Morris State Bancshares Announces Solid Earnings in 2021 and Increases Quarterly Dividend


DUBLIN, Ga., Jan. 31, 2022 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank (the “Bank”), today announced net income of $24.0 million for the year-ended December 31, 2021, representing an increase of $6.6 million, or 37.66%, compared to net income of $17.4 million for the year-ended December 31, 2020. The company also announced diluted earnings per share of $11.40 for 2021, representing a 37.35% increase over diluted earnings per share of $8.30 for 2020.

Highlights of the Company’s and Bank’s performance in 2021 include the following:

  • Growth in net interest income of $5.6 million, representing an increase of 11.52% over 2020
  • Organic growth in loans of $146 million, or 19.01% exclusive of PPP loans
  • Return on average assets (Bank) of 1.96%, compared to 1.78% in 2020
  • Return on average tangible common equity (Bank) of 16.55%, compared with 14.38% in 2020
  • Net interest margin (Bank) of 4.09% during 2021, down 42 basis points from 2020 amid a challenging rate environment
  • Growth in tangible book value per share of 15.56%, from $56.04 at the end of 2020 to $64.77 at the end of 2021
  • Successful lift-out and integration of a team of seasoned commercial and mortgage lenders in the Bulloch County market leading the Company to record more security deeds than any competitor in that market over a 12-month period
  • Successful upgrade of core banking platform that will enhance our technology services for customers
  • Efficiency ratio of 50.56% versus 51.52% at the end of 2020
  • Net charge-offs of 0.09% of average total loans
  • Continued management of nonperforming assets, down 32 basis points to 0.89% of total loans and other real estate as of 12/31/2021 compared to 12/31/2020.

“I’m very proud of the company’s performance this year. Our team worked hard to complete another round of SBA’s Paycheck Protection Program (PPP) loans while continuing to grow core commercial business and consumer mortgage relationships throughout our markets. On a sequential basis, we finished the year strong growing both loans and deposits in the fourth quarter producing strong net interest income capping off a very strong performance for the year,” said Spence Mullis, President and CEO.

The Company’s total shareholders’ equity increased 14.56% to $148.3 million as of December 31, 2021, as compared to $129 million as of December 31, 2020. Tangible book value per share increased to $64.77 as of December 31, 2021, a 15.56% increase or $8.73 per share from December 31, 2020. On January 24, 2022, the board of directors approved an increase in its first quarter dividend to $0.44 per share payable on or about March 15, 2022 to all shareholders of record as of February 15, 2022.

Net interest income before provision for loan losses for the year-ended December 31, 2021 and December 31, 2020 was $54.4 million and $48.8 million respectively, an increase of $5.6 million, or 11.52%. The Bank’s net interest margin for the year-ended December 31, 2021 was 4.09%, which was a decline from 4.51% for the year-ended December 31, 2020.   The Bank’s cost of funds declined from 0.52% for the year-ended December 31, 2020 to 0.20% for the year-ended December 31, 2021.

“As the Federal Reserve is expected to dial back its accommodative monetary policy via rate hikes and tapering of its net asset purchases in the coming quarters, our management team is focused on offering prudent terms to both our borrowers and depositors and growing non-interest-bearing deposits further in order to maintain a solid net interest margin,” said Mullis.

Provision for loan losses was $2.0 million for the year ended December 31, 2021, versus $3.6 million for the year ended December 30, 2020.   The Bank’s reserve as a percentage of total loans remained at 1.30% for the year ended December 31, 2021, as it was on December 31, 2020.   The Bank’s adversely classified coverage ratio was 8.74% as of December 31, 2021, as compared to 8.76% as of December 31, 2020.   The Bank’s non-performing assets to total loans and other real estate declined from 1.21% as of December 31, 2020, to 0.89% as of December 31, 2021.

Noninterest expense increased 9.75%, or $2.7 million, to $30.9 million for the year ended December 31, 2021, versus $28.1 million as of December 31, 2020. Most of this increase was related to salaries and employee benefits as the labor market remains tight.

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
December 31, 2021
        
        
 December 31, December 31,    
  2021   2020  Change % Change
 (Unaudited)  (Unaudited)     
ASSETS       
        
Cash and due from banks$162,649,843  $56,290,263  $106,359,580  188.95%
Federal funds sold 14,278,248   93,200,409   (78,922,161) -84.68%
Total cash and cash equivalents 176,928,091   149,490,672   27,437,419  18.35%
        
Interest-bearing time deposits in other banks 350,000   350,000   -  0.00%
Securities available for sale, at fair value 244,979,034   205,427,671   39,551,363  19.25%
Securities held to maturity, at cost 11,123,253   12,730,837   (1,607,584) (12.63%)
Federal Home Loan Bank stock, restricted, at cost 624,300   899,700   (275,400) (30.61%)
        
Loans, net of unearned income 926,226,134   837,333,161   88,892,973  10.62%
Less-allowance for loan losses (12,008,416)  (10,781,434)  (1,226,982) 11.38%
Loans, net 914,217,718   826,551,727   87,665,991  10.61%
        
Bank premises and equipment, net 14,938,591   15,348,697   (410,106) -2.67%
ROU assets for operating lease, net 1,239,826   641,008   598,818  93.42%
Goodwill 9,361,704   9,361,770   (66) -0.00%
Intangible assets, net 2,369,390   2,717,311   (347,921) -12.80%
Other real estate and foreclosed assets 5,332,096   141,255   5,190,841  3674.80%
Accrued interest receivable 4,647,197   4,763,849   (116,652) -2.45%
Cash surrender value of life insurance 13,977,951   13,620,443   357,508  2.62%
Other assets 11,014,182   7,370,992   3,643,190  49.43%
Total Assets$1,411,103,333  $1,249,415,932  $161,687,401  12.94%
        
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
        
Deposits:       
Non-interest bearing$337,810,442  $282,746,775  $55,063,667  19.47%
Interest bearing 886,394,003   804,440,237   81,953,766  10.19%
  1,224,204,445   1,087,187,012   137,017,433  12.60%
        
Other borrowed funds 28,752,079   28,677,477   74,602  0.26%
Lease liability for operating lease 1,239,826   641,008   598,818  93.42%
Accrued interest payable 134,392   269,880   (135,488) -50.20%
Accrued expenses and other liabilities 8,513,648   3,221,471   5,292,177  164.28%
        
Total liabilities 1,262,844,390   1,119,996,848   142,847,542  12.75%
        
Shareholders' Equity:       
Common stock 2,159,148   2,144,766   14,382  0.67%
Paid in capital surplus 40,349,139   39,292,064   1,057,075  2.69%
Retained earnings 80,075,546   65,858,082   14,217,464  21.59%
Current year earnings 23,964,290   17,407,988   6,556,302  37.66%
Accumulated other comprehensive income (loss) 3,404,364   6,381,381   (2,977,017) -46.65%
Treasury Stock, at cost 51,291 (1,693,544)  (1,665,197)  (28,347) 1.70%
Total shareholders' equity 148,258,943   129,419,084   18,839,859  14.56%
        
Total Liabilities and Shareholders' Equity$1,411,103,333  $1,249,415,932   161,687,401  12.94%
        


MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
        
Consolidating Statement of Income
December 31, 2021
        
        
 December 31, December 31,
      
  2021   2020  Change % Change
 (Unaudited)  (Unaudited)     
Interest and Dividend Income:       
Interest and fees on loans$52,043,715  $50,465,805  $1,577,910  3.13%
Interest income on securities 5,895,358   4,015,455   1,879,903  46.82%
Income on federal funds sold 74,911   103,208   (28,297) -27.42%
Income on time deposits held in other banks 130,572   286,418   (155,846) -54.41%
Other interest and dividend income 177,004   59,919   117,085  195.41%
Total interest and dividend income 58,321,560   54,930,805   3,390,755  6.17%
        
Interest Expense:       
Deposits 2,338,787   5,037,818   (2,699,031) -53.58%
Interest on other borrowed funds 1,559,428   1,091,607   467,821  42.86%
Interest on federal funds purchased --   72   (72) -100.00%
Total interest expense 3,898,215   6,129,497   (2,231,282) -36.40%
        
Net interest income before provision for loan losses 54,423,345   48,801,308   5,622,037  11.52%
Less-provision for loan losses 2,000,000   3,635,000   (1,635,000) -44.98%
Net interest income after provision for loan losses 52,423,345   45,166,308   7,257,037  16.07%
        
Noninterest Income:       
Service charges on deposit accounts 1,983,721   1,951,399   32,322  1.66%
Other service charges, commissions and fees 1,600,219   1,282,853   317,366  24.74%
Gain on sales and calls of securities 299,870   46,323   253,547  547.35%
Gain on sale of loans 37,683   187,006   (149,323) -79.85%
Gain on sales of premises and equipment --   4,000   (4,000) -100.00%
Increase in CSV of life insurance 357,508   372,060   (14,552) -3.91%
Other income 380,138   366,850   13,288  3.62%
Total noninterest income 4,659,139   4,210,491   448,648  10.66%
        
Noninterest Expense:       
Salaries and employee benefits 18,241,891   16,656,208   1,585,683  9.52%
Occupancy and equipment expenses, net 2,201,420   2,650,008   (448,588) -16.93%
(Gain) Loss on sales of foreclosed assets and other real estate (2,610)  74,094   (76,704) -103.52%
Other expenses 10,413,609   8,732,695   1,680,914  19.25%
Total noninterest expense 30,854,310   28,113,005   2,741,305  9.75%
        
Income Before Income Taxes 26,228,174   21,263,794   4,964,380  23.35%
Provision for income taxes 2,263,886   3,855,806   (1,591,920) -41.29%
        
Net Income$23,964,288  $17,407,988  $6,556,300  37.66%
        
        
Earnings per common share:       
Basic$11.40  $8.30  $3.10  37.35%
Diluted$11.40  $8.30  $3.10  37.35%
        


MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
             
Selected Financial Information
             
             
                       Year Ending Quarter Ended
 December 31,December 31, December 31, September 30,
 June 30,  March 31,  December 31,
  2021  2020   2021   2021   2021   2021   2020 
(Dollars in thousand, except per share data)(Unaudited)(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
             
Per Share Data            
Basic Earnings per Common Share$11.40 $8.31  $3.38  $2.93  $2.60  $2.49  $2.64 
Diluted Earnings per Common Share 11.40  8.31   3.38   2.93   2.60   2.49   2.64 
Dividends per Common Share 1.52  1.75   0.38   0.38   0.38   0.38   0.35 
Book Value per Common Share 70.34  61.81   70.34   67.99   65.53   62.48   61.81 
Tangible Book Value per Common Share 64.77  56.04   64.77   62.36   59.86   56.77   56.04 
             
             
Average Diluted Shares Outstanding 2,102,359  2,095,633   2,106,819   2,105,370   2,102,108   2,094,978   2,095,185 
End of Period Common Shares Outstanding 2,107,857  2,093,839   2,107,857   2,100,471   2,100,471   2,099,871   2,093,839 
             
Selected Balance Sheet Data (Bank Only)            
Loans (net of PPP) 913,818  767,833   913,818   861,455   824,190   798,555   767,833 
PPP Loans 9,974  63,945   9,974   20,421   32,700   51,349   63,945 
Total Loans 923,792  831,778   923,792   881,876   856,890   849,904   831,778 
             
Non-Interest Bearing Deposits 343,437  286,868   343,437   338,952   308,270   309,533   286,868 
Interest Bearing Demand Deposits 271,693  227,097   271,693   242,023   236,871   248,681   227,097 
Savings & Money Market Deposits 436,462  383,786   436,462   434,810   433,902   436,697   383,786 
             
Earnings Summary            
Net Interest Income 54,423  48,801   14,029   13,421   13,332   13,563   12,190 
Provision for Loan Losses 2,000  3,635   150   450   750   650   750 
Non-Interest Income 4,659  4,210   1,397   1,345   915   1,182   1,219 
Non-Interest Expense 30,854  28,113   8,186   7,969   7,490   7,322   6,989 
Earnings before Taxes 26,228  21,264   7,090   6,347   6,008   6,773   5,669 
Income Taxes 2,264  3,856   -   163   547   1,554   121 
Net Income 23,964  17,408   7,090   6,184   5,461   5,219   5,548 
             
Annualized Performance Ratios (Bank Only)            
Return on Average Assets 1.96% 1.78%  2.24%  1.97%  1.80%  1.81%  2.03%
Return on Average Equity 16.55% 14.38%  18.99%  16.56%  15.23%  15.25%  16.17%
Equity/Assets 11.85% 11.98%  11.85%  11.77%  12.02%  11.37%  11.98%
Cost of Funds 0.20% 0.52%  0.17%  0.17%  0.22%  0.25%  0.31%
Net Interest Margin 4.09% 4.51%  4.16%  4.10%  4.10%  4.37%  4.43%
Efficiency Ratio 50.56% 51.52%  51.25%  52.12%  51.03%  47.80%  51.45%
             
 

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