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 $6.8 million for Q2 2022, a 22.31% increase from the previous quarter's $5.6 million. Diluted earnings per share rose 21.59% to $3.21. The growth was primarily driven by increased net interest income of $14.1 million and a decline in non-interest expenses, bolstered by a one-time health insurance adjustment. Total shareholders’ equity rose 3.72% to $159 million. The bank also announced a $0.44 per share dividend.

Positive

• Net income increased by $1.2 million, or 22.31%, to $6.8 million.
• Diluted EPS rose 21.59% to $3.21.
• Net interest income grew to $14.1 million, a 3.66% increase.
• Loan growth of over $52.3 million, a 5.4% increase.
• Total shareholders’ equity increased 3.72% to $159 million.
• Tangible book value per share increased to $69.52, up 3.79%.
• Improved asset quality with a better coverage ratio of 6.82%.

Negative

• Provision for loan losses remained at $375 thousand, indicating ongoing risk.

DUBLIN, Ga., July 29, 2022 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $6.8 million for the quarter ended June 30, 2022, representing an increase of $1.2 million, or 22.31%, compared to net income of $5.6 million for the quarter ended March 31, 2022. The company also announced diluted earnings per share of $3.21 for quarter, representing a 21.59% increase over diluted earnings per share of $2.64 for prior quarter. Higher quarter over quarter net earnings were driven primarily by increased net interest income and lower non-interest expense. The decline in non-interest expense was driven by a one-time adjustment to health insurance expense during the quarter. At the bank level, the company generated a Return on Average Assets (ROA) of 2.08% during the quarter ending June 30, 2022, versus a 1.74% ROA during the quarter ending March 31, 2022.

“The second quarter was a very solid one for the company. During the quarter, our team generated loan growth of over $52.3 million, which was an increase of over 5.4% (annualized over 21%) from the quarter ending March 31, 2022. As our loan portfolio grew with only slightly higher deposit costs, we produced net interest income of $14.1 million, a 3.66% increase over the first quarter’s level of $13.6 million,” said Spence Mullis, CEO and Chairman. “We’re proud of our results in the second quarter, and we’re positioned well for the second half of the year. As the Federal Reserve continues to try and tame inflation through tighter monetary policy, we expect some softening in the broader economy along with higher deposit costs in the coming months. However, our balance sheet is positioned well to perform in this scenario as we are entering the second half of the year with a low-cost deposit mix as well as solid credit metrics.”

The Company’s total shareholders’ equity increased 3.72% to $159 million as of June 30, 2022, as compared to $153 million as of March 31, 2022. Tangible book value per share increased to $69.52 as of June 30, 2022, a 3.79% increase from $66.98 per share on March 31, 2022. On July 20, 2022, the board of directors approved a third quarter dividend of $0.44 per share payable on or about September 15th to all shareholders of record as of August 15th.

The bank sold a piece of other real estate during the second quarter and realized a gain of $305 thousand, which contributed to an overall net gain on sales of other real estate of $290 thousand during the quarter. Provision for loan losses was $375 thousand for the quarter ended June 30, 2022, which is in line with the quarter ending March 31, 2022. The bank’s reserve as a percentage of total loans was 1.24% as of June 30, 2022, versus 1.30% as of March 31, 2022. Asset quality improved during the quarter as the bank’s adversely classified coverage ratio improved to 6.82% as of June 30, 2022, versus 8.28% as of March 31, 2022.

“We are very excited about our bank’s footprint and future with the recent announcement of several industrial and manufacturing projects in our service areas. Large manufacturing projects were announced in both Houston and Bulloch counties during the second quarter, as well as an electric vehicle manufacturer just to the south of our Bulloch County market, which will be transformational for the whole region,” said Mullis. “We look forward to continuing to serve our customers, communities, team members as well as our shareholders with a commitment to enhancing value for each every day.”

*In the prior earnings release dated April 28, 2022, net income for the first quarter of 2022 was understated by $314 thousand.  The understatement was related to a gain on sale of other real estate (different from this quarter’s aforementioned gain).  All other performance ratios, per share data and credit metrics were correct in the April 28, 2022, earnings announcement. 

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,
								2022				2022			Change				% Change				2021
							(Unaudited)				(Unaudited)											(Unaudited)
	ASSETS
																									`
	Cash and due from banks						$	74,271,951			$	143,422,859			$	(69,150,908	)		-48.21	%		$	66,121,775
	Federal funds sold							18,873,609				15,664,564				3,209,045			20.49	%			87,869,237
	Total cash and cash equivalents							93,145,560				159,087,423				(65,941,863	)		-41.45	%			153,991,012
	Interest-bearing time deposits in other banks							350,000				350,000				--			--				350,000
	Securities available for sale, at fair value							--				--				--			--				263,891,405
	Securities held to maturity, at cost							275,498,923				267,833,392				7,665,531			2.86	%			1,682,445
	Federal Home Loan Bank stock, restricted, at cost							744,500				624,300				120,200			19.25	%			624,200
	Loans, net of unearned income							1,009,838,142				957,533,245				52,304,897			5.46	%			858,178,798
	Less-allowance for loan losses							(12,519,189	)			(12,408,458	)			(110,731	)		0.89	%			(12,099,672	)
	Loans, net							997,318,953				945,124,787				52,194,166			5.52	%			846,079,126
	Bank premises and equipment, net							14,721,005				14,837,637				(116,632	)		-0.79	%			15,178,731
	ROU assets for operating lease, net							1,061,310				1,158,386				(97,076	)		-8.38	%			505,635
	Goodwill							9,361,704				9,361,704				--			--				9,361,770
	Intangible assets, net							2,196,485				2,282,410				(85,925	)		-3.76	%			2,543,350
	Other real estate and foreclosed assets							3,751,184				5,106,587				(1,355,403	)		-26.54	%			271,389
	Accrued interest receivable							4,685,278				4,352,997				332,281			7.63	%			4,362,402
	Cash surrender value of life insurance							14,153,898				14,065,097				88,801			0.63	%			13,798,452
	Other assets							14,274,462				14,505,874				(231,412	)		-1.60	%			10,029,683
	Total Assets						$	1,431,263,262			$	1,438,690,594			$	(7,427,332	)		-0.52	%		$	1,322,669,600
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
	Non-interest bearing						$	367,004,039			$	355,354,700			$	11,649,339			3.28	%		$	306,244,572
	Interest bearing							871,719,946				896,502,158				(24,782,212	)		-2.76	%			853,411,310
								1,238,723,985				1,251,856,858				(13,132,873	)		-1.05	%			1,159,655,882
	Other borrowed funds							28,789,380				28,770,730				18,650			0.06	%			28,714,778
	Lease liability for operating lease							1,061,310				1,158,386				(97,076	)		-8.38	%			505,635
	Accrued interest payable							106,192				321,188				(214,996	)		-66.94	%			198,992
	Accrued expenses and other liabilities							3,616,439				3,316,942				299,497			9.03	%			6,958,927
	Total liabilities							1,272,297,306				1,285,424,104				(13,126,798	)		-1.02	%			1,196,034,214
	Shareholders' Equity:
	Common stock							2,171,665				2,165,730				5,935			0.27	%			2,151,398
	Paid in capital surplus							41,391,867				40,907,274				484,593			1.18	%			39,735,842
	Retained earnings							101,723,321				103,112,378				(1,389,057	)		-1.35	%			81,672,346
	Current year earnings							12,363,616				5,561,414				6,802,202			122.31	%			10,679,804
	Accumulated other comprehensive income (loss)							3,009,031				3,213,238				(204,207	)		-6.36	%			5,061,193
	Treasury Stock, at cost 51,291							(1,693,544	)			(1,693,544	)			--			--				(1,665,197	)
	Total shareholders' equity							158,965,956				153,266,490				5,699,466			3.72	%			137,635,386
	Total Liabilities and Shareholders' Equity						$	1,431,263,262			$	1,438,690,594				(7,427,332	)		-0.52	%		$	1,333,669,600

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
					June 30,			March 31,										June 30,
					2022			2022			Change				% Change				2021
					(Unaudited)			(Unaudited)										(Unaudited)
	Interest and Dividend Income:
	Interest and fees on loans				$	12,916,106		$	12,708,366		$	207,740			1.63	%		$	12,795,036
	Interest income on securities					1,809,274			1,581,771			227,503			14.38	%			1,449,522
	Income on federal funds sold					18,380			4,771			13,609			285.24	%			18,769
	Income on time deposits held in other banks					145,381			66,520			78,861			118.55	%			28,685
	Other interest and dividend income					49,189			50,708			(1,519	)		-3.00	%			53,518
	Total interest and dividend income					14,938,330			14,412,136			526,194			3.65	%			14,345,530
	Interest Expense:
	Deposits					485,077			462,472			22,605			4.89	%			626,030
	Interest on other borrowed funds					398,866			391,195			7,671			1.96	%			387,005
	Interest on federal funds purchased					--			--			--			--				--
	Total interest expense					883,943			853,667			30,276			3.55	%			1,013,035
	Net interest income before provision for loan losses					14,054,387			13,558,469			495,918			3.66	%			13,332,495
	Less-provision for loan losses					375,000			375,000			-			0.00	%			750,000
	Net interest income after provision for loan losses					13,679,387			13,183,469			495,918			3.76	%			12,582,495
	Noninterest Income:
	Service charges on deposit accounts					628,174			569,074			59,100			10.39	%			418,331
	Other service charges, commisions and fees					472,427			363,780			108,647			29.87	%			365,636
	Gain on sales of foreclosed assets					290,564			314,210			(23,646	)		-7.53	%			--
	Gain on sales and calls of securities					--			--			--			--				--
	Gain on sale of loans					--			--			--			--				--
	Increase in CSV of life insurance					88,800			87,146			1,654			1.90	%			89,787
	Other income					7,992			41,987			(33,995	)		-80.97	%			41,655
	Total noninterest income					1,487,957			1,376,197			111,760			8.12	%			915,409
	Noninterest Expense:
	Salaries and employee benefits					4,516,545			5,066,729			(550,184	)		-10.86	%			4,449,439
	Occupancy and equipment expenses, net					543,815			532,932			10,883			2.04	%			573,066
	Loss (gain) on sales of foreclosed assets and other real estate					--			--			--			--				(138	)
	Other expenses					2,883,858			2,851,857			32,001			1.12	%			2,467,806
	Total noninterest expense					7,944,218			8,451,518			(507,300	)		-6.00	%			7,490,173
	Income Before Income Taxes					7,223,126			6,108,148			1,114,978			18.25	%			6,007,731
	Provision for income taxes					420,925			546,734			(125,809	)		-23.01	%			547,193
	Net Income				$	6,802,201		$	5,561,414			1,240,787			22.31	%		$	5,460,538
	Earnings per common share:
	Basic				$	3.21		$	2.64			0.57			21.59	%		$	2.60
	Diluted				$	3.21		$	2.64			0.57			21.59	%		$	2.60

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Selected Financial Information
Quarter Ending
					June 30,				March 31,				June 30,
					2022				2022				2021
Dollars in thousand, except per share data					(Unaudited)				(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share					$	3.21			$	2.64			$	2.60
Diluted Earnings per Common Share						3.21				2.64				2.60
Dividends per Common Share						0.44				0.44				0.38
Book Value per Common Share						74.97				72.49				65.53
Tangible Book Value per Common Share						69.52				66.98				59.86
Average Diluted Shared Outstanding					$	2,112,305			$	2,108,037			$	2,097,534
End of Period Common Shares Outstanding					$	2,120,374			$	2,114,439			$	2,100,471
Annualized Performance Ratios (Bank Only)
Return on Average Assets						2.08	%			1.74	%			1.80	%
Return on Average Equity						16.93	%			14.87	%			15.23	%
Equity/Assets						12.44	%			11.90	%			12.02	%
Yield on Earning Assets						4.29	%			4.18	%			4.30	%
Cost of Funds						0.16	%			0.15	%			0.22	%
Net Interest Margin						4.14	%			4.04	%			4.10	%
Efficiency Ratio						48.06	%			53.50	%			51.03	%
Credit Metrics
Allowance for Loan Losses to Total Loans						1.24	%			1.30	%			1.41	%
Allowance for Loan Losses to Total Loans*						1.24	%			1.30	%			1.47	%
Adversely Classified Assets to Tier 1 Capital
plus Allowance for Loan Losses						6.82	%			8.28	%			8.43	%
* Excludes PPP Loans

FAQ

What were the earnings results for Morris State Bancshares (MBLU) in Q2 2022?

Morris State Bancshares reported a net income of $6.8 million and diluted earnings per share of $3.21 for Q2 2022.

How did the net interest income perform for MBLU in Q2 2022?

Net interest income for MBLU increased to $14.1 million, a 3.66% increase from the previous quarter.

What is the future outlook for Morris State Bancshares (MBLU) after Q2 2022?

The company expects some softening in the economy but is well positioned with a low-cost deposit mix.

When is the dividend payout for MBLU shareholders?

The dividend of $0.44 per share will be payable on or about September 15, 2022.