Morris State Bancshares Announces Quarterly Earnings, Declares Second Quarter Dividend and Announces new Chairman and Lead Director

Rhea-AI Summary

Morris State Bancshares, Inc. (MBLU) reported a net income of $5.2 million for Q1 2022, consistent with Q1 2021 but below the record $7.1 million in Q4 2021. The tangible book value increased by 15.24% year-over-year to $66.98 as of March 31, 2022. Key highlights include a 16.76% annualized loan growth of $38.3 million and a core deposit growth of 14.72%. Despite challenges such as higher salaries and reduced net interest income, management remains optimistic about continued organic growth and protecting shareholder equity, with a dividend of $0.44 per share announced for Q2 2022.

Positive

• Net income of $5.2 million for Q1 2022 consistent with the prior year.
• Tangible book value increased 15.24% year-over-year to $66.98.
• Annualized loan growth of 16.76%, adding $38.3 million during Q1 2022.
• Core deposit growth of 14.72%, or $38.6 million, enhancing liquidity.
• Total shareholders' equity increased 16.8% year-over-year to $153 million.
• Q2 2022 dividend of $0.44 per share announced.

Negative

• Q1 2022 net income decreased from $7.1 million in Q4 2021.
• Income tax expense of $547,000 reported in Q1 2022.
• Lower net interest income of $13.6 million in Q1 2022 compared to $14.0 million in Q4 2021.
• Higher salaries and benefits costs increased to $5.1 million in Q1 2022 from $4.8 million in Q4 2021.

DUBLIN, Ga., April 28, 2022 (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 ending March 31, 2022. This level was in line with the first quarter of 2021’s net income of $5.2 million and below record-level net income of $7.1 million in the fourth quarter of 2021. Tangible book value of the company grew to $66.98 on March 31, 2022, from $56.77, or 15.24%, from the March 31, 2021, and from $64.77 or 3.41% from December 31, 2021.

1^st Quarter 2022 Highlights:

• Returned 1.74% on average assets and 14.87% percent on average tangible common equity
• Annualized loan growth of 16.76%, or $38.3 million, during the quarter (excluding PPP)
• Continued strong asset quality, with a net recovery realized in the first 3 months of 2022
• Annualized core deposit growth of 14.72%, or $38.6 million, during the quarter
• Appointment of CEO and President, Spence Mullis to serve as Chairman of the Board
• Appointment of Leonard Blount as Lead Director

“I’m very pleased to report a solid start to 2022. The team followed the record 4^th quarter of 2021 with a very solid first quarter in 2022. We generated symmetrical balance sheet growth with organic, non-PPP loans and core deposits each increasing over $38 million during the quarter. These core items significantly outpaced our overall asset growth of $27.6 million, or 2% from year-end 2021. Although confronted with headwinds of the tight labor market and slower mortgage fee revenue, we are poised to offset those with, solid organic loan growth in our Middle and Southeast Georgia markets. We remain optimistic that our team will continue to execute our strategy to generate solid profits the remainder of the year.”

Lower sequential net income was due to 3 key factors including:

• the recording of income tax expense of $547 thousand during 2022Q1 versus no income tax expense in the 2021Q4 at the company continued its use of tax credits
• lower overall net interest income, including mortgage fees of $13.6 million during 2022Q1 versus $14.0 million in 2021Q4
• 5% higher salaries and benefit costs totaling $5.1 million in 2022Q1 versus $4.8 million in 2021Q4
  

The Company’s total shareholders’ equity increased 16.8% year-over-year to $153 million as of March 31, 2021, and up 3% or $5 million from December 31, 2021. During the quarter, management made the decision to move our entire securities portfolio from available for sale to held to maturity effective January 1, 2022.  This change eliminated the volatility in tangible book value that would occur due to changes in accumulated other comprehensive income (AOCI) in equity as bond yields increased significantly during the quarter and are projected to increase further as the Fed continues raising rates. With the bank’s core liquidity levels and robust contingent funding plans in place, management was able to make this decision to eliminate the “noise” from the numbers on a go-forward basis as it relates to tangible book value, which ended the quarter at $66.98.

On April 20, 2022, the board of directors approved a second quarter dividend of $0.44 per share payable on or about June 15, 2022, to all shareholders of record as of May 15, 2022. During said meeting, the board also elected Spence Mullis to serve as Chairman of the Board. Mullis started with the bank 20 years ago and initially served as a community and commercial lender and CFO. He became President in 2005 and CEO in 2006. The board also elected Leonard Blount as Lead Independent Director. Blount became a part of Morris Bank in 2019 when Morris purchased Farmers and Merchants Bank (FMB) in Statesboro, Georgia. Prior to the merger, Blount served 27 years on the FMB board of directors. Since the merger with Morris, Blount has served as a member of the bank’s board of directors, Chair of the Audit Committee and a Bulloch Advisory Board member. He is owner and principal of Blount Property Group, a retail and commercial investment company. He is also a founder of Capstone Benefits Consulting, a firm specializing in employee benefit solutions throughout the Southeast.

“It has been an absolute honor and pleasure to have worked with such a great team of bankers at Morris Bank for the past 20 years. We’ve worked hard to grow the bank from less than $150 million in total assets to now over $1.4 billion serving customers throughout Middle and Southeast Georgia,” said Mullis. “I’m honored and humbled beyond measure that our board has entrusted me to serve as Chairman. Furthermore, I’m excited we have a Lead Independent Director that is of the caliber of Leonard Blount. His over 30 years of community banking experience will continue to augment our other great board members’ and team members’ passion to deliver best-in-class products and services to our customers in the years to come, driving great value for our shareholders, team members, and communities.”

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
March 31, 2022
			2022				2021			Change				% Change
		(Unaudited)				(Unaudited)
ASSETS
Cash and due from banks		$	143,422,859			$	71,164,883			$	72,257,976			101.54	%
Federal funds sold			15,664,564				115,957,486				(100,292,922	)		-86.49	%
Total cash and cash equivalents			159,087,423				187,122,369				(28,034,946	)		-14.98	%
Interest-bearing time deposits in other banks			350,000				350,000				-			0.00	%
Securities available for sale, at fair value			-				245,200,205				(245,200,205	)		-100.00	%
Securities held to maturity, at cost			267,833,392				12,707,803				255,125,589			2007.63	%
Federal Home Loan Bank stock, restricted, at cost			624,300				899,700				(275,400	)		(30.61	%)
Loans, net of unearned income			957,533,245				851,806,225				105,727,020			12.41	%
Less-allowance for loan losses			(12,408,458	)			(11,400,979	)			(1,007,479	)		8.84	%
Loans, net			945,124,787				840,405,246				104,719,541			12.46	%
Bank premises and equipment, net			14,837,637				15,278,014				(440,377	)		-2.88	%
ROU assets for operating lease, net			1,158,386				570,961				587,425			102.88	%
Goodwill			9,361,704				9,361,770				(66	)		-0.00	%
Intangible assets, net			2,282,410				2,630,331				(347,921	)		-13.23	%
Other real estate and foreclosed assets			5,106,587				265,542				4,841,045			1823.08	%
Accrued interest receivable			4,352,997				4,358,189				(5,192	)		-0.12	%
Cash surrender value of life insurance			14,065,097				13,708,665				356,432			2.60	%
Other assets			14,505,874				6,882,236				7,623,638			110.77	%
Total Assets		$	1,438,690,594			$	1,339,741,031			$	98,949,563			7.39	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing		$	355,354,700			$	305,974,839			$	49,379,861			16.14	%
Interest bearing			896,502,158				870,266,327				26,235,831			3.01	%
			1,251,856,858				1,176,241,166				75,615,692			6.43	%
Other borrowed funds			28,770,730				28,696,127				74,603			0.26	%
Lease liability for operating lease			1,158,386				570,961				587,425			102.88	%
Accrued interest payable			321,188				413,062				(91,874	)		-22.24	%
Accrued expenses and other liabilities			3,316,942				2,613,863				703,079			26.90	%
Total liabilities			1,285,424,104				1,208,535,179				76,888,925			6.36	%
Shareholders' Equity:
Common stock			2,165,730				2,150,798				14,932			0.69	%
Paid in capital surplus			40,907,274				39,690,242				1,217,032			3.07	%
Retained earnings			103,112,378				82,470,411				20,641,967			25.03	%
Current year earnings			5,561,414				5,219,266				342,148			6.56	%
Accumulated other comprehensive income (loss)			3,213,238				3,340,332				(127,094	)		-3.80	%
Treasury Stock, at cost 51,291			(1,693,544	)			(1,665,197	)			(28,347	)		1.70	%
Total shareholders' equity			153,266,490				131,205,852				22,060,638			16.81	%
Total Liabilities and Shareholders' Equity		$	1,438,690,594			$	1,339,741,031				98,949,563			7.39	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
for the Three Months Ended
		March 31,			December 31,										March 31,
		2022			2021			Change				% Change			2021
		(Unaudited)			(Unaudited)										(Unaudited)
Interest and Dividend Income:
Interest and fees on loans		$	12,708,366		$	13,222,192		$	(513,826	)		-3.89	%		$	13,183,691
Interest income on securities			1,581,771			1,591,250			(9,479	)		-0.60	%			1,273,895
Income on federal funds sold			4,771			15,365			(10,594	)		-68.95	%			19,057
Income on time deposits held in other banks			66,520			44,472			22,048			49.58	%			27,936
Other interest and dividend income			50,708			50,890			(182	)		-0.36	%			21,217
Total interest and dividend income			14,412,136			14,924,169			(512,033	)		-3.43	%			14,525,796
Interest Expense:
Deposits			462,472			505,251			(42,779	)		-8.47	%			569,068
Interest on other borrowed funds			391,195			389,776			1,419			0.36	%			393,271
Interest on federal funds purchased			--			--			--			--				--
Total interest expense			853,667			895,027			(41,360	)		-4.62	%			962,339
Net interest income before provision for loan losses			13,558,469			14,029,142			(470,673	)		-3.35	%			13,563,457
Less-provision for loan losses			375,000			150,000			225,000			150.00	%			650,000
Net interest income after provision for loan losses			13,183,469			13,879,142			(695,673	)		-5.01	%			12,913,457
Noninterest Income:
Service charges on deposit accounts			569,074			578,480			(9,406	)		-1.63	%			469,437
Other service charges, commisions and fees			363,780			353,683			10,097			2.85	%			375,312
Gain on sales and calls of securities			--			298,025			(298,025	)		-100.00	%			--
Gain on sale of loans			--			37,683			(37,683	)		-100.00	%			--
Increase in CSV of life insurance			87,146			88,787			(1,641	)		-1.85	%			88,222
Other income			41,987			40,686			1,301			3.20	%			248,699
Total noninterest income			1,061,987			1,397,344			(335,357	)		-24.00	%			1,181,670
Noninterest Expense:
Salaries and employee benefits			5,066,729			4,826,176			240,553			4.98	%			4,318,080
Occupancy and equipment expenses, net			532,932			539,247			(6,315	)		-1.17	%			513,406
Loss (gain) on sales of foreclosed assets and other real estate			--			--			--			--				4,202
Other expenses			2,851,857			2,820,816			31,041			1.10	%			2,486,633
Total noninterest expense			8,451,518			8,186,239			265,279			3.24	%			7,322,321
Income Before Income Taxes			5,793,938			7,090,247			(1,296,309	)		-18.28	%			6,772,806
Provision for income taxes			546,734			--			546,734			--				1,553,540
Net Income		$	5,247,204		$	7,090,247			(1,843,043	)		-25.99	%		$	5,219,266
Earnings per common share:
Basic		$	2.64		$	3.38			(0.74	)		-21.89	%		$	2.49
Diluted		$	2.64		$	3.38			(0.74	)		-21.89	%		$	2.49

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Selected Financial Information
		Quarter Ending
		March 31,				December 31,				March 31,
			2022				2021				2021
Dollars in thousand, except per share data		(Unaudited)				(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	2.64			$	3.38			$	2.49
Diluted Earnings per Common Share			2.64				3.38				2.49
Dividends per Common Share			0.44				0.38				0.38
Book Value per Common Share			72.49				70.34				62.48
Tangible Book Value per Common Share			66.98				64.77				56.77
Average Diluted Shares Outstanding			2,108,037				2,102,359				2,094,978
End of Period Common Shares Outstanding			2,114,439				2,107,857				2,099,871
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.74	%			2.24	%			1.81	%
Return on Average Equity			14.87	%			18.99	%			15.25	%
Equity/Assets			11.90	%			11.85	%			11.37	%
Yield on Earning Assets			4.18	%			4.31	%			4.60	%
Cost of Funds			0.15	%			0.17	%			0.25	%
Net Interest Margin			4.04	%			4.16	%			4.37	%
Efficiency Ratio			53.50	%			51.25	%			47.80	%
Credit Metrics
Allowance for Loan Losses to Total Loans			1.30	%			1.30	%			1.34	%
Allowance for Loan Losses to Total Loans*			1.30	%			1.31	%			1.43	%
Adversely Classified Assets to Tier 1 Capital
plus Allowance for Loan Losses			8.28	%			8.74	%			9.20	%
* Excludes PPP Loans

FAQ

What are the net income results for MBLU in Q1 2022?

Morris State Bancshares, Inc. reported a net income of $5.2 million for Q1 2022.

How much did the tangible book value increase for MBLU in 2022?

The tangible book value increased by 15.24% year-over-year to $66.98 as of March 31, 2022.

What was the loan growth rate for MBLU in Q1 2022?

Morris State Bancshares achieved an annualized loan growth of 16.76%, adding $38.3 million during Q1 2022.

What dividend did MBLU announce for Q2 2022?

The board of directors approved a dividend of $0.44 per share payable on or about June 15, 2022.

What were the challenges faced by MBLU in Q1 2022?

Challenges included a decline in net interest income, higher salaries, and recording an income tax expense.