Morris State Bancshares Announces Quarterly Earnings and Declares Third Quarter Dividend

Thursday, 29. July 2021 15:20

DUBLIN, Ga., July 29, 2021 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $5.5 million for the quarter ended June 30, 2021, representing an increase of $241 thousand, or 4.62%, compared to net income of $5.2 million for the quarter ended March 31, 2021. The company also announced diluted earnings per share of $2.60 for quarter, representing a 4.42% increase over diluted earnings per share of $2.49 for prior quarter. Net earnings were slightly higher quarter over quarter because of lower provisioning for income taxes due to the company’s investment in certain tax credits.

“In the second quarter, we generated net interest income of $13.3 million, just below the first quarter’s level of $13.6 million” said Spence Mullis, President and CEO. “As projected, our margin continued to compress slightly in the second quarter due to our excess liquidity levels, continued forgiveness/payoffs of SBA Payroll Protection Program (PPP) loans, and the competitive pricing of new and renewed loans. Our non-interest expense increased slightly during the quarter as we launched a new website, completed a core system conversion, and lifted a team of seasoned commercial and mortgage bankers from another institution. We look forward to these investments augmenting shareholder value in the quarters to come.”

The Company’s total shareholders’ equity increased 4.90% to $138 million as of June 30, 2021, as compared to $131 million as of March 31, 2021. Tangible book value per share increased to $59.86 as of June 30, 2021, a 5.40% increase from $56.77 per share on March 31, 2021. On July 21, 2021, the board of directors approved its third quarter dividend of $0.38 per share payable on or about September 15th to all shareholders of record as of August 10th.

Loans, net of PPP loans, grew $25.0 million during the quarter or 2.9%, while revenue on the gross portfolio decreased 3.0% or $388 thousand from the first quarter. The gross decrease was driven primarily by lower PPP fee revenue. PPP fee revenue of $811 thousand was recognized during the quarter, which was a decline of 42% from the $1.4 million recognized during the first quarter. Gross secondary mortgage revenue for the quarter remained strong at $785 thousand, up $47 thousand or 6.4% from the first quarter. With the recent drop in market rates and the addition of mortgage originators via the aforementioned lift out, management expects solid mortgage revenue in the coming quarter.

Provision for loan losses was $750 thousand as of June 30, 2021 versus $650 thousand as of March 31, 2021. Our reserve as a percentage of total loans was 1.47% when PPP loans are netted out of total loans as of June 30, 2021, versus 1.42% as of March 31, 2021. Our adversely classified coverage ratio was 8.43% as of June 30, 2021 versus 9.20% as of March 30, 2021.

Forward-looking Statements

Certain statements contained in this release may not be based on historical facts and are forward-looking statements. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “would,” “could” or “intend.” We caution you not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors, including, among others, the business and economic conditions; risks related to the integration of acquired businesses and any future acquisitions; changes in management personnel; interest rate risk; ability to execute on planned expansion and organic growth; credit risk and concentrations associated with the Company’s loan portfolio; asset quality and loan charge-offs; inaccuracy of the assumptions and estimates management of the Company makes in establishing reserves for probable loan losses and other estimates; lack of liquidity; impairment of investment securities, goodwill or other intangible assets; the Company’s risk management strategies; increased competition; system failures or failures to prevent breaches of our network security; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes; and increases in capital requirements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release. 

MORRIS STATE BANCSHARES, INC.   
AND SUBSIDIARIES   
               
Consolidating Balance Sheet   
    
     June 30, March 31,     June 30, 
      2021   2021  Change % Change  2020  
     (Unaudited)  (Unaudited)      (Unaudited)  
 ASSETS             
               
 Cash and due from banks   $66,121,775  $71,164,883  $(5,043,108) -7.09% $56,702,226  
 Federal funds sold    87,869,237   115,957,486   (28,088,249) -24.22%  28,826,177  
 Total cash and cash equivalents    153,991,012   187,122,369   (33,131,357) -17.71%  85,528,403  
               
 Interest-bearing time deposits in other banks    350,000   350,000   -  0.00%  1,350,000  
 Securities available for sale, at fair value    263,891,405   245,200,205   18,691,200  7.62%  139,789,954  
 Securities held to maturity, at cost    12,682,445   12,707,803   (25,358) (0.20%)  9,983,201  
 Federal Home Loan Bank stock, restricted, at cost    624,200   899,700   (275,500) (30.62%)  899,700  
               
 Loans, net of unearned income    858,178,798   851,806,225   6,372,573  0.75%  845,165,974  
 Less-allowance for loan losses    (12,099,672)  (11,400,979)  (698,693) 6.13%  (10,149,609) 
 Loans, net    846,079,126   840,405,246   5,673,880  0.68%  835,016,365  
               
 Bank premises and equipment, net    15,178,731   15,278,014   (99,283) -0.65%  15,593,015  
 ROU assets for operating lease, net    505,635   570,961   (65,326) -11.44%  410,758  
 Goodwill    9,361,770   9,361,770   -  0.00%  9,361,770  
 Intangible assets, net    2,543,350   2,630,331   (86,981) -3.31%  2,891,386  
 Other real estate and foreclosed assets    271,389   265,542   5,847  2.20%  645,231  
 Accrued interest receivable    4,362,402   4,358,189   4,213  0.10%  5,799,765  
 Cash surrender value of life insurance    13,798,452   13,708,665   89,787  0.65%  13,434,514  
 Other assets    10,029,683   6,882,236   3,147,447  45.73%  6,150,319  
 Total Assets   $1,333,669,600  $1,339,741,031  $(6,071,431) -0.45% $1,126,854,381  
               
               
 LIABILITIES AND SHAREHOLDERS' EQUITY             
               
 Deposits:             
 Non-interest bearing   $306,244,572  $305,974,839  $269,733  0.09% $261,805,349  
 Interest bearing    853,411,310   870,266,327   (16,855,017) -1.94%  723,800,470  
      1,159,655,882   1,176,241,166   (16,585,284) -1.41%  985,605,819  
               
 Other borrowed funds    28,714,778   28,696,127   18,651  0.06%  14,124,000  
 Lease liability for operating lease    505,635   570,961   (65,326) -11.44%  410,758  
 Accrued interest payable    198,992   413,062   (214,070) -51.83%  393,973  
 Accrued expenses and other liabilities    6,958,927   2,613,863   4,345,064  166.23%  7,042,426  
               
 Total liabilities    1,196,034,214   1,208,535,179   (12,500,965) -1.03%  1,007,576,976  
               
 Shareholders' Equity:             
 Common stock    2,151,398   2,150,798   600  0.03%  2,144,766  
 Paid in capital surplus    39,735,842   39,690,242   45,600  0.11%  39,292,064  
 Retained earnings    81,672,346   82,470,411   (798,065) -0.97%  67,336,736  
 Current year earnings    10,679,804   5,219,266   5,460,538  104.62%  7,407,128  
 Accumulated other comprehensive income (loss)    5,061,193   3,340,332   1,720,861  51.52%  4,661,280  
 Treasury Stock, at cost 50,927    (1,665,197)  (1,665,197)  -  0.00%  (1,564,569) 
 Total shareholders' equity    137,635,386   131,205,852   6,429,534  4.90%  119,277,405  
               
 Total Liabilities and Shareholders' Equity   $1,333,669,600  $1,339,741,031   (6,071,431) -0.45% $1,126,854,381  
               


MORRIS STATE BANCSHARES, INC.  
AND SUBSIDIARIES  
                
Consolidating Statement of Income  
for the Three Months Ended   
                
       June 30, March 31,     June 30,
        2021   2021 Change % Change  2020
       (Unaudited)  (Unaudited)      (Unaudited)
 Interest and Dividend Income:              
 Interest and fees on loans     $12,795,036  $13,183,691 $(388,655) -2.95% $12,758,312
 Interest income on securities      1,449,522   1,273,895  175,627  13.79%  942,506
 Income on federal funds sold      18,769   19,057  (288) -1.51%  8,615
 Income on time deposits held in other banks      28,685   27,936  749  2.68%  7,766
 Other interest and dividend income      53,518   21,217  32,301  152.24%  38,358
 Total interest and dividend income      14,345,530   14,525,796  (180,266) -1.24%  13,755,557
                
 Interest Expense:              
 Deposits      626,030   569,068 $56,962  10.01%  1,381,632
 Interest on other borrowed funds      387,005   393,271  (6,266) -1.59%  179,337
 Interest on federal funds purchased      --   --  --  --   --
 Total interest expense      1,013,035   962,339  50,696  5.27%  1,560,969
                
 Net interest income before provision for loan losses      13,332,495   13,563,457  (230,962) -1.70%  12,194,588
 Less-provision for loan losses      750,000   650,000  100,000  15.38%  2,000,000
 Net interest income after provision for loan losses      12,582,495   12,913,457  (330,962) -2.56%  10,194,588
                
 Noninterest Income:              
 Service charges on deposit accounts      418,331   469,437  (51,106) -10.89%  387,440
 Other service charges, commissions and fees      365,636   375,312  (9,676) -2.58%  544,539
 Gain on sale of loans      --   --  --  --   --
 Increase in CSV of life insurance      89,787   88,222  1,565  1.77%  93,136
 Other income      41,655   248,699  (207,044) -83.25%  9,742
 Total noninterest income      915,409   1,181,670  (266,261) -22.53%  1,034,857
                
 Noninterest Expense:              
 Salaries and employee benefits      4,449,439   4,318,080  131,359  3.04%  4,377,552
 Occupancy and equipment expenses, net      573,066   513,406  59,660  11.62%  603,710
 (Gain) loss on sales and calls of securities      --   --  --  --   --
 Loss (gain) on sales of foreclosed assets and other real estate     (138)  4,202  (4,340) -103.28%  2,240
 Gain on sales of premises and equipment      --   --  --  --   --
 Other expenses      2,467,806   2,486,633  (18,827) -0.76%  1,601,247
 Total noninterest expense      7,490,173   7,322,321  167,852  2.29%  6,584,749
                
 Income Before Income Taxes      6,007,731   6,772,806  (765,075) -11.30%  4,644,696
 Provision for income taxes      547,193   1,553,540  (1,006,347) -64.78%  1,275,320
                
 Net Income     $5,460,538  $5,219,266 $241,272  4.62% $3,369,376
                
                
 Earnings per common share:              
 Basic     $2.60  $2.49 $0.11  4.42% $1.60
 Diluted     $2.60  $2.49 $0.11  4.42% $1.60
                


MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
 
Selected Financial Information
     
  Quarter Ending  
  June 30, March 31, June 30,
   2021   2021   2020 
Dollars in thousand, except per share data)(Unaudited) (Unaudited) (Unaudited)
       
Per Share Data      
Basic Earnings per Common Share $2.60  $2.49  $1.60 
Diluted Earnings per Common Share  2.60   2.49   1.60 
Dividends per Common Share  0.38   0.38   0.35 
Book Value per Common Share  65.53   62.48   56.92 
Tangible Book Value per Common Share  59.86   56.77   51.07 
       
       
Average Diluted Shared Outstanding  2,097,534   2,094,978   2,095,468 
End of Period Common Shares Outstanding 2,100,471   2,099,871   2,095,468 
       
       
Annualized Performance Ratios (Bank Only)     
Return on Average Assets  1.80%  1.81%  1.31%
Return on Average Equity  15.23%  15.25%  10.65%
Equity/Assets  12.02%  11.37%  11.31%
Yield on Earning Assets  4.30%  4.60%  5.21%
Cost of Funds  0.22%  0.25%  0.57%
Net Interest Margin  4.10%  4.37%  4.69%
Efficiency Ratio  51.03%  47.80%  50.56%
       
Credit Metrics      
Allowance for Loan Losses to Total Loans 1.41%  1.34%  1.21%
Allowance for Loan Losses to Total Loans* 1.47%  1.42%  1.34%
Adversely Classified Assets to Total Capital     
plus Allowance for Loan Losses  8.43%  9.20%  12.25%
       
       
* Excludes PPP Loans      

CONTACT:
Morris State Bancshares
Chris Bond
Chief Financial Officer
478-272-5202 

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