Morris State Bancshares Announces Solid Earnings in 2020 and Increases Quarterly Dividend

Rhea-AI Summary

Morris State Bancshares, Inc. (MBLU) reported a net income of $17.4 million for the year ended December 31, 2020, a 27.80% increase from $13.6 million in 2019. Diluted earnings per share rose 20.82% to $8.30. Key drivers included strong fee income from the SBA Paycheck Protection Program and robust mortgage production. Core deposits grew over 37% to $896 million, with noninterest-bearing deposits increasing 45%. Total shareholders' equity climbed 16.15% to $129 million, and tangible book value per share reached $56.04. A dividend of $0.38 per share was also approved for March 2021.

Positive

• Net income increased 27.80% to $17.4 million.
• Diluted earnings per share rose 20.82% to $8.30.
• Core deposits grew over 37% to $896 million.
• Total shareholders' equity increased 16.15% to $129 million.
• Tangible book value per share increased 18.78% to $56.04.
• Net interest income rose 25.23% to $48.8 million.
• Dividends increased to $0.38 per share.

Negative

• Provision for loan losses increased from $1.7 million in 2019 to $3.6 million in 2020.
• Adversely classified coverage ratio decreased from 14.49% to 8.75%.
• Noninterest expense increased by 9.62% to $28.1 million, primarily due to salaries and employee benefits.

DUBLIN, Ga., Feb. 12, 2021 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $17.4 million for the year ended December 31, 2020, representing an increase of $3.8 million, or 27.80%, compared to net income of $13.6 million for the year ended December 31, 2019. The company also announced diluted earnings per share of $8.30 for 2020, representing a 20.82% increase over diluted earnings per share of $6.87 for 2019. Earnings were a result of disciplined cost of funds management and strong fee income from the SBA Paycheck Protection Program, or PPP, and strong mortgage production.

“We are very pleased with the financial performance of the Company in 2020. It was a year of significant change and challenges with the pandemic. Our team worked to strengthen community partnerships with our customers during the unprecedented economic conditions,” said Spence Mullis, President and CEO. “We continued to create significant value for our shareholders as we grew core deposits over 37% to $896 million. Noninterest-bearing deposit growth represented $87.7 million, or 45%, of the overall core deposit growth.”

The Company’s total shareholders’ equity increased 16.15% to $129 million as of December 31, 2020, as compared to $111 million as of December 31, 2019. Tangible book value per share increased to $56.04 as of December 31, 2020, an 18.78% increase or $8.86 per share from December 31, 2019. On January 27, 2021, the board of directors approved an increase in its first quarter dividend to $0.38 per share payable on or about March 15, 2021 to all shareholders of record as of February 28, 2021.

Net interest income for the years ended December 31, 2020 and 2019 was $48.8 million and $38.9 million respectively, an increase of $9.8 million, or 25.23%. With many moving parts during 2020, the net interest margin at the bank ended at 4.53% for December 31, 2020, which was equal to the December 31, 2019 level. The bank was an active participant in PPP, booking over $86 million in loans and recognizing $2.2 million in fee income during 2020. The margin’s stamina was a result of diligent cost of funds management that offset moderate earning asset yield contraction. Our earning asset yield declined form 5.47% for 2019 to 5.00% for the year ended December 31, 2020, a 47-basis point reduction. Our cost of funds declined from 1.02% for 2019 to 0.52% for the year ended December 31, 2020, a 50-basis point reduction. We anticipate continued pressure on the margin going forward as it will be difficult to significantly lower our cost of funds while competition for good loans will remain.

Provision for loan losses was $3.6 million for the year ended December 31, 2020 versus $1.7 million for the year ended December 31, 2019. Our reserve as a percentage of total loans was 1.39% when PPP loans are netted out of total loans as of December 31, 2020, versus 1.31% as of December 31, 2019. Our adversely classified coverage ratio was 8.75% as of December 31, 2020 versus 14.49% as of December 31, 2019. Our level of other real estate owned (ORE) decreased to $131 thousand as of December 31, 2020 from $384 thousand as of December 31, 2019. This level of problem assets and ORE are the lowest held by the bank in over ten years.

Noninterest expense increased 9.62%, or $2.46 million, to $28.1 million for the year ended December 31, 2020 versus $25.6 million as of December 31, 2019. 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. 

CONTACT:
Morris State Bancshares
Chris Bond
Chief Financial Officer
478-272-5202 

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
December 31, 2020
			2020				2019			Change				% Change
		(Unaudited)
Interest and Dividend Income:
Interest and fees on loans		$	50,465,805			$	43,205,235			$	7,260,570			16.80	%
Interest income on securities			4,015,455				2,885,821				1,129,634			39.14	%
Income on federal funds sold			103,208				513,422				(410,214	)		-79.90	%
Income on time deposits held in other banks			286,418				925,860				(639,442	)		-69.06	%
Other interest and dividend income			59,919				137,457				(77,538	)		-56.41	%
Total interest and dividend income			54,930,805				47,667,795				7,263,010			15.24	%
Interest Expense:
Deposits			5,037,818				7,963,852			$	(2,926,034	)		-36.74	%
Interest on other borrowed funds			1,091,607				733,330				358,277			48.86	%
Interest on federal funds purchased			72				151				(79	)		-52.32	%
Total interest expense			6,129,497				8,697,333				(2,567,836	)		-29.52	%
Net interest income before provision for loan losses			48,801,308				38,970,462				9,830,846			25.23	%
Less-provision for loan losses			3,635,000				1,650,000				1,985,000			120.30	%
Net interest income after provision for loan losses			45,166,308				37,320,462				7,845,846			21.02	%
Noninterest Income:
Service charges on deposit accounts			1,951,399				2,303,415				(352,016	)		-15.28	%
Other service charges, commissions and fees			1,282,853				828,467				454,386			54.85	%
Gain on sale of loans			187,006				263,029				(76,023	)		-28.90	%
Increase in CSV of life insurance			372,060				213,246				158,814			74.47	%
Other income			366,850				401,956				(35,106	)		-8.73	%
Total noninterest income			4,160,168				4,010,113				150,055			3.74	%
Noninterest Expense:
Salaries and employee benefits			16,656,208				14,358,637				2,297,571			16.00	%
Occupancy and equipment expenses, net			2,650,008				2,372,548				277,460			11.69	%
(Gain) loss on sales and calls of securities			(46,323	)			24,471				(70,794	)		-289.30	%
Loss (gain) on sales of foreclosed assets and other real estate			74,094				(270,572	)			344,666			-127.38	%
Gain on sales of premises and equipment			(4,000	)			(1,000	)			(3,000	)		300.00	%
Other expenses			8,732,695				9,116,832				(384,137	)		-4.21	%
Total noninterest expense			28,062,682				25,600,916				2,461,766			9.62	%
Income Before Income Taxes			21,263,794				15,729,659				5,534,135			35.18	%
Provision for income taxes			3,855,806				2,108,705				1,747,101			82.85	%
Net Income		$	17,407,988			$	13,620,954			$	3,787,034			27.80	%
Earnings per common share:
Basic		$	8.30			$	6.87			$	1.43			20.82	%
Diluted		$	8.30			$	6.87			$	1.43			20.82	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Balance Sheet
December 31, 2020
			2020				2019			Change				% Change
		(Unaudited)
ASSETS
Cash and due from banks		$	56,290,263			$	77,696,887			$	(21,406,624	)		-27.55	%
Federal funds sold			93,200,409				16,293,628				76,906,781			472.01	%
Total cash and cash equivalents			149,490,672				93,990,515				55,500,157			59.05	%
Interest-bearing time deposits in other banks			350,000				1,350,000				(1,000,000	)		-74.07	%
Securities available for sale, at fair value			205,427,671				124,315,098				81,112,573			65.25	%
Securities held to maturity, at cost			12,730,837				4,752,384				7,978,453			167.88	%
Federal Home Loan Bank stock, restricted, at cost			899,700				842,900				56,800			6.74	%
Loans, net of unearned income			837,333,161				738,886,405				98,446,756			13.32	%
Less-allowance for loan losses			(10,781,434	)			(9,716,060	)			(1,065,374	)		10.97	%
Loans, net			826,551,727				729,170,345				97,381,382			13.36	%
Bank premises and equipment, net			15,348,697				15,618,198				(269,501	)		-1.73	%
ROU assets for operating lease, net			641,008				519,601				121,407			23.37	%
Goodwill			9,361,770				9,361,770				-			0.00	%
Intangible assets, net			2,717,311				3,067,075				(349,764	)		-11.40	%
Other real estate and foreclosed assets			141,255				396,486				(255,231	)		-64.37	%
Accrued interest receivable			4,763,849				3,962,808				801,041			20.21	%
Cash surrender value of life insurance			13,620,443				13,248,384				372,059			2.81	%
Other assets			7,370,992				6,352,407				1,018,585			16.03	%
Total Assets		$	1,249,415,932			$	1,006,947,971			$	242,467,961			24.08	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing		$	282,746,775			$	195,016,772			$	87,730,003			44.99	%
Interest bearing			804,440,237				682,509,497				121,930,740			17.87	%
			1,087,187,012				877,526,269				209,660,743			23.89	%
Other borrowed funds			28,677,477				14,483,605				14,193,872			98.00	%
Lease liability for operating lease			641,008				519,601				121,407			23.37	%
Accrued interest payable			269,880				537,598				(267,718	)		-49.80	%
Accrued expenses and other liabilities			3,221,471				2,455,266				766,205			31.21	%
Total liabilities			1,119,996,848				895,522,339				224,474,509			25.07	%
Shareholders' Equity:
Common stock			2,144,766				2,144,766				-			0.00	%
Paid in capital surplus			39,292,064				39,292,064				-			0.00	%
Retained earnings			65,858,082				55,916,996				9,941,086			17.78	%
Current year earnings			17,407,988				13,620,954				3,787,034			27.80	%
Accumulated other comprehensive income (loss)			6,381,381				1,830,484				4,550,897			248.62	%
Treasury Stock, at cost 50,927 in 2020 and 46,517 shares in 2019			(1,665,197	)			(1,379,632	)			(285,565	)		20.70	%
Total shareholders' equity			129,419,084				111,425,632				17,993,452			16.15	%
Total Liabilities and Shareholders' Equity		$	1,249,415,932			$	1,006,947,971				242,467,961			24.08	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Selected Financial Information
		Year Ending							Quarter Ended
		December 31,			December 31,				December 31,				September 30,				June 30,				March 31,				December 31,
			2020			2019				2020				2020				2020				2020				2019
(Dollars in thousand, except per share data)		(Unaudited)							(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	8.30		$	6.87			$	2.64			$	1.95			$	0.95			$	2.50			$	1.48
Diluted Earnings per Common Share			8.30			6.87				2.64				1.95				0.95				2.50				1.48
Dividends per Common Share			1.75			0.93				-				-				-				1.02				-
Book Value per Common Share			61.81			53.11				61.81				51.87				49.78				46.71				53.11
Tangible Book Value per Common Share			56.04			47.18				56.04				45.91				43.62				45.18				47.18
Average Diluted Shares Outstanding			2,095,633			1,997,735				2,095,185				2,058,039				1,988,231				1,840,764				2,100,395
End of Period Common Shares Outstanding			2,093,839			2,098,250				2,093,839				2,100,842				2,057,568				1,840,980				2,098,250
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.78%			1.63%				2.05%				1.74%				1.51%				1.75%				1.49%
Return on Average Equity			14.38%			14.56%				16.31%				14.07%				11.82%				14.46%				12.37%
Equity/Assets			11.98%			11.81%				11.98%				12.48%				2.00%				11.88%				11.65%
Cost of Funds			0.52%			1.03%				0.31%				0.40%				0.57%				0.84%				0.91%
Net Interest Margin			4.53%			4.53%				4.44%				4.40%				4.70%				4.59%				4.41%
Efficiency Ratio			51.52%			57.80%				51.45%				51.38%				50.56%				53.26%				54.88%

FAQ

What was Morris State Bancshares' net income for 2020?

Morris State Bancshares reported a net income of $17.4 million for 2020.

How much did diluted earnings per share increase for MBLU in 2020?

Diluted earnings per share increased by 20.82% to $8.30 in 2020.

What dividends were declared by MBLU for the first quarter of 2021?

Morris State Bancshares declared a dividend of $0.38 per share for the first quarter of 2021.

What was the total shareholders' equity for MBLU as of December 31, 2020?

Total shareholders' equity for Morris State Bancshares increased to $129 million as of December 31, 2020.

How much did core deposits grow for MBLU in 2020?

Core deposits grew over 37% to $896 million in 2020.