DUBLIN, Ga., Oct. 25, 2023 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $4.5 million for the quarter ending September 30, 2023, representing a decrease of $315 thousand, or 6.55%, compared to net income of $4.8 million for the quarter ended June 30, 2023. The Company also announced diluted earnings per share of $2.12 for quarter, representing a 0.15% decrease from diluted earnings per share of $2.27 for the prior quarter. Net earnings for the third quarter were driven by the bank’s lower provisioning for income taxes due to the accretion of deferred tax assets (DTA’s) related to a prior merger and the accelerated use of solar tax credits associated with solar projects coming online as supply chain issues improved through the year.
“In the third quarter, we generated net interest income of $12.9 million, just below the second quarter level of $13.2 million,” said Spence Mullis, Chairman and CEO. “As projected, our margin compressed slightly in the third quarter, but we had solid loan growth of $25.4 million, or 10.0% annualized. This loan growth bolstered our net interest income as it remained in line of that of the second quarter. Our non-interest expense increased slightly during the quarter due to increased salaries and employee costs as well as expenses associated with selling and financing of a large, long-held piece of other real estate (ORE). The said ORE will remain on the bank’s balance sheet in the near term as the purchaser is in the process of improving the property with their funds which will eventually allow us to carry the asset as a loan versus ORE.”
The Company’s total shareholders’ equity increased 2.05% to $173.3 million as of September 30, 2023, as compared to $170.0 million as of June 30, 2023. Tangible book value per share increased to $76.61 as of September 30, 2023, a 2.24% increase from $74.93 per share on June 30, 2023. On October 18, 2023, the board of directors approved its fourth quarter dividend of $0.44 per share payable on or about December 15th to all shareholders of record as of November 15th.
Deposits grew slightly by $2.3 million during the quarter. The Company’s funding mix continues to shift towards certificates of deposit (CDs) as interest rates have continued to rise. CDs as a percentage of total deposits has increased and represented approximately 9% of total deposits at the end of the third quarter. In the current interest-rate environment, management anticipates CD levels will continue to rise and represent a higher percentage of the overall funding mix on a go-forward basis. From a historical perspective, ten years ago, CD funding represented 38% of our overall deposit mix at the quarter ending September 30, 2013. Management remains focused on managing overall deposit costs as tightly as possible and booking or renewing new loans at higher rates to minimize margin compression. Due to economic growth in the bank’s various markets related to many new manufacturing projects, solid loan growth opportunity is expected to continue.
Credit quality of the loan book remained consistent during the quarter. Adversely classified assets to Tier 1 Capital plus the allowance ended the quarter at 7.00%, as compared to 6.41% at the end of the second quarter. The bank’s allowance for credit losses as a percentage of loans was 1.32%, as compared with 1.36% at the end of the second quarter.
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, | September 30, | ||||||||||||||||||||||||
| 2023 | 2023 | Change | % Change | 2022 | Change | % Change | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||
| Cash and due from banks | $ | 36,373,555 | $ | 49,157,915 | $ | (12,784,360 | ) | -26.01 | % | $ | 61,031,336 | $ | (24,657,781 | ) | -40.40 | % | ||||||||||
| Federal funds sold | 8,695,149 | 16,908,217 | (8,213,068 | ) | -48.57 | % | 24,137,905 | (15,442,756 | ) | -63.98 | % | |||||||||||||||
| Total cash and cash equivalents | 45,068,704 | 66,066,132 | (20,997,428 | ) | -31.78 | % | 85,169,241 | (40,100,537 | ) | -47.08 | % | |||||||||||||||
| Interest-bearing time deposits in other banks | 100,000 | 100,000 | - | 0.00 | % | 100,000 | - | 0.00 | % | |||||||||||||||||
| Securities available for sale, at fair value | 3,879,531 | - | 3,879,531 | 0.00 | % | - | 3,879,531 | 0.00 | % | |||||||||||||||||
| Securities held to maturity, at cost (net of CECL Reserve) | 244,837,916 | 253,917,288 | (9,079,372 | ) | -3.58 | % | 266,551,405 | (21,713,489 | ) | -8.15 | % | |||||||||||||||
| Federal Home Loan Bank stock, restricted, at cost | 1,727,100 | 1,494,300 | 232,800 | 15.58 | % | 1,494,400 | 232,700 | 15.57 | % | |||||||||||||||||
| Loans, net of unearned income | 1,049,730,890 | 1,024,348,931 | 25,381,959 | 2.48 | % | 1,030,422,253 | 19,308,637 | 1.87 | % | |||||||||||||||||
| Less-allowance for credit losses | (13,860,420 | ) | (13,912,231 | ) | 51,811 | -0.37 | % | (13,027,473 | ) | (832,947 | ) | 6.39 | % | |||||||||||||
| Loans, net | 1,035,870,470 | 1,010,436,700 | 25,433,770 | 2.52 | % | 1,017,394,780 | 18,475,690 | 1.82 | % | |||||||||||||||||
| Bank premises and equipment, net | 13,325,846 | 13,528,556 | (202,710 | ) | -1.50 | % | 14,018,310 | (692,464 | ) | -4.94 | % | |||||||||||||||
| ROU assets for operating lease, net | 1,216,601 | 1,327,882 | (111,281 | ) | -8.38 | % | 1,569,358 | (352,757 | ) | -22.48 | % | |||||||||||||||
| Goodwill | 9,361,704 | 9,361,704 | - | 0.00 | % | 9,361,704 | - | 0.00 | % | |||||||||||||||||
| Intangible assets, net | 1,765,877 | 1,851,765 | (85,888 | ) | -4.64 | % | 2,110,003 | (344,126 | ) | -16.31 | % | |||||||||||||||
| Other real estate and foreclosed assets | 3,567,309 | 3,749,267 | (181,958 | ) | -4.85 | % | 3,774,402 | (207,093 | ) | -5.49 | % | |||||||||||||||
| Accrued interest receivable | 5,585,081 | 5,224,150 | 360,931 | 6.91 | % | 4,737,122 | 847,959 | 17.90 | % | |||||||||||||||||
| Cash surrender value of life insurance | 14,613,337 | 14,516,332 | 97,005 | 0.67 | % | 14,244,800 | 368,537 | 2.59 | % | |||||||||||||||||
| Other assets | 25,711,989 | 23,327,101 | 2,384,888 | 10.22 | % | 14,373,367 | 11,338,622 | 78.89 | % | |||||||||||||||||
| Total Assets | $ | 1,406,631,465 | $ | 1,404,901,177 | $ | 1,730,288 | 0.12 | % | $ | 1,434,898,892 | (28,267,427 | ) | -1.97 | % | ||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||
| Non-interest bearing | $ | 316,825,603 | $ | 318,451,205 | $ | (1,625,602 | ) | -0.51 | % | $ | 368,015,994 | (51,190,391 | ) | -13.91 | % | |||||||||||
| Interest bearing | 862,167,812 | 858,291,311 | 3,876,501 | 0.45 | % | 870,746,377 | (8,578,565 | ) | -0.99 | % | ||||||||||||||||
| 1,178,993,415 | 1,176,742,516 | 2,250,899 | 0.19 | % | 1,238,762,371 | (59,768,956 | ) | -4.82 | % | |||||||||||||||||
| - | ||||||||||||||||||||||||||
| Other borrowed funds | 42,132,633 | 45,113,982 | (2,981,349 | ) | -6.61 | % | 28,808,031 | 13,324,602 | 46.25 | % | ||||||||||||||||
| Lease liability for operating lease | 1,216,601 | 1,327,882 | (111,281 | ) | -8.38 | % | 1,569,358 | (352,757 | ) | -22.48 | % | |||||||||||||||
| Accrued interest payable | 979,913 | 580,607 | 399,306 | 68.77 | % | 306,662 | 673,251 | 219.54 | % | |||||||||||||||||
| Accrued expenses and other liabilities | 10,056,934 | 11,359,139 | (1,302,205 | ) | -11.46 | % | 5,784,488 | 4,272,446 | 73.86 | % | ||||||||||||||||
| - | ||||||||||||||||||||||||||
| Total liabilities | 1,233,379,496 | 1,235,124,126 | (1,744,630 | ) | -0.14 | % | 1,275,230,910 | (41,851,414 | ) | -3.28 | % | |||||||||||||||
| Shareholders' Equity: | ||||||||||||||||||||||||||
| Common stock | 2,179,210 | 2,179,075 | 135 | 0.01 | % | 2,171,665 | 7,545 | 0.35 | % | |||||||||||||||||
| Paid in capital surplus | 42,177,860 | 42,167,829 | 10,031 | 0.02 | % | 41,086,276 | 1,091,584 | 2.66 | % | |||||||||||||||||
| Retained earnings | 116,076,498 | 116,950,728 | (874,230 | ) | -0.75 | % | 100,832,787 | 15,243,711 | 15.12 | % | ||||||||||||||||
| Current year earnings | 13,404,804 | 8,911,726 | 4,493,078 | 50.42 | % | 14,464,536 | (1,059,732 | ) | -7.33 | % | ||||||||||||||||
| Accumulated other comprehensive income (loss) | 2,148,509 | 2,302,605 | (154,096 | ) | -6.69 | % | 2,809,715 | (661,206 | ) | -23.53 | % | |||||||||||||||
| Treasury Stock, at cost 63,014 | (2,734,912 | ) | (2,734,912 | ) | - | 0.00 | % | (1,696,997 | ) | (1,037,915 | ) | 61.16 | % | |||||||||||||
| Total shareholders' equity | 173,251,969 | 169,777,051 | 3,474,918 | 2.05 | % | 159,667,982 | 13,583,987 | 8.51 | % | |||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,406,631,465 | $ | 1,404,901,177 | 1,730,288 | 0.12 | % | $ | 1,434,898,892 | (28,267,427 | ) | -1.97 | % | |||||||||||||
| MORRIS STATE BANCSHARES, INC. | |||||||||||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||||||
| Consolidating Statement of Income | |||||||||||||||||||||||||
| for the Three Months Ended | |||||||||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||||||||
| 2023 | 2023 | Change | % Change | 2022 | Change | % Change | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||
| Interest and Dividend Income: | |||||||||||||||||||||||||
| Interest and fees on loans | $ | 15,803,711 | $ | 15,361,766 | $ | 441,945 | 2.88 | % | $ | 13,401,241 | $ | 2,402,470 | 17.93 | % | |||||||||||
| Interest income on securities | 2,051,695 | 2,099,593 | (47,898 | ) | -2.28 | % | 1,882,931 | 168,764 | 8.96 | % | |||||||||||||||
| Income on federal funds sold | 216,377 | 106,490 | 109,887 | 103.19 | % | 58,422 | 157,955 | 270.37 | % | ||||||||||||||||
| Income on time deposits held in other banks | 302,545 | 267,047 | 35,498 | 13.29 | % | 284,617 | 17,928 | 6.30 | % | ||||||||||||||||
| Other interest and dividend income | 43,630 | 66,236 | (22,606 | ) | -34.13 | % | 53,095 | (9,465 | ) | -17.83 | % | ||||||||||||||
| Total interest and dividend income | 18,417,958 | 17,901,132 | 516,826 | 2.89 | % | 15,680,306 | 2,737,652 | 17.46 | % | ||||||||||||||||
| Interest Expense: | |||||||||||||||||||||||||
| Deposits | 5,109,712 | 4,290,251 | 819,461 | 19.10 | % | 1,298,347 | 3,811,365 | 293.56 | % | ||||||||||||||||
| Interest on other borrowed funds | 455,105 | 574,301 | (119,196 | ) | -20.75 | % | 433,142 | 21,963 | 5.07 | % | |||||||||||||||
| Interest on federal funds purchased | -- | 705 | (705 | ) | 0.00 | % | 2,854 | (2,854 | ) | 0.00 | % | ||||||||||||||
| Total interest expense | 5,564,817 | 4,865,257 | 699,560 | 14.38 | % | 1,734,343 | 3,830,474 | 220.86 | % | ||||||||||||||||
| Net interest income before provision for loan losses | 12,853,141 | 13,035,875 | (182,734 | ) | -1.40 | % | 13,945,963 | (1,092,822 | ) | -7.84 | % | ||||||||||||||
| Less-provision for credit losses | (33,351 | ) | (141,187 | ) | 107,836 | -76.38 | % | 3,750,000 | (3,783,351 | ) | -100.89 | % | |||||||||||||
| Net interest income after provision for credit losses | 12,886,492 | 13,177,062 | (290,570 | ) | -2.21 | % | 10,195,963 | 2,690,529 | 26.39 | % | |||||||||||||||
| Noninterest Income: | |||||||||||||||||||||||||
| Service charges on deposit accounts | 532,598 | 533,273 | (675 | ) | -0.13 | % | 639,971 | (107,373 | ) | -16.78 | % | ||||||||||||||
| Other service charges, commissions and fees | 399,587 | 376,266 | 23,321 | 6.20 | % | 411,386 | (11,799 | ) | -2.87 | % | |||||||||||||||
| Gain on sales of foreclosed assets | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||
| Increase in CSV of life insurance | 97,005 | 92,372 | 4,633 | 5.02 | % | 90,902 | 6,103 | 6.71 | % | ||||||||||||||||
| Other income | 7,681 | 106,051 | (98,370 | ) | -92.76 | % | 70,907 | (63,226 | ) | -89.17 | % | ||||||||||||||
| Total noninterest income | 1,036,871 | 1,107,962 | (71,091 | ) | -6.42 | % | 1,213,166 | (176,295 | ) | -14.53 | % | ||||||||||||||
| Noninterest Expense: | |||||||||||||||||||||||||
| Salaries and employee benefits | 4,374,087 | 3,889,461 | 484,626 | 12.46 | % | 4,499,343 | (125,256 | ) | -2.78 | % | |||||||||||||||
| Occupancy and equipment expenses, net | 599,714 | 570,746 | 28,968 | 5.08 | % | 618,367 | (18,653 | ) | -3.02 | % | |||||||||||||||
| Loss on sales of premises and equipment | 54,269 | -- | 54,269 | -- | 220,280 | (166,011 | ) | -75.36 | % | ||||||||||||||||
| Loss on sales of foreclosed assets | 320,110 | 5,816 | 314,294 | 0.00 | % | 995 | 319,115 | 0.00 | % | ||||||||||||||||
| Other expenses | 3,837,844 | 3,681,617 | 156,227 | 4.24 | % | 3,401,150 | 436,694 | 12.84 | % | ||||||||||||||||
| Total noninterest expense | 9,186,024 | 8,147,640 | 1,038,384 | 12.74 | % | 8,740,135 | 445,889 | 5.10 | % | ||||||||||||||||
| Income Before Income Taxes | 4,737,339 | 6,137,384 | (1,400,045 | ) | -22.81 | % | 2,668,994 | 2,068,345 | 77.50 | % | |||||||||||||||
| Provision for income taxes | 244,258 | 1,329,595 | (1,085,337 | ) | -81.63 | % | 568,076 | (323,818 | ) | -57.00 | % | ||||||||||||||
| - | |||||||||||||||||||||||||
| Net Income | $ | 4,493,081 | $ | 4,807,789 | (314,708 | ) | -6.55 | % | $ | 2,100,918 | 2,392,163 | 113.86 | % | ||||||||||||
| Earnings per common share: | |||||||||||||||||||||||||
| Basic | $ | 2.12 | $ | 2.27 | (0.15 | ) | -6.61 | % | $ | 0.98 | 1.14 | 116.33 | % | ||||||||||||
| Diluted | $ | 2.12 | $ | 2.27 | (0.15 | ) | -6.61 | % | $ | 0.98 | 1.14 | 116.33 | % | ||||||||||||
| Quarter Ending | ||||||||||
| September 30, | June 30, | Sept 30, | ||||||||
| 2023 | 2023 | 2022 | ||||||||
| Dollars in thousand, except per share data | (Unaudited) | (Unaudited) | (Unaudited) | |||||||
| Per Share Data | ||||||||||
| Basic Earnings per Common Share | $ | 2.12 | $ | 2.27 | $ | 0.98 | ||||
| Diluted Earnings per Common Share | 2.12 | 2.27 | 0.98 | |||||||
| Dividends per Common Share | 0.44 | 0.44 | 0.44 | |||||||
| Book Value per Common Share | 81.87 | 80.23 | 75.42 | |||||||
| Tangible Book Value per Common Share | 76.61 | 74.93 | 70.01 | |||||||
| Average Diluted Shared Outstanding | 2,116,186 | 2,118,681 | 2,116,463 | |||||||
| End of Period Common Shares Outstanding | 2,116,196 | 2,116,061 | 2,116,921 | |||||||
| Annualized Performance Ratios (Bank Only) | ||||||||||
| Return on Average Assets | 1.45 | % | 1.60 | % | 0.80 | % | ||||
| Return on Average Equity | 11.37 | % | 12.79 | % | 6.34 | % | ||||
| Equity/Assets | 12.79 | % | 12.45 | % | 12.49 | % | ||||
| Yield on Earning Assets | 5.48 | % | 5.38 | % | 4.50 | % | ||||
| Cost of Funds | 1.69 | % | 1.47 | % | 0.43 | % | ||||
| Net Interest Margin | 3.94 | % | 4.04 | % | 4.12 | % | ||||
| Efficiency Ratio | 62.46 | % | 54.37 | % | 52.81 | % | ||||
| Credit Metrics | ||||||||||
| Allowance for Loan Losses to Total Loans | 1.32 | % | 1.36 | % | 1.27 | % | ||||
| Adversely Classified Assets to Tier 1 Capital plus Allowance for Loan Losses | 7.00 | % | 6.41 | % | 5.59 | % | ||||
