Morris State Bancshares Announces Quarterly Earnings and Declares Second Quarter Dividend

Rhea-AI Summary

Morris State Bancshares, Inc. announced a net income of $4.9 million for the first quarter of 2024, marking a 19.17% increase compared to the same period last year. However, net income decreased by 17.55% from the previous quarter. The company reported stable core earnings with a 3.99% net interest margin and a 17 basis point increase in the average yield on earning assets. Noninterest expense and provision for income taxes saw significant increases during the quarter. Shareholders' equity grew by 2.16% to $182 million, and a second quarter dividend of $0.461 per share was declared.

Positive

• Solid net interest margin and net interest income
• Improvement in asset quality with a reduction in Other Real Estate
• Increase in total shareholders' equity and tangible book value
• Declaration of a second quarter dividend of $0.461 per share

Negative

• Decrease in net income from the previous quarter
• Higher noninterest expense and provision for income taxes

DUBLIN, Ga., May 03, 2024 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $4.9 million for the quarter ending March 31, 2024, representing an increase of $787 thousand, or 19.17%, compared to net income of $4.1 million for the quarter ended March 31, 2023. In the linked quarter comparison, the bank’s net income decreased $1.0 million, or 17.55%, compared to net income of $5.9 million for the quarter ended December 31, 2023. Net interest income before provision for credit losses was in line with prior quarter levels. Lower linked quarter net earnings were a result of higher salaries and employee benefits expense related to beginning of the year pay raises, bonuses, and equity-related benefits.

“We are pleased with the first quarter and the stability of our core earnings as evidenced by a solid net interest margin and net interest income. While our cost of funds has continued to rise, we’ve been able to keep pace with parallel increases in our earning asset yield. We continue to experience larger loan payoffs that have impeded our loan growth for the year but have provided higher pricing opportunities for new loans in addition to the repricing of scheduled maturities within the portfolio. We were also able to reduce our non-earning asset levels through a significant reduction in our other real estate (ORE) during the first quarter. Other real estate and foreclosed assets declined by over $3.5 million down to $39 thousand during the quarter,” said Spence Mullis, Chairman and CEO.

The net interest margin was 3.99% for the first quarter of 2024 compared to 3.97% for the fourth quarter of 2023 and 3.98% for the first quarter of 2023. The average yield on earning assets grew 17 basis points from 5.70%, as of December 31, 2023, to 5.87%, while the bank’s cost of funds grew 17 basis points from 1.92% to 2.09% during the same period.

Provision for credit losses declined $237 thousand during the quarter as a result of lower unfunded commitments which decreased the required CECL unfunded commitment reserve and with reduced loan levels due to the slight contraction in the loan portfolio of $3.0 million since the beginning of the year. The Company’s asset quality improved with a $3.5 million reduction in Other Real Estate during the quarter, which improved the bank’s adversely classified index from 6.69% as of December 31, 2023, to 5.22% as of March 31, 2024. The bank’s reserve as a percentage of total loans was 1.34% for March 31, 2024, as compared to 1.34% for December 31, 2023, and 1.35% for March 31, 2023. Noninterest expense increased $847,951, or 10.25%, over December 31, 2023, due mainly to the previously mentioned higher salary and benefits expense. Provision for income taxes increased $568,470, or 136.56%, during the quarter.

The Company’s total shareholders’ equity increased 2.16% during the quarter to $182 million as of March 31, 2024, and up 9.36%, or $15.6 million, from March 31, 2023. Tangible book value of the company grew to $80.83¹ on March 31, 2024, from $78.97¹ on December 31, 2023, and was up 10.51% from $73.14 as of March 31, 2023. On April 17, 2024, the board of directors approved a second quarter dividend of $0.46¹ per share payable on or about June 15, 2024, to all shareholders of record as of May 15, 2024. As announced on April 23, 2024, the bank declared a 4 for 1 stock dividend to all shareholders of record on that date. As such, the aforementioned cash dividend approved on April 17 will equate to approximately $0.09 cents per share outstanding of record on May 15, 2024, after giving effect to the stock dividend.

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.

______________________________
¹ Per share amounts have not been adjusted to reflect the April 23, 2024 4-for-1 stock dividend.

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Balance Sheet
	March 31,				December 31,											March 31,
		2024				2023			Change				% Change				2023			Change				% Change
	(Unaudited)				(Unaudited)											(Unaudited)
ASSETS
Cash and due from banks	$	67,354,916			$	33,192,772			$	34,162,144			102.92	%		$	51,448,341			$	15,906,575			30.92	%
Federal funds sold		3,746,408				17,268,446				(13,522,038	)		-78.30	%			16,102,872				(12,356,464	)		-76.73	%
Total cash and cash equivalents		71,101,324				50,461,218				20,640,106			40.90	%			67,551,213				3,550,111			5.26	%
Interest-bearing time deposits in other banks		100,000				100,000				-			0.00	%			100,000				-			0.00	%
Securities available for sale, at fair value		7,845,095				7,875,780				(30,685	)		-0.39	%			-				7,845,095			0.00	%
Securities held to maturity, at cost (net of CECL Reserve)		231,758,455				240,205,635				(8,447,180	)		-3.52	%			257,399,845				(25,641,390	)		-9.96	%
Federal Home Loan Bank stock, restricted, at cost		1,029,600				1,029,600				-			0.00	%			1,588,300				(558,700	)		-35.18	%
Loans, net of unearned income		1,060,755,992				1,063,772,222				(3,016,230	)		(0.28	%)			1,040,411,604				20,344,388			1.96	%
Less-allowance for credit losses		(14,236,149	)			(14,291,923	)			55,774			-0.39	%			(14,047,855	)			(188,294	)		1.34	%
Loans, net		1,046,519,843				1,049,480,299				(2,960,456	)		-0.28	%			1,026,363,749				20,156,094			1.96	%
																					-
Bank premises and equipment, net		13,112,437				13,188,353				(75,916	)		-0.58	%			13,658,218				(545,781	)		-4.00	%
ROU assets for operating lease, net		1,035,712				1,126,156				(90,444	)		-8.03	%			1,431,413				(395,701	)		-27.64	%
Goodwill		9,361,704				9,361,704				-			0.00	%			9,361,704				-			0.00	%
Intangible assets, net		1,594,101				1,679,989				(85,888	)		-5.11	%			1,937,652				(343,551	)		-17.73	%
Other real estate and foreclosed assets		38,558				3,611,235				(3,572,677	)		-98.93	%			3,803,252				(3,764,694	)		-98.99	%
Accrued interest receivable		5,964,911				6,424,090				(459,179	)		-7.15	%			4,959,915				1,004,996			20.26	%
Cash surrender value of life insurance		14,813,139				14,711,623				101,516			0.69	%			14,423,960				389,179			2.70	%
Other assets		25,151,653				25,321,095				(169,442	)		-0.67	%			22,390,328				2,761,325			12.33	%
Total Assets	$	1,429,426,532			$	1,424,576,777			$	4,849,755			0.34	%		$	1,424,969,549				4,456,983			0.31	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	302,810,356			$	298,356,827			$	4,453,529			1.49	%		$	323,091,870				(20,281,514	)		-6.28	%
Interest bearing		904,181,606				909,976,336				(5,794,730	)		-0.64	%			877,794,418				26,387,188			3.01	%
		1,206,991,962				1,208,333,163				(1,341,201	)		-0.11	%			1,200,886,288				6,105,674			0.51	%
																					-
Other borrowed funds		27,169,934				27,151,283				18,651			0.07	%			47,095,332				(19,925,398	)		-42.31	%
Lease liability for operating lease		1,035,712				1,126,156				(90,444	)		-8.03	%			1,431,413				(395,701	)		-27.64	%
Accrued interest payable		1,419,439				1,059,226				360,213			34.01	%			491,159				928,280			189.00	%
Accrued expenses and other liabilities		10,830,616				8,773,430				2,057,186			23.45	%			8,660,358				2,170,258			25.06	%
																					-
Total liabilities		1,247,447,663				1,246,443,258				1,004,405			0.08	%			1,258,564,550				(11,116,887	)		-0.88	%
Shareholders' Equity:
Common stock		2,179,210				2,179,210				-			0.00	%			2,177,510				1,700			0.08	%
Paid in capital surplus		42,816,048				41,635,204				1,180,844			2.84	%			41,281,108				1,534,940			3.72	%
Retained earnings		133,038,717				115,774,853				17,263,864			14.91	%			118,570,582				14,468,135			12.20	%
Current year earnings		4,890,818				19,332,490				(14,441,672	)		-74.70	%			4,103,935				786,883			19.17	%
Accumulated other comprehensive income (loss)		1,811,160				1,968,846				(157,686	)		-8.01	%			2,468,079				(656,919	)		-26.62	%
Treasury Stock, at cost 63,290		(2,757,084	)			(2,757,084	)			-			0.00	%			(2,196,215	)			(560,869	)		25.54	%
Total shareholders' equity		181,978,869				178,133,519				3,845,350			2.16	%			166,404,999				15,573,870			9.36	%
Total Liabilities and Shareholders' Equity	$	1,429,426,532			$	1,424,576,777				4,849,755			0.34	%		$	1,424,969,549				4,456,983			0.31	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
for the Three Months Ended
	March 31,				December 31,											March 31,
		2024				2023			Change				% Change				2023			Change				% Change
	(Unaudited)				(Unaudited)											(Unaudited)
Interest and Dividend Income:
Interest and fees on loans	$	17,124,889			$	16,525,637			$	599,252			3.63	%		$	14,466,103			$	2,658,786			18.38	%
Interest income on securities		1,970,394				2,039,123				(68,729	)		-3.37	%			2,005,741				(35,347	)		-1.76	%
Income on federal funds sold		168,129				171,564				(3,435	)		-2.00	%			132,805				35,324			26.60	%
Income on time deposits held in other banks		408,412				397,228				11,184			2.82	%			247,252				161,160			65.18	%
Other interest and dividend income		75,848				84,638				(8,790	)		-10.39	%			61,186				14,662			23.96	%
Total interest and dividend income		19,747,672				19,218,190				529,482			2.76	%			16,913,087				2,834,585			16.76	%
Interest Expense:
Deposits		6,339,843				5,730,050				609,793			10.64	%			3,469,654				2,870,189			82.72	%
Interest on other borrowed funds		445,278				554,336				(109,058	)		-19.67	%			564,278				(119,000	)		-21.09	%
Interest on federal funds purchased		--				137				(137	)		-100.00	%			--				-			0.00	%
Total interest expense		6,785,121				6,284,523				500,598			7.97	%			4,033,932				2,751,189			68.20	%
Net interest income before provision for loan losses		12,962,551				12,933,667				28,884			0.22	%			12,879,155				83,396			0.65	%
Less-provision for credit losses		4,501				241,637				(237,136	)		-98.14	%			383,376				(378,875	)		-98.83	%
Net interest income after provision for credit losses		12,958,050				12,692,030				266,020			2.10	%			12,495,779				462,271			3.70	%
Noninterest Income:
Service charges on deposit accounts		491,568				514,786				(23,218	)		-4.51	%			562,893				(71,325	)		-12.67	%
Other service charges, commisions and fees		362,692				410,311				(47,619	)		-11.61	%			403,583				(40,891	)		-10.13	%
Gain on sales of foreclosed assets		700				2,723				(2,023	)		-74.29	%			1,420				(720	)		-50.70	%
Gain on sales of premises and equipment		--				--				--			--				--				--			--
Increase in CSV of life insurance		101,516				98,285				3,231			3.29	%			90,416				11,100			12.28	%
Other income		251,361				72,233				179,128			247.99	%			420,788				(169,427	)		-40.26	%
Total noninterest income		1,207,837				1,098,338				109,499			9.97	%			1,479,100				(271,263	)		-18.34	%
Noninterest Expense:
Salaries and employee benefits		4,861,534				4,254,389				607,145			14.27	%			4,896,748				(35,214	)		-0.72	%
Occupancy and equipment expenses, net		545,126				530,833				14,293			2.69	%			549,051				(3,925	)		-0.71	%
Other expenses		3,716,219				3,489,706				226,513			6.49	%			3,433,785				282,434			8.23	%
Total noninterest expense		9,122,879				8,274,928				847,951			10.25	%			8,879,584				243,295			2.74	%
Income Before Income Taxes		5,043,008				5,515,440				(472,432	)		-8.57	%			5,095,295				(52,287	)		-1.03	%
Provision for income taxes		152,190				(416,280	)			568,470			136.56	%			991,360				(839,170	)		-84.65	%
																					-
Net Income	$	4,890,818			$	5,931,720				(1,040,902	)		-17.55	%		$	4,103,935				786,883			19.17	%
Earnings per common share:
Basic	$	2.31			$	2.81				(0.50	)		-17.79	%		$	1.94				0.37			19.07	%
Diluted	$	2.31			$	2.81				(0.50	)		-17.79	%		$	1.94				0.37			19.07	%

		Quarter Ending
		March 31,			December 31,			March 31,
		2024			2023			2023
Dollars in thousand, except per share data		(Unaudited)			(Unaudited)			(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	2.31		$	2.81		$	1.94
Diluted Earnings per Common Share			2.31			2.81			1.94
Dividends per Common Share			0.46			0.44			0.44
Book Value per Common Share			86.00			84.14			78.47
Tangible Book Value per Common Share			80.83			78.97			73.14
Average Diluted Shared Outstanding		$	2,116,078		$	2,116,078		$	2,111,955
End of Period Common Shares Outstanding		$	2,115,919		$	2,115,920		$	2,120,598
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.55	%		1.84	%		1.33	%
Return on Average Equity			11.74	%		14.11	%		10.64	%
Equity/Assets			13.09	%		13.07	%		11.90	%
Yield on Earning Assets			5.87	%		5.70	%		5.06	%
Cost of Funds			2.09	%		1.92	%		1.18	%
Net Interest Margin			3.99	%		3.97	%		3.98	%
Efficiency Ratio			61.48	%		55.18	%		59.32	%
Credit Metrics
Allowance for Loan Losses to Total Loans			1.34	%		1.34	%		1.35	%
Adversely Classified Assets to Tier 1 Capital
plus Allowance for Loan Losses			5.22	%		6.69	%		6.49	%