DUBLIN, Ga., April 28, 2022 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $5.2 million for the quarter ending March 31, 2022. This level was in line with the first quarter of 2021’s net income of $5.2 million and below record-level net income of $7.1 million in the fourth quarter of 2021. Tangible book value of the company grew to $66.98 on March 31, 2022, from $56.77, or 15.24%, from the March 31, 2021, and from $64.77 or 3.41% from December 31, 2021.
1st Quarter 2022 Highlights:
- Returned 1.74% on average assets and 14.87% percent on average tangible common equity
- Annualized loan growth of 16.76%, or $38.3 million, during the quarter (excluding PPP)
- Continued strong asset quality, with a net recovery realized in the first 3 months of 2022
- Annualized core deposit growth of 14.72%, or $38.6 million, during the quarter
- Appointment of CEO and President, Spence Mullis to serve as Chairman of the Board
- Appointment of Leonard Blount as Lead Director
“I’m very pleased to report a solid start to 2022. The team followed the record 4th quarter of 2021 with a very solid first quarter in 2022. We generated symmetrical balance sheet growth with organic, non-PPP loans and core deposits each increasing over $38 million during the quarter. These core items significantly outpaced our overall asset growth of $27.6 million, or 2% from year-end 2021. Although confronted with headwinds of the tight labor market and slower mortgage fee revenue, we are poised to offset those with, solid organic loan growth in our Middle and Southeast Georgia markets. We remain optimistic that our team will continue to execute our strategy to generate solid profits the remainder of the year.”
Lower sequential net income was due to 3 key factors including:
- the recording of income tax expense of $547 thousand during 2022Q1 versus no income tax expense in the 2021Q4 at the company continued its use of tax credits
- lower overall net interest income, including mortgage fees of $13.6 million during 2022Q1 versus $14.0 million in 2021Q4
- 5% higher salaries and benefit costs totaling $5.1 million in 2022Q1 versus $4.8 million in 2021Q4
The Company’s total shareholders’ equity increased 16.8% year-over-year to $153 million as of March 31, 2021, and up 3% or $5 million from December 31, 2021. During the quarter, management made the decision to move our entire securities portfolio from available for sale to held to maturity effective January 1, 2022. This change eliminated the volatility in tangible book value that would occur due to changes in accumulated other comprehensive income (AOCI) in equity as bond yields increased significantly during the quarter and are projected to increase further as the Fed continues raising rates. With the bank’s core liquidity levels and robust contingent funding plans in place, management was able to make this decision to eliminate the “noise” from the numbers on a go-forward basis as it relates to tangible book value, which ended the quarter at $66.98.
On April 20, 2022, the board of directors approved a second quarter dividend of $0.44 per share payable on or about June 15, 2022, to all shareholders of record as of May 15, 2022. During said meeting, the board also elected Spence Mullis to serve as Chairman of the Board. Mullis started with the bank 20 years ago and initially served as a community and commercial lender and CFO. He became President in 2005 and CEO in 2006. The board also elected Leonard Blount as Lead Independent Director. Blount became a part of Morris Bank in 2019 when Morris purchased Farmers and Merchants Bank (FMB) in Statesboro, Georgia. Prior to the merger, Blount served 27 years on the FMB board of directors. Since the merger with Morris, Blount has served as a member of the bank’s board of directors, Chair of the Audit Committee and a Bulloch Advisory Board member. He is owner and principal of Blount Property Group, a retail and commercial investment company. He is also a founder of Capstone Benefits Consulting, a firm specializing in employee benefit solutions throughout the Southeast.
“It has been an absolute honor and pleasure to have worked with such a great team of bankers at Morris Bank for the past 20 years. We’ve worked hard to grow the bank from less than $150 million in total assets to now over $1.4 billion serving customers throughout Middle and Southeast Georgia,” said Mullis. “I’m honored and humbled beyond measure that our board has entrusted me to serve as Chairman. Furthermore, I’m excited we have a Lead Independent Director that is of the caliber of Leonard Blount. His over 30 years of community banking experience will continue to augment our other great board members’ and team members’ passion to deliver best-in-class products and services to our customers in the years to come, driving great value for our shareholders, team members, and communities.”
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 | |||||||||||||||
| March 31, 2022 | |||||||||||||||
| 2022 | 2021 | Change | % Change | ||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 143,422,859 | $ | 71,164,883 | $ | 72,257,976 | 101.54 | % | |||||||
| Federal funds sold | 15,664,564 | 115,957,486 | (100,292,922 | ) | -86.49 | % | |||||||||
| Total cash and cash equivalents | 159,087,423 | 187,122,369 | (28,034,946 | ) | -14.98 | % | |||||||||
| Interest-bearing time deposits in other banks | 350,000 | 350,000 | - | 0.00 | % | ||||||||||
| Securities available for sale, at fair value | - | 245,200,205 | (245,200,205 | ) | -100.00 | % | |||||||||
| Securities held to maturity, at cost | 267,833,392 | 12,707,803 | 255,125,589 | 2007.63 | % | ||||||||||
| Federal Home Loan Bank stock, restricted, at cost | 624,300 | 899,700 | (275,400 | ) | (30.61 | %) | |||||||||
| Loans, net of unearned income | 957,533,245 | 851,806,225 | 105,727,020 | 12.41 | % | ||||||||||
| Less-allowance for loan losses | (12,408,458 | ) | (11,400,979 | ) | (1,007,479 | ) | 8.84 | % | |||||||
| Loans, net | 945,124,787 | 840,405,246 | 104,719,541 | 12.46 | % | ||||||||||
| Bank premises and equipment, net | 14,837,637 | 15,278,014 | (440,377 | ) | -2.88 | % | |||||||||
| ROU assets for operating lease, net | 1,158,386 | 570,961 | 587,425 | 102.88 | % | ||||||||||
| Goodwill | 9,361,704 | 9,361,770 | (66 | ) | -0.00 | % | |||||||||
| Intangible assets, net | 2,282,410 | 2,630,331 | (347,921 | ) | -13.23 | % | |||||||||
| Other real estate and foreclosed assets | 5,106,587 | 265,542 | 4,841,045 | 1823.08 | % | ||||||||||
| Accrued interest receivable | 4,352,997 | 4,358,189 | (5,192 | ) | -0.12 | % | |||||||||
| Cash surrender value of life insurance | 14,065,097 | 13,708,665 | 356,432 | 2.60 | % | ||||||||||
| Other assets | 14,505,874 | 6,882,236 | 7,623,638 | 110.77 | % | ||||||||||
| Total Assets | $ | 1,438,690,594 | $ | 1,339,741,031 | $ | 98,949,563 | 7.39 | % | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest bearing | $ | 355,354,700 | $ | 305,974,839 | $ | 49,379,861 | 16.14 | % | |||||||
| Interest bearing | 896,502,158 | 870,266,327 | 26,235,831 | 3.01 | % | ||||||||||
| 1,251,856,858 | 1,176,241,166 | 75,615,692 | 6.43 | % | |||||||||||
| Other borrowed funds | 28,770,730 | 28,696,127 | 74,603 | 0.26 | % | ||||||||||
| Lease liability for operating lease | 1,158,386 | 570,961 | 587,425 | 102.88 | % | ||||||||||
| Accrued interest payable | 321,188 | 413,062 | (91,874 | ) | -22.24 | % | |||||||||
| Accrued expenses and other liabilities | 3,316,942 | 2,613,863 | 703,079 | 26.90 | % | ||||||||||
| Total liabilities | 1,285,424,104 | 1,208,535,179 | 76,888,925 | 6.36 | % | ||||||||||
| Shareholders' Equity: | |||||||||||||||
| Common stock | 2,165,730 | 2,150,798 | 14,932 | 0.69 | % | ||||||||||
| Paid in capital surplus | 40,907,274 | 39,690,242 | 1,217,032 | 3.07 | % | ||||||||||
| Retained earnings | 103,112,378 | 82,470,411 | 20,641,967 | 25.03 | % | ||||||||||
| Current year earnings | 5,561,414 | 5,219,266 | 342,148 | 6.56 | % | ||||||||||
| Accumulated other comprehensive income (loss) | 3,213,238 | 3,340,332 | (127,094 | ) | -3.80 | % | |||||||||
| Treasury Stock, at cost 51,291 | (1,693,544 | ) | (1,665,197 | ) | (28,347 | ) | 1.70 | % | |||||||
| Total shareholders' equity | 153,266,490 | 131,205,852 | 22,060,638 | 16.81 | % | ||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,438,690,594 | $ | 1,339,741,031 | 98,949,563 | 7.39 | % | ||||||||
| MORRIS STATE BANCSHARES, INC. | ||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||
| Consolidating Statement of Income | ||||||||||||||||
| for the Three Months Ended | ||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||
| 2022 | 2021 | Change | % Change | 2021 | ||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Interest and Dividend Income: | ||||||||||||||||
| Interest and fees on loans | $ | 12,708,366 | $ | 13,222,192 | $ | (513,826 | ) | -3.89 | % | $ | 13,183,691 | |||||
| Interest income on securities | 1,581,771 | 1,591,250 | (9,479 | ) | -0.60 | % | 1,273,895 | |||||||||
| Income on federal funds sold | 4,771 | 15,365 | (10,594 | ) | -68.95 | % | 19,057 | |||||||||
| Income on time deposits held in other banks | 66,520 | 44,472 | 22,048 | 49.58 | % | 27,936 | ||||||||||
| Other interest and dividend income | 50,708 | 50,890 | (182 | ) | -0.36 | % | 21,217 | |||||||||
| Total interest and dividend income | 14,412,136 | 14,924,169 | (512,033 | ) | -3.43 | % | 14,525,796 | |||||||||
| Interest Expense: | ||||||||||||||||
| Deposits | 462,472 | 505,251 | (42,779 | ) | -8.47 | % | 569,068 | |||||||||
| Interest on other borrowed funds | 391,195 | 389,776 | 1,419 | 0.36 | % | 393,271 | ||||||||||
| Interest on federal funds purchased | -- | -- | -- | -- | -- | |||||||||||
| Total interest expense | 853,667 | 895,027 | (41,360 | ) | -4.62 | % | 962,339 | |||||||||
| Net interest income before provision for loan losses | 13,558,469 | 14,029,142 | (470,673 | ) | -3.35 | % | 13,563,457 | |||||||||
| Less-provision for loan losses | 375,000 | 150,000 | 225,000 | 150.00 | % | 650,000 | ||||||||||
| Net interest income after provision for loan losses | 13,183,469 | 13,879,142 | (695,673 | ) | -5.01 | % | 12,913,457 | |||||||||
| Noninterest Income: | ||||||||||||||||
| Service charges on deposit accounts | 569,074 | 578,480 | (9,406 | ) | -1.63 | % | 469,437 | |||||||||
| Other service charges, commisions and fees | 363,780 | 353,683 | 10,097 | 2.85 | % | 375,312 | ||||||||||
| Gain on sales and calls of securities | -- | 298,025 | (298,025 | ) | -100.00 | % | -- | |||||||||
| Gain on sale of loans | -- | 37,683 | (37,683 | ) | -100.00 | % | -- | |||||||||
| Increase in CSV of life insurance | 87,146 | 88,787 | (1,641 | ) | -1.85 | % | 88,222 | |||||||||
| Other income | 41,987 | 40,686 | 1,301 | 3.20 | % | 248,699 | ||||||||||
| Total noninterest income | 1,061,987 | 1,397,344 | (335,357 | ) | -24.00 | % | 1,181,670 | |||||||||
| Noninterest Expense: | ||||||||||||||||
| Salaries and employee benefits | 5,066,729 | 4,826,176 | 240,553 | 4.98 | % | 4,318,080 | ||||||||||
| Occupancy and equipment expenses, net | 532,932 | 539,247 | (6,315 | ) | -1.17 | % | 513,406 | |||||||||
| Loss (gain) on sales of foreclosed assets and other real estate | -- | -- | -- | -- | 4,202 | |||||||||||
| Other expenses | 2,851,857 | 2,820,816 | 31,041 | 1.10 | % | 2,486,633 | ||||||||||
| Total noninterest expense | 8,451,518 | 8,186,239 | 265,279 | 3.24 | % | 7,322,321 | ||||||||||
| Income Before Income Taxes | 5,793,938 | 7,090,247 | (1,296,309 | ) | -18.28 | % | 6,772,806 | |||||||||
| Provision for income taxes | 546,734 | -- | 546,734 | -- | 1,553,540 | |||||||||||
| Net Income | $ | 5,247,204 | $ | 7,090,247 | (1,843,043 | ) | -25.99 | % | $ | 5,219,266 | ||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 2.64 | $ | 3.38 | (0.74 | ) | -21.89 | % | $ | 2.49 | ||||||
| Diluted | $ | 2.64 | $ | 3.38 | (0.74 | ) | -21.89 | % | $ | 2.49 | ||||||
| MORRIS STATE BANCSHARES, INC. | ||||||||||||
| AND SUBSIDIARIES | ||||||||||||
| Selected Financial Information | ||||||||||||
| Quarter Ending | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Dollars in thousand, except per share data | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
| Per Share Data | ||||||||||||
| Basic Earnings per Common Share | $ | 2.64 | $ | 3.38 | $ | 2.49 | ||||||
| Diluted Earnings per Common Share | 2.64 | 3.38 | 2.49 | |||||||||
| Dividends per Common Share | 0.44 | 0.38 | 0.38 | |||||||||
| Book Value per Common Share | 72.49 | 70.34 | 62.48 | |||||||||
| Tangible Book Value per Common Share | 66.98 | 64.77 | 56.77 | |||||||||
| Average Diluted Shares Outstanding | 2,108,037 | 2,102,359 | 2,094,978 | |||||||||
| End of Period Common Shares Outstanding | 2,114,439 | 2,107,857 | 2,099,871 | |||||||||
| Annualized Performance Ratios (Bank Only) | ||||||||||||
| Return on Average Assets | 1.74 | % | 2.24 | % | 1.81 | % | ||||||
| Return on Average Equity | 14.87 | % | 18.99 | % | 15.25 | % | ||||||
| Equity/Assets | 11.90 | % | 11.85 | % | 11.37 | % | ||||||
| Yield on Earning Assets | 4.18 | % | 4.31 | % | 4.60 | % | ||||||
| Cost of Funds | 0.15 | % | 0.17 | % | 0.25 | % | ||||||
| Net Interest Margin | 4.04 | % | 4.16 | % | 4.37 | % | ||||||
| Efficiency Ratio | 53.50 | % | 51.25 | % | 47.80 | % | ||||||
| Credit Metrics | ||||||||||||
| Allowance for Loan Losses to Total Loans | 1.30 | % | 1.30 | % | 1.34 | % | ||||||
| Allowance for Loan Losses to Total Loans* | 1.30 | % | 1.31 | % | 1.43 | % | ||||||
| Adversely Classified Assets to Tier 1 Capital | ||||||||||||
| plus Allowance for Loan Losses | 8.28 | % | 8.74 | % | 9.20 | % | ||||||
| * Excludes PPP Loans | ||||||||||||
