abstained, with respect to
Approval of Independent Public Accountants:





For
                    
                    Against
                    
                    
                    Abstain1,988,817
                    
                    
                    2,214
                    
                    
                    
                    714


Proposal
No. 3 – Advisory Vote on Executive Compensation





Set forth
below is the number of votes cast for, against, or abstained, with respect to
Advisory Vote on Executive Compensation.





For
                    
                    Against
                    
                    
                    Abstain1,953,490
                    
                    
                    22,094
                    
                    
                    
                    16,161




Proposal
No. 4 – Shareholder Proposal related to Director Classification





Set forth
below is the number of votes cast for, against, or abstained, with respect to
Shareholder Proposal related to Director Classification





For
                    
                    Against
                    
                    
                    Abstain219,912
                    
                    
                    1,238,772
                    
                    
                    
                    80,382










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 one report on Form 8-K during the quarter ended June 30,
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. JOHNSON8-12-09
                  
                  David
      E. Johnson,(Date)
                  
                  Chief
      Executive Officer/s/
      DEEDEE LOWERY8-12-09
                  
                  DeeDee
      Lowery, Executive(Date)
                  
                  Vice
      President and Chief Financial
Officer