Morris State Bancshares Announces Quarterly Earnings and Declares Third Quarter Dividend

Rhea-AI Summary

Morris State Bancshares, Inc. (OTCQX: MBLU) reported a net income of $5.5 million for Q2 2021, a 4.62% increase from the previous quarter. Diluted earnings per share rose to $2.60, up 4.42% from $2.49. The company’s total shareholders’ equity increased 4.90% to $138 million. Loans, excluding PPP loans, grew by 2.9% or $25 million, but gross portfolio revenue declined 3.0% due to lower PPP fee revenue. The third-quarter dividend of $0.38 per share is payable on September 15, 2021.

Positive

• Net income increased by $241 thousand, or 4.62%, quarter over quarter.
• Diluted earnings per share rose to $2.60, reflecting a 4.42% increase.
• Total shareholders' equity grew by 4.90% to $138 million.
• Loans net of PPP loans increased by $25 million or 2.9%.
• Tangible book value per share increased to $59.86, a 5.40% rise.
• Upcoming dividend of $0.38 per share approved for payment.

Negative

• Gross portfolio revenue decreased by 3.0%, or $388 thousand, primarily due to lower PPP fee revenue.
• PPP fee revenue dropped by 42% from the prior quarter, recognized at $811 thousand.
• Provision for loan losses increased to $750 thousand from $650 thousand in the prior quarter.
• Adverse classified coverage ratio decreased to 8.43% from 9.20%.

DUBLIN, Ga., July 29, 2021 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $5.5 million for the quarter ended June 30, 2021, representing an increase of $241 thousand, or 4.62%, compared to net income of $5.2 million for the quarter ended March 31, 2021. The company also announced diluted earnings per share of $2.60 for quarter, representing a 4.42% increase over diluted earnings per share of $2.49 for prior quarter. Net earnings were slightly higher quarter over quarter because of lower provisioning for income taxes due to the company’s investment in certain tax credits.

“In the second quarter, we generated net interest income of $13.3 million, just below the first quarter’s level of $13.6 million” said Spence Mullis, President and CEO. “As projected, our margin continued to compress slightly in the second quarter due to our excess liquidity levels, continued forgiveness/payoffs of SBA Payroll Protection Program (PPP) loans, and the competitive pricing of new and renewed loans. Our non-interest expense increased slightly during the quarter as we launched a new website, completed a core system conversion, and lifted a team of seasoned commercial and mortgage bankers from another institution. We look forward to these investments augmenting shareholder value in the quarters to come.”

The Company’s total shareholders’ equity increased 4.90% to $138 million as of June 30, 2021, as compared to $131 million as of March 31, 2021. Tangible book value per share increased to $59.86 as of June 30, 2021, a 5.40% increase from $56.77 per share on March 31, 2021. On July 21, 2021, the board of directors approved its third quarter dividend of $0.38 per share payable on or about September 15th to all shareholders of record as of August 10th.

Loans, net of PPP loans, grew $25.0 million during the quarter or 2.9%, while revenue on the gross portfolio decreased 3.0% or $388 thousand from the first quarter. The gross decrease was driven primarily by lower PPP fee revenue. PPP fee revenue of $811 thousand was recognized during the quarter, which was a decline of 42% from the $1.4 million recognized during the first quarter. Gross secondary mortgage revenue for the quarter remained strong at $785 thousand, up $47 thousand or 6.4% from the first quarter. With the recent drop in market rates and the addition of mortgage originators via the aforementioned lift out, management expects solid mortgage revenue in the coming quarter.

Provision for loan losses was $750 thousand as of June 30, 2021 versus $650 thousand as of March 31, 2021. Our reserve as a percentage of total loans was 1.47% when PPP loans are netted out of total loans as of June 30, 2021, versus 1.42% as of March 31, 2021. Our adversely classified coverage ratio was 8.43% as of June 30, 2021 versus 9.20% as of March 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
							June 30,				March 31,											June 30,
								2021				2021			Change				% Change				2020
							(Unaudited)				(Unaudited)											(Unaudited)
	ASSETS
	Cash and due from banks						$	66,121,775			$	71,164,883			$	(5,043,108	)		-7.09	%		$	56,702,226
	Federal funds sold							87,869,237				115,957,486				(28,088,249	)		-24.22	%			28,826,177
	Total cash and cash equivalents							153,991,012				187,122,369				(33,131,357	)		-17.71	%			85,528,403
	Interest-bearing time deposits in other banks							350,000				350,000				-			0.00	%			1,350,000
	Securities available for sale, at fair value							263,891,405				245,200,205				18,691,200			7.62	%			139,789,954
	Securities held to maturity, at cost							12,682,445				12,707,803				(25,358	)		(0.20	%)			9,983,201
	Federal Home Loan Bank stock, restricted, at cost							624,200				899,700				(275,500	)		(30.62	%)			899,700
	Loans, net of unearned income							858,178,798				851,806,225				6,372,573			0.75	%			845,165,974
	Less-allowance for loan losses							(12,099,672	)			(11,400,979	)			(698,693	)		6.13	%			(10,149,609	)
	Loans, net							846,079,126				840,405,246				5,673,880			0.68	%			835,016,365
	Bank premises and equipment, net							15,178,731				15,278,014				(99,283	)		-0.65	%			15,593,015
	ROU assets for operating lease, net							505,635				570,961				(65,326	)		-11.44	%			410,758
	Goodwill							9,361,770				9,361,770				-			0.00	%			9,361,770
	Intangible assets, net							2,543,350				2,630,331				(86,981	)		-3.31	%			2,891,386
	Other real estate and foreclosed assets							271,389				265,542				5,847			2.20	%			645,231
	Accrued interest receivable							4,362,402				4,358,189				4,213			0.10	%			5,799,765
	Cash surrender value of life insurance							13,798,452				13,708,665				89,787			0.65	%			13,434,514
	Other assets							10,029,683				6,882,236				3,147,447			45.73	%			6,150,319
	Total Assets						$	1,333,669,600			$	1,339,741,031			$	(6,071,431	)		-0.45	%		$	1,126,854,381
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
	Non-interest bearing						$	306,244,572			$	305,974,839			$	269,733			0.09	%		$	261,805,349
	Interest bearing							853,411,310				870,266,327				(16,855,017	)		-1.94	%			723,800,470
								1,159,655,882				1,176,241,166				(16,585,284	)		-1.41	%			985,605,819
	Other borrowed funds							28,714,778				28,696,127				18,651			0.06	%			14,124,000
	Lease liability for operating lease							505,635				570,961				(65,326	)		-11.44	%			410,758
	Accrued interest payable							198,992				413,062				(214,070	)		-51.83	%			393,973
	Accrued expenses and other liabilities							6,958,927				2,613,863				4,345,064			166.23	%			7,042,426
	Total liabilities							1,196,034,214				1,208,535,179				(12,500,965	)		-1.03	%			1,007,576,976
	Shareholders' Equity:
	Common stock							2,151,398				2,150,798				600			0.03	%			2,144,766
	Paid in capital surplus							39,735,842				39,690,242				45,600			0.11	%			39,292,064
	Retained earnings							81,672,346				82,470,411				(798,065	)		-0.97	%			67,336,736
	Current year earnings							10,679,804				5,219,266				5,460,538			104.62	%			7,407,128
	Accumulated other comprehensive income (loss)							5,061,193				3,340,332				1,720,861			51.52	%			4,661,280
	Treasury Stock, at cost 50,927							(1,665,197	)			(1,665,197	)			-			0.00	%			(1,564,569	)
	Total shareholders' equity							137,635,386				131,205,852				6,429,534			4.90	%			119,277,405
	Total Liabilities and Shareholders' Equity						$	1,333,669,600			$	1,339,741,031				(6,071,431	)		-0.45	%		$	1,126,854,381

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
for the Three Months Ended
							June 30,				March 31,										June 30,
								2021				2021		Change				% Change				2020
							(Unaudited)				(Unaudited)										(Unaudited)
	Interest and Dividend Income:
	Interest and fees on loans						$	12,795,036			$	13,183,691		$	(388,655	)		-2.95	%		$	12,758,312
	Interest income on securities							1,449,522				1,273,895			175,627			13.79	%			942,506
	Income on federal funds sold							18,769				19,057			(288	)		-1.51	%			8,615
	Income on time deposits held in other banks							28,685				27,936			749			2.68	%			7,766
	Other interest and dividend income							53,518				21,217			32,301			152.24	%			38,358
	Total interest and dividend income							14,345,530				14,525,796			(180,266	)		-1.24	%			13,755,557
	Interest Expense:
	Deposits							626,030				569,068		$	56,962			10.01	%			1,381,632
	Interest on other borrowed funds							387,005				393,271			(6,266	)		-1.59	%			179,337
	Interest on federal funds purchased							--				--			--			--				--
	Total interest expense							1,013,035				962,339			50,696			5.27	%			1,560,969
	Net interest income before provision for loan losses							13,332,495				13,563,457			(230,962	)		-1.70	%			12,194,588
	Less-provision for loan losses							750,000				650,000			100,000			15.38	%			2,000,000
	Net interest income after provision for loan losses							12,582,495				12,913,457			(330,962	)		-2.56	%			10,194,588
	Noninterest Income:
	Service charges on deposit accounts							418,331				469,437			(51,106	)		-10.89	%			387,440
	Other service charges, commissions and fees							365,636				375,312			(9,676	)		-2.58	%			544,539
	Gain on sale of loans							--				--			--			--				--
	Increase in CSV of life insurance							89,787				88,222			1,565			1.77	%			93,136
	Other income							41,655				248,699			(207,044	)		-83.25	%			9,742
	Total noninterest income							915,409				1,181,670			(266,261	)		-22.53	%			1,034,857
	Noninterest Expense:
	Salaries and employee benefits							4,449,439				4,318,080			131,359			3.04	%			4,377,552
	Occupancy and equipment expenses, net							573,066				513,406			59,660			11.62	%			603,710
	(Gain) loss on sales and calls of securities							--				--			--			--				--
	Loss (gain) on sales of foreclosed assets and other real estate							(138	)			4,202			(4,340	)		-103.28	%			2,240
	Gain on sales of premises and equipment							--				--			--			--				--
	Other expenses							2,467,806				2,486,633			(18,827	)		-0.76	%			1,601,247
	Total noninterest expense							7,490,173				7,322,321			167,852			2.29	%			6,584,749
	Income Before Income Taxes							6,007,731				6,772,806			(765,075	)		-11.30	%			4,644,696
	Provision for income taxes							547,193				1,553,540			(1,006,347	)		-64.78	%			1,275,320
	Net Income						$	5,460,538			$	5,219,266		$	241,272			4.62	%		$	3,369,376
	Earnings per common share:
	Basic						$	2.60			$	2.49		$	0.11			4.42	%		$	1.60
	Diluted						$	2.60			$	2.49		$	0.11			4.42	%		$	1.60

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Selected Financial Information
		Quarter Ending
		June 30,				March 31,				June 30,
			2021				2021				2020
Dollars in thousand, except per share data)		(Unaudited)				(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	2.60			$	2.49			$	1.60
Diluted Earnings per Common Share			2.60				2.49				1.60
Dividends per Common Share			0.38				0.38				0.35
Book Value per Common Share			65.53				62.48				56.92
Tangible Book Value per Common Share			59.86				56.77				51.07
Average Diluted Shared Outstanding			2,097,534				2,094,978				2,095,468
End of Period Common Shares Outstanding			2,100,471				2,099,871				2,095,468
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.80	%			1.81	%			1.31	%
Return on Average Equity			15.23	%			15.25	%			10.65	%
Equity/Assets			12.02	%			11.37	%			11.31	%
Yield on Earning Assets			4.30	%			4.60	%			5.21	%
Cost of Funds			0.22	%			0.25	%			0.57	%
Net Interest Margin			4.10	%			4.37	%			4.69	%
Efficiency Ratio			51.03	%			47.80	%			50.56	%
Credit Metrics
Allowance for Loan Losses to Total Loans			1.41	%			1.34	%			1.21	%
Allowance for Loan Losses to Total Loans*			1.47	%			1.42	%			1.34	%
Adversely Classified Assets to Total Capital
plus Allowance for Loan Losses			8.43	%			9.20	%			12.25	%
* Excludes PPP Loans

FAQ

What were Morris State Bancshares' earnings for Q2 2021?

Morris State Bancshares reported net income of $5.5 million for the quarter ended June 30, 2021.

How much did diluted earnings per share increase in Q2 2021 for MBLU?

Diluted earnings per share increased to $2.60, a rise of 4.42% from the previous quarter.

What is the dividend payment date for MBLU's Q3 dividend?

The Q3 dividend of $0.38 per share is payable on or about September 15, 2021.

Did the total shareholders' equity change for MBLU in Q2 2021?

Yes, total shareholders' equity increased by 4.90% to $138 million as of June 30, 2021.

How did the loan portfolio perform for MBLU in Q2 2021?

Loans net of PPP loans grew by $25 million, or 2.9%, for the quarter.