Morris State Bancshares Announces Quarterly Earnings and Declares Second Quarter Dividend

Rhea-AI Summary

Morris State Bancshares, Inc. (OTCQX: MBLU) reported a net income of $5.2 million for Q1 2021, a 29.26% increase from $4.0 million in Q1 2020. Diluted earnings per share rose to $2.49, reflecting a 29.02% growth. Key growth drivers included strong fe income from the PPP program and cost management, leading to a 26.65% rise in net interest income to $13.6 million. Shareholders' equity grew by 14.80% to $131 million. However, net interest margin decreased to 4.37%, down 21 basis points year-over-year.

Positive

• Net income increased by $1.2 million, or 29.26%, year-over-year.
• Diluted EPS rose to $2.49, a 29.02% increase from the previous year.
• Net interest income grew by $2.9 million, or 26.65%, to $13.6 million.
• Total shareholders' equity increased by 14.80% to $131 million.
• Noninterest-bearing deposits grew by $111.5 million, or 57%.

Negative

• Net interest margin declined to 4.37%, down 21 basis points year-over-year.
• Earning asset yield decreased from 5.35% to 4.60%, a 75-basis point reduction.
• Provision for loan losses increased to $650 thousand from $435 thousand.

DUBLIN, Ga., April 30, 2021 (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 ended March 31, 2021, representing an increase of $1.2 million, or 29.26%, compared to net income of $4.0 million for the quarter ended March 31, 2020. The company also announced diluted earnings per share of $2.49 for 2021, representing a 29.02% increase over diluted earnings per share of $1.93 for 2020. Earnings were a result of strong fee income from the SBA Paycheck Protection Program, or PPP, continued cost of funds management, and strong mortgage production.

“In the first quarter, we experienced net interest income growth of $2.9 million, or 26.65%,” said Spence Mullis, President and CEO. “Our increased net interest income and improved operational efficiency led to very solid earnings for the quarter. We continued to create significant value for our shareholders with strong core deposit growth. Noninterest-bearing deposit growth represented $111.5 million, or a 57% increase.”

The Company’s total shareholders’ equity increased 14.80% to $131 million as of March 31, 2021, as compared to $114 million as of March 31, 2020. Tangible book value per share increased to $56.77 as of March 31, 2021, a 16.69% increase from $48.65 per share on March 31, 2020. On April 21, 2021, the board of directors approved its first quarter dividend of $0.38 per share payable on or about June 15th to all shareholders of record as of June 1st.

Net interest income for the quarter ended March 31, 2021 and 2020 was $13.6 million and $10.7 million respectively, an increase of $2.9 million, or 26.65%. The bank’s net interest margin was 4.37% for March 31, 2021, a decline of 21 basis points from 4.58% on March 31, 2020. The bank participated in the second round of PPP, booking over $24 million in loans and recognizing $1.4 million in fee income during the quarter ended March 31, 2021. The margin’s reduction was a result of earning asset yields declining faster than the cost of funds. Our earning asset yield declined from 5.35% for March 31, 2020 to 4.60% for March 31, 2021, a 75-basis point reduction. Our cost of funds declined from 0.84% on March 31, 2020 to 0.25% on March 31, 2021, a 59-basis point reduction. Continued pressure on the margin is anticipated as it will be difficult to lower our cost of funds significantly while remaining competitive on pricing of good loans.

Provision for loan losses was $650 thousand as of March 31, 2021 versus $435 thousand as of March 31, 2020. Our reserve as a percentage of total loans was 1.42% when PPP loans are netted out of total loans as of March 31, 2021, versus 1.29% as of March 31, 2020. Our adversely classified coverage ratio was 9.20% as of March 31, 2021 versus 14.46% as of March 30, 2020 as the bank’s asset quality remains strong.

Noninterest expense increased 15.21%, or $967 million, to $7.3 million as of March 31, 2021 versus $6.4 million as of March 31, 2020. Most of this increase was related to salaries and employee benefits.

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 Statement of Income
March 31, 2021
		2021			2020			Change				% Change
		(Unaudited)			(Unaudited)
Interest and Dividend Income:
Interest and fees on loans		$	13,183,691		$	11,536,693		$	1,646,998			14.28	%
Interest income on securities			1,273,895			877,946			395,949			45.10	%
Income on federal funds sold			19,057			79,065			(60,008	)		-75.90	%
Income on time deposits held in other banks			27,936			5,345			22,591			422.66	%
Other interest and dividend income			21,217			209,220			(188,003	)		-89.86	%
Total interest and dividend income			14,525,796			12,708,269			1,817,527			14.30	%
Interest Expense:
Deposits			569,068			1,839,673		$	(1,270,605	)		-69.07	%
Interest on other borrowed funds			393,271			158,799			234,472			147.65	%
Interest on federal funds purchased			--			--			--			--
Total interest expense			962,339			1,998,472			(1,036,133	)		-51.85	%
Net interest income before provision for loan losses			13,563,457			10,709,797			2,853,660			26.65	%
Less-provision for loan losses			650,000			435,000			215,000			49.43	%
Net interest income after provision for loan losses			12,913,457			10,274,797			2,638,660			25.68	%
Noninterest Income:
Service charges on deposit accounts			469,437			604,173			(134,736	)		-22.30	%
Other service charges, commissions and fees			375,312			502,401			(127,089	)		-25.30	%
Gain on sale of loans			--			--			--			--
Increase in CSV of life insurance			88,222			92,995			(4,773	)		-5.13	%
Other income			248,699			4,413			244,286			5535.60	%
Total noninterest income			1,181,670			1,203,982			(22,312	)		-1.85	%
Noninterest Expense:
Salaries and employee benefits			4,318,080			3,713,931			604,149			16.27	%
Occupancy and equipment expenses, net			513,406			627,425			(114,019	)		-18.17	%
(Gain) loss on sales and calls of securities			--			--			--			--
Loss (gain) on sales of foreclosed assets and other real estate									4,202			5,072
Gain on sales of premises and equipment			--			--			--			--
Other expenses			2,486,633			2,009,074			477,559			23.77	%
Total noninterest expense			7,322,321			6,355,502			966,819			15.21	%
Income Before Income Taxes			6,772,806			5,123,277			1,649,529			32.20	%
Provision for income taxes			1,553,540			1,085,525			468,015			43.11	%
Net Income		$	5,219,266		$	4,037,752		$	1,181,514			29.26	%
Earnings per common share:
Basic		$	2.49		$	1.93		$	0.56			29.02	%
Diluted		$	2.49		$	1.93		$	0.56			29.02	%

 

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Balance Sheet
March 31, 2021
			2021				2020			Change				% Change
		(Unaudited)				(Unaudited)
ASSETS
Cash and due from banks		$	71,164,883			$	52,915,891			$	18,248,992			34.49	%
Federal funds sold			115,957,486				27,300,392				88,657,094			324.75	%
Total cash and cash equivalents			187,122,369				80,216,283				106,906,086			133.27	%
Interest-bearing time deposits in other banks			350,000				1,350,000				(1,000,000	)		-74.07	%
Securities available for sale, at fair value			245,200,205				139,307,643				105,892,562			76.01	%
Securities held to maturity, at cost			12,707,803				4,743,041				7,964,762			167.93	%
Federal Home Loan Bank stock, restricted, at cost			899,700				842,900				56,800			6.74	%
Loans, net of unearned income			851,806,225				753,148,006				98,658,219			13.10	%
Less-allowance for loan losses			(11,400,979	)			(9,788,969	)			(1,612,010	)		16.47	%
Loans, net			840,405,246				743,359,037				97,046,209			13.06	%
Bank premises and equipment, net			15,278,014				15,628,803				(350,789	)		-2.24	%
ROU assets for operating lease, net			570,961				467,579				103,382			22.11	%
Goodwill			9,361,770				9,361,770				-			0.00	%
Intangible assets, net			2,630,331				2,979,230				(348,899	)		-11.71	%
Other real estate and foreclosed assets			265,542				589,675				(324,133	)		-54.97	%
Accrued interest receivable			4,358,189				2,889,890				1,468,299			50.81	%
Cash surrender value of life insurance			13,708,665				13,341,379				367,286			2.75	%
Other assets			6,882,236				7,352,653				(470,417	)		-6.40	%
Total Assets		$	1,339,741,031			$	1,022,429,883			$	317,311,148			31.04	%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing		$	305,974,839			$	194,485,444			$	111,489,395			57.33	%
Interest bearing			870,266,327				694,767,211				175,499,116			25.26	%
			1,176,241,166				889,252,655				286,988,511			32.27	%
Other borrowed funds			28,696,127				14,124,000				14,572,127			103.17	%
Lease liability for operating lease			570,961				467,579				103,382			22.11	%
Accrued interest payable			413,062				421,993				(8,931	)		-2.12	%
Accrued expenses and other liabilities			2,613,863				3,868,481				(1,254,618	)		-32.43	%
Total liabilities			1,208,535,179				908,134,708				300,400,471			33.08	%
Shareholders’ Equity:
Common stock			2,150,798				2,144,766				6,032			0.28	%
Paid in capital surplus			39,690,242				39,292,064				398,178			1.01	%
Retained earnings			82,470,411				68,070,150				14,400,261			21.16	%
Current year earnings			5,219,266				4,037,752				1,181,514			29.26	%
Accumulated other comprehensive income (loss)			3,340,332				2,315,012				1,025,320			44.29	%
Treasury Stock, at cost 50,927			(1,665,197	)			(1,564,569	)			(100,628	)		6.43	%
Total shareholders’ equity			131,205,852				114,295,175				16,910,677			14.80	%
Total Liabilities and Shareholders’ Equity		$	1,339,741,031			$	1,022,429,883				317,311,148			31.04	%

 

		Quarter Ending								Year Ending
		March 31,				March 31,				December 31,
			2021				2020				2020
Dollars in thousand, except per share data)		(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	2.49			$	1.93			$	8.30
Diluted Earnings per Common Share			2.49				1.93				8.30
Dividends per Common Share			0.38				0.70				1.75
Book Value per Common Share			62.48				54.54				61.81
Tangible Book Value per Common Share			56.77				48.65				56.04
Average Diluted Shared Outstanding			2,094,978				2,096,415				2,095,633
End of Period Common Shares Outstanding			2,099,871				2,095,468				2,093,839
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.81	%			1.71	%			1.78	%
Return on Average Equity			15.25	%			14.46	%			14.38	%
Equity/Assets			11.37	%			11.88	%			11.98	%
Yield on Earning Assets			4.60	%			5.35	%			5.00	%
Cost of Funds			0.25	%			0.84	%			0.52	%
Net Interest Margin			4.37	%			4.58	%			4.56	%
Efficiency Ratio			47.80	%			53.26	%			51.52	%
Credit Metrics
Allowance for Loan Losses to Total Loans			1.34	%			1.30	%			1.30	%
Allowance for Loan Losses to Total Loans*			1.42	%			1.30	%			1.39	%
Adversely Classified Assets to Total Capital
plus Allowance for Loan Losses			9.20	%			14.46	%			8.76	%
* Excludes PPP Loans

 

 

FAQ

What were the earnings results for MBLU in Q1 2021?

Morris State Bancshares reported a net income of $5.2 million for Q1 2021, a 29.26% increase from $4.0 million in Q1 2020.

What is the diluted earnings per share for MBLU in Q1 2021?

The diluted earnings per share for Morris State Bancshares in Q1 2021 was $2.49, up 29.02% from $1.93 in Q1 2020.

How did MBLU's net interest income change in Q1 2021?

Net interest income for Morris State Bancshares increased by $2.9 million, or 26.65%, reaching $13.6 million in Q1 2021.

What was the shareholders' equity for MBLU as of March 31, 2021?

Total shareholders' equity for Morris State Bancshares as of March 31, 2021, was $131 million, up 14.80% from the previous year.

What were the challenges faced by MBLU in Q1 2021?

Morris State Bancshares faced a decline in net interest margin to 4.37% and an increase in the provision for loan losses to $650 thousand.