DUBLIN, Ga., April 27, 2023 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $4.1 million for the quarter ending March 31, 2023, representing a decrease of $2.5 million, or 38.23%, compared to net income of $6.6 million for the quarter ended December 31, 2022. Lower quarter over quarter net earnings were a result of higher deposit costs, higher noninterest expense, and higher tax provisioning.
“We continued to navigate a challenging economic environment in the first quarter marked by uncertainty in the banking industry with the backdrop of continued rising interest rates,” said Spence Mullis, Chairman and CEO. “While up 8.66% year over year in loans, we did see our loan book contract slightly, 1.09% or $11.4 million, from year-end. Our deposits held steady at $1.2 billion, which is in line with year-end deposit levels. The cost of these deposits, however, were up $1.2 million, or 51.86% over the fourth quarter of 2022. We expect deposit costs to continue to increase for the remainder of the year as the Fed signals that they will maintain higher rates for longer.”
The net interest margin was 3.98% for the first quarter of 2023 compared to 4.13% for the fourth quarter of 2022 and 4.04% for the first quarter of 2022. The average yield on earning assets grew 24 basis points from 4.82%, as of December 31, 2022, to 5.06%, while the bank’s cost of funds grew 41 basis points to 1.18% during the same period. Management expects the bank’s cost of funds to continue to increase and peak during the latter part of the third quarter of the year based on the current Fed rate forecast.
Noninterest expense increased $573,228, or 6.90%, over December 31, 2022, and provision for income taxes increased $1,695,418, or 240.81%, during the quarter. The increase in noninterest expense and income taxes quarter over quarter was due to the bank not investing in new solar tax credit projects and having to amortize the solar credits used in 2022. Provision for credit losses declined $216,624 during the quarter as the bank moved to the Current Expected Credit Losses Methodology (CECL). The Company’s asset quality remains consistent with an adversely classified index of 6.49% as of March 31, 2023, which compares with 5.99% as of December 31, 2022. The bank’s reserve as a percentage of total loans was 1.35% for March 31, 2023, as compared to 1.30% for March 31, 2022 and 1.30% for December 31, 2022.
The Company’s total shareholders’ equity increased 8.57% year-over-year to $166 million as of March 31, 2022, and up 0.83% or $1.4 million from December 31, 2022. Tangible book value of the company grew to $73.14 on March 31, 2023, from $66.98, or 9.20%, from March 31, 2022, and was in line with the value as of December 31, 2022 of $72.68. On April 19, 2023, the board of directors approved a second quarter dividend of $0.44 per share payable on or about June 15, 2023, to all shareholders of record as of May 15, 2023.
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, | March 31, | December 31, | |||||||||||||||||||||||
| 2023 | 2022 | Change | % Change | 2022 | Change | % Change | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||
| Cash and due from banks | $ | 51,448,341 | $ | 143,422,859 | $ | (91,974,518 | ) | -64.13 | % | $ | 49,302,788 | $ | 2,145,553 | 4.35 | % | ||||||||||
| Federal funds sold | 16,102,872 | 15,664,564 | 438,308 | 2.80 | % | 21,007,642 | (4,904,770 | ) | -23.35 | % | |||||||||||||||
| Total cash and cash equivalents | 67,551,213 | 159,087,423 | (91,536,210 | ) | -57.54 | % | 70,310,430 | (2,759,217 | ) | -3.92 | % | ||||||||||||||
| Interest-bearing time deposits in other banks | 100,000 | 350,000 | (250,000 | ) | -71.43 | % | 100,000 | - | 0.00 | % | |||||||||||||||
| Securities available for sale, at fair value | |||||||||||||||||||||||||
| Securities held to maturity, at cost (net of CECL Reserve) | 257,399,845 | 267,833,392 | (10,433,547 | ) | -3.90 | % | 259,677,508 | (2,277,663 | ) | -0.88 | % | ||||||||||||||
| Federal Home Loan Bank stock, restricted, at cost | 1,588,300 | 624,300 | 964,000 | 154.41 | % | 1,578,400 | 9,900 | 0.63 | % | ||||||||||||||||
| - | |||||||||||||||||||||||||
| Loans, net of unearned income | 1,040,411,604 | 957,533,245 | 82,878,359 | 8.66 | % | 1,051,888,290 | (11,476,686 | ) | -1.09 | % | |||||||||||||||
| Less-allowance for credit losses | (14,047,855 | ) | (12,408,458 | ) | (1,639,397 | ) | 13.21 | % | (13,629,255 | ) | (418,600 | ) | 3.07 | % | |||||||||||
| Loans, net | 1,026,363,749 | 945,124,787 | 81,238,962 | 8.60 | % | 1,038,259,035 | (11,895,286 | ) | -1.15 | % | |||||||||||||||
| - | |||||||||||||||||||||||||
| Bank premises and equipment, net | 13,658,218 | 14,837,637 | (1,179,419 | ) | -7.95 | % | 13,865,943 | (207,725 | ) | -1.50 | % | ||||||||||||||
| ROU assets for operating lease, net | 1,431,413 | 1,158,386 | 273,027 | 23.57 | % | 1,529,545 | (98,132 | ) | -6.42 | % | |||||||||||||||
| Goodwill | 9,361,704 | 9,361,704 | - | 0.00 | % | 9,361,704 | - | 0.00 | % | ||||||||||||||||
| Intangible assets, net | 1,937,652 | 2,282,410 | (344,758 | ) | -15.10 | % | 2,023,540 | (85,888 | ) | -4.24 | % | ||||||||||||||
| Other real estate and foreclosed assets | 3,803,252 | 5,106,587 | (1,303,335 | ) | -25.52 | % | 3,715,202 | 88,050 | 2.37 | % | |||||||||||||||
| Accrued interest receivable | 4,959,915 | 4,352,997 | 606,918 | 13.94 | % | 5,341,616 | (381,701 | ) | -7.15 | % | |||||||||||||||
| Cash surrender value of life insurance | 14,423,960 | 14,065,097 | 358,863 | 2.55 | % | 14,333,544 | 90,416 | 0.63 | % | ||||||||||||||||
| Other assets | 22,390,328 | 14,505,874 | 7,884,454 | 54.35 | % | 16,467,513 | 5,922,815 | 35.97 | % | ||||||||||||||||
| Total Assets | $ | 1,424,969,549 | $ | 1,438,690,594 | $ | (13,721,045 | ) | -0.95 | % | $ | 1,436,563,980 | (11,594,431 | ) | -0.81 | % | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||
| Non-interest bearing | $ | 323,091,870 | $ | 355,354,700 | $ | (32,262,830 | ) | -9.08 | % | $ | 339,657,309 | (16,565,439 | ) | -4.88 | % | ||||||||||
| Interest bearing | 877,794,418 | 896,502,158 | (18,707,740 | ) | -2.09 | % | 876,009,017 | 1,785,401 | 0.20 | % | |||||||||||||||
| 1,200,886,288 | 1,251,856,858 | (50,970,570 | ) | -4.07 | % | 1,215,666,326 | (14,780,038 | ) | -1.22 | % | |||||||||||||||
| - | |||||||||||||||||||||||||
| Other borrowed funds | 47,095,332 | 28,770,730 | 18,324,602 | 63.69 | % | 48,826,681 | (1,731,349 | ) | -3.55 | % | |||||||||||||||
| Lease liability for operating lease | 1,431,413 | 1,158,386 | 273,027 | 23.57 | % | 1,529,545 | (98,132 | ) | -6.42 | % | |||||||||||||||
| Accrued interest payable | 491,159 | 321,188 | 169,971 | 52.92 | % | 143,899 | 347,260 | 241.32 | % | ||||||||||||||||
| Accrued expenses and other liabilities | 8,660,358 | 3,316,942 | 5,343,416 | 161.09 | % | 5,461,126 | 3,199,232 | 58.58 | % | ||||||||||||||||
| - | |||||||||||||||||||||||||
| Total liabilities | 1,258,564,550 | 1,285,424,104 | (26,859,554 | ) | -2.09 | % | 1,271,627,577 | (13,063,027 | ) | -1.03 | % | ||||||||||||||
| Shareholders' Equity: | |||||||||||||||||||||||||
| Common stock | 2,177,510 | 2,165,730 | 11,780 | 0.54 | % | 2,169,557 | 7,953 | 0.37 | % | ||||||||||||||||
| Paid in capital surplus | 42,045,076 | 40,907,274 | 1,137,802 | 2.78 | % | 41,302,572 | 742,504 | 1.80 | % | ||||||||||||||||
| Retained earnings | 117,806,614 | 103,112,378 | 14,694,236 | 14.25 | % | 99,943,774 | 17,862,840 | 17.87 | % | ||||||||||||||||
| Current year earnings | 4,103,935 | 5,561,414 | (1,457,479 | ) | -26.21 | % | 21,108,630 | (17,004,695 | ) | -80.56 | % | ||||||||||||||
| Accumulated other comprehensive income (loss) | 2,468,079 | 3,213,238 | (745,159 | ) | -23.19 | % | 2,608,086 | (140,007 | ) | -5.37 | % | ||||||||||||||
| Treasury Stock, at cost 56,912 | (2,196,215 | ) | (1,693,544 | ) | (502,671 | ) | 29.68 | % | (2,196,216 | ) | 1 | -0.00 | % | ||||||||||||
| Total shareholders' equity | 166,404,999 | 153,266,490 | 13,138,509 | 8.57 | % | 164,936,403 | 1,468,596 | 0.89 | % | ||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,424,969,549 | $ | 1,438,690,594 | (13,721,045 | ) | -0.95 | % | $ | 1,436,563,980 | (11,594,431 | ) | -0.81 | % | |||||||||||
| MORRIS STATE BANCSHARES, INC. | |||||||||||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||||||
| Consolidating Statement of Income | |||||||||||||||||||||||||
| for the Three Months Ended | |||||||||||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||||||||||
| 2023 | 2022 | Change | % Change | 2022 | Change | % Change | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||
| Interest and Dividend Income: | |||||||||||||||||||||||||
| Interest and fees on loans | $ | 14,466,103 | $ | 14,155,669 | $ | 310,434 | 2.19 | % | $ | 12,708,366 | $ | 1,757,737 | 13.83 | % | |||||||||||
| Interest income on securities | 2,005,741 | 2,020,319 | (14,578 | ) | -0.72 | % | 1,581,771 | 423,970 | 26.80 | % | |||||||||||||||
| Income on federal funds sold | 132,805 | 104,483 | 28,322 | 27.11 | % | 4,771 | 128,034 | 2683.59 | % | ||||||||||||||||
| Income on time deposits held in other banks | 247,252 | 311,472 | (64,220 | ) | -20.62 | % | 66,520 | 180,732 | 271.70 | % | |||||||||||||||
| Other interest and dividend income | 61,186 | 57,094 | 4,092 | 7.17 | % | 50,708 | 10,478 | 20.66 | % | ||||||||||||||||
| Total interest and dividend income | 16,913,087 | 16,649,037 | 264,050 | 1.59 | % | 14,412,136 | 2,500,951 | 17.35 | % | ||||||||||||||||
| Interest Expense: | |||||||||||||||||||||||||
| Deposits | 3,469,654 | 2,284,739 | 1,184,915 | 51.86 | % | 462,472 | 3,007,182 | 650.24 | % | ||||||||||||||||
| Interest on other borrowed funds | 564,278 | 517,834 | 46,444 | 8.97 | % | 391,195 | 173,083 | 44.24 | % | ||||||||||||||||
| Interest on federal funds purchased | -- | 240 | (240 | ) | -100.00 | % | -- | - | |||||||||||||||||
| Total interest expense | 4,033,932 | 2,802,813 | 1,231,119 | 43.92 | % | 853,667 | 3,180,265 | 372.54 | % | ||||||||||||||||
| Net interest income before provision for loan losses | 12,879,155 | 13,846,224 | (967,069 | ) | -6.98 | % | 13,558,469 | (679,314 | ) | -5.01 | % | ||||||||||||||
| Less-provision for credit losses | 383,376 | 600,000 | (216,624 | ) | -36.10 | % | 375,000 | 8,376 | 2.23 | % | |||||||||||||||
| Net interest income after provision for credit losses | 12,495,779 | 13,246,224 | (750,445 | ) | -5.67 | % | 13,183,469 | (687,690 | ) | -5.22 | % | ||||||||||||||
| Noninterest Income: | |||||||||||||||||||||||||
| Service charges on deposit accounts | 562,893 | 580,688 | (17,795 | ) | -3.06 | % | 569,074 | (6,181 | ) | -1.09 | % | ||||||||||||||
| Other service charges, commissions and fees | 403,583 | 264,603 | 138,980 | 52.52 | % | 363,780 | 39,803 | 10.94 | % | ||||||||||||||||
| Gain on sales of foreclosed assets | 1,420 | 5,126 | (3,706 | ) | -72.30 | % | 314,210 | (312,790 | ) | -99.55 | % | ||||||||||||||
| Gain on sales of premises and equipment | -- | 19,270 | (19,270 | ) | -100.00 | % | -- | - | |||||||||||||||||
| Increase in CSV of life insurance | 90,416 | 88,744 | 1,672 | 1.88 | % | 87,146 | 3,270 | 3.75 | % | ||||||||||||||||
| Other income | 420,788 | 41,739 | 379,049 | 908.14 | % | 41,987 | 378,801 | 902.19 | % | ||||||||||||||||
| Total noninterest income | 1,479,100 | 1,000,170 | 478,930 | 47.88 | % | 1,376,197 | 102,903 | 7.48 | % | ||||||||||||||||
| Noninterest Expense: | |||||||||||||||||||||||||
| Salaries and employee benefits | 4,896,748 | 4,450,154 | 446,594 | 10.04 | % | 5,066,729 | (169,981 | ) | -3.35 | % | |||||||||||||||
| Occupancy and equipment expenses, net | 549,051 | 595,444 | (46,393 | ) | -7.79 | % | 532,932 | 16,119 | 3.02 | % | |||||||||||||||
| Other expenses | 3,433,785 | 3,260,758 | 173,027 | 5.31 | % | 2,851,857 | 581,928 | 20.41 | % | ||||||||||||||||
| Total noninterest expense | 8,879,584 | 8,306,356 | 573,228 | 6.90 | % | 8,451,518 | 428,066 | 5.06 | % | ||||||||||||||||
| Income Before Income Taxes | 5,095,295 | 5,940,038 | (844,743 | ) | -14.22 | % | 6,108,148 | (1,012,853 | ) | -16.58 | % | ||||||||||||||
| Provision for income taxes | 991,360 | (704,058 | ) | 1,695,418 | 240.81 | % | 546,734 | 444,626 | 81.32 | % | |||||||||||||||
| - | |||||||||||||||||||||||||
| Net Income | $ | 4,103,935 | $ | 6,644,096 | (2,540,161 | ) | -38.23 | % | $ | 5,561,414 | (1,457,479 | ) | -26.21 | % | |||||||||||
| Earnings per common share: | |||||||||||||||||||||||||
| Basic | $ | 1.94 | $ | 3.14 | (1.20 | ) | -38.22 | % | $ | 2.64 | (0.70 | ) | -26.52 | % | |||||||||||
| Diluted | $ | 1.94 | $ | 3.14 | (1.20 | ) | -38.22 | % | $ | 2.64 | (0.70 | ) | -26.52 | % | |||||||||||
| Quarter Ending | ||||||||||
| March 31, | December 31, | March 31, | ||||||||
| 2023 | 2022 | 2022 | ||||||||
| Dollars in thousand, except per share data | (Unaudited) | (Unaudited) | (Unaudited) | |||||||
| Per Share Data | ||||||||||
| Basic Earnings per Common Share | $ | 1.94 | $ | 3.14 | $ | 2.64 | ||||
| Diluted Earnings per Common Share | 1.94 | 3.14 | 2.64 | |||||||
| Dividends per Common Share | 0.44 | 0.44 | 0.44 | |||||||
| Book Value per Common Share | 78.47 | 78.07 | 72.49 | |||||||
| Tangible Book Value per Common Share | 73.14 | 72.68 | 66.98 | |||||||
| Average Diluted Shared Outstanding | $ | 2,111,955 | $ | 2,114,934 | $ | 2,108,037 | ||||
| End of Period Common Shares Outstanding | $ | 2,120,598 | $ | 2,112,645 | $ | 2,114,439 | ||||
| Annualized Performance Ratios (Bank Only) | ||||||||||
| Return on Average Assets | 1.33 | % | 2.03 | % | 1.74 | % | ||||
| Return on Average Equity | 10.64 | % | 15.90 | % | 14.87 | % | ||||
| Equity/Assets | 11.90 | % | 12.83 | % | 11.90 | % | ||||
| Yield on Earning Assets | 5.06 | % | 4.82 | % | 4.18 | % | ||||
| Cost of Funds | 1.18 | % | 0.77 | % | 0.15 | % | ||||
| Net Interest Margin | 3.98 | % | 4.13 | % | 4.04 | % | ||||
| Efficiency Ratio | 59.32 | % | 54.12 | % | 53.50 | % | ||||
| Credit Metrics | ||||||||||
| Allowance for Loan Losses to Total Loans | 1.35 | % | 1.30 | % | 1.30 | % | ||||
| Adversely Classified Assets to Tier 1 Capital plus Allowance for Loan Losses | 6.49 | % | 5.99 | % | 8.27 | % | ||||
