DUBLIN, Ga., Feb. 14, 2020 (GLOBE NEWSWIRE) -- Morris State Bancshares (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $13.6 million for the year ended December 31, 2019, representing a decrease of $1.6 million, or 10.60%, compared to net income of $15.2 million for the year ended December 31, 2018. The company also announced diluted earnings per share of $6.82 for 2019, representing a 18.23% decrease over diluted earnings per share of $8.34 for 2018. Net income for 2019 was impacted by a one-time merger related expense of $924 thousand related to the Company’s completed acquisition of FMB Equibanc, Inc. (“FMB”) as well as income tax expense of $2.1 million in 2019, versus none in 2018 as the company converted to a C corporation during 2019. Excluding merger related expenses, 2019 pre-tax income was $16.7 million, versus $15.2 million for 2018, representing an increase of $1.5 million or 9.3%. This increase was largely driven by the acquisition of FMB, which was completed at the end of April, as well as a one-time gain on sale of government guaranteed loans of $263 thousand of and a gain on sale of other real estate of $409 thousand.
“We are very pleased with the financial performance of the Company in 2019. It was a transformational year in that we completed the purchase and integration of FMB which not only significantly grew our bank’s footings but more importantly our core deposits and geographic diversity,” said Spence Mullis, President and CEO. “We created significant value for our shareholders as we grew core deposits over 53% or $236.7 million. Organic core deposit growth represented $109.0 million or 46% of the overall core deposit growth.”
The Company’s total shareholders’ equity to total assets ratio increased to 11.05%, as of December 31, 2019, as compared to 10.96% as of December 31, 2018. Tangible book value per share increased to $47.18 as of December 31, 2019 an 8.84% increase or $3.83 per share from December 31, 2018. On January 9th, the board of directors approved a first quarter dividend of $0.35 per share payable on or about March 16th to all shareholders of record on March 2, 2020. This quarterly dividend is in addition to the special dividend of the same amount which was paid to all shareholders on January 31, 2020. It is the company’s intentions to resume paying regular quarterly dividends throughout the rest of the calendar year.
Net interest income for the years ending December 31, 2019 and 2018 was $38.9 million and $32.3 million respectively, an increase of $6.7 million or 20.69%. Net interest margin for the years ending December 31, 2019 and 2018 was 4.65% and 4.88%, respectively. The contraction in the margin was a combination of a decline in the yield on earning assets that outpaced the decrease in cost of funds. Our cost of funds increased as a result of the Fed’s tightening of deposit rates throughout 2018 that were priced forward into our 2019 costs. However, we saw our cost of funds decrease towards the end of the year as evidenced by the cost of total deposits for the quarter ended December 31, 2019 of 0.91%, as compared to 0.99% for the quarter ended September 30, 2019. We expect further decreases in our costs throughout the rest of the year.
The provision for loan losses was $1.7 million for the year ending December 31, 2019 versus $1.4 million for the year ending December 31, 2018. Our provision as a percentage of total loans was 1.32% as of December 31, 2019 versus 1.55% as of December 31, 2018. Our adversely classified coverage ratio was 14.49% as of December 31, 2019 versus 15.25% as of December 31, 2018. Our level of ORE decreased to $384,310 at December 31, 2019 from $590,211 at December 31, 2018. This level of ORE is the lowest held in over ten years.
Noninterest income increased $870 thousand or 27.52% for the year ending December 31, 2019. The increase was driven primarily by an increase in service charges on deposit accounts as a result of the FMB merger.
Noninterest expense increased 36.39% or $6.8 million to $25.6 million at December 31, 2019 from $18.8 million as of December 31, 2018. The majority of this increase was related to the aforementioned initial FMB transaction costs as well as 8 months of normal operating costs in the newly acquired market.
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 | ||||||||||||||||
| Consolidated Balance Sheet | ||||||||||||||||
| December 31, 2019 | ||||||||||||||||
| 2019 | 2018 | $ Change | % Change | |||||||||||||
| (Unaudited) | ||||||||||||||||
| ASSETS | ||||||||||||||||
| Cash and due from banks | $ | 77,696,887 | $ | 29,257,366 | $ | 48,439,521 | 165.6 | % | ||||||||
| Federal funds sold | 16,293,628 | 14,044,014 | 2,249,614 | 16.0 | % | |||||||||||
| Interest bearing time deposits in other banks | 1,350,000 | 2,098,000 | (748,000 | ) | -35.7 | % | ||||||||||
| Securities available for sale, at fair value | 124,315,098 | 70,845,928 | 53,469,170 | 75.5 | % | |||||||||||
| Securities held to maturity, at cost | 4,752,384 | 5,716,318 | (963,934 | ) | -16.9 | % | ||||||||||
| Federal Home Loan Bank stock | 842,900 | 993,300 | (150,400 | ) | -15.1 | % | ||||||||||
| Loans, less allowance for loan losses | ||||||||||||||||
| of $9,716,060 and $9,480,989 respectfully | 729,170,345 | 603,548,731 | 125,621,614 | 20.8 | % | |||||||||||
| Premises and equipment, net | 15,618,198 | 8,884,433 | 6,733,765 | 75.8 | % | |||||||||||
| Goodwill | 9,361,770 | 2,237,890 | 7,123,880 | 318.3 | % | |||||||||||
| Intangible assets, net | 3,067,075 | 288,920 | 2,778,155 | 961.6 | % | |||||||||||
| Other real estate and foreclosed assets | 396,486 | 835,921 | (439,435 | ) | -52.6 | % | ||||||||||
| Accrued interest receivable | 3,962,807 | 3,064,254 | 898,553 | 29.3 | % | |||||||||||
| Cash surrender value of life insurance | 13,248,384 | 7,035,138 | 6,213,246 | 88.3 | % | |||||||||||
| Other assets | 7,979,800 | 1,215,978 | 6,763,822 | 556.2 | % | |||||||||||
| Total assets | $ | 1,008,055,762 | $ | 750,066,191 | $ | 257,989,571 | 34.4 | % | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Non-interest-bearing demand | $ | 195,016,771 | $ | 122,899,907 | $ | 72,116,864 | 58.7 | % | ||||||||
| Interest-bearing | 682,509,497 | 532,608,585 | 149,900,912 | 28.1 | % | |||||||||||
| 877,526,268 | 655,508,492 | 222,017,776 | 33.9 | % | ||||||||||||
| Other borrowed funds | 15,003,206 | 9,857,143 | 5,146,063 | 52.2 | % | |||||||||||
| Accrued interest payable | 537,928 | 401,934 | 135,994 | 33.8 | % | |||||||||||
| Accrued expenses and other liabilities | 3,556,513 | 2,066,457 | 1,490,056 | 72.1 | % | |||||||||||
| Total liabilities | 896,623,915 | 667,834,026 | 228,789,889 | 34.3 | % | |||||||||||
| Shareholders' Equity: | ||||||||||||||||
| Common stock | 2,144,917 | 1,882,740 | 262,177 | 13.9 | % | |||||||||||
| Paid in capital surplus | 39,298,458 | 24,225,182 | 15,073,276 | 62.2 | % | |||||||||||
| Less: treasury stock | (1,379,632 | ) | (1,211,099 | ) | (168,533 | ) | 13.9 | % | ||||||||
| Retained earnings | 55,916,996 | 42,556,445 | 13,360,551 | 31.4 | % | |||||||||||
| Current year earnings | 13,620,624 | 15,236,144 | (1,615,520 | ) | -10.6 | % | ||||||||||
| Accumulated other comprehensive income (loss) | 1,830,484 | (457,247 | ) | 2,287,731 | -500.3 | % | ||||||||||
| Total shareholders' equity | 111,431,847 | 82,232,165 | 29,199,682 | 35.5 | % | |||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,008,055,762 | $ | 750,066,191 | 257,989,571 | 34.4 | % | |||||||||
| MORRIS STATE BANCSHARES, INC. | |||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||
| Consolidated Statement of Income | |||||||||||||||
| December 31, 2019 | |||||||||||||||
| 2019 | 2018 | $ Change | % Change | ||||||||||||
| (Unaudited) | |||||||||||||||
| Interest and dividend income: | |||||||||||||||
| Loans, including fees | $ | 42,472,550 | $ | 35,472,471 | $ | 7,000,079 | 19.73 | % | |||||||
| Securities | 2,885,821 | 1,755,255 | 1,130,566 | 64.41 | % | ||||||||||
| Federal funds sold | 513,422 | 312,613 | 200,809 | 64.24 | % | ||||||||||
| Interest-bearing deposits in banks | 925,860 | 42,579 | 883,281 | 2074.45 | % | ||||||||||
| FHLB stock | 71,588 | 79,172 | (7,584 | ) | -9.58 | % | |||||||||
| Other interest and dividend income | 751,317 | 317,821 | 433,496 | 136.40 | % | ||||||||||
| Total interest income | 47,620,558 | 37,979,911 | 9,640,647 | 25.38 | % | ||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 7,963,852 | 5,408,394 | $ | 2,555,458 | 47.25 | % | |||||||||
| Borrowed funds | 733,660 | 319,560 | 414,100 | 129.58 | % | ||||||||||
| Federal funds purchased | 151 | 946 | (795 | ) | -84.04 | % | |||||||||
| Total interest expense | 8,697,663 | 5,728,900 | 2,968,763 | 51.82 | % | ||||||||||
| Net interest income | 38,922,895 | 32,251,011 | 6,671,884 | 20.69 | % | ||||||||||
| Provision for loan losses | 1,650,000 | 1,425,000 | 225,000 | 15.79 | % | ||||||||||
| Net interest income after | |||||||||||||||
| provision for loan losses | 37,272,895 | 30,826,011 | 6,446,884 | 20.91 | % | ||||||||||
| Noninterest income: | |||||||||||||||
| Service charges on deposit accounts | 3,076,556 | 2,384,911 | 691,645 | 29.00 | % | ||||||||||
| Other fees and commissions | 61,413 | 155,083 | (93,670 | ) | -60.40 | % | |||||||||
| Gain (loss) on sales and calls of securities | (24,471 | ) | (3,351 | ) | (21,120 | ) | 630.26 | % | |||||||
| Gain on sale of loans | 263,029 | 47,493 | 215,536 | 453.83 | % | ||||||||||
| Increase in CSV of life insurance | 213,246 | 183,956 | 29,290 | 15.92 | % | ||||||||||
| Other income | 443,079 | 394,494 | 48,585 | 12.32 | % | ||||||||||
| Total noninterest income | 4,032,852 | 3,162,586 | 870,266 | 27.52 | % | ||||||||||
| Noninterest expense: | |||||||||||||||
| Salaries and employee benefits | 14,056,471 | 11,006,233 | 3,050,238 | 27.71 | % | ||||||||||
| Occupancy and equipment expenses, net | 2,372,548 | 1,771,953 | 600,595 | 33.89 | % | ||||||||||
| Loss (gain) on sales and impairments of of foreclosed | |||||||||||||||
| and other real estate | (270,572 | ) | 265,900 | (536,472 | ) | -201.76 | % | ||||||||
| Loss (gain) on sales of premises and equipment | (1,000 | ) | 435 | (1,435 | ) | -329.89 | % | ||||||||
| Other operating | 9,418,971 | 5,707,932 | 3,711,039 | 65.02 | % | ||||||||||
| Total noninterest expense | 25,576,418 | 18,752,453 | 6,823,965 | 36.39 | % | ||||||||||
| Income before Taxes | 15,729,329 | 15,236,144 | 493,185 | 3.24 | % | ||||||||||
| Income Taxes | 2,108,705 | -- | 2,108,705 | ||||||||||||
| Net Income | $ | 13,620,624 | $ | 15,236,144 | $ | (1,615,520 | ) | -10.60 | % | ||||||
| Earnings per Share | $ | 6.82 | $ | 8.34 | $ | (1.52 | ) | -18.23 | % | ||||||
| TBV per Common Share | $ | 47.18 | $ | 43.35 | $ | 3.83 | 8.84 | % | |||||||
| 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, | |||||||||||||||||||||
| 2019 | 2018* | 2019 | 2019 | 2019 | 2019 | 2018* | |||||||||||||||||||||
| (Dollars in thousand, except per share data) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||
| Per Share Data | |||||||||||||||||||||||||||
| Basic Earnings per Common Share | $ | 6.82 | $ | 8.34 | $ | 1.48 | $ | 1.95 | $ | 0.95 | $ | 2.50 | $ | 2.34 | |||||||||||||
| Diluted Earnings per Common Share | 6.82 | 8.34 | 1.48 | 1.95 | 0.95 | 2.50 | 2.34 | ||||||||||||||||||||
| Dividends per Common Share | 0.93 | 2.61 | - | - | - | 1.02 | - | ||||||||||||||||||||
| Book Value per Common Share | 53.11 | 44.72 | 53.11 | 51.87 | 49.78 | 46.71 | 44.72 | ||||||||||||||||||||
| Tangible Book Value per Common Share | 47.18 | 43.35 | 47.18 | 45.91 | 43.62 | 45.18 | 43.35 | ||||||||||||||||||||
| Average Diluted Shares Outstanding | 1,997,735 | 1,826,854 | 2,100,395 | 2,058,039 | 1,988,231 | 1,840,764 | 1,833,100 | ||||||||||||||||||||
| End of Period Common Shares Outstanding | 2,098,250 | 1,838,816 | 2,098,250 | 2,100,842 | 2,057,568 | 1,840,980 | 1,838,816 | ||||||||||||||||||||
| * Subchapter S Tax Status | |||||||||||||||||||||||||||
| Annualized Performance Ratios (Bank Only) | |||||||||||||||||||||||||||
| Return on Average Assets | 1.63 | % | 2.15 | % | 1.49 | % | 1.80 | % | 0.96 | % | 2.44 | % | 2.35 | % | |||||||||||||
| Return on Average Equity | 14.56 | % | 20.65 | % | 12.37 | % | 14.51 | % | 9.52 | % | 23.74 | % | 22.23 | % | |||||||||||||
| Equity/Assets | 11.65 | % | 10.66 | % | 11.65 | % | 12.23 | % | 12.14 | % | 10.92 | % | 10.66 | % | |||||||||||||
| Cost of Funds | 1.02 | % | 0.89 | % | 0.91 | % | 0.99 | % | 1.06 | % | 1.17 | % | 1.05 | % | |||||||||||||
| Net Interest Margin | 4.65 | % | 4.88 | % | 4.70 | % | 5.20 | % | 4.29 | % | 4.42 | % | 4.98 | % | |||||||||||||
| Efficiency Ratio | 57.80 | % | 52.59 | % | 54.88 | % | 53.00 | % | 64.39 | % | 59.79 | % | 51.07 | % | |||||||||||||