Morris State Bancshares Announces Solid Earnings in 2022 and Declares Dividend

Rhea-AI Summary

Morris State Bancshares, Inc. (OTCQX: MBLU) reported strong financial results for Q4 and full-year 2022. Net income for Q4 was $6.6 million, up from $2.1 million in Q3 2022 and down from $7.1 million in Q4 2021. Diluted earnings per share reached $3.14, compared to $0.99 in Q3 2022 and $3.38 in Q4 2021. Full-year net income totaled $21.1 million, compared to $24.0 million in 2021. Total assets increased to $1.44 billion, while total shareholders’ equity rose to $165.0 million. Despite challenges, the bank achieved a return on average assets of 1.66% for the year. A quarterly dividend of $0.44 per share has been approved for Q1 2023.

Positive

• Net income for Q4 2022 was $6.6 million, up from $2.1 million in Q3 2022.
• Diluted earnings per share for Q4 2022 reached $3.14, compared to $0.99 in Q3 2022.
• Full-year net income was $21.1 million, with total assets of $1.44 billion by year-end.
• Total shareholders' equity grew to $165.0 million.
• Net loans increased by $125.7 million or 13.57% in 2022.
• A quarterly dividend of $0.44 per share was approved for Q1 2023.

Negative

• Full-year net income decreased from $24.0 million in 2021 to $21.1 million in 2022.
• Return on average assets fell from 1.96% in 2021 to 1.66% in 2022.
• Average cost of funds rose from 43 basis points in Q3 2022 to 77 basis points in Q4 2022.

DUBLIN, Ga., Feb. 02, 2023 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank (the “Bank”), today reported its financial results for the quarter and year ended December 31, 2022. Year over year and quarter by quarter comparisons are included herewith. Following is a summary of the quarterly and annual highlights:

Fourth Quarter 2022 Highlights

• Net income for the fourth quarter of 2022 was $6.6 million, compared to $2.1 million for the third quarter of 2022 and $7.1 million for the fourth quarter of 2021.
• Diluted earnings per share for the fourth quarter of 2022 was $3.14, compared to $0.99 for the third quarter of 2022 and $3.38 for the fourth quarter of 2021.
• Earnings before taxes for the fourth quarter of 2022 was $5.9 million, compared to $2.7 million for the third quarter of 2022 and $7.1 million for the fourth quarter of 2021.
• Average cost of funds for the fourth quarter of 2022 was 77 basis points, compared to 43 basis points for the third quarter of 2022 and 17 basis points for the fourth quarter of 2021.
• Loans net of PPP grew $20.5 million, or 7.8% annualized, during the fourth quarter of 2022 as compared to September 30, 2022.
• Return on average assets at the bank level for the fourth quarter of 2022 was 2.03%, compared to 0.80% for the third quarter of 2022 and 2.24% annualized for the fourth quarter of 2021.

Full Year 2022 Highlights

• Total assets were $1.44 billion at December 31, 2022, compared to $1.41 billion at December 31, 2021.
• Total shareholders’ equity was $165.0 million at December 31, 2022, compared to $148.3 at December 31, 2021.
• Full year net income of $21.1 million in 2022, compared to $24.0 million in 2021.
• Diluted earnings per share of $9.98 in 2022, compared to $11.40 in 2021.
• Net loans grew $125.7 million, or 13.57%, during 2022.
• Bank-level efficiency ratio of 52.11% in 2022, compared to 50.56% in 2021.
• Tangible book value per share of $72.65 at December 31, 2022, compared to $64.77 at December 31, 2021.
• Return on average assets at the bank level of 1.66% for the full year 2022, compared to 1.96% for 2021.

“We are very pleased with the overall financial performance of the Company in 2022. In a year in which the Fed raised interest rates an unprecedented seven times and the occurrence of a fraud-related $3 million isolated loan loss we were still able to produce very strong returns for our shareholders,” said Spence Mullis, Chairman and CEO. “At the bank level we produced a 1.66% return on average assets and 13.45% return on average equity while growing assets $25.5 million and total equity $16.8 million at the company level after distributing $3.7 million in dividends back to our shareholders.”

On January 25, 2023, the company approved a first quarter dividend of $0.44 per share payable on or about March 15, 2023, to all shareholders of record as of February 28, 2023. The company also announced that Morris Bank’s Chief Banking Officer Stacy Brantley will be leaving the bank on February 3, 2023, to pursue other career opportunities. Mullis stated, “I would like to thank Stacy Brantley for his contributions to the bank since joining in 2009. Stacy is a great friend to me and has contributed to the growth and success of Morris Bank. I wish him well in his future endeavors.” Mullis was appointed to the additional role of Acting Chief Banking Officer of Morris Bank with Stacy’s departure.

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 December 31, 2022
		December 31,				December 31,
		2022				2021				Change				% Change
		(Unaudited)				(Unaudited)
ASSETS
Cash and due from banks		$	49,302,788			$	162,649,843			$	(113,347,055	)		-69.69	%
Federal funds sold			21,007,642				14,278,248				6,729,394			47.13	%
Total cash and cash equivalents			70,310,430				176,928,091				(106,617,661	)		-60.26	%
Interest-bearing time deposits in other banks			100,000				350,000				(250,000	)		-71.43	%
Securities available for sale, at fair value			--				244,979,034				(244,979,034	)		--
Securities held to maturity, at cost			259,677,508				11,123,253				248,554,255			2234.55	%
Federal Home Loan Bank stock, restricted, at cost			1,578,400				624,300				954,100			152.83	%
Loans, net of unearned income			1,051,888,290				926,226,134				125,662,156			13.57	%
Less-allowance for loan losses			(13,629,255	)			(12,008,416	)			(1,620,839	)		13.50	%
Loans, net			1,038,259,035				914,217,718				124,041,317			13.57	%
Bank premises and equipment, net			13,865,943				14,938,591				(1,072,648	)		-7.18	%
ROU assets for operating lease, net			1,529,545				1,239,826				289,719			23.37	%
Goodwill			9,361,704				9,361,704				--			--
Intangible assets, net			2,023,540				2,369,390				(345,850	)		-14.60	%
Other real estate and foreclosed assets			3,715,202				5,332,096				(1,616,894	)		-30.32	%
Accrued interest receivable			5,341,616				4,647,197				694,419			14.94	%
Cash surrender value of life insurance			14,333,544				13,977,951				355,593			2.54	%
Other assets			16,558,916				11,014,182				5,544,734			50.34	%
Total Assets		$	1,436,655,383			$	1,411,103,333			$	25,552,050			1.81	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing		$	339,657,309			$	337,810,442			$	1,846,867			0.55	%
Interest bearing			876,009,017				886,394,003				(10,384,986	)		-1.17	%
			1,215,666,326				1,224,204,445				(8,538,119	)		-0.70	%
Other borrowed funds			48,826,681				28,752,079				20,074,602			69.82	%
Lease liability for operating lease			1,529,545				1,239,826				289,719			23.37	%
Accrued interest payable			143,899				134,392				9,507			7.07	%
Accrued expenses and other liabilities			5,461,126				8,513,648				(3,052,522	)		-35.85	%
Total liabilities			1,271,627,577				1,262,844,390				8,783,187			0.70	%
Shareholders' Equity:
Common stock			2,171,665				2,159,148				12,517			0.58	%
Paid in capital surplus			41,086,276				40,349,139				737,137			1.83	%
Retained earnings			99,943,774				80,075,546				19,868,228			24.81	%
Current year earnings			21,108,630				23,964,290				(2,855,660	)		-11.92	%
Accumulated other comprehensive income (loss)			2,608,086				3,404,364				(796,278	)		-23.39	%
Treasury Stock, at cost 56,912 shares			(1,890,625	)			(1,693,544	)			(197,081	)		11.64	%
Total shareholders' equity			165,027,806				148,258,943				16,768,863			11.31	%
Total Liabilities and Shareholders' Equity		$	1,436,655,383			$	1,411,103,333				25,552,050			1.81	%

MORRIS STATE BANCSHARES, INC. AND SUBSIDIARIES
Consolidating Statement of Income December 31, 2022
		December 31,				December 31,
		2022				2021				Change				% Change
		(Unaudited)				(Unaudited)
Interest and Dividend Income:
Interest and fees on loans		$	52,930,545			$	52,043,715			$	886,830			1.70	%
Interest income on securities			7,294,294				5,895,358				1,398,936			23.73	%
Income on federal funds sold			186,056				74,911				111,145			148.37	%
Income on time deposits held in other banks			807,990				130,572				677,418			518.81	%
Other interest and dividend income			460,924				177,004				283,920			160.40	%
Total interest and dividend income			61,679,809				58,321,560				3,358,249			5.76	%
Interest Expense:
Deposits			4,530,637				2,338,787				2,191,850			93.72	%
Interest on other borrowed funds			1,741,037				1,559,428				181,609			11.65	%
Interest on federal funds purchased			3,221				--				3,221			--
Total interest expense			6,274,895				3,898,215				2,376,680			60.97	%
Net interest income before provision for loan losses			55,404,914				54,423,345				981,569			1.80	%
Less-provision for loan losses			5,100,000				2,000,000				3,100,000			155.00	%
Net interest income after provision for loan losses			50,304,914				52,423,345				(2,118,431	)		-4.04	%
Noninterest Income:
Service charges on deposit accounts			2,417,905				1,983,721				434,184			21.89	%
Other service charges, commissions and fees			1,512,194				1,600,219				(88,025	)		-5.50	%
Gain on sales of foreclosed assets			608,935				--				608,935			--
Gain on sales and calls of securities			--				299,870				(299,870	)		--
Gain on sale of loans			--				37,683				(37,683	)		--
Increase in CSV of life insurance			355,593				357,508				(1,915	)		-0.54	%
Other income			162,625				380,138				(217,513	)		-57.22	%
Total noninterest income			5,057,252				4,659,139				398,113			8.54	%
Noninterest Expense:
Salaries and employee benefits			18,532,771				18,241,891				290,880			1.59	%
Occupancy and equipment expenses, net			2,290,897				2,201,420				89,477			4.06	%
(Gain) Loss on sales of foreclosed assets and other real estate			--				(2,610	)			2,610			-100.00	%
Loss on sales of premises and equipment			201,009				--				201,009			--
Other expenses			12,397,182				10,413,609				1,983,573			19.05	%
Total noninterest expense			33,421,859				30,854,310				2,567,549			8.32	%
Income Before Income Taxes			21,940,307				26,228,174				(4,287,867	)		-16.35	%
Provision for income taxes			831,677				2,263,886				(1,432,209	)		-63.26	%
Net Income		$	21,108,630			$	23,964,288				(2,855,658	)		-11.92	%
Earnings per common share:
Basic		$	9.98			$	11.40				(1.42	)		-12.46	%
Diluted		$	9.98			$	11.40				(1.42	)		-12.46	%

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,
		2022			2021				2022				2022				2022				2022				2021
(Dollars in thousand, except per share data)		(Unaudited)			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	9.98		$	11.40			$	3.14			$	0.99			$	3.21			$	1.79			$	3.38
Diluted Earnings per Common Share			9.98			11.40				3.14				0.99				3.21				1.79				3.38
Dividends per Common Share			1.76			1.52				0.44				0.44				0.44				0.44				0.38
Book Value per Common Share			78.04			70.34				78.04				75.42				74.97				72.49				70.34
Tangible Book Value per Common Share			72.65			64.77				72.65				70.01				69.52				66.98				64.77
Average Diluted Shares Outstanding			2,115,032			2,102,359				2,116,521				2,118,910				2,116,526				2,108,037				2,106,819
End of Period Common Shares Outstanding			2,114,753			2,107,857				2,114,753				2,116,921				2,120,374				2,114,439				2,107,857
Selected Balance Sheet Data (Bank Only)
Loans (net of PPP)			1,049,916			913,818				1,049,916				1,029,464				1,006,632				952,139				913,818
PPP Loans			33			9,974				33				66				2,768				5,284				9,974
Total Loans			1,049,949			923,792				1,049,949				1,029,530				1,009,399				957,423				923,792
Non-Interest Bearing Deposits			339,785			343,437				339,785				366,924				367,639				365,018				343,437
Interest Bearing Demand Deposits			270,473			271,693				270,473				271,193				283,448				288,575				271,693
Savings & Money Market Deposits			444,170			436,462				444,170				434,765				415,922				434,635				436,462
Earnings Summary
Net Interest Income			55,405			54,423				13,846				13,946				14,054				13,558				14,029
Provision for Loan Losses			5,100			2,000				600				3,750				375				375				150
Non-Interest Income			5,057			4,659				1,000				1,213				1,488				1,376				1,397
Non-Interest Expense			33,422			30,854				8,306				8,740				7,944				8,452				8,186
Earnings before Taxes			21,940			26,228				5,940				2,669				7,223				6,108				7,090
Income Taxes			832			2,264				(704	)			568				421				547				-
Net Income			21,109			23,964				6,644				2,101				6,802				5,561				7,090
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.66	%		1.96	%			2.03	%			0.80	%			2.08	%			1.74	%			2.24	%
Return on Average Equity			13.45	%		16.55	%			15.90	%			6.34	%			16.93	%			14.87	%			18.99	%
Equity/Assets			12.83	%		11.85	%			12.83	%			12.49	%			12.44	%			11.90	%			11.85	%
Cost of Funds			0.38	%		0.20	%			0.77	%			0.43	%			0.16	%			0.15	%			0.17	%
Net Interest Margin			4.11	%		4.18	%			4.13	%			4.12	%			4.14	%			4.04	%			4.16	%
Efficiency Ratio			52.11	%		50.56	%			54.12	%			52.81	%			48.06	%			53.50	%			51.25	%

 

FAQ

What were Morris State Bancshares' earnings results for Q4 2022?

Morris State Bancshares reported a net income of $6.6 million for Q4 2022.

What is Morris State Bancshares' diluted earnings per share for 2022?

The diluted earnings per share for 2022 was $9.98.

How did the total assets of Morris State Bancshares change in 2022?

Total assets increased to $1.44 billion at the end of 2022.

What is the significance of the dividend announced by Morris State Bancshares?

A quarterly dividend of $0.44 per share was approved, payable on or about March 15, 2023.

What were the challenges faced by Morris State Bancshares in 2022?

The company faced challenges such as a fraud-related loan loss of $3 million and rising interest rates.