DUBLIN, Ga., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $6.2 million for the quarter ended September 30, 2021, representing an increase of $723 thousand, or 13.24%, compared to net income of $5.5 million for the quarter ended June 30, 2021. The company also announced diluted earnings per share of $2.94 for the quarter, representing a 13.08% increase over diluted earnings per share of $2.60 for the prior quarter. Net earnings were higher quarter over quarter because of lower credit and tax provisioning as well as higher non-interest income related to service charges and credit insurance premiums.
“In the third quarter, we generated net interest income of $13.4 million, slightly better than the second quarter’s level of $13.3 million,” said Spence Mullis, President and CEO. “We generated both solid loan and deposit growth during the quarter. We are particularly proud of our loan growth, which net of SBA Payroll Protection Program (PPP) loans was $37.0 million or 4.48%. While the average yield on our loans decreased slightly, loan volume and our strong non-interest-bearing deposit growth led to our net interest margin remaining solid at 4.10%. We grew non-interest-bearing deposits $25.4 million or 8.30% during the quarter.”
The Company’s total shareholders’ equity increased 3.76% to $143 million as of September 30, 2021, as compared to $138 million as of June 30, 2021. Tangible book value per share increased to $62.36 as of September 30, 2021, a 4.18% increase from $59.86 per share as of June 30, 2021. On October 20, 2021, the board of directors approved its fourth quarter dividend of $0.38 per share payable on or about December 15th to all shareholders of record as of November 15th.
Secondary mortgage revenue for the quarter was strong at $908 thousand, up $122 thousand or 15.5% from the second quarter. While mortgage rates have ticked up slightly, demand for both purchases and refinances in the Company’s markets remains strong.
The bank had a loan relationship that was stagnant in a Chapter 11 bankruptcy since June of 2019. The borrowing entity was finally discharged from bankruptcy this quarter which allowed the bank to foreclose on a new, but unoccupied assisted living facility as well other ancillary collateral for this relationship. As a result, the relationship which had been on a non-accrual status migrated into other real estate in the amount of $5.2 million. There was no net effect on the bank’s adversely classified ratio, or the ratio of adversely classified loans and other real estate owned to Tier 1 regulatory capital plus the allowance for loan losses, which decreased during the quarter to 8.04% versus 8.43% as of the end of the previous quarter. As previously mentioned, the bank’s provision for loan losses of $450 thousand for the three months ended September 30, 2021 was down from $750 thousand for the three months ended June 30, 2021. The bank’s allowance for loan losses as a percentage of total loans was 1.41% when PPP loans are netted out of total loans as of September 30, 2021, versus 1.47% as of June 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 | |||||||||||||||
| September 30, | June 30, | ||||||||||||||
| 2021 | 2021 | Change | % Change | ||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 98,488,262 | $ | 66,121,775 | $ | 32,366,487 | 48.95 | % | |||||||
| Federal funds sold | 67,966,892 | 87,869,237 | (19,902,345 | ) | -22.65 | % | |||||||||
| Total cash and cash equivalents | 166,455,154 | 153,991,012 | 12,464,142 | 8.09 | % | ||||||||||
| Interest-bearing time deposits in other banks | 350,000 | 350,000 | - | 0.00 | % | ||||||||||
| Securities available for sale, at fair value | 253,026,739 | 263,891,405 | (10,864,666 | ) | -4.12 | % | |||||||||
| Securities held to maturity, at cost | 13,220,095 | 12,682,445 | 537,650 | 4.24 | % | ||||||||||
| Federal Home Loan Bank stock, restricted, at cost | 624,200 | 624,200 | - | 0.00 | % | ||||||||||
| Loans, net of unearned income | 882,889,280 | 858,178,798 | 24,710,482 | 2.88 | % | ||||||||||
| Less-allowance for loan losses | (12,125,731 | ) | (12,099,672 | ) | (26,059 | ) | 0.22 | % | |||||||
| Loans, net | 870,763,549 | 846,079,126 | 24,684,423 | 2.92 | % | ||||||||||
| Bank premises and equipment, net | 15,127,699 | 15,178,731 | (51,032 | ) | -0.34 | % | |||||||||
| ROU assets for operating lease, net | 420,363 | 505,635 | (85,272 | ) | -16.86 | % | |||||||||
| Goodwill | 9,361,770 | 9,361,770 | - | 0.00 | % | ||||||||||
| Intangible assets, net | 2,456,370 | 2,543,350 | (86,980 | ) | -3.42 | % | |||||||||
| Other real estate and foreclosed assets | 5,470,761 | 271,389 | 5,199,372 | 1915.84 | % | ||||||||||
| Accrued interest receivable | 4,670,208 | 4,362,402 | 307,806 | 7.06 | % | ||||||||||
| Cash surrender value of life insurance | 13,889,164 | 13,798,452 | 90,712 | 0.66 | % | ||||||||||
| Other assets | 10,057,607 | 10,029,683 | 27,924 | 0.28 | % | ||||||||||
| Total Assets | $ | 1,365,893,679 | $ | 1,333,669,600 | $ | 32,224,079 | 2.42 | % | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest bearing | $ | 331,663,248 | $ | 306,244,572 | $ | 25,418,676 | 8.30 | % | |||||||
| Interest bearing | 854,987,023 | 853,411,310 | 1,575,713 | 0.18 | % | ||||||||||
| 1,186,650,271 | 1,159,655,882 | 26,994,389 | 2.33 | % | |||||||||||
| Other borrowed funds | 28,733,428 | 28,714,778 | 18,650 | 0.06 | % | ||||||||||
| Lease liability for operating lease | 420,363 | 505,635 | (85,272 | ) | -16.86 | % | |||||||||
| Accrued interest payable | 146,945 | 198,992 | (52,047 | ) | -26.16 | % | |||||||||
| Accrued expenses and other liabilities | 7,137,289 | 6,958,927 | 178,362 | 2.56 | % | ||||||||||
| Total liabilities | 1,223,088,296 | 1,196,034,214 | 27,054,082 | 2.26 | % | ||||||||||
| Shareholders' Equity: | |||||||||||||||
| Common stock | 2,151,398 | 2,151,398 | - | 0.00 | % | ||||||||||
| Paid in capital surplus | 39,735,842 | 39,735,842 | - | 0.00 | % | ||||||||||
| Retained earnings | 80,874,167 | 81,672,346 | (798,179 | ) | -0.98 | % | |||||||||
| Current year earnings | 16,863,337 | 10,679,804 | 6,183,533 | 57.90 | % | ||||||||||
| Accumulated other comprehensive income (loss) | 4,845,836 | 5,061,193 | (215,357) | -4.26 | % | ||||||||||
| Treasury Stock, at cost 50,927 | (1,665,197 | ) | (1,665,197 | ) | - | 0.00 | % | ||||||||
| Total shareholders' equity | 142,805,383 | 137,635,386 | 5,169,997 | 3.76 | % | ||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,365,893,679 | $ | 1,333,669,600 | 32,224,079 | 2.42 | % | ||||||||
| MORRIS STATE BANCSHARES, INC. | |||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||
| Consolidating Statement of Income | |||||||||||||||
| for the Three Months Ended | |||||||||||||||
| September 30, | June 30, | ||||||||||||||
| 2021 | 2021 | Change | % Change | ||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| Interest and Dividend Income: | |||||||||||||||
| Interest and fees on loans | $ | 12,642,615 | $ | 12,795,036 | $ | (152,421 | ) | -1.19 | % | ||||||
| Interest income on securities | 1,580,691 | 1,449,522 | 131,169 | 9.05 | % | ||||||||||
| Income on federal funds sold | 21,720 | 18,769 | 2,951 | 15.72 | % | ||||||||||
| Income on time deposits held in other banks | 29,479 | 28,685 | 794 | 2.77 | % | ||||||||||
| Other interest and dividend income | 51,191 | 53,518 | (2,327 | ) | -4.35 | % | |||||||||
| Total interest and dividend income | 14,325,696 | 14,345,530 | (19,834 | ) | -0.14 | % | |||||||||
| Interest Expense: | |||||||||||||||
| Deposits | 515,038 | 626,030 | $ | (110,992 | ) | -17.73 | % | ||||||||
| Interest on other borrowed funds | 389,377 | 387,005 | 2,372 | 0.61 | % | ||||||||||
| Interest on federal funds purchased | -- | -- | -- | -- | |||||||||||
| Total interest expense | 904,415 | 1,013,035 | (108,620 | ) | -10.72 | % | |||||||||
| Net interest income before provision for loan losses | 13,421,281 | 13,332,495 | 88,786 | 0.67 | % | ||||||||||
| Less-provision for loan losses | 450,000 | 750,000 | (300,000 | ) | -40.00 | % | |||||||||
| Net interest income after provision for loan losses | 12,971,281 | 12,582,495 | 388,786 | 3.09 | % | ||||||||||
| Noninterest Income: | |||||||||||||||
| Service charges on deposit accounts | 517,470 | 418,331 | 99,139 | 23.70 | % | ||||||||||
| Other service charges, commisions and fees | 488,866 | 365,636 | 123,230 | 33.70 | % | ||||||||||
| Gain on sale of loans | -- | -- | -- | -- | |||||||||||
| Increase in CSV of life insurance | 90,712 | 89,787 | 925 | 1.03 | % | ||||||||||
| Other income | 247,726 | 41,655 | 206,071 | 494.71 | % | ||||||||||
| Total noninterest income | 1,344,774 | 915,409 | 429,365 | 46.90 | % | ||||||||||
| Noninterest Expense: | |||||||||||||||
| Salaries and employee benefits | 4,648,196 | 4,449,439 | 198,757 | 4.47 | % | ||||||||||
| Occupancy and equipment expenses, net | 575,664 | 573,066 | 2,598 | 0.45 | % | ||||||||||
| (Gain) loss on sales and calls of securities | -- | -- | -- | -- | |||||||||||
| Loss (gain) on sales of foreclosed assets and other real estate | 4,580 | (138 | ) | 4,718 | -3418.84 | % | |||||||||
| Gain on sales of premises and equipment | -- | -- | -- | -- | |||||||||||
| Other expenses | 2,740,932 | 2,467,806 | 273,126 | 11.07 | % | ||||||||||
| Total noninterest expense | 7,969,372 | 7,490,173 | 479,199 | 6.40 | % | ||||||||||
| Income Before Income Taxes | 6,346,683 | 6,007,731 | 338,952 | 5.64 | % | ||||||||||
| Provision for income taxes | 163,153 | 547,193 | (384,040 | ) | -70.18 | % | |||||||||
| Net Income | $ | 6,183,530 | $ | 5,460,538 | $ | 722,992 | 13.24 | % | |||||||
| Earnings per common share: | |||||||||||||||
| Basic | $ | 2.94 | $ | 2.60 | $ | 0.34 | 13.08 | % | |||||||
| Diluted | $ | 2.94 | $ | 2.60 | $ | 0.34 | 13.08 | % | |||||||
| Quarter Ending | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||
| 2021 | 2021 | 2020 | ||||||||||
| Dollars in thousand, except per share data) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
| Per Share Data | ||||||||||||
| Basic Earnings per Common Share | $ | 2.94 | $ | 2.60 | $ | 2.13 | ||||||
| Diluted Earnings per Common Share | 2.94 | 2.60 | 2.13 | |||||||||
| Dividends per Common Share | 0.38 | 0.38 | 0.35 | |||||||||
| Book Value per Common Share | 67.99 | 65.53 | 59.27 | |||||||||
| Tangible Book Value per Common Share | 62.36 | 59.86 | 53.47 | |||||||||
| Average Diluted Shared Outstanding | 2,098,933 | 2,097,534 | 2,095,783 | |||||||||
| End of Period Common Shares Outstanding | 2,100,471 | 2,100,471 | 2,095,468 | |||||||||
| Annualized Performance Ratios (Bank Only) | ||||||||||||
| Return on Average Assets | 1.97 | % | 1.80 | % | 1.72 | % | ||||||
| Return on Average Equity | 16.56 | % | 15.23 | % | 14.07 | % | ||||||
| Equity/Assets | 11.77 | % | 12.02 | % | 12.48 | % | ||||||
| Yield on Earning Assets | 4.26 | % | 4.30 | % | 4.76 | % | ||||||
| Cost of Funds | 0.17 | % | 0.22 | % | 0.40 | % | ||||||
| Net Interest Margin | 4.10 | % | 4.10 | % | 4.39 | % | ||||||
| Efficiency Ratio | 52.12 | % | 51.03 | % | 51.38 | % | ||||||
| Credit Metrics | ||||||||||||
| Allowance for Loan Losses to Total Loans | 1.37 | % | 1.41 | % | 1.22 | % | ||||||
| Allowance for Loan Losses to Total Loans* | 1.41 | % | 1.47 | % | 1.22 | % | ||||||
| Adversely Classified Assets to Tier 1 Capital | ||||||||||||
| plus Allowance for Loan Losses | 8.04 | % | 8.43 | % | 10.29 | % | ||||||
| * Excludes PPP Loans | ||||||||||||
