Morris State Bancshares Announces Quarterly Earnings and Declares Fourth Quarter Dividend

Rhea-AI Summary

Morris State Bancshares, Inc. (OTCQX: MBLU) reported a net income of $6.2 million for Q3 2021, a 13.24% increase from Q2 2021. Diluted EPS also increased by 13.08% to $2.94 per share. The rise in net earnings was attributed to reduced credit and tax provisions, along with higher non-interest income. Total shareholders’ equity rose 3.76% to $143 million. Notably, loan growth net of PPP loans was $37 million (4.48%). The bank’s provision for loan losses decreased to $450 thousand from $750 thousand in the previous quarter.

Positive

• Net income increased by $723 thousand (13.24%) to $6.2 million for Q3 2021.
• Diluted EPS rose by 13.08% to $2.94.
• Net interest income was $13.4 million, slightly up from Q2.
• Loan growth (excluding PPP) was $37 million (4.48%).
• Total shareholders’ equity increased 3.76% to $143 million.
• Non-interest-bearing deposits grew by $25.4 million (8.30%).
• Tangible book value per share increased to $62.36.

Negative

• Average yield on loans decreased slightly.
• Provision for loan losses was $450 thousand, though down from $750 thousand, indicates ongoing credit concerns.

DUBLIN, Ga., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $6.2 million for the quarter ended September 30, 2021, representing an increase of $723 thousand, or 13.24%, compared to net income of $5.5 million for the quarter ended June 30, 2021. The company also announced diluted earnings per share of $2.94 for the quarter, representing a 13.08% increase over diluted earnings per share of $2.60 for the prior quarter. Net earnings were higher quarter over quarter because of lower credit and tax provisioning as well as higher non-interest income related to service charges and credit insurance premiums.

“In the third quarter, we generated net interest income of $13.4 million, slightly better than the second quarter’s level of $13.3 million,” said Spence Mullis, President and CEO. “We generated both solid loan and deposit growth during the quarter. We are particularly proud of our loan growth, which net of SBA Payroll Protection Program (PPP) loans was $37.0 million or 4.48%. While the average yield on our loans decreased slightly, loan volume and our strong non-interest-bearing deposit growth led to our net interest margin remaining solid at 4.10%. We grew non-interest-bearing deposits $25.4 million or 8.30% during the quarter.”

The Company’s total shareholders’ equity increased 3.76% to $143 million as of September 30, 2021, as compared to $138 million as of June 30, 2021. Tangible book value per share increased to $62.36 as of September 30, 2021, a 4.18% increase from $59.86 per share as of June 30, 2021. On October 20, 2021, the board of directors approved its fourth quarter dividend of $0.38 per share payable on or about December 15th to all shareholders of record as of November 15th.

Secondary mortgage revenue for the quarter was strong at $908 thousand, up $122 thousand or 15.5% from the second quarter. While mortgage rates have ticked up slightly, demand for both purchases and refinances in the Company’s markets remains strong.

The bank had a loan relationship that was stagnant in a Chapter 11 bankruptcy since June of 2019. The borrowing entity was finally discharged from bankruptcy this quarter which allowed the bank to foreclose on a new, but unoccupied assisted living facility as well other ancillary collateral for this relationship. As a result, the relationship which had been on a non-accrual status migrated into other real estate in the amount of $5.2 million. There was no net effect on the bank’s adversely classified ratio, or the ratio of adversely classified loans and other real estate owned to Tier 1 regulatory capital plus the allowance for loan losses, which decreased during the quarter to 8.04% versus 8.43% as of the end of the previous quarter. As previously mentioned, the bank’s provision for loan losses of $450 thousand for the three months ended September 30, 2021 was down from $750 thousand for the three months ended June 30, 2021. The bank’s allowance for loan losses as a percentage of total loans was 1.41% when PPP loans are netted out of total loans as of September 30, 2021, versus 1.47% as of June 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
		September 30,				June 30,
			2021				2021			Change				% Change
		(Unaudited)				(Unaudited)
ASSETS
Cash and due from banks		$	98,488,262			$	66,121,775			$	32,366,487			48.95	%
Federal funds sold			67,966,892				87,869,237				(19,902,345	)		-22.65	%
Total cash and cash equivalents			166,455,154				153,991,012				12,464,142			8.09	%
Interest-bearing time deposits in other banks			350,000				350,000				-			0.00	%
Securities available for sale, at fair value			253,026,739				263,891,405				(10,864,666	)		-4.12	%
Securities held to maturity, at cost			13,220,095				12,682,445				537,650			4.24	%
Federal Home Loan Bank stock, restricted, at cost			624,200				624,200				-			0.00	%
Loans, net of unearned income			882,889,280				858,178,798				24,710,482			2.88	%
Less-allowance for loan losses			(12,125,731	)			(12,099,672	)			(26,059	)		0.22	%
Loans, net			870,763,549				846,079,126				24,684,423			2.92	%
Bank premises and equipment, net			15,127,699				15,178,731				(51,032	)		-0.34	%
ROU assets for operating lease, net			420,363				505,635				(85,272	)		-16.86	%
Goodwill			9,361,770				9,361,770				-			0.00	%
Intangible assets, net			2,456,370				2,543,350				(86,980	)		-3.42	%
Other real estate and foreclosed assets			5,470,761				271,389				5,199,372			1915.84	%
Accrued interest receivable			4,670,208				4,362,402				307,806			7.06	%
Cash surrender value of life insurance			13,889,164				13,798,452				90,712			0.66	%
Other assets			10,057,607				10,029,683				27,924			0.28	%
Total Assets		$	1,365,893,679			$	1,333,669,600			$	32,224,079			2.42	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing		$	331,663,248			$	306,244,572			$	25,418,676			8.30	%
Interest bearing			854,987,023				853,411,310				1,575,713			0.18	%
			1,186,650,271				1,159,655,882				26,994,389			2.33	%
Other borrowed funds			28,733,428				28,714,778				18,650			0.06	%
Lease liability for operating lease			420,363				505,635				(85,272	)		-16.86	%
Accrued interest payable			146,945				198,992				(52,047	)		-26.16	%
Accrued expenses and other liabilities			7,137,289				6,958,927				178,362			2.56	%
Total liabilities			1,223,088,296				1,196,034,214				27,054,082			2.26	%
Shareholders' Equity:
Common stock			2,151,398				2,151,398				-			0.00	%
Paid in capital surplus			39,735,842				39,735,842				-			0.00	%
Retained earnings			80,874,167				81,672,346				(798,179	)		-0.98	%
Current year earnings			16,863,337				10,679,804				6,183,533			57.90	%
Accumulated other comprehensive income (loss)			4,845,836				5,061,193				(215,357)			-4.26	%
Treasury Stock, at cost 50,927			(1,665,197	)			(1,665,197	)			-			0.00	%
Total shareholders' equity			142,805,383				137,635,386				5,169,997			3.76	%
Total Liabilities and Shareholders' Equity		$	1,365,893,679			$	1,333,669,600				32,224,079			2.42	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
for the Three Months Ended
		September 30,				June 30,
			2021				2021			Change				% Change
		(Unaudited)				(Unaudited)
Interest and Dividend Income:
Interest and fees on loans		$	12,642,615			$	12,795,036			$	(152,421	)		-1.19	%
Interest income on securities			1,580,691				1,449,522				131,169			9.05	%
Income on federal funds sold			21,720				18,769				2,951			15.72	%
Income on time deposits held in other banks			29,479				28,685				794			2.77	%
Other interest and dividend income			51,191				53,518				(2,327	)		-4.35	%
Total interest and dividend income			14,325,696				14,345,530				(19,834	)		-0.14	%
Interest Expense:
Deposits			515,038				626,030			$	(110,992	)		-17.73	%
Interest on other borrowed funds			389,377				387,005				2,372			0.61	%
Interest on federal funds purchased			--				--				--			--
Total interest expense			904,415				1,013,035				(108,620	)		-10.72	%
Net interest income before provision for loan losses			13,421,281				13,332,495				88,786			0.67	%
Less-provision for loan losses			450,000				750,000				(300,000	)		-40.00	%
Net interest income after provision for loan losses			12,971,281				12,582,495				388,786			3.09	%
Noninterest Income:
Service charges on deposit accounts			517,470				418,331				99,139			23.70	%
Other service charges, commisions and fees			488,866				365,636				123,230			33.70	%
Gain on sale of loans			--				--				--			--
Increase in CSV of life insurance			90,712				89,787				925			1.03	%
Other income			247,726				41,655				206,071			494.71	%
Total noninterest income			1,344,774				915,409				429,365			46.90	%
Noninterest Expense:
Salaries and employee benefits			4,648,196				4,449,439				198,757			4.47	%
Occupancy and equipment expenses, net			575,664				573,066				2,598			0.45	%
(Gain) loss on sales and calls of securities			--				--				--			--
Loss (gain) on sales of foreclosed assets and other real estate			4,580				(138	)			4,718			-3418.84	%
Gain on sales of premises and equipment			--				--				--			--
Other expenses			2,740,932				2,467,806				273,126			11.07	%
Total noninterest expense			7,969,372				7,490,173				479,199			6.40	%
Income Before Income Taxes			6,346,683				6,007,731				338,952			5.64	%
Provision for income taxes			163,153				547,193				(384,040	)		-70.18	%
Net Income		$	6,183,530			$	5,460,538			$	722,992			13.24	%
Earnings per common share:
Basic		$	2.94			$	2.60			$	0.34			13.08	%
Diluted		$	2.94			$	2.60			$	0.34			13.08	%

		Quarter Ending
		September 30,				June 30,				September 30,
			2021				2021				2020
Dollars in thousand, except per share data)		(Unaudited)				(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	2.94			$	2.60			$	2.13
Diluted Earnings per Common Share			2.94				2.60				2.13
Dividends per Common Share			0.38				0.38				0.35
Book Value per Common Share			67.99				65.53				59.27
Tangible Book Value per Common Share			62.36				59.86				53.47
Average Diluted Shared Outstanding			2,098,933				2,097,534				2,095,783
End of Period Common Shares Outstanding			2,100,471				2,100,471				2,095,468
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.97	%			1.80	%			1.72	%
Return on Average Equity			16.56	%			15.23	%			14.07	%
Equity/Assets			11.77	%			12.02	%			12.48	%
Yield on Earning Assets			4.26	%			4.30	%			4.76	%
Cost of Funds			0.17	%			0.22	%			0.40	%
Net Interest Margin			4.10	%			4.10	%			4.39	%
Efficiency Ratio			52.12	%			51.03	%			51.38	%
Credit Metrics
Allowance for Loan Losses to Total Loans			1.37	%			1.41	%			1.22	%
Allowance for Loan Losses to Total Loans*			1.41	%			1.47	%			1.22	%
Adversely Classified Assets to Tier 1 Capital
plus Allowance for Loan Losses			8.04	%			8.43	%			10.29	%
* Excludes PPP Loans

FAQ

What were the earnings for MBLU in Q3 2021?

Morris State Bancshares reported net income of $6.2 million for Q3 2021.

What is the diluted EPS of MBLU for Q3 2021?

The diluted EPS for MBLU in Q3 2021 is $2.94.

How much did MBLU's total shareholders' equity increase in Q3 2021?

Total shareholders' equity increased by 3.76% to $143 million.

What was the loan growth for MBLU in Q3 2021?

Loan growth, net of PPP loans, was $37 million or 4.48%.

What dividend did MBLU announce for Q4 2021?

MBLU announced a fourth-quarter dividend of $0.38 per share, payable around December 15, 2021.